EXHIBIT 10.8
KMC FUNDING CORPORATION
$325,000,000 7.341% Media Internet Gateway Service Notes, Series 2001-1
NOTE PURCHASE AGREEMENT
Dated: March 30, 2001
To the Purchasers
Named on the Signature Page Hereto
Ladies and Gentlemen:
KMC Funding Corporation, a Delaware corporation (the "ISSUER"), proposes,
subject to the terms and conditions stated herein, to sell to you (the
"PURCHASERS") the aggregate principal amount of notes entitled KMC Funding
Corporation Media Internet Gateway Service Notes, Series 2001-1 (the "NOTES")
issued by the Issuer. The Notes will evidence obligations of the Issuer, will be
secured by the Collateral (as defined in the Indenture), and generally will be
entitled to payments of Monthly Principal and Monthly Interest on the fifteenth
day of each month (or if such day is not a Business Day, the immediately
succeeding Business Day) (each, a "PAYMENT DATE"), as more particularly set
forth in the Indenture, dated as of March 1, 2001 (the "INDENTURE") between the
Issuer and ▇▇▇▇▇ Fargo Bank Minnesota, National Association (the "TRUSTEE").
Forms of the Indenture, the Contracts (as defined herein), the Private
Placement Memorandum (as defined herein) and the Notes have been delivered to
all Purchasers, and each Purchaser hereby represents to the Issuer that each of
the foregoing is acceptable to it. Each document and each document attached to
any of the foregoing is in substantially the form in which it will be executed,
with such changes as may be approved by all Purchasers.
All capitalized terms not otherwise defined herein shall have the
respective meanings set forth in Appendix I to the Indenture.
Section 1. AGREEMENT TO PURCHASE. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, on April
2, 2001, the Issuer agrees to sell and to issue to the Purchasers, and each
Purchaser severally agrees to purchase, the Notes, payable to Cede & Co., in the
original principal amount of $325,000,000. The respective obligations of the
Issuer and each Purchaser hereunder are separate obligations and shall be
subject to purchase by all Purchasers of the respective Notes set forth in such
Schedule I (or the arrangement by the Issuer of a substitute purchaser or
substitute purchasers).
Section 2. DELIVERY AND PAYMENT. Delivery of the Notes shall be made at the
offices of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
at 10:00 A.M., New York time, on April 2, 2001 (the "FUNDING DATE"). The Issuer
will deliver to DTC on the Funding Date one Note, in the aggregate principal
amount of Notes to be acquired by each Purchaser, dated the Closing Date, as set
forth on Schedule I. Upon fulfillment of the foregoing and satisfaction of all
conditions specified in Section 8 of this Agreement, each Purchaser severally
shall pay to the Issuer, on the Funding Date, its respective portion of the
Purchase Price, as defined below, set forth in Section 3 of this Agreement.
Section 3. PURCHASE PRICE; USE OF PROCEEDS. (a) The purchase price (the
"PURCHASE PRICE") for the Notes purchased by the Purchasers shall be 100% of the
original principal amount thereof. Payment of the Purchase Price shall be made
by the Purchasers on the Funding Date by wire transfer of immediately available
funds to the Trustee against delivery to DTC of such Notes on the Funding Date.
(b) The Issuer shall apply the aggregate proceeds of the Notes on the
Funding Date to pay issuance costs, to repay all Indebtedness to Dresdner
Kleinwort ▇▇▇▇▇▇ North America Leasing, Inc. (the "LENDER") then outstanding
under the Loan and Security Agreement, dated as of November 1, 2000, between the
Lender and the Issuer (the "LSA"), to pay the Initial Subordinated Servicing Fee
to KMC VI, to fund the Reserve Account as specified in the Indenture, to pay the
legal fees of Purchasers' counsel to ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ and to pay any
balance to such person as the Issuer shall designate in writing.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer hereby
restates, for the benefit of each Purchaser, each of its representations and
warranties set forth in the Transaction Documents to which it is a party. The
Issuer further represents and warrants (as of the Closing Date) to each
Purchaser that:
(a) The Issuer is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware with its chief
executive office and principal place of business located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and has the power to own its assets and to engage
in the activities in which it is presently engaged and is duly qualified and in
good standing under the laws of each jurisdiction where its ownership of
property or the conduct of its activities requires such qualification, if the
failure to so qualify would have a material adverse effect on the ability of the
Trustee to enforce its rights in any of the Collateral. One hundred percent of
issued and outstanding stock of the Issuer is owned by KMC Telecom Holdings,
Inc. ("KMC"), a Delaware corporation. The Issuer has no subsidiaries;
(b) Each of the Notes, this Agreement, the Indenture, the Amended and
Restated Acknowledgment and Consent, dated as of March 1, 2001 (the "SERVICE
PURCHASERS CONSENT") among the Service Purchasers, KMC Telecom VI, Inc. ("KMC
VI"), a Delaware corporation, the Issuer, the Trustee and the Lender, and each
other Contract has been duly authorized, executed and delivered by the parties
thereto, and constitutes a legal, valid and binding agreement and obligation of
the parties thereto, enforceable in accordance with its terms except that such
enforcement may be limited by (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws (whether statutory, regulatory or decisional)
now or hereafter in effect relating to creditors' rights generally and (2)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
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(c) Neither (1) the execution and delivery of the Transaction
Documents nor (2) the consummation of the transactions herein contemplated nor
the fulfillment of, or compliance with, the terms and provisions hereof, of any
other Transaction Document will conflict with, or result in a breach of or
violation by the Issuer of any law or any of the terms, conditions or provisions
of the certificate of incorporation or bylaws of the Issuer, or of any bond,
debenture, note, mortgage, indenture, or other agreement or instrument to which
the Issuer is a party or by which it or its properties may be bound, or
constitute (or with the giving of notice or the passage of time or both will
constitute) a default thereunder, or result in the creation or imposition of any
lien, charge, security interest or other encumbrance of any nature whatsoever
upon the Collateral pursuant to the terms of any such agreement or instrument
other than the Issuer's pledge of the Collateral to the Trustee pursuant to the
Indenture;
(d) The Issuer owns the Collateral free and clear of all security
interests, liens and encumbrances whatsoever, except for the security interest
Granted to the Lender under the LSA, which security interest will be released
upon the payment to the Lender of an amount from the proceeds of the sale of the
Notes equal to the sum of all Indebtedness of the Issuer then outstanding under
the LSA and the security interest Granted to the Trustee pursuant to the
Indenture;
(e) The Trustee will have, upon payment for the Notes, a duly
perfected first priority security interest in all of the Collateral, and the
Issuer has delivered to the Trustee the executed "SECURED PARTY'S ORIGINAL"
counterpart of each of the Service Purchasers Consent and the MGS Agreement
(collectively, the "SERVICE PURCHASERS CONTRACTS");
(f) Uniform Commercial Code financing statements and documents of
similar import (collectively, the "FINANCING STATEMENTS"), in recordable form,
with respect to the Collateral have been filed against the Issuer, as debtor, in
the jurisdiction where it is organized and where its chief executive office is
located, and in each jurisdiction where the Equipment is located (collectively,
the "FILING LOCATIONS"); and Financing Statements, in recordable form, with
respect to the Collateral have been assigned by the Lender, as assignor, to the
Trustee on behalf of the Noteholders, pertaining to all Filing Locations;
(g) No other security interest has been or will be Granted by the
Issuer, to anyone other than the Trustee, with respect to any of the Collateral
and the income, payments and proceeds therefrom;
(h) The copies of the Indenture, the MGS Agreement (including all
amendments thereto) and each other Transaction Document delivered by the Issuer
to each Purchaser on or prior to the Closing Date, each are true and correct
copies of such documents, each of which is in full force and effect and has not
been amended, modified or terminated in any respect through the Closing Date;
(i) There is no payment under the MGS Agreement or the Service
Purchasers Consent which is now past due pursuant to the terms of the MGS
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Agreement or the Service Purchasers Consent, nor have there been any payments
made in advance on account of any payment due under the MGS Agreement or the
Service Purchasers Consent, and to the best of the Issuer's knowledge, none of
the Service Purchasers, the Issuer or KMC VI is in default under any of its
obligations under the Service Purchasers Contracts;
(j) The Service Purchasers have not notified the Issuer or (to the
best of the Issuer's knowledge), any of KMC VI, Nortel nor Lucent, directly or
indirectly, that: (1) the Issuer, KMC VI, Nortel or Lucent is in default under
any of its obligations under the Contracts to which it is a party, (2) any
material portion of the Equipment is not functioning properly, (3) the Service
Purchasers intend not to pay any amount which is due or which will become due,
or will not satisfy any obligation required to be performed by it, under the
Service Purchasers Contracts, or (4) there has been a material adverse change in
the condition (financial or otherwise) of the Service Purchasers and their
consolidated subsidiaries since September 30, 2000;
(k) There are no setoffs, counterclaims, or defenses on the part of
the Service Purchasers to pay any of the Minimum Payments due under the Service
Purchasers Contracts;
(l) The Issuer's obligations under the Transaction Documents are in
full force and effect and there is no litigation or governmental proceeding
pending or threatened against either KMC VI or the Issuer, the Notes or any
Collateral;
(m) Neither the Issuer nor any "affiliate" (as defined in Rule 501(b)
of Regulation D under the Securities Act ("REGULATION D")) of the Issuer has
directly, or through any agent, including, without limitation, Dresdner
Kleinwort ▇▇▇▇▇▇ North America LLC d/b/a Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ (the
"PLACEMENT AGENT"), (1) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the Securities
Act) which is or will be integrated with the sale of the Notes in a manner that
would render the issuance and sale of the Notes a violation of the Securities
Act or require the registration of the Notes under the Securities Act or (2)
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offering of the Notes. It is not
necessary in connection with the offer, sale and delivery of the Notes to
register the Notes under the Securities Act;
(n) The aggregate amount of Minimum Payments payable by the Service
Purchasers under the Service Purchasers Consent during each Collection Period is
sufficient to pay the Priority Payments on the Notes, as such payments become
due and payable, in accordance with the Indenture (without regard to any
acceleration of the Notes);
(o) Any taxes, fees and other governmental charges arising from the
execution and delivery of the Transaction Documents and in connection with the
execution, delivery and issuance of the Notes and with the transfer of the
Contracts and any interest in the Equipment, have been paid or will be paid by
KMC VI;
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(p) Neither KMC VI nor the Issuer is subject to registration as an
"investment company" under the Investment Company Act of 1940, as amended (the
"1940 ACT"), or will become an "investment company" within the meaning of the
1940 Act as a result of the transactions contemplated by the Transaction
Documents to which it is a party;
(q) None of the transactions contemplated in the Transaction Documents
(including, without limitation thereof, the use of the proceeds from the sale of
the Notes) will violate or result in a violation of Section 7 of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or any regulations issued
pursuant thereto including Regulations T, U and X of the Board of Governors of
the Federal Reserve System, 12 C.F.R., Chapter II;
(r) All approvals, authorizations, consents, orders or other actions
of any Person required in connection with the execution and delivery of the
Transaction Documents to which it is a party by the Issuer, and with the valid
and proper authorization, issuance and sale of the Notes pursuant to this
Agreement, have been or will be taken or obtained on or prior to the Closing
Date;
(s) Each of the Transaction Documents conforms in all material
respects to the respective descriptions thereof in the Private Placement
Memorandum;
(t) None of the Issuer, KMC VI, KMC nor any ERISA Affiliate (as
hereinafter defined) maintains, contributes to or has any obligation to
contribute to any "employee pension benefit plans" as such term is defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and the execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
thereby will not result in, constitute or otherwise give rise to a "prohibited
transaction" described in Section 406 of ERISA or Section 4975 of the Code with
respect to an employee benefit plan (as defined in Section 3(3) of ERISA) of any
of them. "ERISA Affiliate" means each trade or business (whether or not
incorporated) that, together with the Issuer, KMC VI or KMC, is treated as a
single employer under Section 4001 of ERISA or Section 414 of the Code;
(u) There are no liens on the Notes or the Collateral presently
existing or which would exist with the passage of time, arising pursuant to the
Code or ERISA;
(v) The CUSIP Number for the Notes is 482558 AA 1; the ISIN number for
the Notes is US 482558AA12;
(w) The Issuer will treat the Notes as indebtedness of the Issuer for
federal income tax purposes; and
(x) All amounts payable by the Issuer, as assignee of KMC VI, under
the Services Agreement, have been or shall be prepaid at closing, from the
proceeds of the sale of the Notes.
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Section 5. REPRESENTATIONS AND WARRANTIES OF KMC VI. KMC VI hereby
restates, for the benefit of each Purchaser, each of its representations and
warranties set forth in the Transaction Documents to which it is a party. KMC VI
further represents and warrants (as of the Closing Date) to each Purchaser that:
(a) No written materials delivered to any Purchaser by or on behalf of
KMC VI in connection with the sale of the Notes, including, without limitation,
the Confidential Private Placement Memorandum, dated March 19, 2001 (the
"PRIVATE PLACEMENT MEMORANDUM"), contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein not
misleading. There is no fact peculiar to KMC VI or any Affiliate of KMC VI or,
to the knowledge of KMC VI, any Transaction Document or item of Equipment which
KMC VI has not disclosed to all Purchasers in writing which materially adversely
affects or, so far as KMC VI can now reasonably foresee, will materially
adversely affect the ability of KMC VI to perform the transactions contemplated
by the Transaction Documents to which KMC VI is a party;
(b) No lien has attached or is likely to attach to assets of KMC VI
with respect to any "employee pension benefit plans" as such term is defined in
Section 3(3) of ERISA and no circumstances exist which could result in such a
lien;
(c) Financing Statements, in recordable form, with respect to the
Service Purchasers Contracts have been filed against KMC VI, as debtor, with the
Secretary of State of Delaware and the Secretary of State of New Jersey; and
Financing Statements, in recordable form, with respect to the Service Purchasers
Contracts have been assigned by the Lender, as assignor, to the Trustee on
behalf of the Noteholders, pertaining to all Filing Locations;
(d) To the best of KMC VI's knowledge, none of Carrier Hotels, the
Issuer or KMC VI is in default under any of its obligations under any of the
Carrier Hotel Agreements or the Carrier Hotel Consents;
(e) KMC VI is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware with its chief executive
office and principal place of business located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and has the power to own its assets and to engage in the
activities in which it is presently engaged and is duly qualified and in good
standing under the laws of each jurisdiction where its ownership of property or
the conduct of its activities requires such qualification, if the failure to so
qualify would have a material adverse effect on the ability of the Trustee to
enforce its rights in any of the Collateral. One hundred percent of issued and
outstanding stock of KMC VI is owned by KMC. KMC VI has no subsidiaries;
(f) Each Transaction Document to which KMC VI is a party has been duly
authorized, executed and delivered by KMC VI, and constitutes a legal, valid and
binding agreement and obligation of KMC VI, enforceable in accordance with its
terms except that such enforcement may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory, regulatory
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or decisional) now or hereafter in effect relating to creditors' rights
generally and (2) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and
(g) Neither (1) the execution and delivery of the Transaction
Documents nor (2) the consummation of the transactions herein contemplated nor
the fulfillment of, or compliance with, the terms and provisions hereof, of any
other Transaction Document will conflict with, or result in a breach of or
violation by KMC VI of any law or any of the terms, conditions or provisions of
the certificate of incorporation or bylaws of KMC VI, or of any bond, debenture,
note, mortgage, indenture, or other agreement or instrument to which KMC VI is a
party or by which it or its properties may be bound, or constitute (or with the
giving of notice or the passage of time or both will constitute) a default
thereunder, or result in the creation or imposition of any lien, charge,
security interest or other encumbrance of any nature whatsoever upon the
Collateral pursuant to the terms of any such agreement or instrument.
Section 6. COVENANTS AND AGREEMENTS OF THE ISSUER. The Issuer covenants and
agrees:
(a) That all of its right, title and interest in and to the Collateral
and any payments with respect thereto remaining to be paid are and shall be
expressly subject and subordinate to all of the right, title and interest
(including its security interest) of the Trustee for the benefit of the
Noteholders under the Indenture;
(b) Not to take any action with respect to its right, title and
interest in and to any item of Collateral, without the prior written consent of
the Trustee;
(c) To promptly execute and deliver any and all Financing Statements
and other papers or documents consistent herewith which the Trustee may request
from time to time in order to perfect or continue the Trustee's security
interest in the Collateral, or to carry out the purposes hereof, or to
facilitate the collection of monies due or to become due from the Service
Purchasers;
(d) To duly perform its obligations under the MGS Agreement (other
than those obligations delegated by the Issuer to KMC VI under the Amended and
Restated Transfer and Servicing Agreement, dated as of November 1, 2000 (the
"TRANSFER AND SERVICING AGREEMENT"), among KMC VI, the Issuer and the Trustee)
and the Service Purchasers Consent and to remain liable thereunder to the
Service Purchasers notwithstanding the Indenture or the Backup Servicing
Agreement, to duly perform its obligations under the other Transaction
Documents, and to not, without the prior written consent of the Trustee, at the
direction of the Majority of Holders, amend, modify or issue any consent or
waiver of, or release from, any provision of the MGS Agreement or any other
Transaction Document (except for amendments and waivers that will not adversely
affect the rights of the Trustee or the Noteholders) or extend the time of any
payment thereunder, or rescind, cancel or accept the surrender of the MGS
Agreement or any other Transaction Document or any portion thereof;
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(e) To keep the Collateral free and clear of all mortgages, pledges,
liens, charges, security interests and all other encumbrances whatsoever, except
for the security interest Granted to the Trustee pursuant to the Indenture, and
the Issuer shall defend the right, title and interest of the Trustee in and to
the Collateral;
(f) To notify the Trustee and each Purchaser promptly upon actual
knowledge by any of its officers or employees of any default by Lucent, Nortel,
any Service Purchaser or KMC VI under the MGS Agreement or under any other
Transaction Document;
(g) In the event of loss or damage to any material portion of the
Equipment of which it has actual knowledge, promptly to send written notice
thereof to the Trustee, and to cause the affected Equipment promptly to be
repaired or replaced and to perfect the Trustee's interest for the benefit of
the Noteholders in any replacement Equipment;
(h) To give the Trustee at least 30 days' prior written notice of any
change in the location of its principal place of business, chief executive
office or state of formation;
(i) Promptly upon receipt of notice thereof, to pay or cause to be
paid all charges, taxes and assessments levied or assessed against the Issuer,
if the failure to pay such taxes could result in the imposition of any lien
against the Collateral or any payments made or to be made by the Service
Purchasers in respect thereof, other than liens for taxes not yet due;
(j) To forthwith pay over to the Trustee for deposit in the Revenue
Account any monies due or to become due under or with respect to the MGS
Agreement, the Service Purchasers Consent or under any other Contract;
(k) In the event that the Service Purchasers default in payment of any
amounts due under the Service Purchasers Consent or the MGS Agreement, to use
its best efforts to promptly collect for and on behalf of the Trustee such
amounts from the Service Purchasers and to cooperate fully with the Trustee in
connection with the collection of such amounts;
(l) Not to dissolve or terminate its existence as a Delaware
corporation, and to maintain its due qualifications to do business and maintain
its good standing in each jurisdiction where necessary for the Trustee to
enforce its rights under any of the Transaction Documents;
(m) The Issuer shall continue to operate in such a manner so as not to
be substantively consolidated with either of KMC VI or KMC, such that its
separate existence would not be disregarded in the event of a bankruptcy or
insolvency of any of the Issuer, KMC VI or KMC, as the case maybe, and in such
regard, among other things: (1) except as provided in the Management and Tax
Allocation Agreement, neither KMC VI nor KMC shall be involved in the day-to-day
management of the Issuer, (2) neither KMC VI or KMC shall act as agent for the
Issuer in any capacity; PROVIDED that KMC VI is the Servicer under the Transfer
and Servicing Agreement and KMC provides services to the Issuer pursuant to the
Management and Tax Allocation Agreement, (3) the Issuer shall conduct its
business solely in its own name so as to not mislead others as to the identity
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of the entity with which those others are concerned, and particularly will avoid
the appearance of conducting business on behalf of KMC VI, KMC or any of their
Affiliates or that the assets of the Issuer are available to pay the creditors
of KMC VI, KMC or any of their Affiliates, (4) without limiting the generality
of the foregoing, all oral and written communications, including, without
limitation, letters, invoices, purchase orders, contracts, statements and loan
applications, shall be made solely in the Issuer's name and on the Issuer's own
stationery;
(n) The Issuer shall, at all times: (1) maintain (A) its assets
separately from the assets of KMC VI, KMC or any other Persons (including
through the maintenance of a separate bank account), (B) financial books and
records separate from those of KMC VI, KMC or any other Persons and (C) minutes
of its meetings and other proceedings, (2) continuously maintain the
resolutions, agreements and other instruments underlying the transactions
contemplated hereby and by the Transfer and Servicing Agreement, as official
records of the Issuer, (3) act solely in its name to maintain an arm's-length
relationship with each of KMC VI, KMC and any of their Affiliates, (4) pay all
of its operating expenses and liabilities from its own funds, (5) maintain an
office and telephone number separate from each of KMC VI, KMC and any of their
Affiliates (such office may be at the same address as one or more of the
foregoing, provided that such companies have entered into a written agreement
specifying a reasonable allocation of expenses with respect to overhead and
other shared costs with respect to such premises or lease agreement), (6)
characterize each of KMC VI and KMC as separate entities in any report, tax
return, financial statement, other accounting or business transaction and (7)
have at all times at least one director that is an Independent Director, whose
resignation or removal of shall not be effective until a successor Independent
Director has been selected to replace such Independent Director;
(o) The Issuer will cause its accounting records to be clearly and
unambiguously marked to show that the Equipment, the Service Purchasers
Contracts and the other Collateral have been pledged by the Issuer to the
Trustee for the benefit of the Noteholders;
(p) The Issuer will be a party to the consolidated tax returns of KMC;
(q) Not to terminate its rights or obligations under any Transaction
Document without the prior written consent of the Trustee;
(r) Concurrently with the delivery thereof to KMC VI, the Service
Purchasers, any Carrier Hotel, Nortel or Lucent, as the case may be, to deliver
to the Trustee true copies of notices and other communications with regard to
matters that materially adversely affect the rights or interests of the Trustee
with respect to any of the Collateral or the Issuer's ability to perform its
obligations hereunder, and to deliver to the Trustee true copies of notices and
other communications with regard to matters that materially adversely affect the
rights or interests of the Trustee with respect to any of the Collateral or the
Issuer's ability to perform its obligations hereunder, and that it receives from
KMC VI, the Service Purchasers, any Carrier Hotel, Nortel or Lucent, as the case
may be, or pursuant to any Contract;
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(s) To the extent not readily accessible without material cost or
material expense to the Trustee (such as through the Securities and Exchange
Commission's Electronic Data Gathering and Retrieval System ("▇▇▇▇▇") or the
relevant entity's web site), to deliver, or to cause the Service Purchasers,
Nortel and Lucent to prepare (or have their respective auditors prepare) and
deliver, their annual audited financial statements to the Trustee within 120
days of the end of the applicable fiscal year, all such financial statements to
be prepared in accordance with United States GAAP;
(t) No written materials delivered to the Purchasers by or on behalf
of the Issuer in connection with the sale of the Notes, including, without
limitation, the Private Placement Memorandum, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein not misleading; there is no fact peculiar to the Issuer or any Affiliate
of the Issuer or, to the knowledge of the Issuer, any fact relating to any
portion of the Collateral that the Issuer has not disclosed to the Purchasers in
writing that materially adversely affects or, so far as the Issuer can now
reasonably foresee, will materially affect adversely the ability of the Issuer
to perform the transactions contemplated by the Transaction Documents to which
it is a party and the Notes;
(u) The Issuer authorizes the Purchasers to deliver to prospective
Subsequent Purchasers (as defined below) copies of the final Private Placement
Memorandum, any amendments thereof or supplements or exhibits thereto, and any
information obtained pursuant hereto in connection with any offer or sale of the
Notes by the Purchasers in accordance herewith, and agrees that any purchaser of
the Notes from the Purchasers (each such purchaser, a "SUBSEQUENT PURCHASER")
may rely on the representations, warranties, covenants and agreements set forth
or incorporated herein and the other Transaction Documents as of the date when
made to the same extent as if such Subsequent Purchaser were a party hereto;
(v) The Issuer will make available or cause to be made available to
prospective Subsequent Purchasers of the Notes the opportunity to ask questions
and receive answers concerning the terms and conditions of the offering of the
Notes, the condition (financial or otherwise) of the Issuer, the Service
Purchasers, Lucent, Nortel and KMC VI and any other matters relating to the
matters described in the Private Placement Memorandum and the transactions
contemplated thereby;
(w) For so long as any of the Notes are outstanding and are
"restricted securities" within the meaning of Rule l44(a)(3)(iii) under the
Securities Act and the Issuer is not subject to Section 13 or 15(d) of the
Exchange Act: (1) the Issuer will, and shall cause the Service Purchasers to,
provide or cause to be provided to any Holder of Notes and any prospective
Subsequent Purchaser thereof designated by such a Holder, upon the request of
such Holder or prospective Subsequent Purchaser, the information required to be
provided to such Holder or prospective Subsequent Purchaser by Rule 144A(d)(4)
under the Securities Act, and (2) the Issuer shall update such information so
that it does not become false or misleading in any material respect;
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(x) Assuming compliance by each Purchaser with its agreements set
forth in Section 7 hereof, it is not necessary in connection with the offer,
sale and delivery of the Notes in the manner contemplated by this Note Purchase
Agreement to register the Notes under the Securities Act;
(y) No event has occurred and is continuing that constitutes, or with
the passage of time or the giving of notice or both would constitute, an Event
of Default or a Servicer Termination Event under the Transaction Documents; and
the Issuer is not in violation of any agreement, charter instrument, article of
incorporation, bylaw or other instrument to which it is a party or by which it
is or may be bound; and
(z) To the extent, if any, that the respective ratings provided with
respect to the Notes by the Rating Agencies are conditional upon the furnishing
of documents or the taking of any other actions by the Issuer, the Issuer shall
furnish such documents and take any such other actions.
Section 6A. COVENANTS AND AGREEMENTS OF KMC VI. KMC VI covenants and
agrees:
(a) To deliver to the Trustee true copies of notices and other
communications with regard to matters that materially adversely affect the
rights or interests of the Trustee with respect to the Service Purchasers
Contracts or the Minimum Payments and shall provide written notice to the
Trustee of any proposed material amendments, modifications or other changes to
any of the other Transaction Documents;
(b) KMC VI shall continue to operate in such a manner so as not to be
substantively consolidated with either of the Issuer or KMC, such that its
separate existence would not be disregarded in the event of a bankruptcy or
insolvency of any of KMC VI, the Issuer or KMC, as the case maybe, and in such
regard, among other things: (1) except as provided in the Management and Tax
Allocation Agreement, neither the Issuer nor KMC shall be involved in the
day-to-day management of KMC VI, (2) neither the Issuer nor KMC shall act as
agent for KMC VI in any capacity, (3) KMC VI shall conduct its business solely
in its own name so as to not mislead others as to the identity of the entity
with which those others are concerned, and particularly will avoid the
appearance of conducting business on behalf of the Issuer, KMC or any of their
Affiliates or that the assets of KMC VI are available to pay the creditors of
the Issuer, KMC or any of their Affiliates, (4) without limiting the generality
of the foregoing, all oral and written communications, including, without
limitation, letters, invoices, purchase orders, contracts, statements and loan
applications, shall be made solely in KMC VI's name and on KMC VI's own
stationery;
(c) KMC VI shall, at all times: (1) maintain (A) its assets separately
from the assets of the Issuer, KMC or any other Persons (including through the
maintenance of a separate bank account), (B) financial books and records
separate from those of the Issuer, KMC or any other Persons and (C) minutes of
its meetings and other proceedings, (2) continuously maintain the resolutions,
agreements and other instruments underlying the transactions contemplated hereby
11
and by the Transfer and Servicing Agreement, as official records of KMC VI, (3)
act solely in its name to maintain an arm's-length relationship with each of the
Issuer, KMC and any of their Affiliates, (4) pay all of its operating expenses
and liabilities from its own funds, (5) maintain an office and telephone number
separate from each of the Issuer, KMC and any of their Affiliates (such office
may be at the same address as one or more of the foregoing, provided that such
companies have entered into a written agreement specifying a reasonable
allocation of expenses with respect to overhead and other shared costs with
respect to such premises or lease agreement) and (6) characterize each of the
Issuer and KMC as separate entities in any report, tax return, financial
statement, other accounting or business transaction;
(d) KMC VI will cause its accounting records to be clearly and
unambiguously marked to show that the Equipment, the MGS Agreement and the
Contracts have been transferred by KMC VI to the Issuer and pledged by the
Issuer to the Trustee for the benefit of the Noteholders;
(e) KMC VI will be a party to the consolidated tax returns of KMC.
Section 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PURCHASERS.
Each Purchaser hereby severally represents (as of the Closing Date) and warrants
to, and agrees with, the Placement Agent, the Issuer and KMC VI that:
(a) Each Purchaser will make offers and sales (the "EXEMPT RESALES")
of the Notes purchased by it hereunder, solely to Persons whom it reasonably
believes to be: (1) "qualified institutional buyers" as defined in Rule 144A
under the Securities Act ("QIBS") and is aware that the sales to QIBs are being
made in reliance on Rule 144A, (2) institutional "accredited investors"
("INSTITUTIONAL ACCREDITED INVESTORS") as defined in Rule 501 (a)( 1), (2), (3)
or (7) under the Securities Act and is aware that sales to Institutional
Accredited Investors are being made in reliance on Rule 501(a)(l), (2), (3) or
(7) or (3) non-U.S. Persons within the meaning of and in compliance with
Regulation S under the Securities Act and is aware that sales to non-U.S.
persons are being made in reliance on Regulation S (collectively, the "Exempt
Purchasers");
(b) Each Purchaser is not acquiring the Notes with a view to or for a
sale or transfer in connection with any distribution of the Notes under the
Securities Act or the securities laws of any state of the United States and any
other applicable jurisdiction but subject, nevertheless, to any requirement of
law that the disposition of its property shall at all times be within its
control;
(c) Each Purchaser is a QIB as defined in Rule 144A, an Institutional
Accredited Investor as defined in Rule 501(a)(l), (2), (3) or (7) under the
Securities Act, or a non-U.S. Person within the meaning of and in compliance
with Regulation S;
(d) Each Purchaser agrees that neither it nor any of its
representatives have used or will use any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
12
Securities Act) in connection with the offer and sale of any of the Notes within
the United States (as those terms are used in Regulation D under the Securities
Act);
(e) Each Purchaser agrees that, in connection with any Exempt Resales,
it will solicit offers to buy the Notes only from, and will offer to sell the
Notes only to, Persons it reasonably believes to be QIBs as defined in Rule
144A, Institutional Accredited Investors as defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act or non-U.S. Persons within the meaning of and in
compliance with Regulation S. Each Purchaser further agrees that it will offer
to sell the Notes only to, and will solicit offers to buy the Notes only from,
Persons who in purchasing such Notes will be deemed to have represented and
agreed: (1) that they are purchasing the Notes for their own account or accounts
with respect to which they exercise sole investment discretion and that they or
such accounts are Exempt Purchasers, (2) that such Notes will not have been
registered under the Securities Act and may be resold, pledged or otherwise
transferred only (a) to a Person who the seller reasonably believes is an Exempt
Purchaser in a transaction meeting the regulatory requirements of Rule 144A,
Rule 501(a)(l), (2), (3) or (7) or Regulation S, (b) to the Issuer or (c)
pursuant to an effective registration statement, and, in each case, in
accordance with any applicable securities laws of any state of the United States
and any other applicable jurisdiction and (3) that the Purchaser will, and each
Subsequent Purchaser is required to, notify any Subsequent Purchaser from it of
the Notes of the resale restrictions set forth in (1) and (2) above;
(f) Each Purchaser also understands that the Issuer, the Trustee, the
Placement Agent and each other Purchaser will rely upon the accuracy and truth
of the foregoing representations and hereby consents to such reliance;
(g) Each Purchaser represents, by the purchase of its Notes, and
hereby agrees to have any Person to which it transfers any interest in any Note
to represent to the Placement Agent, the Issuer, the Trustee, the Servicer and
any successor Servicer that one or any combination of the following statements
is an accurate representation as to all sources of funds to be used to pay the
purchase price of the Notes: (1) it is not a Plan and is not directly or
indirectly acquiring the Notes on behalf of, as investment manager of, as named
fiduciary of, as trustee of or with the assets of a Plan or (2) the acquisition
and holding of the Notes will not give rise to a prohibited transaction
described in Section 406(a) of ERISA or Section 4975 of the Code for which a
statutory or administrative exemption is unavailable;
(h) Each Purchaser represents, by the purchase of its Notes, to the
Placement Agent, the Issuer, the Trustee and the Servicer that: (1) it is either
(a) a QIB as defined in Rule 144A or (b) an Institutional Accredited Investor as
defined in Rule 501(a)(l), (2), (3) or (7), (2) it has either (x) provided the
Trustee with its office address, place of incorporation (if applicable), U.S.
employer identification number and agrees to notify the Trustee within sixty
(60) days of the date that it becomes a foreign person or (y) provided the
Trustee with an IRS form W-8BEN on which such Purchaser certifies, under
penalties of perjury, to the Trustee that such Purchaser is a non-U.S.
Noteholder and provides such Purchaser's name, address and taxpayer
identification number and (3) it understands that information provided by it to
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the Trustee pursuant to this Section 7(h) may be disclosed to the Internal
Revenue Service (the "IRS") by the Trustee;
(i) Each Purchaser agrees to treat the Notes, for purposes of federal,
state and local income or franchise taxes (and any other tax imposed on or
measured by income) as indebtedness; and
(j) Each Purchaser agrees (1) to treat the information related to any
Service Purchaser obtained pursuant to the Transaction Documents that is not
otherwise publicly available (such information, "Confidential Information") as
confidential, (2) to the best of its knowledge, not to distribute, disclose, or
disseminate any Confidential Information in any way to anyone, except (a) as may
be required by law or by the rules and regulations of the National Association
of Insurance Commissioners, (b) to a Purchaser's or its Affiliate's officers,
directors, employees, accountants and attorneys who, by the nature of their
employment, have a duty to keep such Confidential Information confidential or
(c) to professional consultants and potential investors, provided that such
parties in this clause (c) agree in writing to keep all such Confidential
Information confidential; PROVIDED that if any legal process regarding any of
the Service Purchasers Contracts is served upon any Purchaser, such Purchaser
shall notify KMC VI promptly, and shall cooperate with KMC VI, at KMC VI's
expense, in any lawful effort to contest the validity of such legal process, (3)
that it acknowledges the terms of Section 15 of the MGS Agreement and agrees to
keep the Service Purchasers Contracts confidential in accordance with the terms
of Section 15 of the MGS Agreement and (4) that neither it nor any parent,
subsidiary, or other entity controlling, controlled by, or under common control
with it is a partner, officer, director, parent, subsidiary, or a competitor of
the Service Purchasers. The obligations in this Section 7(j) shall not apply to
any information which any Purchaser independently acquired or had in its
possession from any source other than KMC VI, the Issuer, the Lender or the
Placement Agent or was publicly disclosed by either of the Service Purchasers.
Section 8. CONDITIONS PRECEDENT. The obligation of each Purchaser to
purchase the Notes is subject to the accuracy in all material respects of the
respective representations and warranties of the Issuer and KMC VI herein and in
the Transaction Documents, on the Closing Date, to the performance in all
material respects by the Issuer of its obligations hereunder and under the
Transaction Documents, and to the following additional conditions:
(a) On the Closing Date, each Purchaser shall have received true
copies of each of the following executed contracts (the "CONTRACTS"): the duly
executed "Secured Party's Original Counterpart" of the Service Purchasers
Consent; the duly executed "Secured Party's Original Counterpart" of the MGS
Agreement, including Amendment Nos. 1, 2 and 3 thereto; the Equipment Purchase
Agreement, dated as of November 1, 2000, between the Service Purchasers as
seller and KMC VI as purchaser, as amended, (the "EQUIPMENT PURCHASE
AGREEMENT"); the Transfer and Servicing Agreement; the Services Agreement, dated
as of November 1, 2000, among KMC VI, KMC Telecom, Inc., KMC Telecom of
Virginia, Inc., KMC Telecom II, Inc., KMC Telecom III, Inc., KMC Telecom IV,
Inc., KMC Telecom IV of Virginia, Inc., KMC Telecom V Inc., KMC Telecom V of
14
Virginia, Inc., and KMC Telecom VI of Virginia, Inc. (the "PROVIDERS") and the
Acknowledgment and Consent Agreement thereto, dated as of November 1, 2000,
among the Providers and KMC VI (the "SERVICES AGREEMENT"); the Acknowledgment
and Consent Agreement, dated as of November 15, 2000, among the Providers and
Dresdner Kleinwort ▇▇▇▇▇▇ North America Leasing, Inc. (the "SERVICES AGREEMENT
CONSENT"); the Amended and Restated Backup Servicing Agreement, effective as of
November 1, 2000, between Lucent and KMC VI (the "BACKUP SERVICING AGREEMENT");
the Master Services Agreement, dated as of November 1, 2000, between Lucent and
KMC VI (the "MAINTENANCE AGREEMENT")); the Master Services Agreement, dated as
of November 1, 2000, between Nortel and KMC VI (the "INSTALLATION AGREEMENT");
the Amended and Restated Acknowledgment and Consent Agreement to the Backup
Servicing Agreement, effective November 1, 2000, among Lucent, KMC VI, the
Issuer and ▇▇▇▇▇ Fargo Bank Minnesota, National Association (as trustee) and
acknowledged by and consented to by Dresdner Kleinwort ▇▇▇▇▇▇ North America
Leasing, Inc. (the "LUCENT CONSENT"); the Acknowledgment and Consent Agreement
to the Master Services Agreement, dated as of November 15, 2000, among Lucent,
KMC VI, the Issuer and Dresdner Kleinwort ▇▇▇▇▇▇ North America Leasing, Inc.
(the "MAINTENANCE CONSENT"); the Acknowledgment and Consent Agreement, dated as
of November 15, 2000, among Nortel, KMC VI, the Issuer and Dresdner Kleinwort
▇▇▇▇▇▇ North America Leasing, Inc. (the "INSTALLATION CONSENT"); the Management
and Tax Allocation Agreement, dated as of November 1, 2000, among KMC, KMC VI
and the Issuer (the "MANAGEMENT AND TAX ALLOCATION AGREEMENT"); all Carrier
Hotel Agreements (as defined in the Indenture) then in effect with respect to
the Equipment and all Carrier Hotel Consents (as defined in the Indenture); and
all of the foregoing, by each Purchaser's acquisition of the Notes, shall be
deemed in form and substance acceptable to such Purchaser;
(b) The Issuer and ▇▇▇▇▇ Fargo Bank Minnesota, National Association,
as trustee (the "TRUSTEE") shall have executed and delivered the Indenture;
(c) No event shall have occurred which, with or without notice or the
passage of time, would constitute an Event of Default or a Servicer Termination
Event; the Contracts shall have been duly authorized, executed and delivered and
shall be in full force and effect and the Issuer and KMC VI each shall have
delivered an Officer's Certificate to such effect;
(d) All conditions to closing required to be fulfilled pursuant to the
Transaction Documents shall have been fulfilled or waived;
(e) ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for the Issuer, KMC VI and KMC,
shall have furnished to each Purchaser and the Trustee its written opinions,
dated the Closing Date, which opinions shall each state that it may be relied
upon by the Trustee and each Purchaser, in form and substance satisfactory to
the Purchasers and covering: (1) the Issuer's power and authority to own, lease
and operate its assets and properties and to engage in the activities in which
it is presently engaged and is duly incorporated and in good standing under the
laws of the State of Delaware and of each other jurisdiction where necessary for
the Trustee to enforce its rights under any of the Transaction Documents, (2)
that the Equipment does not constitute "fixtures" under applicable law, (3) that
the Trustee has a first priority perfected security interest in the Collateral
15
and has a perfected, first priority security interest in the Accounts and the
funds on deposit therein from time to time (the "Cash Collateral") for so long
as the Trustee or its duly appointed agent maintains dominion and control over
such Cash Collateral, (4) as to corporate matters of KMC, non-contravention, no
litigation, no consents required and the enforceability of the Management and
Tax Allocation Agreement, (5) as to corporate matters of KMC VI and the Issuer,
the enforceability of their (and of any Affiliates') respective obligations
under the Transaction Documents, non-consolidation and true sale and addressing
property of the estate, automatic stay, nonrejection, non-contravention, no
litigation, no consents required and such related bankruptcy matters as the
Trustee and any Purchaser may request (6) that the Notes constitute valid
indebtedness for income tax purposes and (7) as to compliance with all
regulatory requirements (the "regulatory matters opinion");
(f) Internal counsel for the Trustee, shall have furnished to each
Purchaser and the Issuer its written opinion regarding certain corporate
matters, dated the Closing Date, which opinion shall be in form and substance
satisfactory to the Purchasers;
(g) Any taxes, fees and other governmental charges which are due and
payable prior to the Closing Date by KMC VI or the Issuer in connection with the
execution, delivery and performance of the Contracts shall have been paid at or
prior to the Closing Date;
(h) The Notes shall have been rated not lower than "Baa1" or "BBB+" by
▇▇▇▇▇'▇ and S&P, respectively, and, to the extent, if any, that the rating
provided with respect to the Notes by any Rating Agency is conditional upon the
furnishing of documents or the taking of any other actions by the Issuer, the
Issuer shall have furnished such documents and taken any such action;
(i) Dresdner Kleinwort ▇▇▇▇▇▇ North America Leasing, Inc. shall have
executed and delivered (upon payment of all Indebtedness then outstanding and
unpaid under the LSA) (1) to the Trustee its assignment and release of security
interest in the Collateral in favor of the Trustee, (2) to each of KMC VI, the
Service Purchasers and the Carrier Hotels, its notice of assignment to the
Trustee of its rights under the Service Purchasers Contracts and the other
relevant Transaction Documents and (3) to the Trustee for the benefit of the
Purchasers, the Contract File.
(j) Each Purchaser shall have received evidence, satisfactory to it,
of the filing of: (1) Financing Statements, in recordable form, with respect to
the Collateral against the Issuer, as debtor, in the Filing Locations, (2)
Financing Statements, in recordable form, with respect to the Service Purchasers
Contracts against KMC VI, as debtor, with the Secretary of State of Delaware and
the Secretary of State of New Jersey and (3) UCC assignments, in recordable
form, naming the Lender as assignor and the Trustee as assignee filed with
respect to the Collateral in each Filing Location;
(k) Within four Business Days after the Funding Date, each Purchaser
shall have received copies of UCC, tax and judgment lien search reports (the
16
expense of which shall be paid directly by KMC VI) from all Filing Locations
referred to in Section 8(j) hereof, covering such periods as such Purchaser may
reasonably request, listing effective financing statements and tax and judgment
liens filed against the Issuer and KMC VI, together with copies of such
financing statements and liens, and none of such financing statements (except
those filed in favor of the Trustee) or liens shall refer to the Collateral;
(l) The Issuer shall have paid to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood the fees and
disbursements of such firm as counsel to the Placement Agent in connection with
the transactions contemplated hereunder or the Issuer shall have directed the
Trustee in writing to apply the proceeds of the purchase price of the Notes to
such payment;
(m) Each Purchaser shall have received a copy of each certificate of
insurance that provides for casualty, property, general liability and any other
insurance coverage on the Equipment in accordance with the Transaction
Documents;
(n) Each Purchaser shall have received copies of each ▇▇▇▇ of Sale (as
defined in ss. 4.1(a) of the Transfer and Servicing Agreement) for any and all
Equipment acquired by the Issuer on or before the Closing Date;
(o) Each Purchaser shall have received an opinion of counsel external
to QCC and QCI, dated the Closing Date, which opinion and counsel shall be
satisfactory to such Purchaser;
(p) Each Purchaser shall have received true copies of each of: (1) the
Issuer's certificate of incorporation and bylaws and (2) KMC VI's certificate of
incorporation and bylaws;
(q) Each of the Revenue Account, the Note Reserve Account, the
Servicing Reserve Account and the Property Tax Escrow Account shall have been
established by the Trustee;
(r) Each Purchaser shall have received a certificate, dated the
Closing Date, as to organizational documents, authorization and incumbency of
officers, duly executed by an authorized officer on behalf of each of the
Issuer, KMC VI and KMC;
(s) Each Purchaser shall have received the certificate of
incorporation of each Service Purchaser, certified by the Secretary of State of
Delaware;
(t) Each Purchaser shall have received the certificate of
incorporation of Lucent, certified by the Secretary of State of Delaware;
(u) Each Purchaser shall have received the certificate of
incorporation of Nortel, certified by the Secretary of State of Delaware;
17
(v) Each Purchaser shall have been satisfied with all corporate
proceedings undertaken by the Issuer, KMC VI, Lucent, Nortel and the Service
Purchasers, with respect to the transactions contemplated by this Agreement and
all documents referred to therein and each Purchaser shall have received from
the Issuer, KMC VI, Lucent, Nortel and the Service Purchasers all such other
documents as each Purchaser may reasonably request;
(w) The sum of all amounts then on deposit in the Note Reserve Account
plus the present value (as of the Closing Date) of the Minimum Payments under
the Service Purchasers Consent (discounted monthly at the Note Rate) shall be
not less than the Original Principal Balance of the Notes;
(x) DTC shall have received the duly executed Notes;
(y) KMC VI shall have delivered any and all documents and opinions
necessary to evidence, to the satisfaction of the Purchasers, KMC VI's
compliance with all regulatory requirements;
(z) The Issuer shall have paid to the Placement Agent the placement
agent fee (as set forth in the engagement letter from the Issuer to Dresdner
Kleinwort ▇▇▇▇▇▇ North America LLC), or the Issuer shall have directed the
Trustee in writing to apply the proceeds of the purchase price of the Notes to
such payment;
(aa) Each Purchaser shall have received such other documents,
certificates and opinions as shall have been reasonably requested by such
Purchaser; and
(bb) The Issuer shall have paid to ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ the fees
and disbursements of such firm as counsel to the Purchasers in connection with
the transactions contemplated hereunder or the Issuer shall have directed the
Trustee in writing to apply the proceeds of the purchase price of the Notes to
such payment.
Section 9. INTENTION OF THE PARTIES. The Indenture and the Notes have been
structured with the intention that the Notes will qualify under applicable tax
law as indebtedness, and the Purchasers by acceptance of the Notes (and any
Person which is a legal or beneficial owner of any interest in a Note, by virtue
of such Person's acquisition of a legal or beneficial interest therein)
severally agree to treat the Notes as indebtedness for purposes of federal,
state and local income or franchise taxes and any other tax imposed on or
measured by income.
Section 10. EXPENSES. Whether or not the transactions contemplated hereby
and by the Transaction Documents shall be consummated, the Issuer and KMC VI,
jointly and severally, agree to pay promptly all reasonable out-of-pocket
expenses incurred by each Purchaser and the Placement Agent in connection with
such transactions prior to and on the Closing Date, and any amendment initiated,
directly or indirectly, by the Issuer or any affiliate thereof (whether or not
such amendment becomes effective) or waiver of any such document, including,
without limitation: (1) the cost and expenses of preparing and reproducing the
Transaction Documents and the Private Placement Memorandum, (2) the cost of
arranging for delivery or performance of conditions precedent, (3) all costs and
18
expenses incurred in connection with the transfer and delivery of the Collateral
and the issuance of the Notes to each Purchaser, including custodial fees,
Trustee's fees, fees for financing statement filings and continuations, and KMC
VI's, the Trustee's, the Placement Agent's, each Purchaser's and the Issuer's
attorneys' and accountants' fees. The Issuer further agrees that it will pay or
cause to be paid, promptly upon demand, any reasonable expense incurred by each
Purchaser in connection with the enforcement of each Purchaser's rights with
respect to this Note Purchase Agreement and the other Transaction Documents and
any document executed pursuant hereto or thereto, including the reasonable fees
and disbursements of counsel. The Issuer further agrees that it will pay, or
reimburse each Purchaser for, promptly upon demand, all reasonable costs and
expenses (including reasonable legal fees and disbursements of not more than one
counsel for all Purchasers) incident to or in connection with any proceeding or
governmental investigation against or with respect to the Issuer, KMC VI, or any
subsidiary or affiliate of any of them and which result solely because of the
ownership by each Purchaser of the Notes. The obligations of the Issuer and KMC
VI under this section shall survive the termination of the Indenture.
Section 11. INDEMNIFICATION. Each of KMC VI and the Issuer, jointly and
severally, agree to indemnify and hold harmless each Purchaser and each
Subsequent Purchaser for the amount of any and all losses, claims, damages and
liabilities to the extent that any such loss, claim, damage or liability arose
out of, or was imposed upon such Purchaser or Subsequent Purchaser by reason of,
the failure by either KMC VI or the Issuer to perform any of its covenants under
the Transaction Documents or the breach of a representation or warranty made by
either KMC VI or the Issuer. This indemnity shall not apply to any action, suit,
proceeding or investigation by any Purchaser or Subsequent Purchaser or to the
breach or alleged breach of this Agreement by any Purchaser or Subsequent
Purchaser. If any action, suit, proceeding or investigation is commenced, as to
which any Purchaser or Subsequent Purchaser proposes to demand indemnification,
such Purchaser or Subsequent Purchaser shall notify each of KMC VI and the
Issuer with reasonable promptness. If any action, suit, proceeding or
investigation shall be brought against any Purchaser or Subsequent Purchaser and
if any Purchaser or Subsequent Purchaser shall notify either KMC VI or the
Issuer of the commencement of any such action, suit, proceeding or
investigation, each of KMC VI and the Issuer shall be entitled to assume the
defense of such action, suit, proceeding or investigation with counsel of its
choice at its expense. Notwithstanding the election of either KMC VI or the
Issuer to assume the defense of such action, suit, proceeding or investigation,
each of the Purchasers and each Subsequent Purchaser shall have the right to
employ separate counsel and to participate in the defense of the action, suit,
proceeding or investigation, and each of KMC VI and the Issuer shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use of
counsel chosen by either KMC VI or the Issuer to represent any Purchaser or
Subsequent Purchaser would in the written opinion of counsel chosen by any
Purchaser or Subsequent Purchaser present counsel chosen by either KMC VI or the
Issuer with a conflict of interest; (ii) either KMC VI or the Issuer has not
employed counsel to represent it within a reasonable time after notice of the
institution of such action, suit, proceeding or investigation; or (iii) either
KMC VI or the Issuer shall authorize any Purchaser or Subsequent Purchaser to
employ separate counsel at the expense of each of KMC VI and the Issuer. In no
event shall either or both of KMC VI and the Issuer be liable to pay the
19
expenses of more than one counsel for each Purchaser and each Subsequent
Purchaser pursuant to this Section 11.
Section 12. SURVIVAL. Each of the Issuer and KMC VI agree that the
representations, warranties and covenants made by it in this Agreement, in any
Transaction Document and in any document, certificate or other instrument
delivered pursuant hereto or thereto shall be deemed to be relied upon by each
Purchaser, notwithstanding any investigation heretofore or hereafter made by or
on behalf of each Purchaser. All representations, warranties and covenants made
by any party to this Note Purchase Agreement, or in any such document,
certificate or other instrument shall survive the delivery of and payment for
the Notes.
Section 13. NOTICES. All communications provided for or permitted under
this Note Purchase Agreement shall be in writing and delivered by overnight mail
or facsimile followed by overnight courier other than notices and communications
required to be delivered on a regular periodic basis hereunder, which delivery
shall be deemed to have been duly given if personally delivered to or mailed by
registered mail, postage prepaid, or transmitted by telex, telegraph or
facsimile, with receipt of answerback or written confirmation of the receipt
thereof, if to a Purchaser, addressed to each Purchaser, at its address set
forth on Schedule II hereto: if to the Issuer, addressed to it at ▇▇▇▇ ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇; if to KMC VI, addressed to it at ▇▇▇▇ ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or to such other address as the parties may
have designated in writing to the other parties. Any notice so addressed and
sent shall be deemed to be given when received. The Issuer shall cause the
instructions with respect to payments on the Notes and notification thereof set
forth in Schedule II hereof to be reflected in the books at the Corporate Trust
Office of the Trustee for the registration and transfer of the Notes and all
payments and notifications thereof to each Purchaser shall, pursuant to the
Indenture, be made in accordance therewith.
Section 14. SEVERABILITY OF PROVISIONS. Any part, provision,
representation, warranty or covenant of this Note Purchase Agreement which is
prohibited or which is held to be void or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation, warranty or
covenant of this Note Purchase Agreement which is prohibited or unenforceable or
is held to be void or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Contract
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof.
Section 15. COUNTERPARTS. This Note Purchase Agreement may be executed
simultaneously in any number of counterparts. Each counterpart shall be deemed
to be an original, and all such counterparts shall constitute one and the same
instrument.
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Section 16. GOVERNING LAW. This Note Purchase Agreement shall be construed
and enforced in accordance with the internal laws of the State of New York,
without giving effect to the principles of conflicts of law, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York.
Section 17. CONSENT TO JURISDICTION. (a) Any legal suit, action or
proceeding against any of the Issuer or the Purchasers arising out of or
relating to this Agreement, or any transaction contemplated hereby, may be
instituted in any federal or state court in New York County, State of New York,
and each of the Issuer and the Purchasers hereby waives any objection which it
may now or hereafter have to the laying of venue of any such suit, action or
proceeding, and, solely for the purposes of enforcing this Agreement, each of
the Issuer and the Purchasers hereby irrevocably submits to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding. The
Issuer hereby irrevocably appoints and designates the Trustee, having an address
at Sixth Street and Marquette Avenue, MAC N9311-161, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, its true and lawful attorney-in-fact and duly authorized agent for the
limited purpose of accepting service of legal process and the Issuer agrees that
service of process upon such party shall constitute personal service of such
process on such Person. The Issuer shall maintain the designation and
appointment of such authorized agent until all amounts payable under this
Agreement and the Notes shall have been paid in full. If such agent shall cease
to so act, the Issuer shall immediately designate and appoint another such agent
satisfactory to the other parties hereto and shall promptly deliver to the other
parties hereto evidence in writing of such other agent's acceptance of such
appointment.
(b) EACH OF THE PURCHASERS AND THE ISSUER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE
PURCHASE AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. FURTHER, EACH OF THE
PURCHASERS AND THE ISSUER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD
NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO
JURY TRIAL PROVISION.
(c) Each of the Purchasers, the Issuer and KMC VI hereby waives any
plea of improper jurisdiction or venue based on its not being a resident of New
York County, New York, and hereby specifically authorizes any action brought
under the provisions of this Note Purchase Agreement to be instituted and
prosecuted in either the Supreme Court in and for New York County, New York or
the United States District Court for the Southern District of New York; waives
personal service by manual delivery and agrees that service shall be made and
effective upon the mailing of a post-paid return receipt certified letter to the
persons and at the addresses provided in Section 13 of this Note Purchase
Agreement.
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Section 18. SUCCESSORS AND ASSIGNS. The provisions of this Note Purchase
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective permitted successors and assigns.
Section 19. WAIVER; PRIOR AGREEMENTS. No term or provision of this Note
Purchase Agreement may be waived or modified unless such waiver or modification
is in writing and signed by the party against whom such waiver or modification
is sought to be enforced. This Note Purchase Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof.
Section 20. FURTHER AGREEMENTS. Each Purchaser, the Issuer and KMC VI agree
to execute and deliver to the other such additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Note Purchase Agreement.
Section 21. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Note
Purchase Agreement except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Note Purchase Agreement have the
meanings assigned to them in this Note Purchase Agreement and include the plural
as well as the singular, and the use of any gender herein shall be deemed to
include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with United States GAAP as in effect on the date
hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Note Purchase Agreement;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Note Purchase Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 22. REPRODUCTION OF DOCUMENTS. This Note Purchase Agreement, the
Indenture, the other Transaction Documents and all related documents, including
(a) consents, waivers and modifications which may subsequently be executed, (b)
documents received by each Purchaser at the closing of its purchase of the Notes
(except the Notes themselves) and (c) financial statements, certificates and
other information previously or subsequently furnished to each Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process and you may destroy
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any original document so reproduced. The Issuer and KMC VI agree and stipulate
that any such reproduction shall, to the extent permitted by applicable law, be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not the
reproduction was made by you in the regular course of business) and that any
enlargement, facsimile or further reproduction of the reproduction shall
likewise be admissible in evidence.
Section 23. RIGHT OF INSPECTION. Each of the Issuer and KMC VI, on
reasonable prior notice, shall permit any representative of any Noteholder
during normal business hours, to examine all of its books of account, records,
reports and other papers to make copies and extracts therefrom, to cause such
books to be audited by independent certified public accountants selected by such
Noteholder, as the case may be, and to discuss its affairs, finances and
accounts relating to the Collateral with its officers, employees and independent
public accountants (and by this provision each of the Issuer and KMC VI hereby
authorizes said accountants to discuss with such representatives such affairs,
finances and accounts), all at such reasonable times and as often as may be
reasonably requested. Any expense incident to the exercise by the Noteholders
under this Section 23 shall be borne by the Issuer and KMC VI, respectively.
IN WITNESS WHEREOF, each Purchaser, the Issuer and KMC VI have caused their
names to be signed hereto by their respective authorized representatives as of
the date first above written.
KMC FUNDING CORPORATION
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Title: VICE PRESIDENT
---------------------------------------
KMC TELECOM VI, INC.
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Title: VICE PRESIDENT
---------------------------------------
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TRANSAMERICA LIFE INSURANCE COMPANY, as Purchaser
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Its: VICE PRESIDENT
--------------------------------------------
TRANSAMERICA ANNUITY AND LIFE INSURANCE COMPANY, as Purchaser
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Its: VICE PRESIDENT
--------------------------------------------
LIFE INVESTORS INSURANCE COMPANY OF AMERICA, as Purchaser
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Its: VICE PRESIDENT
--------------------------------------------
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SUNAMERICA LIFE INSURANCE COMPANY, as Purchaser
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Its: AUTHORIZED AGENT
--------------------------------------------
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PRINCIPAL LIFE INSURANCE COMPANY, as Purchaser
By: Principal Capital Management LLC,
a Delaware Limited Liability company,
its authorized representative
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Its: COUNSEL
--------------------------------------------
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Its: COUNSEL
--------------------------------------------
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NIPPON LIFE INSURANCE COMPANY OF AMERICA,
an Iowa Corporation, as Purchaser
By Principal Life Insurance Company,
an Iowa Corporation, its attorney-in-fact
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Its: COUNSEL
--------------------------------------------
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Its: COUNSEL
--------------------------------------------
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CONNECTICUT GENERAL LIFE INSURANCE COMPANY, as Purchaser
By: CIGNA Investments, Inc. (authorized agent)
By: /S/ ▇▇▇▇▇ ▇. HEIGHT
---------------------------------------------
Name: ▇▇▇▇▇ ▇. HEIGHT
-------------------------------------------
Its: MANAGING DIRECTOR
--------------------------------------------
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METROPOLITAN LIFE INSURANCE COMPANY, as Purchaser
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
Its: DIRECTOR
--------------------------------------------
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▇▇▇▇▇▇▇ NATIONAL LIFE INSURANCE COMPANY, as Purchaser
By: PPM America, Inc., as attorney-in-fact,
on behalf of ▇▇▇▇▇▇▇ National Life Insurance Company
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Its: SENIOR MANAGING DIRECTOR
--------------------------------------------
THE PRUDENTIAL ASSURANCE COMPANY LIMITED, as Purchaser
By: PPM America, Inc., as attorney-in-fact,
on behalf of The Prudential Assurance Company Limited
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Its: SENIOR MANAGING DIRECTOR
--------------------------------------------
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HANMI BANK, as Purchaser
By: /S/ DONG ▇▇▇▇ ▇▇▇
---------------------------------------------
Name: DONG ▇▇▇▇ ▇▇▇
-------------------------------------------
Its: VP & INVESTMENT MANAGER
--------------------------------------------
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EMPLOYERS REINSURANCE COMPANY, as Purchaser
By: Asset Allocation & Management Company, L.L.C.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Its: AUTHORIZED SIGNATORY
--------------------------------------------
THE MEDICAL PROTECTIVE COMPANY, as Purchaser
By: Asset Allocation & Management Company, L.L.C.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Its: AUTHORIZED SIGNATORY
--------------------------------------------
GE REINSURANCE COMPANY, as Purchaser
By: Asset Allocation & Management Company, L.L.C.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Its: AUTHORIZED SIGNATORY
--------------------------------------------
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JEFFERSON PILOT LIFE INSURANCE COMPANY, as Purchaser
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
-------------------------------------------
Its: VICE PRESIDENT
--------------------------------------------
JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY, as Purchaser
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
-------------------------------------------
Its: VICE PRESIDENT
--------------------------------------------
[This space intentionally left blank.]
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BEAR ▇▇▇▇▇▇▇ SECURITIES CORP., as Purchaser
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
Its:
---------------------------------------------
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