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Exhibit 10.3
E.SPIRE COMMUNICATIONS, INC.
PURCHASE AGREEMENT
As of September 19, 2000
To: WRH Telecom Partners, L.L.C., as Investment Adviser for
Honeywell International Inc.
Master Retirement Trust
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Ladies and Gentlemen:
e.spire COMMUNICATIONS, INC. (the "Company"), a Delaware corporation,
hereby confirms its agreement with the HONEYWELL INTERNATIONAL INC. MASTER
RETIREMENT TRUST acting through its investment adviser, WRH TELECOM PARTNERS,
L.L.C. (the "Purchaser").
1. Sale of Junior Securities to Third Parties. The Company hereby agrees
to use its commercially reasonable efforts to sell Junior Securities (as such
term is defined in Section 2(d) below) to third parties at a price, under
documentation and on terms (including without limitation registration rights and
the issuance of Transaction Fee Warrants (as such term is defined in Section 13
below)) no less favorable to such third parties than are specified herein with
respect to Purchaser Junior Securities (as such term is defined in Section 2(g)
below).
2. Purchaser Obligation to Purchase.
(a) Purchase Obligations. (i) From and after the Initial Closing (as such
term is defined in Section 2(a)(ii) below) but on or before September 30, 2001,
at each time that the Company gives written notice to The Xxxx Alternative
Income Fund, L.P. ("Xxxx") requiring Xxxx to purchase any Purchaser Junior
Securities pursuant to the Purchase Agreement of even date herewith between the
Company and Xxxx (the "Xxxx Purchase Agreement"), the Company also shall give
written notice(s) (each a "Purchase Notice") to the Purchaser that it is
requiring the Purchaser to purchase from the Company the same Purchaser Junior
Securities. Subject to satisfaction of the terms and conditions set forth
herein, the Purchaser hereby agrees to purchase such Purchaser Junior Securities
from the Company in the amount set forth in each Purchase Notice given in
accordance with this Agreement; provided, however, that notwithstanding anything
to the contrary contained in this Agreement, (i) the maximum purchase which the
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Purchaser shall be required to make in respect of any Purchase Notice shall in
no event be greater than the lower of the Purchaser's Pro Rata Share (as such
term is defined in Section 2(g) below) and the then outstanding Maximum Amount
(as such term is defined in Section 2(f) below), and (ii) the aggregate amount
of Purchaser Junior Securities which the Purchaser shall be required to purchase
in respect of all Purchase Notices given under this Agreement shall in no event
exceed the Maximum Amount. The purchase price payable by the Purchaser to the
Company for the purchase of Purchaser Junior Securities shall be the Junior
Securities Purchase Price (as such term is defined in Section 2(g) below). The
right of the Purchaser to purchase Purchaser Junior Securities pursuant to this
Section 2(a)(i) shall expire on September 30, 2001 (except with respect to
Purchase Notices given on or before September 30, 2001). Each closing of the
purchase of Purchaser Junior Securities hereunder is referred to herein as a
"Closing."
(ii) The initial closing (the "Initial Closing") of the
purchase of Purchaser Junior Securities hereunder shall occur simultaneously
with the execution and delivery of this Agreement. At the Initial Closing,
subject to satisfaction of the terms and conditions set forth herein, the
Company shall issue and sell to the Purchaser and the Purchaser shall purchase
from the Company an aggregate of 14,286 shares of Exchangeable Preferred Stock,
par value $1.00 per share (the "Exchangeable Preferred"), at a price of $1,000
per share for an aggregate purchase price of $14,286,000. The Exchangeable
Preferred purchased at the Initial Closing and at any subsequent Closing (and
all securities issued upon exchange of the Exchangeable Preferred) shall be
deemed to be Purchaser Junior Securities for all purposes of this Agreement, and
the gross proceeds received by the Company from the sale of Exchangeable
Preferred shall be deemed Junior Securities Proceeds for all purposes of this
Agreement.
(b) "Credit Agreement" shall mean that certain First Amended and
Restated Credit Agreement, dated as of September 19, 2000, by any among the
Company, e.spire Finance Corporation, and the Lenders (as defined therein) and
other parties named therein.
(c) "Junior Securities" shall mean Common Stock; warrants for
Common Stock; Exchangeable Preferred; Committed Preferred (as such term is
defined in the Credit Agreement); or other preferred stock of the Company issued
in accordance with the Credit Agreement and the Indentures governing the
Existing Senior Notes; or subordinated notes of the Company, provided that any
such subordinated notes shall (i) be unsecured, (ii) have a maturity not sooner
than six months after the final maturity date of the Loans, (iii) not be
guarantied by any Subsidiary, (iv) have no cash payments required prior to the
final maturity of the Loans, (v) have subordination terms satisfactory to the
Requisite Lenders, (vi) have terms no more restrictive to the Company and its
Subsidiaries (including without limitation in terms of covenants, events of
default, grace periods and other rights granted to holders thereof) than the
Existing Senior Notes, and (vii) be permitted to be issued under the Indentures
governing the Existing Senior Notes. Capitalized terms in this subsection 2(c)
not otherwise defined in this Agreement shall have the meanings therefor set
forth in the Credit Agreement.
(d) "Junior Securities Proceeds" shall mean the total of the gross
proceeds received by the Company from the sale of Purchaser Junior Securities to
the Purchaser hereunder
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(including without limitation any proceeds actually received by the Company from
the sale of Exchangeable Preferred pursuant to this Agreement and on exercise of
any warrants included in the Purchaser Junior Securities).
(e) "Junior Securities Purchase Price" shall mean:
(i) if the Purchaser Junior Securities shall consist of
Common Stock, $.01 par value, of the Company ("Common Stock"), an amount equal
to the lesser of (A) $ 3.367496 per share and (B) 80% of (x) the average of the
closing prices of the Company's Common Stock as reported on the principal
national securities exchange (including The NASDAQ Stock Market) on which it is
then traded on the 20 trading days immediately preceding the date of the closing
of the purchase of such Common Stock hereunder; or (y) if the Company's Common
Stock is not so traded, the fair market value per share of the Company's Common
Stock on the date the applicable Purchase Notice is given as determined by a
recognized investment banking firm or other appraiser specified (with the
approval of the Company in its reasonable discretion) by Xxxx (subject in any
such case to appropriate adjustment for stock dividends, stock splits,
recapitalizations, reorganizations and similar events) (the "Common Stock
Purchase Price");
(ii) if the Purchaser Junior Securities shall consist of
convertible preferred stock, an amount equal to 100% of the liquidation value of
such convertible preferred stock, with the initial conversion price of such
convertible preferred stock to be set at the Common Stock Purchase Price which
would have been in effect had Common Stock been purchased hereunder in respect
of the applicable Purchase Notice instead of such convertible preferred stock;
(iii) if the Purchaser Junior Securities shall consist of
Exchangeable Preferred an amount equal to $1,000 per share; or
(iv) if the Purchaser Junior Securities shall consist in
whole or in part of securities other than as described in clause (i), (ii) or
(iii) above, an amount specified by Xxxx, subject to the consent of the Company
not to be unreasonably withheld, and subject to Purchaser's reasonable
acceptance solely as a condition to Purchaser's obligations under Section 2(a),
providing the Purchaser with a value substantially equivalent (as determined by
a nationally recognized investment banking firm mutually acceptable to Xxxx and
the Company, the fees and expenses of which shall be paid by the Company) to
Common Stock or convertible preferred stock (whichever shall be specified by
Xxxx and shall be reasonably acceptable to Purchaser solely as a condition to
Purchaser's obligations under Section 2(a)) purchased at a price set forth under
clause (i) or (ii) above, as applicable, and assuming for purposes of
determining such value that the financial condition of the Company is no worse
on such date of determination than it is on the date hereof.
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(f) "Maximum Amount" shall mean $21,238,572 minus the aggregate
amount of all Junior Securities Proceeds (as such term is defined in Section
2(d) above) received by the Company from the Purchaser on or before the date any
such Purchase Notice is given.
(g) "Pro Rata Share" shall mean 50% of any Purchaser Junior
Securities sold to Xxxx pursuant to the Xxxx Purchase Agreement.
(h) "Purchaser Junior Securities" shall mean any Junior Securities
(or any combination of Junior Securities) specified by Xxxx in its sole
discretion, provided that (i) in the case of the Company's convertible preferred
stock, such convertible preferred stock shall have terms and conditions
substantially the same (except as provided in this Agreement or as reasonably
specified by Xxxx with the approval of the Company not to be unreasonable
withheld and with the reasonable acceptance by Purchaser solely as a condition
to Purchaser's obligations under Section 2(a)) as the Committed Preferred; (ii)
in the case of the Company's warrants, such warrants shall have terms and
conditions substantially the same (except as to pricing, as provided in this
Agreement or as reasonably specified by Xxxx with the approval of the Company
not to be unreasonably withheld and with the reasonable acceptance by Purchaser
solely as a condition to Purchaser's obligations under Section 2(a)) as the
Warrants purchased by the Purchaser pursuant to that certain Warrant Agreement
(the "Warrant Agreement") dated as of March 1, 2000 among the Company, the
Purchaser and the other parties thereto; and (iii) in the case of Purchaser
Junior Securities other than the Company's Common Stock, convertible preferred
stock or warrants, such Purchaser Junior Securities shall have terms and
conditions (consistent with the provisions of the definition of Junior
Securities set forth in this Agreement) as are reasonably specified by Xxxx with
the approval of the Company not to be unreasonably withheld and as are
reasonably acceptable to Purchaser solely as a condition to Purchaser's
obligations under Section 2(a).
(i) "Series A Preferred" shall mean the Company's Series A
Convertible Preferred Stock, par value $1.00 per share.
3. Registration Rights; Transaction Documents.
(a) The Purchaser and the direct and indirect transferees of the
Purchaser Junior Securities purchased hereunder (including without limitation
the shares of Exchangeable Preferred) and the Transaction Fee Warrants (as such
term is defined in Section 13 hereof) issued hereunder and any securities of the
Company issued upon conversion, exchange or exercise of such Purchaser Junior
Securities and Transaction Fee Warrants (the "Additional Securities" and
collectively with the Purchaser Junior Securities and Transaction Fee
Securities, the "Securities"), will be entitled to the benefits of registration
rights agreements (the "Registration Rights Agreements") (or, in the case of
warrants included in the Purchaser Junior Securities and Transaction Fee
Warrants, registration rights substantially the same as those set forth in the
Warrant Agreement, with such changes therein as may be reasonably specified by
Xxxx (with the consent of the Purchaser and the Company not to be unreasonably
withheld), which will require the Company, among other things, to file with the
Securities and Exchange Commission (the "Commission") one or more shelf
registration statements (the "Registration Statements")
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pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Act"),
relating to the resale of such Securities and to use its reasonable best efforts
to cause such Registration Statements to be declared and remain effective in
accordance therewith. Subject to such changes therein as may be reasonably
specified by Xxxx (with the consent of the Purchaser and the Company not to be
unreasonably withheld), the Registration Rights Agreements shall have terms and
conditions substantially the same as that certain Registration Rights Agreement
dated as of March 1, 2000 among the Company, the Purchaser and the other
signatories thereto.
(b) This purchase agreement (the "Agreement"), and all
certificates of designation, warrant agreements and related warrants, the
Registration Rights Agreements and the other documents and instruments
effectuating or relating to the Securities are herein collectively referred to
as the "Transaction Documents."
4. 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 the Company's 2000 Annual Meeting of Stockholders, the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, the Company's
Quarterly Reports on Form 10-Q for the fiscal quarter ended June 30, 2000, the
Company's Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2000,
and the Company's Current Reports on Form 8-K filed on January 25, 2000,
February 3, 2000, March 14, 2000, April 10, 2000, June 22, 2000, July 11, 2000
and July 20, 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
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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. 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 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 4(c)(i), all Securities to be
issued or sold hereunder and under any Transaction Document relating thereto and
the certificates of designation, warrants, agreements and the instruments,
documents and other Transaction Documents providing therefor or relating thereto
have been (or will be prior to the Closing of the purchase of the applicable
Purchaser Junior Securities by the Purchaser hereunder) duly authorized by the
Company. The Purchaser Junior Securities, when issued, sold and delivered in
accordance with the terms hereof and for the consideration expressed herein and
the applicable Transaction Documents relating thereto, and the Additional
Securities when issued in accordance with the terms of the Transaction Documents
relating thereto, (i) will be duly and validly issued and, in the case of any
shares of capital stock included in the Securities, fully paid and
nonassessable, (ii) will be free of any pledges, liens, security interests,
claims, rights or other encumbrances of any kind, (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 4(c)(ii), all shares of capital stock included among
the Securities (including all shares issuable upon exercise, exchange or
conversion of Purchaser Junior Securities or any of the warrants referred to
herein, including without limitation any Transaction Fee Warrants) shall be duly
and validly reserved for issuance from and after the respective Closings of the
applicable purchases of Purchaser Junior Securities and issuances of any
warrants, including without limitation any Transaction Fee Warrants, hereunder
or as otherwise contemplated hereby.
(d) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and will on the dates of the respective
Closings for the
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purchase hereunder of Purchaser Junior Securities have the requisite corporate
power and authority to execute and deliver the other Transaction Documents
applicable thereto; this Agreement has been (and when executed and delivered the
other Transaction Documents will have been) duly authorized by the Company; and
(assuming due authorization, execution and delivery by the parties thereto other
than the Company) this Agreement constitutes and, when executed and delivered by
the Company the other Transaction Documents 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) rights to indemnity
or contribution thereunder may be limited by federal and state securities laws
and public policy considerations.
(e) The Company has (or will have on the dates of the respective
Closings for the purchase of the Purchaser Junior Securities hereunder) all
requisite corporate power to issue and deliver the Securities, and to consummate
the transactions contemplated hereby and the other Transaction Documents. This
Agreement and each other Transaction Document has been (or on the closing dates
for the purchase hereunder of the Purchaser Junior Securities will have been),
duly authorized, and this Agreement has been and each other Transaction Document
has been or on such closing dates 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 or shall have been obtained
at or before the applicable closing dates for the purchase hereunder of the
Purchaser Junior Securities and are in full force and effect as of such closing
dates, (y) such consents as may be required under state securities or "Blue Sky"
laws in connection with the purchase and resale of the 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 purchase of Common Stock or other voting securities or the
conversion or exercise of any warrants, convertible preferred stock or
convertible indebtedness included in the Securities. 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 4(e) and after giving effect to the Credit Agreement, in default in
the performance or observance of any
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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 or sale of the Securities, nor the
execution, delivery and performance by the Company of the Transaction Documents
or the consummation of the transactions contemplated thereby, will (i) conflict
with the certificate of incorporation or by-laws of the Company, as the same
will be in effect as of each Closing (or other date of issuance of such
Securities) hereunder, (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 (including without limitation The NASDAQ Stock Market and any
related body ("NASDAQ")), other than (A) the Stockholder Approval (as such term
is hereinafter defined), (B) any required consents of the FCC or any State
Telecommunications Authority as a result of the Purchaser's purchase of Common
Stock or other voting securities of the Company or the conversion, exchange or
exercise of warrants, exchangeable or convertible preferred stock or
exchangeable or convertible indebtedness included in the Securities, which
consents will have been obtained and be in full force and effect as of each
Closing of the purchase or other date of issuance of Securities as contemplated
hereby and (C) in the case of any Security other than Committed Preferred,
Exchangeable Preferred, Series A Preferred, Common Stock or warrants for Common
Stock or Committed Preferred or Series A Preferred, consent under the Credit
Agreement; 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 9 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 4(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 (i) the issuance and sale hereunder of all Securities
contemplated by this Agreement (other than the Exchangeable Preferred, but
including all Purchaser Junior Securities issued upon exchange of the
Exchangeable Preferred), and (ii) the issuance and sale of all Junior Securities
to third parties contemplated by this Agreement. Subject to obtaining
Stockholder Approval, the issuance of Securities hereunder (other than the
Exchangeable Preferred) is not and at the time of issuance of such Securities
will not be in
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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. The issuance of
Exchangeable Preferred hereunder is not and at the time of issuance of such
Exchangeable Preferred will not be in violation, breach or contravention of any
NASDAQ Rule and does not 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 to be
issued and sold hereunder or the consummation of the other transactions
contemplated herein or in the other Transaction Documents.
(h) Except as disclosed on Schedule 4(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, know-how and other
intellectual property necessary to conduct the businesses 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 and, as to any applied for, reasonably expects to be granted in a
timely manner and without materially adverse condition, 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 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 June 30,
2000, (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
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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 or other dividends payable in capital stock of the Company on shares
of preferred stock described under Section 4(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 4(e) and after giving effect
to the Credit Agreement, 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.
(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
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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 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 4(o)) has taken, directly or indirectly, any action designed, or
that might reasonably be expected, to cause or result, under the 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.
(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 Act)
(provided that the Purchaser is excluded from the warranty in this Section 4(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
Act) that is or could be integrated with the sale of the Securities in a manner
that would require the registration under the Act of the Securities or (ii)
engaged in any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Act) in connection with the offering of
the Securities or in any manner involving a public offering within the meaning
of Section 4(2) of the Act. Assuming the accuracy of the representations and
warranties of the Purchaser in Section 9 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the Purchaser
in the manner contemplated by this Agreement or any other Transaction Document
to register any of the Securities under the Act.
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(r) Except as set forth on Schedule 4(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 54,683,057 shares were issued and outstanding
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 110,170.9428 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 211,701
shares are issued and outstanding. Except for (A) 1,347,247 shares of Common
Stock reserved for issuance under the Company's 1996 Employee Stock Purchase
Plan; (B) 1,000,000 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) 2,125,311 shares of
Common Stock reserved for issuance upon exercise of the warrants issued by the
Company in connection with the sale of the Company's 13% Senior Discount Notes
due 2005, (E) 4,890,577 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 as of May 31, 2000; (G) 601,103 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) 295,407 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) 262,474 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 $862,500 reserved
for issuance in connection with a settlement agreement to be entered into
between the Company and a third party, (L) 18,216,526 shares of Common Stock
reserved to be issued upon conversion of the Series A Preferred and the Warrants
issued in connection therewith, and (M) shares of Common Stock to be 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) 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. As
of the date of this Agreement, except as set forth on Schedule 4(r) hereto,
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 4(r), no outstanding options, warrants or other securities exercisable
for or convertible into Common Stock require or will require anti-dilution
adjustments by reason of the consummation of the transactions contemplated
hereby.
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(s) Other than as described in the SEC Reports or in Schedule
4(e), since June 30, 2000 (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) Except as set forth on Schedule 4(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 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
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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 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
liability for any Environmental
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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.
(x) At each Closing (including without limitation the Initial
Closing) hereunder, the Company will deliver to the Trustees under each of the
indentures (the "Indentures") with respect to the Company's Existing Senior
Notes: (i) a resolution of the
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Company's Board of Directors certifying that (A) the transactions contemplated
to be consummated at such Closing and by the Transaction Documents relating to
such Closing 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 approved by a majority of 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 (or another investment banking
firm of national standing) 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 will have been at
the time of any such Closing withdrawn or modified in any material respect.
(y) Except for payment of commissions, if any, required to be paid
to Xxxxxx Xxxxxxx pursuant to the terms of the Consulting Agreement, dated
October 19, 1994, between Xxxxxx Xxxxxxx and the Company and the issuance of
Transaction Fee Warrants under Section 13 below (each of 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.
4A. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to and agrees with the Company that the source of funds
(the "Source") to be used by the Purchaser to pay the purchase price of the
Securities to be purchased by the Purchaser hereunder is one or more employee
benefits plans, or a separate account or trust fund comprised of one or more
employee benefits plans, each of which has ben identified to the Company in
writing. As used in this Section, the term "employee benefit plan" has the
meaning assigned to such term in Section 3 of ERISA.
5. Purchase, Sale and Delivery of the Securities. The purchase and sale
of the Purchaser Junior Securities (other than the purchase and sale of shares
of Exchangeable Preferred at the Initial Closing which shall take place as set
forth in the next succeeding sentence hereof) shall take place at the offices of
Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, within two (2)
business 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 Purchaser Junior Securities hereunder, but in no event earlier than
15 business days after the applicable Purchase Notice has been given, or at such
other time and place as the Company and
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17
the Purchaser mutually agree upon in writing. The purchase and sale of
Exchangeable Preferred at the Initial Closing shall take place at the aforesaid
offices simultaneously with the execution and delivery of this Agreement subject
to satisfaction of the conditions set forth in this Agreement required to be
satisfied prior to the consummation of the purchase and sale of the Exchangeable
Preferred at such Initial Closing. At each Closing hereunder the Company shall
deliver to the Purchaser one or more certificates representing any capital stock
being sold and issued, one or more executed warrants representing all of the
warrants (including without limitation the Transaction Fee Warrants) and one or
more executed promissory notes representing all of the indebtedness of the
Company being sold, all in such denomination or denominations and registered in
such name or names as the Purchaser shall request upon notice to the Company,
together with all such other Transaction Documents as may be reasonably
specified by Xxxx, subject to Purchaser's reasonable approval (in form and
substance reasonably specified by Xxxx, subject to the Purchaser's reasonable
approval), against payment by or on behalf of the Purchaser of the purchase
price for the Purchaser Junior Securities by wire transfer, payable to or upon
the order of the Company in immediately available funds.
6. Covenants of the Company. The Company covenants and agrees with the
Purchaser (and in the case of the last sentence of Section 6(f), the Purchaser
agrees) that:
(a) The Company will cooperate at its expense with the Purchaser
in arranging for the qualification of the 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 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 all warrants included in the
Securities, 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 Act to
be eligible for clearance and settlement through The Depository Trust Company
and (iii) permit the Securities upon issuance and registration under the 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) The net proceeds from the issuance and sale of Securities
hereunder and the Junior Securities referred to in Section 1 above will be used
by the Company for 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,
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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
Xxxx shall be excluded from the Company's obligations under this Section 6(d))
will sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Act) that could be integrated with
the sale of the Securities in a manner that would require the registration under
the Act of the 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 Act) in
connection with the offering of the Securities or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.
(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
(as such terms are defined in that certain Purchase Agreement dated March 1,
2000 between the Company and the Purchaser) may be voted at such meeting or
otherwise to obtain Stockholder Approval.
(g) As soon as practicable (but not later than 15 days after the
Restatement Effective Date (as such term is defined in the Credit Agreement)),
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 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, exchange, exercise or payment
of dividends with respect to the Securities. The Company shall make drafts of
the proxy statement (and amendments or supplements thereto) 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
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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. In the
event that Xxxx determines at any time or from time to time that the number of
shares of Common Stock authorized pursuant to this Section 6(g) may be
insufficient, the Company shall promptly file such proxy statements and take
such other actions as Xxxx may reasonably request to promptly obtain the
authorization of such number of additional shares of Common Stock as may be
reasonably specified by Xxxx. The Company shall use its best efforts to cause
the proxy statement and any amendments and supplements to be cleared by the SEC
for mailing to the Company's stockholders as promptly as practicable.
(h) At all times prior to the earlier to occur of the last Closing
to occur hereunder (the "Final Closing") or the termination of the Purchaser's
obligation to purchase Purchaser Junior Securities under this Agreement, 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 such termination, 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 Act, or the Exchange Act,
as 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 the Purchaser's
obligation to purchase Purchaser Junior Securities under this Agreement, unless
otherwise expressly contemplated by this Agreement or consented to beforehand in
writing by Xxxx, 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 each
Closing hereunder for the purchase and sale of preferred stock of the Company,
it shall file or cause to be filed with the Secretary of State of Delaware an
appropriate certificate of designation or other documentation reasonably
specified by the Purchaser consistent with the provisions of this Agreement.
(k) The Company hereby covenants and agrees that, prior to the
earlier to occur of the Final Closing or termination of the Purchaser's
obligation to purchase Purchaser Junior Securities under this Agreement, unless
consented to in writing beforehand by Xxxx, and except for pay-in-kind dividends
or other dividends payable in capital stock of the Company in respect of the
14.75% Preferred Stock, the 12.75% Preferred Stock, the Series A Preferred, the
Exchangeable Preferred and any Junior Securities issued hereunder, and except
for issuances of Common Stock or other capital stock upon exercise of warrants
issued under the Warrant
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Agreement, 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
Series A Preferred or any Exchangeable Preferred 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 Series A Preferred or any Exchangeable Preferred, whether
at the option or right of the holder or the Company or its affiliates, unless
expressly consented to beforehand in writing by Xxxx.
(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 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 FCC or any applicable
state regulatory agency or commission in connection with the sale of the
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 be required as a result of the issuance, conversion, exchange 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.
7. 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 12 hereof: (i) the reasonable documented 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 and other instruments
evidencing the Securities, including transfer agent's fees, (iii) the
qualification of the Securities under state securities and "Blue Sky" laws,
including filing fees and reasonable documented 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 documented fees and disbursements of their respective counsel
whenever such filings are made, (vi) Purchaser's documented appraisal costs not
to exceed $10,000 annually for each separate class or series of Security issued
or sold hereunder or
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in connection herewith, (vii) all expenses and listing fees incurred in
connection with the application, if requested, for quotation of any Securities
on the PORTAL Market, to the extent eligible for resale under Rule 144A, (viii)
all other ongoing costs of holding or converting, exchanging or exercising the
Securities, but excluding ordinary custodial expenses, brokerage and/or
underwriting commissions and taxes, and (ix) such other reasonable documented
costs and expenses as may be incurred by the Purchaser as a result of the nature
of the transactions contemplated by this Agreement or the Securities to be
issued and sold hereunder. Without limiting the provisions of this Section 7
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 8 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 documented
out-of-pocket expenses (including reasonable documented counsel fees and
disbursements) that shall have been incurred by the Purchaser in connection with
the proposed purchase and sale of the Securities.
8. Conditions of the Obligations of the Purchaser. (a) The
obligations of the Purchaser with respect to each Closing under this Agreement
are subject to the fulfillment at or before such Closing of each of the
following conditions (except that the conditions set forth in Section
8(a)(iv)(D), (vi), (x), (xiv), (xv) and (xvi) shall not be applicable to the
purchase and sale of Exchangeable Preferred at the Initial Closing):
(i) The Purchaser shall have received opinions, dated as of
such Closing, of (i) the opinion of Xxxxxxxx Xxxxx, the 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 such Closing as if made on and as of such 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 such Closing; and subsequent to June 30, 2000
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 (i) as
described in the SEC Reports, or (ii) as disclosed in Schedule 4(e).
(iii) The issuance and sale of the Securities 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
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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 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 such
Closing as if made on and as of such Closing (except to the extent any
such representation or warranty is expressly made as to a 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 such Closing;
(B) Subsequent to June 30, 2000, no event has occurred that has
had, or is reasonably likely to have, a Material Adverse Effect, other
than (i) as described in the SEC Reports, or (ii) as disclosed in
Schedule 4(e);
(C) The issuance and sale of the Securities hereunder by the
Company has not been enjoined (temporarily or permanently); and
(D) With respect to any Closing occurring on or after October 1,
2000, 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 as
of the March 31, June 30, September 30 or December 31 immediately
preceding the date of such Closing (and after giving effect to all
financial results, events and other circumstances through the close of
business on such March 31, June 30, September 30 or December 31, as the
case may be).
(v) All authorizations, approvals or permits, if any, of
any Governmental Authority (including without limitation the FCC and State
Telecommunications Authorities) that are required in connection with the lawful
issuance and sale of the Purchaser Junior Securities pursuant to this Agreement
or (subject to the matters set forth in Section 4 (e) and (f) above) the
Additional Securities pursuant to the terms thereof shall have been duly
obtained and be in full force and effect as of each Closing of the purchase of
Purchaser Junior Securities.
(vi) The applicable waiting period under the HSR Act in
respect of this issuance and sale of any Purchaser Junior Securities consisting
of Common Stock or other voting securities of the Company shall have expired.
(vii) Other than the Stockholder Approval and other than
any notification under the HSR Act and any consent of the FCC or any State
Telecommunications
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Authority that may be required as a result of the conversion or exercise of the
Securities consisting of warrants, convertible stock and/or convertible
indebtedness, all consents and waivers, if any, of third parties that are
required in connection with any such Closing under this Agreement and the
consummation of the transactions contemplated hereby and by the applicable
Transaction Documents, shall be duly obtained and effective as of each such
Closing.
(viii) 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.
(ix) On or before each such Closing, 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.
(x) The Company and the Purchaser shall have entered into a
Registration Rights Agreement and other Transaction Documents relating to the
transactions contemplated in connection with such Closing and related matters,
including without limitation warrant agreements for the Transaction Fee
Warrants, as reasonably specified by Xxxx, subject to the reasonable approval of
the Purchaser, consistent with the provisions of this Agreement.
(xi) The Company shall have filed with respect to any
preferred stock of the Company constituting Securities, any certificate of
designation specified by the Purchaser consistent with the provisions of this
Agreement with the Secretary of State of Delaware and the same shall have become
effective and be in full force and effect.
(xii) Since September 19, 2000, there shall not have been
any material adverse change in the price of the Common Stock.
(xiii) The certificates representing the shares of capital
stock included in the Securities purchased or issued at such Closing shall have
been executed and delivered by the Company to the Purchaser, the warrants and
any warrant agreements representing warrants included in the Securities
purchased or issued at such Closing shall have been executed and delivered by
the Company to the Purchaser, and the promissory notes and other instruments
provided hereunder representing indebtedness included in the Securities
purchased at such Closing shall have been executed and delivered by the Company
to the Purchaser.
(xiv) The Company shall have obtained Stockholder Approval.
(xv) With respect to any Closing occurring after December
1, 2000, the Company shall have prepared and submitted to the Purchaser its
final budget for the
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fiscal year ended December 31, 2001 and Xxxx shall have approved such budget
(together with any updates or revisions thereof) or shall have waived in writing
such approval.
(xvi) With respect to any Closing occurring on or after
October 1, 2000, the Company and e.spire Finance Corporation will be 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 as
of the March 31, June 30, September 30 or December 31 immediately preceding the
date of such Closing (and after giving effect to all financial results, events
and other circumstances through the close of business on such March 31, June 30,
September 30 or December 31, as the case may be).
(xvii) The Purchaser shall have received the funds
necessary to pay the purchase price for the Securities being purchased by the
Purchaser at such 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 Section 8
hereof have been satisfied.
(xviii) There shall not have 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 and minimum or
maximum prices shall not have been established on any such exchange or market.
(xix) A banking moratorium shall not have been declared by
New York or United States authorities.
(xx) There shall not have 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 at such closing.
(b) In addition to the conditions set forth in Section 8(a) above
(other than the conditions set forth in Sections 8(a)(iv)(D), (vi), (xiv), (xv)
and (xvi)), the obligations of the Purchaser with respect to the Initial Closing
are subject to the fulfillment at or before the Initial Closing of each of the
following conditions:
(i) The Company shall have filed with respect to the
Exchangeable Preferred a certificate of designation substantially in the form of
Exhibit A hereto with the Secretary of State of Delaware and the same shall have
become effective and be in full force and effect.
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(ii) The Company shall have filed with respect to the
Series A Preferred a certificate of amendment making the amendments and
corrections in the existing certificate of designation for the Series A
Preferred described on Exhibit B hereto and the same shall have become effective
and be in full force and effect. As a holder of such stock, the Purchaser hereby
consents to such amendments.
References in this Agreement to facts, circumstances and events known to
the Purchaser (and similar references) shall exclude matters learned by
employees or other representatives of the Purchaser in their capacity as a
member of or observer on the board of directors of the Company or any
Subsidiary.
9. 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
Registration Rights Agreements 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.
(b) The Purchaser is an "accredited investor" within the meaning
of Rule 501(a) under the 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 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 Act.
(d) The Purchaser understands that the certificates or other
instruments 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 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 Act. Whenever, pursuant to the preceding sentence, any
certificate or other instrument for any of the Securities is no longer required
to bear a restrictive legend, the
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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.
10. 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 6(g) (other than ordinary
investment losses to the extent not arising in connection with (A) any actual 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 10(a) above is
for any reason unavailable to, or insufficient to hold harmless, an Indemnified
Party in respect of any
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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 Securities 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 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 10 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 10(b) above. The amount paid or payable by
the Company as a result of the losses, claims, damages and liabilities referred
to in Section 10(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.
11. 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 6 and 10 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
12. Termination.
(a) The obligation of the Purchaser to purchase all further
Purchaser Junior Securities under this Agreement may be terminated prior to any
Closing under the following circumstances and by the following persons:
(i) by the Purchaser, if subsequent to June 30, 2000, 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
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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 4(e));
(ii) by the mutual consent of the Purchaser and the
Company;
(iii) by the Purchaser at any time after October 15, 2001
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, any such Closing
shall not have been consummated;
(iv) 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 (iv) 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;
(v) 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 such Closing including, without limitation, obtaining the Stockholder
Approval within 90 days after the Restatement Effective Date (as such term is
defined in the Credit Agreement); or
(vi) 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 the Purchaser's obligation to make further
purchases of Securities under this Agreement pursuant to this Section 12 shall
be without liability of any party to any other party except as provided in
Sections 7, 10 and 11.
13. Transaction Fee. As a transaction fee for the Purchaser's agreements
hereunder, the Company shall issue to the Purchaser, simultaneously with each
sale of Purchaser Junior Securities under this Agreement, warrants ("Transaction
Fee Warrants") for that number of shares of Common Stock (subject to appropriate
adjustment for stock dividends, stock splits, recapitalizations, reorganizations
and similar events) equal to (i) 60,000 divided by (ii) the Common Stock
Purchase Price in effect at the applicable Closing minus $.01, for each million
dollars of gross proceeds to the Company from such sales (prorated for any
portion of such million dollars of gross proceeds); provided, however, that in
the event that at each subsequent
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Closing under this Purchase Agreement at which Transaction Fee Warrants are
issued the Common Stock Purchase Price is lower than the Common Stock Purchase
Price that was in effect at the immediately preceding Closing (a "Reduced
Purchase Price"), then additional Transaction Fee Warrants shall be issued in
respect of the immediately preceding Closing in such amount that such additional
Transaction Fee Warrants, when added to the Transaction Fee Warrants previously
issued in respect of such immediately preceding Closing, shall equal the number
of Transaction Fee Warrants that would have been issued at such immediately
preceding Closing had the Reduced Purchase Price been in effect at the time of
such immediately preceding Closing. The Transaction Fee Warrants shall have
terms and conditions substantially the same (except that the exercise price
thereof shall be $.01 per share of Common Stock subject thereto or as such terms
and conditions may be reasonably specified by Xxxx with the approval of the
Purchaser and the Company not to be unreasonably withheld) as the Warrants
purchased under the Warrant Agreement, and shall be evidenced by such
Transaction Documents as may be reasonably specified by Xxxx and are reasonably
acceptable to Purchaser. Purchaser may, in its discretion, elect to receive
Transaction Fee Warrants in respect of the shares of the Exchangeable Preferred
issued at the Initial Closing (and to enter into Transaction Documents relating
thereto) promptly after the Initial Closing rather than at the Initial Closing.
14. 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 000 Xxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000,
Attention: Xxx Xxxxxx, 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.
15. 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 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 10 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 Act or Section 20 of the Exchange Act.
16. Equitable Adjustments. In the event that at any time after the date
hereof and prior to the issuance of any Securities there shall occur any event
which would trigger antidilution adjustments in connection with such Securities
had they been previously issued, the
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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.
17. Entire Agreement. This Agreement, together with the Schedules hereto,
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.
18. 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.
19. 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:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
HONEYWELL INTERNATIONAL INC.
MASTER RETIREMENT TRUST
By: WRH TELECOM PARTNERS, L.L.C.
By:
--------------------------------------
Name:
Title:
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