Exhibit 10.1
$50,000,000
COVAD COMMUNICATIONS GROUP, INC.
COVAD COMMUNICATIONS COMPANY
12% SENIOR SECURED CONVERTIBLE NOTES DUE 2011
6,134,969 SHARES OF COMMON STOCK, PAR VALUE $0.001
PURCHASE AGREEMENT
March 15, 2006
March 15, 2006
EarthLink, Inc.
1375 Peachtree Street, NW
Atlanta, Georgia 30309
Dear Sirs and Mesdames:
Covad Communications Group, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to EarthLink, Inc., a Delaware corporation (the
"Purchaser") (i) together with Covad Communications Company, a California
corporation ("Operating"), $40,000,000 aggregate principal amount of a 12%
Senior Secured Convertible Note due 2011 (the "Note") in the form attached
hereto as Exhibit A and (ii) 6,134,969 shares (the "Primary Shares") of Common
Stock, par value $0.001 (the "Common Stock"). The Note will be convertible into
shares (the "Underlying Shares") of Common Stock.
The Note, the Underlying Shares and the Primary Shares will be offered without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), to the Purchaser in compliance with the exemption from registration
provided by Section 4(2) under the Securities Act.
This Purchase Agreement (this "Agreement"), the Note, the Registration Rights
Agreement attached hereto as Exhibit B, the Security Agreement attached hereto
as Exhibit C, and the Agreement for XGDSL Services attached hereto as Exhibit D
(the "Services Agreement") are collectively referred to herein as (the
"Transaction Documents").
1.
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND OPERATING. THE COMPANY AND OPERATING, JOINTLY AND SEVERALLY,
REPRESENT AND WARRANT TO, AND AGREE WITH THE PURCHASER THAT:
(A)
THE COMPANY (I) IS A CORPORATION DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF
DELAWARE, (II) HAS THE CORPORATE POWER AND AUTHORITY TO OWN ITS PROPERTY AND TO
CONDUCT ITS BUSINESS AS NOW CONDUCTED AND PROPOSED TO BE CONDUCTED AND (III) IS
DULY QUALIFIED TO TRANSACT BUSINESS AND IS IN GOOD STANDING IN EACH JURISDICTION
IN WHICH THE CONDUCT OF ITS BUSINESS OR ITS OWNERSHIP OR LEASING OF PROPERTY
REQUIRES SUCH QUALIFICATION, EXCEPT TO THE EXTENT THAT THE FAILURE TO BE SO
QUALIFIED OR BE IN GOOD STANDING WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON THE
PROPERTIES, ASSETS, OPERATIONS, BUSINESS, RESULTS OF OPERATIONS OR FINANCIAL
CONDITION OF THE COMPANY AND ITS SUBSIDIARIES, TAKEN AS A WHOLE, OR THE ABILITY
OF THE COMPANY OR OPERATING TO PERFORM ANY OF THEIR RESPECTIVE OBLIGATIONS UNDER
THE TRANSACTION DOCUMENTS TO WHICH THEY ARE A PARTY, OTHER THAN: (I) CHANGES OR
CONDITIONS IN THE INDUSTRY OR THE INDUSTRY SECTOR IN WHICH THE COMPANY AND ITS
SUBSIDIARIES OPERATE THAT DO NOT DISPROPORTIONATELY AFFECT THE COMPANY AND ITS
SUBSIDIARIES OR (II) THE EFFECT OF THE PENDENCY OR CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (A "MATERIAL ADVERSE EFFECT").
2
(B)
EACH SUBSIDIARY OF THE COMPANY (I) IS A
CORPORATION, LIMITED LIABILITY COMPANY OR PARTNERSHIP DULY ORGANIZED, VALIDLY
EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS
ORGANIZATION, (II) HAS THE CORPORATE, LIMITED LIABILITY COMPANY OR PARTNERSHIP
POWER AND AUTHORITY TO OWN ITS PROPERTY AND