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Exhibit 10.23
INVESTMENT AGREEMENT
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This Investment Agreement is entered into as of June 20, 1997 by and
between Sygnet Wireless, Inc., an Ohio corporation (the "COMPANY"), and Boston
Ventures Limited Partnership V, a Delaware limited partnership (the "INVESTOR").
Introduction
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The Company wishes to sell shares of its Class A Common Stock and to
use the proceeds to redeem its outstanding preferred stock and to repay
temporarily certain indebtedness of Sygnet Communications, Inc., a wholly-owned
subsidiary ("SCI"), and for other general corporate purposes. The Investor
wishes to purchase such shares on the terms and conditions contained herein.
Certain capitalized terms used herein are defined in Article VII of
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
TERMS AND CONDITIONS
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ARTICLE I. THE INVESTMENT
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SECTION 1.01. PURCHASE AND SALE OF STOCK. Subject to the terms and
conditions hereof, and in reliance on the representations and warranties
contained herein, (a) the Company shall issue and sell to the Investor and the
Investor shall purchase from the Company at the Initial Closing (as hereinafter
defined) 3,000,000 shares of the Company's Class A Common Stock, $.01 par value,
at a price per share of $15 (an aggregate purchase price of $45 million) and (b)
the Investor shall purchase from the holders of record of the Company's Common
Stock and from the Company (if applicable) at the Subsequent Closing (as
hereinafter defined) up to 1,000,000 shares of the Company's Common Stock, $.01
par value, at a purchase price per share of $15 as more fully described in
Section 1.05.
SECTION 1.02. PAYMENT FOR THE STOCK. The Investor shall pay in full at
each Closing the purchase price for the Stock to
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be purchased at such Closing by wire transfer to an account designated in
writing (a) by the Company if purchased from the Company or (b) by the Selling
Stockholders (as defined below), if purchased from such Selling Stockholders.
SECTION 1.03. THE CLOSINGS. The purchase and sale of the Stock shall
take place at closings (the "CLOSINGS") to be held at the offices of Xxxxxx,
Xxxx & Xxxxxxx, Exchange Place, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 at
the times specified below.
(a) INITIAL CLOSING. The initial Closing (the "INITIAL
CLOSING") shall take place at 10:00 a.m. local time on (i) June 20, 1997 (the
"INITIAL CLOSING DATE") or (ii) if later, the date which is five business days
after the conditions to the Initial Closing specified in Article IV have been
satisfied.
(b) SUBSEQUENT CLOSING. The subsequent Closing (the
"SUBSEQUENT CLOSING") shall take place within 15 days after expiration of the
offer specified in Section 1.05 on a date to be selected by the Investor, if the
conditions to the Subsequent Closing specified in Article IV have been
satisfied. The Subsequent Closing may occur no later than six months after the
Initial Closing Date.
SECTION 1.04. USE OF PROCEEDS FROM THE INITIAL CLOSING. The Company
shall use the proceeds of the sale of the Stock received at the Initial Closing
(a) to redeem all outstanding shares of its Preferred Stock, (b) to make a
capital contribution to SCI, for the purpose of enabling SCI to repay
temporarily certain of its outstanding indebtedness, (c) to pay fees and
expenses of the transaction contemplated by this Agreement, or (d) for general
corporate purposes.
SECTION 1.05. OFFER TO EXISTING STOCKHOLDERS. The Investor and the
Company will duly perform each of its obligations hereinafter set forth in this
Section 1.05 subsequent to the Initial Closing:
(a) As soon as practicable after the Initial Closing, the
Investor shall make an offer in writing to the holders of the Company's Common
Stock to purchase for cash up to an aggregate of 1,000,000 shares of Common
Stock at a price per share of $15, such offer to remain open for at least 20
business days. The Investor shall purchase all shares tendered in response to
such offer up to 1,000,000 shares at the price specified. If more than 1,000,000
shares are tendered, the Investor shall purchase a total of 1,000,000 shares
ratably from each tendering stockholder on the basis of the number of shares
tendered by each such stockholder. Within five days after the expiration of the
offer, the Investor shall notify each tendering stockholder of the number of
shares to be acquired from such stockholder and the time, place and manner of
the Subsequent Closing. Each tendering
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stockholder from which the Investor purchases such shares shall be referred to
herein as a "Selling Stockholder". For purposes of this Section, all classes of
Common Stock shall be treated as a single class.
(b) If less than 333,333 shares are tendered, the Investor
shall purchase from the Company and the Company shall issue and sell to the
Investor the number of shares of the Company's Class A Common Stock that is the
difference between 333,333 shares and the number of shares actually tendered by
the stockholders pursuant to this Section at a purchase price per share of $15.
(c) The Company shall administer, and the Investor shall
cooperate in, the foregoing process in its entirety, subject to the Investor's
approval, and shall bear all reasonable expenses incurred by the Investor during
such process up to $35,000 in the aggregate, and shall indemnify the Investor as
set forth in Section 8.02(b) to the extent permitted by that certain Trust
Indenture dated as of September 26, 1996.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company represents and warrants to the Investor that the statements
contained in this Article II are true and correct. For purposes of Sections 2.09
and 2.11, the terms Company and Subsidiary also include their respective
predecessors, unless the context requires otherwise.
SECTION 2.01. CORPORATE EXISTENCE AND POWER. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Ohio and has all necessary corporate and other power and
authority to conduct its business and own its properties as now conducted and
owned and as now proposed to be conducted and owned. True and correct copies of
the Articles of Incorporation and Code of Regulations of the Company, with all
amendments thereto, as in effect on the date hereof, have been furnished to the
Investor by the Company. The Company is licensed or qualified to do business as
a foreign corporation in each jurisdiction in which the nature of its business
or the ownership of its properties makes such licensing or qualification
necessary, except where the failure to be so licensed or so qualified would not
result in a Material Adverse Change.
SECTION 2.02. SUBSIDIARIES. SCI is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Ohio and
has all necessary corporate and other power and authority to conduct its
business and own its properties as now conducted and owned and as now proposed
to be conducted and owned. True and correct copies of the Articles of
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Incorporation and Code of Regulations of SCI, with all amendments thereto, as in
effect on the date hereof, have been furnished to the Investor by the Company.
SCI is licensed or qualified to do business as a foreign corporation in each
jurisdiction in which the nature of its business or the ownership of its
properties makes such licensing or qualification necessary, except where the
failure to be so licensed or so qualified would not result in a Material Adverse
Change. SCI is the only Subsidiary of the Company. Neither the Company nor SCI
is a party to any joint venture. Neither the Company nor SCI owns any legal or
beneficial interest in any Person, except for the Company's ownership of SCI.
SECTION 2.03. POWER AND AUTHORITY RELATIVE TO THIS TRANSACTION. The
Company has full power and authority and has taken all required corporate and
other action necessary to authorize and permit it to execute and deliver the
Agreements and to issue and sell the Stock as provided in Article I, and to
otherwise carry out the terms of the Agreements.
SECTION 2.04. CAPITAL STOCK.
(a) The authorized capital stock of the Company consists of
(i) 60,000,000 shares of Class A Common Stock, $.01 par value per share, of
which 10,653 are outstanding, (b) 10,000,000 shares of Class B Common Stock,
$.01 par value per share, of which 6,159,977 are outstanding, (c) 5,000,000
shares of Preferred Stock, of which 114,992.01 are outstanding, and (d)
10,000,000 shares of Voting Preferred Stock, $.01 par value per share, none of
which are outstanding.
(b) Section 2.04 of the DISCLOSURE SCHEDULE sets forth a
complete and accurate list of all holders of the Company's outstanding capital
stock, and all options, warrants, convertible securities and other rights which
may afford any Person the right to acquire shares of any class of capital stock
of the Company.
(c) The authorized capital stock of SCI consists of 750 shares
of Common Stock, $.01 par value, per share, of which 200 shares are held
beneficially and of record by the Company. Except as set forth on Section 2.04
of the DISCLOSURE SCHEDULE, there are no other outstanding shares of capital
stock of SCI nor any option, warrant, convertible security or other right or
agreement which affords any Person the right to purchase or otherwise acquire
any shares of SCI's capital stock.
(d) Except as set forth in Section 2.04 to the Disclosure
Schedule, neither the Company nor SCI is subject to any obligation (contingent
or otherwise) to purchase or otherwise acquire or retire any of its equity
securities and no Person has any right of first refusal or preemptive right in
connection with the issuance of the Stock or with respect to any future offer,
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sale or issuance of securities by the Company, its stockholders or SCI, other
than as provided in this Agreement.
(e) The Stock is duly authorized and, when delivered at each
Closing, will be duly and validly issued and outstanding, fully paid and
nonassessable, and free to the Investor of any liens, encumbrances and
restrictions (other than under applicable securities laws).
(f) The offer and sale of all shares of capital stock or other
securities of the Company (including without limitation the Company's 11.5%
Senior Notes due October 1, 2006) complied with or were exempt from all federal
and state securities laws. Assuming the accuracy of the representations and
warranties contained in Article III, the offer and sale of the Stock will be
exempt from the registration and prospectus delivery requirements of the 1933
Act and will comply with or be exempt from all state securities laws.
(g) Except as set forth in Section 2.04 to the DISCLOSURE
SCHEDULE, the Company has not granted any Person the right to require the
Company to register any securities of the Company under the 1933 Act, whether on
a demand basis or in connection with the registration of securities of the
Company for its own account or for the account of any other Person.
(h) For purposes of section 1701.01(Z)(1) of the Ohio General
Corporation Law, the purchase of the Stock hereunder is not a "control share
acquisition".
SECTION 2.05. COMPLIANCE WITH LAW, ETC. Neither the Company nor any
Subsidiary is in violation of any term of its charter, code of regulations, or
similar governing document, or of any agreement, instrument, judgment, decree,
order, statute, or governmental rule or regulation applicable to the Company or
any of its Subsidiaries, in any way which has resulted in, or could reasonably
be expected to result in, a Material Adverse Change. The execution, delivery and
performance of the Agreements by the Company will not result in any such
violation or be in conflict with or constitute a default under any such term, or
result in the creation of any mortgage, lien, charge or encumbrance upon any of
the properties or assets of the Company or any Subsidiary pursuant to any such
term. Neither the Company nor any Subsidiary is a party to or bound by any
contract, indenture, agreement, order, law, rule or regulation which in any way
restricts its ability to perform under the Agreements.
SECTION 2.06. BUSINESS. Except as set forth in Section 2.06 of the
DISCLOSURE SCHEDULE, (a) the Company and its Subsidiaries are engaged only in
the business described in (i) the Company's 1996 Annual Report on Form 10-K for
the year ended December 31, 1996; and (ii) the Company's report on Form
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10-Q for the quarter ended March 31, 1997 (collectively, the "DISCLOSURE
DOCUMENTS"), true and correct copies of which have been furnished to the
Investor, and (b) the DISCLOSURE DOCUMENTS contain a complete and accurate
description of the Company's and SCI's business.
SECTION 2.07. FINANCIAL STATEMENTS. The financial statements contained
in the Disclosure Documents have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered thereby. The balance sheets contained in the Disclosure
Documents are complete and accurate in all material respects and fairly present
the financial position of the Company and its Subsidiaries as at the respective
dates indicated, and in each case reflect all material liabilities, contingent
or otherwise, at such dates, required by generally accepted accounting
principles to be reflected therein (subject, in the case of unaudited financial
statements, to year-end and audit adjustments which the Company has no reason to
believe will be material). The statements of operations and cash flows contained
in the Disclosure Documents are complete and accurate in all material respects
and fairly present the results of operations and the changes in financial
position of the Company and its Subsidiaries for the respective periods
indicated (subject, in the case of unaudited financial statements, to year-end
and audit adjustments which the Company has no reason to believe will be
material). The information contained in the Annual Report under the heading
"Selected Historical Consolidated Financial and Other Data" is true and correct
in all material respects.
SECTION 2.08. CHANGES, ETC. Except as set forth in Section 2.08 to the
DISCLOSURE SCHEDULE, since March 31, 1997: each of the Company and its
Subsidiaries has conducted its business only in the usual and ordinary course
and there has been no (a) Material Adverse Change and no event or condition
which could reasonably be expected to result in a Material Adverse Change, (b)
increase in the compensation or commission rate payable by the Company or its
Subsidiaries to any of its directors, any of its 5 most highly compensated
officers or employees or any Affiliate thereof or any bonus or other payment (or
commitment therefor) to any of its directors, any such officer or employee or
any Affiliate thereof, (c) dividend, distribution, redemption, recapitalization
or other transaction by the Company involving the Company's capital stock, (d)
material capital expenditure or commitment therefor not in the ordinary course
of business, or (e) material acquisition or disposition of assets or property or
commitment therefor not in the ordinary course of business.
SECTION 2.09. TAX RETURNS AND PAYMENTS. The Company and its
Subsidiaries have correctly and timely prepared and filed all tax returns
required to have been filed by it with all appropriate federal, state and local
governmental agencies and
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timely paid all taxes owed by them. The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of taxes for all fiscal
periods are adequate in all material respects, and there are no material unpaid
assessments of the Company or any Subsidiary nor, to the knowledge of the
Company, any basis for the assessment of any additional taxes, penalties or
interest for any fiscal period or audit by any federal, state or local taxing
authority except such as which are not material and are being contested in good
faith by the Company and set forth in Section 2.09 of the DISCLOSURE SCHEDULE.
All material taxes and other assessments and levies which the Company or any
Subsidiary is required to withhold or to collect for payment have been duly
withheld and collected and paid to the proper governmental entity or third
party. The Company has furnished the Investor with true and correct copies of
all of its and the Subsidiaries' tax returns, including any amendments, for all
open years. There are no tax liens or claims pending or threatened against the
Company, or any Subsidiary or any of their respective assets or property. There
are no outstanding tax sharing agreements or other such arrangements between the
Company or any Subsidiary and any other corporation or entity (other than
between the Company and its consolidated Subsidiaries). The tax basis of the
assets of the Company by category, including the classification of such assets
as being depreciable or amortizable, as reflected in its tax returns and related
work papers, is true and correct in all material respects. Except as set forth
in Section 2.09 of the DISCLOSURE SCHEDULE, neither the Company, its
Subsidiaries nor any of the Company's stockholders has ever filed (a) an
election pursuant to Section 1362 of the Internal Revenue Code of 1986, as
amended (the "CODE"), that the Company or any Subsidiary be taxed as an S
corporation or (b) a consent pursuant to Section 341(f) of the Code, relating to
collapsible corporations.
SECTION 2.10. LITIGATION. Except as set forth in Section 2.10 of the
DISCLOSURE SCHEDULE, there are no suits, proceedings or investigations pending
or, to the knowledge of the Company threatened against or directly affecting the
Company or its Subsidiaries, or any of their directors, officers or employees
with respect to the affairs of the Company or any Subsidiary, nor, to the
knowledge of the Company is there any basis for any such suit, proceeding, or
investigation which is material.
SECTION 2.11. LICENSES, ETC. The Company and its Subsidiaries have all
necessary franchises, permits and licenses, including all licenses and approvals
from all federal, state, and local agencies and authorities with jurisdiction
over the business or affairs of the Company or any of its Subsidiaries,
including, without limitation, the Federal Communications Commission (the
"FCC"), and other rights to allow them to conduct their businesses and own their
properties as currently owned and
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conducted and as proposed to be owned and conducted hereunder, free from any and
all material restrictions, except such franchises, permits, licenses or rights
the absence of which would not result in a Material Adverse Change. Neither the
Company nor any Subsidiary is in violation, in any material respect, of any
order or decree of any court or administrative agency, including, without
limitation, the FCC, or of any law, order or regulation of any other
governmental authority and neither the Agreements nor the transactions
contemplated hereby will result in any such violation.
The Company and its Subsidiaries have made all filings necessary for
the commencement and completion of construction, and for the operation of their
cellular telephone systems (collectively, the "Systems") as described in the
Disclosure Documents. A complete listing of all of the licenses issued by the
FCC or any other administrative agency to operate the Systems (the "LICENSES")
is set forth on Section 2.11 of the DISCLOSURE SCHEDULE hereto. The Licenses
were duly and validly issued and to the knowledge of the Company, are in full
force and effect, and are valid and enforceable in accordance with their
respective terms, except to the extent that the failure of the Licenses to be
duly and validly issued, in full force and effect, and valid and enforceable
would not result in a Material Adverse Change. Except as set forth on Section
2.11 of the Disclosure Schedule, the issuance of each License is subject to no
further administrative or judicial review and, if issued by the FCC, is a Final
Order (as defined below). There exists no fact or circumstance which constitutes
or which, with the passage of time or the giving of notice, or both, would
constitute a material default under any license or permit or would permit the
grantor to cancel or cause the early termination of the Company's rights
thereunder.
The Investor will not by reason of the execution, delivery and
performance of this Agreement or any of the agreements contemplated herein be
subject to the regulation or control of either the FCC or any state regulatory
agency governing the Licenses. The execution, delivery and performance of this
Agreement or any of the agreements contemplated herein will not require the
approval of the FCC or any state regulatory agency governing the Licenses.
For purposes of this Section, a "Final Order" means an order by the FCC
(i) which has not been vacated, reversed, stayed, set aside, annulled or
suspended, (ii) with respect to which no timely appeal, request for stay, or
petition for rehearing, reconsideration or review by any party or by the FCC on
its own motion is pending, and (iii) as to which the time for filing any such
appeal, request, petition or similar document, for the reconsideration or review
by the FCC on its own motion, has expired.
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SECTION 2.12. MATERIAL CONTRACTS. Section 2.12 of the DISCLOSURE
SCHEDULE is a complete and accurate list of all of the following kinds of
contracts, agreements and arrangements (whether written or unwritten) of the
Company or any Subsidiary:
(a) material contracts of the Company and its Subsidiaries
required to be filed pursuant to Item 601(b)(10) of Regulation S-K promulgated
by the Securities and Exchange Commission;
(b) contracts with any Executive Officer, director or
stockholder, or any relative or Affiliate thereof;
(c) contracts under which the amount payable by the Company
or any Subsidiary is dependent on the revenues or income or similar measure of
the Company or any Subsidiary, in each case involving more than $500,000;
(d) agreements, contracts or instruments relating to the
borrowing of money, the capital lease or purchase on an installment basis of
any asset or the guarantee of any of the foregoing, in each case involving more
than $1,000,000;
(e) contracts with respect to which the Company or any
Subsidiary has any liability or obligation involving more than $500,000,
contingent or otherwise, or which may otherwise have any material continuing
effect after the date of this Agreement;
(f) contracts which place any material limitation on the
method of conducting or scope of the business of the Company or any Subsidiary;
(g) agreements or instruments relating to any debt or equity
securities of the Company or any Subsidiary, including without limitation stock
option plans, warrants, convertible securities, loan agreements, note purchase
agreements, indentures and other similar items;
(h) agreements for the use by the Company or any Subsidiary
of spectrum of others, or for use of their spectrum by others;
(i) agreements relating to the name and affiliation with
"Cellular One", in each case involving more than $250,000; and
(j) agreements and instruments effecting the
Restructuring described in the Annual Report.
The Company has furnished to the Investor copies of all such
contracts (including all amendments and modifications thereto),
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or written descriptions thereof, in the case of oral contracts, and each such
contract (or written description) sets forth in all material respects the entire
agreement and understanding between the Company and the other parties thereto.
Each such contract is valid, binding and in full force and effect, and, to the
knowledge of the Company, there is no event which has occurred or exists, which
constitutes or which, with notice, the happening of any event and/or the passage
of time, would constitute a material default or breach under any such contract
or would cause the acceleration of any obligation of any party thereto or give
rise to any right of termination or cancellation thereof. The Company has no
reason to believe that the parties to such contracts will not fulfill their
obligations thereunder in all material respects.
SECTION 2.13. DISCLOSURE. Neither the Agreements nor any other
document, certificate or statement furnished to the Investor by or on behalf of
the Company or its Subsidiaries in connection with the transactions contemplated
hereby (including, without limitation, the Disclosure Documents), contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein not misleading in
the light of the circumstances under which such statements were made. To the
knowledge of the Company, there is no fact which is material to the condition
(financial or otherwise), ownership, business, performance, operations,
properties or prospects of the Company and its Subsidiaries taken as a whole
which has resulted in, or could reasonably be expected to result in, a Material
Adverse Change which has not been set forth in the Agreements, the DISCLOSURE
SCHEDULE or in the other documents, certificates or statements furnished to the
Investor by or on behalf of the Company prior to the date hereof in connection
with the transactions contemplated hereby.
SECTION 2.14. GOVERNMENT APPROVALS. Except as set forth in Section 2.14
of the DISCLOSURE SCHEDULE, neither the Company nor any Subsidiary is required
to obtain any order, consent, approval or authorization of, or make any
declaration or filing with, any governmental authority in connection with the
execution, delivery and performance of the Agreements, or the offer, issue, sale
and delivery of the Stock pursuant hereto.
SECTION 2.15. PROPERTY. Except as set forth in Section 2.15 of the
DISCLOSURE SCHEDULE, the Company and each Subsidiary owns, or has a valid
leasehold or license interest in, all assets necessary for the conduct of its
business as presently conducted and as proposed to be conducted, in each case
free and clear of all liens, claims, security interests, charges and
encumbrances, other than immaterial liens arising in the ordinary course of
business. All of such assets are reflected on the balance sheets contained in
the DISCLOSURE DOCUMENTS, except to the extent
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acquired or disposed of in the ordinary course of business after the date
thereof. All material operating assets of the Company and the Subsidiaries are
in good operating condition and repair, normal wear and tear excepted. The
Company and each Subsidiary enjoys peaceful and quiet possession of its leased
premises and has not received any notice asserting the existence of a default
under any such lease or indicating that the lessor thereunder has taken action
or threatened early termination of the lease. The leased and owned premises
occupied by the Company or any Subsidiary are adequate for the reasonably
foreseeable needs of the Company and the Subsidiaries. Except as set forth in
Section 2.15 of the DISCLOSURE SCHEDULE, (a) the ownership or use of the
Company's and the Subsidiaries' premises and assets, the occupancy and operation
thereof, and the conduct of the Company's and the Subsidiaries' business are in
compliance in all material respects with all applicable federal, state and local
laws, ordinances, regulations, standards and requirements relating to safety,
health, pollution, environmental protection, hazardous substances and related
matters and (b) to the knowledge of the Company, there is no material liability
attaching to such premises or assets or the ownership, use or operation thereof
as a result of any hazardous substance that may have been discharged on or
released from such premises, or disposed of on-site or off-site, or any other
circumstance occurring prior to the Initial Closing or existing as of the
Initial Closing. For purposes of this Section, "hazardous substance" shall mean
oil or any other substance which is included within the definition of a
"hazardous substance", "pollutant", "toxic substance", "toxic waste", "hazardous
waste", "contaminant" or other words of similar import in any federal, state or
local environmental law, ordinance or regulation.
SECTION 2.16. INTELLECTUAL PROPERTY. Section 2.16 of the DISCLOSURE
SCHEDULE sets forth all patents, trademarks, service marks, trade names,
copyrights, franchises and licenses, all royalties and license agreements, all
applications therefor, and all other rights with respect to the foregoing owned
or used by the Company or any Subsidiary (other than immaterial items such as
licenses to use generally available software). The intellectual property and
rights set forth on such Schedule include all of the foregoing necessary for the
operation of the Company's and the Subsidiaries' business as now conducted and
as proposed to be conducted. To the knowledge of the Company, the Company's and
each Subsidiary's ownership and use of the foregoing does not infringe or
conflict with the rights of others; neither the Company nor any Subsidiary is or
will be obligated to make any royalty, fee or other payments in connection with
its ownership or use of any patent, trademark, trade name, copyright or other
intangible asset in connection with the conduct of its business as now conducted
and as purposed to be conducted, except as described in Section 2.16 of the
DISCLOSURE SCHEDULE. To the knowledge of the Company, except as
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set forth in Section 2.16 of the DISCLOSURE SCHEDULE, neither the Company nor
any Subsidiary has been notified of any claim by any person or entity that the
Company or any Subsidiary is violating any trademark, service xxxx, trade name,
patent or copyright, or other intangible asset or right owned by any other
person or entity or that it is using any name that is confusingly similar to
that of any other person or entity, and there is no basis for any such claim.
SECTION 2.17. EMPLOYEE BENEFIT PLANS.
(a) Section 2.17 of the DISCLOSURE SCHEDULE, sets forth all
material employee benefit plans, agreements, commitments, practices or
arrangements of any type (including, but not limited to, plans described in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) maintained by the Company or any Subsidiary for the benefit of
current or former employees or directors of the Company or any Subsidiary, or
with respect to which the Company or any Subsidiary has a liability, whether
direct or indirect, actual or contingent (including, but not limited to,
liabilities arising from affiliation under Section 414(b), (c), (m) or (o) of
the Code or Section 4001 of ERISA) (collectively, the "BENEFIT PLANS"). There
are no material benefit plans, agreements, commitments, practices or
arrangements of any type providing benefits to employees or directors of the
Company or any Subsidiary, other than the Benefit Plans.
(b) With respect to each Benefit Plan, (other than the Health
Care Plan and the Life Insurance Plan, Short Term Disability Plan and Long Term
Disability Plan, each as described in Section 2.17 of the DISCLOSURE SCHEDULE,
for which only item (i) has been delivered), the Company has delivered to the
Investor true and complete copies of: (i) any and all plan texts and agreements;
(ii) the most recent annual report, if applicable; (iii) the most recent annual
and periodic accounting of plan assets, if applicable; (iv) the most recent
determination letter received from the Internal Revenue Service and (v) the most
recent actuarial evaluation report, if applicable.
(c) With respect to each Benefit Plan: (i) if intended to
qualify under Section 401(a) of the Code, such plan so qualifies, and its trust
is exempt from taxation under Section 501(a) of the Code; (ii) such plan has
been administered and enforced in accordance with its terms and all applicable
laws in all material respects; (iii) no breach of fiduciary duty has occurred
with respect to which the Company, any Subsidiary or any Benefit Plan may be
liable or otherwise damaged in any material respect; (iv) no material disputes
are pending or threatened; (v) no "prohibited transaction" (within the meaning
of either Section 4975(c) of the Code or Section 406 of ERISA) has occurred with
respect to which the Company or any Benefit Plan may be liable or
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otherwise damaged in any material respect; (vi) all contributions, premiums, and
other payment obligations have been accrued on the financial statements of the
Company in accordance with generally accepted accounting principles, and, to the
extent due, have been made on a timely basis, in all material respects; (vii)
all contributions made or required to be made under such plan meet the
requirements for deductibility under the Code; (viii) the Company has expressly
reserved in itself the right to amend, modify or terminate such plan, or any
portion of it, without liability to itself; (ix) no such plan requires the
Company to continue to employ any employee or director.
(d) No Benefit Plan is, or has ever been, subject to Title IV
of ERISA.
(e) With respect to each Benefit Plan which provides welfare
benefits of the type described in Section 3(1) of ERISA: no such plan provides
medical or death benefits with respect to current or former employees or
directors of the Company beyond their termination of employment, other than
coverage mandated by Sections 601-608 of ERISA and 4980B(f) of the Code, (ii)
each such plan has been administered in compliance with Sections 601- 608 of
ERISA and 4980B(f) of the Code; and (iii) no such plan has reserves, assets,
surpluses or prepaid premiums.
SECTION 2.18. INSURANCE. The Company and its Subsidiaries have in full
force and effect (a) insurance reasonably believed to be adequate on all assets
and activities of a type customarily insured, covering property damage and loss
of income by fire or other casualty, and (b) insurance protection reasonably
believed to be adequate against all liabilities, claims and risks against which
it is customary for companies similarly situated as the Company and the
Subsidiaries to insure.
SECTION 2.19. AFFILIATE TRANSACTIONS. Except as set forth in Section
2.19 of the Disclosure Schedule, neither the Company nor any Subsidiary is a
party to any agreement, transaction or arrangement with any of their Executive
Officers, directors, stockholders, affiliates or relatives of any of the
foregoing.
SECTION 2.20. VOTING PROVISIONS. Except as contained in the Company's
Articles of Incorporation and Code of Regulations, there are no agreements,
voting trusts or other arrangements which contain any provision requiring, or
having the effect of requiring a higher voting requirement with respect to
action taken by the Company's or any Subsidiary's Board of Directors or other
governing body, or the holders of its capital stock or other interests than that
which would apply in the absence of such provisions.
SECTION 2.21. BROKERS, ETC. The Company has not dealt with any broker,
finder, commission agent or other similar person in
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connection with the offer or sale of the Stock and the transactions contemplated
by this Agreement other than Xxxxxx Bros., and the Company is under no
obligation to pay any broker's fee, finder's fee, or commission in connection
with such transactions except to Xxxxxx Bros. in an amount not to exceed $1.35
million.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company that:
SECTION 3.01. PARTNERSHIP EXISTENCE AND POWER. The Investor is a
limited partnership duly formed, validly existing and in good standing under the
laws of the State of Delaware and has all necessary partnership power and
authority to enter into and perform its obligations under this Agreement.
SECTION 3.02. INVESTMENT INTENT. The Stock to be acquired by it is
being acquired solely for its own account, for investment purposes only and,
with no present intention of distributing, selling or otherwise disposing of it
in connection with a distribution.
SECTION 3.03. ECONOMIC RISK; SOPHISTICATION. The Investor is able to
bear the economic risk of an investment in the Stock to be acquired by it, can
afford to sustain a total loss on such investment and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the proposed investment.
SECTION 3.04. AUTHORITY. The Investor has all requisite power and
authority to enter into this Agreement and perform its obligations hereunder,
and this Agreement constitutes a valid and binding obligation of the Investor
enforceable against the Investor in accordance with its terms.
SECTION 3.05. BROKERS. No finder, broker, agent, financial advisor or
other intermediary has acted on behalf of the Investor in connection with the
negotiation or consummation of this Agreement or any of the transactions
contemplated hereby, and no such person it entitled to any fee, payment,
commission or other consideration with respect thereto as a result of any
arrangement made by the Investor.
SECTION 3.06. LIMITED LIQUIDITY. The Investor understands that the
Stock to be acquired by it may not be sold, transferred or otherwise disposed of
without registration under the 1933 Act and any state securities laws, or an
exemption therefrom, and that in the absence of an effective registration
statement covering such securities or an available exemption from registration,
such Stock may be required to be held indefinitely.
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The Investor is aware that the Stock to be acquired by it may not be sold
pursuant to Rule 144 promulgated under the 1933 Act unless all of the conditions
of that Rule are met. The Investor represents that, in the absence of an
effective registration statement covering the Stock, it shall sell, transfer or
otherwise dispose of such Stock only in a manner consistent with the
representations set forth herein. Prior to transferring Stock pursuant to an
exemption, Investor shall, upon request, provide the Company with an opinion of
counsel, in form and substance reasonably acceptable to the Company, to the
effect that an exemption from registration is available. Investor further
understands that the Stock may be transferred only in compliance with the rules
and regulations of the FCC.
SECTION 3.07. ACCREDITED INVESTOR. The Investor is an "accredited
investor" as defined in Regulation D under the 1933 Act, an "institutional
buyer" as defined in 950 Code of Massachusetts Regulations section
14-401(L)4(a), and an "institutional investor" as defined in section 1707.01(S)
of the Ohio General Corporation Law.
SECTION 3.08. LEGENDS. The Investor understands that the
certificates representing the Stock it has agreed to purchase,
and any certificate issued in transfer thereof, will bear the
following legend:
"The securities evidenced by this certificate have
not been registered under the Securities Act of
1933, as amended, or under any applicable state
securities laws. These securities may not be sold
or transferred in the absence of such registration
or an exemption therefrom under such Act and under
any applicable state securities laws."
The certificates representing such Stock, and each certificate issued
in transfer thereof, will also bear any legend required under any applicable
state securities law. The Investor understands that the legend set forth above
shall be removed and the Company shall issue a certificate without such legend
to the holder of any such Stock (a) if such Stock is registered under the 1933
Act, or (b) such holder provides the Company with an opinion of counsel, in
form, substance and scope reasonably acceptable to the Company, to the effect
that a public sale or transfer of such Stock may be made without registration
under the 1933 Act and applicable state securities laws or (c) such holder
provides the Company with reasonable assurances that such Stock can be sold
pursuant to Rule 144(k) under the 1933 Act.
SECTION 3.09. INFORMATION. The Investor has been furnished with
certain materials relating to the business, finances and operations of the
Company and its Subsidiaries and materials
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relating to the offer and sale of the Stock. The Investor has been afforded an
opportunity to ask questions of the Company and its Subsidiaries, and has
received what the Investor believes to be satisfactory answers to any such
inquiries. Neither such inquiries nor any other due diligence investigation
conducted by the Investor shall modify, amend or affect the Investor's right to
rely on the Company's representations and warranties contained in Article II;
provided, that the Investor shall promptly provide written notice to the Company
if the Investor determines through its investigation that the Company is in
breach in a material respect of any of its representations or warranties set
forth in this Agreement.
ARTICLE IV. CLOSING CONDITIONS
----------- ------------------
SECTION 4.01. CONDITIONS TO INITIAL CLOSING. The obligations of the
Investor to purchase the Stock to be purchased at the Initial Closing shall be
subject to the satisfaction of the following conditions at and as of the time
of the Initial Closing:
(a) ISSUANCE OF STOCK. The Company shall have duly issued and
delivered to the Investor certificates for the Stock to be issued at the
Initial Closing.
(b) LEGAL OPINION FROM COUNSEL FOR THE COMPANY, ETC. The
Investor shall have received the written opinion of Xxxxxxxxxx & Xxxxxxxx,
Ltd., counsel to the Company, and Xxxxx Xxxx LLP, FCC counsel to the Company,
in the form of EXHIBIT 4.01(B) hereto.
(c) REPRESENTATIONS CORRECT, ETC. The representations and
warranties of the Company set forth in Article II shall be true in all material
respects, and Section 2.04 shall be true in all respects, at and as of the
Initial Closing, as if made as of the date of the Initial Closing.
(d) CLOSING CERTIFICATE. The Company shall have delivered to
the Investor a certificate signed by a principal officer of the Company dated
the date of the Initial Closing to the effect set forth in Section 4.01(c), and
stating that each of the conditions in this Article have been satisfied.
(e) CONSENTS AND APPROVALS. On or before the Initial Closing,
the Company and its Subsidiaries shall have received all consents, approvals
and authorizations of, and shall have made all declarations and filings with,
any other Person, including, without limitation, any governmental authority,
which are required as a condition precedent to the valid execution, delivery
and performance of and the consummation of the transactions contemplated by the
Agreements, including, without limitation, the valid offer, issue, sale and
delivery of the
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Stock, and all such consents, approvals, authorizations, declarations and
filings shall be in full force and effect at the time of the Initial Closing and
none of the same shall be subject to appeal or review.
(f) BOARDS OF DIRECTORS. As of the Initial Closing, the Board
of Directors of the Company shall consist of eleven directors, including at
least two nominees of the Investor, and the Investor Directors shall comprise
at least 2/11ths of the Board of Directors of each Subsidiary. If the Board has
an Executive Committee or any similar committee empowered to act generally on
behalf of the entire Board, no fewer than 2/11ths of the members shall be
Investor Directors.
(g) STOCKHOLDERS AGREEMENT. The Company, the Investor, X. X.
Xxxxxxxxxx, XX and Xxxxxx X. Xxxxxxxxxx, III shall have entered into a
Stockholders Agreement in the form of EXHIBIT 4.01(G) hereto (the "STOCKHOLDERS
AGREEMENT").
(h) REGISTRATION RIGHTS AGREEMENT. The Company and the
Investor shall have entered into a Registration Rights Agreement in the form of
EXHIBIT 4.01(H) (the "REGISTRATION RIGHTS AGREEMENT").
(i) NO LITIGATION. No action, suit, proceeding or
investigation shall have been instituted or threatened which seeks to restrain,
restrict or prohibit or impose penalties or damages with respect to the
consummation of the transactions contemplated by the Agreements.
(j) HSR ACT. All necessary filings under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act (the "HSR ACT") shall have been made
and the applicable waiting period specified therein shall have expired.
(k) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in form and substance to the Investor and its counsel.
(l) REDEMPTION OF PREFERRED STOCK. The Company shall have
made arrangements reasonably satisfactory to the Investor to redeem the
outstanding Preferred Stock in accordance with the terms of the Preferred
Stock.
If the conditions to Initial Closing set forth in this Article have not
been satisfied prior to September 30, 1997, the Company or the Investor may
terminate its obligations under this Agreement.
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SECTION 4.02. CONDITIONS TO SUBSEQUENT CLOSING. The obligations of the
Investor to purchase the Stock at the Subsequent Closing shall be subject to
the satisfaction of the following conditions at and as of the time of the
Subsequent Closing:
(a) SECTION 4.01 CONDITIONS. Each of the conditions to the
Initial Closing set forth in Section 4.01 above shall be satisfied (except that
the representations contained in Section 2.04(e) shall refer only to any Stock
to be issued by the Company in the Subsequent Closing), to the reasonable
satisfaction of the Investor, as of the time of the Subsequent Closing, the
Company shall have delivered all items referred to in Subsections (b) and (d)
thereof as of the time of the Subsequent Closing, and the Company is in
compliance with this Agreement.
(b) STOCKHOLDER SHARES. Each of the Selling Stockholders
shall have tendered certificates representing duly issued and outstanding
shares of capital stock of the Company for which they hold good, marketable and
unencumbered title ("TENDERED SHARES"), duly endorsed for transfer or with duly
executed stock powers attached.
(c) STOCKHOLDER REPRESENTATIONS. Each Selling Stockholder
shall represent and warrant to the Investor, and shall deliver a certificate to
the Investor to such effect, that each of the following statements is true and
correct as of the date thereof:
(i) TITLE. Such Selling Stockholder is the record
and beneficial owner of the Tendered Shares. Such Selling Stockholder has good,
marketable and unencumbered title to the Tendered Shares being sold by such
Selling Stockholder hereunder and full legal right, power and authority to
sell, transfer, assign and deliver such Tendered Shares as herein agreed. The
Investor will, on transfer and delivery of the Tendered Shares at the
Subsequent Closing, acquire good and marketable title to such Tendered Shares,
free and clear of any liens, encumbrances, security interests, claims of other
persons or restrictions on transfer other than restrictions under generally
applicable securities laws and other than liens, encumbrances, security
interests, claims of other persons or restrictions on transfer caused by
actions of the Investor. Such Selling Stockholder has not granted any option or
right, and is not a party to any other agreement, which requires, or upon the
passage of time or payment of money, or occurrence of any other event, may
require such Selling Stockholder to transfer any of the Tendered Shares being
sold by such Selling Stockholder to anyone other than the Investor.
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(ii) DUE ISSUANCE. The Tendered Shares held by
such Selling Stockholder are duly authorized, validly issued, and fully paid and
nonassessable.
(iii) AUTHORIZATIONS OR APPROVALS. No consents,
authorizations or approvals are required to permit such Selling Stockholder to
sell the Tendered Shares to the Investor.
(d) ADDITIONAL COMPANY SHARES. In the event the Company
issues Stock at the Subsequent Closing pursuant to Section 1.05, the Company
shall have duly issued and delivered to the Investor certificates for the Stock
to be issued at the Subsequent Closing.
ARTICLE V. GENERAL COVENANTS OF THE COMPANY
The Company will duly perform and observe each and all of the covenants
and agreements hereinafter set forth in this Article V (i) prior to the Initial
Closing, in the case of Section 5.01, and (ii) subsequent to the Initial
Closing, in the case of each other Section:
SECTION 5.01. COVENANTS PENDING INITIAL CLOSING. Prior to the Initial
Closing, the Company will use its best efforts to (a) cause the Company and its
Subsidiaries to conduct their businesses and affairs in such a manner as to
cause the representations and warranties specified in Article II to be true and
correct at all times, and (b) cause the conditions to the Initial Closing
specified in Article IV to be satisfied. In particular, the Company will file,
or cause to be filed, all reports and notifications required under the HSR Act
and will respond promptly to any second request or other inquiry with respect
thereto.
SECTION 5.02. REPORTS. The Company will furnish to the Investor the
following reports:
(a) MONTHLY REPORTS. As soon as available and in any event
within 30 days after the end of each fiscal month of the Company, consolidated
balance sheets of the Company and its Subsidiaries as at the end of such period
and the related consolidated and consolidating (which for purposes of this
Agreement shall mean by System or business unit consistent with current Company
practice) statements of operations, stockholders' equity and cash flows for such
period and for the portion of the Company's fiscal year ended on the last day of
such month, in the case of statements of operations setting forth in comparative
form the corresponding figures for the same period of the current
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approved budget, all in reasonable detail and certified by a principal financial
officer of the Company to have been prepared in accordance with generally
accepted accounting principles, subject to year-end and audit adjustments.
(b) QUARTERLY REPORTS. As soon as available and in any event
within 45 days after the end of each fiscal quarter of the Company, consolidated
balance sheet of the Company and its Subsidiaries as at the end of such period
and the related consolidated statements of operations, stockholders' equity and
cash flows for such period and for the portion of the Company's fiscal year
ended on the last day of such quarter, all in reasonable detail and certified by
a principal financial officer of the Company to have been prepared in accordance
with generally accepted accounting principles, subject to year-end and audit
adjustments.
(c) ANNUAL REPORTS. As soon as available and in any event
within 90 days after the end of each fiscal year of the Company, consolidated
balance sheet of the Company and its Subsidiaries as at the end of such year and
the related consolidated statements of earnings, stockholders' equity and cash
flows for such year, all in reasonable detail and accompanied by the report on
such consolidated financial statements of Ernst & Young or other "Big 6"
independent certified public accountants selected by the Company and reasonably
satisfactory to the Investor.
(d) AUDIT REPORTS. As promptly as practicable and in any
event within five days after receipt thereof, copies of all reports (including,
without limitation, audit reports and so-called management letters) or written
comments submitted to the Company or any of its Subsidiaries by independent
certified public accountants or other management consultants in connection with
each annual, interim or special audit in respect of the financial statements or
the accounts or the financial or accounting systems or controls of the Company
or any Subsidiary made by any such accountants or other management consultants;
(e) BUDGET. For each fiscal year of the Company, the Company
shall prepare a monthly and annual operating plan and budget, covenant
compliance calculations for all outstanding and projected indebtedness, cash
flow projections and profit and loss projections for the Company and its
Subsidiaries, all in reasonable detail (collectively, the "BUDGET") for such
fiscal year. The Company shall furnish the Investor the Budget promptly after
its completion, but in any event prior to the beginning of each such fiscal
year, and shall furnish to the Investor any
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material changes thereto promptly after such changes have been made.
(f) SECURITIES FILINGS, ETC. As promptly as practicable and
in any event within five days after the same are issued or filed, copies of (i)
all press releases issued by the Company or any Subsidiary, and all notices,
proxy statements, financial statements, reports and documents as the Company or
any Subsidiary shall send or make available generally to its stockholders
(other than the Company, in the case of any Subsidiary) or to financial
analysts, and (ii) all periodic and special reports, documents and registration
statements (other than on Form S-8) which the Company or any Subsidiary
furnishes or files, or any officer or director of the Company or any of its
Subsidiaries furnishes or files with respect to the Company or any of its
Subsidiaries, with the Securities and Exchange Commission (the "SEC") or any
Securities Exchange.
(g) MATERIAL ADVERSE CHANGES. As promptly as practicable and
in any event within five days after any Executive Officer of the Company
obtains knowledge of the existence of any condition or event (including,
without limitation, the filing of any litigation against or the commencement of
any proceeding or investigation involving the Company or any Subsidiary), which
has resulted in, or could reasonably be expected to result in, a Material
Adverse Change written notice specifying in reasonable detail the nature of
such condition or event and what action the Company proposes to take with
respect thereto.
(h) OTHER INFORMATION. Such other information relating to the
Company or its Subsidiaries as from time to time may reasonably be requested by
the Investor.
(i) Prior to its receipt of any such non-public information
pursuant to this Section 5.02, the Investor will execute an agreement
containing customary provisions with respect to the use and confidentiality of
such information.
SECTION 5.03. INSPECTION. The Company will permit any Person designated
by the Investor, on reasonable notice and during normal business hours, to visit
and inspect any of the properties of the Company and its Subsidiaries, to
examine their books, records and other materials relating thereto (and to make
copies thereof and take extracts therefrom) and to discuss its and their
affairs, finances and accounts with, and to be advised as to the same by, its
and their officers, employees, counsel and independent certified public
accountants provided that the Investor has executed an agreement containing
customary
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provisions with respect to the use and confidentiality of such information.
SECTION 5.04. CORPORATE EXISTENCE. The Company shall, and shall cause
each Subsidiary to, maintain its corporate existence, foreign qualifications,
and all rights, permits, licenses and authorizations material to its business
unless a majority of the Company's Board of Directors, including at least one
Investor Director, shall determine otherwise.
SECTION 5.05. BOARDS OF DIRECTORS.
(a) SIZE, ETC. To the extent of its powers under the Ohio
General Corporation Law, the Company shall not permit the Board or the board of
directors of SCI or any other Subsidiary to be classified, and directors shall
not have different rights, except as provided in the Articles of Incorporation
or Code of Regulation of the Company at the date hereof.
(b) BOARD REPRESENTATION. The Investor shall be entitled to
designate the greater of (i) two members of the Board and (ii) and the minimum
number of members of the Board which will cause the nominees of the Investor to
constitute not less than 2/11ths of the members of the Board. The Company will
cause each such designee to be included among the nominees who are recommended
for election as directors by management of the Company, at each meeting of the
Company's stockholders at which directors of the Company are proposed to be
elected (or, if the terms of directors are staggered, at each meeting at which
it is necessary to elect one or more designees of the Investor in order to
insure that the number of designees of the Investor specified in the first
sentence of this Subsection will serve on the Board at all times). The Company
will also cause a special meeting of its Board to be held as soon as practicable
after the creation of any vacancy on the Board arising out of the death,
resignation, removal or other similar occurrence of a designee of the Investor,
or any increase in the number of members of the Board which would entitle the
Investor to designate another director pursuant to the first sentence of this
Subsection, to fill such vacancy with a designee of the Investor or to add one
or more additional designees of the Investor, as appropriate, so that the proper
number of designees of the Investor will at all times serve as directors of the
Company.
(c) SUBSIDIARY BOARDS. The Company shall at all times cause
the board of directors of each Subsidiary to consist of not less than 2/11ths
representation by the Investor Directors.
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(d) MEETINGS. The Company will take such action as shall be
required to cause the Board to meet not less often than quarterly, and will give
each director at least 3 days prior notice of the time and place of any meeting.
(e) INDEMNIFICATION; INSURANCE. The Company shall maintain in
effect a directors and officers liability insurance policy covering the
designees of the Investor to the Board and the boards of directors of each
Subsidiary, providing at least the same coverage as for the other directors of
the Company.
(f) COMMITTEES. Neither the Board nor the boards of directors
of the Subsidiaries shall have an Executive Committee or any similar committee
empowered to act generally on behalf of the Board or the Subsidiaries' boards of
which fewer than 2/11ths of the members are Investor Directors.
SECTION 5.06. VENTURE CAPITAL EXCEPTION. Until six months following
such time as the Investor no longer holds at least 20% of the Stock, (a) the
Investor shall be permitted to consult on a regular basis with the Company's
management with respect to the business and affairs of the Company and, if
requested by the Investor, exercise other "management rights" as may be
necessary to qualify the securities of the Company owned by the Investor as a
"venture capital investment" within the plan asset regulations under ERISA
(Department of Labor Regulation 2510.3-101) (the "PLAN ASSET REGULATIONS"), it
being agreed that all the rights of the Investor under this Agreement and all
rights which the Investor may then have with respect to the management of any
other companies in which such Investor holds investments shall be considered in
determining whether the Investor is permitted to exercise "management rights" to
the extent required under such regulations for venture capital investments, and
(b) the Company will not take any action that would cause it to cease to be an
"operating company" within the meaning of the Plan Asset Regulations.
SECTION 5.07. EXPENSES. The Company will bear all reasonable expenses
of the Investor relating to the transactions contemplated by the Agreements,
including the negotiation, preparation, execution, amendment, waiver and
enforcement thereof, and including without limitation, the reasonable fees and
disbursements of counsel and FCC counsel to the Investor but excluding the fees
and expenses of the Xxxxxx Group.
SECTION 5.08. NO CONFLICTING AGREEMENTS. The Company will not, and
will not permit its Subsidiaries to, take any action, enter into any agreement
or make any commitment which would
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conflict or interfere in any material respect with the obligations to the
Investor under the Agreements.
SECTION 5.09. INSURANCE. The Company shall, and shall cause each
Subsidiary to, have in full force and effect (a) insurance reasonably believed
to be adequate on all assets and activities of a type customarily insured,
covering property damage and loss of income by fire or other casualty, and (b)
insurance reasonably believed to be adequate protection against all liabilities,
claims and risks against which it is customary for companies similarly situated
as the Company and the Subsidiaries to insure.
SECTION 5.10. COMPLIANCE WITH LAWS. The Company will use reasonable
efforts, and will cause each of its Subsidiaries to use reasonable efforts to,
comply in all material respects with all applicable laws, rules, regulations,
orders and decrees of all governmental authorities.
SECTION 5.11. AFFILIATE TRANSACTIONS. The Company shall not, and shall
not permit any Subsidiary to buy, sell or lease any assets, borrow or lend any
money, or deal with or enter into any other transactions or agreements with any
stockholders, officer or director, or any relative or Affiliate of any of the
foregoing, other than (a) as expressly contemplated by this Agreement or any
other agreement contemplated hereby, (b) those that are (i) fully disclosed in
advance to the Board of Directors, and (ii) approved by a disinterested majority
of the Board, including at least one Investor Director, (c) the purchase of
advertising in the ordinary course of business, with affiliated radio and
television stations on terms no more favorable to such radio and television
stations than are generally obtained by them from unaffiliated third parties, or
(d) those that are (i) on terms no less favorable to the Company or any
Subsidiary than could have been obtained from an unaffiliated third party and
(ii) involve less than $100,000 annually, in the aggregate.
SECTION 5.12. AMENDMENTS TO CHARTER, ETC. To the extent permitted by
Ohio General Corporation Law, without the prior approval of at least one
Investor Director, the Company shall not, and shall not permit any Subsidiary
to, amend its Code of Regulations or amend its Articles of Incorporation.
SECTION 5.13. MERGERS. Without the prior approval of at least one
Investor Director, the Company shall not, and shall not permit any Subsidiary
to, (a) merge or consolidate with any person or entity, other than a
wholly-owned Subsidiary in a
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transaction in which the Company is the surviving corporation and in which its
Articles of Incorporation are not altered, (b) sell, lease (as lessor) or
otherwise dispose of all or any substantial portion of its assets, (c) sell,
transfer or otherwise dispose of capital stock of any Subsidiary or (d) enter
into any joint venture, partnership or similar arrangement in which the amount
involved, taken in the aggregate with any arrangements or transactions
contemplated by Sections 5.13(d) and 5.16(a), exceeds $10 million in any twelve
month period, other than any joint venture, partnership or similar arrangement
in the ordinary course of business.
SECTION 5.14. DIVIDENDS. Without the prior approval of at least one
Investor Director, the Company shall not pay or declare any dividend or make any
distribution of money or other property on account of any of its capital stock,
or accord any other payment, benefit or preference to any share of capital
stock, other than pro rata dividends payable solely in shares of Common Stock.
SECTION 5.15. REDEMPTIONS. Without the prior approval of at least one
Investor Director, the Company shall not, and shall not permit any Subsidiary
to, purchase, redeem or otherwise acquire any share of its capital stock, or any
options, warrants, convertible securities or other rights to acquire capital
stock other than (a) the redemption of the Preferred Stock in accordance with
its terms using the proceeds of the issuance of the Stock to be purchased at the
Initial Closing, or (b) repurchases of shares from employees or former employees
of the Company, other than any party to the Stockholders Agreement, PROVIDED
that such repurchases have been approved by the Board and the aggregate amount
spent annually to repurchase such shares shall not exceed $250,000.
SECTION 5.16. ACQUISITIONS AND INVESTMENTS. Without the prior approval
of at least one Investor Director, the Company shall not, and shall not permit
any Subsidiary to:
(a) make any acquisition of stock or assets, or make any
investment in or with any other entity, other than in the ordinary course of the
Company's or any Subsidiary's business, except for acquisitions (including
acquisitions effected by merger) in which the amount involved, together with any
other arrangements or transactions contemplated by Section 5.13(d) and 5.16(a),
does not exceed $10 million in any twelve month period (including purchase
price, assumption of liabilities and other acquisition costs, however
characterized), in the cellular telephone business; or
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(b) make any loan or advance to any person or entity other
than in the ordinary course of the Company's or any Subsidiary's business.
SECTION 5.17. DEBT FINANCING. Without the prior approval of at least
one Investor Director, the Company will not, and will not permit any Subsidiary
to, (a) enter into any new debt financing arrangement or (b) materially modify
the principal amount under any existing debt financing arrangement, involving
borrowed money, capital leases, installment purchases or guarantees, in excess
of $30 million in each case.
SECTION 5.18. EQUITY FINANCING. Without the approval of at least one
Investor Director, the Company will not, and will not permit any Subsidiary to,
issue any shares of capital stock, or any options, warrants, convertible
securities or other rights to acquire capital stock, other than the issuance or
grant of not more than 1,000,000 shares of Common Stock or rights thereto
pursuant to the Company's 1996 Stock Option Plan and not more than 250,000
shares of Common Stock or rights thereto pursuant to the Company's 1996 Stock
Option Plan for Non-Employee Directors (less all such rights outstanding on the
date hereof or shares of stock issued under such plans or upon exercise of
rights previously granted thereunder), without duplication, adjusted
appropriately for any stock splits, stock dividends, combination or the like.
SECTION 5.19 REGISTRATION. Without the approval of at least one
Investor Director, the Company will not, and will not permit any Subsidiary to,
register shares of capital stock or any options, warrants, convertible
securities or other rights to acquire capital stock pursuant to the 1933 Act
except (a) pursuant to the Registration Rights Agreement, (b) registration of
shares issued under currently existing employee benefit plans on Form S-8 and
similar or successor forms or (c) pursuant to the request of the holders of at
least 30% of the then current outstanding Common Stock and involving a
registration of the Company's common stock with an anticipated aggregate
offering price of at least $25,000,000, net of underwriting fees, discounts and
expenses.
SECTION 5.20. KEY EMPLOYEE COMPENSATION. Without the prior approval of
at least one Investor Director, the Company (a) will not hire or terminate, any
of the 5 most highly compensated employees of the Company (including, in any
case, Xxxxxx X. Xxxxxx, Xx., Xxxxx X. Xxxxxx, Xxxxxxx Xxxxxxxx and Xxxxxxx X.
Xxxxxx), or (b) materially change the compensation, benefits, stock, option or
other equity arrangements of any of (i) X. X.
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Xxxxxxxxxx, XX, (xx) Xxxxxx X. Xxxxxxxxxx, III, (iii) any person holding
directly or indirectly, at least 5% of the Company's fully-diluted outstanding
capital stock, or (iv) relatives or Affiliates of any of the foregoing.
SECTION 5.21. LINE OF BUSINESS. Without the prior approval of at least
one Investor Director, the Company shall not, and shall not permit any
Subsidiary to, engage in any line of business other than the businesses in which
the Company and the Subsidiaries are currently engaged, as described in the
Annual Report.
SECTION 5.22. SURVIVAL OF COVENANTS. (a) Except as set forth in (b)
below, the covenants set forth in this Article V, other than in Section 5.06,
shall survive until such time as the Investor beneficially owns or holds less
than 40% of the Stock, and thereafter shall be void and of no further effect.
(b) The covenants set forth in Sections 5.09, 5.10, 5.11 and
5.14 through 5.21 shall survive until the closing of a public offering of the
Company's Common Stock registered under the 1933 Act and resulting in proceeds
to the Company of at least $25,000,000 (net of underwriting fees, discounts and
expenses), and thereafter shall be void and of no further force and effect.
ARTICLE VI. NEW ISSUANCE OF STOCK OR RIGHTS
----------- -------------------------------
SECTION 6.01. RIGHT OF FIRST REFUSAL. If the Company (including, for
purposes of this Article, any Subsidiary) proposes to issue for cash or notes
any capital stock or any security convertible into, exchangeable for or having
rights to purchase capital stock, the Company shall first offer in writing to
sell to the Investor a pro rata portion (calculated as a percentage, the
numerator of which is the Common Stock held by the Investor and the denominator
of which is all outstanding Common Stock at the time of such offer) of the
securities proposed to be issued (the "Offered Securities"). Such offer shall
describe the securities proposed to be issued and specify the quantity, price
(which shall be in U.S. dollars) and the payment terms. If within 15 days after
receipt of such offer the Investor accepts the same in writing as to all or a
lesser amount of the Offered Securities, then the Company shall sell all, or
such lesser amount, as the case may be, of the Offered Securities as the
Investor may specify, to the Investor upon the terms specified. Such sale shall
occur within 60 days thereafter.
SECTION 6.02. SALE TO THIRD PARTY. The Company shall be free to sell
at any time prior to 120 days after the date an
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offer pursuant to Section 6.01 was made, the quantity of such securities not
agreed by the Investor to be purchased by it at a price no less favorable to the
Company than that specified in such offer and on terms no less favorable to the
Company than those specified in such offer. If such sale is not consummated
within the time specified in the preceding sentence, the Company shall not sell
such securities without again complying with Section 6.01.
SECTION 6.03. EXCLUDED TRANSACTIONS. The following transactions shall
be excluded from the restrictions of this Article:
(a) any issuance to an employee, director or consultant of
the Company of Common Stock or rights to purchase Common Stock and as part of
the Company's 1996 Stock Option Plan and 1996 Stock Option Plan for
Non-Employee Directors, provided that, without the prior approval of at least
one Investor Director, not more than 1,000,000 shares and 250,000 shares,
respectively, of Common Stock or rights thereto (less all such rights
outstanding as of the date hereof or shares of stock issued under such plans or
upon exercise of shares previously granted thereunder), adjusted appropriately
for any stock dividends, stock splits, combinations or the like, may be
excluded pursuant to this Subsection;
(b) any issuance of Common Stock to all holders of all
classes of Common Stock, pro rata to the number of shares held by each; and
(c) any issuance of securities upon the exercise of options
or warrants outstanding on the date hereof or other rights which were not
issued in violation of the terms of this Article.
(d) any issuance of securities in connection with any loan or
debt financing arrangements;
(e) any issuance of securities in a public offering
registered under the 1933 Act; and
(f) any issuance of capital stock by a Subsidiary to the
Company.
SECTION 6.04. SURVIVAL OF RIGHT OF FIRST REFUSAL. The obligations set
forth in this Article VI shall survive until such time as the Investor
beneficially owns or holds less than 40% of the Stock, and thereafter shall be
void and of no further effect.
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ARTICLE VII. DEFINITIONS
The terms defined in this Article VII, whenever used and capitalized in
this Agreement, shall, unless the context otherwise requires, have the following
respective meanings:
AFFILIATE: shall have the meaning given to it in the Rules promulgated
under the 1933 Act.
AGREEMENTS: shall mean this Agreement, the Stockholders Agreement, the
Registration Rights Agreement and each of the other agreements and instruments
contemplated to be executed in connection with the transactions contemplated by
this Agreement.
BENEFIT PLANS: shall have the meaning specified in Section 2.17.
BOARD: the Board of Directors of the Company.
BUDGET: shall have the meaning specified in Section 5.02.
CLOSINGS: shall have the meaning specified in Section 1.03.
CODE: shall have the meaning specified in Section 2.09.
COMMON STOCK: shall mean the Class A and Class B Common Stock, $.01 par
value per share, of the Company, or, after the Initial Closing, such other
generally held class of common stock of the Company as may be outstanding from
time to time.
COMPANY: shall have the meaning set forth at the beginning of this
Agreement.
DISCLOSURE DOCUMENTS: shall have the meaning specified in Section
2.06.
DISCLOSURE SCHEDULE: shall mean the separate Disclosure Schedule
delivered by the Company to the Investor on the date hereof, and certified by
the Company to be the Disclosure Schedule referred to herein.
ERISA: shall have the meaning specified in Section 2.17.
EXECUTIVE OFFICER: shall mean the five (5) most highly compensated
employees of the Company.
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FCC: shall have the meaning specified in Section 2.11.
FINAL ORDER: shall have the meaning specified in Section 2.11.
HSR ACT: shall have the meaning specified in Section 4.09.
INITIAL CLOSING: shall have the meaning specified in Section 1.03(a).
INVESTOR: shall mean Boston Ventures Limited Partnership V unless it
transfers 55% or more of the Stock in a single transaction approved by the
Company's Board of Directors, if transferred within five years of the date
hereof, which approval shall not be unreasonably withheld, to another Person or
entity in which case Investor thereafter shall mean such Person provided,
however, that Boston Ventures shall notify the Company at least 30 days prior to
any such transfer; and provided, further, that without the prior approval of the
Company's Board of Directors, no such transfer shall be to a Person that has a
material cellular telephone or similar service operating presence in or
contiguous to the areas served by the Company or its Subsidiaries, or to any
Affiliate of such a Person; and provided further that any Investor other than
Boston Ventures Limited Partnership V must beneficially own and hold at least
55% of the Stock to be entitled to the rights of the Investor herein. There
shall be only one Investor at any time for purposes of this Agreement and if
there is such transfer of the Stock, such transferee shall be deemed to be the
Investor without further action.
INVESTOR DIRECTOR: shall mean a member of the Board designated by the
Investor pursuant to the Stockholders Agreement.
KNOWLEDGE OF THE COMPANY: shall mean that any Executive Officer or
director of the Company has actual awareness or knowledge of such matters.
LICENSES: shall have the meaning specified in Section 2.11.
LOSSES: shall have the meaning specified in Section 8.02.
MATERIAL ADVERSE CHANGE: shall mean a material adverse change in any
of (a) the condition (financial or otherwise), business, ownership,
performance, operations, properties or prospects of the Company and its
Subsidiaries taken as a whole; (b) the ability of the Company or any Subsidiary
to perform any
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of their material obligations under the terms of the Agreements; or (c) the
rights and remedies of any Investor under the Agreements.
1933 ACT: shall mean the Securities Act of 1933, as amended.
1934 ACT: shall mean the Securities Exchange Act of 1934, as amended.
OFFERED SECURITIES: shall have the meaning specified in Section 6.01.
PERSON: shall mean an individual, partnership, corporation, trust,
unincorporated association, joint venture or other entity of any nature.
PLAN ASSET REGULATIONS: shall have the meaning specified in Section
5.05.
PREFERRED STOCK: shall mean the Company's redeemable Series A Senior
Cumulative Nonvoting Preferred Stock, $.01 par value per share.
REGISTRATION RIGHTS AGREEMENT: shall have the meaning specified in
Section 4.08.
SCI: shall have the meaning specified in the Introduction hereto.
SEC: shall have the meaning specified in Section 5.02(f).
SECURITIES EXCHANGE: shall mean any national or regional securities
exchange including without limitation the NASDAQ Stock Market.
SELLING STOCKHOLDER shall have the meaning specified in Section 1.05.
STOCK: shall mean the Common Stock issued to the Investor hereunder,
together with any stock or other securities issued as a dividend or distribution
thereon, any securities issued to the Investor in substitution therefor or in
connection with any merger, consolidation, reorganization, recapitalization or
other transaction affecting the Common Stock.
STOCKHOLDERS AGREEMENT: shall have the meaning specified in Section
4.07.
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SUBSEQUENT CLOSING: shall have the meaning specified in Section
1.03(b).
SUBSIDIARY: shall mean as to any Person, a corporation or other Person
of which more than fifty percent of the outstanding capital stock (or other
beneficial interest) is at the time directly or indirectly owned or controlled
by such Person.
SYSTEMS: shall have the meaning specified in Section 2.11.
TENDERED SHARES: shall have the meaning specified in Section 1.05.
ARTICLE VIII. MISCELLANEOUS
------------- -------------
SECTION 8.01. NOTICES. All notices to a party hereunder shall be in
writing and shall be deemed to have been adequately given if delivered in
person, by facsimile transmission with receipt acknowledged or by delivery by a
recognized courier for overnight delivery, or mailed, certified mail, return
receipt requested, to such party at its address set forth below (or such other
address as it may from time to time designate in writing to the other parties
hereto).
The Company: Sygnet Wireless, Inc.
0000-X Xxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
With a copy to: Xxxxxxx Xxxxxxxx, Esquire
Xxxxx Xxxx LLP
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fax: (000) 000-0000
The Investor: Boston Ventures Limited Partnership V
00 Xxxxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxx
Fax: (000) 000-0000
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With a copy to: Xxxxxxx X. X. Xxxxx, Esquire
Xxxxxx, Hall & Xxxxxxx
Exchange Place
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
SECTION 8.02. INDEMNIFICATION. (a) The Company shall indemnify the
Investor and each of its partners, Affiliates, successors and assigns from and
against all losses, claims, damages, expenses (including reasonable attorneys
fees) and liabilities, and actions in respect thereof (collectively "LOSSES"),
resulting from or arising out of or relating to any misrepresentation or breach
of any warranty or representation made by the Company herein, or the failure to
comply with or nonfulfillment of any covenant or agreement by the Company or any
Subsidiary under the Agreements, except such as may have been disclosed by the
Company to, and specifically waived by, the Investor in writing.
(b) To the extent permitted by that certain Trust Indenture
dated as of September 26, 1996, the Company shall indemnify the Investor and
each of its partners, Affiliates, successors and assigns from and against all
Losses resulting from or arising out of or relating to the purchase of Common
Stock from the Selling Stockholders, except to the extent such Losses result
from, arise out of, or relate to, the gross negligence or willful misconduct of
the Investor or a general decline in value of the Company or the Common Stock
purchased by the Investor at the Subsequent Closing.
(c) The Investor shall indemnify the Company and each of its
partners, Affiliates, successors and assigns from and against all Losses
resulting from or arising out of or relating to any misrepresentation or breach
of any warranty or representation made by the Investor herein, or the failure
to comply with or nonfulfillment of any covenant or agreement by the Investor
under the Agreements, except such as may have been disclosed by the Investor
to, and specifically waived by, the Company in writing.
SECTION 8.03. NO WAIVER. No failure to exercise and no delay in
exercising, on the part of the Investor, any right, power or privilege hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
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SECTION 8.04. AMENDMENTS AND WAIVERS, ETC. Except as hereinafter
provided, this Agreement may be modified or amended by a writing signed by the
Company and the Investor. No waiver of any term or provision hereof shall be
effective unless made in the same manner as an amendment of such term or
provision.
SECTION 8.05. SURVIVAL OF AGREEMENTS, ETC. Except as otherwise provided
herein or therein, all agreements, representations and warranties contained
herein or made in writing by or on behalf of the Company in connection with the
transactions contemplated hereby shall survive the execution and delivery of
this Agreement, the Closings and any investigation at any time made by or on
behalf of the Investor. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed
representations and warranties by the Company.
SECTION 8.06. CONSTRUCTION. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Ohio (without
regard for its conflicts of laws principles). The descriptive headings of the
several Sections hereof are for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
SECTION 8.07. BINDING EFFECT AND BENEFITS. This Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
heirs and successors.
SECTION 8.08. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and with counterpart signature pages (including
signature pages signed and delivered by facsimile transmission), and all such
counterparts shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above written.
SYGNET WIRELESS, INC.
By____________________________________
(Title)
BOSTON VENTURES LIMITED PARTNERSHIP V
By Boston Ventures Company V, L.L.C.,
its general partner
By____________________________________
(Title)
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