FIBERNET TELECOM GROUP, INC.
COMMON STOCK AND WARRANT
PURCHASE AGREEMENT
NOVEMBER 11, 2002
TABLE OF CONTENTS
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1. Purchase and Sale of Stock............................................. 1
1.1. Sale and Issuance of Common Stock and Warrants................... 1
1.2. Closing.......................................................... 2
2. Representations and Warranties of the Company.......................... 2
2.1. Organization, Good Standing and Qualification.................... 2
2.2. Subsidiaries..................................................... 2
2.3. Capitalization and Voting Rights................................. 3
2.4. Authorization.................................................... 3
2.5. Valid Issuance of Common Stock................................... 4
2.6. No Conflict with Laws or Other Instruments; Governmental Consents 4
2.7. Offering......................................................... 5
2.8. Returns and Complaints........................................... 5
2.9. Litigation....................................................... 5
2.10. Intellectual Property............................................ 5
2.11. Compliance with Laws and Instruments............................. 6
2.12. Environmental Matters............................................ 6
2.13. Business Plan.................................................... 8
2.14. Registration Rights.............................................. 8
2.15. Corporate Documents.............................................. 8
2.16. Title to Property and Assets..................................... 8
2.17. Financial Statements............................................. 8
2.18. Absence of Certain Changes....................................... 9
2.19. Absence of Undisclosed Liabilities............................... 10
2.20. Tax Returns, Payments and Elections.............................. 10
2.21. Brokers.......................................................... 10
2.22. Intentionally Omitted............................................ 11
2.23. Private Placement................................................ 11
3. Representations and Warranties of the Investors........................ 11
3.1. Purchase Entirely for Own Account................................ 11
3.2. Disclosure of Information........................................ 11
3.3. Investment Experience............................................ 12
3.4. Accredited Investor.............................................. 12
3.5. Restricted Securities............................................ 12
3.6. Further Limitations on Disposition............................... 12
4. Conditions of Investor's Obligations at Closing........................ 13
4.1. Representations and Warranties................................... 13
4.2. Performance; Material Adverse Change............................. 13
4.3. Compliance Certificate........................................... 13
4.4. Qualifications................................................... 13
4.5. Proceedings and Documents........................................ 13
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4.6. Opinions of Company Counsel...................................... 14
4.7. Execution and Delivery of Transaction Documents; Issuance of
Warrants and Common Stock........................................ 14
4.8. Eighth Amendment to the Amended and Restated Credit Agreement
and Loan Documents............................................... 14
4.9. Intentionally Omitted............................................ 14
4.10. Secretary's Certificate.......................................... 14
4.11. Consents......................................................... 14
4.12. Exchange of Certain Securities................................... 14
4.13. Final Credit Approval............................................ 15
4.14. Company Indebtedness............................................. 15
4.15. Additional Fundraising........................................... 15
4.16. Waivers by Holders of Existing Warrants.......................... 16
4.17. Material Adverse Change, Suits and Defaults...................... 16
5. Indemnification........................................................ 16
5.1. Indemnification by the Company................................... 16
5.2. Indemnification Procedures....................................... 17
6. Miscellaneous.......................................................... 17
6.1. Survival of Representations and Warranties....................... 18
6.2. Exercise of Warrants............................................. 18
6.3. Successors....................................................... 18
6.4. Governing Law.................................................... 18
6.5. Counterparts..................................................... 18
6.6. Interpretation................................................... 18
6.7. Notices.......................................................... 18
6.8. Finder's Fee..................................................... 20
6.9. Expenses......................................................... 20
6.10. Amendments and Waivers........................................... 20
6.11. Severability..................................................... 21
6.12. Aggregation of Stock............................................. 21
6.13. Entire Agreement................................................. 21
6.14. Publication...................................................... 21
6.15. Confidentiality.................................................. 21
6.16. Exculpation Among Investors...................................... 22
6.17. Register of Securities........................................... 22
6.18. Replacement of Certificates...................................... 22
6.19. Interpretation of "Knowledge."................................... 22
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COMMON STOCK AND WARRANT
PURCHASE AGREEMENT
This Common Stock and Warrant Purchase Agreement (this "Agreement")
is made as of the 11th day of November 2002, by and among FiberNet Telecom
Group, Inc., a Delaware corporation (the "Company"), and the investors listed on
Schedule I hereto (the "Investors").
WHEREAS, pursuant to a Purchase Agreement among the Company and the
Investors dated October 30, 2002 (the "Old Purchase Agreement"), the Investors
purchased from the Company, and the Company sold to the Investors, upon the
terms and subject to the conditions set forth therein, an aggregate of
440,000,000 shares of the Common Stock, par value $0.001 per share (the "Common
Stock"), and warrants of the Company to purchase an aggregate of 110,000,000
shares of Common Stock, for an aggregate purchase price of $66,000,000;
WHEREAS, the Investors wish to purchase from the Company, and the
Company wishes to sell to the Investors, upon the terms and subject to the
conditions set forth herein, an aggregate of 20,000,000 shares of the Common
Stock and warrants of the Company to purchase an aggregate of 20,000,000 shares
of Common Stock, for an aggregate purchase price of $2,000,000;
WHEREAS, in connection with the purchase and sale of Common Stock
and warrants pursuant to this Agreement, the Company and the Investors are
amending and restating the Investor's Rights Agreement, dated October 30, 2002,
between the Company and the Investors (the "Existing Rights Agreement"), and the
Stockholders Agreement, dated October 30, 2002, between the Company and certain
of the Investors (the "Existing Stockholders Agreement");
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Purchase and Sale of Stock.
1.1. Sale and Issuance of Common Stock and Warrants. Upon the
terms and subject to the conditions of this Agreement, each Investor agrees,
severally and not jointly, to purchase at the Closing (as defined below), and
the Company agrees to sell and issue to each Investor at the Closing,
(a) that number of shares of Common Stock set forth opposite such
Investor's name on Schedule I hereto under the heading "Shares
Purchased," and
(b) warrants, in substantially the form attached hereto as Exhibit
A (the "Warrants"), to purchase that number of shares of
Common Stock set forth
opposite such Investor's name on Schedule I under the heading
"Warrants"
for the aggregate purchase price set forth opposite such Investor's name under
the heading "Purchase Price" (as paid by means of the cancellation of accrued
interest on indebtedness, as indicated thereon, the "Purchase Price"). The
Warrants shall have an exercise price equal to $0.12 per share and shall be
immediately exercisable.
1.2. Closing. The purchase and sale of the Common Stock and
Warrants (the "Closing") shall take place at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., on the business day
following the date on which all of the conditions to closing set forth in
Article 4 have been satisfied or waived or at such other time and place as the
Company and the Investors may mutually agree (the "Closing Date"). At the time
of the Closing, the Company shall deliver to each Investor certificates
representing the Common Stock and Warrants that such Investor is purchasing, as
set forth on Schedule I attached hereto, against payment of the Purchase Price
therefor.
2. Representations and Warranties of the Company. As of the date
hereof and as of the Closing Date, the Company hereby represents and warrants to
each Investor that, except as specifically set forth in the Schedule of
Exceptions attached hereto as Schedule II (the "Schedule of Exceptions"), which
exceptions shall be deemed to be representations and warranties as if made
hereunder:
2.1. Organization, Good Standing and Qualification. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to carry on its business as now conducted and as presently
proposed to be conducted. The Company is duly qualified to transact business and
is in good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on the business, condition (financial or
otherwise), projections or results of operations of the Company and its
Subsidiaries (as defined below), taken as a whole (a "Material Adverse Effect").
2.2. Subsidiaries. All of the subsidiaries of the Company
(the "Subsidiaries") are identified in Schedule 2.2 to the Schedule of
Exceptions. The equity interests of each of the Subsidiaries of the Company are
identified in Schedule 2.2 to the Schedule of Exceptions. Each of the
Subsidiaries of the Company identified in Schedule 2.2 to the Schedule of
Exceptions is (i) a corporation or limited liability company duly organized or
formed, validly existing and in good standing under the laws of its respective
jurisdiction of organization set forth therein, has all requisite corporate or
limited liability company power and authority to own and operate its properties
and to carry on its business as now conducted and as proposed to be conducted,
and (ii) is qualified to do business and is in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, except where the failure to be so qualified and in
good standing could not reasonably be expected to have a Material Adverse
Effect. Schedule 2.2 to the Schedule of Exceptions completely and correctly sets
forth the ownership of each Subsidiary of the Company.
2.3. Capitalization and Voting Rights.
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(a) As of the date hereof, the authorized capital of
the Company consists of 2,000,000,000 shares of Common Stock, 716,515,187 shares
of which are issued and outstanding, and no shares of Preferred Stock. All of
the outstanding shares of Common Stock have been duly authorized, validly
issued, fully paid and are nonassessable.
(b) The Company has reserved 16,166,720 shares of
Common Stock for issuance to officers, directors, employees and consultants of
the Company pursuant to its Equity Incentive Plan and certain other stock option
arrangements duly adopted by the board of directors and approved by the
stockholders of the Company (the "Stock Plan"). Of such reserved shares of
Common Stock, options to purchase 13,746,512 shares have been granted and are
currently outstanding, and 2,420,208 shares remain available for issuance to
officers, directors, employees and consultants pursuant to the Stock Plan.
103,452 shares of Common Stock have been issued pursuant to the Equity Incentive
Plan.
(c) Except as set forth on Schedule 2.3(c) to the
Schedule of Exceptions, as of the date hereof, there are no outstanding options,
warrants, rights (including conversion or preemptive rights, rights of first
refusal or similar rights) or agreements, orally or in writing, for the purchase
or acquisition from the Company of any shares of its capital stock or other
securities.
2.4. Authorization. All corporate action on the part of the
Company and the Subsidiaries and their respective officers, directors and
stockholders (or in the case of Devnet, L.L.C., FiberNet Equal Access, L.L.C., a
New York limited liability company ("Equal Access"), and Local Fiber, L.L.C., a
New York limited liability company ("Local Fiber"), its partners and members)
necessary for the authorization, execution and delivery of this Agreement, the
Warrants, the First Amended and Restated Investor's Rights Agreement, attached
hereto as Exhibit B (the "Rights Agreement"), the First Amended and Restated
Stockholders Agreement, attached hereto as Exhibit C, (the "Stockholders
Agreement"),the Eighth Amendment (as defined in Section 4.8), the Old Purchase
Agreement, the Amended and Restated Credit Agreement, dated as of February 9,
2001 (as amended prior to the date hereof, the "Credit Agreement"), and any
documents to be executed in connection with the Credit Agreement (the "Loan
Documents," collectively with this Agreement, the Warrants, the Rights
Agreement, the Credit Agreement, and the Stockholders Agreement, the
"Transaction Documents"), the performance of all obligations of the Company
hereunder and thereunder, and the authorization, issuance, sale and delivery of
the Common Stock and Warrants being sold hereunder and securities issuable upon
exercise of the Warrants has been taken or will be taken prior to the Closing.
Each of the Transaction Documents constitutes or, when executed and delivered,
will constitute, the Company's valid and legally binding obligation, enforceable
against the Company in accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, (b) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies, and (c) to the extent the indemnification
provisions contained in any of the Transaction Documents may be limited by
applicable federal or state securities laws.
2.5. Valid Issuance of Common Stock. The Common Stock that is
being purchased by the Investors hereunder, when issued, sold and delivered in
accordance with
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the terms of this Agreement for the consideration expressed herein, will be duly
and validly issued, fully paid, nonassessable, free of restrictions on transfer
other than restrictions on transfer under the Transaction Documents and under
applicable state and federal securities laws and, assuming the accuracy of each
Investor's representations and warranties set forth in Article 3 of this
Agreement, such Common Stock and the Warrants will have been issued in
compliance with all applicable state and federal securities laws. The securities
issuable upon exercise of the Warrants, upon issuance in accordance with the
terms of the Warrants, will be duly and validly issued, fully paid,
nonassessable, free of restrictions on transfer other than restrictions on
transfer under the Transaction Documents and under applicable state and federal
securities laws and will have been issued in compliance with all applicable
state and federal securities laws. The Company's equity securities outstanding
as of the date of this Agreement have been issued in compliance with all
applicable state and federal securities laws.
2.6. No Conflict with Laws or Other Instruments; Governmental
Consents. The execution, delivery and performance by the Company and its
Subsidiaries of the Transaction Documents to which each is a party and the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents: (a) will not require from the board of directors or
stockholders of the Company or any of the Subsidiaries (or in the case of
Devnet, L.L.C., Equal Access and Local Fiber, its partners or members) any
consent or approval, except such as shall have been obtained prior to the
Closing; (b) will not require any authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality of government,
except such filings as may be required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended ("HSR"), and such other consents and
approvals such as shall have been obtained or made prior to the Closing and
except as could not reasonably be expected to have a Material Adverse Effect;
(c) subject to the accuracy of the Investors' representations and warranties
contained in Article 3 of this Agreement, will not cause the Company or any of
the Subsidiaries to violate or contravene (i) any provision of law presently in
effect, (ii) any rule or regulation presently in effect of any agency or
government, (iii) any order, writ, judgment, injunction, decree, determination
or award presently in effect, or (iv) any provision of its certificate of
incorporation or bylaws or equivalent organizational documents, except, in the
case of clauses (i) and (ii), as could not reasonably be expected to have a
Material Adverse Effect; (d) will not violate or be in conflict with, result in
a breach of or constitute (with or without notice or lapse of time or both) a
default under, or require any consent, approval or authorization under, any
indenture, loan or credit agreement, note agreement, deed of trust, mortgage,
security agreement or other agreement, lease, instrument, commitment or
arrangement to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any of their respective
properties, assets or rights is bound, in each case, that is material to the
Company and its Subsidiaries, taken as a whole; (e) will not result in the
creation or imposition of any lien, encumbrance or other restriction on any of
the properties, assets or rights of the Company or the Subsidiaries (in each
case, other than pursuant to the terms of the Transaction Documents), except as
would not have a Material Adverse Effect; and (f) will not result in the
revocation, impairment, forfeiture or nonrenewal of any Permit (as defined
below), except as would not have a Material Adverse Effect.
2.7. Offering. Subject to the truth and accuracy of each
Investor's representations set forth in Article 3 of this Agreement, the offer,
sale and issuance of the
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Common Stock and Warrants as contemplated by this Agreement and the issuance of
the securities issuable upon exercise of the Warrants are exempt from the
registration requirements of the Securities Act (as defined in Section 2.17),
and neither the Company nor any authorized agent acting on its behalf will take
any action hereafter that would cause the loss of such exemption.
2.8. Returns and Complaints. Except as it would not have a
Material Adverse Effect, none of the Company and its Subsidiaries has received
any written customer complaints concerning its products and/or services.
2.9. Litigation. Except as set forth in Schedule 2.9 of the
Schedule of Exceptions, there are no actions, suits, proceedings, arbitrations
or governmental investigations at law or in equity, or before or by any
arbitrator or governmental instrumentality, domestic or foreign (including any
environmental claims) that are, to the knowledge of the Company, pending or
threatened against or affecting the Company or any of its Subsidiaries or any
property of the Company or any of its Subsidiaries, which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries (i) is in violation of any
applicable legal requirement (including environmental laws) which could
reasonably be expected to have a Material Adverse Effect or (ii) is subject to
or in default with respect to any final judgments, writs, injunctions, decrees,
rules or regulations of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which could reasonably be expected to have a Material
Adverse Effect.
2.10. Intellectual Property. To the knowledge of the Company,
the Company and the Subsidiaries have obtained and hold in full force and effect
the intellectual property, free from burdensome restrictions, which is necessary
for the operation of its business as presently conducted except for that
intellectual property which the failure to own or license could not reasonably
be expected to have a Material Adverse Effect. To the knowledge of the Company,
no product, process, method, substance, part or other material presently sold or
employed by the Company or the Subsidiaries in connection with such business
infringes any intellectual property owned by any other person, except as could
not, individually and in the aggregate, reasonably be expected to have a
Material Adverse Effect. All of the material intellectual property owned or used
by the Company or the Subsidiaries as of the Closing Date is set forth in
Schedule 2.10 to the Schedule of Exceptions.
2.11. Compliance with Laws and Instruments. None of the
Company and the Subsidiaries is in violation or default (a) in any respect of
any provision of its certificate of incorporation or bylaws or its equivalent
organizational documents, or (b) in any material respect of any instrument,
judgment, order, writ, decree, contract or agreement to which it is a party or
by which it is bound, or (c) to the best of the Company's knowledge, of any
provision of any federal or state statute, rule or regulation applicable to the
Company or the Subsidiaries, as the case may be, which could reasonably be
expected to have a Material Adverse Effect.
2.12. Environmental Matters.
(a) The following terms shall be defined as follows:
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(i) "Environmental Laws" shall mean any and all
current or future statutes, ordinances, orders, rules, regulations, guidance
documents, judgments, governmental actions, or any other requirements of
governmental authorities relating to (i) environmental matters, including those
relating to any Hazardous Materials Activity(as defined in 2.12.(a)(ii) below),
(ii) the generation, use, storage, transportation or disposal of hazardous
materials, or (iii) occupational safety and health, industrial hygiene, land use
or the protection of human, plant or animal health or welfare, in any manner
applicable to the Company or the Subsidiaries or any Facility (as defined
below), including the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
Section 136 et seq.), the Occupational Safety and Health Act (29 U.S.C. Section
651 et seq.), the Oil Pollution Act (33 U.S.C. Section 2701 et seq.) and the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. Section 11001 et
seq.), each as amended or supplemented, any analogous present or future state or
local statutes or laws, and any regulations promulgated pursuant to any of the
foregoing.
(ii) "Hazardous Materials Activity" (i) any
chemical, material or substance at any time defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous waste," "acutely hazardous waste," "radioactive waste,"
"biohazardous waste," "pollutant," "toxic pollutant," "contaminant," "restricted
hazardous waste," "infectious waste," "toxic substances," or any other term or
expression intended to define, list or classify substances by reason of
properties harmful to health, safety or the indoor or outdoor environment
(including harmful properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws);
(ii) any oil, petroleum, petroleum fraction or petroleum derived substance;
(iii) any drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (iv) any flammable substances or explosives; (v) any radioactive
materials; (vi) any asbestos-containing materials; (vii) urea formaldehyde foam
insulation; (viii) electrical equipment which contains any oil or dielectric
fluid containing polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could pose a hazard to
the health and safety of the owners, occupants or any persons in the vicinity of
any Facility or to the indoor or outdoor environment.
(iii) "Facilities" shall mean any and all real
property (including all buildings, fixtures or other improvements located
thereon) now, hereafter or heretofore owned, leased, operated or used by the
Company or the Subsidiaries or any of their respective predecessors or
affiliates.
(iv) "Property" shall mean all real property
leased or owned by the Company or any Subsidiary either currently or in the
past, excluding Rights of Way.
Except as set forth in Schedule 2.12 to the Schedule of Exceptions:
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(v) neither the Company nor the Subsidiaries
nor any of their respective Facilities are subject to any outstanding written
order, consent decree or settlement agreement with any person relating to (a)
any Environmental Law or (b) any Hazardous Materials Activity;
(vi) neither the Company nor the Subsidiaries
has received any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
Section 9604) or any comparable state law;
(vii) there are and, to the Company's knowledge,
have been, no conditions, occurrences, or Hazardous Materials Activities on any
Facility which could reasonably be expected to form the basis of an
environmental claim against the Company or the Subsidiaries;
(viii) neither the Company nor the Subsidiaries
nor, to the Company's knowledge, any predecessor of the Company or the
Subsidiaries has filed any notice under any Environmental Law indicating past or
present treatment of Hazardous Materials Activities at any Facility, and neither
the Company's nor the Subsidiaries' operations involves the generation,
transportation, treatment, storage or disposal of hazardous waste, as defined
under 40 C.F.R. Parts 260-270 or any state equivalent; and
(ix) compliance with all current requirements
pursuant to or under Environmental Laws could not, individually or in the
aggregate, reasonably be expected to give rise to a Material Adverse Effect.
Notwithstanding anything in Schedule 2.12 to the Schedule of
Exceptions to the contrary, no event or condition has occurred or is occurring
with respect to the Company or the Subsidiaries relating to any Environmental
Law or any Hazardous Materials Activity, including any matter disclosed on
Schedule 2.12 to the Schedule of Exceptions, which individually or in the
aggregate has had or could reasonably be expected to have a Material Adverse
Effect.
2.13. Business Plan. The business plan as amended,
supplemented and previously delivered to each Investor (the "Business Plan") is
a true and accurate copy of the Business Plan adopted by the Company. With
respect to projections contained in the Business Plan, the Company represents
only that such projections were prepared in good faith and that the Company
reasonably believes there is a reasonable basis for such projections.
2.14. Registration Rights. Except as set forth on Schedule
2.14 to the Schedule of Exceptions, the Company has not granted or agreed to
grant any registration rights, including piggyback rights, to any person or
entity.
2.15. Corporate Documents. Except for amendments necessary to
satisfy representations and warranties or conditions contained herein (the forms
of which amendments have been approved by the Investors), the certificate of
incorporation and the bylaws of the Company are in the form previously provided
to special counsel for the Investors.
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2.16. Title to Property and Assets. Each of the Company and
the Subsidiaries has (i) good marketable and insurable fee simple title to (in
the case of fee interests in real property), (ii) valid leasehold interests in
(in the case of leasehold interests in real or personal property), or (iii) good
title to (in the case of all other personal property), all of their respective
material properties and assets reflected in the financial statements referred to
in Section 2.17 except for assets disposed of since the date of such financial
statements in the ordinary course of business. Except as permitted by this
Agreement and set forth on Schedule 2.16 to the Schedule of Exceptions, all such
properties and assets are held free and clear of liens.
2.17. Financial Statements. The Company has timely filed all
forms, statements and documents (the "SEC Documents") required to be filed by it
with the Securities and Exchange Commission (the "SEC") and The Nasdaq SmallCap
Market since September 30, 2001. All documents required to be filed as exhibits
to the SEC Documents have been so filed, and all material contracts so filed as
exhibits are in full force and effect, except those which have expired in
accordance with their terms, and none of the Company and its Subsidiaries is in
material default thereunder. As of their respective filing dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (collectively, the "Exchange Act"), and the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"). The financial statements of the Company,
including the notes thereto, included in the SEC Documents (the "Company
Financial Statements") complied as to form and substance in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto as of their respective dates,
and were prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The Company
Financial Statements fairly present in all material respects the consolidated
financial condition and operating results of Company and its Subsidiaries at the
dates and during the periods indicated therein (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments). Except as
disclosed in the Company's periodic reports filed with the SEC, there has been
no change in Company accounting policies since September 30, 2001. Except as set
forth in the Company Financial Statements, the Company and its Subsidiaries have
no material liabilities, contingent or otherwise, other than (a) liabilities
incurred in the ordinary course of business subsequent to September 30, 2001 and
(b) obligations under contracts and commitments incurred in the ordinary course
of business and not required under GAAP to be reflected in the Company Financial
Statements, which, in both cases, individually or in the aggregate, would not
have a Material Adverse Effect. Except as disclosed in the Company Financial
Statements, none of the Company and the Subsidiaries is a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
2.18. Absence of Certain Changes. From December 31, 2001 (the
"Company Balance Sheet Date") to the date of this Agreement, the Company and its
Subsidiaries have conducted their businesses in the ordinary course consistent
with past practice and, except as disclosed in the Company's periodic reports
filed with the SEC, there has not occurred: (a) any change, event or condition
(whether or not covered by insurance) that has resulted in, or might reasonably
be expected to result in, a Material Adverse Effect; (b) any acquisition, sale
or
8
transfer of any material asset of the Company or any of its Subsidiaries other
than in the ordinary course of business and consistent with past practice; (c)
any change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by the Company or any
revaluation by the Company of any of its or any of its Subsidiaries' assets; (d)
any declaration, setting aside, or payment of a dividend or other distribution
with respect to the shares of the Company or any Subsidiary, or any direct or
indirect redemption, purchase or other acquisition by the Company or any
Subsidiary of any of its shares of capital stock; (e) except as set forth on
Schedule 2.18 to the Schedule of Exceptions, the entering into of any material
contract or any material amendment by the Company or any Subsidiary, other than
in the ordinary course of business and as provided to the Investors; (f) any
termination of, or default under, any material contract to which Company or any
Subsidiary is a party or by which it is bound; (g) any amendment or change to
the certificate of incorporation or bylaws or equivalent organizational
documents of the Company or any Subsidiary; (h) any material change in any
compensation arrangement or agreement with any employee of the Company or any
Subsidiary; (i) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted and as it is proposed to be conducted) and its
Subsidiaries, taken as a whole; (j) any waiver by the Company or any Subsidiary
of a valuable right or of a material debt owed to it; (k) any satisfaction or
discharge of any lien, claim or encumbrance, or payment of any obligation by the
Company or any Subsidiary, except in the ordinary course of business and that is
not material to the assets, properties, financial condition, operating results
or business of the Company (as such business is presently conducted and as it is
proposed to be conducted); (l) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets; (m) any
mortgage, pledge, transfer of a security interest in, or lien, created by the
Company or any Subsidiary, with respect to any of its material properties or
assets, except for Permitted Liens (as defined in the Credit Agreement); or (n)
any agreement or commitment by the Company or any Subsidiary to do any of the
things described in this Section 2.18.
2.19. Absence of Undisclosed Liabilities.
The Company has no material obligations or liabilities of any nature
(matured or unmatured, fixed or contingent) other than (a) those set forth or
adequately provided for in the consolidated balance sheet and the notes thereto
as of December 31, 2001 (the "Company Balance Sheet Date") included in the
Company Financial Statements (the "Company Balance Sheet"), (b) those incurred
in the ordinary course of business and not required to be set forth in the
Company Balance Sheet under GAAP, (c) those incurred in the ordinary course of
business since the Company Balance Sheet Date and not reasonably likely to have
a Material Adverse Effect; (d) those incurred in connection with the execution
of the Transaction Documents, and (e) those disclosed in the Company's periodic
reports filed with the SEC.
2.20. Tax Returns, Payments and Elections. All tax returns and
reports of the Company and the Subsidiaries required to be filed by any such
member have been timely filed, and all taxes required to be paid with respect to
such tax returns to be due and payable and all material assessments, fees and
other governmental charges upon the Company and the Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. The Company does not know
9
of any proposed tax assessment against the Company or the Subsidiaries which
could reasonably be expected to have a Material Adverse Effect that is not being
actively contested by the Company and the Subsidiaries in good faith and by
appropriate proceedings and for which reserves or other appropriate provisions,
if any, as shall be required in conformity with GAAP shall not have been made or
provided therefor.
2.21. Brokers. None of the Company and its Subsidiaries has
any contract, arrangement or understanding with any broker, finder or similar
agent with respect to the transactions contemplated by this Agreement.
2.22. Intentionally Omitted.
2.23. Private Placement. No form of general solicitation or
general advertising (as defined in Regulation D under the Securities Act) was
used by the Company or any of its respective representatives (other than the
Investors, as to whom the Company makes no representation) in connection with
the offer and sale of the Common Stock and Warrants hereby, including, but not
limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. Except as set forth on Schedule 2.23 to the
Schedule of Exceptions, no securities of the same class as the Common Stock or
Warrants have been issued and sold by the Company within the six-month period
immediately prior to the date hereof.
3. Representations and Warranties of the Investors. Each Investor
hereby represents and warrants that:
3.1. Purchase Entirely for Own Account. This Agreement is
made by the Company with such Investor in reliance upon such Investor's
representation to the Company, which by such Investor's execution of this
Agreement such Investor hereby confirms, that the Common Stock and Warrants to
be received by such Investor pursuant to this Agreement (collectively, the
"Securities") will be acquired for investment for such Investor's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that such Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same, except in
compliance with applicable federal or state securities laws. By executing this
Agreement, such Investor further represents that such Investor does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Securities.
3.2. Disclosure of Information. Such Investor believes it has
received all the information it considers necessary and appropriate for deciding
whether to purchase the Securities. Such Investor further represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Common Stock and
Warrants and the business, properties, prospects and financial condition of the
Company. The foregoing, however, does not limit or modify the representations
and warranties of the Company in this Agreement or the right of the Investors to
rely thereon.
10
3.3. Investment Experience. Such Investor can bear the
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of its investment in the Common Stock and Warrants. If other than an
individual, Investor also represents that it has not been organized for the
purpose of acquiring the Securities.
3.4. Accredited Investor. Such Investor is an "accredited
investor" within the meaning of SEC Rule 501 of Regulation D, as presently in
effect.
3.5. Restricted Securities. Such Investor understands that
the Securities it is purchasing are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under such
laws and applicable regulations such Securities may not be resold without
registration under the Securities Act, except in certain limited circumstances.
In this connection, such Investor represents that it is familiar with SEC Rule
144, as presently in effect, and understands the resale limitations imposed
thereby and by the Act.
3.6. Further Limitations on Disposition. Without in any way
limiting the representations set forth above, such Investor further agrees not
to make any disposition of all or any portion of the Securities unless and until
either,
(a) there is then in effect a Registration Statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with such Registration Statement; or
(b) (i) such Investor shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company an opinion of counsel, in form and substance reasonably satisfactory to
the Company, that such disposition will not require registration of such shares
under the Act, and (iii) the transferee has agreed in writing to be bound by
this Article 3, the Rights Agreement and the Stockholders Agreement (with
respect to the Stockholders Agreement and the Rights Agreement to the extent
that the transferor was so bound). It is agreed that the Company will not
require opinions of counsel pursuant to this Section 3.6(b) for transactions
made pursuant to Rule 144, provided that it receives appropriate representations
from the seller with regard to compliance with Rule 144, except in unusual
circumstances.
Notwithstanding the provisions of paragraphs (a) and (b) above, no
such registration statement or opinion of counsel shall be required by the
Company for (i) a transfer to a Permitted Transferee (as defined in the Rights
Agreement), or (ii) a transfer by an Investor to any entity directly or
indirectly controlled by or controlling the Investor.
4. Conditions of Investor's Obligations at Closing. The
obligations of each Investor under Section 1.1 of this Agreement are subject to
the fulfillment on or before the Closing Date of each of the following
conditions, the waiver of which shall not be effective against any Investor who
does not consent in writing thereto:
11
4.1. Representations and Warranties. The representations and
warranties of the Company contained in Article 2 shall be true in all material
respects (except for such representations and warranties that are qualified by
their terms by a reference to materiality, which representation and warranties
as so qualified shall be true and correct in all respects) on and as of the
Closing Date as though such representations and warranties had been made on and
as of the Closing Date.
4.2. Performance; Material Adverse Change. The Company shall
have performed and complied in all material respects with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing Date. There shall not
have occurred a Material Adverse Effect.
4.3. Compliance Certificate. The Chief Executive Officer or
the Chief Financial Officer of the Company shall deliver to each Investor at the
Closing a certificate on behalf of the Company stating that the conditions
specified in Sections 4.1 and 4.2 of this Agreement have been fulfilled.
4.4. Qualifications. All authorizations, approvals, waivers,
consents or permits, if any, of any governmental authority or regulatory body of
the United States or of any state or self regulatory agency that are required in
connection with the lawful issuance and sale of the Securities pursuant to this
Agreement, including such as may be required under the Securities Act, under
state Blue Sky laws and under HSR, shall have been duly obtained by and
effective as of the Closing.
4.5. Proceedings and Documents. Receipt of all governmental,
shareholder and third party consents and approvals necessary in connection with
the issuance of the Common Stock and Warrants hereunder, and the related
financings and other transactions contemplated hereby and expiration of all
applicable waiting periods without any action being taken by any competent
authority that could restrain, prevent or impose any materially adverse
conditions on the issuance of the Common Stock and Warrants hereunder and no
such law or regulation shall be applicable which in the reasonable judgment of
the Administrative Agent under the Credit Agreement could reasonably be expected
to have any such effect.
4.6. Opinions of Company Counsel. Each Investor shall have
received from outside counsel for the Company, an opinion, dated as of the
Closing Date, in substantially the form attached hereto as Exhibit D.
4.7. Execution and Delivery of Transaction Documents;
Issuance of Warrants and Common Stock. Each Investor shall have received a duly
executed copy of each Transaction Document executed by each other party thereto,
and the Company shall have issued and delivered to each Investor certificates
representing the shares of Common Stock and Warrants acquired by such Investor
pursuant to this Agreement.
4.8. Eighth Amendment to the Amended and Restated Credit
Agreement and Loan Documents. Each of the Borrowers (as defined in the Credit
Agreement) and the Lenders (as defined in the Credit Agreement) shall have
entered into the Eighth Amendment to the Amended and Restated Credit Agreement
in substantially the form attached
12
as Exhibit E (the "Eighth Amendment"), and any Loan Documents to which it is a
party, in each case, with such changes as the authorized officers of the parties
thereto shall have approved. Consents to the approval of the Credit Agreement
and the Loan Documents shall have been executed and delivered by each lender
whose consent is required under the terms of the Credit Agreement.
4.9. Intentionally Omitted.
4.10. Secretary's Certificate. The Company shall have
delivered to the Company a certificate issued by the Secretary of the Company
certifying as to the Company's certificate of incorporation and bylaws and
resolutions and/or consents of the Company's board of directors and
stockholders.
4.11. Consents. The Company shall have delivered to the
Investors satisfactory evidence of the consent, approval or waiver of those
parties whose consent, approval or waiver shall be necessary or advisable in
connection with the execution of any Transaction Document and the performance of
obligations thereunder, including pursuant to the contracts set forth on
Schedule 2.6 to the Schedule of Exceptions.
4.12. Exchange of Certain Securities. The Company shall have
consummated the transactions contemplated by each of the Nortel Note Exchange
Agreement, the SDS Note Exchange Agreement, the Series H Share Exchange
Agreement, and the Series J Share Exchange Agreement, including the conversion
of the entire aggregate principal amount, all accrued and unpaid interest
thereon and all other amounts payable in respect of the Promissory Note of the
Company to Nortel Networks Inc. ("Nortel"), dated December 7, 2001 (the "Nortel
Note"), into 9,002,040 shares of Common Stock.
For purposes of this Agreement, the "Nortel Note Exchange Agreement"
means the Note Exchange Agreement, dated as of October 30, 2002, by and between
the Company and SDS Merchant Fund, L.P. as in effect on the date hereof,
pursuant to which the promissory note issued by the Company to Nortel Networks
Inc on December 7, 2001, will be surrendered to the Company in exchange for
9,002,040 shares of Common Stock; the "SDS Note Exchange Agreement" means the
Note Exchange Agreement, dated as of November 8, 2002, by and between the
Company and SDS Merchant Fund, L.P. as in effect on the date hereof, providing
for the conversion of the entire aggregate principal amount, all accrued and
unpaid interest thereon and all other amounts payable in respect of the
promissory note issued by the Company to SDS Merchant Fund, L.P. in March 14,
2002 in an initial principal amount of $2,000,000; the "Series H Share Exchange
Agreement" means the Share Exchange Agreement, dated as of October 30, 2002, by
and among the Company and each of the purchasers whose names appear on the
signature pages thereto, pursuant to which the Company will issue approximately
104,581,425 shares of Common Stock in exchange for all of its issued and
outstanding shares of Series H Preferred Stock; and the "Series J Share Exchange
Agreement" means the Series J-1 Share Exchange Agreement, dated as of October
30, 2002, by and among the Company and each of the purchasers whose names appear
on the signature pages thereto, pursuant to which the Company will issue
60,600,000 shares of Common Stock in exchange for all of its issued and
outstanding shares of Series J-1 Preferred Stock.
13
4.13. Final Credit Approval. Each of the Investors and each
affiliate of the investors shall have received final credit approval to enter
into this Agreement and the documents contemplated by this Agreement (including
the Credit Agreement and the Eighth Amendment) and perform each of its
obligations under each such agreement.
4.14. Company Indebtedness. The Company shall have (a) no
indebtedness other than (1) $41 million of loans under the Credit Agreement, (2)
$700,000 of capital lease obligations, and (3) $2,080,000 of indebtedness
outstanding under the Promissory Note of the Company to SDS Merchant Fund, L.P.,
dated March 14, 2002, and (b) only one class of capital stock outstanding, which
shall be the Common Stock.
4.15. Additional Fundraising. The receipt by the Company of at
least $3.3 million of net proceeds from the issuance of additional Common Stock
and Warrants of the same class and series as, and otherwise identical to, the
Common Stock and Warrants issued hereunder on terms satisfactory to the
Investors (the "Required Equity"). The Company shall not utilize the proceeds of
the Required Equity to fund the purchase of securities held by Nortel (including
the Nortel Note and the Company's Series H Preferred Stock).
4.16. Waivers by Holders of Existing Warrants. The Company
shall have obtained waivers from holders of its warrants outstanding immediately
prior to the Closing Date (the "Pre-Existing Warrants") as required to provide
that the number of shares of Common Stock acquirable under the terms thereof
shall not increase as a result of the transactions contemplated by this
Agreement, the Nortel Note Exchange Agreement, the SDS Note Exchange Agreement,
the Series H Share Exchange Agreement and the Series J Share Exchange Agreement.
4.17. Material Adverse Change, Suits and Defaults. There shall
have occurred no material adverse change in the business, assets, condition
(financial or otherwise), operations, performance, properties, prospects or
projections of the Company since the end of the most recently ended fiscal year
for which audited financial statements have been provided to the Investors or in
the facts and information as represented to date.
There shall exist no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental instrumentality that purports to materially and adversely affect
the issuance of the Common Stock or Warrants hereunder or that could reasonably
be expected to have a Material Adverse Effect.
There shall exist no default under the Transaction Documents or
event that, with notice and/or the passage of time, could become an event of
default.
There shall exist no facts, events or circumstances which come to
the attention of any Investor, which, in its good faith determination,
materially adversely affect the business, assets, condition (financial or
otherwise), operations, performance, properties prospects and projections of the
Company.
5. Indemnification.
14
5.1. Indemnification by the Company. Subject to the provisions of
this Article 5, the Company agrees to indemnify the Investors and their
respective officers, partners, employees, agents or representatives
(collectively, "Investor-indemnified parties") against and to hold each
Investor-indemnified party harmless from any and all damages, losses,
liabilities and expenses (including reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, claim,
suit or proceeding) (collectively, "Damages") incurred or suffered by any
Investor-indemnified party arising from or in connection with (a) any inaccuracy
in any representation or the breach of any warranty of the Company or any
Subsidiary under a Transaction Document, (b) the failure of the Company or any
Subsidiary duly to perform or observe any term, provision, covenant or agreement
to be performed or observed by the Company or any Subsidiary pursuant to this
Agreement or the Warrants, (c) the assertion by any person not a party to this
Agreement of any claim against an Investor-indemnified Party in connection with
the matters or transactions that are the subject of or contemplated by this
Agreement or any of the other Transaction Documents, or (d) the status of any
Investor-indemnified Party as a holder of equity interests in the Company or the
existence or exercise of the rights and powers of such Investor-indemnified
Party relating thereto.
5.2. Indemnification Procedures.
(a) If the indemnified parties shall seek indemnification
pursuant to this Article 5, the indemnified parties shall give prompt notice to
the Company (as such, the "indemnifying party") of the assertion of any claim,
or the commencement of any action, suit or proceeding, in respect of which
indemnity may be sought hereunder and will give the indemnifying party such
information with respect thereto as the indemnifying party may reasonably
request, but no failure to give such notice shall relieve the indemnifying party
of any liability hereunder, except to the extent of actual prejudice or damages
suffered as a result thereof. The indemnifying party may, at its expense,
participate in or assume the defense of any such action, suit or proceeding
involving a third party with counsel reasonably acceptable to the indemnified
party. The indemnified party will have the right to employ its counsel in any
such action, but the fees and expenses of such counsel will be at the expense of
such indemnified party unless (i) the employment of counsel by the indemnified
party has been authorized in writing by the indemnifying party, (ii) named
parties include both the indemnified party and the indemnifying party, and such
counsel has advised the indemnified party that there may be legal defenses
available to it that are different from or in addition to those available to the
indemnifying party (in which case the indemnifying party will not have the right
to direct the defense of such action on behalf of the indemnified party) or
(iii) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees and
expenses of counsel will be at the expense of the indemnifying party, and the
indemnifying party shall reimburse or pay such fees and expenses as they are
incurred. Whether or not the indemnifying party chooses to defend or prosecute
any claim involving a third party, all the parties hereto shall cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith.
(b) The indemnifying party shall not be liable under this
Article 5 for any settlement effected without its consent of any claim,
litigation or proceedings
15
by a third party in respect of which indemnity may be sought hereunder, unless
the indemnifying party refuses to acknowledge liability for indemnification
under this Section 5.2 and/or declines to defend the indemnified party in such
claim, litigation or proceeding.
6. Miscellaneous.
6.1. Survival of Representations and Warranties. Except as
otherwise set forth in this Section 6.1, the representations and warranties of
the Company and the Subsidiaries shall survive any investigation at any time
made by or on behalf of the parties hereto and consummation of the transactions
contemplated by this Agreement.
6.2. Exercise of Warrants. The Company shall use its
reasonable best efforts to cause by February 1, 2003, each holder of its
Pre-Existing Warrants to agree that, upon the request of the Company, such
holder will agree to the repricing of the exercise price of such securities to
$0.001 per share of Common Stock and that immediately following such repricing,
such holder will exercise such securities.
6.3. Successors. This Agreement shall bind and inure to the
benefit of the respective successors and permitted assigns of each of the
parties under the Stockholders Agreement and hereunder.
6.4. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of New York, without regard to the
principles of conflicts of law thereof.
6.5. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.6. Interpretation. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement. When used in this Agreement, the
terms "include," "including," "includes" and other derivations of such word
shall be deemed to be followed by the phrase "without limitation."
6.7. Notices. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified; (b) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not, then on
the next business day; (c) 5 days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (d) 1 day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the address as set forth below or at such other address as such party may
designate by 10 days advance written notice to the other parties hereto:
(i) if to the Company, to:
FiberNet Telecom Group, Inc.
16
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Investors, to:
Deutsche Bank AG New York Branch
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Wachovia Investors, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Bank One, N.A.
55 West Monroe, 17th floor
Mail Code ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ IL 60670-0502
IBM Credit Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Manager, Special Handling
Nortel Networks Inc.
MS 991-15-A40
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Customer Finance
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Toronto Dominion (Texas), Inc.
17
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, Vice President
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
6.8. Finder's Fee. Except as disclosed in the Schedule of
Exceptions, each party represents that it neither is nor will be obligated for
any finders' fee or commission in connection with this transaction. Each party
agrees to indemnify and to hold harmless from any liability for any commission
or compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which such party or
any of its officers, partners, employees, or representatives is responsible,
each other party and such other party's officers, partners, employees or
representatives.
6.9. Expenses. Irrespective of whether the Closing is
effected, the Company shall pay all costs and expenses incurred by it, its
affiliates and the Investors with respect to the negotiation, execution,
delivery and performance of this Agreement, including the reasonable fees and
expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Investors.
6.10. Amendments and Waivers. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
more than 75% of the Common Stock (on a fully-diluted basis) issued or issuable
hereunder. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any Securities purchased under this
Agreement at the time outstanding (including Securities into which such
Securities are convertible), each future holder of all such Securities, and the
Company. Notwithstanding the foregoing, if in any particular instance a party's
obligations or rights under this Agreement are adversely affected thereby in a
disproportionately adverse manner from that in which other parties are affected
by application of this Section, the consent of such party shall also be required
in such instance.
6.11. Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
6.12. Aggregation of Stock. All shares of the Common Stock and
all Warrants held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.
18
6.13. Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement among the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.
6.14. Publication. No party hereto shall use any other party's
name or refer to any other party directly or indirectly in any advertisement,
news release or professional or trade publication, or in any other manner,
unless otherwise required by law or with such party's prior written consent, or
pursuant to this Section 6.14. None of the parties to any of the Transaction
Documents shall issue any press release or other public statement relating to
this Agreement or the transactions contemplated hereby unless advised by counsel
that such disclosure is required by law and, in any case, without first giving
the other parties the opportunity to review and comment upon such statement
unless not reasonably practicable under the circumstances.
6.15. Confidentiality. Each party hereto agrees that, except
with the prior written permission of the other parties, or as permitted by
Section 6.14 of this Agreement, it shall at all times keep confidential and not
divulge, furnish or make accessible to anyone any confidential information,
knowledge or data concerning or relating to the business or financial affairs of
the other parties to which such party has been or shall become privy by reason
of this Agreement, discussions or negotiations relating to this Agreement, the
performance of its obligations hereunder or the ownership of Common Stock and
Warrants purchased hereunder. In addition, the Company agrees it will not
disclose, and will not include in any public announcement, the name of the
Investors, unless expressly agreed to by the Investors or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement. The provisions of this Section 6.15 shall be in
addition to, and not in substitution for, the provisions of any separate
nondisclosure agreement executed by the parties hereto with respect to the
transactions contemplated hereby.
6.16. Exculpation Among Investors. Each Investor acknowledges
that it is not relying upon any person, firm or corporation, other than the
Company and its officers and directors, in making its investment or decision to
invest in the Company. Each Investor agrees that no Investor nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Investor shall be liable to any other Investor for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
purchase of the Securities.
6.17. Register of Securities. The Company or its duly
appointed agent shall maintain a separate register for the shares of Common
Stock in which it shall register the issue and sale of all such shares. All
transfers of securities shall be recorded on the register. The Company shall be
entitled to regard the registered holder of its securities as the holder of such
securities so registered for all purposes until the Company or its agent is
required to record a transfer of such securities on its register. The Company or
its agent shall be required to record a transfer when it receives the security
to be transferred duly and properly endorsed by the registered holder thereof or
by its attorney duly authorized in writing.
19
6.18. Replacement of Certificates. Upon receipt of a lost
instrument certificate with indemnity provisions reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of any certificate
representing any Company securities, the Company shall issue a new certificate
representing such securities in lieu of such lost, stolen, destroyed or
mutilated certificate.
6.19. Interpretation of "Knowledge." Statements herein that
are qualified as to the "knowledge of the Company" or similar statements shall
mean the actual knowledge of the executive officers of the Company, after
reasonable inquiry; provided that any statement qualified as to the "actual
knowledge" of the Company shall mean the actual knowledge of the executive
officers of the Company, without inquiry.
20
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
FIBERNET TELECOM GROUP, INC.
By:
-------------------------------------
Name:
Title:
DEUTSCHE BANK AG NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
WACHOVIA INVESTORS, INC.
By:
-------------------------------------
Name:
Title:
BANK ONE, N.A.
By:
-------------------------------------
Name:
Title:
IBM CREDIT CORPORATION
By:
-------------------------------------
Name:
Title:
NORTEL NETWORKS INC.
By:
-------------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC.
By:
-------------------------------------
Name:
Title:
SCHEDULE I
SHARES PURCHASE
NAME OF INVESTOR PURCHASED WARRANTS PRICE(1)
---------------- --------- --------- -------------
Deutsche Bank AG New York 5,476,190 5,476,190 $ 547,619.05
Branch
Wachovia Investors, Inc. 5,000,000 5,000,000 $ 500,000.00
Bank One, N.A 1,904,762 1,904,762 $ 190,476.19
IBM Credit Corporation 1,904,762 1,904,762 $ 190,476.19
Nortel Networks Inc. 2,857,143 2,857,143 $ 285,714.29
Toronto Dominion (Texas), Inc. 2,857,143 2,857,143 $ 285,714.29
TOTAL 20,000,000 20,000,000 $2,000,000.00
(1) To be paid by means of the conversion of $2,000,000 of accrued interest on
indebtedness due under the Company's Amended and Restated Credit Agreement,
dated as of February 9, 2001 (as amended, supplemented, amended and restated or
otherwise modified from time to time prior to the date hereof), among FiberNet
Operations, Inc., Devnet, L.L.C., the financial institutions from time to time
parties thereto as lenders, Deutsche Bank AG New York Branch, as administrative
agent, Toronto Dominion (USA) Securities Inc., as syndication agent, and
Wachovia Investors, Inc., as documentation agent.
SCHEDULE II
SCHEDULE OF EXCEPTIONS
EXHIBIT A
FORM OF WARRANT
EXHIBIT B
RIGHTS AGREEMENT
EXHIBIT C
STOCKHOLDERS AGREEMENT
EXHIBIT D
FORM OF OPINION
EXHIBIT E
EIGHTH AMENDMENT