STOCKHOLDER REPRESENTATIVE AGREEMENT
Dated as of [●], 2025
by and among
CLIVE ATHERTON
as Stockholder Representative
and
NORTHGATE TELECOMMUNICATIONS PLC
a public limited company organized under the laws of England and Wales
acting for the benefit of and on behalf of the former stockholders of
CASCADIA FIBER NETWORKS, INC.
a Delaware corporation
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STOCKHOLDER REPRESENTATIVE AGREEMENT
This STOCKHOLDER REPRESENTATIVE AGREEMENT (this "Agreement") is dated as of [●], 2025 (the "Agreement Date"), by and among:
(1) Clive Atherton, an individual residing in Portland, Oregon, in his capacity as the Stockholder Representative (the "Stockholder Representative"); and
(2) Northgate Telecommunications PLC, a public limited company organized under the laws of England and Wales, with its principal office at 14 Broadwick Place, London W1F 8HN, United Kingdom ("Parent" or "Northgate"),
acting for the benefit of and on behalf of the former stockholders of Cascadia Fiber Networks, Inc., a Delaware corporation (the "Company" or "Cascadia"), who received merger consideration in connection with the Merger (as defined below) (collectively, the "Holders").
RECITALS
WHEREAS, Northgate Telecommunications PLC, NTP Acquisition Sub, Inc., a Delaware corporation and wholly owned subsidiary of Northgate ("Merger Sub"), and Cascadia Fiber Networks, Inc., a Delaware corporation, have entered into that certain Agreement and Plan of Merger, dated as of April 7, 2025 (as the same may be amended, supplemented, or otherwise modified from time to time in accordance with its terms, the "Merger Agreement"), pursuant to which Merger Sub will merge with and into the Company in a forward merger effected under Section 251 of the Delaware General Corporation Law (the "DGCL"), with the Company surviving as a wholly owned subsidiary of Northgate (the "Merger");
WHEREAS, the aggregate merger consideration payable pursuant to the Merger Agreement is Seven Hundred Fifty Million Dollars ($750,000,000) in cash (with no stock component), payable at an implied per-share price of Fifteen Dollars and Seventy-Nine Cents ($15.79) based on 47,500,000 fully diluted shares of the Company outstanding immediately prior to the effective time of the Merger;
WHEREAS, the Merger Agreement provides for, among other things: (i) the deposit of Sixty-Seven Million Five Hundred Thousand Dollars ($67,500,000) (representing nine percent (9%) of the aggregate merger consideration) into an indemnification escrow fund with Clearfield Escrow Services, Inc. as escrow agent (the "Escrow Agent") pursuant to an Escrow Agreement dated as of the Closing Date (the "Escrow Agreement"); (ii) indemnification obligations of the former stockholders of the Company, subject to an aggregate indemnification cap of One Hundred Thirty-Five Million Dollars ($135,000,000) (representing eighteen percent (18%) of the aggregate merger consideration), a survival period of twenty-four (24) months for general representations and warranties and sixty (60) months for fundamental representations and warranties, a de minimis threshold of Two Hundred Fifty Thousand Dollars ($250,000) per individual claim, and a tipping basket of Seven Million Five Hundred Thousand Dollars ($7,500,000) (representing one percent (1.0%) of the aggregate merger consideration); and (iii) a post-closing working capital adjustment based on Closing Net Working Capital as compared to Target Net Working Capital of Fourteen Million Eight Hundred Thousand Dollars ($14,800,000), subject to a collar of plus or minus One Million Five Hundred Thousand Dollars (±$1,500,000);
WHEREAS, the Merger Agreement contemplates the appointment of a Stockholder Representative to act on behalf of the Holders with respect to certain post-closing matters arising under or relating to the Merger Agreement, the Escrow Agreement, and the transactions contemplated thereby;
WHEREAS, Clive Atherton, in his capacity as Board Chair of Cascadia Fiber Networks, Inc. and Managing Partner of Timberline Growth Management, LLC (the general partner of Timberline Growth Partners, LP, the holder of approximately forty-two and three-tenths percent (42.3%) of the Company's outstanding shares on a fully diluted basis), has agreed to serve as the Stockholder Representative on the terms and conditions set forth herein; and
WHEREAS, each Holder, by virtue of receiving merger consideration in connection with the Merger or by executing a Letter of Transmittal and surrendering shares of the Company's common stock through Trident Transfer Agency, Inc. in its capacity as transfer and paying agent, shall be deemed to have agreed to and be bound by this Agreement as if such Holder were a signatory hereto.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants, agreements, representations, and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed to such terms in the Merger Agreement. The following terms, as used in this Agreement, shall have the meanings set forth below:
"Agreement" has the meaning set forth in the preamble.
"Agreement Date" has the meaning set forth in the preamble.
"Company" or "Cascadia" means Cascadia Fiber Networks, Inc., a Delaware corporation, and following the closing of the Merger, the surviving corporation of the Merger as a wholly owned subsidiary of Northgate.
"De Minimis Threshold" means Two Hundred Fifty Thousand Dollars ($250,000) per individual indemnification claim, as set forth in the Merger Agreement.
"Effective Date" has the meaning set forth in Section 7.1.
"Escrow Agent" means Clearfield Escrow Services, Inc. (Martin Grieves, Escrow Officer), located at 100 Wall Street, 20th Floor, New York, NY 10005, or any successor escrow agent appointed pursuant to the Escrow Agreement.
"Escrow Agreement" means that certain Escrow Agreement, dated as of the Closing Date, among Northgate, the Stockholder Representative, and the Escrow Agent, governing the deposit, maintenance, and release of the Escrow Fund, as the same may be amended, supplemented, or otherwise modified from time to time in accordance with its terms.
"Escrow Fund" means the Sixty-Seven Million Five Hundred Thousand Dollars ($67,500,000) deposited with the Escrow Agent at the closing of the Merger pursuant to the Escrow Agreement, together with any interest or other earnings thereon, less any amounts previously released from escrow in accordance with the Escrow Agreement.
"Expense Fund" has the meaning set forth in Section 5.1.
"Holders" means the former stockholders of the Company (including holders of options, restricted stock units, and warrants that were exercised, settled, or cancelled for cash in connection with the Merger) who received any portion of the merger consideration in connection with the Merger, and their respective heirs, executors, administrators, successors, and assigns.
"Indemnification Cap" means One Hundred Thirty-Five Million Dollars ($135,000,000), representing eighteen percent (18%) of the aggregate merger consideration of Seven Hundred Fifty Million Dollars ($750,000,000).
"Merger" has the meaning set forth in the recitals.
"Merger Agreement" has the meaning set forth in the recitals.
"Merger Sub" means NTP Acquisition Sub, Inc., a Delaware corporation and wholly owned subsidiary of Northgate.
"Parent" or "Northgate" means Northgate Telecommunications PLC, a public limited company organized under the laws of England and Wales.
"Stockholder Representative" means Clive Atherton, an individual, or any successor appointed pursuant to Section 7.4.
"Tipping Basket" means Seven Million Five Hundred Thousand Dollars ($7,500,000), representing one percent (1.0%) of the aggregate merger consideration, as set forth in the Merger Agreement.
"Working Capital Target" means Fourteen Million Eight Hundred Thousand Dollars ($14,800,000), subject to a collar of plus or minus One Million Five Hundred Thousand Dollars (±$1,500,000), as set forth in the Merger Agreement.
Section 1.2 — Interpretation and Construction
(a) The headings and captions in this Agreement are inserted for convenience of reference only and shall not affect the meaning, interpretation, or construction of this Agreement.
(b) Unless the context otherwise requires, (i) words importing the singular shall include the plural and vice versa, (ii) words importing any gender shall include all genders, (iii) the words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation," (iv) the words "herein," "hereof," "hereunder," and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and (v) references to "Articles," "Sections," "Exhibits," and "Schedules" shall refer to Articles, Sections, Exhibits, and Schedules of or to this Agreement, unless otherwise specified.
(c) Unless otherwise specified, all references to "days" shall mean calendar days. References to "business days" shall mean any day other than a Saturday, Sunday, or day on which commercial banks in New York, New York or London, England are authorized or required by law to close.
(d) The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event of any ambiguity or question of intent or interpretation, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
(e) All references to currency amounts in this Agreement are to lawful money of the United States of America, unless otherwise specified.
(f) The rules of interpretation and construction set forth in this Section 1.2 shall be applied consistently with those rules of interpretation and construction set forth in the Merger Agreement to the extent not inconsistent with the terms hereof.
ARTICLE II — APPOINTMENT AND ACCEPTANCE
Section 2.1 — Appointment
Each Holder hereby irrevocably constitutes and appoints Clive Atherton as the Stockholder Representative, as such Holder's true and lawful agent and attorney-in-fact, with full power of substitution, to act on behalf of such Holder with respect to all post-closing matters under and in connection with the Merger Agreement, the Escrow Agreement, and this Agreement, including, without limitation, all matters described in Article III hereof. This appointment is coupled with an interest and shall be irrevocable by any Holder or by the death, incapacity, dissolution, bankruptcy, or other legal disability of any Holder. This appointment shall be binding upon each Holder and such Holder's respective heirs, executors, administrators, personal representatives, successors, and assigns. The appointment of the Stockholder Representative hereunder is intended to constitute a durable power of attorney within the meaning of applicable law.
Section 2.2 — Acceptance
Clive Atherton hereby accepts the appointment as Stockholder Representative and agrees to perform the duties and exercise the authority set forth in this Agreement in accordance with the terms and conditions hereof. By executing this Agreement, the Stockholder Representative confirms his willingness and ability to serve in such capacity and acknowledges that the Holders are relying upon his judgment and expertise in connection with the post-closing matters described herein.
Section 2.3 — Deemed Consent of Holders
Each Holder, by receiving any portion of the merger consideration in connection with the Merger (whether in the form of cash consideration paid at closing, deferred consideration, or otherwise), or by executing a Letter of Transmittal and surrendering shares of the Company's common stock (or evidence of ownership of shares in book-entry form) through Trident Transfer Agency, Inc., located at 480 Washington Boulevard, Jersey City, NJ 07310, in its capacity as transfer and paying agent for the Merger, shall be deemed to have: (a) consented to the appointment of the Stockholder Representative on the terms and conditions set forth herein; (b) agreed to be bound by all of the terms and provisions of this Agreement as if such Holder were a signatory hereto; and (c) authorized the Stockholder Representative to act on such Holder's behalf in accordance with the authority granted herein. No separate signature, instrument of consent, or other written acknowledgment shall be required from any individual Holder in order for this Agreement to be binding upon such Holder, although the Stockholder Representative may, in his discretion, request that individual Holders execute the form of Holder Acknowledgment attached hereto as Exhibit A.
ARTICLE III — AUTHORITY AND POWERS OF THE STOCKHOLDER REPRESENTATIVE
Section 3.1 — General Authority
The Stockholder Representative shall have the sole and exclusive authority to act on behalf of the Holders in connection with all post-closing matters under and relating to the Merger Agreement, the Escrow Agreement, and this Agreement, including, without limitation, the following:
(a) Indemnification Claims. Receiving, reviewing, responding to, contesting, compromising, and settling any and all indemnification claims made by Parent or any of its affiliates (including Cascadia as the surviving entity) under Article IX of the Merger Agreement (or any corresponding provision thereof), including, without limitation, the authority to accept or reject the validity of any such claims, to negotiate the amount of any losses asserted in connection therewith, to authorize or dispute the release of funds from the Escrow Fund in satisfaction of any such claims, and to execute any settlement agreements, releases, or other documents in connection with the resolution of any such claims.
(b) Escrow Matters. Giving and receiving all notices, instructions, and communications to and from the Escrow Agent under the Escrow Agreement, including, without limitation, consenting to or disputing releases from the Escrow Fund, providing joint instructions to the Escrow Agent for the release of escrowed amounts, objecting to claimed releases by Parent, and taking all other actions contemplated by the Escrow Agreement to be taken by the "Stockholder Representative" or the "Seller Representative" (or equivalent designation) thereunder with Clearfield Escrow Services, Inc.
(c) Working Capital Adjustment. Reviewing the Closing Statement delivered by Parent following the closing of the Merger, analyzing the calculation of Closing Net Working Capital contained therein, preparing and delivering any objection notice with respect to such calculation, negotiating adjustments to Closing Net Working Capital relative to the Working Capital Target of Fourteen Million Eight Hundred Thousand Dollars ($14,800,000) (and determining whether any such adjustment falls within or outside the collar of plus or minus One Million Five Hundred Thousand Dollars (±$1,500,000)), engaging independent accounting firms or other experts to assist in the review and resolution of any working capital disputes, and participating in any dispute resolution procedures set forth in the Merger Agreement with respect to the working capital adjustment.
(d) Amendments and Waivers. Agreeing to any amendments, supplements, modifications, extensions, or waivers of the Merger Agreement, the Escrow Agreement, or any ancillary agreement executed in connection with the transactions contemplated by the Merger Agreement, in each case insofar as such amendments, supplements, modifications, extensions, or waivers affect the rights, obligations, or interests of the Holders in their capacity as former stockholders of the Company; provided that any such amendment, supplement, modification, extension, or waiver that would be materially adverse to the Holders as a group shall require the prior written consent of Holders holding a majority in interest of the former shares of the Company (determined on a fully diluted basis immediately prior to the effective time of the Merger), unless the Stockholder Representative determines in good faith that obtaining such consent is impracticable under the circumstances.
(e) Tax Matters. Authorizing any and all actions with respect to tax representations and warranties contained in the Merger Agreement (which, to the extent constituting fundamental representations, survive until sixty (60) days after the expiration of the applicable statute of limitations, including any extensions or tollings thereof), related tax indemnification provisions, and any tax-related notices, elections, or filings that may be required or permitted under the Merger Agreement or applicable law in connection with the Merger, including reviewing and consenting to any amended tax returns or tax refund claims relating to pre-closing tax periods of the Company.
(f) Dispute Resolution. Initiating, defending, participating in, and settling any arbitration, mediation, litigation, or other dispute resolution proceeding arising out of or relating to the Merger Agreement, the Escrow Agreement, or this Agreement on behalf of the Holders, including selecting arbitrators or mediators, engaging in discovery and other pre-trial or pre-hearing procedures, making or opposing motions, entering into stipulations, and approving settlement terms.
(g) Engaging Professionals. Retaining, at the expense of the Holders (payable from the Expense Fund), legal counsel, accountants, financial advisors, consultants, and other professionals as the Stockholder Representative may deem necessary or advisable in connection with the performance of his duties hereunder, and directing and instructing such professionals in connection with any matters arising under this Agreement, the Merger Agreement, or the Escrow Agreement.
(h) General Authority. Executing and delivering any and all documents, instruments, and certificates, giving consents and approvals, making elections and determinations, providing and receiving notices and communications, and taking any and all other actions that the Stockholder Representative deems necessary, appropriate, or desirable in connection with the matters contemplated by this Agreement, the Merger Agreement, the Escrow Agreement, or any ancillary agreement, in each case acting in the capacity of agent and attorney-in-fact for the Holders.
Section 3.2 — Binding Authority
All actions taken, decisions made, consents given, and determinations reached by the Stockholder Representative within the scope of the authority granted hereunder shall be final and binding on all Holders and their respective heirs, executors, administrators, personal representatives, successors, and assigns, as if each such Holder had personally taken such action, made such decision, given such consent, or reached such determination. Neither Parent nor any of its affiliates (including Cascadia as the surviving entity), nor the Escrow Agent, nor any other third party, shall be required to look beyond the actions of the Stockholder Representative to determine the validity, enforceability, or binding nature of any action taken by the Stockholder Representative on behalf of the Holders. No Holder shall have any right to independently pursue any claim, right, or remedy that has been delegated to the Stockholder Representative hereunder, and any attempt by a Holder to do so shall be void and of no force or effect.
Section 3.3 — Reliance by Parent and Third Parties
Parent, the Escrow Agent (Clearfield Escrow Services, Inc.), Trident Transfer Agency, Inc. (in its capacity as transfer and paying agent), and any other third party dealing with the Stockholder Representative in connection with the matters contemplated by this Agreement, the Merger Agreement, or the Escrow Agreement, may conclusively rely, without inquiry, on the authority of the Stockholder Representative to act on behalf of the Holders. None of Parent, the Escrow Agent, Trident Transfer Agency, Inc., or any other third party shall have any obligation or duty to inquire into the authority, propriety, or validity of any action taken, decision made, consent given, or instruction delivered by the Stockholder Representative, and each such party shall be fully protected in acting or refraining from acting in reliance upon any notice, instruction, consent, direction, or other communication received from the Stockholder Representative. Any notice or communication delivered by Parent to the Stockholder Representative shall be deemed to have been delivered to each and every Holder for all purposes hereunder.
Section 3.4 — No Obligation to Consult Holders
The Stockholder Representative may, in his sole discretion, consult with any or all of the Holders before taking any action, making any decision, or giving any consent hereunder; provided, however, that the Stockholder Representative shall not be required to consult with any Holder and shall not be subject to any obligation, duty, or liability for failing to consult with any Holder before exercising the authority granted hereunder. The Stockholder Representative shall have sole and absolute discretion with respect to the manner and timing of the exercise of his authority under this Agreement, subject only to the requirement that the Stockholder Representative shall act in what he reasonably believes to be the best interests of the Holders as a group, and not in the interest of any individual Holder or subset of Holders to the detriment of the Holders as a whole. Nothing in this Section 3.4 shall be construed to create any fiduciary duty of the Stockholder Representative to any individual Holder beyond the obligations expressly set forth in this Agreement.
ARTICLE IV — DECISION-MAKING AUTHORITY AND STANDARDS
Section 4.1 — Standard of Care
The Stockholder Representative shall act in good faith and in what the Stockholder Representative reasonably believes to be the best interests of the Holders as a group. The Stockholder Representative shall exercise reasonable care and diligence in the performance of his duties hereunder, but shall not be held to any higher standard of care. The Stockholder Representative's obligation is to the collective interests of the Holders, and the Stockholder Representative shall have no duty or obligation to act on behalf of, or to protect the individual interests of, any particular Holder or group of Holders to the exclusion of the interests of the Holders as a whole. In discharging his duties, the Stockholder Representative shall be entitled to rely upon any information, advice, opinion, report, or statement provided by legal counsel, accountants, financial advisors, or other professionals retained by the Stockholder Representative pursuant to Section 3.1(g), and any action taken in good faith reliance upon such advice shall be conclusively presumed to satisfy the standard of care set forth in this Section 4.1.
Section 4.2 — Discretion in Settling Claims
The Stockholder Representative shall have full, final, and exclusive authority to settle, compromise, or otherwise resolve any indemnification claim asserted by Parent or any of its affiliates under the Merger Agreement, including by authorizing the release of funds from the Escrow Fund in satisfaction of any such claim, without the consent or approval of any individual Holder. In exercising such authority, the Stockholder Representative may consider, among other factors, the following:
(a) the likelihood of success on the merits of any contested claim;
(b) the estimated cost and duration of any dispute resolution proceeding;
(c) the De Minimis Threshold of Two Hundred Fifty Thousand Dollars ($250,000) per individual claim and whether any individual claim meets or exceeds such threshold;
(d) the aggregate amount of all claims in relation to the Tipping Basket of Seven Million Five Hundred Thousand Dollars ($7,500,000) and whether such basket has been exceeded;
(e) the aggregate amount of all claims in relation to the Indemnification Cap of One Hundred Thirty-Five Million Dollars ($135,000,000);
(f) the remaining balance of the Escrow Fund and the anticipated need for such funds to satisfy other pending or potential claims;
(g) the applicable survival period for the representations and warranties at issue (twenty-four (24) months for general representations, sixty (60) months for fundamental representations, or, in the case of tax representations, sixty (60) days after expiration of the applicable statute of limitations); and
(h) any other factors that the Stockholder Representative deems relevant in the exercise of his reasonable business judgment.
The Stockholder Representative shall not be required to provide any accounting, justification, or explanation to any individual Holder with respect to the settlement of any claim, except as the Stockholder Representative may determine in his sole discretion to be appropriate.
Section 4.3 — No Liability for Good Faith Actions
The Stockholder Representative shall not be liable to any Holder for any action taken, decision made, or omission, in each case made or omitted in good faith in connection with the Stockholder Representative's service hereunder, except to the extent that such action, decision, or omission is determined by a court of competent jurisdiction, in a final and non-appealable judgment, to have constituted fraud, willful misconduct, or gross negligence on the part of the Stockholder Representative. Without limiting the generality of the foregoing, no Holder shall have any claim, right, or cause of action against the Stockholder Representative for any loss, diminution in value, or damage arising from the Stockholder Representative's exercise of judgment in settling, compromising, or resolving any indemnification claim, working capital dispute, or other matter contemplated by this Agreement, provided that the Stockholder Representative acted in good faith and in what he reasonably believed to be the best interests of the Holders as a group. This exculpation shall apply to the fullest extent permitted by applicable law.
Section 4.4 — Conflict of Interest Acknowledgment
Each Holder acknowledges and agrees that Clive Atherton, in his capacity as Stockholder Representative, is also the Board Chair of Cascadia Fiber Networks, Inc. and the Managing Partner of Timberline Growth Management, LLC, which is the general partner of Timberline Growth Partners, LP, the holder of approximately forty-two and three-tenths percent (42.3%) of the Company's outstanding shares on a fully diluted basis. The Holders further acknowledge that the Stockholder Representative may have personal financial interests, through his affiliation with Timberline Growth Partners, LP and otherwise, that may create actual or potential conflicts of interest between the Stockholder Representative's personal interests as a Holder (or as the managing partner of the general partner of the largest Holder) and his duties as Stockholder Representative on behalf of all Holders. Each Holder, by receiving merger consideration or being deemed to have consented to this Agreement pursuant to Section 2.3, hereby (a) acknowledges and consents to such actual or potential conflicts of interest, (b) irrevocably waives any and all claims, rights, or causes of action arising out of or based upon any such conflict of interest, and (c) agrees that the Stockholder Representative shall not be disqualified from serving in such capacity, or be subject to any liability to any Holder, by reason of any such conflict of interest, provided that the Stockholder Representative otherwise acts in compliance with the standard of care set forth in Section 4.1.
ARTICLE V — EXPENSE FUND
Section 5.1 — Establishment of Expense Fund
At the closing of the Merger, an amount equal to Five Hundred Thousand Dollars ($500,000) (the "Expense Fund") shall be withheld from the aggregate merger consideration otherwise payable to the Holders pursuant to the Merger Agreement and shall be deposited with the Stockholder Representative (or into a segregated bank account designated by the Stockholder Representative at a nationally recognized financial institution) to fund the costs and expenses of the Stockholder Representative in performing his duties under this Agreement, the Merger Agreement, and the Escrow Agreement. The Expense Fund shall be deducted from the merger consideration payable to each Holder on a pro rata basis, based on such Holder's pro rata share of the aggregate merger consideration (as set forth on Exhibit B hereto, subject to adjustment at closing). The Stockholder Representative shall maintain the Expense Fund in a segregated account, separate from the Stockholder Representative's personal funds, and shall maintain accurate records of all deposits into and disbursements from the Expense Fund.
Section 5.2 — Use of Expense Fund
The Stockholder Representative may use the Expense Fund to pay costs and expenses reasonably incurred in connection with the performance of his duties hereunder, including, without limitation, the following:
(a) legal fees, costs, and disbursements of legal counsel retained by the Stockholder Representative in connection with indemnification claims, working capital disputes, escrow matters, and other post-closing matters;
(b) accounting and financial advisory fees incurred in connection with the review of the Closing Statement, the calculation of Closing Net Working Capital, the resolution of working capital disputes, and any other financial analysis reasonably necessary or appropriate;
(c) costs and expenses of any dispute resolution proceeding, including arbitrator fees, mediator fees, court costs, filing fees, expert witness fees, and related litigation or arbitration expenses;
(d) out-of-pocket expenses reasonably incurred by the Stockholder Representative in connection with the performance of his duties, including travel expenses, communication costs, postage and courier charges, and costs of reproducing documents; and
(e) any other costs and expenses reasonably related to the Stockholder Representative's duties under this Agreement, the Merger Agreement, or the Escrow Agreement.
The Stockholder Representative shall not be required to obtain the prior approval of any Holder before making any disbursement from the Expense Fund, and no Holder shall have any right to direct or restrict the manner in which the Expense Fund is used, provided that all disbursements are made in connection with the Stockholder Representative's duties hereunder.
Section 5.3 — Additional Funding
In the event that the Expense Fund is insufficient to cover the costs and expenses incurred or expected to be incurred by the Stockholder Representative in connection with the performance of his duties hereunder, the Stockholder Representative may, in his discretion:
(a) request additional contributions from the Holders on a pro rata basis (based on each Holder's pro rata share of the aggregate merger consideration), which contributions shall be voluntary unless otherwise required by the terms of the Merger Agreement or any ancillary agreement; or
(b) authorize the Escrow Agent to release amounts from the Escrow Fund for such purpose, subject to and in accordance with the terms of the Escrow Agreement and the Merger Agreement.
Notwithstanding the foregoing, the Stockholder Representative shall not be required to advance personal funds or incur any personal financial obligation in connection with the performance of his duties hereunder, and the Stockholder Representative's obligation to perform such duties shall be conditioned upon the availability of sufficient funds in the Expense Fund (or from other sources as described in this Section 5.3) to cover the costs and expenses thereof. No Holder shall have any obligation to make additional contributions to the Expense Fund except to the extent such Holder voluntarily agrees to do so or is otherwise obligated pursuant to the terms of the Merger Agreement or any ancillary agreement.
Section 5.4 — Distribution of Remaining Expense Fund
Upon the final resolution of all post-closing matters contemplated by this Agreement, the Merger Agreement, and the Escrow Agreement, and the termination of the Stockholder Representative's duties hereunder in accordance with Article VII, the Stockholder Representative shall, within thirty (30) days following such termination, distribute any remaining balance of the Expense Fund (after deduction of all accrued but unpaid costs and expenses and any reserves reasonably established by the Stockholder Representative for contingent or anticipated expenses) to the Holders on a pro rata basis, based on each Holder's pro rata share of the aggregate merger consideration. Any interest or earnings on the Expense Fund shall be treated as part of the Expense Fund and distributed in accordance with this Section 5.4.
ARTICLE VI — INDEMNIFICATION OF THE STOCKHOLDER REPRESENTATIVE
Section 6.1 — Indemnification by Holders
Each Holder, severally (and not jointly), on a pro rata basis (based on such Holder's pro rata share of the aggregate merger consideration), shall indemnify, defend, and hold harmless the Stockholder Representative and his heirs, executors, administrators, personal representatives, successors, and assigns from and against any and all losses, liabilities, claims, actions, suits, proceedings, demands, damages, penalties, fines, costs, and expenses (including reasonable and documented attorneys' fees and disbursements) (collectively, "Representative Losses") arising out of or relating to the Stockholder Representative's acceptance of or performance of his duties under this Agreement, the Merger Agreement, or the Escrow Agreement, or arising out of any action taken, decision made, or omission made by the Stockholder Representative in connection with his service hereunder; provided, however, that no Holder shall be obligated to indemnify the Stockholder Representative to the extent that any Representative Losses are determined by a court of competent jurisdiction, in a final and non-appealable judgment, to have resulted from the Stockholder Representative's fraud, willful misconduct, or gross negligence.
Section 6.2 — Source of Indemnification
The indemnification obligations of the Holders under this Article VI may be satisfied in the following order of priority:
(a) first, from amounts available in the Expense Fund;
(b) second, to the extent the Expense Fund is insufficient, from amounts otherwise distributable to the Holders from the Escrow Fund (to the extent such amounts are not required to satisfy pending or unresolved indemnification claims of Parent under the Merger Agreement); and
(c) third, to the extent amounts available under clauses (a) and (b) are insufficient, directly from the Holders on a pro rata basis.
Each Holder's aggregate indemnification obligation under this Article VI shall be limited to such Holder's pro rata share of the aggregate merger consideration actually received by such Holder in connection with the Merger (including any amounts received from the Escrow Fund following the resolution of indemnification claims). In no event shall any Holder be required to return, disgorge, or pay any amount in excess of the aggregate merger consideration actually received by such Holder.
Section 6.3 — Survival
The indemnification obligations of the Holders under this Article VI shall survive the termination of this Agreement and the resignation, removal, death, or disability of the Stockholder Representative. The provisions of this Article VI are intended to benefit the Stockholder Representative and his heirs, executors, administrators, personal representatives, successors, and assigns, and shall be enforceable by the Stockholder Representative (or any successor Stockholder Representative or the personal representative of a deceased Stockholder Representative) directly against the Holders.
ARTICLE VII — TERM, RESIGNATION, AND SUCCESSOR
Section 7.1 — Effective Date
This Agreement shall become effective upon the closing of the Merger (the "Effective Date"). If the Merger Agreement is terminated prior to the closing of the Merger for any reason, this Agreement shall be null and void and of no force or effect, and no party shall have any liability or obligation hereunder.
Section 7.2 — Term
The Stockholder Representative's appointment hereunder shall continue from the Effective Date until the earliest of the following:
(a) the final distribution of all amounts in the Escrow Fund (including any amounts held pending the resolution of open indemnification claims, whether arising during the twenty-four (24) month survival period for general representations and warranties, the sixty (60) month survival period for fundamental representations and warranties, or any extended survival period applicable to tax representations as described in clause (c) below), and the release of any remaining escrow balance to the Holders;
(b) the final resolution of all working capital adjustment disputes under the Merger Agreement, including the payment or receipt of any adjustment amounts;
(c) the final resolution of all pending indemnification claims under the Merger Agreement, including any claims relating to tax representations and warranties that survive until sixty (60) days after the expiration of the applicable statute of limitations (including any extensions, waivers, or tollings thereof);
(d) the written agreement of the Stockholder Representative and Parent, executed by both parties, that all post-closing matters under the Merger Agreement, the Escrow Agreement, and this Agreement have been fully and finally resolved and that no further action is required of the Stockholder Representative; and
(e) the distribution of all remaining amounts in the Expense Fund to the Holders in accordance with Section 5.4.
For the avoidance of doubt, the Stockholder Representative's appointment shall not terminate solely by reason of the expiration of the survival period for any particular representation or warranty if any indemnification claim relating to such representation or warranty remains pending and unresolved at the time of such expiration.
Section 7.3 — Resignation
The Stockholder Representative may resign from his appointment hereunder upon not less than thirty (30) days' prior written notice to Parent (at the address set forth in Section 8.1) and to the Holders (at the most recent addresses maintained by the Stockholder Representative or the transfer and paying agent), or upon such shorter notice period as Parent may agree in writing. The Stockholder Representative's resignation shall not become effective until a successor Stockholder Representative has been duly appointed in accordance with Section 7.4 and has accepted such appointment in writing. Until such successor is so appointed and has accepted, the resigning Stockholder Representative shall continue to serve and shall continue to have all of the rights, powers, duties, and obligations set forth in this Agreement.
Section 7.4 — Appointment of Successor
In the event of the death, permanent disability (as determined by a physician mutually agreed upon by Parent and Timberline Growth Partners, LP, or, failing such agreement, by a physician selected by the American Arbitration Association), resignation, or removal of the Stockholder Representative, a successor Stockholder Representative shall be appointed by the vote or written consent of Holders holding a majority in interest of the former shares of the Company (determined on a fully diluted basis immediately prior to the effective time of the Merger, based on each Holder's pro rata share of the aggregate merger consideration).
If no successor Stockholder Representative is appointed within thirty (30) calendar days following the date on which a vacancy arises (whether by death, disability, resignation, or removal), Timberline Growth Partners, LP, as the largest Holder (holding approximately forty-two and three-tenths percent (42.3%) of the former shares on a fully diluted basis), shall have the right to designate a successor Stockholder Representative by delivering written notice to Parent and the Holders identifying the designated successor.
Parent shall have no right to appoint, approve, disapprove, or veto the appointment of any successor Stockholder Representative; provided, however, that Parent shall be given prompt written notice (and in any event within five (5) business days) of the appointment of any successor Stockholder Representative, together with the name, address, and contact information of such successor. Any successor Stockholder Representative appointed pursuant to this Section 7.4 shall succeed to all of the rights, powers, duties, and obligations of the Stockholder Representative under this Agreement, the Merger Agreement, and the Escrow Agreement, and all references herein and therein to the "Stockholder Representative" shall be deemed to refer to such successor.
Section 7.5 — Removal
The Stockholder Representative may be removed from his appointment hereunder at any time by the vote or written consent of Holders holding at least two-thirds (66.67%) in interest of the former shares of the Company (determined on a fully diluted basis immediately prior to the effective time of the Merger, based on each Holder's pro rata share of the aggregate merger consideration); provided, however, that the removal of the Stockholder Representative shall not become effective unless and until a successor Stockholder Representative has been simultaneously appointed in accordance with Section 7.4 and has accepted such appointment in writing. The removed Stockholder Representative shall, upon the effectiveness of his removal, promptly deliver to the successor Stockholder Representative all books, records, documents, funds (including the remaining balance of the Expense Fund), and other materials in his possession or control relating to his service as Stockholder Representative.
ARTICLE VIII — NOTICES
Section 8.1 — Notices
All notices, requests, demands, consents, waivers, and other communications under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received: (i) if delivered by hand or by a nationally recognized overnight courier service (such as Severin Partners LLC, Halcyon Partners LLC, or Tarrant & Co.), when actually received by the intended recipient; (ii) if sent by email (with confirmation of transmission by the sender's email system and no automated "undeliverable" response), when transmitted to the email address specified below (or such other email address as may be designated in accordance with this Section 8.1); provided that a copy of such notice is also sent on the same day by nationally recognized overnight courier service; or (iii) if sent by registered or certified mail, return receipt requested, postage prepaid, on the fifth (5th) business day following the date of mailing. All notices shall be addressed as follows:
If to the Stockholder Representative:
Clive Atherton c/o Timberline Growth Partners, LP 888 SW Fifth Avenue, Suite 1500 Portland, OR 97204
Email: c.atherton@timberlinegrowth.com
with a copy (which shall not constitute notice) to:
Whitmore, Kessler & Braun LLP 1120 SW Quelston Street, Suite 800 Portland, OR 97205
Attention: Jonathan Kessler
Email: jkessler@wkblaw.com
If to Parent (Northgate):
Northgate Telecommunications PLC 14 Broadwick Place London W1F 8HN, United Kingdom
Attention: Philippa Ashworth, General Counsel
Email: p.ashworth@northgatetelecom.co.uk
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, NY 10022
Attention: Oliver Mackenzie
Email: omackenzie@calderwoodharkness.com
Any party hereto may change its address for purposes of this Section 8.1 by giving written notice of such change to the other parties in accordance with this Section 8.1. A copy of any notice to the Stockholder Representative shall be deemed to constitute notice to all Holders for purposes of this Agreement, and the Stockholder Representative shall use commercially reasonable efforts to relay material notices to the Holders at the most recent addresses maintained by the Stockholder Representative or by Trident Transfer Agency, Inc.
ARTICLE IX — MISCELLANEOUS
Section 9.1 — Governing Law
This Agreement and all claims, disputes, and controversies arising out of or relating to this Agreement (including any claims arising under statutory or common law and any claims in tort, contract, or otherwise) shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. The parties acknowledge that this governing law provision is consistent with the governing law provision of the Merger Agreement, which is also governed by the laws of the State of Delaware. The parties further acknowledge that the Escrow Agreement and the Credit Agreement relating to the financing of the Merger are governed by the laws of the State of New York, but the parties intend that the governing law of this Agreement shall be the laws of the State of Delaware for all purposes.
Section 9.2 — Jurisdiction and Venue
Each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, the United States District Court for the District of Delaware, or, if such federal court also declines to accept jurisdiction, any state court of the State of Delaware sitting in Wilmington, Delaware) for the purpose of any action, suit, or proceeding arising out of or relating to this Agreement or any of the transactions contemplated hereby, and each of the parties hereto irrevocably and unconditionally waives, and agrees not to assert, by way of motion, as a defense, counterclaim, or otherwise, in any such action, suit, or proceeding: (a) any claim that it is not personally subject to the jurisdiction of the aforesaid courts for any reason; (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts; and (c) any claim that (i) any such action, suit, or proceeding has been brought in an inconvenient forum, (ii) the venue of such action, suit, or proceeding is improper, or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 9.3 — Waiver of Jury Trial
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY SUCH ACTION, SUIT, OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.3.
Section 9.4 — Entire Agreement
This Agreement, together with the Merger Agreement, the Escrow Agreement, the Letters of Transmittal, and the other transaction documents contemplated by the Merger Agreement, constitutes the entire agreement among the parties hereto (and among the Holders, to the extent applicable) with respect to the subject matter hereof and supersedes all prior negotiations, agreements, understandings, representations, and warranties, whether written or oral, among the parties with respect to such subject matter. No promise, representation, or inducement has been made by any party that is not embodied in this Agreement or the other transaction documents, and no party shall be bound by or liable for any alleged promise, representation, or inducement not so set forth.
Section 9.5 — Amendment
This Agreement may be amended, supplemented, or otherwise modified only by a written instrument duly executed by the Stockholder Representative and Parent. No amendment, supplement, or modification that would be materially adverse to the rights or interests of the Holders as a group shall be made without the prior written consent of Holders holding a majority in interest of the former shares of the Company (determined on a fully diluted basis immediately prior to the effective time of the Merger, based on each Holder's pro rata share of the aggregate merger consideration). No waiver of any provision of this Agreement shall be effective unless set forth in a written instrument signed by the party against whom enforcement of such waiver is sought, and no waiver of any provision shall constitute a waiver of any other provision or of any subsequent breach of the same provision.
Section 9.6 — Assignment
The Stockholder Representative may not assign, delegate, or otherwise transfer any of his rights, duties, or obligations under this Agreement, except to a successor Stockholder Representative appointed in accordance with Section 7.4. Any purported assignment by the Stockholder Representative in violation of this Section 9.6 shall be null and void. Parent may assign its rights (but not its obligations) under this Agreement to any wholly owned subsidiary of Parent or to any successor of Parent by merger, consolidation, acquisition of all or substantially all of Parent's assets, or other business combination, without the consent of the Stockholder Representative or any Holder; provided that no such assignment shall relieve Parent of its obligations hereunder unless the assignee expressly assumes such obligations in writing.
Section 9.7 — Third-Party Beneficiaries
The Holders are intended third-party beneficiaries of this Agreement with respect to: (a) their right to receive distributions from the Escrow Fund and the Expense Fund; (b) the indemnification provisions of Article VI (to the extent providing for the Stockholder Representative's indemnification, for which the Holders bear pro rata responsibility); and (c) the provisions of Sections 5.4 and 7.4 relating to the distribution of the remaining Expense Fund and the appointment of a successor Stockholder Representative, respectively. The Escrow Agent (Clearfield Escrow Services, Inc.) is an intended third-party beneficiary of this Agreement solely for purposes of the provisions of Section 3.3 referencing the Escrow Agent's right to conclusively rely upon the authority of the Stockholder Representative without inquiry. Except as expressly set forth in this Section 9.7, no person or entity that is not a party to this Agreement (and no Holder, except as expressly set forth herein) shall have any right, benefit, or remedy under or by reason of this Agreement.
Section 9.8 — Severability
If any provision of this Agreement (or any portion thereof) is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of any other provision of this Agreement (or any other portion of any provision). The parties shall negotiate in good faith to replace any invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that, to the greatest extent possible, achieves the economic, business, and other purposes of the invalid, illegal, or unenforceable provision.
Section 9.9 — Counterparts
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by electronic mail (including in .pdf, .tif, or similar format) or by electronic signature (including DocuSign or similar platform) shall be effective as delivery of an originally executed counterpart. No party shall raise the use of electronic mail or electronic signature as a defense to the formation of a contract under this Agreement.
Section 9.10 — Specific Performance
The parties hereto acknowledge and agree that the rights of the parties under this Agreement are unique and that irreparable harm would result if this Agreement were not specifically enforced, and that monetary damages alone would not be an adequate remedy for any breach of this Agreement. Accordingly, each party shall be entitled to seek specific performance of, and injunctive or other equitable relief to enforce, the terms and provisions of this Agreement (including the Stockholder Representative's authority under Article III and the Holders' indemnification obligations under Article VI) in any court of competent jurisdiction, without the necessity of proving actual damages or posting any bond or other security. Such remedies shall be in addition to, and not in lieu of, any other remedies available to any party at law or in equity.
Section 9.11 — No Compensation
The Stockholder Representative shall not receive any fee, salary, retainer, or other compensation for serving in the capacity of Stockholder Representative under this Agreement. The Stockholder Representative shall be entitled only to reimbursement of reasonable and documented out-of-pocket expenses incurred in connection with the performance of his duties hereunder, which reimbursement shall be paid from the Expense Fund in accordance with Article V. The parties acknowledge and agree that Clive Atherton's economic interest as a Holder, through Timberline Growth Partners, LP's ownership of approximately forty-two and three-tenths percent (42.3%) of the Company's outstanding shares on a fully diluted basis (representing an approximate pro rata share of the aggregate merger consideration of approximately Three Hundred Seventeen Million Two Hundred Fifty Thousand Dollars ($317,250,000)), constitutes adequate consideration for his agreement to serve as Stockholder Representative hereunder, and no additional compensation shall be required.
[Remainder of page intentionally left blank. Signature pages follow.]
IN WITNESS WHEREOF, the parties hereto have executed this Stockholder Representative Agreement as of the date first set forth above.
STOCKHOLDER REPRESENTATIVE:
________________________________________
Clive Atherton, individually, in his capacity as Stockholder Representative
Date: ________
NORTHGATE TELECOMMUNICATIONS PLC
By: ________
Name: Liam Sutherland
Title: Vice President, Corporate Development
Date: ________
ACKNOWLEDGMENT AND DEEMED CONSENT OF HOLDERS
Each Holder, by receiving merger consideration in connection with the Merger or by executing a Letter of Transmittal and surrendering shares of the Company's common stock (or evidence of ownership of shares in book-entry form) through Trident Transfer Agency, Inc., located at 480 Washington Boulevard, Jersey City, NJ 07310, in its capacity as transfer and paying agent for the Merger, is hereby deemed to have consented to and be bound by all of the terms and provisions of this Stockholder Representative Agreement, including, without limitation: (a) the appointment of Clive Atherton as the Stockholder Representative; (b) the grant of authority to the Stockholder Representative as set forth in Article III; (c) the deduction of such Holder's pro rata share of the Expense Fund from the merger consideration; (d) such Holder's pro rata indemnification obligation under Article VI; and (e) all other provisions of this Agreement as if such Holder were a signatory hereto. No separate signature, instrument of consent, or other written acknowledgment is required from any individual Holder in order for this Agreement to be binding upon such Holder.