e.spire COMMUNICATIONS, INC.
PURCHASE AGREEMENT
September 19, 2000
To: The Xxxx Alternative Income Fund, L.P.
1776 On The Green
00 Xxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Ladies and Gentlemen:
e.spire COMMUNICATIONS, INC. (the "Company"), a
Delaware corporation, hereby confirms its agreement with THE
XXXX 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 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.
(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 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 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:
(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 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.
(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 Xxxx-Xxxxx-Xxxxxx 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 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 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 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.
(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 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.
(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 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 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 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 Xxxxxxxx Xxxxx
Xxxxxx & Xxxxx (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 Xxxxxx Xxxxxxx pursuant to the terms of
the Consulting Agreement, dated October 19, 1994, between
Xxxxxx Xxxxxxx 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, 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, 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 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 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.
(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.
(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 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
Xxxxxxxx Xxxxx, the General Counsel for the Company; (ii) the
opinion of Xxxxx Xxxx & Xxxxxx LLP, special regulatory counsel
for the Company; and (iii) the opinion of Xxxxx Xxxx &
Xxxxxxxx, 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 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 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 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)
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 Bhereto 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 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 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.
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 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.
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, 00 Xxxx Xxxxx, Xxxxxxxxxx, XX
00000, Attention: Xxxxxx X. Xxxxxxxx, Telecopier Number (973)
984-5818, with a copy to Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxx, Telecopier
Number (000) 000-0000; if sent to the Company, shall be mailed
or delivered or telecopied and confirmed in writing to the
Company at 00000 Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: General Counsel, Telecopier Number (000) 000-0000;
with a copy to Xxxxx Xxxx & Xxxxxxxx, Attention: Xxxxxxx
Xxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Telecopier Number (000) 000-0000.
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.
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:_________________________________
Name:_______________________________
Title:________________________________
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
THE XXXX ALTERNATIVE INCOME FUND, L.P.
By:_______________________________________
Name:_____________________________________
Title:______________________________________
EXHIBIT B
The Certificate of Designation for the Company's Series A
Convertible Preferred Stock shall be amended as follows:
1. To delete the reference to the "AT&T Facility" from
the definition of "Secured Credit Facility" in Section 1
thereof.
2. To change the references to Section "8(h)" in the
last sentence of Section 6(h) thereof to "6(h)."
3. To change the clause in Section 7(c)(ii) thereof
reading "as additional dividends (as defined in the certificate
of designation with respect to the 14.75% Preferred Stock)" to
read "any Additional Dividends (as defined in the certificate
of designation with respect to the 14.75% Preferred Stock))".
4. To change the clause in Section 7(c)(ii) thereof
reading "as additional dividends (as defined in the certificate
of designation with respect to the 12.75% Preferred Stock))" to
read "any Additional Dividends (as defined in the certificate of
designation with respect to the 12.75% Preferred Stock))".
5. To change the reference to clause (iii) in the proviso
at the end of Section 7(c) thereof to a reference to clause (iv).
6. To change the word "or" at the end of Section 8(b)(ii)
thereof to read "and".
