SECURITIES PURCHASE AGREEMENT (this "Agreement") dated as of February
4, 1999 among KMC Telecom Holdings, Inc., a Delaware corporation (the "Issuer"),
and Newcourt Commercial Finance Corporation, a Delaware corporation ("Newcourt")
and Lucent Technologies Inc., a Delaware corporation ("Lucent" and together with
Newcourt, the "Purchasers" and each individually, a "Purchaser").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, as used herein, have
the following meanings:
"Certificates of Designations" means, collectively, the Series E
Certificate of Designations and the Series F Certificate of Designations.
"Charter" means the Amended and Restated Certificate of Incorporation
of the Issuer, as amended as of the Closing Date.
"Closing" has the meaning set forth in Section 2.02.
"Closing Date" has the meaning set forth in Section 2.02.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Issuer.
"Environmental Laws" shall mean any applicable law concerning releases
into any part of the natural environment, or protection of natural resources,
the environment and public and employee health and safety including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. ss. 9601 ET Seq.), the Hazardous Materials Transportation Act (49
U.S.C. ss. 1801 ET Seq), the Resource Conservation and Recovery Act (42 U.S.C.
ss. 6901 ET Seq), the Clean Water Act (33 U.S.C. ss. 1251 ET seq), the Clean Air
Act (33 U.S.C. ss. 7401 ET Seq), the Toxic Substances Control Act (15 U.S.C. ss.
7401 ET Seq), and the Occupational Safety and Health Act (29 U.S.C. ss. 651 ET
seq.), as such laws have been and may be amended or supplemented through the
Closing Date, and the regulations promulgated pursuant thereto, and any
applicable state or local statutes, and the regulations promulgated pursuant
thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession.
"Lien" means any lien, claim, charge, pledge, mortgage, security
interest or other encumbrance.
"Loan and Security Agreement" means the Loan and Security Agreement,
dated as of February 4, 1999, among KMC Telecom III, Inc., KMC Telecom Leasing
III LLC, certain lenders from time to time parties thereto, Lucent and the
Collateral Agent (as defined therein).
"Material Adverse Effect" means a material adverse effect, or any
event, occurrence, state of circumstances or facts or development involving a
prospective material adverse effect, on the business, operations, assets,
condition (financial or otherwise), results of operations, properties, assets,
value or prospects of the Issuer and its Subsidiaries taken as a whole.
"Person" means an individual, general partnership, limited
partnership, corporation, limited liability company, trust, joint stock company,
association, joint venture or any other entity or organization, whether or not a
legal entity, including a government or political subdivision or an agency or
instrumentality thereof.
"Preferred Stock" means, collectively, the Series E Preferred Stock
and the Series F Preferred Stock.
"Regulation D" means Regulation D under the Securities Act.
"Securities" means, collectively, the Series E & F Unit, the Series F
Unit and the shares of Preferred Stock and the Warrants comprising such units,
to be issued and sold by the Issuer and purchased by the Purchasers as set forth
in Section 2.01.
"Securities Act" means the Securities Act of 1933, as amended.
"Series E Certificate of Designations" means the Certificate of
Designations in substantially the form of Exhibit A hereto relating to the
Series E Preferred Stock to be filed with the Secretary of State of Delaware.
"Series E Preferred Stock" means the Issuer's Series E Senior
Redeemable, Exchangeable, PIK Preferred Stock having the rights, preferences and
privileges set forth in the Series E Certificate of Designations.
"Series E & F Unit" has the meaning set forth in Section 2.01.
"Series F Certificate of Designations" means the Certificate of
Designations in substantially the form of Exhibit B hereto relating to the
Series F Preferred Stock to be filed with the Secretary of State of Delaware.
"Series F Preferred Stock" means the Issuer's Series F Senior
Redeemable, Exchangeable, PIK Preferred Stock having the rights, preferences and
privileges set forth in the Series F Certificate of Designations.
"Series F Unit" has the meaning set forth in Section 2.01.
"Springing Warrants" means the Warrants which may be issued pursuant
to Section 2.4 of the Warrant Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%) of
the total voting power of shares of capital stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof, or at least a majority of the ownership interests,
and the power to direct the policies, management and affairs thereof, is at the
time owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of such Person or a combination thereof.
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"Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs, duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to
tax or additional amounts imposed by any public or governmental taxing authority
(domestic or foreign) and shall include any transferee liability in respect of
Taxes.
"Tax Returns" shall mean all returns, declarations, reports,
estimates, information returns and statements required to be filed in respect of
any Taxes.
"Warrants" means the warrants to purchase shares of Common Stock to be
issued pursuant to the Warrant Agreement; each warrant entitling the holder
thereof to purchase 0.471756 shares of Common Stock.
"Warrant Agreement" means the warrant agreement, dated the date
hereof, between the Issuer and The Chase Manhattan Bank, as warrant agent.
"Warrant Registration Rights Agreement" means the warrant registration
rights agreement, dated the date hereof, between the Issuer and the Purchasers.
ARTICLE II
PURCHASE AND SALE OF SECURITIES
SECTION 2.01. COMMITMENT TO PURCHASE. (a) Subject to the terms and
conditions hereinafter stated, upon the basis of the representations and
warranties of the Purchasers herein contained, the Issuer agrees to issue and
sell to Newcourt and, upon the basis of the representations and warranties of
the Issuer herein contained, Newcourt agrees to purchase from the Issuer the
Series E & F Unit, which consists of (i) an aggregate of 25,000 shares of Series
E Preferred Stock, (ii) 10,000 shares of Series F Preferred Stock and (iii)
38,636 Warrants (the "Series E & F Unit"), on the date hereof for an aggregate
purchase price of $35,000,000.
(b) Subject to the terms and conditions hereinafter stated, upon the
basis of the representations and warranties of the Purchasers herein contained,
the Issuer agrees to issue and sell to Lucent and, upon the basis of the
representations and warranties of the Issuer herein contained, Lucent agrees to
purchase from the Issuer the Series F Unit, which consists of (i) an aggregate
of 30,000 shares of Series F Preferred Stock and (ii) 13,636 Warrants (the
"Series F Unit"), on the date hereof for an aggregate purchase price of
$30,000,000.
SECTION 2.02. THE CLOSING. (a) Subject to the fulfillment or waiver of
the conditions set forth in Article V hereof, the purchase and sale of the
Securities, as set forth in Section 2.01 (the "Closing"), shall take place at
the offices of Shearman & Sterling at 10:00 a.m. on the date hereof or on such
other date and at such other location as the Issuer and the Purchasers shall
agree. The date and time of the Closing are referred to herein as the "Closing
Date."
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(b) At the Closing, each Purchaser shall deliver to the Issuer, by
wire transfer (of immediately available funds) to an account designated by the
Issuer in writing delivered to each Purchaser, the respective consideration
referred to in Section 2.01.
(c) At the Closing, the Issuer shall deliver to (i) Newcourt, against
payment of the consideration set forth in Section 2.01(a), certificates
evidencing the Series E & F Unit (including the shares of Series E Preferred
Stock, the shares of Series F Preferred Stock and Warrants referred to therein),
registered in the name of Newcourt and (ii) Lucent, against payment of the
consideration set forth in Section 2.01(b), certificates evidencing the Series F
Unit (including the shares of Series F Preferred Stock and Warrants referred to
therein), registered in the name of Lucent.
(d) At the Closing, the Issuer shall execute and deliver Warrant
Certificates (as defined in the Warrant Agreement) representing the Springing
Warrants to the Warrant Agent as provided in Section 2.4(a) of the Warrant
Agreement.
SECTION 2.03. USE OF PROCEEDS. The proceeds from the issuance of the
Series E & F Unit and the Series F Unit will be used to make equity
contributions or "Qualified Intercompany Loans" (as defined in the Loan and
Security Agreement) to KMC Telecom III, Inc. and to pay fees and expenses
relating to the transactions contemplated by this Agreement.
SECTION 2.04. ALLOCATION OF CONSIDERATION. (a) The Issuer and Newcourt
hereby agree that for income tax purposes (but not for any other purpose) the
allocation of the consideration described in Section 2.01(a) for the Series E
Preferred Stock, the Series F Preferred Stock and the Warrants comprising the
Series E & F Unit shall be as follows: $22,909,265 of the consideration shall be
allocated to the Series E Preferred Stock, $9,721,235 of the consideration shall
be allocated to the Series F Preferred Stock, and $2,369,500 of the
consideration shall be allocated to the Warrants.
(b) The Issuer and Lucent hereby agree that for income tax purposes
the allocation of the consideration described in Section 2.01(b) for the Series
F Preferred Stock and the Warrants comprising the Series F Unit shall be as
follows: $29,163,706 of the consideration shall be allocated to the Series F
Preferred Stock and $836,294 of the consideration shall be allocated to the
Warrants.
(c) In light of the highly conditional nature of the purchase rights
provided for in the Springing Warrants, the parties agree that for income tax
purposes only, none of the consideration for the Series E & F Unit or for the
Series F Unit will be allocated to the Springing Warrants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer represents and warrants to each Purchaser as follows as of
the Closing Date:
SECTION 3.01. ORGANIZATION, STANDING, ETC. (a) The Issuer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority under such laws to own or lease and operate its properties and to
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carry on its business as now conducted. The Issuer is duly qualified or licensed
to do business as a foreign corporation in good standing in each jurisdiction in
which the nature of the business transacted by it or the character of the
properties owned or leased by it requires it to so qualify or be licensed,
except where the failure to so qualify or be licensed or be in good standing
would not have a Material Adverse Effect. The copies of the Issuer's Charter,
bylaws and other organizational documents and instruments (in each case, as
amended and/or restated through the date hereof), heretofore made available to
the Purchasers, are true, complete and correct copies thereof.
(b) Each Subsidiary of the Issuer is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its formation, has
all corporate or other power and authority to own its properties and conduct its
business as now conducted and is duly qualified or licensed to transact business
as a foreign company in good standing in each jurisdiction in which the nature
of the business transacted by it or the character of the properties owned or
leased by it requires it to so qualify or be licensed, except (i) as disclosed
on SCHEDULE 3.01 hereto, or (ii) where the failure to so qualify or be licensed
or be in good standing would not have a Material Adverse Effect. All the
outstanding shares of capital stock of each corporate Subsidiary of the Issuer
have been duly authorized and validly issued and are fully paid and
nonassessable and, except as disclosed on SCHEDULE 3.01 hereto are owned
directly or indirectly by the Issuer free and clear of all liens, security
interests, charges and encumbrances. The Issuer does not own any interest in any
other company or entity other than the Subsidiaries set forth on SCHEDULE 3.01.
Except as set forth on SCHEDULE 3.01 hereto, there are no outstanding options,
warrants, rights, agreements or commitments to any third party to subscribe for
or purchase any equity security of any Subsidiary or to cause any Subsidiary to
issue any such equity security.
SECTION 3.02. CAPITALIZATION. (a) The Issuer's authorized capital
stock consists of 3,000,000 shares of Common Stock and 748,800 shares of
preferred stock. Of the 748,800 authorized shares of preferred stock (i) 123,800
shares have been designated as Series A Cumulative Convertible Preferred Stock
(the "Series A Preferred Stock") all of which are currently outstanding, (ii)
350,000 shares have been designated as Series C Cumulative Convertible Preferred
Stock (the "Series C Preferred Stock") of which 175,000 shares are currently
outstanding, (iii) 25,000 shares have been designated as Series D Cumulative
Convertible Preferred Stock (the "Series D Preferred Stock") of which none are
currently outstanding, (iv) 175,000 shares have been designated as Series E
Preferred Stock, of which 25,000 shares will be outstanding upon the
consummation of the purchase of the Series E & F Unit pursuant to this Agreement
and 55,000 shares have been reserved for issuance upon conversion of the Series
F Preferred Stock and (v) 55,000 shares have been designated as Series F
Preferred Stock, of which 40,000 shares will be outstanding upon consummation of
the purchase of the Series F Unit and the Series E & F Unit pursuant to this
Agreement. Of the 3,000,000 authorized shares of Common Stock: (i) 837,876
shares are issued and outstanding, (ii) 600,000 shares have been reserved for
issuance upon conversion of the Series A Preferred Stock, (iii) 333,333 shares
have been reserved for issuance upon conversion of the Series C Preferred Stock,
(iv) 10,000 shares have been reserved for issuance upon exercise of a warrant
held by General Electric Capital Corporation, (v) 100,385 shares have been
reserved for issuance upon exercise of warrants issued in connection with the
Issuer's offering of its 12 1/2% Senior Discount Notes, (vi) 131,877 shares have
been reserved for issuance upon exercise of the Warrants and the Springing
Warrants, (vii) 262,750 shares have been reserved for issuance pursuant to
options granted under the 1998 Stock Purchase and Option Plan for Key Employees
of KMC Telecom Holdings, Inc. and Affiliates and (viii) no shares are held in
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treasury. No other shares of capital stock have been issued or reserved for
issuance for any purpose. All of the outstanding shares of capital stock of the
Issuer have been duly authorized and validly issued, are fully paid and
nonassessable, free of preemptive rights and have been offered and issued
without violation of the Securities Act or any preemptive rights of any person.
SCHEDULE 3.02 hereto accurately sets forth, as of the date hereof, the number of
issued and outstanding shares of Common Stock held by each person known by the
Issuer to own beneficially or of record any shares of the Issuer's capital
stock.
(b) Except as disclosed on SCHEDULE 3.02 hereto: (i) there are no
issued or outstanding securities that are convertible into or exchangeable for
shares of the Issuer's capital stock ("Convertible Securities"); (ii) there are
no issued or outstanding subscriptions, options, warrants or other rights to
purchase or acquire any shares of the capital stock of the Issuer or any
Convertible Securities ("Option Rights") other than the Warrants; (iii) the
Issuer is not a party to any agreement or understanding pursuant to which it is
obligated to purchase or redeem any shares of its capital stock or any
Convertible Securities or Option Rights, other than pursuant to the redemption
provisions in respect of the Preferred Stock set forth in the Certificates of
Designations, and is not otherwise under any obligation to repurchase, redeem or
otherwise acquire any shares of its capital stock or any Convertible Securities
or Option Rights; (iv) the Issuer is not a party to any agreement or
understanding pursuant to which it is obligated to register any shares of its
capital stock or other securities under the Securities Act or any state
securities law; and (v) the Issuer is not, and to the best knowledge of the
Issuer, no securities holder of the Issuer is a party to any voting agreement,
voting trust, irrevocable proxy or other agreement affecting the voting rights
of any shares of the Issuer's capital stock or any agreement providing for any
call or put option, right of first refusal or offer or other right to acquire or
dispose of any shares of the Issuer's capital stock or any Convertible
Securities or Option Rights. Except as described in Section 3.02(a) or Schedule
3.02, no shares of Common Stock are issuable upon the exercise of any
outstanding Convertible Securities or Option Rights of the Issuer and no
additional shares of Common Stock will become issuable upon exercise of such
Convertible Securities or Option Rights on account of the issuance of the
warrants.
SECTION 3.03. AUTHORIZATION; NON-CONTRAVENTION. The execution,
delivery and performance by the Issuer of this Agreement, the Warrant Agreement
and the Warrant Registration Rights Agreement, the issuance, sale and delivery
by the Issuer of the Securities and the execution of Springing Warrants and the
amendments to the Charter effected by the filing of the Certificates of
Designations are within the Issuer's corporate powers, have been duly authorized
by all necessary corporate action, require no action by or in respect of, or
filing with, any governmental body, agency or official (other than the filing of
the Certificates of Designations with the Secretary of State of Delaware) and do
not (i) contravene or constitute a default under any provision of applicable law
or regulation, judgment, injunction, order or decree binding upon or applicable
to the Issuer, (ii) contravene or constitute a default under the Charter or
bylaws or (iii) require any consent, approval or other action by any other
Person (other than the holders of the Series A Cumulative Convertible Preferred
Stock and the Series C Cumulative Convertible Preferred Stock which consent
shall be obtained prior to the Closing Date) or constitute a default under or
contravene any material agreement, judgment, injunction, order, decree or other
instrument binding upon the Issuer or any of its Subsidiaries.
SECTION 3.04. BINDING EFFECT. This Agreement, the Warrant Agreement
and the Warrant Registration Rights Agreement have been duly authorized,
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executed and delivered by the Issuer and constitute valid and legally binding
obligations of the Issuer, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether enforcement is sought by proceedings in equity or at law). The Issuer
has duly authorized the issuance, sale and delivery of the Securities to the
Purchasers and, when issued and delivered by the Issuer pursuant to this
Agreement against payment of the consideration set forth herein, and, with
respect to the Warrants, countersigned by the Warrant Agent (as defined in the
Warrant Agreement), and with respect to the Preferred Stock, authenticated by
the Transfer Agent (as defined in the Certificate of Designations), the
Securities will be validly issued, fully paid and non-assessable free and clear
of all Liens and without violation of any preemptive rights. The Issuer has duly
authorized the issuance and delivery of the Springing Warrants in accordance
with the terms and conditions set forth in Section 2.4 of the Warrant Agreement,
and, when countersigned by the Warrant Agent and delivered pursuant Section 2.4
of the Warrant Agreement, the Springing Warrants will be validly issued, fully
paid and non-assessable free and clear of all Liens and without violation of any
preemptive rights. All of the shares of Common Stock to be issued upon exercise
of the Warrants and the Springing Warrants have been duly and validly authorized
and reserved for issuance upon such exercise and, when issued and delivered upon
exercise of the Warrants and the Springing Warrants in accordance with the terms
of the Warrant Agreement, will be duly and validly issued, fully paid and
non-assessable free and clear of all Liens and without violation of any
preemptive rights. All of the shares of Series E Preferred Stock to be issued
upon conversion of the Series F Preferred Stock have been duly and validly
authorized and reserved for issuance upon such conversion, and when issued and
delivered upon such conversion in accordance with the terms of the Series F
Certificate of Designation will be duly and validly issued, fully paid and
nonassessable.
SECTION 3.05. GOVERNMENTAL REGULATION. Except for the Securities Act,
the Exchange Act and state securities laws, the Issuer is not subject to any
federal or state or foreign law or regulation limiting its ability to issue the
Securities or the Springing Warrants or perform its obligations under the terms
of this Agreement, the Warrant Agreement, the Warrant Registration Rights
Agreement, the Securities or the Springing Warrants. Except as may be required
pursuant to "blue sky laws" or as may be required under the Securities Act or
the Exchange Act in connection with the registration of Warrant Shares as
contemplated under the Warrant Registration Rights Agreement, no notices,
reports or other filings are required to be made by the Issuer or any Subsidiary
with, nor are any consents, registrations, applications, approvals, permits,
licenses or authorizations required to be obtained by the Issuer or any
Subsidiary from, any public or governmental authority or other third party in
connection with the execution and delivery of this Agreement, the Warrant
Agreement or the Warrant Registration Rights Agreement, or the consummation by
the Issuer of the transactions contemplated hereby or thereby, or the exercise
by the Purchasers of their rights hereunder, except for any of the foregoing,
the failure of which to make or obtain would not have a Material Adverse Effect
or adversely affect either of the Purchasers' rights hereunder.
SECTION 3.06. SOLICITATION. Assuming the representations and
warranties of the Purchasers set forth in Section 4.06 hereof are true and
correct in all material respects, the offer and sale of the Securities pursuant
to this Agreement and the issuance of the shares of Series E Preferred Stock
upon conversion of the Series F Preferred Stock and the issuance of the shares
of Common Stock upon exercise of the Warrants and the Springing Warrants
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pursuant to the Warrant Agreement will be exempt from the registration
requirements of the Securities Act. No form of general solicitation or general
advertising was used by the Issuer or, to the best of its knowledge, any other
Person acting on its behalf, in respect of the Securities or in connection with
the offer and sale of the Securities. Neither the Issuer nor any Person acting
on behalf of the Issuer has, either directly or indirectly, sold or offered for
sale to any Person any of the Securities or any other similar security of the
Issuer except as contemplated by this Agreement. Neither the Issuer nor any
Person acting on its behalf has, in connection with the offering of the
Securities, engaged in any action that would require the registration under the
Securities Act of the offering and sale of the Securities pursuant to this
Agreement.
SECTION 3.07. AUTHORIZATION TO DO BUSINESS. The Issuer and its
Subsidiaries (i) possess all licenses, certificates, authorizations, approvals
and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective businesses, as
presently conducted, excepting any licence, certificate, authorization, approval
or permit, the failure to possess which, singly or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect and (ii) have not
received any notice of proceedings relating to revocation or modification of any
such license, certificate, authorization, approval or permit, nor is the Issuer
or any of its Subsidiaries in violation of, or in default under, any such
license, authorization, approval or permit or any decree, order, judgment
applicable to the Issuer or its Subsidiaries the effect of which, singly or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.08. COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE
3.08 hereto and except as would not have a Material Adverse Effect, the business
of the Issuer and each of the Subsidiaries has been and is presently being
conducted in compliance with all applicable federal, state, county and local
ordinances, statutes, rules, regulations and laws (collectively "Laws").
SECTION 3.09. LITIGATION. Except as set forth on SCHEDULE 3.09 hereto,
there are no pending actions, suits, proceedings, arbitrations or investigations
against or affecting the Issuer or any of its Subsidiaries or any of their
respective properties, assets or operations, or with respect to which the Issuer
or any such Subsidiary is responsible by way of indemnity or otherwise (a
"Material Claim") that, if there is an adverse decision, could singly, or in the
aggregate, with all such other actions, suits, investigations or proceedings,
have a Material Adverse Effect, and, to the knowledge of the Issuer, no such
actions, suits, proceedings or investigations are threatened.
SECTION 3.10. PROPERTIES. Except as described in SCHEDULE 3.10 hereto,
the Issuer and its Subsidiaries have good and marketable title to all their
material property and assets, free and clear of all Liens except (a)
materialmen's, mechanics', carriers', workmen's, warehousemen's, repairmen's, or
other like Liens arising in the ordinary course of business with respect to
moneys not yet due and payable; (b) Liens for current Taxes not yet due and
payable or which are being contested in good faith and by proper procedures; or
(c) Liens or minor imperfections of title that do not materially interfere with
the use or materially detract from the value of such property.
SECTION 3.11. TAX MATTERS. The Issuer and its Subsidiaries have filed
all Tax Returns required to be filed and are not in default in the payment of
any Taxes which were payable pursuant to such returns or any assessments in
respect thereof, other than any which the Issuer or any such Subsidiary is
contesting in good faith by proper procedures.
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SECTION 3.12. PATENTS AND TRADEMARKS. Each of the Issuer and its
Subsidiaries has sufficient right, title and ownership of all patents,
trademarks, service marks, trade names, copyrights, licenses with respect to the
foregoing, information, proprietary rights and processes, or shall be able to
obtain all such licenses and other authority necessary or useful for the lawful
conduct of its business as it is contemplated to be conducted, without any known
conflicts with the rights of others. No stockholder, officer, director or
employee of the Issuer or any Subsidiary owns any rights therein which are
competitive with those to be owned or used by the Company and any Subsidiaries.
Neither the Issuer nor any Subsidiary has been sued or charged with any
infringement of any patent, license or permit or has knowledge of any basis for
any such claim.
SECTION 3.13. LABOR MATTERS. (a) Neither the Issuer nor any Subsidiary
is party to any labor or collective bargaining agreement and there are no labor
or collective bargaining agreements which pertain to employees of the Issuer or
any Subsidiary.
(b) No employees of the Issuer or any Subsidiary are represented by
any labor organization. No labor organization or group of employees of the
Issuer or any Subsidiary has made a demand for recognition or certification, and
there are no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the knowledge of the Issuer,
threatened to be brought or filed, with the NLRB or any other labor relations
tribunal or authority. To the knowledge of the Issuer, there are no organizing
activities involving the Issuer or any Subsidiary pending with, or threatened
by, any labor organization.
(c) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor disputes
pending or, to the knowledge of the Issuer, threatened against or involving the
Issuer or any Subsidiary. Except as would not result in any Material Adverse
Effect, there are no unfair labor practice charges, grievances or complaints
pending or, to the knowledge of the Issuer, threatened by or on behalf of any
employee or group of employees of the Issuer or any Subsidiary.
SECTION 3.14. ENVIRONMENTAL MATTERS. (a) Except as set forth in
SCHEDULE 3.14, (i) each of the Issuer and the Subsidiaries is in material
compliance with all Environmental Laws and (ii) neither the Issuer nor any
Subsidiary has received any written communication from a governmental authority
with respect to such compliance or the failure thereof.
(b) Except as set forth in SCHEDULE 3.14, (i) there is no civil,
criminal or administrative action, claim, demand, investigation or notice
relating to a violation of an Environmental Law (an "Environmental Claim")
pending or, to the knowledge of the Issuer, threatened and (ii) to the knowledge
of the Issuer, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge or disposal of any chemical, pollutant, contaminant, waste,
toxic substance, petroleum or petroleum product, that would form the basis of
any Environmental Claim, in either case (A) against the Issuer or any
Subsidiary, (B) against any person or entity whose liability for any
Environmental Claim the Issuer or any Subsidiary has or may have retained or
assumed either contractually or by operation of law, or (C) involving any real
or personal property which the Issuer or any Subsidiary owns, leases or manages
except, in each case, as would not have a Material Adverse Effect.
SECTION 3.15. INSURANCE. The Issuer and its Subsidiaries, in the
reasonable determination of the Issuer's management, maintain with financially
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sound and reputable insurers insurance against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged in
the same or a similar business and similarly situated, and of such types and in
such amounts as is customarily carried under similar circumstances by such other
corporations.
SECTION 3.16. YEAR 2000. The Issuer has engaged in a review of the
hardware and software products used by the Issuer and the Subsidiaries in their
businesses (collectively, the "SOFTWARE") which it believes to be adequate to
identify any material deficiency in "Year 2000 Capabilities". "Year 2000
Capabilities" means the ability of the Software (i) to manage and manipulate
data involving dates, including single century formulas and multi-century
formulas, and to not generate incorrect values or invalid results involving such
dates, (ii) to provide that all date-related user interface functionalities and
data fields include the indication of century, and (iii) to provide that all
date-related data interface functionalities include the indication of century.
The Issuer is taking appropriate steps to identify exposure to deficiencies in
Year 2000 Capabilities resulting from the Year 2000 Capabilities of its vendors,
and to address them on a timely basis. In addition, the Issuer believes that it
has adequate resources to cause its Software to include Year 2000 Capabilities
which currently may not contain them and that the costs of causing its Software
to include Year 2000 Capabilities will not be material to the Issuer's
consolidated financial position, results of operations or cashflows.
SECTION 3.17. CERTAIN EXISTING AGREEMENTS. Except as disclosed in any
document or report filed by the Issuer with the Securities and Exchange
Commission or on SCHEDULE 3.17 hereto, as of the date hereof and as of the
Closing Date: (i) there are and will be no agreements providing for encumbrances
or restrictions that would be grandfathered under Section XI(C) of the
Certificates of Designations, (ii) there is and will be no outstanding
Indebtedness that would be grandfathered under Section XI(A)(a) of the
Certificates of Designations, and (iii) there are and will be no agreements with
any Affiliate (as defined in the Certificates of Designations) or any
stockholder agreements (including registration rights agreements or related
purchase agreements) that would be grandfathered pursuant to Section XI(E) of
the Certificates of Designations.
SECTION 3.18. FINANCIAL INFORMATION. (a) The Issuer has furnished to
each Purchaser the audited consolidated financial statements of the Issuer dated
as of December 31, 1997 and for the year then ended, and the unaudited
consolidated financial statements for the fiscal quarter ended September 30,
1998 and for the month of October 1998, (collectively, the "FINANCIALS"). The
Financials have been prepared in accordance with GAAP applied on a basis
consistent with that of preceding periods and are complete and correct in all
material respects. The Financials fairly represent the Issuer's consolidated
financial position as of the dates of the balance sheets included in the
Financials and its consolidated results of operations for the periods indicated
therein. There are no omissions from the Financials or any other facts or
circumstances not reflected in the Financials which are or may be material
according to GAAP.
(b) Except as and to the extent expressly set forth in the Financials,
or the notes, schedules or exhibits thereto, or as disclosed in the documents
filed by the Issuer with the Securities and Exchange Commission, (i) as of
September 30, 1998 (the "BALANCE SHEET DATE"), neither the Issuer nor its
Subsidiaries had any material liabilities or obligations (whether absolute,
contingent, accrued or otherwise) that would be required to be included on a
balance sheet or in the notes, schedules or exhibits thereto prepared in
10
accordance with GAAP, (ii) since the Balance Sheet Date, the Issuer and its
Subsidiaries have not incurred any such material liabilities or obligations
other than in the normal course of business and (iii) since December 31, 1997,
no event has occurred that has resulted in or is reasonably likely to result in
a Material Adverse Effect.
SECTION 3.19. DISCLOSURE. The Company has provided the Purchasers with
disclosure about its and its Subsidiaries' business that in the aggregate did
not contain an untrue statement of a material fact or omit to state a material
fact necessary to make the statements in such disclosure not misleading.
SECTION 3.20. INVESTMENT COMPANY ACT. The Company is not, and after
giving effect to the offering and sale of the Securities and the application of
the proceeds thereof will not be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
SECTION 3.21. BROKERS. No brokerage or finder's commissions or fees
are payable in connection with the transactions contemplated by this Agreement,
and the Issuer shall defend, indemnify and hold each Purchaser harmless from and
against any liability, loss or expense (including, without limitation,
reasonable attorneys fees) arising in connection with any claim for any such
commissions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, represents and warrants to
the Issuer as follows:
SECTION 4.01. ORGANIZATION. It is duly organized and existing under
the laws of its jurisdiction of organization.
SECTION 4.02. AUTHORITY; NO OTHER ACTION. (a) The execution, delivery
and performance of this Agreement and the Warrant Registration Rights Agreement
are within its powers and have been duly authorized on its part by all requisite
corporate action.
(b) No action by or in respect of, or filing with, any governmental
authority, agency or official is required for the execution, delivery and
performance by such Purchaser of this Agreement or the Warrant Registration
Rights Agreement.
SECTION 4.03. NO CONFLICT. The execution, delivery and performance by
it of this Agreement and the Warrant Registration Rights Agreement and the
consummation of the transactions contemplated hereby and thereby do not and will
not (i) violate its charter, bylaws or similar organizational documents or (ii)
violate any applicable law, rule, regulation, judgment, injunction, order or
decree, which violation would (a) affect the validity of this Agreement or the
Warrant Registration Rights Agreement or (b) individually or in the aggregate
impair the ability of such Purchaser to perform in any material respect the
obligations which it has under this Agreement or the Warrant Registration Rights
Agreement.
SECTION 4.04. BINDING EFFECT. This Agreement and the Warrant
Registration Rights Agreement have been duly authorized, executed and delivered
by it and, except as limited by applicable bankruptcy, insolvency,
11
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
enforcement is sought by proceedings in equity or at law), constitute valid and
binding agreements of such Purchaser enforceable in accordance with their
respective terms.
SECTION 4.05. NO DEFAULTS. It is not in violation of its charter,
bylaws or similar organizational documents or in default under any provision of
applicable law or regulation or of any agreement, judgment, injunction, order,
decree or other instrument binding upon it, which violation or default (i) would
affect the validity of this Agreement or the Warrant Registration Rights
Agreement or (ii) would (individually or in the aggregate) impair the ability of
such Purchaser to perform in any material respect the obligations which it has
under this Agreement or the Warrant Registration Rights Agreement.
SECTION 4.06. PRIVATE PLACEMENT. (a) It understands that (i) the
offering and sale of the Securities is intended to be exempt from registration
under the Securities Act pursuant to Section 4(2) of the Securities Act and (ii)
there is no existing public or other market for any of the Securities and there
can be no assurance that it will be able to sell or dispose of such Securities
purchased by it pursuant to this Agreement.
(b) It is an "Accredited Investor" as such term is defined in
Regulation D.
(c) It has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Securities and it is capable of bearing the economic risks of
such investment, including a complete loss of its investment in the Securities.
(d) It has had access to the management and records of the Issuer and
has been furnished with all the information that it has requested from the
Issuer for determining whether to purchase the Securities and has been given the
opportunity to ask questions of, and receive answers from, management of the
Issuer regarding its business and affairs and concerning the terms and
conditions of the Securities and other related matters.
(e) It understands that the Securities and the shares of Common Stock
issuable upon exercise of the Warrants are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Issuer 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, it represents that it is familiar with SEC
Rules 144 and 144A, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
(f) In addition to the restrictions on transfer imposed by federal or
state securities laws, Lucent hereby covenants and agrees with the Issuer that
it will not transfer, sell, assign or pledge all or any part of the Securities
purchased by it hereunder until the earlier of (i) one year after the date of
any future issuance and sale by the Issuer of any high yield debt securities
yielding gross proceeds to the Issuer of at least $50,000,000 or (ii) August 4,
2000. Notwithstanding the foregoing, the Series F Preferred Stock may be held by
an Affiliate (as defined in the "Certificate of Designations") of Lucent that is
under its control.
12
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.01. CONDITIONS TO THE PURCHASERS' OBLIGATIONS. The
obligation of each Purchaser to purchase the Securities to be purchased by it
hereunder is subject to the satisfaction, on or prior to the Closing Date, of
the following conditions:
(a) each of the representations and warranties of the Issuer
contained herein shall be true and correct in all material respects on
and as of such Closing Date and each of the Purchasers shall have
received a certificate attesting thereto signed by the President or a
Vice President of the Issuer;
(b) there shall not have occurred and there shall not otherwise
exist any condition, event or development having, or likely to have
(in the reasonable judgment of the Purchasers), a Material Adverse
Effect;
(c) the Purchasers shall have received an opinion from Shearman &
Sterling, special counsel to the Issuer, and an opinion from Xxxxxx,
Xxxx & Xxxxxx LLP, counsel to the Issuer, each dated the Closing Date,
in form reasonably satisfactory to the Purchasers;
(d) the Secretary or an Assistant Secretary of the Issuer shall
have delivered to the Purchasers at the Closing Date a Certificate
dated as of the Closing Date certifying: (i) that attached thereto is
a true and complete copy of the bylaws of the Issuer as in effect on
the date of such certification; (ii) that attached thereto is a true
and complete copy of all resolutions adopted by the Board of Directors
of the Issuer authorizing the execution, delivery and performance of
this Agreement, the Warrant Agreement and the Warrant Registration
Rights Agreement, the issuance, sale and delivery of the Securities,
and that all such resolutions are in full force and effect and are all
the resolutions adopted in connection with the transactions
contemplated by this Agreement, the Warrant Agreement and the Warrant
Registration Rights Agreement; (iii) that attached thereto is a true
and complete copy of the Charter as in effect on the date of such
certification; and (iv) to the incumbency and specimen signature of
certain officers of the Issuer;
(e) all corporate and other proceedings to be taken by the Issuer
in connection with the transactions contemplated by this Agreement,
the Warrant Agreement and the Warrant Registration Rights Agreement
and all documents reflecting or evidencing such proceedings shall be
reasonably satisfactory in scope, form and substance to the Purchasers
and their legal counsel, and the Purchasers and their legal counsel
shall have received all such duly executed counterpart originals or
certified or other copies of such documents and instruments as they
may reasonably request.
(f) Newcourt shall have received duly executed and authenticated
certificates representing the Series E & F Unit being purchased by it
pursuant hereto;
(g) Lucent shall have received duly executed and authenticated
certificates representing the Series F Unit being purchased by it
pursuant hereto;
13
(h) the Certificates of Designations shall have been duly filed
with the Secretary of State of Delaware and shall be in full force and
effect; and
(i) the Issuer shall have paid to the Purchasers all fees and
expense reimbursements required to be so paid on or prior to the
Closing Date pursuant to the terms of this Agreement or the fee
letters being executed and delivered concurrently with the execution
and delivery of this Agreement.
SECTION 5.02. CONDITIONS TO ISSUER'S OBLIGATIONS. The obligations of
the Issuer to issue and sell the Securities to the Purchasers pursuant to this
Agreement are subject to the satisfaction, at or prior to the Closing Date, of
the following conditions:
(a) the representations and warranties of each Purchaser
contained herein shall be true and correct in all material respects on
and as of the Closing Date; and
(b) the Issuer shall have simultaneously received from each
Purchaser by wire transfer (of immediately available funds) to an
account designated by the Issuer in writing delivered to each
Purchaser, the consideration referred to in Section 2.01.
ARTICLE VI
COVENANTS
SECTION 6.01. COVENANTS OF THE ISSUER.
(a) ANNOUNCEMENTS. No party or any Affiliate (as defined in the
Certificates of Designations), officer or agent of the parties hereto shall make
any announcement concerning the transactions contemplated hereby without the
other parties' consent, which consent may be withheld in their sole discretion;
PROVIDED, HOWEVER, that any party or such Affiliate, officer or agent may make
any announcements required by applicable law so long as the text of such
announcement shall have been provided to the parties hereto prior to the making
of such announcement. The parties agree to consult with each other with respect
to announcements concerning the transactions contemplated hereby.
(b) SECURITIES. The Issuer hereby covenants to each of the Purchasers,
that from and after the date hereof and so long as any Purchaser owns any
Securities, the Issuer shall:
(i) EXCHANGE OF CERTIFICATES. Upon surrender by the holder of any
certificates representing Securities (or securities issued upon
exchange, conversion or exercise thereof) for exchange or reissuance
at the office of the Issuer, cause to be issued in exchange therefor
new certificates in such denomination or denominations as may be
requested for the same aggregate number of Securities (or securities
issued upon exchange, conversion or exercise thereof) represented by
the certificates so surrendered and registered as such holder may
request, subject to the provisions thereof.
(ii) REPLACEMENT OF CERTIFICATES. Upon receipt by the Issuer of
evidence reasonably satisfactory to it of loss, theft, destruction or
mutilation of any certificate evidencing any of the Securities (or
14
securities issued upon exchange, conversion or exercise thereof), and
(in case of loss, theft or destruction) of indemnity reasonably
satisfactory to the Issuer, and upon the surrender and cancellation of
such certificate, if mutilated, the Issuer shall make and deliver in
lieu of such certificate a new certificate for the number of
Securities (or securities issued upon exchange, conversion or exercise
thereof), as the case may be, evidenced by such lost, stolen,
destroyed or mutilated certificate which remains outstanding. A
Purchaser's (which term does not include any successors or assigns of
the Purchasers) agreement of indemnity shall constitute indemnity
satisfactory to the Issuer for the purposes of this Section 6.01(b)
without the need of any further surety or bond.
(iii) GOVERNMENT AND OTHER APPROVALS. Promptly prepare, submit
and file with all public and governmental authorities, all
applications, notices, registrations, certificates, statements and
such other information, documents and instruments as may be required
pursuant to any federal, state or local law or rule or regulation of
the National Association of Securities Dealers, Inc. or any securities
exchange, in connection with the consummation of the transactions
contemplated by this Agreement, including the effect of any dividends,
exchange or conversion rights, anti-dilution provisions or Board
control contemplated by the terms of the Securities or other
securities of the Issuer which may be acquired by the Purchasers
pursuant to this Agreement. The Issuer shall use its best efforts to
obtain any necessary consents or approvals from any authority in
connection with the consummation of the transactions contemplated by
this Agreement, including the effect of any dividends, exchange or
conversion rights, anti-dilution provisions or Board control
contemplated by the terms of the Securities.
(c) ACCESS AND CONFIDENTIALITY. Prior to the Closing Date, the Issuer
shall (and shall cause each of its Subsidiaries to) afford the Purchasers and
their respective representatives reasonable access during normal business hours
to its properties, books, contracts and records and personnel and advisors and
the Issuer shall (and shall cause each of the Subsidiaries to) furnish promptly
to the Purchasers all information concerning its business properties and
personnel as the Purchasers or their respective representatives may reasonably
request, provided that any review will be conducted in a way that will not
interfere unreasonably with the conduct of the Issuer's business.
(d) REPORTS TO HOLDERS. At all times, upon the request of any
Purchaser so long as the Purchaser owns any Securities, the Company shall supply
to such Purchaser such financial and other information as such Purchaser may
reasonably determine to be necessary in order to permit compliance with Rule
144A in connection with a resale or a proposed resale of any of the Securities.
(e) RESERVATION OF SERIES E PREFERRED STOCK. Issuer shall use its
reasonable best efforts with one year after the Closing Date to amend its
Charter to increase the number of authorized shares of the Company's preferred
stock and amend the Series E Certificate of Designations in order to provide for
the reservation of, and the Issuer hereby agrees to reverse, a sufficient number
of authorized but unissued shares of Series E Preferred Stock (i) to be issued
upon conversion of the Series F Preferred Stock and (ii) to provide for the
payment of all dividends that may accrue on the shares of Series E Preferred
Stock then outstanding in additional shares of Series E Preferred Stock.
15
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopier or similar
writing) and shall be given to such party by certified first class mail at its
address with a return receipt requested, by Federal Express or similar overnight
mail service with signature required for receipt, or by telecopy at the
telecopier number set forth below or such other address or telecopier number as
such party may hereinafter specify in writing for the purpose to the party
giving such notice. Each such notice, request or other communication shall be
effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section and the appropriate electronic
confirmation is received and a copy of such notice is sent by overnight mail
service or (ii) if given by mail or overnight courier, 72 hours after such
communication is deposited in the mails with first class postage prepaid or
given to overnight courier service, addressed as aforesaid.
Issuer: KMC Telecom Holdings, Inc.
0000 Xxxxx 000, Xxxxx 000
Xxxxxxxxxx XX 00000
Attn: Xxxxxxx Xxxxxxxxx
President, Chief Executive Officer
Fax: (000) 000-0000
Purchasers: Newcourt Commercial Finance Corporation
c/o Newcourt Capital USA, Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Vice President - Credit
Fax: (000) 000-0000
with a copy to:
Newcourt Commercial Finance Corporation
c/o Newcourt Capital USA, Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Vice President - Legal
Fax: (000) 000-0000
Lucent Technologies Inc.
000 Xxxx Xxxxxx Xx.
Xxxx X0X 00
Xxxxxx, XX 00000
Attn:
Fax:
SECTION 7.02. NO WAIVERS. No failure or delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 7.03. SUCCESSORS AND ASSIGNS. Subject to Section ss. 4.06(f),
each Purchaser may assign its rights hereunder without the consent of the Issuer
16
to any transferee of any of the Securities. Otherwise, no party to this
Agreement may assign any of its rights or obligations hereunder to any person
except with the prior written consent of the other parties hereto (which consent
may not be unreasonably withheld). This Agreement shall be binding upon the
Issuer and each Purchaser and their respective successors and assigns.
SECTION 7.04. NEW YORK LAW. This Agreement shall be governed by the
laws of the State of New York.
SECTION 7.05. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in any number of counterparts each of which shall be an original with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other hereto.
SECTION 7.06. ENTIRE AGREEMENT. This Agreement, the Warrant Agreement,
the Warrant Registration Rights Agreement, the fee letters and the other side
letters being executed and delivered concurrently with the execution and
delivery of this Agreement, and the Certificates of Designations constitute the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein, and there are no restrictions,
promises, representations, warranties, covenants, or undertakings with respect
to the subject matter hereof, other than those expressly set forth or referred
to herein or therein. This Agreement and the documents referred to in the
preceding sentence supersede all prior agreements and understandings between the
parties hereto with respect to the subject matter hereof.
SECTION 7.07. EXPENSES. Whether or not the transactions contemplated
in this Agreement shall be consummated, the Issuer shall pay each Purchaser's
reasonable out-of-pocket expenses on demand arising in connection with the
execution and delivery of this Agreement, the Warrant Agreement, the Warrant
Registration Rights Agreement and the Certificates of Designation (collectively,
the "Transaction Documents") and the purchase of the Securities, including,
without limitation: (i) the reasonable fees and expenses of counsel to the
Purchasers in connection with the preparation and negotiation of the Transaction
Documents and the consummation of the transactions contemplated therein, and
(ii) costs and expenses, including reasonable attorneys fees and expenses and
the fees and expenses of any other special or financial advisors, incurred in
connection with any bankruptcy or insolvency of the Issuer or in connection with
any workout or restructuring of any of the transactions contemplated in the
Transaction Documents. The obligations of the Issuer under this Section 7.07
shall survive any transfer of any of the Securities by a Purchaser or any
subsequent holder thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
KMC Telecom Holdings, Inc
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President, Chief Financial
Officer
17
Lucent Technologies Inc.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name:
Title:
Newcourt Commercial Finance Corporation
By: /s/ Xxxx X. Xxxxxx, III
------------------------------------------
Name:
Title:
18
SECURITIES PURCHASE AGREEMENT
dated as of
February 4, 1999
among
KMC TELECOM HOLDINGS, INC
and
LUCENT TECHNOLOGIES INC.
and
NEWCOURT COMMERCIAL FINANCE CORPORATION
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.......................................1
ARTICLE II
PURCHASE AND SALE OF SECURITIES
SECTION 2.01. Commitment to Purchase............................4
SECTION 2.02. The Closing.......................................4
SECTION 2.03. Use of Proceeds...................................5
SECTION 2.04. Allocation of Consideration.......................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
SECTION 3.01. Organization, Standing, etc.......................5
SECTION 3.02. Capitalization....................................6
SECTION 3.03. Authorization; Non-Contravention..................7
SECTION 3.04. Binding Effect....................................8
SECTION 3.05. Governmental Regulation...........................8
SECTION 3.06. Solicitation......................................9
SECTION 3.07. Authorization to Do Business......................9
SECTION 3.08. Compliance with Laws..............................9
SECTION 3.09. Litigation........................................9
SECTION 3.10. Properties.......................................10
SECTION 3.11. Tax Matters......................................10
SECTION 3.12. Patents and Trademarks...........................10
SECTION 3.13. Labor Matters....................................10
SECTION 3.14. Environmental Matters............................11
SECTION 3.15. Insurance........................................11
SECTION 3.16. Year 2000........................................11
SECTION 3.17. Certain Existing Agreements......................11
SECTION 3.18. Financial Information............................12
SECTION 3.19. Disclosure.......................................12
SECTION 3.20. Investment Company Act...........................12
SECTION 3.21. Brokers..........................................12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
SECTION 4.01. Organization.....................................13
SECTION 4.02. Authority; No Other Action.......................13
SECTION 4.03. No Conflict......................................13
SECTION 4.04. Binding Effect...................................13
SECTION 4.05. No Defaults......................................13
SECTION 4.06. Private Placement................................14
i
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.01. Conditions to the Purchasers' Obligations........14
SECTION 5.02. Conditions to Issuer's Obligations...............16
ARTICLE VI
COVENANTS
SECTION 6.01. Covenants of the Issuer..........................16
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices..........................................18
SECTION 7.02. No Waivers.......................................19
SECTION 7.03. Successors and Assigns...........................19
SECTION 7.04. New York Law.....................................19
SECTION 7.05. Counterparts; Effectiveness......................19
SECTION 7.06. Entire Agreement.................................19
SECTION 7.07. Expenses.........................................19
EXHIBITS
Exhibit A - Series E Certificate of Designations
Exhibit B - Series F Certificate of Designations
Exhibit C - Form of Opinion of Counsel to Issuer
SCHEDULES
Schedule 3.01 -
Schedule 3.02 -
Schedule 3.08 -
Schedule 3.09 -
Schedule 3.10 -
Schedule 3.14 -
Schedule 3.17 -
ii
EXHIBIT A
Series E Certificate of Designations
EXHIBIT B
Series F Certificate of Designations
EXHIBIT C
Form of Opinion of Counsel to Issuer
SCHEDULE 3.01
SCHEDULE 3.02
SCHEDULE 3.08
SCHEDULE 3.09
SCHEDULE 3.10
SCHEDULE 3.14
SCHEDULE 3.17
