UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Xpedior Incorporated
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
98413B 10 0
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(CUSIP Number)
Kathleen B. Horne, Esq. With a copy to:
Senior Vice President and General Counsel Richard F. Langan, Jr., Esq.
PSINet Inc. Nixon Peabody LLP
44983 Knoll Square 437 Madison Avenue
Ashburn, Virginia 20147 New York, New York 10022
(703) 726-4100 (212) 940-3140
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 15, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
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CUSIP No. 98413B 10 0 Page 2 of 9
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PSINet Inc.
16-1353600
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC with respect to 1,333,333 shares (See Item 3)
OO with respect to 40,005,048 shares (See Item 3)
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of New York
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7 SOLE VOTING POWER
NUMBER OF 1,333,333 (See Item 6)
SHARES -----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 40,005,048 (See Item 6)
EACH -----------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 1,333,333 (See Item 6)
WITH -----------------------------------------------
10 SHARED DISPOSITIVE POWER
40,005,048 (See Item 6)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
41,338,381 (See Item 6)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
80.5%
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14 TYPE OF REPORTING PERSON*
CO
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<PAGE>
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CUSIP No. 98413B 10 0 Page 3 of 9
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PSINet Consulting Solutions, Inc.
76-0556713
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
OO
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
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7 SOLE VOTING POWER
NUMBER O 0
SHARES -----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 40,005,048 (See Item 6)
EACH -----------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH -----------------------------------------------
10 SHARED DISPOSITIVE POWER
40,005,048 (See Item 6)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
40,005,048 (See Item 6)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
80.0%
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14 TYPE OF REPORTING PERSON*
CO
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<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to shares of the common stock, par value
$0.01 per share (the "Common Stock"), of Xpedior Incorporated, a Delaware
corporation (the "Issuer"). This Schedule 13D is being filed due to the recent
acquisition (as described in Item 3) of shares of Common Stock and of a
Convertible Note (the "Convertible Note") which will automatically convert into
shares of the Issuer's Series A 8 1/2% Cumulative Convertible Preferred Stock,
par value $0.01 per share (the "Preferred Stock"), which Preferred Stock is
convertible into shares of Common Stock at any time at the option of the holder
thereof.
The Issuer's principal executive offices are located at One North
Franklin, Suite 1500, Chicago, Illinois 60606.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13D is being filed by PSINet Inc. ("PSINet") and PSINet
Consulting Solutions, Inc., a wholly owned subsidiary of PSINet ("PCS").
PSINet is organized as a corporation under the laws of the State of New
York, and its principal business address is 44983 Knoll Square, Ashburn,
Virginia 20147. PSINet is a leading global provider of Internet and eCommerce
solutions to businesses. The names, business addresses, principal occupations
and citizenship of the directors and executive officers of PSINet are set forth
in Schedule A hereto and are incorporated herein by reference.
PCS, formerly known as Metamor Worldwide, Inc., is organized as a
corporation under the laws of the State of Delaware, and its principal business
address is 4400 Post Oak Parkway, Suite 1100, Houston, Texas 77027. PCS is a
leading provider of information technology solutions with broad and diverse
service offerings. The names, business addresses, principal occupations and
citizenship of the directors and executive officers of PCS are set forth in
Schedule B hereto and are incorporated herein by reference.
None of PSINet, PCS and their respective directors and executive
officers has, during the last five years, been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which he, she or it was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Prior to December 1999, the Issuer was a wholly owned subsidiary of
PCS. In December 1999, the Issuer filed a Registration Statement on Form S-1
with respect to 9,815,250 shares of its Common Stock and became subject to the
reporting requirements of the Act. At the time of such registration, PCS owned
40,005,048 shares of the Issuer's Common Stock. PCS continues to hold such
shares today, which shares represent 80.0% of the total number of shares of
Common Stock outstanding as of June 1, 2000.
On March 21, 2000, PSINet, PCS and PSINet Shelf IV, Inc., a Delaware
corporation that was then a wholly owned subsidiary of PSINet ("PSINet Shelf"),
entered into an Agreement and Plan of Merger (the "Merger Agreement"). On June
15, 2000, pursuant to the Merger Agreement, PSINet Shelf was merged with and
into PCS (the "Merger") and the former shareholders of PCS received 0.9 shares
of common stock, par value $0.01 per share, of PSINet, in exchange for each
share of common stock, par value $0.01 per share, of PCS held by them on the
applicable record date. As a result of the Merger, PCS became a wholly owned
subsidiary of PSINet and PSINet became an indirect holder of the shares of the
Issuer's Common Stock held by PCS. A copy of the Merger Agreement is filed
herewith as Exhibit 1.
Page 4 of 9
<PAGE>
On June 15, 2000, PSINet and the Issuer entered into a Purchase
Agreement (the "Purchase Agreement") pursuant to which the Issuer sold to
PSINet, in consideration for $50,000,000, the Convertible Note. The Convertible
Note will automatically convert into an aggregate of 1,000,000 shares of the
Issuer's Preferred Stock on the twentieth day following the delivery by the
Issuer of an Information Statement to the Issuer's stockholders (provided such
day is not later than August 15, 2000, in which case the Convertible Note will
become immediately due and payable in full for cash). Such Preferred Stock is
convertible at any time, at the option of the holder thereof, into an aggregate
of 1,333,333 shares of the Issuer's Common Stock (subject to anti-dilution
protection in the event of stock splits, stock dividends, recapitalizations,
below-market share issuances and similar events). PSINet is therefore deemed to
be the sole beneficial owner of 1,333,333 shares of the Issuer's Common Stock
which it has the right to acquire within 60 days of the date hereof. Pursuant to
the form of the Certificate of Designations that will govern the terms of the
Preferred Stock (the "Certificate of Designations"), PSINet has the right to
elect two new members of the Issuer's Board of Directors if at any time the
Issuer is in default on six quarterly dividend payments. The Issuer also granted
PSINet certain registration rights pursuant to a Registration Rights Agreement,
dated as of June 15, 2000, between the Issuer and PSINet (the "Registration
Rights Agreement"). A copy of the Purchase Agreement is filed herewith as
Exhibit 2, a copy of the Convertible Note is filed herewith as Exhibit 3, a copy
of the Certificate of Designations is filed herewith as Exhibit 4, and a copy of
the Registration Rights Agreement is filed herewith as Exhibit 5.
ITEM 4. PURPOSE OF THE TRANSACTION.
PCS retained the 40,005,048 shares of the Issuer's Common Stock not
offered to the public in December 1999. At the time of the Issuer's public
offering, PCS was considering a subsequent distribution of such shares to its
stockholders. As a result of the Merger, PCS withdrew its request for a private
letter ruling from the Internal Revenue Service relating to the proposed
distribution.
PSINet acquired the Convertible Note (and therefore the 1,333,333
shares of the Issuer's Common Stock into which it is ultimately convertible) in
order to assist the Issuer with its working capital requirements.
Other than as described in this Schedule 13D, neither PSINet nor PCS
has any present plans or proposals that relate to or would result in (a) the
acquisition by any person of additional securities of the Issuer, or the
disposition of securities of the Issuer, (b) an extraordinary corporate
transaction involving the Issuer or any of its subsidiaries (such as a merger,
reorganization or liquidation), (c) a sale or transfer of a material amount of
assets of the Issuer or any of its subsidiaries, (d) any change in the present
Board of Directors or the management of the Issuer, (e) any material change in
the Issuer's present capitalization or dividend policy, (f) any other material
change in the Issuer's business or corporate structure, (g) changes in the
Issuer's charter, by-laws or instruments corresponding thereto or other actions
that may impede the acquisition of control of the Issuer by any person, or (h) a
class of equity securities of the Issuer being eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act. PSINet and PCS
intend to evaluate the business and operations of the Issuer on an ongoing basis
and maintain a close working relationship with the Issuer, which may include
making such changes to the Board of Directors of the Issuer as they may deem
appropriate.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
PCS is the sole direct beneficial owner of 40,005,048 shares of the
Issuer's Common Stock, or 80.0% of the Issuer's outstanding Common Stock.
However, because PCS is a wholly owned subsidiary of PSINet, PCS and PSINet may
be deemed to share voting and dispositive power with respect to such shares.
PSINet is the indirect beneficial owner of the 40,005,048 shares of the
Issuer's Common Stock held by PCS. PSINet is also deemed to be the sole
beneficial owner of, and to have sole voting and dispositive power with respect
to, the 1,333,333 shares of the Issuer's Common Stock issuable upon conversion
of the Convertible Note and Preferred Stock. Such 41,338,381 shares represent
80.5% of the Issuer's outstanding Common Sock.
Page 5 of 9
<PAGE>
The percentage of the Issuer's Common Stock reported to be beneficially
owned by PCS is based on 50,000,000 shares of the Issuer's Common Stock
outstanding as of June 1, 2000, as represented by the Issuer in documentation
delivered to PSINet in connection with the Purchase Agreement. The percentage of
the Issuer's Common Stock reported to be beneficially owned by PSINet is based
on 50,000,000 shares of the Issuer's Common Stock outstanding as of June 1,
2000, as above, plus, in accordance with Rule 13d-3(d)(1)(i)(D) under the Act,
1,333,333 shares of Common Stock issuable upon conversion of the Convertible
Note and Preferred Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
See Item 3.
PCS is a wholly owned subsidiary of PSINet, and is therefore subject to
its control.
Two representatives of PCS are members of the Issuer's Board of
Directors. The representation by PCS and/or PSINet on the Issuer's Board of
Directors may change from time to time.
Other than as described in this Schedule 13D, to the best knowledge of
PSINet and PCS, there are no contracts, arrangements, understandings or
relationships between PSINet, PCS and any other person, among any of PSINet's or
PCS's executive officers and directors or between any of PSINet's or PCS's
executive officers and directors and any other person, with respect to shares of
the Issuer's Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Agreement and Plan of Merger, dated as of March 21, 2000,
among PSINet, PCS and PSINet Shelf, as previously filed with the Securities
Exchange Commission as an exhibit to PCS's Current Report on Form 8-K dated
March 28, 2000, is hereby incorporated in this Schedule 13D by reference.
2. Purchase Agreement, dated as of June 15, 2000, between PSINet
and the Issuer.
3. Convertible Note, dated as of June 15, 2000, from the Issuer
to PSINet.
4. Form of Certificate of Designations.
5. Registration Rights Agreement, dated as of June 15, 2000,
between PSINet and the Issuer.
6. Joint Filing Agreement, dated as of June 23, 2000, between
PSINet and PCS.
Page 6 of 9
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned each certify that the information set forth in this
statement is true, complete and correct.
Dated: as of June 23, 2000 PSINet INC.
By:/s/Kathleen B. Horne
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Kathleen B. Horne
Senior Vice President, General Counsel
and Corporate Secretary
Dated: as of June 23, 2000 PSINet CONSULTING SOLUTIONS, INC.
By:/s/Margaret G. Reed
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Margaret G. Reed
Senior Vice President, General Counsel
and Corporate Secretary
Page 7 of 9
<PAGE>
<TABLE>
<CAPTION>
Schedule A
EXECUTIVE OFFICERS OF PSINET INC. (all with business addresses at 44983 Knoll Square, Ashburn, Virginia 20147):
<S> <C> <C>
Name Citizen Title
---- ------- -----
William L. Schrader United States Chairman of the Board of Directors and Chief Executive
Officer (Founder)
Harold S. Wills United States President, Chief Operating Officer and Director
David N. Kunkel United States Vice Chairman, Executive Vice President and Director
Geoffrey E. Axton United Kingdom Senior Vice President
James F. Cragg United States Senior Vice President and President, U.S. Operations
Edward A. Davis United States Senior Vice President and President, PSINetworks Company
Jorge R. Forgues United States Vice President and Acting Chief Financial Officer
Harry G. Hobbs United States Senior Vice President and President, PSINet Europe
Kathleen B. Horne United States Senior Vice President, General Counsel and Corporate Secretary
Philippe J. Kuperman United States Senior Vice President and President, PSINet Latin America
Chi H. Kwan United States Senior Vice President and President, PSINet Asia/Pacific
John B. Muleta United States Senior Vice President and President, Global Facilities
Development and IMEA (India, Middle East and Africa)
William A. Opet United States Senior Vice President, President, PSINet Transaction
Solutions and President, Canadian Operations
NON-EXECUTIVE DIRECTORS OF PSINET INC.(all with business addresses at 44983 Knoll Square, Ashburn, Virginia 20147):
Name Citizen Title
---- ------- -----
William H. Baumer United States Director of PSINet, Professor of Philosophy, University at
Buffalo
Ian P. Sharp Canada Director of PSINet, Retired, former President of I.P Sharp
Associates
Ralph J. Swett United States Director of PSINet, Retired, former Chairman, Chief Executive
Officer and President of IXC Communications, Inc.
</TABLE>
Page 8 of 9
<PAGE>
<TABLE>
<CAPTION>
Schedule B
EXECUTIVE OFFICERS OF PSINET CONSULTING SOLUTIONS, INC. (all with business addresses at 4400 Post Oak Parkway, Suite 1100, Houston,
Texas 77027):
Name Citizen Title
---- ------- -----
<S> <C> <C>
Peter T. Dameris United States President and Director
Jacques F. Mottard France President - European Operations
Edward L. Pierce United States Executive Vice President, Chief Financial Officer and
Assistant Secretary
Art Slotkin United States Executive Vice President and Chief Operating Officer
Margaret G. Reed United States Senior Vice President, General Counsel and Corporate Secretary
Kevin P. Cohn United States Vice President and Corporate Controller
NON-EXECUTIVE DIRECTORS OF PSINET CONSULTING SOLUTIONS, INC. (all with business addresses at 4400 Post Oak Parkway,
Suite 1100, Houston, Texas 77027):
Name Citizen Title
---- ------- -----
William L. Schrader United States Director of PCS, Chairman of the Board of Directors and Chief
Executive Officer (Founder) of PSINet
Harold S. Wills United States Director of PCS, President, Chief Operating Officer and
Director of PSINet
David N. Kunkel United States Director of PCS, Vice Chairman, Executive Vice President and
Director of PSINet
</TABLE>
Page 9 of 9
<PAGE>
Exhibit 2
PURCHASE AGREEMENT
DATED AS OF JUNE 15, 2000
BETWEEN
PSINET INC.
AND
XPEDIOR INCORPORATED
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Purchase and Sale....................................................1
Section 1.1 Purchase and Sale................................................1
Section 1.2 Preferred Stock..................................................1
Section 1.3 Closing..........................................................1
Section 1.4 Deliveries at Closing............................................1
ARTICLE II Representations and Warranties of Xpedior...........................2
Section 2.1 Organization and Qualification...................................2
Section 2.2 Capitalization...................................................2
Section 2.3 Authority Relative to this Agreement and the Transactions........4
Section 2.4 No Conflicts; Required Filings and Consents......................4
Section 2.5 Reports and Financial Statements.................................5
Section 2.6 Litigation.......................................................6
Section 2.7 Absence of Certain Changes or Events.............................6
Section 2.8 Employee Benefit Plans...........................................7
Section 2.9 Labor Relations..................................................9
Section 2.10 Taxes...........................................................10
Section 2.11 Compliance with Applicable Laws.................................10
Section 2.12 Assets of Xpedior and Its Subsidiaries..........................11
Section 2.13 Material Contracts..............................................11
Section 2.14 Intellectual Property...........................................12
Section 2.15 Interested Party Transactions...................................13
Section 2.16 Environmental Matters...........................................13
Section 2.17 Restrictions on Business Activities.............................14
Section 2.18 Certain Business Practices......................................14
Section 2.19 Insurance.......................................................15
Section 2.20 Brokers; Expenses...............................................15
Section 2.21 Private Offering................................................15
Section 2.22 Investment Company..............................................15
ARTICLE III Representations and Warranties of PSINet..........................15
Section 3.1 Organization and Qualification..................................15
Section 3.2 Authority Relative to this Agreement............................16
Section 3.3 No Conflicts, Required Filings and Consents.....................16
Section 3.4 Brokers.........................................................16
Section 3.5 Investment Intent...............................................16
Section 3.6 Status..........................................................17
ARTICLE IV Covenants..........................................................17
Section 4.1 Access to Information...........................................17
Section 4.2 Furnishing of Information.......................................17
Section 4.3 Integration.....................................................17
Section 4.4 Adoption of Shareholder Rights Plan.............................18
Section 4.5 Information Statement...........................................18
-i-
<PAGE>
Section 4.6 Repayment of Metamor Note.......................................18
Section 4.7 Transfer Restrictions...........................................18
Section 4.8 Acknowledgment of Dilution......................................19
Section 4.9 Copies and Use of Disclosure Materials..........................19
Section 4.10 Increase in Authorized Shares...................................20
Section 4.11 Listing of Underlying Shares....................................20
Section 4.12 Conversion Obligations of Xpedior...............................20
Section 4.13 Rights and Warrants.............................................20
ARTICLE V General Provisions..................................................21
Section 5.1 Survival of Representations, Warranties and Agreements..........21
Section 5.2 Notices.........................................................21
Section 5.3 Specific Performance............................................22
Section 5.4 Entire Agreement................................................22
Section 5.5 Assignments; Parties in Interest................................22
Section 5.6 Governing Law...................................................22
Section 5.7 Headings; Disclosure............................................23
Section 5.8 Certain Definitions and Rules of Construction...................23
Section 5.9 Counterparts....................................................26
Section 5.10 Severability....................................................27
Section 5.11 Fees and Expenses...............................................27
Section 5.12 Amendment.......................................................27
Section 5.13 Waiver..........................................................27
Exhibit A Convertible Note
Exhibit B Certificate of Designations
Exhibit C Registration Rights Agreement
Exhibit D Legal Opinion of Ropes & Gray
-ii-
<PAGE>
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement"), dated as of June 15, 2000,
is entered into by and between PSINet INC., a New York corporation ("PSINet"),
and XPEDIOR INCORPORATED, a Delaware corporation ("Xpedior"). Capitalized terms
used in this Agreement and not defined in context shall have the meanings
ascribed to them in Section 5.8(a).
WHEREAS, the respective Boards of Directors of PSINet and Xpedior have
approved the issuance and sale by Xpedior to PSINet of a Convertible Note, dated
as of the date hereof, in substantially the form attached hereto as Exhibit A
(the "Convertible Note"), which is convertible into an aggregate of 1,000,000
shares of Xpedior's Series A 8 1/2% Cumulative Convertible Preferred Stock, par
value $0.01 per share (the "Series A Preferred Stock"), all upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
Purchase and Sale
Section 1.1 Purchase and Sale. Upon and subject to the conditions of
this Agreement, Xpedior shall issue and sell to PSINet, and PSINet shall
purchase from Xpedior, the Convertible Note for a purchase price of $50,000,000
(the "Purchase Price").
Section 1.2 Preferred Stock. The Series A Preferred Stock into which
the Convertible Note is convertible shall have the powers, designations,
preferences and relative, participating, optional and other rights and
qualifications, limitations and restrictions as set forth in the Certificate of
Designations in substantially the form attached hereto as Exhibit B (the
"Certificate of Designations").
Section 1.3 Closing. The closing of the Transactions (the "Closing")
shall take place on June 15, 2000. The Closing shall be held at the offices of
Nixon Peabody LLP, 401 9th Street, N.W., Washington D.C., unless another place
is agreed to in writing by the parties hereto. The date on which the Closing
occurs is referred to herein as the "Closing Date".
Section 1.4 Deliveries at Closing. At the Closing, (a) Xpedior shall
deliver to PSINet (i) an executed copy of the Convertible Note, (ii) an executed
copy of the Registration Rights Agreement, dated as of the date hereof, by and
between Xpedior and PSINet, in substantially the form attached hereto as Exhibit
C (the "Registration Rights Agreement"), (iii) an executed copy of the legal
opinion, dated as of the date hereof, of Ropes & Gray, counsel to Xpedior, in
substantially the form attached hereto as Exhibit D, (iv) evidence, in a form
satisfactory to PSINet, that Xpedior has paid to Metamor Worldwide, Inc., a
Delaware corporation which owns a majority in interest of the outstanding
capital stock of Xpedior ("Metamor"), prior to the Closing (except as otherwise
provided in Section 1.4(b)(i)), all accounts payable from Xpedior to Metamor
(the "Metamor Payable"), and (v) all other documents, instruments and writings
<PAGE>
required to have been delivered at or prior to the Closing by Xpedior pursuant
to this Agreement or that PSINet may reasonably request; and (b) PSINet shall
deliver to Xpedior (i) the Purchase Price, in immediately available funds, by
wire transfer to the account or accounts designated in writing by Xpedior for
such purpose at least three business days prior to the Closing Date (which
account or accounts shall, to the extent the Metamor Payable remains outstanding
as of the Closing, include an account designated by Metamor such that all or a
portion of the Purchase Price to be paid by PSINet shall be delivered to
Metamor, on Xpedior's behalf, in full satisfaction of the Metamor Payable), (ii)
an executed copy of the Registration Rights Agreement, and (iii) all other
documents, instruments and writings required to have been delivered at or prior
to the date hereof by PSINet pursuant to this Agreement or that Xpedior may
reasonably request.
ARTICLE II
Representations and Warranties of Xpedior
Xpedior represents and warrants to PSINet that, except as disclosed on
the Xpedior Disclosure Schedule which has been delivered to PSINet prior to the
execution of this Agreement (the "Xpedior Disclosure Schedule"):
Section 2.1 Organization and Qualification. Xpedior is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. Each of Xpedior's Subsidiaries is a corporation or limited
liability company duly organized, validly existing and, if applicable, in good
standing under the laws of the jurisdiction in which it was formed. Each of
Xpedior and its Subsidiaries has the requisite corporate power and authority to
carry on its business as it is now being conducted and is duly qualified or
licensed to do business, and, if applicable, is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification or licensing necessary,
except where the failure to be so organized, qualified, licensed or in good
standing, or to have such power and authority, when taken together with all
other such failures would not have an Xpedior Material Adverse Effect. Xpedior
has heretofore made available to PSINet a complete and correct copy of the
certificate of incorporation, by-laws and other governing documents, each as
amended to the date hereof, of Xpedior and each of its Subsidiaries.
Section 2.2 Capitalization.
(a) The authorized capital stock of Xpedior consists of
100,000,000 shares of common stock, par value $.01 per share (the "Common
Stock"), and 5,000,000 shares of preferred stock, par value $0.01 per share (the
"Preferred Stock"), of which 1,000,000 shares shall be designated as Series A 8
1/2% Cumulative Convertible Preferred Stock, par value $0.01 per share, pursuant
to Section 1.2. As of June 1, 2000, (i) 50,000,000 shares of Common Stock were
issued and outstanding, all of which were duly authorized, validly issued, fully
paid and non-assessable, and 40,005,048 of which were owned beneficially and of
record by Metamor, (ii) an aggregate of 15,000,000 shares of Common Stock were
reserved for issuance under stock options issuable pursuant to Xpedior's Stock
Incentive Plan (the "Stock Options"), and (iii) no shares of Preferred Stock
were issued or outstanding. As of May 31, 2000, there were
-2-
<PAGE>
outstanding Stock Options to purchase 11,164,385 shares of Common Stock, none of
which will be subject to accelerated vesting or exercisability in connection
with the execution and delivery of this Agreement or the consummation of the
Transactions. No shares of capital stock of Xpedior or any of its Subsidiaries
have been issued between March 20, 2000 and the date hereof.
(b) The Convertible Note has been duly authorized and, when
issued in accordance with this Agreement will be free and clear of any and all
liens, charges, claims, encumbrances, restrictions and rights of first refusal
or preemptive rights of any kind granted by or binding upon Xpedior
(collectively, "Liens") other than restrictions imposed by federal and
applicable state securities laws. The Series A Preferred Stock into which the
Convertible Note is convertible, and the Common Stock issuable in payment of
dividends upon, and upon conversion of, the Series A Preferred Stock, has been
duly authorized and, when issued in accordance with the Convertible Note and the
Certificate of Designations, will be validly issued, fully paid and
non-assessable, free and clear of any and all Liens other than restrictions
imposed by federal and applicable state securities laws. Xpedior has an adequate
reserve of Preferred Stock and Common Stock to enable it to perform its
conversion and other obligations under this Agreement, the Convertible Note and
the Certificate of Designations, which number of reserved and available shares
of Preferred Stock and Common Stock is equal to, respectively, at least the
number of shares of Preferred Stock as is issuable upon conversion of the
Convertible Note and the number of shares of Common Stock as is issuable in
payment of dividends upon, and upon conversion in full of, the Series A
Preferred Stock, assuming the payment of all dividends in shares of Common Stock
in accordance with the terms of the Certificate of Designations.
(c) Except for the Convertible Note to be issued in connection
with this Agreement, and except as set forth on the Xpedior Disclosure Schedule,
there are no preemptive or other outstanding rights, options, warrants,
conversion rights (including pursuant to convertible securities), stock
appreciation rights, redemption rights, repurchase rights, voting, buy-sell or
other agreements, arrangements, calls, commitments or rights of any kind
relating to the issued or unissued capital stock of Xpedior or any of its
Subsidiaries or obligating Xpedior or any of its Subsidiaries to issue or sell
any shares of capital stock of, or other equity interests in, Xpedior or any of
its Subsidiaries. All shares of capital stock of Xpedior and its Subsidiaries
subject to issuance pursuant to the Stock Options, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and non-assessable. Without
limiting the generality of the foregoing, neither Xpedior nor any of its
Subsidiaries has adopted a shareholder rights plan or similar plan or
arrangement. As of the date of this Agreement, there are no outstanding
contractual obligations of Xpedior or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of Xpedior or any of its
Subsidiaries or to provide material funds to, or make any material investment
(in the form of a loan, capital contribution or otherwise) in, any Person except
as set forth on the Xpedior Disclosure Schedule. Except for the Registration
Rights Agreement or as set forth on the Xpedior Disclosure Schedule, neither
Xpedior nor any Person acting on its behalf has granted to any Person other than
PSINet the right to (i) require Xpedior to file a registration statement under
the Securities Act with respect to Common Stock or other securities of Xpedior
held by them, or which they have a right to acquire, other than such rights as
have heretofore been exercised and satisfied, or (ii) include any shares of
Common Stock or other securities of Xpedior held by them, or which they have a
right to acquire, in any registration statement filed by Xpedior.
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(d) Xpedior has taken action to cause Section 203 of the
Delaware General Corporation Law to be inapplicable to Xpedior. The consummation
of the Transactions will not cause PSINet to become an interested stockholder of
Xpedior for the purposes of Section 203 of the Delaware General Corporation Law.
Section 2.3 Authority Relative to this Agreement and the Transactions.
Xpedior has all necessary power and authority to execute and deliver this
Agreement, the Convertible Note and the Registration Rights Agreement, to
perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement, the Convertible Note and the
Registration Rights Agreement, by Xpedior, and the consummation by Xpedior of
the Transactions, have been duly and validly authorized by all necessary
corporate action of the stockholders (subject to, with respect to the issuance
of the Series A Preferred Stock and the Common Stock issuable in payment of
dividends upon, and upon conversion of, the Series A Preferred Stock, compliance
with Section 4.5) and of the board of directors of Xpedior and no other
corporate or stockholder proceedings on the part of Xpedior are necessary to
authorize the execution and delivery of this Agreement, the Convertible Note and
the Registration Rights Agreement, or to consummate the Transactions. This
Agreement, the Convertible Note and the Registration Rights Agreement, have each
been duly and validly executed and delivered by Xpedior and, assuming the due
authorization, execution and delivery hereof by PSINet, if applicable,
constitutes a legal, valid and binding obligation of Xpedior, enforceable
against Xpedior in accordance with its terms.
Section 2.4 No Conflicts; Required Filings and Consents.
(a) Subject to, with respect to the issuance of the Series A
Preferred Stock and the Common Stock issuable in payment of dividends upon, and
upon conversion of, the Series A Preferred Stock, compliance with Section 4.5,
the execution and delivery of this Agreement, the Convertible Note and the
Registration Rights Agreement, by Xpedior do not, and the performance of this
Agreement and consummation of the Transactions by Xpedior will not, (i) conflict
with or violate the certificate of incorporation, by-laws or other governing
documents of Xpedior or any of its Subsidiaries, (ii) assuming the consents,
approvals, authorizations and waivers specified in Section 2.4(b) have been
received and any condition precedent to such consent, approval, authorization or
waiver has been satisfied, conflict with or violate any Law applicable to
Xpedior or any of its Subsidiaries or by which any property or asset of Xpedior
or any of its Subsidiaries is bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Xpedior or any of its
Subsidiaries pursuant to, any contract, agreement, note, bond, mortgage,
indenture, credit agreement, lease, license, permit, franchise or other
instrument or obligation to which Xpedior or any of its Subsidiaries is a party
or by which Xpedior or any of its Subsidiaries or any property or asset of
Xpedior or any of its Subsidiaries is bound or affected, except in the case of
clauses (ii) and (iii) for any such conflicts, violations, breaches, defaults or
other occurrences of the type referred to above that would not have an Xpedior
Material Adverse Effect or would not prevent or materially delay the
consummation of the Transactions.
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(b) Subject to, with respect to the issuance of the Series A
Preferred Stock and the Common Stock issuable in payment of dividends upon, and
upon conversion of, the Series A Preferred Stock, compliance with Section 4.5,
the execution and delivery of this Agreement, the Convertible Note and the
Registration Rights Agreement, by Xpedior do not, and the performance of this
Agreement, the Convertible Note and the Registration Rights Agreement, and
consummation of the Transactions by Xpedior will not, require any consent,
approval, authorization, waiver or permit of, or filing with or notification to,
any governmental or regulatory authority, domestic, foreign or supranational (a
"Governmental Entity"), except for (i) filings pursuant to exemptions from the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
securities or "blue sky" laws ("Blue Sky Laws") in connection with the sale and
issuance of the Series A Preferred Stock, and (ii) filing and recordation of the
Certificate of Designations as required by the Delaware General Corporation Law,
except where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not have an Xpedior
Material Adverse Effect or would not prevent or materially delay the
consummation of the Transactions.
Section 2.5 Reports and Financial Statements.
(a) Xpedior has filed with the U.S. Securities and Exchange
Commission (the "SEC") all forms, reports, schedules, registration statements,
definitive proxy statements, information statements and other filings ("SEC
Reports") required to be filed by it with the SEC since December 1, 1999. As of
their respective dates, the SEC Reports complied as to form in all material
respects with the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Securities Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such SEC Reports.
As of their respective dates and as of the date any information from such SEC
Reports has been incorporated by reference, the SEC Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Xpedior has filed all
material contracts and agreements and other documents or instruments required to
be filed as exhibits to the SEC Reports.
(b) The consolidated balance sheets of Xpedior as of December
31, 1999, 1998 and 1997 and the related consolidated statements of operations,
shareholders' equity and cash flows for the years ended December 31, 1999 and
1998 and the period from March 27, 1997 through December 31, 1997 (including the
related notes and schedules thereto) contained in Xpedior's Form 10-K for the
year ended December 31, 1999 (the "Annual Financial Statements") present fairly,
in all material respects, the consolidated financial position and the
consolidated results of operations, retained earnings and cash flows of Xpedior
and its consolidated Subsidiaries as of the dates or for the periods presented
therein in conformity with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved,
except as otherwise noted therein, including in the related notes.
(c) The consolidated balance sheets and the related statements
of operations and cash flows (including, in each case, the related notes
thereto) contained in Xpedior's Form 10-Q for the quarterly period ended March
31, 2000 (the "Quarterly Financial Statements" and, together with the Annual
Financial Statements, the "Financial Statements") have been
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prepared in accordance with the requirements for interim financial statements
contained in Regulation S-X, which do not require all the information and
footnotes necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with GAAP. The Quarterly Financial
Statements reflect all adjustments necessary to present fairly in accordance
with GAAP (except as indicated), in all material respects, the consolidated
financial position, results of operations and cash flows of Xpedior and its
consolidated Subsidiaries for all periods presented therein.
(d) Except as described in the SEC Reports or as set forth on
the Xpedior Disclosure Schedule, the adoption of SEC Staff Accounting Bulletin
No. 101 (Revenue Recognition in Financial Statements) effective January 1, 2000
has not adversely impacted, and will not adversely impact, in any material
respect, the amount or timing of revenue recognition by Xpedior or any of its
Subsidiaries as compared to their prior revenue recognition practices.
(e) Except for those liabilities that are fully reflected or
reserved against on the Financial Statements or as set forth on the Xpedior
Disclosure Schedule, neither Xpedior nor any of its Subsidiaries has outstanding
any liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) which would be required to be
reflected on a balance sheet or in the notes thereto prepared in accordance with
GAAP, except for liabilities and obligations which have been incurred since
March 31, 2000 in the ordinary course of business which are not material in
nature or amount.
Section 2.6 Litigation. Except as disclosed in the SEC Reports or on
the Xpedior Disclosure Schedule, as of the date hereof, there is no civil,
criminal or administrative suit, action or proceeding pending or, to the
knowledge of Xpedior, threatened against or affecting Xpedior or any of its
Subsidiaries that would have an Xpedior Material Adverse Effect, nor is there
any judgment, decree, injunction or order of any Governmental Entity or
arbitrator outstanding against Xpedior or any of its Subsidiaries that would
have an Xpedior Material Adverse Effect.
Section 2.7 Absence of Certain Changes or Events. Except as disclosed
in the SEC Reports or on the Xpedior Disclosure Schedule, or as permitted by
Section 4.1 for events after the date hereof, since March 31, 2000, Xpedior and
each of its Subsidiaries has conducted its business only in the ordinary course
and in a manner consistent with past practice, and since such date there has not
been (a) any Xpedior Material Adverse Effect, (b) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of Xpedior's or any of its Subsidiaries' capital
stock, or any redemption, purchase or other acquisition of any of its or any of
its Subsidiaries' capital stock, (c) any split, combination or reclassification
of any of Xpedior's or any of its Subsidiaries' capital stock or, except with
respect to the Stock Options, any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for any
shares of any of Xpedior's or any of its Subsidiaries' capital stock, (d) any
granting by Xpedior or any of its Subsidiaries to any officer of Xpedior or any
of its Subsidiaries of any increase in compensation or any rights with respect
to compensation in the event of a "change in control" (however defined) of
Xpedior, except in the ordinary course of business consistent with prior
practice or as required under employment agreements in effect as of March 31,
2000, copies of which have been provided previously to PSINet, (e) any granting
by Xpedior or any of its Subsidiaries to any officer or any
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group or class of employees of Xpedior of any increase in severance or
termination pay, except as required under employment, severance or termination
agreements or plans in effect as of March 31, 2000, copies of which have been
provided previously to PSINet, or as previously disclosed to PSINet, (f) any
entry by Xpedior or any of its Subsidiaries into any employment, severance or
termination agreement with any officer of Xpedior, or any increase in benefits
available under, or establishment of, any Benefit Plan, except in the ordinary
course of business consistent with past practice or as previously disclosed to
PSINet, or (g) any material change in accounting methods, principles or
practices by Xpedior, except insofar as may have been required by a change in
GAAP.
Section 2.8 Employee Benefit Plans.
(a) Schedule 2.8 sets forth a complete and correct list of all
existing (i) "employee benefit plans" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and (ii) any other
material pension plans or employee benefit arrangements or payroll practices
(including severance pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, stock option or stock purchase arrangements or policies)
maintained, or contributed to, by Xpedior, any of its Subsidiaries or any trade
or business (whether or not incorporated) which is treated with Xpedior or any
of its Subsidiaries as a single employer under Section 414(b), (c), (m) or (o)
of the Code (an "ERISA Affiliate") with respect to employees of Xpedior, any of
its Subsidiaries or any of their ERISA Affiliates (all such plans, arrangements
or practices, the "Benefit Plans" and each such plan which is sponsored,
maintained or contributed to solely by one or more of Xpedior or its
Subsidiaries is referred to as an "Xpedior Benefit Plan"). Each Xpedior Benefit
Plan is in writing and Xpedior has previously made available to PSINet a true
and complete copy of each existing Xpedior Benefit Plan document, including all
amendments thereto, and a true and complete copy of each material document, if
any, prepared in connection with each such Xpedior Benefit Plan, including (A) a
copy of each trust or other funding arrangement, (B) each summary plan
description and summary of material modifications, (C) the most recently filed
Form 5500, including all attachments thereto, (D) the most recently received IRS
determination letter, and (E) the most recently prepared actuarial report and
financial statement.
(b) No "accumulated funding deficit" as defined in Section 412
of the Code exists with respect to any Xpedior Benefit Plan, whether or not
waived. No "reportable event" within the meaning of Section 4043 of ERISA, and
no event described in Section 4062 or 4063 of ERISA, has occurred with respect
to any Xpedior Benefit Plan. Neither Xpedior nor any ERISA Affiliate of Xpedior
has (i) engaged in, or is a successor corporation or parent corporation to an
entity that has engaged in, a transaction described in Sections 4069 or 4212(c)
of ERISA, or (ii) incurred or reasonably expects to incur any material liability
under (A) Title IV of ERISA arising in connection with the termination of, or a
complete or partial withdrawal from, any plan covered or previously covered by
Title IV of ERISA, or (B) Section 4971 of the Code, that in either case could
become a liability of PSINet or any of its Affiliates after the Closing Date. As
of March 31, 2000, there was no material unfunded liability under any of the
Benefit Plans, computed using reasonable actuarial assumptions and determined as
if all benefits under such Benefit Plans were vested and payable as of such
date. No event has occurred since
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March 31, 2000 that would cause Xpedior to believe that as of the date of this
Agreement there is any such material unfunded liability.
(c) Each of the Xpedior Benefit Plans intended to qualify
under Section 401(a) of the Code has received a favorable determination letter
(or opinion letter in the case of a prototype plan) from the Internal Revenue
Service (the "IRS") that such Benefit Plan is so qualified or is within the
remedial amendment period for applying for such a determination letter, and,
except as disclosed on the Xpedior Disclosure Schedule, nothing has occurred
with respect to the operation of any such Benefit Plan which, either
individually or in the aggregate, could cause the loss of such qualification or
the imposition of any material liability, penalty or tax under ERISA or the
Code.
(d) There has been no non-exempt prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) with
respect to any Xpedior Benefit Plan. None of Xpedior or its Subsidiaries is
currently liable for any excise tax or penalty in connection with any Benefit
Plan arising under the Code or ERISA, including but not limited to Sections
4971, 4972, 4975, 4979, 4980, 4980B and 4980D of the Code and Section 502 of
ERISA, and, to the knowledge of Xpedior, no fact or event exists which could
give rise to any liability except, in each case, for any such liability set
forth on the Xpedior Disclosure Schedule or that would not have an Xpedior
Material Adverse Effect.
(e) All contributions and premiums required by Law or by the
terms of any Xpedior Benefit Plan or any agreement relating thereto have been
timely made (without regard to any waivers granted with respect thereto) in all
material respects.
(f) The liabilities of each Xpedior Benefit Plan that has been
terminated or otherwise wound up have been fully discharged in material
compliance with applicable Law.
(g) There has been no violation of ERISA with respect to the
filing of applicable returns, reports, documents and notices regarding any of
the Xpedior Benefit Plans with the Secretary of Labor or the Secretary of the
Treasury or the furnishing of such notices or documents to the participants or
beneficiaries of the Xpedior Benefit Plans which, either individually or in the
aggregate, could result in a material liability to Xpedior or any of its
Subsidiaries.
(h) To the knowledge of Xpedior, there are no pending legal
proceedings which have been asserted or instituted against any of the Xpedior
Benefit Plans or their assets, Xpedior or any of its Subsidiaries, or the plan
administrator or any fiduciary of any of the Xpedior Benefit Plans with respect
to the operation of such plans (other than routine, uncontested benefits
claims).
(i) Each of the Xpedior Benefit Plans has been maintained, in
accordance with its terms and all provisions of applicable Laws except where
failure to do so would not, either individually or in the aggregate, have an
Xpedior Material Adverse Effect. All amendments and actions required to bring
each of the Xpedior Benefit Plans into conformity in all material respects with
all of the applicable provisions of ERISA and other applicable Laws
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have been made or taken, except to the extent that such amendments or actions
are not required by Law to be made or taken until a date after the Closing Date.
(j) None of Xpedior or its Subsidiaries maintains or has any
liability under any welfare benefit plan providing continuing benefits after the
termination of employment (other than as required by Section 4980B of the Code
and at the former employee's own expense). Except as set forth on the Xpedior
Disclosure Schedule, Xpedior and its Subsidiaries have complied in all material
respects with the notice and continuation requirements of Section 4980B of the
Code and the regulations thereunder. Other than money purchase pension plans,
none of Xpedior, its Subsidiaries and their ERISA Affiliates maintains, sponsors
or contributes to, or, to the knowledge of Xpedior, has ever maintained,
sponsored or contributed to, any benefit plan subject to Title IV of ERISA,
including but not limited to any multiple employer plan subject to Sections 4063
and 4064 of ERISA or any multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
(k) Neither the execution and delivery of this Agreement, nor
the consummation of the Transactions, will (i) result in any material payment
(including severance, unemployment compensation or golden parachute) becoming
due to any director, employee or independent contractor of Xpedior or any of its
Subsidiaries, (ii) materially increase any benefits otherwise payable under any
Xpedior Benefit Plan, or (iii) result in the acceleration of the time of payment
or vesting of any such benefits to any material extent other than vesting of the
Stock Options in accordance with their terms.
(l) Xpedior and each of its Subsidiaries are in compliance in
all material respects with all applicable Laws and collective bargaining
agreements with respect to all benefit plans, contracts and arrangements
covering non-U.S. employees ("Non-U.S. Xpedior Benefit Plans"). None of Xpedior
and its Subsidiaries have any material unfunded liabilities under any Non-U.S.
Xpedior Benefit Plan in violation of local Law or that would, if the plan were
covered by ERISA, violate the funding obligations prescribed by ERISA. All
benefits payable under each of the Non-U.S. Xpedior Benefit Plans are provided
in accordance with the terms of the governing provisions of the relevant
Non-U.S. Xpedior Benefit Plan. None of Xpedior and its Subsidiaries are aware of
any failure to comply with any applicable Law which would or might result in the
loss of tax approval or qualification of any Non-U.S. Xpedior Benefit Plan.
(m) To the knowledge of Xpedior, all individuals providing
services to Xpedior and its Subsidiaries have been properly characterized and
treated as being either an employee or an independent contractor of such Person.
Section 2.9 Labor Relations. There are no labor controversies pending
or, to Xpedior's knowledge, threatened with respect to Xpedior or any of its
Subsidiaries, and neither Xpedior nor any of its U.S. Subsidiaries is a party to
any collective bargaining agreement with any labor union or other representative
of employees. Except as set forth on the Xpedior Disclosure Schedule, no
non-U.S. Subsidiary of Xpedior is a party to any collective bargaining agreement
with any labor union or other representative of employees or any works' council
or similar entity under applicable Laws. To the knowledge of Xpedior, there is
no pending or threatened union organization activity by or among any of its or
any of its Subsidiaries'
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employees. No independent contractors of the Company have asserted claims for
benefits or compensation under any Benefit Plans.
Section 2.10 Taxes. Xpedior and each of its Subsidiaries have duly
filed all material federal, state, local and foreign income, franchise, excise,
real and personal property and other Tax returns and reports (including, but not
limited to, those filed on a consolidated, combined or unitary basis) required
to have been filed by Xpedior or any of its Subsidiaries prior to the date
hereof. All of the foregoing returns and reports are true and correct in all
material respects, and Xpedior and its Subsidiaries have paid or, prior to the
Closing Date will pay, all Taxes shown on such returns or reports as being due.
Xpedior and each of its Subsidiaries have paid and will pay all installments of
estimated taxes due on or before the Closing Date. Xpedior and each of its
Subsidiaries have paid or made adequate provision in accordance with GAAP in the
SEC Reports and Financial Statements for all Taxes payable in respect of all
periods ending on or prior to the date of this Agreement and will have paid or
provided for all Taxes payable in respect of all periods covered thereby. As of
the date hereof, all deficiencies proposed as a result of any audits have been
paid or settled. Xpedior and each of its Subsidiaries has paid, collected or
withheld, or caused to be paid, collected or withheld, all amounts of Tax
required to be paid, collected or withheld, other than such Taxes for which
adequate reserves in the SEC Reports or Financial Statements have been
established or which are being contested in good faith, except as would not have
an Xpedior Material Adverse Effect. There are no claims or assessments pending
against Xpedior or any of its Subsidiaries for any alleged deficiency in any
Tax, and neither Xpedior nor any of its Subsidiaries has been notified in
writing of any proposed Tax claims or assessments against Xpedior or any of its
Subsidiaries. Neither Xpedior nor any of its Subsidiaries has been a member of a
consolidated group filing a consolidated federal income Tax return (other than a
consolidated group of which Metamor is the common parent), or has any liability
for Taxes of any other Person (other than a member of the Metamor consolidated
group) arising from the application of Treasury Regulation Section 1.1502-6
promulgated under the Code (or any analogous Law). No consent under Section
341(f) of the Code has been filed with respect to Xpedior or any of its
Subsidiaries. Except as set forth on the Xpedior Disclosure Schedule, there is
no contract, agreement, plan or arrangement covering any Person that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible by Xpedior or any of its Subsidiaries by reason of
Section 280G of the Code.
Section 2.11 Compliance with Applicable Laws. Xpedior and each of its
Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities (the "Permits") necessary for them to
own, lease or operate their properties and assets and to carry on their
businesses substantially as now conducted or presently intended to be conducted,
except for such permits, licenses, variances, exemptions, orders and approvals
the failure of which to hold would not have an Xpedior Material Adverse Effect.
The Permits are valid and in full force and effect except as would not have an
Xpedior Material Adverse Effect. Except as set forth in the SEC Reports filed
prior to the date hereof, the businesses of each of Xpedior and each of its
Subsidiaries have not been, and are not being, conducted in violation of any
Permit or any Law, arbitration award, agency requirement, license or permit of
any Governmental Entity (a "Governmental Regulation"), except for violations or
possible violations that would not have an Xpedior Material Adverse Effect or
prevent or materially burden or materially impair the ability of Xpedior to
consummate the Transactions. Except as set forth in the SEC Reports filed prior
to the date hereof, no material investigation or review by
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any Governmental Entity with respect to Xpedior or any of its Subsidiaries is
pending or, to Xpedior's knowledge, threatened, nor has any Governmental Entity
indicated an intention to conduct any such investigation or review. No material
change is required in Xpedior's or any of its Subsidiaries' operations,
properties or procedures to comply with any Permit, Law or Governmental
Regulation, and Xpedior has not received any notice or communication of any
material noncompliance with any Permit or Governmental Regulation that has not
been cured as of the date hereof, except as would not have an Xpedior Material
Adverse Effect.
Section 2.12 Assets of Xpedior and Its Subsidiaries. Xpedior and each
of its Subsidiaries has good and defensible title to all of its material
properties and assets, free and clear of all liens, charges and encumbrances,
except liens for Taxes not yet due and payable and such liens or other
imperfections of title that do not individually or in the aggregate constitute
an Xpedior Material Adverse Effect. All leases, easements, licenses, rights of
way and other rights pursuant to which Xpedior or any of its Subsidiaries lease
from others or otherwise have the right to use real or personal property,
individually or in the aggregate material to the business of Xpedior (the
"Property Rights"), are valid and binding and are in full force and effect and
enforceable against Xpedior or its Subsidiaries and, to Xpedior's knowledge, the
other parties thereto, as applicable, in accordance with their respective terms,
and there is not, under any such Property Right, any existing default or event
of default (or event that with notice or lapse of time, or both, would
constitute a default or event of default), except where the lack of such
validity and effectiveness or the existence of such default or event of default
does not and will not constitute an Xpedior Material Adverse Effect. Xpedior has
made available to PSINet true and accurate copies of the documents creating or
reflecting the Property Rights. No consent of any Person is needed in order for
each Property Right to continue in full force and effect in accordance with its
terms without penalty, acceleration or rights of early termination by reason of
the consummation of the Transactions, except for consents the absence of which
would not have an Xpedior Material Adverse Effect. The tangible and intangible
assets owned or leased by Xpedior and its Subsidiaries are all of the assets
used in their respective businesses or necessary for them to conduct their
respective businesses as presently conducted or presently intended to be
conducted. All material items of tangible property used by Xpedior or its
Subsidiaries in their businesses are in operable condition and adequate for the
purposes used (normal wear and tear excepted).
Section 2.13 Material Contracts. Neither Xpedior nor any of its
Subsidiaries is a party or is subject to any contract, note, bond, mortgage,
indenture, credit agreement, lease, license, agreement, understanding,
instrument, bid or proposal (excluding any contract or arrangement that is or is
associated with a Benefit Plan), or any amendment or modification thereto
(collectively, "Contracts"), that is required to be described in or filed as an
exhibit to any SEC Report that is not so described in or filed as required by
the Securities Act or the Exchange Act, as the case may be. All Contracts to
which Xpedior or any of its Subsidiaries is a party, or by which any of them is
bound, are valid and binding and are in full force and effect and enforceable
against Xpedior, its Subsidiaries and, to the knowledge of Xpedior, the other
party or parties thereto in accordance with their respective terms, and no
consent of any Person is needed in order for each Contract to continue in full
force and effect in accordance with its terms without penalty, acceleration or
rights of early termination by reason of the consummation of the Transactions,
except for any failure to be in full force and effect or failure to obtain a
consent that would not, in the aggregate with all other such failures, have an
Xpedior Material Adverse
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Effect. Neither Xpedior nor any of its Subsidiaries is in violation or breach
of, or default in any material respect under, any Contract to which it is a
party or by which it is bound, nor, to Xpedior's knowledge, is any other party
to any such Contract in violation or breach of or default in any material
respect under any such Contract.
Section 2.14 Intellectual Property.
(a) Except as set forth on the Xpedior Disclosure Schedule,
Xpedior and each of its Subsidiaries, directly or indirectly, own, license or
otherwise have legally enforceable rights to use, or can acquire on reasonable
terms and without material expense, all patents, trademarks, trade names,
service marks, copyrights and any applications therefor, technology, know-how,
computer software and applications and tangible or intangible proprietary
information or materials, that are material to and used in the businesses of
Xpedior or any of its Subsidiaries as presently conducted or presently intended
to be conducted (the "Intellectual Property Rights").
(b) In the case of Intellectual Property Rights owned by
Xpedior or one of its Subsidiaries, either Xpedior or such Subsidiary owns such
Intellectual Property Rights free and clear of any material liens, charges or
encumbrances. Xpedior or one of its Subsidiaries has an adequate right to the
use of the Intellectual Property Rights or the material covered thereby in
connection with the services or products in respect of which such Intellectual
Property Rights are being used. The manufacture, sale, licensing or use of any
of the services or products of Xpedior or any of its Subsidiaries as now
manufactured, sold, licensed or used, or proposed for manufacture, sale,
licensing or use, by Xpedior or any of its Subsidiaries in the ordinary course
of Xpedior's business, as presently conducted or presently intended to be
conducted, does not infringe on any copyright, patent, trade mark, service mark
or trade secret of a third party where such infringement could have an Xpedior
Material Adverse Effect. The use by Xpedior or any of its Subsidiaries of any
trademarks, service marks, trade names, trade secrets, copyrights, patents,
technology or know-how or applications used in the businesses of Xpedior or any
of its Subsidiaries as presently conducted or presently intended to be conducted
does not infringe on any other Person's trademarks, service marks, trade names,
trade secrets, copyrights, patents, technology or know-how or applications where
such infringement could have an Xpedior Material Adverse Effect. Except as set
forth on the Xpedior Disclosure Schedule, Xpedior has not received any
information challenging the ownership by Xpedior or any of its Subsidiaries, or
the validity of, any of the Intellectual Property Rights. All registered
patents, trademarks, service marks and copyrights held by Xpedior and its
Subsidiaries are valid and subsisting, except to the extent any failure to be
valid and subsisting does not constitute an Xpedior Material Adverse Effect. To
the knowledge of Xpedior, there is no material unauthorized use, infringement or
misappropriation of any of the Intellectual Property Rights by any third party,
including any employee or former employee of Xpedior or any of its Subsidiaries.
Xpedior or one of its Subsidiaries has valid, binding and enforceable agreements
with each employee, former employee and contractor who has or has had access to
confidential or proprietary intellectual property of Xpedior or any of its
Subsidiaries pursuant to which such Person is required to maintain the
confidentiality of such information for a reasonable period of time, or such
agreements are not necessary to adequately protect the interests of Xpedior or
such Subsidiary. No Intellectual Property Right is subject to any known
outstanding decree, order, judgment or
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stipulation restricting in any manner the licensing thereof by Xpedior or any of
its Subsidiaries, except to the extent any such restriction does not constitute
an Xpedior Material Adverse Effect.
(c) The computer systems, software, hardware, firmware,
middleware and other information technology (collectively, "Information
Technology") of Xpedior and each of its Subsidiaries are Year 2000 Ready, except
as would not have an Xpedior Material Adverse Effect, and none of Xpedior and
its Subsidiaries has experienced any material disruption in their Information
Technology or in the services and products provided to them by their vendors and
suppliers as a result of the occurrence of the year 2000. "Year 2000 Ready"
means that Information Technology is designed to be used prior to, during and
after the calendar year 2000 A.D., and such Information Technology will
accurately receive, provide and process date/time data (including calculating,
comparing, sequencing and making leap year calculations) from, into and between
the twentieth and twenty-first centuries A.D., and will not malfunction, cease
to function or provide invalid or incorrect results as a result of any date/time
data (including to the extent that other Information Technology used in
combination with such Information Technology properly exchanges date/time data
with it).
Section 2.15 Interested Party Transactions. Since its inception, or as
described in the SEC Reports, no event has occurred that would be required to be
reported by Xpedior pursuant to Item 404 of Regulation S-K promulgated by the
SEC. Except as expressly set forth in the Xpedior Disclosure Schedule, there are
no agreements, arrangements, understandings or commitments (including Debt,
guarantees, financial support or keep whole arrangements) between or involving
Xpedior or any one or more of its Subsidiaries, on the one hand, and Metamor or
any one or more of its Subsidiaries (other than Xpedior and its Subsidiaries),
on the other hand.
Section 2.16 Environmental Matters. Except as disclosed on the Xpedior
Disclosure Schedule or in the SEC Reports, and excluding matters that would not
have an Xpedior Material Adverse Effect:
(a) Xpedior and each of its Subsidiaries (i) are in compliance
with all Environmental Laws and are not subject to any asserted liability or, to
Xpedior's knowledge, any unasserted liability (including liability with respect
to current or former Subsidiaries or operations), under any Environmental Laws,
(ii) hold or have applied for all Environmental Permits required for their
properties or operations, and (iii) are in compliance with their respective
Environmental Permits;
(b) none of Xpedior and its Subsidiaries has received any
written notice, demand, letter, claim or request for information alleging that
Xpedior or any of its Subsidiaries is or may be in violation of, or liable
under, any Environmental Law;
(c) none of Xpedior and its Subsidiaries (i) has entered into
or agreed to any consent decree or order or is subject to any judgment, decree
or judicial order relating to compliance with Environmental Laws, Environmental
Permits or the investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials and, to the knowledge of Xpedior and
its Subsidiaries, no investigation, litigation or other proceeding is pending or
threatened in writing with respect thereto, or (ii) has received written notice
asserting
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that it is an indemnitor in connection with any threatened or asserted claim by
any third-party indemnitee for any liability under any Environmental Law or
relating to any Hazardous Materials; and
(d) none of the real property owned or leased by Xpedior or
any of its Subsidiaries is listed on or, to the knowledge of Xpedior, proposed
for listing on the "National Priorities List" under CERCLA, as updated through
the date hereof, or any similar state or foreign list of sites requiring
investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"Environmental Laws" means any applicable federal, state, local,
foreign or supranational statute, Law, ordinance, regulation, rule, code,
treaty, writ or order, and any enforceable judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree, judgment, stipulation, injunction, permit, authorization, policy,
opinion or agency requirement, in each case having the force and effect of Law,
relating to the pollution, protection, investigation or restoration of the
environment, health and safety or natural resources, including those relating to
the use, handling, presence, transportation, treatment, storage, disposal,
release, threatened release or discharge of Hazardous Materials or noise, odor,
wetlands, pollution, contamination or any injury or threat of injury to Persons
or property, or to the siting, construction, operation, closure and post-closure
care of waste disposal, handling and transfer facilities.
"Environmental Permits" means any Permit, approval, identification
number, license or other authorization required under any Environmental Law.
"Hazardous Materials" means (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls, or (ii) any chemical, material or other
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any Environmental Law.
Section 2.17 Restrictions on Business Activities. Except as set forth
on the Xpedior Disclosure Schedule, there is no Contract, judgment, injunction,
order or decree binding upon Xpedior or any of its Subsidiaries or any of their
properties which has had or could reasonably be expected to have the effect of
prohibiting or materially impairing (a) any material business practice of
Xpedior, any of its Subsidiaries or, to the knowledge of Xpedior, PSINet or any
of its Affiliates, or (b) the conduct of any material business by Xpedior, any
of its Subsidiaries or, to the knowledge of Xpedior, PSINet or any of its
Affiliates, as currently conducted or as currently proposed to be conducted by
Xpedior and its Subsidiaries.
Section 2.18 Certain Business Practices. Neither Xpedior nor any of its
Subsidiaries, nor any director, officer, employee or agent of Xpedior or any of
its Subsidiaries, has in any material respect (a) used any funds for unlawful
contributions, gifts, entertainment or other unlawful payments relating to
political activity, (b) made any unlawful payment to any foreign or domestic
governmental official or employee or to any foreign or domestic political party
or
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campaign or violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, (c) consummated any transaction, made any payment, entered into any
agreement or arrangement or taken any other action in violation of Section
1128B(b) of the Social Security Act, as amended, or (d) made any other unlawful
payment.
Section 2.19 Insurance. Xpedior has adequate insurance covering all of
the customarily insurable liabilities, including product liability, director and
officer liability, and general and casualty liabilities, in each case with
financially secure insurers.
Section 2.20 Brokers; Expenses. Except as set forth on the Xpedior
Disclosure Schedule, no agent, broker, finder, investment banker or other firm
or Person is or will be entitled to any broker's or finder's fee or other
similar commission or fee in connection with the Transactions based upon
arrangements made by or on behalf of Xpedior.
Section 2.21 Private Offering.
(a) Neither Xpedior nor any Person acting on its behalf has
taken or will take any action which might subject the offering, issuance or sale
of the Convertible Note (or the Series A Preferred Stock into which it is
convertible or the Common Stock into which the Series A Preferred Stock is
convertible or with which dividends upon the Series A Preferred Stock may be
paid) to the registration requirement of Section 5 of the Securities Act, or
that would make the Transactions ineligible for exemption under Rule 506
promulgated under the Securities Act. Assuming the accuracy of the
representations and warranties of PSINet set forth in this Agreement, the offer,
sale and issuance of the Convertible Note to PSINet pursuant to this Agreement
is exempt from the registration requirement of Section 5 of the Securities Act.
(b) Neither Xpedior nor any Person acting on its behalf has
distributed any offering materials in connection with the offering and sale of
the Convertible Note, or solicited any offer to buy or sell the Convertible Note
by means of any form of general solicitation or advertising.
(c) Neither Xpedior nor any Person acting on its behalf has
issued or sold, or offered to issue or sell, any shares of the Convertible Note
to any Person other than PSINet.
Section 2.22 Investment Company. Xpedior is not, and is not controlled
by, an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
ARTICLE III
Representations and Warranties of PSINet
PSINet represents and warrants to Xpedior that, except as disclosed on
the PSINet Disclosure Schedule which has been delivered to Xpedior prior to the
execution of this Agreement (the "PSINet Disclosure Schedule"):
Section 3.1 Organization and Qualification. PSINet is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York.
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Section 3.2 Authority Relative to this Agreement. PSINet has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Transactions. The execution and
delivery of this Agreement by PSINet, and the consummation by PSINet of the
Transactions, have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of PSINet are necessary to
authorize the execution and delivery of this Agreement or to consummate the
Transactions. This Agreement has been duly and validly executed and delivered by
PSINet and, assuming the due authorization, execution and delivery hereof by
Xpedior, constitutes a legal, valid and binding obligation of PSINet,
enforceable against PSINet in accordance with its terms.
Section 3.3 No Conflicts, Required Filings and Consents.
(a) The execution and delivery of this Agreement by PSINet
does not, and the performance of this Agreement and consummation of the
Transactions by PSINet will not, (i) conflict with or violate the certificate of
incorporation or by-laws of PSINet, (ii) assuming the consents, approvals,
authorizations and waivers specified in Section 3.3(b) have been received and
any condition precedent to such consent, approval, authorization or waiver has
been satisfied, conflict with or violate any Law applicable to PSINet or by
which any property or asset of PSINet is bound or affected, or (iii) result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of PSINet
pursuant to, any contract, agreement, note, bond, mortgage, indenture, credit
agreement, lease, license, permit, franchise or other instrument or obligation
to which PSINet is a party or by which PSINet or any property or asset of PSINet
is bound or affected, except in the case of clauses (ii) or (iii) for any such
conflicts, violations, breaches, defaults or other occurrences of the type
referred to above that would not prevent or materially delay the consummation of
the Transactions.
(b) The execution and delivery of this Agreement by PSINet
does not, and the performance of this Agreement and consummation of the
Transactions by PSINet will not, require any consent, approval, authorization,
waiver or permit of, or filing with or notification to, any Governmental Entity,
except as required pursuant to the Exchange Act, Merger Control Laws, and
regulations promulgated thereunder, except where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay the consummation of the
Transactions.
Section 3.4 Brokers. Except as set forth on the PSINet Disclosure
Schedule, no agent, broker, finder, investment banker or other firm or Person is
or will be entitled to any broker's or finder's fee or other similar commission
or fee in connection with the Transactions based upon arrangements made by or on
behalf of PSINet.
Section 3.5 Investment Intent. PSINet is acquiring the Convertible Note
for its own account for investment purposes only and not with a view to or for
distributing or reselling such Convertible Note, or any part thereof or interest
therein; provided, however, that this Section 3.5 shall not prejudice in any way
PSINet's right at all times to sell or otherwise convert or dispose of all or
any part of such Convertible Note (or all or any part of the Series A Preferred
Stock into which it may be converted or all or any part of the Common Stock
issuable as a dividend upon
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the Series A Preferred Stock or into which the Series A Preferred Stock may be
converted) pursuant to an effective registration statement under the Securities
Act, or under an exemption from such registration, and, in each case, in
compliance with applicable Blue Sky Laws.
Section 3.6 Status. PSINet is, and at the Closing Date, will be, an
"accredited investor" as defined in Rule 501(a) under the Securities Act.
ARTICLE IV
Covenants
Section 4.1 Access to Information. As soon as practicable after the
date hereof, Xpedior shall use its reasonable best efforts to cooperate with and
assist PSINet and PSINet's independent public accountants in the compilation and
preparation of all financial statements and financial statement schedules of
Xpedior in accordance with GAAP, and to obtain such reports and consents of
Xpedior's independent public accountants, as may be necessary or deemed
advisable by PSINet to comply with its SEC reporting and disclosure
requirements, if any. Xpedior shall deliver to PSINet's independent public
accountants or Xpedior's independent public accountants all engagement letters
and management representation letters as may be reasonably requested by PSINet
or such accountants. Xpedior shall use its reasonable best efforts to cause its
independent public accountants to cooperate with and assist PSINet and its
independent public accountants in the preparation of any financial statements
contemplated by this Section 4.1.
Section 4.2 Furnishing of Information. As long as PSINet owns the
Convertible Note or any shares of Series A Preferred Stock or Common Stock,
Xpedior covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by
Xpedior after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act. If at any time prior to the date on which PSINet may resell all of the
shares of Common Stock acquired by it as a dividend upon, or upon conversion of,
the Series A Preferred Stock without volume restrictions pursuant to Rule 144(k)
promulgated under the Securities Act (as determined by counsel to Xpedior, which
may be counsel employed by Xpedior, pursuant to a written opinion letter to such
effect, if necessary, addressed and acceptable to Xpedior's transfer agent for
the benefit of and also addressed to PSINet) Xpedior is not required to file
reports pursuant to such sections, it will prepare and furnish to PSINet, and
make publicly available, information in accordance with Rule 144(c) promulgated
under the Securities Act. Xpedior further covenants that it will take such
further action as any holder of the Convertible Note or Series A Preferred
Shares may reasonably request, all to the extent required from time to time to
enable such Person to sell such shares of Common Stock without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 promulgated under the Securities Act, including providing the legal
opinion referenced above in this Section 4.2 (if required by Xpedior's transfer
agent). Upon the request of any such Person, Xpedior shall deliver to such
Person a written certification of Xpedior executed by a duly authorized officer
on behalf of Xpedior as to whether it has complied with such requirements of
Rule 144(c).
Section 4.3 Integration. Xpedior shall not, and shall use its
reasonable best efforts to ensure that none of its Affiliates, agents or
representatives shall, sell, offer for sale, solicit offers
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to buy or otherwise negotiate in respect of any "security" (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Convertible Note or the Series A Preferred Stock in a manner that would
require the registration under the Securities Act of the issue or sale of the
Convertible Note or the Series A Preferred Stock to PSINet.
Section 4.4 Adoption of Shareholder Rights Plan. As long as PSINet or
any of its Affiliates owns the Convertible Note or any shares of Series A
Preferred Stock or Common Stock, Xpedior covenants not to implement a
shareholder rights plan, arrangement or any similar plan or agreement.
Section 4.5 Information Statement. Xpedior shall promptly prepare and
file with the SEC an information statement relating to this Agreement, the
Transactions and the authorization and issuance of the Convertible Note
hereunder (the "Information Statement"), incorporate in the Information
Statement the reasonable comments of PSINet and its counsel, and use all
reasonable efforts to cause the Information Statement to be mailed to its
shareholders as promptly as practicable after the date hereof pursuant to Rule
14c-2(b) under the Exchange Act. Xpedior shall mail the Information Statement
(and all other materials required to be mailed therewith) to its stockholders as
promptly as practicable after the passage of the ten-day period required by Rule
14c-5(a) under the Exchange Act and shall take all other actions required under
Regulation 14C under the Exchange Act in connection with this Agreement, the
Transactions and the issuance of the Series A Preferred Stock hereunder. PSINet
shall cooperate with Xpedior and provide Xpedior with such information, and
provide such other assistance, as Xpedior may reasonably request in order to
promptly prepare, file and mail the Information Statement.
Section 4.6 Repayment of Metamor Note. Xpedior shall, on or before the
Closing Date, pay to Metamor the Metamor Payable.
Section 4.7 Transfer Restrictions.
(a) Securities may only be disposed of pursuant to an
effective registration statement under the Securities Act, to Xpedior, or
pursuant to an available exemption therefrom or in a transaction not subject to
the registration requirements thereof. In connection with any transfer of any
Securities other than pursuant to an effective registration statement or to
Xpedior, Xpedior may require that the transferor thereof provide to Xpedior an
opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to Xpedior, to the effect that such
transfer does not require registration under the Securities Act. Except as
otherwise expressly provided herein, neither the Convertible Note nor the Series
A Preferred Stock may be sold, hypothecated (other than pursuant to a bona fide
loan arrangement with a broker, dealer or financial institution), transferred or
otherwise conveyed by PSINet or any direct or indirect permitted transferee
thereof without the prior written consent of Xpedior, which consent shall not be
unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing,
Xpedior hereby consents to and agrees to register on its book and records (i)
any transfer by PSINet to (A) any Affiliate of PSINet, or (B) any Affiliate of a
permitted transferee company, and (ii) any transfers among any such Affiliates
or permitted transferees. With respect to any such transfer, no documentation
shall be required other than (i) executed transfer documents, and (ii) an
executed instrument of such transferee pursuant to which such transferee makes
representations and warranties to Xpedior to the same effect as those as set
forth in
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Sections 3.5 and 3.6 and agrees to be bound by the terms of this Agreement and
the Registration Rights Agreement. Any transferee of Securities pursuant to this
Section 4.7(a) shall have the rights and obligations of PSINet under this
Agreement and of a "Holder" under the Registration Rights Agreement.
(b) PSINet agrees to the imprinting, so long as is required by
this Section 4.7(b) of the following legend on the Securities:
NEITHER THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE] HAVE BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS.
Securities shall not contain the legend set forth above if the conversion of
Series A Preferred Stock, or other issuance of such Securities, occurs at any
time while a registration statement is effective with respect thereto under the
Securities Act or, in the event there is not such an effective registration
statement at such time, if in the opinion of counsel to Xpedior such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncement issued by the staff of the SEC).
Xpedior agrees that it will provide PSINet, upon request, with a certificate or
certificates representing the Securities, free from such legend, at such time as
such legend is no longer required hereunder. Xpedior shall not make any notation
on its records or give any instructions to any transfer agent of Xpedior which
enlarge the restrictions on transfer set forth in this Section 4.7.
Section 4.8 Acknowledgment of Dilution. Xpedior acknowledges that the
issuance of the Common Stock upon conversion of the Series A Preferred Stock may
result in dilution of the outstanding shares of Common Stock, which dilution may
be substantial under certain market conditions. Xpedior further acknowledges
that, subject to the terms of the Certificate of Designations and applicable
Law, after the Closing its obligations to issue Series A Preferred Stock in
accordance with the terms of the Convertible Note and to issue Common Stock in
accordance with the terms of the Series A Preferred Stock are unconditional and
absolute regardless of the effect of any such dilution.
Section 4.9 Copies and Use of Disclosure Materials. Xpedior consents to
the use of the SEC Reports, any reports filed by Xpedior under the Exchange Act
after the date hereof and any information provided by Xpedior pursuant to
Section 4.2 of this Agreement, and any amendments and supplements thereto, by
PSINet in connection with resales of the Securities other than pursuant to an
effective registration statement. Xpedior makes no representation or warranty as
to the continued completeness or accuracy of any of the SEC Reports or any other
such reports and undertakes no obligations to update any of the SEC Reports or
any such reports
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after the Closing Date, except as and to the extent required under the Exchange
Act and the Registration Rights Agreement.
Section 4.10 Increase in Authorized Shares. At such time or times as
Xpedior would be, if a notice of conversion were to be delivered on such date,
precluded from converting the Convertible Note or the then outstanding Series A
Preferred Stock by reason of an insufficient number of authorized shares of
Series A Preferred Stock or Common Stock then being authorized for issuance, the
Board of Directors of Xpedior shall take the actions set forth in the
Convertible Note or the Certificate of Designations, as applicable.
Section 4.11 Listing of Underlying Shares. Xpedior shall use its
reasonable best efforts to maintain the listing of its Common Stock on the
Nasdaq National Market (or any other national securities exchange or market on
which the Common Stock is then listed or quoted). In addition, if at any time
the number of shares of Common Stock then issuable upon conversion of all then
issued shares of Series A Preferred Stock, plus the number of shares of Common
Stock reserved for issuance upon payment of dividends upon the Series A
Preferred Stock (assuming all dividends are paid in shares of Common Stock), is
greater than the number of shares of Common Stock theretofore listed with the
Nasdaq National Market (and any such other national securities exchange or
market), then Xpedior shall promptly take such action to file an additional
shares listing application so that a number of shares equal to the number of
shares of Common Stock as would then be issuable upon conversion of all of the
Series A Preferred Stock, plus the number of shares of Common Stock reserved for
issuance upon payment of dividends upon the Series A Preferred Stock (assuming
all dividends are paid in shares of Common Stock), shall have been listed with
the Nasdaq National Market (and any such other national securities exchange or
market).
Section 4.12 Conversion Obligations of Xpedior. Xpedior shall honor
conversions of the Convertible Note and the Series A Preferred Stock and shall
deliver Series A Preferred Stock and Common Stock in accordance with the terms
and conditions and time periods set forth in the Convertible Note and the
Certificate of Designations, as applicable. Each of the parties hereto agrees
that the other party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Section 4.12 and to enforce
specifically this Section 4.12 and the terms and provisions of this Section 4.12
in any action instituted in any court of the United States or any state thereof
having jurisdiction over the parties to this Agreement and the matter, in
addition to any other remedy to which they may be entitled, at Law or in equity.
Section 4.13 Rights and Warrants. If Xpedior, at any time while the
Convertible Note or any shares of Series A Preferred Stock are outstanding,
shall issue any rights and/or warrants to all of the holders of Common Stock as
a class entitling them to subscribe for or purchase shares of Common Stock, then
PSINet shall receive an amount of such rights and/or warrants equal to the
number of rights and/or warrants it would have received, at the time of issuance
of such rights and/or warrants, if it had then converted the Convertible Note
and all of its shares of Series A Preferred Stock and if all dividends due but
not yet paid on the Preferred Stock had been paid in shares of Common Stock.
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ARTICLE V
General Provisions
Section 5.1 Survival of Representations, Warranties and Agreements. The
representations, warranties, covenants and agreements in this Agreement shall
survive the Closing.
Section 5.2 Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to Xpedior:
Xpedior Incorporated
One North Franklin, Suite 1500
Chicago, Illinois 60606
Attention: Executive Vice President and Chief Operating Officer
Telecopy: (312) 251-2460
With a copy to:
Xpedior Incorporated
35 Corporate Drive, 4th Floor
Burlington, Massachusetts 01803
Attention: Caesar J. Belbel, Esq., Senior Vice President,
General Counsel and Secretary
Telecopy: (781) 685-4726
And to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attention: Ann L. Milner, Esq.
Telecopy: (617) 951-7050
If to PSINet:
PSINet Inc.
44983 Knoll Square
Alexandria, Virginia 20147
Attention: Chairman and Chief Executive Officer
Telecopy: (703) 726-4250
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With a copy to:
PSINet Inc.
44983 Knoll Square
Alexandria, Virginia 20147
Attention: Kathleen B. Horne, Esq., Senior Vice
President and General Counsel
Telecopy: (703) 726-5254
And to:
Nixon Peabody LLP
437 Madison Avenue
New York, New York 10022
Attention: Richard F. Langan, Jr., Esq.
Telecopy: (212) 940-9940
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 5.2.
Section 5.3 Specific Performance. The parties hereto agree that each
party shall be entitled to an injunction or restraining order to prevent
breaches of this Agreement, the Convertible Note, the Certificate of
Designations or the Registration Rights Agreement, and to enforce specifically
the terms and provisions hereof and thereof in any court of the United States or
any state having jurisdiction, this being in addition to any other right or
remedy to which such party may be entitled under this Agreement, the Convertible
Note, the Certificate of Designations or the Registration Rights Agreement, at
Law or in equity.
Section 5.4 Entire Agreement. This Agreement, the Convertible Note, the
Certificate of Designations and the Registration Rights Agreement (including the
documents and instruments referred to herein and therein) constitute the entire
agreement and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
Section 5.5 Assignments; Parties in Interest. Neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any
of the parties hereto (whether by operation of Law or otherwise) without the
prior written consent of the other party. Subject to the foregoing, this
Agreement shall be binding upon and inure solely to the benefit of (a) each
party hereto, and (b) any permitted transferee of the Convertible Note or shares
of the Series A Preferred Stock (or the Common Stock issuable in payment of
dividends upon, or upon conversion of, the Series A Preferred Stock), and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement, including to confer third party
beneficiary rights.
Section 5.6 Governing Law. This Agreement shall be governed in all
respects by the Laws of the State of Delaware (without giving effect to the
provisions thereof relating to conflicts of Law). The non-exclusive venue for
the adjudication of any dispute or proceeding
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arising out of this Agreement or the performance hereof shall be the courts
located in Newcastle County, Delaware, and the parties hereto each consents to
and hereby submits to the jurisdiction of any court located in Newcastle County,
Delaware or any Federal courts located in Delaware.
Section 5.7 Headings; Disclosure. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. Any disclosure by
Xpedior or PSINet in any portion of its respective Disclosure Schedule shall be
deemed disclosure in each other portion of such Disclosure Schedule to which
such disclosure reasonably relates on its face.
Section 5.8 Certain Definitions and Rules of Construction.
(a) As used in this Agreement:
"Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person; for purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Annual Financial Statements" has the meaning set forth in Section
2.5(b).
"Blue Sky Laws" has the meaning set forth in Section 2.4(b).
"Benefit Plans" has the meaning set forth in Section 2.8(a).
"CERCLA" has the meaning set forth in Section 2.16.
"Certificate of Designations" has the meaning set forth in Section 1.2.
"Closing" has the meaning set forth in Section 1.3.
"Closing Date" has the meaning set forth in Section 1.3.
"Code" has the meaning set forth in Section 2.8(a).
"Common Stock" has the meaning set forth in Section 2.2(a).
"Contracts" has the meaning set forth in Section 2.13.
"Convertible Note" has the meaning set forth in the preamble to this
Agreement.
"Debt" means, with respect to any Person, all indebtedness of such
Person for borrowed money or the deferred purchase price of property or services
(excluding trade payables and other accrued current liabilities arising in the
ordinary course of business), obligations of such Person evidenced by bonds,
notes, indentures or similar instruments, obligations of such Person under
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interest rate agreements, currency hedging agreements, commodity price
protection agreements or similar hedging instruments, capital lease obligations
of such Person, redeemable capital stock of such Person and any other
obligations of such Person classified as indebtedness under GAAP.
"Environmental Laws" has the meaning set forth in Section 2.16.
"Environmental Permits" has the meaning set forth in Section 2.16.
"ERISA" has the meaning set forth in Section 2.8(a).
"ERISA Affiliate" has the meaning set forth in Section 2.8(a).
"Exchange Act" has the meaning set forth in Section 2.5(a).
"Financial Statements" has the meaning set forth in Section 2.5(c).
"GAAP" has the meaning set forth in Section 2.5(b).
"Governmental Entity" has the meaning set forth in Section 2.4(b).
"Governmental Regulation" has the meaning set forth in Section 2.11.
"Hazardous Materials" has the meaning set forth in Section 2.16.
"Information Statement" has the meaning set forth in Section 5.7.
"Information Technology" has the meaning set forth in Section 2.14(c).
"Intellectual Property Rights" has the meaning set forth in Section
2.14(a).
"IRS" has the meaning set forth in Section 2.8(c).
"Law" or "Laws" means any domestic (federal, state or local), foreign
or supranational law, rule, regulation, order, judgment or decree.
"Liens" has the meaning set forth in Section 2.2(b).
"Merger Control Laws" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder,
and the Law of any other Governmental Entity with respect to competition,
mergers or other business combinations.
"Metamor" has the meaning set forth in Section 1.4.
"Metamor Payable" has the meaning set forth in Section 1.4.
"Non-U.S. Benefit Plans" has the meaning set forth in Section 2.8(l).
"Permits" has the meaning set forth in Section 2.11.
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<PAGE>
"Person" shall include individuals, corporations, partnerships, limited
liability companies, trusts, other entities and groups (which term shall include
a "group" as such term is defined in Section 13(d)(3) of the Exchange Act).
"Preferred Stock" has the meaning set forth in Section 2.2(a).
"Property Rights" has the meaning set forth in Section 2.12.
"PSINet" has the meaning set forth in the preamble to this Agreement.
"PSINet Disclosure Schedule" has the meaning set forth in Article III,
Introduction.
"Purchase Price" has the meaning set forth in Section 1.1.
"Quarterly Financial Statements" has the meaning set forth in Section
2.5(c).
"Registration Rights Agreement" has the meaning set forth in Section
1.4.
"SEC" has the meaning set forth in Section 2.5(a).
"SEC Reports" has the meaning set forth in Section 2.5(a).
"Securities" means the Series A Preferred Stock and the Common Stock
issued or issuable as dividends upon, or upon conversion of, Series A Preferred
Stock.
"Securities Act" has the meaning set forth in Section 2.4(b).
"Series A Preferred Stock" has the meaning set forth in the preamble to
this Agreement.
"Stock Options" has the meaning set forth in Section 2.2(a).
"Subsidiary" or "Subsidiaries" means, with respect to PSINet, Xpedior
or any other Person, any corporation, partnership, joint venture or other legal
entity of which PSINet, Xpedior or such other Person, as the case may be (either
alone or through or together with any other Subsidiary), owns, directly or
indirectly, stock or other equity interests the holders of which are generally
entitled to more than 50% of the vote for the election of the board of directors
or other governing body of such corporation or other legal entity.
"Tax" means any federal, state, local, foreign or provincial income,
gross receipts, property, sales, service, use, license, lease, excise,
franchise, employment, payroll, withholding, employment, unemployment insurance,
workers' compensation, social security, alternative or added minimum, ad
valorem, value added, stamp, business license, occupation, premium,
environmental, windfall profit, customs, duties, estimated, transfer or excise
tax, or any other tax, custom, duty, premium, governmental fee or other
assessment or charge of any kind whatsoever, together with any interest, penalty
or addition to tax imposed by, any Governmental Entity.
"Transactions" means the transactions contemplated by this Agreement,
the Certificate of Designations and the Registration Rights Agreement.
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<PAGE>
"Xpedior" has the meaning set forth in the preamble to this Agreement.
"Xpedior Benefit Plans" has the meaning set forth in Section 2.8(a).
"Xpedior Disclosure Schedule" has the meaning set forth in Article II,
Introduction.
"Xpedior Material Adverse Effect" means any circumstance, event or
occurrence, or any series of circumstances, events or occurrences, which
individually or in the aggregate with all other circumstances, events or
occurrences would be reasonably likely to have a material adverse effect on the
business, assets, operations, financial condition, revenues or results of
operations of Xpedior and its Subsidiaries taken as a whole, other than any
change, circumstances or effect relating to (i) a change after the date of this
Agreement in Law or GAAP, or in any interpretations thereof, that applies to
Xpedior or its Subsidiaries, (ii) the economy or securities markets in general,
or (iii) the industries in which Xpedior operates in general and not
specifically relating to Xpedior.
"Year 2000 Ready" has the meaning set forth in Section 2.14(c).
(b) Other Rules of Construction.
(i) References in this Agreement to any gender shall
include references to all genders. Unless the context otherwise requires,
references in the singular include references in the plural and vice versa.
References to a party to this Agreement or to other agreements described herein
means those Persons executing such agreements.
(ii) The words "include", "including" and "includes"
shall each be deemed to be followed by the phrase "without limitation" or the
phrase "but not limited to" in all places where such words appear in this
Agreement. The word "or" shall be deemed to be inclusive.
(iii) This Agreement is the joint drafting product of
PSINet and Xpedior, and each provision has been subject to negotiation and
agreement and shall not be construed for or against either party as drafter
thereof.
(iv) In each case in this Agreement where this
Agreement or a Contract is represented or warranted to be enforceable, such
representation or warranty will be deemed to include a limitation thereon to the
extent that enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar Laws affecting the
enforcement of creditors' rights generally and to general equitable principles,
whether applied in equity or at Law.
(v) All references in this Agreement to financial
terms shall be deemed to refer to such terms as they are defined under GAAP,
consistently applied.
Section 5.9 Counterparts. This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
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Section 5.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economics or legal
substance of the Transactions are not affected in any manner materially adverse
to either party. Upon determination that any term or other provision hereof is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable Law in an acceptable manner to the end that the Transactions are
fulfilled to the extent possible.
Section 5.11 Fees and Expenses. Whether or not the Transactions are
consummated, all costs and expenses incurred in connection with this Agreement
and the Transactions shall be paid by the party incurring such expenses.
Section 5.12 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 5.13 Waiver. At any time prior to the Closing, the parties
hereto may, to the extent permitted by applicable Law, (a) extend the time for
the performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the representations and warranties by the
other party contained herein or in any documents delivered by the other party
pursuant hereto, and (c) waive compliance with any of the agreements of the
other party or with any conditions to its own obligations contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
<PAGE>
IN WITNESS WHEREOF, PSINet and Xpedior have caused this Agreement to be
signed by their respective officers thereunto duly authorized all as of the date
first written above.
PSINET INC.
By:/s/Harold S. Wills
-------------------------------
Name Harold S. Wills
Title: President and Chief Operating Officer
XPEDIOR INCORPORATED
By:/s/David N. Campbell
------------------------------
Name: David N. Campbell
Title: President and Chief Executive Officer
<PAGE>
Exhibit 3
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
XPEDIOR INCORPORATED
Convertible Note
$50,000,000.00 June 15, 2000
FOR VALUE RECEIVED, the undersigned, Xpedior incorporated, a Delaware
corporation ("Xpedior"), HEREBY PROMISES TO PAY ON AUGUST 15, 2000, to the order
of PSINet, INC., a New York corporation ("PSINet"), or its assigns, at its
office at 44983 Knoll Square, Ashburn, Virginia 20147, in lawful money of the
United States of America and in immediately available funds, FIFTY MILLION
UNITED STATES DOLLARS (U.S. $50,000,000.00), together with interest in like
money on the unpaid principal balance thereof at the rate of 8 1/2% per annum.
1. Interest. Interest on this Convertible Note shall be calculated
on the basis of a 360-day year and shall accrue daily commencing on the date
hereof. Interest on this Convertible Note shall be payable in full on the
earlier to occur of the maturity date of this Note and the Conversion Date. In
no case shall the interest on this Convertible Note exceed the maximum amount
permitted under applicable Law. Interest on this Convertible Note is payable in
cash in immediately available funds or, at the option of PSINet, shares of
Xpedior's common stock, par value $0.01 per share (the "Common Stock"), or any
combination thereof. If PSINet elects to have interest on this Convertible Note
paid in shares of Common Stock, then the number of shares of Common Stock
issuable with respect to such interest shall be equal to the aggregate dollar
value of all interest then due, divided by the Five Day Average Market Price of
the Common Stock as of the date the interest is due.
2. Ranking. This Convertible Note is a senior unsubordinated
obligation of Xpedior and ranks pari passu with all other senior unsubordinated
Debt of Xpedior.
<PAGE>
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3. Conversion.
(a) This Convertible Note (including the principal and
interest due hereon) shall automatically convert into an aggregate of 1,000,000
shares of Xpedior's Series A 8 1/2% Cumulative Convertible Preferred Stock, par
value $0.01 per share (the "Series A Preferred Stock"), on the twentieth day
(the "Conversion Date") following the delivery by Xpedior to its common
stockholders of the Information Statement contemplated by the Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), between
Xpedior and PSINet, provided that Xpedior shall have delivered to PSINet (i) a
certificate or certificates representing the Series A Preferred Stock,
registered in the name of PSINet or its designee, in a form satisfactory to
PSINet, (ii) a copy of the filed Certificate of Designations in substantially
the form attached to the Purchase Agreement (the "Certificate of Designations"),
as certified by the Delaware Secretary of State, together with a copy of the
filing receipt therefor, (iii) evidence, satisfactory to PSINet, that the shares
of Common Stock issuable in payment of dividends upon, or upon conversion of,
the Series A Preferred Stock shall have been approved for listing on the Nasdaq
National Market upon official notice of issuance, and (iv) all other documents,
instruments and writings required to have been delivered at or prior to the
Conversion Date by Xpedior pursuant to this Convertible Note or that PSINet may
reasonably request.
(b) The issuance of certificates for shares of Series A
Preferred Stock upon conversion of this Convertible Note shall be made without
charge to PSINet for any transfer, documentary stamp or similar taxes that may
be payable in respect of the issue or delivery of such certificates; provided,
however, that Xpedior shall not be required to pay any tax that may be payable
in respect of any transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of PSINet of this
Convertible Note, and that Xpedior shall not be required to issue or deliver
such certificates unless or until PSINet shall have paid to Xpedior the amount
of any such tax or shall have established to the satisfaction of Xpedior that
any such tax has been paid.
(c) Xpedior shall at all times reserve and keep available out
of its authorized and unissued Preferred Stock, solely for the purpose of
issuance upon conversion of this Convertible Note as herein provided, free from
preemptive rights or any other actual or contingent purchase rights of Persons
other than PSINet, not less than the number of shares of Series A Preferred
Stock as shall be issuable upon conversion of this Convertible Note. All shares
of Series A Preferred Stock that shall be so issuable shall, upon issue, be duly
authorized, validly issued and fully paid and non-assessable.
(d) Upon conversion pursuant to this Section 3, this
Convertible Note shall be canceled.
4. Defaults and Remedies.
(a) An "Event of Default" shall occur if:
(i) Xpedior shall fail to pay when due any payment
hereunder.
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(ii) Xpedior shall fail to comply with any of its
covenants or agreements set forth in this Convertible Note and the default
continues for a period of thirty days after there shall have been given to
Xpedior by PSINet, a written notice specifying such failure and requiring
Xpedior to cause such failure to be cured, or such Debt to be discharged, and
stating that such notice is a "Notice of Default" hereunder.
(iii) Xpedior shall fail to comply with any of its
covenants or agreements set forth in the Purchase Agreement, or otherwise
breaches or defaults under the Purchase Agreement.
(iv) An event or events of default, as defined in any
one or more mortgages, indentures or other Debt instruments under which there
may be issued, or by which there may be secured or evidenced, any Debt of
Xpedior or any of its Subsidiaries, whether such Debt now exists or shall
hereafter be created, shall occur which permits the holders of such Debt to
declare an aggregate principal amount of at least $100,000 of such Debt to
become due and payable prior to the date on which it would otherwise have become
due and payable and such event or events of default shall not have been cured in
accordance with the provisions of such mortgage, indenture or other Debt
instrument, or such Debt shall not have been discharged within a period of
thirty days after there shall have been given to Xpedior by PSINet a Notice of
Default.
(v) A court of competent jurisdiction shall enter a
final, non-appealable judgment or judgments for the payment of money in the
aggregate in excess of $100,000 against Xpedior or any or its Subsidiaries and
such judgment is not rescinded, annulled, stayed or satisfied for a period
(during which execution shall not be effectively stayed) of thirty days after
the amount of such judgment is determined.
(vi) Xpedior, pursuant to or within the meaning of
any Bankruptcy Law, (A) commences a voluntary case, (B) consents to the entry of
an order for relief against it in an involuntary case, (C) consents to the
appointment of a legal representative, however named, of it or for all or
substantially all of its property, or (D) makes a general assignment for the
benefit of its creditors.
(vii) A court of competent jurisdiction enters an
order or decree under any Bankruptcy Law, which order or decree remains unstayed
and in effect for at least thirty days, that (A) is for relief against Xpedior
in an involuntary case, (B) appoints a legal representative, however named, of
Xpedior or for all or substantially all of its property, or (C) orders the
liquidation of Xpedior.
(b) If an Event of Default occurs and is continuing, PSINet
may, by notice to Xpedior, declare the principal of, and accrued interest on,
the Convertible Note to be immediately due and payable. Upon such declaration,
such principal and interest shall be immediately due and payable. PSINet may, by
notice to Xpedior, rescind an acceleration and its consequences if all existing
Events of Default have been cured or waived and if the rescission would not
conflict with any judgment or decree.
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(c) If an Event of Default occurs and is continuing, PSINet
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Convertible Note or to enforce the
performance of any provision of the Convertible Note. A delay or omission by
PSINet in exercising any right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
5. Certain Definitions and Rules of Construction.
(a) As used in this Convertible Note:
"Bankruptcy Law" means Title 11 of the U.S. Code or any
similar Law for the relief of debtors.
"Certificate of Designations" has the meaning set forth in
Section 3(a).
"Common Stock" has the meaning set forth in Section 1.
"Conversion Date" has the meaning set forth in Section 3(a).
"Convertible Note" has the meaning set forth in the preamble
to this Convertible Note.
"Debt" means, with respect to any Person, all indebtedness of
such Person for borrowed money or the deferred purchase price of property or
services (excluding trade payables and other accrued current liabilities arising
in the ordinary course of business), obligations of such Person evidenced by
bonds, notes, indentures or similar instruments, obligations of such Person
under interest rate agreements, currency hedging agreements, commodity price
protection agreements or similar hedging instruments, capital lease obligations
of such Person, redeemable capital stock of such Person and any other
obligations of such Person classified as indebtedness under generally accepted
accounting principles.
"Event of Default" has the meaning set forth in Section 4(a).
"Five Day Average Market Price" as at any date shall mean the
average Per Share Market Value for the five Trading Days immediately preceding,
but not including, such date; provided, however, that, at the option of Xpedior,
any Trading Day during such five-Trading-Day period on which PSINet sets the
last closing bid price on the Common Stock shall not be used for determining the
Five Day Average Market Price, in which case the first Trading Day preceding
such five-Trading-Day period on which PSINet did not set the last closing bid
price on the Common Stock shall be used for determining the Five Day Average
Market Price.
"Law" or "Laws" means any domestic (federal, state or local),
foreign or supranational law, rule, regulation, order, judgment or decree.
<PAGE>
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"Notice of Default" has the meaning set forth in Section
4(a)(ii).
"Per Share Market Value" as at any particular date means (i)
the closing bid price per share of the Common Stock on such date on the Nasdaq
National Market or other principal stock exchange or quotation system on which
the Common Stock is then listed or quoted or, if there is no such price as at
such date, then the closing bid price on such exchange or quotation system as at
the date nearest preceding such date, or (ii) if the Common Stock is not listed
or quoted then on the Nasdaq National Market or any other national securities
exchange or quotation system, the closing bid price for a share of Common Stock
in the over-the-counter market, as reported by the OTC Bulletin Board or in the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding to its functions of reporting prices) as at the close of business on
such date, or (iii) if the Common Stock is not then reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding
to its functions of reporting prices), then the average of the "Pink Sheet" bid
quotes for the relevant day, as determined in good faith by PSINet, or (iv) if
the Common Stock is not then publicly traded, the fair market value of a share
of Common Stock on such date as determined by a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountants of recognized standing (which may be the firm that regularly
examines the financial statements of Xpedior) selected in good faith by Xpedior
and reasonably acceptable PSINet.
"Person" shall include individuals, corporations,
partnerships, limited liability companies, trusts, other entities and groups
(which term shall include a "group" as such term is defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended).
"PSINet" has the meaning set forth in the preamble to this
Convertible Note.
"Purchase Agreement" has the meaning set forth in Section
3(a).
"Series A Preferred Stock" has the meaning set forth in
Section 3(a).
"Subsidiary" or "Subsidiaries" means, with respect to PSINet,
Xpedior or any other Person, any corporation, partnership, joint venture or
other legal entity of which PSINet, Xpedior or such other Person, as the case
may be (either alone or through or together with any other Subsidiary), owns,
directly or indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
"Trading Day" means (i) a day on which the Common Stock is
traded on the Nasdaq National Market or other national securities exchange or
quotation system on which the Common Stock is then listed or quoted, (ii) if the
Common Stock is not listed or quoted on the Nasdaq National Market or any other
national securities exchange or quotation system, a day on which the Common
Stock is traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (iii) if the Common Stock is not quoted on the OTC Bulletin Board, a
day on which the Common Stock is quoted in the over-the-counter market as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting prices).
<PAGE>
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"Xpedior" has the meaning set forth in the preamble to this
Agreement.
(b) Other Rules of Construction.
(i) References in this Convertible Note to any gender
shall include references to all genders. Unless the context otherwise requires,
references in the singular include references in the plural and vice versa.
References to a party to this Convertible Note or to other agreements described
herein means those Persons executing such agreements.
(ii) The words "include", "including" and "includes"
shall each be deemed to be followed by the phrase "without limitation" or the
phrase "but not limited to" in all places where such words appear in this
Convertible Note. The word "or" shall be deemed to be inclusive.
(iii) This Convertible Note is the joint drafting
product of PSINet and Xpedior, and each provision has been subject to
negotiation and agreement and shall not be construed for or against either party
as drafter thereof.
(iv) In each case in this Convertible Note where this
Convertible Note or a contract or agreement is represented or warranted to be
enforceable, such representation or warranty will be deemed to include a
limitation thereon to the extent that enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar Laws affecting the enforcement of creditors' rights
generally and to general equitable principles, whether applied in equity or at
Law.
6. Notices. All notices or other communications under this
Convertible Note shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed in accordance with Section 5.2 of the
Purchase Agreement.
7. Waiver of Usury Law. Xpedior covenants (to the extent that it
may lawfully do so) that it will not at any time voluntarily (and that it will
resist any effort to make it do so involuntarily) insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any usury law
wherever enacted, or at any time hereafter in force, which may affect the
covenants or the performance of this Convertible Note.
8. Governing Law. This Note shall be governed in all respects by the
laws of the State of Delaware (without giving effect to the provisions thereof
relating to conflicts of law). The nonexclusive venue for the adjudication of
any dispute or proceeding arising out of this Convertible Note or the
performance hereof shall be the courts located in Newcastle County, Delaware,
and the parties hereto each consents to and hereby submits to the jurisdiction
of any court located in Newcastle County, Delaware or any Federal courts located
in Delaware.
9. Severability. The invalidity, illegality or unenforceability of
any provision of this Convertible Note shall not render invalid, illegal or
unenforceable any other provision hereof.
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10. Costs of Collection. Xpedior agrees to pay all reasonable
out-of-pocket expenses of PSINet (including reasonable fees of its counsel) in
connection with the enforcement of any provision of this Convertible Note or the
collection of this Convertible Note.
11. No Waiver of Remedies. No failure or delay on the part of
PSINet in the exercise of any power or right in this Convertible Note shall
operate as a waiver thereof, and no exercise or waiver of any single power or
right, or the partial exercise thereof, shall affect Holder's rights with
respect to any and all other rights and powers.
12. Certain Waivers. Xpedior hereby waives presentment, demand for
payment, notice of dishonor, protest and notice of protest and any and all other
notices and demands in connection with the delivery, acceptance, performance,
default or enforcement of this Convertible Note.
13. Successors and Assigns. This Convertible Note shall be binding
upon Xpedior and its successors and assigns.
<PAGE>
IN WITNESS WHEREOF, Xpedior Incorporated has caused this Convertible
Note to be executed by David N. Campbell, its President and Chief Executive
Officer, as of this 15th day of June, 2000.
XPEDIOR INCORPORATED
By:/s/David Campbell
---------------------------------
Name: David Campbell
Title: President and Chief Executive Officer
[SEAL]
Attest:
By:/s/Caesar J. Belbel
-------------------------------------
Name: Caesar J. Belbel
Title: Senior Vice President and General Counsel
<PAGE>
Exhibit 4
CERTIFICATE
OF THE
DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS
OF THE
SERIES A 8 1/2% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
XPEDIOR INCORPORATED
FILED BY:
Ropes & Gray
One International Place
Boston, Massachusetts 02110
<PAGE>
CERTIFICATE
OF THE
DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS
OF THE
SERIES A 8 1/2% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
XPEDIOR INCORPORATED
Pursuant to Section 151 of the
General Corporation Law
of the State of Delaware
I, David N. Campbell, President and Chief Executive Officer of Xpedior
Incorporated, a corporation organized and existing under the General Corporation
Law of the State of Delaware (the "Corporation"), do hereby certify that the
Board of Directors of the Corporation, at a meeting, adopted the following
resolution, which resolution remains in full force and effect on the date
hereof:
RESOLVED: That, pursuant to the authority conferred upon the
Board of Directors of the Corporation by its Certificate of Incorporation (the
"Certificate of Incorporation"), and pursuant to the provisions of Sections 151
and 157 of the General Corporation Law of the State of Delaware, a series of
Preferred Stock of the Corporation be and hereby is created, classified and
authorized, and the issuance thereof is provided for, and that the designation
and number of shares, and the preferences and relative, participating, optional
and other special rights and qualifications, limitations and restrictions shall
be as set forth in the following Sections 1 through 9 (in addition to those set
forth in the Certificate of Incorporation which are applicable to all classes
and series of Preferred Stock) and in Exhibit A attached hereto and made a part
hereof:
Section 1. Designation, Number and Par Value. The series of
preferred stock shall be designated as the Series A 8 1/2% Cumulative
Convertible Preferred Stock (the "Series A Preferred Stock"), and the number of
shares so designated shall be 1,000,000 (which shall not be subject to increase
without the prior approval of the holders (each holder of shares of Series A
Preferred Stock, a "Holder" and, together with all other Holders, the "Holders")
of at least two-thirds of the shares of Series A Preferred Stock then
outstanding). Each share of Series A Preferred Stock shall have a par value of
$.01 per share and a stated value of $50 per share (the "Stated Value").
<PAGE>
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Section 2. Dividends.
(a) (i) Holders shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available therefor,
and the Corporation shall, to the extent funds are legally available therefor,
pay on each Dividend Payment Date, in arrears, cumulative dividends on the
Series A Preferred Stock at the rate per share (as a percentage of the Stated
Value per share) equal to 8 1/2% per annum, payable in cash or shares of Common
Stock, or any combination thereof, at (subject to the terms and conditions set
forth herein) the option of the Corporation. Dividends on the Series A Preferred
Stock shall be calculated on the basis of a 360-day year, shall accrue daily
commencing on the date of the first issuance of any shares of the Series A
Preferred Stock, and shall be deemed to accrue on such date whether or not
earned or declared and whether or not there are profits, surplus or other funds
of the Corporation legally available for the payment of dividends. The party
that holds of record the Series A Preferred Stock on the record date for the
applicable Dividend Payment Date for any dividend payment shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available therefor, such dividend payment and any other accrued and unpaid
dividends which accrued prior to such Dividend Payment Date, without regard to
any sale or disposition of such Series A Preferred Stock subsequent to the
applicable record date but prior to the applicable Dividend Payment Date. Except
as otherwise provided in the Certificate of Incorporation or this Certificate of
Designations, and except as otherwise required by law, if at any time the
Corporation pays a portion, but less than the total amount, of dividends then
accrued on account of the Series A Preferred Stock, such payment shall be
distributed ratably among the Holders based upon the number of shares held by
each Holder. In order for the Corporation to exercise its right to pay dividends
in shares of Common Stock on a Dividend Payment Date, the Corporation shall, no
less than 30 days prior to the Dividend Payment Date, provide each Holder notice
(the "Common Stock Dividend Notice") of its intention to pay dividends in shares
of Common Stock. If the Corporation elects to pay dividends in shares of Common
Stock, then the number of shares of Common Stock issuable with respect to each
share of Series A Preferred Stock outstanding on the record date for payment of
such dividend shall be equal to the aggregate dollar value of all dividends then
payable in respect of such share, divided by the Five Day Average Market Price
at the applicable Dividend Payment Date.
(ii) If, and so often as, the Corporation shall be in
default in the payment of dividends on the Series A Preferred Stock in an amount
equivalent to six quarterly dividends (whether or not consecutive, earned or
declared), the number of directors of the Corporation shall thereupon, and until
all dividends in default shall have been paid, be two more than the full number
constituting the Board of Directors immediately prior to such default. The
Holders, voting separately as a class, shall be entitled to elect two directors
(the "Series A Preferred Stock Directors") to fill the vacancies resulting from
such increase, and the Holders may, at a meeting called and held as hereinafter
provided, elect such Series A Preferred Stock Directors to hold office until the
next annual meeting of shareholders. When the special class voting rights
provided for in this Section 2(a)(ii) shall have become vested, they shall
remain so vested at each succeeding meeting of shareholders for the election of
directors; provided, however, that such special voting rights shall become
divested, and the terms of office of the Series A Preferred Stock Directors
shall terminate, if and when all dividends then in default on the Series A
Preferred Stock shall be paid, but always subject to the same provisions for the
vesting of such special rights in case of further like defaults in the payment
of dividends. No
<PAGE>
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Series A Preferred Stock Director shall, during his or her term of office, be
removed from office except upon the vote of the Holders, voting separately as a
class, and, regardless of any provision of the Corporation's By-laws, any
vacancy caused by the death, resignation, inability to serve or removal of any
Series A Preferred Stock Director shall be filled only by the vote of the
Holders, voting separately as a class, at a special meeting of the Holders
called for such purpose, or at the next annual meeting of shareholders. Whenever
the Holders become entitled to elect Series A Preferred Stock Directors pursuant
to this Section 2(a)(ii), a meeting of the Holders shall be held upon call by
the Secretary of the Corporation within 60 days after receipt of a request in
writing of the Holders of not less than 10% of the Series A Preferred Stock then
outstanding, addressed to the Secretary at the principal office of the
Corporation; provided, however, that the Corporation shall not be required to
call such a special meeting if the annual meeting of shareholders is to be held
within 90 days after the date of receipt of such request. The Corporation shall
pay all reasonable expenses incurred in connection with the calling and holding
of any such meeting (and the solicitation of proxies therefor), and the notice
of the meeting shall be accompanied by a proxy statement containing such
material as is then required by the applicable rules and regulations of the
Securities and Exchange Commission. At all meetings of shareholders held for the
purpose of electing Series A Preferred Stock Directors, the presence in person
or by proxy of the Holders of 40% of the outstanding Series A Preferred Stock
shall be required to constitute a quorum of such class for the election of
Series A Preferred Stock Directors; provided, however, that the absence of a
quorum of the Holders of Series A Preferred Stock shall not prevent the election
at any such meeting (or any adjournment thereof) of any other directors by the
holders of all other classes of shares having voting rights for the election of
directors if the necessary quorums are present in person or by proxy at such
meeting; provided further, however, that, in the absence of a quorum of the
Holders of Series A Preferred Stock, the Holders of a majority of the shares of
Series A Preferred Stock who are present in person or by proxy shall have the
power to adjourn the election of the Series A Preferred Stock Directors from
time to time, without notice other than an announcement at such meeting (or
adjournment thereof), until the Holders of the requisite number of shares of
Series A Preferred Stock shall be present in person or by proxy.
(iii) Notwithstanding anything contained in the
Certificate of Incorporation or this Certificate of Designations to the
contrary, no dividends or distributions on shares of Series A Preferred Stock
shall be declared by the Board of Directors of the Corporation or paid or set
apart for payment by the Corporation at such time as the terms and provisions of
any agreement, instrument or indenture of the Corporation relating to its
indebtedness specifically prohibits such declaration, payment or setting apart
for payment or provides that such declaration, payment or setting apart for
payment would constitute a breach thereof or a default or event of default
thereunder; provided, however, that nothing contained in the Certificate of
Incorporation or this Certificate of Designations shall be construed or deemed
to require the Board of Directors to declare, or the Corporation to pay or set
apart for payment, any dividends or distributions on shares of Series A
Preferred Stock at any time, whether permitted by any of such agreements,
instruments or indentures, or not.
(b) Notwithstanding anything to the contrary contained in
Section 2(a)(i), the Corporation may not pay dividends on the Series A Preferred
Stock in shares of Common Stock (and, except as otherwise provided below, must
deliver cash in respect thereof) if, at the date of declaration of such
dividend:
<PAGE>
-4-
(i) (A) the number of shares of Common Stock at
the time reserved for issuance for the payment of such dividends in shares of
Common Stock on such Dividend Payment Date, together with the number of shares
of Common Stock held as treasury stock, are insufficient to satisfy the
Corporation's then existing obligations to issue shares of Common Stock for the
payment of such dividends in shares of Common Stock on such Dividend Payment
Date, or (B) the number of shares of Common Stock equal to the sum of (I) the
number of shares of Common Stock at the time reserved for issuance in payment of
dividends upon, or upon conversion of, the Series A Preferred Stock, (II) the
number of authorized but unissued shares of Common Stock not reserved for any
purpose, (III) the number of shares of Common Stock at the time reserved for
issuance for all other purposes, and (IV) the number of shares of Common Stock
held as treasury stock, is insufficient to satisfy the Corporation's then
existing obligations to issue shares of Common Stock for all purposes (including
the conversion of shares of Series A Preferred Stock);
(ii) the shares of Common Stock payable as a dividend
on the Series A Preferred Stock are not designated for quotation on the Nasdaq
National Market or listed on the New York Stock Exchange or the American Stock
Exchange;
(iii) the Corporation has failed to timely satisfy
its obligations with respect to any Conversion Notice and such failure shall be
continuing as of such Dividend Payment Date;
(iv) the aggregate number of shares of Common Stock
(A) then held by the Holders (or former Holders) of Series A Preferred Stock
which were issued upon the conversion of shares of Series A Preferred Stock, (B)
then issuable upon conversion of any shares of Series A Preferred Stock held by
the Holders, and (C) then held by the Holders (or former Holders) which were
received as payment of dividends upon shares of Series A Preferred Stock,
including in payment of the current dividend, exceeds (I) prior to the Three
Year Date, ___________ shares (which amount is equivalent to 15% of the
aggregate number of outstanding shares of Common Stock as of the Commencement
Date), or (II) on or after the Three Year Date, ___________ shares (which amount
is equivalent to 17.5% of the aggregate number of outstanding shares of Common
Stock as of the Commencement Date), as such amounts may be adjusted to reflect
the occurrence of any of the events described in Sections 5(c)(ii), 5(c)(iii) or
5(c)(iv); or
(v) at any time prior to the Three Year Date, the
Five Day Average Market Price at the applicable Dividend Payment Date is less
than $10 per share (subject to adjustment for stock splits, reverse stock
splits, recapitalizations and similar events).
(c) (i) So long as any shares of Series A Preferred Stock
shall remain outstanding, neither the Corporation nor any of its subsidiaries or
affiliates shall (A) redeem, purchase or otherwise acquire, directly or
indirectly, any Junior Securities other than the repurchase of Common Stock
pursuant to employment agreements or employee or director benefit or stock
plans, (B) directly or indirectly pay or declare any dividend or make any
distribution upon, nor shall any distribution (other than a dividend or
distribution described in Sections 5(c)(ii) or 5(c)(iii)) be made in respect of,
any Junior Securities, or set aside any funds for any such payment or
distribution, or (C) set aside any funds for or apply any funds to the
<PAGE>
-5-
purchase, redemption or acquisition (through a sinking fund or otherwise) of any
Junior Securities.
(ii) So long as any shares of Series A Preferred
Stock shall remain outstanding, neither the Corporation nor any of its
subsidiaries or affiliates shall take any of the actions set forth in Section
2(c)(i) with respect to Parity Stock, if any, (A) unless and until the
Corporation shall have taken substantially similar actions with respect to the
Series A Preferred Stock, or (B) in a manner or on terms more favorable to the
holders of such Parity Stock, if any, than to the Holders of the Series A
Preferred Stock.
Section 3. Voting Rights. Except as otherwise provided in the
Certificate of Incorporation or this Certificate of Designations, and except as
otherwise required by law, the Series A Preferred Stock shall have no voting
rights; provided, however, that, so long as any shares of Series A Preferred
Stock shall remain outstanding, the Corporation shall not, without the requisite
approval of the Holders of the Series A Preferred Stock then outstanding, (a)
take any of the actions described in Section 7, or (b) enter into any agreement
or arrangement with respect to any other action which requires the approval of
the Holders of the Series A Preferred Stock then outstanding, unless conditioned
upon receipt of the requisite approval of the Holders of the Series A Preferred
Stock.
Section 4. Liquidation Preference. Subject to applicable law,
upon any liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary (a "Liquidation"), the Holders shall be entitled to
receive out of the assets of the Corporation, whether such assets are capital or
surplus, for each share of Series A Preferred Stock, an amount equal to the
Stated Value plus all accrued but unpaid dividends per share, whether declared
or not, before any distribution or payment shall be made to the holders of any
Junior Securities, and if the assets of the Corporation shall be insufficient to
pay in full such amounts and all amounts payable to holders of Parity Stock, if
any, then, subject to applicable law, the entire assets to be distributed to the
Holders and the holders of Parity Stock, if any, shall be distributed among the
Holders and the holders of Parity Stock, if any, ratably in accordance with the
respective amounts that would be payable on such shares if all amounts payable
thereon were paid in full. The Corporation shall mail written notice of any such
Liquidation to each Holder not less than 45 days prior to the payment date
stated therein.
Section 5. Conversion.
(a) (i) Each share of Series A Preferred Stock is
convertible by the Holder thereof into shares of Common Stock (subject to
adjustment as provided in this Section 5) at the Conversion Ratio at the option
of the Holder at any time and from time to time. A Holder shall effect
conversions by surrendering the certificate or certificates representing the
shares of Series A Preferred Stock to be converted to the Corporation, together
with the form of conversion notice attached hereto as Exhibit A (the "Conversion
Notice"). Each Conversion Notice shall specify the number of shares of Series A
Preferred Stock to be converted and the date on which such conversion is to be
effected, which date may not be prior to the date on which the Holder delivers
such Conversion Notice (the "Conversion Date"). If no Conversion Date is
specified in a Conversion Notice, the Conversion Date shall be deemed to be the
date that the Conversion Notice is deemed delivered pursuant to Section 5(i).
Subject to Section 5(b), each Conversion
<PAGE>
-6-
Notice, once delivered, shall be irrevocable. If the Holder is converting less
than all of the shares of Series A Preferred Stock represented by the
certificate or certificates tendered by the Holder with the Conversion Notice,
or if a conversion hereunder cannot be effected in full for any reason, the
Corporation shall promptly deliver to such Holder (in the manner and within the
time set forth in Section 5(b)) a certificate for such number of shares of
Series A Preferred Stock as have not been converted. Except as otherwise
provided in the Certificate of Incorporation or this Certificate of
Designations, on and after the effective date of a conversion, the Holder
entitled to receive Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder of the shares of Common Stock issuable
upon conversion, and the Series A Preferred Stock so converted shall no longer
be deemed to be issued and outstanding.
(ii) Notwithstanding anything contained in the
Certificate of Incorporation or this Certificate of Designations to the
contrary, in no event shall the Corporation be obligated to issue any shares of
Common Stock upon conversion of a Holder's shares of Series A Preferred Stock
if, based upon the number of shares of Common Stock outstanding as at the
Commencement Date, such issuance would be in violation of Nasdaq Rule
4460(i)(1)(D) ("Rule 4460"), if then applicable; provided, however, that, in
such event, the Corporation shall be obligated to (A) deliver (in the manner and
within the time set forth in Section 5(b)) the maximum number of shares of
Common Stock as would not be in violation of Rule 4460, (B) use its reasonable
best efforts to take all such actions as shall be necessary or appropriate to
promptly cause such issuance not to be in violation of Rule 4460, and (C)
deliver the remaining shares of Common Stock (in the manner and within the time
set forth in Section 5(b)) as soon as it is possible to do so other than in
violation of Rule 4460; provided further, however, that in the case of clauses
(A) and (C) above, each such issuance shall be distributed ratably among the
Holders based upon the number of shares of Series A Preferred Stock each Holder
has requested to be converted into Common Stock.
(b) Not later than three Trading Days after a Conversion Date,
the Corporation shall deliver to the converting Holder (i) one or more
certificates representing the number of shares of Common Stock being issued upon
the conversion of shares of Series A Preferred Stock, (ii) one or more
certificates representing the number of shares of Series A Preferred Stock not
converted, (iii) a bank check in the amount of accrued and unpaid dividends (if
the Corporation has elected or is required hereunder to pay accrued dividends in
cash), and (iv) if the Corporation has elected and is permitted hereunder
(notwithstanding any applicable notice period) to pay accrued dividends in
shares of Common Stock, one or more certificates representing such number of
shares of Common Stock as are issuable on account of accrued dividends
determined in accordance with Section 2(a); provided, however, that the
Corporation shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon conversion of any shares of Series A Preferred
Stock until certificates evidencing such shares of Series A Preferred Stock are
either delivered for conversion to the Corporation or, if so directed by the
Corporation, to any transfer agent for the Series A Preferred Stock or Common
Stock, or the Holder of such Series A Preferred Stock certifies to the
Corporation and, if required, any such transfer agent that such certificates
have been lost, stolen or destroyed and provides a bond (or other adequate
security) reasonably satisfactory to the Corporation and any such transfer agent
to indemnify and hold harmless the Corporation and any such transfer agent from
any loss incurred by it in connection therewith. The Corporation shall, upon
request of the Holder, use its reasonable best efforts to deliver any
certificate or certificates required to be delivered by the
<PAGE>
-7-
Corporation under this Section 5(b) electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions. If in the case of any Conversion Notice such certificate or
certificates, including for purposes hereof, any shares of Common Stock to be
issued on the Conversion Date on account of accrued but unpaid dividends
hereunder, are not delivered to or as directed by the applicable Holder by the
close of business on the third Trading Day after the Conversion Date, the Holder
shall be entitled by written notice to the Corporation at any time on or before
its receipt of such certificate or certificates thereafter, to rescind such
conversion, in which event the Corporation shall immediately return the
certificates representing the shares of Series A Preferred Stock tendered to it
for conversion and thereupon the Holder shall no longer be treated as a record
holder of the shares of Common Stock issuable upon conversion.
(c) (i) The conversion price for each share of Series A
Preferred Stock (the "Conversion Price") on any Conversion Date shall be equal
to $37.50; provided, however, that (A) if on the first anniversary of the
Commencement Date (the "One Year Date") the Thirty Day Average Market Price of
the Common Stock (the "One Year Reset Price") is less than the then effective
Conversion Price, then on and after the One Year Date the Conversion Price shall
be equal to the One Year Reset Price, (B) if on the second anniversary of the
Commencement Date (the "Two Year Date") the Thirty Day Average Market Price of
the Common Stock (the "Two Year Reset Price") is less than the then effective
Conversion Price, then on and after the Two Year Date the Conversion Price shall
be equal to the Two Year Reset Price, and (C) if on the third anniversary of the
Commencement Date (the "Three Year Date") the Thirty Day Average Market Price of
the Common Stock (the "Three Year Reset Price") is less than the then effective
Conversion Price, then on and after the Three Year Date the Conversion Price
shall be equal to 95% of the Three Year Reset Price. The Conversion Price
determined in accordance with this Section 5(c)(i) shall be subject to further
adjustment as set forth in Sections 5(c)(ii), 5(c)(iii) and 5(c)(iv).
(ii) If the Corporation, at any time after the
Commencement Date, shall (A) pay a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock payable in shares of
Common Stock, (B) subdivide any outstanding shares of Common Stock into a larger
number of shares, (C) combine any outstanding shares of Common Stock into a
smaller number of shares, or (D) issue by reclassification of shares of Common
Stock any shares of capital stock of the Corporation, then the Conversion Price
shall be adjusted by multiplying the Conversion Price then in effect by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding before such event, and the denominator of which shall be the number
of shares of Common Stock outstanding after such event. Such adjustment shall be
made each time any such dividend, distribution, subdivision, combination or
reclassification is made and shall become effective (X) immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution, or (Y) immediately after the effective date in the
case of a subdivision, combination or re-classification.
(iii) If the Corporation, at any time after the
Commencement Date, shall distribute to all holders of Common Stock as a class
(and not to Holders) evidences of its indebtedness or assets, then in each such
case the Conversion Price at which each share of Series A Preferred Stock shall
thereafter be convertible shall be adjusted by multiplying the Conversion Price
in effect immediately prior to the record date fixed for determination of
stockholders
<PAGE>
-8-
entitled to receive such distribution by a fraction, the denominator of which
shall be the Five Day Average Market Price of Common Stock determined as of the
record date mentioned above, and the numerator of which shall be such Five Day
Average Market Price of the Common Stock on such record date less the then fair
market value at such record date of the portion of such assets or the value of
such evidence of indebtedness so distributed applicable to one outstanding share
of Common Stock as determined by the Board of Directors in good faith; provided,
however, that in the event of a distribution exceeding 10% of the net assets of
the Corporation, such fair market value shall be determined by a nationally
recognized or major regional investment banking firm or firm of independent
certified public accountants of recognized standing (which may be the firm that
regularly examines the financial statements of the Corporation) (an "Appraiser")
selected in good faith by the Corporation and reasonably acceptable to the
Holders of a majority in interest of the shares of Series A Preferred Stock then
outstanding. Such adjustment shall be made each time any such distribution is
made and shall become effective immediately after the record date mentioned
above.
(iv) (A) If the Corporation, at any time after
the Commencement Date, shall issue or sell any shares of Common Stock (other
than (I) in payment of a dividend upon, or upon the conversion of, shares of
Series A Preferred Stock, or (II) upon exercise or conversion of warrants,
options or convertible or exchangeable securities outstanding as of the
Commencement Date) without consideration or at a price per share that is less
than the Five Day Average Market Price in effect immediately prior to such
issuance or sale, then in each such case the Conversion Price, upon each such
issuance or sale, shall be lowered to that price determined by multiplying the
Conversion Price then in effect by a fraction, the numerator of which shall be
the sum of the number of shares of Common Stock outstanding immediately prior to
such issuance or sale plus the number of shares of Common Stock which the
aggregate consideration, if any, received by the Corporation for such additional
shares of Common Stock so issued or sold would purchase at the Five Day Average
Market Price then in effect, and the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance or sale
plus the number of such additional shares of Common Stock so issued or sold.
(B) For purposes of this Section 5(c)(iv),
the issuance (or adjustment in exercise or purchase price) of any warrants,
options, subscriptions or other purchase rights with respect to shares of Common
Stock (other than to all holders of Common Stock as a class), and the issuance
(or adjustment in conversion price or exchange ratio) of any securities
convertible into or exchangeable for shares of Common Stock (or the issuance or
adjustment in exercise or purchase price of any warrants, options, subscriptions
or other purchase rights with respect to such convertible or exchangeable
securities) shall be deemed to be an issuance at such time of shares of Common
Stock, and shall be subject to the provisions of Section 5(c)(iv)(A), if the
Five Day Average Market Price then in effect is greater than an amount equal to
(I) the sum of the aggregate consideration, if any, received by the Corporation
for the issuance of such warrants, options, subscriptions, other purchase rights
and/or convertible or exchangeable securities, plus the minimum amount of
consideration, if any, payable to the Corporation upon the exercise, purchase,
conversion or exchange thereof, divided by (II) the aggregate number of shares
of Common Stock that would be issued if all such warrants, options,
subscriptions, other purchase rights and/or convertible and exchangeable
securities were exercised, purchased, converted or exchanged, in each case
determined as of the date of issuance or sale (or adjustment in exercise,
purchase or conversion price or exchange ratio), without
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giving effect to any possible future upward price adjustments or rate
adjustments. For purposes of this Section 5(c)(iv), if a part or all of the
consideration received by the Corporation in connection with such issuance or
sale shall consist of property other than cash, then the fair market value of
such property shall be determined by the Board of Directors in good faith;
provided, however, that in the event the aggregate number of shares of Common
Stock subject to issuance or sale exceeds 10% of the shares of Common Stock
outstanding immediately prior to the issuance or sale of such warrants, options,
subscriptions, other purchase rights and/or convertible or exchangeable
securities, then the fair market value of such property shall be determined by
an Appraiser.
(v) All calculations under this Section 5 shall be
made to the nearest whole cent or the nearest 1/100th of a share, as the case
may be.
(vi) Whenever the Conversion Price is adjusted
pursuant to this Section 5(c), the Corporation shall promptly give notice to
each Holder, which notice shall set forth the Conversion Price after such
adjustment and a brief statement of the facts requiring such adjustment.
(vii) If:
(A) the Corporation shall declare a dividend
(or any other distribution) on its Common Stock;
(B) the Corporation shall declare a special
non-recurring cash dividend on its Common Stock;
(C) the Corporation shall authorize the
granting to all holders of the Common Stock, as a class, rights or warrants to
subscribe for or purchase any shares of capital stock of any class or of any
rights;
(D) the approval of any stockholders of the
Corporation shall be required in connection with any reclassification of the
Common Stock of the Corporation, any consolidation or merger to which the
Corporation is a party, or any sale or transfer of all or substantially all of
the assets of the Corporation; or
(E) the Corporation shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Corporation;
then the Corporation shall cause to be filed at each office or agency maintained
for the purpose of conversion and transfer of Series A Preferred Stock, and
shall cause to be mailed to each of the Holders at their last addresses as they
shall appear upon the stock books of the Corporation, at least 30 calendar days
prior to the applicable record or effective date hereinafter specified, a notice
stating (I) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, redemption, rights or warrants are to
be determined, or (II) the date on which such reclassification, consolidation,
merger, sale or transfer is expected by the Corporation to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be
<PAGE>
-10-
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale or
transfer.
(d) If at any time conditions shall arise by reason of action
taken by the Corporation which in the opinion of the Board of Directors are not
adequately covered by the other provisions hereof and which would materially and
adversely affect the rights of the Holders (different than or distinguished from
the effect generally on rights of holders of any class of the Corporation's
capital stock), or if at any time any such conditions are expected by the
Corporation to arise by reason of any action contemplated by the Corporation,
the Corporation shall mail a written notice briefly describing the action
contemplated and the material adverse effects of such action on the rights of
the Holders at least 30 calendar days prior to the effective date of such
action, and an Appraiser selected by the Corporation and reasonably acceptable
to the Holders of a majority in interest of the Series A Preferred Stock then
outstanding shall give its opinion as to the adjustment, if any (not
inconsistent with the standards established in this Section 5), of the
Conversion Price (including, if necessary, any adjustment as to the securities
into which shares of Series A Preferred Stock may thereafter be convertible) and
any distribution which is or would be required to preserve without diluting the
rights of the Holders. To the extent permitted by applicable law and stock
exchange or Nasdaq rules, the Corporation shall make the adjustment recommended
forthwith upon the receipt of such opinion or the taking of any such action
contemplated, as the case may be; provided, however, that no such adjustment of
the Conversion Price shall be made which in the opinion of the Appraiser would
result in an increase of the Conversion Price to more than the Conversion Price
then in effect.
(e) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of issuance in payment of dividends upon, and upon conversion of, the
Series A Preferred Stock as herein provided, free from preemptive rights or any
other actual or contingent purchase rights of Persons other than the Holders (in
their capacity as Holders), not less than the number of shares of Common Stock
as shall be issuable (taking into account the adjustments and restrictions of
Section 5(c)) in payment of dividends upon, or upon the conversion of, all
outstanding shares of Series A Preferred Stock assuming the payment of all
future dividends in shares of Common Stock in accordance with the terms hereof.
All shares of Common Stock that shall be so issuable shall, upon issue, be duly
authorized, validly issued and fully paid and non-assessable. At such time as
the Corporation would be, if a notice of conversion were to be delivered on such
date, precluded from converting the then outstanding Series A Preferred Stock by
reason of an insufficient number of authorized shares of Common Stock then being
authorized for issuance, the Corporation shall promptly prepare and mail to the
shareholders of the Corporation proxy materials requesting authorization to
amend the Corporation's Certificate of Incorporation to increase the number of
shares of Common Stock which the Corporation is authorized to issue to at least
a number of shares equal to the sum of (i) all shares of Common Stock then
outstanding, (ii) the number of shares of Common Stock issuable on account of
all outstanding warrants, options and convertible securities (other than the
Series A Preferred Stock) and on account of all shares reserved under any stock
option, stock purchase or similar plan or agreement, and (iii) the number of
shares of Common Stock as would then be issuable in payment of dividends upon,
and upon conversion in full of, the Series A Preferred Stock, assuming the
payment of all future dividends in shares of Common Stock in accordance with the
terms hereof. In connection therewith, the Corporation shall use reasonable
efforts to cause its Board of Directors to (i) adopt
<PAGE>
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proper resolutions authorizing such increase, (ii) recommend to and otherwise
use its reasonable best efforts to promptly and duly obtain shareholder approval
to carry out such resolutions (and hold a special meeting of the shareholders no
later than the 60th day after delivery of the proxy materials to the
shareholders relating to such meeting), and (iii) within five Trading Days of
obtaining such shareholder authorization, file an appropriate amendment to the
Corporation's Certificate of Incorporation to evidence such increase.
(f) Upon a conversion hereunder, the Corporation shall not be
required to issue certificates representing fractions of shares of Common Stock,
but may, to the extent permitted by applicable law, make a cash payment in
respect of any final fraction of a share based on the Five Day Average Market
Price as at the applicable Conversion Date.
(g) The issuance of certificates for shares of Common Stock
upon conversion of Series A Preferred Stock shall be made without charge to the
Holders thereof for any documentary stamp or similar taxes that may be payable
in respect of the issue or delivery of such certificates; provided, however,
that the Corporation shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the Holder of such
shares of Series A Preferred Stock so converted, and that the Corporation shall
not be required to issue or deliver such certificates unless or until the Person
or Persons requesting the issuance thereof shall have paid to the Corporation
the amount of any such tax or shall have established to the satisfaction of the
Corporation that any such tax has been paid.
(h) Shares of Series A Preferred Stock converted into Common
Stock shall be canceled and shall have the status of authorized but unissued
shares of undesignated Preferred Stock.
(i) Except as may otherwise be required by applicable law, any
and all notices or other communications or deliveries to be provided by the
Holders hereunder, including, without limitation, any Conversion Notice, shall
be in writing and delivered personally, transmitted by facsimile, sent by a
nationally recognized overnight courier service or sent by certified or
registered mail, postage prepaid, addressed to the attention of the President of
the Corporation, with a copy to the Corporation's General Counsel (provided that
the failure to send a copy of such notice to the Corporation's General Counsel
shall not affect the validity of such notice), at the facsimile telephone number
or address of the principal place of business of the Corporation as set forth in
the Purchase Agreement, or at such other facsimile number or address as the
Corporation may notify the Holders in writing from time to time. Except as
otherwise specifically provided herein, any and all notices or other
communications or deliveries to be provided by the Corporation hereunder shall
be delivered in accordance with the provisions of the Purchase Agreement and
deemed given on the date or time provided therein.
Section 6. Optional Conversion. If at any time (the "225%
Date") after the One Year Date (a) the Per Share Market Value for at least 30
consecutive Trading Days (provided, however, that, for purposes of such
calculation, at the option of the Corporation, any Trading Day during such
30-Trading-Day period on which a Holder sets the last closing bid price on the
Common Stock shall not be used in such calculation, in which case the first
Trading Day preceding such 30-Trading-Day period on which no Holder set the last
closing bid price on the
<PAGE>
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Common Stock shall be used for determining such calculation) is greater than
225% of the then effective Conversion Price (as adjusted in accordance with
Section 5(c)), and (b) the average daily trading volume of the Common Stock on
the Nasdaq National Market (or such other stock exchange or quotation system on
which the shares of Common Stock are listed or quoted) for such 30 consecutive
Trading Days exceeds 100,000 shares (as adjusted in accordance with Section
5(c)), then the Corporation shall, at its option, have the right to cause the
conversion of all, but not less than all, of the then outstanding shares of
Series A Preferred Stock into Common Stock in accordance with the terms of this
Certificate of Designations at the Conversion Price in effect on the date of the
225% Conversion Notice. If the Corporation elects to cause such a conversion, it
shall, within 15 days after the 225% Date, give written notice (the "225%
Conversion Notice") to the Holders of its intent to cause the conversion of the
Series A Preferred Stock on the date which is 30 days subsequent to the date of
the 225% Conversion Notice (the "225% Conversion Date"); provided, however, that
no such conversion shall be permitted unless at the time of the delivery of the
225% Conversion Notice and on the 225% Conversion Date, (x) the shares of Common
Stock which would be issuable upon conversion of the Series A Preferred Stock
are designated for quotation or listed for trading on the Nasdaq National
Market, the New York Stock Exchange or the American Stock Exchange, and (y) the
Corporation has duly reserved for issuance the shares of Common Stock which
would be issuable upon such conversion.
Section 7. Protective Provisions. So long as any shares of
Series A Preferred Stock shall remain outstanding, except as otherwise provided
herein or by applicable law, the Corporation shall not, without first obtaining
the approval of the Holders of at least two-thirds of the then outstanding
shares of Series A Preferred Stock:
(a) alter or change the rights, preferences or privileges of
the Series A Preferred Stock so as to affect adversely the Series A Preferred
Stock as a class; provided, however, that neither the designation, creation or
issuance of any Junior Stock or Parity Stock shall be deemed to affect adversely
the Series A Preferred Stock as a class;
(b) create any new class or series of capital stock having a
preference over the Series A Preferred Stock as to redemption, conversion, the
payment of dividends or distribution of assets upon a Liquidation Event or any
other liquidation, dissolution or winding up of the Corporation;
(c) increase the authorized number of shares of Series A
Preferred Stock; or
(d) issue any shares of Series A Preferred Stock.
Section 8. Definitions. For the purposes hereof, the following
terms shall have the following meanings:
"Appraiser" shall have the meaning set forth in Section
5(c)(iii).
"Certificate of Incorporation" shall have the meaning set
forth in the resolution creating the Series A Preferred Stock.
"Commencement Date" means June 15, 2000.
<PAGE>
-13-
"Common Stock" means the common stock, $.01 par value per
share, of the Corporation, and any stock of any other class into which such
shares may hereafter have been reclassified or changed.
"Common Stock Dividend Notice" shall have the meaning set
forth in Section 2(a)(i).
"Conversion Date" shall have the meaning set forth in Section
5(a)(i).
"Conversion Notice" shall have the meaning set forth in
Section 5(a)(i).
"Conversion Price" shall have the meaning set forth in Section
5(c)(i).
"Conversion Ratio" with respect to a share of Series A
Preferred Stock means, at any time, a fraction, the numerator of which is the
Stated Value of such share, and the denominator of which is the Conversion Price
as at such time.
"Corporation" shall have the meaning set forth in the
introduction to this Certificate of Designations.
"Dividend Payment Date" shall mean March 31, June 30,
September 30 and December 31 of each year, commencing on September 30, 2000, and
each Conversion Date.
"Five Day Average Market Price" as at any date shall mean the
average Per Share Market Value for the five Trading Days immediately preceding,
but not including, such date; provided, however, that, at the option of the
Corporation, any Trading Day during such five-Trading-Day period on which a
Holder sets the last closing bid price on the Common Stock shall not be used for
determining the Five Day Average Market Price, in which case the first Trading
Day preceding such five-Trading-Day period on which no Holder set the last
closing bid price on the Common Stock shall be used for determining the Five Day
Average Market Price.
"Holder" or "Holders" shall have the meaning set forth in
Section 1.
"Junior Securities" means the Common Stock and all other
equity securities of the Corporation, other than Series A Preferred Stock and
Parity Stock, if any.
"Liquidation" shall have the meaning set forth in Section 4.
"One Year Date" shall have the meaning set forth in Section
5(c)(i).
"One Year Reset Price" shall have the meaning set forth in
Section 5(c)(i).
"Parity Stock" means any capital stock of the Corporation that
ranks on parity with the Series A Preferred Stock as to redemption, conversion,
the payment of dividends or distribution of assets upon a Liquidation Event or
any other liquidation, dissolution or winding up of the Corporation.
<PAGE>
-14-
"Per Share Market Value" as at any particular date means (a)
the closing bid price per share of the Common Stock on such date on the Nasdaq
National Market or other principal stock exchange or quotation system on which
the Common Stock is then listed or quoted or, if there is no such price as at
such date, then the closing bid price on such exchange or quotation system as at
the date nearest preceding such date, or (b) if the Common Stock is not listed
or quoted then on the Nasdaq National Market or any other national securities
exchange or quotation system, the closing bid price for a share of Common Stock
in the over-the-counter market, as reported by the OTC Bulletin Board or in the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding to its functions of reporting prices) as at the close of business on
such date, or (c) if the Common Stock is not then reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding
to its functions of reporting prices), then the average of the "Pink Sheet" bid
quotes for the relevant day, as determined in good faith by the Holder, or (d)
if the Common Stock is not then publicly traded, the fair market value of a
share of Common Stock on such date as determined by an Appraiser selected in
good faith by the Corporation and reasonably acceptable to Holders of a majority
in interest of the shares of the Series A Preferred Stock then outstanding.
"Person" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind.
"Purchase Agreement" means the Purchase Agreement, dated as of
June 15, 2000, by and between the Corporation and PSINet Inc., a New York
corporation, a copy of which is available for inspection at the principal
corporate office of the Corporation.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of June 15, 2000 by and among the Corporation and the
original Holders of the Series A Preferred Stock, a copy of which is available
for inspection at the principal corporate office of the Corporation.
"Rule 4460" shall have the meaning set forth in Section
5(a)(ii).
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" shall have the meaning set forth in
Section 1.
"Series A Preferred Stock Directors" shall have the meaning
set forth in Section 2(a)(ii).
"Stated Value" shall have the meaning set forth in Section 1.
"Trading Day" means (a) a day on which the Common Stock is
traded on the Nasdaq National Market or other principal stock exchange or
quotation system on which the Common Stock is then listed or quoted, or (b) if
the Common Stock is not listed or quoted on the Nasdaq National Market or any
other national securities exchange or quotation system, a day on which the
Common Stock is traded in the over-the-counter market, as reported by the OTC
Bulletin Board, or (c) if the Common Stock is not quoted on the OTC Bulletin
Board, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the National
<PAGE>
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Quotation Bureau Incorporated (or any similar organization or agency succeeding
to its functions of reporting prices).
"Three Year Date" shall have the meaning set forth in Section
5(c)(i).
"Three Year Reset Price" shall have the meaning set forth in
Section 5(c)(i).
"Two Year Date" shall have the meaning set forth in Section
5(c)(i).
"Two Year Reset Price" shall have the meaning set forth in
Section 5(c)(i).
"225% Date" shall have the meaning set forth in Section 6.
"225% Conversion Date" shall have the meaning set forth in
Section 6.
"225% Conversion Notice" shall have the meaning set forth in
Section 6.
Section 9. Tax Withholding. Notwithstanding any provision
hereof to the contrary, all payments, distributions or transfers in respect of
the Series A Preferred Stock shall be subject to such withholdings as may be
required by applicable law.
<PAGE>
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IN WITNESS WHEREOF, Xpedior Incorporated has caused this Certificate to
be executed by David N. Campbell, its President and Chief Executive Officer, as
of this ___ day of _______, 2000.
XPEDIOR INCORPORATED
By:
----------------------------
Name:
Title:
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be executed by the registered Holder
in order to convert shares of Series A
8 1/2% Cumulative Convertible Preferred Stock)
The undersigned hereby elects to convert the number of shares of Series A 8 1/2%
Cumulative Convertible Preferred Stock of Xpedior Incorporated (the
"Corporation") indicated below, into the number of shares of the Corporation's
common stock, par value $.01 per share (the "Common Stock"), indicated below, as
of the date written below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto, if any, and is delivering herewith such certificates and
opinions as reasonably requested by the Corporation in connection therewith. No
fee will be charged to the Holder for any conversion, except for such transfer
taxes, if any.
Conversion calculations:
--------------------------------------------------------------------------------
Date to Effect Conversion
--------------------------------------------------------------------------------
Number of shares of Series A 8 1/2% Cumulative Convertible
Preferred Stock to be Converted
--------------------------------------------------------------------------------
Number of shares of Common Stock to be Issued
--------------------------------------------------------------------------------
Applicable Conversion Price
--------------------------------------------
Signature
--------------------------------------------
Name
--------------------------------------------
Address
<PAGE>
Exhibit 5
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June
15, 2000, is entered into by and between PSINet INC., a New York corporation
("PSINet"), and XPEDIOR INCORPORATED, a Delaware corporation ("Xpedior").
Capitalized terms used in this Agreement and not defined in context shall have
the meanings ascribed to them in Section 5(h).
WHEREAS, this Agreement is made pursuant to the Purchase Agreement,
dated as of June 15, 2000, by and between PSINet and Xpedior (the "Purchase
Agreement");
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Demand Shelf Registration.
(a) Subject to Section 2(f), from time to time, on or prior to
the 60th day (or, if such date is not a Trading Day, the next Trading Day
following such 60th day) (the "Filing Date") after the delivery to Xpedior by
Holders of a majority in interest of the Registrable Securities of a notice (the
"Demand Notice") demanding that Xpedior register such Holders' Registrable
Securities, Xpedior shall prepare and file with the SEC a "shelf" Registration
Statement covering all or any portion of the Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act; provided, however, that the Holders may only deliver three
Demand Notices pursuant to this Section 1. Such Registration Statement shall be
on Form S-3 or, if Xpedior is not then eligible to register the Registrable
Securities for resale on Form S-3, such Registration Statement shall be on
another appropriate form in accordance herewith, which form shall be reasonably
acceptable to the Holders. Subject to Section 2(f), Xpedior shall use its
reasonable best efforts to cause such Registration Statement to be declared
effective under the Securities Act within 120 days after the delivery of the
applicable Demand Notice, but in any event no later than the date which is the
earlier of the fifth day after (i) Xpedior is advised by the SEC that the SEC
has no additional comments to such Registration Statement, and (ii) Xpedior
receives a "no review" notice from the SEC (or, if such date is not a Trading
Day, the next Trading Day following such date) (in each case, the "Effectiveness
Date"), and to keep such Registration Statement continuously effective under the
Securities Act until the date which is two years after the applicable
Effectiveness Date or such earlier date when all Registrable Securities covered
by such Registration Statement have been sold or may be sold without volume
restrictions pursuant to Rule 144 under the Securities Act, as determined by
counsel to Xpedior (in each case, the "Effectiveness Period"). If an additional
Registration Statement is required to be filed because the actual number of
shares of Common Stock into which the Series A Preferred Stock is convertible
exceeds the number of shares of Common Stock initially registered in respect of
the Series A Preferred Stock, subject to Section 2(f) Xpedior shall have 30
Trading Days to file such additional Registration Statement. Once the
<PAGE>
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third Registration Statement filed pursuant to this Section 1(a) is declared
effective by the SEC, the Holders of the Series A Preferred Stock shall not have
the right to make any additional demands for registration under this Section
1(a), other than demands to register additional shares of Common Stock in the
circumstances set forth in the preceding sentence.
(b) If the Holders of a majority of the Registrable Securities
so elect, an offering of Registrable Securities pursuant to a Registration
Statement may be effected in the form of an Underwritten Offering, certain costs
and expenses of which will be paid in accordance with Section 3(b), provided
that a managing underwriter is selected pursuant to Section 1(c). Xpedior shall
not be required to effect more than three Underwritten Offerings under this
Agreement and shall not be required to effect an Underwritten Offering unless at
the time of a written request of the Holders electing an Underwritten Offering
the average daily trading volume of the Common Stock on the Nasdaq National
Market (or such other market or quotation system on which Xpedior's Common Stock
is then quoted or listed) during the period of 60 days immediately prior to such
request shall be less than 50,000 shares (subject to adjustment for stock
splits, reverse stock splits, recapitalizations and similar events). In such
event, and if the managing underwriter advises Xpedior and such Holders in
writing that in its opinion the amount of Registrable Securities proposed to be
sold in such Underwritten Offering exceeds the amount of Registrable Securities
which can be sold in such Underwritten Offering, there shall be included in such
Underwritten Offering only the amount of such Registrable Securities which in
the opinion of such managing underwriter can be sold, and such amount shall be
allocated pro rata among the Holders proposing to sell Registrable Securities in
such Underwritten Offering.
(c) If any of the Registrable Securities are to be sold in an
Underwritten Offering, the managing underwriter that will administer such
offering (which managing underwriter shall be of national standing and
reputation) shall be selected by the participating Holders with the consent of
Xpedior, which consent shall not be unreasonably withheld, delayed or
conditioned. No Holder may participate in any Underwritten Offering hereunder
unless such Person (i) agrees to sell its Registrable Securities on the basis
provided in any underwriting agreements described in Section 2(a)(xii), and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
arrangements. No Holder may participate in any registration hereunder unless
such Holder executes and delivers an agreement not to divulge any proprietary or
confidential information of Xpedior or any of its subsidiaries which becomes
known to such Holder in connection with any such registration.
2. Registration Procedures.
(a) In connection with each of Xpedior's registration
obligations hereunder, Xpedior shall:
(i) Not less than seven Trading Days (or such longer
period as may be reasonably practicable) prior to the intended filing date of
the Registration Statement or any related Prospectus, or of any amendment or
supplement thereto (excluding any document that would be incorporated or deemed
to be incorporated therein by reference), Xpedior shall (A) furnish to the
Holders, any one firm of counsel to the Holders (their "Special Counsel") and
any
<PAGE>
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managing underwriter copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be incorporated by
reference) shall be subject to the review of such Holders, their Special Counsel
and such managing underwriter, and (B) cause its officers, directors, counsel
and independent certified public accountants to respond to such inquiries as
shall be necessary, in the reasonable opinion of respective counsel to such
Holders and any managing underwriter, to conduct a reasonable investigation
within the meaning of the Securities Act. Xpedior shall not file any such
Registration Statement or any such Prospectus, or any amendments or supplements
thereto, to which the Holders of a majority of the Registrable Securities, their
Special Counsel or any managing underwriter shall reasonably object in writing
within four Trading Days of their receipt thereof, in which case Xpedior shall
revise such Registration Statement and Prospectus substantially in accordance
with the reasonable comments of the Holders of a majority of the Registrable
Securities, their Special Counsel or any managing underwriter until such Person
approves such Registration Statement and Prospectus for filing. If Xpedior is
unable to file such Registration Statement with the SEC by the Filing Date
solely because of the additional time necessary to address such comments, then
the Filing Date shall be extended by the amount of time reasonably necessary for
Xpedior to make the necessary revisions to such Registration Statement and
Prospectus in order to receive filing approval from such Person.
(ii) (A) Prepare and file with the SEC such
amendments, including post-effective amendments, to the Registration Statement
as may be necessary to keep such Registration Statement continuously effective
as to the Registrable Securities throughout the applicable Effectiveness Period,
(B) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424 under the Securities Act, (C) respond as promptly as practicable to any
comments received from the SEC with respect to the Registration Statement, the
Prospectus or any amendment thereto and promptly provide the Holders true and
complete copies of all correspondence from and to the SEC relating to the
Registration Statement and the Prospectus, and (D) comply with the provisions of
the Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement, as so amended or
supplemented.
(iii) Notify the Holders of Registrable Securities to
be sold, their Special Counsel and any managing underwriter as promptly as
practicable (and, in the case of (A)(I) below, not less than three days prior to
such filing) and, if requested by any such Person, confirm such notice in
writing no later than two Trading Days following the day, (A)(I) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed, (II) when the SEC notifies
Xpedior whether there will be a "review" of such Registration Statement and
whenever the SEC comments in writing on such Registration Statement, and (III)
with respect to the Registration Statement or any post-effective amendment, when
the same has become effective, (B) of any request by the SEC or any other
Federal or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information, (C) of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose, (D) of the receipt by Xpedior of
any notification with respect to the suspension of the qualification or
exemption from
<PAGE>
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qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any Proceeding for such purpose, and (E) of
the occurrence of any event that could reasonably be expected to make any
statement made in the Registration Statement or Prospectus, or in any document
incorporated or deemed to be incorporated therein by reference, untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents such that, in the case of the Registration
Statement or the Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that Xpedior shall not be required to provide the Holders with the details of
any such event if Section 2(f) shall be applicable to such event.
(iv) Use its reasonable best efforts to avoid the
issuance of, or, if issued, obtain the withdrawal of, (A) any order suspending
the effectiveness of the Registration Statement, or (B) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, as soon as reasonably practicable.
(v) If requested by any managing underwriter or by
Holders of a majority in interest of the Registrable Securities to be sold in
connection with an Underwritten Offering, (A) promptly incorporate into a
Prospectus supplement or post-effective amendment to the Registration Statement
such information concerning the manner of distribution of Registrable Securities
as such managing underwriter and such Holders reasonably agree should be
included therein, and (B) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after Xpedior
has received notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; provided, however, that Xpedior shall
not be required to take any action pursuant to this Section 2(a)(v) that would,
in the opinion of counsel for Xpedior, violate applicable law or be materially
detrimental to the business prospects of Xpedior.
(vi) Furnish to each Holder, their Special Counsel
and any managing underwriter, without charge, at least one conformed copy of
each Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits thereto, to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the SEC.
(vii) Promptly deliver to each Holder, their Special
Counsel and any underwriters, without charge, as many copies of the Prospectus
(including each form of prospectus), and each amendment or supplement thereto,
as such Persons may reasonably request; and Xpedior hereby consents to the use
of such Prospectuses and each amendment or supplement thereto by each of the
selling Holders and any underwriters in connection with the offering and sale of
the Registrable Securities covered by such Prospectuses and any amendment or
supplement thereto.
(viii) Prior to any public offering of Registrable
Securities, (A) use its reasonable best efforts to register or qualify, or
cooperate with the selling Holders, any underwriters and their Special Counsel
in connection with the registration or qualification (or
<PAGE>
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exemption from such registration or qualification) of, such Registrable
Securities for offer and sale under the securities or "Blue Sky" laws of such
jurisdictions within the United States as any Holder or underwriter requests in
writing, (B) keep each such registration or qualification (or exemption
therefrom) continuously effective throughout the applicable Effectiveness
Period, and (C) do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by a Registration Statement; provided, however, that Xpedior shall not
be required to (X) qualify generally to do business in any jurisdiction where it
is not then so qualified, (Y) take any action that would subject it to general
service of process in any jurisdiction where it is not then so subject, or (Z)
subject Xpedior to any material tax in any jurisdiction where it is not then so
subject.
(ix) Cooperate with the Holders and any managing
underwriter to facilitate the timely preparation and delivery of certificates
representing the Registrable Securities to be sold pursuant to a Registration
Statement, which certificates shall be free, to the extent permitted by
applicable law, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations, and registered in such names, as any
such managing underwriter or Holders may request at least two Trading Days prior
to any sale of Registrable Securities.
(x) Upon the occurrence of any event contemplated by
Section 2(a)(iii)(E), except as contemplated by Section 2(f), as promptly as
reasonably practicable, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required documents such that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(xi) (A) On or prior to the Filing Date, prepare
and file with the Nasdaq National Market (and any other securities exchange,
quotation system, market or over-the-counter bulletin board, if any, on which
shares of Common Stock are listed or quoted) an additional shares listing
application covering the maximum number of shares of Common Stock issuable in
payment of dividends upon, or upon conversion of, the Series A Preferred Stock
(assuming all dividends are paid in shares of Common Stock ), (B) use its
reasonable best efforts to cause such shares of Common Stock to be approved for
listing on the Nasdaq National Market (and any other securities exchange,
quotation system, market or over-the-counter bulletin board, if any, on which
shares of Common Stock are listed or quoted) on or before the applicable
Effectiveness Date, including preparing and filing any amendments, supplements
or exhibits thereto, (C) promptly provide to the Holders evidence of such
listing(s), (D) use its reasonable best efforts to keep such listing(s)
continuously effective throughout the applicable Effectiveness Period, and (E)
if at any time during the applicable Effectiveness Period the number of shares
of Common Stock issuable in payment of dividends upon, or upon conversion of,
the Series A Preferred Stock shall be greater than the number of shares listed
pursuant to clause (A) above, promptly file one or more additional shares
listing applications, and promptly take such other actions, such that the number
of shares so issuable shall equal or exceed the number of shares so listed.
<PAGE>
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(xii) Enter into such agreements (including, if
applicable, an underwriting agreement in form, scope and substance as is
customary in underwritten offerings) and take all such other actions in
connection therewith (including those reasonably requested by any managing
underwriter and the Holders of a majority in interest of the Registrable
Securities being sold) in order to expedite or facilitate the disposition of
such Registrable Securities, and whether or not an underwriting agreement is
entered into, (A) make such representations and warranties to such Holders as
may be deemed to be underwriters for purposes of Section 2(a)(11) of the
Securities Act ("Requesting Holders") and any underwriters as are customarily
made by issuers to underwriters in underwritten offerings, and confirm the same
if and when reasonably requested, (B) immediately prior to the effectiveness of
the Registration Statement and, in the case of an Underwritten Offering, at the
time of delivery of any Registrable Securities sold pursuant thereto, obtain and
deliver copies of opinions of counsel to Xpedior (and updates thereof) addressed
to such Requesting Holders and the managing underwriter, if any, in form, scope
and substance reasonably satisfactory to any such managing underwriter and
Special Counsel to such Requesting Holders covering the matters customarily
covered in opinions requested in underwritten offerings and such other matters
as may be reasonably requested by such Special Counsel and managing underwriter,
(C) immediately prior to the effectiveness of the Registration Statement, and,
in the case of an Underwritten Offering, at the time of delivery of any
Registrable Securities sold pursuant thereto, obtain and deliver copies to such
Holders and the managing underwriter, if any, of "comfort" letters (and updates
thereof) from the independent certified public accountants of Xpedior (and, if
necessary, any other independent certified public accountants of any Subsidiary
of Xpedior or of any business acquired by Xpedior for which financial statements
and financial data is, or is required to be, included in the Registration
Statement), addressed to each such Requesting Holder and each underwriter, if
any, in form and substance as are customary in connection with underwritten
offerings, (D) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable to the
selling Holders and the underwriters, if any, than those set forth in Section 4
(or such other provisions and procedures acceptable to Xpedior, the managing
underwriter, if any, and Holders of a majority in interest of the Registrable
Securities participating in such Underwritten Offering), and (E) deliver such
documents and certificates as may be reasonably requested by the Holders of a
majority in interest of the Registrable Securities being sold by such Requesting
Holders, their Special Counsel and any managing underwriter to evidence the
continued validity of the representations and warranties made pursuant to clause
(A) above and to evidence compliance with any customary conditions contained in
the underwriting agreement or other agreement entered into by Xpedior.
(xiii) Make available for inspection by the selling
Holders, any representative of such Holders, any underwriter participating in
any disposition of Registrable Securities and any attorney or accountant
retained by such selling Holders or underwriters, at the offices where normally
kept, during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of Xpedior and its Subsidiaries,
and cause the officers, directors, agents and employees of Xpedior and its
Subsidiaries to supply all information in each case reasonably requested by any
such Holder, representative, underwriter, attorney or accountant in connection
with the Registration Statement; provided, however, that such records,
documents, properties and information requested to be inspected or supplied are
of the kind reasonably necessary to be inspected or obtained by the selling
Holders in connection with the disposition of the Registrable Securities;
provided further, however, that such persons
<PAGE>
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shall agree to keep confidential all information that is determined in good
faith by Xpedior in writing to be of a confidential nature at the time of
delivery of such information, unless (A) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (B) disclosure of such information, in the
reasonable opinion of counsel to such Person, is required by law, (C) such
information becomes generally available to the public other than as a result of
a disclosure or failure to safeguard by such Person, or (D) such information
becomes available to such Person from a source other than Xpedior and such
source is not known by such Person to be bound by a confidentiality agreement
with Xpedior.
(xiv) Comply with all applicable rules and
regulations of the SEC and make generally available to its security holders
earning statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 promulgated thereunder not later than 45 days after the end of
any 12-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) (A) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm commitment or
best efforts Underwritten Offering, and (B) if not sold to underwriters in an
Underwritten Offering, commencing on the first day of the first fiscal quarter
of Xpedior after the effective date of the Registration Statement, which
statement shall cover said 12-month period or such shorter period as is
consistent with the requirements of Rule 158.
(b) Xpedior may require each selling Holder to furnish to
Xpedior such information, including information regarding the distribution of
such Registrable Securities, as is required by law to be disclosed in the
Registration Statement, and Xpedior may exclude from such registration the
Registrable Securities of any such Holder who fails to furnish such information
within a reasonable time after receiving such request. The failure by Xpedior to
file the Registration Statement by the Filing Date, to cause it to become
effective by the applicable Effectiveness Date or to maintain its effectiveness
for the applicable Effectiveness Period, if due to the breach of a Holder's
obligations under this Section 2(b), shall not be deemed a breach of Xpedior's
obligations under this Agreement or the Purchase Agreement with respect to such
Holder; provided, however, that Xpedior's obligations to Holders that timely
furnish such information shall remain in full force and effect.
(c) If the Registration Statement refers to any Holder by name
or otherwise as the holder of any securities of Xpedior, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar Federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
(d) Each Holder agrees by its acquisition of such Registrable
Securities that it will (i) not sell any Registrable Securities under the
Registration Statement until it has received copies of the Prospectus as then
amended or supplemented as contemplated in Section 2(a)(vii), and notice from
Xpedior that such Registration Statement and any post-effective amendments
thereto have become effective as contemplated by Section 2(a)(iii), and (ii)
comply with the prospectus delivery requirements of the Securities Act as
applicable to such Holder in connection with sales of Registrable Securities
pursuant to the Registration Statement.
<PAGE>
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(e) Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of written notice from Xpedior of the occurrence
of any event of the kind described in Section 2(a)(iii)(B) through (E), such
Holder shall forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder (i) has received the copies
of the supplemented Prospectus and amended Registration Statement contemplated
by Section 2(a)(x), or (ii) has been advised in writing by Xpedior that the use
of the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration Statement.
(f) If (i) there is material non-public information regarding
Xpedior which Xpedior's senior management or Board of Directors reasonably
determines not to be in Xpedior's best interest to disclose, and which Xpedior
is not otherwise required to disclose, or (ii) there is a significant business
opportunity or event (including, but not limited to, the acquisition or
disposition of assets or any merger, consolidation, tender offer, joint venture,
strategic alliance or other similar transaction) available to Xpedior which
Xpedior's senior management or Board of Directors reasonably determines not to
be in Xpedior's best interest to disclose, then Xpedior may postpone or suspend
for any individual period of less than 30 days and aggregate periods not to
exceed 90 days in any calendar year filing of a Registration Statement,
Prospectus, prospectus supplement or any report, form or statement incorporated
by reference or to be incorporated by reference into any of the foregoing, or
any amendment to any of the foregoing, and suspension of offers and sales
pursuant to the foregoing, and, upon delivery of written notice from Xpedior of
any such postponement or suspension, Holders shall cease and be prohibited from
making any offers or sales of Registrable Securities pursuant thereto. The
Holders shall keep confidential and not use for any purpose such written notice
and the contents thereof, and any related information, unless and until such
information has been disclosed publicly by Xpedior, except as required by law
(other than in order to permit offers and sales of securities of Xpedior by a
Holder during such time period) or otherwise agreed to in writing by Xpedior.
3. Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by Xpedior shall, except as and to the extent
specified in Section 3(b), be borne by Xpedior whether or not pursuant to an
Underwritten Offering, whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with the Nasdaq National Market and each other
securities exchange, quotation system, market or over-the-counter bulletin
board, if any, on which shares of Common Stock are required hereunder to be
listed or quoted, and (B) in compliance with state securities or "Blue Sky" laws
(including, without limitation, reasonable fees and disbursements of counsel for
the Holders in connection with Blue Sky qualifications of the Registrable
Securities, or exemptions from such qualification, and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the managing underwriter, if any, or the Holders of a majority
in interest of the Registrable Securities may reasonably designate)), (ii)
printing expenses (including, without
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limitation, expenses of printing certificates for the Registrable Securities and
of printing Prospectuses, if the printing of Prospectuses is requested by the
managing underwriter, if any, or by the Holders of a majority in interest of the
Registrable Securities, included in the Registration Statement), (iii)
reasonable messenger, telephone, facsimile and delivery expenses, (iv)
reasonable fees and disbursements of counsel for Xpedior and one firm of Special
Counsel for the Holders, (v) Securities Act liability insurance, if Xpedior so
desires such insurance, and (vi) fees and expenses of all other Persons retained
by Xpedior in connection with the consummation of the transactions contemplated
by this Agreement. In addition, Xpedior shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
(b) If the Holders request an Underwritten Offering pursuant
to the terms hereof, Xpedior shall be responsible for all costs, fees and
expenses incurred in connection therewith, except for the fees and disbursements
of the Underwriters (including any underwriting commissions and discounts) and
their legal counsel and accountants.
4. Indemnification.
(a) Indemnification by Xpedior. Xpedior shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents (including its Special Counsel and any underwriters
retained by such Holder in connection with the offer and sale of Registrable
Securities), brokers (including brokers who offer and sell Registrable
Securities as principals as a result of a pledge or any failure to perform under
a margin call of Common Stock), investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus, or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except to the extent, but only to the
extent, that (i) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to Xpedior by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder for
use in the Registration Statement, such Prospectus or such form of prospectus,
or in any amendment or supplement thereto (including, without limitation, any
information incorporated therein pursuant to Section 2(a)(v)), or (ii) such
Losses arise directly from the failure of a Holder to comply with the prospectus
delivery requirements applicable to it (provided that Xpedior has timely
prepared all necessary prospectus supplements or amendments and provided them to
the Holders or their representatives in
<PAGE>
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accordance with the terms of this Agreement and otherwise done all things
required of it in this Agreement so as not to adversely affect the ability of
any Holder to timely comply with such Holder's delivery requirements). Xpedior
shall notify the Holders promptly of the institution, threat or assertion of any
Proceeding of which Xpedior is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless Xpedior, the directors, officers,
agents and employees of Xpedior, each Person who controls Xpedior (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses
arising (i) solely out of or based solely upon any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus, or arising solely out of or based solely upon any omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue statement or omission is contained in any information furnished in
writing by such Holder to Xpedior expressly for use therein or to the extent
that such information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder for use in the Registration Statement, such Prospectus
or such form of prospectus, or (ii) directly from the failure of a Holder to
comply with the prospectus delivery requirements applicable to it (provided that
Xpedior has timely prepared all necessary prospectus supplements or amendments
and provided them to the Holders or their representatives in accordance with the
terms of this Agreement and otherwise done all things required of it in this
Agreement so as not to adversely affect the ability of any Holder to timely
comply with such Holder's delivery requirements); provided, however, that in no
event shall the liability of any selling Holder hereunder be greater in amount
than the dollar amount of the net proceeds received by such Holder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings.
(i) If any Proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an "Indemnified Party"),
such Indemnified Party shall promptly so notify the Person from whom indemnity
is sought (the "Indemnifying Party") in writing, and the Indemnifying Party
shall assume in the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all fees and
expenses reasonably incurred in connection with the defense thereof; provided,
however, that the failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
(ii) An Indemnified Party shall have the right to
employ separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Parties unless (A) the Indemnifying Party has agreed
in writing to pay such fees and expenses, (B) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to
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employ counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding, or (C) the named parties to any such Proceeding (including any
impleaded parties) include both the Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
the Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party); provided,
however, that if more than one Indemnified Party is seeking indemnification with
respect to the same Proceeding, the Indemnifying Party shall not be required to
pay for more than one separate counsel for all such Indemnified Parties as a
group. The Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld, delayed or conditioned, effect any settlement of
any pending Proceeding in respect of which any Indemnified Party is a party.
(iii) All fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section 4) shall be paid to the Indemnified Party, as
incurred, within 20 Trading Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, however, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).
(d) Contribution.
(i) If a claim for indemnification under Section 4(a)
or (b) is unavailable to an Indemnified Party because of a failure or refusal of
a court, arbitrator or governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and the Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 4(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or
<PAGE>
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expenses if the indemnification provided for in this Section 4 was available to
such party in accordance with its terms.
(ii) The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 4(d) were determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to in Section 4(d)(i).
Notwithstanding the provisions of this Section 4(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount of net
proceeds actually received by such Holder, and no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(iii) The indemnity and contribution agreements
contained in this Section 4 are in addition to any liability that the
Indemnifying Parties may otherwise have to the Indemnified Parties.
5. General Provisions.
(a) Granting of Other Rights Agreements. Xpedior shall not
grant any registration rights in respect of any shares of capital stock or other
securities of Xpedior unless such rights are on the same or less favorable terms
than those that are granted to the Holders under this Agreement; provided,
however, that the Holders hereby consent and agree that Xpedior may grant in
other agreements to other holders of securities of Xpedior registration rights
which rank ratably with the registration rights granted hereunder to the
Holders.
(b) Piggy-Back Registrations. If, at any time when there is
not an effective Registration Statement pursuant to this Agreement pertaining to
all of the Registrable Securities, Xpedior shall determine to prepare and file
with the SEC a registration statement relating to an offering for its own
account for cash or the account of others under the Securities Act of any of its
common stock, other than on Form S-4 or Form S-8 relating to equity securities
to be issued solely in connection with any acquisition of any entity or business
or equity securities issuable in connection with any stock option or other
employee benefit plan, Xpedior shall send to each Holder of Registrable
Securities written notice of such determination and, if within 20 days after
receipt of such notice, any such Holder shall so request in writing, Xpedior
shall include in such registration statement all or any part of the Registrable
Securities such Holder requests to be registered; provided, however, that
Xpedior shall not be required to register any shares of Registrable Securities
pursuant to this paragraph that are eligible for sale pursuant to Rule 144(k)
under the Securities Act. If the total amount of securities, including
Registrable Securities, to be included in such registration statement exceeds
the amount of securities that the managing underwriter (or, if the offering is
not being underwritten, Xpedior's Board of Directors) determines, in its written
opinion, in good faith is compatible with the success of the offering, then the
number of shares that may be included in the registration statement shall be
allocated as follows: first, to Xpedior (or, if the offering is being made for
the account of Persons other than Xpedior and not in violation of any rights of
the Holders pursuant to this Agreement, to such Persons), second, to the Holders
on a pro rata basis based on the total number of Registrable Securities held by
such Holders, and third, to any other Persons participating in such offering on
a pro rata basis. No such reduction shall reduce the amount of Registrable
Securities of the
<PAGE>
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selling Holders included in the registration below 15% of the total amount of
securities included in such registration, unless such Holders are afforded, at
any time more than 120 days after the effective date of such registration, the
right to an additional demand shelf registration pursuant to Section 1 hereof.
In no event shall any shares of any other selling stockholder be included in any
registration of securities for the account of Xpedior that would reduce the
number of Registrable Securities that may be included in such registration by
the Holders. As a condition to participation in any such underwritten offering,
each Holder shall enter into such underwriting, lock-up and other agreements,
and execute such other instruments, as is customary in an underwritten offering.
As a condition to participation in any such non-underwritten offering, each
Holder shall cooperate to provide such information necessary for the preparation
of the Registration Statement as is customary in a non-underwritten offering.
(c) Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed in accordance with Section 6.2 of the
Purchase Agreement.
(d) Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement, and to enforce specifically the terms and provisions hereof and
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other right or remedy to which such party may be
entitled under this Agreement, at law or in equity.
(e) Assignment; Parties in Interest. The rights of each Holder
hereunder, including the right to have Xpedior register for resale Registrable
Securities in accordance with the terms of this Agreement, shall be
automatically assignable by the Holder, to any permitted assignee or transferee
of all or a portion of the Registrable Securities if (i) the Holder agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to Xpedior within a reasonable time after such
assignment, (ii) Xpedior is, within a reasonable time after such transfer or
assignment, furnished with written notice of (A) the name and address of such
transferee or assignee, and (B) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws, and (iv) at or before the time Xpedior receives the
written notice contemplated by clause (ii) of this Section 5(e), the transferee
or assignee agrees in writing with Xpedior to be bound by all of the provisions
of this Agreement. The rights to assignment shall apply to the Holder and to
subsequent permitted successors and assigns. Subject to the foregoing, this
Agreement shall be binding upon and inure solely to the benefit of each party
hereto and the Indemnified Parties, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement,
including any third party beneficiary rights.
<PAGE>
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(f) Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Delaware (without giving effect to the
provisions thereof relating to conflicts of law). The nonexclusive venue for the
adjudication of any dispute or proceeding arising out of this Agreement or the
performance hereof shall be the courts located in Newcastle County, Delaware,
and the parties hereto and their Affiliates each consents to and hereby submits
to the jurisdiction of any court located in Newcastle County, Delaware or any
Federal courts located in Delaware.
(g) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
(h) Certain Definitions. As used in this Agreement:
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person; for purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Common Stock" means Xpedior's common stock, par value $.01
per share.
"Demand Notice" has the meaning set forth in Section 1(a).
"Effectiveness Date" has the meaning set forth in Section
1(a).
"Effectiveness Period" has the meaning set forth in Section
1(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" has the meaning set forth in Section 1(a).
"Holder" or "Holders" means any record holder of Series A
Preferred Stock or of Common Stock issued in payment of dividends upon, or upon
conversion of, Series A Preferred Stock who is a party to this Agreement or is
otherwise entitled to the benefits of this Agreement. When this Agreement
specifies a percentage, number or proportion of the Registrable Securities
required to take some action, each Holder of Series A Preferred Stock, as such,
shall be deemed to be a Holder of the number of shares of Common Stock into
which such Series A Preferred Stock is convertible.
"Indemnified Party" has the meaning set forth in Section 4(c).
"Indemnifying Party" has the meaning set forth in Section
4(c).
<PAGE>
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"Losses" has the meaning set forth in Section 4(a).
"Original Issue Date" has the meaning set forth in Xpedior's
Certificate of Designations to be filed with the Delaware Secretary of State
with respect to the Series A Preferred Stock.
"Person" shall include individuals, corporations,
partnerships, limited liability companies, trusts, other entities and groups
(which term shall include a "group" as such term is defined in Section 13(d)(3)
of the Exchange Act).
"Proceeding" means any action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus or prospectuses included in
the Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus (including pre- and post-effective amendments),
all exhibits thereto and all material incorporated by reference or deemed to be
incorporated by reference into such prospectus.
"PSINet" has the meaning set forth in the preamble to this
Agreement.
"Purchase Agreement" has the meaning set forth in the recitals
to this Agreement.
"Registrable Securities" at any time means (i) the shares of
Common Stock issued in payment of dividends upon, or upon conversion of, Series
A Preferred Stock, provided such shares are held by a Holder, and (ii) the
shares of Common Stock that are issuable at that time in payment of declared but
unpaid dividends upon, or upon conversion of, Series A Preferred Stock by a
Holder thereof (regardless of whether a conversion notice has been given).
"Registration Statement" means the registration statement or
statements contemplated by Section 1(a), including (in each case) the
Prospectus, amendments and supplements to such registration statement or
statements or Prospectus (including pre- and post-effective amendments), all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference into such registration statement or statements.
"Requesting Holder" or "Requesting Holders" has the meaning
set forth in Section 2(a)(xii).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
<PAGE>
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"Series A Preferred Stock" means Xpedior's Series A 8 1/2%
Cumulative Convertible Preferred Stock, par value $.01 per share.
"Special Counsel" has the meaning set forth in Section 2(a).
"Subsidiary" or "Subsidiaries" means, with respect to PSINet,
Xpedior or any other Person, any corporation, partnership, joint venture or
other legal entity of which PSINet, Xpedior or such other Person, as the case
may be (either alone or through or together with any other Subsidiary), owns,
directly or indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
"Trading Day" means (i) a day on which the Common Stock is
traded on the Nasdaq National Market or other national securities exchange or
quotation system on which the Common Stock is then listed or quoted, (ii) if the
Common Stock is not listed or quoted on the Nasdaq National Market or any other
national securities exchange or quotation system, a day on which the Common
Stock is traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (iii) if the Common Stock is not quoted on the OTC Bulletin Board, a
day on which the Common Stock is quoted in the over-the-counter market as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting prices).
"Underwritten Offering" means an offering in which Registrable
Securities are sold to one or more underwriters for resale to the public
pursuant to an effective Registration Statement, provided that the managing
underwriter executes and delivers to Xpedior a confidentiality agreement in form
and substance reasonably satisfactory to Xpedior.
"Xpedior" has the meaning set forth in the preamble to this
Agreement.
(i) Counterparts. This Agreement may be executed in two or
more counterparts which together shall constitute a single agreement.
(j) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economics or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to either party. Upon determination that any term or other
provision hereof is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
(k) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by Xpedior and
the Holders of at least two-thirds in interest of the then outstanding
Registrable Securities; provided, however, that, for the purposes of this
sentence, Registrable Securities that are owned, directly or indirectly, by
Xpedior or a controlled Affiliate
<PAGE>
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of Xpedior shall not be deemed to be outstanding. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of certain Holders, and that does
not directly or indirectly affect the rights of other Holders, may be given by
Holders of at least a majority in interest of the Registrable Securities to
which such waiver or consent relates; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the immediately preceding sentence.
(l) Shares Held by Xpedior and its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by Xpedior or its
controlled Affiliates shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.
(m) Rules of Construction.
(i) References in this Agreement to any gender shall
include references to all genders. Unless the context otherwise requires,
references in the singular include references in the plural and vice versa.
References to a party to this Agreement or to other agreements described herein
means those Persons executing such agreements.
(ii) The words "include", "including" and "includes"
shall each be deemed to be followed by the phrase "without limitation" or the
phrase "but not limited to" in all places where such words appear in this
Agreement. The word "or" shall be deemed to be inclusive.
(iii) This Agreement is the joint drafting product of
PSINet and Xpedior, and each provision has been subject to negotiation and
agreement and shall not be construed for or against either party as drafter
thereof.
<PAGE>
IN WITNESS WHEREOF, PSINet and Xpedior have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
PSINET INC.
By:/s/Harold S. Wills
---------------------------------------
Name: Harold S. Wills
Title: President and Chief Operating Officer
XPEDIOR INCORPORATED
By:/s/David N. Campbell
---------------------------------------
Name: David N. Campbell
Title: President and Chief Executive Officer
<PAGE>
Exhibit 6
JOINT FILING AGREEMENT
The undersigned hereby agree that the Schedule 13D under the Securities
and Exchange Act of 1934, as amended, relating to shares of the common stock,
par value $0.01 per share, of Xpedior Incorporated to which this Agreement is an
Exhibit and which is to be filed with the Securities and Exchange Commission is
filed on behalf of each of the undersigned.
This Agreement may be executed in several counterparts, each of which
shall be an original but all of which together shall constitute one and the same
instrument.
DATED: as of June 23, 2000
PSINet INC.
By:/s/Kathleen B. Horne
--------------------------------------
Kathleen B. Horne
Senior Vice President, General Counsel
and Corporate Secretary
PSINet CONSULTING SOLUTIONS, INC.
By:./s/Margaret G. Reed
--------------------------------------
Margaret G. Reed
Senior Vice President, General Counsel
and Corporate Secretary
