WARRANT REGISTRATION RIGHTS AGREEMENT
between
KMC TELECOM HOLDINGS, INC.
and
NEWCOURT COMMERCIAL FINANCE CORPORATION
and
LUCENT TECHNOLOGIES INC.
and
ANY ADDITIONAL PURCHASER
Dated as of February 4, 1999
WARRANT REGISTRATION RIGHTS AGREEMENT
WARRANT REGISTRATION RIGHTS AGREEMENT, dated as of February 4, 1999
(this "AGREEMENT"), among KMC TELECOM HOLDINGS, INC., a Delaware corporation
(the "COMPANY"), and Newcourt Commercial Finance Corporation, a Delaware
corporation ("NEWCOURT"), Lucent Technologies Inc., a Delaware corporation,
("LUCENT") and any other Person (as defined herein) who becomes a party to this
Agreement after the date hereof in accordance with the provisions of Section
10(m) hereof (each an "ADDITIONAL PURCHASER" and together with Newcourt and
Lucent, the "PURCHASERS").
WHEREAS, in connection with the sale of shares of its preferred
stock from time to time, the Company intends to issue and sell warrants (each, a
"WARRANT" and collectively, the "WARRANTS") to be issued pursuant to a Warrant
Agreement of even date herewith (the "WARRANT AGREEMENT") among the Company, the
Purchasers and the Warrant Agent (as defined herein), each Warrant initially
entitling the holder thereof to purchase 0.471756 shares of Common Stock (as
defined below) of the Company at an exercise price of $.01 per Common Share (as
defined below);
WHEREAS, pursuant to the terms of a Securities Purchase Agreement of
even date herewith (the "PURCHASE AGREEMENT"), among the Company, Newcourt and
Lucent, the Company has agreed to issue and sell to (a) Newcourt a unit (the
"SERIES E & F UNIT"), consisting of 25,000 shares of the Company's Series E
Senior, Redeemable, Exchangeable PIK Preferred Stock (the "SERIES E PREFERRED
STOCK"), 10,000 shares of the Company's Series F Senior, Redeemable,
Exchangeable PIK Preferred Stock (the "SERIES E PREFERRED STOCK") and 38,636
Warrants and (b) to Lucent a unit (the "SERIES F UNIT" and together with the
Series E Unit, the "UNITS"), consisting of 30,000 shares of the Company's Series
F Preferred Stock and 13,636 Warrants;
WHEREAS, as described in Section 2.4 of the Warrant Agreement, the
holders of the Series E Preferred Stock and the Series F Preferred Stock have
the right to receive 227,273 Warrants, unless certain conditions are met; and
WHEREAS, in addition to the 38,636 Warrants that will be issued as
part of the Series E & F Unit, the 13,636 Warrants that will be issued as part
of the Series F Unit and the Warrants that may be issued to the holders of the
Series F Preferred Stock pursuant to Section 2.4 of the Warrant Agreement, the
Company may, from time to time, issue and sell additional Warrants pursuant to
the Warrant Agreement in connection with the sale to Additional Purchasers of
additional units, consisting of shares of the Company's Series E Preferred Stock
or Series F Preferred Stock and Warrants.
In consideration of the foregoing and of the mutual agreements
contained herein and in the Purchase Agreement, the Company and the Purchaser
hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Additional Purchasers" has the meaning specified in the recitals of
this Agreement.
"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.
"Closing Date" means February 4, 1999.
"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 IPO 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.
"Existing Holder" means the record holders of the Existing Warrants
and the holders of Common Shares (or other securities) received upon exercise
thereof.
"Existing Warrant Agreement" means the Warrant Agreement dated
January 29, 1998 between the Company and The Chase Manhattan Bank relating to
the Existing Warrants.
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"Existing Warrant Registration Rights Agreement" means the Warrant
Registration Rights Agreement, dated January 26, 1998, between the Company and
Xxxxxx Xxxxxxx & Co. Incorporated.
"Existing Warrants" means the 460,800 warrants that were issued
pursuant to the Existing 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.
"Existing Warrant Shares" means the Common Shares issuable upon
exercise of an Existing Holder's Existing Warrants, such other securities as
shall be issuable upon the exercise of the Existing Warrants, or the Common
Shares or such other securities received upon the exercise thereof, pursuant to
the Existing 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.
"Expiration Date" means the second anniversary of the Closing Date,
except that in the event the Springing Warrants are issued as provided in
Section 2.3 of the Warrant Agreement, the Expiration Date, with respect to the
Springing Warrants only, shall be the second anniversary from the date of
issuance of the Springing Warrants.
"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.
"managing underwriter" has the meaning specified in Section 2
hereof.
"Opinion" has the meaning specified in Section 3 hereof.
"Other IPO Shares" has the meaning specified in Section 2 hereof.
"Piggy-back Registration Rights" has the meaning specified in
Section 2 hereof.
"Purchasers" has the meaning specified in the recitals to this
Agreement.
"Purchase Agreement" has the meaning specified in the recitals to
this Agreement.
"Registration Statement" has the meaning specified in Section 2
hereof.
"Resale Shelf" has the meaning specified in Section 3 hereof.
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"Securities Act" means the United States Securities Act of 1933, as
amended.
"Series E Preferred Stock" has the meaning specified in the recitals
to this Agreement.
"Series E & F Unit" has the meaning specified in the recitals to
this Agreement.
"Series F Preferred Stock" has the meaning specified in the recitals
to this Agreement.
"Series F Unit" has the meaning specified in the recitals to this
Agreement.
"Springing Warrants" has the meaning set forth in the Warrant
Agreement.
"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.
"Units" has the meaning specified in the recitals to this Agreement.
"Warrants" has the meaning specified in the recitals to this
Agreement, including the Springing Warrants.
"Warrant Agent" means The Chase Manhattan Bank, in its capacity as
Warrant Agent under the Warrant Agreement.
"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.
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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 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
included, unless the underwriter for the public offering or the underwriter
managing the public offering (in either case, the "MANAGING UNDERWRITER")
delivers a 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 IPO 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) Existing Warrant Shares to be sold
by any Existing Holders and (b) 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 IPO SHARES"),
plus the number of Existing Warrant Shares that the Existing 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 IPO 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 IPO Shares. Such maximum number of shares that may
be so sold, excluding the Company IPO Shares, are referred to as the "INCLUDIBLE
SHARES."
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If the managing underwriter delivers such Cutback Notice, (i) the
Company shall be entitled to include all of the Company IPO Shares in the public
offering, (ii) each stockholder who has requested the inclusion of Other IPO
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 IPO Shares and each
Existing Holder who has requested the inclusion of its Existing Warrant Shares
shall be entitled to include all of its Existing 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 IPO
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 Existing Warrant Shares, Warrant Shares and Other IPO 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 the Common Shares being distributed. If the managing
underwriter delivers such Cutback Notice, (i) each stockholder who has requested
the inclusion of Other IPO 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 IPO Shares and each Existing Holder who has requested the inclusion of its
Existing Warrant Shares shall be entitled to include all of its Existing 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 IPO 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
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appropriate form (the "WARRANT REGISTRATION STATEMENT") 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 (1) in no event may the Warrant
Registration Statement be declared effective prior to the first anniversary of
the Closing Date and (2) 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, in the case of clause (2), 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 the Purchaser 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
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)(2) 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
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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, 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, 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");
(v) cause to be provided to Holders and beneficial owners of Warrant
Shares an Opinion and Comfort Letter with respect to each Form 10-K and
Form 10-Q, including any amendments thereto, that is incorporated by
reference in such Resale Shelf; and
(vi) 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
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
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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 privilege to suspend
availability of the Warrant Registration Statement and the related prospectus
for (i) up to two 30-consecutive-day periods, 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, (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
and (C) the Expiration Date; 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.
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 the Warrant
Registration Statement has been suspended, (i) the Warrant Registration
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Statement 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 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.
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, damages or liabilities 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 the Warrant
Registration Statement, of the representations, warranties or agreements
contained in Section 6 hereof. 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.
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
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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 (vi) the fees and disbursements, if any, of the Auditors; but
excluding any and all fees, expenses and disbursements of the Holders (not
specifically included above), including, without limitation, (x) fees and
disbursements of counsel retained by the participating Holders and (y) 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.
(c) The Company shall not grant to any Person (other than a Holder
of Warrant Shares) any registration rights with respect to securities of the
Company, or enter into any agreement, that would be inconsistent with the
registration rights granted to Holders of Warrants herein.
10. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. Each of the Company and the
Purchaser 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
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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.
(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); (ii) if to the Company, initially at the Company's address set
forth in the Purchase Agreement and thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 10(c); and
(iii) if to the Purchaser, initially at the Purchaser's address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 10(c).
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.
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(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 Purchase Agreement or
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 shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Purchaser, 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
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 judgement,
13
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.
(m) ADDITIONAL PURCHASERS. From time to time the Company may issue
and sell additional Warrants to be issued under the Warrant Agreement, together
with shares of Series E Preferred Stock or Series F Preferred Stock, to
Additional Purchasers; PROVIDED THAT, any such Additional Purchaser shall agree
to all of the terms and conditions of, and assume all of the rights and
obligations of a "Purchaser" under, this Agreement and the Warrant Agreement,
such action to be evidenced by such Additional Purchaser executing and
delivering to the Company a counterpart to the signature page of this Agreement
(in the form attached hereto as Exhibit A) and the Warrant Agreement (in the
form set forth therein). Other than such Additional Purchaser, the Company and
the Warrant Agent with respect to the Warrant Agreement, and the Company and
such Additional Purchaser with respect to this Agreement, no other party need
execute such counterparts in order for them to be effective.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
KMC TELECOM HOLDINGS, INC.
By /s/ Xxxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President, Chief Financial
Officer
14
NEWCOURT COMMERCIAL FINANCE
CORPORATION
By /s/ Xxxx X. Xxxxxx, III
--------------------------------------
Name:
Title:
LUCENT TECHNOLOGIES INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name:
Title:
15
EXHIBIT A
IN WITNESS WHEREOF, the undersigned hereby agrees to the terms and
conditions of, and agrees to be bound by the provisions of, the Warrant
Registration Rights Agreement dated as of February __, 1999, as if the
undersigned was a party thereto as of such date, and has caused this signature
page thereto to be duly executed as of the day and year set forth below.
Date:__________________ [ NAME OF ADDITIONAL OF PURCHASER ]
By:______________________________
Name:
Title:
Acknowledged and consented to:
KMC TELECOM HOLDINGS, INC.
By:______________________________
Name:
Title:
