-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F9s8T8mIRxPje3f+9VS/wi2L1eTQ8CjbOre5+ElT9olpCSbWmD9VITGGAITjUlS7 sTqARuTzLLuUkFyGQAmv2Q== 0000950168-00-001346.txt : 20000515 0000950168-00-001346.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950168-00-001346 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20000512 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: US LEC CORP CENTRAL INDEX KEY: 0001054290 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 562065535 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-54177 FILM NUMBER: 629762 BUSINESS ADDRESS: STREET 1: 401 N TRYON ST STREET 2: STE 1000 CITY: CHARLOTTE STATE: NC ZIP: 28251 MAIL ADDRESS: STREET 1: 212 S TRYON ST STREET 2: SUITE 1540 CITY: CHARLOTTE STATE: NC ZIP: 28281 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AAB RICHARD I CENTRAL INDEX KEY: 0001060471 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 212 SOUTH TRYON STREET STREET 2: SUITE 1540 CITY: CHARLOTTE STATE: NC ZIP: 28281 MAIL ADDRESS: STREET 1: 212 SOUTH TRYON STREET STREET 2: SUITE 1540 CITY: CHARLOTTE STATE: NC ZIP: 28281 SC 13D 1 US LEC CORP. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (AMENDMENT NO. 1) UNDER THE SECURITIES EXCHANGE ACT OF 1934 US LEC Corp. - -------------------------------------------------------------------------------- (Name of Issuer) Class A Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 90331S 10 9 - -------------------------------------------------------------------------------- (CUSIP Number) Richard T. Aab c/o US LEC Corp. 401 North Tryon Street, Suite 1000 Charlotte, North Carolina 28202 (704) 319-1000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 11, 2000 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. SEE Rule 13d-1(a) for other parties to whom copies are sent. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act.
CUSIP NO.: 90331S 10 9 Page 2 of 9 Pages - ------------------- -------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Richard T. Aab - ------------------- -------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x] (b) [ ] - ------------------- -------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------- -------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS PF - ------------------- -------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] - ------------------- -------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - ------------------- ----------- -------------------------------------------------------------------------------------- NUMBER OF SHARES 7 SOLE VOTING POWER 17,153,445 ----------- -------------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 ----------- -------------------------------------------------------------------------------------- EACH REPORTING 9 SOLE DISPOSITIVE POWER 8,799,945 ----------- -------------------------------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 4,309,500 - ------------------- -------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 17,153,445 - ------------------- -------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------- -------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 62.3% - ------------------- -------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - ------------------- -------------------------------------------------------------------------------------------------- CUSIP NO.: 90331S 10 9 Page 3 of 9 Pages - ------------------- -------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Joyce M. Aab - ------------------- -------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x] (b) [ ] - ------------------- -------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------- -------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS PF - ------------------- -------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] - ------------------- -------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - ------------------- ----------- -------------------------------------------------------------------------------------- NUMBER OF SHARES 7 SOLE VOTING POWER 0 ----------- -------------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 ----------- -------------------------------------------------------------------------------------- EACH REPORTING 9 SOLE DISPOSITIVE POWER 0 ----------- -------------------------------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 4,309,500 - ------------------- -------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,309,500 - ------------------- -------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.7% - ------------------- -------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - ------------------- -------------------------------------------------------------------------------------------------- CUSIP NO.: 90331S 10 9 Page 4 of 9 Pages - ------------------- -------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Tansukh V. Ganatra - ------------------- -------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x] (b) [ ] - ------------------- -------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------- -------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS PF - ------------------- -------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] - ------------------- -------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - ------------------- ----------- -------------------------------------------------------------------------------------- NUMBER OF SHARES 7 SOLE VOTING POWER 0 ----------- -------------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 ----------- -------------------------------------------------------------------------------------- EACH REPORTING 9 SOLE DISPOSITIVE POWER 4,044,000 ----------- -------------------------------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 0 - ------------------- -------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,044,000 - ------------------- -------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 27.4% - ------------------- -------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - ------------------- -------------------------------------------------------------------------------------------------- Page 5 of 9 Pages
EXPLANATORY NOTE: Richard T. Aab, Melrich Associates, L.P. (a New York limited partnership controlled by Mr. Aab and his wife, Joyce M. Aab) ("Melrich"), Tansukh V. Ganatra, and Super STAR Associates Limited Partnership (a Georgia limited partnership controlled by Mr. Ganatra) ("Super STAR") (collectively, the "Class B Stockholders") are the sole record holders of all outstanding shares of Class B Common Stock issued by US LEC Corp. (the "Company"). Shares of Class B Common Stock are convertible on a one-for-one basis into shares of the Company's Class A Common Stock, at the option of the holder or automatically in certain circumstances. Each Class B Stockholder has entered into a Second Amended and Restated Stockholders Agreement, dated as of April 10, 2000 (the "Class B Stockholders Agreement"), pursuant to which, among other things, the parties agreed to grant to Mr. Aab an irrevocable proxy to vote all of their shares of Class B Common Stock. As a result of the Class B Stockholders Agreement, Mr. Aab may be deemed, for the purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to have formed a "group" with Mrs. Aab and Mr. Ganatra. This Amendment No. 1 is being filed as a result of the Class B Stockholders entering into the Class B Stockholders Agreement and a Voting and Tag Along Agreement, dated April 11, 2000 (the "Voting Agreement"), by and among the Class B Stockholders and affiliates of Bain Capital, Inc. ("Bain") and Thomas H. Lee, L.P. ("THL") (collectively, the "Investors") in connection with the Company's sale of 100,000 shares of its Series A Convertible Preferred stock to each of Bain and THL (the "Preferred Stock Transaction"). ITEM 1. SECURITY AND ISSUER This statement relates to the Class A Common Stock of US LEC Corp., a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 401 North Tryon Street, Suite 1000, Charlotte, North Carolina 28202. ITEM 2. IDENTITY AND BACKGROUND (A) - (C) AND (F) This statement is being filed on behalf of Richard T. Aab, Joyce M. Aab, and Tansukh V. Ganatra (the "Reporting Persons") as a result of the Class B Stockholders entering into the Class B Stockholders Agreement and the Voting Agreement, as more fully described under Items 3 and 5. Mr. Aab, a United States citizen, is the Chairman of the Company. His address is c/o US LEC Corp., 401 North Tryon Street, Suite 1000, Charlotte, North Carolina 28202,. Mrs. Aab, a United States citizen, is the wife of Mr. Aab. Her address is c/o US LEC Corp., 401 North Tryon Street, Suite 1000, Charlotte, North Carolina 28202. Mr. Ganatra, a United States citizen, is the Chief Executive Officer and Vice Chairman of the Company. His address is c/o US LEC Corp., 401 North Tryon Street, Suite 1000, Charlotte, North Carolina 28202. Page 6 of 9 Pages (d) AND (e) During the last five years, the Reporting Persons have not (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect to such laws. ITEM 4. PURPOSE OF TRANSACTION All shares of Class B Common Stock held by the Reporting Persons were acquired in connection the formation of the Company or its predecessors, equity contributions prior to the registration of the Class A Common Stock under Section 12(g) of the Exchange Act ("Registration") and in open market or privately negotiated transactions since Registration. All shares of Class A Common Stock and Class B Common Stock acquired by the Reporting Persons have been acquired for general investment purposes. The Reporting Persons may from time to time seek to increase, reduce or dispose of their investment in the Company in open market or privately negotiated transactions or otherwise. The determination to effect any such transactions will depend on, among other things, the market price of the Company's securities, availability of funds, borrowing costs, market conditions, tax considerations, developments affecting the Company and the Reporting Persons, other opportunities available to the Reporting Persons and other considerations. As a result of the sole voting power held by Mr. Aab with respect to 100% of the Class B Common Stock and 78,175 shares of Class A Common Stock, Mr. Aab controls the Company. From time to time, Mr. Aab or one or more of the other Reporting Persons may hold discussions with third parties or with management of the Company in which the Reporting Person may suggest or take a position with respect to potential changes in the operations, management or capital structure of the Company. Such suggestions or positions may relate to one or more of the transactions specified in clauses (a) through (j) of Item 4 of Schedule 13D. Except as set forth above, the Reporting Persons do not have any present plans or proposals that relate to or would result in any of the actions required to be described in Item 4 of Schedule 13D. Each of the Reporting Persons may, at any time, review or reconsider his or her position with respect to the Company and formulate plans or proposals with respect to any of such matters, but has no present intention of doing so. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (A)-(B) Mr. Aab beneficially owns 17,153,445 shares of Class A Common Stock. This amount includes (i) 8,480,770 shares of Class A Common Stock issuable upon conversion of an equal number of shares of Class B Common Stock, 61,995 shares of Class A Common Stock held of record by Global Vista Communications, LLC, a limited liability controlled by Mr. Aab, and 16,180 shares of Class A Common Stock held of record by Mr. Aab as to which Mr. Aab has sole voting and dispositive power; (ii) 4,309,500 shares of Class A Common Stock issuable upon conversion of an equal number of shares of Class B Common Stock held of record by Melrich, of Page 7 of 9 Pages which Mr. and Mrs. Aab are the sole general partners and as to which Mr. and Mrs. Aab share dispositive power and Mr. Aab has sole voting power pursuant to the Class B Stockholders Agreement; and (iii) 294,000 shares issuable upon conversion of an equal number of shares of Class B Common Stock held of record by Mr. Ganatra and 3,750,000 shares issuable upon conversion of an equal number of shares of Class B Common Stock held of record by Super STAR, as to which Mr. Aab has sole voting power pursuant to the Class B Stockholders Agreement. Mr. Aab beneficially owns 62.3% of the Class A Common Stock, an amount which assumes conversion of the 16,834,270 shares of Class B Common Stock held of record by Mr. Aab, Melrich, Mr. Ganatra, and Super STAR. Mrs. Aab beneficially owns 4,309,500 shares of Class A Common Stock issuable upon conversion of an equal number of shares of Class B Common Stock held of record by Melrich and as to which Mr. and Mrs. Aab share dispositive power. Mrs. Aab beneficially owns 28.7% of the Class A Common Stock, an amount which assumes conversion of the 4,309,500 shares of Class B Common Stock held of record by Melrich. Mr. Ganatra beneficially owns 4,044,000 shares of Class A Common Stock. This amount includes 294,000 shares issuable upon conversion of an equal number of shares of Class B Common Stock held of record by Mr. Ganatra directly and 3,750,000 shares issuable upon conversion of an equal number of shares of Class B Common Stock held of record by Super STAR. Mr. Ganatra holds sole dispositive power with respect to these shares. Mr. Ganatra beneficially owns 27.4% of the Class A Common Stock, an amount which assumes conversion of the 4,044,000 shares of Class B Common Stock held of record by Mr. Ganatra and Super STAR. (c) No transactions by the Class B Stockholders have been effected within the last 60 days other than the elective conversion by Mr. Aab of 241,000 shares of Class B Common Stock into an equal number of shares of Class A Common Stock on March 20, 2000. (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIP WITH RESPECT TO SECURITIES OF THE ISSUER THE CLASS B STOCKHOLDERS AGREEMENT. The Reporting Persons own all of the issued and outstanding shares of Class B Common Stock and are parties to the Class B Stockholders Agreement, pursuant to which Melrich, Ganatra and Super STAR have agreed to vote their shares of Class B Common Stock in the same manner as Mr. Aab and granted to him an irrevocable proxy to vote their shares of Class B Common Stock. Upon Mr. Aab's death or incapacity, the proxy held by him will terminate and the parties to the Class B Stockholders Agreement will then be obligated to vote their shares of Class B Common Stock in the same manner as Mr. Ganatra and grant to Mr. Ganatra an irrevocable proxy to vote their shares of Page 8 of 9 Pages Class B Common Stock. The voting and proxy provisions of the agreement terminate upon the the last to occur of the death or incapacity of Mr. Aab or Mr. Ganatra. The Class B Stockholders Agreement also provides that if a party proposes to sell or otherwise transfer shares of Class B Common Stock to anyone other than a Permitted Transferee (as defined in the Company's Restated Certificate of Incorporation) or to convert such shares into Class A Common Stock, the other holders of Class B Common Stock would have a right to acquire the shares of Class B Common Stock that are proposed to be sold, transferred, or converted. THE VOTING AGREEMENT. The holders of Series A Preferred Stock are entitled to elect two directors of the Company ("Investor Directors") for so long as they own at least 30% of the Class A Common Stock issued or issuable upon conversion of the Series A Preferred Stock (the "Underlying Common Stock"), and one director for so long as they own less than 30% but more than 20% of the Underlying Common Stock. In connection with the Preferred Stock Transaction, the Class B Stockholders entered into the Voting Agreement. Pursuant to the Voting Agreement, at any time when the Class B Stockholders are entitled to vote on the election of Investor Directors, they must vote in favor of the election of any Investor Director nominated in accordance with the agreements governing the Preferred Stock Transaction. In addition, the Class B Stockholders agreed not to transfer for value any shares of the Company's common stock if, as a result of such transfer, a Change of Control (as defined in the Certificate of Designation of the Series A Preferred Stock) would occur, unless certain conditions have been met. Under the Voting Agreement, the Class B Stockholders also granted to the Investors the right to participate in certain sales of the Company's common stock to third parties. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 1: Joint Filing Agreement of Richard T. Aab, Joyce M. Aab, and Tansukh V. Ganatra pursuant to Rule 13d-1(k)* Exhibit 2: Second Amended and Restated Class B Stockholders Agreement, dated as of April 10, 2000, by and among the Class B Stockholders Exhibit 3 Voting and Tag Along Agreement, dated as of April 11, 2000 by and among the Class B Stockholders and the Investors ----------- * Incorporated by reference to Exhibit 1 of the statement on Schedule 13D filed by the Reporting Persons on June 11, 1998. Page 9 of 9 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: May 12, 2000 /s/ Richard T. Aab ---------------------- Richard T. Aab /s/ Joyce M. Aab ---------------------- Joyce M. Aab /s/ Tansukh V. Ganatra ---------------------- Tansukh V. Ganatra EX-2 2 SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT THIS SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of the 10th day of April, 2000, is by and among RICHARD T. AAB, a resident of Pittsford, New York ("Aab"), MELRICH ASSOCIATES, L.P., a New York limited partnership ("Melrich"), TANSUKH V. GANATRA, a resident of Charlotte, North Carolina ("Ganatra"), and SUPER STAR ASSOCIATES LIMITED PARTNERSHIP, a Georgia limited partnership ("Super STAR"). Aab, Melrich, Ganatra and Super STAR are sometimes referred to individually as a "Stockholder" and collectively as the "Stockholders." BACKGROUND: ----------- A. US LEC Corp., a Delaware corporation (the "Corporation"), has Seventeen Million Seventy-Five Thousand Two Hundred Seventy-Two (17,075,272) shares of authorized Class B Common Stock, par value $.01 per share ("Class B Common"), of which Sixteen Million Eight Hundred Thirty-Four Thousand Two Hundred Seventy (16,834,270) shares are currently issued and outstanding (as defined in Section 6, the "Shares"). B. The Stockholders own and hold of record the following Shares: STOCKHOLDER NUMBER OF SHARES ----------- ---------------- Richard T. Aab 8,480,770 Melrich Associates, L.P. 4,309,500 Tansukh V. Ganatra 294,000 Super STAR Associates Limited Partnership 3,750,000 C. The Stockholders believe that it is in their best interest to enter into specific agreements concerning the disposition, conversion and voting of the Shares. D. Concurrently with the execution of this Agreement, the Corporation and affiliates of Bain Capital, Inc. and Thomas H. Lee Partners, L.P. (the "INVESTORS") are entering into a Preferred Stock Purchase Agreement (the "PURCHASE AGREEMENT") which provides for, among other things, the purchase by the Investors of 200,000 shares of the Corporation's Series A Convertible Preferred Stock for an aggregate purchase price of $200,000,000. E. The Stockholders believe the transactions contemplated by the Purchase Agreement are in the best in of the Corporation and will be of direct benefit to them by providing the Corporation with additional capital to expand and diversify its telecommunications business and potentially increase the value of the Shares. F. As an inducement to the Investors to enter into the Purchase Agreement, and the other agreements contemplated by the Purchase Agreement, the Class B Stockholders are willing to enter into and be bound by this Agreement pursuant to which the Stockholders agree to amend and restate certain provisions concerning the disposition, conversion and voting of the Shares contained in the Amended and Restated Shareholders Agreement, dated January 1, 1998, and the irrevocable proxy executed in connection therewith, both of which shall be superceded in their entirety by this Agreement and the irrevocable proxies in the forms attached hereto as Exhibit A and Exhibit B. Accordingly, in consideration of the premises and of the mutual covenants and agreements contained herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Stockholders do hereby agree as follows: 1. VOTING OF THE SHARES (a) For so long as Aab is living and not Incapacitated (as defined below), each Stockholder other than Aab shall vote all of his, hers or its Shares (whether now owned or hereafter acquired), whether for directors or for any other purpose, in the same manner as Aab. (b) For so long as Aab is living and not Incapacitated, each Stockholder other than Aab shall give his, hers or its irrevocable proxy to Aab, contemporaneously with the execution and delivery of this Agreement and hereafter from time to time at the request of Aab, by executing and delivering to Aab an irrevocable proxy in the form of the proxy attached hereto as Exhibit A. Aab shall vote the Shares to elect one (1) designee of Ganatra and one (1) designee of Aab as Class B Directors (as defined in the Restated Certificate of the Corporation (the "Certificate")). (c) If Aab shall die or become Incapacitated prior to such time as Ganatra dies or becomes Incapacitated, the irrevocable proxy granted pursuant to Section 1(b) of this Agreement shall terminate and, for so long as Ganatra is living and not Incapacitated, each Stockholder other than Ganatra shall vote all of his, hers or its Shares (whether now owned or hereafter acquired), whether for directors or for any other purpose, in the same manner as Ganatra. (d) If Aab shall die or become Incapacitated prior to such times as Ganatra dies or becomes Incapacitated, for so long as Ganatra is living and not Incapacitated, each Stockholder other than Ganatra shall give his, hers or its irrevocable proxy to Ganatra, and thereafter from time to time at the request of Ganatra, by executing and delivering to Ganatra an irrevocable proxy in the form of proxy attached hereto as Exhibit B. (e) If, at any time subsequent to becoming Incapacitated, Aab shall cease being Incapacitated, Sections 1(a) and (b) of this Agreement shall again become operative as if this Agreement had been executed and delivered at such time and the irrevocable proxy given pursuant to Section 1(d) shall terminate. 2. Offer Upon Elective Conversion. If any Stockholder desires to effect an elective conversion of any Shares (whether now owned or hereafter acquired) into shares of Class A Common Stock of the Corporation ("Class A Common"), as provided for in the Restated 2 Certificate, the Stockholder shall first submit to all other Stockholders a written notice of the Stockholder's intent to convert his, her or its Shares into Class A Common, along with an offer to sell or exchange all or part of the Shares proposed to be converted, pursuant to this Section 2 (the "Conversion Notice"). Each Conversion Notice shall constitute dual, binding offers by the offering Stockholder to (A) sell all or part of such Shares for cash (the "Cash Offer") or (B) exchange all or part of such Shares for an equal number of shares of Class A Common (the "Exchange Offer"). (a) The offered Shares shall be allocated among the other Stockholders on the basis of the percentage of Shares then owned by them (excluding Shares owned by the offering Stockholder). Each offeree Stockholder shall have the right to purchase (by cash or exchange of shares of Class A Common) all or part of his, her or its allocated portion of the offered Shares. (b) Within ten (10) days of delivery of the Conversion Notice, each offeree Stockholder shall provide written notice to the offering Stockholder and all other Stockholders of his, her or its election to consider acceptance of either the Cash Offer or the Exchange Offer and, if he, she or it intends to consider a Cash Offer, the expiration date for the six month period referred to in subsection (c)(ii) below (if applicable). An election by an offeree Stockholder to consider the Cash Offer shall automatically terminate the Exchange Offer to such Stockholder and an election by an offeree Stockholder to consider the Exchange Offer shall automatically terminate the Cash Offer to such Stockholder. (c) For those offeree Stockholders electing to consider the Cash Offer (the "Cash Offerees"), the Cash Offer shall continue to be a binding offer of the offering Stockholder to sell until the later of, (i) the expiration of thirty (30) days after delivery of the Conversion Notice or (ii) 5:00 p.m. on the first business day subsequent to the expiration of the six month period following consummation, by any Cash Offeree, of any transaction treated as a nonexempt sale under Section 16(b) of the Securities Exchange Act of 1934, as amended (the later of such times is referred to herein as the "Cash Offer Expiration Date"). If any Cash Offeree does not purchase all of his, her or its allocated portion of the offered Shares on or before the Cash Offer Expiration Date, the offering Stockholder shall give written notice to the other Cash Offerees, and such other Cash Offerees shall have an additional ten (10) days from the delivery of such notice to elect to purchase such declined Shares at the same price and upon the same terms previously offered to the declining Cash Offeree (and the Cash Offer shall continue to be a binding offer with respect to such declined shares until the expiration of such additional ten (10) day period). Any such Shares shall be allocated to the remaining Cash Offeree(s) on the basis of the percentage of Shares owned by them (excluding Shares owned by the offering Stockholder, the declining Cash Offeree(s), and the Exchange Offeree(s), as defined below). (d) For those offeree Stockholders electing to consider the Exchange Offer (the "Exchange Offerees"), the Exchange Offer shall continue to be a binding offer of the offering Stockholder to exchange Shares for an equal number of shares of Class A Common until the expiration of thirty (30) days after delivery of the Conversion Notice (the "Exchange Offer Expiration Date"). If any Exchange Offeree does not exchange all of his, her or its allocated share of the offered Shares on or before the Exchange Offer Expiration Date, the offering Stockholder shall give written notice to the other Exchange Offerees, and such other Exchange Offerees shall have an additional ten (10) days from the delivery of 3 such notice to elect to acquire such declined Shares upon the same terms previously offered to the declining Exchange Offeree (and the Exchange Offer shall continue to be a binding offer with respect to such declined Shares until the expiration of such additional ten (10) day period). Any such Shares shall be allocated to the remaining Exchange Offeree(s) on the basis of the percentage of Shares owned by them (excluding Shares owned by the offering Stockholder, the declining Exchange Offeree(s), and the Cash Offeree(s)). (e) Purchase Price Payable by Cash Offerees. The cash purchase price of each Share for purposes of this Section 2 shall be the average of the closing prices of a share of Class A Common for the ten (10) trading days immediately following the date on which Conversion Notice is given by the offering Stockholder, as reported in The Wall Street Journal or other reporting services acceptable to all parties hereto. If at the time the purchase price is to be determined, shares of the Class A Common are not publicly traded, the purchase price shall be determined as follows: ( 8 x EBITDA -------------- Per Share Purchase Price = .75 x Total A&B ) Where EBITDA = The Corporation's earnings before interest, taxes, depreciation and amortization as shown on the most recent consolidated year end financial statements of the Corporation. and Total A&B = Total issued and outstanding shares of the Corporation's Class A Common and Class B Common at the time the purchase price is determined. (f) Terms of Purchase and Payment for Cash Offerees. If any Cash Offeree elects to purchase Shares in accordance with this Section 2, the purchase must be consummated at the principal office of the Corporation in the State of North Carolina on the last day the Cash Offer remains binding (or at such other time and place as may otherwise be acceptable to the selling Stockholder and the purchasing Stockholder). Payment of the purchase price of the Shares shall be made at closing by wire transfer of immediately available funds to an account designated by the selling Stockholder or by certified check payable to the selling Stockholder. Upon tender of the purchase price, the selling Stockholder shall deliver to the purchasing Stockholder one or more certificates representing all Shares being purchased, duly endorsed over to the purchaser or accompanied by duly executed stock powers. The Stockholders shall cause the Corporation to cooperate with selling and purchasing Stockholders in connection with such offers and closing, including, but not limited to, providing appropriately denominated certificates on a timely basis. If, pursuant to this Section 2, the Cash Offer Expiration Date occurs on a date which is subsequent to the thirtieth (30th) day subsequent to delivery of the Conversion Notice, then on the thirtieth day subsequent to delivery of the Conversion Notice, the Cash Offerees (other than those who have, prior to such date either purchased their allocated portion of the offered Shares or have notified the offering Stockholder of their decision not to purchase their allocated share of the offered Shares) shall submit a non-refundable deposit (by wire transfer of immediately available funds to an account designated by the offering Stockholder 4 or by certified check payable to the offering Stockholder) to the offering Stockholder in an amount equal to twenty-five percent (25%) of the purchase price of such Stockholder's share of offered Shares (not previously purchased or declined). In the event that a Cash Offeree who has submitted a deposit does not purchase his, her or its allocated portion of the offered Shares on or before the Cash Offer Expiration Date, his, her or its deposit shall be forfeited. (g) Terms of Closing for Exchange Offerees. If any Exchange Offeree elects to accept the Exchange Offer in accordance with this Section 2, the exchange must be consummated at the principal office of the Corporation in the State of North Carolina on the last day on which the Exchange Offer remains binding (or at such other time or place as may otherwise be acceptable to the selling Stockholder and the purchasing Stockholder). At the closing, the accepting Exchange Offerees shall deliver to the selling Stockholder one or more certificates representing all shares of Class A Common being exchanged, duly endorsed over to the selling Stockholder or accompanied by duly executed stock powers, and the selling Stockholder shall deliver to the Exchange Offerees one or more certificates representing all Shares being exchanged, duly endorsed over to the accepting Exchange Offerees or accompanied by duly executed stock powers. The Stockholders shall cause the Corporation to cooperate with the participating Stockholders in connection with such exchange and closing, including, but not limited to, providing appropriately denominated certificates on a timely basis. 3. Transfer of Shares. The Stockholders hereby agree that, unless all of the other Stockholders give their written consent thereto, no Stockholder shall make a voluntary transfer or otherwise dispose of (as defined in Section 6(c) herein) any of his, her or its Shares, whether now owned or hereafter acquired, to any party other than another Stockholder, except that such Shares may be transferred to a Permitted Transferee (as defined in Article IV of the Certificate), but only if, simultaneously with the transfer of such Shares, such Permitted Transferee becomes a signatory to this Agreement as a "Stockholder" (by executing and delivering to all other Stockholders a signature page by which he, she or it agrees without condition to be bound by this Agreement as a "Stockholder," and provides an address for the giving of notices, and executes and delivers to Aab or Ganatra, as applicable, an irrevocable proxy as required by Section 1 of this Agreement. 4. Divorce or Legal Separation of a Stockholder (a) Notwithstanding anything herein to the contrary, if a spouse of a Stockholder has received Shares as a Permitted Transferee (as defined in Article IV of the Certificate) and such spouse is subsequently no longer legally married to or is legally separated from such Stockholder, then such Stockholder shall have an option to purchase any or all of such Shares (by cash payment or exchange). The option shall constitute a binding offer of the spouse to sell any or all of the Shares to the Stockholder at the same price per share and upon the same terms as is provided in Section 2 hereof, except that the cash purchase price shall be determined based on the closing prices of a share of Class A Common for the ten (10) trading days immediately following the date of the legal separation or divorce of such spouse and Stockholder and the option shall extend from the date of the divorce or legal separation until the applicable expiration date (excluding the additional ten day periods) provided in Section 2 (calculated by using the date of the divorce or legal separation rather than the date of delivery of the Conversion Notice). 5 (b) If such Stockholder does not purchase all such Shares of his or her spouse pursuant to the option described in (a), then (i) such Stockholder shall give written notice (a "Divorce Notice") to all other Stockholders, and (ii) the other Stockholders shall have an option to acquire all or part of the declined Shares. This option shall constitute a binding offer of such spouse to sell all or part of the Shares to the other Stockholders at the same price per share and upon the same terms as provided in Section 2 hereof, except that the cash purchase price shall be determined based on the closing prices of a share of Class A Common for the ten (10) trading days immediately following the date of the legal separation or divorce of such spouse and Stockholder. The option shall confer upon each such other Stockholder the right to purchase (by cash payment or exchange) his, her or its allocated portion of the declined Shares (allocated pro rata based on the Shares owned by all Stockholders other than the spouse and the declining Stockholder), and shall extend, with regard to each Stockholder, from the delivery of the Divorce Notice to such other Stockholder until the applicable expiration date (including but not limited to the additional ten day periods) provided in Section 2 (calculated by using the date of the delivery of the Divorce Notice rather than the date of delivery of the Conversion Notice). 5. Endorsement on Stock Certificate. The Stockholders shall use their best efforts to cause each certificate representing Shares at any time owned by any Stockholder to bear the following legend prominently displayed thereon: "THE SHARES REPRESENTED BY THIS CERTIFICATE, AND THE TRANSFER HEREOF, ARE SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AS OF JANUARY 1, 1998, AS AMENDED FROM TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED FROM ANY STOCKHOLDER OWNING SHARES OF CLASS B COMMON STOCK UPON REQUEST." 6. Certain Interpretations and Definitions. As used in this Agreement: (a) "Stockholder" or "Stockholders" means stockholders of the Corporation who are parties to this Agreement as provided on page 1 hereof, and any successor in interest or transferee of any Shares of such Stockholder who purchased shares in accordance with this Agreement. (b) "Shares" means any outstanding shares of Class B Common Stock of the Corporation now owned (as shown in the Background recitals hereto) or hereafter acquired by any Stockholder, any shares of Class B Common Stock distributed with respect to any such shares in a stock split, stock dividend or other recapitalization or reorganization, and any other outstanding shares of the Corporation that otherwise become subject to this Agreement by written agreement among the parties. (c) The terms "transfer", "dispose of" and/or "disposition", when used with respect to shares, mean and include any sale, assignment, transfer, conveyance, gift, encumbrance, pledge, hypothecation, equitable distribution or other disposition of Shares (whether voluntary, involuntary, or otherwise), including permitting a levy or attachment on the Shares. 6 (d) An "involuntary" transfer or disposition of shares means (i) a testamentary or intestate transfer or disposition made incident to the death of a Stockholder, (ii) a transfer made in connection with the divorce or separation of a Stockholder pursuant to a property settlement agreement that is filed for public record, or (iii) a transfer made pursuant to an order issued by a court of competent jurisdiction in connection with the involuntary bankruptcy of, or the appointment of a receiver for, a Stockholder. (e) A "voluntary" transfer or disposition of Shares refers to any transfer or disposition other than an involuntary transfer or disposition. (f) "Incapacitated" means under any one or more of the following circumstances: (i) during any period that the individual is legally incompetent as determined by a court of competent jurisdiction; (ii) during any period beginning when two physicians licensed to practice medicine certify in writing that, in their opinion, the individual, as a result of illness, age or other cause, no longer has the capacity to act prudently or effectively in financial affairs and continuing until two such physicians (whether or not those making the initial determination) certify in writing that, in their opinion, the individual's capacity is restored; or (iii) during any period that a person (other than such individual) has evidence that the individual is absent without explanation or is being detained against his will under circumstances in which he does not have the capacity to act prudently or effectively in financial affairs. 7. Term. The term of this Agreement shall commence on the date hereof and shall continue in effect until January 1, 2010. Thereafter, this Agreement shall automatically renew for successive one (1) year terms unless all of the Stockholders then holding Shares elect to terminate this Agreement as of the end of the then current term (initial or renewal). Notwithstanding the foregoing, Section 1 hereof shall be of no further force or effect upon the last to occur of: (a) The death or Incapacity of Aab; or (b) The death or Incapacity of Ganatra. 8. Notices. Any and all notices, consents, offers, acceptances or other communications made hereunder must be in writing and shall be deemed given and delivered when delivered personally or by courier service, provided evidence of receipt is obtained, or three (3) days after mailing if mailed by registered or certified mail, return receipt requested, postage prepaid, and addressed as follows (or to such other address that the parties may from time to time designate in a writing sent to all other parties of this Agreement in the manner required by this Section 8, except that any such change of address notice shall only be effective upon receipt): (a) if to Richard T. Aab: 200 Meridian Centre, Suite 140 Rochester, New York 14618 (b) if to Melrich Associates L.P.: 200 Meridian Centre, Suite 140 Rochester, New York 14618 7 (c) if to Tansukh V. Ganatra: 6523 Ashdale Place Charlotte, North Carolina 28215 (d) if to Super STAR Associates Limited Partnership: 6523 Ashdale Place Charlotte, North Carolina 28215 (e) Copies of any such correspondence shall also be sent to: US LEC Corp. 401 North Tryon Street, Suite 1000 Charlotte, North Carolina 28202 Attention: General Counsel and Moore & Van Allen, PLLC 100 North Tryon Street, Floor 47 Charlotte, North Carolina 28202-4003 Attention: Barney Stewart III 9. Severability. If any such provision of this Agreement shall be invalid or unenforceable for any reason, the other provisions shall continue to be effective and binding and this Agreement shall be construed as if the invalid or unenforceable provision were omitted. If any provision of this Agreement is unenforceable after a certain period of years from the date hereof due to the requirements of any state laws, the remainder of the Agreement shall remain enforceable and binding in accordance with its terms. 10. Binding Effect. This Agreement shall be binding upon the Stockholders, and their respective heirs, legal representatives, executors, administrators, successors and permitted assigns. Any rights given or duties imposed upon the estate of a deceased Stockholder shall inure to the benefit of and be binding upon the legal representative of such deceased Stockholder's estate in his or her fiduciary capacity. 11. Entire Agreement, Amendment, Waiver. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes any and all other agreements, either written or oral, among the parties hereto regarding the same subject matter. The provisions of this Agreement may be amended, modified or waived only as provided for herein or on unanimous written consent of the Stockholders. A written waiver provided pursuant to this Section 11 shall be effective only in the specific instance and for the specific purpose for which given. No failure or delay on the part of any Stockholder in the exercise of any right, power or privilege hereunder shall operate as a waiver of any such right, power or privilege nor shall any such failure or delay preclude any other or further exercise hereof. 8 12. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. 13. Captions. The captions herein are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Agreement nor any provisions hereof. 14. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware. 15. Arbitration. (a) Any dispute, controversy, difference or claim arising out of, relating to or in connection with this Agreement, any transaction hereunder, or the breach hereof shall be decided by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect, except as otherwise agreed by the parties. Any such arbitration shall be conducted on the earliest possible date and conducted in Charlotte, North Carolina. The arbiter's award shall be final and binding on the parties hereto and judgment upon the award may be entered in any court having jurisdiction thereof. Expenses in the arbitration shall be apportioned between the parties by the arbiter. The arbitration award may include reasonable attorneys' fees from the other party. No action, regardless of form, arising out of this Agreement may be brought more than three (3) years after the cause of action for such action has accrued. (b) Notwithstanding subsection (a), either party may, if it believes that it requires or is entitled to injunctive relief, file a civil action in any court having jurisdiction seeking injunctive relief. Any claim or demand for monetary damages shall, however, be governed exclusively by the provisions for arbitration set forth in subsection (a). 9 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement under seal as of the date first above written. /s/ Richard T. Aab ---------------------------------------------- Richard T. Aab MELRICH ASSOCIATES, L.P. By: /s/ Richard T. Aab ------------------------------------- Richard T. Aab, General Partner By: /s/ Joyce M. Aab ------------------------------------- Joyce M. Aab, General Partner T. V. Ganatra ---------------------------------------------- Tansukh V. Ganatra SUPER STAR ASSOCIATES LIMITED PARTNERSHIP By: T. V. Ganatra ------------------------------------- Tansukh V. Ganatra, General Partner 10 EXHIBIT A to SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT APPOINTMENT OF IRREVOCABLE PROXY The undersigned stockholder of US LEC CORP., a Delaware corporation (the "Corporation"), does hereby constitute and appoint RICHARD T. AAB ("Aab") as his, her or its proxy with full power of substitution, for and on its behalf to attend all meetings of stockholders of such Corporation and to act, vote and execute consents with respect to all shares of Class B Common Stock of the Corporation owned by the undersigned stockholder, as fully and to the same extent as the undersigned stockholder might do itself. This proxy is irrevocable and is coupled with an interest, having been executed in connection with that certain Amended and Restated Stockholders Agreement dated as of April __, 2000 to which Aab and the undersigned are among the parties (the "Stockholders Agreement"). This appointment of proxy shall continue in full force and effect during the period specified in the Stockholders Agreement. This the ____ day of , 2000. ----------------------- By: --------------------------------- Name: ------------------------------- EXHIBIT B to SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT APPOINTMENT OF IRREVOCABLE PROXY The undersigned stockholder of US LEC CORP., a Delaware corporation (the "Corporation"), does hereby constitute and appoint TANSUKH V. GANATRA ("Ganatra") as his, her or its proxy with full power of substitution, for and on its behalf to attend all meetings of stockholders of such Corporation and to act, vote and execute consents with respect to all shares of Class B Common Stock of the Corporation owned by the undersigned stockholder, as fully and to the same extent as the undersigned stockholder might do itself. This proxy is irrevocable and is coupled with an interest, having been executed in connection with that certain Amended and Restated Stockholders Agreement dated as of April __, 2000 to which Ganatra and the undersigned are among the parties (the "Stockholders Agreement"). This appointment of proxy shall continue in full force and effect during the period specified in the Stockholders Agreement. This the day of , . ----- ----------------------- -------- By: ------------------------------- Name: ----------------------------- EX-3 3 VOTING AND TAG ALONG AGREEMENT VOTING AND TAG ALONG AGREEMENT This Voting AND TAG ALONG Agreement (this "Agreement") is made and entered into as of April 11, 2000, by and among the persons whose names are set forth on the attached Schedule I (collectively, the "Investors") and Richard T. Aab ("Aab"), Melrich Associates, L.P., a New York limited partnership ("Melrich"), Tansukh V. Ganatra ("Ganatra") and Super STAR Associates Limited Partnership, a Georgia limited partnership ("Super STAR"). Aab, Melrich, Ganatra and Super STAR are collectively referred to herein as the "Class B Stockholders." STATEMENT OF PURPOSE A. The Class B Stockholders own and hold of record the following shares of Class B Common Stock, par value $0.01 per share ("Class B Common Stock"), issued by US LEC Corp., a Delaware corporation (the "Company"), which constitute all of the issued and outstanding shares of Class B Common Stock: CLASS B NUMBER STOCKHOLDERS OF SHARES ----------------------- ----------------- Aab 8,480,770 Melrich 4,309,500 Ganatra 294,000 Super STAR 3,750,000 ----------------- Total 16,834,270 ================= B. The Class B Stockholders have entered into a Second Amended and Restated Stockholders Agreement, of even date herewith (the "Stockholders Agreement"), pursuant to which, among other things, Melrich, Ganatra and Super STAR (i) agreed to vote all of their shares of Class B Common Stock in the same manner as Aab and (ii) granted to Aab an irrevocable proxy, with full power of substitution, for and on their behalf to attend all meetings of stockholders of the Company and to act, vote and execute consents with respect to all of their shares of Class B Common Stock, which proxy continues in full force and effect for the period specified in the Stockholders Agreement (the "Irrevocable Proxy"). C. The Board of Directors of the Company has designated a new series of Series A Convertible Preferred Stock (the "Preferred Stock") pursuant to a Certificate of Designation (the "Designation") amending the Company's Restated Certificate of Incorporation (as so amended and as further amended from time to time, the "Restated Certificate"). D. Concurrently with the execution of this Agreement, the Company and the Investors are entering into a Preferred Stock Purchase Agreement (the "Purchase Agreement") which provides for (i) the purchase by the Investors of an aggregate of 200,000 shares of the Preferred Stock, (ii) the issuance of an option to the Investors (the "Option") to purchase up to an aggregate of 100,000 shares of the Company's Series B Convertible Preferred Stock (the "Option Preferred Stock") having the terms set forth in the Series B Certificate of Designation (the "Option Designation") attached as an exhibit to the Option Agreement (as defined in the Purchase Agreement) and (iii) a Corporate Governance Agreement which obligates the Company to take certain actions in connection with the Purchase Agreement (the "Corporate Governance Agreement"). E. Shares of the Preferred Stock and shares of Option Preferred Stock, when issued under the Option Agreement, will be convertible into shares of the Company's Class A Common Stock, par value $.01 per share ("Class A Common Stock"). "Common Stock" means any Class A Common Stock, Class B Common Stock or any other class of common stock created by the Company. "Subject Common Stock" means any Common Stock now or hereafter held by the Class B Stockholders. F. As an inducement to the Investors to enter into the Purchase Agreement, the Class B Stockholders are willing to enter into and be bound by this Agreement pursuant to which, among other things, the Class B Stockholders grant to the Investors, certain tag-along rights and voting agreements with respect to the shares of Subject Common Stock upon the terms set forth herein. Now, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows: 1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CLASS B STOCKHOLDERS. The Class B Stockholders hereby represent, warrant and covenant to the Investors as follows: (a) Ownership of and Proxy Held With Respect to the Class B Shares. Aab owns and holds of record 8,480,770 shares of Class B Common Stock and holds an irrevocable proxy with respect to the 4,309,500 shares of Class B Common Stock owned and held of record by Melrich, 294,000 shares of Class B Common Stock owned and held of record by Ganatra and 3,750,000 shares of Class B Common Stock owned and held of record by Super STAR. (b) Authority; No Conflict. This Agreement has been duly executed and delivered by the Class B Stockholders and constitutes the legal, valid and binding obligation of each of them, enforceable against each of them in accordance with its terms, except as limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally and (ii) general principles of equity, regardless of whether asserted in a proceeding in equity or at law. Neither the execution and delivery of this Agreement nor the performance by the Class B Stockholders of the obligations contemplated hereby will result in a violation of, or a default under, or conflict with, any contract, trust, commitment, agreement, understanding, arrangement or restriction of any kind to which a Class B Stockholder is a party or bound or to which the shares of Subject Common Stock are subject. Performance by the Class B Stockholders of the obligations contemplated hereby will not violate, or require any consent, approval, or notice under, any provision of any judgment, order, decree, statute, law, rule or regulation applicable to the Class B Stockholders or the shares of Subject Common Stock. 2 (c) Investors' Reliance. The Class B Stockholders understand and acknowledge that the Investors are entering into the Purchase Agreement in reliance upon the Class B Stockholders' execution and delivery of this Agreement. 2. ADDITIONAL DOCUMENTS The Class B Stockholders hereby covenant and agree to execute and deliver any additional documents necessary or desirable, in the reasonable opinion of the Investors, to carry out the intent of this Agreement. 3. AGREEMENT TO VOTE FOR DIRECTORS (a) If, pursuant to the Restated Certificate, the Class B Stockholders are authorized to vote on a proposal to elect one or more Investor Directors (as defined in the Corporate Governance Agreement) presented at any meeting of stockholders of the Company, the Class B Stockholders shall vote each share of Subject Common Stock as to which they hold voting power in favor of the election of any Investor Director at such meeting and any adjournment thereof. (b) If, pursuant to the Restated Certificate, the Class B Stockholders are authorized to vote on a proposal to elect one or more persons as directors to the Board (as defined in the Corporate Governance Agreement) presented at any meeting of stockholders of the Company called upon (i) the exercise by the Investor Agents (as defined in the Corporate Governance Agreement) of a remedy they are entitled to exercise pursuant to Section 3.4 of the Corporate Governance Agreement, or (ii) the exercise by the Permitted Owners (as defined in the Corporate Governance Agreement) of any rights they are entitled to exercise under Section 5 of the Designation and the Option Designation, the Class B Stockholders shall vote each share of Subject Common Stock as to which they hold voting power in favor of the election of such persons as directors as may be designated or nominated by the Investor Agents or Permitted Owners, as applicable (including any Investor Directors as defined in the Corporate Governance Agreement); provided that the Class B Stockholders shall not be required to vote their shares of Subject Common Stock in favor of more than such number of persons so designated or nominated who, upon their election, would then constitute (together with any incumbent Investor Directors) a majority of the members of the Board. 4. POTENTIAL CHANGE OF CONTROL TRANSFERS The Class B Stockholders agree not to Transfer for value any shares of Subject Common Stock if, as a result of such Transfer, a Change of Control (as defined in the Designation and the Option Designation) would occur unless either (i) the outstanding shares of Preferred Stock and Option Preferred Stock have been converted into Class A Common Stock prior to such Change of Control or (ii) the Company is legally able, and has the resources necessary, to comply with the provisions of Section 5.1(b) of the Designation and the Option Designation upon the exercise by the holders of Preferred Stock and Option Preferred Stock of their rights to require the Company to redeem the Preferred Stock and Option Preferred Stock. 3 5. TAG ALONG RIGHTS No Class B Stockholder (each such stockholder, a "Prospective Selling Class B Stockholder") shall Transfer for value (a "Sale") any shares of Common Stock ("Shares") to any Person (a "Prospective Buyer") except in compliance with this Section 5. Any attempted Sale of Shares not in compliance with this Section 5 shall be null and void, and the Company shall not in any way give effect to any such impermissible Sale. (a) Notice. A written notice (the "Tag Along Notice") shall be furnished by the Prospective Selling Class B Stockholders to the Company, and to each Permitted Owner of the Underlying Common Stock (as defined in the Corporate Governance Agreement) known to them based on the records maintained by the Company (each, a "Tag Along Holder") at least ten Business Days (as defined in the Purchase Agreement) prior to such Sale. The Tag Along Notice shall include: (i) The material terms of the proposed Sale, including the number of Shares to be purchased from the Prospective Selling Class B Stockholders, the percentage of the total number of Shares held by the Prospective Selling Class B Stockholders or their Affiliates (as defined in the Purchase Agreement) which such number of Shares constitutes (the "Tag Along Sale Percentage"), the maximum and minimum per share purchase price (which maximum price shall not be more than 110% of the minimum price) and the name and address of the Prospective Buyer; and (ii) An invitation to each Tag Along Holder to make an offer to include in the proposed Sale to the Prospective Buyer an additional number of Shares (not in any event to exceed the Tag Along Sale Percentage of the total number of shares of Underlying Common Stock held by such Tag Along Holder) owned by such Tag Along Holder, on the same terms and conditions, with respect to each Share sold, as the Prospective Selling Class B Stockholders shall sell each of their Shares. (b) Exercise. Within ten Business Days after the effectiveness of the Tag Along Notice, each Tag Along Holder desiring to make an offer to include Shares in the proposed Sale (each a "Participating Seller" and, together with the Prospective Selling Class B Stockholders, collectively, the "Tag Along Sellers") shall send a written offer (the "Tag Along Offer") to the Prospective Selling Class B Stockholders, with a copy to the Company, specifying the number of Shares (not in any event to exceed the Tag Along Sale Percentage of the total number of shares of Underlying Common Stock held by such Participating Seller) which such Participating Seller desires to have included in the proposed Sale. Each Tag Along Holder who does not accept the Prospective Selling Class B Stockholders' invitation to make an offer to include Shares in the proposed Sale shall be deemed to have waived all of its rights with respect to such Sale, and the Tag Along Sellers shall thereafter be free to sell to the Prospective Buyer, at a per share price no greater than the maximum per share price set forth in the Tag Along Notice and on other principal terms which are not materially more favorable to the Tag Along Sellers than those set forth in the Tag Along Notice, without any further obligation to such non-accepting Tag Along Holder. 4 (c) Irrevocable Offer. The offer of each Participating Seller contained in its Tag Along Offer shall be irrevocable, and, to the extent such offer is accepted, such Participating Seller shall be bound and obligated to sell in the proposed Sale on the same terms and conditions, with respect to each Share sold, as the Prospective Selling Class B Stockholders, up to such number of Shares as such Participating Seller shall have specified in its Tag Along Offer; provided, however, that if the principal terms of the proposed Sale change with the result that the per share price shall be less than the minimum per share price set forth in the Tag Along Notice or the other principal terms shall be materially less favorable to the Tag Along Sellers than those set forth in the Tag Along Notice, each Participating Seller shall be permitted to withdraw the offer contained in its Tag Along Offer and shall be released from its obligations thereunder. (d) Reduction of Shares Sold. The Prospective Selling Class B Stockholders shall attempt to obtain the inclusion in the proposed Sale of the entire number of Shares which the Tag Along Sellers requested to have included in the Sale (as evidenced in the case of the Prospective Selling Class B Stockholders by the Tag Along Notice and in the case of each Participating Seller by such Participating Seller's Tag Along Offer). In the event the Prospective Selling Class B Stockholders shall be unable to obtain the inclusion of such entire number of Shares in the proposed Sale, the number of Shares to be sold in the proposed Sale shall be allocated among the Tag Along Sellers in proportion, as nearly as practicable, to the respective number of Shares which each Tag Along Seller requested to be included in the proposed Sale. (e) Additional Compliance. If (i) prior to consummation, the terms of the proposed Sale shall change with the result that the per share price to be paid in such proposed Sale shall be greater than the maximum per share price set forth in the Tag Along Notice or the other principal terms of such proposed Sale shall be materially more favorable to the Tag Along Sellers than those set forth in the Tag Along Notice, the Tag Along Notice shall be null and void, and it shall be necessary for a separate Tag Along Notice to be furnished, and the terms and provisions of this Section 5 separately complied with, in order to consummate such proposed Sale pursuant to this Section 5; provided, however, that in the case of such a separate Tag Along Notice, the applicable period to which reference is made in Sections 5(a) and 5(b) shall be five Business Days and (ii) the Prospective Selling Class B Stockholders have not completed the proposed Sale by the end of the 90th day following the date of the effectiveness of the Tag Along Notice, each Participating Seller shall be released from its obligations under its Tag Along Offer, the Tag Along Notice shall be null and void, and it shall be necessary for a separate Tag Along Notice to be furnished, and the terms and provisions of this Section 5 separately complied with, in order to consummate such proposed Sale pursuant to this Section 5, unless the failure to complete such proposed Sale resulted from any failure by any Participating Seller to comply with the terms of this Section 5. (f) Excluded Transactions. Notwithstanding the foregoing, the Class B Stockholders shall not be obligated to comply with the foregoing provisions of this Section 5 and none of the Permitted Owners shall have any right of participation pursuant to the terms of this Section 5, or otherwise, in each case, with respect to any Sale of Shares: 5 (i) by a Class B Stockholder to another Class B Stockholder or to a Permitted Transferee who agrees to be bound by this Agreement as a Class B Stockholder; (ii) in a public offering of Common Stock with respect to which holders of Registrable Securities (as defined in the Registration Rights Agreement) have piggyback registration rights pursuant to the Registration Rights Agreement (as defined in the Purchase Agreement); or (iii) if, after giving effect to such Sale, the Class B Stockholders and their Permitted Transferees will continue to own in the aggregate not less than 85% of the shares of Subject Common Stock held by the Class B Stockholders as of the date of this Agreement. (g) Further Assurances. Each Participating Seller, whether in its capacity as a Participating Seller, stockholder, officer or director of the Company, or otherwise, shall take or cause to be taken all such actions as may be necessary or reasonably desirable in order expeditiously to consummate each Sale pursuant to this Section 5 and any related transactions, including, without limitation, executing, acknowledging and delivering consents, assignments, waivers and other documents or instruments; furnishing information and copies of documents; filing applications, reports, returns, filings and other documents or instruments with governmental authorities; and otherwise cooperating with the Prospective Selling Class B Stockholders and the Prospective Buyer; provided, however, that Participating Sellers shall be obligated to become liable in respect of any representations, warranties, covenants, indemnities or otherwise to the Prospective Buyer solely to the extent provided in the immediately following sentence. Without limiting the generality of the foregoing, each Participating Seller agrees to execute and deliver such agreements as may be reasonably specified by the Prospective Selling Class B Stockholders, to which such Prospective Selling Class B Stockholders will also be party, including, without limitation, agreements to (A) make individual representations, warranties, covenants and other agreements as to the unencumbered title to its Shares and the power, authority and legal right to sell such Shares and the absence of any adverse claim with respect to such Shares and (B) be liable (whether by purchase price adjustment, indemnity payments or otherwise) in respect of representations, warranties, covenants and agreements in respect of the Company and its subsidiaries; provided, however, that, except with respect to individual representations, warranties, covenants, indemnities and other agreements of Participating Sellers of the type described in clause (A) above, the aggregate amount of such liability shall not exceed the lesser of (x) such Participating Seller's pro rata portion of any such liability, to be determined in accordance with such Participating Seller's portion of the total number of Shares included in such Sale or (y) the proceeds to such Participating Seller in connection with such Sale; and provided, further, that with respect to individual representations, warranties, covenants, indemnities and other agreements of Participating Sellers of the type described in clause (A) above, the aggregate amount of such liability shall not exceed the proceeds to such Participating Seller in connection with such Sale. (h) Sale Process. The Prospective Selling Class B Stockholders shall, in their sole discretion, decide whether or not to pursue, consummate, postpone or abandon any 6 proposed Sale and the terms and conditions thereof. No Prospective Selling Class B Stockholder or any Affiliate of any Prospective Selling Class B Stockholder shall have any liability to any other holder of Shares arising from, relating to or in connection with the pursuit, consummation, postponement, abandonment or terms and conditions of any proposed Sale except to the extent such Prospective Selling Class B Stockholder shall have failed to comply with the provisions of this Section 5. (i) Expenses. All reasonable costs and expenses incurred by the Prospective Selling Class B Stockholders or the Company in connection with any proposed Sale pursuant to this Section 5 (whether or not consummated), including without limitation all attorneys fees and expenses, all accounting fees and charges and all finders, brokerage or investment banking fees, charges or commissions, shall be paid by the Prospective Selling Class B Stockholders. The reasonable costs and expenses incurred by the Participating Sellers in connection with any proposed Sale pursuant to this Section 5 (whether or not consummated) including, without limitation, all attorneys fees and expenses, all accounting fees and charges and all finders, brokerage or investment banking fees, charges or commissions, shall be paid by the Participating Seller(s). (j) Closing. The closing of a Sale pursuant to the Section 5 shall take place at such time and place as the Prospective Selling Class B Stockholders shall specify by notice to each Participating Seller. At the closing of any Sale under this Section 5, each Participating Seller shall deliver the certificates evidencing the Shares to be sold by such Participating Seller, duly endorsed, or with stock (or equivalent) powers duly endorsed, for transfer with signature guaranteed, free and clear of any liens or encumbrances, with any stock (or equivalent) transfer tax stamps affixed, against delivery of the applicable consideration. (k) Termination. The provisions of this Section 5 shall terminate and have no further force or effect immediately after the Permitted Owners cease to hold at least 20% of the Underlying Common Stock. 6. SUBJECT COMMON STOCK; TRANSFERS TO PERMITTED TRANSFEREES (a) Subject Common Stock. The Class B Stockholders agree that any shares of Subject Common Stock held or owned by them, or with respect to which they otherwise acquire beneficial ownership after the execution of this Agreement, including, without limitation, in the event of any stock split, stock dividend, recapitalization or other change in the capital structure of the Company affecting the Subject Common Stock, shall be subject to the terms and conditions of this Agreement to the same extent as if such shares constituted the shares of Subject Common Stock issued and outstanding as of the date hereof. (b) Transfers to Permitted Transferees. The Class B Stockholders agree that this Agreement and the obligations hereunder shall be binding upon any Permitted Transferee (as defined in the Restated Certificate) to which legal or beneficial ownership of any shares of Subject Common Stock shall pass, whether by operation of law or otherwise. No transfer of the legal or beneficial ownership of such shares to a Permitted Transferee shall be valid unless such Permitted Transferee agrees to be bound by this Agreement as a "Class B Stockholder." 7 7. MISCELLANEOUS (a) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, then the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. (b) Binding Effect and Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any Permitted Transferees); provided, however, except as otherwise specifically provided herein, neither this Agreement nor any of the rights, interests or obligations of the Class B Stockholders may be assigned by the Class B Stockholders without the prior written consent of the Permitted Owners holding a majority of the Underlying Common Stock. (c) Amendments and Modification. This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by the Class B Stockholders and Permitted Owners holding a majority of the Underlying Common Stock. (d) Specific Performance; Injunctive Relief. The parties hereto acknowledge that the Investors will be irreparably harmed and that there will be no adequate remedy at law for a violation of any of the covenants or agreements of the Class B Stockholders set forth herein. Therefore, it is agreed that, in addition to any other remedy or remedies that may be available to the Investors upon any such violation, the Investors shall have the right to enforce such covenants and agreements by specific performance, injunctive relief or by any other means available to the Investors at law or in equity without posting any bond and without proving that monetary damages would be inadequate. (e) Notices. All notices, requests, claims, demands and other communications hereunder ("Notices") shall be in writing and sent by certified or registered mail, return receipt requested, a recognized overnight courier service, telecopier or personal delivery, as follows: 8 (i) if to any Class B Stockholder: Richard T. Aab Melrich Associates, L.P. Tansukh V. Ganatra Super STAR Associates Limited Partnership c/o US LEC Corp. Transamerica Square 401 N. Tryon Street, Suite 1000 Charlotte, North Carolina 28202 Attention: General Counsel Telecopier: (704) 319-3098 with required copies to: Richard T. Aab 29 Woodstone Rise Pittsford, NY 14534 Tansukh V. Ganatra 6523 Ashdale Place Charlotte, North Carolina 28215 US LEC Corp. Transamerica Square 401 N. Tryon Street, Suite 1000 Charlotte, North Carolina 28202 Attention: General Counsel Telecopier: (704) 319-3098 and Moore & Van Allen, PLLC 100 North Tryon Street, Floor 47 Charlotte, North Carolina 28202-4003 Attention: Barney Stewart III Telecopier: (704) 331-1151 (ii) if to the Investors: Bain Capital, Inc. Two Copley Place Boston, Massachusetts 02116 Attention: Ian K. Loring Telecopier: (617) 572-3274 and 9 Thomas H. Lee Partners, L.P. 75 State Street, 26th Floor Boston, Massachusetts 02109 Attention: Anthony J. DiNovi Telecopier: (617) 227-3514 with a required copy to: Ropes & Gray One International Plaza Boston, Massachusetts 02110-2624 Attention: Philip J. Smith Telecopier: (617) 951-7050 All such Notices shall be deemed to have been duly given: when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial overnight courier service; five Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is acknowledged by the individual to whose attention the telecopy is sent, if telecopied. A party may change its address for purposes of this Agreement by Notice in accordance with this Section 7(e). (f) Governing Law. The laws of the State of Delaware (irrespective of its choice of laws, rules or principles) will govern the validity of this Agreement, the construction of its terms and the interpretation and enforcement of the rights and duties of the parties hereto. (g) Entire Agreement. This Agreement and the Purchase Agreement contain the entire understanding of the parties with respect to the subject matter hereof, and supersede all prior negotiations and understandings between the parties with respect to such subject matter. (h) Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but which together shall constitute one and the same agreement. (i) Effect of Headings. The section headings herein are for convenience only and shall not affect the construction or interpretation of this Agreement. (j) Definition of Transfer. For purposes of Sections 4 and 5 of this Agreement, a "Transfer" means any sale, assignment or other disposition of any Shares to any other Person, whether directly, indirectly, voluntarily, involuntarily, by operation of law, pursuant to judicial process or otherwise; provided that the term "Transfer" shall not include the pledge or granting of a security interest in the Shares or the subsequent disposition of any of such Shares upon the exercise by the pledgee or secured party, in accordance with its customary practices, of its rights upon a default with respect to any obligation owed to such pledgee or secured party by a Class B Stockholder. 10 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. CLASS B STOCKHOLDERS: /s/ Richard T. Aab -------------------------------------------- Richard T. Aab MELRICH ASSOCIATES, L.P. By: /s/ Richard T. Aab ----------------------------------- Richard T. Aab, General Partner By: /s/ Joyce M. Aab ----------------------------------- Joyce M. Aab, General Partner /s/ T. V. Ganatra -------------------------------------------- Tansukh V. Ganatra SUPER STAR ASSOCIATES LIMITED PARTNERSHIP By: /s/ T. V. Ganatra ----------------------------------- Tansukh V. Ganatra, General Partner 11 US LEC CORP. By: /s/ Michael K. Robinson ----------------------------------- Name: Michael K. Robinson Title: Executive Vice President and Chief Financial Officer BAIN CAPITAL CLEC INVESTORS, L.L.C. By: Bain Capital Fund VI, L.P., its Administrative Member By: Bain Capital Partners VI, L.P., its General Partner By: Bain Capital Investors VI, Inc., its general partner By: /s/ Michael A. Krupka ----------------------------------- Name: Michael A. Krupka Title: Managing Director THOMAS H. LEE EQUITY FUND IV, L.P. By: THL Equity Advisors IV, LLC, its general partner By: /s/ Anthony J. DiNovi ----------------------------------- Name: Anthony J. DiNovi Title: Managing Director THOMAS H. LEE FOREIGN FUND IV-B, L.P. By: THL Equity Advisors IV, LLC, its general partner By: /s/ Anthony J. DiNovi ------------------------------------- Name: Anthony J. DiNovi Title: Managing Director 12 THOMAS H. LEE FOREIGN FUND IV, L.P. By: THL Equity Advisors IV, LLC, its general partner By: /s/ Scott M. Sperling ----------------------------------- Name: Scott M. Sperling Title: Managing Director PUTNAM INVESTMENTS, INC. By: /s/ William H. Woolverton ----------------------------------- Name: William H. Woolverton Title: Managing Director 1997 THOMAS H. LEE NOMINEE TRUST By: /s/ Gerald Wheeler ----------------------------------- Trustee THOMAS H. LEE CHARITABLE INVESTMENT L.P. By: /s/ Thomas H. Lee ----------------------------------- Name: Thomas H. Lee Title: President /s/ David V. Harkins -------------------------------------- DAVID V. HARKINS THE HARKINS 1995 GIFT TRUST By: /s/ Sheryll J. Harkins ----------------------------------- Trustee /s/ Scott A. Schoen -------------------------------------- SCOTT A. SCHOEN 13 /s/ C. Hunter Boll -------------------------------------- C. HUNTER BOLL /s/ Scott M. Sperling -------------------------------------- SCOTT M. SPERLING /s/ Anthony J. DiNovi -------------------------------------- ANTHONY J. DINOVI /s/ Thomas M. Hagerty -------------------------------------- THOMAS M. HAGERTY /s/ Warren C. Smith, Jr. -------------------------------------- WARREN C. SMITH, JR. /s/ Seth W. Lawry -------------------------------------- SETH W. LAWRY /s/ Kent R. Weldon -------------------------------------- KENT R. WELDON /s/ Terrence M. Mullen -------------------------------------- TERRENCE M. MULLEN /s/ Todd M. Abbrecht -------------------------------------- TODD M. ABBRECHT /s/ Charles A. Brizius -------------------------------------- CHARLES A. BRIZIUS /s/ Scott Jaeckel -------------------------------------- SCOTT JAECKEL /s/ Soren Oberg -------------------------------------- SOREN OBERG 14 /s/ Thomas R. Shepherd -------------------------------------- THOMAS R. SHEPHERD /s/ Wendy L. Masler -------------------------------------- WENDY L. MASLER /s/ Andrew D. Flaster -------------------------------------- ANDREW D. FLASTER ROBERT SCHIFF LEE 1988 IRREVOCABLE TRUST By: /s/ Charles W. Robins ----------------------------------- Trustee /s/ Stephen Zachary Lee -------------------------------------- STEPHEN ZACHARY LEE /s/ Charles W. Robins -------------------------------------- CHARLES W. ROBINS AS CUSTODIAN FOR JESSE LEE /s/ Charles W. Robins -------------------------------------- CHARLES W. ROBINS AS CUSTODIAN FOR NATHAN LEE /s/ Charles W. Robins -------------------------------------- CHARLES W. ROBINS /s/ James Westra -------------------------------------- JAMES WESTRA 15 THL-CCI INVESTORS LIMITED PARTNERSHIP By: THL Investment Management Corp., its general partner By: ----------------------------------- Name: Title: /s/ Adam A. Abramson -------------------------------------- ADAM A. ABRAMSON /s/ Joanne M. Ramos -------------------------------------- JOANNE M. RAMOS /s/ P. Holden Spaht -------------------------------------- P. HOLDEN SPAHT /s/ Nancy M. Graham -------------------------------------- NANCY M. GRAHAM /s/ Gregory A. Ciongoli -------------------------------------- GREGORY A. CIONGOLI /s/ Wm. Matthew Kelly -------------------------------------- WM. MATTHEW KELLY /s/ Kevin F. Sullivan -------------------------------------- KEVIN F. SULLIVAN /s/ Diane M. Barriere -------------------------------------- DIANE M. BARRIERE /s/ Kim H. Oakley -------------------------------------- KIM H. OAKLEY 16 -----END PRIVACY-ENHANCED MESSAGE-----