Exhibit 4.1
Execution Copy
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AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
among
KMC TELECOM HOLDINGS, INC.,
NASSAU CAPITAL PARTNERS L.P.,
NAS PARTNERS I L.L.C.,
XXXXXX X. XXXXXX,
KMC TELECOMMUNICATIONS L.P.,
AT&T CREDIT CORPORATION,
GENERAL ELECTRIC CAPITAL CORPORATION
CORESTATES BANK, N.A.
and
CORESTATES HOLDINGS, INC.
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Dated as of October 31, 1997
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AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of October 31,
1997 (this "AGREEMENT"), among KMC Telecom Holdings, Inc., a Delaware
corporation (the "COMPANY"), Nassau Capital Partners L.P., a Delaware limited
partnership ("NASSAU CAPITAL"), NAS Partners I L.L.C., a Delaware limited
liability company ("NAS" and, together with Nassau Capital, "NASSAU"), Xxxxxx X.
Xxxxxx ("HNK"), KMC Telecommunications L.P. ("KMC LP", AND, TOGETHER WITH HNK,
"KAMINE"), AT&T Credit Corporation, a Delaware corporation ("AT&T"), General
Electric Capital Corporation, a New York corporation ("GECC"), CoreStates Bank,
N.A., a national banking association ("CORESTATES BANK") and CoreStates
Holdings, Inc., a Delaware corporation ("CORESTATES HOLDINGS", AND TOGETHER WITH
CORESTATES BANK, "CORESTATES").
WHEREAS, the parties hereto (other than GECC and CoreStates Holdings)
are parties to a Stockholders Agreement dated as of September 22, 1997 (the
"EXISTING STOCKHOLDERS AGREEMENT");
WHEREAS, pursuant to a Purchase Agreement dated as of the date hereof
with the Company, GECC and CoreStates Holdings are purchasing an aggregate of
150,000 shares of the Company's Series C Cumulative Convertible Preferred Stock,
par value $.01 per share ("SERIES C CONVERTIBLE PREFERRED STOCK") and Nassau is
purchasing 25,000 shares of the Company's Series D Cumulative Convertible
Preferred Stock, par value $.01 per share ("SERIES D CONVERTIBLE PREFERRED
STOCK");
WHEREAS, after giving effect to such purchases: (i) HNK owns 573,835
shares of Common Stock, par value $.01 per share, of the Company (the "COMMON
STOCK"), 13,835 shares of which are subject to repurchase by the Company under
certain circumstances; (ii) KMC L.P. owns 40,000 shares of Common Stock; (iii)
Nassau owns 123,800 shares of Series A Cumulative Convertible Preferred Stock,
par value $.01 per share, of the Company ("SERIES A CONVERTIBLE PREFERRED
STOCK"), 25,000 shares of Series D Convertible Preferred Stock and 13,835 shares
of Common Stock which shares of Common Stock are subject to repurchase by the
Company under certain circumstances; (iv) AT&T owns 112,020.5 shares of Common
Stock (20,752.5 shares of which are "AT&T Warrant Stock") and a warrant ("AT&T
COMPANY WARRANT") to purchase 91,268 shares of Common Stock (subject to certain
adjustments); (v) GECC owns 100,000 shares of Series C Convertible Preferred
Stock and a warrant (the "GECC Warrant") to purchase 10,000 shares of Common
Stock; and (vi) CoreStates owns 50,000 shares of Series C Convertible Preferred
Stock and 6,917.5 shares of Common Stock ("CORESTATES WARRANT STOCK" and
together with AT&T Warrant Stock, "WARRANT STOCK"); and
WHEREAS, in connection with the purchases of Series C and Series D
Convertible Preferred Stock the parties hereto wish to amend certain provisions
of the Existing Stockholders Agreement
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and to restate the provisions of such Agreement, as so amended, in their
entirety;
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the adequacy of which is hereby acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, terms which are used
herein but not defined herein are used herein as defined in the Investment
Agreement, and the following terms shall have the meanings set forth below:
"ACCREDITED INVESTOR" shall have the meaning ascribed to such term in
subsections (a)(1), (a)(2), (a)(3) and (a)(7) of Rule 501 of the Securities
Act.
"AFFILIATE" shall mean, with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as
a trustee, guardian or other fiduciary, 25% or more of the Capital Stock
having ordinary voting power in the election of directors of such Person,
(ii) each Person that controls, is controlled by or is under common control
with such Person or any Affiliate of such Person or (iii) each of such
Person's executive officers and directors. For the purpose of this
definition, "CONTROL" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management
or policies, whether through the ownership of voting securities, by
contract or otherwise.
"AT&T COMPANY WARRANT" has the meaning assigned to such term in the
recitals.
"AT&T SUBSIDIARY WARRANT" means Warrant No. 4, dated September 22,
1997 and granted to AT&T, to purchase shares of common stock, par value
$.01 per share, of KMC.
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"CERTIFICATE" means the Amended and Restated Certificate of
Incorporation of the Company in the form annexed hereto as Exhibit A.
"COMMON STOCK" means Common Stock, par value $.01 per share, of the
Company or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"COMMON STOCK EQUIVALENTS" means any security or obligation which is
by its terms convertible into shares of Common Stock and any option,
warrant or other subscription or purchase right with respect to Common
Stock.
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"CONVERTIBLE PREFERRED STOCK" means the Series A Convertible Preferred
Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred
Stock and Series D Convertible Preferred Stock.
"CORESTATES SUBSIDIARY WARRANT" means Warrant No. 5, dated September
22, 1997 and granted to CoreStates, to purchase shares of Common Stock.
"DEMAND HOLDER" has the meaning assigned such term in Section 6.1.
"DEMAND RIGHTS COMMENCEMENT DATE" means the date on which the Company
completes an initial Public Offering and any related holdback period under
Section 6.3 expires.
"DGCL" means the General Corporation Law of the State of Delaware.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC thereunder.
"FAMILY MEMBERS" has the meaning assigned such term in Section 2.2.2.
"FAMILY TRUST" has the meaning assigned such term in Section 2.2.2.
"FULLY-DILUTED BASIS" means at any date as of which the number of
shares of Common Stock is to be determined, ON A BASIS INCLUDING all shares
of Common Stock outstanding at such date and the maximum shares of Common
Stock issuable in respect of Common Stock Equivalents (giving effect to the
then current respective conversion prices) and other rights to purchase
(directly or indirectly) shares of Common Stock or Common Stock
Equivalents, outstanding on such date, to the extent such rights to
convert, exchange of exercise thereunder are presently exercisable.
"GECC WARRANT" has the meaning assigned to such term in the recitals.
"HIGH YIELD DEBT AND EQUITY OFFERING" shall have the meaning assigned
to such term in a Subordinated Loan and Security Agreement, dated as of
September 22, 1997, among the Company, KMC Telecom II, Inc. and AT&T
Commercial Finance Corporation, as in effect as of the date hereof.
"INVESTMENT AGREEMENT" shall mean the Amended and Restated Note
Purchase and Investment Agreement, dated as of October 22, 1996, by and
among KMC Telecom Inc. ("KMC"), Nassau, HNK, and Parent, as amended from
time to time.
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"KAMINE DIRECTORS" has the meaning assigned such term in the
Certificate.
"LIQUIDITY EVENT" shall mean the occurrence of (i) the sale of all or
substantially all of the stock or assets of the Company, the consolidation
or merger of the Company with one or more other corporations or (ii) the
closing of an initial public offering of Common Stock in which the Company
receives aggregate gross proceeds (before deduction of underwriting
discounts and expenses of sale) of at least $40,000,000.
"MAJORITY SERIES C HOLDERS" shall mean the Persons holding, from time
to time, greater than 50% of the combined voting power of the outstanding
shares of Series C Convertible Preferred Stock and the outstanding shares
of Common Stock into which shares of Series C Convertible Preferred Stock
theretofore have been converted.
"NASSAU DIRECTORS" has the meaning assigned such term in the
Certificate.
"OFFERED SECURITIES" has the meaning assigned such term in Section
3.1.1.
"OFFERING NOTICE" has the meaning assigned such term in Section 3.1.1.
"OFFER PRICE" has the meaning assigned such term in Section 3.1.1.
"PERMITTED TRANSFEREES" has the meaning assigned such term in Section
2.2.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, fund, unincorporated
association or organization or government or other agency or political
subdivision thereof.
"PROHIBITED TRANSFEREE" means any person actively engaged, either
directly, or indirectly through subsidiaries, in the operation of providing
local access or long distance telephone services.
"PUBLIC OFFERING" means any offer for sale of Common Stock pursuant to
an effective Registration Statement filed under the Securities Act.
"QUALIFIED PUBLIC OFFERING" or "QPO" means the first offer for sale of
Common Stock, in any single transaction or series of related transactions,
pursuant to an effective registration statement filed by Holdings under the
1933 Act in which the Company receives aggregate gross proceeds (before
deduction of underwriting discounts and expenses of sale) of at least
$40,000,000, provided that, the price per
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share at which such shares are sold in the offering (before deduction of
underwriting discounts and expenses of sale) is at least four (4) times the
Conversion Price of the Company's Series A Convertible Preferred Stock
which would then be in effect if determined pursuant to the terms of the
Series A Convertible Preferred Stock in effect as of the date hereof
(whether or not any shares of such stock are then outstanding).
"REGISTRABLE SECURITIES" means (i) the Common Stock issued or issuable
upon the conversion of the Convertible Preferred Stock or the exercise of
the AT&T Company Warrant or the GECC Warrant, (ii) any Common Stock
acquired by Nassau, Kamine, AT&T, GECC, CoreStates, any Accredited Investor
that is a permitted transferee of Common Stock pursuant to Section 3.1.6 or
any of their respective Affiliates after the date hereof, (iii) the Common
Stock held by Kamine, Nassau, AT&T and CoreStates and their respective
Affiliates and (iv) any shares of capital stock of the Company issued or
issuable with respect to the securities referred to in clauses (i), (ii)
and (iii) by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. For purposes of this Agreement, a Person will be deemed to
be a holder of Registrable Securities whenever such Person has the right to
acquire directly or indirectly such Registrable Securities (including,
without limitation, upon conversion or exercise in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such
acquisition has actually been effected. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable
Securities when (i) such securities shall have been registered under the
Securities Act, and the registration statement with respect to the sale of
such securities shall have become effective under the Securities Act or
such securities shall have been sold under circumstances in which all
applicable conditions of Rule 144 (or any similar provision then in force)
under the Securities Act are met or may be sold pursuant to Rule 144(k),
(ii) such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer
shall have been delivered by the Company and subsequent disposition of such
securities shall not require registration or qualification of such
securities under the Securities Act or any state securities or blue sky
laws then in force in a preponderance of states or (iii) such securities
shall cease to be outstanding.
"REGISTRATION EXPENSES" shall mean all expenses incident to the
Company's performance of or compliance with this Agreement, including,
without limitation, all SEC and stock exchange or National Association of
Securities Dealers, Inc. ("NASD") registration and filing fees and
expenses, fees and expenses of compliance with securities or blue sky laws
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(including, without limitation, reasonable fees and disbursements of
counsel for the underwriters in connection with blue sky qualifications of
the Registrable Securities), rating agency fees, printing expenses,
messenger, telephone and delivery expenses, the fees and expenses incurred
in connection with the listing of the securities to be registered on each
securities exchange or national market system on which similar securities
issued by the Company are then listed, fees and disbursements of counsel
for the Company and all independent certified public accountants (including
the expenses of any annual audit, special audit and "cold comfort" letters
required by or incident to such performance and compliance), securities
laws liability insurance (if the Company so desires), the fees and
disbursements of underwriters (including, without limitation, all fees and
expenses of any "qualified independent underwriter" required by the rules
of the NASD) customarily paid by issuers or sellers of securities (but not
including any underwriting discounts or commissions attributable to the
sale of Registrable Securities by the sellers of Registrable Securities),
the reasonable fees of counsel selected pursuant to Section 6.5(b) hereof
by the holders of Registrable Securities in connection with each such
registration, the reasonable fees and expenses of any special experts
retained by the Company in connection with such registration, fees and
expenses of other persons retained by the Company.
"REGISTRATION STATEMENT" means a registration statement filed pursuant
to the Securities Act.
"RULE 144" means Rule 144 under the Securities Act (or any similar
rule then in force).
"RULE 144A" means Rule 144A under the Securities Act (or any similar
rule then in force).
"SEC" means the Securities and Exchange Commission or any governmental
body or agency succeeding to the functions thereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder.
"SELLING STOCKHOLDER" has the meaning assigned such term in Section
3.1.1.
"SERIES A CONVERTIBLE PREFERRED STOCK" has the meaning assigned to
such term in the recitals.
"SERIES B CONVERTIBLE PREFERRED STOCK" has the meaning assigned
to such term in the recitals.
"SERIES C CONVERTIBLE PREFERRED STOCK" has the meaning assigned
to such term in the recitals.
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"SERIES C DIRECTOR" has the meaning assigned to such term in Section
4.3.2.
"SERIES D CONVERTIBLE PREFERRED STOCK" has the meaning assigned
to such term in the recitals.
"SHARES" means, with respect to each Stockholder, all shares, whether
now owned or hereafter acquired, of Common Stock and Convertible Preferred
Stock owned thereby; PROVIDED, HOWEVER, that for the purposes of any
computation of the number of Shares either outstanding or held by any
Stockholder or otherwise to be determined hereunder, (i) the shares of
Common Stock issuable upon conversion, exercise or exchange of all Common
Stock Equivalents shall be deemed outstanding whether or not such
conversion, exercise or exchange has actually been effected and (ii) the
number of Shares held by each holder of shares of Convertible Preferred
Stock shall be the number of votes exercisable with respect to such shares
of Convertible Preferred Stock.
"STOCKHOLDERS" shall mean Nassau, Kamine, AT&T, GECC, CoreStates and
any transferee thereof who has agreed to be bound by the terms and
conditions of this Agreement in accordance with Section 2.4, and the term
"Stockholder" shall mean any such Person.
"STOCKHOLDERS MEETING" has the meaning assigned such term in Section
4.1.
"SUBSIDIARY WARRANTS" mean the AT&T Subsidiary Warrant and the
CoreStates Subsidiary Warrant.
"THIRD PARTY PURCHASER" has the meaning assigned such term in Section
3.1.1.
"TRANSFER" has the meaning set forth in Section 2.1.
"WRITTEN CONSENT" has the meaning assigned such term in Section 4.1.
2. RESTRICTIONS ON TRANSFER OF SHARES.
2.1. LIMITATION ON TRANSFER. No Stockholder shall sell, give, assign,
hypothecate, pledge, encumber, grant a security interest in or otherwise dispose
of (whether by operation of law or otherwise) (each a "TRANSFER") any Shares or
any right, title or interest therein or thereto, except in accordance with the
provisions of this Agreement; PROVIDED, HOWEVER, that any transferee obtaining
any of such Shares hereunder shall agree to be bound by this Agreement and shall
comply with Section 2.4. Any attempt to transfer any Shares or any rights
thereunder in violation of the preceding sentence shall be null and void AB
INITIO and the Company shall not register any such transfer.
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2.2. PERMITTED TRANSFERS. Notwithstanding anything to the contrary
contained in this Agreement, each of the Stockholders may transfer Shares in
accordance with this Section 2.2 (the Persons to whom such Stockholders may so
transfer Shares are referred to hereinafter as "PERMITTED TRANSFEREES").
2.2.1 TRANSFERS BY NASSAU, AT&T, GECC, AND CORESTATES. At any
time, each of Nassau, AT&T, GECC, CoreStates and transferees of AT&T, GECC and
CoreStates which are Accredited Investors may (a) subject to Sections 2.3 and
2.4, transfer Shares to any Affiliate and (b) subject to Sections 2.3, 2.4, 3.1
and 4.5, transfer Shares to any Person.
2.2.2 TRANSFERS BY KAMINE. At any time, Kamine may (a) subject
to Sections 2.3 and 2.4, transfer Shares to any of his Affiliates and (b)
subject to Sections 2.3, 2.4, 3.1 and 4.5, transfer Shares to any Person on and
after October 22, 2002. At any time, Kamine may, subject to this Section 2.2.2
and Sections 2.3 and 2.4, transfer Shares to a member of his immediate family,
which shall include his parents, spouse, sibling, children or grandchildren
("FAMILY MEMBERS"), or a trust, corporation, limited liability company or
partnership, all of the beneficial interests in which shall be held by Kamine or
one or more Family Members of Kamine or which would otherwise be an Affiliate of
Kamine (collectively, a "FAMILY TRUST"); PROVIDED, HOWEVER, that during the
period any such trust, corporation, or partnership holds any right, title or
interest in any Shares, no Person other than Kamine or one or more Family
Members of Kamine may be or become beneficiaries, stockholders, members or
limited or general partners thereof.
2.2.3 CERTAIN PERMITTED TRANSFERS BY KAMINE. Notwithstanding the
provisions of Section 2.2.2, Kamine may transfer in the aggregate up to 160,000
of his Shares so long as (i) Kamine first complies with the provisions of
Section 3.1, (ii) if Kamine has received a bona fide written offer, Nassau, AT&T
and the Stockholders owning Series C Convertible Preferred Stock are then given
30 days to exercise the right to acquire such Shares on a pro rata basis, based
on their respective ownership of Common Stock and Common Stock Equivalents on a
Fully Diluted Basis, upon the same price and other terms and conditions offered
in good faith in writing by the proposed transferee of such Shares (even if the
Company has exercised its rights pursuant to Section 3.1) and (iii) the
transferee of such Shares, in its capacity as such, does not receive board seats
or other corporate governance or special shareholder rights). In addition,
notwithstanding the provisions of Section 2.2.2, Kamine may pledge in the
aggregate up to 60% of the number of Shares owned by Kamine (measured at the
time of the first pledge pursuant to this sentence) provided that (x) the
institution receiving such pledge is a financial institution that has a combined
capital and surplus of at least $25,000,000 and assets of greater than
$500,000,000) and (b) such institution agrees to the following restrictions on
the remedies it can exercise with respect to such pledged Shares: (1) upon a
foreclosure Nassau, AT&T and the Stockholders owning Series C
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Preferred Stock have the right to purchase the loan (pro rata as described
above) at the unpaid principal amount thereof and take possession of the pledged
Shares as the pledgees thereof and to hold such Shares subject to the terms of
the pledge agreement relating thereto, and (2) such institution will not have
board visitation rights for a period of six months after foreclosing on the
pledged Shares or the right to designate board members for a period of one year
after foreclosing on the pledged Shares.
2.3. PERMITTED TRANSFER PROCEDURES. If any Stockholder wishes to
transfer Shares to a Permitted Transferee under this Section 2, such Stockholder
shall give notice to the Company of its intention to make any transfer permitted
under this Section 2 not less than ten (10) days prior to effecting such
transfer, which notice shall state the name and address of each Permitted
Transferee to whom such transfer is proposed and the number of Shares proposed
to be transferred to such Permitted Transferee.
2.4. TRANSFERS IN COMPLIANCE WITH LAW; SUBSTITUTION OF TRANSFEREE.
Notwithstanding any other provision of this Agreement, no transfer may be made
pursuant to this Section 2 or Section 3 unless (a) the Permitted Transferee
(other than a financial institution referred to in Section 2.2.3) has agreed in
writing to be bound by the terms and conditions of this Agreement, (b) the
transfer complies in all respects with the applicable provisions of this
Agreement and (c) the transfer complies in all respects with applicable federal
and state securities laws, including, without limitation, the Securities Act.
If requested by the Company in its reasonable judgment, an opinion of counsel to
such transferring Stockholder shall be supplied to the Company at such
transferring Stockholder's expense, to the effect that such transfer complies
with the applicable federal and state securities laws. Any attempt to transfer
any Shares or rights hereunder in violation of this Agreement shall be null and
void AB INITIO and the Company shall not register such transfer. Upon becoming
a party to this Agreement, a Permitted Transferee shall be substituted for, and
shall enjoy the same rights and be subject to the same obligations as, its
predecessor hereunder only to the extent that this Agreement specifically states
that such Permitted Transferee shall enjoy the particular right or be subject to
the particular obligation of its predecessor, as the case may be.
3. PROPOSED VOLUNTARY TRANSFERS.
3.1. PROPOSED VOLUNTARY TRANSFERS; RIGHT OF FIRST OFFER.
3.1.1 OFFERING NOTICE. If any Stockholder (each, a "SELLING
STOCKHOLDER") wishes to sell or otherwise transfer all or any portion of its or
his Shares to any Person (other than to (i) a Permitted Transferee that is an
Affiliate thereof or (ii) a Permitted Transferee that is a Family Member or
Family Trust of Kamine, in the case of Kamine) (a "THIRD PARTY PURCHASER") to
the extent permitted under Section 2 of this Agreement, such Selling Stockholder
shall offer such Shares first to the Company (and
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second to the other Stockholders) by sending written notice (the "OFFERING
NOTICE") to the Company and the other Stockholders, which shall state (a) the
number of Shares proposed to be sold or otherwise transferred (the "OFFERED
SECURITIES") and (b) the proposed purchase price per Share which the Selling
Stockholder is willing to accept (the "OFFER PRICE"). Upon delivery of the
Offering Notice, such offer shall be irrevocable unless and until the rights of
first offer provided for herein shall have been waived or shall have expired.
3.1.2 OPTION. For a period of fifteen (15) business days after
the giving of the offering Notice pursuant to Section 3.1.1 (the "OPTION
PERIOD"), the Company shall have the right to purchase (and, if the Company
chooses not to exercise such right, the other Stockholders shall have the right
to purchase on a pro rata basis based on the number of Shares held by such other
Stockholders, provided that any Offered Securities thereby offered to any other
Stockholder that elects not to purchase such Offered Securities shall be
reallocated pro rata among the remaining other Stockholders who have elected to
exercise their option to purchase such Offered Securities) all (but not less
than all) of the Offered Securities at a purchase price equal to the Offer Price
and upon the terms and conditions set forth in the Offering Notice.
3.1.3 EXERCISE OF OPTIONS. The option under Section 3.1.2 shall
be exercisable (x) by the Company by delivering written notice of the exercise
thereof, prior to the expiration of the 15-business day period referred to in
Section 3.1.2, to the Selling Stockholder with a copy to the other Stockholders
and (y) to the extent the Company has elected not to exercise its option, by the
other Stockholders by delivering written notice of the exercise thereof within
15 days of receiving a notice from the Selling Stockholders that the Company has
elected not to exercise its option. The failure of the Company and the other
Stockholders to respond within such 15-business day and 15-day periods,
respectively, to the Selling Stockholder shall be deemed to be a waiver of their
rights under Section 3.1.2.
3.1.4 CLOSING OF THE SALE TO THE COMPANY OR THE OTHER
STOCKHOLDERS. The closing of the purchase of Offered Securities subscribed to
by the Company or the other Stockholders under Section 3.1.2 shall be held at
the principal office of the Company at 11:00 a.m., local time, on the 60th day
after the giving of the Offering Notice pursuant to Section 3.1.1 or at such
other time and place as the parties to the transaction may agree. At such
closing, the Selling Stockholder shall deliver to the Company or the other
Stockholders exercising such option, as the case may be, certificates
representing the Offered Securities, duly endorsed for transfer and accompanied
by all requisite transfer taxes, if any, and such Offered Securities shall be
free and clear of any Liens (other than those arising hereunder), and the
Selling Stockholder shall so represent and warrant, and shall further represent
and warrant that it is the sole beneficial and record owner of such Offered
Securities. The Company or the other
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Stockholders exercising such option, as the case may be, shall deliver at the
closing to the Selling Stockholder payment in full in immediately available
funds for the Offered Securities purchased by it or them.
3.1.5 SALE TO THIRD PARTY PURCHASER. Unless the Company or the
other Stockholders elect to purchase all of the Offered Securities pursuant to
Section 3.1.2, the Selling Stockholder may sell the Offered Securities to the
Third Party Purchaser at a price per Share equal to (or greater than) the Offer
Price set forth in the Offering Notice and otherwise on the terms and conditions
set forth in the Offering Notice; PROVIDED, HOWEVER, that such sale is bona fide
and made pursuant to a contract entered into within ninety (90) days of the
earlier of the waiver by the Company and the other Stockholders of their option
to purchase the Offered Securities or the expiration of the Option Period (the
earlier of such dates being referred to herein as the "CONTRACT DATE"); and
PROVIDED, FURTHER, that such sale shall not be consummated unless and until all
of the following conditions are met:
(a) The Selling Stockholder shall deliver to the Company and the other
Stockholders a certificate of the Third Party Purchaser stating that (i)
the terms and conditions set forth in the Offering Notice have been
approved by the Third Party Purchaser's board of directors (or the
equivalent if the Third Party Purchaser is not a corporation), if
necessary, (ii) the Third Party Purchaser is aware of the rights of the
Company and the other Stockholders contained in this Section 3.1 and (iii)
prior to the purchase by the Third Party Purchaser of any of such Offered
Securities, the Third Party Purchaser shall become a party to this
Agreement and agree to be bound by the terms and conditions hereof in
accordance with Section 2.4 hereof.
(b) The consummation of such sale to the Third Party Purchaser shall
not be subject to any conditions (other than necessary filings under the
HSR Act and other customary closing conditions).
(c) The purchase price shall be payable by the Third Party Purchaser
wholly in cash.
(d) The Third Party Purchaser shall have furnished evidence
satisfactory to the Company and the other Stockholders, in their reasonable
judgments, as to the financial ability of such Third Party Purchaser to
consummate the proposed purchase.
If such sale is not consummated within forty-five (45) days of the Contract Date
for any reason, then the restrictions provided for herein shall again become
effective, and no transfer of such Offered Securities may be made thereafter by
the Selling Stockholder without again offering the same to the Company and the
other Stockholders in accordance with this Section 3.1.
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3.1.6 Notwithstanding the foregoing provisions of Section 3, from
and after the earliest of (i) a Public Offering, (ii) the first anniversary of
the High Yield Debt and Equity Offering and (iii) December 31, 1998, AT&T, GECC,
CoreStates and Accredited Investors that are transferees of Shares pursuant
hereto shall not be subject to any of the provisions set forth in subsections
3.1.1 through 3.1.5 with respect to any sale or transfer of Shares that meets
both of the following conditions: (i) the transferee of such Shares (A) is an
Accredited Investor and (B) if any such transfer occurs prior to a Public
Offering, such transferee is not a Prohibited Transferee or an Affiliate thereof
and (ii) the proceeds from such transfer shall be at least $150,000.
4. CORPORATE GOVERNANCE.
4.1. GENERAL. From and after the execution of this Agreement, each
Stockholder shall vote its or his Shares at any regular or special meeting of
stockholders of the Company (a "STOCKHOLDERS MEETING") or in any written consent
executed in lieu of such a meeting of stockholders (a "WRITTEN CONSENT"), and
shall take all other actions necessary, to give effect to the provisions of this
Agreement (including, without limitation, Section 4.3 hereof) and to ensure that
the Certificate and the By-laws of the Company do not, at any time hereafter,
conflict in any respect with the provisions of this Agreement and the Investment
Agreement. In addition, each Stockholder shall vote its or his Shares at any
Stockholders Meeting or act by Written Consent with respect to such Shares, upon
any matter submitted for action by the Company's stockholders or with respect to
which such Stockholder may vote or act by Written Consent, in conformity with
the specific terms and provisions of this Agreement and the Certificate and the
By-laws of the Company. Furthermore, the Company agrees to notify AT&T, GECC
and CoreStates, in accordance with Section 9.1 hereof, of all meetings of the
Board of Directors of the Company within the time frame specified in the
Company's By-laws for notifying members of the Board of Directors of such
meetings. The Company further agrees that a designated representative of each
of AT&T, GECC and CoreStates will be entitled to attend and participate in each
meeting of the Board of Directors of the Company, whether in person or by
teleconference and that the Company shall provide AT&T, GECC and CoreStates with
all materials provided to members of the Board of Directors in connection with
such meetings. Such representative of AT&T shall not be entitled to participate
in any portion of any meeting of the Board of Directors at which any discussion
or vote is taking place with respect to any contract or transaction with AT&T or
any of its Affiliates (or any proposal
13
with respect thereto) or any other matter in respect of which AT&T or any of its
Affiliates has a direct or indirect financial interest (other than
proportionately as a Stockholder of the Company). Such representative of GECC
shall not be entitled to participate in any portion of any meeting of the Board
of Directors at which any discussion or vote is taking place with respect to any
contract or transaction with GECC or any of its Affiliates (or any proposal with
respect thereto) or any other matter in respect of which GECC or any of its
Affiliates has a direct or indirect financial interest (other than
proportionately as a Stockholder of the Company). Such representative of
CoreStates shall not be entitled to participate in any portion of any meeting of
the Board of Directors at which any discussion or vote is taking place with
respect to any contract or transaction with CoreStates or any of its Affiliates
(or any proposal with respect thereto) or any other matter in respect of which
CoreStates or any of its Affiliates has a direct or indirect financial interest
(other than proportionately as a Stockholder of the Company). The foregoing
rights of each of AT&T, GECC and CoreStates to receive materials and notices
with respect to and to participate in meetings of the Board of Directors shall
exists so long as such party holds at least 2% of the Common Stock on a
Fully-Diluted Basis. Furthermore, the rights of each of GECC and CoreStates to
receive materials and notices with respect to and to participate in meetings of
the Board of Directors pursuant to this Section 4.1 shall be suspended during
any period in which the board includes Series C Directors. At the request of
AT&T or GECC, the Company agrees to call Stockholders Meetings and Board of
Directors meetings so long as AT&T or GECC, respectively, holds at least 5% of
the total Common Stock outstanding on a Fully-Diluted Basis, PROVIDED that with
respect to a Stockholders Meeting, a Public Offering shall not have occurred.
4.2. STOCKHOLDERS ACTIONS. In order to effectuate the provisions of
this Section 4, each Stockholder hereby agrees that when any action or vote is
required to be taken by such Stockholder pursuant to this Agreement, such
Stockholder shall use its or his best efforts to call, or cause the appropriate
officer and directors of the Company to call, a Stockholders Meeting or to
execute or cause to be executed a Written Consent pursuant to Section 228(a) of
the DGCL to effectuate such stockholder action. Further, each Stockholder shall
use its or his best efforts to cause the Board of Directors to adopt, either at
a meeting of the Board of Directors or by unanimous written consent of the Board
of Directors pursuant to Section 141(f) of the DGCL, all the resolutions
necessary to effectuate the provisions of this Agreement and the Investment
Agreement. Each Stockholder shall use its or his best efforts to cause the
Board of Directors to cause the Secretary of the Company, or if there be no
secretary, such other officer of the Company as the Board of Directors may
appoint to fulfill the duties of Secretary, to not record any vote or consent
contrary to the terms of this Section 4.
4.3. ELECTION OF DIRECTORS.
4.3.1 NUMBER AND COMPOSITION. Subject to Section 4.3.2, each
Stockholder agrees that the number of directors shall be seven (7) and each
Stockholder shall vote its or his Shares at any Stockholders Meeting, or act by
Written Consent with respect to such Shares, and take all other actions
necessary to ensure that the number of directors constituting the entire Board
of Directors shall be seven (7), as provided for below. Each
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Stockholder shall vote its or his Shares at any Stockholders Meeting called for
the purpose of filling the positions on the Board of Directors, or in any
Written Consent executed for such purpose, and to take all other actions
necessary to ensure, including, without limitation, using its or his best
efforts to cause the Board of Directors to take such actions to ensure: (i) the
election to the Board of Directors of (x) three individuals designated by Nassau
to serve initially as Nassau Directors, (y) subject to paragraph (b) of Section
4.4, three individuals (one of whom shall be the President and chief executive
officer of the Company from time to time, elected pursuant to Article IV of the
By-Laws) designated by Kamine to serve initially as Kamine Directors and (z) one
independent director who shall be mutually acceptable to Nassau, Kamine and
either AT&T or the Majority Series C Holders, provided that it is agreed that
Xxxx X. Xxxxxx shall be the independent director beginning November 1, 1997;
(ii) the election to each committee of the Board of Directors of an equal number
of Nassau Directors and Kamine Directors; and (iii) the election of the
independent director to the compensation committee of the Board of Directors.
4.3.2 INCREASE IN NUMBER OF DIRECTORS. (a) If, with the prior
written consent of Nassau, the Company sells from time to time additional Shares
to any person who is not a Stockholder, the number of directors constituting the
entire Board of Directors may be increased by up to two individuals, subject to
paragraph (b) below.
(b) In the event that a Default (as such term is defined in the Loan
Agreement (as defined below) as in effect as of the date hereof) relating to
payment obligations for principal and interest thereunder has occurred and
continued for a period of 90 days under the Amended and Restated Loan and
Security Agreement, dated as of September 22, 1997, among KMC Telecom Inc., KMC
Telecom II, Inc. and AT&T Commercial Finance Corporation (the "Loan Agreement"),
the number of directors constituting the entire Board of Directors shall be
increased by two individuals and the Majority Series C Holders (for themselves
and on behalf of all Stockholders holding shares of Common Stock into which
shares of Series C Convertible Preferred Stock have been, or may be, converted)
shall be entitled to elect two individuals (the "Series C Directors") to the
Board of Directors. Immediately upon the cure of such Default, the number of
directors constituting the entire Board of Directors shall be reduced by two
individuals and the Majority Series C Holders shall cause the Series C Directors
to resign from the Board of Directors.
4.4. REMOVAL AND REPLACEMENT.(a) Nassau shall be entitled at any time
and for any reason (or for no reason) to designate any or all of the Nassau
Directors for removal. Subject to Section 4.5, if at any time, a vacancy is
created on the Board of Directors by reason of the death, removal or resignation
of any Nassau Director, then each Stockholder shall, as soon as practicable
after the date such vacancy first occurs and in any event prior to the
transaction of any other business by the
15
Stockholders or the Board of Directors, take action, including the voting of its
Shares, to elect a director or directors designated by Nassau to fill such
vacancy or vacancies.
(b) Kamine shall be entitled at any time and for any reason (or for no
reason) to designate any or all of the Kamine Directors for removal; provided
that Kamine shall not be entitled, and agrees to take no action, to designate
the President and chief executive officer of the Company for removal as a Kamine
Director without the prior written consent of Nassau. Subject to Section 4.5, if
at any time, a vacancy is created on the Board of Directors by reason of the
death, removal or resignation of any Kamine Director, then each Stockholder
shall, as soon as practicable after the date such vacancy first occurs, and in
any event prior to the transaction of any other business by the Stockholders or
the Board of Directors, take action, including the voting of its Shares, to
elect a director or directors designated by Kamine to fill such vacancy or
vacancies. If at any time the person serving as President and chief executive
officer of the Company is removed or resigns from such office, Kamine shall
designate such person for removal as a Kamine Director.
4.5. ADJUSTMENT OF RIGHTS UNDER SECTIONS 4.3.1 AND 4.4. (a)
Notwithstanding anything herein to the contrary, (i) from and after the date
that Nassau and its Affiliates own in the aggregate Shares representing less
than two-thirds of the Shares (on an as if fully converted basis) owned in the
aggregate by them immediately following the Reorganization, Nassau shall have
the right to designate only two (2) directors for election or removal pursuant
to Section 4.3.1 or 4.4 (and shall cause one of the Nassau Directors to resign),
(ii) from and after the date that Nassau and its Affiliates own in the aggregate
Shares representing less than one-third of the Shares (on an as if fully
converted basis) owned in the aggregate by them immediately following the
Reorganization, Nassau shall have the right to designate only one (1) director
for election or removal pursuant to section 4.3.1 or 4.4 (and shall cause such
number of Nassau Directors to resign such that one Nassau Director remains on
the Board of Directors) and (iii) at such time as Nassau and its Affiliates owns
less than 5% of the Shares on a Fully Diluted Basis, Nassau shall not be
entitled to designate any director for election or removal pursuant to Section
4.3.1 or Section 4.4 (and shall cause all Nassau Directors to resign).
(b) Notwithstanding anything herein to the contrary, (i) from and
after the date that Kamine and his Affiliates own in the aggregate Shares
representing less than two-thirds of the Shares (on an as if fully converted
basis) owned in the aggregate by them immediately following the Reorganization,
Kamine shall have the right to designate only two (2) directors for election or
removal pursuant to Section 4.3.1 or 4.4 (and shall cause one of the Kamine
Directors to resign), (ii) from and after the date that Kamine and his
Affiliates own in the aggregate Shares representing less than one-third of the
Shares (on an as if fully converted basis) owned in the aggregate by them
immediately following the
16
Reorganization, Kamine shall have the right to designate only one (1) director
for election or removal pursuant to Section 4.3.1 or 4.4 (and shall cause such
number of Kamine Directors to resign such that one Kamine Director remains on
the Board of Directors) and (iii) at such time as Kamine and his Affiliates own
less than 5% of the Shares on a Fully Diluted Basis, Kamine shall not be
entitled to designate any director for election or removal pursuant to Section
4.3.1 or 4.4 (and shall cause all Kamine Directors to resign).
5. PUT RIGHT. (a) If no Liquidity Event shall have occurred by the
later of October 22, 2003 or 90 days following the final maturity date of debt
securities issued in the High Yield Debt and Equity Offering, then each of
Nassau and its Affiliates, AT&T, GECC and CoreStates shall have the right, at
any time thereafter, by giving written notice to the Company (a "PUT NOTICE"),
to require the Company to repurchase (a "PUT") all or any portion of the shares
of Convertible Preferred Stock or Common Stock held by such Stockholder for an
amount (the "PUT AMOUNT") equal to (A) the fair market value of the shares
subject to such Put as determined within 30 days of each Put Notice by an
investment bank of national reputation which is mutually acceptable to the
Company and holders of a majority of the voting power of Common Stock and Common
Stock Equivalents held by all parties exercising Puts hereunder or (B) in the
case of any shares of Convertible Preferred Stock, at the liquidation preference
thereof plus all accrued and unpaid dividends, at the option of holders thereof;
provided that AT&T, GECC and CoreStates shall not have the right to exercise a
Put hereunder unless Nassau or its Affiliates have exercised a Put. The Company
shall give AT&T, GECC and CoreStates prompt notice of Nassau's intent to
exercise a Put. The Company shall give Notice to Nassau and the other
Stockholders of any exercise of the Put right under Section 14 of either of the
Subsidiary Warrants or hereunder. The Company shall pay to the party exercising
a Put the Put Amount within 60 days of the date of such determination of fair
market value. Any unpaid balance of a Put Amount thereafter shall bear
interest, which interest shall be paid together with any payment of such Put
Amount, at a rate of 18.0% per annum (the "DEFAULT RATE"); provided that accrual
of interest at the Default Rate shall not constitute a waiver of any party
exercising a Put hereunder to receive immediate payment of the Put Amount.
(b) If at the time of any exercise of a Put hereunder there shall be
pending any Put by any other party hereunder or any Repurchase Notice under
Section 14 of either Subsidiary Warrant, and if either the Company or KMC shall
not have funds legally available in the amount necessary to repurchase all the
Convertible Preferred Stock, Common Stock, Subsidiary Warrants and Warrant Stock
with respect to which a Put Notice or Repurchase Notice has been received, then
such Convertible Preferred Stock, Common Stock, Subsidiary Warrants and Warrant
Stock, as applicable, shall be repurchased by the Company or KMC, as applicable,
to the extent that funds are legally available for such repurchases; PROVIDED
that (A) the Put Amount and (B) the
17
Repurchase Amount (as defined in the Subsidiary Warrants) to be received by each
party exercising a Put shall be aggregated and paid to each such party pro rata.
Any Put not satisfied in full in cash shall remain an obligation of the Company
and shall be evidenced by a promissory note due within 366 days and bearing
interest at the Default Rate to the extent provided above.
(c) The Company agrees that it will effect all such capital
contributions, advances, dividends and other actions among itself and its
wholly-owned subsidiaries so as to maximize the Company's and KMC's ability to
satisfy the Put rights contained in this Section 5 and the put rights contained
in Section 14 of either Subsidiary Warrant subject to such limitations as may be
applicable under applicable law and the terms of any agreement to which the
Company and its subsidiaries may be bound.
6. REGISTRATION RIGHTS.
6.1. DEMAND REGISTRATIONS.
(a) RIGHT TO DEMAND. At any time and from time to time after June 5,
2000, each of Nassau, Kamine, AT&T and the Majority Series C Holders (each of
which is referred to in this Section 6 as a "Demand Holder") may request the
Company to register its Registrable Securities in the manner set forth herein by
written notice (the "REGISTRATION NOTICE") to the Company only if a disposition
of the Registrable Securities may not, in the opinion of the Demand Holder, be
effected in the public marketplace (as opposed to a private transaction under
the Securities Act) at equally favorable net terms to the Demand Holder without
registration of such shares under the Securities Act. In the event that the
Company receives a Registration Notice, the Company shall effect a registration
under the Securities Act of the number of Registrable Securities determined in
accordance with Section 6.1(c) on Form S-1 or any similar long-form registration
("LONG-FORM REGISTRATIONS") or on Form S-2 or S-3 or any similar short-form
registration ("SHORT-FORM REGISTRATIONS") if available. All registrations
requested pursuant to this Section 6.1(a) are referred to herein as "DEMAND
REGISTRATIONS.
(b) NUMBER OF DEMAND REGISTRATIONS. Each of Nassau and Kamine will
be entitled to obtain up to two (2) Long-Form Registrations and two (2)
Short-Form Registrations. So long as AT&T or any of its Affiliates shall hold
any Registrable Securities, then AT&T, or if AT&T and its Affiliates no longer
hold any Registrable Securities, then the holders of at least 50% of the
aggregate number of Registrable Securities transferred by AT&T which are
Registrable Securities on the date such request is being made, will be entitled
following the Demand Rights Commencement Date to obtain up to an aggregate of
two (2) Registrations (which may be Short-Form Registrations, at the Company's
option, if the Company is then eligible therefor). The Majority Series C
Holders (for themselves and on behalf of all Stockholders holding shares of
Common Stock into which shares of
18
Series C Convertible Preferred Stock have been, or may be, converted) will be
entitled following the Demand Rights Commencement Date to obtain up to an
aggregate of two (2) Registrations (which may be Short-Form Registrations, at
the Company's option, if the Company is then eligible therefor). A registration
will not count as a Long-Form Registration or Short-Form Registration, as the
case may be, until such Demand Registration has become effective and unless the
Demand Holder is able to register and sell at least 66 2/3% of the Registrable
Securities requested to be included in such registration. Demand Registrations
will be Short-Form Registrations whenever the Company is permitted to use any
applicable short form. After the Company has become subject to the reporting
requirements of the Exchange Act, the Company will use its best efforts to make
Short-Form Registrations available for the sale of Registrable Securities. The
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to this Section 6.1(b) (including the Company's
internal costs in proceeding on such request, as reasonably determined by the
Company's Board of Directors) if the registration request is subsequently
withdrawn, unless the Demand Holder agrees to treat the withdrawn request as a
registration undertaken pursuant to this Section 6.1(b); PROVIDED, that if the
Demand Holder withdraws a request as a result of a material adverse change in
the condition, business or prospects of the Company or in the market for the
Company's securities from that known to the Demand Holder at the time of its
request, the Company, and not the Demand Holder, shall be required to pay all
the expenses relating to the proposed registration and such request shall not be
treated as a registration for purposes of this Section 6.1(b).
(c) DEMAND REGISTRATIONS. Within (a) 75 days after the Company
receives a Registration Notice with respect to the first offer for sale of
Shares pursuant to an effective registration statement filed by the Company
under the Securities Act or (b) within 45 days after the Company receives a
Registration Notice with respect to any other demand registration, the Company
shall file with the SEC a registration statement under the Securities Act for
such Demand Registration. The Company shall use its best efforts to cause the
Demand Registration to be declared effective under the Securities Act as soon as
is practical after filing, and once effective, the Company shall cause such
Demand Registration to remain effective for such time period as is specified in
such request, but for no time period longer than the period ending on the
earlier of (i) the one-year anniversary of the effective date of such Demand
Registration, (ii) the date on which all Registrable Securities have been sold
pursuant to the Demand Registration or (iii) the date as of which there are no
longer any Registrable Securities in existence. Each request for a Demand
Registration shall specify the approximate number of Registrable Securities
requested to be registered and the anticipated per share price range for such
offering.
(d) PRIORITY ON DEMAND REGISTRATIONS. The Company will not include
in any Demand Registration any securities which
19
are not Registrable Securities without the prior written consent of the Demand
Holder. If a Demand Registration is an underwritten offering and the managing
underwriters advise the Company in writing that in their opinion the number of
Registrable Securities and, if permitted hereunder, other securities requested
to be included in such offering exceeds the number of Registrable Securities and
other securities, if any, which can be sold therein without adversely affecting
the marketability of the offering, the Company will include in such
registration, (i) first, the Registrable Securities requested to be included in
such registration, pro rata among the holders of such Registrable Securities, on
the basis of the number of shares of Registrable Securities owned by each such
holder and requested to be included therein and (ii) second, other securities,
if any, requested to be included in such registration. Any Persons other than
holders of Registrable Securities who participate in Demand Registrations which
are not at the Company's expense must pay their proportionate share of the
Registration Expenses as provided in Section 6.5 hereof.
(e) RESTRICTIONS ON DEMAND REGISTRATIONS. The Company will not be
obligated to effect any Demand Registration within six months after the
effective date of a previous Demand Registration. If at the time of any request
to register Registrable Securities pursuant to Section 6.1 hereof, the Company
is engaged, or has fixed plans to engage within 90 days of the time of the
request, in a registered public offering as to which the Stockholders may
include such Registrable Securities pursuant to Section 6.2 hereof or is engaged
in any activity which, in the good faith determination of the Company's Board of
Directors, would be adversely affected by the requested registration to the
material detriment of the Company, then the Company may at its option direct
that such request be delayed for a period not in excess of 60 days from the
effective date of such offering, or the date of commencement of such other
material activity, as the case may be, such right to delay a request to be
exercised by the Company not more than once within any twelve month period.
(f) SELECTION OF UNDERWRITERS. In the case of a Demand Registration,
the Company shall have the right to select the investment banker or bankers,
underwriters and managers to administer the offering; PROVIDED, HOWEVER, that
such investment banker or bankers underwriters and managers shall be
satisfactory to the Demand Holder.
(g) OTHER REGISTRATION RIGHTS. (i) Within the limitations prescribed
by this paragraph (i), but not otherwise, the Company may grant to subsequent
investors in the Company rights of incidental registration (such as those
provided in Section 6.2). Such rights may only pertain to shares of Common
Stock, including shares of Common Stock into which any other securities may be
converted. Such rights may be granted with respect to (a) registrations
actually requested by a Demand Holder pursuant to Section 6.1, but only in
respect of that portion of any such registration as remains after inclusion of
all
20
Registrable Securities requested by the Demand Holder and (b) registrations
initiated by the Company, but only in respect of that portion of such
registration as is available under the limitations set forth in Section 6.2(c)
(which limitations shall apply pro rata to all holders of registrable
securities) and such rights shall be limited in all cases to sharing pro rata in
the available portion of the registration in question with holders of
registrable securities, such sharing to be based on the number of shares of
Common Stock held by the respective holders of registrable securities and held
by such other investors, plus the number of shares of Common Stock into which
other securities held by the holders of registrable securities and such other
investors are convertible, which are entitled to registration rights. With
respect to registrations which are for underwritten public offerings, "available
portion" as used above shall mean the portion of the underwritten shares which
is available as specified in clauses (a) and (b) of the third sentence of this
paragraph (i). Shares not included in such underwriting shall not be
registered.
(ii) The Company may not grant to subsequent investors in the Company
rights of registration upon request (such as those provided in Section 6.1)
unless (a) such rights are limited to shares of Common Stock; (b) the Demand
Holders are given enforceable contractual rights to participate in registrations
requested by such subsequent investors (but subject to the right of priority of
registration in the following order: such subsequent investors and the holders
of Registrable Securities on a pro rata basis), such participation to be on the
pro rata basis and subject to the limitations described in the final three
sentences of paragraph (i) of this Section 6.1(g); (c) such rights shall not
become effective prior to 90 days after the effective date of the first
registration pursuant to Section 6.1; and (d) such rights shall not be more
favorable than those granted to the Demand Holders.
6.2. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register
any of its equity securities, including, without limitation, the Common Stock
under the Securities Act (other than pursuant to a registration statement on
Form S-8 or S-4 or any successor forms), and the form to be used may be used for
the registration of Registrable Securities (a "PIGGYBACK REGISTRATION"), the
Company will give prompt written notice to all holders of Registrable Securities
of its intention to effect such a registration and will include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 20 days after the receipt
of the Company's notice.
(b) PIGGYBACK EXPENSES. The Registration Expenses of the holders of
Registrable Securities will be paid by the Company in all Piggyback
Registrations.
21
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company, the Company
will include in such registration all securities requested to be included in
such registration; PROVIDED, that if the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of the offering, the
Company will include in such registration (i) first, the securities the Company
proposes to sell, (ii) second, the Registrable Securities requested to be
included in such registration, pro rata among the holders of such Registrable
Securities on the basis of the number of Registrable Securities owned by each
such holder and requested to be included therein, and (iii) third, other
securities, if any, requested to be included in such registration.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities (which registration was consented to pursuant to Section 6.1(g)
above), and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company will include
in such registration (i) first, the Registrable Securities requested to be
included in such registration, pro rata among the holders of such Registrable
Securities on the basis of the number of Registrable Securities owned by each
such holder and requested to be included therein, and (ii) second, other
securities requested to be included in such registration.
(e) SELECTION OF UNDERWRITERS. If any Piggyback Registration is an
underwritten offering, the investment banker(s), underwriter(s) and manager(s)
for the offering or distribution will be selected by the Company.
(f) OTHER REGISTRATIONS. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to this
Section 6.2, and if such previous registration statement has not been withdrawn
or abandoned, the Company will not file or cause to be effected any other
registration of any of its equity securities, including, without limitation, the
Common Stock, or securities convertible or exchangeable into or exercisable for
its equity securities under the Securities Act (except on Forms S-4 or S-8, or
any successor forms), whether on its own behalf or at the request of any holder
or holders of such securities, until a period of at least six months has elapsed
from the effective date of such previous registration or qualification.
22
6.3. HOLDBACK AGREEMENTS.
(a) Each holder of Registrable Securities agrees not to effect any
public sale or distribution (including sales pursuant to Rule 144) of equity
securities, including, without limitation, the Common Stock, of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to and the 180-day period beginning on
the effective date of any Demand Registration or Piggyback Registration for a
public offering to be underwritten on a firm commitment basis (except as part of
such underwritten registration), unless the investment bankers or underwriters
managing the public offering otherwise agree.
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, including, without limitation, the Common
Stock, or any securities convertible into or exchangeable or exercisable for
such securities, during the seven days prior to and during the 180-day period
beginning on the effective date of any underwritten Demand Registration or
Piggyback Registration (except as part of such underwritten registration),
unless the underwriters managing the registered public offering otherwise agree,
and (ii) to use best efforts to cause each holder of at least 5% (on a Fully
Diluted Basis) of its equity securities, including, without limitation, Common
Stock, or any securities convertible into or exchangeable or exercisable for
such securities, purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering or distribution) to agree
not to effect any public sale or distribution (including sales pursuant to Rule
144) of any such securities during such period (except as part of such
underwritten registration), unless the underwriters managing the public offering
or distribution otherwise agree.
6.4. REGISTRATION PROCEDURES. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective (provided that before
filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish to the counsel selected by
the holders of a majority of the Registrable Securities covered by such
registration statement copies of all such documents proposed to be filed);
(b) subject to Section 6.4(e), prepare and file with the SEC such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as
23
may be necessary to keep such registration statement effective for a period
of not less than six months and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such
jurisdictions of the United States of America as any seller reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition
in such jurisdictions of the Registrable Securities owned by such seller
(provided that the Company will not be required to (i) qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this subsection, (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process (i.e.,
service of process which is not limited solely to securities law
violations) in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such seller,
the Company will promptly prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading; PROVIDED, that upon not less than
five days' notice to the holders of Registrable Securities, the Company may
defer the filing of an amendment or withdraw an amendment or may defer the
effectiveness of an amendment or the preparation of a supplement if the
Board of Directors of the Company determines, in good faith, that such
amendment or supplement, or the disclosure of any information in connection
therewith, would have a material adverse affect upon the Company or its
subsidiaries; and PROVIDED, FURTHER, that the Company may not defer the
filing of any such amendment or supplement for more than 30 days;
24
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are
then listed and, if not so listed, to be listed on the National Association
of Securities Dealers Automated Quotations System ("NASDAQ") and, if listed
on the NASDAQ, use its best efforts to secure designation of all such
Registrable Securities covered by such registration statement as a
"national market system security" within the meaning of Rule 11Aa2-1 of the
SEC or, failing that, to secure NASDAQ authorization for such Registrable
Securities and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register as such with respect to
such Registrable Securities with the NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities (including, without
limitation, effecting a stock split or a combination of shares);
(i) make available, subject to any confidentiality agreements
reasonably requested by the Company, for inspection by any seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or
other agent retained by any such seller or underwriter, all financial and
other records, pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and, if required, make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day
of the Company's first full calendar quarter after the effective date of
the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any equity securities, including, without limitation, the
Common Stock, included in such registration statement for sale in any
25
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(l) use its best efforts to cause such Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
the sellers thereof to consummate the disposition of such Registrable
Securities; and
(m) obtain a "cold comfort" letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by "cold comfort" letters as the holders of a majority
of the Registrable Securities being sold reasonably request; and
It shall be a condition precedent to the obligation of the Company to
take any action pursuant to this Agreement in respect of the securities which
are to be registered at the request of any holder of Registrable Securities that
such holder shall furnish to the Company such information regarding the
securities held by such holder and the intended method of disposition thereof as
the Company shall reasonably request in connection with such registration.
6.5. REGISTRATION EXPENSES.
(a) Except as otherwise expressly provided in this Agreement, all
Registration Expenses will be borne by the Company.
(b) Except as otherwise expressly provided in this Agreement, in
connection with each Demand Registration and each Piggyback Registration, the
Company will reimburse the holders of Registrable Securities covered by such
registration for the reasonable fees and disbursements of one counsel chosen by
the holders of a majority of the Registrable Securities initially requesting
such registration.
6.6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless, to the full
extent permitted by law, each holder of Registrable Securities, its officers and
directors and each Person who controls such holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
arising out of or based upon any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, and shall reimburse such holder,
director, officer or controlling person for any legal or other expenses
reasonably incurred by such holder, director, officer or controlling person in
connection with the investigation or defense of such loss, claim, damage,
liability or expense,
27
except insofar as the same are contained in any information furnished in writing
to the Company by such holder expressly for use therein or by such holder's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished such holder
with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company will indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder will furnish to the
Company in writing such information as the Company reasonably requests for use
in connection with any such registration statement or prospectus and, to the
full extent permitted by law, will indemnify and hold harmless the Company, its
directors and officers and each Person who controls the Company or any other
holder of registrable securities (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information so furnished in writing by such holder; PROVIDED,
that the obligation to indemnify will be individual to each holder and will be
limited to the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement will be in
addition to any liability the indemnifying
27
party may otherwise have and without prejudice to any other right or remedy the
indemnified party may otherwise have, which will remain in full force and effect
regardless of any omission to give notice (except to the extent such omission
effects the ability of the indemnifying party to defend such claim) or any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party and will survive the
transfer of securities. The Company also agrees to make such provisions, as are
reasonably requested by any indemnified party, for contribution to such party in
the event the Company's indemnification is unavailable for any reason.
6.7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements; PROVIDED, that no holder of Registrable Securities included in any
underwritten registration shall be required to make any representations or
warranties to the Company or the underwriters other than representations and
warranties regarding such holder and such holder's intended method of
distribution.
6.8. RULE 144 REPORTING. With a view to making available to the
holders of Registrable Securities the benefits of certain rules and regulations
of the SEC which may permit the sale of the Registrable Securities to the public
without registration, the Company agrees to use its best efforts to:
(a) make and keep current public information available, within the
meaning of Rule 144 or any similar or analogous rule promulgated under the
Securities Act, at all times after it has become subject to the reporting
requirements of the Exchange Act;
(b) file with the SEC, in a timely manner, all reports and other
documents required of the Company under the Securities Act and Exchange Act
(after it has become subject to such reporting requirements); and
(c) so long as any party hereto owns any Registrable Securities,
furnish to such Person forthwith upon request, a written statement by the
Company as to its compliance with the reporting requirements of said Rule
144 (at any time commencing 90 days after the effective date of the first
registration filed by the Company for an offering of its securities to the
general public), the Securities Act and the Exchange Act (at any time after
it has become subject to such reporting requirements); a copy of the most
recent annual or quarterly report of the Company; and such other reports
and documents as such Person may reasonably request in availing
28
itself of any rule or regulation of the SEC allowing it to sell any such
securities without registration.
7. AFTER-ACQUIRED SECURITIES. All of the provisions of this
Agreement shall apply to all of the Shares now owned or which may be issued or
transferred hereafter to a Stockholder in consequence of any additional
issuance, purchase, exchange or reclassification of any of the Shares (including
without limitation, upon the exercise of any option or warrant), corporate
reorganization, or any other form of recapitalization, consolidation, merger,
share split or share dividend, or which are acquired by a Stockholder in any
other manner.
8. STOCK CERTIFICATE LEGEND. A copy of this Agreement shall be
filed with the Secretary of the Company and kept with the records of the
Company. Each certificate issued on or after the date hereof representing
Shares now held or hereafter acquired by any Stockholder shall, for as long as
this Agreement is effective, bear legends substantially in the following forms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS OR
PURSUANT TO A WRITTEN OPINION OF COUNSEL FOR THE COMPANY THAT REGISTRATION
IS NOT REQUIRED.
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT, DATED AS OF OCTOBER 31, 1997 (THE
"STOCKHOLDERS AGREEMENT"), AMONG KMC TELECOM HOLDINGS, INC., NASSAU CAPITAL
PARTNERS L.P., NAS PARTNERS I L.L.C., XXXXXX X. XXXXXX, KMC
TELECOMMUNICATIONS L.P., GENERAL ELECTRIC CAPITAL CORPORATION, CORESTATES
HOLDINGS, INC. AND AT&T CREDIT CORPORATION, A COPY OF WHICH MAY BE
INSPECTED AT THE COMPANY'S PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER
[6~ THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND
UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF SUCH
STOCKHOLDERS AGREEMENT.
9. MISCELLANEOUS.
9.1. NOTICES. All notices or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telecopied or sent by certified, registered or express mail, postage prepaid.
Any such notice shall be deemed
29
given when so delivered personally, telecopied or sent by certified, registered
or express mail or, if mailed, five days after the date of deposit in the United
States mail, as follows:
(a) if to the Company or Kamine:
KMC Telecom Holdings, Inc.
0000 Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Chief Executive Officer
Telecopier No: (000) 000-0000
with a copy to:
Xxxxxx Xxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx, Esq.
Telecopier No: (000) 000-0000/7899
(b) if to Nassau:
Nassau Capital L.L.C.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx., Esq.
Telecopy: (000) 000-0000
(c) if to AT&T:
AT&T Credit Corporation
00 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Capital Markets Division
Vice President Operations
Telephone: 000-000-0000
Telecopy: 000-000-0000
with copies to:
AT&T Credit Corporation
00 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Capital Markets Division
Chief Counsel
Telephone: 000-000-0000
Telecopy: 000-000-0000
30
and
Xxxx X. X'Xxxx, Esq.
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
(d) if to CoreStates Bank:
CoreStates Bank, N.A.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxx
FC1-8-11-28
Telecopy: 000-000-0000
with a copy to:
Pepper, Xxxxxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: 000-000-0000
(e) if to CoreStates Holdings:
CoreStates Holdings, Inc.
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, XX
Telecopy: 000-000-0000
with a copy to:
Pepper, Xxxxxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: 000-000-0000
(e) if to GECC:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Manager-Operations
Telecopy: 000-000-0000
with a copy to
Pillsbury Madison & Sutro
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
31
Attention: Xxxxxx Xxxxx
Telecopy: 415-983-1200
(f) if to any other Stockholder, at its address as it appears on the
record books of the Company. Any party may by notice given in accordance
with this Section 9.1 designate another address or person for receipt of
notices hereunder.
9.2. AMENDMENT AND WAIVER.
(a) No failure or delay on the part of any party hereto in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy. The remedies provided for herein are cumulative and are not
exclusive of any remedies that may be available to the parties hereto at law, in
equity or otherwise.
(b) Any amendment, supplement or modification of or to any provision
of this Agreement, any waiver of any provision of this Agreement, and any
consent to any departure by any party from the terms of any provision of this
Agreement, shall be effective (i) only if it is made or given in writing and
signed by Nassau, Kamine, AT&T, GECC and CoreStates and (ii) only in the
specific instance and for the specific purpose for which made or given;
PROVIDED, HOWEVER, that any such amendment, supplement or modification to this
Agreement shall not be effective to withdraw, deny or adversely affect the
rights of any Stockholder who has not consented in writing to such amendment,
supplement or modification.
9.3. SPECIFIC PERFORMANCE. The parties hereto intend that each of the
parties have the right to seek damages or specific performance in the event that
any other party hereto fails to perform such party's obligations hereunder.
Therefore, if any party shall institute any action or proceeding to enforce the
provisions hereof, any party against whom such action or proceeding is brought
hereby waives any claim or defense therein that the plaintiff party has an
adequate remedy at law.
9.4. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.5. SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
32
9.6. ENTIRE AGREEMENT. This Agreement, together with the Investment
Agreement, is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the exhibits hereto, supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
9.7. TERM OF AGREEMENT. The provisions of this Agreement shall become
effective upon the execution hereof and, except as otherwise specified herein,
the provisions of Sections 2 and 3 of this Agreement shall terminate upon the
consummation of a QPO and the remaining provision of this Agreement shall
terminate as provided herein.
9.8. VARIATIONS IN PRONOUNS. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
9.9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAW THEREOF.
9.10. FURTHER ASSURANCES. Each of the parties shall, and shall cause
their respective Affiliates to, execute such instruments and take such action as
may be reasonably required or desirable to carry out the provisions hereof and
the transactions contemplated hereby.
9.11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors, heirs,
legatees and legal representatives. This Agreement is not assignable except in
connection with a transfer of Shares in accordance with this Agreement.
9.12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
33
IN WITNESS WHEREOF, the undersigned have executed, or have cause to be
executed, this Agreement on the date first written above.
KMC TELECOM HOLDINGS, INC.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Financial Officer
KMC TELECOMMUNICATIONS L.P.
By:
---------------------------------
Name:
Title:
NASSAU CAPITAL PARTNERS L.P.
By: Nassau Capital L.L.C., its General
Partner
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Member
NAS PARTNERS I L.L.C.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Member
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
------------------------------------
AT&T CREDIT CORPORATION
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President and Treasurer
34
CORESTATES BANK, N.A.
By: /s/ Xxxxxxxxx Elomze
---------------------------------
Name:Xxxxxxxxx Elomze
Title: Vice President
CORESTATES HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx XX
---------------------------------
Name: Xxxxxxx X. Xxxxxx XX
Title: Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Manager, Operations
