AMENDMENT NO. 5 TO
THE AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
AMENDMENT NO. 5 dated as of April 30, 1999 to the Amended and Restated
Stockholders Agreement, dated as of October 31, 1997 (as heretofore amended, the
"Stockholders Agreement") among KMC Telecom Holdings, Inc., Nassau Capital
Partners L.P., NAS Partners I L.L.C., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Newcourt Commercial
Finance Corporation (as successor to AT&T Credit Corporation), General Electric
Capital Corporation, First Union National Bank (as successor to CoreStates Bank,
N.A.), CoreStates Holdings, Inc., and ., KMC Telecommunications L.P.
W I T N E S S E T H
WHEREAS, the parties hereto desire to make certain amendments to the
Stockholders Agreement;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein, all capitalized
terms defined in the Stockholders Agreement and used herein are so used as so
defined. In addition, the following terms shall have the meanings set forth
below:
"HYDO II" means the offering and sale of not more than $300,000,000
aggregate principal amount of Senior Notes due 2009 of the Company,
substantially in the manner contemplated by a purchase agreement to be entered
into between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, Credit Suisse
First Boston, First Union Capital Markets, CIBC Oppenheimer, BancBoston
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Inc..
"PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT" means the Preferred
Stock Registration Rights Agreement dated as of April 30, 1999 between the
Company and First Union Investors, Inc.
"PREFERRED STOCK WARRANT AGREEMENT 2" means the Warrant Agreement
dated as of April 30, 1999 among the Company, The Chase Manhattan Bank, as
Warrant Agent and First Union Investors, Inc., which Preferred Stock Warrant
Agreement 2 is being entered into in connection with the execution and delivery
of the Purchase Agreement 2.
"PREFERRED STOCK WARRANT SHARES 2" means shares of Common Stock
issuable upon exercise of Preferred Stock Warrants 2, such other securities as
shall be issuable upon the exercise of Preferred Stock Warrants 2, or shares of
Common Stock or other securities received upon the exercise of Preferred Stock
Warrants 2.
"PREFERRED STOCK WARRANTS 2" means Warrants issued to holders of
Series E Preferred Stock pursuant to the Preferred Stock Warrant Agreement 2,
each such Warrant initially entitling the holder thereof to purchase 0.471756
shares of Common Stock at an exercise price of $.01 per share.
"PURCHASE AGREEMENT 2" means the Securities Purchase Agreement dated
as of April 30, 1999 among the Company and First Union Investors, Inc.
"REGISTRATION RIGHTS AGREEMENT II" means the Registration Rights
Agreement to be entered into between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, Credit Suisse First Boston, First Union Capital Markets, CIBC
Oppenheimer, BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.,
Inc., relating to the granting by the Company of Registration Rights with
respect to the 2009 Senior Notes.
"2009 SENIOR NOTES" means the Senior Notes due 2009 to be issued by
the Company in connection with the HYDO II.
"WARRANT REGISTRATION RIGHTS AGREEMENT 2" means the Warrant
Registration Rights Agreement dated as of April 30, 1999 among the Company and
First Union Investors, Inc., which Warrant Registration Rights Agreement 2 is
being entered into in connection with the execution and delivery of the
Preferred Stock Warrant Agreement 2.
2. AMENDMENTS TO SECTION 5 OF THE STOCKHOLDERS AGREEMENT. Paragraph(a)
of Section 5 of the Stockholders Agreement is amended to read as follows:
PUT RIGHT. (a) Subject to the covenants contained in the
indentures entered into in connection with the Senior Discount Notes and 2009
Senior Notes if no Liquidity Event shall have occurred by the later of October
22, 2003 or 90 days following the final maturity date of debt securities issued
in the HYDO II, then each of Nassau and its Affiliates, AT&T, GECC and
CoreStates shall have the right, at any time thereafter, by giving written
notice to the Company (a "PUT NOTICE"), to require the Company to repurchase (a
"PUT") all or any portion of the shares of Convertible Preferred Stock or Common
Stock held by such Stockholder for an amount (the "PUT AMOUNT") equal to (A) the
fair market value of the shares subject to such Put as determined within 30 days
of each Put Notice by an investment bank of national reputation which is
mutually acceptable to the Company and holders of a majority of the voting power
of Common Stock and Common Stock Equivalents held by all parties exercising Puts
hereunder or (B) in the case of any shares of Convertible Preferred Stock, at
the liquidation preference thereof plus all accrued and unpaid dividends, at the
option of holders thereof; provided that AT&T, GECC and CoreStates shall not
have the right to exercise a Put hereunder unless Nassau or its Affiliates have
exercised a Put; and provided further that the Company may not repurchase any
shares of Convertible Preferred Stock or Common Stock hereunder so long as the
Series E Preferred Stock or the Series F Preferred Stock remain outstanding
unless the holders of the Series E Preferred Stock and the holders of the Series
F Preferred Stock have waived in writing their right to have the Company
repurchase their Series E Preferred Stock and Series F Preferred Stock prior to
the repurchase by the Company of any shares of Convertible Preferred Stock or
Common Stock hereunder. The Company shall give AT&T, GECC and CoreStates prompt
notice of Nassau's intent to exercise a Put. The Company shall give notice to
Nassau and the other Stockholders of any exercise of the Put right under Section
14 of either of the Subsidiary Warrants or hereunder. The Company shall pay to
the party exercising a Put the Put Amount within 60 days of the date of such
determination of fair market value. Any unpaid balance of a Put Amount
thereafter shall bear interest, which interest shall be paid together with any
payment of such Put Amount, at a rate of 18.0% per annum (the "DEFAULT RATE");
provided that accrual of interest at the Default Rate shall not constitute a
waiver of any party exercising a Put hereunder to receive immediate payment of
the Put Amount.
2. AMENDMENTS TO SECTIONS 6.1 AND 6.2 OF THE STOCKHOLDERS AGREEMENT.
Paragraph (g) of Section 6.1 and paragraph (c) of Section 6.2 of the
Stockholders Agreement are amended to read as follows:
6.1 DEMAND REGISTRATIONS.
(g) OTHER REGISTRATION RIGHTS. (i) Within the limitations prescribed
by this paragraph (i), but not otherwise, the Company may grant to subsequent
investors in the Company rights of incidental registration (such as those
provided in Section 6.2). Such rights may only pertain to the Senior Discount
Notes and Warrant Shares, in the case of the HYDEO, Preferred Stock Warrant
Shares, in the case of the Preferred Stock Warrant Agreement, 2009 Senior Notes,
in the case of the HYDO II, and Preferred Stock Warrant Shares 2, in the case of
the Preferred Stock Warrant Agreement 2. Such rights may be granted with respect
to (a) registrations actually requested by a Demand Holder pursuant to Section
6.1, but only in respect of that portion of any such registration as remains
after inclusion of all Registrable Securities requested by the Demand Holder and
(b) registrations initiated by the Company, but only in respect of that portion
of such registration as is available under the limitations set forth in Section
6.2(c) (which limitations shall apply pro rata to all holders of Registrable
Securities) and such rights shall be limited in all cases to sharing in the
available portion of the registration in question with holders of Registrable
Securities and other investors as provided in Section 6.2(c), such sharing to be
based on the number of shares of Common Stock held by the respective holders of
Registrable Securities and held by such other investors, plus the number of
shares of Common Stock into which other securities held by the holders of
Registrable Securities and such other investors are convertible, which are
entitled to registration rights. With respect to registrations which are for
underwritten public offerings, "available portion" as used above shall mean the
portion of the underwritten shares which is available as specified in clauses
(a) and (b) of the third sentence of this paragraph (i). Shares not included in
such underwriting shall not be registered.
(ii) The Company may not grant to subsequent investors in the
Company rights of registration upon request (such as those provided in Section
6.1) unless (a) such rights are limited to shares of Common Stock; (b) the
Demand Holders are given enforceable contractual rights to participate in
registrations requested by such subsequent investors (but subject to the right
of priority of registration in the following order: such subsequent investors
and the holders of Registrable Securities on a pro rata basis), such
participation to be on the pro rata basis and subject to the limitations
described in the final three sentences of paragraph (i) of this Section 6.1(g);
(c) such rights shall not become effective prior to 90 days after the effective
date of the first registration pursuant to Section 6.1; and (d) such rights
shall not be more favorable than those granted to the Demand Holders.
Notwithstanding the foregoing or anything to the contrary contained in this
Agreement, the Company may file shelf registrations under the Securities Act (v)
as required by Section 3 of the Warrant Registration Rights Agreement,
substantially upon the terms and subject to the conditions contained therein,
(w) as required by Section 2(b) of the Registration Rights Agreement,
substantially upon the terms and subject to the conditions contained therein,
(x) as required by Section 3 of the 1999 Warrant Registration Rights Agreement,
substantially upon the terms and subject to the conditions contained therein,
(y) as required by Section 2(b) of the Registration Rights Agreement II,
substantially upon the terms and subject to the conditions contained therein and
(z) as required by Section 3 of the Warrant Registration Rights Agreement 2,
substantially upon the terms and subject to the conditions contained therein.
Notwithstanding the foregoing or anything to the contrary contained in this
Agreement, the Company may grant registration rights to the holders of Series E
Preferred Stock pursuant to the Preferred Stock Registration Rights Agreement as
provided therein.
6.2 PIGGYBACK REGISTRATIONS.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, the Company will
include in such registration all securities requested to be included in such
registration; PROVIDED, that if the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the price, timing or distribution of the offering,
the Company will include in such registration (i) first, the securities the
Company proposes to sell, (ii) second, the Registrable Securities requested to
be included in such registration, pro rata among the holders of such Registrable
Securities on the basis of the number of Registrable Securities owned by each
such holder and requested to be included therein, and (iii) third, other
securities (including Warrant Shares, Preferred Stock Warrant Shares and
Preferred Stock Warrant Shares 2, if any, requested to be included in such
registration (in such relative order of priority among such securities as may be
specified with respect thereto).
4. Except as expressly amended hereby, all of the provisions of the
Stockholders Agreement are hereby affirmed and shall continue in full force and
effect in accordance with their terms.
5. This Amendment shall be governed and construed in accordance with
the laws of the state of Delaware applicable to agreements made and to be
performed entirely within such state, without regard to the principles of
conflicts of laws thereof.
6. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed, or caused to be
executed, this Agreement as of the date first above written.
KMC TELECOM HOLDINGS, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
NASSAU CAPITAL PARTNERS L.P.
By: Nassau Capital L.L.C., its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
NAS PARTNERS I L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________
NEWCOURT COMMERCIAL FINANCE
CORPORATION
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
Title: Vice President
Signature Page to
Amendment No. 5 to the
Amended and Restated
Stockholders Agreement
FIRST UNION NATIONAL BANK
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
CORESTATES HOLDINGS, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Manager-Operating
GENERAL ELECTRIC CAPITAL
CORPORATION
By:/s/ ▇. ▇▇▇▇▇
________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager-Operating
Signature Page to
Amendment No. 5 to the
Amended and Restated
Stockholders Agreement
KMC TELECOMMUNICATIONS L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: General Managing Partner
Signature Page to
Amendment No. 5 to the
Amended and Restated
Stockholders Agreement