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Exhibit 10.31    
    

 
 

CONSULTING AGREEMENT
  
    EFFECTIVE DATE: March 25, 2004    
    

        This Consulting Agreement (the "Agreement") is made by and between  Cypress Bioscience, Inc. ("Client"), a Delaware corporation, and Charles B. Nemeroff
("Consultant"). 

	1.
	Engagement of Services. Client hereby retains Consultant's services for various matters to be determined from to time to by Client,
including but not limited to (a) service as a continuing member of Client's Scientific Advisory Board and (b) Consultant's assistance and cooperation in facilitating the transition of
new members onto Client's Board of Directors (the "Board").

	2.
	Compensation. Client will pay Consultant a fee of fifty thousand ($50,000) dollars per year for services rendered up to and including
two (2) days per fiscal quarter, as requested by Client. If Client requests Consultant to perform additional services, Client will do so in writing and Consultant will be paid five thousand
($5,000) dollars per each additional day of services requested by and rendered to Client. On a quarterly basis, by providing notice to Client at any time during the last two (2) weeks of such
quarter, Consultant may elect to receive the above compensation in the form of a fully vested stock option to be granted on the last trading day of such fiscal quarter. If Consultant elects to receive
such an option grant, the quarterly grant will cover the number of shares that results from dividing the then accrued but unpaid compensation earned by Consultant in the applicable fiscal quarter by
the closing share price of Client's common stock as reported on Nasdaq for the last trading day of such fiscal quarter. Such option grant(s) will be made pursuant to the terms of Client's 2000 Equity
Incentive Plan (the "Plan") and standard Nonstatutory Stock Option Agreement. The exercise price of such option grant(s) will be equal to the fair
market value of Client's common stock on the last day of the applicable quarter, which shall be the closing sales price as reported on Nasdaq. In addition to the above compensation, Consultant will
vest in all unvested shares under Consultant's outstanding option grants in equal monthly installments over the Consulting Term (as defined below), as outlined on  Exhibit A. Except as expressly set
forth herein, such current option grants will remain subject to all terms and conditions set forth in the
applicable plans and option agreements governing such grants. In addition, during the Consulting Term, Consultant agrees to abide by Client's Stock Trading and Pre-Clearance Policy.
Consultant further agrees that with respect to the next secondary public offering of Client's common stock, (a) all option grants and shares held by Consultant will be subject to the same
90-day lock up period applicable to Client's officers and directors and (b) Consultant will execute a form lock-up agreement as may be required by the underwriters of
such offering. Consultant will be reimbursed for expenses incurred in the performance of services hereunder in accordance with Client's expense reimbursement policy as in effect from time to time.
Payment of Consultant's fees and expenses will be made in quarterly installments in accordance with Client's standard payroll procedures.

	3.
	Resignation from Board of Directors. Consultant acknowledges and agrees that, effective upon execution of this Agreement, he resigns as
a member of the Board.

	4.
	Ownership of Work Product. Consultant hereby assigns to Client all right, title and interest in and to any work product created by
Consultant, or to which Consultant contributes, pursuant to this Agreement (the "Work Product"), including all copyrights, trademarks and other
intellectual property rights contained therein. Consultant agrees to execute, at Client's request and expense, all documents and other instruments necessary or desirable to confirm such assignment,
including without limitation, the copyright assignment. 

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	5.
	Representations and Warranties. Consultant represents and warrants that: (a) Consultant has the right and unrestricted ability to
assign the Work Product to Client as set forth in Section 4 (including without limitation the right to assign any Work Product created by Consultant's employees or contractors), and
(b) the Work Product will not infringe upon any copyright, patent, trademark, right of publicity or privacy, or any other proprietary right of any person, whether contractual, statutory or
common law. Consultant agrees to indemnify Client from any and all damages, costs, claims, expenses or other liability (including reasonable attorneys' fees) arising from or relating to the breach or
alleged breach by Consultant of the representations and warranties set forth in this Section 5.

	6.
	Independent Contractor Relationship. Consultant's relationship with Client is that of an independent contractor, and nothing in this
Agreement is intended to, or should be construed to, create a partnership, agency, joint venture or employment relationship. Consultant will not be entitled to any of the benefits which Client may
make available to its employees, including, but not limited to, group health or life insurance, profit-sharing or retirement benefits. Consultant is not authorized to make any representation, contract
or commitment on behalf of Client unless specifically requested or authorized in writing to do so by a Client officer. Consultant is solely responsible for, and will file, on a timely basis, all tax
returns and payments required to be filed with, or made to, any federal, state or local tax authority with respect to the performance of services and receipt of fees under this Agreement. Consultant
is solely responsible for, and must maintain adequate records of, expenses incurred in the course of performing services under this Agreement. No part of Consultant's compensation will be subject to
withholding by Client for the payment of any social security, federal, state or any other employee payroll taxes. Client will regularly report amounts paid to Consultant by filing
Form 1099-MISC with the Internal Revenue Service as required by law.

	7.
	Confidential Information. Consultant agrees to hold Client's Confidential Information in strict confidence and not to disclose such
Confidential Information to any third parties. "Confidential Information" as used in this Agreement shall mean all information disclosed by Client to
Consultant that is not generally known in the Client's trade or industry and shall include, without limitation, (a) concepts and ideas relating to the in-license, development or
distribution of compounds or technologies or to the current, future and proposed products or services of Client or its subsidiaries or affiliates; (b) trade secrets, drawings, inventions and
know-how; (c) information regarding plans for research, development, new service offerings or products, marketing and selling, business plans, business forecasts, budgets and
unpublished financial statements, licenses and distribution arrangements, prices and costs, suppliers and customers; (d) existence of any business discussions, negotiations or agreements
between the parties; and (e) any information regarding the skills and compensation of employees, contractors or other agents of the Client or its subsidiaries or affiliates. Confidential
Information also includes proprietary or confidential information of any third party who may disclose such information to Client or Consultant in the course of Client's business. Consultant's
obligations set forth in this Section 7 shall not apply with respect to any portion of the Confidential Information that Consultant can document by competent proof that such portion:
(a) was in the public domain at the time it was communicated to Consultant by Client; (b) entered the public domain through no fault of Consultant, subsequent to the time it was
communicated to Consultant by Client; (c) was in Consultant's possession free of any obligation of confidence at the time it was communicated to Consultant by Client; (d) was rightfully
communicated to Consultant free of any obligation of confidence subsequent to the time it was communicated to Consultant by the Client; (e) was developed by employees or agents of Consultant
independently of and without reference to any information communicated to Consultant by Client; or (f) was communicated by Client to an unaffiliated third party free of any obligation of
confidence. In addition, Consultant may disclose Client's Confidential Information in response to a valid order by a court or other governmental body, as otherwise required by law. All 

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Confidential
Information furnished to Consultant by Client is the sole and exclusive property of Client or its suppliers or customers. Upon request by Client, Consultant agrees to promptly deliver to
Client the original and any copies of the such Confidential Information. 

	8.
	No Conflict of Interest. During the term of this Agreement, Consultant will not accept work, enter into a contract, or accept an
obligation from any third party, inconsistent or incompatible with Consultant's obligations, or the scope of services rendered for Client, under this Agreement. Consultant warrants that there is no
other contract or duty on its part inconsistent with this Agreement. Consultant agrees to indemnify Client from any and all loss or liability incurred by reason of the alleged breach by Consultant of
any services agreement with any third party. 

9. Term and Termination.  

	9.1
	Term. The term of this Agreement is for two (2) years from the Effective Date set forth above (the
"Consulting Term"), unless earlier terminated as provided in this Agreement. An executed copy of this agreement by Consultant must be returned to the
Client within five (5) days of the Effective Date or this agreement will become null and void. Consultant may terminate this Agreement at any time upon five (5) days prior written notice
to Client.

	9.2
	Termination by Client. Client may terminate this Agreement with or without Cause, at any time upon five (5) days prior written
notice to Consultant. If this Agreement is terminated by Client without Cause, or if there is a Corporate Transaction (as defined in Section 11(c) of the Plan), then (a) Client shall pay
Consultant, within thirty (30) days of such event, all remaining consideration Consultant would have received has services continued under this Agreement through the entire Consulting Term,
(b) all of Consultant's remaining unvested option shares will immediately vest in full, and (c) Consultant will be allowed to exercise such option grants through the second anniversary
of the Effective Date of this Agreement.

	9.3
	Definition of Cause. For purposes of this Agreement, Cause will mean Consultant's (a) disparagement of Client (or its officers,
directors, affiliates, agents or representatives), (b) breach of any applicable confidentiality obligation, (c) gross misconduct or (d) refusal to perform services under this
Agreement.

	9.4
	Survival. The rights, obligations and terms contained in Sections 4, 5, 7, 9, 13, 14, 15, 16, 17, 18 and 19 will survive any
termination or expiration of this Agreement.

	10.
	Successors and Assigns. Consultant may not subcontract or otherwise delegate its obligations under this Agreement without Client's
prior written consent. Subject to the foregoing, this Agreement will be for the benefit of Client's successors and assigns, and will be binding on Consultant's assignees.

	11.
	Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed
given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; (iii) by telecopy or facsimile transmission
upon acknowledgment of receipt of electronic transmission; or (iv) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to the addresses
set forth below or such other address as either party may specify in writing.

	12.
	Attorneys' Fees. Client will reimburse Consultant for reasonable attorneys' fees in connection with Consultant's resignation from the
Board and the execution of this Agreement, not to exceed eleven thousand six hundred sixty-six ($11,666) dollars.

	13.
	Continuing Indemnification. Client will continue to provide Consultant with the same level of directors and officers insurance and
indemnification as provided to Client's officers and directors 

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by
Client's then current certificate of incorporation, bylaws and agreements for a period of at least five (5) years after the Effective Date of this Agreement. 

	14.
	Mutual Release of Claims. Except as expressly set forth in the last sentence of this Section 14, Consultant and Client, on
behalf of themselves, and their respective heirs, executors, officers, directors, employees, consultants, investors, administrators, predecessor and successor corporations, and assigns, hereby fully
and forever release each other and their respective heirs, executors, officers, directors, employees, consultants, investors, shareholders, administrators, predecessor and successor corporations, and
assigns, from, and agree not to sue concerning, any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that
any of them may possess arising from any omissions, acts or facts that have occurred up until and including the date of this Agreement including, without limitation: (a) any and all claims
relating to or arising from Consultant's service to the Company and the termination of that service; (b) any and all claims relating to, or arising from, Consultant's right to purchase, or
actual purchase of shares of common stock of Client; (c) any and all claims of violation of public policy, discrimination, breach of contract (both express and implied), breach of a covenant of
good faith and fair dealing (both express and implied), promissory estoppel, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or
intentional interference with contract or prospective economic advantage, unfair business practices, defamation, libel, slander, negligence, personal injury, invasion of privacy and conversion;
(d) any and all claims for violation of any federal, state or municipal constitution, law, statute, regulation or ordinance; and (e) any and all claims for attorneys' fees and costs.
Client and Consultant agree that the release set forth in this Section 14 will be and remain in effect in all respects as a complete general release as to the matters released. Consultant
agrees that this release does not extend to any claims of any nature or type against Consultant based on a breach by Consultant of any fiduciary duty owed to Client or its stockholders or any claims
brought by the stockholders of Client against Consultant (whether in their own name or in the name, or on behalf, of Client).

	15.
	Civil Code Section 1542. Consultant and the Client acknowledge that they have been advised by legal counsel and are familiar
with the provisions of California Civil Code Section 1542, which provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIS MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. Consultant and the Client, being aware of said code section, agree to
expressly waive any rights they may have thereunder, as well as under any other statute or common law principles of similar effect.

	16.
	Governing Law. This Agreement shall be governed in all respects by the laws of the United States of America and by the laws of the
State of California, as such laws are applied to agreements entered into and to be performed entirely within California between California residents.

	17.
	Severability. Should any provisions of this Agreement be held by a court of law to be illegal, invalid or unenforceable, the legality,
validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby.

	18.
	Waiver. The waiver by Client of a breach of any provision of this Agreement by Consultant shall not operate or be construed as a waiver
of any other or subsequent breach by Consultant.

	19.
	Entire Agreement. This Agreement constitutes the entire agreement between the parties relating to this subject matter and supersedes
all prior or contemporaneous oral or written agreements concerning such subject matter including, without limitation, the term sheet previously evidencing the terms of this Agreement and the Restated
Consulting Agreement dated March 27, 2003 between Client and Consultant. The terms of this Agreement will govern all services undertaken by 

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Consultant
for Client. This Agreement may only be changed by mutual agreement of authorized representatives of the parties in writing. 

        In Witness Whereof, the parties have executed this Agreement as of the date first written above. 

	
"Client"	
 	

"Consultant"
	

Cypress Bioscience, Inc.	
 	

Dr. Charles B. Nemeroff
	

 	
 	

/s/  CHARLES B. NEMEROFF      

	

Tel: (858) 452-2323

Fax: (858) 452-1222

	
 	

 

	

By:	
 	

/s/  JAY D. KRANZLER      
 Dr. Jay D. Kranzler

Chief Executive Officer	
 	

Date:	
 	

March 25, 2004

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Exhibit A    
    

1st Chart—Unvested shares as of 3-25-04  

	Date of Grant
 
	 	Total Number

of Options
	 	Currently

Vested
	 	Unvested
	 	Date Fully

Vested

	1/27/2002	 	12,500	 	8,547	 	3,953	 	12/1/2005
	4/29/2002	 	7,500	 	3,572	 	3,928	 	4/29/2006
	4/29/2002	 	7,500	 	—	 	7,500	 	4/29/2008
	3/27/2003	 	58,956	 	33,460	 	25,496	 	3/27/2007
	1/1/2004	 	13,000	 	2,991	 	10,009	 	12/31/2004

2nd Chart—Unvested & Over 2 years to complete Vesting  

	New Vesting

Date of Grant
 
	 	Unvested
	 	Schedule

	1/27/2002	 	3,953	(1)	3/24/2006
	4/29/2002	 	3,928	(1)	3/24/2006
	4/29/2002	 	7,500	(1)	3/24/2006
	3/27/2003	 	25,496	(1)	3/24/2006

	(1)
	vesting
 monthly over next 2 years 

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QuickLinks

Exhibit 10.31

CONSULTING AGREEMENT EFFECTIVE DATE: March 25, 2004

Exhibit AExhibit 4.2

 

 

 

TELEGLOBE INTERNATIONAL HOLDINGS LTD

 

 

SHAREHOLDERS’ AGREEMENT

 

 

Dated as of October 1, 2003

 

 

 

1

 

SHAREHOLDERS’ AGREEMENT

 

This SHAREHOLDERS’ AGREEMENT (this “Agreement”) is made and
entered into as of October 1, 2003, by and among TELEGLOBE INTERNATIONAL HOLDINGS LTD., a company organized
under the laws of Bermuda (the “Company”), the investors set
forth on Schedule 1 hereto (each, an “Investor” and
collectively, the “Investors”) and the shareholders set forth on Schedule 2
hereto (the “Other
Shareholders” and together with the Investors, the “Shareholders”).

 

W  I  T  N
E  S  S  E  T  H :

 

WHEREAS, the Company, through certain of its
subsidiaries, purchased the assets of the Core Business (as defined in the
Purchase Agreement (as defined below)) of Teleglobe Inc. and certain of its subsidiaries (collectively, “Old
Teleglobe”) on May 30, 2003 pursuant to the terms of a Purchase Agreement,
dated September 18, 2002, by and among TLGB Acquisition LLC (the “Buyer”)
and Old Teleglobe, as amended and supplemented by the Settlement Agreement,
dated March 29, 2003, by and among the Buyer and Old Teleglobe (the “Purchase
Agreement”);

 

WHEREAS, the Buyer and each of the Other Stockholders
entered into Employment Agreements, dated April 14, 2003, by and between
the Buyer and the Other Stockholders (the “Employment Agreements”) pursuant to
which the Buyer and the Other Stockholders agreed that the Company (as the
Owner Entity (as defined in the Employment Agreements)) would, among other
things, arrange for the applicable Executive (as defined in each Employment
Agreement) to purchase a portion of the common shares of the Company and that
the Executive would become party to a shareholder agreement of the Company;

 

WHEREAS,
in order to induce the Investors to consummate the transactions contemplated by
the Purchase Agreement and the Employment Agreements, the Company and the Other
Shareholders are executing and delivering this Agreement;

 

NOW,
THEREFORE, in
consideration of the mutual covenants and agreements contained herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows (capitalized terms used herein and not defined herein have the
meanings set forth in the Purchase Agreement):

 

1.                                       DEFINITIONS. 
As used in this Agreement, the following terms shall have the following
meanings:

 

“Affiliate” shall mean (i) with respect to any Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person. 
The term “control” includes, without limitation, the possession,
directly or indirectly, of

 

2

 

the power to direct the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Agents” shall have the meaning set forth in Section 5.1.

 

“Agreement” has the meaning set forth in the preamble.

 

“Board of Directors” shall mean the board of directors of the
Company as constituted from time to time.

 

“Business Day” shall mean any day that is not a Saturday, Sunday
or day on which banking institutions in New York, New York are not required to
be open.

 

“Common Shares” shall mean the common shares of the Company.

 

“Company” shall have the meaning set forth in the preamble.

 

“Demand Registration” shall mean a registration required to be
effected by the Company pursuant to Section 2.1.

 

“Demand Registration Statement” shall mean a registration
statement of the Company which covers the Registrable Securities requested to
be included therein pursuant to the provisions of Section 2.1 and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference (or
deemed to be incorporated by reference) therein.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations thereunder, or any
successor statute.

 

“Family Group” has the meaning set forth in Section 7.5.

 

“Holders” shall mean each of the Shareholders for so long as it
owns any Registrable Securities and such of its respective heirs, successors
and permitted assigns (including any permitted transferees of Registrable
Securities) who acquire or are otherwise the transferee of Registrable
Securities, directly or indirectly, from such Shareholder (or any subsequent
Holder), for so long as such heirs, successors and permitted assigns own any
Registrable Securities.  For purposes of
this Agreement, a Person will be deemed to be a Holder whenever such Person
holds an option to purchase, or a security convertible into or exercisable or
exchangeable for, Registrable Securities, whether or not such purchase,
conversion, exercise or exchange has actually been effected and disregarding
any legal restrictions upon the exercise of such rights.  Registrable Securities issuable upon exercise
of an option or upon conversion, exchange or exercise of another security shall
be deemed outstanding for the purposes of this Agreement.

 

“Holders’ Counsel” shall mean one firm of counsel (per
registration) to the Holders of Registrable Securities participating in such
registration, which counsel shall be

 

3

 

selected by the Majority Holders of the
Registration.

 

“Incidental Registration” shall mean a registration required to
be effected by the Company pursuant to Section 2.2.

 

“Incidental Registration Statement” shall mean a registration
statement of the Company which covers the Registrable Securities requested to
be included therein pursuant to the provisions of Section 2.2 and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference (or
deemed to be incorporated by reference) therein.

 

“Initial Public Offering” shall mean the first public offering
of any class of equity securities of the Company pursuant to a registration
statement filed with and declared effective by the SEC, other than, in the case
of Section 3.1 and Section 10.11(b) of this Agreement, a registration
relating solely to employee benefit plans on Form F-1 or Form F-8 or similar
forms which may be promulgated in the future, or a registration relating solely
to a Securities and Exchange Commission Rule 145 transaction on Form F-4 or
similar forms which may be promulgated in the future.

 

“Inspector” or “Inspectors” has the meaning set forth in
Section 4.1(g).

 

“Investor Holders” shall mean each of the Investors and its
Affiliates for so long as it owns any Registrable Securities and such of its
respective heirs, successors and permitted assigns (including any Permitted
Transferees of Registrable Securities) who acquire or are otherwise the
transferee of Registrable Securities, directly or indirectly, from such
Investor (or any subsequent holder), for so long as such heirs, successors and
permitted assigns own any Registrable Securities.

 

“Majority Holders” shall mean one or more Holders of Registrable
Securities who would hold a majority of the Registrable Securities then
outstanding.

 

“Majority Holders of the Registration” shall mean, with respect
to a particular registration, one or more Holders of Registrable Securities who
would hold a majority of the Registrable Securities to be included in such
registration.

 

“Majority Investor Holders” shall mean one or more Investor
Holders of Registrable Securities who would hold a majority of the Registrable
Securities held by all Investor Holders then outstanding.

 

“Majority Investor Holders of the Registration” shall mean one
or more Investor Holders of Registrable Securities who would hold a majority of
the Registrable Securities to be included in such registration.

 

“Majority Other Shareholders” shall mean one or more Other
Shareholders who would hold a majority of the Registrable Securities held by
all Other Shareholders then

 

4

 

outstanding.

 

“NASD” shall mean the National Association of Securities
Dealers, Inc.

 

“Nasdaq National Market” shall have the meaning set forth in
Section 4.1(k).  

 

“Offered Shares” shall have the meaning set forth in
Section 7.2(a).

 

“Permitted Transferee” shall have the meaning set forth in
Section 7.5.

 

“Person” shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision
thereof, and shall include any successor (by merger or otherwise) of such
entity.

 

“Proportionate Percentage” shall mean, with respect to any group
of Shareholders, the ratio of the number of shares of Common Shares then owned
by any member of such group to the aggregate number of shares of Common Shares
then owned by all members of such group.

 

“Prospectus” shall mean the prospectus included in a
Registration Statement (including, without limitation, any preliminary
prospectus and any prospectus that includes any information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), and any such
Prospectus as amended or supplemented by any prospectus supplement, and all
other amendments and supplements to such Prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
(or deemed to be incorporated by reference) therein.

 

“Purchase Offer” shall have the meaning set forth in
Section 7.2(a).

 

“Purchaser” has the meaning set forth in Section 7.3(a).

 

“Records” shall have the meaning set forth in
Section 4.1(g).

 

“Registrable Securities” shall mean (i) any Common Shares now
held or otherwise hereafter purchased or acquired by the Shareholders, and (ii)
any other securities of the Company (or any successor or assign of the Company,
whether by merger, consolidation, sale of assets or otherwise) which may be
issued with respect to, in exchange for, or in substitution of, Registrable
Securities referenced in clause (i) and (ii) above by reason of any dividend or
stock split, combination of shares, merger, consolidation, recapitalization,
reclassification, reorganization, sale of assets or similar transaction.  As to any particular Registrable Securities,
such securities shall cease to be Registrable Securities when (A) a
registration statement with respect to the sale of such securities shall have
been declared effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement, (B) such
securities are sold pursuant to Rule 144 (or any similar provisions then in
force) under the Securities Act, (C) such securities have been otherwise
transferred, a new certificate or other

 

5

 

evidence of ownership for them not bearing the legend restricting further
transfer shall have been delivered by the Company and subsequent public
distribution of them shall not require registration under the Securities Act,
or (D) such securities shall have ceased to be outstanding.

 

“Registration Expenses” shall mean any and all expenses incident
to performance of or compliance with this Agreement by the Company and its
subsidiaries, including, without limitation (i) all SEC, stock exchange, NASD
and other registration, listing and filing fees, (ii) all fees and expenses incurred
in connection with compliance with state securities or blue sky laws and
compliance with the rules of any stock exchange (including fees and
disbursements of counsel in connection with such compliance and the preparation
of a blue sky memorandum and legal investment survey), (iii) all expenses of
any Persons in preparing or assisting in preparing, word processing, printing,
distributing, mailing and delivering any Registration Statement, any
Prospectus, any underwriting agreements, transmittal letters, securities sales
agreements, securities certificates and other documents relating to the
performance of or compliance with this Agreement, (iv) the fees and
disbursements of counsel for the Company, (v) the fees and disbursements of
Holders’ Counsel, (vi) the fees and disbursements of all independent public
accountants (including the expenses of any audit and/or “cold comfort” letters)
and the fees and expenses of other Persons, including experts, retained by the
Company, (vii) the expenses incurred in connection with making road show
presentations and holding meetings with potential investors to facilitate the
distribution and sale of Registrable Securities which are customarily borne by
the issuer, (viii) any fees and disbursements of underwriters customarily paid
by issuers or sellers of securities, and (ix) premiums and other costs of
policies of insurance against liabilities arising out of the public offering of
the Registrable Securities being registered; provided, however,
Registration Expenses shall not include discounts and commissions payable to
underwriters, selling brokers, dealer managers or other similar Persons engaged
in the distribution of any of the Registrable Securities; and provided  further,
that in any case where Registration Expenses are not to be borne by the
Company, such expenses shall not include salaries of Company personnel or
general overhead expenses of the Company, auditing fees, premiums or other
expenses relating to liability insurance required by underwriters of the Company
or other expenses for the preparation of financial statements or other data
normally prepared by the Company in the ordinary course of its business or
which the Company would have incurred in any event; and provided, further,
that in the event the Company shall, in accordance with Section 2.2 or
Section 2.6 hereof, not register any securities with respect to which it
had given written notice of its intention to register to Holders,
notwithstanding anything to the contrary in the foregoing, all of the costs
incurred by the Holders in connection with such registration shall be deemed to
be Registration Expenses.

 

“Registration Statement” shall mean any registration statement
of the Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.

 

“Request” shall have the meaning set forth in
Section 2.1(a).

 

6

 

“S-3 Registration” shall mean a registration required to be
effected by the Company pursuant to Section 2.3(a).

 

“SEC” shall mean the Securities and Exchange Commission, or any
successor agency having jurisdiction to enforce the Securities Act.

 

“Securities Act” shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.

 

“Seller” shall have the meaning set forth in Section 7.2.

 

“Shares” shall have the meaning set forth in Section 7.2.

 

“Shelf Registration” shall have the meaning set forth in
Section 2.1(a).

 

“Shareholder Joinder” means a joinder agreement, substantially
in the form of Exhibit A attached hereto, executed by a Person, other
than a current Shareholder, who has acquired Shares from a current Shareholder,
with the effect that the holder thereafter shall be deemed to be a Shareholder
for all purposes of this Agreement.

 

“Shareholders” shall have the meaning set forth in the preamble.

 

“Transfer” shall have the meaning set forth in Section 7.1.

 

“Underwriters” shall mean the underwriters, if any, of the
offering being registered under the Securities Act.

 

“Underwritten Offering” shall mean a sale of securities of the
Company to an Underwriter or Underwriters for reoffering to the public.

 

“Withdrawn Demand Registration” shall have the meaning set forth
in Section 2.1(a).

 

“Withdrawn Request” shall have the meaning set forth in
Section 2.1(a).

 

2.                                       REGISTRATION UNDER THE SECURITIES ACT.

 

2.1.                              Demand Registration.

 

(a)                                  Right
to Demand Registration.  Subject to
Section 2.1(c), at any time or from time to time, the Majority Investor
Holders shall have the right to request in writing that the Company register
all or part of such Investor Holder’s Registrable Securities (a “Request”)
(which Request shall specify the amount of Registrable Securities intended to
be disposed of by such Holders and the intended method of disposition thereof)
by filing with the SEC a Demand Registration Statement.  As promptly as practicable, but no later
than 15 days after receipt of a Request, the Company shall give written notice
of such requested registration to all other Investor Holders of Registrable

 

7

 

Securities.  Subject to
Section 2.1(b), the Company shall include in a Demand Registration (A) the
Registrable Securities intended to be disposed of by the Investor Holders
initiating the Request and (B) the Registrable Securities intended to be
disposed of by any other Investor Holder which shall have made a written
request (which request shall specify the amount of Registrable Securities to be
registered and the intended method of disposition thereof) to the Company for
inclusion thereof in such registration within 20 days after the receipt of such
written notice from the Company.  The
Company shall, as expeditiously as possible (subject to the terms of
Section 4.1) following a Request, file with the SEC a Demand Registration
Statement providing for the registration under the Securities Act of the
Registrable Securities which the Company has been so requested to register by
all such Investor Holders, to the extent necessary to permit the disposition of
such Registrable Securities to be registered in accordance with the intended
methods of disposition thereof specified in such Request or further requests
(including, without limitation, by means of a shelf registration pursuant to
Rule 415 under the Securities Act (a “Shelf Registration”) if so
requested and if the Company is then eligible to use such a registration).  The Company shall use its best efforts to
have such Demand Registration Statement declared effective by the SEC as soon
as practicable thereafter and to keep such Demand Registration Statement
continuously effective for the period specified in Section 4.1(b).

 

(i)                                     A Request may be
withdrawn prior to the filing of the Demand Registration Statement by the
Majority Investor Holders of the Registration (a “Withdrawn Request”)
and a Demand Registration Statement may be withdrawn prior to the effectiveness
thereof by the Majority Investor Holders of the Registration (a “Withdrawn
Demand Registration”), and such withdrawals shall be treated as a Demand
Registration which shall have been effected pursuant to this Section 2.1,
unless the Investor Holders of Registrable Securities to be included in such
Registration Statement reimburse the Company for its reasonable out-of-pocket
Registration Expenses relating to the preparation and filing of such Demand
Registration Statement (to the extent actually incurred), in which case such
withdrawal shall not be treated as a Demand Registration effected pursuant to
this Section 2.1 (and shall not be counted toward the maximum number of
Demand Registrations described in Section 2.1(c)); provided, however,
that if a Withdrawn Request or Withdrawn Registration Statement is made (A)
because of a material adverse change in the business, financial condition or
prospects of the Company, or (B) because the sole or lead managing Underwriter
advises that the amount of Registrable Securities to be sold in such offering
be reduced pursuant to Section 2.1(b) by more than 15% of the Registrable
Securities to be included in such Registration Statement, then such withdrawal
shall not be treated as a Demand Registration effected pursuant to this
Section 2.1 (and shall not be counted toward the maximum number of Demand
Registrations described in Section 2.1(c)), and the Company shall pay all
Registration Expenses in connection therewith. 
Any Investor Holder requesting inclusion in a Demand Registration may,
at any time prior to the effective date of the Demand Registration Statement
(and for any reason) revoke such request by delivering written notice to the
Company revoking such requested inclusion.

 

(ii)                                  The registration
rights granted pursuant to the provisions of this Section 2.1 shall be in
addition to the registration rights granted pursuant to the other provisions of
Section 2 hereof.

 

(b)                                 Priority
in Demand Registrations.  If a
Demand Registration involves an Underwritten Offering,

 

8

 

and the sole or lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing (with a copy to each
Investor Holder requesting registration) on or before the date five days prior
to the date then scheduled for such offering that, in its opinion, the amount
of Registrable Securities requested to be included in such Demand Registration
exceeds the number which can be sold in such offering within a price range
acceptable to the Majority Investor Holders of the Registration (such writing
to state the basis of such opinion and the approximate number of Registrable
Securities which may be included in such offering), and the Request is not
thereafter withdrawn, the Company shall include in such Demand Registration, to
the extent of the number which the Company is so advised may be included in such
offering, (i) first, the Registrable Securities requested to be included in
such registration by the Investor Holders, allocated pro  rata in
proportion to the number of Registrable Securities requested to be included in
such Demand Registration by each of them and (ii) second, other securities of
the Company to be registered on behalf of any other Person.  In the event the Company shall not, by
virtue of this Section 2.1(b), include in any Demand Registration all of
the Registrable Securities of any Investor Holder requested to be included in
such Demand Registration, such Investor Holder may, upon written notice to the
Company given within five days of the time such Investor Holder first is
notified of such matter, further reduce the amount of Registrable Securities it
desires to have included in such Demand Registration, whereupon only the
Registrable Securities, if any, that it desires to have included will be so
included and the Investor Holders not so reducing shall be entitled to a
corresponding pro rata increase in the amount of Registrable Securities to be
included in such Demand Registration.

 

(c)                                  Limitations
on Registrations.  The rights of the
Investor Holders to request Demand Registrations pursuant to
Section 2.1(a) are subject to the following limitations: (i) in no event
shall the Company be required to effect a Demand Registration until after the
earlier of (A) an Initial Public Offering and (B) the first anniversary of this
Agreement; (ii) in no event shall the Company be required to effect a Demand
Registration unless the aggregate offering price, net of underwriting discounts
and commissions, is at least $10,000,000; provided, however, that
the Company shall be required to effect a Demand Registration regardless of the
aggregate offering price in the event that the Majority Investor Holders are
disposing of all of the Registrable Securities held by them; and (iii) in no
event shall the Company be required to effect, in the aggregate, more than four
Demand Registrations; provided, however, that Investor Holders
shall be deemed not to have expended a Demand Registration right to the extent
the Company (x) does not include in what would otherwise be the final
registration for which the Company is required to pay Registration Expenses the
number of Registrable Securities requested to be registered by the Holders by
reason of Section 2.1(b) or (y) terminates a Shelf Registration pursuant
to Section 2.3 prior to the time that all Registrable Securities covered
by such Shelf Registration have been sold; and provided, further,
that the Registration Expenses in connection with each other Demand
Registration shall be allocated pro rata among all Persons on whose behalf
securities of the Company are included in such registration, on the basis of
the respective amounts of the securities then being registered on their behalf.

 

(d)                                 Underwriting;
Selection of Underwriters. Notwithstanding anything to the contrary
contained in Section 2.1(a), if the Majority Investor Holders so elect,
the offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of a firm commitment

 

9

 

Underwritten Offering and such Majority Investor Holders may require
that all Persons (including other Holders) participating in such registration
sell their Registrable Securities to the Underwriters at the same price and on
the same terms of underwriting applicable to the Investor Holders.  If any Demand Registration involves an
Underwritten Offering, the sole or managing Underwriters and any additional
investment bankers and managers to be used in connection with such registration
shall be selected by the Majority Investor Holders subject to the approval (not
to be unreasonably withheld) of the Company.

 

(e)                                  Effective
Registration Statement; Suspension. 
A Demand Registration Statement shall not be deemed to have become
effective (and the related registration will not be deemed to have been
effected) (i) unless it has been declared effective by the SEC and remains
effective in compliance with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by such Demand
Registration Statement for the time period specified in Section 4.1(b),
(ii) if the offering of any Registrable Securities pursuant to such Demand
Registration Statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or
court, or (iii) if, in the case of an Underwritten Offering, the conditions to
closing specified in an underwriting agreement to which the Company is a party
are not satisfied (other than by the sole reason of any breach or failure by
the Holders of Registrable Securities) and are not otherwise waived.

 

(f)                                    Registration
Statement Form.  Registrations under
this Section 2.1 shall be on such appropriate registration form of the SEC
(i) as shall be selected by the Company subject to the approval of the Majority
Investor Holders, and (ii) which shall be available for the sale of Registrable
Securities in accordance with the intended method or methods of disposition
specified in the requests for registration. 
The Company agrees to include in any such Registration Statement all
information which any selling Investor Holder, upon advice of counsel, shall
reasonably request.

 

(g)                                 Other
Registrations.  During the period
(i) beginning on the date of a Request and (ii) ending on the date that is 90
days after the date that a Demand Registration Statement filed pursuant to such
Request has been declared effective by the SEC or, if the Majority Investor
Holders shall withdraw such Request or such Demand Registration Statement, on
the date of such Withdrawn Request or such Withdrawn Demand Registration, the
Company shall not, without the consent of the Majority Investor Holders, file a
registration statement pertaining to any other securities of the Company.

 

2.2.                              Incidental Registration.

 

(a)                                  Right
to Include Registrable Securities. 
(i) If the Company at any time or from time to time after an Initial
Public Offering proposes to register any of its securities under the Securities
Act (other than in a registration on Form F-4 or F-8 or any successor form to
such forms and other than pursuant to Section 2.1 or 2.3) whether or not
pursuant to registration rights granted to other holders of its securities and
whether or not for sale for its own account, the Company shall deliver prompt
written notice (which notice shall be given at least 45 days prior to such
proposed registration) to all Holders of Registrable Securities of its
intention to undertake such registration, describing in reasonable detail the
proposed registration and distribution (including the anticipated range of the
proposed offering price, the class and number of securities proposed

 

10

 

to be registered and the distribution arrangements) and of such
Holders’ right to participate in such registration under this Section 2.2
as hereinafter provided.  Subject to the
other provisions of this Section 2.2(a) and Section 2.2(b), upon the
written request of any Holder made within 30 days after the receipt of such
written notice (which request shall specify the amount of Registrable
Securities to be registered and the intended method of disposition thereof),
the Company shall effect the registration under the Securities Act of all
Registrable Securities requested by Holders to be so registered (an “Incidental
Registration”), to the extent required to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, by inclusion of such Registrable Securities in
the Registration Statement which covers the securities which the Company
proposes to register and shall cause such Registration Statement to become and
remain effective with respect to such Registrable Securities in accordance with
the registration procedures set forth in Section 4.  If an Incidental Registration involves an
Underwritten Offering, immediately upon notification to the Company from the
Underwriter of the price at which such securities are to be sold, the Company
shall so advise each participating Holder. 
The Holders requesting inclusion in an Incidental Registration may, at
any time prior to the effective date of the Incidental Registration Statement
(and for any reason), revoke such request by delivering written notice to the
Company revoking such requested inclusion.

 

(ii)                                  If at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the Incidental Registration Statement filed in connection
with such registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to each Holder of
Registrable Securities and, thereupon, (A) in the case of a determination not
to register, the Company shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from its
obligation to pay the Registration Expenses incurred in connection therewith),
without prejudice, however, to the rights of Holders to cause such registration
to be effected as a registration under Section 2.1 or 2.3(a) and (B) in
the case of a determination to delay such registration, the Company shall be
permitted to delay the registration of such Registrable Securities for the same
period as the delay in registering such other securities; provided, however,
that if such delay shall extend beyond 120 days from the date the Company
received a request to include Registrable Securities in such Incidental
Registration, then the Company shall again give all Holders the opportunity to
participate therein and shall follow the notification procedures set forth in
the preceding paragraph.  There is no
limitation on the number of such Incidental Registrations pursuant to this
Section 2.2 which the Company is obligated to effect.

 

(iii)                               The registration rights
granted pursuant to the provisions of this Section 2.2 shall be in
addition to the registration rights granted pursuant to the other provisions of
Section 2 hereof.

 

(b)                                 Priority
in Incidental Registration.  If an
Incidental Registration involves an Underwritten Offering (on a firm commitment
basis), and the sole or the lead managing Underwriter, as the case may be, of
such Underwritten Offering shall advise the Company in writing (with a copy to
each Holder requesting registration) on or before the date five days prior to
the date then scheduled for such offering that, in its opinion, the amount of
securities (including Registrable

 

11

 

Securities) requested to be included in such registration exceeds the
amount which can be sold in such offering without materially interfering with
the successful marketing of the securities being offered (such writing to state
the basis of such opinion and the approximate number of such securities which
may be included in such offering without such effect), the Company shall
include in such registration, to the extent of the number which the Company is
so advised may be included in such offering without such effect, (i) in the
case of a registration initiated by the Company, (A) first, the securities that
the Company proposes to register for its own account (but solely to the extent
that the proceeds thereof shall not be used to purchase common shares of the
Company or other securities of the Company), (B) second, the Registrable Securities
requested to be included in such registration by the Holders, allocated pro
rata in proportion to the number of Registrable Securities requested to
be included in such registration by each of them, and (C) third, other
securities of the Company to be registered on behalf of any other Person, and
(ii) in the case of a registration initiated by a Person other than the
Company, (A) first, the securities requested to be included in such
registration by any Persons initiating such registration, (B) second, the
Registrable Securities requested to be included in such registration by the
Holders, (C) third, any other Persons (not including Affiliates of the
Company), allocated pro  rata in proportion to the number of
securities requested to be included in such registration by each of them,  and (D) fourth, the securities that the
Company proposes to register for the account of it and its Affiliates, provided,
however, that in the event the Company will not, by virtue of this
Section 2.2(b), include in any such registration all of the Registrable
Securities of any Holder requested to be included in such registration, such
Holder may, upon written notice to the Company given within three days of the
time such Holder first is notified of such matter, reduce the amount of
Registrable Securities it desires to have included in such registration,
whereupon only the Registrable Securities, if any, it desires to have included
will be so included and the Holders not so reducing shall be entitled to a
corresponding pro rata increase in the amount of Registrable Securities to be
included in such registration.

 

2.3.                              S-3 Registration; Shelf Registration.

 

(a)                                  S-3
Registration.  If at any time (i)
any Investor Holder requests that the Company file a registration statement on
Form S-3 or any successor form thereto for a public offering of all or any
portion of the shares of Registrable Securities held by such Investor
Holder(s), the reasonably anticipated aggregate price to the public of which
would exceed $1,000,000, and (ii) the Company is a registrant entitled to use
Form S-3 or any successor form thereto to register such securities, then the
Company shall, as expeditiously as possible following such Request, use its
best efforts to register under the Securities Act on Form S-3 or any successor
form thereto, for public sale in accordance with the intended methods of
disposition specified in such Request or any subsequent requests (including,
without limitation, by means of a Shelf Registration) the Registrable
Securities specified in such Request and any subsequent requests; provided,
that if such registration is for an Underwritten Offering, the terms of
Sections 2.1(b) and 2.1(d) shall apply (and any reference to “Demand
Registration” therein shall, for purposes of this Section 2.3, instead be
deemed a reference to “S-3 Registration”).  
Whenever the Company is required by this Section 2.3 to use its
best efforts to effect the registration of Registrable Securities, each of the
procedures and requirements of Section 2.1(a) and 2.1(e) (including but
not limited to the requirements that the Company (A) notify all Holders of
Registrable Securities from whom such

 

12

 

Request for registration has not been received and provide them with
the opportunity to participate in the offering and (B) use its best
efforts to have such S-3 Registration Statement declared and remain effective
for the time period specified herein) shall apply to such registration (and any
reference in such Sections 2.1(a) and 2.1(e) to “Demand Registration” shall,
for purposes of this Section 2.3, instead be deemed a reference to “S-3
Registration”).  Notwithstanding
anything to the contrary contained herein, no Request may be made under this
Section 2.3 within 90 days after the effective date of a Registration
Statement filed by the Company covering a firm commitment Underwritten Offering
in which the Holders of Registrable Securities shall have been entitled to join
pursuant to this Agreement in which there shall have been effectively
registered all shares of Registrable Securities as to which registration shall
have been requested.  There is no
limitation on the number of S-3 Registrations that the Company is obligated to
effect.  The registration rights granted
pursuant to the provisions of this Section 2.3(a) shall be in addition to
the registration rights granted pursuant to the other provisions of this
Section 2.

 

(b)                                 Shelf
Registration.  If a request made
pursuant to Section 2.1 or 2.3(a) is for a Shelf Registration, the Company
shall use its best efforts to keep the Shelf Registration continuously
effective through the date on which all of the Registrable Securities covered
by such Shelf Registration may be sold pursuant to Rule 144(k) under the
Securities Act (or any successor provision having similar effect); provided,
however, that prior to the termination of such Shelf Registration, the
Company shall first furnish to each Holder of Registrable Securities
participating in such Shelf Registration (i) an opinion, in form and substance
satisfactory to the Majority Holders of the Registration, of counsel for the
Company satisfactory to the Majority Holders of the Registration stating that
such Registrable Securities are freely saleable pursuant to Rule 144(k) under
the Securities Act (or any successor provision having similar effect) or (ii) a
“No-Action Letter” from the staff of the SEC stating that the SEC would not
recommend enforcement action if the Registrable Securities included in such
Shelf Registration were sold in a public sale other than pursuant to an
effective registration statement.

 

2.4.                              Underwritten Offerings.

 

(a)                                  Demand
Underwritten Offerings.  If
requested by the sole or lead managing Underwriter for any Underwritten
Offering effected pursuant to a Demand Registration or an S-3 Registration, the
Company shall enter into a customary underwriting agreement with the
Underwriters for such offering, such agreement to be reasonably satisfactory in
substance and form to the Company and the Majority Investor Holders
participating in such offering and to contain such representations and
warranties by the Company and such other terms as are generally prevailing in
agreements of that type, including, without limitation, indemnification and
contribution to the effect and to the extent provided in Section 5.

 

(b)                                 Holders
of Registrable Securities to be Parties to Underwriting Agreement.  The Holders of Registrable Securities to be
distributed by Underwriters in an Underwritten Offering contemplated by
Section 2 shall be parties to the underwriting agreement between the
Company and such Underwriters and may, at such Holders’ option, require that
any or all of the representations and warranties by, and the other agreements
on the part of, the Company to and

 

13

 

for the benefit of such Underwriters shall also be made to and for the
benefit of such Holders of Registrable Securities and that any or all of the
conditions precedent to the obligations of such Underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Holders of Registrable Securities; provided, however, that the
Company shall not be required to make any representations or warranties with
respect to written information specifically provided by a selling Holder for
inclusion in the Registration Statement. 
No Holder shall be required to make any representations or warranties
to, or agreements with, the Company or (in the case of an Incidental
Registration) the Underwriters other than representations, warranties or
agreements regarding such Holder, such Holder’s Registrable Securities and such
Holder’s intended method of disposition.

 

(c)                                  Participation
in Underwritten Registration. 
Notwithstanding anything herein to the contrary, no Person may
participate in any underwritten registration hereunder unless such Person (i)
agrees to sell its securities on the same terms and conditions provided in any
underwritten arrangements approved by the Persons entitled hereunder to approve
such arrangement and (ii) accurately completes and executes in a timely manner
all questionnaires, powers of attorney, indemnities, custody agreements,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.

 

2.5.                              Expenses.  The
Company shall pay all Registration Expenses in connection with any Demand
Registration, Incidental Registration, S-3 Registration or Shelf Registration
whether or not such registration shall become effective and whether or not all
Registrable Securities originally requested to be included in such registration
are withdrawn or otherwise ultimately not included in such registration, except
as otherwise provided with respect to a Withdrawn Request and a Withdrawn
Demand Registration in Section 2.1(a).

 

2.6.                              Conversions; Exercises.  Notwithstanding anything to the contrary
herein, in order for any Registrable Securities that are issuable upon the
exercise of conversion rights, options or warrants to be included in any
registration pursuant to Section 2 hereof, the exercise of such conversion
rights, options or warrants must be effected no later than immediately prior to
the closing of any sales under the Registration Statement pursuant to which
such Registrable Securities are to be sold.

 

3.                                       HOLDBACK ARRANGEMENTS.

 

3.1.                              Restrictions on Sale by Holders of
Registrable Securities.  Each Holder
of Registrable Securities agrees, by acquisition of such Registrable
Securities, if timely requested in writing by the sole or lead managing
Underwriter, not to make any short sale of, loan, grant any option for the
purchase of or effect any public sale or distribution, of any of the Company’s
equity securities (or any security convertible into or exchangeable or
exercisable for any of the Company’s equity securities) during the time period
reasonably requested by the sole or lead managing Underwriter not to exceed 90
days or, in the case of an Initial Public Offering, 180 days beginning on the
effective date of the applicable registration statement (except as part of such
underwritten registration or pursuant to registrations on Forms F-4 or F-8 or
any successor form to such forms), unless the sole or lead managing Underwriter
in such Underwritten Offering otherwise agrees; provided, however,
that to the extent the Company or the sole lead managing Underwriter

 

14

 

releases any
other Person from the foregoing or equivalent restrictions in whole or in part
it shall, on the same day, notify the Holders of such release and such parties
shall automatically be released to the same extent.

 

3.2.                              Restrictions on Sale
by the Company and Others. 
The Company agrees that if timely requested in writing by the sole or
lead managing Underwriter in an Underwritten Offering of any Registrable
Securities, not to make any short sale of, loan, grant any option for the
purchase of or effect any public sale or distribution of any of the Company’s
equity securities (or any security convertible into or exchangeable or
exercisable for any of the Company’s equity securities) during the time period
reasonably requested by the sole or lead managing Underwriter not to exceed 90
days or, in the case of an Initial Public Offering, 180 days, beginning on the
effective date of the applicable registration statement (except as part of such
underwritten registration or pursuant to registrations on Forms F-4 or F-8 or
any successor form to such forms), unless the sole or lead managing Underwriter
in such Underwritten Offering otherwise agrees.

 

4.                                       REGISTRATION PROCEDURES.

 

4.1.                              Obligations of the Company.  Whenever the Company is required to effect
the registration of Registrable Securities under the Securities Act pursuant to
Section 2 of this Agreement, the Company shall, as expeditiously as possible:

 

(a)                                  prepare
and file with the SEC (promptly, and in any event within 60 days after receipt
of a request to register Registrable Securities) the requisite Registration
Statement to effect such registration, which Registration Statement shall comply
as to form in all material respects with the requirements of the applicable
form and include all financial statements required by the SEC to be filed
therewith, and the Company shall use its best efforts to cause such
Registration Statement to become effective as soon as practicable thereafter (provided,
that the Company may discontinue any registration of its securities that are
not Registrable Securities, and, under the circumstances specified in
Section 2.2, its securities that are Registrable Securities); provided,
however, that before filing a Registration Statement or Prospectus or
any amendments or supplements thereto, or comparable statements under
securities or blue sky laws of any jurisdiction, the Company shall (i) provide
Holders’ Counsel and any other Inspector (as defined below) with an adequate
and appropriate opportunity to participate in the preparation of such
Registration Statement and each Prospectus included therein (and each amendment
or supplement thereto or comparable statement) to be filed with the SEC, which
documents shall be subject to the review and comment of Holders’ Counsel, and
(ii) not file any such Registration Statement or Prospectus (or amendment
or supplement thereto or comparable statement) with the SEC to which Holder’s
Counsel, any selling Holder or any other Inspector shall have reasonably
objected on the grounds that such filing does not comply in all material
respects with the requirements of the Securities Act or of the rules or
regulations thereunder;

 

(b)                                 prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the Prospectus used in connection therewith as may be necessary
(i) to keep such Registration Statement effective, and (ii) to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement, in each case
until such time as all of such Registrable Securities have been disposed of in

 

15

 

accordance with the intended methods of disposition by the seller(s)
thereof set forth in such Registration Statement; provided, that except
with respect to any Shelf Registration, such period need not extend beyond 12
months after the effective date of the Registration Statement; and provided,
further, that with respect to any Shelf Registration, such period need
not extend beyond the time period provided in Section 2.3, and which
periods, in any event, shall terminate when all Registrable Securities covered
by such Registration Statement have been sold (but not before the expiration of
the 90 day period referred to in Section 4(3) of the Securities Act and
Rule 174 thereunder, if applicable);

 

(c)                                  furnish,
without charge, to each selling Holder of such Registrable Securities and each
Underwriter, if any, of the securities covered by such Registration Statement,
such number of copies of such Registration Statement, each amendment and
supplement thereto (in each case including all exhibits), and the Prospectus
included in such Registration Statement (including each preliminary Prospectus)
in conformity with the requirements of the Securities Act, and other documents,
as such selling Holder and Underwriter may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities
owned by such selling Holder (the Company hereby consenting to the use in
accordance with applicable law of each such Registration Statement (or
amendment or post-effective amendment thereto) and each such Prospectus (or
preliminary prospectus or supplement thereto) by each such selling Holder of
Registrable Securities and the Underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by such Registration Statement
or Prospectus);

 

(d)                                 prior
to any public offering of Registrable Securities, use its best efforts to
register or qualify all Registrable Securities and other securities covered by
such Registration Statement under such other securities or blue sky laws of
such jurisdictions as any selling Holder of Registrable Securities covered by
such Registration Statement or the sole or lead managing Underwriter, if any,
may reasonably request to enable such selling Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
selling Holder and to continue such registration or qualification in effect in
each such jurisdiction for as long as such Registration Statement remains in
effect (including through new filings or amendments or renewals), and do any
and all other acts and things which may be necessary or advisable to enable any
such selling Holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such selling Holder;

 

(e)                                  use
its best efforts to obtain all other approvals, consents, exemptions or
authorizations from such governmental agencies or authorities as may be
necessary to enable the selling Holders of such Registrable Securities to
consummate the disposition of such Registrable Securities;

 

(f)                                    notify
Holders’ Counsel, each Holder of Registrable Securities covered by such
Registration Statement and the sole or lead managing Underwriter, if any:
(i) when the Registration Statement, any pre-effective amendment, the
Prospectus or any prospectus supplement related thereto or post-effective
amendment to the Registration Statement has been filed and, with respect to the
Registration Statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the SEC or any state securities or
blue sky authority for amendments or supplements to the Registration Statement
or the Prospectus related thereto or for

 

16

 

additional information, (iii) of the issuance by the SEC of any stop
order suspending the effectiveness of the Registration Statement or the
initiation or threat of any proceedings for that purpose, (iv) of the receipt
by the Company of any notification with respect to the suspension of the qualification
of any Registrable Securities for sale under the securities or blue sky laws of
any jurisdiction or the initiation of any proceeding for such purpose, (v) of
the existence of any fact of which the Company becomes aware or the happening
of any event which results in (A) the Registration Statement containing an
untrue statement of a material fact or omitting to state a material fact
required to be stated therein or necessary to make any statements therein not
misleading or (B) the Prospectus included in such Registration Statement
containing an untrue statement of a material fact or omitting to state a
material fact required to be stated therein or necessary to make any statements
therein, in the light of the circumstances under which they were made, not
misleading, (vi) if at any time the representations and warranties contained in
any underwriting agreement in respect of such offering cease to be true and
correct in all material respects, and (vii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate or that there exists circumstances not yet disclosed to the
public which make further sales under such Registration Statement inadvisable
pending such disclosure and post-effective amendment; and, if the notification
relates to an event described in any of the clauses (ii) through (vii) of this
Section 4.1(f), the Company shall promptly prepare a supplement or
post-effective amendment to such Registration Statement or related Prospectus or
any document incorporated therein by reference or file any other required
document so that (1) such Registration Statement shall not contain any 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 not misleading and
(2) as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such Prospectus shall not include 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 (and shall furnish to each such
Holder and each Underwriter, if any, a reasonable number of copies of such
Prospectus so supplemented or amended); and if the notification relates to an
event described in clause (iii) of this Section 4.1(f), the Company shall
take all reasonable action required to prevent the entry of such stop order or
to remove it if entered;

 

(g)                                 make
available for inspection by any selling Holder of Registrable Securities, any
sole or lead managing Underwriter participating in any disposition pursuant to
such Registration Statement, Holders’ Counsel and any attorney, accountant or
other agent retained by any such selling Holder or any Underwriter (each, an “Inspector”
and, collectively, the “Inspectors”), all financial and other records,
pertinent corporate documents and properties of the Company and any
subsidiaries thereof as may be in existence at such time (collectively, the “Records”)
as shall be necessary, in the opinion of such Holders’ and such Underwriters’
respective counsel, to enable them to exercise their due diligence
responsibility and to conduct a reasonable investigation within the meaning of
the Securities Act, and cause the Company’s and any subsidiaries’ officers,
directors and employees, and the independent public accountants of the Company,
to supply all information reasonably requested by any such Inspectors in connection
with such Registration Statement;

 

17

 

(h)                                 obtain
an opinion from the Company’s counsel and a “cold comfort” letter from the
Company’s independent public accountants who have certified the Company’s financial
statements included or incorporated by reference in such Registration
Statement, in each case dated the effective date of such Registration Statement
(and if such registration involves an Underwritten Offering, dated the date of
the closing under the underwriting agreement), in customary form and covering
such matters as are customarily covered by such opinions and “cold comfort”
letters delivered to underwriters in underwritten public offerings, which
opinion and letter shall be reasonably satisfactory to the sole or lead
managing Underwriter, if any, and to the Majority Holders of the Registration,
and furnish to each Holder participating in the offering and to each
Underwriter, if any, a copy of such opinion and letter addressed to such Holder
(in the case of the opinion) and Underwriter (in the case of the opinion and
the “cold comfort” letter);

 

(i)                                     provide
a CUSIP number for all Registrable Securities and provide and cause to be
maintained a transfer agent and registrar for all such Registrable Securities
covered by such Registration Statement not later than the effectiveness of such
Registration Statement;

 

(j)                                     otherwise
use its best efforts to comply with all applicable rules and regulations of the
SEC and any other governmental agency or authority having jurisdiction over the
offering, and make available to its security holders, as soon as reasonably
practicable but no later than 90 days after the end of any 12-month period, an
earnings statement (i) commencing at the end of any month in which Registrable
Securities are sold to Underwriters in an Underwritten Offering and (ii)
commencing with the first day of the Company’s calendar month next succeeding
each sale of Registrable Securities after the effective date of a Registration
Statement, which statement shall cover such 12-month periods, in a manner which
satisfies the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder;

 

(k)                                  if
so requested by the Majority Holders of the Registration, use its best efforts
to cause all such Registrable Securities to be (i) duly included for quotation
on the Nasdaq Stock Market’s National Market (the “Nasdaq National Market”)
or listed on the principal national securities exchange on which the Company’s
similar securities are then listed, if applicable, or (ii) if securities of the
Company are not at the time included on the Nasdaq National Market or listed on
any national securities exchange (or if the listing of Registrable Securities
is not permitted under the rules of each national securities exchange on which
the Company’s securities are then listed), on the National Nasdaq Market or a
national securities exchange designated by the Majority Holders of the
Registration;

 

(l)                                     enter
into and perform customary agreements (including, if applicable, an
underwriting agreement in customary form) and provide officers’ certificates
and other customary closing documents;

 

(m)                               cooperate
with each selling Holder of Registrable Securities and each Underwriter
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
NASD and make reasonably available its employees and personnel and otherwise
provide reasonable assistance to the Underwriters (taking into account the
needs of the Company’s businesses and the requirements of the marketing
process) in the marketing of Registrable Securities in any Underwritten
Offering;

 

18

 

(n)                                 cooperate
with the selling Holders of Registrable Securities and the sole or lead
managing Underwriter, if any, to facilitate the timely preparation and delivery
of certificates not bearing any restrictive legends representing the
Registrable Securities to be sold, and cause such Registrable Securities to be
issued in such denominations and registered in such names in accordance with
the underwriting agreement prior to any sale of Registrable Securities to the
Underwriters or, if not an Underwritten Offering, in accordance with the
instructions of the selling Holders of Registrable Securities at least three
business days prior to any sale of Registrable Securities;

 

(o)                                 keep
each selling Holder of Registrable Securities advised in writing as to the
initiation and progress of any registration under Section 2 hereunder;

 

(p)                                 furnish
to each Holder participating in the offering and the sole or lead managing
Underwriter, if any, without charge, at least one manually-signed copy of the
Registration Statement and any post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those deemed to be incorporated by
reference);

 

(q)                                 if
requested by the sole or lead managing Underwriter or any selling Holder of
Registrable Securities, promptly incorporate in a prospectus supplement or
post-effective amendment such information concerning such Holder of Registrable
Securities, the Underwriters or the intended method of distribution as the sole
or lead managing Underwriter or the selling Holder of Registrable Securities
reasonably requests to be included therein and as is appropriate in the
reasonable judgment of the Company, including, without limitation, information
with respect to the number of shares of the Registrable Securities being sold
to the Underwriters, the purchase price being paid therefor by such
Underwriters and with respect to any other terms of the Underwritten Offering
of the Registrable Securities to be sold in such offering; make all required
filings of such Prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment; and supplement or make amendments to any Registration
Statement if requested by the sole or lead managing Underwriter of such
Registrable Securities; and

 

(r)                                    use
its best efforts to take all other steps necessary to expedite or facilitate
the registration and disposition of the Registrable Securities contemplated
hereby.

 

4.2.                              Seller Information.  The Company may require each selling Holder of Registrable
Securities as to which any registration is being effected to furnish to the
Company such information regarding such seller and the disposition of such securities
as the Company may from time to time reasonably request in writing; provided,
however, that such information shall be used only in connection with
such Registration.  If any Registration
Statement or comparable statement under “blue sky” laws refers to any Holder by
name or otherwise as the Holder of any securities of the Company, then such
Holder shall have the right to require (i) the insertion therein of language,
in form and substance satisfactory to such Holder and the Company, to the
effect that the holding by such Holder of such securities is not to be
construed as a recommendation by such Holder of the investment quality of the
Company’s securities covered thereby and that such holding does not imply that
such Holder will assist in meeting any future financial requirements of the
Company and (ii) in the event that such reference to such Holder by name or
otherwise is not, in the

 

19

 

judgment of
the Company, as advised by counsel, required by the Securities Act or any
similar federal statute or any state “blue sky” or securities law then in
force, the deletion of the reference to such Holder.

 

4.3.                              Notice to Discontinue.  Each Holder of Registrable Securities agrees
by acquisition of such Registrable Securities that, (a) upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 4.1(f)(ii) through 4.1(f)(vii), such Holder shall forthwith
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Holder’s receipt of
the copies of the supplemented or amended prospectus contemplated by
Section 4.1(f) and, (b) if so directed by the Company, such Holder shall
deliver to the Company (at the Company’s expense) all copies, other than
permanent file copies, then in such Holder’s possession, of the Prospectus
covering such Registrable Securities which is current at the time of receipt of
such notice.  If the Company shall give any
such notice, the Company shall extend the period during which such Registration
Statement shall be maintained effective pursuant to this Agreement (including,
without limitation, the period referred to in Section 4.1(b)) by the
number of days during the period from and including the date of the giving of
such notice pursuant to Section 4.1(f) to and including the date when the
Holder shall have received the copies of the supplemented or amended prospectus
contemplated by and meeting the requirements of Section 4.1(f).

 

5.                                       INDEMNIFICATION; CONTRIBUTION.

 

5.1.                              Indemnification by the Company.  The Company agrees to indemnify and hold
harmless, to the fullest extent permitted by law, each Holder of Registrable
Securities, its officers, directors, partners, members, shareholders,
employees, Affiliates, advisers, attorneys and agents (collectively, “Agents”)
and each Person who controls such Holder (within the meaning of the Securities
Act) and its Agents with respect to each registration which has been effected
pursuant to this Agreement, against any and all losses, claims, damages or
liabilities, joint or several, actions or proceedings (whether commenced or
threatened) in respect thereof, and expenses (as incurred or suffered and
including, but not limited to, any and all expenses incurred in investigating,
preparing or defending any litigation or proceeding, whether commenced or
threatened, and the reasonable fees, disbursements and other charges of legal
counsel) in respect thereof (collectively, “Claims”), insofar as such
Claims arise out of or are based upon any untrue or alleged untrue statement of
a material fact contained in any Registration Statement or Prospectus
(including any preliminary, final or summary prospectus and any amendment or
supplement thereto) related to any such registration or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation by the Company of
the Securities Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in
connection with any such registration, or any qualification or compliance
incident thereto; provided, however, that the Company will not be
liable in any such case to the extent that any such Claims arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
or omission or alleged omission of a material fact so made in reliance upon and
in conformity with written information furnished to the Company by a Holder
expressly for use therein.  The Company
shall also indemnify any Underwriters of the Registrable Securities, their

 

20

 

Agents and
each Person who controls any such Underwriter (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the Holders of Registrable Securities.  Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of any Person
who may be entitled to indemnification pursuant to this Section 5 and
shall survive the transfer of securities by such Holder or Underwriter.

 

5.2.                              Indemnification by Holders.  Each Holder, if Registrable Securities held
by it are included in the securities as to which a registration is being
effected, agrees to, severally and not jointly, indemnify and hold harmless, to
the fullest extent permitted by law, the Company, its directors and officers,
each other Person who participates as an Underwriter in the offering or sale of
such securities and its Agents and each Person who controls the Company within
the meaning of either Section 15 of the Securities Act of Section 20
of the Exchange Act against any and all Claims, insofar as such Claims arise
out of or are based upon any untrue or alleged untrue statement of a material
fact contained in any Registration Statement or Prospectus (including any
preliminary, final or summary prospectus and any amendment or supplement
thereto) related to such registration, or 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, to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by a Holder expressly for use therein; provided,
however, that the aggregate amount which any such Holder shall be
required to pay pursuant to this Section 5.2 shall in no event be greater
than the amount of the net proceeds received by such Holder upon the sale of
the Registrable Securities pursuant to the Registration Statement giving rise
to such Claims less all amounts previously paid by such Holder with respect to
any such Claims.  Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of any Person who may be entitled to indemnification pursuant to this
Section 5 and shall survive the transfer of securities by such Holder or
Underwriter.

 

5.3.                              Conduct of Indemnification
Proceedings.  Promptly after
receipt by an indemnified party of notice of any Claim or the commencement of
any action or proceeding involving a Claim under this Section 5, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 5, (a) notify the indemnifying
party in writing of the Claim or the commencement of such action or proceeding;
provided, that the failure of any indemnified party to provide such
notice shall not relieve the indemnifying party of its obligations under this
Section 5, except to the extent the indemnifying party is materially and
actually prejudiced thereby and shall not relieve the indemnifying party from
any liability which it may have to any indemnified party otherwise than under
this Section 5, and (b) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party; provided, however, that any indemnified party shall have
the right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party has agreed in writing
to pay such fees and expenses, (ii) the indemnifying party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory to
such indemnified party within 20 days after receiving notice from such

 

21

 

indemnified
party that the indemnified party believes it has failed to do so, or (C) in the
reasonable judgment of any such indemnified party, based upon advice of
counsel, a conflict of interest shall exist between such indemnified party and
the indemnifying party with respect to such claims; it being understood,
however, that the indemnifying party shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to no more than one firm of local counsel) at any time
for all such indemnified parties.  No
indemnifying party shall be liable for any settlement of any such claim or
action effected without its written consent, which consent shall not be
unreasonably withheld.  No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement of any claim or action in respect of
which indemnification or contribution may be sought hereunder, unless such
settlement, (x) includes an unconditional release of the indemnified party from
all liability arising out of such action or claim, (y) does not include a
statement as to or an admission of fault, culpability or a failure to act, by
or on behalf of any indemnified party, and (z) does not provide for any action
on the part of any party other than the payment of money damages which is to be
paid in full by the indemnifying party.

 

5.4.                              Contribution. 
If the indemnification provided for in Section 5.1 or 5.2 from the
indemnifying party for any reason is unavailable to (other than by reason of
exceptions provided therein), or is insufficient to hold harmless an
indemnified party hereunder in respect of any Claim, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Claim in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and the indemnified party, on the other
hand, in connection with the actions which resulted in such Claim, as well as
any other relevant equitable considerations. 
The relative fault of such indemnifying party and indemnified party
shall 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 to state a material fact, has been made by, or
relates to information supplied by, such indemnifying party or indemnified
party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action. 
If, however, the foregoing allocation is not permitted by applicable
law, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative faults but also the relative benefits of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations.

 

5.5.                              Indemnification Payments.  The indemnification and contribution
required by this Section 5 shall be made by periodic payments of the
amount thereof in immediately available funds during the course of any
investigation or defense, as and when bills are received or any expense, loss,
damage or liability is incurred.

 

5.6.                              Other Indemnification.  Indemnification similar to that specified in
the preceding Sections 5.1 and 5.2 (with appropriate modifications) shall be
given by the Company and each selling Holder of Registrable Securities with
respect to any required registration or other qualification of

 

22

 

securities
under any Federal or state law or regulation of any governmental authority,
other than the Securities Act.  The indemnity
agreements contained herein shall be in addition to any other rights to
indemnification or contribution which any indemnified party may have pursuant
to law or contract.

 

6.                                       GENERAL PROVISIONS REGARDING
REGISTRATIONS.

 

6.1.                              Adjustments Affecting Registrable
Securities.  The Shareholders
agree not to cause the Company to effect or permit to occur any combination or
subdivision of shares which would adversely affect the ability of the Holder of
any Registrable Securities to include such Registrable Securities in any
registration contemplated by this Agreement or the marketability of such
Registrable Securities in any such registration.

 

6.2.                              Registration Rights to Others.  The Company represents and warrants that it
is not currently a party to any agreement with respect to its securities
granting registration rights to Persons other than the Holders.  If the Company shall at any time hereafter
provide to any holder of any securities of the Company rights with respect to
the registration of such securities under the Securities Act (not including any
such rights which have been previously granted), (i) such rights shall not be
in conflict with or adversely affect any of the rights provided in this
Agreement to the Holders and (ii) if such rights are provided on terms or
conditions more favorable to such holder than the terms and conditions provided
in this Agreement, the Company shall provide (by way of amendment to this
Agreement or otherwise) such more favorable terms or conditions to the Holders.

 

6.3.                              Availability of Information; Rule
144; Rule 144A; Other Exemptions. 
So long as the Company shall not have filed a registration statement
pursuant to Section 12 of the Exchange Act or a registration statement
pursuant to the requirements of the Securities Act, the Company shall, at any
time and from time to time, upon the request of any Holder of Registrable
Securities and upon the request of any Person designated by such Holder as a
prospective purchaser of any Registrable Securities, furnish in writing to such
Holder or such prospective purchaser, as the case may be, a statement as of a
date not earlier than 12 months prior to the date of such request of the nature
of the business of the Company and the products and services it offers and
copies of the Company’s most recent balance sheet and profit and loss and
retained earnings statements, together with similar financial statements for
such part of the two preceding fiscal years as the Company shall have been in
operation, all such financial statements to be audited to the extent audited
statements are reasonable available, provided that, in any event the
most recent financial statements so furnished shall include a balance sheet as
of a date less than 16 months prior to the date of such request, statements of
profit and loss and retained earnings for the 12 months preceding the date of
such balance sheet, and, if such balance sheet is not as of a date less than 6
months prior to the date of such request, additional statements of profit and
loss and retained earnings for the period from the date of such balance sheet
to a date less than 6 months prior to the date of such request.  If the Company shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, the Company covenants that it shall timely file any reports
required to be filed by it under the Securities Act or the Exchange Act
(including, but not limited

 

23

 

to, the
reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) of Rule 144 under the Securities Act), and that it shall take
such further action as any Holder of Registrable Securities 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 limitation of the exemptions provided by (i) Rule 144 and Rule 144A
under the Securities Act, as such rules may be amended from time to time, or
(ii) any other rule or regulation now existing or hereafter adopted by the
SEC.  Upon the request of any Holder of
Registrable Securities, the Company shall deliver to such Holder a written
statement as to whether it has complied with such requirements.

 

7.                                       RESTRICTIONS ON TRANSFERS APPLICABLE
TO SECURITYHOLDERS.

 

7.1.                              General Restriction.  No Other Shareholder nor any of its
Permitted Transferees may, directly or indirectly, sell, assign, transfer, pledge,
bequeath, hypothecate, mortgage, grant any proxy with respect to, or in any
other way encumber or otherwise dispose of (collectively, a “Transfer”)
any Shares except pursuant to the provisions of this Section 7 and
Section 9 hereof.

 

7.2.                              Rights of First Refusal.  (a) 
Subject to Section 7.3 hereof, if at any time an Other Shareholder
or a Permitted Transferee of an Other Shareholder wishes to Transfer all or any
portion of its Common Shares (“Shares”) owned by it (the “Seller”)
for cash pursuant to the terms of a bona fide offer received from a third
party, such Seller shall submit to each Investor Holder such offer in writing
to sell such Shares (the “Offered Shares”) on terms and conditions,
including price, on which such Seller proposes to sell such Shares to such
third party (the “Purchase Offer”). 
The Purchase Offer shall disclose (i) the identity of the proposed
purchaser or transferee, (ii) the Offered Shares proposed to be sold or
transferred, (iii) the total number of Shares owned by the Seller, (iv) the
agreed terms, including price of the sale or transfer, and any other material
facts relating to the sale or transfer. 
The Purchase Offer shall further state that each Investor Holder may
acquire, in accordance with the provisions of this Section 7.2, the
Offered Shares for the same price and upon the same terms and conditions set
forth therein.  The Purchase Offer shall
also provide that, in order for the Purchase Offer to be effective, the Investor
Holders must purchase an aggregate of all, but not less than all, of the
Offered Shares.  Each Investor Holder shall
have the right to purchase that number of the Offered Shares as shall be equal
to (i) the aggregate number of Offered Shares multiplied by (ii) its
Proportionate Percentage.  The amount of
shares each Investor Holder is entitled to purchase under this Section 7.2
shall be referred to as its “Pro Rata Share”.  Within thirty (30) days after receipt of the Purchase
Offer, each Investor Holder shall give notice to such Seller of its intent to
purchase all or any portion of its Proportionate Percentage, which communication shall be delivered to
such Seller pursuant to Section 10.2 below and shall, when taken in
conjunction with the Purchase Offer be deemed to constitute a valid, legally
binding and enforceable agreement between the Seller and such Investor Holder
for the sale and purchase of the Shares covered thereby.  In the event that any Investor Holder does
not elect to purchase its Pro Rata Share (or any portion thereof) during such
thirty (30) day period, then the Seller shall give prompt written notice to
each Investor Holder who has elected to purchase its Pro Rata Share, and such
Investor Holder who so elect shall have the right to purchase, on a pro  rata
basis with any Investor Holder who so elect, such Pro Rata Share (or any
portion thereof) not purchased by any Investor Holder by giving notice to the
Seller

 

24

 

within ten (10) days after
receipt of such notice from the Seller. 
In the event that an Investor Holder shall elect to purchase all or part
of the Offered Shares covered by the Purchase Offer, such Investor Holder shall
individually communicate in writing such election to purchase to the Seller.

 

(b)                                 Transfers
of Shares under the terms of Section 7.2 shall be made at the offices of
the Company on a mutually satisfactory Business Day within 90 days after the
expiration of the last applicable period described in Section 7.2(a).  Delivery of certificates or other
instruments evidencing such Shares together with a duly endorsed instrument of
transfer for the Transfer shall be made on such date against payment of the
purchase price therefor.

 

(c)                                  In
the event that the Investor Holders,
taken together, do not purchase the Offered Shares offered by Seller pursuant
to Section 7.2, the Offered Shares may be sold by such a Seller to the
third party purchaser at any time within the ninety (90) days after such
applicable fifteen (15) or five (5) day period referenced in Section 7.2(a)
has expired, but subject to the
provisions of Section 7.3
below.  Any such sale shall be for cash
at not less than the price and upon other terms and conditions, if any, not
more favorable to the third party purchaser than those specified in the
Purchase Offer.  Any Shares not sold
within such ninety (90) day period shall continue to be subject to the
requirements of Section 7.2
hereof.  Subject to the provisions of
Section 10.3 hereof, any transferee of Shares under Section 7.2 shall be entitled to the benefits
conferred by and subject to the restrictions imposed by this Agreement.

 

(d)                                 The
election by an Investor Holder not
to exercise its rights under this Section 7.2 in any one instance shall
not affect the rights of such Investor Holder as to any subsequent proposed Transfer.  Any Transfer by any Other Shareholder of any
of its Common Shares without first giving the Investor Holders the rights
described in this Section 7.2 shall be void and of no force or effect.

 

7.3.                              Right of Co-Sale.  (a)  If any Investor Holder
wishes to Transfer any Shares owned by such Investor Holder to any other Person
(the “Purchaser”) in one or more transactions (other than a Permitted
Transfer) and immediately after giving effect to such transaction(s) the
Investor Stockholders in the aggregate will own less than 51% of the Company’s
outstanding Common Shares, pursuant to the terms of a bona fide offer received
from a third party, such transferring Investor Holder shall submit to the Other
Stockholders the terms of such offer in writing to sell such Shares (the “Co-Sale
Shares”) on terms and conditions, including price, on which such Seller
proposes to sell such Shares to such third party (the “Co-Sale Offer”).  The Co-Sale Offer shall disclose (i) the
identity of the proposed purchaser or transferee, (ii) the Co-Sale Shares
proposed to be sold or transferred, (iii) the total number of Shares owned by
the Seller, (iv) the agreed terms, including price of the sale or transfer, and
any other material facts relating to the sale or transfer.  To the extent that the Co-Sale Offer
includes the sale of preferred shares along with Common Stock, the applicable
price for the Common Shares to be purchased pursuant to such Co-Sale Offer
shall equal the total price minus the face value of the preferred shares to be
sold and minus the total amount of any accrued but unpaid dividends on such
preferred shares.  Each Other Stockholder shall have the right
to require, as a condition to such sale or disposition, that the Purchaser
purchase from such Other Stockholder at the same price and on the same terms
and conditions as

 

25

 

involved in
such sale or disposition
by such transferring Investor Stockholder, the number of Shares owned by such
Other Stockholder equal to the aggregate number of Shares to be purchased by
the Purchaser multiplied by its Proportionate Percentage.  Within ten (10) days after receipt of
the Co-Sale Offer, any such Other Stockholder shall give notice to such
Investor Stockholder of its intent to sell all or any portion of its Pro Rata
Share, which communication shall be
delivered to such transferring Investor Holder pursuant to Section 10.2
below.

 

(b)                                 The
Investor Stockholder intending to Transfer Shares and each participating Other
Stockholder shall sell to the Purchaser all of the Shares proposed to be sold
by them at a price and upon other terms and conditions, if any, not more
favorable to the Purchaser than those originally offered in the Co-Sale Offer.  If there are no participating Other
Stockholders, the Investor Stockholder shall sell to the Purchaser all of the
Shares proposed to be sold by it at a price and upon other terms and
conditions, if any, not more favorable to the Investor Holder than those
originally offered in the Co-Sale Offer. The
Investor Holder and the Other Stockholders shall use their best efforts to
obtain the agreement of the Purchaser to the participation of the participating
Other Stockholders in the
contemplated sale, and the Investor Holder shall not sell any Shares to the
Purchaser if the Purchaser declines to permit the participating Other
Stockholders to participate pursuant to
the terms of this Section 7.3.  The
provisions of this Section 7.3 shall not apply to transfers pursuant to
Section 7.5 hereof.  Subject to the
provisions of Section 10.3 hereof, any transferee of Shares under this
Section 7.3 shall be entitled to the benefits conferred by and subject to
the restrictions imposed by this Agreement.

 

(c)                                  Transfers
of Shares under the terms of this Section 7.3 shall be made at the offices
of the Company on a mutually satisfactory Business Day within 90 days after the
expiration of the last applicable period described in Section 1.3(a).  Delivery of certificates or other
instruments evidencing such Shares together with a duly endorsed instrument of
transfer for the Transfer shall be made on such date against payment of the
purchase price therefor.

 

(d)                                 The
election by an Other Stockholder not to exercise its rights under this
Section 7.3 in any one instance shall not affect the rights of that Other
Stockholder as to any subsequent proposed Transfer.

 

7.4.                              Drag-Along Right.  In the event one or more Investor Holder (the “Transferor”)
proposes to Transfer at least a majority of the outstanding Common Shares to an
unrelated third party (a “Transferee”), such Transferor may require the Other
Stockholders and any other Investor Holders to participate in such Transfer and
sell or transfer all the Common Shares held by such Stockholders in the manner
and on the same terms and conditions as such Transferor (the “Drag-Along
Right”).

 

(a)                                  No
later than fifteen (15) days prior to the consummation of the Transfer, the
Transferor shall delivery a written notice to the Other Shareholders (and any
other Investor Holder) specifying the (i) names and address of the proposed
parties to such Transfer (ii) proposed closing date for such sale, (iii)
proposed amount and form of consideration to be paid for the Common Shares and
(iv) other terms and conditions of such Transfer.  In the event such written notice is given, any warrants and
options held by each Shareholder which are then presently exercisable (or
become exercisable as a result of the transaction that is the subject of the
notice), shall be exercised by the

 

26

 

Shareholders for Common Shares, which Common Shares shall also be
subject to the Drag-Along Right, and such options and warrants to the extent
not then exercisable (or to the extent such options and warrants would not
become exercisable as a result of such transaction) shall automatically be
cancelled.  The closing of the Transfer
shall be held at such time and place as the Transferor or the Transferee shall
specify.  Prior to or at such closing,
each Shareholder shall deliver stock certificates representing the Shares,
together with a duly endorsed instrument of transfer for the Transfer, and each
such Shareholder shall represent and warrant that (i) such Shareholder is the
record and beneficial owner of such Shares and (ii) such Shares are being
transferred free and clear of any liens, charges, claims or encumbrances (other
than restrictions imposed pursuant to applicable Federal and state securities
laws and this Agreement).  Each
Shareholder agrees to take all actions necessary and desirable in connection
with the consummation of the Transfer, including without limitation, the waiver
of all appraisal rights available to any such Shareholder under applicable law,
and shall make such additional representations and warranties as shall be
customary in transactions of a similar nature.

 

7.5.                              Permitted Transfers.  Any Shareholder may, subject to
Section 9, transfer Shares to any Affiliate of such Shareholder or, if
such Shareholder is an individual, to such Shareholders’ Family Group (each
such Person, a “Permitted Transferee”).  “Family Group” means an
individual Shareholder’s spouse and descendants (whether natural or adopted)
and any trust or family partnership or limited liability company maintained
solely for the benefit of such individual Shareholder and/or such individual
Shareholder’s spouse or descendants.  Any
transfer pursuant to this Section 7.5 may be effected without complying
with the provisions of Section 7.2 or 7.3.  Upon the consummation of, and as a condition to, any transfer
pursuant to this Section 7.5, the transferee must execute a Shareholder
Joinder in the form of Exhibit A hereto and thereby become a party to,
and be bound by, the terms and provisions of this Agreement.  References in this Agreement to Shares held
or owned by any Shareholder shall be deemed to include Shares held or owned by
any such Permitted Transferee(s).

 

7.6.                              Bermuda Monetary Authority.   Each Shareholder acknowledges that no
Transfer may occur without the prior written permission of the Bermuda Monetary
Authority under the Exchange Control Act of Bermuda.

 

8.                                       COVENANTS AND AGREEMENTS.

 

8.1.                              Information Rights of Investor
Holders.  For as long as any
Investor Holder owns Shares representing at least 5% of the Shares outstanding on
the date of this Agreement, the Company shall deliver to such Investor Holder:

 

(a)                                  within
30 days after the end of each month and 60 days after the end of each quarter
(except the last) in each fiscal year of Company, a consolidated and
consolidating balance sheet of the Company as of the end of such quarter, and
consolidated and consolidating statements of income and cash flow of the
Company for such quarter and the portion of the fiscal year ending with such
quarter, setting forth in each case in comparative form the figures for the
corresponding periods a year earlier;

 

(b)                                 within
90 days after the end of each fiscal year of the Company, a consolidated and
consolidating

 

27

 

audited balance sheet of the Company as of the end of such fiscal year,
and a consolidated audited statement of income, changes in Shareholders’ equity
and changes in financial position of the Company for such fiscal year, in each
case prepared in accordance with generally accepted accounting principles,
consistently applied.  Such audited
financial statements shall be audited by an independent accounting firm of
national reputation;

 

(c)                                  such
other information about the Company as any Investor Holder may reasonably
request.

 

8.2.                              Information Rights of Other
Shareholders.  During any period
when the Company is not subject to the reporting requirements of
Section 13 or Section 15(d) under the Exchange Act, the Company shall
deliver to each Other Shareholder:

 

(a)                                  within
60 days after the end of each quarter (except the last fiscal quarter of the
year) in each fiscal year of Company, a consolidated and consolidating balance
sheet of the Company as of the end of such quarter, and consolidated and
consolidating statements of income and cash flow of the Company for such
quarter and the portion of the fiscal year ending with such quarter, setting
forth in each case in comparative form the figures for the corresponding
periods a year earlier; and

 

(b)                                 within
90 days after the end of each fiscal year of the Company, a consolidated and
consolidating audited balance sheet of the Company as of the end of such fiscal
year, and a consolidated audited statement of income, changes in shareholders’
equity and changes in financial position of the Company for such fiscal year,
in each case prepared in accordance with generally accepted accounting
principles, consistently applied.  Such
audited financial statements shall be audited by an independent accounting firm
of national reputation.

 

9.                                       OTHER TRANSFER PROVISIONS.

 

9.1.                              Other Transfer Restrictions. Anything
contained herein to the contrary notwithstanding, any Person not already a
Shareholder who acquires Shares from a Shareholder pursuant to Section 7
shall execute a Shareholder Joinder and from that point forward shall be deemed
to be a Shareholder for all purposes of this Agreement.

 

9.2.                              Legends.  Each
certificate representing Shares held by a Shareholder shall be stamped or
otherwise imprinted with a legend in substantially the following form:

 

“THE TRANSFER OF THESE SECURITIES IS SUBJECT
TO THE CONDITIONS SPECIFIED IN THE SHAREHOLDERS’ AGREEMENT DATED AS OF
OCTOBER     , 2003, AS IT MAY BE AMENDED FROM TIME TO
TIME, BY AND AMONG TELEGLOBE INTERNATIONAL HOLDINGS LTD (THE “COMPANY”)
AND THE SHAREHOLDERS PARTY THERETO AND NO TRANSFER OF THESE SECURITIES SHALL BE
VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED.

 

28

 

COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY.”

 

9.3.                              Procedures For Transferring.  Upon request by the Company, any Shareholder
seeking to Transfer Shares shall deliver a written opinion, addressed to the
Company, of counsel for such Shareholder, stating that in the opinion of such
counsel (which opinion and counsel shall be reasonably satisfactory to the
Company), the proposed Transfer does not involve a transaction requiring
registration or qualification of such Shares under the Securities Act; provided,
however, that no such opinion shall be required in the case of a
Transfer by any Investor Holder to its Affiliates or, if any Shareholder is a
partnership or limited liability company, a Transfer by any Shareholder or its
Affiliates to its partners or members. 
Subject to Section 7, such Shareholder shall be entitled to
Transfer such Shares in accordance with the terms of the Purchase Offer
delivered to the Company and the Shareholders, if the Company does request such
opinion within five days after delivery of such notice, or, if it requests such
opinion, after it has received such opinion. 
Each certificate or other instrument evidencing the securities issued
upon the Transfer of any Shares (and each certificate or other instrument
evidencing any untransferred balance of such Shares) shall bear the legends set
forth in Section 9.2.

 

9.4.                              Failure to Deliver Shares.  If a Shareholder becomes obligated to sell
any Shares to an Other Shareholder or a Transferee pursuant to Sections 7.2 or
7.4 hereof (a “Purchasing Party”) under this Agreement and fails to
deliver an instrument of transfer for the Transfer of such Shares in accordance
with the terms of this Agreement, such Purchasing Party may, at its option, in
addition to all other remedies it may have,
send to such Shareholder the purchase price for such Shares as specified in
connection with such sale.  Thereupon,
the Company upon written notice to such Shareholder, (a) shall remove the name
of such Shareholder from its Register of Member as the holder of such shares
and thereupon all of said Shareholder’s rights in and to such Shares shall
terminate and shall cancel on its books the certificate or certificates
representing the Shares to be sold and (b) shall register, in lieu thereof, the
name of such Purchasing Party, and shall issue, in lieu thereof, a new
certificate or certificates representing such Shares.

 

10.                                 GENERAL.

 

10.1.                        Amendments and Waivers.  The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified, supplemented or
terminated, and waivers or consents to departures from the provisions hereof
may not be given, without the written consent of each of the Company, the
Investors and the Majority Other Shareholders; provided, however,
that nothing herein shall prohibit any amendment, modification, supplement,
termination, waiver or consent to departure the effect of which is limited only
to those Shareholders who have agreed to such amendment, modification,
supplement, termination, waiver or consent to departure; provided  further,
however, that this Agreement shall not be amended in the event that such
amendment will disproportionately adversely affect any Shareholder without the
consent of such Shareholder.

 

29

 

10.2.                        Notices.  All
notices, requests, consents and other communications hereunder to any party
shall be deemed to be sufficient if contained in a written instrument and shall
be deemed to have been duly given when delivered in person, by telecopy, by
nationally-recognized overnight courier, or by first class registered or
certified mail, postage prepaid, addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing by
the addressee as follows:

 

if to any Shareholder, to the address and telecopier numbers set forth
on Exhibit B hereto:

 

and

 

if to the Company, to the address set forth below:

 

Teleglobe International Holdings Ltd

Clarendon House

2 Church Street

Hamilton, HM11

Bermuda

Attention:  Chief Executive Officer

Fax Number:  (514) 868-7234

 

All such notices, requests, consents and other communications shall be
deemed to have been delivered (a) in the case of personal delivery or delivery
by telecopy, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next Business Day and (c) in
the case of mailing, on the third Business Day following such mailing if sent
by certified mail, return receipt requested.

 

10.3.                        Successors and Assigns.  Without limiting the restrictions on
Transfer contained in this Agreement, the Company and the Shareholders shall
cause any Person, other than a current Shareholder, who acquires Shares from a
Shareholder to become a Shareholder hereunder by executing a Shareholder
Joinder.  This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, successors and assigns.

 

10.4.                        Counterparts. 
This Agreement may be executed in two or more counterparts, each of which,
when so executed and delivered, shall be deemed to be an original, but all of
which counterparts, taken together, shall constitute one and the same
instrument.

 

10.5.                        Descriptive Headings, Etc.   The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. 
Unless the context of this Agreement otherwise requires: (1) words of
any gender shall be deemed to include each other gender; (2) words using the
singular or plural number shall also include the plural or singular number,
respectively; (3) the words “hereof”, “herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
Section and paragraph references are to the Sections and paragraphs of
this Agreement unless otherwise specified; (4) the word “including” and words
of similar import when used in this Agreement shall mean “including, without

 

30

 

limitation,”
unless otherwise specified; (5) “or” is not exclusive; and (6) provisions apply
to successive events and transactions.

 

10.6.                        Severability. 
In the event that any one or more of the provisions, paragraphs, words,
clauses, phrases or sentences contained herein, or the application thereof in
any circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision, paragraph,
word, clause, phrase or sentence in every other respect and of the other
remaining provisions, paragraphs, words, clauses, phrases or sentences hereof
shall not be in any way impaired, it being intended that all rights, powers and
privileges of the parties hereto shall be enforceable to the fullest extent
permitted by law.

 

10.7.                        GOVERNING LAW.  THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK, OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN
THE STATE OF NEW YORK TO BE APPLIED.  IN
FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW YORK WILL
CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER
SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE
LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

 

10.8.                        Jurisdiction and Venue.

 

(a)                                  Each
of the parties hereto hereby irrevocably and unconditionally submits, for
itself or himself and its or his property, to the exclusive jurisdiction of any
New York state court sitting in New York county or federal court of the United
States of America sitting in New York county, and any appellate court presiding
thereover, in any action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereunder or thereunder or for
recognition or enforcement of any judgment relating thereto, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any
such New York state court or, to the extent permitted by law, in any such
federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.

 

(b)                                 Each
of the parties hereto irrevocably and unconditionally waives, to the fullest
extent it or he may legally and effectively do so, any objection that it or he
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereunder or thereunder in any 
State or federal court sitting in New York county.  Each of the parties hereto irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

(c)                                  The
parties hereto further agree that the notice of any process required by any
such court in the

 

31

 

manner set forth in Section 10.2 shall constitute valid and lawful
service of process against them, without the necessity for service by any other
means provided by law.

 

10.9.                        Remedies; Specific Performance.  The parties hereto acknowledge that money
damages would not be an adequate remedy at law if any party fails to perform in
any material respect any of its obligations hereunder, and accordingly agree
that each party, in addition to any other remedy to which it may be entitled at
law or in equity, shall be entitled to seek to compel specific performance of
the obligations of any other party under this Agreement, without the posting of
any bond, in accordance with the terms and conditions of this Agreement in any
court specified in Section 10.8 hereof, and if any action should be
brought in equity to enforce any of the provisions of this Agreement, none of
the parties hereto shall raise the defense that there is an adequate remedy at
law.  Except as otherwise provided by
law, a delay or omission by a party hereto in exercising any right or remedy
accruing upon any such breach shall not impair the right or remedy or
constitute a waiver of or acquiescence in any such breach.  No remedy shall be exclusive of any other
remedy.  All available remedies shall be
cumulative.

 

10.10.                  Entire Agreement.  This Agreement contains the entire agreement and understanding of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements and understandings between the Company and the
other parties to this Agreement with respect to such subject matter.

 

10.11.                  Termination. 
(a)  Except as provided in
Section 10.11(b), this Agreement, and the respective rights and
obligations of the Shareholders and the Company, shall terminate upon the earlier
to occur of the following:  (i) the sale
of all or substantially all of the assets or business of the Company by merger,
sale of assets or otherwise unless the holders of capital stock of the Company
immediately prior thereto shall, immediately thereafter, hold as a group the
right to cast at least a majority of votes of all holders of voting securities
of the resulting or surviving corporation or entity on any matter on which any
such holder of voting securities shall be entitled to vote or (ii) with respect
to each Shareholder, at such time such Shareholder no longer holds, or is
deemed to hold, any Shares.

 

(b)                                 Section 7.2,
Section 7.3 and Section 7.4 shall terminate upon the consummation of
an Initial Public Offering.

 

10.12.                  Further Assurances.  Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

10.13.                  Construction. 
The Company, the Investors and the Other Shareholders acknowledge that
each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review this Agreement with its legal counsel
and that this Agreement shall be construed as if jointly drafted by the
Company, the Investors and the Other Shareholders.

 

10.14.                  No Inconsistent Agreement.  The Company will not hereafter enter into
any agreement which is 

 

32

 

inconsistent
with the rights granted to the Shareholders in this Agreement.

 

10.15.                  Costs and Attorneys’ Fees.  In the event that any action, suit or other
proceeding is instituted concerning or arising out of this Agreement, the
Company and the Holders agree that the prevailing party shall recover from the
non-prevailing party all of such prevailing party’s costs and reasonable attorneys’
fees incurred in each and every such action, suit or other proceeding,
including any and all appeals or petitions therefrom.

 

[Remainder of this page intentionally left
blank.  Signature page follows.]

 

33

 

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

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  TELEGLOBE
  INTERNATIONAL HOLDINGS LTD

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lenard
  Tessler

  
	
   

  	
   

  	
  Name: Lenard
  Tessler

  
	
   

  	
   

  	
  Title: Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SHAREHOLDERS:

  
	
   

  	
   

  
	
   

  	
  TLGB ACQUISITION
  LLC

  
	
   

  	
   

  
	
   

  	
  By: TELEGLOBE
  HOLDINGS LLC,

  
	
   

  	
  its Managing Member

  
	
   

  	
   

  
	
   

  	
  By: CERBERUS
  PARTNERS, L.P.,

  
	
   

  	
  its Managing
  Member

  
	
   

  	
   

  
	
   

  	
  By: Cerberus
  Associates, L.L.C.,

  
	
   

  	
  its General
  Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Seth Plattus

  
	
   

  	
  Name: Seth P.
  Plattus

  
	
   

  	
  Title:
  Managing Director

  
	
   

  	
   

  
	
   

  	
  GEMINI TRUST

  
	
   

  	
   

  
	
   

  	
  By: ROYAL BANK OF CANADA

  
	
   

  	
  TRUST COMPANY (BAHAMAS) LIMITED,

  as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barbara Carroll

  
	
   

  	
   

  	
  Name: Barbara Carroll

  
	
   

  	
   

  	
  Title: Senior Trust Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daphne Moss

  
	
   

  	
   

  	
  Name: Daphne Moss

  
	
   

  	
   

  	
  Title: Senior Trust Officer

  
						

 

34

 

	
   

  	
  THE WILLETT TRUST

  
	
   

  	
   

  
	
   

  	
  By: Richard David Willett, Sr., as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Richard Willet

  
	
   

  	
  Richard David Willett, Sr.

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/Serge Fortin

  
	
   

  	
   

  	
  Serge Fortin

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Daniel Bergeron

  
	
   

  	
   

  	
  Daniel Bergeron

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Henri Alexandre

  
	
   

  	
   

  	
  Henri Alexandre

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Michel Guyot

  
	
   

  	
   

  	
  Michel Guyot

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Jean-Pierre Gratton

  
	
   

  	
   

  	
  Jean-Pierre Gratton

  	
   

  
									

 

35

 

SCHEDULE 1

 

INVESTOR HOLDERS

 

TLGB Acquisition LLC

 

36

 

SCHEDULE 2

 

OTHER SHAREHOLDERS

 

Gemini Trust

 

The Willett Trust

 

Serge Fortin

 

Daniel Bergeron

 

Henri Alexandre

 

Michel Guyot

 

Jean-Pierre Gratton

 

37

 

EXHIBIT
A

 

SHAREHOLDER
JOINDER

 

By execution
of this Shareholder Joinder, the undersigned agrees to become a party to that
certain Shareholders’ Agreement dated as of
             ,
2002, as may be amended, among TELEGLOBE INTERNATIONAL HOLDINGS LTD and the
parties named therein.  The undersigned
shall have all the rights, and shall observe all the obligations, applicable to
a Shareholder.

 

 

	
  Name:

  	
   

  	
   

  	
  Number of Securities

  
	
   

  	
  Acquired:

  	
   

  	
   

  
	
  Address for

  	
  with copies

  
	
  Notices:

  	
  to:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
													

 

38

 

EXHIBIT B

 

NOTICE FOR SHAREHOLDERS

 

	
  If to an Investor:

  	
  With a copy to:

  
	
   

  	
   

  
	
  c/o Cerberus Capital Management, L.P.

  	
  Schulte Roth & Zabel LLP

  
	
  450 Park Avenue

  	
  919 Third Avenue

  
	
  New York, New York

  	
  New York, New York 10022

  
	
  Attn: Lenard Tessler

  	
  Attn: Stuart D. Freedman

  
	
  Facsimile: (212) 758-5305

  	
  Facsimile: (212) 593-5955

  
	
   

  	
   

  
	
  If to any Other Shareholder:

  	
   

  
	
   

  	
   

  
	
  c/o Teleglobe International Holdings Ltd.

  	
   

  
	
  1000 rue de la Gauchetiere Ouest

  	
   

  
	
  Montreal (Quebec) H3B 4X5 Canada

  	
   

  
	
  Facsimile: (514) 868-7234

  	
   

  

 

39

 

TABLE OF CONTENTS

 

	
  1.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  REGISTRATION UNDER THE SECURITIES ACT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1.

  	
  Demand Registration

  	
   

  
	
   

  	
  2.2.

  	
  Incidental Registration

  	
   

  
	
   

  	
  2.3.

  	
  S-3 Registration; Shelf Registration

  	
   

  
	
   

  	
  2.4.

  	
  Underwritten Offerings

  	
   

  
	
   

  	
  2.5.

  	
  Expenses

  	
   

  
	
   

  	
  2.6.

  	
  Conversions; Exercises

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  HOLDBACK ARRANGEMENTS.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  Restrictions on Sale by Holders of Registrable Securities

  	
   

  
	
   

  	
  3.2.

  	
  Restrictions on Sale by the Company and Others

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REGISTRATION PROCEDURES.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
  Obligations of the Company

  	
   

  
	
   

  	
  4.2.

  	
  Seller Information

  	
   

  
	
   

  	
  4.3.

  	
  Notice to Discontinue

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  INDEMNIFICATION; CONTRIBUTION.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Indemnification by the Company

  	
   

  
	
   

  	
  5.2.

  	
  Indemnification by Holders

  	
   

  
	
   

  	
  5.3.

  	
  Conduct of Indemnification Proceedings

  	
   

  
	
   

  	
  5.4.

  	
  Contribution

  	
   

  
	
   

  	
  5.5.

  	
  Indemnification Payments

  	
   

  
	
   

  	
  5.6.

  	
  Other Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  GENERAL PROVISIONS REGARDING REGISTRATIONS.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
  Adjustments Affecting Registrable
  Securities

  	
   

  
	
   

  	
  6.2.

  	
  Registration Rights to Others

  	
   

  
	
   

  	
  6.3.

  	
  Availability of Information; Rule 144; Rule 144A; Other Exemptions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  RESTRICTIONS ON TRANSFERS APPLICABLE TO SECURITYHOLDERS.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  General Restriction

  	
   

  
	
   

  	
  7.2.

  	
  Rights of First Refusal

  	
   

  
	
   

  	
  7.3.

  	
  Right of Co-Sale

  	
   

  
	
   

  	
  7.4.

  	
  Drag-Along Right

  	
   

  
	
   

  	
  7.5.

  	
  Permitted Transfers

  	
   

  
	
   

  	
  7.6.

  	
  Bermuda Monetary Authority

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  COVENANTS AND AGREEMENTS.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1.

  	
  Information Rights of Investor Holders

  	
   

  
	
   

  	
  8.2.

  	
  Information Rights of Other Shareholders

  	
   

  

 

40

 

	
  9.

  	
  OTHER TRANSFER PROVISIONS.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1.

  	
  Other Transfer Restrictions

  	
   

  
	
   

  	
  9.2.

  	
  Legends

  	
   

  
	
   

  	
  9.3.

  	
  Procedures For Transferring

  	
   

  
	
   

  	
  9.4.

  	
  Failure to Deliver Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  GENERAL.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1.

  	
  Amendments and Waivers

  	
   

  
	
   

  	
  10.2.

  	
  Notices

  	
   

  
	
   

  	
  10.3.

  	
  Successors and Assigns

  	
   

  
	
   

  	
  10.4.

  	
  Counterparts

  	
   

  
	
   

  	
  10.5.

  	
  Descriptive Headings, Etc

  	
   

  
	
   

  	
  10.6.

  	
  Severability

  	
   

  
	
   

  	
  10.7.

  	
  GOVERNING LAW

  	
   

  
	
   

  	
  10.8.

  	
  Jurisdiction and Venue.

  	
   

  
	
   

  	
  10.9.

  	
  Remedies; Specific Performance

  	
   

  
	
   

  	
  10.10.

  	
  Entire Agreement

  	
   

  
	
   

  	
  10.11.

  	
  Termination

  	
   

  
	
   

  	
  10.12.

  	
  Further Assurances

  	
   

  
	
   

  	
  10.13.

  	
  Construction

  	
   

  
	
   

  	
  10.14.

  	
  No Inconsistent Agreement

  	
   

  
	
   

  	
  10.15.

  	
  Costs and Attorneys’ Fees

  	
   

  

 

41

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]