e.spire COMMUNICATIONS, INC.Units consisting of
Series A Convertible Preferred Stock
and
Warrants to Purchase Shares of Common Stock
PURCHASE AGREEMENT
March 1, 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. The Securities. Subject to the terms and
conditions herein contained, the Company hereby agrees to issue
and sell to the Purchaser and the Purchaser hereby agrees to
purchase from the Company up to an aggregate of 100,000 Units
(hereinafter defined) at a price of $1,000 per Unit (or $792.29
per share of Preferred Stock (hereinafter defined) and $207.71
per Warrant (hereinafter defined)) for an aggregate purchase
price of $100 million. Each Unit shall consist of one (1) share
of Series A Convertible Preferred Stock of the Company par value
$1.00 per share (collectively, the "Preferred Stock"), each share
of which Preferred Stock is initially convertible into 126.42225
shares of the common stock, par value $.01 per share (the "Common
Stock") of the Company at a conversion price of $7.91 per share,
subject to adjustment as provided in the Transaction Documents
(hereinafter defined) and one (1) Warrant in the form attached as
Exhibit A hereto (collectively, the "Warrants," and, together
with the Preferred Stock, the "Units"), each of which Warrants is
initially exercisable to purchase 44.1 shares (the "Warrant
Shares") of the Common Stock at an exercise price of $9.89 per
share, subject to adjustment as provided in Section 6(d) and as
provided in the Warrant Agreement (hereinafter defined). The
Preferred Stock shall upon issuance have the rights and
preferences set forth in the Certificate of Designation
("Certificate of Designation") attached hereto as Exhibit B. The
Units, the Preferred Stock and the Warrants are herein
collectively referred to as the "Securities."
The Securities will be offered and sold to the
Purchaser without being registered under the Securities Act of
1933, as amended (the "Act"), in reliance upon one or more
exemptions therefrom.
The Purchaser and the direct and indirect transferees
of the Securities will be entitled to the benefits of (i) the
Registration Rights Agreement substantially in the form attached
hereto as Exhibit C (the "Registration Rights Agreement"), among
the Company, the Purchaser and the other signatories thereto,
which will require the Company, among other things, to file with
the Securities and Exchange Commission (the "Commission") a shelf
registration statement (the "Registration Statement") pursuant to
Rule 415 under the Act relating to the resale of the Preferred
Stock and shares of Common Stock issuable in connection with the
conversion thereof (collectively, the "Conversion Shares" and,
together with the Warrant Shares and the Additional Warrant
Shares (hereinafter defined), the "Additional Securities") and to
use its reasonable best efforts to cause such registration
statement to be declared and remain effective in accordance
therewith and (ii) the Warrant Agreement among the Company, the
Purchaser and other signatories thereto substantially in the form
attached hereto as Exhibit D (the "Warrant Agreement") which will
require the Company, among other things, to file with the
Commission a registration statement (the "Warrant Registration
Statement") pursuant to Rule 415 under the Securities Act
relating to the resale of the Warrants and Warrant Shares and to
use its reasonable best efforts to cause such registration
statement to be declared and remain effective in accordance
therewith.
This purchase agreement (the "Agreement"), the
Certificate of Designation, the Warrant Agreement and related
Warrants and the Registration Rights Agreement are herein
collectively referred to as the "Transaction Documents."
2. 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 1999
Annual Meeting of Stockholders, the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, the Company's
Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, June 30 and September 30, 1999, respectively, and the
Company's Current Reports on Form 8-K dated February 22, 1999,
July 8, 1999, October 28, 1999, November 1, 1999, December 3,
1999 and February 1, 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. Except as described on Schedule 2(b)(i),
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 2(c)(i), the Preferred
Stock, the Warrants, the Conversion Shares, the Warrant Shares,
the Change in Control Warrants (hereinafter defined), any shares
of Common Stock issuable upon exercise of the Change in Control
Warrants (the "Additional Warrant Shares", and the Certificate of
Designation have been duly authorized by the Company. The
Preferred Stock, the Warrants and the Change in Control Warrants,
when issued, sold and delivered in accordance with the terms
hereof and for the consideration expressed herein, and the
Warrant Shares, the Additional Warrant Shares and the Conversion
Shares when issued in accordance with the terms of the Warrants,
the Change in Control Warrants and Preferred Stock, as the case
may be, (i) will be duly and validly issued and, in the case of
the Preferred Stock, the Warrant Shares, the Additional Warrant
Shares and the Conversion Shares, fully paid and nonassessable,
(ii) will be free of any pledges, liens, security interests,
claims, rights or other encumbrances of any kind (other than
under applicable federal and state securities laws),
(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 2(c)(ii), the
Preferred Stock, the Warrant Shares, the Additional Warrant
Shares and the Conversion Shares have been duly and validly
reserved for issuance.
(d) The Company has all requisite corporate power and
authority to execute and deliver the Warrant Agreement and the
Registration Rights Agreement; the Warrant Agreement and the
Registration Rights Agreement have been duly authorized by the
Company and, when executed and delivered by the Company (assuming
due authorization, execution and delivery by the parties thereto
other than the Company) 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) any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws
and public policy considerations.
(e) The Company has all requisite corporate power and
authority to execute and deliver this Agreement, the Warrants and
the Change in Control Warrants, to issue the Warrant Shares and
the Additional Warrant Shares and, subsequent to the filing of
the Certificate of Designation, to issue and deliver the
Preferred Stock and the Conversion Shares, and to consummate the
transactions contemplated hereby. This Agreement and each other
Transaction Document has been duly authorized, and this Agreement
has been and each other Transaction Document has been or as of
the Initial Closing 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, (y) such
consents as may be required under state securities or "Blue Sky"
laws in connection with the purchase and resale of the Securities
and the Additional 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 conversion of Preferred Stock or exercise of
Warrants or Additional Warrants. 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 2(e), 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 and sale of the Securities or the
Change in Control Warrants and the Additional Securities, nor the
execution, delivery and performance by the Company of this
Agreement, the Warrant Agreement or the Registration Rights
Agreement or the consummation of the transactions contemplated
hereby and 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, (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, and including without limitation as of the Initial
Closing, The NASDAQ Stock Market and any related body ("NASDAQ"),
other than (A) required consents under the Credit Agreement dated
as of August 11, 1999 among the Company, e.spire Finance
Corporation, the Lenders, Xxxxxxx Sachs Credit Partners L.P., the
Bank of New York, First Union National Bank and Newcourt
Commercial Finance Corporation (the "Credit Agreement"), (B)
solely with respect to the Securities to be issued and sold at
the Final Closing, the Stockholder Approval (hereinafter
defined)and (C) any required consents of the FCC or any State
Telecommunications Authority as a result of the Purchaser's
conversion of Preferred Stock or exercise of Warrants; 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 7 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 2(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 the issuance of the
Preferred Stock and Conversion Shares hereunder and to Greenwich
and Honeywell (as each term is hereinafter defined), as well as
the Preferred Stock included in the Subsequent Securities
referred to in Section 13 (and Conversion Shares relating
thereto), as and to the extent all such Preferred Stock and
Conversion Shares taken together may result in the issuance of a
number of shares of Common Stock which exceeds 20% of the total
outstanding Common Stock immediately prior to the Initial
Closing. The issuance and sale of the Warrants and the Initial
Preferred Stock (hereinafter defined) at the Initial Closing, any
issuance of Change in Control Warrants, and the issuance of any
Additional Securities with respect to such Initial Preferred
Stock and Change in Control Warrants pursuant to the conversion
or exercise thereof (at an adjusted conversion or exercise price,
as the case may be), without in any case obtaining Stockholder
Approval, is not and at the time of issuance of such Additional
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. Subject to obtaining
Stockholder Approval, the Remaining Preferred Stock (hereinafter
defined) may be issued and sold at the Final Closing and any
Additional Securities may be issued and sold with respect thereto
without violation, breach or contravention of any NASDAQ Rule 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 or
Additional Securities to be sold hereunder or the consummation of
the other transactions contemplated herein or in the other
Transaction Documents.
(h) Except as disclosed on Schedule 2(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 and know-how, and as of each Closing
(hereinafter defined) will continue to own or possess such
licenses, rights and know-how and other intellectual property
necessary to conduct the businesses currently 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, 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
September 30, 1999, (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 on shares of preferred stock described under
Section 2(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 2(e), 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 Additional 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 2(o)) has taken, directly or
indirectly, any action designed, or that might reasonably be
expected, to cause or result, under the Securities 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 or the
Additional 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 Securities Act) (provided that the
Purchaser is excluded from the warranty in this Section 2(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 Securities Act) that is or
could be integrated with the sale of the Securities or the
Additional Securities in a manner that would require the
registration under the Securities Act of the Securities or the
Additional Securities or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) in connection with the
offering of the Securities or the Additional Securities or in any
manner involving a public offering within the meaning of
Section 4(2) of the Securities Act. Assuming the accuracy of the
representations and warranties of the Purchaser in Section 7
hereof, it is not necessary in connection with the offer, sale
and delivery of the Securities or the Additional Securities to
the Purchaser in the manner contemplated by this Agreement to
register any of the Securities or the Additional Securities under
the Securities Act.
(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 51,570,766 shares were issued and
outstanding at January 31, 2000 and 54,827,337 are reserved for
issuance 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 [107,235.94] 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 198,843 shares are issued and
outstanding. Except for (A) 489,405 shares of Common Stock
reserved for issuance under the Company's 1996 Employee Stock
Purchase Plan; (B) 20,000 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) 2,330,757 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) 5,259,294
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; (G) 560,800 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) 305,614 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) 421,726
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
$600,000 reserved for issuance in connection with a settlement
agreement to be entered into between the Company and a third
party and (L) 29,841,394 shares of Common Stock 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) any 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.
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 2(r), no outstanding options, warrants or
other securities exercisable for or convertible into Common Stock
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 2(e), since September 30,1999 (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) 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 the Initial Closing, the Company will deliver to the
Trustees under each of the indentures with respect to the
Company's Existing Notes (as such term is defined in the
Certificate of Designation): (i) a resolution of the Company's
Board of Directors certifying that (A) the transactions
contemplated by this Agreement and the other Transaction Documents
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
unanimously approved by 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 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 has been withdrawn or
modified in any material respect.
(y) Except for (i) commitment fees paid to the Purchaser and
to Greenwich and Honeywell, if any, and (ii) payment of
commissions to Xxxxxx Xxxxxxx pursuant to the terms of the
Consulting Agreement, dated October 19, 1994, between Xxxxxx
Xxxxxxx and the Company (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.
No representation or warranty of the Company contained herein
shall be affected by any knowledge of or attributable to any
employee or other representative of the Purchaser including
without limitation any present or former representative on or
observer to the Company's or its Subsidiaries' boards of directors
who is an employee, designee, or affiliate of the Purchaser.
3. Purchase, Sale and Delivery of the Securities.
(a) Subject to the terms and conditions of this Agreement,
(i) at the Initial Closing, subject to possible reduction in the
number of Securities to be purchased by the Purchaser at the
Initial Closing in accordance with Section 3(d) below, the
Purchaser shall purchase and the Company shall sell and issue to
the Purchaser (A) all of the Warrants and (B) that number of
shares of Preferred Stock (the "Initial Preferred Stock") as would
result (if the shares of Preferred Stock included in the Initial
Preferred Stock were then converted) in the issuance of shares of
Common Stock equal to 19.9% of the shares of Common Stock of the
Company outstanding immediately prior to the Initial Closing and
(ii) at the Final Closing (hereinafter defined) the Purchaser
shall purchase and the Company shall sell and issue to the
Purchaser that number of shares of Preferred Stock (the "Remaining
Preferred Stock") equal to the difference between (x) 100,000 and
(y) the number of shares of Initial Preferred Stock sold and
issued to the Purchaser at the Initial Closing. The Company shall
deliver to the Purchaser at the Initial Closing a schedule,
certified by the Company's Chief Financial Officer, setting forth
in such reasonable detail as may be requested by the Purchaser,
the calculations called for by this Section 3(a).
(b) The purchase and sale of the Warrants and the Initial
Preferred Stock shall take place at the offices of Proskauer Rose
LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, within two (2) 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 Warrants and the Initial Preferred
Stock hereunder, but in no event later than March 6, 2000, or at
such other time and place as the Company and the Purchaser
mutually agree upon in writing (which time and place are
designated as the "Initial Closing"). At the Initial Closing, the
Company shall deliver to the Purchaser one or more certificates
representing the Initial Preferred Stock being sold and issued,
and an executed Warrant representing all of the Warrants, in such
denomination or denominations and registered in such name or names
as the Purchaser shall request upon notice to the Company against
payment by or on behalf of the Purchaser of the purchase price
therefor by wire transfer, payable to or upon the order of the
Company in immediately available funds.
(c) The purchase and sale of the Remaining Preferred Stock
shall take place at the offices of Proskauer Rose LLP, 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, within two (2) days following
the satisfaction of the conditions set forth in this Agreement
required to be satisfied prior to consummation of the purchase and
sale of the Remaining Preferred Stock, but in no event later than
100 days following the Initial Closing, or at such other time and
place as the Company and the Purchaser mutually agree upon orally
or in writing (which time and place are designated as the "Final
Closing"). At the Final Closing, the Company shall deliver to the
Purchaser one or more certificates representing the Remaining
Preferred Stock being sold and issued, in such denomination or
denominations and registered in such name or names as the
Purchaser shall request upon notice to the Company, against
payment by or on behalf of the Purchaser of the purchase price
therefor by wire transfer, payable to or upon the order of the
Company in immediately available funds.
(d) In the event that Greenwich Street Capital Partners II,
L.P. or any affiliate fund thereof ("Greenwich") and The Honeywell
International Inc. Master Retirement Trust or any affiliate
thereof ("Honeywell"), agree to purchase Securities at the Initial
Closing, then (i) the full number of Warrants provided under
Section 3(a)(i) above to be issued and sold by the Company to the
Purchaser at the Initial Closing shall be issued and sold to the
Purchaser at the Initial Closing; and (ii) the number of shares of
Initial Preferred Stock provided under Section 3(a)(i) above to be
issued and sold by the Company to the Purchaser at the Initial
Closing shall be allocated 57.14285% to the Purchaser, 14.28572%
to Greenwich and 28.57143% to Honeywell. (In the event that only
one of Greenwich and Honeywell enters into such an agreement, the
number of shares of Initial Preferred Stock shall be appropriately
prorated between the Purchaser and Greenwich or Honeywell, as the
case may be.)
(e) Notwithstanding anything to the contrary elsewhere in
this Agreement, in the event that the per share closing price of
the Common Stock on the day immediately preceding the Initial
Closing is less than $6.27, then (A) notwithstanding anything to
the contrary contained herein (including without limitation
Section 6(c)(i) below), no Stockholder Approval shall be required
in connection with the transactions contemplated by this Agreement
and (B) the Final Closing shall occur as soon as reasonably
practicable after the Initial Closing.
The Initial Closing and the Final Closing are sometimes
referred to collectively in this Agreement as the "Closings" and
each as a "Closing".
4. Covenants of the Company. The Company covenants
and agrees with the Purchaser (and in the case of the last
sentence of Section 4(f), the Purchaser agrees) that:
(a) The Company will cooperate at its expense with the
Purchaser in arranging for the qualification of the Securities and
the Additional 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 and the Additional 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 the Warrants and the Change
in Control Warrants, 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 Securities
Act to be eligible for clearance and settlement through The
Depository Trust Company and (iii) permit the Additional
Securities upon issuance and registration under the Securities 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) Approximately two-thirds of the aggregate net proceeds
from the issuance and sale of the Units will be used by the
Company for general corporate purposes; the remaining one-third of
the aggregate net proceeds will be contributed by the Company to
its subsidiary, ACSI Network Technologies, Inc., for its 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 4(d)) will sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Securities Act) that could be
integrated with the sale of the Securities or the Additional
Securities in a manner that would require the registration under
the Securities Act of the Securities or the Additional 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 Securities Act) in connection with the offering of the
Securities or the Additional Securities or in any manner involving
a public offering within the meaning of Section 4(2) of the
Securities 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 may be voted at such meeting or otherwise
to obtain Stockholder Approval.
(g) As soon as practicable (but not later than March 7,
2000), 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 (or the proxy
statement for the next annual meeting of stockholders) 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, exercise or payment of dividends with respect to
the Securities. The Company shall make drafts of the proxy
statement 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.
(h) At all times prior to the earlier to occur of the Final
Closing or termination of this Agreement (including any
termination of this Agreement with respect to the Remaining
Preferred Stock) pursuant to Section 10(a)(iv)), 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 termination of this
Agreement (including any termination of this Agreement with
respect to the Remaining Preferred Stock pursuant to 10(a)(iv)),
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 ("RequiredFilings").
All of such Required Filings shall comply in all
material respects with the requirements of the Securities 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
this Agreement, unless otherwise expressly contemplated by this
Agreement or consented to beforehand in writing by The Xxxx
Alternative Income Fund, L.P., 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
the Initial Closing it shall file or cause to be filed with the
Secretary of State of Delaware the Certificate of Designation.
(k) The Company hereby covenants and agrees that, prior to
the earlier to occur of the Final Closing or termination of this
Agreement, unless consented to in writing beforehand by The Xxxx
Alternative Income Fund, L.P., and except for pay-in-kind
dividends in respect of the 14.75% Preferred Stock and the 12.75%
Preferred Stock, 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 Preferred Stock 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 Preferred Stock, 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 Securities 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 Federal Communications Commission or any applicable state
regulatory agency or commission in connection with the sale of the
Securities and the Additional Securities under the Purchase
Agreements and the sale of any Subsequent 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 conversion 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.
5. 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 10 hereof: (i) the reasonable
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 evidencing the Securities and the
Additional Securities, including transfer agent's fees, (iii) the
qualification of the Securities and the Additional Securities
under state securities and "Blue Sky" laws, including filing fees
and reasonable 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 fees and disbursements of their
respective counsel whenever such filings are made,
(vi) Purchaser's appraisal costs not to exceed $10,000 annually,
(vii) all expenses and listing fees incurred in connection with
the application, if requested, for quotation of the Warrants and
the Change of Control Warrants on the PORTAL Market, to the extent
eligible for resale under Rule 144A, and (viii) all other ongoing
costs of holding or converting or exercising the Securities, but
excluding ordinary custodial expenses, brokerage and/or
underwriting commissions and taxes. Without limiting the
provisions of this Section 5 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 6 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
out-of-pocket expenses (including reasonable counsel fees and
disbursements) that shall have been incurred by the Purchaser in
connection with the proposed purchase and sale of the Securities.
6. Conditions of the Obligations of the Purchaser.
(a) Conditions to the Purchaser's Obligations at Each
Closing.
The obligations of the Purchaser with respect to each Closing
under this Agreement are subject to the fulfillment at or before
each Closing of each of the following conditions:
(i) The Purchaser shall have received opinions, dated
as of each Closing, of (i) the opinion of Xxxxx X. Xxxxxx,
Esq., 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 each Closing as if made on and
as of each Closing (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 the Closing; and subsequent to September 30,
1999 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 as described in the SEC
Reports or as disclosed in Schedule 2(e).
(iii) The issuance and sale of the Securities and
Change in Control Warrants 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 each 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 each Closing as if made on
and as of each Closing (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 the Closing;
(B) Subsequent to September 30, 1999, no event has
occurred that has had, or is reasonably likely to have,
a Material Adverse Effect, other than as described in
the SEC Reports or as disclosed in Schedule 2(e);
(C) The issuance and sale of the Securities and
the Change in Control Warrants hereunder by the Company
has not been enjoined (temporarily or permanently);
(D) As at December 31, 1999 (and after giving
effect to all financial results, events and other
circumstances through the close of business on such
date), 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.
(v) All authorizations, approvals or permits, if any,
of any Governmental Authority that are required in connection
with the lawful issuance and sale of the Securities or the
Change in Control Warrants pursuant to this Agreement or
(subject to the matters set forth in Section 2 (e) and (z)
above) the Additional Securities pursuant to the terms
thereof shall have been duly obtained.
(vi) Other than the Stockholder Approval in the case of
the Final Closing 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, all consents
and waivers, if any, of third parties that are required in
connection with such Closing under this Agreement and the
consummation of the transactions contemplated hereby, shall
be duly obtained and effective as of the Closing.
(vii) 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.
(viii) On or before the Closing Date, 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.
(ix) The Company and the Purchaser shall have entered
into the Registration Rights Agreement and the Warrant
Agreement.
(x) The Company shall have received the written
confirmation of NASDAQ, in form and substance satisfactory to
the Purchaser and its counsel, that other than obtaining
Stockholder Approval as contemplated by Section 2(f) above,
the Securities, Additional Securities and Change in Control
Warrants may be issued and sold, and the transactions
contemplated by this Agreement and the other Transaction
Documents may be consummated, without breach, violation or
contravention of any NASDAQ Rule ("NASDAQ Approval").
(xi) The Company shall have filed the Certificate of
Designation with the Secretary of State of Delaware and the
same shall have become effective and be in full force and
effect.
(xii) Since January 18, 2000, there shall not have
been any material adverse change in the price of the Common
Stock.
(xiii) As at December 31, 1999 (and after giving
effect to all financial results, events and other
circumstances through the close of business on such date),
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.
(xiv) Either the Purchaser shall have received
confirmation from the Company's independent certified public
accountants reasonably satisfactory to the Purchaser that no
"going concern" or similar exception will be taken in
connection with the Company's financial statements for the
year ended December 31, 1999, or the Purchaser shall have
received a waiver reasonably acceptable to it from the
lenders under the Credit Agreement of any default under the
Credit Agreement relating to such "going concern" or similar
exception.
(b) Additional Conditions to the Purchaser's Obligation at
the Initial Closing.
In addition to the conditions set forth in Section 6(a)
above, the obligations of the Purchaser to the Company under this
Agreement are subject to the fulfillment on or before the Initial
Closing of the following additional conditions:
(i) Approval of Budget. The Company shall have
prepared and submitted to the Purchaser its final budget for
the fiscal year ended December 31, 2000 and the Purchaser
shall have approved such budget (together with any updates or
revisions thereof) or shall have waived in writing such
approval.
(ii) Issuance of Warrants. The Warrants (and if a
Change in Control shall have occurred, the Change in Control
Warrants) shall have been issued at the Initial Closing.
(iii) Issuance of Stock Certificates. The
certificates representing the shares of Initial Preferred
Stock shall have been executed and delivered by the Company
to the Purchaser at the Initial Closing.
(iv) Completion of Capital Calls by Purchaser. The
Purchaser shall have received the funds necessary to pay the
purchase price for the Warrants and Initial Preferred Stock
being purchased by the Purchaser at the Initial 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 Sections 6(a) and (c) hereof have
been satisfied.
(c) Additional Conditions to the Purchaser's Obligations at
the Final Closing
In addition to the conditions set forth in Section 6(a)
above, the obligations of the Purchaser to the Company under this
Agreement are subject to the fulfillment on or before the Final
Closing of the following additional conditions:
(i) Stockholder Approval. The Company shall have
obtained the Stockholder Approval.
(ii) Issuance of any Change in Control Warrants. If a
Change in Control shall have occurred, the Change in Control
Warrants shall have been issued.
(iii) Issuance of Stock Certificates. The
certificates representing the Remaining Preferred Stock shall
have been executed and delivered by the Company to the
Purchaser at the Final Closing.
(iv) Completion of Capital Calls by the Purchaser. The
Purchaser shall have received the funds necessary to pay the
purchase price for the Remaining Preferred Stock being
purchased by the Purchaser at the Final 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 Sections 6(a) and (b) hereof have
been satisfied.
(d) Failure of Certain Conditions To Be Met.
(i) If on the trading day immediately preceding the
Initial Closing the closing price of the Common Stock as
reported in the New York edition of the Wall Street Journal
is less than $6.26145 per share (subject to appropriate
adjustment for stock dividends, stock splits and similar
events) (a "Stock Decline"), then in such event the exercise
price of all Warrants (including, without limitation, the
Change in Control Warrants) shall be reset to equal $7.25 per
share (subject to adjustment in accordance with the
provisions of the Warrant Agreement in connection with events
other than the Stock Decline).
(ii) In the event that there shall be a Change in
Control of the Company, then the Purchaser shall receive
simultaneously with the occurrence of the Change in Control
or as soon thereafter as shall be practicable 25,000
additional Warrants (the "Change in Control Warrants"), each
of which Change in Control Warrants being exercisable for the
same number of shares of Common Stock and at the same
exercise price as are than in effect under the Warrants (or,
if no Warrants are then outstanding, as would have been in
effect had Warrants then been outstanding) and otherwise
having the same terms and subject to the same conditions as
the Warrants. As used herein, the term "Change in Control"
means (A) the sale, conveyance, transfer or lease of all or
substantially all of the assets of the Company (which, for
purposes of this sentence, shall include any successor to the
Company) to any "person" or "group" (within the meaning of
Section 13(d)(3) and 14(d)(2) of the Exchange Act or any
successor provision to either of the foregoing, including any
group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-
5(b)(i) under the Exchange Act), other than to the Purchaser,
ING Equity Partners L.P.I., Apex Investment Fund I, L.P.,
Apex Investment Fund II, L.P., The Productivity Fund II, L.P.
and Xxxxxxx Xxxxxxxxx (including any affiliate of any of the
foregoing other than the Company or any Restricted Subsidiary
of the Company (as defined in the Indenture, dated July 24,
1998 with respect to the Company's 10.625% Senior Discount
Notes Due July 1, 2008)) (the "Permitted Holders") shall have
occurred; or (B) any "person" or "group" (within the meaning
of Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any
successor provision to either of the foregoing, including any
group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule
13d-5(b)(i) under the Exchange Act), other than any Permitted
Holder, becomes the "beneficial owner" (as defined under the
Exchange Act) of more than 35 percent of the total voting
power of all classes of the voting capital stock of the
Company (including any warrants, options or rights to acquire
such voting capital stock), calculated on fully diluted
basis, and such voting power percentage is greater than or
equal to the total voting power percentage then beneficially
owned by the Permitted Holders in the aggregate; or
(C) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors
whose election or appointment by such board or whose
nomination for election by the stockholders of the Company
was approved by a vote a majority of the directors then still
in office who were either directors at the beginning of such
period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
Notwithstanding anything to the contrary herein or in any
other Transaction Document, the parties hereby agree that the
provisions of this Section 6(e) (and any other provisions
hereof or any other Transaction Document relating to the
Change in Control Warrants or any Additional Securities
issuable in connection therewith) may be amended by the
Company and the holders of a majority of the outstanding
shares of Preferred Stock (including any shares of Preferred
Stock issued to Purchaser hereunder, to Greenwich, to
Honeywell and to any Additional Purchasers (hereinafter
defined) (the "Majority Holders"), and any waiver relating to
such change in Control Warrants and/or Additional Securities
may be given on behalf of the Purchaser by such Majority
Holders; provided, however, that any such amendment or waiver
treats all holders of Preferred Stock in the same fashion.
7. 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 Warrant Agreement and the Registration Rights
Agreement 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 Securities 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 Securities 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 Securities Act.
(d) The Purchaser understands that the certificates
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 Securities 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 Securities Act. Whenever,
pursuant to the preceding sentence, any certificate 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.
8. 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 4(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 8(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 Units or the
Change in Control Warrants 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 8 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 8(b) above. The amount paid
or payable by the Company as a result of the losses, claims,
damages and liabilities referred to in Section 8(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.
9. 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) 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 5 and 8
hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
10. Termination.
(a) This Agreement may be terminated prior to the Initial
Closing or the Final Closing, as the case may be, under the
following circumstances and by the following persons:
(i) by the Purchaser, if subsequent to September 30,
1999, any event 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 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 2(e));
(ii) by the mutual consent of the Purchaser and the
Company;
(iii) by the Purchaser at any time after March 6,
2000 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, the Initial Closing shall not have been
consummated;
(iv) solely with respect to the Remaining Preferred
Stock, by the Purchaser at any time after the expiration of
100 days following the Initial Closing (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 the Final
Closing shall not have been consummated;
(v) 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
(v) 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;
(vi) 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, 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 Closing
including, without limitation, and solely with respect to the
Final Closing, obtaining the Stockholder Approval within 100
days after the Initial Closing (unless not required as
provided in Section 3(e));
(vii) by the Purchaser, if there has 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 or if minimum or
maximum prices shall have been established on any such
exchange or market;
(viii) by the Purchaser, if a banking moratorium
shall have been declared by New York or United States
authorities;
(ix) by the Purchaser, if there has 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 by this Agreement; or
(x) 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 this Agreement pursuant to this
Section 10 shall be without liability of any party to any other
party except as provided in Sections 5, 8 and 9.
11. 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 (000) 000-0000,
with a copy to Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxx X. Xxxxxxx, Telecopier Number (212)
969-2900; 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 (212) 474-
3700.
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.
12. 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 8 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 Securities Act
or Section 20 of the Exchange Act.
13. Subsequent Securities. In addition to the issuance
and sale of the Securities hereunder and any purchase of
Securities by Greenwich and Honeywell, the Company shall use
reasonable efforts to sell to other investors (which investors
shall exclude the Purchaser) acceptable to the Company's Board of
Directors (the "Additional Investors") up to $75,000,000 of
additional Preferred Stock and Warrants (the "Subsequent
Securities"), of which up to $25,000,000 of such Subsequent
Securities shall be on the same terms and conditions (including
initial conversion price and initial warrant exercise price) as
the Preferred Stock and Warrants included in the Securities and up
to $50,000,000 of such Subsequent Securities may, if so determined
by the Company's Board of Directors, be on terms and conditions
more favorable to the Company. Such purchases will occur at the
Final Closing (or in the event there is no Final Closing, at one
or more closings on mutually convenient dates, times and places,
no later than 100 days after the Initial Closing). Such purchases
shall be conditioned in addition to the conditions to the Closings
set forth above, upon (i) Stockholder Approval, and (ii) the
execution and delivery by the Additional Purchasers of definitive
commitment letters to the Company covering their investments no
later than March 6, 2000 (with a copy to be delivered by the
Company to Purchaser promptly thereafter).
14. Equitable Adjustments. In the event that at any
time after the date hereof and prior to the issuance of any
Securities or Change in Control Warrants there shall occur any
event which would trigger antidilution adjustments in connection
with such Securities or Change in Control Warrants 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.
15. Entire Agreement. This Agreement, together with
the Exhibits and Schedules hereto, the Warrant Agreement and the
Registration Rights Agreement, 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.
16. 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.
17. 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: ____________________
