EXHIBIT 4.2
EXECUTION
WARRANT REGISTRATION RIGHTS AGREEMENT
WARRANT REGISTRATION RIGHTS AGREEMENT, dated as of April 12, 2001
(this "AGREEMENT"), among KMC TELECOM HOLDINGS, INC., a Delaware corporation
(the "COMPANY"), the "Lenders" party hereto (each a "LENDER" or, together,
"LENDERS"), and FIRST UNION NATIONAL BANK, as administrative agent for the
Lenders (the "AGENT").
WHEREAS, KMC Telecom Inc., a Delaware corporation, KMC Telecom II,
Inc., a Delaware corporation, KMC Telecom III, Inc., a Delaware corporation, and
the other borrowers party thereto (collectively, the "BORROWERS"), the Agent,
and the Lenders are parties to that certain Amended and Restated Loan and
Security Agreement dated as of February 15, 2000, as amended by Amendment No. 1
thereto dated as of March 28, 2000, Amendment No. 2 thereto dated as of July 28,
2000, Amendment No. 3 and Limited Waiver thereto dated as of February 23, 2001
and Amendment No. 4 and Limited Waiver thereto dated as of April 12, 2001 (the
"FOURTH Amendment") (as so amended, the "LOAN AGREEMENT"; capitalized terms not
otherwise defined herein shall have the meanings assigned to them in the Loan
Agreement), pursuant to which the Lenders have agreed to make certain "Loans"
and other financial accommodations to the Borrowers; and
WHEREAS, pursuant to the terms of the Fourth Amendment, and a
Warrant Agreement of even date herewith (the "WARRANT AGREEMENT") among the
Company, Agent, the Lenders and the Warrant Agent, Lenders are entitled to
receive certain warrants to purchase shares of common stock of the Company
("WARRANTS"), unless certain conditions are satisfied; and
WHEREAS, the Company, the Lenders and the Agent desire to enter into
this Agreement to provide for, among other things, the registration under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), of the disposition of
the shares received upon exercise of the Warrants.
In consideration of the foregoing and of the mutual agreements
contained herein and in the Warrant Agreement, the Company, the Agent and the
Lenders hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"AGENT" has the meaning specified in the recitals to this Agreement.
"APRIL 1999 WARRANT HOLDER" means the record holders of the April
1999 Warrants and the holders of Common Shares (or other securities) received
upon exercise thereof.
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"APRIL 1999 WARRANTS" means the warrants that were issued pursuant
to the April 1999 Warrant Agreement.
"APRIL 1999 WARRANT AGREEMENT" means the Warrant Agreement dated as
of April 30, 1999 among the Company and The Chase Manhattan Bank, as warrant
agent, and First Union Investors, Inc. relating to the April 1999 Warrants.
"APRIL 1999 WARRANT SHARES" means the Common Shares issuable upon
exercise of an April 1999 Warrant Holder's April 1999 Warrants, such other
securities as shall be issuable upon the exercise of the April 1999 Warrants, or
the Common Shares or such other securities received upon the exercise thereof,
pursuant to the April 1999 Warrant Agreement, in each case to the extent that
such Common Shares or other securities would be (upon issuance) or are, as the
case may be, subject to restrictions on transfer.
"AUDITORS" means, at any time, the independent auditors of the
Company at such time.
"BOARD" means the board of directors of the Company from time to
time.
"BORROWERS" has the meaning specified in the recitals to this
Agreement.
"COMFORT LETTER" has the meaning specified in Section 3 hereof.
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMMON SHARES" means the shares of the Common Stock of the Company.
"COMMON STOCK" means the common stock, par value $.01 per share, of
the Company.
"COMPANY" has the meaning specified in the recitals to this
Agreement.
"COMPANY OFFERED SHARES" has the meaning specified in Section 2
hereof.
"CUTBACK NOTICE" has the meaning specified in Section 2 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXPIRATION DATE" means, with respect to any Warrant, the tenth
anniversary of the date such Warrant is countersigned by the Warrant Agent.
"FEBRUARY 1999 WARRANT HOLDER" means the record holders of the
February 1999 Warrants and the holders of Common Shares (or other securities)
received upon exercise thereof.
"FEBRUARY 1999 WARRANTS" means the warrants that were issued
pursuant to the February 1999 Warrant Agreement, including any Springing
Warrants (as defined in the February 0000 Xxxxxxx Agreement).
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"FEBRUARY 1999 WARRANT AGREEMENT" means the Warrant Agreement dated
as of February 4, 1999 among the Company and the Purchasers (as defined therein)
relating to the February 1999 Warrants.
"FEBRUARY 1999 WARRANT SHARES" means the Common Shares issuable upon
exercise of a February 1999 Warrant Holder's February 1999 Warrants, such other
securities as shall be issuable upon the exercise of the February 1999 Warrants,
or the Common Shares or such other securities received upon the exercise
thereof, pursuant to the February 1999 Warrant Agreement, in each case to the
extent that such Common Shares or other securities would be (upon issuance) or
are, as the case may be, subject to restrictions on transfer.
"HOLDERS" means the record holders of the Warrants and the holders
of Common Shares (or other securities) received upon exercise thereof.
"INCLUDIBLE SECONDARY SHARES" has the meaning specified in Section 2
hereof.
"JANUARY 1998 WARRANT HOLDER" means the record holders of the
January 1998 Warrants and the holders of Common Shares (or other securities)
received upon exercise thereof.
"JANUARY 1998 WARRANT AGREEMENT" means the Warrant Agreement dated
January 29, 1998 between the Company and The Chase Manhattan Bank relating to
the January 1998 Warrants.
"JANUARY 1998 WARRANTS" means the 460,800 warrants that were issued
pursuant to the January 1998 Warrant Agreement, each such warrant initially
entitling the holder thereof to purchase 0.21785 shares of Common Stock of the
Company at an exercise price of $.01 per Common Share.
"JANUARY 1998 WARRANT SHARES" means the Common Shares issuable upon
exercise of a January 1998 Warrant Holder's January 1998 Warrants, such other
securities as shall be issuable upon the exercise of the January 1998 Warrants,
or the Common Shares or such other securities received upon the exercise
thereof, pursuant to the January 1998 Warrant Agreement, in each case to the
extent that such Common Shares or other securities would be (upon issuance) or
are, as the case may be, subject to restrictions on transfer.
"LENDERS" has the meaning specified in the recitals to this
Agreement.
"LOAN AGREEMENT" has the meaning specified in the recitals to this
Agreement.
"MANAGING UNDERWRITER" has the meaning specified in Section 2
hereof.
"OPINION" has the meaning specified in Section 3 hereof.
"OTHER OFFERED SHARES" has the meaning specified in Section 2
hereof.
"PIGGY-BACK REGISTRATION RIGHTS" has the meaning specified in
Section 2 hereof.
"LENDERS" has the meaning specified in the recitals to this
Agreement.
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"REGISTRATION STATEMENT" has the meaning specified in Section 2
hereof.
"RESALE SHELF" has the meaning specified in Section 3 hereof.
"STOCKHOLDERS AGREEMENT" means the Amended and Restated Stockholders
Agreement, dated as of October 31, 1997, among the Company, Nassau Capital
Partners L.P., NAS Partners I L.L.C., Xxxxxx X. Xxxxxx, KMC Telecommunications
L.P., AT&T Credit Corporation, General Electric Capital Corporation, CoreStates
Bank, N.A. and CoreStates Holdings, Inc., as amended and supplemented from time
to time.
"UNDERLYING SECURITIES" means the Common Shares issuable upon
exercise of the Warrants or such other securities as shall be issuable upon the
exercise of the Warrants, pursuant to the Warrant Agreement.
"WARRANTS" has the meaning specified in the recitals to this
Agreement.
"WARRANT AGENT" means First Union National Bank in its capacity as
Warrant Agent under the Warrant Agreement or any replacement or successor
Warrant Agent appointed pursuant to the terms thereof.
"WARRANT AGREEMENT" has the meaning specified in the recitals to
this Agreement.
"WARRANT REGISTRATION STATEMENT" has the meaning specified in
Section 3 hereof.
"WARRANT SHARES" has the meaning specified in Section 2 hereof.
2. PIGGY-BACK REGISTRATION RIGHTS.
(a) If, prior to the Expiration Date, the Company proposes to file a
Registration Statement with the Commission respecting an offering of any shares
of Common Stock (or other securities issuable upon exercise of the Warrants)
(other than (i) an offering registered solely on Form S-4 or S-8 or any
successor form thereto, or (ii) the initial public offering of shares of Common
Stock (or other securities issuable upon exercise of the Warrants) if no
shareholder of the Company participates therein), the Company shall give prompt
written notice (which notice shall specify the intended method or methods of
disposition) to all the Holders of Warrants or Common Shares or such other
securities received upon exercise of Warrants, to the extent such Common Shares
or other securities would be (upon issuance) or are, as the case may be, subject
to restrictions on transfer, at least 30 days prior to the initial filing of the
registration statement relating to such offering (the "REGISTRATION STATEMENT").
Each such Holder shall have the right, within 20 days after delivery of such
notice, to request in writing that the Company include all or a portion of such
of the Common Shares issuable upon exercise of such Holder's Warrants, such
other securities as shall be issuable upon the exercise of the Warrants, or the
Common Shares or such other securities received upon the exercise thereof,
pursuant to the Warrant Agreement, in each case to the extent that such Common
Shares or other securities would be (upon issuance) or are, as the case may be,
subject to restrictions on transfer, ("WARRANT SHARES") in such Registration
Statement ("PIGGY-BACK REGISTRATION RIGHTS"). The Company shall include in the
public offering all of the Warrant Shares that a Holder has requested be
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included, unless the underwriter for the public offering or the underwriter
managing the public offering (in either case, the "MANAGING UNDERWRITER")
delivers a written notice (a "CUTBACK NOTICE") pursuant to Section 2(b) or 2(c)
hereof. The managing underwriter may deliver one or more Cutback Notices at any
time prior to the execution of the underwriting agreement for the public
offering.
(b) If a proposed public offering includes both securities to be
offered for the account of the Company ("COMPANY OFFERED SHARES") and shares to
be sold by stockholders, the provisions of this Section 2(b) shall be applicable
if the managing underwriter delivers a Cutback Notice stating that, in its
opinion, the number of Common Shares (other than (a) January 1998 Warrant Shares
to be sold by any January 0000 Xxxxxxx Holders, (b) February 1999 Warrant Shares
to be sold by any February 0000 Xxxxxxx Holders, (c) April 1999 Warrant Shares
to be sold by any April 1999 Warrant Holders, and (d) Warrant Shares to be sold
by any Holders) that selling stockholders propose to sell therein, whether or
not such selling stockholders have the right to include shares therein (the
"OTHER OFFERED SHARES"), plus the number of January 1998 Warrant Shares that the
January 1998 Warrant Holders have requested to be sold therein, plus the number
of February 1999 Warrant Shares that the February 1999 Warrant Holders have
requested to be sold therein, plus the number of April 1999 Warrant Shares that
the April 1999 Warrant Holders have requested to be sold therein, plus the
number of Warrant Shares that the Holders have requested to be sold therein,
plus the Company Offered Shares, exceeds the maximum number of shares specified
by the managing underwriter in such Cutback Notice that may be distributed
without adversely affecting the price, timing or distribution of the Company
Offered Shares. Such maximum number of shares that may be so sold, excluding the
Company Offered Shares, are referred to as the "INCLUDIBLE SHARES."
If the managing underwriter delivers such Cutback Notice, (i) the
Company shall be entitled to include all of the Company Offered Shares in the
public offering, (ii) each stockholder who has requested the inclusion of Other
Offered Shares in the public offering pursuant to Section 6.1 or 6.2 of the
Stockholders Agreement shall be entitled to include all of its Other Offered
Shares and each January 1998 Warrant Holder who has requested the inclusion of
its January 1998 Warrant Shares shall be entitled to include all of its January
0000 Xxxxxxx Shares, each February 1999 Warrant Holder who has requested the
inclusion of its February 1999 Warrant Shares shall be entitled to include all
of its February 1999 Warrant Shares, and each April 1999 Warrant Holder who has
requested the inclusion of its April 1999 Warrant Shares shall be entitled to
include all of its April 1999 Warrant Shares, in each case, in priority to the
inclusion of any Warrant Shares requested to be included by Holders, and (iii)
except as otherwise provided in the preceding clause (ii), each requesting
Holder shall be entitled to include in the public offering up to its pro rata
portion of the Includible Shares, in priority to the inclusion (except as
otherwise provided in the preceding clause (ii)) of any Other Offered Shares
that are proposed to be sold in such public offering.
(c) If a proposed public offering is entirely a secondary offering,
the provisions of this Section 2(c) shall be applicable if the managing
underwriter delivers a Cutback Notice stating that, in its opinion, the
aggregate number of January 1998 Warrant Shares, February 1999 Warrant Shares,
April 1999 Warrant Shares, Warrant Shares and Other Offered Shares proposed to
be sold therein exceeds the maximum number of shares (the "INCLUDIBLE SECONDARY
SHARES") specified by the managing underwriter in such Cutback Notice that may
be distributed without adversely affecting the price, timing or distribution of
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the Common Shares being distributed. If the managing underwriter delivers such
Cutback Notice, (i) each stockholder who has requested the inclusion of Other
Offered Shares in the public offering pursuant to Section 6.1 or 6.2 of the
Stockholders Agreement shall be entitled to include all of its Other Offered
Shares and each January 1998 Warrant Holder who has requested the inclusion of
its January 1998 Warrant Shares shall be entitled to include all of its January
0000 Xxxxxxx Shares, each February 1999 Warrant Holder who has requested the
inclusion of its February 1999 Warrant Shares shall be entitled to include all
of its February 1999 Warrant Shares, and each April 1999 Warrant Holder who has
requested the inclusion of its April 1999 Warrant Shares shall be entitled to
include all of its April 1999 Warrant Shares, in each case, in priority to the
inclusion of any Warrant Shares requested to be included by Holders and (ii)
except as otherwise provided in the preceding clause (i), each requesting Holder
shall be entitled to include in the public offering up to its pro rata portion
of the Includible Secondary Shares, in priority to the inclusion (except as set
forth in the preceding clause (i)) of any Other Offered Shares that are proposed
to be sold in such public offering.
(d) The underwriting agreement for such public offering shall
provide that each requesting Holder shall have the right to sell its Warrant
Shares (other than Warrant Shares excluded from such public offering pursuant to
a Cutback Notice and the terms of Section 2(b) or 2(c)) to the underwriters and
that the underwriters shall purchase the Warrant Shares at the price paid by the
underwriters for the Common Shares sold by the Company and/or other selling
stockholders, as the case may be.
3. SHELF REGISTRATION.
(a) If only the Company sells Common Shares in an initial public
offering or all of the Warrant Shares have not been sold in a public offering,
the Company shall use its reasonable best efforts to cause to be filed pursuant
to Rule 415 under the Securities Act a shelf registration statement on the
appropriate form (the "WARRANT REGISTRATION STATEMENT", which term shall include
any preliminary prospectus, prospectus or notification or offering circular (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto)) covering the issuance of the Warrant Shares upon exercise
of the Warrants and shall use its reasonable best efforts to cause the Warrant
Registration Statement to become effective under the Securities Act within 180
days after the closing date of the initial public offering; PROVIDED, HOWEVER,
that if the Commission shall request that the Company register the resale of the
Warrant Shares instead of the issuance thereof, the Warrant Registration
Statement shall register such resale as opposed to such issuance. The Company
shall use reasonable best efforts to keep the Warrant Registration Statement
continuously effective until the earlier of (i) such time as all Warrants have
been exercised or, if the Commission shall request that the Company register the
resale of the Warrant Shares instead of the issuance thereof, until such time as
all Warrant Shares have been resold or (ii) the Expiration Date. Prior to filing
the Warrant Registration Statement or any amendment thereto, the Company shall
provide a copy thereof to each Holder and its counsel and afford them a
reasonable time to comment thereon.
If the Company is unable to file or cause to be filed, or is unable
to maintain the effectiveness of a Warrant Registration Statement,
notwithstanding its reasonable best efforts to do so, the Company shall cause
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such filing to take place, or shall cause such Warrant Registration Statement to
again become effective, after removal of the impediment to file or to maintain
the effectiveness of such Warrant Registration Statement.
(b) If the Warrant Registration Statement shall register the resale
of the Warrant Shares (a "RESALE SHELF") as provided in Section 3(a) above, the
Company agrees to:
(i) make available for inspection by representatives of the Holders,
any underwriter participating in any disposition pursuant to such Resale
Shelf and attorneys and accountants designated by the Holders, at
reasonable times and in a reasonable manner, financial and other records,
documents and properties of the Company that are pertinent to the conduct
of due diligence customary for an underwritten offering, and cause the
officers, directors and employees of the Company to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with a Resale Shelf; PROVIDED, HOWEVER, that such
persons shall first agree in writing with the Company to use such
information only in connection with the transaction for which such
information was obtained and that any information that is reasonably and
in good faith designated by the Company in writing as confidential at the
time of delivery of such information shall be kept confidential by such
persons, unless and to the extent that disclosure of such information is
required by law or such information becomes generally available to the
public other than as a result of a disclosure or failure to safeguard such
information by such person;
(ii) use its reasonable best efforts to cause all Warrant Shares
sold under a Resale Shelf to be listed on any securities exchange or any
automated quotation system on which securities of the same class issued by
the Company are then listed if requested by the Holders of Warrant Shares
representing a majority of the Warrants originally issued, to the extent
such Warrant Shares satisfy applicable listing requirements;
(iii) provide as soon as practicable, without charge, a reasonable
number of copies of the Warrant Registration Statement, any pre-effective
or post-effective amendment thereto, and the prospectus (including each
preliminary prospectus and any amendment or supplements thereto) included
in such Resale Shelf to Holders that are selling Warrant Shares pursuant
to such Resale Shelf;
(iv) cause to be provided to the Warrant Agent, on behalf of the
Holders and beneficial owners of Warrant Shares (with copies thereof
provided to the Holders and beneficial owners of Warrant Shares), upon the
effectiveness of such Resale Shelf, a customary "10b-5" opinion of
independent counsel (an "OPINION") and a customary "cold comfort" letter
of independent auditors (a "COMFORT LETTER"); and
(v) notify the Warrant Agent, for distribution to the Holders, (A)
when the Resale Shelf has become effective and when any post-effective
amendment thereto has been filed and becomes effective, (B) of any request
by the Commission or any state securities authority for amendments and
supplements to the Resale Shelf or of any material request by the
Commission or any state securities authority for additional information
after the Resale Shelf has become effective, (C) of the issuance by the
Commission or any state securities authority of any stop order suspending
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the effectiveness of the Resale Shelf or the initiation of any proceedings
for that purpose, (D) if, between the effective date of the Resale Shelf
and the closing of any sale of Warrant Shares covered thereby, the
representations and warranties of the Company contained in any
underwriting agreement, securities sales agreement or other similar
agreement, including this Agreement, relating to disclosure cease to be
true and correct in any material respect or if the Company receives any
notification with respect to the suspension of the qualification of the
Warrant Shares for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (E) of the happening of any event during the
period the Resale Shelf is effective such that such Resale Shelf or the
related prospectus contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary
to make statements therein not misleading and (F) of any determination by
the Company that a post-effective amendment to a Registration Statement
would be appropriate. The Holders hereby agree to suspend the use of the
prospectus contained in any Resale Shelf upon receipt of such notice under
clause (C), (E) or (F) above until, in the case of clause (C), such stop
order is removed or rescinded or, in the case of clauses (E) and (F), the
Company has amended or supplemented such prospectus to correct such
misstatement or omission.
4. SUSPENSION.
Notwithstanding the foregoing, in addition to any suspension
contemplated by clauses (C), (E) or (F) of Section 3(b)(vi), during any
consecutive 365-day period, the Company shall have the right to suspend
availability of the Warrant Registration Statement and the related prospectus
for a reasonable period of time not to exceed two 30-consecutive-day periods
(which period may not be extended or renewed), except for the 30 days
immediately prior to the Expiration Date, if the Board determines in good faith
that there is a valid purpose for such suspension and (ii) five additional,
non-consecutive three-day periods, except for the 30 days immediately prior to
the Expiration Date, if the Board determines in good faith that the Company
cannot provide adequate disclosure during such period due to circumstances
beyond its control. Notice of such suspension shall be given promptly to the
Warrant Agent.
5. BLUE SKY.
The Company shall use its reasonable best efforts to register or
qualify the Underlying Securities proposed to be sold or issued pursuant to the
Registration Statement or the Warrant Registration Statement under all
applicable securities or "blue sky" laws of all jurisdictions in the United
States in which any Holder of Warrants may or may be deemed to purchase
Underlying Securities upon the exercise of Warrants or resale of the Warrant
Shares, as the case may be, and shall use its reasonable best efforts to
maintain such registration or qualification through the earlier of (A) in the
case of a Registration Statement, the date upon which all of the Warrant Shares
have been sold or such other sale as shall be required by applicable law or (B)
the date upon which all Warrants have been exercised or all Warrant Shares have
been resold, as the case may be, under the Warrant Shelf Registration Statement;
PROVIDED, HOWEVER, that the Company shall not be required to (i) qualify as a
foreign corporation or as a broker or a dealer in securities in any jurisdiction
where it would not otherwise be required to qualify but for this Section 5, (ii)
file any general consent to service of process or (iii) subject itself to
taxation in any jurisdiction if it is not otherwise so subject.
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6. ACCURACY OF DISCLOSURE.
The Company (and its successors) represents and warrants to each
Holder (and each beneficial owner of a Warrant or Warrant Share) and agrees for
the benefit of each Holder (and each beneficial owner of a Warrant or Warrant
Share) that, except during any period in which the availability of any
Registration Statement or the Warrant Registration Statement (as the case may
be) has been suspended, (i) such Registration Statement or the Warrant
Registration Statement (as the case may be) and the documents incorporated by
reference therein will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein not
misleading; and (ii) the prospectus delivered to such Holder upon its exercise
of Warrants or pursuant to which such Holder sells its Warrant Shares, as the
case may be, and the documents incorporated by reference therein will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that representations,
warranties and agreements set forth in this Section 6 do not apply to statements
or omissions in any Registration Statement, the Warrant Registration Statement
or any such prospectus based upon information relating to any Holder furnished
to the Company (or its successors) in writing by such Holder expressly for use
therein.
7. INDEMNITY.
(a) The Company hereby agrees to indemnify each beneficial owner of
a Warrant and each person, if any, who controls any beneficial owner of a
Warrant within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, or is under common control with, or is controlled by,
any beneficial owner of a Warrant (whether or not it is, at the time the
indemnity provided for in this Section 7 is sought, such a beneficial owner),
from and against all losses, damage, liabilities and expenses (including
reasonable costs of investigation and the costs, fees and expenses of legal
counsel) which such beneficial owner or any such controlling or affiliated
person suffers as a result of any breach, on the date of any exercise of a
Warrant by such beneficial owner or the resale of any Warrant Share by such
Holder, in either case pursuant to any Registration Statement or the Warrant
Registration Statement (as the case may be), of the representations, warranties
or agreements contained in Section 6 hereof or any violation or alleged
violation by the Company of the Securities Act, any blue sky laws, securities
laws or other applicable laws of any state or country in which the securities
are offered and relating to action or inaction required by the Company in
connection with such offering. Each beneficial owner of a Warrant Share sold
pursuant to a Resale Shelf, by accepting its beneficial ownership of a Warrant,
hereby (i) agrees to provide the Company with information with respect to it
that the Company reasonably requests in connection with any Resale Shelf and
(ii) agrees, severally and not jointly, to indemnify the Company, its directors
and officers and each person, if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act against any liability incurred by it or such controlling person as a result
of any misstatement of information provided by such beneficial owner to the
Company in writing expressly for inclusion in the Resale Shelf or any omission
of a material fact from any such information provided by such beneficial owner
to the Company.
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(b) The indemnifying party shall be entitled to participate in and,
to the extent it may wish, jointly with any other indemnifying party, to assume
the defense of such action at its own expense, with counsel chosen by it and
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party unless
(i) the indemnifying party agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel reasonably satisfactory
to the indemnified party or (iii) the named parties to any such action
(including any impleaded parties) have been advised by such counsel that
representation of such indemnified party and the indemnifying party by the same
counsel would be inappropriate under applicable standards of professional
conduct (in which case the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party). No indemnifying
party shall be liable for any settlement entered into without its consent, which
consent shall not be withheld unreasonably.
(c) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party in respect of
any losses, claims, damages, liabilities, expenses or actions in respect thereof
referred to herein, then each indemnifying party shall in lieu of indemnifying
such indemnified party contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities,
expenses or actions in such proportion as is appropriate to reflect the relative
fault of the Company, on the one hand, and the sellers of such Warrant Shares,
on the other, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities, expenses or actions as well as any
other relevant equitable considerations. The Company and the Holder agree that
it would not be just and equitable if contribution pursuant to this Section were
determined by any method of allocation which did not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section, in no event shall the amount contributed by any seller of Warrant
Shares exceed the net proceeds received by such seller from the sale of Warrant
Shares to which such contribution claim relates. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
8. EXPENSES.
All expenses incident to the Company's performance of or compliance
with its obligations under this Agreement will be borne by the Company,
regardless of whether a Registration Statement or Warrant Registration Statement
becomes effective, including without limitation (i) all Commission or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
reasonable fees and expenses incurred in connection with compliance with state
securities or "blue sky" laws, (iii) all reasonable expenses of any persons
incurred by or on behalf of the Company in preparing or assisting in preparing,
word processing, printing and distributing any registration statement, any
prospectus, any amendments or supplements thereto and other documents relating
to the performance of and compliance with this Agreement, (iv) the reasonable
fees (including reasonable legal fees and expenses) and disbursements of the
Warrant Agent, (v) the reasonable fees and disbursements of counsel for the
Company and one counsel to the Holders and (vi) the fees and disbursements, if
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any, of the Auditors; but excluding any and all fees, expenses and disbursements
of the Holders (not specifically included above), including, without limitation
the Holder's share of underwriting discounts and commissions.
9. COVENANTS OF THE COMPANY.
The Company hereby agrees and covenants as follows:
(a) After any initial public offering of its equity securities, the
Company shall file as and when applicable, on a timely basis, all reports
required to be filed by it under the Exchange Act, and take such further
reasonable action as may be required from time to time and as may be within the
reasonable control of the Company, to enable the Holders to transfer the Warrant
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 under the Securities Act or any similar rule
or regulation hereafter adopted by the Commission.
(b) The Company shall not, directly or indirectly, (i) enter into
any merger, consolidation or reorganization in which the Company shall not be
the surviving corporation or (ii) transfer or agree to transfer all or
substantially all the Company's assets, unless prior to such merger,
consolidation, reorganization or asset transfer, the surviving corporation or
the transferee, respectively, shall have agreed in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Warrant Shares" shall be deemed to include the securities which
the Holders of Warrant Shares would be entitled to receive in exchange for
Warrant Shares pursuant to any such merger, consolidation or reorganization.
10. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. Each of the Company and the Lenders
represent to the other that it has not entered into, and agrees that on or after
the date of this Agreement it will not enter into, any agreement which is
materially inconsistent with the rights granted to the Holders of Warrants or
Warrant Shares in this Agreement or otherwise materially conflicts with the
provisions hereof. The Company represents that the rights granted to the Holders
hereunder do not in any material way conflict with and are not materially
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company and the Warrant Agent have obtained the
written consent of Holders of at least a majority of the outstanding Warrants
affected by such amendment, modification, supplement, waiver or consent;
provided that (i) any amendment, modification or supplement to this Agreement
which, in the good faith opinion of the Board (and evidenced by a resolution of
such board), does not adversely affect any Holder, shall not be subject to such
requirement for written consent; and (ii) any amendment shall not be effective
unless the Warrant Agent shall have received an opinion of counsel, reasonably
satisfactory to it, that such amendment complies with the requirements hereof.
11
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 10(c); or (ii) if to the Company, at the address provided for in the
Warrant Agreement. All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation, subsequent Holders; provided that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Warrants in violation of the terms of the Warrant Agreement. If
any transferee of any Holder shall acquire Warrants, in any manner, whether by
operation of law or otherwise, such Warrants shall be held subject to all of the
terms of this Agreement and the Warrant Agreement, and by taking and holding
such Warrants such person shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement and
the Warrant Agreement and such person shall be entitled to receive the benefits
hereof.
(e) PURCHASES AND SALES OF WARRANTS. The Company shall not, and
shall use its reasonable best efforts to cause its affiliates (as defined in
Rule 405 under the Securities Act) not to, purchase and then resell or otherwise
transfer any Warrants other than Warrants acquired and cancelled.
(f) THIRD PARTY BENEFICIARY. The Holders (other than the Holders
that are signatories hereto) shall be third party beneficiaries to the
agreements made hereunder between the Company and the Lenders, and each Holder
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
(i) GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
12
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) WAIVER OF IMMUNITY. To the extent that the Company has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of its
obligations under this Agreement to the fullest extent permitted by law.
(l) INITIAL PUBLIC OFFERING. Notwithstanding anything to the
contrary herein contained, if the Company conducts an initial public offering of
equity securities (other than nonconvertible preferred shares), the Company will
give the Holders the opportunity to convert such Warrants into warrants to
purchase such equity securities (other than nonconvertible preferred shares) and
such Warrant Shares into such equity securities (other than nonconvertible
preferred shares). Such conversion opportunity will be on terms and conditions
determined to be fair and reasonable by the Company's Board.
13
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
KMC TELECOM HOLDINGS, INC.
By: /S/ XXXXXXXXX XXXXXXXXX
-----------------------
Name:Xxxxxxxxx Xxxxxxxxx
Title: Treasurer
FIRST UNION NATIONAL BANK, as the Agent
and as a Lender
By:/S/ X.X. XXXXXXX
----------------
Name: X. X. Xxxxxxx
Title: Senior Vice President
CIT LENDING SERVICES CORPORATION (f/k/a
NEWCOURT COMMERCIAL FINANCE
CORPORATION), as a Lender
By:/S/ XXXX X'XXXXXX
-----------------
Name: Xxxx X'Xxxxxx
Title: VP
CANADIAN IMPERIAL BANK OF COMMERCE, as a
Lender
By: /S/ XXXXXXXXXX XXXXXXX
----------------------
Name: Xxxxxxxxxx Xxxxxxx
Title: Executive Director
GENERAL ELECTRIC CAPITAL CORPORATION, as
a Lender
By: /S/ XXXXX X. XXXX
-----------------
Name: Xxxxx X. Xxxx
Title: Manager-Operations
S-1
LUCENT TECHNOLOGIES INC., as a Lender
By: /S/ XXXX XXXX
-------------
Name: Xxxx Xxxx
Title: Director-NA Customer Finance
CREDIT SUISSE FIRST BOSTON, as a Lender
By:/S/ XXXXX X. XXXXXX /S/XXXXXX XXXXXX
----------------------- ----------------
Name: Xxxxx X. Xxxxxx Xxxxxx Xxxxxx
Title: Vice President Assistant Vice
President
DRESDNER BANK AG NEW YORK AND GRAND
CAYMAN BRANCHES, as a Lender
By: /S/ XXXXX XXXXXXXXX
-------------------
Name: Xxxxx Xxxxxxxxx
Title: Assistant Vice President
By: /S/ XXXXXXX X. XXXXXXXXX
------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Assistant Vice President
XXXXXX XXXXXXX SENIOR FUNDING, INC., as
a Lender
By: /S/ T. XXXXXX XXXXXXX XX
------------------------
Name: T. Xxxxxx Xxxxxxx XX
Title: Vice President
By:
------------------------
Name:
Title:
S-2
XXXXXX XXXXXXX XXXX XXXXXX PRIME INCOME
TRUST, as a Lender
By: /S/ XXXXXX XXXXXXXX
-------------------
Name: Xxxxxx Xxxxxxxx
Title: Sr. Vice President
UNION BANK OF CALIFORNIA, N.A., as a
Lender
By: /S/ XXXXXXX X. XXXXXXX XX
-------------------------
Name: Xxxxxxx X. Xxxxxxx XX
Title: Vice President
XXXXX XXX & FARNHAM INCORPORATED as
agent for KEYPORT LIFE INSURANCE
COMPANY, as a Lender
By: /S/ XXXXX X. XXXXXXX
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Sr. Vice President & Portfolio
Manager
XXXXX XXX FLOATING RATE LIMITED
LIABILITY COMPANY, as a Lender
By: /S/ XXXXX X. XXXXXXX
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
IBM CREDIT CORPORATION, as a Lender
By: /S/ XXXXXX X. XXXXXX
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Manager of Credit, Commercial &
Specialty Financing
S-3
