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e.spire COMMUNICATIONS, INC.
UNITS CONSISTING OF
SERIES A CONVERTIBLE PREFERRED STOCK
AND
WARRANTS TO PURCHASE SHARES OF COMMON STOCK
PURCHASE AGREEMENT
March 1, 2000
To: The Xxxx Alternative Income Fund, L.P.
1776 On The Green
00 Xxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Ladies and Gentlemen:
e.spire COMMUNICATIONS, INC. (the "Company"), a Delaware
corporation, hereby confirms its agreement with THE XXXX ALTERNATIVE INCOME
FUND, L.P. (the "Purchaser"), a Delaware limited partnership, as set forth
below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company hereby agrees to issue and sell to the Purchaser and the
Purchaser hereby agrees to purchase from the Company up to an aggregate of
100,000 Units (hereinafter defined) at a price of $1,000 per Unit (or $792.29
per share of Preferred Stock (hereinafter defined) and $207.71 per Warrant
(hereinafter defined)) for an aggregate purchase price of $100 million. Each
Unit shall consist of one (1) share of Series A Convertible Preferred Stock of
the Company par value $1.00 per share (collectively, the "Preferred Stock"),
each share of which Preferred Stock is initially convertible into 126.42225
shares of the common stock, par value $.01 per share (the "Common Stock") of the
Company at a conversion price of $7.91 per share, subject to adjustment as
provided in the Transaction Documents
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(hereinafter defined) and one (1) Warrant in the form attached as Exhibit A
hereto (collectively, the "Warrants," and, together with the Preferred Stock,
the "Units"), each of which Warrants is initially exercisable to purchase 44.1
shares (the "Warrant Shares") of the Common Stock at an exercise price of $9.89
per share, subject to adjustment as provided in Section 6(d) and as provided in
the Warrant Agreement (hereinafter defined). The Preferred Stock shall upon
issuance have the rights and preferences set forth in the Certificate of
Designation ("Certificate of Designation") attached hereto as Exhibit B. The
Units, the Preferred Stock and the Warrants are herein collectively referred to
as the "Securities."
The Securities will be offered and sold to the Purchaser
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance upon one or more exemptions therefrom.
The Purchaser and the direct and indirect transferees of the
Securities will be entitled to the benefits of (i) the Registration Rights
Agreement substantially in the form attached hereto as Exhibit C (the
"Registration Rights Agreement"), among the Company, the Purchaser and the other
signatories thereto, which will require the Company, among other things, to file
with the Securities and Exchange Commission (the "Commission") a shelf
registration statement (the "Registration Statement") pursuant to Rule 415 under
the Act relating to the resale of the Preferred Stock and shares of Common Stock
issuable in connection with the conversion thereof (collectively, the
"Conversion Shares" and, together with the Warrant Shares and the Additional
Warrant Shares (hereinafter defined), the "Additional Securities") and to use
its reasonable best efforts to cause such registration statement to be declared
and remain effective in accordance therewith and (ii) the Warrant Agreement
among the Company, the Purchaser and other signatories thereto substantially in
the form attached hereto as Exhibit D (the "Warrant Agreement") which will
require the Company, among other things, to file with the Commission a
registration statement (the "Warrant Registration Statement") pursuant to Rule
415 under the Securities Act relating to the resale of the Warrants and Warrant
Shares and to use its reasonable best efforts to cause such registration
statement to be declared and remain effective in accordance therewith.
This purchase agreement (the "Agreement"), the Certificate of
Designation, the Warrant Agreement and related Warrants and the Registration
Rights Agreement are herein collectively referred to as the "Transaction
Documents."
2. Representations and Warranties. The Company represents and
warrants to and agrees with the Purchaser that:
(a) Since January 1, 1999 and to the date of this Agreement, the
Company has filed with the Commission, a Proxy Statement on Schedule 14A with
respect to
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the Company's 1999 Annual Meeting of Stockholders, the Company's Annual Report
on Form 10-K for the year ended December 31, 1998, the Company's Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, June 30 and
September 30, 1999, respectively, and the Company's Current Reports on Form 8-K
dated February 22, 1999, July 8, 1999, October 28, 1999, November 1, 1999,
December 3, 1999 and February 1, 2000 (including all exhibits to any of such
documents) (collectively the "SEC Reports"), which constitute all reports,
schedules, forms, statements and other documents required to be filed with the
Commission during such period by the Company. As of their respective dates, the
SEC Reports complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission promulgated thereunder applicable to the SEC
Reports, and none of the SEC Reports as of such dates contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that any SEC Report has been revised or
superseded by a later filed SEC Report, none of the SEC Reports contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements of the Company included in the SEC Reports
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the Commission) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present in all materials respects the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments).
(b) The Company owns all the issued and outstanding capital stock or
other equity interests of each of its direct and indirect subsidiaries (the
"Subsidiaries"). Each of the Company and the Subsidiaries is duly incorporated
or organized, validly existing and in good standing as a corporation or a
limited liability company, as the case may be, under the laws of its
jurisdiction of incorporation or organization, with all requisite corporate or
limited liability company power and authority to own or lease its properties and
conduct its business as now conducted, and as proposed to be conducted as
described in the Company's SEC Reports. Except as described on Schedule 2(b)(i),
each of the Company and the Subsidiaries is duly qualified to do business as a
foreign corporation in good standing in the jurisdiction in which it has its
principal place of business and in all other jurisdictions
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where the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not, singly or in the aggregate, have a material adverse effect on the business,
condition (financial or other), assets, nature of assets, liabilities,
operations, prospects or results of operations of the Company and the
Subsidiaries, taken as a whole (any such event, a "Material Adverse Effect").
Except as described in the SEC Reports, the Company does not own or control,
directly or indirectly, any material interest in any other corporation,
association, or other business entity.
(c) Except as set forth on Schedule 2(c)(i), the Preferred Stock, the
Warrants, the Conversion Shares, the Warrant Shares, the Change in Control
Warrants (hereinafter defined), any shares of Common Stock issuable upon
exercise of the Change in Control Warrants (the "Additional Warrant Shares", and
the Certificate of Designation have been duly authorized by the Company. The
Preferred Stock, the Warrants and the Change in Control Warrants, when issued,
sold and delivered in accordance with the terms hereof and for the consideration
expressed herein, and the Warrant Shares, the Additional Warrant Shares and the
Conversion Shares when issued in accordance with the terms of the Warrants, the
Change in Control Warrants and Preferred Stock, as the case may be, (i) will be
duly and validly issued and, in the case of the Preferred Stock, the Warrant
Shares, the Additional Warrant Shares and the Conversion Shares, fully paid and
nonassessable, (ii) will be free of any pledges, liens, security interests,
claims, rights or other encumbrances of any kind (other than under applicable
federal and state securities laws), (iii) assuming the accuracy of the
Purchaser's representations and warranties in this Agreement, will be issued in
compliance with all applicable federal and state securities laws, and (iv) will
not be issued in violation of any preemptive rights of stockholders. Except as
set forth on Schedule 2(c)(ii), the Preferred Stock, the Warrant Shares, the
Additional Warrant Shares and the Conversion Shares have been duly and validly
reserved for issuance.
(d) The Company has all requisite corporate power and authority to
execute and deliver the Warrant Agreement and the Registration Rights Agreement;
the Warrant Agreement and the Registration Rights Agreement have been duly
authorized by the Company and, when executed and delivered by the Company
(assuming due authorization, execution and delivery by the parties thereto other
than the Company) will constitute valid and legally binding agreements of the
Company, enforceable against the Company in accordance with their terms, except
that (i) the enforcement thereof may be subject to (A) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (B) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought and (C) any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public policy
considerations.
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(e) The Company has all requisite corporate power and authority to
execute and deliver this Agreement, the Warrants and the Change in Control
Warrants, to issue the Warrant Shares and the Additional Warrant Shares and,
subsequent to the filing of the Certificate of Designation, to issue and deliver
the Preferred Stock and the Conversion Shares, and to consummate the
transactions contemplated hereby. This Agreement and each other Transaction
Document has been duly authorized, and this Agreement has been and each other
Transaction Document has been or as of the Initial Closing will be duly executed
and delivered by the Company. No consent, approval, authorization or order of
any foreign or domestic national, state, provincial or local government or any
instrumentality, subdivision, court or governmental agency or body thereof, or
any arbitral body (each, a "Governmental Authority") having jurisdiction over
the Company or the Subsidiaries or their respective businesses (including,
without limitation, the Federal Communications Commission (the "FCC")) is
required for the performance of this Agreement and the other Transaction
Documents by the Company or the consummation by the Company of the transactions
contemplated hereby or thereby, except for (x) such consents as have been
obtained, (y) such consents as may be required under state securities or "Blue
Sky" laws in connection with the purchase and resale of the Securities and the
Additional Securities by the Purchaser and (z) any notification as may be
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), or any consent as may be required by the FCC or any
state telecommunications regulatory authorities or commissions ("State
Telecommunications Authorities"), in each such case, as a result of the
Purchaser's conversion of Preferred Stock or exercise of Warrants or Additional
Warrants. Neither the Company nor any of the Subsidiaries nor their operations
is (i) in violation of its certificate of incorporation or by-laws (or similar
organizational document), (ii) in violation of any statute, judgment, decree,
order, rule or regulation applicable to the Company or the Subsidiaries, which
violation would, individually or in the aggregate, be reasonably likely to have
a Material Adverse Effect or (iii) other than as disclosed in the Company's SEC
Reports or as otherwise disclosed in Schedule 2(e), in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, note,
lease, license, franchise agreement, permit, certificate, contract or other
agreement or instrument to which the Company or the Subsidiaries is a party or
to which the Company or the Subsidiaries or their respective assets is subject,
which default would, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect.
(f) Neither the issuance and sale of the Securities or the Change in
Control Warrants and the Additional Securities, nor the execution, delivery and
performance by the Company of this Agreement, the Warrant Agreement or the
Registration Rights Agreement or the consummation of the transactions
contemplated hereby and thereby, will (i) conflict with the certificate of
incorporation
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or by-laws of the Company, as the same will be in effect as of each Closing,
(ii) constitute or result in a breach, default or violation of (with or without
the giving of notice, passage of time or both), or result in the creation or
imposition of a lien, charge or encumbrance on any properties or assets of the
Company or the Subsidiaries under any of the terms or provisions of, any
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, or other agreement or instrument to which the Company is a
party or to which the Company or its respective properties is subject, (iii)
require the consent of any third party or any Governmental Authorities, and
including without limitation as of the Initial Closing, The NASDAQ Stock Market
and any related body ("NASDAQ"), other than (A) required consents under the
Credit Agreement dated as of August 11, 1999 among the Company, e.spire Finance
Corporation, the Lenders, Xxxxxxx Sachs Credit Partners L.P., the Bank of New
York, First Union National Bank and Newcourt Commercial Finance Corporation (the
"Credit Agreement"), (B) solely with respect to the Securities to be issued and
sold at the Final Closing, the Stockholder Approval (hereinafter defined)and (C)
any required consents of the FCC or any State Telecommunications Authority as a
result of the Purchaser's conversion of Preferred Stock or exercise of Warrants;
or (iv) (assuming compliance with all applicable state securities and "Blue Sky"
laws, all applicable rules and regulations of the FCC and State
Telecommunications Authorities, and the HSR Act, and assuming the receipt by the
Company of the Stockholder Approval and assuming the accuracy of the
representations and warranties of the Purchaser in Section 7 hereof) contravene
any statute, judgment, decree, order, rule or regulation of any Governmental
Authority applicable to the Company or any of its respective properties, except
for any conflict, breach, violation, default, lien, charge, contravention or
encumbrance referred to in clauses (ii) and (iii) of this Section 2(f) which
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect. For purposes of this Agreement, "Stockholder Approval"
shall mean the affirmative vote of the holders of a majority of the shares of
the Company's Common Stock present in person or by proxy at a meeting of
stockholders of the Company duly called and held (and at which meeting a quorum
is present) approving the issuance of the Preferred Stock and Conversion Shares
hereunder and to Greenwich and Honeywell (as each term is hereinafter defined),
as well as the Preferred Stock included in the Subsequent Securities referred to
in Section 13 (and Conversion Shares relating thereto), as and to the extent all
such Preferred Stock and Conversion Shares taken together may result in the
issuance of a number of shares of Common Stock which exceeds 20% of the total
outstanding Common Stock immediately prior to the Initial Closing. The issuance
and sale of the Warrants and the Initial Preferred Stock (hereinafter defined)
at the Initial Closing, any issuance of Change in Control Warrants, and the
issuance of any Additional Securities with respect to such Initial Preferred
Stock and Change in Control Warrants pursuant to the conversion or exercise
thereof (at an adjusted conversion or exercise price, as the case may be),
without in any case obtaining Stockholder Approval, is not and at the time of
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issuance of such Additional Securities will not be in violation, breach or
contravention of any rule or other requirement or any criteria for listing or
continued trading through NASDAQ (a "NASDAQ Rule") and does not and will not
require any consent of NASDAQ. Subject to obtaining Stockholder Approval, the
Remaining Preferred Stock (hereinafter defined) may be issued and sold at the
Final Closing and any Additional Securities may be issued and sold with respect
thereto without violation, breach or contravention of any NASDAQ Rule and will
not require any consent of NASDAQ.
(g) Except as described in the Company's SEC Reports, there is neither
pending nor, to the best knowledge of the Company after due inquiry, threatened,
any action, suit, proceeding, inquiry or investigation to which the Company or
any of the Subsidiaries is a party, or to which any of their respective
properties or assets are or would be subject, before or brought by any
Governmental Authority (including, without limitation, the FCC) that would,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect or that seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge or relate to the issuance or sale of the Securities or
Additional Securities to be sold hereunder or the consummation of the other
transactions contemplated herein or in the other Transaction Documents.
(h) Except as disclosed on Schedule 2(h), each of the Company and the
Subsidiaries owns or possesses adequate licenses or other rights to use all
patents, trademarks, service marks, trade names, copyrights and know-how, and as
of each Closing (hereinafter defined) will continue to own or possess such
licenses, rights and know-how and other intellectual property necessary to
conduct the businesses currently operated by it, or as proposed to be conducted
by it as described in the Company's SEC Reports, except for any the absence of
which would not, individually or in the aggregate, be reasonably likely to have
a Material Adverse Effect, and neither the Company nor the Subsidiaries has
received any notice of infringement of, or conflict with (or knows of any such
infringement of or conflict with) asserted rights of others with respect to any
patents, trademarks, service marks, trade names, copyrights or know-how
necessary to conduct the businesses operated by it that, if such assertion of
infringement or conflict were sustained, would, individually or in the
aggregate, have a Material Adverse Effect.
(i) Each of the Company and the Subsidiaries has obtained, or has
applied for, all consents, approvals, authorizations, orders, registrations,
filings, qualifications, licenses (including, without limitation, all licenses
from the FCC and state, local or other governmental authorities), permits,
franchises and other governmental authorizations necessary to conduct its
businesses (or proposed businesses) as described in the Company's SEC Reports,
except for any the absence of which, individually or in the aggregate, would not
be reasonably likely to
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have a Material Adverse Effect. Neither the Company nor any of the Subsidiaries
has received any notice of proceedings related to the revocation or materially
adverse modification of any such consent, approval, authorization, order,
registration, filing, qualification, license or permit, except for any which
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect.
(j) Except as disclosed in the SEC Reports, subsequent to September 30,
1999, (i) neither the Company nor any of the Subsidiaries has incurred any
liabilities or obligations, direct or contingent, or entered into any material
transactions not in the ordinary course of business that would, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect; and
(ii) the Company has not purchased any of its outstanding capital stock or
(except for regularly scheduled pay-in-kind dividends on shares of preferred
stock described under Section 2(r) below) declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock.
(k) There are no legal or governmental proceedings involving or
affecting the Company or any of the Subsidiaries or any of their respective
properties or assets (other than proceedings, individually or in the aggregate,
which would not, if the subject of an unfavorable decision, ruling or finding,
result in a Material Adverse Effect) that are not described in the SEC Reports.
Except as described in the SEC Reports or Schedule 2(e), neither the Company nor
any of the Subsidiaries is in default under any contract, has received a notice
or claim of any such default or has knowledge of any breach of any such contract
by the other party or parties thereto, except such defaults or breaches which
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect.
(l) Each of the Company and the Subsidiaries has filed all necessary
federal, state, local and foreign income, franchise and property tax returns,
except where the failure to so file such returns would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect, and each
of the Company and the Subsidiaries has paid all taxes shown as due when due;
and other than tax deficiencies that the Company or any of the Subsidiaries is
contesting in good faith and for which adequate reserves have been provided,
there is no tax deficiency that has been asserted against the Company or any of
the Subsidiaries that would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect. The charges, accruals and reserves on
the consolidated books of the Company in respect of any tax liability for any
years not finally determined are adequate to meet any assessments or
re-assessments for additional tax for any years not finally determined, except
to the extent of any inadequacy that would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
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(m) Except as disclosed in the SEC Reports, each of the Company and the
Subsidiaries has good and marketable title to all real property and good title
to all personal property owned or claimed to be owned by it and good and valid
title to all leasehold interests in the real and personal property leased by it
(except for those leases of real property in which the Company has good title
and that would be marketable but for the requirement that the landlord consent
to an assignment or sublease of the lease), free and clear of all liens,
charges, encumbrances or restrictions, except to the extent the failure to have
such title or the existence of such liens, charges, encumbrances or restrictions
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect. All leases, contracts and agreements to which the
Company or any of the Subsidiaries is a party or by which any of them is bound
are valid and enforceable against the Company or such Subsidiaries and are valid
and enforceable against the other party or parties thereto and are in full force
and effect with only such exceptions as would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect. No real or
personal property, rights-of-way, conduits, pole attachments or fiber leased,
licensed or used by the Company or any of the Subsidiaries lies in an area that
is, or to the best knowledge of the Company will be, subject to zoning, use, or
building code restrictions that would prohibit, and no state of facts relating
to the actions or inaction of another person or entity or his, her or its
ownership, leasing, licensing or use of any such real or personal property,
rights-of-way, conduits, pole attachments or fiber exists that would prevent the
continued effective leasing, licensing or use of such real or personal property,
rights-of-way, conduits, pole attachments or fiber in the business of the
Company or any of the Subsidiaries as presently conducted, subject in each case
to such exceptions as, individually or in the aggregate, do not have and are not
reasonably likely to have a Material Adverse Effect.
(n) None of the Company or any of the Subsidiaries is and, after giving
effect to the offering and sale of the Securities and the Additional Securities
and the application of the proceeds therefrom as described herein, none will be,
an "investment company," as such term is defined in the Investment Company Act
of 1940, as amended, and the rules and regulations thereunder.
(o) Neither the Company nor any of its directors, officers or
controlling persons (provided that the Purchaser is excluded from the warranty
in this Section 2(o)) has taken, directly or indirectly, any action designed, or
that might reasonably be expected, to cause or result, under the Securities Act
or otherwise, in, or that has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of any of
the Securities or the Additional Securities.
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(p) Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls that
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(q) None of the Company, any of the Subsidiaries or any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under the
Securities Act) (provided that the Purchaser is excluded from the warranty in
this Section 2(q)) has directly, or through any agent, (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of, any
"security" (as defined in the Securities Act) that is or could be integrated
with the sale of the Securities or the Additional Securities in a manner that
would require the registration under the Securities Act of the Securities or the
Additional Securities or (ii) engaged in any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) in connection with the offering of the Securities or the
Additional Securities or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act. Assuming the accuracy of the
representations and warranties of the Purchaser in Section 7 hereof, it is not
necessary in connection with the offer, sale and delivery of the Securities or
the Additional Securities to the Purchaser in the manner contemplated by this
Agreement to register any of the Securities or the Additional Securities under
the Securities Act.
(r) As of the date of this Agreement, the authorized capital of the
Company consists of (i) 125,000,000 shares of Common Stock, of which 51,570,766
shares were issued and outstanding at January 31, 2000 and 54,827,337 are
reserved for issuance and (ii) 3,000,000 shares of preferred stock, par value
$1.00 per share, of which (x) 400,000 shares have been designated 14.75%
Redeemable Preferred Stock due 2008 (the "14.75% Preferred Stock") of which
[107,235.94] shares are issued and outstanding, (y) 200,000 shares have been
designated Series A 12.75% Junior Redeemable Preferred Stock due 2009 of which
18.25 shares are issued and outstanding and (z) 700,000 shares have been
designated Series B 12.75% Junior Redeemable Preferred Stock (the "12.75%
Preferred Stock") of which 198,843 shares are issued and outstanding. Except for
(A) 489,405 shares of Common Stock reserved for issuance under the Company's
1996 Employee Stock Purchase Plan; (B) 20,000 shares of Common Stock reserved
for issuance under the Company's 1998 Restricted Stock Plan; (C) 5,646,355
shares of Common Stock reserved for issuance upon exercise of the warrants
issued by the Company in connection with the sale of the 14.75% Preferred Stock;
(D) 2,330,757 shares of Common Stock reserved for issuance upon exercise of the
warrants issued by the
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Company in connection with the sale of the Company's 13% Senior Discount Notes
due 2005, (E) 5,259,294 shares of Common Stock reserved for issuance in
connection with the Company's non-plan employee stock options; (F) 9,471,992
shares of Common Stock reserved for issuance under the Company's 1994 Employee
Stock Option Plan; (G) 560,800 shares of Common Stock reserved for issuance
under the Company's Annual Performance Plan; (H) 480,000 shares of Common Stock
reserved for issuance in connection with stock options granted to the Company's
outside directors; (I) 305,614 shares of Common Stock reserved for issuance upon
exercise of warrants issued by the Company in connection with certain preferred
provider and local services agreements entered into by the Company; (J) 421,726
shares of Common Stock reserved for issuance upon the exercise of warrants
registered pursuant to Form S-3, Commission File No. 333-40337, (K) shares of
Common Stock in an amount up to $600,000 reserved for issuance in connection
with a settlement agreement to be entered into between the Company and a third
party and (L) 29,841,394 shares of Common Stock reserved to be issued in
connection with this Purchase Agreement and the respective purchase agreements,
if any, between Greenwich and Honeywell and the Company, there are not
outstanding (and, except as contemplated by this Agreement, the Company does not
have any plan to issue, grant or enter into) any options, warrants, rights
(including conversion or preemptive rights), subscriptions or agreements for the
purchase, or acquisition from or by the Company of any shares of its or any of
its Subsidiaries capital stock or any other securities convertible into or
exercisable for any shares of its or any of its Subsidiaries capital stock.
There are no voting agreements, voting trust agreements, stockholder agreements
or other agreements relating to the capital stock of the Company or any of its
Subsidiaries or any other securities convertible into or exercisable for any
shares of its or any of its Subsidiaries capital stock. Except as disclosed in
Schedule 2(r), no outstanding options, warrants or other securities exercisable
for or convertible into Common Stock require anti-dilution adjustments by reason
of the consummation of the transactions contemplated hereby.
(s) Other than as described in the SEC Reports or in Schedule 2(e),
since September 30,1999 (i) there has not been any change in the capital stock
or long-term indebtedness of the Company or any of the Subsidiaries which could,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect and (ii) there has not occurred, nor has information become known
nor has any state of facts arisen that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect whether or not arising
in the ordinary course of business.
(t) Other than routine individual grievances or disputes in an
individual amount less than $50,000 and in the aggregate less than $250,000,
there is no strike, labor dispute, slowdown or work stoppage with the employees
of the
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Company or any of the Subsidiaries that is pending or, to the knowledge of the
Company or any of the Subsidiaries, threatened. Neither the Company nor any
Subsidiary is a party to any collective bargaining agreement. The Company does
not know of any activities or proceedings of any labor organization (or
representative thereof) to organize any employees of the Company or any
Subsidiary.
(u) Each of the Company and the Subsidiaries carries insurance in such
amounts and covering such risks as is adequate for the conduct of its business
and the value of its properties.
(v) The Company maintains, sponsors, contributes to, or has or has had
an obligation with respect to "employee benefit plans," within the meaning of
Section 3(3) of ERISA, and may or has had obligations with respect to other
bonus, profit sharing, compensation, pension, severance, deferred compensation,
fringe benefit, insurance, welfare, post-retirement, health, life, stock option,
stock purchase, restricted stock, tuition refund, service award, company car,
scholarship, relocation, disability, accident, sick, vacation, holiday,
termination, unemployment, individual employment, consulting, executive
compensation, incentive, commission, payroll practices, retention, change in
control, noncompetition, collective bargaining and other plans, agreements,
policies, trust funds, or arrangements (whether written or unwritten, insured or
self-insured) on behalf of employees, directors, or shareholders of the Company
(whether current, former, or retired) or their beneficiaries (each a "Plan" and,
collectively, the "Plans"). Neither the Company nor any ERISA Affiliate has any
liability, direct or indirect, or actual or contingent (but excluding any
contributions due in the ordinary course) with respect to any plan subject to
Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA that has or
could reasonably be expected to have a Material Adverse Effect. The consummation
of the transactions contemplated by this Agreement will not give rise to any
liability with respect to any Plan that could reasonably be expected to have a
Material Adverse Effect, including, without limitation, liability for severance
pay, unemployment compensation, termination pay or withdrawal liability, or
accelerate the time of payment or vesting or increase the amount of compensation
or benefits due to any employee, director, or shareholder of the Company
(whether current, former, or retired) or their beneficiaries solely by reason of
such transactions. Except as would not individually or in the aggregate have, or
could not reasonably be expected to have, a Material Adverse Effect: (i) neither
the Company nor any ERISA Affiliate has made any promises or commitments to
create any additional plan, agreement, or arrangement; (ii) no event, condition,
or circumstance exists that could result in an increase of the benefits provided
under any Plan or the expense of maintaining any Plan from the level of benefits
or expense incurred for the most recent fiscal year ended before Closing; and
(iii) neither the Company nor any ERISA Affiliate has or could be expected to
have any liability for any prohibited transaction as defined in Section 406 of
ERISA or Section 4975 of the Code. With respect to each of the
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Plans: (i) each Plan intended to qualify under Section 401(a) of the Code has
been qualified since its inception and has received a determination letter under
Revenue Procedure 93-39 from the IRS to the effect that the Plan is qualified
under Section 401 of the Code and any trust maintained pursuant thereto is
exempt from federal income taxation under Section 501 of the Code and nothing
has occurred or is expected to occur at or before Closing that caused or could
cause the loss of such qualification or exemption or the imposition of any
penalty or tax liability that has or could reasonably be expected to have a
Material Adverse Effect; (ii) no claim, lawsuit, arbitration, audit or
investigation or other action has been threatened, asserted, instituted, or
anticipated against the Plans (other than non-material routine claims for
benefits, and appeals of such claims), any trustee or fiduciaries thereof, the
Company, any ERISA Affiliate, any director, officer, or employee thereof, or any
of the assets of any trust of the Plans that would have or could reasonably be
expected to have a Material Adverse Effect; (iii) the Plan complies in all
material respects and has been maintained and operated in all material respects
in accordance with its terms and applicable law, including, without limitation,
ERISA and the Code; and (iv) with respect to each Plan that is funded mostly or
partially through an insurance policy, the Company has no liability in the
nature of retroactive rate adjustment, loss sharing arrangement or other actual
or contingent liability arising wholly or partially out of events occurring on
or before Closing that has or could reasonably be expected to have a Material
Adverse Effect.
(w) Except for matters which would not in the aggregate have a Material
Adverse Effect,
(i) (A) the Company and each Subsidiary is in compliance with
all applicable Environmental Laws (as defined below); (B) all permits
and other authorizations of any Governmental Authority currently held
by the Company and each Subsidiary pursuant to the Environmental Laws
are in full force and effect, the Company and each Subsidiary is in
compliance with all of the terms of such permits and authorizations,
and no other permits or authorizations are required by the Company or
any Subsidiary for the conduct of their respective businesses on the
date hereof; and (C) the management, handling, storage, transportation,
treatment, and disposal by the Company and each Subsidiary of any
Hazardous Materials (as defined below) has been in compliance with all
applicable Environmental Laws. Neither the Company nor any Subsidiary
has received any written communication that alleges that the Company or
any Subsidiary is not in compliance in all material respects with all
applicable Environmental Laws.
(ii) There is no Environmental Claim (hereinafter defined)
pending or, to the knowledge of the Company, threatened against or
involving the Company or any of the Subsidiaries or against any person
or entity whose
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liability for any Environmental Claim the Company or any of the
Subsidiaries has or may have retained or assumed either contractually
or by operation of law.
(iii) To the knowledge of the Company, there are no past or
present actions or activities by the Company or any Subsidiary
including the storage, treatment, release, emission, discharge,
disposal or arrangement for disposal of any Hazardous Materials, that
could reasonably form the basis of any Environmental Claim against the
Company or any of the Subsidiaries or against any person or entity
whose liability for any Environmental Claim the Company or any
Subsidiary may have retained or assumed either contractually or by
operation of law.
(iv) As used herein, these terms shall have the following
meanings:
(A) "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits,
demands, demand letters, directives, claims, liens,
investigations, proceedings or notices of noncompliance or
violation (written or oral) by any person or governmental
authority alleging potential liability arising out of based on
or resulting from the presence, or release or threatened
release into the environment, of any Hazardous Materials at
any location owned or leased by the Company or any Subsidiary
or other circumstances forming the basis of any violation or
alleged violation of any Environmental Law.
(B) "Environmental Laws" means all applicable
foreign, federal, state and local laws (including the common
law), rules, requirements and regulations relating to
pollution, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or
subsurface strata) or protection of human health as it relates
to the environment including, without limitation, laws and
regulations relating to releases of Hazardous Materials, or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials or relating to management of
asbestos in buildings.
(C) "Hazardous Materials" means wastes, substances,
or materials (whether solids, liquids or gases) that are
deemed hazardous, toxic, pollutants, or contaminants,
including without limitation, substances defined as "hazardous
substances", "toxic substances", "radioactive materials", or
other similar designations in, or otherwise subject to
regulation under, any Environmental Laws.
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(x) At the Initial Closing, the Company will deliver to the Trustees
under each of the indentures with respect to the Company's Existing Notes (as
such term is defined in the Certificate of Designation): (i) a resolution of the
Company's Board of Directors certifying that (A) the transactions contemplated
by this Agreement and the other Transaction Documents are on terms no less
favorable to the Company than those that would have been obtained in a
comparable arms-length transaction by the Company with a person or entity that
is not an Affiliate (as such term is defined in the respective Indentures), and
(B) the transactions contemplated by this Agreement have been unanimously
approved by the Independent Directors (as such term is defined in the respective
Indentures) on the Company's Board of Directors, who have determined that such
transactions are in the best interests of the Company, (ii) opinions of Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx that such transactions are fair to the Company from a
financial point of view, and (iii) copies of the officers' certificates
delivered to the Trustees to the effect that such opinions comply with the
Indentures, all of the foregoing in conformity with the requirements of the
Indentures. None of such resolutions, opinions or certificates has been
withdrawn or modified in any material respect.
(y) Except for (i) commitment fees paid to the Purchaser and to
Greenwich and Honeywell, if any, and (ii) payment of commissions to Xxxxxx
Xxxxxxx pursuant to the terms of the Consulting Agreement, dated October 19,
1994, between Xxxxxx Xxxxxxx and the Company (which is the Company's
obligation), no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or the other Transaction Documents
based upon arrangement made by or on behalf of the Company.
Any certificate signed by any officer of the Company or any Subsidiary
and delivered to the Purchaser or to counsel for the Purchaser shall be deemed a
representation and warranty by the Company and each of its Subsidiaries to the
Purchaser as to the matters covered thereby.
No representation or warranty of the Company contained herein shall be
affected by any knowledge of or attributable to any employee or other
representative of the Purchaser including without limitation any present or
former representative on or observer to the Company's or its Subsidiaries'
boards of directors who is an employee, designee, or affiliate of the Xxxxxxxxx.
00
- 00 -
0. Xxxxxxxx, Sale and Delivery of the Securities.
(a) Subject to the terms and conditions of this Agreement, (i) at the
Initial Closing, subject to possible reduction in the number of Securities to be
purchased by the Purchaser at the Initial Closing in accordance with Section
3(d) below, the Purchaser shall purchase and the Company shall sell and issue to
the Purchaser (A) all of the Warrants and (B) that number of shares of Preferred
Stock (the "Initial Preferred Stock") as would result (if the shares of
Preferred Stock included in the Initial Preferred Stock were then converted) in
the issuance of shares of Common Stock equal to 19.9% of the shares of Common
Stock of the Company outstanding immediately prior to the Initial Closing and
(ii) at the Final Closing (hereinafter defined) the Purchaser shall purchase and
the Company shall sell and issue to the Purchaser that number of shares of
Preferred Stock (the "Remaining Preferred Stock") equal to the difference
between (x) 100,000 and (y) the number of shares of Initial Preferred Stock sold
and issued to the Purchaser at the Initial Closing. The Company shall deliver to
the Purchaser at the Initial Closing a schedule, certified by the Company's
Chief Financial Officer, setting forth in such reasonable detail as may be
requested by the Purchaser, the calculations called for by this Section 3(a).
(b) The purchase and sale of the Warrants and the Initial Preferred
Stock shall take place at the offices of Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, within two (2) days following the satisfaction of the
conditions set forth in this Agreement required to be satisfied prior to the
consummation of the purchase and sale of the Warrants and the Initial Preferred
Stock hereunder, but in no event later than March 6, 2000, or at such other time
and place as the Company and the Purchaser mutually agree upon in writing (which
time and place are designated as the "Initial Closing"). At the Initial Closing,
the Company shall deliver to the Purchaser one or more certificates representing
the Initial Preferred Stock being sold and issued, and an executed Warrant
representing all of the Warrants, in such denomination or denominations and
registered in such name or names as the Purchaser shall request upon notice to
the Company against payment by or on behalf of the Purchaser of the purchase
price therefor by wire transfer, payable to or upon the order of the Company in
immediately available funds.
(c) The purchase and sale of the Remaining Preferred Stock shall take
place at the offices of Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, within two (2) days following the satisfaction of the conditions set
forth in this Agreement required to be satisfied prior to consummation of the
purchase and sale of the Remaining Preferred Stock, but in no event later than
100 days following the Initial Closing, or at such other time and place as the
Company and the Purchaser mutually agree upon orally or in writing (which time
and place are designated as the "Final Closing"). At the Final Closing, the
Company shall deliver to the Purchaser one or more certificates representing the
Remaining Preferred Stock being sold and
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issued, in such denomination or denominations and registered in such name or
names as the Purchaser shall request upon notice to the Company, against payment
by or on behalf of the Purchaser of the purchase price therefor by wire
transfer, payable to or upon the order of the Company in immediately available
funds.
(d) In the event that Greenwich Street Capital Partners II, L.P. or any
affiliate fund thereof ("Greenwich") and The Honeywell International Inc. Master
Retirement Trust or any affiliate thereof ("Honeywell"), agree to purchase
Securities at the Initial Closing, then (i) the full number of Warrants provided
under Section 3(a)(i) above to be issued and sold by the Company to the
Purchaser at the Initial Closing shall be issued and sold to the Purchaser at
the Initial Closing; and (ii) the number of shares of Initial Preferred Stock
provided under Section 3(a)(i) above to be issued and sold by the Company to the
Purchaser at the Initial Closing shall be allocated 57.14285% to the Purchaser,
14.28572% to Greenwich and 28.57143% to Honeywell. (In the event that only one
of Greenwich and Honeywell enters into such an agreement, the number of shares
of Initial Preferred Stock shall be appropriately prorated between the Purchaser
and Greenwich or Honeywell, as the case may be.)
(e) Notwithstanding anything to the contrary elsewhere in this
Agreement, in the event that the per share closing price of the Common Stock on
the day immediately preceding the Initial Closing is less than $6.27, then (A)
notwithstanding anything to the contrary contained herein (including without
limitation Section 6(c)(i) below), no Stockholder Approval shall be required in
connection with the transactions contemplated by this Agreement and (B) the
Final Closing shall occur as soon as reasonably practicable after the Initial
Closing.
The Initial Closing and the Final Closing are sometimes referred to
collectively in this Agreement as the "Closings" and each as a "Closing".
4. Covenants of the Company. The Company covenants and agrees
with the Purchaser (and in the case of the last sentence of Section 4(f), the
Purchaser agrees) that:
(a) The Company will cooperate at its expense with the Purchaser in
arranging for the qualification of the Securities and the Additional Securities
for offering and sale under the securities or "Blue Sky" laws of such
jurisdictions as the Purchaser may designate and will continue such U.S.
qualifications in effect for as long as may be necessary to complete the resale
of the Securities and the Additional Securities by the Purchaser; provided,
however, that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject the Company to any tax in any such
jurisdiction where it is not then so subject. The Company will cooperate with
the Purchaser to (i) if requested, permit the Warrants and the Change
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in Control Warrants, to the extent eligible for resale pursuant to Rule 144A, to
be designated PORTAL securities in accordance with the rules and regulations
adopted by the NASD relating to trading in the Private Offerings, Resales and
Trading through Automated Linkages Market (the "PORTAL Market"), (ii) if
requested, permit the Securities upon issuance and registration under the
Securities Act to be eligible for clearance and settlement through The
Depository Trust Company and (iii) permit the Additional Securities upon
issuance and registration under the Securities Act to be listed for quotation
through the Nasdaq National Market or listed on any national securities exchange
on which the Company's Common Stock is then listed.
(b) Approximately two-thirds of the aggregate net proceeds from the
issuance and sale of the Units will be used by the Company for general corporate
purposes; the remaining one-third of the aggregate net proceeds will be
contributed by the Company to its subsidiary, ACSI Network Technologies, Inc.,
for its general corporate purposes.
(c) From time to time, and as soon as reasonably practicable upon
demand, the Company will provide to the Purchaser such additional information
regarding results of operations, financial condition, business or prospects of
the Company or the Subsidiaries, including without limitation, cash flow
analyses, financial statements, budgets, business plans, projections and other
financial information and minutes of any meetings of the Board of Directors of
the Company or the Subsidiaries, as may be reasonably requested by the
Purchaser. The Company shall also afford to the Purchaser (and its
representatives) access, at reasonable times and on reasonable prior notice, to
the books, records and properties of the Company and the Subsidiaries, and shall
permit the Purchaser (and its representatives) to make copies of such books and
records and also shall afford such access to meet and consult with management
and the advisors of the Company and its Subsidiaries with respect to the
business of the Company and its Subsidiaries.
(d) Neither the Company nor any of its Affiliates (provided that the
Purchaser shall be excluded from the Company's obligations under this Section
4(d)) will sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any "security" (as defined in the Securities Act) that could be
integrated with the sale of the Securities or the Additional Securities in a
manner that would require the registration under the Securities Act of the
Securities or the Additional Securities.
(e) The Company will not, and will not permit any of the Subsidiaries
to, engage in any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) in connection with the
offering of the Securities or the Additional Securities or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act.
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(f) The Company will take all action necessary in accordance with
applicable law and its Certificate of Incorporation and By-laws to convene a
special meeting of its stockholders as promptly as practicable to obtain the
Stockholder Approval. The Board of Directors of the Company shall, subject to
its fiduciary duties, recommend such approval to the stockholders of the Company
and the Company shall take all lawful actions and use its best efforts to
solicit and obtain such approval. The Company and the Purchaser hereby
acknowledge and agree that neither any Conversion Shares nor any Warrant Shares
may be voted at such meeting or otherwise to obtain Stockholder Approval.
(g) As soon as practicable (but not later than March 7, 2000), the
Company shall file a proxy statement in preliminary form with the Commission in
connection with the special meeting of the Company's stockholders to consider
and vote upon the Stockholder Approval. Such proxy statement (or the proxy
statement for the next annual meeting of stockholders) shall include a proposal
seeking stockholder approval of an increase in the authorized Common Stock of
the Company for the reservation for issuance of a sufficient number of shares of
Common Stock issuable upon conversion, exercise or payment of dividends with
respect to the Securities. The Company shall make drafts of the proxy statement
available to the Purchaser for its review reasonably in advance of filing. The
Purchaser agrees to reasonably cooperate with the Company in the preparation of
the proxy statement. The definitive proxy statement ("Proxy Statement") for the
stockholders meeting shall be mailed to stockholders as soon as practicable. The
Company shall cause the Proxy Statement to comply in all material respects with
the requirements of the Exchange Act, and the applicable rules and regulations
thereunder, and to contain no untrue statement of any material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
(h) At all times prior to the earlier to occur of the Final Closing or
termination of this Agreement (including any termination of this Agreement with
respect to the Remaining Preferred Stock) pursuant to Section 10(a)(iv)), the
Company will amend or supplement each SEC Report to the extent required to
correct any untrue statement of a material fact contained therein or any
omission of a material fact required to be stated therein to make the statements
in such SEC Report, in light of the circumstances under which they were made,
not misleading. From and after the date of this Agreement and at all times prior
to the earlier to occur of the Final Closing or termination of this Agreement
(including any termination of this Agreement with respect to the Remaining
Preferred Stock pursuant to 10(a)(iv)), the Company shall timely file with the
Commission true, accurate and complete copies of all reports, schedules, forms,
statements and other documents required to be filed by the Company ("Required
Filings"). All of such Required Filings shall comply in all material respects
with the requirements of the Securities Act, or the Exchange Act, as
20
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the case may be, and the rules and regulations of the Commission promulgated
thereunder applicable to the Required Filings.
(i) The Company hereby covenants and agrees that, prior to the earlier
to occur of the Final Closing or the termination of this Agreement, unless
otherwise expressly contemplated by this Agreement or consented to beforehand in
writing by The Xxxx Alternative Income Fund, L.P., the Company shall, and shall
cause each Subsidiary to, operate its business only in the usual and ordinary
course consistent with past practices.
(j) The Company hereby covenants and agrees that, prior to the Initial
Closing it shall file or cause to be filed with the Secretary of State of
Delaware the Certificate of Designation.
(k) The Company hereby covenants and agrees that, prior to the earlier
to occur of the Final Closing or termination of this Agreement, unless consented
to in writing beforehand by The Xxxx Alternative Income Fund, L.P., and except
for pay-in-kind dividends in respect of the 14.75% Preferred Stock and the
12.75% Preferred Stock, the Company will not issue or take any action to issue
any capital stock or securities convertible into or exercisable for any capital
stock having rights, privileges or preferences, including, without limitation,
with respect to the payment of dividends or payment upon liquidation of the
Company (bankruptcy or otherwise), that are on a par or senior to any payment on
the Preferred Stock in any respect, or that are redeemable for cash, or that
provide for the payment of dividends in cash ahead of any payment on the
Preferred Stock, whether at the option or right of the holder or the Company or
its affiliates, unless expressly consented to beforehand in writing by the
Purchaser.
(l) The Company shall timely file any and all statements or reports
required to be filed by it with the Commission under and in accordance with the
Securities Act and the Exchange Act.
(m) As soon as practicable after the Purchaser's request therefor, the
Company shall (at its sole expense) file any notices, requests, registrations or
approvals required to be filed with the Federal Communications Commission or any
applicable state regulatory agency or commission in connection with the sale of
the Securities and the Additional Securities under the Purchase Agreements and
the sale of any Subsequent Securities and shall use its reasonable best efforts
to cause such notices, requests, registrations or approvals to be processed
successfully or approved, as the case may be.
(n) As soon as practicable after the Purchaser's request therefor, the
Company shall (at its sole expense) file any notifications under the HSR Act as
may
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be required as a result of the conversion or exercise of the Securities and
shall use its reasonable best efforts and shall cooperate with Purchaser to
cause the early termination or expiration of the waiting period for any such
notifications.
(o) The Company shall comply with all of its obligations in respect of
the MCI Preemptive Right.
5. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance of its
obligations under this Agreement and the other Transaction Documents, whether or
not the transactions contemplated herein or therein are consummated or this
Agreement is terminated pursuant to Section 10 hereof: (i) the reasonable fees
and disbursements of counsel, accountants and any other experts or advisors
retained by the Company and/or the Purchaser, (ii) the preparation (including
printing), issuance and delivery to the Purchaser of certificates evidencing the
Securities and the Additional Securities, including transfer agent's fees, (iii)
the qualification of the Securities and the Additional Securities under state
securities and "Blue Sky" laws, including filing fees and reasonable fees and
disbursements of counsel relating thereto, (iv) the fees and expenses of the
transfer agent and registrar of the Company, including fees and expenses of its
counsel, (v) any fees and expenses incurred by the Purchaser in connection with
any filing required to be made pursuant to the HSR Act, including filing fees
and reasonable fees and disbursements of their respective counsel whenever such
filings are made, (vi) Purchaser's appraisal costs not to exceed $10,000
annually, (vii) all expenses and listing fees incurred in connection with the
application, if requested, for quotation of the Warrants and the Change of
Control Warrants on the PORTAL Market, to the extent eligible for resale under
Rule 144A, and (viii) all other ongoing costs of holding or converting or
exercising the Securities, but excluding ordinary custodial expenses, brokerage
and/or underwriting commissions and taxes. Without limiting the provisions of
this Section 5 above, if the issuance and sale of the Securities provided for
herein are not consummated because any condition to the obligations of the
Purchaser set forth in Section 6 hereof is not satisfied or because of any
failure, refusal or inability on the part of the Company to perform all
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder (other than solely by reason of a default by the Purchaser of its
obligations hereunder after all conditions hereunder have been satisfied in
accordance herewith), the Company will reimburse the Purchaser upon demand for
all reasonable out-of-pocket expenses (including reasonable counsel fees and
disbursements) that shall have been incurred by the Purchaser in connection with
the proposed purchase and sale of the Securities.
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6. Conditions of the Obligations of the Purchaser.
(a) Conditions to the Purchaser's Obligations at Each Closing.
The obligations of the Purchaser with respect to each Closing under
this Agreement are subject to the fulfillment at or before each Closing of each
of the following conditions:
(i) The Purchaser shall have received opinions, dated as of
each Closing, of (i) the opinion of Xxxxx X. Xxxxxx, Esq., General
Counsel for the Company; (ii) the opinion of Xxxxx Xxxx & Xxxxxx LLP,
special regulatory counsel for the Company, and (iii) the opinion of
Xxxxx Xxxx & Xxxxxxxx, special counsel for the Company, all in form and
substance consistent with the Company's opinions in prior private
placements as may be reasonably agreed upon by the parties.
(ii) The representations and warranties of the Company
contained in this Agreement shall be true and correct when made and
true and correct at each Closing as if made on and as of each Closing
(other than to the extent any such representation or warranty is
expressly made as to a certain date); the Company shall have performed
all covenants and agreements in all material respects and satisfied all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing; and subsequent to September 30, 1999 no event
shall have occurred which has had, or in the judgment of the Purchaser,
is reasonably likely to have a Material Adverse Effect, other than as
described in the SEC Reports or as disclosed in Schedule 2(e).
(iii) The issuance and sale of the Securities and Change in
Control Warrants pursuant to this Agreement shall not be enjoined
(temporarily or permanently) and no restraining order or other
injunctive order shall have been issued or any action, suit or
proceeding shall have been commenced with respect to this Agreement or
other Transaction Document before any court or Governmental Authority
(including, without limitation, the FCC).
(iv) The Purchaser shall have received certificates, dated as
of each Closing, signed on behalf of the Company by its Chief Operating
Officer and its Chief Financial Officer to the effect that:
(A) The representations and warranties of the Company
in this Agreement were true and correct when made and true and
correct at each Closing as if made on and as of each Closing
(other than to the extent any such representation or warranty
is expressly made as to a
23
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certain date), and the Company has performed all covenants and
agreements in all material respects and satisfied all
conditions on its part to be performed or satisfied hereunder
at or prior to the Closing;
(B) Subsequent to September 30, 1999, no event has
occurred that has had, or is reasonably likely to have, a
Material Adverse Effect, other than as described in the SEC
Reports or as disclosed in Schedule 2(e);
(C) The issuance and sale of the Securities and the
Change in Control Warrants hereunder by the Company has not
been enjoined (temporarily or permanently);
(D) As at December 31, 1999 (and after giving effect
to all financial results, events and other circumstances
through the close of business on such date), the Company and
e.spire Finance Corporation were in compliance with each of
the covenants and obligations of the Company and e.spire
Finance Corporation set forth in Sections 6.5 and 6.6 of the
Credit Agreement.
(v) All authorizations, approvals or permits, if any, of any
Governmental Authority that are required in connection with the lawful
issuance and sale of the Securities or the Change in Control Warrants
pursuant to this Agreement or (subject to the matters set forth in
Section 2 (e) and (z) above) the Additional Securities pursuant to the
terms thereof shall have been duly obtained.
(vi) Other than the Stockholder Approval in the case of the
Final Closing and other than any notification under the HSR Act and any
consent of the FCC or any State Telecommunications Authority that may
be required as a result of the conversion or exercise of the
Securities, all consents and waivers, if any, of third parties that are
required in connection with such Closing under this Agreement and the
consummation of the transactions contemplated hereby, shall be duly
obtained and effective as of the Closing.
(vii) All corporate and other proceedings required in
connection with the transactions contemplated at such Closing and all
documents incident thereto shall be satisfactory in form and substance
to the Purchaser and its counsel and the Purchaser and such counsel
shall have received such counterpart originals and certified or other
copies of such documents as they may reasonably request.
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(viii) On or before the Closing Date, the Purchaser (and its
counsel) shall have received such further documents, certificates and
schedules or instruments relating to the business, corporate, legal and
financial affairs of the Company as they shall have heretofore
reasonably requested from the Company.
(ix) The Company and the Purchaser shall have entered into the
Registration Rights Agreement and the Warrant Agreement.
(x) The Company shall have received the written confirmation
of NASDAQ, in form and substance satisfactory to the Purchaser and its
counsel, that other than obtaining Stockholder Approval as contemplated
by Section 2(f) above, the Securities, Additional Securities and Change
in Control Warrants may be issued and sold, and the transactions
contemplated by this Agreement and the other Transaction Documents may
be consummated, without breach, violation or contravention of any
NASDAQ Rule ("NASDAQ Approval").
(xi) The Company shall have filed the Certificate of
Designation with the Secretary of State of Delaware and the same shall
have become effective and be in full force and effect.
(xii) Since January 18, 2000, there shall not have been any
material adverse change in the price of the Common Stock.
(xiii) As at December 31, 1999 (and after giving effect to all
financial results, events and other circumstances through the close of
business on such date), the Company and e.spire Finance Corporation
were in compliance with each of the covenants and obligations of the
Company and e.spire Finance Corporation set forth in Sections 6.5 and
6.6 of the Credit Agreement.
(xiv) Either the Purchaser shall have received confirmation
from the Company's independent certified public accountants reasonably
satisfactory to the Purchaser that no "going concern" or similar
exception will be taken in connection with the Company's financial
statements for the year ended December 31, 1999, or the Purchaser shall
have received a waiver reasonably acceptable to it from the lenders
under the Credit Agreement of any default under the Credit Agreement
relating to such "going concern" or similar exception.
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(b) Additional Conditions to the Purchaser's Obligation at the Initial
Closing.
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In addition to the conditions set forth in Section 6(a) above,
the obligations of the Purchaser to the Company under this Agreement are subject
to the fulfillment on or before the Initial Closing of the following additional
conditions:
(i) Approval of Budget. The Company shall have prepared and
submitted to the Purchaser its final budget for the fiscal year ended
December 31, 2000 and the Purchaser shall have approved such budget
(together with any updates or revisions thereof) or shall have waived
in writing such approval.
(ii) Issuance of Warrants. The Warrants (and if a Change in
Control shall have occurred, the Change in Control Warrants) shall have
been issued at the Initial Closing.
(iii) Issuance of Stock Certificates. The certificates
representing the shares of Initial Preferred Stock shall have been
executed and delivered by the Company to the Purchaser at the Initial
Closing.
(iv) Completion of Capital Calls by Purchaser. The Purchaser
shall have received the funds necessary to pay the purchase price for
the Warrants and Initial Preferred Stock being purchased by the
Purchaser at the Initial Closing in accordance with the capital call
procedures applicable to the Purchaser under the Purchaser's capital
call instruments, but in no event later than five business days after
the Purchaser receives written notice from the Company that all
conditions to Closing set forth under Sections 6(a) and (c) hereof have
been satisfied.
(c) Additional Conditions to the Purchaser's Obligations at the Final
Closing
In addition to the conditions set forth in Section 6(a) above,
the obligations of the Purchaser to the Company under this Agreement are subject
to the fulfillment on or before the Final Closing of the following additional
conditions:
(i) Stockholder Approval. The Company shall have obtained the
Stockholder Approval.
(ii) Issuance of any Change in Control Warrants. If a Change
in Control shall have occurred, the Change in Control Warrants shall
have been issued.
(iii) Issuance of Stock Certificates. The certificates
representing the Remaining Preferred Stock shall have been executed and
delivered by the Company to the Purchaser at the Final Closing.
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(iv) Completion of Capital Calls by the Purchaser. The
Purchaser shall have received the funds necessary to pay the purchase
price for the Remaining Preferred Stock being purchased by the
Purchaser at the Final Closing in accordance with the capital call
procedures applicable to the Purchaser under the Purchaser's capital
call instruments but in no event later than five business days after
the Purchaser receives written notice from the Company that all
conditions to Closing set forth under Sections 6(a) and (b) hereof have
been satisfied.
(d) Failure of Certain Conditions To Be Met.
(i) If on the trading day immediately preceding the Initial
Closing the closing price of the Common Stock as reported in the New
York edition of the Wall Street Journal is less than $6.26145 per share
(subject to appropriate adjustment for stock dividends, stock splits
and similar events) (a "Stock Decline"), then in such event the
exercise price of all Warrants (including, without limitation, the
Change in Control Warrants) shall be reset to equal $7.25 per share
(subject to adjustment in accordance with the provisions of the Warrant
Agreement in connection with events other than the Stock Decline).
(ii) In the event that there shall be a Change in Control of
the Company, then the Purchaser shall receive simultaneously with the
occurrence of the Change in Control or as soon thereafter as shall be
practicable 25,000 additional Warrants (the "Change in Control
Warrants"), each of which Change in Control Warrants being exercisable
for the same number of shares of Common Stock and at the same exercise
price as are than in effect under the Warrants (or, if no Warrants are
then outstanding, as would have been in effect had Warrants then been
outstanding) and otherwise having the same terms and subject to the
same conditions as the Warrants. As used herein, the term "Change in
Control" means (A) the sale, conveyance, transfer or lease of all or
substantially all of the assets of the Company (which, for purposes of
this sentence, shall include any successor to the Company) to any
"person" or "group" (within the meaning of Section 13(d)(3) and
14(d)(2) of the Exchange Act or any successor provision to either of
the foregoing, including any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule
13d-5(b)(i) under the Exchange Act), other than to the Purchaser, ING
Equity Partners L.P.I., Apex Investment Fund I, L.P., Apex Investment
Fund II, L.P., The Productivity Fund II, L.P. and Xxxxxxx Xxxxxxxxx
(including any affiliate of any of the foregoing other than the Company
or any Restricted Subsidiary of the Company (as defined in the
Indenture, dated July 24, 1998 with respect to the Company's 10.625%
Senior Discount Notes Due July 1, 2008)) (the "Permitted Holders")
shall have
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occurred; or (B) any "person" or "group" (within the meaning of
Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor
provision to either of the foregoing, including any group acting for
the purpose of acquiring, holding or disposing of securities within the
meaning of Rule 13d-5(b)(i) under the Exchange Act), other than any
Permitted Holder, becomes the "beneficial owner" (as defined under the
Exchange Act) of more than 35 percent of the total voting power of all
classes of the voting capital stock of the Company (including any
warrants, options or rights to acquire such voting capital stock),
calculated on fully diluted basis, and such voting power percentage is
greater than or equal to the total voting power percentage then
beneficially owned by the Permitted Holders in the aggregate; or (C)
during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election or appointment
by such board or whose nomination for election by the stockholders of
the Company was approved by a vote a majority of the directors then
still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office. Notwithstanding anything to the contrary
herein or in any other Transaction Document, the parties hereby agree
that the provisions of this Section 6(e) (and any other provisions
hereof or any other Transaction Document relating to the Change in
Control Warrants or any Additional Securities issuable in connection
therewith) may be amended by the Company and the holders of a majority
of the outstanding shares of Preferred Stock (including any shares of
Preferred Stock issued to Purchaser hereunder, to Greenwich, to
Honeywell and to any Additional Purchasers (hereinafter defined) (the
"Majority Holders"), and any waiver relating to such change in Control
Warrants and/or Additional Securities may be given on behalf of the
Purchaser by such Majority Holders; provided, however, that any such
amendment or waiver treats all holders of Preferred Stock in the same
fashion.
7. Restrictions on Transfer. The Purchaser hereby represents
and warrants to the Company that:
(a) The Securities to be purchased by the Purchaser will be acquired
for investment for its own account, and, except as contemplated by the Warrant
Agreement and the Registration Rights Agreement or otherwise in accordance with
applicable securities laws, not with a view to the resale or distribution of any
part thereof and without the present intention of selling, granting any
participation in, or otherwise distributing the same.
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(b) The Purchaser is an "accredited investor" within the meaning of
Rule 501(a) under the Securities Act and can bear the economic risk of its
investment and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Securities and has received all information from the Company that it has
requested with respect to the Company and the Securities.
(c) The Purchaser understands that the Securities it is purchasing are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act,
only in certain limited circumstances. In this connection, the Purchaser
represents that it is familiar with Rule 144 of the Commission, as presently in
effect, and understands the resale limitations imposed hereby by the Securities
Act.
(d) The Purchaser understands that the certificates evidencing the
Securities will bear a legend evidencing the foregoing restrictions on transfer.
The Securities shall not be required to bear a restrictive legend if a
registration statement under the Securities Act is effective with respect to the
transfer of such securities or an opinion of counsel reasonably satisfactory to
the Company is delivered to the Company to the effect that neither the legend
nor the restrictions on transfer described in this Agreement are required to
ensure compliance with the Securities Act. Whenever, pursuant to the preceding
sentence, any certificate for any of the Securities is no longer required to
bear a restrictive legend, the Company may and if requested by the holder
thereof, shall, issue to the holder, at the Company's expense any new
certificate not bearing a restrictive legend.
8. Indemnification. (a) The Company agrees to indemnify the
Purchaser, each of its affiliates and each officer, director, employee, member,
partner (whether general or limited) and agent of the Purchaser and of each of
its affiliates (the "Indemnified Parties") for, and to hold each Indemnified
Party harmless from and against any and all damages, losses, claims and other
liabilities of any and every kind, including, without limitation, judgments and
costs of settlement (or actions or other proceedings commenced or threatened in
respect thereof) and reasonable expenses that arise out of, result from or in
any way relate to this Agreement or any other Transaction Document, or in
connection with any of the transactions contemplated hereby or thereby,
including, without limitation, in connection with the preparation, filing with
the Commission and mailing to the Company's stockholders of the proxy statement
for the Stockholder Approval and any other proxy statement for the increase in
the authorized Common Stock referred to in Section 4(g) (other than ordinary
investment losses to the extent not arising in connection with (A) any actual
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or alleged misrepresentation or breach of covenant, warranty duty or obligation
by the Company or (B) any actual or threatened action or proceeding arising out
of, resulting from or in any way relating to this Agreement or any other
Transaction Document, or any of the transactions contemplated hereby or
thereby), and to reimburse each Indemnified Party, upon its demand, for any
reasonable legal or other expenses incurred in connection with investigating,
defending or participating in any such loss, claim, damage, liability or action
or other proceeding (whether or not such person is a party to any action or
proceeding out of which such expenses arise). The Indemnified Parties shall have
the right to select counsel, subject to the prior consent of the Company, which
consent shall not be unreasonably withheld or delayed, to defend the Indemnified
Parties at the Company's expense in any action or proceeding that is the subject
of indemnification hereunder, provided, that the Company shall not be liable for
the fees and expenses of more than one counsel (plus any local counsel) for all
Indemnified Parties (unless any Indemnified Party shall have reasonably
determined that an actual or potential conflict of interest makes such common
representation inappropriate) in connection with any such action or proceeding.
The Company will not be required to indemnify any Indemnified Party for any
amount paid in settlement of any action or proceeding which is the subject of
indemnification hereunder unless the Company shall have consented in writing to
such settlement, such consent not to be unreasonably withheld or delayed. The
Company shall not, without the prior consent of the Indemnified Party, effect
any settlement or compromise of any pending or threatened proceeding in respect
of which any Indemnified Party is or could have been a party, or indemnity could
have been sought hereunder by such Indemnified Party, unless such settlement (A)
includes an unconditional written release of such Indemnified Party, in form and
substance reasonably satisfactory to such Indemnified Party, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of any Indemnified Party.
(b) If the indemnification provided for in Section 8(a) above is for
any reason unavailable to, or insufficient to hold harmless, an Indemnified
Party in respect of any losses, claims, damages or liabilities referred to
therein, then the Company, in lieu of indemnifying such Indemnified Party
thereunder and in order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect (i) the relative benefits received by the Indemnified
Party or Parties on the one hand and the Company on the other from the offering
of the Units or the Change in Control Warrants or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of the Company on the
one hand and the Indemnified Party or Parties on the other in connection with
any statements or omissions or alleged statements or omissions or other matters
that resulted in
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such losses, claims, damages or liabilities (or actions in respect thereof) as
well as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether any
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or such Indemnified Party, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances.
(c) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Indemnified Parties were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in Section 8(b) above. The amount paid or payable by
the Company as a result of the losses, claims, damages and liabilities referred
to in Section 8(b) above shall be deemed to include, subject to the limitations
set forth above, any reasonable legal or other expenses actually incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim.
9. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company or its officers and of the Purchaser set forth in this Agreement or made
by or on behalf of them, respectively, pursuant to this Agreement shall remain
in full force and effect, regardless of (i) any investigation made by or on
behalf of the Company or the Purchaser and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 5 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
10. Termination.
(a) This Agreement may be terminated prior to the Initial Closing or
the Final Closing, as the case may be, under the following circumstances and by
the following persons:
(i) by the Purchaser, if subsequent to September 30, 1999, any
event shall have occurred which, in the sole judgment of the Purchaser,
has had, individually or in the aggregate, a Material Adverse Effect,
or there shall have been, in the sole judgment of the Purchaser, any
events or developments that, individually or in the aggregate, have or
could be reasonably likely to have a Material Adverse Effect (except
for the events disclosed in the SEC Reports or in Schedule 2(e));
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(ii) by the mutual consent of the Purchaser and the Company;
(iii) by the Purchaser at any time after March 6, 2000 or such
later date as shall have been agreed to in writing by the parties
hereto, if at the time notice of such termination is given, the Initial
Closing shall not have been consummated;
(iv) solely with respect to the Remaining Preferred Stock, by
the Purchaser at any time after the expiration of 100 days following
the Initial Closing (or such later date as shall have been agreed to in
writing by the parties hereto), if at the time notice of such
termination is given the Final Closing shall not have been consummated;
(v) by the Purchaser or the Company if any court of competent
jurisdiction in the United States or other United States Governmental
Authority has issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement or the other Transaction Documents and
such order, decree, ruling or other action shall have become final and
nonappealable provided, that the provisions of this clause (v) shall
not be available to any party whose failure to fulfill its obligations
pursuant to this Agreement shall have been the cause of, or shall have
resulted in, such order, decree, ruling or other action;
(vi) by the Purchaser, if there has been a material
misrepresentation or omission or material breach on the part of the
Company in any of the representations, warranties, covenants or
agreements of the Company set forth herein or in any other Transaction
Document, or if there has been any material failure on the part of the
Company to comply with its obligations and satisfy all conditions on
its part to be performed or satisfied hereunder at or prior to Closing
including, without limitation, and solely with respect to the Final
Closing, obtaining the Stockholder Approval within 100 days after the
Initial Closing (unless not required as provided in Section 3(e));
(vii) by the Purchaser, if there has been a suspension in
trading in securities of the Company or in securities generally on the
New York Stock Exchange, American Stock Exchange or The Nasdaq Stock
Market or if minimum or maximum prices shall have been established on
any such exchange or market;
(viii) by the Purchaser, if a banking moratorium shall have
been declared by New York or United States authorities;
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(ix) by the Purchaser, if there has been (A) an outbreak or
escalation of hostilities between the United States and any foreign
power, or (B) an outbreak or escalation of any other insurrection or
armed conflict involving the United States or any other national or
international calamity or emergency, or (C) any material adverse change
in (1) the capital markets generally, (2) the capital markets for
equity securities or (3) the capital markets for telecommunication
company equity securities which, in the case of (A), (B) or (C) above
and in the sole judgment of the Purchaser, makes it impracticable or
inadvisable to proceed with the purchase and sale of the Securities as
contemplated by this Agreement; or
(x) by the Purchaser, if third parties, the approvals of which
are necessary to consummate the transactions contemplated hereby or by
the other Transaction Documents, require changes to the terms of this
Agreement or any other Transaction Document that are adverse to the
Purchaser, as determined by the Purchaser in its sole judgment.
(b) Termination of this Agreement pursuant to this Section 10 shall be
without liability of any party to any other party except as provided in Sections
5, 8 and 9.
11. Notices. All communications hereunder shall be in writing
and, if sent to the Purchaser, shall be mailed or delivered or telecopied and
confirmed in writing to the Purchaser at 1776 On The Green, 00 Xxxx Xxxxx,
Xxxxxxxxxx, XX 00000, Attention: Xxxxxx X. Xxxxxxxx, Telecopier Number (973)
984-5818, with a copy to Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxx X. Xxxxxxx, Telecopier Number (000) 000-0000; if sent to
the Company, shall be mailed or delivered or telecopied and confirmed in writing
to the Company at 00000 Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention:
General Counsel, Telecopier Number (000) 000-0000; with a copy to Xxxxx Xxxx &
Xxxxxxxx, Attention: Xxxxxxx Xxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Telecopier Number (000) 000-0000.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; and one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
12. Successors. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and legal
representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or
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claim under or in respect of this Agreement, or any provisions herein contained;
this Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that the indemnities of the Company contained in Section
8 of this Agreement shall also be for the benefit of any Indemnified Party and
any person or persons who control the Purchaser within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act.
13. Subsequent Securities. In addition to the issuance and
sale of the Securities hereunder and any purchase of Securities by Greenwich and
Honeywell, the Company shall use reasonable efforts to sell to other investors
(which investors shall exclude the Purchaser) acceptable to the Company's Board
of Directors (the "Additional Investors") up to $75,000,000 of additional
Preferred Stock and Warrants (the "Subsequent Securities"), of which up to
$25,000,000 of such Subsequent Securities shall be on the same terms and
conditions (including initial conversion price and initial warrant exercise
price) as the Preferred Stock and Warrants included in the Securities and up to
$50,000,000 of such Subsequent Securities may, if so determined by the Company's
Board of Directors, be on terms and conditions more favorable to the Company.
Such purchases will occur at the Final Closing (or in the event there is no
Final Closing, at one or more closings on mutually convenient dates, times and
places, no later than 100 days after the Initial Closing). Such purchases shall
be conditioned in addition to the conditions to the Closings set forth above,
upon (i) Stockholder Approval, and (ii) the execution and delivery by the
Additional Purchasers of definitive commitment letters to the Company covering
their investments no later than March 6, 2000 (with a copy to be delivered by
the Company to Purchaser promptly thereafter).
14. Equitable Adjustments. In the event that at any time after
the date hereof and prior to the issuance of any Securities or Change in Control
Warrants there shall occur any event which would trigger antidilution
adjustments in connection with such Securities or Change in Control Warrants had
they been previously issued, the number of shares of Common Stock issuable upon
the conversion or exercise thereof, and the conversion or exercise price
applicable thereto, shall be equitably adjusted to reflect such events.
15. Entire Agreement. This Agreement, together with the
Exhibits and Schedules hereto, the Warrant Agreement and the Registration Rights
Agreement, is intended by the parties as a final and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein and any and all prior oral or written
agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Purchaser on the one
hand and the Company on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAW.
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If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the
Company and the Purchaser.
Very truly yours,
e.spire COMMUNICATIONS, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
----------------------------------
Title: Interim Chief Financial Officer
----------------------------------
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
THE XXXX ALTERNATIVE INCOME FUND, L.P.
By: /s/ Xx Xxxxx
---------------------------------
Name: Xx Xxxxx
---------------------------
Title: Investment Officer
---------------------------
