[EXECUTION COPY]
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XXXXXX COMMUNICATIONS CORPORATION
INVESTMENT AND TRANSACTION AGREEMENT
dated as of December 23, 1998
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INVESTMENT AND TRANSACTION AGREEMENT
INVESTMENT AND TRANSACTION AGREEMENT, dated as of December 23, 1998 (this
"AGREEMENT"), by and among the investors referred to on Schedule I (the
"PURCHASERS"), and Xxxxxx Communications Corporation, an Oklahoma corporation
(the "COMPANY").
WHEREAS:
(A) The Company wishes to authorize and create new classes of preferred
stock, including, Class D Preferred Stock (such term and each other capitalized
term used but not defined in these recitals having the meaning given such term
in Article I), Class E Preferred Stock, Class G Preferred Stock and Class H
Preferred Stock. Class D Preferred Stock shall be convertible into Class A
Common Stock and Class E Preferred Stock and Class G Preferred Stock shall be
convertible into Class A Common Stock and Class H Preferred Stock and the
holders of Class D Preferred Stock and Class G Preferred Stock shall participate
in and receive the economic benefits of the Logix Communications Spin-Off upon
its occurrence; and
(B) The Company wishes to authorize and create a new class of Common
Stock, Class C Common Stock, which shall be issued to employees and managers of
the Company pursuant to the New Company Stock Option Plan; and
(C) The parties wish to amend the Certificate of Incorporation and to file
the Certificates of Designation for each of the Class D Preferred Stock, the
Class E Preferred Stock, the Class G Preferred Stock, and the Class H Preferred
Stock with the office of the Secretary of State for the State of Oklahoma in
order to reflect, among other things, the authorization of the securities being
issued by the Company hereunder, and the parties wish to enter into certain
agreements relating to the parties' rights and obligations in connection with
the New Company; and
(D) The JWC Group and the Xxxxxx Partnership wish to acquire Class D
Preferred Stock to be issued by the Company in the amounts set forth opposite
such Purchasers' names on Schedule I, and the Company wishes to sell and issue
such securities to such Purchasers, all on the terms and subject to the
conditions herein set forth; and
(E) The Company wishes to issue to the Xxxxxx Partnership 37,853 shares of
Class G Preferred with an aggregate value of $25.0 million in exchange for the
redemption by the Company from the Xxxxxx Partnership of 37,853 shares of
Class A Common Stock on the terms and subject to the conditions herein set
forth; and
(F) Certain of the parties hereto are party to the Fleet Purchase
Agreement pursuant to which Fleet Equity will sell to the Company 100,000
shares of Class C Preferred Stock and convert 100,000 shares of Class B
Preferred Stock into shares of Class A Common Stock and sell
such shares of Class A Common Stock to such other parties on the terms and
conditions contained therein; and
(G) On or prior to the Closing, the Company and Fleet Equity, will
terminate the Fleet Equity Purchase Agreement and the Company and its current
shareholders will terminate the Former Shareholders' Agreement and the Company
and its Stockholders will enter into the Stockholder and Investor Rights
Agreement pursuant to which the Company will replace its current management
stock option plan with the New Company Stock Option Plan and the Company will
establish a management stock option plan for its Subsidiary, Logix
Communications, substantially in the form of the Logix Communications 1998 Stock
Option Plan.
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section I.1 CERTAIN DEFINED TERMS. As used herein, the following terms
have the following meanings (unless indicated otherwise, all Section and Article
references are to Sections and Articles in this Agreement, and all Schedule and
Exhibit references are to Schedules and Exhibits to this Agreement):
"AFFILIATE" shall have the meaning given such term in Rule 501(b)
under the Securities Act.
"CELLULAR SUBSIDIARIES" mean the Company's Subsidiaries which own the
Cellular Systems currently owned by the Company.
"CELLULAR SYSTEM" means a mobile communication system constructed and
operated in a MSA or RSA (or any successor territorial designations or
subdivision thereof authorized by the FCC) exclusively using frequencies in
the 800 MHz band, or portions thereof, pursuant to a License therefor
issued by the FCC.
"CERTIFICATES OF DESIGNATION" shall mean collectively the Certificates
of Designation of the Company in respect of each class of Preferred Stock,
substantially in the forms of Exhibits A-1 through A-4 hereto.
"CLAIM" has the meaning set forth in Section 8.4(a).
"CLASS A COMMON STOCK" shall mean the Class A Common Stock, par value
$0.001 per share, of the Company.
"CLASS A PREFERRED STOCK" shall mean the Class A Preferred Stock of
the Company, par value $1.00 per share.
"CLASS B COMMON STOCK" shall mean the Class B Common Stock, par value
$0.001 per share, of the Company.
"CLASS B PREFERRED STOCK" shall mean the Class B Preferred Stock of
the Company, par value $1.00 per share, which has been redeemed as of the
date of this Agreement.
"CLASS C COMMON STOCK" shall mean the Class C Common Stock of the
Company, par value $0.001 per share, which is designed to track the
financial performance of the Wireless Subsidiaries.
"CLASS C PREFERRED STOCK" shall mean the Class C Preferred Stock of
the Company, par value $1.00 per share.
"CLASS D PREFERRED STOCK" shall mean the Class D Preferred Stock of
the Company, par value $1.00 per share.
"CLASS E PREFERRED STOCK" shall mean the Class E Preferred Stock of
the Company, par value $1.00 per share.
"CLASS F PREFERRED STOCK" shall mean the Class F Preferred Stock of
the Company, par value $1.00 per share.
"CLASS F PREFERRED STOCK DOCUMENTS" shall mean the Class F Preferred
Stock Investors Agreement, the Class F Preferred Stock Warrants and the
Class F Preferred Stock (and the Certificate of Designation relating
thereto).
"CLASS F PREFERRED STOCK WARRANT AGREEMENT" shall mean the Warrant
Agreement entered into by the Company in respect of the Class F Preferred
Stock Warrants.
"CLASS F PREFERRED STOCK WARRANT SHARES" shall mean the Class A Common
Stock issued by the Company upon exercise of the Class F Preferred Stock
Warrants.
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"CLASS F PREFERRED STOCK WARRANTS" shall mean any warrant certificate
evidencing warrants to purchase Class A Common Stock issued by the Company
in conjunction with the Class F Preferred Stock.
"CLASS G PREFERRED STOCK" shall mean the Class G Preferred Stock of
the Company, par value $1.00 per share.
"CLASS H PREFERRED STOCK" shall mean the Class H Preferred Stock of
the Company, par value $1.00 per share.
"CLOSING" has the meaning set forth in Section 2.1.
"CLOSING DATE" has the meaning set forth in Section 2.1.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COMMON STOCK" shall mean, collectively, the Class A Common Stock, the
Class B Common Stock and the Class C Common Stock.
"COMPANY" has the meaning set forth in the preamble.
"CONSENTS" shall mean all consents and approvals of Governmental
Authorities or other third parties necessary to authorize, approve or
permit the parties hereto to consummate the transactions contemplated
hereby and for the Company to operate its business after the Closing Date
as currently contemplated.
"CREDIT AGREEMENTS" shall mean (i) the Credit Agreement, dated as of
March 25, 1998, among First Union National Bank (as successor by merger to
CoreStates Bank, N.A.) as Administrative Agent, Xxxxxx Operating Company,
as Borrower, the Company, as Guarantor, and the Company Subsidiaries party
thereto, (ii) the Revolving Credit Agreement, dated as of March 25, 1998,
among Xxxxxx Cellular Operations Company as Borrower, and NationsBank, N.A.
(as successor by merger to NationsBank of Texas, N.A.), as Administrative
Agent, (iii) the 364-Day Revolving Credit and Term Loan Agreement, dated as
of March 25, 1998, between Xxxxxx Cellular Operations Company, as Borrower,
and NationsBank, N.A. (as successor by merger to NationsBank of Texas,
N.A.), as Administrative Agent, (iv) the Credit Agreement, dated the date
hereof, between Xxxxxx/Sygnet Operating Company, as Borrower and
NationsBank N.A., as Administrative Agent and (v) the Term Loan Agreement,
dated as of the date hereof, among Xxxxxx Tower Company and Nationsbank,
N.A.
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"CREDIT DOCUMENTS" shall mean, collectively, the Credit Agreements
and all documents and instruments evidencing or securing or guarantying
indebtedness thereunder.
"DCC OPTION" shall mean the option held by the Xxxxxx Partnership to
purchase from Fleet Equity 40,000 shares of Class B Preferred Stock
pursuant to the Option Agreement, dated as of March 19, 1996, among the
Xxxxxx Partnership and Fleet Equity.
"XXXXXX PARTNERSHIP" means Xxxxxx XX Limited Partnership, an Oklahoma
limited partnership.
"XXXXXX/SYGNET" shall mean Xxxxxx/Sygnet Communications Company, an
Oklahoma corporation.
"XXXXXX/SYGNET NOTE DOCUMENTS" shall mean, collectively, the
Xxxxxx/Sygnet Note Indenture, the Xxxxxx/Sygnet Note Purchase Agreement,
the Xxxxxx/Sygnet Notes and the Xxxxxx/Sygnet Notes Registration Rights
Agreement.
"XXXXXX/SYGNET NOTE INDENTURE" shall mean the Indenture, dated the
date hereof, among Xxxxxx/Sygnet, and United States Trust Company of New
York, as trustee thereunder in respect of the Xxxxxx/Sygnet Notes.
"XXXXXX/SYGNET NOTE PURCHASE AGREEMENT" shall mean the Purchase
Agreement, dated as of December 16, 1998, among Xxxxxx/Sygnet, and
NationsBanc Xxxxxxxxxx Securities LLC.
"XXXXXX/SYGNET NOTES" shall mean the $200 million in aggregate
principal amount of 12 1/4% Senior Notes due 2008 issued by Xxxxxx/Sygnet
pursuant to the Xxxxxx/Sygnet Note Indenture.
"XXXXXX/SYGNET REGISTRATION RIGHTS AGREEMENT" shall mean the
Registration Rights Agreement, dated as of the date hereof, among
Xxxxxx/Sygnet and NationsBanc Xxxxxxxxxx Securities LLC.
"EMPLOYEE PLANS" has the meaning set forth in Section 4.16.
"ENVIRONMENTAL CLAIM" means any claim, action cause of action,
investigation or notice by any person or entity alleging potential
liability resulting from (a) the presence, Release or threatened Release of
any Hazardous Materials or (b) circumstances forming the basis of any
violation, or alleged violation of any Environmental Law.
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"ENVIRONMENTAL LAWS" means all Federal, state and local laws and
regulations relating to pollution or protection of human health or the
environment, including without limitation, laws relating to the
manufacture, distribution, use, treatment, storage, Release, disposal,
transport or handling of Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC
promulgated from time to time thereunder.
"FCC" shall mean the Federal Communications Commission or similar
regulatory authority established in replacement thereof.
"FCC LAW" shall mean the Communications Act of 1934, as amended,
including as amended by the Telecommunications Act of 1996, and the rules,
regulations and policies promulgated thereunder.
"FINANCING AGREEMENTS" shall mean, collectively, the Senior Note
Documents, the Xxxxxx/Sygnet Note Documents, the Credit Documents, the
Senior PIK Preferred Stock Certificate of Designation, the Sygnet PIK
Preferred Stock Documents, the Class F Preferred Stock Documents, and this
Agreement, and, as appropriate, all documents, instruments and agreements
evidencing, or securing the foregoing and any refinancings or amendments
thereto permitted by Section 12.5 of the Stockholder and Investor Rights
Agreement. This definition shall not be construed in accordance with the
final sentence of Section 1.2.
"FLEET EQUITY" shall mean collectively Fleet Equity Partners, Fleet
Venture Resources and Xxxxxxx Plaza Partners.
"FLEET EQUITY PARTNERS" means Fleet Equity Partners VI, L.P., a
Delaware limited partnership.
"FLEET EQUITY PURCHASE AGREEMENT" shall mean the Securities Purchase
Agreement, dated as of March 19, 1996, among the Company and the purchasers
named therein as amended by Amendment No.1 thereto, dated as of February
26, 1997.
"FLEET PURCHASE AGREEMENT" means the Stock Purchase Agreement, dated
the date hereof, among Fleet Equity and the other parties thereto.
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"FLEET VENTURE RESOURCES" means Fleet Venture Resources, Inc., a
Delaware corporation.
"FORMER SHAREHOLDERS' AGREEMENT" shall mean the Shareholders'
Agreement, dated as of February 26, 1997, among the Company and the
shareholders named therein and which has been terminated, effective as of
the execution of this Agreement.
"GUARANTEED PENSION PLAN" shall mean any employee pension benefit plan
within the meaning of Section 3(2) of ERISA maintained or contributed to by
the Company or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA,
other than a Multiemployer Plan.
"GOVERNMENTAL AUTHORITY" shall mean a Federal, State or local court,
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
"HAZARDOUS MATERIALS" means all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5,
or defined as such by any Environmental Law.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8.4(a).
"INDEMNIFYING PARTY" has the meaning set forth in Section 8.4(a).
"INTELLECTUAL PROPERTY" shall mean trademarks, service marks, trade
names, Internet domain names, designs, logos, slogans, and general
intangibles of like nature, together with all goodwill, registrations and
applications related to the foregoing (collectively, "Trademarks"); patents
and industrial design registrations or applications (including any
continuations, divisionals, continuations-in-part, renewals, reissues, and
applications for any of the foregoing); copyrights (including any
registrations and applications for any of the foregoing); "mask works" (as
defined use 17 USC Section 901) and any registrations and applications for
"mask works"; Software; any of the following that is not known to the
general public, that confers a material economic advantage for the entity
claiming rights in the same: technology, trade secrets and other
confidential information, know-how, proprietary processes, formulate,
algorithms, models, and methodologies (collectively, "Trade Secrets");
rights of publicity and privacy relating to the use of the names,
likenesses, voices, signatures and biographical information of real
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persons; in each case used in or necessary for the conduct of the Company's
and each of its Subsidiaries' business are currently conducted or
contemplated to be conducted.
"INVESTOR QUESTIONNAIRE" means the Investor Questionnaire, dated the
date hereof, completed and delivered to the Company by each Purchaser who
is a member of the JWC Group.
"JWC" means X.X. Childs Equity Partners II, L.P., a Delaware limited
partnership and its affiliated funds.
"JWC COMMON STOCK" means the 17,412 shares of Class A Common Stock
purchased by JWC from Fleet Equity pursuant to the Fleet Purchase
Agreement, dated the date hereof, among Fleet Equity and the purchasers
named therein.
"JWC GROUP" means JWC together with its affiliated funds and
co-investors as set forth on Schedule I hereto.
"JWC TRANSACTION FEE" means the transaction fee of $500,000 payable by
wire transfer of immediately available funds by the Company to JWC at the
Closing.
"KPP" means Xxxxxxx Plaza Partners.
"LAW" shall mean applicable common law and any statute, ordinance,
code or other law, rule, permit, permit condition, regulation, order,
decree, technical or other standard, requirement or procedure enacted,
adopted, promulgated, applied or followed by any Governmental Authority.
"LICENSE" shall mean a license, permit, certificate of authority,
waiver, approval, certificate of public convenience and necessity,
registration or other authorization, consent or clearance to construct or
operate a facility, including any emissions, discharges or releases
therefrom, or to transact an activity or business, to construct a tower or
to use an asset or process, in each case issued or granted by a
Governmental Authority.
"LIEN" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, right of first refusal or right of
others therein, or encumbrance of any nature whatsoever in respect of such
asset.
"LOGIX COMMUNICATIONS" shall mean Logix Communications Enterprises,
Inc., an Oklahoma corporation.
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"LOGIX COMMUNICATIONS 1998 STOCK OPTION PLAN" shall mean the Logix
Communications Enterprises, Inc. 1998 Stock Option Plan.
"LOGIX COMMUNICATIONS COMMON STOCK" shall mean the Common Stock, par
value $1.00 per share, of Logix Communications.
"LOGIX COMMUNICATIONS SPIN-OFF" shall mean the consummation of the
proposed spin-off by the Company of the business of Logix Communications.
"LOSSES" has the meaning set forth in Section 8.2.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect in the
business, assets, properties (tangible and intangible), operations,
condition (financial or otherwise), liabilities or prospects of the Company
and the Subsidiaries, taken as a whole, whether or not in the ordinary
course of business, whether separately or in the aggregate with other
occurrences or developments, and whether insured against or not or any
event, circumstances or conditions which reasonably may have such a
material adverse effect.
"MSA" means a Metropolitan Statistical Area, comprised of one or more
counties in the United States, as listed in Public Notice Report No.
CL-92-40, "Common Carrier Public Mobile Services Information, Cellular
MSA/RSA Markets and Counties," dated January 24, 1992. DA 92-109.
"MULTIEMPLOYER PLAN" shall mean any multiemployer plan within the
meaning of Section 3(37) of ERISA at any time maintained or contributed to
by the Company or any ERISA Affiliate or to which the Company of any ERISA
Affiliate is or was obligated to contribute.
"NEW COMPANY STOCK OPTION PLAN" shall mean the Xxxxxx Communications
Corporation 1996 Stock Option Plan, adopted on February 6, 1997, as amended
by Amendment No. 1 dated December 21, 1998.
"NEW YORK COURTS" has the meaning set forth in Section 9.6.
"PBGC" has the meaning set forth in Section 4.16.
"PERMITTED LIENS" shall mean (i) Liens arising in favor of sellers or
lessors for indebtedness and obligations incurred to purchase or lease
fixed or capital assets, PROVIDED that such liens secure only the
indebtedness and obligations created thereunder and are limited to the
assets purchased or leased pursuant thereto and the proceeds
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thereof; (ii) mechanic's and workmen's Liens, Liens for taxes,
assessments or other governmental charges; (iii) pledges or deposits to
secure obligations under workmen's compensation, unemployment insurance
or social security laws or similar legislation; (iv) deposits to secure
performance or payment bonds, bids, tenders, contracts, leases,
franchises or public and statutory obligations required in the ordinary
course of business; (v) deposits to secure surety, appeal or custom
bonds required in the ordinary course of business; (vi) statutory
landlord Liens; (vii) all Liens of the FCC, and (viii) to the extent not
described in clauses (i) through (vii), all Liens permitted under the
Financing Agreements or any instrument refinancing indebtedness under
any Financing Agreement permitted pursuant to Section 12.5 of the
Stockholder and Investor Rights Agreement.
"PERSON" shall mean an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental
Authority, business trust, unincorporated organization, or other legal
entity.
"PREFERRED STOCK" shall mean collectively, the Senior PIK Preferred
Stock, the Sygnet PIK Preferred Stock, the Class A Preferred Stock, the
Class D Preferred Stock, the Class E Preferred Stock, the Class F Preferred
Stock, the Class G Preferred Stock and the Class H Preferred Stock.
"PURCHASER REPRESENTATIVE" means JWC acting on behalf of the JWC Group
for purposes of Regulation D under the Securities Act.
"PURCHASERS" has the meaning set forth in the preamble.
"RELATED AGREEMENTS" shall mean the Stockholder and Investor Rights
Agreement, the Certificates of Designation for each of the Class D
Preferred Stock, the Class E Preferred Stock, the Class G Preferred and the
Class H Preferred, the New Company Stock Option Plan, and the Logix
Communications 1998 Stock Option Plan and the Investor Questionnaires.
"RELEASE" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, leaching or migration of Hazardous
Materials into the environment (including without limitations, ambient air,
surface water, groundwater and surface or subsurfaces strata) or into or
out of any property owned or operated by the Company or any of its
Subsidiaries.
"RESTATED BYLAWS" shall mean the Amended and Restated Bylaws of the
Company, in the form of Exhibit B, to be adopted as of the Closing Date.
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"RESTATED CERTIFICATE" shall mean the Amended and Restated Certificate
of Incorporation of the Company, in the form of Exhibit C, to be filed with
the office of the Secretary of State of the State of Oklahoma on the
Closing Date.
"RETURNS" has the meaning set forth in Section 4.18.
"RSA" means a Rural Statistical Area, comprised of one or more
counties in the United States, as listed in Public Notice Report No.
CL-92-40, "Common Carrier Public Mobile Services Information, Cellular
MSA/RSA Markets and Counties," dated January 24, 1992, DA 92-109.
"SEC" means the Securities and Exchange Commission.
"SEC DOCUMENTS" shall mean each statement, report, registration
statement, definitive proxy statement and any other document filed by the
Company with the SEC pursuant to the Securities Act or the Exchange Act,
including all amendments, schedules and exhibits thereto.
"SECTION 8.2 INDEMNIFIED PARTY" has the meaning set forth in
Section 8.2.
"SECTION 8.3 INDEMNIFIED PARTY" has the meaning set forth in
Section 8.3.
"SECURITIES" shall mean, collectively, the shares of Class D Preferred
Stock being issued by the Company hereunder and the 37,853 shares of Class
G Preferred Stock being transferred by the Company to the Xxxxxx
Partnership, together with any shares of stock issued upon conversion of or
delivered in substitution or exchange for any of the foregoing, including
without limitation, in the case of the Class D Preferred Stock, Class A
Common Stock and Class E Preferred Stock and in the case of the Class G
Preferred Stock, the Class H Preferred Stock.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SENIOR NOTE DOCUMENTS" means, collectively, the Senior Note
Indenture, the Senior Notes Escrow and Security Agreement and the Senior
Notes.
"SENIOR NOTES ESCROW AND SECURITY AGREEMENT" means the Escrow and
Security Agreement, dated February 28, 1997, among, the Company and the
placement agents, party thereto, and United States Trust Company of New
York, as Trustee thereunder.
"SENIOR NOTE INDENTURE" means the Indenture, dated as of February 28,
1997 among the Company and United States Trust Company of New York, as
Trustee
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thereunder, in respect of the Senior Notes.
"SENIOR NOTES" means the 11 3/4% Senior Notes due 2007 issued by the
Company pursuant to the Senior Note Indenture.
"SENIOR PIK PREFERRED STOCK" means the 12 1/4% Senior Exchangeable
Preferred Stock of the Company issued on January 22, 1998 Mandatorily
Redeemable 2008, par value $1.00 per share.
"SOFTWARE" means any and all (a) computer programs, including any and
all software implementation of algorithms, models and methodologies,
whether in source code or object code form, (b) databases and compilations,
including any and all data and collections of data, and (c) all
documentation, including user manuals and training materials, relating to
any of the foregoing.
"SENIOR PIK PREFERRED STOCK CERTIFICATE OF DESIGNATION" shall mean the
Senior PIK Certificate of Designation in respect of the Senior PIK
Preferred Stock.
"STOCKHOLDER AND INVESTOR RIGHTS AGREEMENT" shall mean the Stockholder
and Investor Rights Agreement, by and among the Company and the
stockholders named therein, dated as of the date hereof.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest
in a partnership, association, or other business entity if such Person or
Persons shall be allocated a majority of partnership, association or other
business entity gains or losses or shall be or control the managing general
partner of such partnership, association or other business entity.
"SYGNET ACQUISITION" shall mean the acquisition by the Company's
wholly owned subsidiary, Xxxxxx/Sygnet, of all of the outstanding capital
stock of Sygnet Wireless, Inc., an Ohio corporation, pursuant to the Sygnet
Merger Agreement dated July 28, 1998,
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as amended, between Xxxxxx/Sygnet Operating Company and Sygnet Wireless,
Inc.
"SYGNET ACQUISITION DOCUMENTS" shall mean, collectively, the Sygnet
Merger Agreement and all certificates, authorizations, instruments and
other documents delivered in connection with the Sygnet Acquisition.
"SYGNET MERGER AGREEMENT" shall mean the Agreement and Plan of Merger,
dated as of July 28, 1998, between Xxxxxx/Sygnet Operating Company and
Sygnet Wireless, Inc.
"SYGNET PIK PREFERRED STOCK" means the Sygnet PIK Preferred Stock of
the Company, par value $1.00 per share.
"SYGNET PIK PREFERRED STOCK DOCUMENTS" shall mean, collectively, the
Sygnet PIK Preferred Stock Purchase Agreement, the Sygnet PIK Preferred
Stock, and the Sygnet PIK Preferred Stock Registration Rights Agreement.
"SYGNET PIK PREFERRED STOCK PURCHASE AGREEMENT" shall mean the
Purchase Agreement, dated December 16, 1998, between the Company and
NationsBanc Xxxxxxxxxx Securities LLC, in respect of the Sygnet PIK
Preferred Stock.
"SYGNET PIK PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT" shall mean
the Registration Rights Agreement, dated the date hereof, between the
Company and NationsBanc Xxxxxxxxxx Securities LLC.
"SYSTEM" means the Cellular Systems currently owned by the Company.
"TAX ACCRUAL" has the meaning set forth in Section 4.18.
"TRANSFER TAXES" has the meaning set forth in Section 2.3.
"WIRELESS SUBSIDIARIES" shall mean collectively DCC PCS, Inc., Western
Financial Services, Inc., Xxxxxx Cellular Operations Company, Xxxxxx
Operating Company, Xxxxxx Tower Company, DOC Cellular Subsidiary Company,
Xxxxxx/Sygnet, and their respective Subsidiaries.
Section I.2 OTHER DEFINITIONAL PROVISIONS. Terms defined in this Agreement
in Sections other than Section 1.1 shall have the meanings as so defined when
used in this Agreement. As used herein, accounting terms relating to the Company
and its Subsidiaries not defined or to the extent not defined, shall have the
respective meanings given to them under generally accepted
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accounting principles ("GAAP"). References to a document or agreement shall
be to such document or agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
ARTICLE II
CLOSING
Section II.1 TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated hereby (the "CLOSING") is taking place concurrently with the
execution hereof at the offices of Xxxxx, Xxxxx & Xxxxx, 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (the "CLOSING DATE").
Section II.2 CLOSING ACTIONS AND DELIVERIES. Simultaneous with the
execution hereof the parties are taking the following actions:
(a) JWC PAYMENTS TO COMPANY. JWC is delivering by wire transfer of
immediately available funds to the Company, to the account designated by
the Company on Schedule II, $81.0 million, in full consideration for the
issuance and sale of 71,559.9 shares of Class D Preferred Stock to the JWC
Group.
(b) XXXXXX PARTNERSHIP PAYMENTS TO COMPANY. The Xxxxxx Partnership is
delivering by wire transfer of immediately available funds to the Company,
to the account designated by the Company on Schedule II, $4.0 million, in
full consideration for the issuance and sale of 3,533.8 shares of Class D
Preferred Stock to the Xxxxxx Partnership.
(c) ISSUANCE AND EXCHANGE OF CLASS G PREFERRED STOCK SHARES. The
Company is issuing and transferring 37,853 shares of Class G Preferred
Stock, having an aggregate value of $25.0 million, to the Xxxxxx
Partnership in exchange for the transfer to the Company by the Xxxxxx
Partnership of 37,853 shares of Class A Common Stock, together with duly
executed stock powers.
(d) OTHER DELIVERIES. The parties are executing and delivering or
causing to be executed and delivered all other documents, instruments,
opinions and certificates contemplated by this Agreement to be delivered at
the Closing or necessary and appropriate in order to consummate the
transactions contemplated to be consummated on the Closing Date.
Section II.3 PAYMENT OF TRANSFER TAXES. The Company shall pay or cause to
be paid at the Closing or, if due thereafter, promptly when due, all gross
receipts taxes, gains taxes
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(including, without limitation, real property gains tax or other similar
taxes), transfer taxes, sales taxes, stamp taxes, and any other taxes, but
excluding any Federal, State or local income taxes (collectively, "TRANSFER
TAXES"), payable in connection with the transfer by it of any Securities.
Section II.4 RESTRICTIVE LEGENDS. Each certificate representing
Securities (including Securities originally issued hereunder or delivered upon
conversion of the Class D Preferred Stock, or delivered in substitution or
exchange for any of the foregoing) will bear a legend reading substantially as
follows until such Securities have been sold pursuant to an effective
registration statement under the Securities Act, Rule 144 under the Securities
Act, or an opinion of counsel reasonably satisfactory in form and substance to
the Company that such registration is not required and otherwise in full
compliance with any other applicable restrictions on transfer, including those
contained in this Agreement and the Stockholder and Investor Rights Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT'), OR UNDER ANY STATE
SECURITIES OR 'BLUE SKY' LAWS. SAID SECURITIES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF,
UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES AND
REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR 'BLUE
SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE
SECURITIES OR 'BLUE SKY' LAWS."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each of the Xxxxxx Partnership and JWC (on behalf of itself and the other
members of the JWC Group), severally and not jointly, represents and warrants to
the Company and each of the other parties, as to itself, as follows:
Section III.1 ORGANIZATION, POWER AND AUTHORITY. (a) Each of the
Purchasers, other than Purchasers who are individuals, is a corporation,
limited liability company, trust, general partnership or limited partnership, or
other entity, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has the requisite power and
authority to perform its obligations under this Agreement and the Stockholder
and Investor Rights Agreement and the transactions contemplated hereby and
thereby.
15
(b) The execution and delivery of this Agreement by it and the
consummation by it of the transactions contemplated hereby have been duly and
validly authorized by its Board of Directors (or equivalent body), if any
and no other proceedings on its part which have not been taken (including,
without limitation, approval of its stockholders, partners or members) are
necessary to authorize this Agreement or to consummate such transactions.
(c) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) or by an implied covenant of good faith and
fair dealing.
Section III.2 CONSENTS; NO CONFLICTS; APPROVAL. Neither the execution,
delivery and performance by it of this Agreement nor the consummation of the
transactions contemplated hereby will (a) conflict with, or result in a
breach or violation of, any provision of its organizational documents; or (b)
require any Consent, other than those set forth on Schedule 3.2 or the
approval of its board of directors, general partner, stockholders or similar
constituent bodies; or (c) require any approvals or filings under any state
"blue sky" laws or related securities laws except for any necessary
post-closing filings under state laws; except in each case, where such breach
or violation or the failure to obtain or give such Consent would not
materially adversely affect the transactions contemplated hereby or its
ability to perform its obligations hereunder.
Section III.3 LITIGATION. There is no action, proceeding or
investigation pending or, to its knowledge, threatened against it or any of
its properties or assets that would be expected to have a material adverse
effect on its ability to fulfill its obligations under this Agreement.
Section III.4 FCC COMPLIANCE. The fact that it owns the interest in
the Company contemplated by this Agreement will not cause the Company or its
wholly owned Subsidiaries to be ineligible under FCC rules to hold PCS
licenses in general or the licenses to be held by the Company's wholly owned
Subsidiaries.
Section III.5 BROKERS. It has not employed any broker, finder or
investment banker or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with this Agreement.
Section III.6 NO DISTRIBUTION. It is acquiring the Securities to be
purchased by it hereunder for the purpose of investment and not with a view
to or for sale in connection with any public distribution thereof (other than
in compliance with the Securities Act and all applicable
16
state securities laws).
Section III.7 INVESTOR ACKNOWLEDGMENTS. (a) Each Purchaser is an
"accredited investor" as defined in Regulation D of the Securities Act or it
has such knowledge and experience in financial and business affairs that it
is capable of evaluating the merits and risks of purchasing the Securities it
is purchasing hereunder and it is able to financially bear the risks thereof.
Each Purchaser has (i) been provided with all suitable information in
respect of the transactions contemplated hereby by the Company (or, in the
case of Purchasers who are members of the JWC Group, by the Purchaser
Representative) pursuant to Rule 502(b) of Regulation D of the Securities
Act, (ii) has been provided with an opportunity to ask questions of, and have
received answers thereto from, the Company and its representatives (or, in
the case of Purchasers who are members of the JWC Group, by the Purchaser
Representative) `regarding the terms and conditions of its purchase of
Securities, and the Company and its proposed business generally, and (iii)
has obtained all additional information requested by it to verify the
accuracy of all information furnished to it in connection with such purchase.
(b) It is not relying on and acknowledges that no representation
is being made by any other Purchaser, the Company, the Xxxxxx Partnership or
any of their respective officers, employees, Affiliates, agents or
representatives, except for representations and warranties expressly set
forth in this Agreement, and, in particular, it is not relying on, and
acknowledges that no representation is being made in respect of, (x) any
projections, estimates or budgets delivered to or made available to them of
future revenues, expenses or expenditures, or future results of operations
and (y) any other information or documents delivered or made available to it
or its representatives, except for representations and warranties expressly
set forth in this Agreement.
(c) In deciding to invest in the Company, it has relied
exclusively on the representations and warranties of the Company expressly
set forth in this Agreement and the investigations made by itself and its
representatives and the Purchaser Representative and its representatives and
the knowledge of the Purchaser Representative and its representatives of the
industry in which the Company proposes to operate. Based solely on such
representations and warranties of the Company and such investigations and
knowledge, it or its Purchase Representative has determined that the
Securities it is acquiring are a suitable investment for it.
(d) It understands that (i) the Securities have not been
registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated under the
Securities Act, (ii) the Securities must be held indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration, (iii) the Securities will bear a legend to
such effect and (iv) the Company will make
17
notations on its respective transfer books to such effect.
Section III.8 POWER OF ATTORNEY. Each Purchaser who is a member of the
JWC Group has properly executed and delivered a valid, irrevocable and
effective Power of Attorney in the form of Exhibit F hereto appointing Xxxx
Xxxxxxxx its attorney-in-fact for the purposes of this Agreement and the
Related Agreements and the transactions contemplated hereby and thereby, and
such Power of Attorney is in full force and effect under the laws of the
jurisdiction governing its execution and delivery and permits the
attorney-in-fact to bind the relevant Purchaser as a party hereto and binds
such relevant Purchaser to the terms of the Stockholder and Investor Rights
Agreement.
Section III.9 PURCHASER REPRESENTATIVE REPRESENTATIONS. (a) JWC has
complied with, and is currently in compliance with, the provisions of Rule
501 of Regulation D of the Securities Act ("RULE 501") with respect to its
appointment as Purchaser Representative (as defined in Rule 501) for the JWC
Group, and such appointment has not been rescinded or modified in any way as
to result in the non-compliance of JWC with the provisions of Rule 501.
(b) The JWC Group does not contain more than 35 purchasers of
Securities, as calculated in accordance with Rule 501.
(c) Each member of the JWC Group who is a natural person had the
legal capacity to complete and sign the Investor Questionnaire.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Purchasers as set
forth in this Article IV. For the purpose of this Agreement and the exhibits
and schedules hereto, references to "know" or "knowledge" of the Company
shall mean (i) information actually known to any member of the Company's or
any of its Subsidiaries' senior management, or (ii) information which members
of the Company's senior management should have known through the exercise of
reasonable diligence in the exercise of their management responsibilities.
Section IV.1 ORGANIZATION, POWER AND AUTHORITY. (a) Each of the
Company and each of its Subsidiaries is a corporation, duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation and has the requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted and proposed to be conducted. Exhibits X-0, X-0, X-0, X-0, B and
C, respectively, contain a true and
18
correct copy of its Certificate of Designation for the Class D Preferred
Stock, Class E Preferred Stock, Class G Preferred Stock and Class H Preferred
Stock, Restated Bylaws and Restated Certificate, as in effect on the Closing
Date.
(b) Each of the Company and each of its Subsidiaries has the
requisite power and authority to execute, deliver and perform this Agreement
and each of the Related Agreements to which it is a party and each other
instrument, document, certificate and agreement required or contemplated to
be executed, delivered and performed by it hereunder and thereunder to which
it is or will be a party.
(c) Each of the Company and each of its Subsidiaries is duly
qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes
such qualification necessary other than any such jurisdiction in which the
failure to be so qualified would not have a Material Adverse Effect on the
Company or such Subsidiary or materially adversely affect the transactions
contemplated hereby or its ability to perform its obligations hereunder or
under the Related Agreements upon their execution and delivery.
(d) The execution and delivery of this Agreement and the Related
Agreements to which it is a party by the Company and each of the Subsidiaries
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by the Board of Directors of the Company
and, where necessary the Board of Directors of each of the Subsidiaries and
no other proceedings on the part of the Company or any Subsidiary which have
not been taken (including, without limitation, approval of its shareholders)
are necessary to authorize this Agreement or to consummate such transactions.
(e) This Agreement and each of the Related Agreements to which it
is a party has been duly executed and delivered by the Company and the
Subsidiaries, as the case may be, and constitutes the valid and binding
obligation of the Company and each of the Subsidiaries, if applicable,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
Section IV.2 CONSENTS; NO CONFLICTS. Assuming the consummation of the
transactions contemplated by the Class F Preferred Stock Documents, the
Sygnet Acquisition Documents and the Sygnet PIK Preferred Stock Documents,
all to be consummated concurrently with the transactions contemplated hereby,
neither the execution, delivery and performance by the Company or any of its
Subsidiaries of this Agreement and, upon its execution, delivery and
19
performance, the Related Agreements to which it is a party nor the
consummation of the transactions contemplated hereby or thereby will (a)
conflict with, or result in a breach or violation of, any provision of the
organizational documents of the Company or its Subsidiaries; (b) subject to
obtaining the Consents set forth on Schedule 4.2, constitute, with or without
the giving of notice or passage of time or both, a breach, violation or
default, create a Lien, or give rise to any right of termination,
modification, cancellation, prepayment or acceleration, under (i) any Law, or
(ii) any note, bond, mortgage, indenture, lease, agreement or other
instrument, in each case which is applicable to or binding upon the Company
or any of its Subsidiaries or any of their assets (including, without
limitation, the Financing Agreements); or (c) require any Consent on the part
of the Company or any of its Subsidiaries, other than those set forth on
Schedule 4.2 or the approval of the Company's Board of Directors (which
approval has been obtained), except in each case where such breach,
violation, default, Lien, right, or the failure to obtain or give such
Consent would not have a Material Adverse Effect on the Company or any of its
Subsidiaries or materially adversely affect the transactions contemplated
hereby, its ability to perform its obligations under the Related Agreements
or the operation of the business of the Company and its Subsidiaries after
the Closing Date substantially as such business of the Company and its
Subsidiaries is being operated as of the Closing Date. To its knowledge,
there is no fact relating to it or its Affiliates that would be reasonably
expected to prevent it from consummating the transactions contemplated hereby
or performing its obligations under the Related Agreements.
Section IV.3 LITIGATION. There is no action, proceeding or
investigation pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened against the Company or any of its Subsidiaries or
any of its or their properties or assets that would have a Material Adverse
Effect on the ability of the Company to consummate the transactions
contemplated hereby or to fulfill its obligations under this Agreement, or,
in the case of the Company and its Subsidiaries, to operate the business of
the Company and its Subsidiaries after the Closing Date, substantially as
such business of the Company and its Subsidiaries is being operated as of the
Closing Date or which seeks to prevent or challenge the transactions
contemplated hereby. There is no judgment, decree, injunction, rule or order
outstanding against the Company which would limit in any material respect the
ability of the Company or its Subsidiaries taken as a whole to operate the
business of the Company and its Subsidiaries in the manner currently
contemplated.
Section IV.4 REGULATORY COMPLIANCE.
(a) The Company and its Subsidiaries have all FCC Licenses and
orders of Governmental Authorities necessary to enable the Company and its
Subsidiaries to conduct the business of the Company and its Subsidiaries,
substantially as conducted as of the Closing Date (the "Company Licenses").
The Company Licenses are in full force and effect except where the failure
would not result in a Material Adverse Effect, and the conduct of the
business or
20
operations of the Company and its Subsidiaries is in accordance with the
Company Licenses in all material respects. The Company has no reason to
believe that the Company Licenses will not be renewed by the FCC or other
granting authority in the ordinary course.
(b) Each of the Company and the Subsidiaries has filed with the
FCC and all Governmental Authorities all material reports, documents,
instruments, information and applications required to be filed pursuant to
the FCC's rules, regulations and requests and the rules, regulations and
requests of such Governmental Authorities. No notice has been issued by the
FCC or any Governmental Authority which could permit, or after notice or
lapse of time or both could permit, revocation or termination of any Company
License prior to the expiration dates thereof or which could reasonably be
expected to result in any other material impairment of any of the Company's
or the Subsidiaries' rights thereunder and which could reasonably be expected
to, singly or in the aggregate, have a Material Adverse Effect.
(c) Each of the Company and its Subsidiaries has complied and is
currently in compliance with each law, regulation, ordinance and code
promulgated by any Federal, state, local or foreign governmental authority
applicable to the operation, conduct or ownership of the property or business
of the Company and the Subsidiaries (including without limitation those
relating to the offering and sale of securities, communications,
environmental protection, occupational safety and health, equal employment
practices, antitrust, consumer protection, and employee benefits and
pensions), except where such failure to comply with any such law, regulation,
ordinance or code could not reasonably be expected to have, in the aggregate
with all such failures, a Material Adverse Effect.
(d) There is not issued, outstanding or pending any Notice of
Violation, Notice of Apparent Liability, Order to Show Cause, material
complaint or investigation by or before the FCC or any Governmental Authority
which could materially threaten or materially adversely affect any of the
Company Licenses or which could reasonably be expected to result, singly or
in the aggregate, in any Material Adverse Effect.
Section IV.5 BROKERS. Neither the Company nor any of its Subsidiaries
has employed any broker, finder or investment banker or incurred any
liability for any brokerage fees, commissions or finder's fees in connection
with this Agreement.
Section IV.6 FINANCIAL STATEMENTS. The Company has furnished to the
Purchasers (i) its audited consolidated financial statements for the fiscal
years ended 1997, 1996 and 1995 (including all management letters, if any,
issued in connection therewith) consisting of the audited consolidated
balance sheets, income statements, cash flow statements and statements of
stockholders' equity for each such fiscal year, and (ii) its unaudited
consolidated quarterly financial statements for the quarters ending March 31,
June 30, and September 30, 1998,
21
consisting of the unaudited consolidated balance sheets, income statements
and cash flow statements for each such quarter (all of the preceding
financial statements being, collectively, the "FINANCIAL STATEMENTS". The
Financial Statements are accurate and complete, consistent with the books and
records of the Company, have been prepared in accordance with GAAP,
consistently applied, and fairly present in all material respects the
financial position of the Company and its Subsidiaries and the results of its
operations and cash flows and financial position for the periods covered
thereby, except, in the case of the unaudited Financial Statements, for
normal year-end adjustments and the omission of certain footnote disclosures.
Section IV.7 SEC DOCUMENTS. (a) The Purchasers have been provided by
the Company with true and complete copies of each SEC Document on its behalf
or on behalf of any of its Subsidiaries filed with the SEC since January 1,
1998 which are all the documents (other than preliminary material) that the
Company has been required to file with the SEC since such date. As of their
respective dates, the SEC Documents complied in all material respects with
the requirements of the Securities Act and the Exchange Act applicable to the
SEC Documents. None of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The financial statements of the Company included in the SEC
Documents referred to in Section 4.7(a) comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) and fairly present in all
material respects (subject, in the case of unaudited statements, to normal
annual footnotes and year-end audit adjustments) the respective consolidated
financial positions of the Company and its consolidated Subsidiaries as at
the dates thereof and the consolidated results of operations and cash flows
and changes in financial condition for the periods then ended.
Section IV.8 MATERIAL ADVERSE CHANGE. Since December 31, 1997, the
business of the Company and its Subsidiaries has been conducted in the
ordinary course and in substantially the same manner as previously conducted
and, to the extent that any of the following would produce a Material Adverse
Effect, there has not been (i) any adverse change in its financial
performance or results of operations; (ii) any damage, destruction or loss,
whether covered by insurance or not, adversely affecting the properties or
business of the Company and its Subsidiaries taken as a whole; (iii) any
declaration, setting aside or payment of any dividend or distribution in
respect of the capital stock of the Company or any redemption or acquisition
of such stock by the Company; (iv) any increase in the compensation payable
or to become payable by the Company or its Subsidiaries to any of their
officers or key employees other than increases in the ordinary
22
course of business; (v) any adoption of, or increase in, any bonus, incentive
compensation, pension, profit sharing, retirement, insurance, medical
reimbursement or other employee benefit plan, payment or arrangement made to,
for or with any officers or key employees of the Company and its
Subsidiaries, other than increases made in the ordinary course of business
consistent with prior practice; (vi) any sale or other disposition of any
assets, including, without limitation, Intellectual Property, other than
sales or other dispositions made in the ordinary course of business and sales
or other dispositions which individually or in the aggregate are not material
to the operations of the Company and its Subsidiaries taken as a whole; (vii)
any write-offs or write-downs of accounts receivable by the Company or its
Subsidiaries other than in the ordinary course of business and consistent
with prior practice; (viii) any borrowings by the Company or its Subsidiaries
other than in the ordinary course of business and as contemplated by the
Financing Agreements; (ix) any change in its accounting principles or
methods; or (x) any agreement by the Company or any of its Subsidiaries to
take any action described in this Section 4.8. Since December 31, 1997, (i)
except pursuant to the Financing Agreements, the Company has not issued any
notes, bonds or other debt securities or any securities, convertible,
exchangeable or exercisable for any capital stock or equity securities of the
Company, and (ii) except under the Financing Agreements, mortgaged or pledged
any of its properties or assets or subjected them to any Lien, except Liens
for current property taxes not yet due and payable.
Section IV.9 CAPITALIZATION. Schedule 4.9 hereto sets forth the
stockholders of the Company as of the Closing Date. As of the Closing Date,
after giving effect to the filing of the Restated Certificate, the authorized
capital stock of the Company will consist of (i) 1,500,000 shares of Common
Stock, comprising 1,438,000 shares of Class A Common Stock, of which 491,954
shares are issued and outstanding, 31,000 shares of Class B Common Stock, of
which 28,934 shares are subject to options which have been granted but not
exercised, and 31,000 shares of Class C Common Stock, of which no shares are
issued and outstanding, and (ii) 2,500,000 shares of preferred stock, par
value $1.00 per share, comprising (A) 550,000 shares of Senior PIK Preferred
Stock, of which 185,513 shares are issued and outstanding, (B) 180,000 shares
of Sygnet PIK Preferred Stock, of which 64,646 shares are issued and
outstanding, (C) 150,000 shares of Class A Preferred Stock, of which 100,000
shares are issued and outstanding, (D) 90,000 shares of Class D Preferred
Stock, of which 75,093.7 shares are issued and outstanding, (E) 405,000
shares of Class E Preferred Stock, of which zero shares are issued and
outstanding, (F) 205,000 shares of Class F Preferred Stock, of which 30,000
shares are issued and outstanding, (G) 62,000 shares of Class G Preferred
Stock, of which 37,853 shares are issued and outstanding, and (H) 62,000
shares of Class H Preferred Stock, of which no shares are issued and
outstanding. The record and beneficial owners of such outstanding shares of
Common Stock and Preferred Stock, as of the Closing Date, after giving effect
to the transactions contemplated hereby, are set forth on Schedule 4.9. On
the Closing Date, after giving effect to the transactions contemplated
hereby, there will not be any existing options, warrants, securities, calls,
subscriptions, or other rights, or other agreements or commitments,
obligating the Company to
23
issue, transfer or sell any shares of capital stock of the Company, except
for shares of Common Stock issuable (i) pursuant to the New Company Stock
Option Plan, (ii) the Logix Communications 1998 Stock Option Plan, (iii) upon
the conversion of the Class D Preferred Stock and the Class G Preferred Stock
and (iv) upon the exercise of the Class F Preferred Stock Warrants, in each
case as set forth on Exhibit I hereto.
Section IV.10 SHARES. The shares of Class D Preferred Stock (and the
Class A Common Stock and Class E Preferred Stock, Logix Communications Common
Stock or other capital stock issued upon conversion, exchange, as a
distribution or otherwise in respect of the Class D Preferred Stock) and
Class G Preferred Stock (and any Class H Preferred or other capital stock
issued upon conversion, exchange, as a distribution or otherwise in respect
of the Class G Preferred Stock) being issued to the Purchasers hereunder,
when issued and paid for pursuant to the terms of this Agreement will be duly
authorized, validly issued, fully paid and nonassessable, and will be free of
any Liens caused or created by the Company.
Section IV.11 NO UNDISCLOSED LIABILITIES; SUBSIDIARIES. As of the date
hereof before giving effect to the transactions contemplated hereby, the
Financing Agreements and the Sygnet Acquisition, the Company has no material
indebtedness or liability of any nature whatsoever, absolute or contingent,
liquidated or unliquidated. The Company owns all of the outstanding shares
of capital stock of each of its Subsidiaries, free and clear of any Liens,
except Permitted Liens and Liens granted to the lenders under the Credit
Agreements pursuant to the Credit Documents. Schedule 4.11 contains a
complete list of the Company's direct and indirect Subsidiaries as of the
date hereof. Except in accordance with the Logix Communications 1998 Stock
Option Plan, no equity securities of any Subsidiary of the Company are or may
become required to be issued by reason of any options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible or exchangeable into, shares
of any capital stock of any Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any such Subsidiary is
bound to issue additional shares of its capital stock, or options, warrants
or rights to purchase or acquire any additional share of its capital stock.
Except for the Liens of the lenders under the Credit Agreements, all of such
shares so owned, are owned directly and are nonassessable and are owned free
and clear of any Lien with respect thereto.
Section IV.12 OFFERING OF SECURITIES. (a) Neither the Company nor
anyone acting on its behalf has offered the Class A Common Stock being sold
by it hereunder or any similar equity securities of the Company for sale to,
or solicited any offers to buy such shares of Class A Common Stock or any
similar equity securities of the Company from, any Person, other than JWC.
(b) Neither the Company nor anyone acting on its behalf will,
directly or indirectly, take any action which might subject the offering,
issuance or sale of the Class A
24
Common Stock being sold by it hereunder to the registration and prospectus
delivery requirements of Section 5 of the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Purchasers contained in Sections 3.6 and 3.7 and in the Investor
Questionnaires (in the case of the JWC Group), each of the offering and sale
of shares of Preferred Stock under this Agreement to the Purchasers complies
with all applicable requirements of Federal and state securities laws.
Section IV.13 USE OF PROCEEDS. The Company shall use the net cash
proceeds of its sale of the Securities being sold by it hereunder to finance
a portion of the Sygnet Acquisition.
Section IV.14 TITLE TO PROPERTIES; LIENS; ENCUMBRANCES; INSURANCE. The
Company and its Subsidiaries have marketable title to all of their respective
real properties in fee simple absolute (except for leasehold interests, in
which event the entity directly holding such interest has a valid leasehold
interest) and have marketable title to all of their respective other
properties and assets (except for leased properties and assets, in which case
the lessee has a valid leasehold interest) material to the business subject
only to (i) statutory Liens arising or incurred in the ordinary course of
business with respect to which the underlying obligations are not delinquent
or the validity of which is being contested in good faith by appropriate
proceedings, (ii) Liens for taxes not yet delinquent or the validity of which
is being contested in good faith by appropriate proceedings, (iii) Liens
pursuant to the Financing Agreements, and (iv) Liens and defects in title
except as would not have a Material Adverse Effect. The Company and its
Subsidiaries maintain insurance in such amounts and of such character as is
consistent with industry practice and reasonable for the conduct of the
business of the Company and its Subsidiaries.
Section IV.15 MATERIAL CONTRACTS. None of the Company and its
Subsidiaries is in default of any provision under or has failed in the
performance of any of its obligations under any material contract, except for
defaults which would not have a Material Adverse Effect and each material
contract is in full force and effect and is a legal, valid and binding
obligation of the Company or its Subsidiaries, as the case may be,
enforceable against it in accordance with its terms. To the knowledge of the
Company and its Subsidiaries, no party to any material contract is in default
under any material contract. No event has occurred which (whether with or
without notice, lapse of time or the happening or occurrence of any other
event) would constitute a default by any of the Company or its Subsidiaries
under any material contract or, to the best knowledge of the Company, by any
other party thereto, except for defaults which would not have a Material
Adverse Effect.
Section IV.16 EMPLOYEE PLANS. For purposes of this Section 4.16, an
"ERISA Affiliate" shall mean any trade or business, whether or not incorporated,
that, together with the Company, would be deemed a "single employer" within the
meaning of Section 4001(b) of ERISA. The
25
Company, its Subsidiaries, their ERISA Affiliates and each Employee Plan are
in substantial compliance in all respects with the applicable provisions of
ERISA and the Code and the regulations thereunder. No "reportable event" (as
described in ERISA and the regulations thereunder) has occurred with respect
to any employee benefit plan, program or arrangement, whether or not subject
to ERISA, pension, profit-sharing, health, welfare, severance, bonus,
incentive plan, program or arrangement to which the Company or any Subsidiary
is a party or by which any of them are bound or under which any of them have,
or within the last five years, had any liability (the "EMPLOYEE PLANS"),
which reportable event could subject the Company and its Subsidiaries to any
material liability. Each Employee Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified and the trusts
maintained thereunder are exempt from taxation under Section 501(a) of the
Code. Each Employee Plan intended to satisfy the requirements of Section
501(c)(9) has satisfied such requirements. No amounts payable under the
Employee Plans will fail to be deductible for federal income tax purposes by
virtue of Section 162(a)(1), 162(m) or 280G of the Code. The consummation of
the transactions contemplated by this Agreement will not, either alone or in
combination with another event, (i) entitle any current or former employee or
officer of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer. No liability to the Pension Benefit Guaranty Corporation (the
"PBGC") has been incurred, or is expected to be incurred, by any of the
Company and its Subsidiaries or any other person with respect to any Employee
Plan of the Company and its Subsidiaries, other than liability for insurance
premiums which are not in default. The Company does not know of any event or
condition which presents a substantial risk of termination of any such
Employee Plan by the PBGC, nor does it have notice or knowledge that any
proceedings for termination or partial termination of any such plan have been
instituted by the PBGC, where such termination or partial termination would
result in any material liability to the Company or any member of its
"controlled group" (as defined in ERISA). With respect to any pension plan
(other than a multiemployer plan or a multiple employer plan) that is an
Employee Plan, the present value (determined on the basis of actuarial
assumptions used for purposes of determining ongoing contributions to such
plan) of the accrued benefits under each such plan did not, as of the last
annual valuation date, exceed the fair market value of the assets of each
such plan available for the payment of such benefits and nothing has occurred
prior to the date hereof which could reasonably be expected to cause such
present value to exceed the value of such assets. Neither the Company nor
any Subsidiary has incurred any liability which remains unpaid to any
multiemployer plan within the last three years, other than liability for
contributions which are not in default. For purposes of this Section 4.16,
the term "multiemployer plan" shall have the meaning set forth in Section
4001 of ERISA and the term "multiple employer plan" shall mean a plan
referred to in Section 4063 of ERISA. There are no other related entities
other than the Subsidiaries.
26
Section IV.17 LABOR MATTERS. Since December 31, 1997, to the best
knowledge of the Company, there has been no strike or labor dispute between
the Company and its Subsidiaries, on one hand, and any group of employees, on
the other hand which would result in a Material Adverse Effect. No employees
of the Company and its Subsidiaries are the subject of any collective
bargaining agreement.
Section IV.18 TAXES. Federal income tax returns of the Company and its
Subsidiaries have been closed through the fiscal year ended December 31,
1997. (i) The Company and its Subsidiaries have filed or been included in,
and will, before the Closing Date, file or be included in, all returns,
declarations and reports and information returns and statements required to
be filed by them before the Closing Date relating to any Taxes (as defined
below) with respect to any income, properties or operations of the Company or
any of its Subsidiaries before the Closing Date (collectively, "RETURNS") and
all such Returns were, or are, correct and complete in all material respects;
(ii) the Company and its Subsidiaries have timely paid or made provision for
all Taxes that have been shown as due and payable on the Returns that have
been filed and are not delinquent in the payment of any amount of Taxes
attributable to settlements with governmental authorities; (iii) the charges,
accruals and reserves (the "TAX ACCRUAL") for Taxes (including deferred
taxes) currently reflected on the books of the Company and its Subsidiaries
are and will be as of the Closing Date adequate in accordance with generally
accepted accounting principles to cover all unpaid Tax liabilities accruing
or payable by the Company and its Subsidiaries in respect of periods that end
before the Closing Date and for any periods that begin before the Closing
Date and end after the Closing Date to the extent such Taxes are attributable
to the portion of any such period ending at the Closing Date (determined on a
closing of the books method); (iv) neither the Company nor any of its
Subsidiaries has requested any extension of time within which to file any
Return, which Return has not since been filed; (v) no deficiency for any
amount of Taxes has been proposed, asserted or assessed in writing against
the Company or any of its Subsidiaries; (vi) neither the Company nor any of
its Subsidiaries has granted any extension of the limitation period
applicable to any Tax claims; (vii) neither the Company nor any of its
Subsidiaries is or has been a party to any tax sharing agreement with any
corporation which, as of the Closing Date, is not a member of the affiliated
group of which the Company is a member; (viii) neither the Company nor any of
its Subsidiaries has made any election under Section 341(f) of the Code; (ix)
neither the Company nor any of its Subsidiaries has agreed to or is required
to make any adjustment pursuant to Section 481(a) of the Code by reason of a
change in accounting method initiated by the Company or any of its
Subsidiaries and neither the Company nor any of its Subsidiaries has any
knowledge that the Internal Revenue Service has proposed any such adjustment
or change in accounting method; (x) neither the Company nor any of its
Subsidiaries has filed with respect to any item a disclosure statement
pursuant to Section 6661 of the Code or any comparable disclosure with
respect to foreign, state and/or local tax statutes and (xi) the Company has
not, for the 5-year period preceding the Closing Date, been a United States
real property holding corporation within the meaning of Section 897(c)(2) of
the
27
Code. The term "Tax" or "Taxes" means with respect to any person a net
income, gross income, gross receipts, sales, use, ad valorem, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
transfer, occupation, premium, property or windfall profit tax, custom duty
or other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest and any penalty, addition to tax or
additional amount imposed by any jurisdiction or other taxing authority
(domestic or foreign) on such person.
Section IV.19 AFFILIATE TRANSACTIONS. Except as set forth on Schedule
4.19, as of the date of this Agreement, there are no existing agreements,
understandings or arrangements between the Company or any Subsidiary, on the
one hand, and any of its stockholders or any of their respective Affiliates,
on the other hand, other than transactions in the ordinary course of
business, or transactions involving amounts less than $500,000 provided,
however that it is contemplated that the Company and its Subsidiaries may
lease on an arms-length basis a commercial property from Affiliates of the
Xxxxxx Partnership.
Section IV.20 SOLVENCY; ADEQUATE CAPITAL. Following the sale of the
Securities to the Purchasers, the Company will have adequate capital and
surplus in order to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement and the Related Agreements
(including the exchange and conversion of Class D Preferred Stock for and
into Class A Common Stock and Class E Preferred Stock and the issuance of
Logix Communications Common Stock upon the occurrence of the Logix
Communications Spin-Off, the exchange and conversion of Class G Preferred
Stock for and into Class H Preferred Stock, the issuance of Class F Preferred
Stock Warrant Shares upon the exercise of the Class F Preferred Stock
Warrants), and the Company and its Subsidiaries will be able to pay their
respective debts as they become due.
Section IV.21 INTELLECTUAL PROPERTY. (a) The Company or one of its
Subsidiaries owns, or has a valid right to use, free and clear of all Liens
(except Liens pursuant to the Financing Agreements and to the FCC), all
Intellectual Property that is material to the conduct of its business as
presently conducted or as planned to be conducted. To the best of the
Company's knowledge, all Intellectual Property used by the Company or any of
its Subsidiaries is subsisting, in full force and effect, has not been
cancelled, expired or abandoned, and is valid and enforceable.
(b) The conduct of the Company's and its Subsidiaries' business as
currently conducted or planned to be conducted does not infringe in any
material respect upon (either directly or indirectly) any Intellectual
Property rights of any third party. There is no pending or, to the best of
the Company's knowledge, threatened claim, suit, arbitration or other
adversarial proceeding (i) alleging that the conduct of the Company's or any
of its Subsidiaries' business does or will violate or constitute the
unauthorized use of any third party's Intellectual Property
28
rights, or (ii) challenging the ownership, use, validity or enforceability of
any Intellectual Property owned by the Company or any of its Subsidiaries
which, if adversely determined, would have a Material Adverse Effect.
(c) To the best of the Company's knowledge, no third party is
misappropriating, infringing, diluting or violating any Intellectual Property
right owned or used by the Company or any of its Subsidiaries in any material
respect, and no such claims, suits, arbitrations or other adversarial
proceedings have been brought by the Company or any of its Subsidiaries which
remain unresolved.
(d) The Company has provided or made available to JWC or its
representatives true and complete copies of all material license agreements,
development agreements, distribution agreements, settlement agreements,
consent to use agreements and covenants not to xxx to which the Company or
one of its Subsidiaries is a party and which (i) grant or obtain any right to
use or practice rights under any Intellectual Property, or (ii) restrict the
Company's or any Subsidiary's rights to use any Intellectual Property
(collectively, the "License Agreements"). To the best of the Company's
knowledge, the License Agreements are valid and binding obligations of all
parties thereto, enforceable in accordance with their terms, and there exists
no event or condition which will result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default by
any party under such License Agreements, except for such defaults which would
not, individually or in the aggregate, have a Material Adverse Effect.
(e) To the best of the Company's knowledge, no current or former
partner, director, officer or employee of the Company or any of its
Subsidiaries (or any of their respective predecessors in interest) will,
after giving effect to the transactions contemplated herein, own or retain
any rights in or to any of the Intellectual Property owned or used by the
Company. To the best of the Company's knowledge, no Trade Secret has been
disclosed or authorized to be disclosed to any third party other than
pursuant to a non-disclosure agreement, the disclosure of which would have a
Material Adverse Effect. To the best of the Company's knowledge, no party to
any non-disclosure agreement relating to its Trade Secrets is in breach or
default thereof, which would have a Material Adverse Effect.
(f) The consummation of the transactions contemplated hereby will
not result in the loss or impairment of the Company's or any of its
Subsidiaries' rights to own or use any of the Intellectual Property, nor will
it require the consent of any Governmental Authority or third party in
respect of such Intellectual Property.
Section IV.22 ENVIRONMENTAL COMPLIANCE. To the knowledge of the
Company, except as disclosed in the Environmental Reports and except as would
not have a Material Adverse Effect:
29
10 The Company and its Subsidiaries have not received any notice
whether from a Governmental Authority, citizens' group, employee
or otherwise alleging that the Company or any of its Subsidiaries
is not in compliance with Environmental Laws.
20 There is no Environmental Claim pending or threatened against the
Company or any of its Subsidiaries or against any Person whose
liability the Company has assumed by contract or by law.
30 There are no conditions that would reasonably form the basis of
any Environmental Claim against the Company or any of its
Subsidiaries or against any Person whose liability the Company
has assumed by contract or by law.
40 The Company has delivered or otherwise made available for
inspection to the Purchasers true, complete and correct copies of
the Environmental Reports identified in Schedule 4.22 hereto.
Section IV.23 DISCLOSURE REPRESENTATION. No representations or
warranties by the company in this Agreement and no statement of the Company
contained in any document (including, without limitation, the Financial
Statements and the exhibits and schedules attached hereto) or certificate
furnished or to be furnished by the Company to the Purchasers or any of their
representatives pursuant to the provisions hereof or in connection with any
of the transactions contemplated hereby, contains or will contain any untrue
statement of material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was made, in order to
make the statements herein or therein not misleading.
Section IV.24 YEAR 2000. Any reprogramming required to permit the
proper functioning (but only to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following
the year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Company and/or its
Subsidiaries or used or relied upon in the conduct of its business (including
any such systems and other equipment supplied by others or with which the
computer systems of the Company or its Subsidiaries interface), and the
testing of all such systems and other equipment as so reprogrammed, will be
completed by December 31, 1999. The costs to the Company that have not been
incurred as of the date hereof for such reprogramming and testing and for the
other reasonably foreseeable consequences to them of any improper functioning
of other computer systems and equipment containing embedded microchips due to
the occurrence of the year 2000 could not reasonably be expected to have a
Material Adverse Effect. Except for any reprogramming referred to above, the
computer systems of the Company and its Subsidiaries are
30
and, with ordinary course upgrading and maintenance, will continue to be,
sufficient for the conduct of its business as currently conducted.
ARTICLE V
COVENANTS
The Company covenants that so long as each Purchaser holds Class D
Preferred Stock or Class E Preferred Stock or Class A Common Stock received
upon conversion thereof representing at least 35% of such Purchaser's
investment in such Class D Preferred Stock or Class E Preferred Stock or
Class A Common Stock as of the Closing, the Company will comply, and the
Company will cause each of the Subsidiaries to comply, with the following
provisions unless otherwise consented to in writing by each of the Purchasers:
Section V.1 RECORDS AND ACCOUNTS. Each of the Company and the
Subsidiaries will keep true and accurate records and books of account in
which full, true and correct entries will be made in accordance with GAAP and
in all other respects consistent with industry practices.
Section V.2 EXISTENCE; RELATED SECURITIES; MAINTENANCE OF PROPERTIES.
Each of the Company and the Subsidiaries will preserve and keep in full force
and effect and in good standing its corporate or partnership existence, as
the case may be, rights and franchises except for any combination or merger
with and into the Company or a Subsidiary or where the failure to do so would
not have a Material Adverse Effect.
Section V.3 INSURANCE. Each of the Company and the Subsidiaries will
maintain with financially sound and reputable insurance companies, funds or
underwriters insurance of the kinds, covering the risks and in the relative
proportionate amounts usually carried by reasonable and prudent companies
conducting businesses similar to that of the Company and the Subsidiaries,
except where the failure to do so would not have a Material Adverse Effect.
Section V.4 TAXES. Each of the Company and the Subsidiaries will pay
and discharge, or cause to be paid and discharged, before the same shall
become overdue, all Taxes, assessments and other governmental charges imposed
upon it and its real properties, sales and activities, or any part thereof,
or upon the income or profits therefrom, as well as all claims for labor,
materials or supplies, which if unpaid might by law become a Lien upon any of
their properties and would have a Material Adverse Effect; PROVIDED, HOWEVER,
that any such Tax, assessment, charge, levy or claim need not be paid if the
validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and if the Company or the applicable Subsidiary shall
have set aside on its books adequate reserves with respect thereto; and
PROVIDED,
31
FURTHER, that the Company and the applicable Subsidiary will pay or cause to
be paid all such Taxes, assessments, charges, levies or claims forthwith upon
the commencement of foreclosure on any Lien which may have attached as
security therefor.
Section V.5 INSPECTION OF PROPERTIES AND BOOKS. Each of the Company
and the Subsidiaries shall permit each Purchaser or any of its designated
representatives, at the Company's cost, to visit and inspect any of its
properties, to examine its books of account (and to make copies thereof and
extracts therefrom), and to discuss its affairs, finances and accounts with,
and to be advised as to the same by, officers or partners of such Persons,
all at such times and intervals as such Purchaser may reasonably request.
Section V.6 COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS.
Each of the Company and the Subsidiaries will comply in all material respects
with (a) all FCC laws and regulations, all Oklahoma Corporations Commission
laws and regulations and all other material laws and regulations wherever its
business is conducted, (b) the provisions of its Restated Certificate and
Restated Bylaws, (c) all other material agreements and instruments by which
it or any of its properties may be bound (including, without limitation, the
Related Agreements and the agreements, documents and instruments executed and
delivered by it in connection with the Financing Agreements), (d) all
applicable decrees, orders and judgments, and (e) all required FCC and
Oklahoma Corporations Commission approvals, permits and licenses and all
other material approvals, permits and licenses, if, in the case of clauses
(a), (c) and (e), the failure to comply would have a Material Adverse
Effect.
Section V.7 EMPLOYEE BENEFIT PLANS. Neither the Company nor any ERISA
Affiliate will:
(a) engage in any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code;
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in Section 302 of ERISA,
whether or not such deficiency is or may be waived;
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance on the assets of the
Company or any of the Subsidiaries pursuant to Section 302(f) or Section
4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of Section 4001 of ERISA) of all
Guaranteed Pension Plans
32
exceeding the value of the aggregate assets of such Plans, disregarding
for this purpose the benefit liabilities and assets of any such Plan with
assets in excess of benefit liabilities,
if, in each such case, such action or failure would have a Material Adverse
Effect.
The Company will (i) promptly upon filing the same with the Department of
Labor or Internal Revenue Service, furnish to each of the Purchasers a copy
of the most recent actuarial statement required to be submitted under Section
103(d) of ERISA and Annual Report, Form 5500, with all required attachments,
in respect of each Guaranteed Pension Plan, and (ii) promptly upon receipt or
dispatch, furnish to each Purchaser any notice, report or demand sent or
received in respect of a Guaranteed Pension Plan under Sections 302, 4041,
4042, 4043, 4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer
Plan, under Section 4041A, 4202, 4219, 4242 or 4245 of ERISA.
Section V.8 FURTHER ASSURANCES. Each of the Company and the
Subsidiaries will cooperate with the Purchasers and execute such further
instruments and documents as the Purchasers shall reasonably request to carry
out to the satisfaction of the Purchasers the transactions contemplated by
this Agreement or any other Related Agreement.
Section V.9 DISTRIBUTIONS. The Company shall not make any distribution
except (a) repurchases of management, employee or consultant stock and
options pursuant to contractual rights, PROVIDED, that no such repurchases
shall exceed $500,000 in any fiscal year or in any event $1,500,000 in the
aggregate (other than stock and options owned, directly or indirectly, by
members of the Xxxxxx family unless approved by two of the directors selected
in clauses (i) and (iii) of Section 3.1(a) of the Stockholder and Investor
Rights Agreement; PROVIDED, HOWEVER, that in the event that the two directors
in clause (iii) thereof have been selected by the Xxxxxx Partnership without
the approval of JWC, then the consent of the director designated by JWC in
clause (i) of Section 3.1(a) thereof shall be required to approve the
repurchase), (b) the sale or redemption of up to $25.0 million in aggregate
principal amount by Xxxxxx Partnership of Company securities, plus any
accrued and unpaid dividends thereon, in one transaction or a series of
transactions; PROVIDED that no financing or refinancing by the Company in
connection with any such redemption or sale may have an interest rate in
excess of 14% per annum (the "Rate Cap"); and PROVIDED FURTHER that after the
first anniversary of the date hereof, the Rate Cap will not apply to any
financing or refinancing to the extent that the Company has met or exceeded
its EBITDA projections as set forth in the budget attached as Exhibit D
hereto for the previous four fiscal quarters, (c) required distributions in
respect of Sygnet PIK Preferred Stock and Class F Preferred Stock (and
related warrants and warrant shares) issued in connection with the Sygnet
Acquisition, (d) distributions provided by the Restated Certificate, (e)
distributions required or permitted by the Stockholder and Investor Rights
Agreement, including the put and call provisions therein, and (d) the Logix
Communications Spin-Off.
33
Section V.10 MERGER, CONSOLIDATION, SALE OF ASSETS OR OTHER
DISPOSITIONS. Neither the Company nor any Subsidiary will become a party to
any merger or consolidation, or sell, lease, sublease or otherwise transfer
or dispose of any shares of or other equity interests in a Subsidiary or any
substantial portion of its assets, rights and licenses to any Person, or turn
over the management of, or enter into any management contract with respect
to, any of its assets, properties, rights or licenses, whether directly or
indirectly or in a single transaction or a series of related transactions,
without the approval by a vote of 50.1% of the Board of Directors, or, in the
case of any such transaction involving 10% or more of the Company's
consolidated assets as of the end of the most recently completed fiscal
quarter, the unanimous approval by the Company Board of Directors, provided,
that the foregoing will not apply to (a) any pledges, Liens or security
interests in connection with Company financing, (b) any merger,
consolidation, sale, lease, sublease, transfer or disposition solely among or
involving the Company and/or its Subsidiaries, (c) the Logix Communications
Spin-Off, (d) management stock options and incentives approved by the
Company's Board of Directors, (e) sale of Sygnet PIK Preferred Stock and
Class F Preferred Stock (and related warrants and warrant shares) issued in
connection with the Sygnet Acquisition, and (f) transactions in the ordinary
course of business.
Section V.11 SALE AND LEASEBACK OF PROPERTY. Neither the Company nor
any Subsidiary will enter into any arrangement, directly or indirectly, with
any Person whereby it shall sell or transfer any property, whether real,
personal or a combination thereof, used or useful in its business, whether
now owned or hereinafter acquired, and thereafter rent or lease such
property, without the approval by a vote of 50.1% of the Board of
Directors, or, in the case of any such transaction involving 10% or more of
the Company's consolidated assets as of the end of the most recently
completed fiscal quarter, the unanimous approval by the Company Board of
Directors, PROVIDED that no such approval shall be required in connection
with the sale and leaseback by the Company or any Subsidiary of cellular
towers owned by Sygnet Communications, Inc. prior to its acquisition by the
Company
Section V.12 INVESTMENTS. The Company will not, and will not permit
any Subsidiary to, have outstanding or acquire or commit itself to acquire or
hold any investment except investments in: (a) marketable direct obligations
issued or guaranteed by the United States of America which mature within one
year from the date of acquisition thereof or which are subject to a
repurchase agreement, exercisable within 90 days from the date of acquisition
of such agreement, with any commercial bank or trust company incorporated
under the laws of the United States of America or any State thereof or the
District of Columbia, (b) commercial paper maturing within one year from the
date of acquisition thereof and having, at the date of acquisition thereof,
the highest rating obtainable from Xxxxx'x Investors Service, Inc. or
Standard & Poor's Ratings Services, Inc., (c) bankers' acceptances eligible
for rediscount under Federal Reserve Board requirements accepted by any
commercial bank or trust company referred to in clause (a) hereof, (d)
certificates of deposit maturing within one year from the date of
34
acquisition thereof issued by any commercial bank or trust company referred
to in clause (a) hereof and having capital and surplus of at least
$500,000,000, (e) certificates of deposit issued by banks organized under the
laws of any other jurisdiction, each having combined capital and surplus of
not less than $500,000,000, (f) investments by the Company and each
Subsidiary existing on the date of this Agreement, (g) investments by the
Company and its Subsidiaries in the Company or in Subsidiaries of the
Company, (h) investments up to $25,000,000 in aggregate, and (i) investments
permitted by the Company's Financing Agreements.
Section V.13 MERGER, CONSOLIDATION OR OTHER ACQUISITIONS. Neither the
Company nor any Subsidiary shall directly or indirectly, by operation of law
or otherwise, merge with, consolidate with, acquire all or substantially all
of the assets or capital stock of, or otherwise combine with, any Person
without the approval of 50.1% of the Board of Directors, or, in the case of
any such transaction involving 10% or more of the Company's consolidated
assets as of the end of the most recently completed fiscal quarter, the
unanimous consent of the Board of Directors, provided, that the foregoing
will not apply to (a) any merger, consolidation or acquisition solely among
or involving the Company and/or its Subsidiaries, (b) capital expenditures or
capital projects approved by the Board of Directors, and (c) transactions in
the ordinary course of business.
Section V.14 SELL-DOWN OF JWC COMMON STOCK. The JWC Common Stock shall
be converted at JWC's option on a dollar-for-dollar basis into shares of
Class D Preferred Stock (valued at a purchase price of $1131.92 per share of
Class D Preferred Stock) in the event that (i) JWC has not received a
commitment reasonably satisfactory to JWC to purchase up to $33.3 million of
JWC's initial investment in Class D Preferred Stock and JWC Common Stock for
an amount equal to JWC's purchase price of such Securities hereunder plus the
value of any accrued and unpaid dividends thereon, within two months of the
Closing or (ii) JWC has not sold such percentage of securities within three
months of the Closing; PROVIDED that JWC shall have notified the Company of
its election to convert pursuant to this Section 5.14 within 120 days of the
Closing. If the JWC Common Stock is converted into Class D Preferred Stock
pursuant to this paragraph, for purposes of determining accrued dividends,
the effective date of such conversion shall be the Closing Date.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company hereby agrees that so long as any shares of the Preferred
Stock or any shares of the Common Stock are held by any Purchaser, it will
comply with, and it will cause each Subsidiary to comply with, the following
provisions:
35
Section VI.1 ANNUAL STATEMENTS. (a) As soon as available and in any
event within 90 days after the close of each fiscal year of the Company, the
Company will deliver to each Purchaser audited consolidated and unaudited
consolidating balance sheets and statements of income and retained earnings
and of cash flows of the Company audited by Xxxxxx Xxxxxxxx, L.L.P. or any
other public accounting firm selected by the Company and reasonably
acceptable to the Purchasers, showing the financial condition of the Company
as of the close of such fiscal year and the results of the Company's
operations during such fiscal year, all on a consolidated basis.
(b Each of the financial statements delivered pursuant to this
SECTION 6.1 shall be certified without qualification by the applicable
accounting firm to have been prepared in accordance with GAAP consistently
applied.
Section VI.2 QUARTERLY STATEMENTS. Within forty-five (45) days after
the end of each quarter, the Company will deliver to each Purchaser
consolidated and consolidating unaudited balance sheets and statements of
income and retained earnings and of cash flows of the Company as of the end
of each such quarter and for the period of the then current fiscal year to
the end of such month, and presenting on a comparative basis the
corresponding figures for such period in the preceding fiscal year and the
then current Budget (as defined below), in each case by region, certified by
the Chief Financial Officer of the Company to be true and correct and to have
been prepared in accordance with GAAP subject to normal year-end adjustments
described in reasonable detail.
Section VI.3 BUDGETS AND OTHER REPORTS. (a) The Company will deliver
to the Purchasers, prior to the commencement of each fiscal year project
spending and capital budgets for the five immediately succeeding fiscal
years, projected monthly statements of income and cash flow for such fiscal
years (the "Budget"), projected quarterly balance sheets for such fiscal
years and as soon as practical after preparation thereof, complete and
correct copies of all quarterly (if any) or annual budgetary analyses or
forecasts of the Company and the Subsidiaries in the form customarily
prepared by management for its own internal use or the use of the Company.
The Company and the Purchasers shall once each calendar year, conduct an
annual off-site meeting to review the Company's projections and business
plans with respect to such fiscal year and the immediately succeeding four
fiscal years.
(b) The Company shall also furnish to each Purchaser (i) within
five (5) days of the Company's receipt thereof, copies of all management
letters of the Company's accountants; (ii) within five (5) days of the
Company's receipt thereof, notice with respect to any material pending or
threatened litigation to which the Company or any Subsidiary is or may become
a party; (iii) within five (5) days of the Company's receipt thereof, notice
of any default or event of default with respect to any material agreement to
which the Company or any Subsidiary is a
36
party; (iv) within five (5) days of the filing thereof, copies of all
material filings made by or on behalf of the Company or any Subsidiary with
any governmental regulatory agency; and (v) such other information as any
Purchaser may reasonably request from time to time.
(c) Within thirty (30) days after the end of each calendar month,
the Company will deliver to each Purchaser monthly and year-to-date
summaries, in a form and to the same extent prepared by the Company
management on a consolidated basis broken down for each market in which the
Company or any Subsidiary operates any System compared on a monthly and
year-to-date basis to the Company's Budget, of the following: (a) number of
Pops, (b) number of subscribers, (c) gross activations, (d) net activations,
(e) deactivations (and setting forth the reason therefor), (f) acquisition
cost per gross activation, (g) average monthly revenue per subscriber, (h)
total number of roaming minutes, (i) total roaming revenue and (j) any other
reasonable information which the Purchasers may request from time to time.
ARTICLE VII
ADDITIONAL CLOSING DELIVERIES
Section VII.1 DELIVERIES AT CLOSING. At the Closing, each of the
following deliveries shall be made:
(a) The Stockholder and Investor Rights Agreement shall have been
executed and delivered by the parties thereto and each shareholder shall
have performed in all material respects all agreements contained therein
required to be performed by it at or before the Closing.
(b) The Purchasers shall have received a copy, certified by its duly
authorized officer to be true and complete as of the Closing Date, of the
Restated Bylaws thereof, and (b) a certificate, dated not more than ten
days prior to the Closing Date, of the relevant governmental authority or
other appropriate official of the State of Oklahoma and of each state in
which it is qualified to do business, as to such Person's corporate good
standing or qualification to do business, as the case may be. The
Purchasers shall have received from the Company an incumbency certificate,
dated the Closing Date, signed by a duly authorized officer thereof and
giving the name and bearing a specimen signature of each individual who
shall be authorized to sign, in the name and on behalf of the Company, this
Agreement and each Related Agreement to which the Company is or is to
become a party on or prior to the Closing Date.
(c) The Purchasers shall have received from the Company copies
certified by the
37
Secretary or Assistant Secretary thereof to be true and complete as of
the Closing Date, of the records of all corporate action taken to
authorize the execution, delivery and performance of this Agreement and
each Related Agreement to be executed on or prior to the Closing Date to
which the Company is a party.
(d) The Purchasers shall have received legal opinions from each of
(i) McAfee and Xxxx, (ii) Xxxxx, Xxxxx & Xxxxx, special New York counsel
to the Company, and (iii) Wilkinson, Barker, Xxxxxx & Xxxxx, LLP, FCC
counsel to the Company, in form and substance reasonably satisfactory to
Purchasers.
(e) The Purchasers shall have received an executed copy of the Fleet
Purchase Agreement.
(f) On the Closing Date, JWC shall have received the JWC Transaction
Fee.
(g) The Company shall have received an opinion of Skadden, Arps,
Meagher, Slate & Xxxx, LLP, special counsel to the JWC Group, in form and
substance reasonably satisfactory to the Company.
(h) The Company shall have received an executed Investor
Questionnaire from each Purchaser who is a member of the JWC Group in
substantially the form attached hereto as EXHIBIT E.
(i) The Company shall have received copies of duly executed,
irrevocable and effective Powers of Attorney of each Purchaser who is a
member of the JWC Group appointing Xxxx Xxxxxxxx as its attorney-in-fact
for the purposes of the transactions contemplated by this Agreement and the
Related Agreements substantially in the form attached hereto as EXHIBIT F.
Section VII.2 CLOSING DATE EXCHANGE AND CONVERSION OF SECURITIES.
Immediately after the Purchasers' purchase and receipt of stock certificates
representing shares of Class A Common Stock from Fleet Equity pursuant to the
Fleet Purchase Agreement, the Purchasers shall return such stock certificates
to the Company and the Company shall issue stock certificates evidencing
ownership of such shares of Class A Common Stock by such Purchasers and the
Company shall cancel the stock certificates in respect of such shares of
Class A Common Stock evidencing ownership thereof by Fleet Equity.
ARTICLE VIII
38
SURVIVAL AND INDEMNIFICATION
Section VIII.1 SURVIVAL. The representations and warranties made in
this Agreement shall survive the Closing until the third anniversary thereof
and shall thereupon expire together with any right to indemnification in
respect thereof (except to the extent a written notice asserting a claim for
breach of any such representation or warranty and describing such claim in
reasonable detail shall have been given prior to such date to the party which
made such representation or warranty). The covenants and agreements
contained in this Agreement to be performed or complied with after the
Closing shall survive the Closing; PROVIDED that the right to indemnification
pursuant to this Article VIII in respect of a breach of a representation or
warranty shall expire on the third anniversary of the Closing (except to the
extent written notice asserting a claim thereunder and describing such claim
in reasonable detail shall have been given prior to such date to the party
from whom such indemnification is sought); PROVIDED, FURTHER, that the
representations and warranties contained in SECTIONS 4.16 and 4.18 shall
survive the Closing and continue to full force and effect until 60 days
following expiration of any applicable statutes of limitations. After the
Closing, the sole and exclusive remedy of the parties for any breach or
inaccuracy of any representation or warranty contained in this Agreement, or
any other claim (whether or not alleging a breach of this Agreement) that
arises out of the facts and circumstances constituting such breach or
inaccuracy, shall be the indemnity provided in this Article VIII.
Section VIII.2 INDEMNIFICATION BY THE PURCHASERS. Each of DCC, L.P.
and JWC, severally and not jointly, shall indemnify and hold harmless each
other, the Company, and their respective Affiliates, and the shareholders,
members, managers, officers, employees, agents and/or the legal
representatives of any of them (each, a "SECTION 8.2 INDEMNIFIED PARTY"),
against all liabilities and expenses (including amounts paid in satisfaction
of judgments, in compromise, as fines and penalties, and as counsel fees)
(collectively, "LOSSES") incurred by such SECTION 8.2 Indemnified Party in
connection with the investigation, defense, or disposition of any action,
suit or other proceeding in which such Section 8.2 Indemnified Party may be
involved or with which he or it may be threatened that arises out of or
results from (a) any representation or warranty of such indemnifying party
contained in this Agreement or any Related Agreement being untrue in any
material respect as of the date on which it was made, including, but not
limited to, any representation made under Article III hereof by any Purchaser
or by the Purchaser Representative, or (b) any material default by such
indemnifying party or any of its Affiliates in the performance of their
respective obligations under this Agreement and any Related Agreement, except
to the extent (but only to the extent) any such Losses arise out of or result
from the gross negligence or willful misconduct of such Section 8.2
Indemnified Party or its Affiliates.
Section VIII.3 INDEMNIFICATION BY THE COMPANY. The Company shall
indemnify and
39
hold harmless each of the Purchasers, and their respective Affiliates, and
the shareholders, members, managers, officers, employees, agents and/or the
legal representatives of any of them (each, a "SECTION 8.3 INDEMNIFIED
PARTY"), against all Losses incurred by him or it in connection with the
investigation, defense, or disposition of any action, suit or other
proceeding in which any Section 8.3 Indemnified Party may be involved or with
which he or it may be threatened that arises out of or results from (a) any
representation or warranty of the Company contained in this Agreement or any
Related Agreement being untrue in any material respect as of the date on
which it was made or (b) any material default by the Company or any of its
Affiliates in the performance of their respective obligations under this
Agreement and any Related Agreement, except to the extent (but only to the
extent) any such Losses arise out of or result from the gross negligence or
willful misconduct of such Section 8.3 Indemnified Party or its Affiliates.
Section VIII.4 PROCEDURES. (a) The terms of this Section 8.4 shall
apply to any claim (a "CLAIM") for indemnification under the terms of
Sections 8.2 or 8.3. The Section 8.2 Indemnified Party or Section 8.3
Indemnified Party (each, an "INDEMNIFIED PARTY"), as the case may be, shall
give prompt written notice of such Claim to the indemnifying party (the
"INDEMNIFYING PARTY") under the applicable Section, which party may assume
the defense thereof, PROVIDED that any delay or failure to so notify the
Indemnifying Party shall relieve the Indemnifying Party of its obligations
hereunder only to the extent, if at all, that it is materially prejudiced by
reason of such delay or failure. The Indemnified Party shall have the right
to approve any counsel selected by the Indemnifying Party and to approve the
terms of any proposed settlement, such approval not to be unreasonably
delayed or withheld (unless such settlement provides only, as to the
Indemnified Party, the payment of money damages actually paid by the
Indemnifying Party and a complete release of the Indemnified Party in respect
of the claim in question). The Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense of any
Claim; PROVIDED, however that the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement agreement with respect to
such Claim without the prior written consent of the Indemnifying Party, such
approval not to be unreasonably withheld or delayed. Notwithstanding any of
the foregoing to the contrary, the provisions of this Article VIII shall not
be construed so as to provide for the indemnification of any Indemnified
Party for any liability to the extent (but only to the extent) that such
indemnification would be in violation of applicable law or that such
liability may not be waived, modified or limited under applicable law, but
shall be construed so as to effectuate the provisions of this Article VIII to
the fullest extent permitted by law.
(b In the event that the Indemnifying Party undertakes the
defense of any Claim, the Indemnifying Party will keep the Indemnified Party
advised as to all material developments in connection with such Claim,
including, but not limited to, promptly furnishing the Indemnified Party with
copies of all material documents filed or served in connection therewith.
40
(c) In the event that the Indemnifying Party fails to assume the
defense of any Claim within ten business days after receiving written notice
thereof, the Indemnified Party shall have the right, subject to the
Indemnifying Party's right to assume the defense pursuant to the provisions
of this Article VIII, to undertake the defense, compromise or settlement of
such Claim for the account of the Indemnifying Party. Unless and until the
Indemnifying Party assumes the defense of any Claim, the Indemnifying Party
shall advance to the Indemnified Party any of its reasonable attorneys' fees
and other costs and expenses incurred in connection with the defense of any
such action or proceeding. Each Indemnified Party shall agree in writing
prior to any such advancement that, in the event he or it receives any such
advance, such Indemnified Party shall reimburse the Indemnifying Party for
such fees, costs and expenses to the extent that it shall be determined that
he or it was not entitled to indemnification under this Article VIII.
(d) In no event shall an Indemnifying Party be required to pay in
connection with any Claim for more than one firm of counsel (and local
counsel) for each of the following groups of Indemnified Parties: (i) the
Purchasers, their respective Affiliates, and the shareholders, members,
managers, officers, employees, agents and/or the legal representatives of any
of them; and (ii) the Company, and its shareholders, members, managers,
officers, employees, agents and/or the legal representatives of any of them.
(e) If for any reason the indemnification provided for in Section
8.2 or 8.3 is unavailable to an Indemnified Party as contemplated therein,
then the Indemnifying Party, in lieu of indemnification shall contribute to
the amount paid or payable by the Indemnified Party as a result of such loss,
claim, damage, expense or liability (or action in respect thereof) in such
proportion as is appropriate to reflect not only the relative benefits
received by the Indemnified Party and the Indemnifying Party, but also the
relative fault of the Indemnified Party and the Indemnifying Party, as well
as any other relevant equitable considerations No person guilty of a
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 any such fraudulent misrepresentation. 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
to state a material fact, has been 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.
Section VIII.5 REGISTRATION RIGHTS. Notwithstanding anything to the
contrary in this Article VIII, the indemnification and contribution
provisions set forth in Sections 5(e) and 5(f) of the Stockholder and
Investor Rights Agreement shall govern any claim made with respect to the
registration statements filed pursuant to Section 5 of the Stockholder and
Investor Rights Agreement or sales made thereunder.
41
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section IX.1 AMENDMENT AND MODIFICATION. This Agreement may be
amended, modified or supplemented only by written agreement of each of the
parties.
Section IX.2 WAIVER OF COMPLIANCE; CONSENTS. Any failure of any of the
parties to comply with any obligation, covenant, agreement or condition
herein may be waived by the party or parties entitled to the benefits thereof
only by a written instrument signed by the party granting such waiver, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto,
such consent shall be given in writing in a manner consistent with the
requirement for a waiver of compliance as set forth in this Section 9.2.
Section IX.3 NOTICES. All notices or other communications hereunder
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by facsimile transmission, or by
registered or certified mail (return receipt requested), postage prepaid,
with an acknowledgment of receipt signed by the addressee or an authorized
representative thereof, addressed as follows (or to such other address for a
party as shall be specified by like notice; PROVIDED that notice of a change
of address shall be effective only upon receipt thereof):
If to the JWC Group:
X.X. Childs Equity Partners II, L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxx-Xxxxx Xxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
42
Facsimile: (000) 000-0000
If to the Company, to it:
Xxxxxx Communications Corporation
00000 X. Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, President
Facsimile (000) 000-0000
With a copy to the Company at the same address to:
Attention: Xxxxxx X. Xxxxxx, Senior Corporate Counsel
Facsimile: (000) 000-0000
With a further copy to:
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Section IX.4 EXPENSES. The Company agrees, in the event the
transactions contemplated hereby are consummated, to (i) pay the JWC
Transaction Fee, and (ii) pay and save JWC and the Xxxxxx Partnership
harmless against, the reasonable expenses of JWC and the Xxxxxx Partnership
(including the reasonable fees and expenses of counsel and accountants to JWC
and the Xxxxxx Partnership) in connection with the preparation, negotiation,
execution and delivery of this Agreement, the instruments and documents
executed pursuant hereto or in connection herewith, and the consummation of
the transactions contemplated hereby.
Section IX.5 PARTIES IN INTEREST; ASSIGNMENT. This Agreement is
binding upon and is solely for the benefit of the parties hereto and their
respective permitted successors, legal representatives and permitted assigns.
None of the Company, any Purchaser, or any Selling Shareholder may assign
its rights and obligations hereunder without the prior written consent of
each of the other parties; PROVIDED, that: any Purchaser may assign its
rights and obligations hereunder to any Affiliate, PROVIDED, that such
assignee shall have assumed in writing all the obligations of such Purchaser
hereunder and no such assignment shall relieve such Purchaser of its
obligations hereunder.
43
Section IX.6 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the conflicts of law principles thereof. The parties hereto hereby
irrevocably and unconditionally consent to submit to the non-exclusive
jurisdiction of the courts of the State of New York and of the United States
of America located in the County of New York, New York (the "NEW YORK
COURTS") for any litigation arising out of or relating to this Agreement and
the transactions contemplated hereby, waive any objection to the laying of
venue of any such litigation in the New York Courts and agrees not to plead
or claim in any New York Court that such litigation brought therein has been
brought in an inconvenient forum.
Section IX.7 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
Section IX.8 INTERPRETATION. The article and section headings
contained in this Agreement are for convenience of reference only, are not
part of the agreement of the parties and shall not affect in any way the
meaning or interpretation of this Agreement. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the referenced Person may require.
Section IX.9 ENTIRE AGREEMENT. This Agreement and the Related
Agreements, including the exhibits and schedules hereto and thereto and the
certificates and instruments delivered pursuant to the terms of this
Agreement and the Related Agreements, embody the entire agreement and
understanding of the parties hereto in respect of the transactions
contemplated hereby, save for those matters the subject of Related Agreements
to be executed subsequent to the Closing Date. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to herein or the Related Agreements
executed as of the date hereof. This Agreement supersedes and, together with
the Related Agreements upon their execution, will supersede, all prior
agreements and understandings between the parties with respect to such
transactions.
Section IX.10 PUBLICITY. So long as this Agreement is in effect, the
parties agree to consult with each other in issuing any press release or
otherwise making any public statement with respect to the transactions
contemplated hereby, and no party shall issue any press release or make any
such public statement prior to such consultation, except as may be required
by Law. No press release or other public statement by the parties hereto
shall disclose any of the financial terms of the transactions contemplated
hereby without the prior consent of the other parties, except as may be
required by Law. A breach of the provisions of this Section 9.10 by a party
shall not give rise to any right to terminate this Agreement.
44
Section IX.11 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. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
New York Courts.
Section IX.12 REMEDIES CUMULATIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise or
beginning of the exercise of any thereof by any party shall not preclude the
simultaneous or later exercise of any other such right, power or remedy by
such party.
45
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
XXXXXX COMMUNICATIONS CORPORATION
By: /s/ Xxxxxxx Xxxxxx
--------------------------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
PURCHASERS:
XXXXXX XX LIMITED PARTNERSHIP,
By: RLD, Inc., its General Partner
By: /s/ Xxxxxxx Xxxxxx
--------------------------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
PURCHASERS:
X.X. CHILDS EQUITY PARTNERS II, L.P.
By: X.X. Childs Advisors II, L.P.,
its general partner
By: X.X. Childs Associates, L.P.,
its general partner
By: X.X. Childs Associates, Inc.,
its general partner
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
SCHEDULE I
JWC GROUP STOCKHOLDERS
Xxxxxx XX Limited Partnership
X.X. Childs Equity Partners II, L.P.
JWC Equity Funding II, Inc.
Xxxx Family Trust
Xxxx X. Childs
Xxxxxxx X. Childs
Xxxxx X. Childs
Xxxxxxx X. Xxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxx
X. Xxxx XxxXxxxxx
Xxxxxxx X. Xxxx
Xxxx X. Xxxxxxxx
Chechesse Creek Trust
Xxxxxx X. Xxxxx
SGS 1995 Family Limited Partnership
Xxxxxx X. Xxxxx 1995 Irrevocable Trust
SGS-III Family Limited Partnership
Xxxx X. Xxxxxx
Xxxx X. Xxxxxx Irrevocable Family Trust
Suttin Family Trust II
Xxxxxx X. Xxxxxx XXX
Xxxxxx X. Xxx
Xxx Family Trust
Xx Xxxxxxxxx
Xxx Xxxxxx
Rebacliff, Xxxxx & Xxxxx, LLC
Xxxxx X. Xxxxxxx
Xxxxx Xxxxxxx
Xxxx Xxxxx
OFS Investment Partners II
SCHEDULE 3.2
PURCHASER CONSENTS
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Trade Commission/Department of Justice.
SCHEDULE 4.2
COMPANY AND SELLING SHAREHOLDER CONSENTS
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Trade Commission/Department of Justice.
2. Consents under the Credit Agreements.
SCHEDULE 4.9
CAPITALIZATION
OWNERSHIP OF OUTSTANDING STOCK AND MANAGEMENT
OPTIONS TO PURCHASE STOCK OF
XXXXXX COMMUNICATIONS CORPORATION
Shares Prior to Shares After
Closing Closing
------- -------
CLASS A COMMON STOCK
Xxxxxx XX Limited Partnership 469,998 471,338
Xxxxxxx X. Xxxxxx 3,154 3,154
X.X. Childs -0- 17,412
CLASS B NON-VOTING COMMON STOCK* 28,934 28,934
CLASS C NON-VOTING COMMON STOCK* -0- 4,453
CLASS A 5% NON-CUMULATIVE. NON-
VOTING, NON-CONVERTIBLE PREFERRED STOCK
Xxxxxx Operating Company 100,000 22,000
CLASS B CONVERTIBLE PREFERRED STOCK
Fleet Venture Resources, Inc. 69,446 -0-
Fleet Equity Partners VI, L.P. 29,762 -0-
Xxxxxxx Xxxxx Partners 792 -0-
CLASS C 8% CUMULATIVE NON-VOTING,
NON-CONVERTIBLE PREFERRED STOCK
Fleet Venture Resources, Inc. 69,446 -0-
Fleet Equity Partners VI, L.P. 29,762 -0-
Xxxxxxx Xxxxx Partners 792 -0-
CLASS D 15% CONVERTIBLE PREFERRED
STOCK
X.X. Childs -0- 71,559.9
Xxxxxx XX Limited Partnership -0- 3,533.8
CLASS F 16% NON-CONVERTIBLE
PREFERRED STOCK -0- 30,000
CLASS G 16% CONVERTIBLE
PREFERRED STOCK
Xxxxxx XX Limited Partnership -0- 37,853
SR. 12 1/4% EXCHANGEABLE PIK 185,513 250,159
*Options issued. not stock outstanding
SCHEDULE 4.11
SUBSIDIARIES
XXXXXX COMMUNICATIONS CORPORATION SUBSIDIARIES AND PARTNERSHIPS
(As of December 22, 1998)
CORPORATIONS: STATE OF ORGANIZATIONS:
Xxxxxx Communications Corporation Oklahoma
Associated Telecommunications and Technologies, Inc. Oklahoma
DCC PCS, Inc. Oklahoma
DOC Cellular Subsidiary Company Oklahoma
Xxxxxx Cellular of Arizona, Inc. Oklahoma
Xxxxxx Cellular of California, Inc. Oklahoma
Xxxxxx Cellular of Enid, Inc. Oklahoma
Xxxxxx Cellular of Imperial, Inc. Oklahoma
Xxxxxx Cellular of Kansas/Missouri, Inc. Oklahoma
Xxxxxx Cellular of Maryland, Inc. Oklahoma
Xxxxxx Cellular of Xxxxxxx, Inc. Oklahoma
Xxxxxx Cellular of Sandusky, Inc. Oklahoma
Xxxxxx Cellular of Texas, Inc. Oklahoma
Xxxxxx Cellular of Xxxxxxxx, Inc. Oklahoma
Xxxxxx Cellular Operations Company Oklahoma
Xxxxxx Cellular Systems, Inc. Oklahoma
Xxxxxx Fiber/FORTE of Colorado, Inc. Oklahoma
Xxxxxx Operating Company Oklahoma
Xxxxxx Telephone Company, a/k/a
McLoud Telephone Company Oklahoma
Xxxxxx Tower Company Oklahoma
Xxxxxx/Sygnet Operating Company Ohio
Xxxxxx/Sygnet Communications Company Oklahoma
Logix Communications Corporation Oklahoma
Logix Communications Enterprises, Inc. Oklahoma
Santa Xxxx Cellular Telephone, Inc. California
Western Financial Services Corp. Oklahoma
PARTNERSHIPS: STATE OF ORGANIZATION:
Gila River Cellular General Partnership Arizona
Forte of Colorado, General Partnership Colorado
Oklahoma Independent RSA 5 Partnership Oklahoma
Oklahoma Independent RSA 7 Partnership Oklahoma
Oklahoma RSA 3 Limited Partnership Oklahoma
Oklahoma RSA 5 Limited Partnership Oklahoma
Oklahoma RSA 7 Limited Partnership Oklahoma
Texas RSA No. 2 Partnership Oklahoma
SCHEDULE 4.19
AFFILIATED TRANSACTIONS
Affiliated Transactions in excess of $500,000 since December 31, 1997
1. In June 1998, Logix Communications Corporation acquired for $4.8
million substantially all of the long distance customers and accounts
receivable from Zenex Long Distance, Inc. The $4.8 million was paid by
paying 3 promissory notes due by Zenex and by paying $2.3 million to WorldCom
- MCI in satisfaction of a Zenex past due xxxx.
2. In June 1998, Xxxxxx Communications Corporation acquired from
Xxxxxxx X. Xxxxxx for $1.1 million (a) an $886,145 promissory note of the
Gila River Indian Community; (b) 35,000 shares of Zenex Long Distance, Inc.
and (c) a $265,069 promissory note of Zenex Long Distance, Inc., this Zenex
Note was paid by Logix as part of the $4.8 million consideration paid for the
Zenex assets.
SCHEDULE 4.21
ENVIRONMENTAL REPORTS
---------------------------------------------------------------------------------------------------
Assessment: Site: Prepared by: Date:
---------------------------------------------------------------------------------------------------
1. Phase I 29 Sites in Madera, Merced, San Xxxxxx Xxxxxxx December 29, 1997
Xxxxxx, Fresno, Mariposa and Environmental
Stanislaus Counties, California Corporation
---------------------------------------------------------------------------------------------------
2. Phase I 14 Sites in Santa Xxxx and Santa Xxxxxx Xxxxxxx January 26, 1998
Xxxxx Counties California Environmental
Corporation
---------------------------------------------------------------------------------------------------
3. Phase I American Telco, Texas Xxxxxx Xxxxxxx March 31, 1998
Environmental
Corporation
---------------------------------------------------------------------------------------------------
4. Phase I Sites leased by American Telco, Xxxxxx Xxxxxxx March 31, 1998
Texas Environmental
Corporation
---------------------------------------------------------------------------------------------------
5. Phase I Communication Tower Facility Deep Bentley August, 1998
Creek Lake Site, Xxxxxxx County, Environmental
Maryland Engineering, Inc.
---------------------------------------------------------------------------------------------------
6. Phase I Communication Tower Facility Bentley August, 1998
Gantsville Site, Xxxxxxx County, Environmental
Maryland Engineering, Inc.
---------------------------------------------------------------------------------------------------
7. Phase I Communication Tower Facility Bentley August, 1998
Keyser Site, Mineral County, West Environmental
Virginia Engineering, Inc.
---------------------------------------------------------------------------------------------------
8. Phase I Communication Tower Facility Deer Bentley August, 1998
Park Site, Xxxxxxx County, Environmental
Maryland Engineering, Inc.
---------------------------------------------------------------------------------------------------
9. Phase I Communication Tower Facility Bentley August, 1998
Friendville Site, Xxxxxxx County, Environmental
Maryland Engineering, Inc.
---------------------------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS
Section 1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . 12
ARTICLE II CLOSING
Section 2.1 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . 13
Section 2.2 Closing Actions and Deliveries. . . . . . . . . . . . . . . . . . . 13
Section 2.3 Payment of Transfer Taxes . . . . . . . . . . . . . . . . . . . . . 13
Section 2.4 Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Section 3.1 Organization, Power and Authority . . . . . . . . . . . . . . . . . 14
Section 3.2 Consents; No Conflicts; Approval. . . . . . . . . . . . . . . . . . 15
Section 3.3 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.4 FCC Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.5 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.6 No Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.7 Investor Acknowledgments. . . . . . . . . . . . . . . . . . . . . . 15
Section 3.8 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.9 Purchaser Representative Representations. . . . . . . . . . . . . . 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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Section 4.1 Organization, Power and Authority . . . . . . . . . . . . . . . . . 17
Section 4.2 Consents; No Conflicts. . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.3 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.4 Regulatory Compliance . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.5 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.7 SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.8 Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.9 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.10 Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.11 No Undisclosed Liabilities; Subsidiaries. . . . . . . . . . . . . . 22
Section 4.12 Offering of Securities. . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.13 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.14 Title to Properties; Liens; Encumbrances; Insurance . . . . . . . . 23
Section 4.15 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.16 Employee Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.17 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.18 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.19 Affiliate Transactions. . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.20 Solvency; Adequate Capital. . . . . . . . . . . . . . . . . . . . . 26
Section 4.21 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.22 Environmental Compliance. . . . . . . . . . . . . . . . . . . . . . 27
Section 4.23 Disclosure Representation . . . . . . . . . . . . . . . . . . . . . 28
Section 4.24 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V COVENANTS
Section 5.1 Records and Accounts. . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.2 Existence; Related Securities; Maintenance of Properties. . . . . . 29
Section 5.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.4 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.5 Inspection of Properties and Books. . . . . . . . . . . . . . . . . 29
Section 5.6 Compliance with Laws, Contracts, Licenses and Permits . . . . . . . 29
Section 5.7 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.8 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 30
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Section 5.9 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.10 Merger, Consolidation, Sale of Assets or Other Dispositions . . . . 31
Section 5.11 Sale and Leaseback of Property. . . . . . . . . . . . . . . . . . . 31
Section 5.12 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.13 Merger, Consolidation or Other Acquisitions . . . . . . . . . . . . 32
Section 5.14 Sell-Down of JWC Common Stock . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI AFFIRMATIVE COVENANTS
Section 6.1 Annual Statements . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.2 Quarterly Statements. . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.3 Budgets and Other Reports . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII ADDITIONAL CLOSING DELIVERIES
Section 7.1 Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.2 Closing Date Exchange and Conversion of Securities. . . . . . . . . 35
ARTICLE VIII SURVIVAL AND INDEMNIFICATION
Section 8.1 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.2 Indemnification by the Purchasers . . . . . . . . . . . . . . . . . 36
Section 8.3 Indemnification by the Company. . . . . . . . . . . . . . . . . . . 36
Section 8.4 Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.5 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IX MISCELLANEOUS PROVISIONS
Section 9.1 Amendment and Modification. . . . . . . . . . . . . . . . . . . . . 38
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Section 9.2 Waiver of Compliance; Consents. . . . . . . . . . . . . . . . . . . 39
Section 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.4 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.5 Parties in Interest; Assignment . . . . . . . . . . . . . . . . . . 40
Section 9.6 Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.8 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.9 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.11 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.12 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . 41
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SCHEDULES
Schedule I -- Purchasers
Schedule II -- Company Wire Transfer and other Information
Schedule 3.2 -- Purchaser Consents
Schedule 4.2 -- Company Consents
Schedule 4.9 -- Capitalization
Schedule 4.11 -- Subsidiaries
Schedule 4.19 -- Affiliated Transactions
Schedule 4.21 -- Environmental Reports
EXHIBITS
Exhibit A-1 -- Form of Certificate of Designation for Class D Preferred
Stock
Exhibit A-2 -- Form of Certificate of Designation for Class E Preferred
Stock
Exhibit A-3 -- Form of Certificate of Designation for Class G Preferred
Stock
Exhibit A-4 -- Form of Certificate of Designation for Class H Preferred
Stock
Exhibit B -- Form of Restated Bylaws
Exhibit C -- Form of Restated Certificate
Exhibit D -- EBITDA Projections
Exhibit E -- Form of Investor Questionnaire
Exhibit F -- Form of Power of Attorney
Exhibit G -- Logix Communications 1998 Stock Option Plan
Exhibit H -- New Company Stock Option Plan
Exhibit I -- Options Granted Under the Stock Option Plans
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