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Exhibit 10.1
e.spire COMMUNICATIONS, INC.
PURCHASE AGREEMENT
September 19, 2000
To: The ▇▇▇▇ Alternative Income Fund, L.P.
1776 On The Green
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
e.spire COMMUNICATIONS, INC. (the "Company"), a Delaware
corporation, hereby confirms its agreement with THE ▇▇▇▇ ALTERNATIVE INCOME
FUND, L.P. (the "Purchaser"), a Delaware limited partnership, as set forth
below.
1. Sale of Junior Securities to Third Parties. The Company hereby
agrees to use its commercially reasonable efforts to sell, in increments of no
less than $25,000,000, Junior Securities (as such term is defined in Section
2(d) below) to third parties at a price, under documentation and on terms
(including without limitation registration rights and the issuance of
Transaction Fee Warrants (as such term is defined in Section 13 below)) no less
favorable to such third parties than are specified herein with respect to
Purchaser Junior Securities (as such term is defined in Section 2(g) below).
2. Purchaser Obligation to Purchase.
(a) Purchase Obligations. (i) From time to time on or
before September 30, 2001, the Company may give written notice(s) (each a
"Purchase Notice") to the Purchaser that it is requiring the Purchaser to
purchase from the Company Purchaser Junior Securities. Subject to satisfaction
of the terms and conditions set forth herein, the Purchaser hereby agrees to
purchase Purchaser Junior Securities from the Company in the amount set forth in
each Purchase Notice given in accordance with this Agreement; provided, however,
that notwithstanding anything to the contrary contained in this Agreement, (i)
the minimum purchase which the Purchaser shall be required to make in respect of
any Purchase Notice shall in no event be less than the lower of $25,000,000 and
the then outstanding Committed Amount (as such term is defined in Section 2(b)
below), and (ii) the aggregate amount of Purchaser Junior Securities which the
Purchaser shall be required to purchase in respect of all Purchase Notices given
under this Agreement shall in no event exceed the Committed Amount. The purchase
price payable by the Purchaser to the Company for the purchase of Purchaser
Junior Securities shall be the Junior Securities Purchase Price (as such term is
defined in Section 2(f) below). Notwithstanding anything to the contrary
contained herein, if the Company reasonably believes (or, in any event, if the
Purchaser notifies the
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Company that it believes) that any Put Amount will be outstanding on a Put
Effectiveness Date (as each such term is defined in Section 2(h) below) the
Company shall give a Purchase Notice as far in advance of such Put Effectiveness
Date as is reasonably practical (and in any event on such date as the Purchaser
may specify), for Purchaser Junior Securities in the amount of the Put Amount
anticipated by the Purchaser to be outstanding on such Put Effectiveness Date.
The obligation of the Purchaser to purchase Purchaser Junior Securities shall
expire on September 30, 2001 (except with respect to Purchase Notices given on
or before September 30, 2001). Each closing of the purchase of Purchaser Junior
Securities hereunder is referred to herein as a "Closing."
(ii) The initial closing (the "Initial Closing") of
the purchase of Purchaser Junior Securities hereunder shall occur simultaneously
with the execution and delivery of this Agreement. At the Initial Closing,
subject to satisfaction of the terms and conditions set forth herein, the
Company shall issue and sell to the Purchaser and the Purchaser shall purchase
from the Company 28,572 shares of Exchangeable Preferred Stock, par value $1.00
per share (such shares, together with any shares qualifying as Bridge Preferred
under the Credit Agreement, whether issued at or simultaneously with the Initial
Closing of thereafter, and whether sold to the Purchaser or another person or
entity, being herein referred to as the "Exchangeable Preferred") at a price of
$1,000 per share for an aggregate purchase price of $28,572,000. The
Exchangeable Preferred purchased at the Initial Closing and at any subsequent
Closing (and all securities issued upon exchange of the Exchangeable Preferred)
shall be deemed to be Purchaser Junior Securities for all purposes of this
Agreement, and the gross proceeds received by the Company from the sale of
Exchangeable Preferred shall be deemed Junior Securities Proceeds for all
purposes of this Agreement.
(b) "Committed Amount" shall mean (i) in connection with
all Purchase Notice(s) given on or before March 31, 2001, an aggregate of
$124,300,000 minus the Junior Securities Proceeds (as such term is defined in
Section 2(e) below and including the gross proceeds received by the Company from
the sale of Exchangeable Preferred) received by the Company on or before the
date any such Purchase Notice is given, and (ii) in connection with all Purchase
Notice(s) given on or after April 1, 2001 and on or before September 30, 2001,
an aggregate of (A) the lesser of (x) $50,000,000 or (y) the Committed Amount at
the close of business on March 31, 2001 minus (B) the Junior Securities Proceeds
received by the Company on or after April 1, 2001 and on or before the date any
such Purchase Notice is given; provided, however, that the Committed Amount
calculated as aforesaid shall be further reduced by the Put Exercise Amount set
forth in any Notice of Put Exercise given on or before the date the applicable
Closing occurs hereunder; provided, further, that if and to the extent that the
Purchaser shall fail to pay any such Put Exercise Amount required by the Put
Agreement to be paid in connection with such Notice of Put Exercise within 15
business days after the date such Notice of Put Exercise is given (or such later
date as may be permitted by the Put Lenders), the Committed Amount shall be
recalculated to add back the Put Exercise Amount which the Purchaser has failed
to pay.
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(c) "Credit Agreement" shall mean that certain First
Amended and Restated Credit Agreement, dated as of September 19, 2000, by any
among the Company, e.spire Finance Corporation, and the Lenders and other
parties named therein.
(d) "Junior Securities" shall mean Common Stock; warrants
for Common Stock; Exchangeable Preferred, Committed Preferred (as such term is
defined in the Credit Agreement) or other preferred stock of the Company issued
in accordance with the Credit Agreement and the Indentures governing the
Existing Senior Notes; or subordinated notes of the Company, provided that any
such subordinated notes shall (i) be unsecured, (ii) have a maturity not sooner
than six months after the final maturity date of the Loans, (iii) not be
guarantied by any Subsidiary, (iv) have no cash payments required prior to the
final maturity of the Loans, (v) have subordination terms satisfactory to the
Requisite Lenders, (vi) have terms no more restrictive to the Company and its
Subsidiaries (including without limitation in terms of covenants, events of
default, grace periods and other rights granted to holders thereof) than the
Existing Senior Notes and (vii) be permitted to be issued under the Indentures
governing the Existing Senior Notes. Capitalized terms in subsection 2(c) or
2(d) hereof not otherwise defined in this Agreement shall have the meanings
therefor set forth in the Credit Agreement.
(e) "Junior Securities Proceeds" shall mean the total of
the gross proceeds received by the Company from the sale of Purchaser Junior
Securities to the Purchaser hereunder (including without limitation any proceeds
actually received by the Company on exercise of any warrants included in the
Purchaser Junior Securities) plus the gross proceeds received by the Company
from the sale of Junior Securities by the Company to persons or entities other
than the Purchaser (including without limitation any proceeds actually received
by the Company on exercise of any warrants included in Junior Securities);
provided, however, that for purposes of determining the Committed Amount on the
date any Purchase Notice is given, (i) the Company shall be deemed to have
actually received the proceeds of any Junior Securities covered by any purchase
agreement, commitment letter or letter of intent then in effect or which is
entered into within 15 business days after the giving of such Purchase Notice
with any person or entity other than the Purchaser provided that the purchase
thereunder shall close within 30 days after the date on which such Purchase
Notice shall have been given, and (ii) in the event such closing shall not occur
within such 30 day period (or shall occur for a lesser amount than the amount
deemed to have been received by the Company under clause (i) above) the
Committed Amount on the date the relevant Purchase Notice is given shall be
(without duplication) appropriately recalculated and the obligation of the
Purchaser to purchase Purchaser Junior Securities in respect of such Purchase
Notice appropriately reinstated.
(f) "Junior Securities Purchase Price" shall mean:
(i) if the Purchaser Junior Securities shall consist
of Common Stock, $.01 par value, of the Company ("Common Stock"), an amount
equal to the lesser of (A) $3.367496 per share and (B) 80% of (x) the average of
the closing prices of the
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Company's Common Stock as reported on the principal national securities exchange
(including The NASDAQ Stock Market) on which it is then traded on the 20 trading
days immediately preceding the date of the closing of the purchase of such
Common Stock hereunder; or (y) if the Company's Common Stock is not so traded,
the fair market value per share of the Company's Common Stock on the date the
applicable Purchase Notice is given as determined by a recognized investment
banking firm or other appraiser specified (with the approval of the Company in
its reasonable discretion) by the Purchaser (subject in any such case to
appropriate adjustment for stock dividends, stock splits, recapitalizations,
reorganizations and similar events) (the "Common Stock Purchase Price");
(ii) if the Purchaser Junior Securities shall
consist of convertible preferred stock, an amount equal to 100% of the
liquidation value of such convertible preferred stock, with the initial
conversion price of such convertible preferred stock to be set at the Common
Stock Purchase Price which would have been in effect had Common Stock been
purchased hereunder in respect of the applicable Purchase Notice instead of such
convertible preferred stock;
(iii) if the Purchaser Junior Securities shall
consist of Exchangeable Preferred, an amount equal to $1,000 per share; or
(iv) if the Purchaser Junior Securities shall
consist in whole or in part of securities other than as described in clause (i),
(ii) or (iii) above, an amount specified by the Purchaser, subject to the
consent of the Company not to be unreasonably withheld, providing the Purchaser
with a value substantially equivalent (as determined by a nationally recognized
investment banking firm mutually acceptable to the Purchaser and the Company,
the fees and expenses of which shall be paid by the Company) to Common Stock or
convertible preferred stock (whichever shall be specified by the Purchaser)
purchased at a price set forth under clause (i) or (ii) above, as applicable,
and assuming for purposes of determining such value that the financial condition
of the Company is no worse on such date of determination than it is on the date
hereof.
(g) "Purchaser Junior Securities" shall mean any Junior
Securities (or any combination of Junior Securities) specified by the Purchaser
in its sole discretion, provided that (i) in the case of the Company's
convertible preferred stock, such convertible preferred stock shall have terms
and conditions substantially the same (except as reasonably specified by the
Purchaser with the approval of the Company not to be unreasonable withheld) as
the Committed Preferred; (ii) in the case of the Company's warrants, such
warrants shall have terms and conditions substantially the same (except as to
pricing, as provided in this Agreement or as reasonably specified by the
Purchaser with the approval of the Company not to be unreasonably withheld) as
the Warrants purchased by the Purchaser pursuant to that certain Warrant
Agreement (the "Warrant Agreement") dated as of March 1, 2000 among the Company,
the Purchaser and the other parties thereto; and (iii) in the case of Purchaser
Junior Securities other than the Company's Common Stock, convertible preferred
stock or warrants, such Purchaser Junior Securities shall have terms and
conditions (consistent with the
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provisions of the definition of Junior Securities set forth in this Agreement)
as are reasonably specified by the Purchaser with the approval of the Company
not to be unreasonably withheld.
(h) "Put Agreement" shall mean that certain Loan Put
Agreement dated as of September 19, 2000 among the Purchaser, and the Lenders
and Administrative Agent named therein. "Put Amount", "Put Effectiveness Date",
"Put Lender", "Notice of Put Exercise" and "Put Exercise Amount" shall have the
respective meanings therefor set forth in the Put Agreement.
(i) "Series A Preferred" shall mean the Company's Series A
Convertible Preferred Stock.
3. Registration Rights; Transaction Documents.
(a) The Purchaser and the direct and indirect transferees
of the Purchaser Junior Securities purchased hereunder (including without
limitation the shares of Exchangeable Preferred) and the Transaction Fee
Warrants (as such term is defined in Section 13 hereof) issued hereunder and any
securities of the Company issued upon conversion, exchange or exercise of such
Purchaser Junior Securities and Transaction Fee Warrants (the "Additional
Securities" and collectively with the Purchaser Junior Securities and
Transaction Fee Securities, the "Securities"), will be entitled to the benefits
of registration rights agreements (the "Registration Rights Agreements") (or, in
the case of warrants included in the Purchaser Junior Securities and Transaction
Fee Warrants, registration rights substantially the same as those set forth in
the Warrant Agreement, with such changes therein as may be reasonably specified
by the Purchaser, with the consent of the Company not to be unreasonably
withheld), which will require the Company, among other things, to file with the
Securities and Exchange Commission (the "Commission") one or more shelf
registration statements (the "Registration Statements") pursuant to Rule 415
under the Securities Act of 1933, as amended (the "Act"), relating to the resale
of such Securities and to use its reasonable best efforts to cause such
Registration Statements to be declared and remain effective in accordance
therewith. Subject to such changes therein as may be reasonably specified by the
Purchaser (with the consent of the Company not to be unreasonably withheld), the
Registration Rights Agreements shall have terms and conditions substantially the
same as that certain Registration Rights Agreement dated as of March 1, 2000
among the Company, the Purchaser and the other signatories thereto.
(b) This purchase agreement (the "Agreement"), and all
certificates of designation, warrant agreements and related warrants, the
Registration Rights Agreements and the other documents and instruments
effectuating or relating to the Securities are herein collectively referred to
as the "Transaction Documents."
4. Representations and Warranties. The Company represents and
warrants to and agrees with the Purchaser that:
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(a) Since January 1, 1999 and to the date of this
Agreement, the Company has filed with the Commission, a Proxy Statement on
Schedule 14A with respect to the Company's 2000 Annual Meeting of Stockholders,
the Company's Annual Report on Form 10-K for the year ended December 31, 1999,
the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2000, the Company's Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 2000, and the Company's Current Reports on Form 8-K filed on January
25, 2000, February 3, 2000, March 14, 2000, April 10, 2000, June 22, 2000, July
11, 2000 and July 20, 2000 (including all exhibits to any of such documents)
(collectively the "SEC Reports"), which constitute all reports, schedules,
forms, statements and other documents required to be filed with the Commission
during such period by the Company. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission promulgated thereunder applicable to the SEC
Reports, and none of the SEC Reports as of such dates contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that any SEC Report has been revised or
superseded by a later filed SEC Report, none of the SEC Reports contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements of the Company included in the SEC Reports
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the Commission) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present in all materials respects the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments).
(b) The Company owns all the issued and outstanding capital
stock or other equity interests of each of its direct and indirect subsidiaries
(the "Subsidiaries"). Each of the Company and the Subsidiaries is duly
incorporated or organized, validly existing and in good standing as a
corporation or a limited liability company, as the case may be, under the laws
of its jurisdiction of incorporation or organization, with all requisite
corporate or limited liability company power and authority to own or lease its
properties and conduct its business as now conducted, and as proposed to be
conducted as described in the Company's SEC Reports. Each of the Company and the
Subsidiaries is duly qualified to do business as a foreign corporation in good
standing in the jurisdiction in which it has its principal place of business and
in all other jurisdictions where the ownership or leasing of its properties or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not, singly or in the aggregate, have a
material adverse effect on the business, condition (financial or other), assets,
nature of assets, liabilities, operations, prospects or results of
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operations of the Company and the Subsidiaries, taken as a whole (any such
event, a "Material Adverse Effect"). Except as described in the SEC Reports, the
Company does not own or control, directly or indirectly, any material interest
in any other corporation, association, or other business entity.
(c) Except as set forth on Schedule 4(c)(i), all Securities
to be issued or sold hereunder and under any Transaction Document relating
thereto and the certificates of designation, warrants, agreements and the
instruments, documents and other Transaction Documents providing therefor or
relating thereto have been (or will be prior to the Closing of the purchase of
the applicable Purchaser Junior Securities by the Purchaser hereunder) duly
authorized by the Company. The Purchaser Junior Securities, when issued, sold
and delivered in accordance with the terms hereof and for the consideration
expressed herein and the applicable Transaction Documents relating thereto, and
the Additional Securities when issued in accordance with the terms of the
Transaction Documents relating thereto, (i) will be duly and validly issued and,
in the case of any shares of capital stock included in the Securities, fully
paid and nonassessable, (ii) will be free of any pledges, liens, security
interests, claims, rights or other encumbrances of any kind, (iii) assuming the
accuracy of the Purchaser's representations and warranties in this Agreement,
will be issued in compliance with all applicable federal and state securities
laws, and (iv) will not be issued in violation of any preemptive rights of
stockholders. Except as set forth on Schedule 4(c)(ii), all shares of capital
stock included among the Securities (including all shares issuable upon
exercise, exchange or conversion of Purchaser Junior Securities or any of the
warrants referred to herein, including without limitation any Transaction Fee
Warrants) shall be duly and validly reserved for issuance from and after the
respective Closings of the applicable purchases of Purchaser Junior Securities
and issuances of any warrants, including without limitation any Transaction Fee
Warrants hereunder or as otherwise contemplated hereby.
(d) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and will on the dates of the
respective Closings for the purchase hereunder of Purchaser Junior Securities
have the requisite corporate power and authority to execute and deliver the
other Transaction Documents applicable thereto; this Agreement has been (and
when executed and delivered the other Transaction Documents will have been) duly
authorized by the Company; and (assuming due authorization, execution and
delivery by the parties thereto other than the Company) this Agreement
constitutes and, when executed and delivered by the Company the other
Transaction Documents will constitute, valid and legally binding agreements of
the Company, enforceable against the Company in accordance with their terms,
except that (i) the enforcement thereof may be subject to (A) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, (B)
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought and (C) rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public policy
considerations.
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(e) The Company has (or will have on the dates of the
respective Closings for the purchase of the Purchaser Junior Securities
hereunder) all requisite corporate power to issue and deliver the Securities,
and to consummate the transactions contemplated hereby and the other Transaction
Documents. This Agreement and each other Transaction Document has been (or on
the closing dates for the purchase hereunder of the Purchaser Junior Securities
will have been), duly authorized, and this Agreement has been and each other
Transaction Document has been or on such closing dates will be duly executed and
delivered by the Company. No consent, approval, authorization or order of any
foreign or domestic national, state, provincial or local government or any
instrumentality, subdivision, court or governmental agency or body thereof, or
any arbitral body (each, a "Governmental Authority") having jurisdiction over
the Company or the Subsidiaries or their respective businesses (including,
without limitation, the Federal Communications Commission (the "FCC")) is
required for the performance of this Agreement and the other Transaction
Documents by the Company or the consummation by the Company of the transactions
contemplated hereby or thereby, except for (x) such consents as have been
obtained or shall have been obtained at or before the applicable closing dates
for the purchase hereunder of the Purchaser Junior Securities, and are in full
force and effect as of such closing dates, (y) such consents as may be required
under state securities or "Blue Sky" laws in connection with the purchase and
resale of the Securities by the Purchaser and (z) any notification as may be
required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), or any consent as may be required by the FCC or any
state telecommunications regulatory authorities or commissions ("State
Telecommunications Authorities"), in each such case, as a result of the
Purchaser's purchase of Common Stock or other voting securities or the
conversion or exercise of any warrants, convertible preferred stock or
convertible indebtedness included in the Securities. Neither the Company nor any
of the Subsidiaries nor their operations is (i) in violation of its certificate
of incorporation or by-laws (or similar organizational document), (ii) in
violation of any statute, judgment, decree, order, rule or regulation applicable
to the Company or the Subsidiaries, which violation would, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect or (iii)
other than as disclosed in the Company's SEC Reports or as otherwise disclosed
in Schedule 4(e) and after giving effect to the Credit Agreement, in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
note, lease, license, franchise agreement, permit, certificate, contract or
other agreement or instrument to which the Company or the Subsidiaries is a
party or to which the Company or the Subsidiaries or their respective assets is
subject, which default would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect.
(f) Neither the issuance or sale of the Securities, nor the
execution, delivery and performance by the Company of the Transaction Documents
or the consummation of the transactions contemplated thereby, will (i) conflict
with the certificate of incorporation or by-laws of the Company, as the same
will be in effect as of each Closing (or other date of issuance of such
Securities) hereunder, (ii) constitute or result in a breach, default or
violation of (with or without the giving of notice, passage of time or both), or
result in the creation or imposition of a lien, charge or encumbrance on any
properties or assets of the
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Company or the Subsidiaries under any of the terms or provisions of, any
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, or other agreement or instrument to which the Company is a
party or to which the Company or its respective properties is subject, (iii)
require the consent of any third party or any Governmental Authorities
(including without limitation The NASDAQ Stock Market and any related body
("NASDAQ")), other than (A) the Stockholder Approval (as such term is
hereinafter defined), (B) any required consents of the FCC or any State
Telecommunications Authority as a result of the Purchaser's purchase of Common
Stock or other voting securities of the Company or the conversion, exchange or
exercise of warrants, exchangeable or convertible preferred stock or
exchangeable or convertible indebtedness included in the Securities, which
consents will have been obtained and be in full force and effect as of each
Closing of the purchase or other date of issuance of Securities as contemplated
hereby and (C) in the case of any Security other than Committed Preferred,
Series A Preferred, Exchangeable Preferred, Common Stock or warrants for Common
Stock or Committed Preferred, consent under the Credit Agreement; or (iv)
(assuming compliance with all applicable state securities and "Blue Sky" laws,
all applicable rules and regulations of the FCC and State Telecommunications
Authorities, and the HSR Act, and assuming the receipt by the Company of the
Stockholder Approval and assuming the accuracy of the representations and
warranties of the Purchaser in Section 9 hereof) contravene any statute,
judgment, decree, order, rule or regulation of any Governmental Authority
applicable to the Company or any of its respective properties, except for any
conflict, breach, violation, default, lien, charge, contravention or encumbrance
referred to in clauses (ii) and (iii) of this Section 4(f) which would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect. For purposes of this Agreement, "Stockholder Approval" shall
mean the affirmative vote of the holders of a majority of the shares of the
Company's Common Stock present in person or by proxy at a meeting of
stockholders of the Company duly called and held (and at which meeting a quorum
is present) approving (i) the issuance and sale hereunder of all Securities
contemplated by this Agreement (other than the Exchangeable Preferred, but
including all Purchaser Junior Securities issued upon exchange of the
Exchangeable Preferred), and (ii) the issuance and sale of all Junior Securities
to third parties contemplated by this Agreement. Subject to obtaining
Stockholder Approval, the issuance of Securities hereunder (other than the
Exchangeable Preferred) is not and at the time of issuance of such Securities
will not be in violation, breach or contravention of any rule or other
requirement or any criteria for listing or continued trading through NASDAQ (a
"NASDAQ Rule") and does not and will not require any consent of NASDAQ. The
issuance of Exchangeable Preferred hereunder is not and at the time of issuance
of such Exchangeable Preferred will not be in violation, breach or contravention
of any NASDAQ Rule and does not and will not require any consent of NASDAQ.
(g) Except as described in the Company's SEC Reports, there
is neither pending nor, to the best knowledge of the Company after due inquiry,
threatened, any action, suit, proceeding, inquiry or investigation to which the
Company or any of the Subsidiaries is a party, or to which any of their
respective properties or assets are or would be subject, before or brought by
any Governmental Authority (including, without limitation, the FCC) that would,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect or that
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seeks to restrain, enjoin, prevent the consummation of or otherwise challenge or
relate to the issuance or sale of the Securities to be issued and sold hereunder
or the consummation of the other transactions contemplated herein or in the
other Transaction Documents.
(h) Except as disclosed on Schedule 4(h), each of the
Company and the Subsidiaries owns or possesses adequate licenses or other rights
to use all patents, trademarks, service marks, trade names, copyrights, know-how
and other intellectual property necessary to conduct the businesses operated by
it, or as proposed to be conducted by it as described in the Company's SEC
Reports, except for any the absence of which would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect, and neither
the Company nor the Subsidiaries has received any notice of infringement of, or
conflict with (or knows of any such infringement of or conflict with) asserted
rights of others with respect to any patents, trademarks, service marks, trade
names, copyrights or know-how necessary to conduct the businesses operated by it
that, if such assertion of infringement or conflict were sustained, would,
individually or in the aggregate, have a Material Adverse Effect.
(i) Each of the Company and the Subsidiaries has obtained,
or has applied for and, as to any applied for, reasonably expects to be granted
in a timely manner and without materially adverse condition, all consents,
approvals, authorizations, orders, registrations, filings, qualifications,
licenses (including, without limitation, all licenses from the FCC and state,
local or other governmental authorities), permits, franchises and other
governmental authorizations necessary to conduct its businesses (or proposed
businesses) as described in the Company's SEC Reports, except for any the
absence of which, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect. Neither the Company nor any of the
Subsidiaries has received any notice of proceedings related to the revocation or
materially adverse modification of any such consent, approval, authorization,
order, registration, filing, qualification, license or permit, except for any
which would not, individually or in the aggregate, be reasonably likely to have
a Material Adverse Effect.
(j) Except as disclosed in the SEC Reports, subsequent to
June 30, 2000, (i) neither the Company nor any of the Subsidiaries has incurred
any liabilities or obligations, direct or contingent, or entered into any
material transactions not in the ordinary course of business that would,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect; and (ii) the Company has not purchased any of its outstanding
capital stock or (except for regularly scheduled pay-in-kind dividends or other
dividends payable in capital stock of the Company on shares of preferred stock
described under Section 4(r) below) declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock.
(k) There are no legal or governmental proceedings
involving or affecting the Company or any of the Subsidiaries or any of their
respective properties or assets (other than proceedings, individually or in the
aggregate, which would not, if the subject of an unfavorable decision, ruling or
finding, result in a Material Adverse Effect) that are not described in the SEC
Reports. Except as described in the SEC Reports or Schedule 4(e) and after
giving effect to the Credit Agreement, neither the Company nor any of the
Subsidiaries is
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in default under any contract, has received a notice or claim of any such
default or has knowledge of any breach of any such contract by the other party
or parties thereto, except such defaults or breaches which would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.
(l) Each of the Company and the Subsidiaries has filed all
necessary federal, state, local and foreign income, franchise and property tax
returns, except where the failure to so file such returns would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect, and each of the Company and the Subsidiaries has paid all taxes
shown as due when due; and other than tax deficiencies that the Company or any
of the Subsidiaries is contesting in good faith and for which adequate reserves
have been provided, there is no tax deficiency that has been asserted against
the Company or any of the Subsidiaries that would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect. The charges,
accruals and reserves on the consolidated books of the Company in respect of any
tax liability for any years not finally determined are adequate to meet any
assessments or re-assessments for additional tax for any years not finally
determined, except to the extent of any inadequacy that would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect.
(m) Except as disclosed in the SEC Reports, each of the
Company and the Subsidiaries has good and marketable title to all real property
and good title to all personal property owned or claimed to be owned by it and
good and valid title to all leasehold interests in the real and personal
property leased by it (except for those leases of real property in which the
Company has good title and that would be marketable but for the requirement that
the landlord consent to an assignment or sublease of the lease), free and clear
of all liens, charges, encumbrances or restrictions, except to the extent the
failure to have such title or the existence of such liens, charges, encumbrances
or restrictions would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect. All leases, contracts and agreements
to which the Company or any of the Subsidiaries is a party or by which any of
them is bound are valid and enforceable against the Company or such Subsidiaries
and are valid and enforceable against the other party or parties thereto and are
in full force and effect with only such exceptions as would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect. No
real or personal property, rights-of-way, conduits, pole attachments or fiber
leased, licensed or used by the Company or any of the Subsidiaries lies in an
area that is, or to the best knowledge of the Company will be, subject to
zoning, use, or building code restrictions that would prohibit, and no state of
facts relating to the actions or inaction of another person or entity or his,
her or its ownership, leasing, licensing or use of any such real or personal
property, rights-of-way, conduits, pole attachments or fiber exists that would
prevent the continued effective leasing, licensing or use of such real or
personal property, rights-of-way, conduits, pole attachments or fiber in the
business of the Company or any of the Subsidiaries as presently conducted,
subject in each case to such exceptions as, individually or in the aggregate, do
not have and are not reasonably likely to have a Material Adverse Effect.
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(n) None of the Company or any of the Subsidiaries is and,
after giving effect to the offering and sale of the Securities and the
application of the proceeds therefrom as described herein, none will be, an
"investment company," as such term is defined in the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
(o) Neither the Company nor any of its directors, officers
or controlling persons (provided that the Purchaser is excluded from the
warranty in this Section 4(o)) has taken, directly or indirectly, any action
designed, or that might reasonably be expected, to cause or result, under the
Act or otherwise, in, or that has constituted, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of any
of the Securities.
(p) Each of the Company and the Subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting controls
that provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the reported accountability
for its assets is compared with existing assets at reasonable intervals.
(q) None of the Company, any of the Subsidiaries or any of
their respective Affiliates (as defined in Rule 501(b) of Regulation D under the
Act) (provided that the Purchaser is excluded from the warranty in this Section
4(q)) has directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any "security" (as defined
in the Act) that is or could be integrated with the sale of the Securities in a
manner that would require the registration under the Act of the Securities or
(ii) engaged in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) in connection with the
offering of the Securities or in any manner involving a public offering within
the meaning of Section 4(2) of the Act. Assuming the accuracy of the
representations and warranties of the Purchaser in Section 9 hereof, it is not
necessary in connection with the offer, sale and delivery of the Securities to
the Purchaser in the manner contemplated by this Agreement or any other
Transaction Document to register any of the Securities under the Act.
(r) Except as set forth on Schedule 4(r), as of the date of
this Agreement, the authorized capital of the Company consists of (i)
125,000,000 shares of Common Stock, of which 54,683,057 shares were issued and
outstanding and (ii) 3,000,000 shares of preferred stock, par value $1.00 per
share, of which (x) 400,000 shares have been designated 14.75% Redeemable
Preferred Stock due 2008 (the "14.75% Preferred Stock") of which 110,170.9428
shares are issued and outstanding, (y) 200,000 shares have been designated
Series A 12.75% Junior Redeemable Preferred Stock due 2009 of which 18.25 shares
are issued and outstanding and (z) 700,000 shares have been designated Series B
12.75% Junior Redeemable Preferred Stock (the "12.75% Preferred Stock") of which
211,701 shares are issued and outstanding. Except for (A) 1,316,266 shares of
Common Stock
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reserved for issuance under the Company's 1996 Employee Stock Purchase Plan; (B)
1,000,000 shares of Common Stock reserved for issuance under the Company's 1998
Restricted Stock Plan; (C) 5,646,355 shares of Common Stock reserved for
issuance upon exercise of the warrants issued by the Company in connection with
the sale of the 14.75% Preferred Stock; (D) 2,125,311 shares of Common Stock
reserved for issuance upon exercise of the warrants issued by the Company in
connection with the sale of the Company's 13% Senior Discount Notes due 2005,
(E) 4,890,577 shares of Common Stock reserved for issuance in connection with
the Company's non-plan employee stock options; (F) 9,471,992 shares of Common
Stock reserved for issuance under the Company's 1994 Employee Stock Option Plan
as of May 31, 2000; (G) 601,103 shares of Common Stock reserved for issuance
under the Company's Annual Performance Plan; (H) 480,000 shares of Common Stock
reserved for issuance in connection with stock options granted to the Company's
outside directors; (I) 295,407 shares of Common Stock reserved for issuance upon
exercise of warrants issued by the Company in connection with certain preferred
provider and local services agreements entered into by the Company; (J) 262,474
shares of Common Stock reserved for issuance upon the exercise of warrants
registered pursuant to Form S-3, Commission File No. 333-40337, (K) shares of
Common Stock in an amount up to $862,500 reserved for issuance in connection
with a settlement agreement to be entered into between the Company and a third
party, (L) 18,216,526 shares of common stock reserved to be issued upon
conversion of the Series A Preferred and the Warrants issued in connection
therewith, and (M) shares of Common Stock to be reserved to be issued in
connection with this Purchase Agreement and the respective purchase agreements,
if any, between Greenwich and Honeywell and the Company, there are not
outstanding (and, except as contemplated by this Agreement, the Company does not
have any plan to issue, grant or enter into) options, warrants, rights
(including conversion or preemptive rights), subscriptions or agreements for the
purchase, or acquisition from or by the Company of any shares of its or any of
its Subsidiaries capital stock or any other securities convertible into or
exercisable for any shares of its or any of its Subsidiaries capital stock. As
of the date of this Agreement, except as set forth on Schedule 4(r) hereto,
there are no voting agreements, voting trust agreements, stockholder agreements
or other agreements relating to the capital stock of the Company or any of its
Subsidiaries or any other securities convertible into or exercisable for any
shares of its or any of its Subsidiaries capital stock. Except as disclosed in
Schedule 4(r), no outstanding options, warrants or other securities exercisable
for or convertible into Common Stock require or will require anti-dilution
adjustments by reason of the consummation of the transactions contemplated
hereby.
(s) Other than as described in the SEC Reports or in
Schedule 4(e), since June 30, 2000 (i) there has not been any change in the
capital stock or long-term indebtedness of the Company or any of the
Subsidiaries which could, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect and (ii) there has not occurred, nor
has information become known nor has any state of facts arisen that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect whether or not arising in the ordinary course of business.
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(t) Except as set forth on Schedule 4(t), other than
routine individual grievances or disputes in an individual amount less than
$50,000 and in the aggregate less than $250,000, there is no strike, labor
dispute, slowdown or work stoppage with the employees of the Company or any of
the Subsidiaries that is pending or, to the knowledge of the Company or any of
the Subsidiaries, threatened. Neither the Company nor any Subsidiary is a party
to any collective bargaining agreement. The Company does not know of any
activities or proceedings of any labor organization (or representative thereof)
to organize any employees of the Company or any Subsidiary.
(u) Each of the Company and the Subsidiaries carries
insurance in such amounts and covering such risks as is adequate for the conduct
of its business and the value of its properties.
(v) The Company maintains, sponsors, contributes to, or has
or has had an obligation with respect to "employee benefit plans," within the
meaning of Section 3(3) of ERISA, and may or has had obligations with respect to
other bonus, profit sharing, compensation, pension, severance, deferred
compensation, fringe benefit, insurance, welfare, post-retirement, health, life,
stock option, stock purchase, restricted stock, tuition refund, service award,
company car, scholarship, relocation, disability, accident, sick, vacation,
holiday, termination, unemployment, individual employment, consulting, executive
compensation, incentive, commission, payroll practices, retention, change in
control, noncompetition, collective bargaining and other plans, agreements,
policies, trust funds, or arrangements (whether written or unwritten, insured or
self-insured) on behalf of employees, directors, or shareholders of the Company
(whether current, former, or retired) or their beneficiaries (each a "Plan" and,
collectively, the "Plans"). Neither the Company nor any ERISA Affiliate has any
liability, direct or indirect, or actual or contingent (but excluding any
contributions due in the ordinary course) with respect to any plan subject to
Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA that has or
could reasonably be expected to have a Material Adverse Effect. The consummation
of the transactions contemplated by this Agreement will not give rise to any
liability with respect to any Plan that could reasonably be expected to have a
Material Adverse Effect, including, without limitation, liability for severance
pay, unemployment compensation, termination pay or withdrawal liability, or
accelerate the time of payment or vesting or increase the amount of compensation
or benefits due to any employee, director, or shareholder of the Company
(whether current, former, or retired) or their beneficiaries solely by reason of
such transactions. Except as would not individually or in the aggregate have, or
could not reasonably be expected to have, a Material Adverse Effect: (i) neither
the Company nor any ERISA Affiliate has made any promises or commitments to
create any additional plan, agreement, or arrangement; (ii) no event, condition,
or circumstance exists that could result in an increase of the benefits provided
under any Plan or the expense of maintaining any Plan from the level of benefits
or expense incurred for the most recent fiscal year ended before Closing; and
(iii) neither the Company nor any ERISA Affiliate has or could be expected to
have any liability for any prohibited transaction as defined in Section 406 of
ERISA or Section 4975 of the Code. With respect to each of the Plans: (i) each
Plan intended to qualify under Section 401(a) of the Code has been qualified
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since its inception and has received a determination letter under Revenue
Procedure 93-39 from the IRS to the effect that the Plan is qualified under
Section 401 of the Code and any trust maintained pursuant thereto is exempt from
federal income taxation under Section 501 of the Code and nothing has occurred
or is expected to occur at or before Closing that caused or could cause the loss
of such qualification or exemption or the imposition of any penalty or tax
liability that has or could reasonably be expected to have a Material Adverse
Effect; (ii) no claim, lawsuit, arbitration, audit or investigation or other
action has been threatened, asserted, instituted, or anticipated against the
Plans (other than non-material routine claims for benefits, and appeals of such
claims), any trustee or fiduciaries thereof, the Company, any ERISA Affiliate,
any director, officer, or employee thereof, or any of the assets of any trust of
the Plans that would have or could reasonably be expected to have a Material
Adverse Effect; (iii) the Plan complies in all material respects and has been
maintained and operated in all material respects in accordance with its terms
and applicable law, including, without limitation, ERISA and the Code; and (iv)
with respect to each Plan that is funded mostly or partially through an
insurance policy, the Company has no liability in the nature of retroactive rate
adjustment, loss sharing arrangement or other actual or contingent liability
arising wholly or partially out of events occurring on or before Closing that
has or could reasonably be expected to have a Material Adverse Effect.
(w) Except for matters which would not in the aggregate
have a Material Adverse Effect,
(i) (A) the Company and each Subsidiary is in
compliance with all applicable Environmental Laws (as defined below); (B) all
permits and other authorizations of any Governmental Authority currently held by
the Company and each Subsidiary pursuant to the Environmental Laws are in full
force and effect, the Company and each Subsidiary is in compliance with all of
the terms of such permits and authorizations, and no other permits or
authorizations are required by the Company or any Subsidiary for the conduct of
their respective businesses on the date hereof; and (C) the management,
handling, storage, transportation, treatment, and disposal by the Company and
each Subsidiary of any Hazardous Materials (as defined below) has been in
compliance with all applicable Environmental Laws. Neither the Company nor any
Subsidiary has received any written communication that alleges that the Company
or any Subsidiary is not in compliance in all material respects with all
applicable Environmental Laws.
(ii) There is no Environmental Claim (hereinafter
defined) pending or, to the knowledge of the Company, threatened against or
involving the Company or any of the Subsidiaries or against any person or entity
whose liability for any Environmental Claim the Company or any of the
Subsidiaries has or may have retained or assumed either contractually or by
operation of law.
(iii) To the knowledge of the Company, there are no
past or present actions or activities by the Company or any Subsidiary including
the storage, treatment, release, emission, discharge, disposal or arrangement
for disposal of any Hazardous
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Materials, that could reasonably form the basis of any Environmental Claim
against the Company or any of the Subsidiaries or against any person or entity
whose liability for any Environmental Claim the Company or any Subsidiary may
have retained or assumed either contractually or by operation of law.
(iv) As used herein, these terms shall have the
following meanings:
(A) "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, liens, investigations,
proceedings or notices of noncompliance or violation (written or
oral) by any person or governmental authority alleging potential
liability arising out of based on or resulting from the presence,
or release or threatened release into the environment, of any
Hazardous Materials at any location owned or leased by the Company
or any Subsidiary or other circumstances forming the basis of any
violation or alleged violation of any Environmental Law.
(B) "Environmental Laws" means all applicable foreign,
federal, state and local laws (including the common law), rules,
requirements and regulations relating to pollution, the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or
protection of human health as it relates to the environment
including, without limitation, laws and regulations relating to
releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials or relating
to management of asbestos in buildings.
(C) "Hazardous Materials" means wastes, substances, or
materials (whether solids, liquids or gases) that are deemed
hazardous, toxic, pollutants, or contaminants, including without
limitation, substances defined as "hazardous substances", "toxic
substances", "radioactive materials", or other similar
designations in, or otherwise subject to regulation under, any
Environmental Laws.
(x) At each Closing (including without limitation
the Initial Closing) hereunder, the Company will deliver to the Trustees under
each of the indentures (the "Indentures") with respect to the Company's
Existing Senior Notes: (i) a resolution of the Company's Board of Directors
certifying that (A) the transactions contemplated to be consummated at such
Closing and by the Transaction Documents relating to such Closing are on terms
no less favorable to the Company than those that would have been obtained in a
comparable arms-length transaction by the Company with a person or entity that
is not an Affiliate (as such term is defined in the respective Indentures), and
(B) the transactions contemplated by this Agreement have been approved by a
majority of the Independent
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Directors (as such term is defined in the respective Indentures) on the
Company's Board of Directors, who have determined that such transactions are in
the best interests of the Company, (ii) opinions of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇ (or another investment banking firm of national standing) that such
transactions are fair to the Company from a financial point of view, and (iii)
copies of the officers' certificates delivered to the Trustees to the effect
that such opinions comply with the Indentures, all of the foregoing in
conformity with the requirements of the Indentures. None of such resolutions,
opinions or certificates will have been at the time of any such Closing
withdrawn or modified in any material respect.
(y) Except for payment of commissions, if any, required to
be paid to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to the terms of the Consulting Agreement,
dated October 19, 1994, between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Company and the issuance
of Transaction Fee Warrants under Section 13 below (each of which is the
Company's obligation), no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or the other Transaction Documents
based upon arrangement made by or on behalf of the Company.
Any certificate signed by any officer of the Company or any
Subsidiary and delivered to the Purchaser or to counsel for the Purchaser shall
be deemed a representation and warranty by the Company and each of its
Subsidiaries to the Purchaser as to the matters covered thereby.
5. Purchase, Sale and Delivery of the Securities. The purchase and
sale of the Purchaser Junior Securities (other than the purchase and sale of
shares of Exchangeable Preferred at the Initial Closing which shall take place
as set forth in the next succeeding sentence hereof) shall take place at the
offices of Proskauer Rose LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, within
two (2) business days following the satisfaction of the conditions set forth in
this Agreement required to be satisfied prior to the consummation of the
purchase and sale of the Purchaser Junior Securities hereunder, but in no event
earlier than 15 business days after the applicable Purchase Notice has been
given, or at such other time and place as the Company and the Purchaser mutually
agree upon in writing. The purchase and sale of Exchangeable Preferred at the
Initial Closing shall take place at the aforesaid offices simultaneously with
the execution and delivery of this Agreement subject to satisfaction of the
conditions set forth in this Agreement required to be satisfied prior to the
consummation of the purchase and sale of the Exchangeable Preferred at such
Initial Closing. At each Closing hereunder the Company shall deliver to the
Purchaser one or more certificates representing any capital stock being sold and
issued, one or more executed warrants representing all of the warrants
(including without limitation the Transaction Fee Warrants) and one or more
executed promissory notes representing all of the indebtedness of the Company
being sold, all in such denomination or denominations and registered in such
name or names as the Purchaser shall request upon notice to the Company,
together with all such other Transaction Documents as may be reasonably
specified by the Purchaser (in form and substance reasonably specified by the
Purchaser), against payment by or on behalf of the Purchaser of the purchase
price for
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the Purchaser Junior Securities by wire transfer, payable to or upon the order
of the Company in immediately available funds.
6. Covenants of the Company. The Company covenants and agrees with
the Purchaser (and in the case of the last sentence of Section 6(f), the
Purchaser agrees) that:
(a) The Company will cooperate at its expense with the
Purchaser in arranging for the qualification of the Securities for offering and
sale under the securities or "Blue Sky" laws of such jurisdictions as the
Purchaser may designate and will continue such U.S. qualifications in effect for
as long as may be necessary to complete the resale of the Securities by the
Purchaser; provided, however, that in connection therewith the Company shall not
be required to qualify as a foreign corporation or to execute a general consent
to service of process in any jurisdiction or subject the Company to any tax in
any such jurisdiction where it is not then so subject. The Company will
cooperate with the Purchaser to (i) if requested, permit all warrants included
in the Securities, to the extent eligible for resale pursuant to Rule 144A, to
be designated PORTAL securities in accordance with the rules and regulations
adopted by the NASD relating to trading in the Private Offerings, Resales and
Trading through Automated Linkages Market (the "PORTAL Market"), (ii) if
requested, permit the Securities upon issuance and registration under the Act to
be eligible for clearance and settlement through The Depository Trust Company
and (iii) permit the Securities upon issuance and registration under the Act to
be listed for quotation through the Nasdaq National Market or listed on any
national securities exchange on which the Company's Common Stock is then listed.
(b) The net proceeds from the issuance and sale of
Securities hereunder and the Junior Securities referred to in Section 1 above
will be used by the Company for general corporate purposes.
(c) From time to time, and as soon as reasonably
practicable upon demand, the Company will provide to the Purchaser such
additional information regarding results of operations, financial condition,
business or prospects of the Company or the Subsidiaries, including without
limitation, cash flow analyses, financial statements, budgets, business plans,
projections and other financial information and minutes of any meetings of the
Board of Directors of the Company or the Subsidiaries, as may be reasonably
requested by the Purchaser. The Company shall also afford to the Purchaser (and
its representatives) access, at reasonable times and on reasonable prior notice,
to the books, records and properties of the Company and the Subsidiaries, and
shall permit the Purchaser (and its representatives) to make copies of such
books and records and also shall afford such access to meet and consult with
management and the advisors of the Company and its Subsidiaries with respect to
the business of the Company and its Subsidiaries.
(d) Neither the Company nor any of its Affiliates (provided
that the Purchaser shall be excluded from the Company's obligations under this
Section 6(d)) will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as
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defined in the Act) that could be integrated with the sale of the Securities in
a manner that would require the registration under the Act of the Securities.
(e) The Company will not, and will not permit any of the
Subsidiaries to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Securities or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.
(f) The Company will take all action necessary in
accordance with applicable law and its Certificate of Incorporation and By-laws
to convene a special meeting of its stockholders as promptly as practicable to
obtain the Stockholder Approval. The Board of Directors of the Company shall,
subject to its fiduciary duties, recommend such approval to the stockholders of
the Company and the Company shall take all lawful actions and use its best
efforts to solicit and obtain such approval. The Company and the Purchaser
hereby acknowledge and agree that neither any Conversion Shares nor any Warrant
Shares (as such terms are defined in that certain Purchase Agreement dated March
1, 2000 between the Company and the Purchaser) may be voted at such meeting or
otherwise to obtain Stockholder Approval.
(g) As soon as practicable (but not later than 15 days
after the Restatement Effective Date (as such term is defined in the Credit
Agreement)), the Company shall file a proxy statement in preliminary form with
the Commission in connection with the special meeting of the Company's
stockholders to consider and vote upon the Stockholder Approval. Such proxy
statement shall include a proposal seeking stockholder approval of an increase
in the authorized Common Stock of the Company for the reservation for issuance
of a sufficient number of shares of Common Stock issuable upon conversion,
exchange, exercise or payment of dividends with respect to the Securities, such
number of shares to be mutually agreed upon by the Company and the Purchaser.
The Company shall make drafts of the proxy statement (and amendments or
supplements thereto) available to the Purchaser for its review reasonably in
advance of filing. The Purchaser agrees to reasonably cooperate with the Company
in the preparation of the proxy statement. The definitive proxy statement
("Proxy Statement") for the stockholders meeting shall be mailed to stockholders
as soon as practicable. The Company shall cause the Proxy Statement to comply in
all material respects with the requirements of the Exchange Act, and the
applicable rules and regulations thereunder, and to contain no untrue statement
of any material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. In the event that the
Purchaser determines at any time or from time to time that the number of shares
of Common Stock authorized pursuant to this Section 6(g) may be insufficient,
the Company shall promptly file such proxy statements and take such other
actions as the Purchaser may reasonably request to promptly obtain the
authorization of such number of additional shares of Common Stock as may be
reasonably specified by the Purchaser. The Company shall use its best efforts to
cause the proxy statement and any amendments and supplements to be cleared by
the SEC for mailing to the Company's stockholders as promptly as practicable.
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(h) At all times prior to the earlier to occur of the last
Closing to occur hereunder (the "Final Closing") or the termination of the
Purchaser's obligation to purchase Purchaser Junior Securities under this
Agreement, the Company will amend or supplement each SEC Report to the extent
required to correct any untrue statement of a material fact contained therein or
any omission of a material fact required to be stated therein to make the
statements in such SEC Report, in light of the circumstances under which they
were made, not misleading. From and after the date of this Agreement and at all
times prior to the earlier to occur of the Final Closing or such termination,
the Company shall timely file with the Commission true, accurate and complete
copies of all reports, schedules, forms, statements and other documents required
to be filed by the Company ("Required Filings"). All of such Required Filings
shall comply in all material respects with the requirements of the Act, or the
Exchange Act, as the case may be, and the rules and regulations of the
Commission promulgated thereunder applicable to the Required Filings.
(i) The Company hereby covenants and agrees that, prior to
the earlier to occur of the Final Closing or the termination of the Purchaser's
obligation to purchase Purchaser Junior Securities under this Agreement, unless
otherwise expressly contemplated by this Agreement or consented to beforehand in
writing by the Purchaser, the Company shall, and shall cause each Subsidiary to,
operate its business only in the usual and ordinary course consistent with past
practices.
(j) The Company hereby covenants and agrees that, prior to
each Closing hereunder for the purchase and sale of preferred stock of the
Company, it shall file or cause to be filed with the Secretary of State of
Delaware an appropriate certificate of designation, substantially in the form of
Exhibit C hereto, or other documentation reasonably specified by the Purchaser
consistent with the provisions of this Agreement.
(k) The Company hereby covenants and agrees that, prior to
the earlier to occur of the Final Closing or termination of the Purchaser's
obligation to purchase Purchaser Junior Securities under this Agreement, unless
consented to in writing beforehand by the Purchaser, and except for pay-in-kind
dividends or other dividends payable in capital stock of the Company in respect
of the 14.75% Preferred Stock, the 12.75% Preferred Stock, the Series A
Preferred, the Exchangeable Preferred and any Junior Securities issued hereunder
or to other purchasers that reduce the commitment hereunder, the Company will
not issue or take any action to issue any capital stock or securities
convertible into or exercisable for any capital stock having rights, privileges
or preferences, including, without limitation, with respect to the payment of
dividends or payment upon liquidation of the Company (bankruptcy or otherwise),
that are on a par or senior to any payment on the Series A Preferred or any
Exchangeable Preferred in any respect, or that are redeemable for cash, or that
provide for the payment of dividends in cash ahead of any payment on the Series
A Preferred or any Exchangeable Preferred, whether at the option or right of the
holder or the Company or its affiliates, unless expressly consented to
beforehand in writing by the Purchaser.
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(l) The Company shall timely file any and all statements or
reports required to be filed by it with the Commission under and in accordance
with the Act and the Exchange Act.
(m) As soon as practicable after the Purchaser's request
therefor, the Company shall (at its sole expense) file any notices, requests,
registrations or approvals required to be filed with the FCC or any applicable
state regulatory agency or commission in connection with the sale of the
Securities and shall use its reasonable best efforts to cause such notices,
requests, registrations or approvals to be processed successfully or approved,
as the case may be.
(n) As soon as practicable after the Purchaser's request
therefor, the Company shall (at its sole expense) file any notifications under
the HSR Act as may be required as a result of the issuance, conversion, exchange
or exercise of the Securities and shall use its reasonable best efforts and
shall cooperate with Purchaser to cause the early termination or expiration of
the waiting period for any such notifications.
(o) The Company shall comply with all of its obligations in
respect of the MCI Preemptive Right.
(p) The Company shall not hold any meeting of its
stockholders or circulate or provide to its stockholders (or participate or
assist in the circulation of) any consent of its stockholders, which meeting of
stockholders or consent is being held or circulated or provided for the purpose
of considering the approval of a merger or consolidation to which the Company is
a party, the sale, lease or exchange of all or substantially all of the
Company's property and assets, or the dissolution of the Company, or any
transactions similar to the foregoing, if such meeting would be held or such
consent would be so circulated or provided on a date on or prior to six months
after any Closing hereunder or, if there is no such Closing, on or prior to six
months after the date this Agreement is entered into.
7. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance of its
obligations under this Agreement and the other Transaction Documents, whether or
not the transactions contemplated herein or therein are consummated or this
Agreement is terminated pursuant to Section 12 hereof: (i) the reasonable
documented fees and disbursements of counsel, accountants and any other experts
or advisors retained by the Company and/or the Purchaser, (ii) the preparation
(including printing), issuance and delivery to the Purchaser of certificates and
other instruments evidencing the Securities, including transfer agent's fees,
(iii) the qualification of the Securities under state securities and "Blue Sky"
laws, including filing fees and reasonable documented fees and disbursements of
counsel relating thereto, (iv) the fees and expenses of the transfer agent and
registrar of the Company, including fees and expenses of its counsel, (v) any
fees and expenses incurred by the Purchaser in connection with any filing
required to be made pursuant to the HSR Act, including filing fees and
reasonable documented fees and disbursements of their respective counsel
whenever such filings are
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made, (vi) Purchaser's documented appraisal costs not to exceed $10,000 annually
for each separate class or series of Security issued or sold hereunder or in
connection herewith, (vii) all expenses and listing fees incurred in connection
with the application, if requested, for quotation of any Securities on the
PORTAL Market, to the extent eligible for resale under Rule 144A, (viii) all
other ongoing costs of holding or converting, exchanging or exercising the
Securities, but excluding ordinary custodial expenses, brokerage and/or
underwriting commissions and taxes, and (ix) such other reasonable documented
costs and expenses as may be incurred by the Purchaser as a result of the nature
of the transactions contemplated by this Agreement or the Securities to be
issued and sold hereunder. Without limiting the provisions of this Section 7
above, if the issuance and sale of the Securities provided for herein are not
consummated because any condition to the obligations of the Purchaser set forth
in Section 8 hereof is not satisfied or because of any failure, refusal or
inability on the part of the Company to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder (other than solely
by reason of a default by the Purchaser of its obligations hereunder after all
conditions hereunder have been satisfied in accordance herewith), the Company
will reimburse the Purchaser upon demand for all reasonable documented
out-of-pocket expenses (including reasonable documented counsel fees and
disbursements) that shall have been incurred by the Purchaser in connection with
the proposed purchase and sale of the Securities.
8. Conditions of the Obligations of the Purchaser. (a) The
obligations of the Purchaser with respect to each Closing under this Agreement
are subject to the fulfillment at or before such Closing of each of the
following conditions (except that the conditions set forth in Section
8(a)(iv)(D), (vi), (x), (xiv), (xv) and (xvi) shall not be applicable to the
purchase and sale of Exchangeable Preferred at the Initial Closing):
(i) The Purchaser shall have received opinions,
dated as of such Closing, of (i) the opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the General
Counsel for the Company; (ii) the opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, special
regulatory counsel for the Company; and (iii) the opinion of ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇, special counsel for the Company, all in form and substance consistent
with the Company's opinions in prior private placements as may be reasonably
agreed upon by the parties.
(ii) The representations and warranties of the
Company contained in this Agreement shall be true and correct when made and true
and correct at such Closing as if made on and as of such Closing (except insofar
as facts or circumstances that would make such representations and warranties to
be untrue and incorrect are known to the Purchaser on the date of this Agreement
and other than to the extent any such representation or warranty is expressly
made as to a certain date); the Company shall have performed all covenants and
agreements in all material respects and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to such Closing; and subsequent
to June 30, 2000 no event shall have occurred which has had, or in the judgment
of the Purchaser, is reasonably likely to have a Material Adverse Effect, other
than (i) as described in the SEC Reports, (ii) as
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disclosed in Schedule 4(e) or (iii) any such event as is known by the Purchaser
on the date of this Agreement.
(iii) The issuance and sale of the Securities
pursuant to this Agreement shall not be enjoined (temporarily or permanently)
and no restraining order or other injunctive order shall have been issued or any
action, suit or proceeding shall have been commenced with respect to this
Agreement or other Transaction Document before any court or Governmental
Authority (including, without limitation, the FCC).
(iv) The Purchaser shall have received certificates,
dated as of Closing, signed on behalf of the Company by its Chief Operating
Officer and its Chief Financial Officer to the effect that:
(A) The representations and warranties of the Company in
this Agreement were true and correct when made and true and
correct at such Closing as if made on and as of such Closing
(except insofar as facts or circumstances that would make such
representations and warranties to be untrue and incorrect are
known to the Purchaser on the date of this Agreement and other
than to the extent any such representation or warranty is
expressly made as to a certain date), and the Company has
performed all covenants and agreements in all material respects
and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to such Closing;
(B) Subsequent to June 30, 2000, no event has occurred that
has had, or is reasonably likely to have, a Material Adverse
Effect, other than (i) as described in the SEC Reports, (ii) as
disclosed in Schedule 4(e) or (iii) any such event as is known to
the Purchaser on the date of this Agreement;
(C) The issuance and sale of the Securities hereunder by
the Company has not been enjoined (temporarily or permanently);
and
(D) With respect to any Closing occurring on or after
October 1, 2000, the Company and e.spire Finance Corporation were
in compliance with each of the covenants and obligations of the
Company and e.spire Finance Corporation set forth in Sections 6.5
and 6.6 of the Credit Agreement as of the March 31, June 30,
September 30 or December 31 immediately preceding the date of such
Closing (and after giving effect to all financial results, events
and other circumstances through the close of business on such
March 31, June 30, September 30 or December 31, as the case may
be).
(v) All authorizations, approvals or permits, if
any, of any Governmental Authority (including without limitation the FCC and
State Telecommunications Authorities) that are required in connection with the
lawful issuance and sale of the Purchaser Junior Securities pursuant to this
Agreement or (subject to the matters set
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forth in Section 4 (e) and (f) above) the Additional Securities pursuant to the
terms thereof shall have been duly obtained and be in full force and effect as
of each Closing of the purchase of Purchaser Junior Securities.
(vi) The applicable waiting period under the HSR Act
in respect of this issuance and sale of any Purchaser Junior Securities
consisting of Common Stock or other voting securities of the Company shall have
expired.
(vii) Other than the Stockholder Approval and other
than any notification under the HSR Act and any consent of the FCC or any State
Telecommunications Authority that may be required as a result of the conversion
or exercise of the Securities consisting of warrants, convertible stock and/or
convertible indebtedness, all consents and waivers, if any, of third parties
that are required in connection with any such Closing under this Agreement and
the consummation of the transactions contemplated hereby and by the applicable
Transaction Documents, shall be duly obtained and effective as of each such
Closing.
(viii) All corporate and other proceedings required
in connection with the transactions contemplated at such Closing and all
documents incident thereto shall be satisfactory in form and substance to the
Purchaser and its counsel and the Purchaser and such counsel shall have received
such counterpart originals and certified or other copies of such documents as
they may reasonably request.
(ix) On or before each such Closing, the Purchaser
(and its counsel) shall have received such further documents, certificates and
schedules or instruments relating to the business, corporate, legal and
financial affairs of the Company as they shall have heretofore reasonably
requested from the Company.
(x) The Company and the Purchaser shall have
entered into a Registration Rights Agreement and other Transaction Documents
relating to the transactions contemplated in connection with such Closing and
related matters, including without limitation warrant agreements for the
Transaction Fee Warrants, as reasonably specified by the Purchaser consistent
with the provisions of this Agreement.
(xi) The Company shall have filed with respect to
any preferred stock of the Company constituting Securities, any certificate of
designation specified by the Purchaser consistent with the provisions of this
Agreement with the Secretary of State of Delaware and the same shall have become
effective and be in full force and effect.
(xii) Since September 19, 2000, there shall not have
been any material adverse change in the price of the Common Stock.
(xiii) The certificates representing the shares of
capital stock included in the Securities purchased or issued at such Closing
shall have been executed and delivered by the Company to the Purchaser, the
warrants and any warrant agreements
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representing warrants included in the Securities purchased or issued at such
Closing shall have been executed and delivered by the Company to the Purchaser,
and the promissory notes and other instruments provided hereunder representing
indebtedness included in the Securities purchased at such Closing shall have
been executed and delivered by the Company to the Purchaser.
(xiv) The Company shall have obtained Stockholder
Approval.
(xv) With respect to any Closing occurring after
December 1, 2000, the Company shall have prepared and submitted to the Purchaser
its final budget for the fiscal year ended December 31, 2001 and the Purchaser
shall have approved such budget (together with any updates or revisions thereof)
or shall have waived in writing such approval.
(xvi) With respect to any Closing occurring on or
after October 1, 2000, the Company and e.spire Finance Corporation will be in
compliance with each of the covenants and obligations of the Company and e.spire
Finance Corporation set forth in Sections 6.5 and 6.6 of the Credit Agreement as
of the March 31, June 30, September 30 or December 31 immediately preceding the
date of such Closing (and after giving effect to all financial results, events
and other circumstances through the close of business on such March 31, June 30,
September 30 or December 31, as the case may be).
(xvii) The Purchaser shall have received the funds
necessary to pay the purchase price for the Securities being purchased by the
Purchaser at such Closing in accordance with the capital call procedures
applicable to the Purchaser under the Purchaser's capital call instruments, but
in no event later than five business days after the Purchaser receives written
notice from the Company that all conditions to Closing set forth under Section 8
hereof have been satisfied.
(xviii) There shall not have been a suspension in
trading in securities of the Company or in securities generally on the New York
Stock Exchange, American Stock Exchange or The NASDAQ Stock Market and minimum
or maximum prices shall not have been established on any such exchange or
market.
(xix) A banking moratorium shall not have been
declared by New York or United States authorities.
(xx) There shall not have been (A) an outbreak or
escalation of hostilities between the United States and any foreign power, or
(B) an outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international calamity or
emergency, or (C) any material adverse change in (1) the capital markets
generally, (2) the capital markets for equity securities or (3) the capital
markets for telecommunication company equity securities which, in the case of
(A), (B) or (C)
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above and in the sole judgment of the Purchaser, makes it impracticable or
inadvisable to proceed with the purchase and sale of the Securities as
contemplated at such closing.
(b) In addition to the conditions set forth in Section 8(a)
above (other than the conditions set forth in Sections 8(a)(iv)(D), (vi), (xiv),
(xv) and (xvi)), the obligations of the Purchaser with respect to the Initial
Closing are subject to the fulfillment at or before the Initial Closing of each
of the following conditions:
(i) The Company shall have filed with respect to
the Exchangeable Preferred a certificate of designation substantially in the
form of Exhibit A hereto with the Secretary of State of Delaware and the same
shall have become effective and be in full force and effect.
(ii) The Company shall have filed with respect to
the Series A Preferred a certificate of amendment making the corrections in the
existing certificate of designation for the Series A Preferred described on
Exhibit B hereto and the same shall have become effective and be in full force
and effect. As a holder of such stock, the Purchaser hereby consents to such
amendment.
References in this Agreement to facts, circumstances and events
known to the Purchaser (and similar references) shall exclude matters learned by
employees or other representatives of the Purchaser in their capacity as a
member of or observer on the board of directors of the Company or any
Subsidiary.
9. Restrictions on Transfer. The Purchaser hereby represents and
warrants to the Company that:
(a) The Securities to be purchased by the Purchaser will be
acquired for investment for its own account, and, except as contemplated by the
Registration Rights Agreements or otherwise in accordance with applicable
securities laws, not with a view to the resale or distribution of any part
thereof and without the present intention of selling, granting any participation
in, or otherwise distributing the same.
(b) The Purchaser is an "accredited investor" within the
meaning of Rule 501(a) under the Act and can bear the economic risk of its
investment and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Securities and has received all information from the Company that it has
requested with respect to the Company and the Securities.
(c) The Purchaser understands that the Securities it is
purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Securities may be resold
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without registration under the Act, only in certain limited circumstances. In
this connection, the Purchaser represents that it is familiar with Rule 144 of
the Commission, as presently in effect, and understands the resale limitations
imposed hereby by the Act.
(d) The Purchaser understands that the certificates or
other instruments evidencing the Securities will bear a legend evidencing the
foregoing restrictions on transfer.
The Securities shall not be required to bear a restrictive legend
if a registration statement under the Act is effective with respect to the
transfer of such securities or an opinion of counsel reasonably satisfactory to
the Company is delivered to the Company to the effect that neither the legend
nor the restrictions on transfer described in this Agreement are required to
ensure compliance with the Act. Whenever, pursuant to the preceding sentence,
any certificate or other instrument for any of the Securities is no longer
required to bear a restrictive legend, the Company may and if requested by the
holder thereof, shall, issue to the holder, at the Company's expense any new
certificate not bearing a restrictive legend.
10. Indemnification. (a) The Company agrees to indemnify the
Purchaser, each of its affiliates and each officer, director, employee, member,
partner (whether general or limited) and agent of the Purchaser and of each of
its affiliates (the "Indemnified Parties") for, and to hold each Indemnified
Party harmless from and against any and all damages, losses, claims and other
liabilities of any and every kind, including, without limitation, judgments and
costs of settlement (or actions or other proceedings commenced or threatened in
respect thereof) and reasonable expenses that arise out of, result from or in
any way relate to this Agreement or any other Transaction Document, or in
connection with any of the transactions contemplated hereby or thereby,
including, without limitation, in connection with the preparation, filing with
the Commission and mailing to the Company's stockholders of the proxy statement
for the Stockholder Approval and any other proxy statement for the increase in
the authorized Common Stock referred to in Section 6(g) (other than ordinary
investment losses to the extent not arising in connection with (A) any actual or
alleged misrepresentation or breach of covenant, warranty duty or obligation by
the Company or (B) any actual or threatened action or proceeding arising out of,
resulting from or in any way relating to this Agreement or any other Transaction
Document, or any of the transactions contemplated hereby or thereby), and to
reimburse each Indemnified Party, upon its demand, for any reasonable legal or
other expenses incurred in connection with investigating, defending or
participating in any such loss, claim, damage, liability or action or other
proceeding (whether or not such person is a party to any action or proceeding
out of which such expenses arise). The Indemnified Parties shall have the right
to select counsel, subject to the prior consent of the Company, which consent
shall not be unreasonably withheld or delayed, to defend the Indemnified Parties
at the Company's expense in any action or proceeding that is the subject of
indemnification hereunder, provided, that the Company shall not be liable for
the fees and expenses of more than one counsel (plus any local counsel) for all
Indemnified Parties (unless any Indemnified Party shall have reasonably
determined that an actual or potential conflict of interest makes such common
representation inappropriate) in connection
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with any such action or proceeding. The Company will not be required to
indemnify any Indemnified Party for any amount paid in settlement of any action
or proceeding which is the subject of indemnification hereunder unless the
Company shall have consented in writing to such settlement, such consent not to
be unreasonably withheld or delayed. The Company shall not, without the prior
consent of the Indemnified Party, effect any settlement or compromise of any
pending or threatened proceeding in respect of which any Indemnified Party is or
could have been a party, or indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement (A) includes an unconditional written
release of such Indemnified Party, in form and substance reasonably satisfactory
to such Indemnified Party, from all liability on claims that are the subject
matter of such proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of any
Indemnified Party.
(b) If the indemnification provided for in Section 10(a)
above is for any reason unavailable to, or insufficient to hold harmless, an
Indemnified Party in respect of any losses, claims, damages or liabilities
referred to therein, then the Company, in lieu of indemnifying such Indemnified
Party thereunder and in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect (i) the relative benefits received by the Indemnified
Party or Parties on the one hand and the Company on the other from the offering
of the Securities or (ii) if the allocation provided by the foregoing clause (i)
is not permitted by applicable law, not only such relative benefits but also the
relative fault of the Company on the one hand and the Indemnified Party or
Parties on the other in connection with any statements or omissions or alleged
statements or omissions or other matters that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof) as well as any other
relevant equitable considerations. The relative fault of the parties shall be
determined by reference to, among other things, whether any untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or such Indemnified Party, on the other, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances.
(c) The parties agree that it would not be just and
equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation (even if the Indemnified Parties were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 10(b) above. The amount paid
or payable by the Company as a result of the losses, claims, damages and
liabilities referred to in Section 10(b) above shall be deemed to include,
subject to the limitations set forth above, any reasonable legal or other
expenses actually incurred by such Indemnified Party in connection with
investigating or defending any such action or claim.
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11. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company or its
officers and of the Purchaser set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) (other than with respect to any facts or
circumstances known to the Purchaser on the date of this Agreement) any
investigation made by or on behalf of the Company or the Purchaser and (ii)
delivery of and payment for the Securities. The respective agreements,
covenants, indemnities and other statements set forth in Sections 6 and 10
hereof shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
12. Termination.
(a) The obligation of the Purchaser to purchase all further
Purchaser Junior Securities under this Agreement may be terminated prior to any
Closing under the following circumstances and by the following persons:
(i) by the Purchaser, if subsequent to June 30,
2000, any event (other than an event known by the Purchaser on the date of this
Agreement) shall have occurred which, in the sole judgment of the Purchaser, has
had, individually or in the aggregate, a Material Adverse Effect, or there shall
have been, in the sole judgment of the Purchaser, any events or developments
(other than events or developments known by the Purchaser on the date of this
Agreement) that, individually or in the aggregate, have or could be reasonably
likely to have a Material Adverse Effect (except for the events disclosed in the
SEC Reports or in Schedule 4(e));
(ii) by the mutual consent of the Purchaser and the
Company;
(iii) by the Purchaser at any time after October 15,
2001 or such later date as shall have been agreed to in writing by the parties
hereto, if at the time notice of such termination is given, any such Closing
shall not have been consummated;
(iv) by the Purchaser or the Company if any court of
competent jurisdiction in the United States or other United States Governmental
Authority has issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement or the other Transaction Documents and such order, decree, ruling
or other action shall have become final and nonappealable provided, that the
provisions of this clause (iv) shall not be available to any party whose failure
to fulfill its obligations pursuant to this Agreement shall have been the cause
of, or shall have resulted in, such order, decree, ruling or other action;
(v) by the Purchaser, if there has been a material
misrepresentation or omission or material breach on the part of the Company in
any of the representations, warranties, covenants or agreements of the Company
set forth herein or in any
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other Transaction Document (other than facts or circumstances known to the
Purchaser on the date of this Agreement), or if there has been any material
failure on the part of the Company to comply with its obligations and satisfy
all conditions on its part to be performed or satisfied hereunder at or prior to
such Closing including, without limitation, obtaining the Stockholder Approval
within 90 days after the Restatement Effective Date (as such term is defined in
the Credit Agreement); or
(vi) by the Purchaser, if third parties, the
approvals of which are necessary to consummate the transactions contemplated
hereby or by the other Transaction Documents, require changes to the terms of
this Agreement or any other Transaction Document that are adverse to the
Purchaser, as determined by the Purchaser in its sole judgment.
(b) Termination of the Purchaser's obligation to make
further purchases of Securities under this Agreement pursuant to this Section 12
shall be without liability of any party to any other party except as provided in
Sections 7, 10 and 11.
13. Transaction Fee. As a transaction fee for the Purchaser's
agreements hereunder, the Company shall issue to the Purchaser, simultaneously
with the closing of each sale of Purchaser Junior Securities under this
Agreement, warrants ("Transaction Fee Warrants") for that number of shares of
Common Stock (subject to appropriate adjustment for stock dividends, stock
splits, recapitalizations, reorganizations and similar events) equal to (i)
60,000, divided by (ii) the Common Stock Purchase Price in effect at such
Closing minus $.01, for each million dollars of gross proceeds to the Company
from such sales (prorated for any portion of such million dollars of gross
proceeds), provided, however, that in the event that at any subsequent Closing
under this Agreement at which Transaction Fee Warrants are issued the Common
Stock Purchase Price is lower than the Common Stock Purchase Price that was in
effect at the immediately preceding Closing at which Transaction Fee Warrants
were issued (a "Reduced Purchase Price"), then additional Transaction Fee
Warrants shall be issued in respect of such immediately preceding Closing in
such amount that such additional Transaction Fee Warrants, when added to the
Transaction Fee Warrants previously issued in respect of such immediately
preceding Closing, shall equal the number of Transaction Fee Warrants that would
have been issued at such immediately preceding Closing had the Reduced Purchase
Price been in effect at the time of such immediately preceding Closing. The
Transaction Fee Warrants shall have terms and conditions substantially the same
(except that the exercise price thereof shall be $.01 per share of Common Stock
subject thereto or as such terms and conditions may be reasonably specified by
the Purchaser with the approval of the Company not to be unreasonably withheld)
as the Warrants purchased under the Warrant Agreement, and shall be evidenced by
such Transaction Documents as may be reasonably specified by the Purchaser and
are reasonably acceptable to Greenwich. Purchaser may, in its discretion, elect
to receive Transaction Fee Warrants in respect of the shares of Exchangeable
Preferred issued at the Initial Closing (and to enter into Transaction Documents
relating thereto) promptly after the Initial Closing rather than at the Initial
Closing.
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14. Notices. All communications hereunder shall be in writing and,
if sent to the Purchaser, shall be mailed or delivered or telecopied and
confirmed in writing to the Purchaser at 1776 On The Green, ▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Telecopier Number (973)
984-5818, with a copy to Proskauer Rose LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Telecopier Number (▇▇▇) ▇▇▇-▇▇▇▇; if sent to
the Company, shall be mailed or delivered or telecopied and confirmed in writing
to the Company at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel, Telecopier Number (▇▇▇) ▇▇▇-▇▇▇▇; with a copy to ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Telecopier Number (▇▇▇) ▇▇▇-▇▇▇▇.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; and one
business day after being timely delivered to a next-day air courier; and when
receipt is acknowledged by the addressee, if telecopied.
15. Successors. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and legal
representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that the indemnities of the Company
contained in Section 10 of this Agreement shall also be for the benefit of any
Indemnified Party and any person or persons who control the Purchaser within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act.
16. Equitable Adjustments. In the event that at any time after the
date hereof and prior to the issuance of any Securities there shall occur any
event which would trigger antidilution adjustments in connection with such
Securities had they been previously issued, the number of shares of Common Stock
issuable upon the conversion or exercise thereof, and the conversion or exercise
price applicable thereto, shall be equitably adjusted to reflect such events.
17. Entire Agreement. This Agreement, together with the Schedules
hereto, is intended by the parties as a final and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein and any and all prior oral or written
agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Purchaser on the one
hand and the Company on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
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18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAW.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and the Purchaser.
Very truly yours,
e.spire COMMUNICATIONS, INC.
By:
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Name:
------------------------------
Title:
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The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
THE ▇▇▇▇ ALTERNATIVE INCOME FUND, L.P.
By:
--------------------------------
Name:
------------------------------
Title:
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