EXHIBIT A
NEON COMMUNICATIONS, Inc.
SUBORDINATED CONVERTIBLE NOTE PURCHASE AGREEMENT
This SUBORDINATED CONVERTIBLE nOTE Purchase Agreement (the "Agreement") is
entered into as of August 10, 2001, between NEON COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), and EXELON ENTERPRISES MANAGEMENT, INC., a
Pennsylvania corporation (the "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of up to a
maximum of $11,500,000 in aggregate principal amount of an 18 % Subordinated
Convertible Note due 2008 (the "Note"), which Note is convertible into shares
(the "Conversion Shares") of the Company's common stock, par value $.01 per
share (the "Common Stock") in accordance with the terms of the Note;
WHEREAS, Purchaser desires to purchase the Note on the terms and conditions
set forth herein and subject to the terms and conditions of the Note; and
WHEREAS, the Company desires to issue and sell the Note to Purchaser on the
terms and conditions set forth herein and as set forth in the Note.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
1.1 "Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
1.2 "Agreement" shall have the meaning set forth in the Preamble.
1.3 "Amended and Restated Registration Rights Agreement" means that
certain Amended and Restated Registration Rights Agreement dated as of August
10, 2001 by and among the Company, Purchaser and CEC, amending and restating the
Registration Rights Agreement dated as of September 14, 2000 by and among the
Company, Purchaser and CEC, substantially in the form attached hereto as Exhibit
B.
1.4 "Amendment No. 1 to Stockholders Agreement" means that certain
Amendment No. 1 to Stockholders Agreement dated as of August 10, 2001 by and
among Xxxx 0, XXX, Xxxxxxxxx and the Company, amending the Stockholders
Agreement dated as of September 14, 2000 by and among Mode 1, CEC, Purchaser and
Company, substantially in the form attached hereto as Exhibit C.
1.5 "Amendment No. 3 to Subscription Agreement" means that certain
Amendment No. 3 to Subscription Agreement dated as of August 10, 2001 by and
among Purchaser, the Company and Northeast Optic Network, Inc. ("Northeast
Optic"), amending the Subscription Agreement dated as of November 23, 1999 by
and among Purchaser, the Company and Northeast Optic, as amended on May 1, 2000
and September 6, 2000, respectively, substantially in the form attached hereto
as Exhibit D.
1.6 "By-laws" means the by-laws of the Company as in effect on the
Closing Date.
1.7 "CEC" means Consolidated Edison Communications, Inc., a New York
corporation.
1.8 "Certificate of Incorporation" means the amended and restated
certificate of incorporation of the Company as in effect on the Closing Date.
1.9 "Closing" shall have the meaning set forth in Section 2.3.
1.10 "Closing Date" shall have the meaning set forth in Section 2.3.
1.11 "Common Stock" shall have the meaning set forth in the Recitals.
1.12 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
1.13 "GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America, applied on a
consistent basis both as to classification of items and amounts.
1.14 "Governmental Authority" means any court, administrative or
regulatory agency or commission or other governmental entity or instrumentality,
domestic, foreign or supranational or any department thereof.
1.15 "Indebtedness" with respect to any Person means, without
duplication: (i) all indebtedness (including principal, interest, fees and
charges) of such Person for borrowed money or for the deferred purchase price of
property or services other than trade payables included in current liabilities
in accordance with GAAP and incurred in respect of Property or services
purchased in the ordinary course of business and which obligation is payable on
terms no longer than 180 days past the invoice date, (ii) the maximum amount
available to be drawn under all letters of credit issued for the account of such
Person and all unpaid drawings in respect of such letters of credit, and (iii)
all Indebtedness of the types described in clause (i) or (ii) of this definition
secured by any lien on any property owned by such Person, whether or not such
Indebtedness has been assumed by such Person.
1.16 "Indenture" means the Indenture dated as of August 5, 1998,
between the Company and U.S. Bank Trust National Association.
1.17 "Material Adverse Effect" means any materially adverse effect
upon the business operation, assets, liabilities, financial condition, results
of operations or business prospects of the Company or any of its Subsidiaries,
or upon the ability of the Company to operate its current business or to perform
the Transaction Documents, resulting from any act, omission, situation, status,
event or undertaking, either singly or taken together.
1.18 "Mode 1" means Mode 1 Communications, Inc., a Connecticut
corporation.
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1.19 "Nasdaq" means the National Association of Securities Dealers,
Inc. Automated Quotation System.
1.20 "NEON Opinion of Counsel" shall mean the opinion of Paul,
Hastings, Xxxxxxxx & Xxxxxx LLP, counsel to NEON, dated as of the Closing Date,
substantially in the form set forth in Exhibit G.
1.21 "NEON SEC Documents" means the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2000 as amended by the form 10-K/A
filed on April 30, 2001; the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 2001; and the Company's Proxy Statement filed on
July 5, 2001.
1.22 "Note" shall have the meaning set forth in the Recitals.
1.23 "Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization, any
other entity or Governmental Authority.
1.24 "Proprietary Information" shall mean any and all confidential
information or technical or business information furnished, in whatever form or
medium, or disclosed by the Company to Purchaser including, but not limited to,
Capital Expenditure proposals, annual Budget and Capital Expenditure plans,
marketing plans and other financial or business data.
1.25 "Purchase Price" shall have the meaning set forth in Section 2.2.
1.26 "Purchaser" shall have the meaning set forth in the Preamble and
shall include any assignee of Purchaser which is an Affiliate of Purchaser or
any assignee permitted under Section 7.5 hereof.
1.27 "Registration Rights Agreement" means the Registration Rights
Agreement between Purchaser and the Company dated August 10, 2001 substantially
in the form attached hereto as Exhibit E.
1.28 "SEC" means the Securities and Exchange Commission.
1.29 "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder.
1.30 "Subsidiary" shall mean (i) any corporation of which fifty
percent (50%) or more of the voting stock, or any partnership of which fifty
percent (50%) or more of the outstanding partnership interests, is at any time
owned by the Company, or by one or more Subsidiaries of the Company, or by the
Company and one or more Subsidiaries of the Company, and (ii) any other entity
which is controlled or capable of being controlled by the Company or by one or
more Subsidiaries of the Company or by the Company and one or more Subsidiaries
of the Company.
1.31 "Termination Agreement" means that certain Termination Agreement
between the Company, NEON Optica, Inc., PECO Energy Company and Purchaser dated
as of August 10, 2001, which terminates the System Agreement between the
Company, NEON Optica, Inc., PECO Energy Company and Purchaser dated as of
September 14, 2000, substantially in the form attached hereto as Exhibit F.
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1.32 "Transaction Documents" means this Agreement, the Note, Amended
and Restated Registration Rights Agreement, Amendment No. 1 to Stockholders
Agreement, Amendment No. 3 to Subscription Agreement, Termination Agreement and
the Registration Rights Agreement.
2. AGREEMENT TO SELL AND PURCHASE; CLOSING.
2.1 Authorization of Note. On or prior to the Closing Date, the
Company shall have authorized the (i) sale and issuance to Purchaser of the
Note, and (ii) issuance of the Conversion Shares. The Note shall be
substantially in the form attached hereto as Exhibit A. As used in this
Agreement, "Note" shall include the Note issued pursuant to this Agreement,
together with any Note issued in exchange therefor or replacement thereof and
any Note which may be issued in payment of interest in accordance with the terms
thereof.
2.2 Purchase and Sale of Note. Subject to the terms and conditions
hereof, in reliance upon the representations of Purchaser set forth in Section
4, at the Closing, the Company hereby agrees to execute, sell and deliver to
Purchaser and, in reliance upon the representations of the Company set forth in
Section 3, Purchaser agrees to purchase from the Company, a Note in the
aggregate principal amount of $11,500,000 (the "Purchase Price"), against
receipt of funds by wire transfer to an account or accounts designated by the
Company prior to the Closing as payment in full of the Purchase Price of the
Note.
2.3 Closing. The closing of the purchase and sale of the Note under
this Agreement (the "Closing") shall take place on August 10, 2001, at the
offices of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, at 000 Xxxx Xxxxxx, Xxx Xxxx,
XX 00000 or at such other time or place as the Company and Purchaser may
mutually agree upon (which time and place are designated as the "Closing Date").
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on a Schedule of Exceptions delivered by the
Company to Purchaser at the Closing (as attached as Schedule 1 hereto), the
Company hereby represents and warrants to Purchaser as of the date of the
Closing Date as follows:
3.1 Organization and Qualification. The Company 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 to own, lease
and operate its properties and to carry on its business as is now being
conducted. The Company is duly qualified or licensed and in good standing to do
business in each jurisdiction where the conduct of its business or the
ownership, leasing or operation of its respective properties require such
qualification or licensing, except where the failure to be so qualified or
licensed and in good standing, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
3.2 Authority. The Company has all necessary corporate power and
authority to execute and deliver the Transaction Documents and to consummate the
transactions contemplated by the Transaction Documents. The execution and
delivery by the Company of the Transaction Documents and the consummation by the
Company of the transactions contemplated by the Transaction Documents have been
duly and validly authorized by the Board of Directors of the Company or by a
committee thereof to whom such authority has been delegated and no other
corporate proceedings on the part of the Company are necessary to authorize the
Transaction Documents or the consummation of the transactions contemplated by
the Transaction Documents. The Transaction Documents have been duly and validly
executed and delivered by the Company and, assuming the Transaction Documents
constitute valid and binding agreements of each other party hereto and thereto,
constitute valid and binding agreements of the Company, enforceable against the
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Company in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights and (ii) general
principles of equity that restrict the availability of equitable remedies.
3.3 Consents and Approvals; No Violation.
(a) No material declaration, filing or registration with, or
notice to, or authorization, consent or approval of any Governmental Authority
or any consent from a third party, including any bank, alliance partner, lender,
investor or other Person, is necessary for the consummation by the Company of
the transactions contemplated by the Transaction Documents other than those
filings or consents which have already been made or received.
(b) Neither the execution and delivery of the Transaction
Documents by the Company nor the sale by the Company of the Note or the issuance
of the Conversion Shares upon conversion of the Note pursuant to the terms of
this Agreement and the Note will (i) conflict with or result in any breach of
any provision of the Certificate of Incorporation or By-laws of the Company,
(ii) result in a default (or give rise to any right of termination, cancellation
or acceleration) or constitute an event which, with or without the giving of
notice, lapse of time, or both, would constitute a default under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which the Company is a
party or by which the Company or any of its respective properties is or may be
bound or (iii) except for the filing with Nasdaq of the Listing Application for
Additional Shares, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of its respective properties, except
in the case of (ii) and (iii), any such conflict, event of default or violation
which would not be reasonably likely to have a Material Adverse Effect.
(c) Neither the issuance of the Note, any payment of interest or
principal on the Note, nor any conversion of all or a portion of the Note into
Conversion Shares nor any setoff of the obligations of the Company due under the
Note against any liability owed by Purchaser to the Company under the
Termination Agreement will result in a default under the Indenture.
(d) Neither the issuance of the Note nor the conversion of the
Note into Conversion Shares will trigger any anti-dilution provision contained
in any existing securities or contracts or any other instrument of the Company.
3.4 NEON SEC Documents.
(a) The capitalization of the Company, as well as its annual
balance sheets, statements of income and statements of cash flows, are disclosed
in all material respects in the NEON SEC Documents. The filed NEON SEC
Documents, at the time filed with the SEC, conformed in all material respects to
the then applicable requirements of the Exchange Act. The NEON SEC Documents do
not contain any untrue statements of a material fact or omit to state a material
fact required to be stated therein necessary in order to make the statements
therein not misleading in light of the circumstances in which they were made.
(b) There has been no change to the business, assets or finances
of the Company since December 31, 2000, which has not been disclosed in the NEON
SEC Documents which would be reasonably expected to have a Material Adverse
Effect.
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3.5 Legal Proceedings. Except as set forth on Schedule 1 hereto, there
are no claims, actions, proceedings or investigations pending or, to the
knowledge of the Company, threatened against or relating to the Company which
would, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect.
3.6 Conversion Shares. Upon conversion of the Note, the Conversion
Shares, when issued and delivered to Purchaser in accordance with the terms of
the Note, will be duly and validly issued, fully paid and nonassessable, and
free and clear of any preemptive rights, liens and encumbrances.
3.7 Offering Valid. Assuming the accuracy of the representations and
warranties of Purchaser contained in Section 4 hereof, the offer, sale and
issuance of the Note and the Conversion Shares will be exempt from the
registration requirements of the Securities Act and will have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable state
securities laws. Neither the Company nor any agent on its behalf has solicited
or will solicit any offers to sell or has offered to sell or will offer to sell
all or any part of the Note to any person or persons so as to bring the sale of
such Note by the Company within the registration provisions of the Securities
Act or any state securities laws.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 Requisite Power and Authority. Purchaser has all necessary power
and authority under all applicable provisions of law to execute and deliver the
Transaction Documents and to consummate the transactions contemplated by the
Transaction Documents. All actions on Purchaser's part required for the lawful
execution and delivery of the Transaction Documents have been or will be
effectively taken prior to the Closing. No consent or approval is needed from
the SEC under the Public Utility Holding Company Act of 1935 in order for
Purchaser to purchase and hold the Note or the Conversion Shares. Upon their
execution and delivery, the Transaction Documents will be valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their
terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights and (b) general principles of equity that
restrict the availability of equitable remedies.
4.2 Investment Representations. Purchaser understands that neither the
Note nor the Conversion Shares have been registered under the Securities Act.
Purchaser also understands that the Note and the Conversion Shares are being
offered and sold pursuant to an exemption from registration contained in the
Securities Act based in part upon Purchaser's representations contained in the
Agreement. Purchaser hereby represents and warrants as follows:
(a) Purchaser Bears Economic Risk. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Note (or the Conversion Shares) is
registered pursuant to the Securities Act, or an exemption from registration is
available. Purchaser understands that, except for complying with its obligations
under the Registration Rights Agreement, the Company has no present intention of
registering the Note or the Conversion Shares. Purchaser also understands that
there is no assurance that any exemption from registration under the Securities
Act will be available and that, even if available, such exemption may not allow
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Purchaser to transfer all or any portion of the Note or the Conversion Shares
under the circumstances, in the amounts or at the times Purchaser might propose.
(b) Acquisition Solely for Investment. Purchaser is acquiring the
Note and the Conversion Shares for Purchaser's own account for investment only,
and not with a view to, or for sale in connection with, any distribution of such
shares in violation of the Securities Act or any rule or regulation under the
Securities Act.
(c) Purchaser Can Protect Its Interest. Purchaser represents that
by reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated by the Transaction Documents. Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated by the Transaction Documents.
(d) Accredited Investor. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) Company Information. Purchaser has received and read the
financial statements of the Company in the NEON SEC Documents and has had an
opportunity to discuss the Company's business, management and financial affairs
with directors, officers and management of the Company and has had access to,
and the opportunity to review, the Company's operations and facilities.
Purchaser has also had the opportunity to ask questions of and receive answers
from, the Company and its management regarding the terms and conditions of this
investment.
(f) Rule 144. Purchaser acknowledges and agrees that the Note,
and, if issued, the Conversion Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act as in effect from
time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the availability of certain current public information about the
Company, the resale occurring following the required holding period under Rule
144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(g) Residence. The office or offices of Purchaser in which its
investment decision was made is located at the address or addresses of Purchaser
set forth in Section 7.9 hereof.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Purchaser's Obligations at the Closing. Purchaser's
obligations to purchase the Note at the Closing are subject to the satisfaction,
at or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties True; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing Date
with the same force and effect as if they had been made as of the Closing Date,
and the Company shall have performed all obligations and conditions herein
required to be performed or observed by it on or prior to the Closing.
(b) Officer's Certificate. The Company shall have delivered to
Purchaser a Certificate, executed by the President of the Company, dated the
Closing Date, to the effect that the conditions specified in subsection (a) of
this Section 5.1 have been satisfied.
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(c) Registration Rights Agreement. Each of Purchaser and the
Company shall have executed and delivered the Registration Rights Agreement.
(d) Note. The Note shall have been executed and delivered by the
Company to Purchaser.
(e) Waiver. The Company shall have obtained from CEC a waiver of
its right of first refusal under Section 5.05 of the Subscription Agreement
between the Company and CEC dated as of November 23, 1999, and as amended on May
1, 2000 and September 6, 2000.
(f) Amended and Restated Registration Rights Agreement. Each of
CEC, the Company and Purchaser shall have executed and delivered the Amended and
Restated Registration Rights Agreement.
(g) Amendment No. 1 to Stockholders' Agreement. Each of Mode 1,
CEC, Purchaser and the Company shall have executed and delivered Amendment No. 1
to Stockholders' Agreement.
(h) Amendment No. 3 to Subscription Agreement. Each of Northeast
Optic Network, Inc., the Company and Purchaser shall have executed and delivered
Amendment No. 3 to Subscription Agreement.
(i) Termination Agreement. Each of Purchaser, the Company, PECO
Energy Company and NEON Optica, Inc. shall have executed and delivered the
Termination Agreement.
(j) NEON Opinion of Counsel. Purchaser shall have received the
NEON Opinion of Counsel.
(k) Stockholder Approval. If required by law, Nasdaq rules or
otherwise, the Company shall have obtained approval of the issuance of the Notes
and the Conversion Shares by the Company's stockholders holding a majority of
the outstanding shares of Common Stock entitled to vote in person or by proxy.
5.2 Conditions to Obligations of the Company. The Company's obligation
to issue and sell the Note at Closing is subject to the satisfaction, on or
prior to Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties made by Purchaser in Section 4 hereof shall be true and correct in
all material respects at the Closing Date.
(b) Performance of Obligations. Purchaser shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by Purchaser on or before the Closing.
(c) Purchase Price. Purchaser shall have delivered to the Company
an amount equal to the Purchase Price.
(d) Registration Rights Agreement. Each of Purchaser and the
Company shall have executed and delivered the Registration Rights Agreement.
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(e) Amended and Restated Registration Rights Agreement. Each of
Purchaser, the Company and CEC shall have executed and delivered the Amended and
Restated Registration Rights Agreement.
(f) Termination Agreement. Each of Purchaser, the Company, PECO
Energy Company and NEON Optica, Inc. shall have executed and delivered the
Termination Agreement.
(g) Fairness Opinion. The Company shall have received an opinion
from a nationally recognized investment banking firm that the transactions
contemplated by the Transaction Documents are fair, from a financial standpoint,
to the Company and its Subsidiaries.
(h) Stockholder Approval. If required by law, Nasdaq rules or
otherwise, the Company shall have obtained approval of the issuance of the Notes
and the Conversion Shares by the Company's stockholders holding a majority of
the outstanding shares of Common Stock entitled to vote in person or by proxy.
6. COVENANTS OF THE COMPANY.
So long as the aggregate principal amount of the Note outstanding is
greater than or equal to one million dollars ($1,000,000), the Company shall
observe and perform the following covenant:
6.1 Incurrence of Indebtedness. The Company shall not incur, directly
or indirectly, any Indebtedness which is equal or senior in ranking to the Note
without the written consent of Purchaser.
7. MISCELLANEOUS.
7.1 Stockholder Approval. At any meeting of the stockholders of the
Company at which approval of the issuance of the Note has been submitted for
stockholder action, Purchaser hereby agrees to vote all of the shares of Common
Stock it is entitled to vote in person or by proxy at such meeting authorizing
the issuance of the Note.
7.2 Termination. This Agreement may be terminated by written notice by
one party to the other if the Closing Date has not occurred (other than through
the failure of the party seeking to terminate this Agreement to comply fully
with its obligations under this Agreement) on or before September 1, 2001, or
such later date as the parties hereto may agree in writing. If this Agreement is
terminated pursuant to this Section 7.2, all further obligations of the parties
under this Agreement will terminate, except that the obligations in Section 7.3
hereof will survive.
7.3 Proprietary Information.
(a) Protection of Proprietary Information. The Company and
Purchaser hereby agree that if the Company provides (or prior to the execution
of this Agreement, has provided) any Proprietary Information to Purchaser, such
Proprietary Information shall be held in confidence, and Purchaser shall afford
such Proprietary Information the same care and protection as it affords
generally to its own confidential and proprietary information (which in any case
shall be not less than reasonable care) in order to avoid disclosure to or
unauthorized use by any third party.
(b) Ownership of Proprietary Information. All Proprietary
Information, unless otherwise specified in writing, shall remain the property of
the Company, shall be used by Purchaser only for the intended purpose, and such
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written Proprietary Information, including all copies thereof, shall be returned
to the Company or destroyed after Purchaser's need for it has expired or upon
the request of the Company. Proprietary Information shall not be reproduced
except to the extent necessary to accomplish the purpose and intent of this
Agreement, or as otherwise may be permitted in writing by the Company.
(c) Exceptions. The foregoing provisions of this Section 7.3
shall not apply to any Proprietary Information which (i) becomes publicly
available other than through Purchaser; (ii) is required to be disclosed by a
governmental or judicial law, order, rule or regulation; (iii) is developed
independently by Purchaser; (iv) becomes available to Purchaser without
restriction from a third party; or (v) becomes relevant to the settlement of any
dispute or enforcement of either party's rights under this Agreement in
accordance with the provisions of this Agreement, in which case appropriate
protective measures shall be taken to preserve the confidentiality of such
Proprietary Information as fully as possible within the confines of such
settlement or enforcement process. If any Proprietary Information is required to
be disclosed pursuant to the foregoing clause (ii), Purchaser shall promptly
inform the Company in writing of the requirements of such disclosure.
(d) Permitted Disclosures. Notwithstanding the foregoing,
Purchaser may disclose Proprietary Information to its employees, agents, and
legal, financial, and accounting advisors and providers (including its lenders
and other financiers) to the extent necessary or appropriate in connection with
the negotiation and/or performance of this Agreement or its obtaining of
financing, provided; that each such party is notified of the confidential and
proprietary nature of such Proprietary Information and is subject to or agrees
to be bound by similar restrictions on its use and disclosure of Proprietary
Information.
7.4 Governing Law. This Agreement shall be governed in all respects by
the laws of the Commonwealth of Pennsylvania, regardless of conflicts of laws
principles.
7.5 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
Person who shall be a holder of the Note from time to time. The Note and the
rights of the holder of the Note under this Agreement are fully assignable: (a)
to Affiliates of the holder without the prior approval of the Company; and (b)
to third parties without the prior approval of the Company.
7.6 Entire Agreement. This Agreement, the Exhibits and Schedules
hereto and the other documents delivered pursuant hereto constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and no party shall be liable or bound to any other in any manner
by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
7.7 Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
7.8 Amendment and Waiver. This Agreement may be amended or modified
only upon the written consent of the Company and the holder of the Note. The
obligations of the Company and the rights of the holder of the Note under the
Agreement may be waived only with the written consent of the holder of the Note.
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7.9 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given (as of the time of delivery or, in the case
of a telecopied communication, of confirmation and accompanied by another manner
of giving notice provided in this Section 7.9) if delivered personally,
telecopied (which is confirmed) or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
if to the Company, to:
NEON Communications, Inc.
0000 Xxxx Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, General Counsel
Facsimile Number: (000) 000-0000
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
if to Purchaser, to:
Exelon Enterprises Management, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Exelon Business Services Legal
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
7.10 Expenses. Each party shall pay the costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement.
7.11 Titles and Subtitles. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
7.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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7.13 Pronouns. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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In Witness Whereof, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY: PURCHASER:
NEON COMMUNICATIONS, INC. EXELON ENTERPRISES MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxx
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Title: Chief Executive Officer Title: President
-------------------------------- ------------------------------
Address: 0000 Xxxx Xxxx Xxxxx Address: 0000 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
SUBORDINATED CONVERTIBLE NOTE PURCHASE AGREEMENT
SIGNATURE PAGE
SCHEDULE 1
SCHEDULE OF EXCEPTIONS
Section 3.3
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Listing Application for Additional Shares to be filed with the NASD, Inc.
Waiver of Right of First Refusal by CEC under Section 5.05 of the Subscription
Agreement between the Company and CEC dated as of November 23, 1999, and as
amended on May 1, 2000 and September 5, 2000.
Section 3.5
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On May 7, 2001, Neon Optica, Inc. was named as defendant in a case entitled
Fiber Optek Interconnect Corp. v. Neon Optica, Inc. f/k/a Northeast Optic
Network, Inc. The Complaint, which was filed in New York State Supreme Court in
Westchester County on May 7, 2001, sought damages of $24 million related to its
construction contracts with the defendants. During settlement discussions
between Fiber Optek and the Company, Fiber Optek agreed to the dismissal of the
lawsuit without prejudice. On May 16, 2001, Fiber Optek filed a "Voluntary
Discontinuance Without Prejudice" and on June 8, 2001, the Company filed a
Notice of Removal of the case to the U.S. District Court for the Southern
District of New York. On July 30 ,2001, the Company moved to dismiss the action
based on Fiber Optek's May 16, 2001 "Voluntary Discontinuance Without
Prejudice". To date, Fiber Optek has filed mechanics' liens in White Plains,
Rye, New Xxxxxxxx, and Harrison, New York upon real property of the Company in
such locations, including optical cable networks and license agreements. While
it is not possible to predict the ultimate outcome of the Company's negotiations
with Fiber Optek, the Company believes that this matter will not have a Material
Adverse Effect.
On July 18, 2001, the Company's agent was served by a complaint filed by Xxxxxxx
X. and Xxxx Xxxx of East Haddam, Connecticut, in the Middlesex District of the
Connecticut Superior Court, alleging trespass and damage to their property in
the Company's installation and use of a fiber optic cable on an easement owned
by Northeast Utilities traversing the Pach property. The Company is required to
answer the complaint on August 14, 2001 and expects to contest the claim. While
it is not possible to predict the ultimate outcome of this claim, the Company
believes that this matter will not have a Material Adverse Effect.
EXHIBIT A
SUBORDINATED CONVERTIBLE NOTE
EXHIBIT B
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
EXHIBIT C
AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT
EXHIBIT D
AMENDMENT NO. 3 TO SUBSCRIPTION AGREEMENT
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
EXHIBIT F
TERMINATION AGREEMENT
EXHIBIT G
NEON OPINION OF COUNSEL
