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Exhibit 10.22
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
by and between
PROVIDENCE EQUITY PARTNERS III L.P.
PROVIDENCE EQUITY OPERATING PARTNERS III L.P.
J K & B CAPITAL III L.P.
J K & B CAPITAL, L.P.
J K & B CAPITAL II, L.P.
J K & B CAPITAL III QIP, L.P.
and
MGC COMMUNICATIONS, INC.
Dated as of November 19, 1999
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A Certificate of Designation
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Securityholders' Agreement
Exhibit D Form of Opinion of Counsel to the Company
Exhibit E Form of Opinion of Regulatory Counsel to the Company
Exhibit F Amendment to Certificate of Designation for Series B
Preferred
Exhibit G Form of Promissory Note
Schedule 2.1: List of Purchasers
Schedule 3.4(a): Capitalization
Schedule 3.4(b): Options, Etc.
Schedule 3.4(c): Registration Rights
Schedule 3.5: Subsidiaries; Other Interests
Schedule 3.6: September Balance Sheet
Schedule 3.9 Title to Assets
Schedule 3.10 Necessary Property
Schedule 3.11 Compliance with Law
Schedule 3.12 No Material Adverse Change
Schedule 3.13 No Brokers
Schedule 3.14 Network
Schedule 3.15 Customers and Suppliers
Schedule 3.16: Year 2000 Compliance Plan
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AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
MGC COMMUNICATIONS, INC.
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As of November 19, 1999
Providence Equity Partners III L.P.
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Providence Equity Operating Partners III L.P.
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JK&B Capital III L.P.
JK&B Capital, L.P.
JK&B Capital II, L.P.
JK&B Capital III QIP, L.P.
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Ladies and Gentlemen:
The undersigned, MGC Communications, Inc., a Nevada corporation (the
"Company"), hereby agrees with you as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in this Article I:
Business Day. The term "Business Day" shall mean any day other than
Saturday, Sunday, a federal holiday or other day on which commercial banks in
the State of Rhode Island or Las Vegas, Nevada are required or permitted to
close by law.
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Charter. The term "Charter" means the certificate or articles of
incorporation, by-laws, statute, constitution, joint venture, certificate of
limited partnership, partnership agreement, articles of organization, limited
liability company operating agreement or other organizational document of any
Person other than an individual, each as from time to time amended or modified.
Closing Date. The term "Closing Date" shall have the meaning specified in
Section 2.2 or such other date as the Company and the Purchasers may agree upon.
Common Stock. The term "Common Stock" shall mean the Common Stock, $.001
par value, of the Company.
Company. The term "Company" shall mean MGC Communications, Inc., a Nevada
corporation.
Contract. The term "Contract" means any contract, plan, lease, commitment,
indenture or other agreement.
Current Financial Statements. The term "Current Financial Statements"
shall have the meaning specified in Section 3.6.
Equity Securities. The term "Equity Securities" means all shares of
capital stock of the Company, including (i) all classes of shares of capital
stock, voting and non-voting (including, without limitation, the Purchased
Securities), (ii) any warrants, options or other rights to subscribe for or to
acquire, directly or indirectly, whether pursuant to any division or split of
any class of shares of capital stock of the Company or in connection with a
combination, exchange, reorganization, recapitalization, reclassification,
merger, consolidation or similar business combination transaction involving the
Company or otherwise, (iii) any other equity interests in the Company or any
bonds, notes, debentures, or other securities convertible into or exchangeable
for, directly or indirectly, any shares of capital stock or equity interests of
the Company and (iv) any interests in any of the foregoing in each case
outstanding at any time.
FCC. The term "FCC" shall mean the Federal Communications Commission.
GAAP. The term "GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with prior periods and such that a chartered
accountant would, insofar as the use of accounting principles is pertinent, be
in a position to deliver an unqualified opinion as to financial statements in
which such principles have been properly applied.
Governmental Authority. The term "Governmental Authority" shall mean any
government or any agency, bureau, board, commission, court, department,
official, political subdivision, tribunal or other instrumentality of any
government (foreign, federal, local or otherwise) and shall include any
international regulatory or trade body or organization and the FCC and any State
Regulatory Agency.
Income Statement. The term "Income Statement" shall have the meaning
specified in
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Section 3.6.
Indebtedness. The term "Indebtedness" shall mean all obligations,
contingent (to the extent required to be reflected in financial statements
prepared in accordance with GAAP) and otherwise, which in accordance with GAAP
should be classified on the obligor's balance sheet as liabilities, including
without limitation, in any event and whether or not so classified: (i) all debt
and similar monetary obligations, whether direct or indirect; (ii) all
liabilities secured by any mortgage, pledge, security interest, lien, charge or
other encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; (iii) all
guarantees, endorsements and other contingent obligations whether direct or
indirect in respect of Indebtedness or performance of others, including any
obligation to supply funds to or in any manner to invest in, directly or
indirectly, the debtor to purchase Indebtedness or to assure the owner of
Indebtedness against loss, through an agreement to purchase goods, supplies or
services for the purpose of enabling the debtor to make payment of the
Indebtedness held by such owner or otherwise and (iv) obligations to reimburse
issuers of any letters of credit.
Licenses. The term "Licenses" shall mean all licenses, permits, consents,
approvals, concessions and authorizations of all Governmental Authorities,
whether foreign, federal, state or local, including, without limitation, the
Federal Communications Commission and any State Regulatory Agency and their
equivalents in foreign countries.
Lien. The term "Lien" shall mean (a) any encumbrance, mortgage, pledge,
lien, charge or other security interest of any kind upon any property or assets
of any character, or upon the income or profits therefrom; (b) any acquisition
of or agreement to have an option to acquire any property or assets upon
conditional sale or other title retention agreement, device or arrangement
(including a capitalized lease); or (c) any sale, assignment, pledge or other
transfer for security of any accounts, general intangibles or chattel paper,
with or without recourse.
Majority Purchasers. The term "Majority Purchasers" shall mean, at any
time, the record holders of more than fifty percent (50%) of the outstanding
Purchased Securities.
Material Adverse Effect. The term "Material Adverse Effect" shall mean,
with respect to any Person, any effect that is, or series of related effects
that are, in the aggregate, materially adverse to the business, assets,
properties, condition (financial or otherwise) or prospects of such Person.
Person. The term "Person" shall mean an individual, partnership, limited
liability company, corporation, association, trust, joint venture,
unincorporated organization and any Governmental Authority.
Purchased Securities. The term "Purchased Securities" shall mean the
Series C Preferred being purchased by the Purchasers pursuant to Section 2.1 of
this Agreement, the Common Stock issuable upon conversion of the Series C
Preferred or otherwise and any capital stock or other securities of the Company
issued or issuable in exchange therefor upon an exchange, conversion,
reorganization, reclassification, recapitalization, merger, consolidation or
other similar business transaction involving the Company, its Subsidiaries or
otherwise.
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Purchaser. The term "Purchaser" shall mean the several purchasers named in
Schedule 2.1 (individually, a "Purchaser" and collectively, the "Purchasers")
and their respective successors and assigns.
Related Agreements. The term "Related Agreements" shall mean the
Securityholders' Agreement and the Registration Rights Agreement.
Registration Rights Agreement. The term "Registration Rights Agreement"
shall mean that certain Amended and Restated Registration Rights Agreement,
dated the Closing Date, by and among the Company, and the Purchasers, in the
form of Exhibit B attached hereto, as the same may be amended, modified or
supplemented from time to time.
SEC. The term "SEC" shall mean the Securities and Exchange Commission.
SEC Documents. The term "SEC Documents" shall have the meaning specified
in Section 3.17.
Securities Act. The term "Securities Act" shall mean all applicable
securities laws, rules, regulations, notices and policies in force in the United
States, as amended, modified or supplemented from time to time.
Securityholders' Agreement. The term "Securityholders' Agreement" shall
mean that certain Amended and Restated Securityholders' Agreement among the
Company, the Purchasers and certain holders of the Company's outstanding Common
Stock and Series B Preferred, in the form of Exhibit C attached hereto, as the
same may be amended, modified or supplemented from time to time.
September Balance Sheet. The term "September Balance Sheet" shall have the
meaning specified in Section 3.6.
Series C Preferred. The term "Series C Preferred" shall mean the Series C
Preferred Stock, $.001 par value, of the Company.
State Regulatory Agency. The term "State Regulatory Agency" means any of
the various state regulatory agencies with primary regulatory jurisdiction over
telecommunications matters.
Subsidiary. The term "Subsidiary" shall mean any Person of which the
Company or other specified Person now or hereafter shall at the time own,
directly or indirectly through a Subsidiary, at least a majority of the
outstanding Equity Securities (or other shares of beneficial interest) entitled
to vote generally.
Tax or Taxes The term "Tax" or "Taxes" shall mean all taxes, charges,
fees, levies, imposts and other assessments, including all income, sales, use,
goods and services, value added, capital, capital gains, alternative net worth,
transfer, profits, withholding, payroll, employer health, excise, real property
and personal property taxes, and any other taxes, customs duties,
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fees, assessments or similar charges in the nature of a tax, including, without
limitation, pension plan contributions and workers compensation premiums,
together with any interest, fines and penalties imposed by any Governmental
Authority, and whether disputed or not.
Section 1.2. Hereof, Herein, etc. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified herein, the term "or" has the inclusive
meaning represented by the term "and/or" and the term "including" is not
limiting. All references as to "Sections", "Subsections", "Articles",
"Schedules" and "Exhibits" shall be to Section, Subsections, Articles, Schedules
and Exhibits, respectively, of this Agreement unless otherwise specifically
provided.
Section 1.3. Computation of Time Periods. In the computation of periods of
time from a specified date to a later specified date, unless otherwise specified
herein the words "commencing on" mean "commencing on and including", the word
"from" means "from and including" and the words "to" and "until" each means "to
and including".
ARTICLE II
SALE AND PURCHASE OF PURCHASED SECURITIES
Section 2.1. Sale and Purchase of the Purchased Securities. Subject to all
of the terms and conditions hereof and in reliance on the representations and
warranties set forth or referred to herein, the Company agrees to issue and sell
to each Purchaser and each Purchaser agrees to purchase, on the Closing Date,
the number of Purchased Securities set forth opposite the name of such Purchaser
on Schedule 2.1, at a purchase price per share equal to $28.00 (the "Per Share
Price"). Notwithstanding the foregoing, in the event the Company issues shares
of Common Stock, Series D Convertible Preferred Stock ("Series D Preferred") or
other class or series of Preferred Stock prior to the Closing Date and the
effective price per share of Common Stock issued or issuable upon conversion of
the Series D Preferred or effective cost per share of Common Stock of such other
class or series of Preferred Stock upon conversion is less than the Per Share
Price, such Per Share Price shall be reduced to the lowest of the issue price of
such Common Stock, such effective price per share of Common Stock issuable upon
conversion of the Series D Preferred or effective cost per share of Common Stock
issuable pursuant to such other class or series of Preferred Stock and the
number of shares of Purchased Securities to be purchased by each Purchaser shall
be increased proportionally. In addition, in such event appropriate changes
shall be made herein and in the Exhibits hereto to give effect to such lower Per
Share Price.
Section 2.2. Closing. The closing of the purchase and sale of the
Purchased Securities contemplated by Section 2.1 (the "Closing") will take place
at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on a mutually agreeable date within five (5) business
days of satisfaction of the Conditions to Closing contained in Article V (the
"Closing Date"). Subject to the satisfaction of the conditions to Closing set
forth in Article V, as payment in full for the Purchased Securities being
purchased by the Purchasers under this Agreement on the Closing Date, each
Purchaser shall deliver to the Company, in
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immediately available funds, the amount set forth opposite such Purchaser's name
under the heading "Aggregate Purchase Price of the Purchased Securities" on
Schedule 2.1, provided, however, that JK&B Capital III, L.P. shall pay for the
Purchased Securities to be purchased by it by delivery to the Company of $1.4
million in immediately available funds and the balance by delivery of its
promissory note due March 1, 2000 in the form set forth as Exhibit G.
Section 2.3. Use of Proceeds. Proceeds from the sale of the Purchased
Securities hereunder shall be used for the expansion of the Company's
telecommunications network and sales and marketing program and for working
capital and general corporate purposes, as determined from time to time by the
Company's Board of Directors and consistent with the Company's business plan in
effect at such time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchasers to enter into this Agreement and to
purchase the Purchased Securities, the Company hereby represents and warrants
that:
Section 3.1. Organization and Existence. (a) The Company is duly
organized, validly existing and in good standing in its jurisdiction of
organization and is duly qualified as a foreign corporation and authorized to do
business in all other jurisdictions in which the nature of its business or
property makes such qualification necessary except where the failure to so
qualify would not have a Material Adverse Effect. The Company has the power to
own its properties and to carry on its business as now conducted and as proposed
to be conducted.
(b) Each of the Company's Subsidiaries is duly organized, validly existing
and in good standing in its jurisdiction of incorporation and is duly qualified
as a foreign entity and authorized to do business in all other jurisdictions in
which the nature of its business or property makes such qualification necessary
and where the failure to so qualify would not have a Material Adverse Effect.
Each of the Subsidiaries has the power to own its properties and to carry on its
business as now conducted and as proposed to be conducted. The Company holds of
record all outstanding shares of each Subsidiary.
Section 3.2. Authorization; No Conflicts. The execution, delivery and
performance by the Company of this Agreement and of each Related Agreement, and
the issuance and sale by the Company of the Purchased Securities hereunder, (a)
are within its power and authority, and (b) have been duly authorized by all
necessary action of the Company (including the audit committee of the Company's
Board of Directors) and its stockholders and by all other requisite proceedings.
Neither the execution and delivery by the Company of this Agreement or any
Related Agreement nor the consummation by the Company of the transactions
contemplated thereby (including, without limitation, the purchase and sale of
the Purchased Securities hereunder) (a) will violate any provision of the
Charter of the Company or any of its Subsidiaries, (b) will violate or conflict
with any applicable statute, law, ordinance, rule, regulation, order, judgment,
writ, injunction, license, permit or decree applicable to the Company or any of
its Subsidiaries, (c) will conflict with or constitute a violation of or a
default (or an
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event which with notice or lapse of time or both, would constitute a default)
under, or will result in the termination of, or accelerate performance required
by, any Contract to which the Company or any of its Subsidiaries is a party or
to which any of the assets or properties of the Company or any of its
Subsidiaries are subject, (d) will result in the creation of any Lien upon any
of the Equity Securities of the Company or any of its Subsidiaries or upon any
of the property or assets of the Company or any of its Subsidiaries, or (e) will
require the consent, authorization or approval of, or notice to or filing or
registration with, any Person, other than stockholder approval, if required by
Nasdaq.
Section 3.3. Enforceability. The execution and delivery by the Company of
this Agreement and of each of the Related Agreements, and the issuance and sale
by the Company of the Purchased Securities hereunder, will result in legally
binding obligations of the Company enforceable against the Company in accordance
with the respective terms and provisions hereof and thereof, subject, however,
to limitations with respect to enforcement imposed by law in connection with
bankruptcy or similar proceedings, or to the extent that equitable remedies such
as specific performance and injunction are in the discretion of the court from
which they are sought.
Section 3.4. Capitalization.
(a) Schedule 3.4(a) accurately sets forth the number, type and class of
Equity Securities the Company is authorized to issue, the name and address of
those Persons owning 5% or more of the Company's outstanding Equity Securities
immediately prior to giving effect to the transactions contemplated hereby and
the number and class of Equity Securities owned by each such record owner. All
of the Company's issued Equity Securities have been duly authorized, validly
issued and outstanding and are fully paid and non-assessable.
(b) Options, Etc. Except as set forth on Schedule 3.4(b) and except for
the rights of the Purchasers hereunder, no Person has any rights (either
pre-emptive or otherwise) or options to subscribe for or purchase from the
Company, or any warrants or other agreements providing for or requiring the
issuance by the Company of, any Equity Securities or other securities
convertible into or exchangeable for, or exercisable into Equity Securities of
the Company, or any voting trusts, proxies or agreements relating to the voting
of the Company's or any Subsidiary's Equity Securities. The number of shares of
Common Stock available for issuance under the Company's Stock Option Plan is
4,640,000. Schedule 3.4(b) sets forth the (i) name of each Person holding such
convertible or exchangeable securities, (ii) the type of security, (iii) the
amount of shares of Common Stock issuable upon exercise of such securities, and
(iv) the exercise price of such securities.
(c) Registration Rights. Except as set forth on Schedule 3.4(c) and as
provided under the Registration Rights Agreement, no other holder of Equity
Securities has registration rights with respect to such Equity Securities.
Section 3.5. Subsidiaries; Other Ownership Interests. Except as set forth
on Schedule 3.5 hereto, the Company does not have any Subsidiaries (foreign or
domestic) and does not own or hold of record and/or beneficially own or hold,
directly or through a Subsidiary, any Equity
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Securities of any corporation, general or limited partnership, limited liability
company, business trust or joint venture or in any other unincorporated trade or
business enterprise. Except as set forth on Schedule 3.5 hereto, all outstanding
Equity Securities of each such Subsidiary and such other business enterprises is
owned by the Company or another Subsidiary of the Company as set forth on such
Schedule 3.5, free and clear of any Lien, is validly issued and outstanding, and
is fully paid and non-assessable, and there are no commitments for the purchase
or sale of, and no options, warrants or other rights to subscribe for or
purchase, any Equity Securities of any such Subsidiary.
Section 3.6. Reports and Financial Statements. Each Purchaser has
heretofore been furnished with the consolidated balance sheet and statement of
income and cash flow of the Company and its subsidiaries as of September 30,
1999 (the "September Balance Sheet") and statement of income for the nine-month
period ended September 30, 1999 (the "Income Statement", and together with the
September Balance Sheet, the "Current Financial Statements"), such September
Balance Sheet being attached hereto as Schedule 3.6.
Section 3.7. Indebtedness and Liens. Neither the Company nor any of its
Subsidiaries has Indebtedness or Liens upon any of their properties other than
those which are reflected on the September Balance Sheet and Indebtedness
incurred in the ordinary course of business since September 30, 1999.
Section 3.8. Taxes.
(a) Each of the Company and its Subsidiaries has prepared and filed on
time with all appropriate Governmental Authorities all Tax returns and other
material documents that it has been required to file in respect of any Taxes for
all fiscal periods ending on or prior to the Closing Date and all such returns
or other material documents are correct and complete in all material respects.
(b) Each of the Company and its Subsidiaries has paid in full all Taxes
due on or before the date hereof and, in the case of such Taxes accruing on or
before such date that are not due on or before such date, the Company has made
adequate provision in its books and records and financial statements (including
the September Balance Sheet) for such payment.
Section 3.9. Title to Assets. Except as disclosed on Schedule 3.9, the
Company and its Subsidiaries own all of their assets, and have good and
marketable title with respect thereto, reflected in the September Balance Sheet,
subject to no Liens.
Section 3.10. Necessary Property. Except as may be set forth in Schedule
3.10 and the other Schedules hereto, the properties and assets owned, leased by
or licensed to the Company or any of its Subsidiaries and reflected in the
Current Financial Statements and any properties or assets acquired since
September 30, 1999, constitute all of the material real and personal properties,
tangible and intangible, which are necessary, used or useful in the conduct of
its business in the manner and to the extent presently conducted by them.
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Section 3.11. Compliance with Law.
(a) Except as may be set forth in Schedule 3.11, neither the Company nor
any Subsidiary is in default under, or in violation of, any laws, rules or
regulations (including, without limitation, foreign, federal, state or local
laws, rules or regulations relating to the issuance or sale of securities,
telecommunications, anti-trust, occupational safety, the protection of the
environment, transportation, storage or disposal of hazardous waste,
anti-pollution and air and water quality laws), or any Licenses, granted by, or
any judgment, decree, writ, injunction or order of, any Governmental Authority,
applicable to its business or any of its properties or assets, which defaults
and violations would in the aggregate expose the Company and its Subsidiaries to
liabilities in excess of an aggregate of $250,000 or otherwise materially
adversely affect the assets or properties or business or operations of the
Company and its Subsidiaries or requiring or prohibiting future activities.
Neither the Company nor any Subsidiary has received any notification alleging
any violations of any of the foregoing with respect to which adequate corrective
action has not been taken.
(b) Except as set forth on Schedule 3.11, there are no proceedings or
investigations pending or threatened, before the FCC or any State Regulatory
Agency directed specifically at the Company or, in the case of matters of
general applicability to the telecommunications industry, in which the Company
is identified for possible disparate treatment or whose outcome may have a
disparate impact on the Company in which any of the following matters are being
considered which are reasonably likely to have a material adverse effect on the
Company, nor has the Company or any of its Subsidiaries received written notice
or inquiry from the FCC or any State Regulatory Agency, indicating that any of
such matters should be considered or may become the object of consideration or
investigation specifically regarding the Company which are reasonably likely to
have a material adverse effect on the Company or, in the case of matters of
general applicability to the telecommunications industry, in which the Company
is identified for possible disparate treatment or whose outcome may have a
disparate impact on the Company: (a) increases or reductions in access charges,
universal service contributions or the like; (b) traffic routing restrictions or
restrictions on use of facilities; (c) reduction or restriction of rates charged
to customers; (d) reduction of earnings; (e) refunds or other forfeitures of
amounts previously charged to customers; (f) use of NXX codes; or (g) failure to
meet any expense, infrastructure, service quality or other commitments
previously made to or imposed by the FCC or any State Regulatory Agency.
(c) Except as set forth on Schedule 3.11, neither the Company nor any of
its Subsidiaries has any outstanding commitments made in the context of a matter
or proceeding related specifically to the Company or, in the case of matters of
general applicability to the telecommunications industry, in which the Company
is identified for possible disparate treatment or whose outcome may have a
disparate impact on the Company (and no such obligations have been imposed upon
the Company and remain outstanding), regarding: (a) increases or reductions in
access charges, universal service contributions or the like; (b) traffic routing
restrictions or restrictions on use of facilities; (c) reduction or restriction
of rates charged to customers; (d) reduction of earnings; (e) refunds or other
forfeitures of amounts previously charged to customers; (f) use of NXX codes; or
(g) expenses, infrastructure expenditures, service quality or
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other regulatory requirements, to or by the FCC or any State Regulatory Agency,
in each case which are reasonably likely to have a material adverse effect on
the Company.
Section 3.12. No Material Adverse Changes. Except as disclosed in the
Company's SEC Documents or as set forth on Schedule 3.12, since December 31,
1998, there has occurred no material adverse change in the business, assets,
properties, prospects, operations, or condition (financial or otherwise) of the
Company or any of its Subsidiaries, whether or not in the ordinary course of
business, whether separately or in the aggregate with other occurrences or
developments, and whether insured against or not.
Section 3.13. No Brokers. Except as set forth on Schedule 3.13, the
Company has not employed any broker, finder, advisor or intermediary in
connection with the transactions contemplated hereby which would be entitled to
a broker's, finder's or similar fee or commission in connection therewith or
upon the consummation of the transactions contemplated by this Agreement or any
Related Agreement.
Section 3.14. Network.
(a) Schedule 3.14 sets forth, as of September 30, 1999, (i) the location
of each switch owned by the Company and the switch's make and model and (ii) the
location of all of the Company's colocation sites.
(b) The Company's switches are (i) fully installed, (ii) interconnected to
the incumbent telephone company's local network and (iii) capable of carrying
commercial traffic.
(c) The Company's colocation sites possess all of the necessary equipment
to carry commercial traffic and are linked via leased or owned transmission
cable to a switch owned by the Company.
Section 3.15. Customers and Suppliers.
(a) Schedule 3.15 sets forth as of September 30, 1999 (i) the total number
of lines sold and (ii) the total number of lines in service.
(b) Less than three percent (3%) of the Company's consolidated revenues is
derived from local resale of telecommunications services.
Section 3.16. Year 2000 Compliance. The Company has performed an audit to
determine if the material hardware and software systems used by the Company and
the Company's key vendors and suppliers are Year 2000 Compliant or will be Year
2000 Compliant by December 31, 1999, and, based on that, has formulated a plan
to make such systems Year 2000 Compliant, as more particularly described on
Schedule 3.16 (the "Year 2000 Compliance Plan"). The term "Year 2000 Compliant"
as used herein means that the computer systems at issue will accurately process,
provide, and receive date data from, into, and between the twentieth and
twenty-first centuries, including the years 1999 and 2000, and leap year
calculations. The Company represents that it is using its best efforts to
achieve the goals set
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forth in its Year 2000 Compliance Plan, and that if such goals are achieved, the
material hardware and software systems used by the Company will be Year 2000
Compliant by December 31, 1999.
Section 3.17. Financial Reports and SEC Documents. The Company's Annual
Reports on Form 10-K for the fiscal years ended December 31, 1998 and December
31, 1997, and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by it under the
Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act,
in the form filed or to be filed with the SEC (collectively, "SEC Documents"),
as of the date filed, (A) complied or will comply as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case may be,
and (B) did not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any of the Company's SEC Documents (including the
related notes and schedules thereto) fairly presents, or will fairly present,
the financial position of the Company and its Subsidiaries as of its date, and
each of the statements of income and changes in stockholders' equity and cash
flows or equivalent statements in the Company's SEC Documents (including any
related notes and schedules thereto) fairly presents, or will fairly present,
the results of operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the Company and its Subsidiaries for the period to
which they relate, in each case, in compliance with applicable accounting
requirements and with the published rules of the SEC with respect thereto and in
accordance with GAAP consistently applied during the periods involved, except,
in each case, as may be noted herein, subject to normal year-end audit
adjustments in the case of unaudited statements.
Section 3.18. Disclosure. No representation, warranty or statement made in
this Agreement, any Purchased Security, any Related Agreement or any agreement,
certificate, statement or document furnished by or on behalf of the Company in
connection herewith or therewith when considered as a whole contains any untrue
statement of material fact or omits to state a material fact necessary in order
to make the statements contained herein or therein, in light of the
circumstances in which they were made, not misleading.
ARTICLE IV
PURCHASERS' REPRESENTATIONS
Each of the Purchasers hereby, severally and not jointly, represents and
warrants to the Company as follows:
Section 4.1. Organization and Good Standing. Such Purchaser is validly
existing and in good standing under the laws of the state of its formation.
Section 4.2. Authorization. This Agreement and the Related Agreements to
which such Purchaser is a party have been executed by a duly authorized Person
on its behalf and the execution, delivery and performance hereof and thereof (a)
have been duly authorized by all appropriate action, and (b) will not violate
the provision of any material law or regulation of any
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Governmental Authority applicable to it or constitute a violation of any
material agreement or instrument by which it is bound.
Section 4.3. Enforceability. The execution and delivery of this Agreement
and the Related Agreements and the transactions contemplated thereunder will
result in legally binding obligations of such Purchaser enforceable against such
Purchaser in accordance with the respective terms and provisions hereof and
thereof, subject, however, to limitations with respect to enforcement imposed by
law in connection with bankruptcy or similar proceedings or to the extent that
equitable remedies such as specific performance and injunction are in the
discretion of the court from which they are sought.
Section 4.4. Investment Intent. Such Purchaser (i) is an "accredited
investor" as defined in Regulation D of the Securities Act, (ii) is acquiring
the Purchased Securities to be purchased by such Purchaser pursuant to Section
2.1 hereof for investment and not with a view to the distribution thereof, and
(iii) has not engaged any broker, agent or finder who may claim a fee in
connection with the acquisition of the Purchased Securities.
ARTICLE V
CONDITIONS TO PURCHASERS' OBLIGATION TO PURCHASE AND THE
COMPANY'S OBLIGATION TO SELL
Section 5.1. Purchasers' Closing Conditions. Each Purchaser's obligation
to purchase the Purchased Securities pursuant to Section 2.1 is subject to
compliance by the Company with its agreements herein contained, and to the
satisfaction, on or prior to the Closing Date of the following conditions:
(a) Related Agreements. Each of the Related Agreements shall have been
executed and delivered in the form attached hereto or in such other form
satisfactory to the Purchasers. All covenants, agreements and conditions
contained in the Related Agreements which are to be performed or complied with
on or prior to the Closing Date shall have been performed or complied with in
all material respects.
(b) Charter Documents. The Purchasers shall have received from the Company
a copy, certified by the appropriate Governmental Authority to be true and
complete as of a date no more than twenty (20) days prior to the Closing Date,
of (a) the certificate of incorporation of the Company and (b) a certificate,
dated not more than twenty (20) days prior to the Closing Date, of the relevant
Governmental Authority or other appropriate official of each State in which the
Company is incorporated or qualified to do business, as to the Company's good
standing in such State or qualification to do business, as the case may be.
(c) Proof of Action. The Purchasers shall have received from the Company
copies, certified by a duly authorized officer thereof to be true and complete
as of the Closing Date, of the records of all action taken to authorize the
execution, delivery and performance of this Agreement and each of the Related
Agreements to which the Company is a party.
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(d) Incumbency Certificate. The Purchasers shall have received from the
Company an incumbency certificate, dated the Closing Date, signed by a duly
authorized officer thereof and giving the name and bearing a specimen signature
of each individual who shall be authorized to sign, in the name and on behalf of
the Company, this Agreement and each of the Related Agreements to which the
Company is or is to become a party, and to give notices and to take other action
on behalf of the Company under each of such documents.
(e) Legal Opinion. The Purchasers shall have received from Ellis, Funk,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Dokson, P.C., counsel to the Company, an opinion
substantially in the form of Exhibit D attached hereto.
(f) Regulatory Opinion. The Purchasers shall have received from ▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇ LLP, regulatory counsel to the Company, an opinion reasonably
satisfactory to the Purchasers, or otherwise substantially in the form of
Exhibit E attached hereto.
(g) Representations and Warranties; Covenants; Officers' Certificates. The
representations and warranties contained or incorporated by reference herein
shall be true and correct in all material respects (except those representations
and warranties qualified by materiality, which shall be true and correct in all
respects) on and as of the Closing Date. The Company shall have performed and
complied with all conditions and agreements required to be performed or complied
with by it prior to the Closing. The Purchasers shall have received on the
Closing Date a certificate with respect to the foregoing executed by an
authorized officer of the Company.
(h) Legality; Governmental and Other Authorizations. The purchase of the
Purchased Securities shall not be prohibited by any law or governmental order or
regulation, and shall not subject any Purchaser to any penalty, special Tax, or
other onerous condition. All necessary consents, approvals, Licenses, orders and
authorizations of, and registrations, declarations and filings with, any
Governmental Authority (including the FCC and any State Regulatory Agency) or
any other Person, with respect to any of the transactions contemplated by this
Agreement or any of the Related Agreements, shall have been duly obtained or
made and shall be in full force and effect. The Nasdaq Stock Market ("Nasdaq")
shall have issued written confirmation to the Company satisfactory to the
Purchasers stating that stockholder approval of the transactions contemplated
hereby is not required by Nasdaq's rules and regulations or, if the approval of
the Company's stockholders is so required, then such approval shall have been
validly obtained.
(i) Filing of Certificate of Designation. The Purchasers shall have
received satisfactory evidence of the filing of the Certificate of Designation
with the Secretary of State of Nevada.
(j) Payment of Certain Fees and Disbursements. The Purchasers shall have
been reimbursed for all reasonable costs and expenses (including, but not
limited to, legal, consulting and accounting) incurred by them through the
Closing Date in connection with the transactions contemplated by this Agreement.
(k) Amendment. The Certificate of Designation for the Series B Preferred
shall have
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been amended to read as set forth in Exhibit F hereto.
(l) General. All instruments and corporate proceedings in connection with
the transactions contemplated by this Agreement and the Related Agreements shall
be satisfactory in form and substance to the Purchasers and their counsel, and
the Purchasers shall have received copies of all documents, including, without
limitation, records of corporate or other proceedings, opinions of counsel and
consents which the Purchaser may have reasonably requested in connection
therewith.
The agreements, certificates, documents, other evidence of compliance and
opinions described in this Section 5.1 shall be in form and substance reasonably
acceptable to each Purchaser, and shall, except as otherwise provided, be
delivered to the Purchasers at the Closing; provided, however, any one or more
of the foregoing conditions may be waived with the prior written consent of each
Purchaser.
Section 5.2. Company's Closing Conditions. The Company's obligation to
sell the Purchased Securities pursuant to Section 2.1 is subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
a. Representations and Warranties. The representations and warranties of
the Purchasers contained herein shall be true and correct in all material
respects (except those representations and warranties qualified by materiality,
which shall be true and correct in all respects) on and as of the Closing Date.
b. Sufficient Investment. The Purchasers shall be prepared to purchase at
least $35,000,000 of Purchased Securities pursuant to Section 2.1.
c. Certain Agreements. The Securityholders Agreement and Registration
Rights Agreement shall have been executed and delivered by the Purchasers.
d. Charter Amendment. The Company's Board of Directors and the holders of
a majority of the Company's outstanding Series B Preferred Stock shall have
approved the Certificate of Designation for the Series C Preferred and the
Amended and Restated Certificate of Designation for the Company's Series B
Preferred Stock.
ARTICLE VI
COVENANTS APPLICABLE TO THE COMPANY WHILE ANY
PURCHASED SECURITIES ARE OUTSTANDING
The Company covenants that while any of the Purchased Securities are held
by any of the Purchasers or an assignee thereof, other than a transferee
pursuant to a public sale, the Company will cooperate with the Purchasers and
will execute, acknowledge and deliver, or cause to be executed, acknowledged or
delivered, all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as the Purchasers shall
reasonably request to carry out to the satisfaction of the Purchasers the
transactions contemplated by this
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Agreement and the Related Agreements.
ARTICLE VII
DELIVERY OF FINANCIAL AND OTHER REPORTS WHILE ANY
PURCHASED SECURITIES ARE OUTSTANDING
The Company hereby agrees that so long as 250,000 shares of Series C
Preferred are outstanding (subject to adjustment for stock splits, stock
dividends and similar events) it will provide to each Purchaser holding at least
250,000 shares of Series C Preferred and/or Common Stock (subject to adjustment
for stock splits, stock dividends and similar events) (a "Qualified Purchaser")
the information called for by the following provisions, so long as such
Qualified Purchaser has acknowledged in writing that it will be precluded from
trading in the Company's stock while in possession of material information
concerning the Company that has not been disclosed to the public:
Section 7.1. Monthly Statements. Within thirty (30) days after the end of
each month, commencing with the month ending October 31, 1999, the Company will
deliver to each Qualified Purchaser internal, unaudited consolidated balance
sheet and statement of income and retained earnings and of cash flow of the
Company and its Subsidiaries as of the end of each such month, together with
comparative information to the results for the same month of the prior year, and
to the budget for such month and year to date results with a comparison of such
year-to-date information to budget and to the comparable period of the prior
year.
Section 7.2. Other Financial Information. The Company will deliver to each
Qualified Purchaser prior to the commencement of each fiscal year, an annual
budget and projected monthly balance sheets and statements of income and
quarterly statements of cash flow for such fiscal year, prepared on a
comparative basis to the previous year and as soon as practical after
preparation thereof, complete copies of all quarterly (if any) or annual
budgetary analyses or forecasts of the Company and its Subsidiaries in the form
customarily prepared by management for its own internal use or the use of the
Board of Directors of the Company.
Section 7.3. Officers' Certificates. Together with delivery of the
financial statements of the Company and its Subsidiaries pursuant to Sections
7.1 and 7.2, the Company shall deliver to each Qualified Purchaser a certificate
of the President, chief financial officer or Treasurer of the Company to the
effect that (a) such statements have been prepared in accordance with GAAP and
present fairly the financial position of the Company and its Subsidiaries as of
the dates specified and the results of its operations and cash flow with respect
to the periods specified (subject in the case of interim financial statements
and the year-end financials, when delivered prior to their having been audited,
only to normal year-end audit adjustments), and (b) such officers have caused
the provisions of this Agreement and the Purchased Securities to be reviewed and
have no knowledge of any default, or if either such officer has such knowledge,
specifying such default and the nature thereof, and what action the Company has
taken, is taking or proposes to take with respect thereto.
Section 7.4. Notice of Litigation, Defaults, Etc. The Company will
promptly give
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notice to each Qualified Purchaser of any litigation or any administrative
proceeding to which the Company or any of its Subsidiaries may hereafter become
a party which may result in a Material Adverse Effect on the Company or any of
its Subsidiaries. Forthwith upon any officer of the Company obtaining knowledge
of any material default under a material agreement or any default or event of
default under this Agreement or any Related Agreement, the Company will furnish
a notice specifying the nature and period of existence thereof, what action the
Company has taken, is taking or proposes to take with respect thereto. Promptly
after the receipt thereof, the Company will provide copies of any reports as to
adequacies in accounting controls submitted by independent accountants with
respect to the Company and its Subsidiaries.
Section 7.5. Other Information. The Company will deliver to each Qualified
Purchaser copies of all papers distributed from time to time to the members or
stockholders of the Company at such time as such papers are so distributed to
them. In addition, from time to time upon the request of a Qualified Purchaser,
the Company will furnish such information regarding the business, affairs,
prospects and financial condition of the Company and its Subsidiaries as the
representatives or officers of a Qualified Purchaser may reasonably request.
Each such representative and officer shall have the right during normal business
hours to examine the books and records of the Company or any of its Subsidiaries
to make copies, notes and abstracts therefrom, and to make an independent
examination, at such Qualified Purchaser's cost, of the books and records of the
Company or any of its Subsidiaries, all at such reasonable times and intervals
as the applicable Qualified Purchaser may reasonably request.
ARTICLE VIII
EXPENSES; INDEMNITY
Section 8.1. Expenses. The Company hereby agrees to pay at the Closing all
reasonable fees, costs and expenses incurred by the Purchasers in connection
with the transactions hereunder and in connection with any amendments or waivers
(whether or not the same become effective) hereof and all reasonable expenses
incurred by the Purchasers in connection with the enforcement of any rights
hereunder or with respect to any Purchased Security, including without
limitation (i) the cost and expenses of preparing and duplicating this
Agreement, each Related Agreement and the Purchased Securities; (ii) the cost of
delivering to each Purchaser's principal office, insured to such Purchaser's
satisfaction, the Purchased Securities sold to such Purchaser hereunder and any
securities delivered to such Purchaser in exchange therefor or upon any
exercise, conversion or substitution thereof; (iii) the reasonable fees,
expenses and disbursements of one counsel for the Purchasers, in connection with
the preparation, administration or interpretation of this Agreement and the
Related Agreements and other agreements, documents and instruments mentioned
herein or therein, the Closing, any amendments, modifications, approvals,
consents or waivers hereto, thereto, hereunder or thereunder; (iv) the
out-of-pocket fees, expenses and costs incurred by the Purchasers in connection
with the Purchasers' due diligence investigation of the Company and its
Subsidiaries; and (v) all Taxes (other than Taxes determined with respect to
income and Taxes relating to any transfer of the Purchased Securities to any
Person other than to the Company) including, without limitation, any recording
fees, filing fees and documentary stamp and similar Taxes at any time payable in
respect of this Agreement or any Related Agreement or the issuance of any of the
Purchased Securities and any securities
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issued in exchange therefor or upon any exercise, conversion or substitution
thereof. Further, the Company agrees to pay all reasonable legal, consulting,
accounting, appraisal and investment banking fees and charges incurred by any
holder of the Purchased Securities or their representatives in connection with
the enforcement of or preservation of rights under this Agreement or any Related
Agreement in the event of a breach or reasonably alleged breach by the Company
of its obligations hereunder or thereunder.
Section 8.2. Indemnification. The Company hereby further agrees to
indemnify, exonerate and hold each Purchaser and its (if applicable) general and
limited partners and their respective shareholders, officers, directors,
employees and agents free and harmless from and against any and all actions,
causes of action, suits, losses, liabilities, damages and expenses, including,
without limitation, reasonable attorneys' fees and disbursements, incurred in
any capacity by any of the indemnities as a result of or relating to (i) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with proceeds from the sale of any of the Purchased Securities, (ii)
the execution, delivery, performance or enforcement of this Agreement, the
Related Agreements or any agreement, document or instrument contemplated hereby
or thereby (including, without limitation, any failure by the Company to comply
with any of the covenants thereunder), or (iii) any breach of any representation
or warranty of the Company in this Agreement or any Related Agreement.
Section 8.3. Brokers' Fees. The Company hereby indemnifies each Purchaser
against and agrees that it will hold it harmless from any claim, demand or
liability for any broker's, finder's or similar fee or commission alleged to
have been incurred by the Company (and not by a Purchaser) in connection with
the transactions contemplated by this Agreement or any Related Agreement.
ARTICLE IX
NOTICES
Any notices or other communications required to be given pursuant to this
Agreement shall be in writing and shall be deemed given: (i) upon delivery, if
by hand; (ii) three (3) Business Days after mailing, if sent by registered or
certified mail, postage prepaid, return receipt requested; (iii) one (1)
Business Day after mailing, if sent via overnight courier; or (iv) upon
transmission, if sent by telex or facsimile except that if such notice or other
communication is received by telex or facsimile after 5:00 p.m. on a Business
Day at the place of receipt, it shall be effective as of the following Business
Day. All notices and other communications hereunder shall be given as follows:
(a) If to the Company, to it at:
MGC Communications, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Ellis, Funk, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Dokson, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇
(b) If to Providence Equity Partners III L.P. or Providence Equity
Operating Partners III L.P., to it at:
c/o Providence Equity Partners L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(c) If to another Purchaser, to it at the address set forth on Schedule
2.1
Any party may change its address for receiving notice by written notice given to
the other names above in the manner provided above.
ARTICLE X
SURVIVAL OF COVENANTS, AGREEMENTS,
REPRESENTATIONS AND WARRANTIES, TRANSFER
All covenants, agreements, representations and warranties made herein to
the Purchasers or the Company or in any other document referred to herein or
delivered to the Purchasers or the Company pursuant hereto shall be deemed to
have been relied on by each of the Purchasers and the Company, notwithstanding
any investigation made by any of the Purchasers or on their behalf, or by the
Company, and shall survive the execution and delivery of this Agreement and
other such documents and the delivery to the Purchasers of the Purchased
Securities for a period of eighteen (18) months after the Closing Date, except
for the representations and warranties
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contained in Sections 3.1, 3.2, 3.3, and 3.8 which shall survive the Closing and
continue in full force and effect forever thereafter (subject to any applicable
statute of limitations). Whether or not any express assignment has been made in
this Agreement, the provisions of this Agreement that are for the benefit of any
Purchaser as the holder of any Purchased Securities are also for the benefit of,
and enforceable by, all subsequent holders of the Purchased Securities, and the
provisions of this Agreement that subject any Purchaser to obligations as the
holder of any Purchased Securities also subject all subsequent holders of
Purchased Securities thereto.
ARTICLE XI
AMENDMENTS AND WAIVERS
No modification to or amendment of any provision of this Agreement shall
be effective against the Company or any Purchaser unless such modification or
amendment is approved in writing by the Majority Purchasers and the Company. No
waiver of the rights and obligations hereunder of any party hereto shall be
effective unless such waiver is in writing and duly executed and delivered by
(a) the Majority Purchasers (in the event such waiver is sought by the Company),
or (b) the Company (in the event such waiver is sought by any Purchaser). The
failure of any party hereto to enforce any of provision of this Agreement shall
in no way be construed as a waiver of such provision and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms. Any amendment or waiver effected in
accordance with this Article XI shall be binding upon the Company and each
holder of any Purchased Security sold pursuant to this Agreement.
ARTICLE XII
WAIVER OF JURY TRIAL
EACH OF THE COMPANY AND THE PURCHASERS HEREBY EXPRESSLY WAIVES ANY RIGHT
IT MAY HAVE TO A JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING EXISTING UNDER OR
RELATING TO THIS AGREEMENT, THE PURCHASED SECURITIES OR ANY OF THE RELATED
AGREEMENTS.
ARTICLE XIII
GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF RHODE ISLAND WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE
SUBSTANTIVE LAWS OF ANY OTHER STATE, AND SHALL BIND AND INURE TO THE BENEFIT OF
THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
ARTICLE ▇▇▇
▇▇
▇▇
PUBLIC ANNOUNCEMENTS
The Company hereby acknowledges that each Purchaser will have the right to
publicize its investment in the Company as contemplated hereby by means of a
press release reasonably acceptable to the Company, a tombstone advertisement or
other customary advertisement in newspapers and other periodicals. The Majority
Purchasers shall have the right to reasonably approve in advance the content of
any public announcement by the Company regarding the transactions contemplated
hereby.
ARTICLE XV
TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
ARTICLE XVI
ENTIRE AGREEMENT; COUNTERPARTS; SECTION HEADINGS
This Agreement, the Purchased Securities and the Related Agreements set
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby and supersede any prior written or oral
understandings with respect thereto. This Agreement may be executed
simultaneously in one or more counterparts thereof, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. Signatures sent by telecopy shall be deemed to constitute original
signatures. The headings in this Agreement are for convenience of reference only
and shall not alter or otherwise affect the meaning hereof.
[Remainder of page intentionally left blank.]
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If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and the accompanying copies thereof in the appropriate
space below.
Very truly yours,
MGC COMMUNICATIONS, INC.
By:
Name:
Title:
Accepted and agreed to:
PROVIDENCE EQUITY PARTNERS III L.P.
By: Providence Equity Partners III L.L.C., its general partner
By:________________________________
Managing Director
PROVIDENCE EQUITY OPERATING PARTNERS III L.P.
By: Providence Equity Partners III L.L.C., its general partner
By:________________________________
Managing Director
JK&B CAPITAL III L.P.
By: JK&B Capital, LLC, its general partner
By:
[Signature page to Securities Purchase Agreement]
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JK&B CAPITAL, L.P.
By: , its general partner
By:
JK&B CAPITAL II, L.P.
By: , its general partner
By:
JK&B CAPITAL III QIP, L.P.
By: , its general partner
By:
[Signature page to Securities Purchase Agreement]
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SCHEDULE 2.1
List of Purchasers
Aggregate
Purchase Price
Number of Purchased of the
Securities to be Purchased
Name and Address Purchased * Securities
---------------- ------------------- --------------
1. Providence Equity
Partners III L.P. 886,259 shares of
Suite 900, Fleet Center Series C
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Preferred Stock $24,815,252
2. Providence Equity
Operating
Partners III L.P. 6,598 shares of
Suite 900, Fleet Center Series C
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Preferred Stock $184,744
3. JK&B Capital III L.P. 225,000 shares of
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Series C
Suite 808 Convertible
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Preferred Stock $6,300,000
4. JK&B Capital, L.P. 59,524 shares of
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Series C
Suite 808 Convertible
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Preferred Stock $1,666,672
5. JK&B Capital II, L.P. 29,762 shares of
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Series C
Suite 808 Convertible
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Preferred Stock $833,336
6. JK&B Capital III QIP, L.P. 42,857 shares of
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Series C
Suite 808 Convertible
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Preferred Stock $1,200,000
Total: 1,250,000 $35,000,004
* Subject to adjustment as provided in Section 2.1.
26
Exhibit A
to
Securities Purchase Agreement
Dated as of November 19, 1999
Certificate of Designation
26
27
Exhibit B
to
Securities Purchase Agreement
Dated as of November 19, 1999
Form of Registration Rights Agreement
27
28
Exhibit C
to
Securities Purchase Agreement
Dated as of November 19, 1999
Form of Securityholders' Agreement
28
29
Exhibit D
to
Securities Purchase Agreement
Dated as of November 19, 1999
Form of Company Corporate Opinion
29
30
Exhibit E
to
Securities Purchase Agreement
Dated as of November 19, 1999
Form of Company Regulatory Opinion
30
31
Exhibit G
to
Securities Purchase Agreement
Dated as of November 19, 1999
Form of Promissory Note
31