1
EXHIBIT 99.(A)
EXHIBIT (A)
SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
PROVIDENCE EQUITY PARTNERS III L.P.
PROVIDENCE EQUITY OPERATING PARTNERS III L.P.
J K & B CAPITAL III L.P.
AND
MGC COMMUNICATIONS, INC.
DATED AS OF NOVEMBER 19, 1999
2
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Certificate of Designation
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Securityholders' Agreement
Exhibit D Form of Opinion of Counsel to the Company
Exhibit E Form of Opinion of Regulatory Counsel to the Company
Exhibit F Amendment to Certificate of Designation for Series B Preferred
Schedule 2.1: List of Purchasers
Schedule 3.4(a): Capitalization
Schedule 3.4(b): Options, Etc.
Schedule 3.4(c): Registration Rights
Schedule 3.5: Subsidiaries; Other Interests
Schedule 3.6: September Balance Sheet
Schedule 3.9 Title to Assets
Schedule 3.10 Necessary Property
Schedule 3.11 Compliance with Law
Schedule 3.12 No Material Adverse Change
Schedule 3.13 No Brokers
Schedule 3.14 Network
Schedule 3.15 Customers and Suppliers
Schedule 3.16: Year 2000 Compliance Plan
- i -
3
SECURITIES PURCHASE AGREEMENT
MGC COMMUNICATIONS, INC.
0000 Xxxxx Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
As of November 19, 1999
Providence Equity Partners III L.P.
000 Xxxxx Xxxxxx
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Providence Equity Operating Partners III L.P.
000 Xxxxx Xxxxxx
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
JK&B Capital III L.P.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
The undersigned, MGC Communications, Inc., a Nevada corporation (the
"Company"), hereby agrees with you as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in this Article I:
Business Day. The term "Business Day" shall mean any day other than
Saturday, Sunday, a federal holiday or other day on which commercial banks in
the State of Rhode Island or Las Vegas, Nevada are required or permitted to
close by law.
Charter. The term "Charter" means the certificate or articles of
incorporation, by-laws, statute, constitution, joint venture, certificate of
limited partnership, partnership agreement, articles of organization, limited
liability company operating agreement or other organizational
4
document of any Person other than an individual, each as from time to time
amended or modified.
Closing Date. The term "Closing Date" shall have the meaning specified
in Section 2.2 or such other date as the Company and the Purchasers may agree
upon.
Common Stock. The term "Common Stock" shall mean the Common Stock,
$.001 par value, of the Company.
Company. The term "Company" shall mean MGC Communications, Inc., a
Nevada corporation.
Contract. The term "Contract" means any contract, plan, lease,
commitment, indenture or other agreement.
Current Financial Statements. The term "Current Financial Statements"
shall have the meaning specified in Section 3.6.
Equity Securities. The term "Equity Securities" means all shares of
capital stock of the Company, including (i) all classes of shares of capital
stock, voting and non-voting (including, without limitation, the Purchased
Securities), (ii) any warrants, options or other rights to subscribe for or to
acquire, directly or indirectly, whether pursuant to any division or split of
any class of shares of capital stock of the Company or in connection with a
combination, exchange, reorganization, recapitalization, reclassification,
merger, consolidation or similar business combination transaction involving the
Company or otherwise, (iii) any other equity interests in the Company or any
bonds, notes, debentures, or other securities convertible into or exchangeable
for, directly or indirectly, any shares of capital stock or equity interests of
the Company and (iv) any interests in any of the foregoing in each case
outstanding at any time.
FCC. The term "FCC" shall mean the Federal Communications Commission.
GAAP. The term "GAAP" shall mean generally accepted accounting
principles applied on a basis consistent with prior periods and such that a
chartered accountant would, insofar as the use of accounting principles is
pertinent, be in a position to deliver an unqualified opinion as to financial
statements in which such principles have been properly applied.
Governmental Authority. The term "Governmental Authority" shall mean
any government or any agency, bureau, board, commission, court, department,
official, political subdivision, tribunal or other instrumentality of any
government (foreign, federal, local or otherwise) and shall include any
international regulatory or trade body or organization and the FCC and any State
Regulatory Agency.
Income Statement. The term "Income Statement" shall have the meaning
specified in Section 3.6.
2
5
Indebtedness. The term "Indebtedness" shall mean all obligations,
contingent (to the extent required to be reflected in financial statements
prepared in accordance with GAAP) and otherwise, which in accordance with GAAP
should be classified on the obligor's balance sheet as liabilities, including
without limitation, in any event and whether or not so classified: (i) all debt
and similar monetary obligations, whether direct or indirect; (ii) all
liabilities secured by any mortgage, pledge, security interest, lien, charge or
other encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; (iii) all
guarantees, endorsements and other contingent obligations whether direct or
indirect in respect of Indebtedness or performance of others, including any
obligation to supply funds to or in any manner to invest in, directly or
indirectly, the debtor to purchase Indebtedness or to assure the owner of
Indebtedness against loss, through an agreement to purchase goods, supplies or
services for the purpose of enabling the debtor to make payment of the
Indebtedness held by such owner or otherwise and (iv) obligations to reimburse
issuers of any letters of credit.
Licenses. The term "Licenses" shall mean all licenses, permits,
consents, approvals, concessions and authorizations of all Governmental
Authorities, whether foreign, federal, state or local, including, without
limitation, the Federal Communications Commission and any State Regulatory
Agency and their equivalents in foreign countries.
Lien. The term "Lien" shall mean (a) any encumbrance, mortgage, pledge,
lien, charge or other security interest of any kind upon any property or assets
of any character, or upon the income or profits therefrom; (b) any acquisition
of or agreement to have an option to acquire any property or assets upon
conditional sale or other title retention agreement, device or arrangement
(including a capitalized lease); or (c) any sale, assignment, pledge or other
transfer for security of any accounts, general intangibles or chattel paper,
with or without recourse.
Majority Purchasers. The term "Majority Purchasers" shall mean, at any
time, the record holders of more than fifty percent (50%) of the outstanding
Purchased Securities.
Material Adverse Effect. The term "Material Adverse Effect" shall mean,
with respect to any Person, any effect that is, or series of related effects
that are, in the aggregate, materially adverse to the business, assets,
properties, condition (financial or otherwise) or prospects of such Person.
Person. The term "Person" shall mean an individual, partnership,
limited liability company, corporation, association, trust, joint venture,
unincorporated organization and any Governmental Authority.
Purchased Securities. The term "Purchased Securities" shall mean the
Series C Preferred being purchased by the Purchasers pursuant to Section 2.1 of
this Agreement, the Common Stock issuable upon conversion of the Series C
Preferred or otherwise and any capital stock or other securities of the Company
issued or issuable in exchange therefor upon an exchange, conversion,
reorganization, reclassification, recapitalization, merger, consolidation or
other similar business transaction involving the Company, its Subsidiaries or
otherwise.
3
6
Purchaser. The term "Purchaser" shall mean the several purchasers named
in Schedule 2.1 (individually, a "Purchaser" and collectively, the "Purchasers")
and their respective successors and assigns.
Related Agreements. The term "Related Agreements" shall mean the
Securityholders' Agreement and the Registration Rights Agreement.
Registration Rights Agreement. The term "Registration Rights Agreement"
shall mean that certain Amended and Restated Registration Rights Agreement,
dated the Closing Date, by and among the Company, and the Purchasers, in the
form of Exhibit B attached hereto, as the same may be amended, modified or
supplemented from time to time.
SEC. The term "SEC" shall mean the Securities and Exchange Commission.
SEC Documents. The term "SEC Documents" shall have the meaning
specified in Section 3.17.
Securities Act. The term "Securities Act" shall mean all applicable
securities laws, rules, regulations, notices and policies in force in the United
States, as amended, modified or supplemented from time to time.
Securityholders' Agreement. The term "Securityholders' Agreement" shall
mean that certain Amended and Restated Securityholders' Agreement among the
Company, the Purchasers and certain holders of the Company's outstanding Common
Stock and Series B Preferred, in the form of Exhibit C attached hereto, as the
same may be amended, modified or supplemented from time to time.
September Balance Sheet. The term "September Balance Sheet" shall have
the meaning specified in Section 3.6.
Series C Preferred. The term "Series C Preferred" shall mean the Series
C Preferred Stock, $.001 par value, of the Company.
State Regulatory Agency. The term "State Regulatory Agency" means any
of the various state regulatory agencies with primary regulatory jurisdiction
over telecommunications matters.
Subsidiary. The term "Subsidiary" shall mean any Person of which the
Company or other specified Person now or hereafter shall at the time own,
directly or indirectly through a Subsidiary, at least a majority of the
outstanding Equity Securities (or other shares of beneficial interest) entitled
to vote generally.
Tax or Taxes. The term "Tax" or "Taxes" shall mean all taxes, charges,
fees, levies, imposts and other assessments, including all income, sales, use,
goods and services, value added, capital, capital gains, alternative net worth,
transfer, profits, withholding, payroll, employer health, excise, real property
and personal property taxes, and any other taxes, customs duties,
4
7
fees, assessments or similar charges in the nature of a tax, including, without
limitation, pension plan contributions and workers compensation premiums,
together with any interest, fines and penalties imposed by any Governmental
Authority, and whether disputed or not.
SECTION 1.2. HEREOF, HEREIN, ETC. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified herein, the term "or" has the inclusive
meaning represented by the term "and/or" and the term "including" is not
limiting. All references as to "Sections", "Subsections", "Articles",
"Schedules" and "Exhibits" shall be to Section, Subsections, Articles, Schedules
and Exhibits, respectively, of this Agreement unless otherwise specifically
provided.
SECTION 1.3. COMPUTATION OF TIME PERIODS. In the computation of periods
of time from a specified date to a later specified date, unless otherwise
specified herein the words "commencing on" mean "commencing on and including",
the word "from" means "from and including" and the words "to" and "until" each
means "to and including".
ARTICLE II
SALE AND PURCHASE OF PURCHASED SECURITIES
SECTION 2.1. SALE AND PURCHASE OF THE PURCHASED SECURITIES. Subject to
all of the terms and conditions hereof and in reliance on the representations
and warranties set forth or referred to herein, the Company agrees to issue and
sell to each Purchaser and each Purchaser agrees to purchase, on the Closing
Date, the number of Purchased Securities set forth opposite the name of such
Purchaser on Schedule 2.1, at a purchase price per share equal to $28.00 (the
"Per Share Price"). Notwithstanding the foregoing, in the event the Company
issues shares of Common Stock, Series D Convertible Preferred Stock ("Series D
Preferred") or other class or series of Preferred Stock prior to the Closing
Date and the effective price per share of Common Stock issued or issuable upon
conversion of the Series D Preferred or effective cost per share of Common Stock
of such other class or series of Preferred Stock upon conversion is less than
the Per Share Price, such Per Share Price shall be reduced to the lowest of the
issue price of such Common Stock, such effective price per share of Common Stock
issuable upon conversion of the Series D Preferred or effective cost per share
of Common Stock issuable pursuant to such other class or series of Preferred
Stock and the number of shares of Purchased Securities to be purchased by each
Purchaser shall be increased proportionally. In addition, in such event
appropriate changes shall be made herein and in the Exhibits hereto to give
effect to such lower Per Share Price.
SECTION 2.2. CLOSING. The closing of the purchase and sale of the
Purchased Securities contemplated by Section 2.1 (the "Closing") will take place
at the offices of Xxxxxxx & Xxxxxx, 0000 XxxxXxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx
Xxxxxx 00000 at 10:00 a.m. on a mutually agreeable date within five (5) business
days of satisfaction of the Conditions to Closing contained in Article V (the
"Closing Date"). Subject to the satisfaction of the conditions to Closing set
forth in Article V, as payment in full for the Purchased Securities being
purchased by the Purchasers
5
8
under this Agreement on the Closing Date, each Purchaser shall deliver to the
Company, in immediately available funds, the amount set forth opposite such
Purchaser's name under the heading "Aggregate Purchase Price of the Purchased
Securities" on Schedule 2.1.
SECTION 2.3. USE OF PROCEEDS. Proceeds from the sale of the Purchased
Securities hereunder shall be used for the expansion of the Company's
telecommunications network and sales and marketing program and for working
capital and general corporate purposes, as determined from time to time by the
Company's Board of Directors and consistent with the Company's business plan in
effect at such time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchasers to enter into this Agreement and to
purchase the Purchased Securities, the Company hereby represents and warrants
that:
SECTION 3.1. ORGANIZATION AND EXISTENCE. (a) The Company is duly
organized, validly existing and in good standing in its jurisdiction of
organization and is duly qualified as a foreign corporation and authorized to do
business in all other jurisdictions in which the nature of its business or
property makes such qualification necessary except where the failure to so
qualify would not have a Material Adverse Effect. The Company has the power to
own its properties and to carry on its business as now conducted and as proposed
to be conducted.
(b) Each of the Company's Subsidiaries is duly organized, validly
existing and in good standing in its jurisdiction of incorporation and is duly
qualified as a foreign entity and authorized to do business in all other
jurisdictions in which the nature of its business or property makes such
qualification necessary and where the failure to so qualify would not have a
Material Adverse Effect. Each of the Subsidiaries has the power to own its
properties and to carry on its business as now conducted and as proposed to be
conducted. The Company holds of record all outstanding shares of each
Subsidiary.
SECTION 3.2. AUTHORIZATION; NO CONFLICTS. The execution, delivery and
performance by the Company of this Agreement and of each Related Agreement, and
the issuance and sale by the Company of the Purchased Securities hereunder, (a)
are within its power and authority, and (b) have been duly authorized by all
necessary action of the Company (including the audit committee of the Company's
Board of Directors) and its stockholders and by all other requisite proceedings.
Neither the execution and delivery by the Company of this Agreement or any
Related Agreement nor the consummation by the Company of the transactions
contemplated thereby (including, without limitation, the purchase and sale of
the Purchased Securities hereunder) (a) will violate any provision of the
Charter of the Company or any of its Subsidiaries, (b) will violate or conflict
with any applicable statute, law, ordinance, rule, regulation, order, judgment,
writ, injunction, license, permit or decree applicable to the Company or any of
its Subsidiaries, (c) will conflict with or constitute a violation of or a
default (or an event which with notice or lapse of time or both, would
constitute a default) under, or will result
6
9
in the termination of, or accelerate performance required by, any Contract to
which the Company or any of its Subsidiaries is a party or to which any of the
assets or properties of the Company or any of its Subsidiaries are subject, (d)
will result in the creation of any Lien upon any of the Equity Securities of the
Company or any of its Subsidiaries or upon any of the property or assets of the
Company or any of its Subsidiaries, or (e) will require the consent,
authorization or approval of, or notice to or filing or registration with, any
Person, other than stockholder approval, if required by Nasdaq.
SECTION 3.3. ENFORCEABILITY. The execution and delivery by the Company
of this Agreement and of each of the Related Agreements, and the issuance and
sale by the Company of the Purchased Securities hereunder, will result in
legally binding obligations of the Company enforceable against the Company in
accordance with the respective terms and provisions hereof and thereof, subject,
however, to limitations with respect to enforcement imposed by law in connection
with bankruptcy or similar proceedings, or to the extent that equitable remedies
such as specific performance and injunction are in the discretion of the court
from which they are sought.
SECTION 3.4. CAPITALIZATION.
(a) Schedule 3.4(a) accurately sets forth the number, type and class of
Equity Securities the Company is authorized to issue, the name and address of
those Persons owning 5% or more of the Company's outstanding Equity Securities
immediately prior to giving effect to the transactions contemplated hereby and
the number and class of Equity Securities owned by each such record owner. All
of the Company's issued Equity Securities have been duly authorized, validly
issued and outstanding and are fully paid and non-assessable.
(b) Options, Etc. Except as set forth on Schedule 3.4(b) and except for
the rights of the Purchasers hereunder, no Person has any rights (either
pre-emptive or otherwise) or options to subscribe for or purchase from the
Company, or any warrants or other agreements providing for or requiring the
issuance by the Company of, any Equity Securities or other securities
convertible into or exchangeable for, or exercisable into Equity Securities of
the Company, or any voting trusts, proxies or agreements relating to the voting
of the Company's or any Subsidiary's Equity Securities. The number of shares of
Common Stock available for issuance under the Company's Stock Option Plan is
4,640,000. Schedule 3.4(b) sets forth the (i) name of each Person holding such
convertible or exchangeable securities, (ii) the type of security, (iii) the
amount of shares of Common Stock issuable upon exercise of such securities, and
(iv) the exercise price of such securities.
(c) Registration Rights. Except as set forth on Schedule 3.4(c) and as
provided under the Registration Rights Agreement, no other holder of Equity
Securities has registration rights with respect to such Equity Securities.
SECTION 3.5. SUBSIDIARIES; OTHER OWNERSHIP INTERESTS. Except as set
forth on Schedule 3.5 hereto, the Company does not have any Subsidiaries
(foreign or domestic) and does not own or hold of record and/or beneficially own
or hold, directly or through a Subsidiary, any Equity
7
10
Securities of any corporation, general or limited partnership, limited liability
company, business trust or joint venture or in any other unincorporated trade or
business enterprise. Except as set forth on Schedule 3.5 hereto, all outstanding
Equity Securities of each such Subsidiary and such other business enterprises is
owned by the Company or another Subsidiary of the Company as set forth on such
Schedule 3.5, free and clear of any Lien, is validly issued and outstanding, and
is fully paid and non-assessable, and there are no commitments for the purchase
or sale of, and no options, warrants or other rights to subscribe for or
purchase, any Equity Securities of any such Subsidiary.
SECTION 3.6. REPORTS AND FINANCIAL STATEMENTS. Each Purchaser has
heretofore been furnished with the consolidated balance sheet and statement of
income and cash flow of the Company and its subsidiaries as of September 30,
1999 (the "September Balance Sheet") and statement of income for the nine-month
period ended September 30, 1999 (the "Income Statement", and together with the
September Balance Sheet, the "Current Financial Statements"), such September
Balance Sheet being attached hereto as Schedule 3.6.
SECTION 3.7. INDEBTEDNESS AND LIENS. Neither the Company nor any of its
Subsidiaries has Indebtedness or Liens upon any of their properties other than
those which are reflected on the September Balance Sheet and Indebtedness
incurred in the ordinary course of business since September 30, 1999.
SECTION 3.8. TAXES.
(a) Each of the Company and its Subsidiaries has prepared and filed on
time with all appropriate Governmental Authorities all Tax returns and other
material documents that it has been required to file in respect of any Taxes for
all fiscal periods ending on or prior to the Closing Date and all such returns
or other material documents are correct and complete in all material respects.
(b) Each of the Company and its Subsidiaries has paid in full all Taxes
due on or before the date hereof and, in the case of such Taxes accruing on or
before such date that are not due on or before such date, the Company has made
adequate provision in its books and records and financial statements (including
the September Balance Sheet) for such payment.
SECTION 3.9. TITLE TO ASSETS. Except as disclosed on Schedule 3.9, the
Company and its Subsidiaries own all of their assets, and have good and
marketable title with respect thereto, reflected in the September Balance Sheet,
subject to no Liens.
SECTION 3.10. NECESSARY PROPERTY. Except as may be set forth in
Schedule 3.10 and the other Schedules hereto, the properties and assets owned,
leased by or licensed to the Company or any of its Subsidiaries and reflected in
the Current Financial Statements and any properties or assets acquired since
September 30, 1999, constitute all of the material real and personal
8
11
properties, tangible and intangible, which are necessary, used or useful in the
conduct of its business in the manner and to the extent presently conducted by
them.
SECTION 3.11. COMPLIANCE WITH LAW.
(a) Except as may be set forth in Schedule 3.11, neither the Company
nor any Subsidiary is in default under, or in violation of, any laws, rules or
regulations (including, without limitation, foreign, federal, state or local
laws, rules or regulations relating to the issuance or sale of securities,
telecommunications, anti-trust, occupational safety, the protection of the
environment, transportation, storage or disposal of hazardous waste,
anti-pollution and air and water quality laws), or any Licenses, granted by, or
any judgment, decree, writ, injunction or order of, any Governmental Authority,
applicable to its business or any of its properties or assets, which defaults
and violations would in the aggregate expose the Company and its Subsidiaries to
liabilities in excess of an aggregate of $250,000 or otherwise materially
adversely affect the assets or properties or business or operations of the
Company and its Subsidiaries or requiring or prohibiting future activities.
Neither the Company nor any Subsidiary has received any notification alleging
any violations of any of the foregoing with respect to which adequate corrective
action has not been taken.
(b) Except as set forth on Schedule 3.11, there are no proceedings or
investigations pending or threatened, before the FCC or any State Regulatory
Agency directed specifically at the Company or, in the case of matters of
general applicability to the telecommunications industry, in which the Company
is identified for possible disparate treatment or whose outcome may have a
disparate impact on the Company in which any of the following matters are being
considered which are reasonably likely to have a material adverse effect on the
Company, nor has the Company or any of its Subsidiaries received written notice
or inquiry from the FCC or any State Regulatory Agency, indicating that any of
such matters should be considered or may become the object of consideration or
investigation specifically regarding the Company which are reasonably likely to
have a material adverse effect on the Company or, in the case of matters of
general applicability to the telecommunications industry, in which the Company
is identified for possible disparate treatment or whose outcome may have a
disparate impact on the Company: (a) increases or reductions in access charges,
universal service contributions or the like; (b) traffic routing restrictions or
restrictions on use of facilities; (c) reduction or restriction of rates charged
to customers; (d) reduction of earnings; (e) refunds or other forfeitures of
amounts previously charged to customers; (f) use of NXX codes; or (g) failure to
meet any expense, infrastructure, service quality or other commitments
previously made to or imposed by the FCC or any State Regulatory Agency.
(c) Except as set forth on Schedule 3.11, neither the Company nor any
of its Subsidiaries has any outstanding commitments made in the context of a
matter or proceeding related specifically to the Company or, in the case of
matters of general applicability to the telecommunications industry, in which
the Company is identified for possible disparate treatment or whose outcome may
have a disparate impact on the Company (and no such obligations have been
imposed upon the Company and remain outstanding), regarding: (a) increases or
reductions in access charges, universal service contributions or the like; (b)
traffic routing restrictions or
9
12
restrictions on use of facilities; (c) reduction or restriction of rates charged
to customers; (d) reduction of earnings; (e) refunds or other forfeitures of
amounts previously charged to customers; (f) use of NXX codes; or (g) expenses,
infrastructure expenditures, service quality or other regulatory requirements,
to or by the FCC or any State Regulatory Agency, in each case which are
reasonably likely to have a material adverse effect on the Company.
SECTION 3.12. NO MATERIAL ADVERSE CHANGES. Except as disclosed in the
Company's SEC Documents or as set forth on Schedule 3.12, since December 31,
1998, there has occurred no material adverse change in the business, assets,
properties, prospects, operations, or condition (financial or otherwise) of the
Company or any of its Subsidiaries, whether or not in the ordinary course of
business, whether separately or in the aggregate with other occurrences or
developments, and whether insured against or not.
SECTION 3.13. NO BROKERS. Except as set forth on Schedule 3.13, the
Company has not employed any broker, finder, advisor or intermediary in
connection with the transactions contemplated hereby which would be entitled to
a broker's, finder's or similar fee or commission in connection therewith or
upon the consummation of the transactions contemplated by this Agreement or any
Related Agreement.
SECTION 3.14. NETWORK.
(a) Schedule 3.14 sets forth, as of September 30, 1999, (i) the
location of each switch owned by the Company and the switch's make and model and
(ii) the location of all of the Company's colocation sites.
(b) The Company's switches are (i) fully installed, (ii) interconnected
to the incumbent telephone company's local network and (iii) capable of carrying
commercial traffic.
(c) The Company's colocation sites possess all of the necessary
equipment to carry commercial traffic and are linked via leased or owned
transmission cable to a switch owned by the Company.
SECTION 3.15. CUSTOMERS AND SUPPLIERS.
(a) Schedule 3.15 sets forth as of September 30, 1999 (i) the total
number of lines sold and (ii) the total number of lines in service.
(b) Less than three percent (3%) of the Company's consolidated revenues
is derived from local resale of telecommunications services.
SECTION 3.16. YEAR 2000 COMPLIANCE. The Company has performed an audit
to determine if the material hardware and software systems used by the Company
and the Company's key vendors and suppliers are Year 2000 Compliant or will be
Year 2000 Compliant by December 31, 1999, and, based on that, has formulated a
plan to make such systems Year 2000 Compliant, as more particularly described on
Schedule 3.16 (the "Year 2000 Compliance
10
13
Plan"). The term "Year 2000 Compliant" as used herein means that the computer
systems at issue will accurately process, provide, and receive date data from,
into, and between the twentieth and twenty-first centuries, including the years
1999 and 2000, and leap year calculations. The Company represents that it is
using its best efforts to achieve the goals set forth in its Year 2000
Compliance Plan, and that if such goals are achieved, the material hardware and
software systems used by the Company will be Year 2000 Compliant by December 31,
1999.
SECTION 3.17. FINANCIAL REPORTS AND SEC DOCUMENTS. The Company's Annual
Reports on Form 10-K for the fiscal years ended December 31, 1998 and December
31, 1997, and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by it under the
Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act,
in the form filed or to be filed with the SEC (collectively, "SEC Documents"),
as of the date filed, (A) complied or will comply as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case may be,
and (B) did not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any of the Company's SEC Documents (including the
related notes and schedules thereto) fairly presents, or will fairly present,
the financial position of the Company and its Subsidiaries as of its date, and
each of the statements of income and changes in stockholders' equity and cash
flows or equivalent statements in the Company's SEC Documents (including any
related notes and schedules thereto) fairly presents, or will fairly present,
the results of operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the Company and its Subsidiaries for the period to
which they relate, in each case, in compliance with applicable accounting
requirements and with the published rules of the SEC with respect thereto and in
accordance with GAAP consistently applied during the periods involved, except,
in each case, as may be noted herein, subject to normal year-end audit
adjustments in the case of unaudited statements.
SECTION 3.18. DISCLOSURE. No representation, warranty or statement made
in this Agreement, any Purchased Security, any Related Agreement or any
agreement, certificate, statement or document furnished by or on behalf of the
Company in connection herewith or therewith when considered as a whole contains
any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances in which they were made, not misleading.
ARTICLE IV
PURCHASERS' REPRESENTATIONS
Each of the Purchasers hereby, severally and not jointly, represents
and warrants to the Company as follows:
11
14
SECTION 4.1. ORGANIZATION AND GOOD STANDING. Such Purchaser is validly
existing and in good standing under the laws of the state of its formation.
SECTION 4.2. AUTHORIZATION. This Agreement and the Related Agreements
to which such Purchaser is a party have been executed by a duly authorized
Person on its behalf and the execution, delivery and performance hereof and
thereof (a) have been duly authorized by all appropriate action, and (b) will
not violate the provision of any material law or regulation of any Governmental
Authority applicable to it or constitute a violation of any material agreement
or instrument by which it is bound.
SECTION 4.3. ENFORCEABILITY. The execution and delivery of this
Agreement and the Related Agreements and the transactions contemplated
thereunder will result in legally binding obligations of such Purchaser
enforceable against such Purchaser in accordance with the respective terms and
provisions hereof and thereof, subject, however, to limitations with respect to
enforcement imposed by law in connection with bankruptcy or similar proceedings
or to the extent that equitable remedies such as specific performance and
injunction are in the discretion of the court from which they are sought.
SECTION 4.4. INVESTMENT INTENT. Such Purchaser (i) is an "accredited
investor" as defined in Regulation D of the Securities Act, (ii) is acquiring
the Purchased Securities to be purchased by such Purchaser pursuant to Section
2.1 hereof for investment and not with a view to the distribution thereof, and
(iii) has not engaged any broker, agent or finder who may claim a fee in
connection with the acquisition of the Purchased Securities.
ARTICLE V
CONDITIONS TO PURCHASERS' OBLIGATION TO PURCHASE AND
THE COMPANY'S OBLIGATION TO SELL
SECTION 5.1. PURCHASERS' CLOSING CONDITIONS. Each Purchaser's
obligation to purchase the Purchased Securities pursuant to Section 2.1 is
subject to compliance by the Company with its agreements herein contained, and
to the satisfaction, on or prior to the Closing Date of the following
conditions:
(a) Related Agreements. Each of the Related Agreements shall have been
executed and delivered in the form attached hereto or in such other form
satisfactory to the Purchasers. All covenants, agreements and conditions
contained in the Related Agreements which are to be performed or complied with
on or prior to the Closing Date shall have been performed or complied with in
all material respects.
(b) Charter Documents. The Purchasers shall have received from the
Company a copy, certified by the appropriate Governmental Authority to be true
and complete as of a date no more than twenty (20) days prior to the Closing
Date, of (a) the certificate of incorporation of the Company and (b) a
certificate, dated not more than twenty (20) days prior to the Closing Date, of
the relevant Governmental Authority or other appropriate official of each State
in which the
12
15
Company is incorporated or qualified to do business, as to the Company's good
standing in such State or qualification to do business, as the case may be.
(c) Proof of Action. The Purchasers shall have received from the
Company copies, certified by a duly authorized officer thereof to be true and
complete as of the Closing Date, of the records of all action taken to authorize
the execution, delivery and performance of this Agreement and each of the
Related Agreements to which the Company is a party.
(d) Incumbency Certificate. The Purchasers shall have received from the
Company an incumbency certificate, dated the Closing Date, signed by a duly
authorized officer thereof and giving the name and bearing a specimen signature
of each individual who shall be authorized to sign, in the name and on behalf of
the Company, this Agreement and each of the Related Agreements to which the
Company is or is to become a party, and to give notices and to take other action
on behalf of the Company under each of such documents.
(e) Legal Opinion. The Purchasers shall have received from Ellis, Funk,
Xxxxxxxx, Xxxxxxxx & Dokson, P.C., counsel to the Company, an opinion
substantially in the form of Exhibit D attached hereto.
(f) Regulatory Opinion. The Purchasers shall have received from Xxxxxx
Xxxx & Xxxxxx LLP, regulatory counsel to the Company, an opinion reasonably
satisfactory to the Purchasers, or otherwise substantially in the form of
Exhibit E attached hereto.
(g) Representations and Warranties; Covenants; Officers' Certificates.
The representations and warranties contained or incorporated by reference herein
shall be true and correct in all material respects (except those representations
and warranties qualified by materiality, which shall be true and correct in all
respects) on and as of the Closing Date. The Company shall have performed and
complied with all conditions and agreements required to be performed or complied
with by it prior to the Closing. The Purchasers shall have received on the
Closing Date a certificate with respect to the foregoing executed by an
authorized officer of the Company.
(h) Legality; Governmental and Other Authorizations. The purchase of
the Purchased Securities shall not be prohibited by any law or governmental
order or regulation, and shall not subject any Purchaser to any penalty, special
Tax, or other onerous condition. All necessary consents, approvals, Licenses,
orders and authorizations of, and registrations, declarations and filings with,
any Governmental Authority (including the FCC and any State Regulatory Agency)
or any other Person, with respect to any of the transactions contemplated by
this Agreement or any of the Related Agreements, shall have been duly obtained
or made and shall be in full force and effect. The Nasdaq Stock Market
("Nasdaq") shall have issued written confirmation to the Company satisfactory to
the Purchasers stating that stockholder approval of the transactions
contemplated hereby is not required by Nasdaq's rules and regulations or, if the
approval of the Company's stockholders is so required, then such approval shall
have been validly obtained.
13
16
(i) Filing of Certificate of Designation. The Purchasers shall have
received satisfactory evidence of the filing of the Certificate of Designation
with the Secretary of State of Nevada.
(j) Payment of Certain Fees and Disbursements. The Purchasers shall
have been reimbursed for all reasonable costs and expenses (including, but not
limited to, legal, consulting and accounting) incurred by them through the
Closing Date in connection with the transactions contemplated by this Agreement.
(k) Amendment. The Certificate of Designation for the Series B
Preferred shall have been amended to read as set forth in Exhibit F hereto.
(l) General. All instruments and corporate proceedings in connection
with the transactions contemplated by this Agreement and the Related Agreements
shall be satisfactory in form and substance to the Purchasers and their counsel,
and the Purchasers shall have received copies of all documents, including,
without limitation, records of corporate or other proceedings, opinions of
counsel and consents which the Purchaser may have reasonably requested in
connection therewith.
The agreements, certificates, documents, other evidence of compliance
and opinions described in this Section 5.1 shall be in form and substance
reasonably acceptable to each Purchaser, and shall, except as otherwise
provided, be delivered to the Purchasers at the Closing; provided, however, any
one or more of the foregoing conditions may be waived with the prior written
consent of each Purchaser.
SECTION 5.2. COMPANY'S CLOSING CONDITIONS. The Company's obligation to
sell the Purchased Securities pursuant to Section 2.1 is subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
a. Representations and Warranties. The representations and warranties
of the Purchasers contained herein shall be true and correct in all material
respects (except those representations and warranties qualified by materiality,
which shall be true and correct in all respects) on and as of the Closing Date.
b. Sufficient Investment. The Purchasers shall be prepared to purchase
at least $35,000,000 of Purchased Securities pursuant to Section 2.1.
c. Certain Agreements. The Securityholders Agreement and Registration
Rights Agreement shall have been executed and delivered by the Purchasers.
d. Charter Amendment. The Company's Board of Directors and the holders
of a majority of the Company's outstanding Series B Preferred Stock shall have
approved the Certificate of Designation for the Series C Preferred and the
Amended and Restated Certificate of Designation for the Company's Series B
Preferred Stock.
14
17
ARTICLE VI
COVENANTS APPLICABLE TO THE COMPANY WHILE ANY PURCHASED SECURITIES
ARE OUTSTANDING
The Company covenants that while any of the Purchased Securities are
held by any of the Purchasers or an assignee thereof, other than a transferee
pursuant to a public sale, the Company will cooperate with the Purchasers and
will execute, acknowledge and deliver, or cause to be executed, acknowledged or
delivered, all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as the Purchasers shall
reasonably request to carry out to the satisfaction of the Purchasers the
transactions contemplated by this Agreement and the Related Agreements.
ARTICLE VII
DELIVERY OF FINANCIAL AND OTHER REPORTS WHILE ANY PURCHASED
SECURITIES ARE OUTSTANDING
The Company hereby agrees that so long as 250,000 shares of Series C
Preferred are outstanding (subject to adjustment for stock splits, stock
dividends and similar events) it will provide to each Purchaser holding at least
250,000 shares of Series C Preferred and/or Common Stock (subject to adjustment
for stock splits, stock dividends and similar events) (a "Qualified Purchaser")
the information called for by the following provisions, so long as such
Qualified Purchaser has acknowledged in writing that it will be precluded from
trading in the Company's stock while in possession of material information
concerning the Company that has not been disclosed to the public:
SECTION 7.1. MONTHLY STATEMENTS. Within thirty (30) days after the end
of each month, commencing with the month ending October 31, 1999, the Company
will deliver to each Qualified Purchaser internal, unaudited consolidated
balance sheet and statement of income and retained earnings and of cash flow of
the Company and its Subsidiaries as of the end of each such month, together with
comparative information to the results for the same month of the prior year, and
to the budget for such month and year to date results with a comparison of such
year-to-date information to budget and to the comparable period of the prior
year.
SECTION 7.2. OTHER FINANCIAL INFORMATION. The Company will deliver to
each Qualified Purchaser prior to the commencement of each fiscal year, an
annual budget and projected monthly balance sheets and statements of income and
quarterly statements of cash flow for such fiscal year, prepared on a
comparative basis to the previous year and as soon as practical after
preparation thereof, complete copies of all quarterly (if any) or annual
budgetary analyses or forecasts of the Company and its Subsidiaries in the form
customarily prepared by management for its own internal use or the use of the
Board of Directors of the Company.
SECTION 7.3. OFFICERS' CERTIFICATES. Together with delivery of the
financial statements of the Company and its Subsidiaries pursuant to Sections
7.1 and 7.2, the Company shall deliver to
15
18
each Qualified Purchaser a certificate of the President, chief financial officer
or Treasurer of the Company to the effect that (a) such statements have been
prepared in accordance with GAAP and present fairly the financial position of
the Company and its Subsidiaries as of the dates specified and the results of
its operations and cash flow with respect to the periods specified (subject in
the case of interim financial statements and the year-end financials, when
delivered prior to their having been audited, only to normal year-end audit
adjustments), and (b) such officers have caused the provisions of this Agreement
and the Purchased Securities to be reviewed and have no knowledge of any
default, or if either such officer has such knowledge, specifying such default
and the nature thereof, and what action the Company has taken, is taking or
proposes to take with respect thereto.
SECTION 7.4. NOTICE OF LITIGATION, DEFAULTS, ETC. The Company will
promptly give notice to each Qualified Purchaser of any litigation or any
administrative proceeding to which the Company or any of its Subsidiaries may
hereafter become a party which may result in a Material Adverse Effect on the
Company or any of its Subsidiaries. Forthwith upon any officer of the Company
obtaining knowledge of any material default under a material agreement or any
default or event of default under this Agreement or any Related Agreement, the
Company will furnish a notice specifying the nature and period of existence
thereof, what action the Company has taken, is taking or proposes to take with
respect thereto. Promptly after the receipt thereof, the Company will provide
copies of any reports as to adequacies in accounting controls submitted by
independent accountants with respect to the Company and its Subsidiaries.
SECTION 7.5. OTHER INFORMATION. The Company will deliver to each
Qualified Purchaser copies of all papers distributed from time to time to the
members or stockholders of the Company at such time as such papers are so
distributed to them. In addition, from time to time upon the request of a
Qualified Purchaser, the Company will furnish such information regarding the
business, affairs, prospects and financial condition of the Company and its
Subsidiaries as the representatives or officers of a Qualified Purchaser may
reasonably request. Each such representative and officer shall have the right
during normal business hours to examine the books and records of the Company or
any of its Subsidiaries to make copies, notes and abstracts therefrom, and to
make an independent examination, at such Qualified Purchaser's cost, of the
books and records of the Company or any of its Subsidiaries, all at such
reasonable times and intervals as the applicable Qualified Purchaser may
reasonably request.
ARTICLE VIII
EXPENSES; INDEMNITY
SECTION 8.1. EXPENSES. The Company hereby agrees to pay at the Closing
all reasonable fees, costs and expenses incurred by the Purchasers in connection
with the transactions hereunder and in connection with any amendments or waivers
(whether or not the same become effective) hereof and all reasonable expenses
incurred by the Purchasers in connection with the enforcement of any rights
hereunder or with respect to any Purchased Security, including without
limitation (i) the cost and expenses of preparing and duplicating this
Agreement, each Related Agreement and the Purchased Securities; (ii) the cost of
delivering to each Purchaser's principal
16
19
office, insured to such Purchaser's satisfaction, the Purchased Securities sold
to such Purchaser hereunder and any securities delivered to such Purchaser in
exchange therefor or upon any exercise, conversion or substitution thereof;
(iii) the reasonable fees, expenses and disbursements of one counsel for the
Purchasers, in connection with the preparation, administration or interpretation
of this Agreement and the Related Agreements and other agreements, documents and
instruments mentioned herein or therein, the Closing, any amendments,
modifications, approvals, consents or waivers hereto, thereto, hereunder or
thereunder; (iv) the out-of-pocket fees, expenses and costs incurred by the
Purchasers in connection with the Purchasers' due diligence investigation of the
Company and its Subsidiaries; and (v) all Taxes (other than Taxes determined
with respect to income and Taxes relating to any transfer of the Purchased
Securities to any Person other than to the Company) including, without
limitation, any recording fees, filing fees and documentary stamp and similar
Taxes at any time payable in respect of this Agreement or any Related Agreement
or the issuance of any of the Purchased Securities and any securities issued in
exchange therefor or upon any exercise, conversion or substitution thereof.
Further, the Company agrees to pay all reasonable legal, consulting, accounting,
appraisal and investment banking fees and charges incurred by any holder of the
Purchased Securities or their representatives in connection with the enforcement
of or preservation of rights under this Agreement or any Related Agreement in
the event of a breach or reasonably alleged breach by the Company of its
obligations hereunder or thereunder.
SECTION 8.2. INDEMNIFICATION. The Company hereby further agrees to
indemnify, exonerate and hold each Purchaser and its (if applicable) general and
limited partners and their respective shareholders, officers, directors,
employees and agents free and harmless from and against any and all actions,
causes of action, suits, losses, liabilities, damages and expenses, including,
without limitation, reasonable attorneys' fees and disbursements, incurred in
any capacity by any of the indemnities as a result of or relating to (i) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with proceeds from the sale of any of the Purchased Securities, (ii)
the execution, delivery, performance or enforcement of this Agreement, the
Related Agreements or any agreement, document or instrument contemplated hereby
or thereby (including, without limitation, any failure by the Company to comply
with any of the covenants thereunder), or (iii) any breach of any representation
or warranty of the Company in this Agreement or any Related Agreement.
SECTION 8.3. BROKERS' FEES. The Company hereby indemnifies each
Purchaser against and agrees that it will hold it harmless from any claim,
demand or liability for any broker's, finder's or similar fee or commission
alleged to have been incurred by the Company (and not by a Purchaser) in
connection with the transactions contemplated by this Agreement or any Related
Agreement.
ARTICLE IX
NOTICES
Any notices or other communications required to be given pursuant to
this Agreement shall be in writing and shall be deemed given: (i) upon delivery,
if by hand; (ii) three (3)
17
20
Business Days after mailing, if sent by registered or certified mail, postage
prepaid, return receipt requested; (iii) one (1) Business Day after mailing, if
sent via overnight courier; or (iv) upon transmission, if sent by telex or
facsimile except that if such notice or other communication is received by telex
or facsimile after 5:00 p.m. on a Business Day at the place of receipt, it shall
be effective as of the following Business Day. All notices and other
communications hereunder shall be given as follows:
(a) If to the Company, to it at:
MGC Communications, Inc.
0000 Xxxxx Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Xx.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Ellis, Funk, Xxxxxxxx, Xxxxxxxx & Dokson, P.C.
0000 Xxxxxxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000 X000
(b) If to Providence Equity Partners III L.P. or Providence Equity
Operating Partners III L.P., to it at:
c/o Providence Equity Partners L.L.C.
000 Xxxxx Xxxxxx
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxx, LLP
0000 XxxxXxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
18
21
(c) If to another Purchaser, to it at the address set forth on
Schedule 2.1
Any party may change its address for receiving notice by written notice given to
the other names above in the manner provided above.
ARTICLE X
SURVIVAL OF COVENANTS, AGREEMENTS,
REPRESENTATIONS AND WARRANTIES, TRANSFER
All covenants, agreements, representations and warranties made herein
to the Purchasers or the Company or in any other document referred to herein or
delivered to the Purchasers or the Company pursuant hereto shall be deemed to
have been relied on by each of the Purchasers and the Company, notwithstanding
any investigation made by any of the Purchasers or on their behalf, or by the
Company, and shall survive the execution and delivery of this Agreement and
other such documents and the delivery to the Purchasers of the Purchased
Securities for a period of eighteen (18) months after the Closing Date, except
for the representations and warranties contained in Sections 3.1, 3.2, 3.3, and
3.8 which shall survive the Closing and continue in full force and effect
forever thereafter (subject to any applicable statute of limitations). Whether
or not any express assignment has been made in this Agreement, the provisions of
this Agreement that are for the benefit of any Purchaser as the holder of any
Purchased Securities are also for the benefit of, and enforceable by, all
subsequent holders of the Purchased Securities, and the provisions of this
Agreement that subject any Purchaser to obligations as the holder of any
Purchased Securities also subject all subsequent holders of Purchased Securities
thereto.
ARTICLE XI
AMENDMENTS AND WAIVERS
No modification to or amendment of any provision of this Agreement
shall be effective against the Company or any Purchaser unless such modification
or amendment is approved in writing by the Majority Purchasers and the Company.
No waiver of the rights and obligations hereunder of any party hereto shall be
effective unless such waiver is in writing and duly executed and delivered by
(a) the Majority Purchasers (in the event such waiver is sought by the Company),
or (b) the Company (in the event such waiver is sought by any Purchaser). The
failure of any party hereto to enforce any of provision of this Agreement shall
in no way be construed as a waiver of such provision and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms. Any amendment or waiver effected in
accordance with this Article XI shall be binding upon the Company and each
holder of any Purchased Security sold pursuant to this Agreement.
19
22
ARTICLE XII
WAIVER OF JURY TRIAL
EACH OF THE COMPANY AND THE PURCHASERS HEREBY EXPRESSLY WAIVES ANY
RIGHT IT MAY HAVE TO A JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING EXISTING
UNDER OR RELATING TO THIS AGREEMENT, THE PURCHASED SECURITIES OR ANY OF THE
RELATED AGREEMENTS.
ARTICLE XIII
GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF RHODE ISLAND WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE
SUBSTANTIVE LAWS OF ANY OTHER STATE, AND SHALL BIND AND INURE TO THE BENEFIT OF
THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
ARTICLE XIV
PUBLIC ANNOUNCEMENTS
The Company hereby acknowledges that each Purchaser will have the right
to publicize its investment in the Company as contemplated hereby by means of a
press release reasonably acceptable to the Company, a tombstone advertisement or
other customary advertisement in newspapers and other periodicals. The Majority
Purchasers shall have the right to reasonably approve in advance the content of
any public announcement by the Company regarding the transactions contemplated
hereby.
ARTICLE XV
TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
ARTICLE XVI
ENTIRE AGREEMENT; COUNTERPARTS; SECTION HEADINGS
This Agreement, the Purchased Securities and the Related Agreements set
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby and supersede any prior written or oral
understandings with respect thereto. This Agreement may be executed
simultaneously in one or more counterparts thereof, each of which shall be
deemed an
20
23
original but all of which together shall constitute one and the same instrument.
Signatures sent by telecopy shall be deemed to constitute original signatures.
The headings in this Agreement are for convenience of reference only and shall
not alter or otherwise affect the meaning hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
21
24
If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and the accompanying copies thereof in the appropriate
space below.
Very truly yours,
MGC COMMUNICATIONS, INC.
By:
-------------------------------------
Name:
------------------------------
Title:
-----------------------------
Accepted and agreed to:
PROVIDENCE EQUITY PARTNERS III L.P.
By: Providence Equity Partners III L.L.C., its general partner
By:
----------------------------------------
Managing Director
PROVIDENCE EQUITY OPERATING PARTNERS III L.P.
By: Providence Equity Partners III L.L.C., its general partner
By:
------------------------------------------
Managing Director
JK&B CAPITAL III L.P.
By: JK&B Capital, LLC, its general partner
By:
-------------------------------------------
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
22
25
SCHEDULE 2.1
LIST OF PURCHASERS
Number of Purchased Aggregate Purchase
Securities to be Price of the Purchased
Name and Address Purchased * Securities
---------------- ----------- ----------
1. Providence Equity 886,259 shares of Series C $24,815,252
Partners III L.P. Convertible Preferred Stock
Suite 900, Fleet Center
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
2. Providence Equity Operating 6,598 shares of Series C $184,744
Partners III L.P. Convertible Preferred Stock
Suite 900, Fleet Center
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
3. JK&B Capital III L.P. 357,143 shares of Series C $10,000,004
000 X. Xxxxxxxx Xxxxxx Convertible Preferred Stock
Xxxxx 000
Xxxxxxx, XX 00000
TOTAL: 1,250,000 $35,000,000
* Subject to adjustment as provided in Section 2.1.
26
EXHIBIT A
TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF NOVEMBER 19, 1999
CERTIFICATE OF DESIGNATION
27
EXHIBIT B
TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF NOVEMBER 19, 1999
FORM OF REGISTRATION RIGHTS AGREEMENT
28
EXHIBIT C
TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF NOVEMBER 19, 1999
FORM OF SECURITYHOLDERS' AGREEMENT
29
EXHIBIT D
TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF NOVEMBER 19, 1999
FORM OF COMPANY CORPORATE OPINION
30
EXHIBIT E
TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF NOVEMBER 19, 1999
FORM OF COMPANY REGULATORY OPINION
