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Warrants to Purchase Shares of Common Stock

 

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Title:

Warrants to Purchase Shares of Common Stock

Entities:

e.spire Communications Inc.; First Union National Bank; Goldman Sachs Credit Partners LP; Honeywell International Inc.; Bank of New York; Davis Polk & Wardwell

Date:

2000

Size:

Preview shows 19KB of 104KB total

Price:

$40

ID:

#534495

 

 

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                  e.spire COMMUNICATIONS, INC.Units consisting of

Series A Convertible Preferred Stock
and
Warrants to Purchase Shares of Common Stock

PURCHASE AGREEMENT
March 1, 2000
To: The Huff Alternative Income Fund, L.P.
1776 On The Green
67 Park Place
Morristown, New Jersey 07960


Ladies and Gentlemen:

e.spire COMMUNICATIONS, INC. (the "Company"), a
Delaware corporation, hereby confirms its agreement with THE HUFF
ALTERNATIVE INCOME FUND, L.P. (the "Purchaser"), a Delaware
limited partnership, as set forth below.
1. The Securities. Subject to the terms and
conditions herein contained, the Company hereby agrees to issue
and sell to the Purchaser and the Purchaser hereby agrees to
purchase from the Company up to an aggregate of 100,000 Units
(hereinafter defined) at a price of $1,000 per Unit (or $792.29
per share of Preferred Stock (hereinafter defined) and $207.71
per Warrant (hereinafter defined)) for an aggregate purchase
price of $100 million. Each Unit shall consist of one (1) share
of Series A Convertible Preferred Stock of the Company par value
$1.00 per share (collectively, the "Preferred Stock"), each share
of which Preferred Stock is initially convertible into 126.42225
shares of the common stock, par value $.01 per share (the "Common
Stock") of the Company at a conversion price of $7.91 per share,
subject to adjustment as provided in the Transaction Documents
(hereinafter defined) and one (1) Warrant in the form attached as
Exhibit A hereto (collectively, the "Warrants," and, together
with the Preferred Stock, the "Units"), each of which Warrants is
initially exercisable to purchase 44.1 shares (the "Warrant
Shares") of the Common Stock at an exercise price of $9.89 per
share, subject to adjustment as provided in Section 6(d) and as
provided in the Warrant Agreement (hereinafter defined). The
Preferred Stock shall upon issuance have the rights and
preferences set forth in the Certificate of Designation
("Certificate of Designation") attached hereto as Exhibit B. The
Units, the Preferred Stock and the Warrants are herein
collectively referred to as the "Securities."
The Securities will be offered and sold to the
Purchaser without being registered under the Securities Act of
1933, as amended (the "Act"), in reliance upon one or more
exemptions therefrom.
The Purchaser and the direct and indirect transferees
of the Securities will be entitled to the benefits of (i) the
Registration Rights Agreement substantially in the form attached
hereto as Exhibit C (the "Registration Rights Agreement"), among
the Company, the Purchaser and the other signatories thereto,
which will require the Company, among other things, to file with
the Securities and Exchange Commission (the "Commission") a shelf
registration statement (the "Registration Statement") pursuant to
Rule 415 under the Act relating to the resale of the Preferred
Stock and shares of Common Stock issuable in connection with the
conversion thereof (collectively, the "Conversion Shares" and,
together with the Warrant Shares and the Additional Warrant
Shares (hereinafter defined), the "Additional Securities") and to
use its reasonable best efforts to cause such registration
statement to be declared and remain effective in accordance
therewith and (ii) the Warrant Agreement among the Company, the
Purchaser and other signatories thereto substantially in the form
attached hereto as Exhibit D (the "Warrant Agreement") which will
require the Company, among other things, to file with the
Commission a registration statement (the "Warrant Registration
Statement") pursuant to Rule 415 under the Securities Act
relating to the resale of the Warrants and Warrant Shares and to
use its reasonable best efforts to cause such registration
statement to be declared and remain effective in accordance
therewith.

This purchase agreement (the "Agreement"), the
Certificate of Designation, the Warrant Agreement and related
Warrants and the Registration Rights Agreement are herein
collectively referred to as the "Transaction Documents."
2. Representations and Warranties. The Company
represents and warrants to and agrees with the Purchaser that:

(a) Since January 1, 1999 and to the date of this
Agreement, the Company has filed with the Commission, a Proxy
Statement on Schedule 14A with respect to the Company's 1999
Annual Meeting of Stockholders, the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, the Company's
Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, June 30 and September 30, 1999, respectively, and the
Company's Current Reports on Form 8-K dated February 22, 1999,
July 8, 1999, October 28, 1999, November 1, 1999, December 3,
1999 and February 1, 2000 (including all exhibits to any of such
documents) (collectively the "SEC Reports"), which constitute all
reports, schedules, forms, statements and other documents
required to be filed with the Commission during such period by
the Company. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations of the Commission promulgated
thereunder applicable to the SEC Reports, and none of the SEC
Reports as of such dates contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein, in light of the circumstances under which they
were made, not misleading. Except to the extent that any SEC
Report has been revised or superseded by a later filed SEC
Report, none of the SEC Reports contains any untrue statement of
a material fact or omits to state any material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of
the Company included in the SEC Reports comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect
thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of
the Commission) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and
fairly present in all materials respects the consolidated
financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended
(subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments).

(b) The Company owns all the issued and outstanding capital
stock or other equity interests of each of its direct and
indirect subsidiaries (the "Subsidiaries"). Each of the Company
and the Subsidiaries is duly incorporated or organized, validly
existing and in good standing as a corporation or a limited
liability company, as the case may be, under the laws of its
jurisdiction of incorporation or organization, with all requisite
corporate or limited liability company power and authority to own
or lease its properties and conduct its business as now
conducted, and as proposed to be conducted as described in the
Company's SEC Reports. Except as described on Schedule 2(b)(i),
each of the Company and the Subsidiaries is duly qualified to do
business as a foreign corporation in good standing in the
jurisdiction in which it has its principal place of business and
in all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such
qualification, except where the failure to be so qualified would
not, singly or in the aggregate, have a material adverse effect
on the business, condition (financial or other), assets, nature
of assets, liabilities, operations, prospects or results of
operations of the Company and the Subsidiaries, taken as a whole
(any such event, a "Material Adverse Effect"). Except as
described in the SEC Reports, the Company does not own or
control, directly or indirectly, any material interest in any
other corporation, association, or other business entity.

(c) Except as set forth on Schedule 2(c)(i), the Preferred
Stock, the Warrants, the Conversion Shares, the Warrant Shares,
the Change in Control Warrants (hereinafter defined), any shares
of Common Stock issuable upon exercise of the Change in Control
Warrants (the "Additional Warrant Shares", and the Certificate of
Designation have been duly authorized by the Company. The
Preferred Stock, the Warrants and the Change in Control Warrants,
when issued, sold and delivered in accordance with the terms
hereof and for the consideration expressed herein, and the
Warrant Shares, the Additional Warrant Shares and the Conversion
Shares when issued in accordance with the terms of the Warrants,
the Change in Control Warrants and Preferred Stock, as the case
may be, (i) will be duly and validly issued and, in the case of
the Preferred Stock, the Warrant Shares, the Additional Warrant
Shares and the Conversion Shares, fully paid and nonassessable,
(ii) will be free of any pledges, liens, security interests,
claims, rights or other encumbrances of any kind (other than
under applicable federal and state securities laws),
(iii) assuming the accuracy of the Purchaser's representations
and warranties in this Agreement, will be issued in compliance
with all applicable federal and state securities laws, and
(iv) will not be issued in violation of any preemptive rights of
stockholders. Except as set forth on Schedule 2(c)(ii), the
Preferred Stock, the Warrant Shares, the Additional Warrant
Shares and the Conversion Shares have been duly and validly
reserved for issuance.

(d) The Company has all requisite corporate power and
authority to execute and deliver the Warrant Agreement and the
Registration Rights Agreement; the Warrant Agreement and the
Registration Rights Agreement have been duly authorized by the
Company and, when executed and delivered by the Company (assuming
due authorization, execution and delivery by the parties thereto
other than the Company) will constitute valid and legally
binding agreements of the Company, enforceable against the
Company in accordance with their terms, except that (i) the
enforcement thereof may be subject to (A) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors'
rights generally, (B) general principles of equity and the
discretion of the court before which any proceeding therefor may
be brought and (C) any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws
and public policy considerations.

(e) The Company has all requisite corporate power and
authority to execute and deliver this Agreement, the Warrants and
the Change in Control Warrants, to issue the Warrant Shares and
the Additional Warrant Shares and, subsequent to the filing of
the Certificate of Designation, to issue and deliver the
Preferred Stock and the Conversion Shares, and to consummate the
transactions contemplated hereby. This Agreement and each other
Transaction Document has been duly authorized, and this Agreement
has been and each other Transaction Document has been or as of
the Initial Closing will be duly executed and delivered by the
Company. No consent, approval, authorization or order of any
foreign or domestic national, state, provincial or local
government or any instrumentality, subdivision, court or
governmental agency or body thereof, or any arbitral body (each,
a "Governmental Authority") having jurisdiction over the Company
or the Subsidiaries or their respective businesses (including,
without limitation, the Federal Communications Commission (the
"FCC")) is required for the performance of this Agreement and the
other Transaction Documents by the Company or the consummation by
the Company of the transactions contemplated hereby or thereby,
except for (x) such consents as have been obtained, (y) such
consents as may be required under state securities or "Blue Sky"
laws in connection with the purchase and resale of the Securities
and the Additional Securities by the Purchaser and (z) any
notification as may be required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
or any consent as may be required by the FCC or any state
telecommunications regulatory authorities or commissions ("State
Telecommunications Authorities"), in each such case, as a result
of the Purchaser's conversion of Preferred Stock or exercise of
Warrants or Additional Warrants. Neither the Company nor any of
the Subsidiaries nor their operations is (i) in violation of its
certificate of incorporation or by-laws (or similar
organizational document), (ii) in violation of any statute,
judgment, decree, order, rule or regulation applicable to the
Company or the Subsidiaries, which violation would, individually
or in the aggregate, be reasonably likely to have a Material
Adverse Effect or (iii) other than as disclosed in the Company's
SEC Reports or as otherwise disclosed in Schedule 2(e), in
default in the performance or observance of any obligation,
agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other
agreement or instrument to which the Company or the Subsidiaries
is a party or to which the Company or the Subsidiaries or their
respective assets is subject, which default would, individually
or in the aggregate, be reasonably likely to have a Material
Adverse Effect.

(f) Neither the issuance and sale of the Securities or the
Change in Control Warrants and the Additional Securities, nor the
execution, delivery and performance by the Company of this
Agreement, the Warrant Agreement or the Registration Rights
Agreement or the consummation of the transactions contemplated
hereby and thereby, will (i) conflict with the certificate of
incorporation or by-laws of the Company, as the same will be in
effect as of each Closing, (ii) constitute or result in a breach,
default or violation of (with or without the giving of notice,
passage of time or both), or result in the creation or imposition
of a lien, charge or encumbrance on any properties or assets of
the Company or the Subsidiaries under any of the terms or
provisions of, any indenture, mortgage, deed of trust, loan
agreement, note, lease, license, franchise agreement, or other
agreement or instrument to which the Company is a party or to
which the Company or its respective properties is subject, (iii)
require the consent of any third party or any Governmental
Authorities, and including without limitation as of the Initial
Closing, The NASDAQ Stock Market and any related body ("NASDAQ"),
other than (A) required consents under the Credit Agreement dated
as of August 11, 1999 among the Company, e.spire Finance
Corporation, the Lenders, Goldman Sachs Credit Partners L.P., the
Bank of New York, First Union National Bank and Newcourt
Commercial Finance Corporation (the "Credit Agreement"), (B)
solely with respect to the Securities to be issued and sold at
the Final Closing, the Stockholder Approval (hereinafter
defined)and (C) any required consents of the FCC or any State
Telecommunications Authority as a result of the Purchaser's
conversion of Preferred Stock or exercise of Warrants; or
(iv) (assuming compliance with all applicable state securities
and "Blue Sky" laws, all applicable rules and regulations of the
FCC and State Telecommunications Authorities, and the HSR Act,
and assuming the receipt by the Company of the Stockholder
Approval and assuming the accuracy of the representations and
warranties of the Purchaser in Section 7 hereof) contravene any
statute, judgment, decree, order, rule or regulation of any

 

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