SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Z TEL TECHNOLOGIES, INC.
------------------------
(Name of Issuer)
Common Stock, $.01 par value per share
--------------------------------------
(Title of Class of Securities)
988792107
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(CUSIP Number)
Edward A. Balogh, Jr.
Bank of America Capital Investors
100 North Tryon Street, 25th floor
Bank of America Corporate Center
Charlotte, North Carolina 28255
(704) 386-1792
----------------------------------
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
December 15, 1999
------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(e), (f) or (g), check the following box .
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<PAGE>
CUSIP No. 988792107
1 . Names of Reporting Persons S.S. or I.R.S. Identification Nos.
of Persons:
BA Capital Company, L.P.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) (b) |X|
3. SEC Use Only
4. Source of Funds (See instructions)
WC
5. Check box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
6. Citizenship or Place of Organization
Delaware
Number of Shares 7. Sole Voting Power 1,780,325 Shares
Beneficially Owned by 8. Shared Voting Power
Each Reporting Person 9. Sole Dispositive Power 1,780,325 Shares
With 10. Shared Dispositive Power
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,780,325 Shares
12. Check if the Aggregate Amount in Row 11 Excludes Certain
Shares (See Instructions)
13. Percent of Class Represented by Amount in Row 11.
5.8%
14. Type of Reporting Person (See Instructions):
PN
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<PAGE>
CUSIP No. 988792107
1 . Names of Reporting Persons S.S. or I.R.S. Identification Nos.
of Persons:
BA SBIC Management, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) (b) |X|
3. SEC Use Only
4. Source of Funds (See instructions)
AF
5. Check box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
6. Citizenship or Place of Organization
Delaware
Number of Shares 7. Sole Voting Power 1,780,325 Shares
Beneficially Owned by 8. Shared Voting Power
Each Reporting Person 9. Sole Dispositive Power 1,780,325 Shares
With 10. Shared Dispositive Power
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,780,325 Shares
12. Check if the Aggregate Amount in Row 11 Excludes Certain
Shares (See Instructions)
13. Percent of Class Represented by Amount in Row 11.
5.8%
14. Type of Reporting Person (See Instructions):
OO
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<PAGE>
CUSIP No. 988792107
1 . Names of Reporting Persons S.S. or I.R.S. Identification Nos.
of Persons:
BA Equity Management, L.P.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) (b) |X|
3. SEC Use Only
4. Source of Funds (See instructions)
AF
5. Check box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
6. Citizenship or Place of Organization
Delaware
Number of Shares 7. Sole Voting Power 1,780,325 Shares
Beneficially Owned by 8. Shared Voting Power
Each Reporting Person 9. Sole Dispositive Power 1,780,325 Shares
With 10. Shared Dispositive Power
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,780,325 Shares
12. Check if the Aggregate Amount in Row 11 Excludes Certain
Shares (See Instructions)
13. Percent of Class Represented by Amount in Row 11.
5.8%
14. Type of Reporting Person (See Instructions):
PN
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<PAGE>
1 . Names of Reporting Persons S.S. or I.R.S. Identification Nos.
of Persons:
BA Equity Management GP, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) (b) |X|
3. SEC Use Only
4. Source of Funds (See instructions)
AF
5. Check box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
6. Citizenship or Place of Organization
Delaware
Number of Shares 7. Sole Voting Power 1,780,325 Shares
Beneficially Owned by 8. Shared Voting Power
Each Reporting Person 9. Sole Dispositive Power 1,780,325 Shares
With 10. Shared Dispositive Power
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,780,325 Shares
12. Check if the Aggregate Amount in Row 11 Excludes Certain
Shares (See Instructions)
13. Percent of Class Represented by Amount in Row 11.
5.8%
14. Type of Reporting Person (See Instructions):
OO
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<PAGE>
CUSIP No. 988792107
1 . Names of Reporting Persons S.S. or I.R.S. Identification Nos.
of Persons:
Walter W. Walker, Jr.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) (b) |X|
3. SEC Use Only
4. Source of Funds (See instructions)
AF
5. Check box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
6. Citizenship or Place of Organization
United States
Number of Shares 7. Sole Voting Power 1,780,325 Shares
Beneficially Owned by 8. Shared Voting Power
Each Reporting Person 9. Sole Dispositive Power 1,780,325 Shares
With 10. Shared Dispositive Power
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,780,325 Shares
12. Check if the Aggregate Amount in Row 11 Excludes Certain
Shares (See Instructions)
13. Percent of Class Represented by Amount in Row 11.
5.8%
14. Type of Reporting Person (See Instructions):
IN
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<PAGE>
CUSIP No. 988792107
1 . Names of Reporting Persons S.S. or I.R.S. Identification Nos.
of Persons:
Bank of America Corporation
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) (b) |X|
3. SEC Use Only
4. Source of Funds (See instructions)
AF
5. Check box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
6. Citizenship or Place of Organization
Delaware
Number of Shares 7. Sole Voting Power 1,780,325 Shares
Beneficially Owned by 8. Shared Voting Power
Each Reporting Person 9. Sole Dispositive Power 1,780,325 Shares
With 10. Shared Dispositive Power
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,780,325 Shares
12. Check if the Aggregate Amount in Row 11 Excludes Certain
Shares (See Instructions)
13. Percent of Class Represented by Amount in Row 11.
5.8%
14. Type of Reporting Person (See Instructions):
CO
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<PAGE>
Item 1. Security and Issuer.
This statement relates to shares of common stock, par
value $0.01 per share, (the "Common Stock") of Z Tel
Technologies, Inc., a Delaware corporation (the "Company"),
having its principal executive offices at Knights Point, 601
South Harbour Island Boulevard, Suite 220, Tampa, Florida
33602.
Item 2. Identity and Background.
(a) This statement is being jointly
filed by (1) BA Capital Company, L.P., a
Delaware limited partnership ("BA Capital"),
(2) BA SBIC Management, LLC, a Delaware
limited liability company ("BA SBIC
Management"), (3) BA Equity Management,
L.P., a Delaware limited partnership ("BA
Equity Management"), (4) BA Equity
Management GP, LLC, a Delaware limited
liability company ("BA Equity Management
GP"), (5) Walter W. Walker, Jr., a United
States citizen and (6) Bank of America
Corporation, a Delaware corporation ("Bank
of America") (BA Capital, BA SBIC
Management, BA Equity Management, BA Equity
Management GP, Walter W. Walker, Jr. and
Bank of America, collectively the "Reporting
Persons"). A list of the directors and
executive officers of Bank of America is
attached hereto as Annex A.
(b) The address of the principal business office
of each Reporting Person is
as follows:
Reporting Person Address
1. BA Capital 100 North Tryon Street, Floor 25
Bank of America Corporate Center
Charlotte, NC 28255
2. BA SBIC 100 North Tryon Street, Floor 25
Management Bank of America Corporate Center
Charlotte, NC 28255
3. BA Equity 100 North Tryon Street, Floor 25
Management Bank of America Corporate Center
Charlotte, NC 28255
4. BA Equity 100 North Tryon Street, Floor 25
Management GP Bank of America Corporate Center
Charlotte, NC 28255
5. Walter W. c/o BA Capital Company, L.P.
Walker, Jr. 100 North Tryon Street, Floor 25
Bank of America Corporate Center
Charlotte, NC 28255
-8-
<PAGE>
6. Bank of America 100 North Tryon Street, Floor 25
Bank of America Corporate Center
Charlotte, NC 28255
(c) BA Capital is an investment partnership engaged
principally in the business of making private investments. BA
SBIC Management is engaged in the business of being the
general partner of BA Capital. BA Equity Management is engaged
in the business of being the sole member of BA SBIC
Management. BA Equity Management GP is engaged in the business
of being the general partner of BA Equity Management. Walter
W. Walker, Jr.'s principal occupation is serving as the
Managing Member of BA Equity Management GP and as an employee
of a subsidiary of Bank of America. Bank of America is a bank
holding company registered under the Bank Holding Company Act
of 1956, as amended, and is engaged in the general banking and
financial services business through its subsidiaries.
(d) During the last five years, none of the Reporting
Persons, and to the knowledge of each Reporting Person, none
of the executive officers or directors of Bank of America, as
set forth on Annex A, has been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, none of the Reporting
Persons, and to the knowledge of each Reporting Person, none
of the executive officers or directors of Bank of America, as
applicable, has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a
result of which such person was or is subject to a judgement,
decree or final result of which such person was or is subject
to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject
to, Federal or state securities laws or finding any violation
with respect to such laws.
(f) Citizenship/State of Organization
BA Capital Company, L.P. - Delaware
BA SBIC Management, LLC - Delaware
BA Equity Management, L.P. - Delaware
BA Equity Management GP, LLC - Delaware
Walter W. Walker, Jr. - United States
Bank of America Corporation - Delaware
Except as otherwise indicated on Annex A, to the knowledge of
the Reporting Persons, each executive officer and director of
Bank of America, as set forth on Annex A, is a citizen of the
United States.
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<PAGE>
Item 3. Source and Amount of Funds or Other Consideration.
On November 4, 1998, BA Capital, successor-by-merger to
NationsBanc Capital Corporation ("NBCC"), purchased 1,617,477
shares of Series A Convertible Preferred Stock (the "Preferred
Stock") of the Company. BA Capital paid an aggregate cash
purchase price of $5,999,999.07 for such Preferred Stock.
Funds for such cash purchase price were provided from the
working capital of BA Capital and its affiliates.
Pursuant to a registered initial public offering of 6,900,000
shares of Common Stock of the Company on December 15, 1999
(the "IPO"), all of the Preferred Stock of the Company held by
BA Capital prior to the IPO were converted into 1,779,225
shares of Common Stock.
Item 4. Purpose of Transaction.
BA Capital purchased the Preferred Stock of the Company solely
for investment purposes. As of the date of this Statement, and
as a result of the IPO, BA Capital is the direct beneficial
owner of 1,780,325 shares of Common Stock which represents
approximately 5.8% of the shares of Common Stock of the
Company currently outstanding. BA Capital may acquire
additional securities of the Company, subject to certain
factors, including, without limitation, (i) applicable
securities laws and governmental restrictions on the number of
voting securities BA Capital may hold, (ii) market conditions
and (iii) its assessment of the business prospects of the
Company. BA Capital is continuously evaluating the business
and business prospects of the Company, and its present and
future interests in, and intentions with respect to, the
Company and may at any time decide to dispose of any or all of
the shares of the Company currently owned by it, subject to
any applicable laws, governmental restrictions or contractual
restrictions.
Other than discussed herein, BA Capital currently has no plans
to effect:
(a) any extraordinary corporate transaction,
such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries;
(b) a sale or transfer of a material amount of
the assets of the Company or any of its subsidiaries;
(c) any change in the present Board of Directors or
management of the Company, including any plans or proposals to
change the number or term of directors or to fill any existing
vacancies on the Board of Directors;
(d) any material change in the present
capitalization or dividend policy of the Company;
(e) any other material change in the Company's
business or corporate structure;
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<PAGE>
(f) any change in the Company's certificate of
incorporation, by-laws or instruments corresponding thereto or
other actions which may impede the acquisition or control of
the Company by any person;
(g) the delisting of any class of securities
of the Company from a national securities exchange or the
ceasing to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities
association;
(h) any class of equity securities of the
company becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934; or
(i) any action similar to any of those
enumerated above.
BA Capital intends to re-evaluate continuously its investment
in the Company and may, based on such re-evaluation, determine
at a future date to change its current position with respect
to any action enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) The aggregate number and percentage of Common
Stock to which this statement relates is 1,780,325 shares,
representing 5.8% of the 30,888,158 shares of common stock of
the Company currently issued and outstanding, as reported in
the Company's prospectus dated December 15, 1999. The
Reporting Persons beneficially own the Common Stock, which
includes 1,100 shares of Common Stock held in the form of
options granted to BA Capital in connection with its
participation in designating a member to serve on the
Company's board of directors, in connection with the
conversion of the Preferred Stock pursuant to the IPO, as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Shares of
Reporting Person Common Stock % Common Stock
---------------- ------------ -------------
1. BA Capital 1,780,325 5.8%
2. BA SBIC Management 1,780,325 5.8%
3. BA Equity Management 1,780,325 5.8%
4. BA Equity Management GP 1,780,325 5.8%
5. Walter W. Walker, Jr. * 1,780,325 5.8%
6. Bank of America 1,780,325 5.8%
</TABLE>
* Mr. Walker disclaims such beneficial ownership.
(b) BA Capital has sole voting and dispositive
power with respect to 1,780,325 shares of Common Stock.
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<PAGE>
BA SBIC Management is the general partner of
BA Capital. Pursuant to the limited partnership agreement for
BA Capital, BA SBIC Management has sole voting and dispositive
power with respect to 1,780,325 shares of Common Stock.
BA Equity Management is the sole member of
BA SBIC Management. Pursuant to the operating agreement of BA
SBIC Management, BA Equity Management has sole voting and
dispositive power with respect to 1,780,325 shares of Common
Stock.
BA Equity Management GP is the general
partner of BA Equity Management. Pursuant to the limited
partnership agreement for BA Equity Management, BA Equity
Management GP has sole voting and dispositive power with
respect to 1,780,325 shares of Common Stock.
Walter W Walker, Jr. is the Managing Member
of BA Equity Management GP, in which capacity he has sole
voting and dispositive power with respect to 1,780,325
shares of Common Stock. Mr. Walker disclaims such beneficial
ownership.
As a result of the employment arrangement
between Walter W. Walker, Jr. and Bank of America, Bank of
America has sole voting and dispositive power with respect to
1,780,325 shares of Common Stock.
(c) The Reporting Persons have not, and to the
knowledge of the Reporting Persons, no director or executive
officer of any of the Reporting Persons has, effected any
transaction in shares of Common Stock during the period
extending from the date hereof to the date 60 days prior to
the date hereof.
(d) To the knowledge of the Reporting Persons, except
as set forth herein, no other person has the right to receive
or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the Common Stock owned by BA
Capital.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
(a) Stockholders' Agreement. The Company entered
into an Amended and Restated Stockholders' Agreement, dated
October __, 1999 (the "Stockholders' Agreement"), with D.
Gregory Smith, James A. Kitchen, Charles W. McDonough, J.
Bryan Bunting, BA Capital, Sewanee Partners II, L.P. and
Gramercy Z-Tel LLC (collectively, excluding BA Capital, the
"Other Stockholders"). The following description of the
Stockholders' Agreement is subject to and qualified in its
entirety by reference to the Stockholders' Agreement, which
has been listed in Item 7 and filed as an exhibit to this
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<PAGE>
Schedule 13D. BA Capital and the Other Shareholders of the
Company have been granted the right, subject to certain
restrictions, to require the Company to include shares held by
them in any registration statements filed by the Company with
the Securities and Exchange Commission, subject to certain
limited exceptions. The Company has agreed to pay certain
expenses relating to any registration of shares effected
pursuant to the Stockholders' Agreement and to indemnify the
parties thereto against certain liabilities in connection with
any such registration.
(b) Lock-Up Agreement. In connection with the IPO,
the Company, its directors, certain officers of the Company
and certain of the shareholders of the Company each entered
into a lock-up agreement dated December 15, 1999 with the
underwriters participating in such offering. Each of the
Company, is directors, certain officers of the Company and
certain shareholders have agreed, subject to certain
conditions, not to, directly or indirectly, offer for sale,
sell, pledge or otherwise dispose of, any shares of Common
Stock (or any securities convertible into or exercisable or
exchangeable for shares of Common Stock) or enter into any
swap or other derivatives transaction that transfers any
economic benefits of such Common Stock for a period of 180
days after the date of the offering, without the prior written
consent of such underwriters.
Item 7. Materials to Be Filed as Exhibits.
Exhibit 1. Joint Filing Agreement, dated February __,
2000, by BA Capital Company, L.P., BA SBIC Management, LLC,
BA Equity Management, L.P., BA Equity Management, GP, LLC,
Walter W. Walker, Jr., Bank of America Corporation.
Exhibit 2. Amended and Restated Stockholders' Agreement,
dated October __, 1999, by and among Z-Tel Technologies, Inc.
D. Gregory Smith, James A. Kitchen, Charles W. McDonough, J.
Bryan Bunting, BA Capital Company, L.P., Sewanee Partners II,
L.P. and Gramercy Z-Tel LLC.
Exhibit 3. Lock-Up Agreement, dated December 15, 1999,
by BA Capital Company, L.P., in favor of Thomas Weisel
Partners LLC, Credit Suisse First Boston Corporation, J.C.
Bradford & Co. and Stephens, Inc.
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<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
<TABLE>
<CAPTION>
<S> <C>
Date: February 14, 2000 BA CAPITAL COMPANY, L.P.
By: BA SBIC Management, LLC,
its general partner
By: BA Equity Management, L.P.,
its sole member
By: BA Equity Management GP, LLC
its general partner
By: /s/ Walter W. Walker, Jr.
-------------------------
Name: Walter W. Walker, Jr.
Title: Managing Member
BA SBIC MANAGEMENT, LLC
By: BA Equity Management, L.P.,
its sole member
By: BA Equity Management GP, LLC,
its general partner
By: /s/ Walter W. Walker, Jr.
-------------------------
Name: Walter W. Walker, Jr.
Title: Managing Member
BA EQUITY MANAGEMENT, L.P.
By: BA Equity Management GP, LLC,
its general partner
By: /s/ Walter W. Walker, Jr.
-------------------------
Name: Walter W. Walker, Jr.
Title: Managing Member
BA EQUITY MANAGEMENT GP, LLC
By: /s/ Walter W. Walker, Jr.
-------------------------
Name: Walter W. Walker, Jr.
Title: Managing Member
/s/ Walter W. Walker, Jr.
-------------------------
Walter W. Walker, Jr.
BANK OF AMERICA CORPORATION
By: /s/ John E. Mack
------------------
Name: John E. Mack
Title: Senior Vice President
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</TABLE>
<PAGE>
ANNEX A
BANK OF AMERICA CORPORATION
DIRECTORS AND OFFICERS
AS OF NOVEMBER 1, 1999
Directors
Charles W. Coker Timm F. Crull
Chairman Retired Chairman and CEO
Sonoco Products Company Nestle USA, Inc.
Hartsville, SC Newport Beach, CA
Alan T. Dickson Kathleen F. Feldstein
Chairman President
Ruddick Corporation Economics Studies, Inc.
Charlotte, NC Belmont, MA
Paul Fulton Donald E. Guinn
Chairman and CEO Chairman Emeritus
Bassett Furniture Industries, Inc. Pacific Telesis Group
Winston Salem, NC San Francisco, CA
James H. Hance, Jr. C. Ray Holman
Vice Chairman and Chief Financial Officer Chairman and CEO
Bank of America Corporation Mallinckrodt Inc.
Charlotte, NC St. Louis, MO
W.W. Johnson Kenneth D. Lewis
Chairman Executive Committee President
Bank of America Corporation Bank of America Corporation
Charlotte, NC Charlotte, NC
Walter E. Massey Hugh L. McColl, Jr.
President Chairman and CEO
Morehouse College Bank of America Corporation
Atlanta, GA Charlotte, NC
Richard M. Rosenberg O. Temple Sloan, Jr.
Retired Chairman and CEO Chairman
Bank of America Corporation General Parts Inc.
San Francisco, CA Raleigh, NC
Meredith R. Spangler Ronald Townsend
Trustee and Board Member Communications Consultant
Charlotte, NC Jacksonville, FL
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<PAGE>
Solomon D. Trujillo Jackie M. Ward
Chairman, President and CEO President and CEO
U S West Computer Generation Incorporated
Denver, CO Atlanta, GA
Virgil R. Williams Shirley Young
Chairman and CEO Vice President
Williams Group International, Inc. General Motors Corporation
Stone Mountain, GA Detroit, MI
A. Michael Spence
Dean
Graduate School of Business,
Stanford University
Stanford, CA
Principal Officers
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Hugh L. McColl, Jr.
Chairman and Chief Executive Officer
James H. Hance, Jr.
Vice Chairman and Chief Financial Officer
Kenneth D. Lewis
President and Chef Operating Officer
Michael J. Murray
President, Global Corporate and Investment
Banking
F. William Vandiver, Jr.
Corporate Risk Management Executive
Address
- -------
All Bank of America officers and directors can be reached c/o:
100 North Tryon Street, Floor 25
Bank of America Corporate Center
Charlotte, NC 28255
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EXHIBIT 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) under the Securities Exchange Act of
1934, the persons named below agree to the joint filing on behalf of each of
them of a Statement on Schedule 13D (including amendments thereto) with respect
to the Common Stock of Z-Tel Technologies, Inc. and further agree that this
Joint Filing Agreement (the "Agreement") be included as an exhibit to such joint
filing. In evidence thereof, the undersigned, being duly authorized, hereby
execute this Agreement this February 14, 2000. The Agreement may be executed in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such parts taken together will constitute a part of
this Agreement.
<TABLE>
<S> <C>
Date: February 14, 2000 BA CAPITAL COMPANY, L.P.
By: BA SBIC Management, LLC,
its general partner
By: BA Equity Management, L.P.,
its sole member
By: BA Equity Management GP, LLC
its general partner
By: /s/ Walter W. Walker, Jr.
---------------------------
Name: Walter W. Walker, Jr.
Title: Managing Member
BA SBIC MANAGEMENT, LLC
By: BA Equity Management, L.P.,
its sole member
By: BA Equity Management GP, LLC,
its general partner
By: /s/ Walter W. Walker, Jr.
---------------------------
Name: Walter W. Walker, Jr.
Title: Managing Member
BA EQUITY MANAGEMENT, L.P.
By: BA Equity Management GP, LLC,
its general partner
By: /s/ Walter W. Walker, Jr.
---------------------------
Name: Walter W. Walker, Jr.
Title: Managing Member
BA EQUITY MANAGEMENT GP, LLC
By: /s/ Walter W. Walker, Jr.
---------------------------
Name: Walter W. Walker, Jr.
Title: Managing Member
/s/ Walter W. Walker, Jr.
-------------------------
Walter W. Walker, Jr.
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<PAGE>
BANK OF AMERICA CORPORATION
By: /s/ John E. Mack
------------------
Name: John E. Mack
Title: Senior Vice President
</TABLE>
EXHIBIT 2
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (the "Agreement") is
made as of this __ day of October, 1999, by and among Z-Tel Technologies, Inc.,
a Delaware corporation (the "Company"), D. Gregory Smith, James A. Kitchen,
Charles W. McDonough, and J. Bryan Bunting (each a "Management Stockholder" and
together, the "Management Stockholders"), BA Capital Company, L.P., a Texas
limited partnership (formerly known as NationsBanc Capital Corporation, a Texas
corporation ("BACC")), Sewanee Partners II, L.P., a Tennessee limited
partnership ("SW II"), and Gramercy Z-Tel LLC, a Delaware limited liability
company ("Gramercy," and together with BACC and SW II, collectively, the
"Investors" and each individually, an "Investor") and the other stockholders
listed on the signature pages hereto (each Stockholder that is not a Management
Stockholder or an Investor, collectively, the "Other Stockholders" and
collectively with the Management Stockholders and the Investors, the
"Stockholders" and each individually, a "Stockholder").
W I T N E S S E T H:
WHEREAS, each of the Stockholders now or may hereafter own equity
securities of the Company (including, without limitation, shares of the
Company's common stock, $0.01 par value per share (the "Common Stock")), any
class or series of preferred stock (including, without limitation, shares of the
Company's Series A Preferred Stock, $0.01 par value per share (the "Series A
Preferred"), Series B Preferred Stock, $0.01 par value per share (the "Series B
Preferred"), and Series C Preferred Stock, $0.01 par value per share (the
"Series C Preferred" and, together with Series A Preferred and the Series B
Preferred, the "Preferred Stock")), options, warrants, instruments convertible
or exchangeable into such securities or rights to acquire such securities
(collectively, the "Securities");
WHEREAS, Gramercy and the Company are parties; to that certain Amended
and Restated Stock Purchase Agreement, dated as of September 30, 1999 (the
"Series C Purchase Agreement")
WHEREAS, the obligations of Gramercy under the Series C Purchase
Agreement are conditioned, among other things, upon the execution and delivery
of this Agreement by BACC, SW II, the Management Stockholders, the Other
Stockholders and the Company;
WHEREAS, BACC, SW II, the Management Stockholders, certain of the Other
Stockholders and the Company are parties to a Stockholders' Agreement, dated as
of November 4, 1998 (the "Prior Stockholders' Agreement"); and
WHEREAS, in order to induce Gramercy to invest funds in the Company
pursuant to the Series C Purchase Agreement, the parties to the Prior
Stockholders' Agreement hereby amend and restate the Prior Stockholders'
Agreement on the terms herein provided.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned parties hereto
agree as follows:
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<PAGE>
1. Definitions.
-----------
(a) All capitalized terms used and not otherwise defined herein shall
have the meanings given them in the Amended and Restated Certificate of
Designations of the Company filed with the Secretary of State of Delaware on
October __, 1999 (the "Certificate").
(b) An "Affiliate" shall mean, with respect to any corporation, limited
liability company, partnership, limited partnership, joint venture, joint stock
company, firm, company, syndicate, trust, estate, association, governmental
authority, business, organization or any other incorporated or unincorporated
entity (each a "Person"), any other Person that, directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with, such Person.
(c) "Control" (including the terms "controlling", "controlled by" and
"under common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management, policies or activities
of a Person whether through the ownership of securities, by contract or agency
or otherwise; provided, however, that none of the Investors will be deemed to
"control" the Company.
(d) A "Co-Sale Pro Rata Share" shall mean the ratio that (i) the sum of
the number of shares of Common Stock then held by the Eligible Seller (as
defined herein) and the number of shares of Common Stock issuable upon exercise
of any options, warrants or convertible securities (including, without
limitation, the Preferred Stock) then held by such Eligible Seller bears to (ii)
the sum of the total number of shares of Common Stock then held by all Eligible
Sellers and the number of shares of Common Stock issuable upon exercise of any
options, warrants or convertible securities (including, without limitation, the
Preferred Stock) held by all Eligible Sellers plus the number of shares of
Common Stock then held by the Stockholder proposing to sell his or its shares of
Common Stock.
(e) "Independent Third Party" shall mean any person who, immediately
prior to the contemplated transaction, is not an Affiliate of a Stockholder.
(f) The "Majority Investors" shall mean both (i) the holders of a
majority of the outstanding shares of the Series A Preferred for so long as such
holders and their respective Affiliates own at least fifty percent (50%) of the
Securities (counted on an as-converted basis) owned by them on the date hereof
and (ii) the holders of a majority of the outstanding shares of the Series C
Preferred for so long as such holders and their respective Affiliates own at
least fifty percent (50%) of the Securities (counted on an as-converted basis)
owned by them on the date hereof.
(g) "New Securities" shall mean (i) any shares of capital stock of the
Company, including Common Stock, Preferred Stock and any other series or class
of common stock, preferred stock or other capital stock, whether now authorized
or not, (ii) rights, options or warrants to purchase said shares of capital
stock, and (iii) securities of any type whatsoever that are, or may become,
convertible into, exchangeable, or exercisable for said shares of capital stock;
provided, however, that for purposes hereunder, "New Securities" shall not
include (i) the Common Stock, Preferred Stock and other securities
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of the Company issued prior to the date hereof and set forth in Schedule 2.5 of
the Series C Purchase Agreement, (ii) the Securities of the Company issued
pursuant to the Series C Purchase Agreement, (iii) the Securities of the Company
issued upon conversion of the Preferred Stock (the "Preferred Conversion
Shares"), (iv) the Series A Payments-in-Kind, (v) the Series B Payments-in-Kind,
(vi) the Series C Payments- in-Kind, (vii) any Common Stock offered to the
public generally pursuant to a registration statement under the Securities Act
in connection with a Qualified Public Offering, (viii) securities granted,
issued or sold in connection with the Option Pool ("Option Securities"), (ix)
securities issued upon exercise of the securities in existence on the date
hereof and set forth in Schedule 2.5 of the Series C Purchase Agreement,
including without limitation, the Option Securities, and (x) stock issued in
connection with any stock split, stock dividend or recapitalization by the
Company.
(h) A "Permitted Transferee" shall mean (i) in the case of a
Stockholder that is a natural person, such Stockholder's spouse, siblings, heirs
(whether by will or operation of law) and descendants (whether natural or
adopted), any trust for the benefit of such person or persons or any of the
foregoing or any charitable organization and (ii) in the case of any Stockholder
that is not a natural person, any Affiliate of such Stockholder, provided in
each case that such person has entered into an Assumption Agreement in the form
attached hereto as Exhibit A, whereby such person has agreed to be bound by the
terms of this Agreement and to be treated as an "Other Stockholder" for purposes
of this Agreement or, if such person is an Affiliate of an Investor, an
"Investor" for purposes of this Agreement or, if such person is the spouse,
sibling, heir, descendent or trust for the benefit of any of the foregoing of a
Management Stockholder, as a "Management Stockholder" for purposes of this
Agreement.
(i) "Pro Rata Share" shall mean the ratio that (i) the sum of the total
number of shares of Common Stock which are then held by a Stockholder and those
which the Stockholder has the right to obtain pursuant to exercise or conversion
of any option, warrant, right or convertible security (including, without
limitation, the Preferred Stock) bears to (ii) the sum of the total number of
shares of Common Stock then outstanding and which are issuable pursuant to
exercise or conversion of any then outstanding options, warrants, rights or
convertible securities (including, without limitation, the Preferred Stock).
(j) "Put Securities" shall mean the Series A Preferred, Series B
Preferred, Series C Preferred, the Preferred Conversion Shares, Series A
Payments-in-Kind, Series B Payments-in-Kind or Series C Payments-in-Kind held by
an Investor or holder of shares of Series B Preferred exercising the Put on a
Put Date.
(k) A "Remaining Pro Rata Share" shall mean the ratio that (a) the sum
of the number of shares of Common Stock then held by the Eligible Offeree (as
defined herein) and the number of shares of Common Stock issuable upon exercise
of any options, warrants or convertible securities (including, without
limitation, the Preferred Stock) then held by such Eligible Offeree bears to (b)
the sum of the total number of shares of Common Stock then held by all Eligible
Offerees and the number of shares of Common Stock issuable upon exercise of any
options, warrants or convertible securities (including, without limitation, the
Preferred Stock) then held by all Eligible Offerees.
(l) "Requisite Holders" shall mean Persons holding in the aggregate
shares of the capital stock of the Company representing at least forty percent
(40%) of the votes eligible to be cast in an election for the directors of the
Company, which group must include (i) BACC for so long as BACC and its
Affiliates
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collectively own at least fifty percent (50%) of the Securities (counted on an
as-converted basis) owned by them on the date hereof and (ii) Gramercy for so
long as Gramercy and its Affiliates collectively own at least fifty percent
(50%) of the Securities (counted on an as-converted basis) owned by them on the
date hereof.
(m) A "Sale of the Company" shall mean the sale of the Company to an
Independent Third Party or group of Independent Third Parties pursuant to which
such party or parties acquire (i) capital stock of the Company possessing the
voting power under normal circumstances to elect a majority of the Company's
board of directors (whether by merger, consolidation or sale or Transfer of the
Company's capital stock or otherwise) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis.
(n) "Series A Purchase Agreement" shall mean the Stock Purchase
Agreement, dated November 4, 1998, by and among the Company, BACC and SW II.
(o) "Transfer" (including al correlative meanings) shall mean any
transfer of Securities, whether by sale, assignment, pledge, encumbrance, gift,
bequest, appointment or otherwise.
2. Right of First Refusal.
----------------------
(a) In the event that (i) a Management Stockholder or (ii) any Other
Stockholder that, together with such Other Stockholders' Affiliates,
collectively own in the aggregate more than one percent (1%) of the fully
diluted Common Stock of the Company, proposes to Transfer any of his or its
Securities (other than in a Qualified Public Offering (subject to the
Stockholders' piggyback registration rights set forth in Exhibit B) or as
permitted pursuant to Section 8 hereof), such Stockholder shall give the Board
of Directors of the Company written notice of the price, terms and conditions of
the proposed transfer. Subject to any required approval of the holders of the
Series A Preferred and the Series C Preferred pursuant to the Certificate, the
Company shall have thirty (30) days from the date of receipt of any such notice
to agree to purchase up to all of such Securities, for the price and upon the
terms and conditions specified in the notice, by delivering written notice to
such Stockholder stating therein the quantity of Securities to be purchased up
to all of such Securities.
(b) In the event that the Company does not receive the requisite
approval from the holders of Series A Preferred and Series C Preferred or the
Company determines that it shall not purchase all of the Securities that such
Stockholder proposes to Transfer within the thirty (30) day period specified in
Section 2(a) hereof, such Stockholder shall then give the Investors
(collectively, the "Eligible Offerees") written notice of the price, terms and
conditions of the proposed Transfer (which shall be the same price, terms and
conditions specified in the notice to the Company pursuant to Section 2(a)
above). Each Eligible Offeree shall have thirty (30) days from the date of
receipt of any such notice to agree to purchase up to its Remaining Pro Rata
Share of such Securities, for the price and upon the terms and conditions
specified in the notice, by giving written notice to the Transferring
Stockholder stating therein the quantity of securities to be purchased up to
such person's Remaining Pro Rata Share. If any Eligible Offeree fails to agree
to purchase its full Remaining Pro Rata Share within such thirty (30) day
period, the Stockholder Transferring such Securities will give the Eligible
Offerees who did so agree (the "Electing Offerees") notice of the number of
Securities which were not subscribed for. Such notice may be by telephone if
followed by
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written confirmation within two (2) days. The Electing Offerees shall have
fifteen (15) days from the date of such second notice (which 15-day period shall
be measured from the date of the telephonic notice, if so made, provided that
written confirmation is supplied in accordance with the previous sentence) to
purchase their Remaining Pro Rata Share (or such greater amount as such Electing
Offerees agree upon) of all or any part of the Securities not purchased by such
other Eligible Offerees. For purposes of the second election under this Section
2(b), shares held by Eligible Offerees other than Electing Offerees shall be
excluded from clause (b) for the definition of a "Remaining Pro Rata Share."
(c) Notwithstanding anything to the contrary in this Section 2, the
Company, the Eligible Offerees and the Electing Offerees may not in the
aggregate purchase less than all of the Securities proposed to be Transferred
pursuant to the notice to the Company pursuant to Section 2(a) above.
(d) Subject to the provisions of Section 3, in the event the Company,
the Eligible Offerees and the Electing Offerees fail to agree to purchase all of
the Securities proposed to be Transferred within the specified thirty (30) day
period in the case of the Company, plus the then specified thirty (30) day
period in the case of the Eligible Offerees, plus the then specified fifteen
(15) day period in the case of the Electing Offerees, respectively, such
Stockholder shall have ninety (90) days thereafter to Transfer the Securities
proposed to be Transferred at the cash price and upon the terms and conditions
no more favorable to the purchasers of such securities than specified in the
notice to the Company pursuant to Section 2(a) above. In the event such
Stockholder has not Transferred the Securities within such ninety (90) day
period, such Stockholder shall not thereafter Transfer any of his or its
Securities without first offering such Securities in the manner provided in this
Section 2.
(e) For the avoidance of doubt, Transfers by any of the Investors
shall not be subject to this Section 2.
3. Tag Along; Drag Along Provisions.
(a) Notwithstanding the foregoing Section 2(d), no Management
Stockholder may Transfer any of his Securities (other than in a Qualified Public
Offering (subject to the Stockholders' piggyback registration rights set forth
in Exhibit B) or as permitted pursuant to Section 8 hereof) pursuant to Section
2(d) until the remaining Stockholders (the "Eligible Sellers") shall have been
given the opportunity, exercisable within thirty (30) days from the date of
notice to the Eligible Sellers by such Management Stockholder, to Transfer to
the proposed transferee or transferees, upon the same terms and conditions
offered to the Transferring Management Stockholder, its Co-Sale Pro Rata Share
of the Securities proposed to be Transferred. If an Eligible Seller fails to
notify the Transferring Management Stockholder within (30) days after the notice
given pursuant hereto, it shall be deemed to have waived its right under this
Section 3. Any Transfer made pursuant to this Section 3 shall be consummated
within one hundred and twenty (120) days of the date of the notice given
pursuant to Section 2(a) above and shall be conditioned upon the agreement of
the proposed transferee or transferees that such proposed transferee or
transferees will purchase each Eligible Sellers' Co-Sale Pro Rata Share of the
Securities proposed to be Transferred.
(b) If the Requisite Holders approve a Sale of the Company (an
"Approved Sale"), each Stockholder shall vote for, consent to and raise no
objections against such Approved Sale. If the Approved Sale is structured as a
(i) merger or consolidation, each Stockholder shall waive any dissenters
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<PAGE>
rights, appraisal rights or similar rights in connection with such merger or
consolidation or (ii) sale of stock, each Stockholder shall agree to sell all of
his Securities and rights to acquire shares of Common Stock on the same terms
and conditions applicable to the Requisite Holders. Each Stockholder shall take
all necessary or desirable actions in connection with the consummation of the
Approved Sale and the distribution of the aggregate consideration from such
Approved Sale as requested by the Company.
4. Registration Rights. Each of the Stockholders shall have the
registration rights specified on Exhibit B, which Exhibit is a part of this
Agreement for all purposes hereunder.
5. Voting Agreements. The parties hereto agree as follows with
respect to all of the voting of the Securities held by them:
(a) Voting of Capital Stock. Prior to a Qualified Public Offering, each
Stockholder (other than a Management Stockholder or an Investor) agrees to vote
all shares of Series B Preferred owned or controlled by them as designated by
the holders of 75% of the issued and outstanding shares of Series A Preferred
and Series C Preferred, voting together as a single class.
(b) Board of Directors. Each Stockholder hereby covenants and agrees
that, except as required by the Certificate, he or it shall take no action to
change the number of members on the Board of Directors from eight (8).
(c) Common Stockholder Nominees. For so long as the Investors and the
Investors' Permitted Transferees own any shares of Series A Preferred, Series C
Preferred or Common Stock of the Company, the Company agrees to nominate to, and
the Stockholders and their Permitted Transferees agree to cause to be elected
to, the Company's Board of Directors, the nominees designated by the holders of
a majority of the issued and outstanding shares of Common Stock pursuant to that
certain Agreement among the Company and the Investors of even date herewith (the
"Director Agreement").
6. Preemptive Rights.
-----------------
(a) Grant of Right. The Company hereby grants to the Investors the
right of first refusal to purchase their Pro Rata Share of New Securities which
the Company may, from time to time, propose to issue and sell.
(b) Notice. In the event the Company proposes to undertake an issuance
or sale of New Securities it shall give the Investors written notice of its
intention, describing the amount and type of New Securities and the cash price
and terms upon which the Company proposes to issue the same. Each Investor shall
have thirty (30) days from the date of receipt of any such notice to agree to
purchase up to its respective Pro Rata Share of such New Securities for the cash
price and upon the terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased.
Subject to the previous sentence, the closing of the purchase of the New
Securities to be issued and sold to an Investor shall occur at the same time as
the closing of the sale of New Securities not elected or eligible to be
purchased by the Investors shall occur.
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<PAGE>
(c) Eligible Sales to Third Parties. After giving the notice and
opportunity for the Investors to participate as required under Section 6(b)
above, the Company shall have ninety (90) days thereafter to issue and sell the
New Securities not elected nor eligible to be purchased by the Investors at the
cash price and upon the terms no more favorable to the purchasers of such
securities than specified in the Company's notice under Section 6(b). In the
event the Company has not sold such New Securities within said ninety (90) day
period, the Company shall not thereafter issue or sell any New Securities
without first offering such securities in the manner provided above.
(d) Waiver of Preemptive Rights. Notwithstanding anything in this
Article 6 to the contrary, SW II hereby waives its right of first refusal to
purchase its Pro Rata Share of New Securities that represent the next $21
million in gross proceeds to the Company from the sale of New Securities after
the date hereof. This Section 6(d) shall no longer apply when Gramercy shall
have been offered the opportunity to purchase at least $15 million in New
Securities that the Company proposes to issue and issues after the date hereof.
After Gramercy shall have been offered the opportunity to purchase at least $15
million in New Securities that the Company proposes to issue and issues after
the date hereof, regardless of whether Gramercy has elected to so purchase such
New Securities all of its rights under this Section 6(d) shall terminate.
7. Put Provisions.
--------------
(a) Put Prior to initiation of a transaction which the Company expects
to result in a Qualified Public Offering (provided that the Company shall give
written notice of its intent to initiate such a transaction at least thirty (30)
days prior to such initiation), at any time and from time to time after the
earlier of either (i) November 4, 2005 or (ii) the date upon which the holders
of either (x) a majority of the outstanding shares of Series A Preferred (which
must include BACC as long as it holds any Series A Preferred) or (y) a majority
of the outstanding shares of Series C Preferred (which must include Gramercy as
long as it holds any Series C Preferred) give the Company written notice that
the Company has violated any material provision of the Series A Purchase
Agreement (in the case of the Series A Preferred stockholders) or the Series C
Purchase Agreement (in the case of the Series C Preferred stockholders), this
Agreement, the Certificate or the Director Agreement, which violation or breach
is not cured within thirty (30) days after delivery of such written notice, the
Investors and the Stockholders holding Series B Preferred ("Series B Preferred
Stockholders") shall have the right thereafter to cause the Company to
repurchase ("Put") their respective Put Securities pursuant to the terms set
forth herein. The Company agrees to give each other Investor and the Series B
Preferred Stockholders notice of any event in clause (ii) above.
(b) Put Date. In the event an Investor or Series B Preferred
Stockholder wishes to exercise the right to Put its Put Securities, such
Investor or Series B Preferred Stockholder shall notify the Company at least
sixty (60) days prior to the effective Put Date of its intention to exercise the
Put right and the effective Put Date, which Put must cover all of such
Investor's or Series B Preferred Stockholder's Put Securities; provided,
however, that if a "fair market value" determination made pursuant to Section
7(c) below extends beyond the effective Put Date as specified in the notice
above, then such effective Put Date shall be ten (10) days after such "fair
market value" determination. The Company shall give all other Investors and
Series B Preferred Stockholders notice of the Put Date and the opportunity to
Put their Put
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<PAGE>
Securities on such Put Date; provided that the Company shall not be required to
give such notice more than once during any 90-day period.
(c) Put Price. The purchase price per share (the "Put Price") of the
Put Securities shall be the greater of (i) the "fair market value" (plus all
accrued but unpaid dividends, whether declared or not declared, payable on the
Put Securities) of each of such Put Securities or (ii) the then Conversion Price
per Series A Preferred, Series B Preferred or Series C Preferred share, as
applicable (as adjusted pursuant to the Certificate) (plus all accrued but
unpaid dividends, whether declared or not declared, payable on the Put
Securities calculated in the manner set forth in the Certificate). For purposes
of this Section 7, the term "fair market value" shall mean the fair market value
of such Put Securities on the Put Date, determined as follows:
(i) By written agreement of the Company and the Majority
Investors;
(ii) If the Company and the Majority Investors fail to reach a
written agreement within thirty (30) days after the notice given by the
Investor(s) and the Series B Preferred Stockholders pursuant to Section 7(b)
above, the Company and the Majority Investors shall together appoint an
independent appraiser (which may be an investment banker) to determine the "fair
market value" of the Put Securities, which shall be binding on the parties; or
(iii) If the Company and the Majority Investors are unable to
agree upon the choice of an independent appraiser under (II) hereof within forty
(40) days after the notice given by the Investor(s) pursuant to Section 7(b),
then the Company, on the one hand, and the Majority Investors, on the other
hand, shall each appoint, within ten (10) days following the expiration of such
40-day period, an independent appraiser, and the two appraisers together shall
determine the "fair market value." If only one appraiser is appointed during the
10-day period referred to above, then such appraiser shall alone determine the
"fair market value," which determination shall be binding on the Company and all
Stockholders. If both appraisers are appointed within such 10-day period, and
within thirty (30) days after the appointment of the second of the two
appraisers, they cannot agree on the "fair market value" of the Put Securities,
then each appraiser shall prepare a separate appraisal report of the fair market
value ("FMV") of the Company and the "fair market value" of the Put Securities
within sixty (60) days after the appointment of the second of the two
appraisers, and if the lower of the two FMVs of the Company is equal to at least
85% of the higher FMV of the Company, then the "fair market value" of the Put
Securities shall be the average of the "fair market value" of the Put Securities
as determined by the two appraisers. If only one of the appraisers submits an
appraisal report on or before such 60th day, then the "fair market value" of the
Put Securities shall be the "fair market value" of the Put Securities as
determined by such report; or
(iv) If neither of the appraisers submits an appraisal report
on or before such 60th day, or if both appraisers submit an appraisal report but
the averaging requirements set forth in (III) above are not met, then the two
appraisers shall promptly appoint a third appraiser who shall determine the
"fair market value" of the Put Securities. If the two appraisers fail to appoint
a third appraiser as required hereunder, either party shall have the right to
submit the determination to arbitration under the rules and procedures of the
American Arbitration Association.
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<PAGE>
(v) The appraisers and arbitrators shall have access to all
books and records of the Company and shall have the right to examine all of its
accounts, books and assets of the Company and do all things fully and completely
to enable them to arrive at the FMV of the Company and the "fair market value"
of the Put Securities. The cost of any appraisal proceedings shall be paid
one-half ( 1/2) by the Company and one-half ( 1/2) by the Investor(s) and the
Series B Preferred Stockholders exercising the Put.
(vi) An appraiser making an appraisal pursuant to this
Agreement shall assume: (x) no discounts for minority interests; (y) that the
restrictions on Transfer specified in this Agreement, any applicable
securityholder agreement and/or any applicable federal or state securities law
restrictions on Transfer are not applicable to such Put Securities; and (z) that
no restricted stock discount or publicly traded stock premium is applicable to
such Put Securities. All appraisers appointed shall be experienced and
knowledgeable in the industry or industries in which the Company does business.
(vii) The "fair market value" determination pursuant to clause
(c) hereof, shall be binding on the Company and all Stockholders for purposes of
this Section 7.
(d) Continuing Obligation. If the Company is unable to purchase all
Put Securities required to be purchased on a Put Date due to state law
restrictions, Put Securities shall be repurchased (on a pro rata basis from the
holders of the Put Securities based upon the relative "fair market values" of
the aggregate number of Put Securities to be purchased) from time to time, to
the extent the Company is legally permitted to do so, and the Put obligations of
the Company under this Section 7 will be a continuing obligation until the
Company's repurchase of all such Put Securities. Dividends shall continue to
accrue on any Put Securities that have not been repurchased by the Company.
(e) Procedures at Closing(s). On each Put Date (including any
subsequent purchase closing date if multiple purchases result from the
application of Section 7(d)) the Put closing shall occur at the Company's
principal office. At the Put closing, to the extent applicable, each Investor
and Series B Preferred Stockholder exercising the Put shall deliver the Put
Securities being sold, duly endorsed in blank, accompanied by such supporting
documents as may be necessary to pass to the Company good title to the Put
Securities, free and clear of all liens or other encumbrances (other than
restrictions under applicable securities laws, this Agreement and/or any
securityholder agreement). In consideration therefor, the Company shall deliver
to such Investor and Series B Preferred Stockholder, at the Company's option,
(i) immediately available funds equal to the aggregate Put Price, based upon the
number of Put Securities being sold by each Investor and Series B Preferred
Stockholder or (ii) a full recourse promissory note or notes evidencing the
aggregate Put Price (the "Put Notes") for the Put Securities being sold by each
Investor and Series B Preferred Stockholder, provided that the Company must
elect the same payment method for each participating Investor and Series B
Preferred Stockholder. Each Put Note shall be secured by a pledge from the
Company of the Put Securities for which the Put Note is executed, and the
Company hereby agrees to take all actions and execute all documents (in form
reasonably satisfactory to the Investors) necessary or appropriate to properly
and fully secure each Put Note with the Put Securities Transferred in exchange
therefor. In addition, each Put Note shall be in form reasonably satisfactory to
such Investor and Series B Preferred Stockholder and shall in any case, unless
otherwise agreed to by the Company and the Majority Investors (I) have a term of
three (3) years, (II) provide for repayment of the aggregate Put Price at a rate
no less than one-third per year, with principal and interest payable in equal
quarterly installments, (III) provide that the unpaid balance of the Put Note
shall accrue interest at the rate of 8% per
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annum, compounded on a quarterly basis, from the date of issuance until full
payment of the aggregate Put Price is made, and (IV) provide that all amounts
due under such Put Note may be accelerated and declared immediately payable upon
a default in any payment by the Company under such Put Note, which is not cured
within ninety (90) days, upon the first such default, and sixty (60) days upon
any subsequent default.
(f) Right to Withdraw Put. At any time prior to the effective Put Date
specified in the notice given pursuant to Section 7(b) any such Investor or
Series B Preferred Stockholder may withdraw the Put, without impairing its right
to exercise its rights pursuant to this Section 7 at a later date. Any costs for
appraisals shall be paid by the parties as contemplated by Section 7(c)(V).
8. Permitted Transferees. Each Stockholder may Transfer any Securities
free of the provisions of Sections 2 and 3 of this Agreement to a Permitted
Transferee provided that such Permitted Transferee has entered into an
Assumption Agreement, in the form attached hereto as Exhibit A, whereby such
person has agreed to be bound by this Agreement in the same manner applicable to
such Permitted Transferee's transferor.
9.Changes in Stock. If, from time to time during the term of
this Agreement:
(a) There is a dividend of any security, stock split or other
change in the character or amount of any of the outstanding securities of the
Company, or
(b) There is any consolidation, merger, recapitalization or other
business combination immediately following which stockholders of the Company
hold more than 50% of the voting equity securities of the surviving corporation,
then, in such event, any and all new, substituted or additional securities or
other property to which any Stockholder is entitled by reason of his ownership
of the Securities shall be immediately subject to the provisions of this
Agreement and be included in the word "Securities" for all purposes of this
Agreement with the same force and effect as the Securities presently subject to
this Agreement and with respect to which such securities or property were
distributed.
10. Legends. All certificates of the Stockholders representing
any Securities subject to the provisions of this Agreement shall have endorsed
thereon a legend to substantially the following effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
AN AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, DATED AS
OF OCTOBER __, 1999, RESTRICTING THE TRANSFER, PLEDGE AND
ENCUMBRANCE OF SHARES. ANY TRANSFER OR ACQUISITION IN
VIOLATION OF THAT AGREEMENT IS NULL AND VOID. THE COMPANY
WILL FURNISH ANY OF ITS STOCKHOLDERS A COPY OF THE AGREEMENT
UPON REQUEST AND WITHOUT CHARGE."
11. Transfer of Stock. The Company shall not: (a) permit any
Transfer on its books of any securities which shall have been sold or
Transferred in violation of any of the provisions set forth in this
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Agreement or (b) treat as an owner of such Securities or accord the right to
vote as an owner or to pay dividends to any transferee to whom such Securities
shall have been sold, Transferred, pledged or hypothecated in violation of any
of the provisions set forth in this Agreement.
12. Termination. Sections 2, 3, 5, 6 and 7 of this Agreement
shall terminate upon the earliest to occur of:
(a) An agreement in writing by the Company, Management Stockholders
holding greater than fifty percent (50%) of the Securities then held by such
Management Stockholders (counted on an as- converted basis and which Management
Stockholders must include D. Gregory Smith), Other Stockholders holding greater
than fifty percent (50%) of the Securities then held by the Other Stockholders
(counted on an as-converted basis), and the Majority Investors;
(b) The consummation of a Qualified Public Offering; or
(c) The consolidation, merger, recapitalization or other business
combination (but only with respect to a consolidation, merger, recapitalization
or other business combination pursuant to which stockholders of the Company
(determined prior to such transaction) hold less than 50% of the voting equity
of the surviving corporation) or sale of all or substantially all of the assets
of the Company, in each case approved pursuant to Article 8 of the Certificate.
13. Transfer of Rights. The rights set forth in this Agreement (other
than the rights set forth in Section 7) (the "Rights") are assignable or
transferable by each Stockholder to any party in connection with the sale of
such Securities to such party pursuant to the terms of this Agreement, so long
as the sale of such Securities otherwise complies with the terms of this
Agreement and the Transferee has entered into an Assumption Agreement, in the
form attached hereto as Exhibit A, whereby such person agrees to be bound by the
terms of this Agreement to the same extent as such Transferee's Transferor.
14. Amendments; Waivers.
-------------------
(a) Any provision of this Agreement may be amended only with the
written consent of the Company, Management Stockholders holding greater than
fifty percent (50%) of the Securities then held by such Management Stockholders
(counted on an as-converted basis and which Management Stockholders must include
D. Gregory Smith), Other Stockholders holding greater than fifty percent (50%)
of the Securities then held by the Other Stockholders (counted on an as-
converted basis), and the Majority Investors. Any amendment effected in
accordance with this Section 14 shall be binding upon each Stockholder, each
Permitted Transferee and the Company.
(b) Any provision of this Agreement may be waived (either generally or
in a particular instance) only with the written consent of the party against
whom such waiver is sought to be enforced. No failure or delay by any party in
exercising any right, power or privilege hereunder will operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided will be cumulative and not exclusive of
any rights or remedies provided by law.
-11-
<PAGE>
15. Governing Law. This Agreement and the legal relations between
the parties arising hereunder shall be governed by and interpreted in accordance
with the laws of the State of Delaware.
16. Entire Agreement. This Agreement, the Series A Purchase Agreement,
the Series C Purchase Agreement, including all exhibits, schedules and
attachments thereto, the Certificate and all other agreements executed in
connection therewith, constitute the full and entire understanding and agreement
between the parties regarding the matters set forth herein and therein. Except
as otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon the successors, assigns, heirs, executors and
administrators of the parties hereto.
17. Notices, Etc. Except as otherwise specifically provided herein, all
notices and other communications required or permitted hereunder shall be in
writing and shall be deemed effectively given (i) upon personal delivery to the
party to be notified, (ii) upon confirmation of receipt or delivery, if made by
fax, or (iii) one business day after being deposited with a reputable next-day
courier, postage prepaid, in each case if addressed (a) if to any Investors, at
the applicable Investor's address as set forth on the signature page hereto, or
at such other address as such Investor shall have furnished to the Company in
writing in accordance with this Section 17; (b) if to any other holder of the
Series A Preferred, the Series B Preferred, the Series C Preferred and the
Common Stock issued upon conversion thereof to whom the Rights have been
Transferred in accordance with Section 17 hereof, at such address as such holder
shall have furnished the Company in writing in accordance with this Section 17,
or, until any such holder so furnishes an address to the Company, then to and at
the address of the last holder thereof who has so furnished an address to the
Company; (c) if to a Management Stockholder, at such address as such Management
Stockholder shall have last furnished the Company and the Stockholders in
writing; (d) if to any Other Stockholder, at such address as such Other
Stockholder shall have last furnished the Company and the Stockholders in
writing; or (e) if to the Company, at its principal office.
18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
19. Specific Performance. The Company and the Stockholders agree that
the rights created by this Agreement are unique, and that the loss of any such
right is not susceptible to monetary quantification. Consequently, the parties
agree that an action for specific performance (including for temporary and/or
permanent injunctive relief) of the obligations created by this Agreement is a
proper remedy for the breach of the provisions of this Agreement, without the
necessity of proving actual damages. If the parties hereto are forced to
institute legal proceedings to enforce their rights in accordance with the
provisions of this Agreement, the prevailing party shall be entitled to recover
its reasonable expenses, including attorneys' fees, in connection with any such
action.
20. Severability. If any provision of this Agreement or the application
of any such provision is invalid, illegal or unenforceable in any jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or invalidate or render unenforceable such provision
in any other jurisdiction. To the extent permitted by applicable law, the
parties waive any provision of law that renders any provision of this Agreement
invalid, illegal or unenforceable in any respect. The parties shall, to the
extent lawful and practicable, use their reasonable good faith efforts to enter
into arrangements to reinstate the intended benefits, net of the intended
burdens, of any such provision held invalid, illegal or
-12-
<PAGE>
unenforceable. In the event that any provision of this Agreement shall be
finally determined by a court of competent jurisdiction to be unenforceable such
court shall have jurisdiction to reform this Agreement so that it is enforceable
to the maximum extent permitted by applicable law and the parties shall abide by
such court's determination. If such provision cannot be reformed, such provision
shall be deemed to be severed from this Agreement, but every other provision of
this Agreement shall remain in full force and effect.
21. Corporate Opportunities.
-----------------------
(a) The Stockholders and the Company recognize that the Investors,
their Affiliates and the directors elected or appointed to the Board of
Directors of the Company by the Investors (i) have participated, directly or
indirectly, and will continue to participate in venture capital and other direct
investments in corporations, partnerships, joint ventures, limited liability
companies and other entities and other similar transactions, (ii) may have
interests in, participate with, aid and maintain seats on the board of directors
of other such entities and (iii) may develop opportunities for such entities.
Specifically, such directors may be directors or employees of a management
company for the Investors, directors or employees of the Investors or their
Affiliates, or directors or advisors of entities in which the Investors or their
Affiliates have invested or may invest (collectively, the "Positions"). In such
Positions, such directors elected or appointed by the Investors may encounter
business opportunities that the Company or its Stockholders may desire to
pursue. The Stockholders and the Company recognize that such opportunities may
include, but shall not be limited to, identifying, pursuing and investing in
entities, engaging investment banking firms or other underwriters for access to
public and private securities markets, and obtaining investment funds from
institutional and private investors or others.
(b) Therefore, the Stockholders and the Company agree that the
Investors and the directors elected or appointed by the Investors shall have no
obligation to the Company, the Stockholders or to any other person or entity to
present any such business opportunity to the Company before presenting and
allowing time to develop such opportunity to any other entities other than such
opportunities presented to him or her solely in, and as a direct result of, his
or her capacity as a director of the Company; provided, that the preceding shall
in no way allow a natural person or director to usurp a corporate opportunity
solely for his or her personal benefit without first presenting and allowing
time to develop such opportunity to the entities set forth above.
Notwithstanding the preceding sentence, if an opportunity is separately
presented to and developed by any such other entity, including the Investors,
such entity shall be free to pursue such opportunity even if it came to the
director's attention solely as a result of and in his or her capacity as a
director of the Company.
(c) The Stockholders and the Company acknowledge that, in any such
case, to the extent a court might hold that the conduct of such activity is a
breach of a duty to the Company, the Stockholders and the Company hereby waive
any and all claims and causes of action that the Stockholders or the Company may
have for such activities. The Stockholders and the Company further agree that
the waivers and agreements in this Agreement identify certain types and
categories of activities which do not violate the director's duty of loyalty to
the Company, and such types and categories are not manifestly unreasonable. The
waivers and agreements in this Agreement apply equally to activities conducted
in the future and that have been conducted in the past.
-13-
<PAGE>
22. Jurisdiction; Consent to Service of Process.
-------------------------------------------
(a) Each party hereby irrevocably and unconditionally agrees to submit,
for itself and its property, to the jurisdiction of the New York state court
located in the Borough of Manhattan, City of New York or the United States
District for the Southern District of New York (as applicable, a "New York
Court"), and any appellate court from any such court, in any suit, action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment resulting from any such suit, action or proceeding,
and each party hereby irrevocably and unconditionally agrees that all claims in
respect of any such suit, action or proceeding may be heard and determined in
the New York Court.
(b) No party may move to (i) transfer any such suit, action or
proceeding from the New York Court to another jurisdiction, (ii) consolidate any
such suit, action or proceeding brought in the New York Court with a suit,
action or proceeding in another jurisdiction, or (iii) dismiss any such suit,
action or proceeding brought in the New York Court for the purpose of bringing
the same in another jurisdiction.
(c) Each party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, (i) any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in the New York Court,
(ii) the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court, and (iii) the right to object, with
respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party.
(d) Each party irrevocably consents to service of process in any
manner permitted by law.
23. Waiver by Series A Stockholders. By their execution hereof, the
Series A Stockholders hereby waive the provision of Section 4.1 of Stock
Purchase Agreement, dated November 4, 1998 relating to the delivery of
consolidated financial statements for the fiscal year ended December 31, 1998.
The Company acknowledges and agree to deliver such audited consolidated
financial statements no later than October 31, 1999.
24. Consents. The Company hereby confirms that its has obtained all of
the consents necessary to amend and restate the Stockholders' Agreement, dated
November 4, 1998, by and among the Company, the Management Stockholders, the
Investors and the Other Stockholders (each as defined in such Stockholders'
Agreement), in accordance with the terms of such Stockholders' Agreement,
including, without limitation, its terms regarding amendments.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Z-TEL TECHNOLOGIES, INC.
By: /s/ Gregory Smith
----------------------
Name: Gregory Smith
Title: President and Chief Executive
Officer
INVESTORS:
GRAMERCY Z-TEL LLC
By: /s/ Lawrence S. Grafstein
-------------------------
Name: Lawrence S. Grafstein
Title: Managing Director
Notice Address:
------------------------------
------------------------------
------------------------------
Attention:
Fax No.:
BA CAPITAL COMPANY, L.P.
By: BA SBIC Management, LLC
Its General Partner
By: BA Equity Management, L.P.,
Its Sole Member
By: BA Equity Management GP, LLC
Its General Partner
By: /s/ Douglas C. Williamson
-------------------------
Douglas C. Williamson
Member
Notice Address:
------------------------------
------------------------------
<PAGE>
------------------------------
Attention:
Fax No.:
SEWANEE PARTNERS II, L.P.
By: /s/ Buford H. Ortale
----------------------
Name: Buford H. Ortale
Title: President of General Partner
Notice Address:
------------------------------
------------------------------
------------------------------
Attention:
Fax No.:
MANAGEMENT STOCKHOLDERS:
/s/ D. Gregory Smith
---------------------
D. Gregory Smith
/s/ James A. Kitchen
---------------------
James A. Kitchen
/s/ Charles W. McDonough
--------------------------
Charles W. McDonough
/s/ J. Bryan Bunting
--------------------------
J. Bryan Bunting
<PAGE>
SERIES B PREFERRED STOCKHOLDERS:
/s/ Abdoney Enterprises, Ltd.
--------------------------------
Abdoney Enterprises, Ltd.
/s/ Richard Allerton, Jr.
----------------------------
Allerton, Richard, Jr.
/s/ Paul W. Armes
----------------------------
Armes, Paul W.
/s/ James C. Barden, Jr.
---------------------------
Barden, James C., Jr.
/s/ Jacob J. Barker
---------------------------
Barker, Jacob J.
/s/ Christoph Bayer
---------------------------
Bayer, Christoph
/s/ Larry A. Bentley
---------------------------
Bentley, Larry A.
/s/ Clay M. Biddinger
----------------------------
Biddinger, Clay M.
/s/ Henry L. Brenner, Jr.
----------------------------
Brenner, Henry L., Jr.
/s/ John E. Chapoton, Jr.
----------------------------
Chapoton, John E., Jr.
<PAGE>
/s/ Jonathan L. Collens, Sr.
-------------------------------
Collens, Jonathan L., Sr.
/s/ LeRoy Collins
-------------------------------
Collins, LeRoy
/s/ Michael Cowden
-------------------------------
Cowden, Michael
/s/ Patricia Frist Elcan
--------------------------------
Elcan, Patricia Frist
/s/ Robert L. and Elizabeth M. Fisher
--------------------------------------
Fisher, Robert L. and Elizabeth M.
/s/ Troy Fowler
------------------------------
Fowler, Troy
/s/Louis Frey, Jr.
-----------------------------
Frey, Louis, Jr. et al
/s/ Louis Frey, Jr.
-----------------------------
Frey, Louis, Jr., retirement account
/s/ Mary Ann MacKay Garner
---------------------------
Garner, Mary Ann MacKay
/s/ William Hamilton Hall
-----------------------------
Hall, William Hamilton
/s/ Herbert L. Hill
-------------------------------
Hill, Herbert L.
<PAGE>
/s/ Charles D. Hyman
------------------------------
Hyman, Charles D.
/s/ Mark Johnson
-------------------------------
Johnson, Mark
/s/ B.N. and Donna J. Kaylor
-------------------------------
Kaylor, B. N. and Donna J.
/s/ Stephen B. Kelly
--------------------------------
Kelly, Stephen B.
/s/ Eric Kreher and Catherine Ziegler
--------------------------------------
Kreher, Eric and Catherine Ziegler
/s/ Mortimer Z. Landsberg
----------------------------
Landsberg, Mortimer Z.
/s/ Mahmoud Larizaden
---------------------------
Larizaden, Mahmoud
/s/ Alfred F. MacKay
---------------------------
MacKay, Alfred F.
/s/ K. H. (Buddy) MacKay, Jr.
-------------------------------
MacKay, K. H. (Buddy), Jr.
/s/ David L. MacKay
--------------------------------
MacKay, David L.
/s/ David R. MacKay
---------------------------------
MacKay, David R.
/s/ Douglas K. Mackay
--------------------------------
MacKay, Douglas K.
<PAGE>
/s/ George A. MacKay
--------------------------------
MacKay, George A.
/s/ George L. MacKay
--------------------------------
MacKay, George L.
/s/ Ken MacKay
--------------------------------
MacKay, Ken
/s/ Charles F. and Marie Mincey
--------------------------------
Mincey, Charles F. and Marie
/s/ Michael Morris
--------------------------------
Morris, Michael
/s/ Bernard C. O'Neill, Jr.
------------------------------
O'Neill, Bernard C., Jr.
/s/ Buddy Ortale
--------------------------------
Ortale, Buddy
/s/ Thomas W. Patrick
--------------------------------
Patrick, Thomas W.
/s/ Carolyn Perrone
--------------------------------
Perrone, Carolyn
/s/ Charles M. Pinckney
--------------------------------
Pinckney, Charles M.
/s/ Gilbert H. Reese
--------------------------------
Reese, Gilbert H.
/s/ David G. Seidenberg
--------------------------------
Seidenberg, David G.
<PAGE>
/s/ Frederick W. Shaw
--------------------------------
Shaw, Frederick W.
/s/ Robert L. Stefanelli, Jr.
--------------------------------
Stefanelli, Robert L., Jr.
/s/ Robert ("Randy") and Sara Stevens
--------------------------------------
Stevens, Robert ("Randy") and Sara
/s/ Alexander Taylor
--------------------------------
Taylor, Alexander
/s/ Martin Tolan
--------------------------------
Tolan, Martin
/s/ William A. Turner
--------------------------------
Turner, William A.
/s/ Ward J. Viator
--------------------------------
Viator, Ward J.
/s/ Joe Williams
--------------------------------
Williams, Joe
/s/ Richard Allerton, Jr.
--------------------------------
Allerton, Jr., Richard
/s/ Michael Ammerman
--------------------------------
Ammerman, Michael
/s/ Chad E. Angell
--------------------------------
Angell, Chad E.
/s/ John K. Aurell
--------------------------------
Aurell, John K.
<PAGE>
/s/ Jacob J. Barker
--------------------------------
Barker, Jacob J.
/s/ Timothy C. Bell
--------------------------------
Bell, Timothy C.
/s/ Joe Binkley
--------------------------------
Binkley, Joe
/s/ Oakwest Corporation
--------------------------------
Oakwest Corporation
/s/ Jason R. Blackmore
--------------------------------
Blackmore, Jason R
/s/ Bob Bolen
--------------------------------
Bolen, Bob
/s/ Henry L. Brenner, Jr.
-------------------------
Brenner, Jr., Henry L.
/s/ Richard J. Byrne
--------------------------------
Byrne, Richard J.
/s/ Thomas W. Cardy
--------------------------------
Thomas W. Cardy Family Trust
/s/ Sam and Mary Carubba
--------------------------------
Carubba, Sam and Mary
/s/ Anthony J. and Merry Jo Cipolla
------------------------------------
Cipolla, Anthony J. and Merry Jo
/s/ Jonathan L. Collens, Sr.
-------------------------------
Jonathan L. Collens, Sr.
<PAGE>
/s/ LeRoy Collins, Jr.
--------------------------------
Collins, Jr., LeRoy
/s/ Mungo Conner
--------------------------------
Conner, Mungo
/s/ Ian Cordell
--------------------------------
Cordell, Ian
/s/ Douglas W. Daniel
--------------------------------
Daniel, Douglas W.
/s/ Edmund DeBarba
--------------------------------
DeBarba, Edmund
/s/ Leonard A. Denittis
--------------------------------
Denittis, Leonard A.
/s/ Christi A. S. Edwards
---------------------------
Edwards, Christi A. S.
/s/ Paul Enoch, Jr.
--------------------------------
Enoch, Jr., Paul
/s/ George W. & Lisa O. Ethridge
----------------------------------
Ethridge, George W. & Lisa O.
/s/ Gregg Freishtat
--------------------------------
Freishtat, Gregg
/s/ Louis Frey
--------------------------------
Frey, Louis
/s/ Bob Hesse
--------------------------------
Hesse, Bob
<PAGE>
/s/ Bill Gahan
--------------------------------
Gahan, Bill
/s/ Thomas J. Gahan
--------------------------------
Gahan, Thomas J.
/s/ Dennis C. & Linda S. Garber
----------------------------------
Garber, Dennis C. & Linda S.
/s/ James P. Garvey
--------------------------------
Garvey, James P.
/s/ Forest S. III and Mary Carolyn Gay
---------------------------------------
Gay, Forest S. III and Mary Carolyn, Joint
Tenants with rights of survivorship
/s/ Mary Priscilla Gay
--------------------------------
Gay, Mary Priscilla
/s/ GEA Fund LLP
--------------------------------
GEA Fund LLP
/s/ James Gerdsen & Cynthia Clegg
----------------------------------
Gerdsen, James & Cynthia Clegg
/s/ Lawrence J. Hogan
--------------------------------
Hogan, Lawrence J.
/s/ Charles Houser
--------------------------------
Houser, Charles
/s/ Christopher Kent
--------------------------------
Kent, Christopher
/s/ Robert Koenig
--------------------------------
Koenig, Robert
<PAGE>
/s/ David E. Linch
--------------------------------
Linch, David E.
/s/ Diane C. Lykes
--------------------------------
Lykes, Diane C.
/s/ Charlie N. Martin, Jr.
-----------------------------
Martin, Jr., Charlie N.
/s/ Mark D. McKell
--------------------------------
McKell, Mark D.
/s/ Larry McKinney
--------------------------------
McKinney, Larry
/s/ Noel Misthopoulos
--------------------------------
Misthopoulos, Noel
/s/ Robert O. Moore
--------------------------------
Moore, Robert O.
/s/ Michael D. Nadeau
--------------------------------
Nadeau, Michael D.
/s/ George Northrop
--------------------------------
Northrop, George
/s/ Glen Oken
--------------------------------
Oken, Glen
/s/ William P. Ortale
--------------------------------
Ortale, William P.
/s/ Buddy Ortale
--------------------------------
Ortale, Buddy
<PAGE>
/s/ Gregory Perrone
--------------------------------
Perrone, Gregory
/s/ Charles M. Pinckney
--------------------------------
Pinckney, Charles M.
/s/ Steven J. Renchan
--------------------------------
Renchan, Steven J.
/s/ Rich Roberts
--------------------------------
Roberts, Rich
/s/ Nick Stevenson
--------------------------------
Stevenson, Nick
/s/ James A. Todd, Jr.
-------------------------
Todd, Jr., James A.
/s/ Sarah Ann Valdes
--------------------------------
Valdes, Sarah Ann
/s/ Ward Viator
--------------------------------
Viator, Ward
/s/ Mary Viator
--------------------------------
Viator, Mary
/s/ Alexander Waugh
--------------------------------
Waugh, Alexander
/s/ William Wegner
--------------------------------
Wegner, William
/s/ ABI Companies, Inc.
--------------------------------
ABI Companies, Inc.
<PAGE>
/s/ Liberty Ventures LLC
--------------------------------
Liberty Ventures LLC
/s/ Dewey Mills, Inc.
--------------------------------
Dewey Mills, Inc.
/s/ Dominion Financial Group International
LDC
--------------------------------
Dominion Financial Group International LDC
/s/ ZT Partners, Ltd.
--------------------------------
ZT Partners, Ltd.
/s/ Fulmead Ventures Limited
--------------------------------
Fulmead Ventures Limited
/s/ Stevens Revocable Trust
--------------------------------
Stevens Revocable Trust
/s/ Stevens Revocable Trust
--------------------------------
Stevens Revocable Trust
/s/ Reed Family Partnership
--------------------------------
Reed Family Partnership
/s/ Troy Prop Group LLC
--------------------------------
Troy Prop Group LLC
/s/ Alexandra R. Taylor Revocable Trust
----------------------------------------
Alexandra R. Taylor Revocable Trust
/s/ CS First Boston
--------------------------------
CS First Boston
/s/ Harbour Town Investments Z-414, LLC
----------------------------------------
Harbour Town Investments Z-414, LLC
<PAGE>
Exhibit B
REGISTRATION RIGHTS
1. Definitions. For purposes of this Exhibit, in addition to the
terms defined elsewhere in this Agreement, the following terms have the
following meanings when used herein with initial capital letters:
"Advice" has the meaning set forth in Section 6.
"Currently Owned Securities" means the equity securities set forth on
Schedule A to this Agreement.
"Demand Notice" has the meaning set forth in Section 3(a).
"Demand Registration" has the meaning set forth in Section 3(a).
"indemnified party" has the meaning set forth in Section 8(c).
"indemnifying party" has the meaning set forth in Section 8(c).
"Losses" has the meaning set forth in Section 8(a).
"Minimum Amount" has the meaning set forth in Section 3(a).
"Notice" has the meaning set forth in Section 3(b).
"Other Shares" means any equity securities of the Company and any
other securities issued by the Company that are exercisable to purchase,
convertible into or exchangeable for shares of equity securities of the Company
that are owned of record or beneficially by the Stockholders or any of their
respective Affiliates, whether acquired prior to, on or after the date hereof.
"Piggyback Registration" has the meaning set forth in Section 4.
"Prior Agreements" mean, collectively, (i) the Stock Purchase
Agreement, dated November 4, 1998, by and among the Company, BA Capital Company,
L.P. (formerly known as NationsBanc Capital Corporation) and Sewanee Partners
II, L.P. and (ii) the Investment Agreement, dated March 15, 1999, between the
Company and CMB Capital, LLC.
"Prior Registration Rights" means the rights to register the Currently
Owned Securities granted to the Stockholders prior to the date of this
Agreement, including without limitation, the registration rights set forth in
the Prior Agreements.
"Prospectus" means the prospectus included in any Registration
Statement (including without limitation a prospectus that discloses information
previously omitted from a prospectus filed as part of an
-1-
<PAGE>
effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and all other amendments and
supplements to such prospectus, including without limitation post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Registrable Securities" means the shares of Common Stock that are
issued to the Stockholders, any of their respective Affiliates or any permitted
transferee or designee in respect of the Shares or upon any stock split, stock
dividend, recapitalization or other distribution with respect to, conversion or
exchange of or in replacement of the Shares, until, in the case of any such
security, (i) it is registered under the Securities Act and disposed of in
accordance with the Registration Statement covering it, (ii) it is saleable by
the holder thereof pursuant to Rule 144(k) without any volume limitation
applicable thereto, or (iii) it is distributed to the public pursuant to Rule
144.
"Registration Expenses" means all fees and expenses incident to the
performance of or compliance with this Agreement by the Company, including
without limitation (i) all registration and filing fees (including without
limitation fees and expenses (x) with respect to filings required to be made
with the National Association of Securities Dealers, Inc. and (y) in compliance
with securities or "blue sky" laws (including without limitation reasonable fees
and disbursements of counsel for the underwriters or selling holders in
connection with "blue sky" qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as the managing underwriters, if any, or
holders of a majority of the Registrable Securities being sold may designate)),
(ii) printing expenses (including printing of prospectuses if requested by the
holders of a majority of the Registrable Securities included in any Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) reasonable
fees and disbursements of counsel for the Company and counsel for the
underwriters, (v) fees and disbursements of all independent certified public
accountants referred to in Section 6(m)(iii) hereof (including the reasonable
expenses of any special audit and "comfort" letters required by or incident to
such performance), (vi) reasonable fees and expenses of any "qualified
independent underwriter" or other independent appraiser participating in an
offering pursuant to Section 3 of Schedule E to the By-laws of the National
Association of Securities Dealers, Inc., if any, (vii) Securities Act liability
insurance if the Company so desires such insurance, (viii) the fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange on which similar securities by the Company are then
listed, (ix) fees and expenses of all other persons retained by the Company, and
(x) the reasonable fees and disbursements of not more than one counsel (the
"Special Counsel") chosen by the holders of a majority of the Registrable
Securities being registered; provided, however, that Registration Expenses will
not include underwriting discounts and commissions relating to the offer and
sale of Registrable Securities, all of which shall be borne by the holders of
such Registrable Securities.
"Registration Statement" means any registration statement under the
Securities Act that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including without limitation the related
Prospectus, all amendments and supplements to such registration statement
(including post-effective amendments), all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
-2-
<PAGE>
"Rule 144" means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the Currently Owned Securities and any Other Shares.
------
"underwritten registration" or "underwritten offering" means a
distribution, registered pursuant to the Securities Act in which securities of
the Company are sold to an underwriter for reoffering to the public.
2. Holders of Registrable Securities. Whenever a number or percentage
of Registrable Securities is to be determined hereunder, each then-outstanding
Share that is exercisable to purchase, convertible into or exchangeable for
shares of capital stock of the Company will be deemed to be equal to the number
of shares of Common Stock for which such Share (or the security into which such
Share is then convertible) is then so purchasable, convertible or exercisable.
3. Demand Registration. (a) Requests for Registration. At any time and
from time to time 180 calendar days after the date on which a registration
statement of the Company on Form S-1 or any similar form with respect to the
Common Stock of the Company filed by the Company becomes effective, the holders
of Registrable Securities will have the right by written notice delivered to the
Company (a "Demand Notice") to require the Company to register (a "Demand
Registration") under and in accordance with the provisions of the Securities Act
a number of Registrable Securities that would reasonably be expected to result
in aggregate gross proceeds from such offering of not less than $10,000,000
($1,000,000 with respect to any Demand Registration requested to be effected as
a "shelf" registration on Form S-3 or any similar successor form) (each, the
"Minimum Amount"); provided, however, that no Demand Notice may be given prior
to 60 calendar days after the effective date of the immediately preceding Demand
Registration. The Company will be responsible for all Registration Expenses
related to the first three Demand Registrations pursuant to this Section 3(a)
that are underwritten offerings; provided, however, that there shall be excluded
therefrom (1) any Demand Registration that is an underwritten registration if
the managing underwriter or underwriters have advised the holders of Registrable
Securities that the total number of Registrable Securities requested to be
included therein exceeds the number of Registrable Securities that can be sold
in such offering in accordance with the provisions of this Agreement without
adversely affecting the success of such offering, (2) any Demand Registration
that does not become effective or is not maintained effective for the period
required pursuant to Section 3(b) hereof, unless in the case of this clause (2)
such Demand Registration does not become effective after being filed by the
Company solely by reason of the refusal to proceed by the holders of Registrable
Securities unless (i) the refusal to proceed is based upon the advice of counsel
relating to a matter with respect to the Company or (ii) the holders of the
Registrable Securities elect to pay all Registration Expenses in connection with
such Demand Registration, (3) any Demand Registration in connection with which
any other stockholder of the Company exercises a right of first refusal which it
may otherwise have and purchases all the stock registered and to be sold
pursuant to the Demand Registration, and (4) any Demand Registration as to which
the Company exercises any rights under Sections 3(d) or 4(b) hereof.
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(b) Filing and Effectiveness. The Company will file a Registration
Statement relating to any Demand Registration within 30 calendar days, and will
use its reasonable best efforts to cause the same to be declared effective by
the SEC within 90 calendar days, of the date on which the holders of Registrable
Securities first give the Demand Notice required by Section 3(a) hereof with
respect to such Demand Registration. All requests made pursuant to this Section
3 will specify the number of Registrable Securities to be registered and will
also specify the intended methods of disposition thereof, provided, that if the
holders demanding such registration specify one particular type of underwritten
offering, the Company will use its reasonable best efforts to use such method of
disposition as the type of underwritten offering or a series of such
underwritten offerings (as such demanding holders of Registrable Securities may
elect) during the period during which the Registration Statement is effective.
If any Demand Registration is requested to be effected as a "shelf" registration
by the holders of Registrable Securities demanding such Demand Registration, the
Company will keep the Registration Statement filed in respect thereof effective
for such period as may be requested by the holder demanding such registration,
but will not be required to keep the Registration Statement effective in respect
of any single Demand Registration for longer than twelve months from the date on
which the SEC declares such Registration Statement effective (subject to
extension pursuant to Sections 5 and 6 hereof) or such shorter period that will
terminate when all Registrable Securities covered by such Registration Statement
have been sold pursuant to such Registration Statement. Within five calendar
days after receipt of such Demand Notice, the Company will promptly serve
written notice thereof (the "Notice") to all other holders of Registrable
Securities and will, subject to the provisions of Section 3(c) hereof, include
in such registration all Registrable Securities with respect to which the
Company receives written requests for inclusion therein within 15 calendar days
after the receipt of the Notice by the applicable holder. The holders of
Registrable Securities will be permitted to withdraw Registrable Securities from
a Registration at any time prior to the effective date of such Registration
provided the remaining number of Registrable Securities subject to a Demand
Notice is not less than the applicable Minimum Amount.
(c) Priority on Demand Registration. With respect to any Demand
Registration of Registrable Securities to be sold in one or more firm commitment
underwritten offerings, the Company may also provide written notice to holders
of its Shares (other than Registrable Securities), if any, who have piggyback
registration rights with respect thereto and permit all such holders who request
to be included in the Demand Registration to include any or all Shares held by
such holders in such Demand Registration on the same terms and conditions as the
Registrable Securities. Notwithstanding the foregoing, if the managing
underwriter or underwriters of the offering to which such Demand Registration
relates advise the holders of Registrable Securities that the total amount of
Registrable Securities and securities that such equity security holders intend
to include in such Demand Registration is in the aggregate such as to adversely
affect the success of such offering, then (i) first, the amount of securities to
be offered for the account of the holders of such other Shares (other than
Registrable Securities) will be reduced, to zero if necessary (pro rata among
such holders on the basis of the amount of such other securities to be included
therein by each such holder), and (ii) second, the number of Registrable
Securities included in such Demand Registration will, if necessary, be reduced
and there will be included in such firm commitment underwritten offering only
the number of Registrable Securities that, in the opinion of such managing
underwriter or underwriters, can be sold without adversely affecting the success
of such offering, allocated pro rata among the holders of Registrable Securities
on the basis of the amount of Registrable Securities requested to be included
therein by each such holder.
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(d) Postponement of Demand Registration. The Company will be entitled
to postpone the filing period (or suspend the effectiveness) of any Demand
Registration for a reasonable period of time not in excess of 60 calendar days
during any twelve-month period, if the Company determines, in the good faith
exercise of its reasonable business judgment, that such registration and
offering could materially interfere with bona fide financing plans of the
Company or would require disclosure of information, the premature disclosure of
which could materially and adversely affect the Company. If the Company
postpones the filing of a Registration Statement, it will promptly notify the
holders of Registrable Securities in writing of the postponement, the reasons
therefor and the proposed length of the postponement and promptly notify such
holders in writing when the events or circumstances permitting such postponement
have ended.
4. Piggyback Registration. (a) Right to Piggyback. If at any time the
Company proposes to file a registration statement under the Securities Act with
respect to an offering of any class of Shares (other than a registration
statement (i) on Form S-4, S-8 or any successor form thereto or (ii) filed
solely in connection with an offering made solely to employees of the Company),
whether or not for its own account, then the Company will give written notice of
such proposed filing to the holders of Registrable Securities promptly, but in
any event at least 15 calendar days before the anticipated filing date. Such
notice will offer such holders the opportunity to register such amount of
Registrable Securities as each such holder may request (a "Piggyback
Registration"). Subject to Section 4(b) hereof, the Company will include in each
such Piggyback Registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein. The holders of
Registrable Securities will be permitted to withdraw all or part of the
Registrable Securities from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration. If the Company offers any
securities for its own account in any Piggyback Registration, the Company will
be responsible for all Registration Expenses related to such Piggyback
Registration. If the Company does not offer any securities for its own account
in a Piggyback Registration, all Registration Expenses shall be borne pro rata
among all holders of Registrable Securities whose Shares are being registered in
such Piggyback Registration based on the number of Registrable Securities
included therein.
(b) Priority on Piggyback Registrations. The Company will cause the
managing underwriter or underwriters of a proposed underwritten offering to
permit holders of Registrable Securities requested to be included in the
registration for such offering to include therein all such Registrable
Securities requested to be so included on the same terms and conditions as any
similar securities, if any, of the Company included therein. Notwithstanding the
foregoing, if the managing underwriter or underwriters of such offering deliver
an opinion to the holders of Registrable Securities to the effect that the total
amount of securities which such holders, the Company and any other persons
having rights to participate in such registration propose to include in such
offering is such as to adversely affect the success of such offering, then:
(i) if such registration is a primary registration on
behalf of the Company, the amount of securities to be included
therein for the account of all other persons other than
holders of Registrable Securities and the Company will be
reduced (to zero if necessary) pro rata in proportion to the
respective amounts of securities requested to be included
therein to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters and,
thereafter, if such reduction is not sufficient so as, in the
opinion of such managing underwriter or underwriters, to
permit the inclusion of Registrable Securities without
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adversely affecting the success of the offering, the amount of
Registrable Securities so included in the Registration
Statement for the account of holders of Registrable Securities
(allocated pro rata among such holders on the basis of the
Registrable Securities requested to be included therein by
each such holder) will be reduced (to zero if necessary) to
the amount recommended by such managing underwriter or
underwriters, provided, however, that the Company may exercise
the right under this Section 4(b) on only two occasions; and
(ii) if such registration is an underwritten
secondary registration on behalf of holders of securities of
the Company other than the Company or holders of Registrable
Securities, then the priority provisions applicable to Demand
Registrations under Section 3(c) will apply.
(c) Registration of Securities Other than Registrable Securities.
Without the written consent of the holders of 66% of the then-outstanding
Registrable Securities, the Company will not grant to any person the right to
request the Company to register any equity securities of the Company under the
Securities Act unless the rights so granted are subject to the prior rights of
the holders of Registrable Securities set forth herein and, if exercised, would
not otherwise conflict or be inconsistent with the provisions of, this
Agreement.
5. Restrictions on Sale by Holders of Registrable Securities. Each
holder of Registrable Securities whose Registrable Securities are covered by a
Registration Statement filed pursuant to Section 3 or Section 4 hereof agrees,
and will confirm such agreement in writing if such holder is so requested
(pursuant to a timely written notice) by the managing underwriter or
underwriters in an underwritten offering, not to effect any public sale or
distribution of any of the Company's Shares (except as part of such underwritten
offering), including a sale pursuant to Rule 144, during the 10-calendar day
period prior to, and during the 90-calendar day period (or such shorter period
as to which the managing underwriter or underwriters may require of any officer,
director or other stockholder bound by any similar limitation in connection with
any underwritten public offering.) beginning on, the closing date of each
underwritten offering made pursuant to such Registration Statement. If a request
is made pursuant to this Section 5, the time period during which a Demand
Registration (if a shelf registration) is required to remain continuously
effective pursuant to Section 3(b) will be extended by 100 calendar days or such
shorter period that will terminate when all such Registrable Securities not so
included have been sold pursuant to such Registration Statement.
6. Registration Procedures. In connection with the Company's
registration obligations pursuant to Sections 3 and 4 hereof, the Company will
effect such registrations to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the holders thereof in
accordance with the intended method or methods of distribution thereof, and
cause each such Registration Statement to become effective and remain effective
as provided herein; provided, however, that before filing a Registration
Statement or Prospectus or any amendments or supplements thereto
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<PAGE>
(including documents that would be incorporated or deemed to be incorporated
therein by reference), the Company will furnish to the holders of the
Registrable Securities covered by such Registration Statement, the Special
Counsel and the managing underwriters, if any, copies of all such documents
proposed to be filed, and will provide such holders, the Special Counsel and
such underwriters a reasonable period of time to review and comment on such
documents. The Company will not file any such Registration Statement or
amendment thereto or any Prospectus or any supplement thereto (including such
documents which, upon filing, would or would be incorporated or deemed to be
incorporated by reference therein) to which the holders of a majority of the
Registrable Securities covered by such Registration Statement, the Special
Counsel or the managing underwriter, if any, shall reasonably object on a timely
basis;
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period
specified in Section 3; cause the related Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act; and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or to such
Prospectus as so supplemented;
(c) Notify the selling holders of Registrable Securities, the Special
Counsel and the managing underwriters, if any, promptly, and (if requested by
any such person) confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any other federal
or state governmental authority for amendments or supplements to a Registration
Statement or related Prospectus or for additional information, (iii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) if at any time the
representations and warranties of the Company contained in any agreement
contemplated by Section 6(m) hereof (including any underwriting agreement) cease
to be true and correct in any material respect, (v) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (vi) of the occurrence of any event which makes any statement made in
such Registration Statement or related Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or which requires the making of any changes in a Registration Statement,
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and, in the case of the Prospectus, it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated or is necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and (vii)
of the Company's determination that a post-effective amendment to a Registration
Statement would be appropriate.
(d) Use every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the lifting
of any suspension of the qualification (or exemption
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<PAGE>
from qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest reasonably possible moment;
(e) If requested by the managing underwriters, if any, or the holders
of a majority of the Registrable Securities being registered, (i) promptly
incorporate in a Prospectus supplement or post- effective amendment such
information as the managing underwriters, if any, and such holders agree should
be included therein as may be required by applicable law and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company will not be required to take any
actions under this Section 6(e) that are not, in the opinion of counsel for the
Company, in compliance with applicable law;
(f) Furnish to each selling holder of Registrable Securities, the
Special Counsel and each managing underwriter, if any, without charge, at least
one conformed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements (but excluding schedules, all
documents incorporated or deemed incorporated therein by reference and all
exhibits, unless requested in writing by such holder, counsel or underwriter);
(g) Deliver to each selling holder of Registrable Securities, the
Special Counsel and the underwriters, if any, without charge, as many copies of
the Prospectus or Prospectuses relating to such Registrable Securities
(including each preliminary prospectus) and any amendment or supplement thereto
as such persons may request; and the Company hereby consents to the use of such
Prospectus or each amendment or supplement thereto by each of the selling
holders of Registrable Securities and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus or any amendment or supplement thereto provided that each such
selling holder and each of the underwriters shall cease using such prospectus or
amendment or supplement thereto immediately upon receipt of written notice from
the Company;
(h) Prior to any public offering of Registrable Securities, register or
qualify or cooperate with the selling, holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions within the United States as
any seller or underwriter reasonably requests in writing; keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdiction of the Registrable Securities covered by the applicable
Registration Statement; provided, however that the Company will not be required
to (i) qualify generally to do business or pay taxes in any jurisdiction in
which it is not then so qualified or so required or (ii) take any action that
would subject it to general service of process in any such jurisdiction in which
it is not then so subject;
(i) Cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold, which
certificates will not bear any restrictive legends; and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, shall request at least two business days prior to
any sale of Registrable Securities to the underwriters;
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<PAGE>
(j) Cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States except as may be
required solely as a consequence of the nature of such selling holder's
business, in which case the Company will cooperate in all reasonable respects
with the filing of such Registration Statement and the granting of such
approvals as may be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Registrable
Securities;
(k) Upon the occurrence of any event contemplated by Section 6(c)(vi)
or 6(c)(vii) hereof, prepare a supplement or post-effective amendment to each
Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the Stockholders of the Registrable Securities being
sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(l) Use its reasonable best efforts to cause all Registrable Securities
covered by such Registration Statement to be listed on each securities exchange,
if any, on which similar securities issued by the Company are then listed;
(m) Enter into such agreements (including, in the event of an
underwritten offering, an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other actions in
connection therewith (including those requested by the holders of a majority of
the Registrable Securities being sold or, in the event of an underwritten
offering, those requested by the managing underwriters) in order to expedite or
facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration, (i) make such
representations and warranties to the holders of such Registrable Securities and
the underwriters, if any, with respect to the business of the Company and its
subsidiaries, the Registration Statement, Prospectus and documents incorporated
by reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority of the Registrable
Securities being sold) addressed to such selling holders of Registrable
Securities and each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such holders and underwriters,
including without limitation the matters referred to in clause (i) above; (iii)
use its reasonable best efforts to obtain "comfort" letters and updates thereof
from the independent certified public accountants of the Company (and, if
necessary, any other certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data is, or is required to be, included in the
Registration Statement), addressed to each selling holder of Registrable
Securities and each of the underwriters, if any, such letters to be in customary
form and covering matters of the type customarily covered in "comfort" letters
in connection with underwritten offerings; and (iv) deliver such documents and
certificates as may be requested by the holders of a majority of the Registrable
Securities being sold, the Special Counsel and the managing underwriters, if
any, to
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<PAGE>
evidence the continued validity of the representations and warranties of the
Company and its subsidiaries made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in the underwriting agreement
or similar agreement entered into by the Company. The foregoing actions will be
taken in connection with each closing under such underwriting or similar
agreement as and to the extent required thereunder;
(n) Make available for inspection by a representative of the holders of
Registrable Securities being sold, any underwriter participating in any
disposition of Registrable Securities, and any attorney or accountant retained
by such selling holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the Company and
its subsidiaries to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with such
Registration Statement; provided, however, that any records, information or
documents that are designated by the Company in writing as confidential at the
time of delivery of such records, information or documents will be kept
confidential by such persons unless (i) such records, information or documents
are in the public domain or otherwise publicly available, (ii) disclosure of
such records, information or documents is required by court or administrative
order or is necessary to respond to inquires of regulatory authorities, or (iii)
disclosure of such records, information or documents, in the opinion of counsel
to such person, is otherwise required by law (including without limitation
pursuant to the requirements of the Securities Act);
(o) In connection with an underwritten offering, cause the officers of
the Company to participate in, and assist in the preparation of, any "road show"
presentation to potential investors as the managing underwriter may determine;
and
(p) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45
calendar days after the end of any 12-month period (or 90 calendar days after
the end of any 12-month period if such period is a fiscal year) (i) commencing
at the end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten offering, and
(ii) if not sold to underwriters in such an offering, commencing on the first
day of the first fiscal quarter of the Company, after the effective date of a
Registration Statement, which statements shall cover said 12-month period.
The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may, from time to time, reasonably request in writing and the Company
may exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each holder of Registrable Securities will be deemed to have agreed by
virtue of its acquisition of such Registrable Securities that, upon receipt of
any notice from the Company of the occurrence of any event of the kind described
in Section 6(c)(ii), 6(c)(iii), 6(c)(v), 6(c)(vi) or 6(c)(vii) hereof, such
holder will forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus until such holder's receipt
of the copies of the supplemented or amended Prospectus contemplated by Section
6(k) hereof, or until it is advised in writing (the "Advice") by the Company
that
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the use of the applicable Prospectus may be resumed, and has received copies of
any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus. In the event the Company shall
give any such notice, the time period prescribed in Section 3(a) hereof will be
extended by the number of days during the time period from and including the
date of the giving of such notice to and including the date when each seller of
Registrable Securities covered by such Registration Statement shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 6(k) hereof or (y) the Advice.
7. Reserved.
--------
8. Indemnification. (a) Indemnification by the Company. The
Company will, without limitation as to time, indemnify and hold harmless, to the
fullest extent permitted by law, each holder of Registrable Securities
Registered pursuant to this Agreement, the officers, directors and agents and
employees of each of them, each person who controls such holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, agents and employees of any such controlling
person, from and against all losses, claims, damages, liabilities, costs
(including without limitation the costs of investigation and attorneys' fees)
and expenses (collectively, 'Losses"), as incurred, arising out of or based upon
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or form of Prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as the same are based solely upon information furnished in
writing to the Company by such holder expressly for use therein; provided,
however, that the Company shall not be liable to any holder of Registrable
Securities to the extent that any such Losses arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if either (A) (i) such holder failed to send
or deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale by such holder of a Registrable Security to the person
asserting the claim from which such Losses arise and (ii) the Prospectus would
have completely corrected such untrue statement or alleged untrue statement or
such omission or alleged omission; or (B) such untrue statement or alleged
untrue statement or such omission or alleged omission is completely corrected in
an amendment or supplement to the Prospectus previously furnished by or on
behalf of the Company with copies of the Prospectus as so amended or
supplemented, and such holder thereafter fails to deliver such Prospectus as so
amended or supplemented prior to or concurrently with the sale of a Registrable
Security to the person asserting the claim from which such Losses arise.
The rights of any holder of Registrable Securities hereunder will not
be exclusive of the rights of any holder of Registrable Securities under any
other agreement or instrument of any holder of Registrable Securities to which
the Company is a party. Nothing in such other agreement or instrument will be
interpreted as limiting or otherwise adversely affecting a holder of Registrable
Securities hereunder and nothing in this Agreement will be interpreted as
limiting or otherwise adversely affecting the holder of Registrable Securities'
rights under any such other agreement or instrument, provided, however , that no
indemnified party will be entitled hereunder to recover more than its
indemnified Losses.
(b) Indemnification by Holders of Registrable Securities. In
connection with any Registration Statement in which a holder of Registrable
Securities is participating, such holder of Registrable Securities
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will furnish to the Company in writing such information as the Company
reasonably requests for use in connection with any Registration Statement or
Prospectus and will severally indemnify, to the fullest extent permitted by law,
the Company, its directors and officers, agents and employees, each person who
controls the Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling persons, from and against all Losses arising out
of or based upon any untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus or arising out of
or based upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue statement or omission is finally judicially
determined to have been contained in any information so furnished in writing by
such holder to the Company expressly for use in such Registration Statement or
Prospectus and was relied upon by the Company in the preparation of such
Registration Statement, Prospectus or preliminary prospectus. In no event will
the liability of any selling holder of Registrable Securities hereunder be
greater in amount than the dollar amount of the proceeds (net of payment of all
expenses and underwriter's discounts and commissions) received by such holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. If any person shall become
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party from which such indemnity is sought (the
"indemnifying party") of any claim or of the commencement of any action or
proceeding with respect to which such indemnified party seeks indemnification or
contribution pursuant hereto; provided, however, that the failure to so notify
the indemnifying party will not relieve the indemnifying party from any
obligation or liability except to the extent that the indemnifying party has
been prejudiced materially by such failure. All fees and expenses (including any
fees and expenses incurred in connection with investigating or preparing to
defend such action or proceeding) will be paid to the indemnified party, as
incurred, within five calendar days of written notice thereof to the
indemnifying party (regardless of whether it is ultimately determined that an
indemnified party is not entitled to indemnification hereunder). The
indemnifying party will not consent to entry of any judgment or enter into any
settlement or otherwise seek to terminate any action or proceeding in which any
indemnified party is or could be a party and as to which indemnification or
contribution could be sought by such indemnified party under this Section 8,
unless such judgment, settlement or other termination includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance satisfactory to the
indemnified party, from all liability in respect of such claim or litigation for
which such indemnified party would be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this Section 8
is unavailable to an indemnified party under Section 8(a) or 8(b) hereof in
respect of any Losses or is insufficient to hold such indemnified party
harmless, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, will, jointly and severally, contribute to the amount paid or
payable by such indemnified party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the indemnifying party or
indemnifying parties, on the one hand, and such indemnified party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party or indemnifying parties, on the one hand, and
such indemnified party, on the other hand, will be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or related to information supplied by,
such
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indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses will be deemed to include any legal or other fees or expenses
incurred by such party in connection with any action or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Section 8(d), an indemnifying party that
is a selling holder of Registrable Securities will not be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities sold by such indemnifying party and distributed to the
public exceeds the amount of any damages which such indemnifying party has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The provisions of this Section 8 will survive so long as Registrable
Securities remain outstanding, notwithstanding any transfer of the Registrable
Securities by any holder thereof or any termination of this Agreement.
9. Rules 144 and 144A. The Company will file the reports required to be
filed by it under the Securities Act and the Exchange Act in a timely manner,
and will cooperate with any holder of Registrable Securities (including without
limitation by making such representations as any such holder may reasonably
request), all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act within
the limitations of the exemptions provided by Rules 144 and 144A (including
without limitation the requirements of Rule 144A(d)(4)). Upon the request of any
holder of Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such filing requirements.
10. Underwritten Registrations. If any of the Registrable Securities
covered by any Demand Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the holder of Registrable Securities
that gave the Demand Notice with respect to such offering; provided, that such
investment banker or manager shall be reasonably satisfactory to the Company. If
any Piggyback Registration is an underwritten offering, the Company will have
the right to select the investment banker or investment bankers and managers to
administer the offering.
11. Miscellaneous. (a) No Inconsistent Agreements. Except for
the Prior Registration Rights, which shall terminate and be of no further force
and effect as of the date of this Agreement, the Company has not, as of the date
hereof, and will not, on or after the date hereof, enter into any agreement with
respect to its securities which is inconsistent with the rights granted to the
holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof.
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<PAGE>
(b) Amendments and Waivers. The provisions of this Exhibit, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of holders of 66% of
the then-outstanding Registrable Securities. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of holders of Registrable Securities
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of a majority of the Registrable
Securities being sold by such holders; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the immediately preceding sentence.
(c) Owner of Registrable Securities. The Company will maintain, or
will cause its registrar and transfer agent to maintain, a stock book with
respect to the Common Stock, in which all transfers of Registrable Securities of
which the Company has received notice will be recorded. The Company may deem and
treat the person in whose name Registrable Securities are registered in the
stock book of the Company as the owner thereof for all purposes, including
without limitation the giving of notices under this Agreement.
(d) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, will be
entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
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EXHIBIT 3
LOCK-UP AGREEMENT
_________, 1999
Thomas Weisel Partners LLC
Credit Suisse First Boston Corporation
J.C. Bradford & Co.
Stephens Inc.
As Representatives of the several Underwriters
c/o Thomas Weisel Partners LLC
One Montgomery Street, Suite 3700
San Francisco, California 94104
Re: Lock-Up Agreement (the "Agreement")
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of
certain shares of Common Stock, par value $0.01 per share (the "Common Stock"),
of Z-Tel Technologies, Inc., a Delaware corporation (the "Company"), or
securities convertible into or exchangeable or exercisable for Common Stock. The
undersigned understands that you, as representatives (the "Representatives"),
propose to enter into an Underwriting Agreement on behalf of the several
Underwriters named in Schedule A to such agreement (collectively, the
"Underwriters"), with the Company providing for a public offering of the Common
Stock of the Company pursuant to a Registration Statement on Form S-1 to be
filed with the Securities and Exchange Commission (the "Public Offering"). The
undersigned recognizes that the Public Offering will be of benefit to the
undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that you and
the other Underwriters are relying on the representations and agreements of the
undersigned contained in this letter in carrying out the Public Offering and in
entering into underwriting arrangements with the Company with respect to the
Public Offering.
To induce the Underwriters that may participate in the Public
Offering to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Thomas
Weisel Partners (which consent may be withheld in its sole discretion), it will
not, during the period commencing on the date hereof and ending 180 days after
the date of the final prospectus relating to the Public Offering (the
"Prospectus"), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or (2) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. In addition, the
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undersigned agrees that, without the prior written consent of Thomas Weisel
Partners (which consent may be withheld in its sole discretion), it will not,
during the period commencing on the date hereof and ending 180 days after the
date of the Prospectus, make any demand for or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock. With respect to the Public
Offering, the undersigned waives any registration rights relating to
registration under the Securities Act of any Common Stock owned either of record
or beneficially by the undersigned, including any rights to receive notice of
the Public Offering.
The foregoing restrictions are expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a sale or disposition of the
Common Stock even if such Common Stock would be disposed of by someone other
than the undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put option or put equivalent position or
call option or call equivalent position with respect to any of the Common Stock
or with respect to any security that includes, relates to, or derives any
significant part of its value from such Common Stock.
Notwithstanding the foregoing, the undersigned may transfer shares of
Common Stock (i) as a bona fide gift or gifts, provided that the donee or donees
thereof agree to be bound by the restrictions set forth herein, (ii) to any
trust for the direct or indirect benefit of the undersigned or the immediate
family of the undersigned, provided that the trustee of the trust agrees to be
bound by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value, or (iii) to the Underwriters
pursuant to the Underwriting Agreement. For purposes of this Agreement,
"immediate family" shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin. In addition, notwithstanding the foregoing,
if the undersigned is a corporation, the corporation may transfer the capital
stock of the Company to any wholly-owned subsidiary of such corporation;
provided however, that in any such case, it shall be a condition to the transfer
that the transferee execute an agreement stating that the transferee is
receiving and holding such capital stock subject to the provisions of this
Agreement and there shall be no further transfer of such capital stock except in
accordance with this Agreement, and provided further that any such transfer
shall not involve disposition for value.
The undersigned understands that whether or not the Public Offering
actually occurs depends on a number of factors, including stock market
conditions. The Public Offering will only be made pursuant to an Underwriting
Agreement, the terms of which are subject to negotiation among the Company and
the Underwriters.
The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
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This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and the assigns
of the undersigned.
Very truly yours,
/s/ Douglas C. Williamson
-----------------------------
Douglas C. Williamson
Senior Vice President/
Managing Director
BA Capital Company, L.P.
---------------------------
(Address)
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