Exhibit 10.1
PURCHASE AGREEMENT
dated as of
August 22, 2002
by and among
ITC/\DeltaCom, Inc.,
the Several Purchasers named herein
and
ITC Holding Company, Inc.
TABLE OF CONTENTS
Page
ARTICLE I
ISSUANCE AND SALE OF PREFERRED SHARES, WARRANTS AND NEW COMMON
STOCK
1.1. Issuance, Purchase and Sale .................................... 2
1.2. Closing ........................................................ 3
1.3. Deliveries ..................................................... 3
1.4. Capitalized Terms .............................................. 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Organization; Subsidiaries. .................................... 4
2.2. Due Authorization .............................................. 4
2.3. Capitalization ................................................. 5
2.4. SEC Reports .................................................... 5
2.5. Litigation ..................................................... 5
2.6. Absence of Certain Changes ..................................... 6
2.7. Consents; No Violations ........................................ 6
2.8. Brokers or Finders ............................................. 7
2.9. No General Solicitation or Advertising; No Integration ......... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
3.1. Acquisition for Investment ..................................... 7
3.2. Accredited Investor Status ..................................... 7
3.3. Information .................................................... 7
3.4. Government Review .............................................. 8
3.5. Sale or Transfer ............................................... 8
3.6. Residency ...................................................... 8
3.7. No Brokers or Finders .......................................... 8
3.8. Organization ................................................... 8
3.9. Due Authorization .............................................. 8
3.10. Consents: No Violations ........................................ 9
3.11. Litigation ..................................................... 9
3.12. Availability of Funds .......................................... 9
3.13. Redemption or Purchase of Holding Capital Stock ................ 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOLDING
4.1. Organization ................................................... 10
ii
4.2. Due Authorization ................................................................. 10
4.3. Consents; No Violations ........................................................... 10
4.4. Litigation ........................................................................ 11
4.5. Availability of Funds ............................................................. 11
4.6. Redemption or Purchase of Holding Capital Stock ................................... 11
ARTICLE V
COVENANTS
5.1. Public Announcements .............................................................. 11
5.2. Consents, Approvals and Filings ................................................... 11
5.3. Reasonable Best Efforts ........................................................... 11
5.4. Listing ........................................................................... 12
5.5. Preferred Stock Certificate of Designation ........................................ 12
5.6. Reservation of New Common Stock ................................................... 12
5.7. Board Representation Rights ....................................................... 12
5.8. Confidential Treatment of Confidential Information ................................ 12
5.9. Registration Rights ............................................................... 13
5.10. Redemption Obligations of Holding ................................................. 13
5.11. Obligation of Holding to Vote in Favor of the Plan ................................ 13
5.12. Obligation by ▇▇▇▇▇▇ to Vote in Favor of the Plan ................................. 14
5.13. Further Assurances ................................................................ 14
5.14. Waiver of Right to Participate in Rights Offering ................................. 14
ARTICLE VI
PURCHASERS' REPRESENTATIVE
ARTICLE VII
CONDITIONS
7.1. Conditions to Obligations of the Purchasers, Holding and the Company at
Closing ........................................................................... 15
7.2. Additional Conditions to Obligations of the Purchasers and Holding at the
Closing ........................................................................... 16
7.3. Additional Conditions to Obligations of the Company at the Closing. ............... 17
7.4. Independent Purchase Obligations .................................................. 18
ARTICLE VIII
TERMINATION
8.1. Termination ....................................................................... 18
8.2. Effect of Termination ............................................................. 19
ARTICLE IX
▇▇▇▇▇▇ GUARANTEE
9.1. ▇▇▇▇▇▇ Guarantee .................................................................. 19
9.2. Guarantee Absolute ................................................................ 19
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ARTICLE X
MISCELLANEOUS
10.1. Definitions ....................................................................... 19
10.2. Survival of Representations and Warranties ........................................ 22
10.3. Fees and Expenses ................................................................. 22
10.4. Enforcement ....................................................................... 22
10.5. Restrictive Legends ............................................................... 22
10.6. Successors and Assigns ............................................................ 24
10.7. Inspections; No Other Representations ............................................. 25
10.8. Entire Agreement .................................................................. 25
10.9. Notices ........................................................................... 25
10.10. Business Days ..................................................................... 27
10.11. Amendments; Waivers ............................................................... 27
10.12. Counterparts ...................................................................... 27
10.13. Descriptive Headings; Interpretation; No Strict Construction ...................... 27
10.14. References ........................................................................ 27
10.15. Governing Law ..................................................................... 27
10.16. Exclusive Jurisdiction; Venue ..................................................... 28
10.17. Waiver of Jury Trial .............................................................. 28
10.18. Severability ...................................................................... 28
10.19. Delivery by Facsimile ............................................................. 28
Exhibit A - Form of Preferred Stock Certificate of Designation
Exhibit B - Form of Warrant Agreement
Exhibit C - Form of Registration Rights Agreement
Schedule 1 - Purchasers' Committed Amounts
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TABLE OF DEFINED TERMS
Affiliate ............................. 19 Material Adverse Effect ...................... 21
Agreement ............................. 1 New Common Stock ............................. 1
Bankruptcy Code ....................... 1 NMS .......................................... ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ...................... 1 Notes ........................................ 21
Bankruptcy Documents .................. 19 Order ........................................ 21
beneficial owner ...................... 19 Person ....................................... 21
beneficially own ...................... 19 Plan ......................................... 21
Business Day .......................... 19 Preferred Shares ............................. 2
Capital Stock ......................... 20 Preferred Stock Certificate of Designation ... 2
Chapter 11 Case ....................... 1 Process Agent ................................ 28
Closing ............................... 3 Purchaser .................................... 1
Closing Date .......................... 3 Purchaser's Committed Amount ................. 2
Commitment ............................ 20 Purchasers ................................... 1
Commitment Shares ..................... 1 Purchasers' Counsel .......................... 21
Committed Amount ...................... 2 Purchasers' Representative ................... 14
Company ............................... 1 Registration Rights Agreement ................ 13
Company Board ......................... 20 Reorganization ............................... 1
Company Disclosure Schedule ........... 4 Rights ....................................... 5
Company Existing Securities ........... 13 Rights Offering .............................. 2
Confidential Information .............. 20 SCANA ........................................ 1
Consents, Approvals and Filings ....... 6 SCANA Purchase Agreement ..................... 2
Conversion Shares ..................... 4 SCANA Subscription Agreement ................. 1
Delaware Secretary of State ........... 6 SEC .......................................... 5
Disclosure Statement .................. 20 SEC Reports .................................. 5
Effective Date ........................ 20 Securities ................................... 7
Encumbrances .......................... 4 Securities Act ............................... 21
Exchange Act .......................... 20 Separation Date .............................. 8
Filing Date ........................... 1 Series A Preferred Stock ..................... 1
Governmental Entity ................... 20 Subsidiary ................................... 21
Guaranteed Obligations ................ 19 Terminating Company Breach ................... 18
Holding ............................... 1 Terminating Purchaser Breach ................. 18
Investor Suitability Questionnaire .... 20 Transaction Documents ........................ 22
▇▇▇▇▇▇ ................................ 1 Transfer ..................................... 14
▇▇▇▇▇▇ Subscription Agreement ......... 1 Transferee ................................... 14
Laws .................................. 21 Warrant Agreement ............................ 3
Litigation ............................ 5 Warrant Shares ............................... 4
Majority Purchasers ................... 21 Warrants ..................................... 1
v
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement"), dated as of August
22, 2002, is made among ITC/\DeltaCom, Inc., a Delaware corporation (the
"Company"), ITC Holding Company, Inc. a Delaware corporation ("Holding"), and
the persons and other entities whose names are set forth in Schedule 1 hereto
(collectively, the "Purchasers" and individually, a "Purchaser").
RECITALS
WHEREAS, on June 25, 2002 (the "Filing Date"), the Company filed
a voluntary bankruptcy petition (the "Chapter 11 Case") with the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") in
contemplation of a financial reorganization (the "Reorganization") pursuant to a
plan of reorganization that will be subject to confirmation pursuant to chapter
11 of title 11 of the United States Code (the "Bankruptcy Code");
WHEREAS, the Company's plan of reorganization requires the
Company to raise gross proceeds of at least $30,000,000 from the issuance and
sale of shares of convertible redeemable preferred stock, par value $.01 per
share, of the Company (the "Series A Preferred Stock");
WHEREAS, prior to the filing of the Chapter 11 Case, the Company
entered into (i) a subscription agreement (the "▇▇▇▇▇▇ Subscription Agreement")
with ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III ("▇▇▇▇▇▇") and Holding pursuant to which ▇▇▇▇▇▇ has
committed to purchase Series A Preferred Stock and warrants (the "Warrants") to
purchase shares of the Common Stock, par value $.01 per share, of the Company
(the "New Common Stock") for an aggregate purchase price of $15,000,000, subject
to ▇▇▇▇▇▇'▇ right to assign all or any portion of his commitment to purchase the
Series A Preferred Stock and the Warrants to a limited number of qualified
investors; and (ii) a subscription agreement (the "SCANA Subscription Agreement
") with SCANA Corporation ("SCANA") pursuant to which SCANA has committed to
purchase Series A Preferred Stock and Warrants for an aggregate purchase price
of $15,000,000;
WHEREAS, in consideration for his purchase commitment set forth
in the ▇▇▇▇▇▇ Subscription Agreement, the Company has agreed to issue to ▇▇▇▇▇▇
500,000 shares of New Common Stock (the "Commitment Shares");
WHEREAS, on or prior to the date hereof, ▇▇▇▇▇▇ has assigned
portions of his commitment to purchase the Series A Preferred Stock and Warrants
and of his right to receive Commitment Shares to the other Purchasers and the
Company now wishes, upon the terms and subject to the conditions set forth in
this Agreement, to (i) sell to the Purchasers, and the Purchasers wish to
purchase from the Company, 150,000 shares of Series A Preferred Stock and
Warrants exercisable for 510,000 shares of New Common Stock for an aggregate
purchase price of $15,000,000 and (ii) issue to the Purchasers the Commitment
Shares;
WHEREAS, the shares of Series A Preferred Stock and Warrants
shall be issued in units consisting of one share of Series A Preferred Stock and
3.40 Warrants;
WHEREAS, in accordance with the ▇▇▇▇▇▇ Subscription Agreement,
each Purchaser who is a stockholder of Holding will not be obligated to purchase
such stockholder's Series A Preferred Stock and Warrants, unless it receives
funding from Holding for such purpose and the other conditions to its
obligations hereunder are satisfied;
WHEREAS, Holding, which is currently a stockholder of the
Company, has agreed pursuant to the ▇▇▇▇▇▇ Subscription Agreement to provide
such funding to each Purchaser who is a stockholder of Holding but only if
certain releases of Holding and its affiliates referred to herein by the Company
and the other persons referred to therein become legally binding as part of the
Plan and only if the Company agrees with Holding that Holding and its affiliates
shall obtain such releases, and the Company is willing to make such agreement
with Holding so that Holding will fund such purchases; and
WHEREAS, as of the date hereof and in accordance with the SCANA
Subscription Agreement, SCANA has entered into a purchase agreement (the "SCANA
Purchase Agreement ") to purchase 150,000 shares of Series A Preferred Stock and
Warrants exercisable for 510,000 shares of New Common Stock for an aggregate
purchase price of $15,000,000 upon the terms and conditions set forth in such
agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
ISSUANCE AND SALE OF PREFERRED SHARES, WARRANTS AND NEW
COMMON STOCK
1.1. Issuance, Purchase and Sale
(a) (i) Subject to the terms and subject to the conditions of
this Agreement, the Company shall sell to each Purchaser, and each Purchaser
shall purchase from the Company, the number of shares of Series A Preferred
Stock (the "Preferred Shares") at a stated price of $100 per share which is set
forth opposite such Purchaser's name in column (1) of Schedule 1 attached
hereto. The Preferred Shares to be purchased and sold at Closing shall be issued
pursuant to a certificate of designation substantially in the form of Exhibit A
hereto (the "Preferred Stock Certificate of Designation"). Each Purchaser shall
pay for its Preferred Shares the amount set forth opposite such Purchaser's name
in column (4) of Schedule 1 (such amount, as adjusted pursuant to Section
1.1(a)(ii), a "Purchaser's Committed Amount," and the aggregate purchase price
of $15,000,000, as adjusted pursuant to Section 1.1(a)(ii), the "Committed
Amount").
(ii) The Committed Amount shall be reduced by $1.00 for
every $2.00 of gross proceeds received by the Company from the sale of Series A
Preferred Stock and Warrants in the rights offering of such securities (the
"Rights Offering") made to holders of common stock and preferred stock of the
Company pursuant to the Plan. Upon any adjustment of the Committed Amount, the
number of Preferred Shares to be purchased and sold at the Closing to the
Purchasers hereunder shall be proportionately reduced and such reduction shall
be
2
apportioned pro rata against each Purchaser's Committed Amount. At least two
Business Days prior to Closing, the Company shall provide written notice to each
Purchaser of the amount, if any, by which a Purchaser's Committed Amount shall
be reduced as a result of purchases made pursuant to the Rights Offering, and
the parties hereto agree that such reductions shall be reflected in a new
version of Schedule 1 hereto, which absent any manifest error shall be deemed to
replace the existing Schedule 1 without any further action by the parties
hereto.
(b) At the Closing, the Company shall issue to each Purchaser the
number of Warrants set forth opposite such Purchaser's name in column (2) of
Schedule 1, for no additional consideration, provided, however, that if the
Committed Amount and the number of Preferred Shares to be purchased and sold at
the Closing shall be reduced pursuant to Section 1.1(a)(ii), the number of
Warrants issuable at the Closing to the Purchasers shall be proportionately
reduced and such reduction shall be apportioned pro rata against each
Purchaser's Committed Amount. The Warrants shall be issued pursuant to a warrant
agreement substantially in the form of Exhibit B hereto, which shall be in
effect as of the Closing (the "Warrant Agreement").
(c) At the Closing, the Company shall issue to each Purchaser the
number of Commitment Shares set forth opposite such Purchaser's name in column
(3) of Schedule 1.
(d) The Preferred Shares and Warrants shall be issued at the
Closing in units consisting of one share of Series A Preferred Stock and 3.40
Warrants.
1.2. Closing. The closing of the purchase and sale of the
Preferred Shares and Warrants and the issuance of the Commitment Shares (the
"Closing") shall take place at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. (New York City time) on the
Effective Date (the date of the Closing, the "Closing Date").
1.3. Deliveries. At the Closing, the Company shall deliver to
each Purchaser (i) stock certificates, each registered in the name of such
Purchaser, representing the Preferred Shares being purchased by such Purchaser
and the Commitment Shares being issued to such Purchaser, (ii) the Warrants,
each of which shall be substantially in the form of the warrant certificate
attached as an exhibit to the Warrant Agreement, being acquired by such
Purchaser at the Closing, and (iii) such other instruments and documents as are
specified in Section 7.2. Delivery of such stock certificates and Warrants and
such other instruments and documents shall be made against receipt by the
Company of the purchase price payable therefor equal to the Purchaser's
Committed Amount, which shall be paid by wire transfer of immediately available
funds to an account designated in writing by the Company (such designation to be
received by such Purchaser at least two Business Days prior to the Closing
Date), and such other instruments and documents as are specified in Section 7.3.
1.4. Capitalized Terms. Capitalized terms not otherwise defined
in this Agreement shall have the meanings ascribed to such terms in Section
10.1.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser and
Holding, as of the date hereof and as of the Effective Date (except to the
extent that any representation or warranty
3
herein is stated to be made as of another date, in which case such
representation or warranty shall be true as of that date), as set forth in this
Article II. Each reference in this Article II to a Schedule shall be to the
disclosure schedule delivered by the Company to the Purchasers on or before the
date of this Agreement (the "Company Disclosure Schedule ").
2.1. Organization; Subsidiaries. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to carry
on its business as it is now being conducted. The Company is duly qualified and
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction in which the character of its assets owned or held under lease
or the nature of its business makes such qualification necessary, except where
the failure so to qualify or be licensed would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) Except as set forth on Schedule 2.1(b) or as disclosed in
the SEC Reports or the Bankruptcy Documents, (i) the Company owns, either
directly or indirectly, all of the Capital Stock or other equity interests of
the Subsidiaries free and clear of all liens, charges, claims, security
interests, restrictions, options, proxies, voting trusts or other encumbrances
(collectively, the "Encumbrances") and (ii) there are no outstanding
subscription rights, options, warrants, convertible or exchangeable securities
or other rights of any character whatsoever relating to issued or unissued
Capital Stock or other equity interests of any Subsidiary, or any Commitments of
any character whatsoever relating to issued or unissued Capital Stock or other
equity interests of any Subsidiary or pursuant to which any Subsidiary is or may
become bound to issue or grant additional shares of its Capital Stock or other
equity interests or related subscription rights, options, warrants, convertible
or exchangeable securities or other rights, or to grant preemptive rights.
Except for the Subsidiaries or as disclosed in the SEC Reports, the Company does
not own, directly or indirectly, any interest in any Person in excess of 9.9% of
the outstanding equity of such Person.
2.2. Due Authorization. Subject to any required approvals of the
Bankruptcy Court, the Company shall have the requisite corporate power and
authority to enter into this Agreement and each of the other Transaction
Documents to which it is a party and shall have the requisite corporate power
and authority to consummate the transactions contemplated hereby and thereby.
The execution and delivery by the Company of this Agreement and each of the
other Transaction Documents to which it is a party, the issuance, sale and
delivery of the Preferred Shares, the Warrants and the Commitment Shares by the
Company, and the compliance by the Company with each of the provisions of this
Agreement and each of the other Transaction Documents to which it is a party
(including the reservation and issuance of the New Common Stock issuable upon
conversion of the Series A Preferred Stock (the "Conversion Shares") and the
reservation, issuance and sale of the New Common Stock issuable upon exercise of
the Warrants (the "Warrant Shares), and the consummation by the Company of the
transactions contemplated hereby and thereby) (i) are within the corporate power
and authority of the Company and (ii) upon confirmation of the Plan, shall have
been duly authorized by all necessary corporate action of the Company. Subject
to any required approvals of the Bankruptcy Court, this Agreement has been, and
each of the other Transaction Documents to which the Company is a party when
executed and delivered by the Company shall be, duly and validly executed and
delivered by the Company. Assuming due authorization, execution and delivery by
4
each Purchaser of the Transaction Documents to which it is a party, this
Agreement constitutes, and each of such other Transaction Documents when
executed and delivered by the Company shall constitute, a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except as such enforcement is limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally and for
limitations imposed by general principles of equity. The terms, designations,
powers, preferences and relative, participating, optional and other special
rights, qualifications, limitations and restrictions of the Series A Preferred
Stock shall be as set forth in the Preferred Stock Certificate of Designation.
After giving effect to the Reorganization, (x) the Preferred Shares shall be
validly reserved for issuance and, when issued and delivered in accordance with
the terms of this Agreement, shall be validly issued and outstanding, fully paid
and non-assessable, and not subject to the preemptive or other similar rights of
the stockholders of the Company, (y) the Conversion Shares and the Warrant
Shares shall be validly reserved for issuance and, when issued and delivered in
accordance with the terms of the Preferred Stock Certificate of Designation and
the Warrant Agreement, respectively, shall be duly and validly issued and
outstanding, fully paid and non-assessable, and not subject to the preemptive or
other similar rights of the stockholders of the Company and (z) the Commitment
Shares, when issued and delivered in accordance with the terms of this
Agreement, shall be validly issued and outstanding, fully paid and
non-assessable, and not subject to the preemptive or other similar rights of the
stockholders of the Company.
2.3. Capitalization. After giving effect to the
Reorganization, (i) the authorized Capital Stock of the Company shall consist of
250,000,000 shares of New Common Stock and 5,000,000 shares of preferred stock,
par value $.01 share, (ii) all of the issued and outstanding Capital Stock shall
be duly authorized and will be validly issued, fully paid and non-assessable,
(iii) no shares of Capital Stock of the Company shall be subject to the
preemptive or other similar rights of the stockholders of the Company, and (iv)
except as disclosed in the SEC Reports or the Bankruptcy Documents or as
otherwise contemplated by Article I, there shall be no outstanding subscription
rights, options, warrants, convertible or exchangeable securities or other
rights of any character whatsoever (collectively, "Rights") relating to issued
or unissued Capital Stock of the Company, or any Commitments of any character
whatsoever relating to issued or unissued Capital Stock of the Company or
pursuant to which the Company is or may become bound to issue additional shares
of its Capital Stock or grant related Rights, or to grant preemptive or other
similar rights.
2.4. SEC Reports. Except as set forth in Schedule 2.4, the
Company has timely filed with the Securities and Exchange Commission (the "SEC
") all reports, proxy statements, registration statements and other documents
required to be filed by it under the Securities Act and the Exchange Act since
January 1, 2001 (including the financial statements and other financial data
contained therein) (collectively, the "SEC Reports"). On the date of its filing,
each SEC Report did 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.
2.5. Litigation. (a) Except as set forth on Schedule 2.5(a) or
as disclosed in the SEC Reports or the Bankruptcy Documents, there is no claim,
action, suit, investigation or proceeding (collectively, "Litigation") pending
or, to the knowledge of the Company, threatened
5
against the Company or any of the Subsidiaries or involving any of their
respective properties or assets by or before any court, arbitrator or other
Governmental Entity which (i) challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement or (ii) if
resolved adversely to the Company or a Subsidiary, would reasonably be expected
to have a Material Adverse Effect.
(b) Except as disclosed in the SEC Reports or the Bankruptcy
Documents, neither the Company nor any of the Subsidiaries is in default under
or in breach of any order, judgment or decree of any court, arbitrator or other
Governmental Entity, except for defaults or breaches which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
2.6. Absence of Certain Changes. Except as disclosed in the
SEC Reports or the Bankruptcy Documents, since December 31, 2001, neither the
Company nor any of the Subsidiaries has suffered any change, event or
development or series of changes, events or developments which, individually or
in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect.
2.7. Consents; No Violations. After giving effect to the
consummation of the other transactions to occur on the Effective Date, in the
case of clauses (i) and (ii) below, neither the execution, delivery or
performance by the Company of this Agreement or any of the other Transaction
Documents to which it is a party nor the consummation of the transactions
contemplated hereby or thereby shall (i) conflict with, or result in a breach or
a violation of, any provision of the Restated Certificate of Incorporation or
bylaws of the Company or of the certificate of incorporation, bylaws or other
organizational documents of any of the Subsidiaries; (ii) except as set forth on
Schedule 2.7, constitute, with or without notice or the passage of time or both,
a breach, violation or default, create an Encumbrance, or give rise to any right
of termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration, under any Law or any provision of any agreement or
other instrument to which the Company or any of the Subsidiaries is a party or
pursuant to which any of them or any of their assets or properties is subject,
except for breaches, violations, defaults, Encumbrances, or rights of
termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration, which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect; or (iii) other than as
contemplated by the Bankruptcy Documents, require any consent, order, approval
or authorization of, notification or submission to, filing with, license or
permit from, or exemption or waiver by, any Governmental Entity or any other
Person (collectively, the "Consents, Approvals and Filings") on the part of the
Company or any of the Subsidiaries, except for (a) the filing of the Preferred
Stock Certificate of Designation with the Secretary of State of the State of
Delaware (the "Delaware Secretary of State"), (b) the Consents, Approvals and
Filings required under the Securities Act, the Exchange Act and applicable state
securities laws, (c) the Consents, Approvals and Filings required under rules of
the Nasdaq Stock Market, (d) the Consents, Approvals and Filings set forth on
Schedule 2.7 and (e) such other Consents, Approvals and Filings which the
failure of the Company or any of the Subsidiaries to make or obtain would not
reasonably be expected to have a Material Adverse Effect or materially adversely
affect the ability of the Company to consummate the transactions contemplated by
this Agreement or any Transaction Document.
6
2.8. Brokers or Finders. Except for UBS Warburg LLC, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated and the other Company agents identified in the
Bankruptcy Documents, whose fees shall be paid by the Company, no agent, broker,
investment banker or other Person is or shall be entitled to any broker's or
finder's fee or any other investment banking commission or similar fee from the
Company or any of the Subsidiaries in connection with any of the transactions
contemplated by this Agreement to occur on the Effective Date.
2.9. No General Solicitation or Advertising; No Integration.
With respect to any offering to the Purchasers of the Preferred Shares, the
Warrants, the Commitment Shares, the Conversion Shares or the Warrant Shares
(collectively, the "Securities") made without registration under the Securities
Act and applicable state securities laws, the Company has not (i) engaged in any
general solicitation or general advertising (as such terms are used in Rule
502(c) of the Securities Act), or (ii) made any offers or sales of any security
under circumstances that would require registration of the Securities being
offered or sold under this Agreement under the Securities Act or any state
securities law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally and not jointly represents and
warrants to the Company with respect to the Securities it is acquiring hereunder
as of the date hereof and as of the Effective Date, as set forth in this Article
III.
3.1. Acquisition for Investment. Such Purchaser is acquiring
the Securities for its own account, for investment and not with a view to, or
for sale in connection with, the distribution thereof within the meaning of the
Securities Act (it being understood that except as otherwise provided in this
Agreement and the Transaction Documents to which it is a party, such Purchaser
does not agree to hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with
the Securities Act and state securities laws applicable to such disposition).
3.2. Accredited Investor Status. Such Purchaser is an
"accredited investor," as that term is defined in Rule 501(a) of Regulation D
under the Securities Act. The information provided by such Purchaser in the
Investor Suitability Questionnaire furnished to the Company is accurate and
complete. Such Purchaser has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
its investment in the Securities and is capable of bearing the economic risks of
such investment. Such Purchaser understands that its investment in the
Securities involves a significant degree of risk.
3.3. Information. Such Purchaser and its advisers have been
furnished with all materials relating to the business, finances and operations
of the Company and its Subsidiaries and materials relating to the offer and sale
of the Securities which have been requested by such Purchaser or its advisers.
Such Purchaser and its advisers have been afforded the opportunity to ask
questions of the Company's management concerning the Company and its
Subsidiaries and the Securities. Such Purchaser has been provided with copies
of, and has carefully reviewed, the SEC Reports and the Bankruptcy Documents.
7
3.4. Government Review. Such Purchaser understands that no
Governmental Entity has passed upon or made any recommendation or endorsement of
the Securities.
3.5. Sale or Transfer. Such Purchaser understands that (i)
except as provided in this Agreement or the Registration Rights Agreement, the
sale or re-sale of the Securities has not been and is not being registered under
the Securities Act or any applicable state securities laws, and the Securities
may not be sold or otherwise transferred unless (a) the Securities are sold or
transferred pursuant to an effective registration statement under the Securities
Act and applicable state securities laws, (b) such Purchaser shall have
delivered to the Company an opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration, or (c) the
Securities are sold pursuant to Rule 144 under the Securities Act; (ii) any sale
of such Securities made in reliance on Rule 144 may be made only in accordance
with the terms of such Rule and further, if such Rule is not applicable, any
sale of such Securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the Securities Act) may require compliance with another exemption
under the Securities Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other Person is under any obligation to
register such Securities under the Securities Act or any state securities laws
or to comply with the terms and conditions of any exemption thereunder (in each
case, other than pursuant to the Registration Rights Agreement). The Preferred
Shares and the Warrants constituting units shall not become separately
transferable until the first anniversary of the Closing Date (such first
anniversary of the Closing Date, a "Separation Date").
3.6. Residency. In the case of any Purchaser that is not a
natural person, the principal offices of such Purchaser and the offices of such
Purchaser in which it made its decision to purchase the Securities are located
at the address set forth in such Purchaser's Investor Suitability Questionnaire
or as otherwise specified to the Company in writing. In the case of any
Purchaser that is a natural person, the principal residence of such Purchaser is
located at the address set forth in such Purchaser's Investor Suitability
Questionnaire or as otherwise specified to the Company in writing.
3.7. No Brokers or Finders. No agent, broker, investment
banker or other Person is or shall be entitled to any broker's or finder's fee
or any other commission or similar fee from such Purchaser in connection with
the transactions contemplated by this Agreement to occur on the Closing Date.
3.8. Organization. In the case of any Purchaser that is not a
natural person, such Purchaser is an entity duly organized, validly existing and
in good standing under the laws of its jurisdiction of formation and has the
requisite power and authority to carry on its business as it is now being
conducted.
3.9. Due Authorization. Such Purchaser has the requisite power
and authority to enter into this Agreement and each of the other Transaction
Documents to which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution and
8
delivery by such Purchaser of this Agreement and each of the other Transaction
Documents to which it is a party and the compliance by such Purchaser with each
of the provisions of this Agreement and each of the Transaction Documents to
which it is a party (including the consummation by such Purchaser of the
transactions contemplated hereby and thereby) (i) are within the power and
authority of such Purchaser and (ii) have been duly authorized by all necessary
action on the part of such Purchaser. This Agreement has been, and each of the
other Transaction Documents to which it is a party when executed and delivered
by such Purchaser shall be, duly and validly executed and delivered by such
Purchaser. Assuming due authorization, execution and delivery by the Company of
the Transaction Documents to which it is a party, this Agreement constitutes,
and each of such other Transaction Documents when executed and delivered by such
Purchaser shall constitute, a valid and binding agreement of such Purchaser
enforceable against such Purchaser in accordance with its terms, except as such
enforcement is limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and for limitations
imposed by general principles of equity.
3.10. Consents: No Violations. Neither the execution, delivery
or performance by such Purchaser of this Agreement or any of the other
Transaction Documents to which it is a party nor the consummation of the
transactions contemplated hereby or thereby shall (i) in the case of any
Purchaser that is not a natural person conflict with, or result in a breach or a
violation of, any provision of the certificate of incorporation, bylaws or other
organizational documents of such Purchaser; (ii) constitute, with or without
notice or the passage of time or both, a breach, violation or default, create an
Encumbrance, or give rise to any right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration,
under any Law, or any provision of any agreement or other instrument to which
such Purchaser is a party or pursuant to which such Purchaser or any of its
assets or properties is subject, except for breaches, violations, defaults,
Encumbrances, or rights of termination, modification, cancellation, prepayment,
suspension, limitation, revocation or acceleration, which, individually or in
the aggregate, would not materially adversely affect the ability of such
Purchaser to consummate the transactions contemplated by this Agreement or any
Transaction Document to which it is a party; or (iii) require any Consents,
Approvals and Filings on the part of such Purchaser, except for (a) the
Consents, Approvals and Filings required under the Exchange Act and applicable
state securities laws, (b) the Consents, Approvals and Filings set forth on
Schedule 3.10 and (c) such other Consents, Approvals and Filings which the
failure of such Purchaser to make or obtain would not materially adversely
affect the ability of such Purchaser to consummate the transactions contemplated
by this Agreement or any Transaction Document.
3.11. Litigation. There is no Litigation pending or, to the
knowledge of such Purchaser, threatened against such Purchaser or any of its
Affiliates or involving any of its properties or assets by or before any court,
arbitrator or other Governmental Entity which in any manner challenges or seeks
to prevent, enjoin, alter or materially delay the transactions contemplated by
this Agreement.
3.12. Availability of Funds. Such Purchaser has, or if such
Purchaser is a stockholder of Holding, upon the purchase by Holding of such
Purchaser's capital stock of
9
Holding as contemplated by this Agreement shall have, sufficient funds to pay
the purchase price for the Preferred Shares and the Warrants to be acquired by
it hereunder.
3.13. Redemption or Purchase of Holding Capital Stock. If such
Purchaser is a stockholder of Holding, such Purchaser has agreed with Holding on
the price and other terms upon which the purchase or redemption of such
Purchaser's capital stock of Holding by Holding as contemplated by this
Agreement shall be consummated.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOLDING
Holding represents and warrants to the Company and each
Purchaser as of the date hereof and as of the Closing Date, as set forth in this
Article IV.
4.1. Organization. Holding is an entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
formation and has the requisite power and authority to carry on its business as
it is now being conducted.
4.2. Due Authorization. Holding has the requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by Holding of this Agreement and
the compliance by Holding with each of the provisions of this Agreement
(including the consummation by Holding of the transactions contemplated hereby)
(i) are within the power and authority of Holding and (ii) have been duly
authorized by all necessary action on the part of Holding. This Agreement has
been duly and validly executed and delivered by Holding. Assuming due
authorization, execution and delivery by the Company, this Agreement constitutes
a valid and binding agreement of Holding enforceable against Holding in
accordance with its terms, except as such enforcement is limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally and for limitations imposed by general principles of equity.
4.3. Consents; No Violations. Neither the execution, delivery
or performance by Holding of this Agreement (including, without limitation, the
performance of Holding's obligations pursuant to Section 5.10) nor the
consummation of the transactions contemplated hereby shall (i) conflict with, or
result in a breach or a violation of, any provision of the certificate of
incorporation or bylaws of Holding; (ii) constitute, with or without notice or
the passage of time or both, a breach, violation or default, create an
Encumbrance, or give rise to any right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration,
under any Law, or any provision of any agreement or other instrument to which
Holding is a party or pursuant to which Holding or its assets or properties is
subject, except for breaches, violations, defaults, Encumbrances, or rights of
termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration, which, individually or in the aggregate, would not
materially adversely affect the ability of Holding to perform its obligations
under this Agreement and to consummate the transactions contemplated by this
Agreement; or (iii) require any Consents, Approvals and Filings on the part of
Holding, except for such Consents, Approvals and Filings which the failure of
Holding to make or obtain would not materially adversely affect the ability of
Holding to perform its
10
obligations under this Agreement and to consummate the transactions contemplated
by this Agreement.
4.4. Litigation. There is no Litigation pending or, to the
knowledge of Holding, threatened against Holding or any of its Affiliates or
involving any of its properties or assets by or before any court, arbitrator or
other Governmental Entity which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the performance by Holding of its obligations
under this Agreement or the transactions contemplated by this Agreement.
4.5. Availability of Funds. Holding has sufficient funds to
pay the purchase price for all the capital stock of Holding that it may become
obligated to redeem or purchase as contemplated by this Agreement.
4.6. Redemption or Purchase of Holding Capital Stock. Holding
has agreed with each Purchaser that owns capital stock of Holding and who shall
have such capital stock purchased or redeemed by Holding as contemplated by this
Agreement on the price and other terms on which such purchase or redemption of
capital stock shall be consummated, and there are no unsatisfied conditions with
respect to such purchase or redemption.
ARTICLE V
COVENANTS
5.1. Public Announcements. The Company, Holding and the
Purchasers shall consult with each other before issuing any press release with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any such press release or make any such public statement with respect
thereto without the prior consent of the others, which consent shall not be
unreasonably withheld, delayed or conditioned; provided, however, that a party
may, without the prior consent of the other party, issue such press release or
make such public statement as may upon the advice of counsel be required by Law,
by rules of the Nasdaq Stock Market, by any other automated quotation system on
which the Company's securities or, if applicable, the securities of any
Purchaser are quoted or to be quoted or by any national securities exchange on
which the Company's securities or, if applicable, the securities of any
Purchaser are listed or to be listed, provided, further, that, to the extent
time permits, such party has used all reasonable best efforts to consult with
the other parties prior thereto.
5.2. Consents, Approvals and Filings. Subject to the terms of
this Agreement and the confirmation of the Plan, the Company, Holding and each
Purchaser shall use its reasonable best efforts to take, or cause to be taken,
all actions, and do, or cause to be done, and to assist and cooperate with the
other party in doing, all things necessary, proper, desirable or advisable to
obtain and make all Consents, Approvals and Filings required to be obtained or
made by the Company and its Subsidiaries, Holding or such Purchaser, as the case
may be, in connection with the authorization, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
5.3. Reasonable Best Efforts. Except as otherwise expressly
provided in this Agreement and subject to the Company's duties and obligations
under Law (including, without limitation, the Bankruptcy Code), the Company,
Holding and each Purchaser each shall
11
use its reasonable best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable under
applicable Laws to consummate the transactions contemplated by this Agreement.
In furtherance and not in limitation of the other covenants of the parties
contained in this Agreement, if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement, each party shall cooperate in all respects with the other party and
use its reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts the
consummation of the transactions contemplated by this Agreement.
5.4. Listing. The Company shall use reasonable efforts to have
the New Common Stock quoted on the National Market System of the Nasdaq Stock
Market (the "NMS") or listed on a national securities exchange or quoted on
another national automated quotation system other than the NMS for so long as
any Securities are outstanding.
5.5. Preferred Stock Certificate of Designation. On or prior
to the Closing Date, the Company Board shall approve and adopt the Preferred
Stock Certificate of Designation authorizing such Preferred Shares, and the
Company shall cause such Preferred Stock Certificate of Designation to be filed
with the Delaware Secretary of State.
5.6. Reservation of New Common Stock. From and after the
Closing Date, the Company at all times shall reserve and keep available, free of
preemptive rights, solely for issuance and delivery upon conversion of the
Preferred Shares and upon exercise of the Warrants, the number of shares of New
Common Stock from time to time issuable upon conversion of all of the Preferred
Shares or upon exercise of the Warrants, in each case at the time outstanding.
5.7. Board Representation Rights. The Company shall take all
corporate action necessary to provide the Purchasers with the benefit of the
Company Board representation rights set forth in the Preferred Stock Certificate
of Designation.
5.8. Confidential Treatment of Confidential Information. (a)
In the event any Purchaser (including its officers, employees, counsel,
accountants, partners and other authorized representatives) obtains from the
Company or the Subsidiaries any Confidential Information, such Purchaser (i)
shall treat all such Confidential Information as confidential, (ii) shall use
such Confidential Information only for the purposes contemplated in this
Agreement and (iii) shall not disclose such Confidential Information to any
third party except to such officers, employees, counsel, accountants, partners
and other authorized representatives of such Purchaser who need to know such
Confidential Information for the purpose of effectuating the transactions
contemplated by this Agreement and who have been informed of and have agreed to
protect the confidential nature of such Confidential Information (and such
Purchaser shall be responsible for compliance with this Section 5.8 by such
officers, employees, counsel, accountants, partners and other authorized
representatives). Notwithstanding the preceding sentence, if such Purchaser or
any of its authorized representatives becomes legally required pursuant to
applicable law or regulation (including securities laws or regulations or the
12
regulations of the NMS or any applicable stock exchange) or regulatory, legal or
judicial process (including by deposition, interrogatory, request for
documents, subpoena or similar process) to disclose any of the Confidential
Information, such Purchaser shall provide the Company with prompt prior written
notice of such requirement so that the Company may seek a protective order or
other appropriate remedy or waive in writing compliance with the provisions of
this Agreement. If such protective order or other remedy is not obtained and
such a written waiver has not been received from the Company that would permit
such required disclosure, such Purchaser and its authorized representatives
shall disclose only that portion of the Confidential Information which the
Purchaser is advised in the opinion of its counsel is legally required to be
disclosed and shall take all reasonable steps to preserve the confidentiality of
the Confidential Information by cooperating with the Company to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information.
(b) Upon the Company's request at any time, a Purchaser shall
(i) return to the Company or destroy all documents (including any copies
thereof) embodying the Confidential Information and (ii) certify in writing to
the Company, within ten days following the Company's request, that all such
Confidential Information has been returned or destroyed.
5.9. Registration Rights. On or prior to the Closing Date,
the Company shall enter into the Registration Rights Agreement with the
Purchasers and SCANA Corporation substantially in the form of Exhibit C hereto
(the "Registration Rights Agreement"), which agreement shall then be in full
force and effect, and the Company shall comply with the terms thereof.
5.10. Redemption Obligations of Holding. Subject to the terms
and conditions of this Agreement, on or prior to the Closing Date, Holding shall
redeem or purchase from a Purchaser that holds capital stock of Holding such
amount of the capital stock of Holding held by such Purchaser as shall be
necessary to enable such Purchaser to have immediately available funds at the
Closing in an amount equal to such Purchaser's Committed Amount, provided, that
nothing herein contained shall be deemed to preclude a sale or business
combination of or involving Holding prior to the Closing Date, provided,
further, that, as part of such transaction (or series of related transactions),
the Purchasers that hold capital stock of Holding receive consideration for such
Holding capital stock sufficient for such Purchasers to fulfill their commitment
to purchase the Series A Preferred Stock and the Warrants as specified in this
Agreement. The aggregate purchase price of securities Holding shall be obligated
to purchase pursuant to this Agreement shall not exceed $15,000,000.
5.11. Obligation of Holding to Vote in Favor of the Plan.
Holding hereby acknowledges to the Company that it supports the terms of the
Plan. Holding agrees that, for so long as it is the beneficial owner of Notes,
common stock of the Company or Series B-1 or Series B-2 Cumulative Convertible
Preferred Stock of the Company (collectively, the "Company Existing
Securities"), it (i) shall vote, or shall cause its Subsidiaries that own
Company Existing Securities of record to vote, its claims in respect of the
Company Existing Securities in favor of the Plan and (ii) shall not object to,
delay, impede or take any other action to interfere, directly or indirectly,
with the acceptance or implementation of the Plan, including commencing any
action to oppose or object to the Plan. The provisions of this Section 5.11
shall not in any way limit or condition the right of Holding or any of its
subsidiaries to sell, transfer or otherwise dispose of (a
13
"Transfer") any or all of the Company Existing Securities at any time or to any
person (a "Transferee") in the sole and absolute discretion of Holding or any
such Subsidiary; provided, however, that, if and to the extent that Holding or
any such Subsidiary Transfers any of the Company Existing Securities before the
date of confirmation of the Plan, Holding shall use its reasonable best efforts
to obtain, or to cause such Subsidiary to obtain, the agreement of the
Transferee prior to the effectiveness of such Transfer to be bound by the terms
of this Section 5.11 with respect to the Company Existing Securities being
Transferred to the Transferee. Such agreement of the Transferee shall be
confirmed in a writing, which may include a trade confirmation issued by a
broker or dealer, acting as principal or as agent for the Transferee, stating
that such agreement is a term of such Transfer.
5.12. Obligation by ▇▇▇▇▇▇ to Vote in Favor of the Plan.
▇▇▇▇▇▇ hereby acknowledges to the Company that he supports the terms of the
Plan. ▇▇▇▇▇▇ agrees that, for so long as he is the beneficial owner of Company
Existing Securities, he (i) shall vote his claims in respect of the Company
Existing Securities in favor of the Plan and (ii) shall not object to, delay,
impede or take any other action to interfere, directly or indirectly, with the
acceptance or implementation of the Plan, including commencing any action to
oppose or object to the Plan. ▇▇▇▇▇▇ shall not Transfer any of his Company
Existing Securities before the date of confirmation of the Plan except to a
Transferee who agrees prior to the effectiveness of such Transfer to be bound by
the terms of this Section 5.12 with respect to the Company Existing Securities
being Transferred to the Transferee. Such agreement of the Transferee shall be
confirmed in a writing, which may include a trade confirmation issued by a
broker or dealer, acting as principal or as agent for the Transferee, stating
that such agreement is a term of such Transfer.
5.13. Further Assurances. At any time or from time to time
after the date of this Agreement, the Company, on the one hand, and each of the
Purchasers and Holding, on the other hand, agree to cooperate with each other,
and at the request of any other party, to execute and deliver any further
instruments or documents and to take all such further action as such other party
may reasonably request in order to evidence or effectuate the consummation of
the transactions contemplated by this Agreement or by the other Transaction
Documents and otherwise to carry out the intent of the parties hereunder or
thereunder.
5.14. Waiver of Right to Participate in Rights Offering. The
Purchasers hereby irrevocably and unconditionally waive any and all rights that
they have as of the date hereof or may have after the date hereof to subscribe
for Series A Preferred Stock and Warrants pursuant to the Rights Offering.
ARTICLE VI
PURCHASERS' REPRESENTATIVE
Subject to the last sentence of this Article VI, the
Purchasers hereby appoint ▇▇▇▇▇▇ as the Purchasers' exclusive agent to act on
the Purchasers' behalf with respect to the matters specified in this Article VI.
Such representative, or such other representative as the Purchasers may appoint
from time to time to replace ▇▇▇▇▇▇, is hereinafter referred to as the
"Purchasers' Representative." The Purchasers' Representative shall take any and
all actions which the Purchasers' Representative believes are necessary or
appropriate under this Agreement for and on behalf of the Purchasers as fully as
if the Purchasers were acting on their own behalf,
14
including, without limitation, receiving notice of and defending any claims
pursuant to this Agreement, giving notice of and asserting any claims pursuant
to this Agreement, consenting to, compromising or settling claims made pursuant
to this Agreement, taking any and all other actions specified in or contemplated
by this Agreement to be taken by the Purchasers prior to, on or after the
Closing Date and engaging counsel, accountants or other representatives in
connection with the foregoing matters. The Company and Holding shall have the
right to rely upon all actions taken or omitted to be taken by the Purchasers'
Representative pursuant to this Agreement, all of which actions or omissions
shall be legally binding upon each of the Purchasers. Notwithstanding the
foregoing, the Purchasers' Representative shall not act on behalf of UBS Warburg
LLC or its affiliates with respect to any matters arising under this Agreement.
ARTICLE VII
CONDITIONS
7.1. Conditions to Obligations of the Purchasers, Holding and
the Company at Closing. The obligations of each Purchaser, Holding and the
Company to consummate the transactions contemplated hereby to be consummated at
the Closing are subject to the satisfaction or waiver at or prior to the Closing
Date of each of the following conditions:
(a) no preliminary or permanent injunction or other Order by
any Governmental Entity which prevents the consummation of the
transactions contemplated hereby shall have been issued and remain in
effect (each party agreeing to use its reasonable best efforts to have
any such injunction or Order lifted);
(b) no statute, rule, regulation or other Law shall have been
enacted by any Governmental Entity which would prevent or make illegal
the consummation of the transactions contemplated by this Agreement;
(c) any Consents, Filings and Approvals that are necessary
for the consummation of the transactions contemplated by this Agreement
shall have been made or obtained except where (i) the Company's failure
to make or obtain such Consents, Filings and Approvals would not have a
Material Adverse Effect or a material adverse effect on the Company's
ability to perform its obligations under this Agreement, provided that
any failure by the Company to obtain any necessary or required consents
from any party to lawsuits or other proceedings which challenge the
Company's rights to use its network easements, rights-of-way,
franchises or licenses shall not be deemed a failure to satisfy this
condition, or (ii) the failure of such Purchaser or Holding to obtain
such Consents, Filings and Approvals would not have a material adverse
effect on the ability of such Purchaser or Holding, as the case may be,
to perform its obligations under this Agreement;
(d) the Company's plan of reorganization shall have been
confirmed by the Bankruptcy Court on substantially the terms set forth
in the Plan, and an unstayed order by such Bankruptcy Court approving
the transactions contemplated by the Company's plan of reorganization
on substantially the terms set forth in the Plan, shall have been
entered, on or before December 31, 2002; and
15
(e) the other transactions contemplated by the Plan to occur on the
Effective Date (including, without limitation, the cancellation of the
Notes and the Company's existing equity securities and the issuance of the
New Common Stock) shall have been consummated substantially concurrently
with the sale and purchases under this Agreement on substantially the terms
set forth in the Plan.
7.2. Additional Conditions to Obligations of the Purchasers and
Holding at the Closing. The obligations of each Purchaser and Holding to
consummate the transactions contemplated hereby to be consummated at the Closing
shall be subject to the satisfaction or waiver at or prior to the Closing Date
of each of the following additional conditions (except in the case of the
condition set forth in Section 7.2(h), which shall only be a condition to the
obligations hereunder of any Purchaser that is a stockholder of Holding):
(a) the representations and warranties of the Company contained in
this Agreement shall have been true and correct in all respects at and as
of the date they were made, and shall be true and correct in all respects
at and as of the Closing Date (unless any such representations and
warranties are stated to be made as of a date other than the date hereof,
in which case they shall have been true and correct in all respects as of
that date); provided, that this condition shall be deemed satisfied unless
the failure of such representations and warranties to be true and correct
in all respects (without regard to any qualifiers with respect to
materiality or Material Adverse Effect set forth therein) would have, in
the aggregate, a Material Adverse Effect or would have, in the aggregate, a
material adverse effect on the Company's ability to perform its obligations
under this Agreement;
(b) the Company shall have performed, in all material respects, all of
its obligations contemplated herein to be performed by the Company on or
prior to the Closing Date;
(c) from the date hereof through the Closing Date, there shall not
have occurred, and be continuing, a Material Adverse Effect;
(d) the Company and the holders of Notes representing at least 51% of
the principal amount of all outstanding Notes (including Appaloosa
Management L.P. and its affiliates that beneficially own or control Notes)
shall be legally bound by releases as set forth in Sections 11.6 and 11.7
of the Plan;
(e) the Preferred Stock Certificate of Designation with respect to the
Preferred Shares to be issued at the Closing and as dividends on the
Preferred Shares shall have been duly filed with the Delaware Secretary of
State in accordance with the laws of the State of Delaware, and the
Preferred Stock Certificate of Designation shall be in full force and
effect and the Purchasers shall have received evidence of such filing;
(f) the Warrants shall be duly issued in accordance with the Warrant
Agreement and the Warrant Agreement shall be in full force and effect;
16
(g) the Conversion Shares issuable upon conversion of the Preferred
Shares and the Warrant Shares issuable upon exercise of the Warrants shall
have been duly authorized and reserved for issuance;
(h) Holding shall have complied with its obligations to purchase or
redeem capital stock of Holding pursuant to Section 5.10 (or, if there
shall have been a sale or business combination of or involving Holding
prior to the Closing Date, the Purchasers that hold capital stock of
Holding shall have received, as part of such transaction (or series of
related transactions), consideration for such Holding capital stock
sufficient for such Purchasers to fulfill their commitment to purchase the
Series A Preferred Stock and the Warrants as specified in this Agreement);
and
(i) the Company shall have delivered the following to each Purchaser:
(i) an officer's certificate certifying as to the Company's
compliance with the conditions set forth in clauses (a) and (b) of
this Section 7.2;
(ii) a counterpart of the Registration Rights Agreement executed
by the Company;
(iii) the certificates and Warrants specified in Section 1.1(b);
(iv) such other documents as may be required by this Agreement
or reasonably requested by the Purchasers and Holding.
7.3. Additional Conditions to Obligations of the Company at the
Closing. The obligations of the Company to consummate the transactions
contemplated hereby to be consummated at the Closing shall be subject to the
satisfaction or waiver at or prior to the Closing Date of each of the following
additional conditions:
(a) the representations and warranties of the Purchasers and Holding
contained in this Agreement shall have been true and correct in all
respects at and as of the date they were made, and shall be true and
correct in all respects at and as of the Closing Date (unless any such
representations and warranties are stated to be made as of a date other
than the date hereof, in which case they shall have been true and correct
in all respects as of that date); provided, that this condition shall be
deemed satisfied unless the failure of such representations and warranties
to be true and correct in all respects (without regard to any qualifiers
with respect to materiality or material adverse effect set forth therein)
would have, in the aggregate, a material adverse effect on the ability of
any Purchaser or Holding to perform its obligations under this Agreement;
(b) the Purchasers and Holding shall have performed, in all material
respects, all of their respective obligations contemplated herein to be
performed by them on or prior to the Closing Date;
(c) Holding shall be legally bound by a release releasing the Company
and its officers, directors, employees and affiliates in substantially the
form of the release of Holding and its affiliates by the Company set forth
in Section 11.6 of the Plan; and
17
(d) each Purchaser shall have delivered the following to the Company:
(i) such Purchaser's Committed Amount, as adjusted in accordance
with Section 1.1.(a)(ii), payable for the Preferred Shares being
purchased by such Purchaser at the Closing; and
(ii) such other documents as may be required by this Agreement or
reasonably requested by the Company.
7.4. Independent Purchase Obligations. The obligations of each
Purchaser under this Agreement shall be several and not joint with the
obligations of any other Purchaser, and, subject to the obligations of ▇▇▇▇▇▇
set forth in Article IX, no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser. Without limiting the
generality of the foregoing, no purchase of Preferred Shares by any Purchaser
hereunder shall be a condition precedent to the obligation of any other
Purchaser to purchase Preferred Shares hereunder.
ARTICLE VIII
TERMINATION
8.1. Termination. This Agreement may be terminated at any time
before the Closing Date:
(a) by mutual written agreement of the Company and the Majority
Purchasers;
(b) by the Company (i) upon a breach of any covenant or agreement on
the part of any Purchaser or Holding set forth in this Agreement or if any
representation or warranty of any Purchaser or Holding set forth in this
Agreement shall not be true and correct, in either case such that the
conditions set forth in Section 7.3(a) or 7.3(b) would not be satisfied (a
"Terminating Purchaser Breach"); provided, that such Terminating Purchaser
Breach shall not have been waived or cured within 30 days after written
notice of such Terminating Purchaser Breach is given to such Purchaser or
Holding, as the case may be, by the Company; or (ii) if any condition to
the Company's obligations to close at the Closing set forth in Article VII
has not been satisfied as of the Closing Date or satisfaction of such a
condition is or becomes impossible (other than because of the failure of
the Company to comply with its obligations under this Agreement), and the
Company has not waived such condition; and
(c) by the Majority Purchasers (i) upon a breach of any covenant or
agreement on the part of the Company set forth in this Agreement or if any
representation or warranty of the Company set forth in this Agreement shall
not be true and correct, in either case such that the conditions set forth
in Section 7.2(a) or 7.2(b) would not be satisfied (a "Terminating Company
Breach"); provided, that such Terminating Company Breach shall not have
been waived or cured within 30 days after written notice of such
Terminating Company Breach is given to the Company by the Majority
Purchasers; or (ii) if any condition to the Purchasers' obligations to
close set forth in Article VII has not been satisfied as of the Closing
Date or satisfaction of such a condition is or becomes impossible (other
than because of the failure of the Purchasers to comply with their
18
obligations under this Agreement), and the Majority Purchasers have not
waived such condition.
8.2. Effect of Termination. If this Agreement is terminated by either
the Company or the Purchasers pursuant to the provisions of Section 8.1, this
Agreement shall forthwith become void and there shall be no further obligations
with respect to the sale and purchase of the Securities on the part of the
Company or the Purchasers or their respective stockholders, directors, officers,
employees, agents or representatives, except for the provisions of Article IX
and Sections 5.1, 5.8, 10.1, 10.2, 10.3, 10.4, 10.8, 10.9, 10.13, 10.14, 10.15,
10.16 and 10.17, all of which shall survive any termination of this Agreement;
provided, that nothing in this Section 8.2 shall relieve any party hereunder
from liability for any willful breach of this Agreement.
ARTICLE IX
▇▇▇▇▇▇ GUARANTEE
9.1. ▇▇▇▇▇▇ Guarantee. ▇▇▇▇▇▇ hereby absolutely, irrevocably and
unconditionally guarantees to the Company (as a primary obligor and not as a
surety only) the due and punctual payment of each Purchaser's Committed Amount
payable by each Purchaser pursuant to this Agreement (collectively, the
"Guaranteed Obligations ").
9.2. Guarantee Absolute. ▇▇▇▇▇▇ guarantees that the Guaranteed
Obligations will be duly and punctually paid strictly in accordance with the
terms of this Agreement. If for any reason a Purchaser shall fail or be unable
duly and punctually to pay any Guaranteed Obligation as and when the same shall
become due or otherwise required, ▇▇▇▇▇▇ shall, subject to the terms and
conditions of this Agreement, forthwith duly and punctually pay such Guaranteed
Obligation. ▇▇▇▇▇▇ further agrees that this Agreement constitutes a guarantee of
payment when due and not of collection and is in no way conditioned or
contingent upon any attempt to collect from any Purchaser. ▇▇▇▇▇▇'▇ liability
under this Agreement shall be absolute, unconditional, irrevocable and
continuing.
ARTICLE X
MISCELLANEOUS
10.1. Definitions. The following terms, as used in this Agreement,
shall have the following meanings:
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
under the Exchange Act.
"Bankruptcy Documents" shall mean the Plan and the Disclosure
Statement.
"beneficial owner" or "beneficially own," or any derivation of such
terms, shall have the meaning set forth in Rule 13d-3 under the Exchange Act.
"Business Day" shall mean any day except Saturday, Sunday and any
legal holiday or a day on which banking institutions in The City of New York or
the State of Georgia generally are authorized or required by law or other
governmental actions to close.
19
"Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting or non-voting) of such Person's capital stock,
and any and all rights (other than any evidence of indebtedness), warrants or
options exchangeable for or convertible into such capital stock.
"Commitment" shall mean a contract, agreement, understanding,
arrangement and commitment of any nature whatsoever, whether written or oral,
including all amendments thereof and supplements thereto.
"Company Board" shall mean the Board of Directors of the Company.
"Confidential Information" shall mean information relating to the
Company's business, intellectual property and processes, operations, strategies,
liquidity and financial condition, Reorganization terms, pricing policies,
markets, customers, distribution, sales, marketing and production and future
business plans and any other information of a "confidential" nature,
specifically including any information that is identified orally or in writing
by the Company to be confidential, or that any Purchaser should reasonably
understand under the circumstances to be a trade secret or information of a
similar nature, provided, that Confidential Information shall not include any
such information which (i) was in the public domain on the date hereof or
subsequently comes into the public domain other than through the fault or
negligence of a Purchaser, (ii) was lawfully obtained by a Purchaser from a
third party without breach of this Agreement and otherwise not in violation of
the Company's rights, (iii) was known to a Purchaser at the time of disclosure
of such Confidential Information to a Purchaser by the Company, provided that a
Purchaser was not, at such time, subject to any confidentiality obligation with
respect thereto, or (iv) was independently developed by a Purchaser without
making use of any Confidential Information.
"Disclosure Statement" shall mean the Company's disclosure statement,
dated August 22, 2002 and as amended or supplemented through the date hereof,
relating to the Plan, including, without limitation, all exhibits and schedules
thereto, which is subject to approval by the Bankruptcy Court pursuant to
Section 1125 of the Bankruptcy Code.
"Effective Date" shall mean the date upon which the transactions
contemplated by the Plan to become effective on such date, including, without
limitation, the cancellation of the Notes and the Company's existing equity
securities and the issuance of the New Common Stock, become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, in each case as the same shall be in
effect at the time.
"Governmental Entity" shall mean any supranational, or United States
or foreign national, federal, state or local, judicial, legislative, executive,
administrative or regulatory body or authority.
"Investor Suitability Questionnaire" shall mean the questionnaire
completed by each Purchaser and delivered by such Purchaser to the Company prior
to the date of this Agreement.
20
"Laws" shall mean all United States and foreign national, federal,
state, and local laws, statutes, ordinances, rules, regulations, orders, and
decrees.
"Majority Purchasers" shall mean (i) prior to the Closing Date,
Purchasers having the right hereunder to purchase Preferred Shares representing
in the aggregate at least 51% of the Committed Amount and (ii) after the Closing
Date, Purchasers holding securities representing at least a majority of the
Conversion Shares on an as-converted basis.
"Material Adverse Effect" shall mean a material adverse effect on the
business, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole; except that any of the following changes,
events, conditions or effects shall not constitute a "Material Adverse Effect":
(i) changes or conditions in the industry or the industry sector in which the
Company and its Subsidiaries operate that do not disproportionately affect the
Company and its Subsidiaries; (ii) the effect of the pendency or consummation of
the transactions contemplated by this Agreement; (iii) any material adverse
effect that shall have been or will be eliminated or rendered immaterial by the
Reorganization as of the Effective Date; or (iv) a bankruptcy filing or filings
of the Company and one or more of the Company's Subsidiaries and the
continuation of such bankruptcy cases.
"Notes" shall mean the Company's 11% Senior Notes due 2007, 8? %
Senior Notes due 2008, 9 3/4% Senior Notes due 2008 and 4 1/2% Convertible
Subordinated Notes due 2006.
"Order" shall mean any order, judgment, injunction, edict, decree,
ruling, pronouncement, determination, decision, opinion, sentence, subpoena,
writ or award issued, made, entered or rendered by any court, administrative
agency or other Governmental Entity or by any arbitrator.
"Person" shall mean any natural person, firm, corporation, limited
liability company, partnership, company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Plan" shall mean the Company's plan of reorganization, dated August
22, 2002 and as amended or supplemented through the date hereof, which is
subject to confirmation by the Bankruptcy Court.
"Purchasers' Counsel" shall mean ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
which shall be the single counsel representing all of the Purchasers hereunder.
"Restated Certificate of Incorporation" shall mean the certificate of
incorporation of the Company restated and filed pursuant to the Plan and
including the Preferred Stock Certificate of Designation.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, in each case as the same shall be in effect at
the time.
"Subsidiary" shall mean in the case of any Person, each corporation,
partnership or other entity of which shares of Capital Stock or other equity
interests having ordinary voting
21
power (other than Capital Stock or other equity interests having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, directly or indirectly, or the management of which is
otherwise controlled, directly or indirectly, or both, by such Person and which,
in the case of the Company, shall be each corporation, partnership or other
entity listed on Schedule 10.1.
"Transaction Documents" shall mean this Agreement, the Preferred Stock
Certificate of Designation, the Warrant Agreement, the Warrants and the
Registration Rights Agreement.
10.2. Survival of Representations and Warranties. All representations
and warranties set forth in this Agreement or in any writing delivered by any
party in connection herewith shall survive the transactions contemplated by this
Agreement to be consummated at the Closing (regardless of any investigation,
inquiry, or examination made by any party or on its behalf or any knowledge of
any party or the acceptance by any party of any certificate or opinion) for a
period of one year following the Closing Date.
10.3. Fees and Expenses. On the Closing Date, the Company shall pay,
(i) in an amount not to exceed $150,000, the reasonable fees and expenses of
Purchasers' Counsel and all other costs and expenses incurred by the Purchasers
in connection with the negotiation, preparation, execution, delivery and
performance of this Agreement, and (ii) in an amount not to exceed $40,000, the
reasonable fees and expenses of Holding incurred by Holding in connection with
the negotiation, preparation, execution, delivery and performance of this
Agreement.
10.4. Enforcement. (a) The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific intent or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, in
addition to any other remedy to which they may be entitled by law or equity.
(b) Holding's obligations set forth in this Agreement (including,
without limitation, Holding's redemption and purchase obligations pursuant to
Section 5.10) are for the benefit of, and may be directly enforced by, ▇▇▇▇▇▇,
each other Purchaser that is a stockholder of Holding and/or the Company.
10.5. Restrictive Legends. (a) Each certificate representing any of
the Preferred Shares shall bear a legend in substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE SHALL BE REDEEMABLE AND
CONVERTIBLE INTO THE COMPANY'S COMMON STOCK IN THE MANNER AND
ACCORDING TO THE TERMS SET FORTH IN THE CERTIFICATE OF DESIGNATION.
22
(b) Each certificate representing any of the Preferred Shares,
Conversion Shares, Warrant Shares or Commitment Shares shall bear legends in
substantially the following form:
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OR SERIES
OF CAPITAL STOCK. THE CORPORATION SHALL FURNISH TO ANY HOLDER UPON
REQUEST AND WITHOUT CHARGE THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH
CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS OF EACH CLASS OR
SERIES AUTHORIZED TO BE ISSUED BY THE CORPORATION SO FAR AS THEY HAVE
BEEN FIXED AND DETERMINED AND OF THE AUTHORITY OF THE BOARD OF
DIRECTORS TO FIX AND DETERMINE THE DESIGNATIONS, VOTING RIGHTS,
PREFERENCES, LIMITATIONS AND SPECIAL RIGHTS OF THE CLASSES AND SERIES
OF SECURITIES OF THE CORPORATION.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, PLEDGED,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE
WITH AND SUBJECT TO THE PROVISIONS OF A PURCHASE AGREEMENT DATED AS
OF AUGUST 22, 2002, AS AMENDED FROM TIME TO TIME (THE "PURCHASE
AGREEMENT"). A COPY OF THE PURCHASE AGREEMENT IS AVAILABLE UPON
REQUEST FOR INSPECTION AT THE OFFICES OF THE CORPORATION.
The second legend set forth immediately above and any applicable stop
transfer orders shall be removed, and the Company shall issue certificates
without such legend, with respect to any of such Securities transferred in any
sale or transfer permitted by the terms of this Agreement with respect to which
the provisions of this Agreement provide that the transferee of such Securities
shall not be subject to the restrictions of this Agreement.
In addition, certificates representing any of the Preferred Shares,
Conversion Shares, Warrant Shares or Commitment Shares issued in a transaction
exempt from the registration requirements of the Securities Act and applicable
state securities laws, or as to which the subsequent transfer or disposition of
such Securities shall require registration or qualification thereof under the
Securities Act or applicable state securities laws, shall bear a legend in
substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR ARE SUBJECT TO
RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT AND SUCH LAWS. THE
SECURITIES MAY NOT BE SOLD,
23
PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN A TRANSACTION OTHERWISE IN COMPLIANCE
WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THE CORPORATION
RESERVES THE RIGHT PRIOR TO ANY SUCH TRANSACTION TO REQUIRE AN OPINION
OF COUNSEL SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE
FOREGOING RESTRICTIONS.
The legend set forth immediately above and any applicable stop
transfer orders shall be removed, and the Company shall issue certificates
without such legend, with respect to any of such Securities with respect to
which the Company has received an opinion from counsel to the applicable
Purchaser, in form and substance and from counsel reasonably satisfactory to the
Company (which opinion shall be in addition to any opinion required to be
provided pursuant to Section 3.5), to the effect that the subsequent transfer or
other disposition of such Securities shall not require registration under the
Securities Act.
(c) Each certificate representing any of the Preferred Shares
issued prior to the applicable Separation Date shall also bear a legend in
substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED IN
UNITS AS PART OF AN ISSUANCE OF SHARES OF THE CORPORATION'S
8% SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK (THE "PREFERRED
STOCK") AND WARRANTS ENTITLING THE HOLDER THEREOF TO PURCHASE THE
CORPORATION'S COMMON STOCK (THE "WARRANTS"). UNTIL THE FIRST
ANNIVERSARY OF THE DATE OF INITIAL ISSUANCE OF THE PREFERRED STOCK
UNDER THE PURCHASE AGREEMENT, EACH SHARE OF PREFERRED STOCK EVIDENCED
BY THIS CERTIFICATE MAY NOT BE TRANSFERRED SEPARATELY FROM, BUT MAY BE
TRANSFERRED ONLY TOGETHER WITH, 3.40 WARRANTS.
(d) Each Warrant shall bear legends substantially in the form of
the legends set forth in the form of Warrant appended to the Warrant Agreement
attached hereto as Exhibit B.
(c) The Company, at its discretion, may cause a stop transfer order
to be placed with its transfer agent with respect to the certificates for the
Securities.
10.6. Successors and Assigns. Except as otherwise expressly provided
herein, (i) all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed or
not, and (ii) no party may assign or delegate all or any portion of its rights,
obligations or liabilities under this Agreement without the prior written
24
consent of each other party to this Agreement; provided, that any such consent
required to be given by the Purchasers shall be effective if given by the
Majority Purchasers. Nothing herein contained shall be deemed to preclude a sale
or business combination of or involving Holding, provided, that as part of such
transaction (or series of related transactions), the Purchasers that hold
capital stock of Holding receive consideration for such Holding capital stock
sufficient for such Purchasers to fulfill their commitment to purchase the
Series A Preferred Stock and the Warrants as specified in this Agreement.
Without limiting the generality of the foregoing, this Agreement shall survive
the death or disability of ▇▇▇▇▇▇ and each other Purchaser that is a natural
person.
10.7. Inspections; No Other Representations. Each Purchaser is an
informed and sophisticated purchaser, and has undertaken such investigation and
has been provided with and has evaluated such documents and information as it
deems necessary to enable it to make an informed decision with respect to the
execution, delivery and performance of this Agreement. Each Purchaser agrees to
accept the Preferred Shares, Warrants and Commitment Shares based upon its own
inspection, examination and determination with respect thereto as to all
matters, and without reliance upon any express or implied representations or
warranties of any nature made by or on behalf or imputed to the Company, except
as expressly set forth in this Agreement. Without limiting the generality of the
foregoing, each Purchaser acknowledges that the Company makes no representation
or warranty with respect to any projections, estimates or budgets delivered to
or made available to any Purchaser of future revenues, future results of
operations (or any component thereof), future cash flows or future financial
condition (or any component thereof) of the Company and its Subsidiaries or the
future business and operations of the Company and the Subsidiaries except as
expressly set forth in this Agreement.
10.8. Entire Agreement. This Agreement (including the Schedules
hereto) and the other Transaction Documents constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof, and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein. Without limiting the generality of the foregoing, the
parties hereto agree and acknowledge that this Agreement shall supersede and
replace in its entirety the ▇▇▇▇▇▇ Subscription Agreement, which shall, on and
after the date hereof, be terminated in full and no longer be in force or
effect.
10.9. Notices. All notices, demands, requests, consents or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (i)
when delivered personally to the recipient, (ii) when telecopied to the
recipient (with hard copy sent to the recipient by reputable overnight courier
service (charges prepaid) that same day) if telecopied before 5:00 p.m. New York
City time on a Business Day, and otherwise on the next Business Day, (iii) one
Business Day after being sent to the recipient by reputable overnight courier
service (charges prepaid), or (iv) on the first Business Day that is at least
five days after the date of deposit in the United States mails for delivery by
certified mail. Such notices, demands, requests, consents and other
communications shall be sent to the following Persons at the following
addresses:
25
(i) if to the Company, to:
ITC/\DeltaCom, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Senior Vice President, General Counsel and
Secretary
(ii) if to the Purchasers (other than UBS Warburg LLC), to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
c/o ITC Holding Company, Inc.
▇▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to
Purchasers' Counsel:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇/▇. ▇▇▇▇ ▇▇▇▇▇▇▇
(iii) if to UBS Warburg LLC, to:
UBS Warburg LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇ ▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
(iv) if to Holding, to:
ITC Holding Company, Inc.
▇▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
26
10.10. Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is not a Business Day, the time
period shall automatically be extended to the Business Day immediately following
such day.
10.11. Amendments; Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent thereto of the Company, Holding and
the Majority Purchasers. Notwithstanding the foregoing, any such amendment,
modification, supplement, waiver or consent with respect to a matter that
relates exclusively to the rights or obligations of (i) a particular Purchaser
and that does not directly or indirectly affect the rights or obligations of any
other Purchaser or of Holding, may be entered into or given solely by the
Company and such affected Purchaser and (ii) Holding and that does not directly
or indirectly affect the rights or obligations of any Purchaser, may be entered
into or given solely by the Company and Holding; provided that the provisions of
this sentence may not be amended, modified or supplemented, and no waiver or
consent to departure from such provisions may be given, except in accordance
with the provisions of the immediately preceding sentence.
10.12. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same Agreement.
10.13. Descriptive Headings; Interpretation; No Strict
Construction. The descriptive headings of this Agreement are inserted for
convenience only and do not constitute a substantive part of this Agreement.
Whenever required by the context, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
forms of nouns, pronouns, and verbs shall include the plural and vice versa.
Reference to any agreement, document, or instrument means such agreement,
document, or instrument as amended or otherwise modified from time to time in
accordance with the terms thereof and, if applicable, hereof. The use of the
words "include" or "including" in this Agreement shall be by way of example
rather than by limitation. The use of the words "or," "either" or "any" shall
not be exclusive. The parties to this Agreement have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. The parties agree that prior drafts of this
Agreement shall be deemed not to provide any evidence as to the meaning of any
provision hereof or the intention of the parties hereto with respect to this
Agreement.
10.14. References. When a reference is made in this Agreement
or any other Transaction Document to a Section, Exhibit, Schedule or Appendix,
such reference shall be to a Section of or an Exhibit or a Schedule or Appendix
to this Agreement or such other Transaction Document, unless otherwise
indicated.
10.15. Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware applicable to contracts executed and to be performed wholly
within such state.
27
10.16. Exclusive Jurisdiction; Venue. Any process against the
Company or a Purchaser in, or in connection with, any suit, action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby, may be served personally or by certified mail pursuant to the notice
provision set forth in Section 10.9 with the same effect as though served on it
personally. Each of the parties hereto hereby irrevocably submits in any suit,
action or proceeding by the parties hereto arising out of or relating to this
Agreement or any of the transactions contemplated hereby to the exclusive
jurisdiction and venue of the federal and state courts of the State of Delaware
and irrevocably waives any and all objections to exclusive jurisdiction and
review of venue that any such party may have under the laws of the State of
Delaware or the United States. Without limiting the other remedies, this
Agreement shall be enforceable by specific performance. Each of the foregoing
parties hereby irrevocably designates RL&F Service Corp. (the "Process Agent"),
with offices at the date hereof at One ▇▇▇▇▇▇ Square, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, as its designee, appointee and agent to receive,
for and on its behalf, service of process in the State of Delaware in any legal
action or proceedings with respect to this Agreement and the transactions
contemplated hereby, and such service shall be deemed complete upon delivery
thereof to the Process Agent, provided that in the case of any such service upon
the Process Agent, the party effecting such service shall also deliver a copy
thereof to the other party in accordance with the notice provision set forth in
Section 10.9. Each party shall take all such action as may be necessary to
continue such appointment in full force and effect or to appoint another agent,
who will thereafter be referred to herein as the "Process Agent," so that each
such party shall at all times have an agent for service for the foregoing
purposes in the State of Delaware.
10.17. Waiver of Jury Trial. The Company, the Purchasers and
Holding hereby waive any right they may have to a trial by jury in respect of
any action, proceeding or litigation directly or indirectly arising out of,
under or in connection with this Agreement or the Transaction Documents.
10.18. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not
render invalid or unenforceable any other provision of this Agreement.
10.19. Delivery by Facsimile. This Agreement, the agreements
referred to herein, and each other agreement or instrument entered into in
connection herewith or therewith or contemplated hereby or thereby, and any
amendments hereto or thereto, to the extent signed and delivered by means of a
facsimile machine, shall be treated in all manner and respects as an original
agreement or instrument and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in person. At
the request of any party hereto or to any such agreement or instrument, each
other party hereto or thereto shall reexecute original forms thereof and deliver
them to all other parties. No party hereto or to any such agreement or
instrument shall raise the use of a facsimile machine to deliver a signature or
the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine as a defense to the
formation or enforceability of a contract, and each such party forever waives
any such defense.
28
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date first above written.
Company:
ITC/\DeltaCom, Inc.
By: /s/
---------------------------------------------
Name:
Title:
Holding:
ITC Holding Company, Inc.
By: /s/
---------------------------------------------
Name:
Title:
Purchasers:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
By: /s/
---------------------------------------------
Name:
Brindlee Capital, LLC
By: /s/
---------------------------------------------
Name:
Title:
▇▇▇▇▇ Investment Partners, L.P.
By: /s/
---------------------------------------------
Name:
Title:
The ▇▇▇▇▇▇ Partnership, Limited Partnership
By: /s/
---------------------------------------------
Name:
Title:
The ▇▇▇▇▇▇ Partnership (QP), Limited Partnership
By: /s/
---------------------------------------------
Name:
Title:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/
---------------------------------------------
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
By: /s/
---------------------------------------------
Name:
CT Communications Northeast, Inc.
By: /s/
---------------------------------------------
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/
---------------------------------------------
Name:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/
---------------------------------------------
Name:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
By: /s/
---------------------------------------------
Name:
▇. ▇▇▇▇▇ ▇▇▇▇▇▇ & Co.
By: /s/
---------------------------------------------
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/
---------------------------------------------
Name:
Title:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: /s/
---------------------------------------------
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: /s/
---------------------------------------------
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: /s/
---------------------------------------------
Name:
North State Telephone Company
By: /s/
---------------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
By: /s/
---------------------------------------------
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/
---------------------------------------------
Name:
UBS Warburg LLC
By: /s/
---------------------------------------------
Name:
▇▇▇▇▇ ▇. ▇▇▇▇
By: /s/
---------------------------------------------
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/
---------------------------------------------
Name:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Charitable Remainder Trust
By: /s/
---------------------------------------------
Name:
1997 Trust FBO ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
By: /s/
---------------------------------------------
Name:
1999 Trust FBO ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
By: /s/
---------------------------------------------
Name:
SCHEDULE 1
Purchasers' Committed Amounts
(1) (2) (3) (4)
Number of Number of Purchaser's
Preferred Number of Commitment Committed
Name of Purchaser Shares Warrants Shares Amount
----------------- ------ -------- ------ ------
Brindlee Capital, LLC 2,500.00 8,500.0000 8,333.3333 $ 250,000
▇▇▇▇▇ Investment Partners, L.P. 529.36 1,799.8240 1,764.5333 $ 52,936
The ▇▇▇▇▇▇ Partnership, Limited Partnership 5,000.00 17,000.0000 16,666.6667 $ 500,000
The ▇▇▇▇▇▇ Partnership (QP), Limited Partnership 15,000.00 51,000.0000 50,000.0000 $ 1,500,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 5,250.00 17,850.0000 17,500.0000 $ 525,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. 2,500.00 8,500.0000 8,333.3333 $ 250,000
CT Communications Northeast, Inc. 12,000.00 40,800.0000 40,000.0000 $ 1,200,000
▇▇▇▇▇ ▇. ▇▇▇▇ 1,000.00 3,400.0000 3,333.3333 $ 100,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 7,500.00 25,500.0000 25,000.0000 $ 750,000
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III 35,485.34 120,650.1560 118,284.4667 $ 3,548,534
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Charitable Remainder Trust 442.09 1,503.1060 1,473.6333 $ 44,209
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ 363.82 1,236.9880 1,212.7333 $ 36,382
1997 Trust FBO ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ 1,265.90 4,304.0600 4,219.6667 $ 126,590
1999 Trust FBO ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ 3,211.20 10,918.0800 10,704.0000 $ 321,120
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 2,500.00 8,500.0000 8,333.3333 $ 250,000
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 4,125.00 14,025.0000 13,750.0000 $ 412,500
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ 15,750.00 53,550.0000 52,500.0000 $ 1,575,000
▇. ▇▇▇▇▇ ▇▇▇▇▇▇ & Co. 2,000.00 6,800.0000 6,666.6667 $ 200,000
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 2,577.29 8,762.7860 8,590.9667 $ 257,729
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 5,000.00 17,000.0000 16,666.6667 $ 500,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,000.00 3,400.0000 3,333.3333 $ 100,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 1,000.00 3,400.0000 3,333.3333 $ 100,000
North State Telephone Company 5,000.00 17,000.0000 16,666.6667 $ 500,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III 5,000.00 17,000.0000 16,666.6667 $ 500,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2,000.00 6,800.0000 6,666.6667 $ 200,000
UBS Warburg LLC 12,000.00 40,800.0000 40,000.0000 $ 1,200,000
------------- --------- ----------- ----------- -----------
TOTALS 150,000.00 510,000 500,000 $15,000,000
4