AMENDMENT NO. 1 TO
THE WARRANT AGREEMENT
AMENDMENT NO. 1 dated as of April 30, 1999 to the Warrant Agreement,
dated as of February 4, 1999 (the "Warrant Agreement") among KMC Telecom
Holdings, Inc., The Chase Manhattan Bank, as Warrant Agent, Newcourt Commercial
Finance Corporation, Lucent Technologies, Inc. and First Union Investors, Inc.
W I T N E S S E T H
WHEREAS, the parties hereto desire to make certain amendments to the
Warrant 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 Warrant Agreement and used herein are so used as so
defined. In addition, the following terms shall have the meanings set forth
below:
"PREFERRED STOCK WARRANT AGREEMENT 2" means the Warrant Agreement
dated as of April 30, 1999 among the Company, The Chase Manhattan Bank, as
Warrant Agent and First Union Investors, Inc., which Preferred Stock Warrant
Agreement 2 is being entered into in connection with the execution and delivery
of the Purchase Agreement 2.
"PREFERRED STOCK WARRANTS 2" means Warrants issued to holders of
Series E Preferred Stock pursuant to the Preferred Stock Warrant Agreement 2,
each such Warrant initially entitling the holder thereof to purchase 0.471756
shares of Common Stock at an exercise price of $.01 per share.
"PURCHASE AGREEMENT 2" means the Securities Purchase Agreement dated
as of April 30, 1999 between the Company and First Union Investors, Inc.
2. AMENDMENT TO SECTION 2.4(B) OF THE WARRANT AGREEMENT.
Paragraph (b) of Section 2.4 of the Warrant Agreement is amended to
read as follows:
"(b) If the Company fails to redeem all shares of Series F Preferred
Stock prior to the date (the "Springing Warrant Date") which is the earlier of
(i) the date that is sixty days after the date on which the Company closes an
underwritten primary offering of at least $200 million of its Common Stock
pursuant to an effective registration statement under the Securities Act or (ii)
February 4, 2001, then the holders of Eligible Shares shall be entitled to
receive the Springing Warrants. Each holder of Eligible Shares shall be entitled
to receive a number of Springing Warrants equal to (1) 227,273 plus the total
number of Warrants and Preferred Stock Warrants 2 held by the holders of
Eligible Shares as of the date hereof, multiplied by a fraction, the numerator
of which shall be the aggregate liquidation preference of such holder's Eligible
Shares and the denominator of which shall be the aggregate liquidation
preference of all outstanding Eligible Shares, LESS (2) the number of Warrants
and Preferred Stock Warrants 2 held by such holder of Eligible Shares as of the
date hereof. On or after the Springing Warrant Date, a holder or holders of at
least 10% or more of the aggregate outstanding Eligible Shares may deliver a
notice to the Warrant Agent in the form set forth in Exhibit C hereto (the
"Springing Notice"), accompanied by a certificate of the Transfer Agent,
certifying as to the number of shares of Series F Preferred Stock that are
outstanding as of such date."
Paragraph (c) of Section 2.4 of the Warrant Agreement is amended to
add the following sentence at the end thereof.
"Upon receipt of a certificate for the number of Springing Warrants to
which it is entitled under this Section 2.4(c), First Union Investors, Inc.
shall deliver such certificate to the Company, and the Company shall issue or
shall cause the Warrant Agent to issue to First Union Investors, Inc. in
exchange therefor a certificate in the same form as for the Preferred Stock
Warrants 2. The Springing Warrants issued to First Union Investors, Inc. shall
be subject to the terms and conditions of the Preferred Stock Warrant Agreement
2 and shall not be subject to the terms and conditions of this Agreement."
3. AMENDMENTS TO SECTION 2.5 OF THE WARRANT AGREEMENT.
The first sentence of Section 2.5 is hereby amended to read as
follows:
"From time to time, the Company may issue and sell additional Warrants
under this Agreement, or additional Warrants under this Agreement, together with
shares of Series E Preferred Stock or Series F Preferred Stock, to Additional
Purchasers; provided that, any such Additional Purchaser shall agree to all of
the terms and conditions of, and assume all of the rights and obligations of a
"Purchaser" under this Agreement and the Warrant Registration Rights Agreement,
such action to be evidenced by such Additional Purchaser executing and
delivering to the Company and the Warrant Agent a counterpart to the signature
page of this Agreement (in the form attached hereto as Exhibit D) and the
Warrant Registration Rights Agreement (in the form set forth herein);
notwithstanding the foregoing, it is agreed that the Preferred Stock Warrants 2
issued to First Union Investors, Inc. shall not be subject to this Agreement or
the Warrant Registration Rights Agreement and that any Springing Warrants issued
to First Union Investors, Inc. pursuant to Section 2.4 of this Agreement shall,
upon issuance, no longer be subject to the terms of this Agreement (as provided
in Section 2.4(c) of this Agreement) or the terms of the Warrant Registration
Rights Agreement."
4. AMENDMENT TO EXHIBIT C TO THE WARRANT AGREEMENT.
Exhibit C to the Warrant Agreement is deleted and replaced by Exhibit
C hereto.
5. 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.
6. 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.
7. 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/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
THE CHASE MANHATTAN BANK, as Warrant Agent
By: /s/ ▇. ▇▇▇▇▇
______________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
NEWCOURT COMMERCIAL FINANCE CORPORATION
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Title: Vice President
LUCENT TECHNOLOGIES INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
FIRST UNION INVESTORS, INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
EXHIBIT C
[Date]
KMC Telecom Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Capital Markets Fiduciary Services
Re: Warrants (the "WARRANTS") to Purchase
Common Shares of
KMC Telecom Holdings, Inc. (the "COMPANY")
Ladies and Gentlemen:
This notice is being provided pursuant to Section 2.4 of the Warrant
Agreement dated as of February 4, 1999, as amended (the "WARRANT AGREEMENT"),
among The Chase Manhattan Bank, as Warrant Agent, the Company, Newcourt
Commercial Finance Corporation, Lucent Technologies, Inc. and First Union
Investors, Inc. and any Additional Purchaser (as described therein). Capitalized
terms not otherwise defined herein shall have the meaning set forth in the
Warrant Agreement.
The undersigned hereby certifies that (i) [it is][we are] the
holder[s] of at least 10% of the aggregate outstanding Eligible Shares and that
(ii) as of the date of this notice, the Company has failed to redeem all share
of Series F Preferred Stock by the earlier of:
(check one)
(a) |_| the date that is sixty days after the date on which
the Company closes an underwritten primary offering of
at least $200 million of its Common Stock pursuant to
an effective registration statement under the
Securities Act;
or
(b) |_| February 4, 2001
As a result in accordance with the provisions of Section 2.4 of the
Warrant Agreement, each holder of Eligible Shares (or their transferees) shall
be entitled to receive a number of Springing Warrants equal to (i) 227,273 plus
the total number of Warrants and Preferred Stock Warrants 2 held by the holders
of Eligible Shares on April 30, 1999, multiplied by a fraction, the numerator of
which shall be the aggregate liquidation preference of such holder's Eligible
Shares and the denominator of which shall be the aggregate liquidation
preference of all outstanding Eligible Shares, LESS (2) the number of Warrants
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and Preferred Stock Warrants 2 held by such holder of Eligible Shares on April
30, 1999. The Warrant Agent is hereby authorized and directed to countersign and
deliver to each registered holder of Eligible Shares, the number of Springing
Warrants each such holder is entitled to receive at such holder's address as set
forth on the records of the Transfer Agent for the Series E Preferred Stock and
the Series F Preferred Stock.
[NAME OF HOLDER OF SERIES [E][F] PREFERRED STOCK
By:________________________
Name:
Title:
Number of shares of Series [E][F] preferred Stock:_______
[NAME OF HOLDER OF SERIES [E][F] PREFERRED STOCK
By:________________________
Name:
Title:
Number of shares of Series [E][F] preferred Stock:_______
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