Exhibit 10.1

 

 

FORM OF LOCK-UP AGREEMENT

 

This LOCK-UP AGREEMENT (this “Agreement”) is made and entered into as of [●],
2016 by and between Communications Sales & Leasing, Inc., a Maryland corporation
(“CS&L”), and [ ][1][, a [ ] [ ] (the “Unitholder”).

 

RECITALS

 

WHEREAS, this Agreement is entered into in connection with the closing (the
“Closing”) of the transactions contemplated by the Agreement and Plan of Merger,
dated as of January 7, 2015 (the “Merger Agreement”), by and among CS&L, CSL
Bandwidth Inc., a Delaware corporation and an indirect wholly owned Subsidiary
(as defined in the Merger Agreement) of CS&L (“Purchaser”), Penn Merger Sub,
LLC, a Delaware limited liability company and wholly owned Subsidiary (as
defined in the Merger Agreement) of Purchaser, PEG Bandwidth Holdings, LLC, a
Delaware Limited Liability Company (“PEG Holdings”), PEG Bandwidth, LLC, a
Delaware limited liability company, and PEG Holdings, as the Unitholders’
Representative thereunder;

 

WHEREAS, at the Closing, the Unitholder received certain shares of convertible
preferred stock of CS&L, par value $0.0001 per share, with the terms set forth
on the Certificate of Designations (as defined in the Merger Agreement) (the
“Convertible Preferred Stock”), and shares of CS&L’s common stock, par value
$0.0001 per share (the “Common Stock”); and

 

WHEREAS, the parties hereto wish to provide for certain arrangements with
respect to the sale and transfer of (i) the Convertible Preferred Stock and
Common Stock received at the Closing, (ii) any Common Stock issued upon
redemption, repurchase, conversion or any other physical settlement of the
Convertible Preferred Stock received at the Closing, pursuant to the terms of
the Certificate of Designations, and (iii) any other securities issued or
issuable with respect to any of the securities described in clauses (i) and (ii)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, amalgamation and
other reorganization (such Convertible Preferred Stock, Common Stock or other
securities described in clauses (i), (ii) and (iii), collectively, the “Subject
Securities”), following the Closing.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

 

 

1 Any party that receives a portion of the Merger Consideration in the form of
Convertible Preferred Stock or Common Stock will be required, as a condition to
receiving such consideration, to execute a lockup agreement substantially
identical to this Agreement.

 

 

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AGREEMENT

 

1. Defined Terms. Capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to them in the Merger Agreement.

 

2. Restrictions on Transfers of Equity Securities. (a) Subject to Section 4,
from and after the date hereof until the second anniversary of the Closing, the
Unitholder agrees that it shall not, and agrees to cause any of its Affiliates
to whom it (or any of its Affiliates) has Transferred Subject Securities
pursuant to the following proviso not to, directly or indirectly, Transfer any
Subject Securities; provided that such prohibition shall not apply to Transfers

 

(1) to Affiliates of such Unitholder so long as such Affiliates are controlled
Affiliates of such Unitholder or Associated Partners, L.P., a Guernsey limited
partnership (“AP”);

 

(2) to CS&L pursuant to any right or obligation of CS&L to repurchase the
Subject Securities from the Unitholder or any of its Affiliates to whom it (or
any of its Affiliates) has Transferred Subject Securities pursuant to clause
(1),

 

(3) with the prior written consent of CS&L,

 

(4) (A) that are a pledge or hypothecation of any Subject Securities to a
nationally recognized bank experienced in margin lending (a “Pledgee”) for
purposes of collateralizing a margin loan, or any entry into a contract, option
or other arrangement or understanding with respect thereto; (B) in which any
Pledgee exercises its rights to foreclose upon and take ownership of any Subject
Securities pledged to it or (C) in which such Pledgee Transfers any Subject
Securities that such Pledgee took ownership of in connection with exercise of
such Pledgee’s rights of foreclosure; provided that in the case of a Transfer
pursuant to clause (4)(C), the Transfer of such Subject Securities is not made
to Persons who are (x) set forth on Exhibit A hereto or (y) identified on the
most-recently available “SharkWatch 50” list (or if such list does not exist, a
nationally recognized, publicly available list of activist investors) as of the
date of such Transfer, provided, further, that, from time to time, CS&L may
identify additional Persons to be set forth on Exhibit A hereto subject to the
consent of the Unitholder (such consent not to be unreasonably withheld,
conditioned or delayed),

 

(5) to a nominee or custodian of a Person to whom Transfer would be permitted
hereunder, provided that such nominee or custodian agrees to be bound in writing
by the restrictions set forth herein and in the Stockholders’ Agreement, and

 

(6) pursuant to any tender offer, merger or other similar business combination
transaction effected by CS&L or by any third Person which is recommended or
approved by the Board.

 

 

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Notwithstanding the foregoing restrictions, in the case of a Transfer pursuant
to clause (4)(C), the Pledgee shall be permitted to sell Subject Securities (a)
in a Broadly Distributed Public Offering of the Subject Securities or (b) over
an exchange or similar anonymous trading platform, provided, in the case of
clause (b), that the purchaser is not identifiable by the Pledgee using
commercial reasonable efforts. “Broadly Distributed Public Offering” means a
public offering in which no one purchaser acquires greater than 5% of the
Subject Securities.

 

(b) Each Affiliate to which the Unitholder transfers Subject Securities in
accordance with Section 2(a)(1) hereof shall be required, at the time of and as
a condition to such Transfer, to become a party to this Agreement by executing
and delivering to CS&L a joinder to this Agreement or an agreement substantially
identical to this Agreement.

 

(c) For purposes of this Agreement, “Transfer” (including the terms
“Transferring” and “Transferred”) means, directly or indirectly (including by
the direct or indirect transfer of the equity of a company or a parent company),
in one transaction or a series of related transactions, to sell, transfer,
assign, pledge, or similarly dispose of or hypothecate, either voluntarily or
involuntarily, or to enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, assignment, pledge or similar
disposition or hypothecation of, any Subject Securities beneficially owned (for
purposes of this definition, as calculated pursuant to Rule 13d-3 under the
Exchange Act) by a Person or any interest in any Subject Securities beneficially
owned by a Person (including any arrangement to provide another Person the
economic performance of all or any portion of such Subject Securities (including
by means of any option, swap, forward or other contract or arrangement the value
of which is linked in whole or in part to the value of such Subject
Securities)).

 

3. Inconsistent Agreements: The Unitholder represents and agrees that it has not
and shall not, and its Affiliates have not and shall not, (1) grant any proxy
with respect to the Subject Securities, (2) enter into or agree to be bound by
any voting trust or agreement with respect to the Subject Securities or (3)
enter into any agreement or arrangement of any kind with any Person, in each
case if any such proxy, voting trust, agreement or arrangement is inconsistent
with the provisions of, or for the purpose or with the effect of denying or
reducing the rights of any party to, this Agreement.

 

4. Termination; Suspension. This Agreement and the obligations and restrictions
hereunder shall terminate in full on the earlier of (i) the second anniversary
of the Closing and (ii) the occurrence of a Change of Control (as defined in the
Certificate of Designations). Notwithstanding the foregoing, the obligations and
restrictions set forth in this Agreement shall be suspended with respect to any
holder of Convertible Preferred Stock during the period beginning on, and
including, the date on which CS&L would have been required to deliver shares of
Common Stock to such holder pursuant to the terms of the Certificate of
Designations but is prohibited from delivering such shares of Common Stock to
such holder by a Stock Ownership Limit (as defined in the Certificate of
Designations) or any other restriction on ownership or transfer contained in the
Charter (as defined in the Certificate of Designations) and ending on, and
including, the date on

 

 

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which CS&L delivers all shares of Common Stock that are due and deliverable
pursuant to the terms of the Certificate of Designations.

 

5. Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission and electronic
mail “e-mail”) and shall be given:

 

if to CS&L, to:

 

Communications Sales & Leasing, Inc.

10802 Executive Center Drive

Benton Building, Suite 300

Little Rock, AR 72211

 

Attention: Daniel L. Heard
Email: Daniel.Heard@cslreit.com

 

with a copy to:

 

Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
Attention: H. Oliver Smith
Facsimile No.: (212) 701-5636
E-mail: oliver.smith@davispolk.com

 

if to the Unitholder, to:

[ _________________]
[__________________]
Attention: [ _________]
Facsimile No.: [ ______]
E-mail: [ ____________]

 

with a copy to:

 

[_________________ ]
[ _________________]
Attention: [ _________]
Facsimile No.: [ ______]
E-mail: [ ____________]

 

or, in each case, such other address, email address or facsimile number as such
party may hereafter specify for the purpose by notice to the other parties
hereto. All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to
4:00 p.m. in the place of receipt and such day is a Business Day. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.

 

 

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6. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Delaware, without regard to the
conflicts of law rules of such state.

 

7. Jurisdiction. The parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in the Delaware Chancery Court or, if such court shall not have
jurisdiction, any federal court located in the State of Delaware or other
Delaware state court, so long as one of such courts shall have subject matter
jurisdiction over such suit, action or proceeding, and that any cause of action
arising out of this Agreement shall be deemed to have arisen from a transaction
of business in the State of Delaware, and each of the parties hereby irrevocably
consents to the exclusive jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Process in
any such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Paragraph 5 shall be deemed effective service of process on such
party.

 

8. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

9. Counterparts; Effectiveness; Third Party Beneficiaries. This Agreement may be
signed in any number of counterparts (including by electronic means), each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received a counterpart hereof signed by all of
the other parties hereto. Until and unless each party has received a counterpart
hereof signed by each other party hereto, this Agreement shall have no effect
and no party shall have any right or obligation hereunder (whether by virtue of
any other oral or written agreement or other communication). No provision of
this Agreement is intended to confer any rights, benefits, remedies,
obligations, or liabilities hereunder upon any Person other than the parties
hereto and their respective successors and assigns.

 

10. Entire Agreement. This Agreement and the Stockholder’s and Registration
Rights Agreement dated as of the date hereof by and between CS&L and AP
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement.

 

11. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other Governmental
Authority to be

 

 

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invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.

 

12. Amendments and Waivers. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed, in
the case of an amendment, by each party to this Agreement, or in the case of a
waiver, by the party against whom the waiver is to be effective.

 

 

 

[The remainder of this page has been left blank intentionally.]

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their authorized representatives as of the date first above written.

 

COMMUNICATIONS SALES & LEASING, INC.     By:     Name:   Title:    

[UNITHOLDER]     By:     Name:   Title:

 

 

 

 

 

[Signature Page to Lockup Agreement]