AMENDMENT NO. 4 TO
THE AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
AMENDMENT NO. 4 dated as of February 4, 1999 to the Amended and
Restated Stockholders Agreement, dated as of October 31, 1997 (as heretofore
amended, the "Stockholders Agreement") among KMC Telecom Holdings, Inc., Nassau
Capital Partners L.P., NAS Partners I L.L.C., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, AT&T Credit
Corporation, General Electric Capital Corporation, CoreStates Bank, N.A., and
CoreStates Holdings, Inc.
W I T N E S S E T H
WHEREAS, the parties hereto desire to make certain amendments to the
Stockholders Agreement;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein, all capitalized
terms defined in the Stockholders Agreement and used herein are so used as so
defined. In addition, the following terms shall have the meanings set forth
below:
"1999 PURCHASE AGREEMENT" means the Securities Purchase Agreement
dated as of February 4, 1999 among the Company, Lucent Technologies Inc. and
Newcourt Capital USA, Inc.
"1999 WARRANT REGISTRATION RIGHTS AGREEMENT" means the Warrant
Registration Rights Agreement dated as of February 4, 1999 among the Company,
Newcourt Capital USA, Inc., Lucent Technologies Inc. and any Additional
Purchasers (as defined therein), , which Warrant Registration Rights Agreement
is being entered into in connection with the execution and delivery of the
Preferred Stock Warrant Agreement.
"PREFERRED STOCK WARRANT AGREEMENT" means the Warrant Agreement dated
as of February 4, 1999 among the Company, The Chase Manhattan Bank, as Warrant
Agent, Newcourt Capital USA, Inc., Lucent Technologies Inc. and any Additional
Purchasers (as defined therein), which Preferred Stock Warrant Agreement is
being entered into in connection with the execution and delivery of the 1999
Purchase Agreement.
"PREFERRED STOCK WARRANT SHARES" means shares of Common Stock issuable
upon exercise of Preferred Stock Warrants, such other securities as shall be
issuable upon the exercise of Preferred Stock Warrants, or shares of Common
Stock or other securities received upon the exercise of Preferred Stock Warrants
"PREFERRED STOCK WARRANTS" means Warrants issued to holders of Series
E Preferred Stock and Series F Preferred Stock pursuant to the Preferred Stock
Warrant Agreement, each such Warrant initially entitling the holder thereof to
purchase 0.42887 shares of Common Stock at an exercise price of $.01 per share.
"SERIES E PREFERRED STOCK" means the Company's Series E Senior,
Redeemable, Exchangeable PIK Preferred Stock, par value $.01 per share.
"SERIES F PREFERRED STOCK" means the Company's Series F Senior,
Redeemable, Exchangeable PIK Preferred Stock, par value $.01 per share.
2. AMENDMENTS TO SECTIONS 6.1 AND 6.2 OF THE STOCKHOLDERS AGREEMENT.
Paragraphs (d) and (g) of Section 6.1 and paragraphs (c) and (d) of Section 6.2
of the Stockholders Agreement are amended to read as follows:
6.1 DEMAND REGISTRATIONS.
(d) PRIORITY ON DEMAND REGISTRATIONS. The Company will not include in
any Demand Registration any securities which are not Registrable Securities
without the prior written consent of the Demand Holder; provided, however, that
no such consent shall be required in connection with the inclusion in any Demand
Registration of the Senior Discount Notes, Warrant Shares and Preferred Stock
Warrant Shares as and to the extent provided below. If a Demand Registration is
an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if any, which
can be sold therein without adversely affecting the price, timing or
distribution of the offering, the Company will include in such registration, (i)
first, the Registrable Securities requested to be included in such registration,
pro rata among the holders of such Registrable Securities, on the basis of the
number of shares of Registrable Securities owned by each such holder and
requested to be included therein and (ii) second, other securities, if any,
requested to be included in such registration (in such relative order of
priority among such securities as may be specified with respect thereto). Any
Persons other than holders of Registrable Securities who participate in Demand
Registrations must pay their proportionate share of the Registration Expenses as
provided in Section 6.5 hereof that are not borne by the Company.
(g) OTHER REGISTRATION RIGHTS. (i) Within the limitations
prescribed by this paragraph (i), but not otherwise, the Company may grant to
subsequent investors in the Company rights of incidental registration (such as
those provided in Section 6.2). Such rights may only pertain to the Senior
Discount Notes and Warrant Shares, in the case of the HYDEO, Preferred Stock
Warrant Shares, in the case of the Preferred Stock Warrant Agreement, and,
otherwise, shares of Common Stock, including shares of Common Stock into which
any other securities may be converted. Such rights may be granted with respect
to (a) registrations actually requested by a Demand Holder pursuant to Section
6.1, but only in respect of that portion of any such registration as remains
after inclusion of all Registrable Securities requested by the Demand Holder and
(b) registrations initiated by the Company, but only in respect of that portion
of such registration as is available under the limitations set forth in Section
6.2(c) (which limitations shall apply pro rata to all holders of Registrable
Securities) and such rights shall be limited in all cases to sharing in the
available portion of the registration in question with holders of Registrable
Securities and other investors as provided in Section 6.2(c), such sharing to be
based on the number of shares of Common Stock held by the respective holders of
Registrable Securities and held by such other investors, plus the number of
shares of Common Stock into which other securities held by the holders of
Registrable Securities and such other investors are convertible, which are
entitled to registration rights. With respect to registrations which are for
underwritten public offerings, "available portion" as used above shall mean the
portion of the underwritten shares which is available as specified in clauses
(a) and (b) of the third sentence of this paragraph (i). Shares not included in
such underwriting shall not be registered.
(ii) The Company may not grant to subsequent investors in the Company
rights of registration upon request (such as those provided in Section 6.1)
unless (a) such rights are limited to shares of Common Stock; (b) the Demand
Holders are given enforceable contractual rights to participate in registrations
requested by such subsequent investors (but subject to the right of priority of
registration in the following order: such subsequent investors and the holders
of Registrable Securities on a pro rata basis), such participation to be on the
pro rata basis and subject to the limitations described in the final three
sentences of paragraph (i) of this Section 6.1(g); (c) such rights shall not
become effective prior to 90 days after the effective date of the first
registration pursuant to Section 6.1; and (d) such rights shall not be more
favorable than those granted to the Demand Holders. Notwithstanding the
foregoing or anything to the contrary contained in this Agreement, the Company
may file shelf registrations under the Securities Act (x) as required by Section
3 of the Warrant Registration Rights Agreement, substantially upon the terms and
subject to the conditions contained therein, (y) as required by Section 2(b) of
the Registration Rights Agreement, substantially upon the terms and subject to
the conditions contained therein and (z) as required by Section 3 of the 1999
Warrant Registration Rights Agreement, substantially upon the terms and subject
to the conditions contained therein.
6.2 PIGGYBACK REGISTRATIONS.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, the Company will
include in such registration all securities requested to be included in such
registration; PROVIDED, that if the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the price, timing or distribution of the offering,
the Company will include in such registration (i) first, the securities the
Company proposes to sell, (ii) second, the Registrable Securities requested to
be included in such registration, pro rata among the holders of such Registrable
Securities on the basis of the number of Registrable Securities owned by each
such holder and requested to be included therein, and (iii) third, other
securities (including Warrant Shares and Preferred Stock Warrant Shares), if
any, requested to be included in such registration (in such relative order of
priority among such securities as may be specified with respect thereto).
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the price, timing or distribution of the offering, the
Company will include in such registration (i) first, the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such Registrable Securities on the basis of the number of Registrable Securities
owned by each such holder and requested to be included therein, and (ii) second,
other securities requested to be included in such registration (in such relative
order of priority among such securities as may be specified with respect
thereto).
3. Except as expressly amended hereby, all of the provisions of the
Stockholders Agreement are hereby affirmed and shall continue in full force and
effect in accordance with their terms.
4. This Amendment shall be governed and construed in accordance with
the laws of the state of Delaware applicable to agreements made and to be
performed entirely within such state, without regard to the principles of
conflicts of laws thereof.
5. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed, or caused to be
executed, this Agreement as of the date first above written.
KMC TELECOM HOLDINGS, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name:
Title:
NASSAU CAPITAL PARTNERS L.P.
By: Nassau Capital L.L.C.,
its General Partner
By: /S/ ▇▇▇▇▇▇▇ ▇. HACK
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Name:
Title:
NAS PARTNERS I L.L.C.
By: /S/ ▇▇▇▇▇▇▇ ▇. HACK
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Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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AT&T CREDIT CORPORATION
By:__________________________
Name:
Title:
First Union National Bank as Successor to
CORESTATES BANK, N.A.
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:
Title:
CORESTATES HOLDINGS, INC.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name:
Title:
KMC TELECOMMUNICATIONS L.P.
By:__________________________
Name:
Title: