1
EXHIBIT 10.1
COMPOSITE CONFORMED COPY
SECURITIES PURCHASE AGREEMENT
AMONG
XXXXXXX COMMUNICATIONS. INC.
AND
THE PURCHASERS NAMED HEREIN
DATED AS OF NOVEMBER 18, 1998, AS AMENDED BY
AGREEMENT DATED AS OF DECEMBER 14, 1998
SERIES A CONVERTIBLE PREFERRED STOCK
AT $3.00 PER SHARE
2
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS...........................................................................................1
ARTICLE II. SALE AND PURCHASE OF SERIES A PREFERRED STOCK ON THE CLOSING DATE....................................8
Section 2.1. Sale and Purchase of Series A Preferred Stock..............................................8
Section 2.2. Purchase Price.............................................................................8
Section 2.3. Closing....................................................................................8
Section 2.4. Possible Subsequent Sales of Series A Preferred Stock......................................8
Section 2.5. Use of Proceeds............................................................................9
ARTICLE III. ADDITIONAL PURCHASES OF SERIES A PREFERRED STOCK....................................................9
Section 3.1. Additional Preferred Stock Subscription Obligation of Purchasers...........................9
Section 3.2. Conditions to Additional Preferred Stock Subscription Obligation...........................10
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................11
Section 4.1. Organization and Good Standing.............................................................11
Section 4.2. Authorization..............................................................................11
Section 4.3. Enforceability.............................................................................11
Section 4.4. Consents...................................................................................11
Section 4.5. Capitalization.............................................................................11
Section 4.6. Subsidiaries...............................................................................12
Section 4.7. Financial Statements; Undisclosed Liabilities..............................................12
Section 4.8. Absence of Certain Developments............................................................13
Section 4.9. Indebtedness and Liens.....................................................................13
Section 4.10. Indebtedness to and from Officers, Directors and Others....................................13
Section 4.11. Licenses, Etc..............................................................................14
Section 4.12. Solvency...................................................................................14
Section 4.13. Title to Assets; Leases....................................................................14
Section 4.14. Litigation.................................................................................14
Section 4.15. Tax Returns................................................................................14
Section 4.16. Defaults...................................................................................15
Section 4.17. Burdensome Obligations.....................................................................15
Section 4.18. Employee Benefit Plans.....................................................................15
Section 4.19. Representations and Warranties under Related Agreements....................................15
Section 4.20. Employment Contracts, Labor Relations......................................................16
Section 4.21. Location of Office.........................................................................16
Section 4.22. Necessary Property.........................................................................16
Section 4.23. Transaction Costs..........................................................................16
Section 4.24. Governmental Regulations...................................................................16
Section 4.25. Small Business Concern.....................................................................17
Section 4.26. Disclosure.................................................................................17
i
3
Section 4.27. Governmental Licenses....................................................................17
Section 4.28. Compliance with Laws.....................................................................17
Section 4.29. Acquisition Agreements...................................................................17
Section 4.30. Material Contracts and Obligations.......................................................17
Section 4.31. Environmental and Safety Laws............................................................19
Section 4.32. Investments in Real Property Holding Interests...........................................19
Section 4.33. Unrelated Business Taxable Income........................................................19
ARTICLE V. PURCHASERS' INVESTMENT REPRESENTATIONS AND WARRANTIES................................................20
ARTICLE VI. CONDITIONS TO PURCHASE..............................................................................22
Section 6.1. Purchaser's Conditions....................................................................22
Section 6.1.1. Related Agreements............................................................22
Section 6.1.2. Charter Documents; Good Standing Certificate..................................22
Section 6.1.3. Proof of Corporate Action.....................................................22
Section 6.1.4. Incumbency Certificate........................................................22
Section 6.1.5. Legal Opinion.................................................................23
Section 6.1.6. Representations and Warranties; Officers' Certificates........................23
Section 6.1.7. Legality; Governmental and Other Authorizations...............................23
Section 6.1.8. Due Diligence.................................................................23
Section 6.1.9. Payment of Certain Fees and Disbursements.....................................23
Section 6.1.10. SBIC Documentation............................................................24
Section 6.1.11. Capitalization................................................................24
Section 6.1.12. Shareholder's Agreement.......................................................24
Section 6.1.13. Certification of Securities Holdings..........................................24
Section 6.1.14. Minimum Investment............................................................24
Section 6.1.15. General.......................................................................24
Section 6.2. The Company's Conditions......................................................24
Section 6.2.1. Related Agreements............................................................24
Section 6.2.2. Legality: Governmental and Other Authorizations..............................25
Section 6.2.3. Capitalization................................................................25
Section 6.2.4. General.......................................................................25
ARTICLE VII. COVENANTS APPLICABLE TO THE COMPANY WHILE ANY OF THE SERIES A PREFERRED STOCK ARE
OUTSTANDING.............................................................................................25
Section 7.1. Records and Accounts......................................................................25
Section 7.2. Corporate Existence; Subsidiaries; Maintenance of Properties..............................25
Section 7.3. Insurance.................................................................................26
Section 7.4. Taxes and Claims..........................................................................26
Section 7.5. Inspection of Properties and Books........................................................26
Section 7.6. Compliance with Laws, Contracts, Licenses and Permits.....................................27
Section 7.7. Employee Benefit Plans....................................................................27
Section 7.8. Further Assurances........................................................................28
Section 7.9. Notices...................................................................................28
Section 7.10. Restrictions on Indebtedness..............................................................29
ii
4
Section 7.11. Restrictions on Liens....................................................................29
Section 7.12. Distributions............................................................................30
Section 7.13. Merger, Consolidation, Sale of Assets or Other Dispositions..............................30
Section 7.14. Merger, Consolidation or Other Acquisitions..............................................30
Section 7.15. Transactions with Affiliates.............................................................31
Section 7.16. Investments..............................................................................31
Section 7.17. Joint Ventures...........................................................................31
Section 7.18. Payments on Permitted Indebtedness.......................................................31
Section 7.19. Response Actions.........................................................................31
Section 7.20. Dilution Protection......................................................................31
Section 7.21. Annual Statements........................................................................32
Section 7.22. Monthly Statements.......................................................................32
Section 7.23. Other Financial Information..............................................................33
Section 7.24. Officer's Certificates...................................................................33
Section 7.25. Notice of Litigation, Defaults, Etc......................................................33
Section 7.26. Charter and By-law Amendments............................................................33
Section 7.26. Proprietary Information and Inventions Agreement.........................................34
Section 7.28. SBIC Covenants...........................................................................34
ARTICLE VIII. DEFAULTS..........................................................................................34
Section 8.1. Events of Default.........................................................................34
Section 8.2. Remedies..................................................................................36
Section 8.3. Waivers...................................................................................36
ARTICLE IX. SUBSEQUENT HOLDERS OF SERIES A PREFERRED STOCK......................................................36
ARTICLE X. REGISTRATION AND TRANSFER OF SERIES A PREFERRED STOCK................................................37
Section 10.1. Transfer and Exchange of Series A Preferred Stock........................................37
Section 10.2. Replacement of Series A Preferred Stock..................................................37
ARTICLE XI. EXPENSES; INDEMNITY.................................................................................37
Section 11.1. Expenses.................................................................................37
Section 11.2. Indemnification..........................................................................38
Section 11.3. Brokers' Fees............................................................................38
Section 11.4. Survival of Obligations..................................................................38
ARTICLE XII. NOTICES............................................................................................39
ARTICLE XIII. SURVIVAL AND TERMINATION OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES..................39
ARTICLE XIV. AMENDMENTS AND WAIVERS.............................................................................40
ARTICLE XV. RIGHT TO PUBLICIZE.................................................................................40
ARTICLE XVI. WAIVER OF JURY TRIAL...............................................................................40
iii
5
ARTICLE XVII. INCORPORATORS, SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES AND PARTNERS FREE FROM
PERSONAL LIABILITY...............................................................................41
ARTICLE XVIII. SCHEDULES........................................................................................41
ARTICLE XIX. ENTIRE AGREEMENT; COUNTERPARTS; SECTION HEADINGS.................................................41
ARTICLE XX. GOVERNING LAW....................................................................................42
ARTICLE XXI. SEVERABILITY.....................................................................................42
iv
6
LIST OF EXHIBITS
EXHIBIT A List of Purchasers
EXHIBIT B Registration Rights Agreement
EXHIBIT C Stockholders' Agreement
EXHIBIT D Amended and Restated Certificate of Incorporation
EXHIBIT E Form of Opinion of Special Counsel to Company
EXHIBIT F Form of Founders' Warrants
EXHIBIT G 1998 Stock Incentive Plan
EXHIBIT H Form of Amendment to Shareholders Agreement dated as of
August 14, 1998
v
7
SECURITIES PURCHASE AGREEMENT
XXXXXXX COMMUNICATIONS, INC.
00000 XXXXXXXXXXXX XXXXX XXXX, XXXXX 000
XXXXXXXXXXXX, XXXXXXXX 00000
As of November 18, 1998, as amended as
of December 14, 1998
The Purchasers Named
on Exhibit A Hereto
Ladies and Gentlemen:
The undersigned, Xxxxxxx Communications, Inc., a Delaware
corporation (the "Company"), hereby agrees with you as follows:
ARTICLE I. DEFINITIONS
For all purposes of this Agreement the following terms shall
have the meanings set forth in this Article I:
ACQUISITION. The term "Acquisition" shall mean an acquisition
by the Company of all or substantially all of the assets or equity interest of
another Person.
ADDITIONAL PREFERRED STOCK SUBSCRIPTION OBLIGATION. The term
"Additional Preferred Stock Subscription Obligation" shall mean, as to any
Purchaser, the obligation to purchase additional shares of Series A Preferred
Stock pursuant to Section 3.1 in an amount set forth opposite each Purchaser on
Exhibit A attached hereto, each such share to be purchased at a purchase price
of $3.00 per share.
ADDITIONAL PURCHASER. The term "Additional Purchaser" shall
have the meaning specified in Section 2.4 of this Agreement.
AFFILIATE. The term "Affiliate" shall mean any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with the Company (or other specified Person) and shall include (a) any
Person who is a director or beneficial owner of at least 10% of the then
outstanding capital stock of the Company (or other specified Person) and Family
Members of any such Person, (b) any Person in which the Company (or other
specified Person) or an Affiliate (as defined in clause (a) above) of the
Company (or other specified Person) shall,
8
directly or indirectly, either beneficially own at least 10% of its then
outstanding equity securities or constitute at least a 10% equity participant,
and (c) in the case of a specified Person who is an individual, Family Members
of such Person; provided, however, that none of the Purchasers nor any of their
designated members of the Company's board of directors shall be an Affiliate of
the Company for purposes of this Agreement.
BALANCE SHEET DATE. The term "Balance Sheet Date" shall have
the meaning specified in Section 4.7(a)(i) of this Agreement.
BOARD OF DIRECTORS. The term "Board of Directors" shall mean
the Board of Directors of the Company.
CAPITAL CALL. The term "Capital Call" shall have the meaning
specified in Section 3.1 of this Agreement.
CAPITAL CALL CLOSING DATE. The term "Capital Call Closing
Date" shall have the meaning specified in Section 3.1(b) of this Agreement.
CAPITAL TRANSACTION. The term "Capital Transaction" shall mean
any of the following: (i) one or more mergers, consolidations, liquidations,
sales of more than 50% of the assets of the Company in a single transaction or
series of related transactions, or other similar corporate actions pursuant to
which the Company or the holders of Common Stock receive cash, securities or
other property; and (ii) the sale by the Company of securities which upon
issuance constitute 50% or more of the Common Stock and the Preferred Stock of
the Company to a Person not an Affiliate of the Company (other than by operation
of such sale) by means of a public or private sale.
CHARTER. The term "Charter" shall include the articles or
certificate of incorporation, statute, constitution, joint venture or
partnership agreement or articles or other organizational document of any Person
other than an individual, each as from time to time amended or modified.
CLOSING. The term "Closing" shall have the meaning specified
in Section 2.3 of this Agreement.
CLOSING DATE. The term "Closing Date" shall have the meaning
specified in Section 2.3 of this Agreement.
CODE. The term "Code" shall mean the Internal Revenue Code of
1986, any successor statute of similar import, and the rules and regulations
thereunder, collectively and as from time to time amended and in effect.
COMMON STOCK. The term "Common Stock" shall have the meaning
specified in Section 4.5(a) of the Agreement.
2
9
COMPANY. The term "Company" shall have the meaning specified
in the introduction to this Agreement.
CONSOLIDATED OR CONSOLIDATED. The term "Consolidated" or
"consolidated" shall mean, with reference to any term defined herein, that term
as applied to the accounts of the Company and all of its Subsidiaries, if any,
consolidated in accordance with generally accepted accounting principles.
CONVERSION STOCK. The term "Conversion Stock" shall mean the
shares of Common Stock issuable upon conversion of the Series A Preferred Stock.
DEFAULT. The term "Default" shall mean an event or condition
which with the passage of time or giving of notice, or both, would become an
Event of Default.
DEFAULTER'S PREFERRED STOCK. The term "Defaulter's Preferred
Stock" shall have the meaning specified in Section 3.1 of this Agreement.
DEFAULTING PURCHASER. The term "Defaulting Purchaser" shall
mean a Purchaser which fails to purchase any additional Series A Preferred Stock
pursuant to a Capital Call.
DELINQUENCY DATE. The term "Delinquency Date" shall mean the
date which is 15 days after the date when the payment is due for any additional
Series A Preferred Stock required to be purchased by a Purchaser pursuant to the
Purchaser's Additional Preferred Stock Subscription Obligation.
DISTRIBUTION. The term "Distribution" shall mean (a) the
declaration or payment of any dividend of cash or property on or in respect of
any shares of any class of capital stock of the Company; (b) the purchase,
redemption or other retirement of any shares of any class of capital stock of
the Company, directly or indirectly or otherwise; or (c) any other distribution
on or in respect of any shares of any class of capital stock of the Company.
EMPLOYEE BENEFIT PLAN. The term "Employee Benefit Plan" shall
mean any employee benefit plan within the meaning of Section 3(3) of ERISA
maintained or contributed to by the Company or any ERISA Affiliate, other than a
Multiemployer Plan.
ENVIRONMENTAL LAW. The term "Environmental Law" means any law,
regulation or ordinance relating to air or water quality, waste management,
hazardous or toxic substances or the protection of health or the environment.
ERISA. The term "ERISA" shall mean the federal Employee
Retirement Income Security Act of 1974, any successor statute of similar import,
and the rules and regulations thereunder, collectively and as from time to time
amended and in effect.
ERISA AFFILIATE. The term "ERISA Affiliate" shall mean any
Person which is treated as a single employer with the Company under ss.414 of
the Code.
3
10
ERISA REPORTABLE EVENT. The term "ERISA Reportable Event"
shall mean a reportable event with respect to a Guaranteed Pension Plan within
the meaning of ss.4043 of ERISA and the regulations promulgated thereunder.
EVENTS OF DEFAULT. The term "Events of Default" shall have
the meaning specified in Section 8.1 of this Agreement.
EXCHANGE ACT. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, or any successor federal statute, and the rules
and regulations of the Securities and Exchange Commission thereunder, as may be
amended from time to time.
FAMILY MEMBERS. The term "Family Members" shall mean, as
applied to any individual, any spouse, child, grandchild, parent, brother or
sister thereof or any spouse of any of the foregoing, and each trust created for
the benefit of one or more of such Persons and each custodian of property of one
or more such Persons.
FCC. The term "FCC" shall mean the Federal Communications
Commission.
FINANCING AGREEMENTS. The term "Financing Agreements" shall
mean this Agreement, the Series A Preferred Stock, the Founders' Warrants, the
Stockholders' Agreement, the Registration Rights Agreement and any and every
other present or future instrument or agreement from time to time entered into
between the Company and the Purchasers or any other holder of the Series A
Preferred Stock which relates to this Agreement, all as from time to time
amended or modified, and all statements, reports or certificates delivered by or
on behalf of the Company to you or any other holder of the Series A Preferred
Stock in connection herewith or therewith.
FOUNDERS' WARRANTS. The term "Founders' Warrants" shall mean
the warrants, substantially in the form of Exhibit F hereto, to be issued to
members of the Company's senior management team to acquire during the five-year
period after the Closing up to 300,000 shares of the Common Stock of the Company
at $3.00 per share.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR GAAP. The terms
"generally accepted accounting principles" or "GAAP" shall mean accounting
principles which are (a) consistent with the principles promulgated or adopted
by the Financial Accounting Standards Board and its predecessors, in effect from
time to time and (b) applied on a basis consistent with prior periods.
GUARANTEED PENSION PLAN. The term "Guaranteed Pension Plan"
shall mean any employee pension benefit plan within the meaning of ss. 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.
4
11
HAZARDOUS MATERIALS. The term "Hazardous Materials" shall
mean, collectively, (a) any petroleum or petroleum products, flammable
explosives, radioactive materials, friable asbestos, urea formaldehyde foam
insulation, and transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls (PCBs), (b) any chemicals or other
materials or substances as included in the definition of "hazardous substance",
"hazardous waste", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", toxic substances", "toxic pollutants",
"contaminants", "pollutants" or words of similar import under any Environmental
Law; and (c) any other chemical or other material or substance, exposure to
which is now prohibited, limited or regulated under any Environmental Law.
INDEBTEDNESS. The term "Indebtedness" shall mean all
obligations, contingent and otherwise, which in accordance with generally
accepted accounting principles should be classified on the obligor's balance
sheet as liabilities, or to which reference should be made by footnotes thereto,
including without limitation, in any event and whether or not so classified: (i)
all debt and similar monetary obligations, whether direct or indirect; (ii) all
liabilities secured by any Lien existing on Property, whether or not the
liability secured thereby shall have been assumed; (iii) all guaranties,
endorsements and other contingent obligations whether direct or indirect in
respect of Indebtedness or performance of others, including any obligation to
supply funds to or in any manner to invest in, directly or indirectly, the
debtor, to purchase Indebtedness, or to assure the owner of Indebtedness against
loss, through an agreement to purchase goods, supplies, or services for the
purpose of enabling the debtor to make payment of the Indebtedness held by such
owner or otherwise, and (iv) obligations to reimburse issuers of any letters of
credit.
INSTITUTIONAL DIRECTORS. The term "Institutional Directors"
shall have the meaning given to such term in the Stockholders' Agreement.
INVESTMENT PERIOD. The term "Investment Period" shall mean
the period beginning with the Closing Date and ending on September 30, 1999.
INVESTMENTS. The term "Investments" shall mean (a) any
investment in shares of capital stock, evidence of Indebtedness or other
securities issued by any other Person, (b) any loan, advance, or extension of
credit to, or contribution to the capital of, any other Person, (c) any purchase
of the securities or business or integral part of the business of any other
Person, or commitment to make such purchase, and (d) any other investment in any
other Person; provided, however, that the term "Investment" shall not include
(i) trade and customer accounts receivable for services rendered in the ordinary
course of business and payable in accordance with customary trade terms, and all
letters of credit or other instruments securing the same, (ii) advances to
employees for travel expenses, drawing accounts and similar expenditures but
only to the extent that (A) each such advance is in an amount less than $2,000,
(B) the aggregate amount of such advances outstanding to any individual employee
at any particular time does not exceed $5,000, and (C) all such advances
outstanding at any particular time do not exceed $25,000, and (iii) stock or
other securities acquired in connection with the satisfaction or enforcement of
Indebtedness or claims due or owing to the Company or any of its Subsidiaries or
as security for any such Indebtedness or claim.
5
12
IRS. The term "IRS" shall have the meaning specified in
Section 4.18 hereof.
LIEN. The term "Lien" shall mean (a) any encumbrance,
mortgage, pledge, lien, charge or other security interest of any kind upon any
Property, or upon the income or profits therefrom; (b) any acquisition of or
agreement to have an option to acquire any Property or assets upon conditional
sale or other title retention agreement, device or arrangement (including a
capitalized lease); or (c) any sale, assignment, pledge or other transfer for
security by the Company or any of its Subsidiaries of any accounts, general
intangibles or chattel paper, with or without recourse.
MAJORITY HOLDERS. The term "Majority Holders" shall mean the
holders of at least 66-2/3% of the Series A Preferred Stock.
MULTIEMPLOYER PLAN. The term "Multiemployer Plan" shall mean
any multiemployer plan within the meaning of Section 3(37) of ERISA maintained
or contributed to by the Company or any ERISA Affiliate.
OPTION PLAN. The term "Option Plan" shall mean the Company's
1998 Stock Incentive Plan, substantially in the form of Exhibit G hereto,
pursuant to which as of the date hereof an aggregate of 1,000,000 shares of
Common Stock has been allocated and reserved for the grant of Awards thereunder.
PBGC. PBGC shall mean the Pension Benefit Guaranty
Corporation created by ss.4002 of ERISA and any successor entity or entities
having similar responsibilities.
PERMITTED INDEBTEDNESS. The term "Permitted Indebtedness"
shall have the meaning specified in Section 7.10 of this Agreement.
PERMITTED LIENS. The term "Permitted Liens" shall have the
meaning specified in Section 7.11 of this Agreement.
PERSON. The term "Person" shall mean an individual,
partnership, corporation, association, trust, joint venture, unincorporated
organization, and any government, governmental department or agency or political
subdivision thereof.
PREFERRED STOCK. The term "Preferred Stock" shall have the
meaning specified in Section 4.5(a) of this Agreement.
PROPERTY. The term "Property" shall mean the assets and
properties owned and/or operated by the Company and its Subsidiaries.
PUBLIC SALE. The term "Public Sale" shall mean any sale of
securities to the public pursuant to a public offering registered under the
Securities Act or to the public through a broker
6
13
or market-maker pursuant to the provisions of Rule 144 (or any successor rule)
adopted under the Securities Act or any other public offering not required to be
registered under the Securities Act.
PURCHASE PRICE. The term "Purchase Price" shall have the
meaning specified in Section 2.2 of this Agreement.
PURCHASERS. Each of the Persons listed on Exhibit A to this
Agreement, and any Person who becomes a party to this Agreement after the date
hereof pursuant to Article X of this Agreement.
REGISTRATION RIGHTS AGREEMENT. The term "Registration Rights
Agreement" shall mean the Registration Rights Agreement dated as of the date
hereof among the Company and the Purchasers substantially in the form of Exhibit
B hereto.
RELATED AGREEMENTS. The term "Related Agreements" shall mean
the Financing Agreements (other than this Agreement) and the Amended and
Restated Certificate of Incorporation of the Company attached as Exhibit D
hereto.
SBA. The term "SBA" shall have the meaning specified in
Section 6.1.10 of this Agreement.
SBIC INVESTOR. The term "SBIC Investor" shall have the meaning
specified in Section 6.1.10 of this Agreement.
SECURITIES ACT. The term "Securities Act" shall mean the
Securities Act of 1933, as amended, or any successor federal statute, and the
rules and regulations of the Securities and Exchange Commission thereunder, all
as the same shall be in effect at the time.
SERIES A PREFERRED STOCK. The terms "Series A Preferred Stock"
shall have the meaning specified in Section 4.5(a) of this Agreement.
SMALL BUSINESS ACT. The term "Small Business Act" shall have
the meaning specified in Section 6.1.10 of this Agreement.
STOCKHOLDERS' AGREEMENT. The term "Stockholders' Agreement"
shall mean the Stockholders' Agreement dated as of the date hereof among the
Company and all of its stockholders substantially in the form of Exhibit C
hereto.
SUBSEQUENT CLOSING. The term "Subsequent Closing" shall have
the meaning specified in Section 2.4 of this Agreement.
SUBSIDIARY. The term "Subsidiary" shall mean any Person in
which the Company shall at the time own directly or indirectly through another
Subsidiary at least a majority of its outstanding capital stock (or other shares
of beneficial interest) entitled to vote generally.
7
14
SUPERMAJORITY BOARD VOTE. The term "Supermajority Board Vote"
shall mean the affirmative vote of at least 66 2/3% of the members of the Board
of Directors present at a meeting at which a quorum is present, which vote shall
include the affirmative vote of at least four Institutional Directors, if there
are five Institutional Directors present at the meeting at which such vote
occurs or three Institutional Directors if there are four or three Institutional
Directors present at the meeting at which such vote occurs.
UNITED STATES BANKRUPTCY CODE. The term "United States
Bankruptcy Code" shall mean Title 11 of the United States Code as in effect from
time to time.
USRPHC. The term "USRPHC" shall have the meaning specified in
Section 4.32 of this Agreement.
ARTICLE II. SALE AND PURCHASE OF SERIES A PREFERRED STOCK ON THE CLOSING
DATE
SECTION 2.1. SALE AND PURCHASE OF SERIES A PREFERRED STOCK.
Subject to all of the terms and conditions hereof and in reliance on the
representations and warranties set forth or referred to herein, the Company
agrees to issue and sell to each Purchaser, and each Purchaser commits to
purchase, the shares of the Company's Series A Preferred Stock as set forth
opposite the name of such Purchaser on Exhibit A attached hereto. Exhibit A also
indicates the Series A Preferred Stock to be purchased on the Closing Date.
SECTION 2.2. PURCHASE PRICE. The per share purchase price for
the Series A Preferred Stock, whether purchased on the Closing Date or pursuant
to a Capital Call, is $3.00 (the "Purchase Price").
SECTION 2.3. CLOSING. The closing of the purchase and sale of
the Series A Preferred Stock initially to be purchased by the Purchasers
hereunder (the "Closing") will take place at the offices of the Company, 00000
Xxxxxxxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxx 00000, at 10:00 a.m.
C.S.T. on November 12, 1998, or at such other time, date and place as the
parties hereto may agree upon (the "Closing Date"). At the Closing, the Company
will deliver to the Purchasers certificates evidencing the shares of Series A
Preferred Stock to be purchased on the Closing Date against payment of the
Purchase Price for all such shares in immediately available funds. Each of the
Series A Preferred Stock to be purchased on the Closing Date will be issued to
the appropriate Purchaser on or before the Closing Date and registered in such
Purchaser's name in the Company's records in the amounts designated in Section
2.1 hereof.
SECTION 2.4. POSSIBLE SUBSEQUENT SALES OF SERIES A PREFERRED
STOCK. At any time on or before December 18, 1998, the Company may sell, in one
or more closings (each a "Subsequent Closing") up to the balance of the
authorized shares of Series A Preferred Stock not sold or subscribed for at the
Closing to the Persons listed in Part II of Exhibit A hereto. At any Subsequent
Closing, (i) the Person purchasing such shares (an "Additional Purchaser") shall
execute a counterpart signature page to this Agreement and the other Financing
Agreements to
8
15
which the Purchasers are a party and thereupon would be deemed a Purchaser
hereunder, (ii) each Additional Purchaser shall purchase the same portion of its
aggregate subscription obligation as the original Purchasers have purchased of
their respective aggregate subscription obligations (as of the date of such
Subsequent Closing) and (iii) the Company shall cause the exhibits and schedules
to this Agreement and such other agreements to be amended to reflect the
purchase made by the Additional Purchaser(s) at each Subsequent Closing. All
such sales shall be made on the terms and conditions of this Agreement,
including satisfaction of the closing conditions set forth herein.
SECTION 2.5. USE OF PROCEEDS. The proceeds from the sale of
the Series A Preferred Stock purchased hereunder will be used to pay for
expenses related to the Closing, for working capital purposes and to acquire or
build telecommunications networks in such markets as shall be determined by the
Board of Directors. The Company covenants and agrees to provide the Purchasers
with such information as they may reasonably request to verify the use of the
proceeds from the sale of the Series A Preferred Stock.
ARTICLE III. ADDITIONAL PURCHASES OF SERIES A PREFERRED STOCK
SECTION 3.1. ADDITIONAL PREFERRED STOCK SUBSCRIPTION
OBLIGATION OF PURCHASERS.
(a) Until the end of the Investment Period, each Purchaser
shall be required to satisfy, if, as and when from time to time requested by the
Company, in accordance with the terms and conditions of this Article III, its
Additional Preferred Stock Subscription Obligation. The Board of Directors may,
with a Supermajority Board Vote, request (a "Capital Call") each Purchaser to
satisfy such Additional Preferred Stock Subscription Obligations from time to
time on a pro rata basis in two substantially equal installments, to the extent
funds are necessary to make any Acquisitions by the Company, to pay operating,
capital or other expenses of the Company, to fund reasonable reserves which the
Board of Directors deems appropriate to establish or for such other purpose as
the Board of Directors deems necessary, consistent with the purposes of the
Company. No such request shall be made which would require a Purchaser to
purchase pursuant to its Additional Preferred Stock Subscription Obligation less
than a whole share of Series A Preferred Stock. The Board of Directors may not
make a Capital Call more than once in any 30-day period, and shall make both
Capital Calls prior to the end of the Investment Period.
(b) The Additional Preferred Stock Subscription Obligation
shall be satisfied by each such Purchaser, by wire transfer of immediately
available funds, in accordance with a written notice from the Company, which
notice shall state the amount required from each Purchaser and the date when
such Additional Preferred Stock Subscription Obligation is to be paid to the
Company (the "Capital Call Closing Date"). The Capital Call Closing Date shall
be a date which is not less than thirty-five (35) days after receipt of such
written notice.
(c) Subject to the provisions of this Section 3.1(c), if a
Purchaser who is
9
16
required to do so fails to satisfy all or any portion of its Additional
Preferred Stock Subscription Obligation by the Delinquency Date, and so long as
all of the conditions set forth in Section 3.2 to such Purchaser's obligations
have been satisfied, such Purchaser shall be deemed a Defaulting Purchaser, and
the Board of Directors may elect in its sole discretion to (i) bring an action
to enforce such Purchaser's obligation to satisfy its Additional Preferred Stock
Subscription Obligation, including interest thereon from the time such payment
was due until paid at the lesser of (A) 18% per annum, compounded on a monthly
basis to the extent permitted by law, or (B) the highest rate permitted by law,
and/or (ii) require the Defaulting Purchaser to exchange any shares of Common
Stock or Preferred Stock then held by the Defaulting Purchaser for shares of a
new series of junior preferred stock of the Company (the "Defaulter's Preferred
Stock"). The Defaulter's Preferred Stock shall (i) be junior to all Preferred
Stock in liquidation, (ii) shall not be entitled to payment of any dividends,
(iii) shall have a liquidation value of $3.00 per share, (iv) unless and until
the Defaulting Purchaser shall have satisfied its Additional Preferred Stock
Subscription Obligation, together with interest thereon at the rate provided
above, shall not be convertible or exchangeable for any other shares of the
capital stock of the Company or redeemable for cash or otherwise, and (v) shall
have no voting rights or any rights as a holder of Series A Preferred Stock
hereunder, under the Stockholders' Agreement or under the Registration Rights
Agreement. All Purchasers hereby agree to vote their shares of stock of the
Company to carry out the provisions of this Section 3.1(c), including, without
limitation, voting to authorize and issue the Defaulter's Preferred Stock as
necessary.
SECTION 3.2. CONDITIONS TO ADDITIONAL PREFERRED STOCK
SUBSCRIPTION OBLIGATION. Each Purchaser's obligation to satisfy all or any
portion of its Additional Preferred Stock Subscription Obligation pursuant to
this Agreement is subject to satisfaction of the following conditions precedent
on or prior to the Capital Call Closing Date:
(a) Such Purchaser shall have received from the Company
copies, certified by a duly authorized officer thereof to be true and
complete as of the Capital Call Closing Date, of the resolutions
adopted by a Supermajority Board Vote approving the Capital Call;
(b) None of the representations of the Company contained in
Article IV of this Agreement shall have been untrue or incorrect as of
the date of this Agreement to the extent that such untrue or incorrect
representation has had or would reasonably be expected to have a
material adverse effect on the assets, liabilities, financial condition
or prospects of the Company and its Subsidiaries taken as a whole;
(c) The purchase of the Series A Preferred Stock by such
Purchaser shall not be prohibited by any applicable law or governmental
order or regulation; and
(d) Such Purchaser shall have received duly executed stock
certificates representing the Series A Preferred Stock being purchased
pursuant to the Capital Call.
10
17
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchasers to enter into this Agreement
and to purchase the Series A Preferred Stock, the Company hereby represents and
warrants as of the date hereof that:
SECTION 4.1. ORGANIZATION AND GOOD STANDING. The Company is
validly existing and in good standing under the laws of the State of Delaware
and in each jurisdiction in which it is required to be qualified as a foreign
corporation. The Company is not required to be qualified as a foreign
corporation in any jurisdiction other than those listed on Schedule 4.1. The
Company has the power to own its properties and to carry on its business as now
conducted and as proposed to be conducted.
SECTION 4.2. AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and each Related Agreement, the
issuance and sale by the Company of the Series A Preferred Stock hereunder and
the issuance of the Conversion Stock upon conversion of the Series A Preferred
Stock, (a) are within its corporate power and authority, (b) have been duly
authorized by all necessary corporate, shareholder and other proceedings, and
(c) do not conflict with or result in any breach of any provision of, or result
in the creation of any Lien upon any of the Property pursuant to, the
Certificate of Incorporation or by-laws of the Company or any law, regulation,
order, judgment, writ, injunction, license, permit, agreement or instrument, the
non-compliance with which would materially adversely affect the business,
operations or financial condition of the Company.
SECTION 4.3. ENFORCEABILITY. This Agreement and each of the
Related Agreements, the issuance and sale by the Company of the Series A
Preferred Stock hereunder and the issuance of the Conversion Stock upon
conversion of the Series A Preferred Stock, constitute legally binding
obligations of the Company enforceable against it in accordance with the
respective terms and provisions hereof and thereof, except to the extent (a)
such enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors' rights, (b) that the availability of the remedy of specific
performance or injunctive or other equitable relief is subject to the discretion
of the court before which any proceeding therefor may be brought and (c) the
enforceability of the indemnity and contribution provisions contained in the
Registration Rights Agreement may be limited under federal securities laws.
SECTION 4.4. CONSENTS. Except as set forth in Schedule 4.4
hereto, the execution, delivery and performance by the Company of this Agreement
and each Related Agreement, the purchase and sale of the Series A Preferred
Stock hereunder and the issuance of the Conversion Stock upon conversion of the
Series A Preferred Stock, do not require the approval or consent of, or any
filing with, any governmental authority or agency or any other Person.
SECTION 4.5. CAPITALIZATION. (a) Capital Stock. The authorized
capital stock of the Company consists solely of 60,000,000 shares of common
stock, $.01 par value per share (the "Common Stock"), and 50,000,000 shares of
Preferred Stock, $.01 par value per share (the "Preferred Stock"), of which
30,200,000 shares are designated as Series A Convertible Preferred
11
18
Stock (the "Series A Preferred Stock"). Of such authorized shares, 5,200,000
shares of Common Stock are issued and outstanding. Schedule 4.5 sets forth a
table indicating the pro forma capitalization of the Company after giving effect
to the issuance of the Series A Preferred Stock and the consummation of all
other transactions contemplated by this Agreement. All of such issued shares of
Common Stock have been duly authorized, are validly issued and outstanding, are
fully paid and non-assessable and were issued in compliance with applicable
state and federal securities laws. All Series A Preferred Stock have been duly
authorized, and, upon payment therefor pursuant to the terms of this Agreement,
will be validly issued and outstanding, fully paid and non-assessable.
(a) Options, Etc. Except for each Purchaser's Additional
Preferred Stock Subscription Obligation and shares of Common Stock issuable
pursuant to the Option Plan and the Founders' Warrants, there are no outstanding
rights (either preemptive or other) or options to subscribe for or purchase from
the Company, or any warrants or other agreements providing for or requiring the
issuance by the Company of, any capital stock or any securities convertible into
or exchangeable for, or exercisable into, its capital stock.
(b) Reservation, Etc. Sufficient shares of authorized but
unissued Series A Preferred Stock have been reserved by appropriate corporate
action for the Purchasers' Additional Preferred Stock Subscription Obligations.
The issuance of such additional shares will not be subject to preemptive rights
in any present or future stockholders of the Company and will not conflict with
any provision of any agreement to which the Company is a party or by which it is
bound, and such additional shares, when issued and paid for upon compliance with
a Capital Call, will be duly authorized, validly issued and outstanding, fully
paid and non-assessable. The Conversion Stock has been duly and validly reserved
for issuance.
SECTION 4.6. SUBSIDIARIES. Schedule 4.6 correctly sets forth
the name of each Subsidiary of the Company, the jurisdiction of its
incorporation and the Persons owning the outstanding capital stock of each such
Subsidiary. Each such Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to own its properties and carry on its businesses as
now being conducted and is qualified to do business in every jurisdiction in
which its ownership of its property or the conduct of its business requires such
qualification. All of the outstanding shares of capital stock of each such
Subsidiary are validly issued, fully paid and non-assessable. Except for such
Subsidiaries, the Company does not own any legal and/or beneficial interest in
any corporation, partnership, business trust, joint venture or other trade or
business enterprise.
SECTION 4.7. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) Each Purchaser has heretofore been furnished with complete and correct
copies of each of the following:
(i) the unaudited balance sheet of the Company
as of September 30, 1998 ("Balance Sheet Date"); and
12
19
(ii) the pro forma balance sheet of the Company and
its Subsidiaries as of the Balance Sheet Date, taking into
account the issuance of all of the Series A Preferred Stock as
contemplated hereby.
(b) The Company's unaudited balance sheet as of the Balance
Sheet Date was prepared in accordance with generally accepted accounting
principles and fairly presents the financial condition of the Company as at the
Balance Sheet Date. Neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature, whether absolute, accrued, contingent
or otherwise, which are not described in such unaudited balance sheet except for
liabilities that may have arisen in the ordinary and usual course of business
since the Balance Sheet Date and that individually or in the aggregate do not
have and could not reasonably be expected to have a material adverse effect on
the Company and its Subsidiaries, taken as a whole, and other liabilities and
obligations expressly disclosed in the Schedules to this Agreement.
(c) The pro forma balance sheet of the Company referred to in
Section 4.7(a)(ii) has been prepared by management of the Company on a
reasonable basis taking into consideration the effect of the transactions
contemplated hereby as of the Closing Date and none of the Company and its
management is aware of any fact which casts doubt on the accuracy or
completeness thereof. After giving effect to the transactions contemplated by
the Related Agreements, neither the Company nor any of its Subsidiaries will
have any material liabilities, contingent or otherwise, which are not referred
to in such balance sheet or in the notes thereto other than liabilities not
required to be disclosed in accordance with generally accepted accounting
principles and liabilities arising under the Related Agreements.
SECTION 4.8. ABSENCE OF CERTAIN DEVELOPMENTS. There has been
no material adverse change in the business, properties, financial condition or
prospects of the Company and its Subsidiaries, taken as a whole, since the
Balance Sheet Date. Prior to and at the Closing Date, the Company will not have
conducted any business or incurred any liabilities other than those arising in
connection with its organization and the transactions contemplated hereby and by
the Related Agreements.
SECTION 4.9. INDEBTEDNESS AND LIENS. Neither the Company nor
any of its Subsidiaries has any Indebtedness or Liens upon any of its Property
other than Permitted Indebtedness and Permitted Liens.
SECTION 4.10. INDEBTEDNESS TO AND FROM OFFICERS, DIRECTORS AND
OTHERS. Except as set forth on Schedule 4.10 hereto, neither the Company nor any
of its Subsidiaries is indebted to any director, officer, employee or consultant
of the Company or any of its Subsidiaries or to any other Affiliate of the
Company, except for amounts due as normal salaries, fees or reimbursement of
ordinary business expenses. Except as set forth on Schedule 4.10, no director,
officer, employee or consultant of the Company or any of its Subsidiaries and no
other Affiliate of the Company is now, or on the Closing Date will be, indebted
to the Company or any Subsidiary of the Company except for ordinary business
expense advances.
13
20
SECTION 4.11. LICENSES, ETC. Schedule 4.11 sets forth a
listing of all franchises, patents, patent applications, patent licenses, patent
rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, licenses, permits, authorizations, certificates of convenience and
necessity, operating rights and other rights as are necessary for the conduct of
the Company's business as currently conducted. All of the foregoing are in full
force and effect, and the Company is in compliance with the foregoing without
any known conflict with the valid rights of others which could affect or impair
in a material manner the business, assets, financial condition or prospects of
the Company. The Company does not believe it is or will be necessary to utilize
any inventions, trade secrets or proprietary information of any of its employees
made prior to their employment by the Company, except for such inventions, trade
secrets or proprietary information that have been assigned to the Company. To
the Company's knowledge, the conduct of the Company's business has not infringed
or misappropriated and does not infringe or misappropriate any proprietary
rights of other persons or entities, nor to the Company's knowledge, would any
future conduct as presently contemplated infringe any proprietary rights of
other persons or entities.
SECTION 4.12. SOLVENCY. Prior to and taking into account the
consummation of the financing transactions contemplated by this Agreement and
the Related Agreements, the Company is solvent, and has tangible and intangible
assets having a fair value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured, and its
capital is not unreasonably small for the conduct of its business as presently
contemplated and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature.
SECTION 4.13. TITLE TO ASSETS; LEASES. The Company owns and
leases no real property except for its leases of office facilities described on
Schedule 4.13. Except as disclosed on Schedule 4.13, the Company enjoys peaceful
and undisturbed possession, and is in compliance with the terms, of such leases
and of all leases of personal property, except where failure to enjoy such
possession or such noncompliance would not have a material adverse effect upon
the business, assets, prospects or financial condition of the Company and all
such leases are valid and in full force and effect.
SECTION 4.14. LITIGATION. There is no litigation, action, suit
or proceeding, at law or in equity, or any proceeding before any court, board or
other governmental or administrative agency or any arbitrator pending or, to the
knowledge of the Company, after due inquiry, threatened, involving the Company
and its Subsidiaries. No judgment, decree or order of any court, board or other
governmental or administrative agency or arbitrator has been issued against or
binds the Company or its assets which has or may have any material adverse
effect on the business, assets, financial condition or prospects of the Company
and its Subsidiaries, taken as a whole.
SECTION 4.15. TAX RETURNS. The Company has filed all tax
returns and reports which are required to be filed by it with any foreign,
federal, state or local governmental authority or agency and has paid, or made
adequate provision for the payment of, all assessments received and all taxes
which have or may become due under applicable foreign, federal, state or local
14
21
governmental law or regulations with respect to the periods in respect of which
such returns and reports were filed. The Company knows of no additional
assessments since the date of such returns and reports for which adequate
reserves appearing on the balance sheet referred to in Section 4.7(a)(ii) have
not been established. The Company has made adequate provisions for all current
taxes.
SECTION 4.16. DEFAULTS. Except as set forth in Schedule 4.16
hereto, neither the Company nor any of its Subsidiaries is in default under any
provisions of its Certificate of Incorporation or by-laws or under any
provisions of any franchise, contract, agreement, lease or other instrument to
which it is a party or by which it or its property is bound, or in violation of
any law, judgment, decree or governmental order, rule or regulation, which
default or violation could affect adversely in any material manner the business,
assets, prospects or financial condition of the Company and its Subsidiaries,
taken as a whole. Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor compliance with its
terms and conditions and with the terms and provisions of the Financing
Agreements, will conflict or result in breach of, or constitute a default under,
any of the material terms, obligations, covenants, conditions or provisions of
any restriction or of any material indenture, mortgage, deed of trust, pledge,
bank loan or credit agreement, charter, by-law or any other material agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective
properties may be bound or affected, or any judgment, order, writ, injunction,
decree or demand of any court, arbitrator, governmental agency or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any property or asset of the Company or any of its Subsidiaries.
SECTION 4.17. BURDENSOME OBLIGATIONS. Neither the Company nor
any of its Subsidiaries is party to or bound by any agreement, deed, lease or
other instrument which is so unusual or burdensome as to affect or impair
materially and adversely the business, assets, prospects or financial condition
of the Company and its Subsidiaries, taken as a whole, in the foreseeable
future.
SECTION 4.18. EMPLOYEE BENEFIT PLANS. Neither the Company nor
any of its Subsidiaries maintains any Employee Benefit Plan, except as set forth
on Schedule 4.18, and neither the Company nor any of its Subsidiaries has ever
maintained or contributed to any Employee Benefit Plan with respect to which the
Company is or was required to file Internal Revenue Service ("IRS") Form 5500,
and neither the Company nor any of its Subsidiaries contributes to or has ever
contributed to any "multiemployer plan," as such term is defined in Section 3 of
ERISA.
SECTION 4.19. REPRESENTATIONS AND WARRANTIES UNDER RELATED
AGREEMENTS. All representations and warranties made by the Company in any of the
Related Agreements or in the certificates delivered in connection therewith are
true and correct in all material respects as of the date hereof with the same
force and effect as though made on and as of the date hereof, and such
representations and warranties are hereby confirmed to you and made
representations and warranties of the Company hereunder as fully as if set forth
herein. To the best of the Company's knowledge, all representations and
warranties made in the Related Agreements by or on behalf of
15
22
any party thereto other than the Company and the Purchasers are true and correct
in all material respects.
SECTION 4.20. EMPLOYMENT CONTRACTS, LABOR RELATIONS. Except as
set forth on Schedule 4.20, neither the Company nor any of its Subsidiaries is a
party to any written employment agreement, arrangement or understanding with any
of its officers or employees and there are no collective bargaining agreements
covering any of the employees of the Company or any of its Subsidiaries. Neither
the Company, nor to the Company's knowledge, any of its employees, is subject to
any noncompete, nondisclosure, confidentiality, employment, consulting or
similar agreements relating to, affecting or in conflict with the present or
proposed business activities of the Company (other than agreements between the
Company and its present and former employees). No consent of any union (or any
similar group or organization) is required in connection with the consummation
of the transactions contemplated hereby or by the Related Agreements. Except as
disclosed in Schedule 4.20, there are no pending, threatened or anticipated (a)
employment discrimination charges or complaints against or involving the Company
or any of its Subsidiaries before any federal, state, or local board,
department, commission or agency, (b) unfair labor practice charges or
complaints, disputes or grievances affecting the Company or any of its
Subsidiaries, (c) union representation petitions respecting the employees of the
Company or any of its Subsidiaries, (d) efforts being made to organize any of
the employees of the Company or any of its Subsidiaries or (e) strikes, slow
downs, work stoppages, or lockouts or threats thereof affecting the Company or
any of its Subsidiaries.
SECTION 4.21. LOCATION OF OFFICE. The Company's executive
offices and the location where its books and records are kept is at the address
set forth above.
SECTION 4.22. NECESSARY PROPERTY. Except as may be set forth
in Schedule 4.22 hereto, the properties and assets owned, leased by or licensed
to the Company and its Subsidiaries constitute all of the real and personal
properties, tangible and intangible, which are necessary, used or useful in the
conduct of the businesses of the Company and its Subsidiaries in the manner and
to the extent presently conducted. Except as may be set forth in Schedule 4.22,
no other material real or personal properties are required for the conduct of
the businesses of the Company and its Subsidiaries as presently conducted.
SECTION 4.23. TRANSACTION COSTS. Except as set forth on
Schedule 4.23, there are no Transaction Costs (as defined below) that will be
payable by the Company with respect to the offer, issue and sale of the Series A
Preferred Stock. The term "Transaction Costs" shall mean all of the costs, fees,
and expenses incurred by the Company in connection with the offer, issue and
sale of the Series A Preferred Stock, including without limitation, broker's,
finder's or placement fees or commissions, attorneys' fees and fees of other
professionals.
SECTION 4.24. GOVERNMENTAL REGULATIONS. The Company is not a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is the Company a "registered investment
company", or an "affiliated person" or a "principal
16
23
underwriter" of a "registered investment company", as such terms are defined in
the Investment Company Act of 1940, as amended.
SECTION 4.25. SMALL BUSINESS CONCERN. The Company, together
with its "affiliates" (as defined in 13 CFR 121.103), qualifies as a "small
business concern" within the meaning of the Small Business Investment Act of
1958, as amended, and as a "small concern" within the meaning of the rules and
regulations thereunder pertaining to financings by small business investment
companies (13 CFR 201). The Company conducts its business in all respects and
maintains its properties and facilities in such a manner that the financing and
financial assistance provided by the Purchasers will comply with 13 CFR 107.720.
SECTION 4.26. DISCLOSURE. No representation, warranty or
statement made in this Agreement, any Related Agreement, or any agreement,
certificate, statement or document furnished by or on behalf of the Company in
connection herewith or therewith contains any untrue statement of material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which they were
made, not misleading.
SECTION 4.27. GOVERNMENTAL LICENSES. Schedule 4.27 describes
and refers to the types of licenses, consents, permits, approvals and
authorizations of public or governmental bodies including, without limitation,
the FCC, and the state, counties and municipalities in which the Company's
businesses will be located, which will be required in connection with and be
material to the installation, conduct and operation of the Company's business
(collectively referred to as the "Authorizations"). As of the date hereto, no
Authorizations have been issued to the Company or any of its Subsidiaries.
SECTION 4.28. COMPLIANCE WITH LAWS. The Company and each of
its Subsidiaries are in compliance in all material respects with and have so
complied with, and are not in any material respect in default under or in
violation of, and the operation of the businesses of the Company and its
Subsidiaries do not contravene in any material respect, any statute, law
(including environmental or employment laws), ordinance, decree, order, rule or
regulation of any governmental body applicable to the Company or any of its
Subsidiaries or any of their respective businesses, including, without
limitation, the rules and regulations of the FCC.
SECTION 4.29. ACQUISITION AGREEMENTS. Except for the
transactions contemplated by this Agreement and the Related Agreements, and
except as set forth in Schedule 4.29, neither the Company nor any of its
Subsidiaries is a party to, bound by or the subject of, any agreement or
understanding relating to the purchase or investment by any Person in the assets
or stock of the Company or any of its Subsidiaries, and neither the Company nor
any of its Subsidiaries is a party to, bound by or the subject of, any agreement
or understanding relating to the purchase of or investment by the Company or any
of its Subsidiaries in the assets or stock of any Person.
SECTION 4.30. MATERIAL CONTRACTS AND OBLIGATIONS. Attached
hereto as Schedule 4.31 is a true, complete and accurate list, categorized by
subject matter, of all of the
17
24
following outstanding contracts, agreements, plans, leases and commitments
entered into by the Company or any of its Subsidiaries which are in writing or,
to the best of the Company's knowledge, have been orally agreed to by the
Company or any of its Subsidiaries:
(i) all purchase orders or contracts for the
purchase of materials, products or supplies which are for a term of more than 6
months, or involve aggregate payments by the Company or any of its Subsidiaries
of more than $10,000, or which were entered into other than in the ordinary
course of business of the Company and its Subsidiaries;
(ii) all written employment, consulting or service
contracts with any stockholder, director, officer, consultant, advisor or
employee of the Company, any person related by blood or marriage to any such
Person or any other Affiliate of the Company, and any such oral contracts which
are not terminable at will by the Company or any of its Subsidiaries;
(iii) all plans, contracts or arrangements providing
for stock options or stock purchases, bonuses, pensions, deferred or incentive
compensation, retirement or severance payments, profit-sharing, insurance or
other benefit plans or programs for any stockholder, director, officer,
consultant, advisor or employee of the Company or any of its Subsidiaries;
(iv) all contracts for construction or for the
purchase of real estate, improvements, fixtures, equipment, machinery and other
items which under GAAP constitute capital expenditures;
(v) all contracts relating to the rental or use of
equipment, vehicles, other personal property or fixtures;
(vi) all contracts relating in any way to direct
or indirect Indebtedness for borrowed money or evidenced by a bond, debenture,
note or other evidence of Indebtedness (whether secured or unsecured) of or to
the Company or any of its Subsidiaries, and all Liens with respect to any
Property used or owned by the Company or any of its Subsidiaries;
(vii) all contracts substantially restricting the
Company or any of its Subsidiaries from engaging in any line of business or
competing with any Person or in any geographical area, or from using or
disclosing any information in its possession (other than routine supplier and
customer confidentiality agreements);
(viii) all license agreements, either as licensor or
licensee;
(ix) all joint venture contracts and agreements
involving a sharing of profits;
(x) all contracts, commitments or shared services
arrangement with any Affiliateand all contracts or commitments not made in the
ordinary course of its business; and
18
25
(xi) all other contracts, except those which are
(A) cancellable on 30 days' or less notice without any penalty or other
financial obligation or (B) if not so cancellable, involve annual aggregate
payments by or to the Company or any of its Subsidiaries of $5,000 or less.
Except as set forth on Schedule 4.30, all contracts,
agreements, plans, leases and commitments required to be disclosed to the
Purchasers pursuant to this Section 4.30 are valid, binding and in full force
and effect as to the Company and its Subsidiaries, and none of the Company or
any of its Subsidiaries or, to the best of the Company's knowledge, any other
party thereto, is in material breach or material violation of, or material
default under, nor is there any reasonable basis for a claim of material breach
or violation by the Company or any of its Subsidiaries of, or default by the
Company or any of its Subsidiaries under, the terms of any such contract,
agreement, plan, lease or commitment, and no event has occurred which
constitutes or, with the lapse of time or the giving of notice or both, would
constitute such a material breach, violation or default by the Company or any of
its Subsidiaries thereunder.
SECTION 4.31. ENVIRONMENTAL AND SAFETY LAWS. To the Company's
knowledge, neither the Company nor any of its Subsidiaries is in violation of
any applicable Environmental Law or any applicable statute, law or regulation
relating to occupational health and safety and to the Company's knowledge, no
material expenditures are or will be required in order to comply with any such
existing statute, law or regulation.
SECTION 4.32. INVESTMENTS IN REAL PROPERTY HOLDING INTERESTS.
The Company's capital stock does not constitute a United States real property
interest as that term is defined in Section 897(c)(1)(A)(ii) of the Code. The
preceding representation is based on a determination by the Company that the
Company is not and, since its inception, has not been a United States real
property holding corporation (as that term is defined in Section 897(c)(2) of
the Code) (a "USRPHC"). From time to time, upon request of any Purchaser, the
Company shall make a determination as to its status as a USRPHC. If at any time
in the future the Company should become a USRPHC, the Company shall, as promptly
as possible, notify each Purchaser of such change in status.
SECTION 4.33. UNRELATED BUSINESS TAXABLE INCOME. Any gross
income derived by the Purchasers from the Series A Preferred Stock and the
Conversion Stock, as holders thereof, shall be in the form of dividends, if any,
and capital gains and losses from the disposition of property, but only such
dividends and capital gains and losses that are not included under Section
512(b)(4) of the Code in calculating unrelated business taxable income. This
Section 4.33 shall not be deemed to apply to (i) any compensation (in cash,
stock or other form), received by any designee of a Purchaser in his or her
capacity as a director of the Company, that is transferred to such Purchaser,
(ii) any income included under Section 512(b)(4) of the Code as a result of
acquisition indebtedness incurred by any Purchaser in connection with the
purchase of an interest in the Company, (iii) any income derived by any
Purchaser from the Company with respect to which such Purchaser has expressly
waived in writing the application of the provisions of this Section 4.33, or
(iv) any income derived by any Purchaser pursuant to the reimbursement of
expenses provisions hereof.
19
26
ARTICLE V. PURCHASERS' INVESTMENT REPRESENTATIONS AND WARRANTIES
Each Purchaser hereby represents and warrants to the Company
and to the directors, officers and control persons (within the meaning of the
Securities Act) of the Company as follows:
(i) Such Purchaser recognizes that the Company has
little financial and operating history and that an investment in the Company is
highly speculative and involves significant risks, including, without
limitation, those disclosed on Schedule 5.1 hereto.
(ii) Such Purchaser has been afforded the
opportunity to ask questions and to receive answers concerning the terms and
conditions of the purchase of Series A Preferred Stock and to obtain any
additional information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of the
information set forth in this Agreement. The Company has responded to all
inquiries that such Purchaser has made of it concerning the Company, its
business, financial condition and prospects or any other matter relating to the
operations of the Company and the offering and sale of the Series A Preferred
Stock. No oral or written statement or inducement which is contrary to the
information set forth in this Agreement has been made by or on behalf of the
Company to such Purchaser.
(iii) Such Purchaser is an "accredited investor"
(as defined in Rule 501 of Regulation D promulgated under the Securities Act)
and has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Series A
Preferred Stock.
(iv) Such Purchaser (a) has adequate means of
providing for its current needs and possible contingencies, (b) has no need for
liquidity in its investment, (c) is able to bear the economic risks of such
investment in the Series A Preferred Stock, and (d) at the present time, can
afford a complete loss of such investment.
(v) Such Purchaser is purchasing the Series A
Preferred Stock for its own account, for investment purposes, and not for
distribution, assignment or resale to others; provided, however, that nothing
contained herein shall prevent any Purchaser and subsequent holders of Series A
Preferred Stock from transferring such securities in compliance with the
provisions of Article XI hereof. No other Person has any direct or indirect
beneficial interest in such Series A Preferred Stock, except as disclosed by
such Purchaser to the Company and except investors in such Purchaser.
(vi) Such Purchaser understands that (a) there is
and will be no market for the Series A Preferred Stock, (b) the sale of the
Series A Preferred Stock has not been and will not be registered under the
Securities Act or any state securities laws in reliance on the exemption for
nonpublic offerings provided by Section 4(2) of the Securities Act and
Regulation
20
27
D promulgated thereunder and analogous state securities law provisions, and must
be held indefinitely unless they are subsequently registered under the
Securities Act and applicable state securities laws or an exemption from such
registration is available, (c) except as expressly provided in the Registration
Rights Agreement, the Company is under no obligation to register the Series A
Preferred Stock on such Purchaser's behalf or to assist it in complying with any
exemption from registration, and (d) none of the Series A Preferred Stock may be
sold pursuant to Rule 144 promulgated by the Securities and Exchange Commission
pursuant to the Securities Act unless all of the conditions of that Rule are
met.
(vii) Such Purchaser understands that no Federal or
state agency has passed upon the Series A Preferred Stock or made any finding or
determination as to the fairness of the investment or any recommendation or
endorsement of the Series A Preferred Stock. Such Purchaser will not transfer
the Purchased Securities without registering or qualifying the same under
applicable securities laws unless such transfer is exempt under such laws.
(viii) Such Purchaser has not been furnished any
offering literature other than this Agreement, the written materials described
in Schedule 5.2 hereto and other materials which the Company may have provided
at the request of such Purchaser, and such Purchaser has relied only on the
information contained in this Agreement, the written materials described in
Schedule 5.2 hereto and the other information furnished or made available to
such Purchaser by the Company, as described in subparagraph (ii) above.
(ix) Such Purchaser has its principal place of
business at the address set forth on the Schedule of Purchasers attached hereto.
(x) Such Purchaser certifies, under penalties of
perjury, (a) that the social security or federal taxpayer identification number
shown on the Schedule of Purchasers is true and complete and (b) that such
Purchaser is not subject to backup withholding either because such Purchaser has
not been notified that such Purchaser is subject to backup withholding as a
result of a failure to report all interest or dividends, or the Internal Revenue
Service has notified such Purchaser that such Purchaser is no longer subject to
backup withholding.
The representations and warranties of the Purchasers herein
shall not limit or modify the representations and warranties of the Company set
forth in this Agreement.
Each Purchaser, severally and not jointly, agrees to indemnify
and hold harmless the Company, its officers, directors, and control persons
(within the meaning of the Securities Act) from and against any and all damage,
loss, liability, cost and expense (including reasonable attorneys' fees) which
any of them may incur by reason of any breach of the representations and
warranties made by such Purchaser herein or in any other document provided by
such Purchaser to the Company. All representations, warranties and covenants in
this Agreement, and the indemnification contained in this Article V, shall
survive any closing hereunder.
Each of the Series A Preferred Stock shall be imprinted with a
legend in substantially the following form:
21
28
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES ACT, AND SUCH SHARES CANNOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
THE REGISTRATION PROVISIONS OF SUCH ACTS OR AN EXEMPTION THEREFROM.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER CONTAINED IN A CERTAIN SECURITIES
PURCHASE AGREEMENT BY AND AMONG THE COMPANY AND THE PURCHASER OF SUCH SHARES, A
COPY OF WHICH IS AVAILABLE AT THE PRINCIPAL OFFICES OF THE COMPANY."
ARTICLE VI. CONDITIONS TO PURCHASE
SECTION 6.1. PURCHASER'S CONDITIONS. Each Purchaser's
obligation to purchase the Series A Preferred Stock to be purchased on the
Closing Date by such Purchaser pursuant to this Agreement is subject to
compliance by the Company with its agreements herein contained, and to the
satisfaction, on or prior to the Closing Date, of the following conditions
unless waived:
SECTION 6.1.1. RELATED AGREEMENTS. Each of the Related
Agreements shall have been executed and delivered in the forms provided for
herein, and each of the Related Agreements shall be in full force and effect and
no term or condition thereof shall have been amended, modified or waived except
with the prior written consent of such Purchaser. All covenants, agreements and
conditions contained in the Related Agreements which are to be performed or
complied with by the Company on or prior to the Closing Date shall have been
performed or complied with in all material respects (or waived with the prior
written consent of such Purchaser).
SECTION 6.1.2. CHARTER DOCUMENTS; GOOD STANDING CERTIFICATE.
Such Purchaser shall have received from the Company (a) a copy, certified by the
Secretary of State of Delaware, of the Amended and Restated Certificate of
Incorporation of the Company, (b) a copy, certified by a duly authorized officer
of the Company to be true and complete as of the Closing Date, of the by-laws of
the Company; and (c) certificates, dated not more than ten days prior to the
Closing Date, of the Secretaries of State of Delaware and Missouri, as to the
Company's corporate good standing in such states.
SECTION 6.1.3. PROOF OF CORPORATE ACTION. Such Purchaser shall
have received from the Company copies, certified by a duly authorized officer
thereof to be true and complete as of the Closing Date, of the records of all
corporate action taken by the Company to authorize the execution, delivery and
performance of this Agreement and each of the Related Agreements.
SECTION 6.1.4. INCUMBENCY CERTIFICATE. Such Purchaser shall
have received from the Company an incumbency certificate, dated the Closing
Date, signed by a duly authorized
22
29
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 of the Related Agreements, and to give notices
and to take other action on behalf of the Company hereunder.
SECTION 6.1.5. LEGAL OPINION. The Purchasers and the Agent
shall have received from Xxxxx Xxxx LLP, special counsel to the Company, a
favorable opinion substantially in the form of Exhibit E hereto, and covering
such other matters with respect to the transactions contemplated by this
Agreement as the Purchasers may reasonably request.
SECTION 6.1.6. REPRESENTATIONS AND WARRANTIES; OFFICERS'
CERTIFICATES. The representations and warranties of the Company contained or
incorporated by reference herein shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date, except for those representations and
warranties which relate specifically to a particular date, provided that such
representations and warranties were true and correct in all respects as of such
date; no event or condition shall have occurred or would result from the
issuance of any of the Series A Preferred Stock which would be a Default or an
Event of Default, and the Company shall have performed and complied with, in all
material respects, all conditions and agreements required to be performed or
complied with by it prior to the Closing; and such Purchaser and the Agent shall
have received on the Closing Date a certificate to these effects signed by an
authorized officer of the Company.
SECTION 6.1.7. LEGALITY; GOVERNMENTAL AND OTHER
AUTHORIZATIONS. The purchase of the Series A Preferred Stock by such Purchaser
shall not be prohibited by any law or governmental order or regulation. All
necessary consents, approvals, licenses, permits, orders and authorizations of,
or registrations, declarations and filings with, any governmental or
administrative agency or of or with any other Person, with respect to any of the
transactions contemplated by this Agreement or any of the Related Agreements,
shall have been duly obtained or made and shall be in full force and effect.
SECTION 6.1.8. DUE DILIGENCE. Such Purchaser shall have
completed its legal, financial, tax, environmental, accounting and business due
diligence review of the Company with the results thereof satisfactory to such
Purchaser in its sole discretion.
SECTION 6.1.9. PAYMENT OF CERTAIN FEES AND DISBURSEMENTS. The
Purchasers shall have been reimbursed by the Company pursuant to Section 12.1 of
this Agreement for all reasonable out-of-pocket costs and expenses (including,
but not limited to, the reasonable legal fees of one counsel to Purchasers)
incurred by them through the Closing Date in connection with the transactions
contemplated by this Agreement.
23
30
SECTION 6.1.10. SBIC DOCUMENTATION. The Company shall have
executed and delivered to each Purchaser that is a Federal licensee (an "SBIC
Investor") under the Small Business Investment Act of 1958, as amended (the
"Small Business Act"), upon request of such SBIC Investor, (i) a Size Status
Declaration on Form 480 of the United States Small Business Administration
("SBA"), (ii) an Assurance of Compliance on SBA Form 652, (iii) an SBA
Certification in substantially the form provided to the Company by such SBIC
Investor and (iv) the information required for such SBIC Investor to prepare a
Portfolio Financing Report on SBA Form 1031.
SECTION 6.1.11. CAPITALIZATION. In addition to (i) the Series
A Preferred Stock and (ii) the Founders' Warrants for 300,000 shares of Common
Stock at an exercise price of $3.00 per share, the Company shall have issued as
of the Closing Date no more than 5,200,000 shares of Common Stock, and shall
have established at or prior to the Closing the Option Plan providing for
issuance of no more than an aggregate of 1,000,000 shares of Common Stock over
the life of the Option Plan and for grants of options in an amount of not more
than 100,000 shares prior to the Closing with an exercise price of $2.40 per
share.
SECTION 6.1.12. SHAREHOLDER'S AGREEMENT. The amendment to that
certain Shareholder's Agreement, dated as of August 14, 1998, in substantially
the form of Exhibit H hereto shall have been duly executed and delivered.
SECTION 6.1.13. CERTIFICATION OF SECURITIES HOLDINGS. The
Company shall have provided to Centennial Fund V, L.P. ("Centennial") a
certification of the direct and indirect holdings of securities of the Company
by certain persons designated by Centennial as required by Centennial's
governing documents.
SECTION 6.1.14. MINIMUM INVESTMENT. The Purchasers shall
purchase, or subscribe to purchase, at least 16,666,666 shares of Series A
Preferred Stock at the Closing.
SECTION 6.1.15. GENERAL. All instruments and legal,
governmental, administrative and corporate proceedings in connection with the
transactions contemplated by this Agreement and the Related Agreements shall be
reasonably satisfactory in form and substance to the Purchasers, and the
Purchasers shall have received copies of all documents which Purchasers may have
reasonably requested in connection therewith, including, without limitation,
records of corporate proceedings, the opinion of counsel contemplated by Section
6.1.5 and any consents, licenses, approvals, permits and orders required to be
secured by the Company in connection with the transactions contemplated hereby.
SECTION 6.2. THE COMPANY'S CONDITIONS. The Company's
obligation to issue and sell the Series A Preferred Stock to be purchased on the
Closing Date pursuant to this Agreement are subject to compliance by each
Purchaser with its agreements herein contained, and to the satisfaction, on or
prior to the Closing Date, of the following conditions:
SECTION 6.2.1. RELATED AGREEMENTS. The Stockholders' Agreement
and Registration Rights Agreement shall each have been executed and delivered by
the Purchasers in
24
31
the forms provided for herein, and each of the other Related Agreements shall be
in full force and effect and no term or condition thereof shall have been
amended, modified or waived except with the prior written consent of the
Company. All covenants, agreements and conditions contained in the Related
Agreements which are to be performed or complied with by the Purchasers on or
prior to the Closing Date shall have been performed or complied with in all
material aspects (or waived with the prior written consent of the Company).
SECTION 6.2.2. LEGALITY: GOVERNMENTAL AND OTHER
AUTHORIZATIONS. The sale of the Series A Preferred Stock by the Company shall
not be prohibited by any law or governmental order or regulation. All necessary
consents, approvals, licenses, permits, orders and authorizations of, or
registrations, declarations and filings with, any governmental or administrative
agency or of or with any other Person, with respect to any of the transactions
contemplated by this Agreement or any of the Related Agreements, shall have been
duly obtained or made and shall be in full force and effect.
SECTION 6.2.3. CAPITALIZATION. In addition to the Series A
Preferred Stock, the Company shall have issued as of the Closing Date (a)
5,200,000 shares of Common Stock, (b) the Founders' Warrants for 300,000 shares
of Common Stock and (c) non-qualified employee stock options for up to 100,000
shares of Common Stock pursuant to the Option Plan exercisable at $2.40 per
share.
SECTION 6.2.4. GENERAL. All instruments and legal,
governmental and administrative and corporate proceedings in connection with the
transactions contemplated by this Agreement and the Related Agreements shall be
reasonably satisfactory in form and substance to the Company, and the Company
shall have received copies of any consents, licenses, approvals, permits and
orders secured by any Purchaser in connection with the transactions contemplated
hereby.
ARTICLE VII. COVENANTS APPLICABLE TO THE COMPANY WHILE ANY OF THE SERIES A
PREFERRED STOCK ARE OUTSTANDING
The Company covenants that, so long as any of the Series A
Preferred Stock is outstanding, the Company will comply and will cause each of
its Subsidiaries to comply with the following provisions unless otherwise
consented to in writing by the Majority Holders:
SECTION 7.1. RECORDS AND ACCOUNTS. Each of the Company and its
Subsidiaries will keep true and accurate records and books of account in which
full, true and correct entries will be made in accordance with generally
accepted accounting principles and maintain adequate accounts and reserves for
all taxes (including income taxes), all depreciation, depletion, obsolescence
and amortization of its Properties, all contingencies, and all other reserves,
all in accordance with GAAP.
SECTION 7.2. CORPORATE EXISTENCE; SUBSIDIARIES; MAINTENANCE OF
PROPERTIES. The Company and its Subsidiaries will not engage in any business
other than providing telecommunications services and those businesses reasonably
ancillary thereto. Unless authorized
25
32
by the Board of Directors each of the Company and its Subsidiaries will (a)
preserve and keep in full force and effect its corporate existence, rights and
franchises, and (b) maintain all of its Properties used or useful in the conduct
of its business in good condition, repair and working order (normal wear and
tear excepted) and cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section 7.2 shall prevent the Company or any of
its Subsidiaries from discontinuing the operation and maintenance of any of such
Properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of such Person's business and does not in the aggregate
materially adversely affect the business of the Company and its Subsidiaries
taken as a whole.
SECTION 7.3. INSURANCE. Each of the Company and its
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 which, in the judgment of the Board of
Directors, are usually carried by reasonable and prudent companies conducting
businesses similar to that of the Company and its Subsidiaries.
SECTION 7.4. TAXES AND CLAIMS. Each of the Company and its
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 the Company and its Subsidiaries and their 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; 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 any of its Subsidiaries shall have
set aside on its books adequate reserves with respect thereto; and provided,
further, that the Company and its Subsidiaries 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 7.5. INSPECTION OF PROPERTIES AND BOOKS. Upon the
request of any holder of Series A Preferred Stock, the Company will furnish such
information regarding the business, affairs, prospects and financial condition
of the Company and its Subsidiaries as such holder may reasonably request. Each
of the Company and its Subsidiaries shall permit any holder of Series A
Preferred Stock or any of its designated representatives, at their respective
cost, to visit and inspect any of the properties of the Company and its
Subsidiaries, to examine the books of account of the Company and its
Subsidiaries (and to make copies thereof and extracts therefrom), and to discuss
the affairs, finances and accounts of each of the Company and its Subsidiaries
with, and to be advised as to the same by, officers of such Persons, all at such
reasonable times and intervals as the Purchaser may reasonably request. At least
three days prior to any interview of an officer of such Person, the chief
executive officer of the Company shall be notified of such interview and shall
be invited to attend such interview. Prior to making any such inspection or
conducting any such interviews, such holder of Series A Preferred Stock and its
representatives who are making the inspection or conducting the interviews shall
execute
26
33
confidentiality and non-disclosure agreements reasonably acceptable to the
Company and its counsel and such holder and its counsel. Each Purchaser shall be
entitled to have one representative attend meetings of the Board of Directors as
a non-voting observer. In connection therewith, the Company shall provide each
such representative with a copy of all notices, minutes, consents and other
materials, financial or otherwise, which the Company provides to members of its
Board of Directors concurrently with the delivery of such information to the
members of its Board of Directors. Participation by observers in any meeting of
the Board of Directors shall be at the reasonable discretion of the Chairman of
the Board. Any observer may be excluded from all or any portion of any meeting
in which the Board of Directors is (i) considering matters with respect to which
such observer or any Affiliate of such observer has a conflict of interest, (ii)
when deemed reasonably advisable by the Chairman of the Board and/or counsel for
the Company to preserve an attorney-client privilege or the confidentiality of
any other significant matter and (iii) when the Board of Directors by majority
vote otherwise resolves to conduct its proceedings in executive session. The
Company shall reimburse out-of-pocket expenses only for one representative of
any Purchaser that does not have the right to designate a member of the Board of
Directors pursuant to Section 4.1(a)(i) of the Stockholders' Agreement.
SECTION 7.6. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND
PERMITS. The Company and each of its Subsidiaries will comply with (a) all
applicable laws and regulations, (b) the provisions of its Charter and by-laws,
(c) all agreements and instruments by which it or any of its Properties may be
bound (including, without limitation, the Related Agreements) (d) all applicable
decrees, orders, and judgments and (e) all required approvals, permits and
licenses. If at any time while any Series A Preferred Stock is outstanding, any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that any of the Company or its Subsidiaries may lawfully fulfill any of its
obligations hereunder, each of the Company and its Subsidiaries will immediately
take or cause to be taken all reasonable steps within its power to obtain such
authorization, consent, approval, permit or license and furnish Purchasers with
evidence thereof.
SECTION 7.7. EMPLOYEE BENEFIT PLANS. Neither of the Company
nor any ERISA Affiliate will:
(a) engage in any "prohibited transaction" within the meaning
of ss.406 of ERISA or ss.4975 of the Code;
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in ss.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 its Subsidiaries pursuant to ss.302(f) or ss.4068 of ERISA; or
27
34
(d) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of ss.4001 of ERISA) of all
Guaranteed Pension Plans 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.
The Company will (i) promptly upon filing the same with the
Department of Labor or Internal Revenue Service, furnish to each holder of
Series A Preferred Stock a copy of the most recent actuarial statement required
to be submitted under ss.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 holder of Series A Preferred
Stock a copy of any notice, report or demand sent or received in respect of a
Guaranteed Pension Plan under ss.ss.302, 4041, 4042, 4043, 4063, 4065, 4066 and
4068 of ERISA, or in respect of a Multiemployer Plan, under ss.ss.4041A, 4202,
4219, 4242 or 4245 of ERISA.
SECTION 7.8. FURTHER ASSURANCES. The parties will cooperate
with each other and execute such further instruments and documents as any party
shall reasonably request to carry out the transactions contemplated by this
Agreement.
SECTION 7.9. NOTICES. The Company will promptly notify each
holder of Series A Preferred Stock in writing of the occurrence of any Default
or Event of Default or if any Person shall give any notice or take any other
action in respect of a claimed default (whether or not constituting a Default or
an Event of Default) under any of the Related Agreements or any other Default
with respect to a material agreement to which the Company or any of its
Subsidiaries is a party. The Company also covenants and agrees to promptly
provide each Purchaser with written notice: (a) upon the Company or any of its
Subsidiaries' obtaining knowledge of any violation of any Environmental Law
regarding the Property or the operations of the Company or any of its
Subsidiaries; (b) upon the Company or any of its Subsidiaries' obtaining
knowledge of any potential or known release, or threat of release, of any
Hazardous Materials at, from, or into the Property which it reports in writing
or is reportable by it in writing to any governmental authority; (c) upon the
Company or any of its Subsidiaries' receipt of any notice of violation of any
Environmental Laws or of any release or threatened release of Hazardous
Materials at, from or into the Property, including a notice or claim of
liability or potential responsibility from any third party (including without
limitation any federal, state or local governmental officials) and including
notice of any formal inquiry, proceeding, demand, investigation or other action
with regard to (i) the Company, any of its Subsidiaries or any other Person's
operation of the Property or (ii) contamination on, from or into the Property;
(d) upon the Company or any of its Subsidiaries' receipt of notice of any
investigation or remediation of offsite locations at which the Company, any of
its Subsidiaries or any of their predecessors are alleged to have directly or
indirectly disposed of Hazardous Materials; or (e) upon the Company or any of
its Subsidiaries' obtaining knowledge that any expense or loss has been incurred
by such governmental authority in connection with the assessment, containment,
removal or remediation of any Hazardous Materials with respect to which the
Company or any of its Subsidiaries may be liable or for which a Lien may be
imposed on the property.
28
35
SECTION 7.10. RESTRICTIONS ON INDEBTEDNESS. Neither the
Company nor any of its Subsidiaries will create, incur, assume, guarantee or be
or remain liable, contingently or otherwise, with respect to any Indebtedness
other than the following ("Permitted Indebtedness"):
(i) Indebtedness as set forth in Schedule 7.10
hereto;
(ii obligations, contingent and otherwise, which in
accordance with GAAP are classified on the obligor's balance sheet as
liabilities or referred to in the footnotes thereto, which are incurred in the
ordinary course of business and not incurred through (A) the borrowing of money,
or (B) the obtaining of credit except for credit on an open account basis
customarily extended in connection with normal purchases of goods and services;
and
(iii) any other Indebtedness of the Company and its
Subsidiaries which shall be approved by a Supermajority Board Vote.
SECTION 7.11. RESTRICTIONS ON LIENS. Neither the Company nor
any of its Subsidiaries will create or incur or suffer to be created or incurred
or to exist any Lien of any kind upon any of its Properties or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom; or transfer any of such Property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; or acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; or suffer to exist for a period of more than
thirty days after the same shall have been incurred any Indebtedness or claim or
demand against it which if unpaid might by law or upon bankruptcy or insolvency,
or otherwise, be given any priority whatsoever over its general creditors (other
than those claims which the Company is contesting in good faith by appropriate
proceedings and as to which the Company shall have set aside on its books
adequate reserves with respect thereto); or sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles or chattel paper,
with or without recourse; provided, however, that the Company and its
Subsidiaries may create or incur or suffer to be created or incurred or to exist
any of the following ("Permitted Liens"):
(a) Liens to secure taxes, assessments and other government
charges or claims for labor, material or supplies in respect of obligations not
overdue or due but being contested to the extent permitted by Section 7.4;
(b) Deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age pensions or
other social security obligations;
(c) Liens in respect of final judgments or awards against the
Company or any of its Subsidiaries in an aggregate amount of not greater than
$100,000 (in excess of available insurance recoveries);
29
36
(d) Liens of carriers, warehousemen, mechanics and
materialmen, and other like Liens;
(e) Encumbrances consisting of easements, rights of way,
zoning restrictions, restrictions on the use of real property and irregularities
in the title thereto, landlord's or lessor's Liens under leases to which the
Company or any of its Subsidiaries is a party, and other minor Liens or
encumbrances none of which interferes materially with the use of the property
affected in the ordinary conduct of the business of the Company and its
Subsidiaries and which defects do not individually or in the aggregate have a
material adverse effect on the business, assets, financial condition or
prospects of the Company or any of its Subsidiaries;
(f) Any Liens on the assets and Property of the Company from
time to time securing Permitted Indebtedness; and
(g) Any other Liens which shall be approved by the Board of
Directors by a Supermajority Board Vote.
SECTION 7.12. DISTRIBUTIONS. Unless approved by a
Supermajority Board Vote, the Company shall not make any Distribution except
that the Company may repurchase the Series A Preferred Stock in accordance with
the terms hereof.
SECTION 7.13. MERGER, CONSOLIDATION, SALE OF ASSETS OR OTHER
DISPOSITIONS. Without the approval of the Board of Directors by a Supermajority
Board Vote, neither the Company nor any of its Subsidiaries will become a party
to any merger or consolidation in which the Company and/or its Stockholders do
not hold a majority of the voting equity in, and do not control, the surviving
entity of such merger or consolidation, or sell, lease, sublease or otherwise
transfer or dispose of (including, but not limited to, any sale and leaseback
transactions) any substantial portion of its Property to any Person whether
directly or indirectly or in a single transaction or a series of related
transactions, other than sales of inventory and used equipment in the ordinary
course of business consistent with past practices; provided, that, the Company
or any wholly-owned Subsidiary may engage in any of the above transactions with
the Company or any other wholly-owned Subsidiary without such approval, so long
as in the case of any merger or consolidation to which it is a party the Company
is the surviving entity.
SECTION 7.14. MERGER, CONSOLIDATION OR OTHER ACQUISITIONS.
Neither the Company nor any Subsidiary shall directly or indirectly, by
operation of law or otherwise, become a party to a merger or consolidation in
which the Company and/or its Stockholders continue to hold in the aggregate a
majority of the voting equity in, or continue to control, the surviving entity
of such merger or consolidation, acquire all or substantially all of the assets
(other than purchases of inventory made in the ordinary course of the Company's
business) or capital stock of, or otherwise combine with, any Person, unless
such acquisition is approved by the Board of Directors by a Supermajority Board
Vote, provided that the Company or any wholly-owned Subsidiary may engage in any
of the above transactions with the Company or any other wholly-owned Subsidiary
without such approval, so long as in the case of any merger or consolidation to
which it is a party the Company is the surviving entity.
30
37
SECTION 7.15. TRANSACTIONS WITH AFFILIATES. Unless approved by
the Board of Directors by a Supermajority Board Vote, neither the Company nor
any of its Subsidiaries will engage in any transaction with any Affiliate except
for transactions contemplated by the Related Agreements and except for
transactions by the Company with any Subsidiary or by any Subsidiary with any
other Subsidiary.
SECTION 7.16. INVESTMENTS. Unless approved by the Board of
Directors by a Supermajority Board Vote, the Company will not, and will not
permit any of its Subsidiaries 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
Corporation, (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 and (d) certificates of deposit maturing within
one year from the date of acquisition thereof issued by any commercial bank or
trust company referred to in clause (a) hereof and having capital and surplus of
at least $100,000,000.
SECTION 7.17. JOINT VENTURES. Neither the Company nor any
Subsidiary will cause or consent to any joint venture engaging in any activity
which would result in a breach of any representation, warranty, covenant or
agreement set forth in this Agreement or which would result in the joint venture
being in breach of any representation, warranty, covenant or agreement set forth
in this Agreement if the joint venture were a Subsidiary.
SECTION 7.18. PAYMENTS ON PERMITTED INDEBTEDNESS. Neither the
Company nor any of its Subsidiaries shall make (i) any payments of the
Indebtedness represented by the Permitted Indebtedness except as specifically
required by the terms of the Permitted Indebtedness or (ii) any prepayments of
such Permitted Indebtedness. In addition, the Company shall not amend, alter or
agree to any such amendment or alteration to the terms and conditions of any of
the documents representing the Permitted Indebtedness.
SECTION 7.19. RESPONSE ACTIONS. The Company covenants and
agrees that if any release or disposal of Hazardous Materials shall occur or
shall have occurred on the Property, the Company will cause the prompt
containment and removal of such Hazardous Materials and remediation of the
Property as necessary to comply in all material respects with all Environmental
Laws or to preserve in all material respects the value of the Property.
SECTION 7.20. DILUTION PROTECTION. Except for the additional
Series A Preferred Stock to be issued pursuant to Articles II and III hereof,
the shares of Common Stock to be issued upon exercise of the Founders' Warrants,
any options issued under the Option Plan and
31
38
any capital stock of the Company issued pursuant to Acquisitions approved by the
Board of Directors as provided in Section 7.14 hereof, without a Supermajority
Board Vote, neither the Company nor any of its Subsidiaries will (a) issue,
sell, give away, transfer, pledge, mortgage, assign or otherwise dispose of,
grant any rights (either preemptive or other) or options to subscribe for or
purchase, enter into any agreements, or issue any warrants, providing for the
issuance of any capital stock of the Company or any stock or securities
convertible into or exchangeable for any capital stock of the Company or (b)
designate any series of Preferred Stock of a class which has been authorized in
the Company's Certificate of Incorporation; provided that the foregoing approval
shall not be required for the issuance or transfer to the Company or any of its
wholly-owned Subsidiaries of securities of any wholly-owned Subsidiary of the
Company. Without the affirmative vote of 66-2/3% of the outstanding Common Stock
and Preferred Stock, voting as a class, the Company will not authorize any
additional class of capital stock or increase the number of shares of authorized
capital stock from that set forth in Section 4.5 hereof or Schedule 4.5 hereto.
The Company shall maintain such number of authorized and unissued shares of (w)
Series A Preferred Stock as shall be necessary to issue upon fulfillment of the
Purchasers' Additional Preferred Stock Subscription Obligations, (x) Common
Stock to be issued upon conversion of the Series A Preferred Stock, (y) Common
Stock to be issued upon exercise of the Founders' Warrants, and (z) Common Stock
to be issued upon exercise of any options issued under the Option Plan.
SECTION 7.21. ANNUAL STATEMENTS. As soon as available and in
any event within 90 days after the close of each fiscal year of the Company
commencing with the fiscal year ending December 31, 1998, the Company will
deliver to each holder of Series A Preferred Stock (a) an audited consolidated
balance sheet and statement of income and retained earnings and of cash flows of
the Company and its Subsidiaries audited to the extent so required by any "big
six" independent public accounting firm, as selected by the Company, and (b)
consolidated internal unaudited balance sheets and statements of income and
retained earnings and of cash flows of each Subsidiary of the Company, in each
case showing the financial condition of the Company and/or each Subsidiary of
the Company as of the close of such fiscal year and the results of the Company's
and/or such Subsidiary's operations during such fiscal year, all on a
consolidated basis, and setting forth in comparative form the comparable
statements for the previous fiscal year, if any. Each of the audited financial
statements delivered hereunder shall be certified by such accounting firm to
have been prepared in accordance with generally accepted accounting principles
consistently applied, accompanied by the written statement of such firm to the
effect that such firm does not know of the existence of any Default or Event of
Default, or if such firm shall have obtained knowledge of any such Default or
Event of Default or other event, setting forth the nature thereof.
SECTION 7.22. MONTHLY STATEMENTS. Within 30 days after the end
of each month commencing with the month ending January 31, 1999, the Company
will deliver to each holder of Series A Preferred Stock (a) a consolidated
internal, unaudited balance sheet and statement of income and retained earnings
and of cash flows of the Company as of the end of each such month, and (b)
consolidated internal unaudited balance sheets and statements of income and
retained earnings and of cash flows of each Subsidiary of the Company, in each
case including a comparison of such financial statements to the annual operating
budget and projected monthly
32
39
balance sheets and statements of income delivered pursuant to Section 7.23
hereof and certified by the chief financial officer of the Company to be true
and correct and to have been prepared in accordance with GAAP consistently
applied (other than such footnotes which may be required by GAAP), subject to
normal year-end adjustments described in reasonable detail.
SECTION 7.23. OTHER FINANCIAL INFORMATION. The Company will
deliver to each holder of Series A Preferred Stock, within 30 days prior to the
commencement of each fiscal year, (i) an annual operating budget and projected
monthly balance sheets and statements of income, (ii) as soon as practical after
preparation thereof, complete and correct copies of all quarterly or annual
budgetary analyses or forecasts of the Company and its Subsidiaries (if any)
prepared by management for the use of the Board of Directors and (iii) updated
five-year projections of the Company and its Subsidiaries (if any) prepared by
management for the use of the Board of Directors. Promptly after the receipt
thereof, the Company will provide to each holder of Series A Preferred Stock
copies of any reports as to adequacies in accounting controls submitted by
independent accountants with respect to the Company and its Subsidiaries.
SECTION 7.24. OFFICER'S CERTIFICATES. Together with delivery
of consolidated financial statements of the Company pursuant to Section 7.22
above, the Company shall deliver to each holder of Series A Preferred Stock a
certificate of the President, chief financial officer or Treasurer of the
Company, to the effect that such financial statements are true and correct and
were prepared in accordance with GAAP and that such officer has caused the
provisions of this Agreement and the Series A Preferred Stock to be reviewed and
has no knowledge of any Default or Event of Default, or if such officer has such
knowledge, specifying such Default or Event of Default and the nature thereof,
and what action the Company has taken, is taking or proposes to take with
respect thereto.
SECTION 7.25. NOTICE OF LITIGATION, DEFAULTS, ETC. The Company
will promptly give notice to each holder of Series A Preferred Stock of any
litigation or any administrative proceeding to which the Company or any of its
Subsidiaries may hereafter become a party which, after giving effect to
applicable insurance, may result in any adverse change in the business, assets,
prospects or financial condition of the Company and its Subsidiaries taken as a
whole. Forthwith upon any officer of the Company obtaining knowledge of any
Default or Event of Default hereunder or any default or event of default under
any Related Agreement or any agreement relating to any Indebtedness of the
Company or any of its Subsidiaries for borrowed money, the Company will furnish
a notice specifying the nature and period of existence thereof and what action
the Company or any of its Subsidiaries has taken, is taking or proposes to take
with respect thereto.
SECTION 7.26. CHARTER AND BY-LAW AMENDMENTS. Except as
otherwise specified in this Agreement, without the consent of the Majority
Holders, the Charter and By-laws of each of the Company and its Subsidiaries
shall not be amended or modified, whether by merger, dissolution or otherwise,
if such amendment or modification has, or would, directly or indirectly,
adversely affect the rights of holders of the Series A Preferred Stock or the
rights or remedies of such holder hereunder or under any of the Related
Agreements.
33
40
SECTION 7.27. PROPRIETARY INFORMATION AND INVENTIONS
AGREEMENT. The Company and its Subsidiaries shall each have and enforce a policy
requiring each employee with access to proprietary information of the Company or
any Subsidiary to enter into a proprietary information and confidentiality and
assignment agreement substantially in the form approved by the Board of
Directors.
SECTION 7.28. SBIC COVENANTS.
(a) The Company acknowledges that each Purchaser that is an
SBIC Investor is subject to regulation by the SBA as a small business investment
company.
(b) As a result of the SBIC Investor's status as Federal
licensee, the Company covenants and agrees that, for a period of one year after
the Closing Date, the Company shall not make a material change in its primary
business activity by becoming involved in real estate financing, project
financing, farm land purchasing, relender or reinvestor financing, foreign
investment and other businesses as described in 13 C.F.R Section 107.720, which
would make it ineligible for financing as a portfolio company by a small
business investment company under 13 C.F.R. Section 107.760(b), a regulation
promulgated by the SBA.
(c) The Company covenants and agrees that proceeds from the
SBIC Investor for its purchase of Series A Preferred Stock will be used for
working capital purposes or to otherwise finance the growth, modernization or
expansion of the Company. The Company shall provide the SBIC Investor and the
SBA reasonable access to the Company's books and records for the purpose of
confirming the use of such proceeds.
(d) The Company shall provide the SBIC Investor with
sufficient information to permit such SBIC Investor to comply with its
obligations under the Small Business Act, provided, however that the SBIC
Investor agrees that it will protect any information which the Company labels as
confidential to the extent permitted by law. For a period of two (2) years
following the Closing Date, any submission of financial information under
Sections 7.21 and 7.22 to the SBIC Investor shall be accompanied by a
certificate of the president, chief executive officer, treasurer or chief
financial officer, which certificate shall state that the Company is not in
material default under any of its covenants set forth in this Section 7.28.
ARTICLE VIII. DEFAULTS
SECTION 8.1. EVENTS OF DEFAULT. The Majority Holders will be
entitled to exercise the remedies provided in Section 8.2 hereof in accordance
with the terms thereof if any one or more of the following events ("Events of
Default") shall occur:
(a) the Company or any of its Subsidiaries shall fail in any
material respect to perform or observe any of the covenants, agreements or
provisions to be performed or observed by it under this Agreement or any of the
Related Agreements (except to the extent such failure is attributable to actions
of any holder of Series A Preferred Stock) (other than covenants,
34
41
agreements or provisions for which a default in the performance or observance
thereof is specifically dealt with elsewhere in this Agreement or any Related
Agreement) and the continuance of such failure for a period of thirty days after
written notice thereof has been given to the Company by the Majority Holders; or
(b) any material representation or warranty made by the
Company or any of its Subsidiaries to any Purchaser in or in connection with
this Agreement or any Related Agreement or any amendment thereto shall prove to
have been materially false on the date as of which it was made; or
(c) default under any Indebtedness of the Company or any of
its Subsidiaries in an amount outstanding which exceeds $1,000,000 in the
aggregate, and such default shall continue, without having been duly cured,
waived or consented to, beyond the period of grace, if any, therein specified
and so as to permit the acceleration thereof, if any acceleration is provided
for therein; or
(d) a final judgment which in the aggregate with other
outstanding final judgments against the Company or any of its Subsidiaries
exceeds $100,000 (in excess of available insurance recoveries) shall be rendered
against such Person and, within 60 days after entry thereof, such judgment shall
not have been satisfied and discharged or stayed pending appeal or bonded, or
within 60 days after expiration of such stay such judgment shall not have been
discharged; or
(e) the Company or any of its Subsidiaries shall:
(i) commence a voluntary case under Title 11 of the
United States Bankruptcy Code as from time to time in effect, or authorize, by
appropriate proceedings of its board of directors or other governing body, the
commencement of such a voluntary case;
(ii) have filed against it a petition commencing an
involuntary case under said Title 11 and such petition shall not have been
dismissed or stayed within 60 days;
(iii) seek relief as a debtor under any applicable law,
other than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the rights of
creditors, or consent to or acquiesce in such relief;
(iv) have entered against it an order by a court of
competent jurisdiction (x) finding it to be bankrupt or insolvent, (y) ordering
or approving its liquidation, reorganization or any modification or alteration
of the rights of its creditors, or (z) assuming custody of, or appointing a
receiver or other custodian for, all or a substantial part of its property;
which order shall not be vacated, denied, set aside, or stayed within 60 days
from the date of entry; or
(v) make an assignment of all or a substantial part of
its Property for the benefit of, or enter into a composition with, its
creditors, or appoint or consent to the appointment of a receiver or other
custodian for all or a substantial part of its Property; or
35
42
(f) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred as a result of which a trustee shall have
been appointed by an appropriate United States District Court to administer such
Guaranteed Pension Plan or the PBGC shall have instituted proceedings to
terminate such Guaranteed Pension Plan, and the Majority Holders shall have
determined in their reasonable discretion that such event reasonably could be
expected to result in liability of the Company or any of its Subsidiaries to the
PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $100,000.
SECTION 8.2. REMEDIES. Upon the occurrence of any of the
Events of Default under Section 8.1 hereof, in each and every such case, the
Majority Holders may proceed to protect and enforce the rights of all such
holders by suit in equity, action at law and/or other appropriate proceeding
either for specific performance of any covenant, provision or condition
contained or incorporated by reference in this Agreement or in aid of the
exercise of any power granted in this Agreement, and in addition, at the option
of the Majority Holders, the Majority Holders shall have the right to hire an
investment banker to (i) commence an underwritten public offering of all of the
Conversion Stock, (ii) assist in obtaining a private buyer for all of the
Conversion Stock, (iii) assist in obtaining a buyer for all the outstanding
stock of the Company or all or substantially all of the assets of the Company or
(iv) assist in effecting any other similar transaction or series of transactions
resulting in the disposition of all the stock or all or substantially all of the
assets and business of the Company, in each case at a price solely acceptable to
the Majority Holders. The Majority Holders shall have the right to (A) to
determine the type of transaction to be effected, (B) to give direction to the
investment banker, (C) to negotiate and control the sale process and all
documentation and (D) to approve the terms and price of any such transaction. In
furtherance of the foregoing (and except for an Event of Default under Section
8.1(f) hereof which shall be automatic), the remedies set forth in this Section
8.2 may only be exercised by the action of the Majority Holders, and not by the
action of any single holder of Series A Preferred Stock.
SECTION 8.3. WAIVERS. Each of the Company and its Subsidiaries
hereby waives, to the extent not prohibited by applicable law, (a) all
presentments, demands for performance and notices of nonperformance (except to
the extent specifically required by the provisions hereof or any Related
Agreement), and (b) any requirement of diligence or promptness on the part of
any holder of Series A Preferred Stock in the enforcement of its rights under
the provisions of this Agreement or any Related Agreement.
ARTICLE IX. SUBSEQUENT HOLDERS OF SERIES A PREFERRED STOCK
The provisions of this Agreement, the Stockholders' Agreement
and the Registration Rights Agreement that are for the benefit of the Purchasers
as the holders of any Series A Preferred Stock are, except as otherwise
specifically provided in such agreement, also for the benefit of, and
enforceable by and binding upon, all subsequent holders of the Series A
36
43
Preferred Stock who may acquire such Series A Preferred Stock, and the
provisions of this Agreement, the Stockholders' Agreement and the Registration
Rights Agreement that subject the Purchasers to obligations as the holders of
any Series A Preferred Stock also subject all subsequent holders of Series A
Preferred Stock thereto.
ARTICLE X. REGISTRATION AND TRANSFER OF SERIES A PREFERRED STOCK
SECTION 10.1. TRANSFER AND EXCHANGE OF SERIES A PREFERRED
STOCK. The Company shall keep at its principal office a register in which shall
be entered the names and addresses of the holders of the Series A Preferred
Stock and the particulars (including without limitation the class thereof) of
the respective Series A Preferred Stock held by them and of all transfers of
Series A Preferred Stock. Upon surrender at such office of any certificate
representing shares of Series A Preferred Stock for registration of exchange or
transfer, in accordance with the terms hereof and of the Financing Agreements,
the Company shall issue, at its expense, one or more new certificates, in such
denomination or denominations as may be requested, for such shares of Series A
Preferred Stock and registered as such holder may request. Any certificate
representing shares of Series A Preferred Stock surrendered for registration of
transfer shall be duly endorsed, or accompanied by a written instrument of
transfer duly executed by the holder of such certificate or his attorney duly
authorized in writing. The Company shall not be responsible for payment of any
transfer taxes due upon any such exchange or transfer.
SECTION 10.2. REPLACEMENT OF SERIES A PREFERRED STOCK. Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Series A Preferred Stock and, in the case of
any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Company, or, in the case of such mutilation, upon the
surrender of such Series A Preferred Stock for cancellation to the Company at
its principal office, the Company will execute and deliver, in lieu thereof, a
new Series A Preferred Stock of like tenor. Any Series A Preferred Stock in lieu
of which any such new Series A Preferred Stock has been so executed and
delivered by the Company shall not be deemed to be outstanding for any purpose
of this Agreement.
ARTICLE XI. EXPENSES; INDEMNITY
SECTION 11.1. EXPENSES. Whether or not the transactions
contemplated by this Agreement shall be consummated, the Company shall pay on
demand (accompanied by reasonable supporting details and documentation) all
reasonable out-of-pocket fees, costs and expenses incurred by the Purchasers in
connection with such transactions hereunder, under any Related Agreements and in
connection with any amendments or waivers (whether or not the same become
effective) hereof or thereof and, following the occurrence of an Event of
Default all reasonable out-of-pocket expenses incurred by the holders of Series
A Preferred Stock in connection with the enforcement of any rights hereunder or
with respect to any Series A Preferred Stock. Such fees, costs and expenses
shall include without limitation (I) the cost and expenses of preparing and
duplicating this Agreement, each Related Agreement and the Series A Preferred
Stock; (ii) the
37
44
cost of delivering to each Purchaser's principal office, insured to such
Purchaser's satisfaction, the Series A Preferred Stock sold to such Purchaser
hereunder and any Common Stock delivered to such Purchaser upon any conversion
thereof; (iii) the reasonable fees and out-of-pocket expenses and disbursements
of one counsel to the Purchasers, Xxxxxx Godward LLP, in connection with the
preparation, administration, interpretation or enforcement of this Agreement and
the Related Agreements and other instruments mentioned herein, the Closing, any
amendments, modifications, approvals, consents or waivers hereto, thereto or
hereunder requested by the Company; (iv) all taxes (other than taxes determined
with respect to income and taxes relating to any transfer of the Series A
Preferred Stock other than to the Company), including any recording fees and
filing fees and documentary stamp and similar taxes at any time payable in
respect of this Agreement, or the issuance of any of the Series A Preferred
Stock; and (v) all reasonable out-of-pocket expenses associated with any rights
of board attendance, and travel and lodging expenses related thereto, incurred
by the board designees of the holders of the Series A Preferred Stock.
SECTION 11.2. INDEMNIFICATION. To the fullest extent permitted
by applicable law, the Company shall indemnify, exonerate and hold each
Purchaser and its (if applicable) general and limited partners and their
respective stockholders, officers, directors, employees and agents free and
harmless from and against any and all actions, causes of action, suits, losses,
liabilities, damages and expenses, including, without limitation, reasonable
attorneys' fees and disbursements, incurred by any of the indemnitees as a
result of or relating to (i) any transaction to which the Company is a party
which is financed or to be financed in whole or in part directly or indirectly
with proceeds from the sale of any of the Series A Preferred Stock, (ii) without
duplication of the reimbursed expenses paid under Section 11.1, the execution,
delivery, performance or enforcement of this Agreement (including, without
limitation, the breach by the Company of any of its representations or
warranties contained in Article IV of this Agreement and any failure by the
Company or any of its Subsidiaries to comply with any of its covenants
hereunder), the Related Agreements or any instrument contemplated hereby or
thereby, (iii) any violation of, or liability under, any Environmental Laws with
respect to conditions at the Property or the operations conducted thereon, or
(iv) the investigation or remediation of offsite locations at which the Company,
any of its Subsidiaries or their predecessors are alleged to have directly or
indirectly disposed of Hazardous Materials.
SECTION 11.3. BROKERS' FEES. The parties shall indemnify each
other against and agree that each will hold the others harmless from any claim,
demand or liability for any other broker's, finder's or placement fees or
lender's incentive fees alleged to have been incurred by it in connection with
the transactions contemplated by this Agreement or the Related Agreements.
SECTION 11.4. SURVIVAL OF OBLIGATIONS. The obligations of the
parties under this Article XI shall survive payment or transfer of the Series A
Preferred Stock and the termination of this Agreement.
38
45
ARTICLE XII. NOTICES
Any notice or other communication in connection with this
Agreement, any Related Agreement or the Series A Preferred Stock shall be deemed
to be received if in writing (or in the form of a telex or telecopy) addressed
as provided below (a) when actually delivered, in person, (b) when telexed or
telecopied to said address, confirmed by registered or certified mail, (c) when
received if delivered by overnight courier, or (d) in the case of delivery by
mail, three business days shall have elapsed after the same shall have been
deposited in the United States mails, postage prepaid and registered or
certified:
(i) If to the Company, at its principal executive
offices, to the attention of the Chief Executive Officer or at
such other address as the Company shall have specified by
notice actually received by the, addressor,
with copies to:
Xxxxxx Investments, L.P.
00000 Xxxxxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
and to: Xxxxx Xxxx LLP
One Metropolitan Square
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
(ii) If to any Purchaser, then to its address set
forth on Exhibit A hereto, or at such other address as such
Purchaser shall have specified by notice actually received by
the addressor, with a copy as provided on said Exhibit A; and
(iii) If to any other holder of record of any Series
A Preferred Stock, to it at its address set forth in the
applicable register referred to in Article X hereof.
ARTICLE XIII. SURVIVAL AND TERMINATION OF COVENANTS, AGREEMENTS, REPRESENTATIONS
AND WARRANTIES
All covenants, agreements, representations and warranties made
herein or in any Related Agreement shall be deemed to have been relied on by the
recipient, notwithstanding any investigation made by the recipient or on the
recipient's behalf, and shall survive the execution and delivery of this
Agreement and the issuance of the Series A Preferred Stock. Except for the
39
46
representations and warranties contained herein and as otherwise expressly
provided herein or in any such Related Agreement, such covenants, agreements,
representations and warranties, shall terminate and be of no further force or
effect upon the automatic conversion of the Series A Preferred Stock pursuant to
the Amended and Restated Certificate of Incorporation of the Company.
ARTICLE XIV. AMENDMENTS AND WAIVERS
Except as otherwise expressly provided herein, any term of
this Agreement may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the Majority Holders, respectively; provided that, no such amendment may
increase or decrease the amount of any Additional Preferred Stock Subscription
Obligation or extend the Investment Period without the consent of all holders of
the Series A Preferred Stock. Any amendment or waiver effected in accordance
with this Article XIV shall be binding upon the Company and each holder of any
Series A Preferred Stock. No course of dealing between the Company or any of its
Subsidiaries on the one hand, and the holder of any Series A Preferred Stock, on
the other hand, shall operate as a waiver of any rights under this Agreement. No
delay or omission in exercising any right under this Agreement shall operate as
a waiver of such right or any other right. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right or remedy on any other
occasion.
ARTICLE XV. RIGHT TO PUBLICIZE
Each of the parties hereby acknowledges that each party, at
its own expense, will have the right to publicly disclose the investments in the
Company contemplated hereby, provided, however, that no party may use in a
public disclosure the name of any other party without the prior approval by such
other party.
ARTICLE XVI. WAIVER OF JURY TRIAL
EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE TO A
JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING EXISTING UNDER OR RELATING TO THIS
AGREEMENT, THE SERIES A PREFERRED STOCK OR ANY OF THE RELATED AGREEMENTS.
40
47
ARTICLE XVII. INCORPORATORS, SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES AND
PARTNERS FREE FROM PERSONAL LIABILITY
No recourse under or upon any obligation, covenant or
agreement of this Agreement or of any Related Agreement will be had against any
incorporator, shareholder (except for obligations specific to any shareholder
under this Agreement or any Related Agreement), officer, director, employee, or
partner as such, past, present, or future, of the Company or any holder of
Series A Preferred Stock or any predecessor or successor entity, either directly
or through the Company or any holder of Series A Preferred Stock, whether by
virtue of any constitution, statute, or rule of law, or by the enforcement of
any assessment or penalty or otherwise, it being expressly understood that this
Agreement and the other Related Agreements are solely corporate obligations, and
no such personal liability whatsoever will attach to, or is or will be incurred
by, the incorporators, shareholders (except for obligations specific to any
shareholder under this Agreement or any Related Agreement), officers, directors
or employees, as such, of the Company or any holder of Series A Preferred Stock
or of any predecessor or successor entity, or any of them, under or by reason of
the obligations, covenants, or agreements contained in this Agreement and the
Related Agreements; provided that nothing in this Article XVII shall eliminate
or limit the liability of any incorporator, shareholder, officer, director,
employee or partner (i) for breach of fiduciary duty, if any, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware or (iv) for any transaction for which the individual derived
an improper personal benefit.
ARTICLE XVIII. SCHEDULES
Any matter or item disclosed in any part of a particular
Schedule hereto shall be deemed to be disclosed in all parts of the Schedules
hereto where such matter is required to be disclosed.
ARTICLE XIX. ENTIRE AGREEMENT; COUNTERPARTS; SECTION HEADINGS
This Agreement and the Related Agreements set forth the entire
understanding of the parties hereto with respect to the subject matter hereof
and thereof and supersede any prior written or oral understandings with respect
thereto. This Agreement may be executed simultaneously in one or more
counterparts thereof, each of which shall be deemed as original but all of which
together shall constitute one and the same instrument. The headings in this
Agreement are for convenience of reference only and shall not alter or otherwise
affect the meaning hereof.
41
48
ARTICLE XX. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF MISSOURI, WITHOUT GIVING EFFECT
TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE
APPLICATION OF THE SUBSTANTIVE LAWS OF ANY OTHER STATE, EXCEPT THAT ALL MATTERS
RELATIVE TO THE INTERNAL AFFAIRS OF THE COMPANY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE GENERAL CORPORATION LAW OF THE STATE OF
DELAWARE.
ARTICLE XXI. SEVERABILITY
If any term or provision of this Agreement, the Series A
Preferred Stock or the Founders' Warrants, or the application thereof to any
Person or circumstance, shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement, the Series A Preferred Stock or the Founders'
Warrants, as the case may be, or its application to other Persons or
circumstances, shall not be affected thereby and each term and provision hereof
shall be enforced to the fullest extent permitted by law.
If the foregoing corresponds with your understanding of our
agreement, kindly sign this letter and the accompanying copies thereof in the
appropriate space below and return one counterpart of the same to the Company,
at the address first listed above.
Very truly yours,
XXXXXXX COMMUNICATIONS, INC.
/s/ XXXXXX X. XXXX
By: ----------------------------
Xxxxxx X. Xxxx, President
42
49
Accepted and agreed to:
XXXXXX INVESTMENTS, L.P. RAB PARTNERSHIP, L.P.
By:_______________________________ By:______________________________
Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx,
General Partner General Partner
CENTENNIAL FUND V, L.P. CENTENNIAL ENTREPRENEURS
FUND V, L.P.
By: Centennial Holdings V, L.P. By: Centennial Holdings V, L.P.
Its: General Partner Its: General Partner
By:______________________________ By:______________________________
Xxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxxx
A General Partner A General Partner
TELECOM PARTNERS II, L.P. DON INVESTMENT GROUP, L.P.
By: Telecom Management II, L.L.C.,
Its: General Partner
By:______________________________ By:______________________________
Name and Title:__________________ Name and Title:__________________
ONELIBERTY FUND IV, L.P. ONELIBERTY ADVISORS FUND IV, L.P.
By: OneLiberty Partners IV, L.L.C. By: OneLiberty Partners IV, L.L.C.
Its: General Partner Its: General Partner
By:_______________________________ By:_______________________________
Xxxxxx X. XxXxxxxx, Xx. Xxxxxx X. XxXxxxxx, Xx.
Managing Member Managing Member
THE XXXXXXX SACHS GROUP, L.P. GS CAPITAL PARTNERS III, L.P.
By: GS Advisors III, L.P.
By: _____________________________ Its: General Partner
By: GS Advisors III, L.L.C.
Name and Title: _________________ Its: General Partner
XXXXXXX, XXXXX & CO.
VERWALTUNGS GmbH By:_________________________________
By: _____________________________ GS CAPITAL PARTNERS III OFFSHORE, L.P.
Managing Director By: GS Advisors III (Cayman), L.P.
Its: General Partner
By: _____________________________ By: GS Advisors III, L.L.C.
Registered Agent Its: General Partner
By:________________________________
43
50
STONE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
Its: General Partner
By: _____________________________
XXXXXX XXXXXX XXXX 0000, X.X.
By: Stone Street Advantage Corp.
Its: Managing General Partner
By: _____________________________
44
51
List of Schedules
4.1 States of Qualification
4.4 Third Party Consents
4.5 Capitalization
4.6 Subsidiaries
4.7(a)(i)and(ii) Financial Statements
4.10 Indebtedness to and from Affiliates
4.11 Licenses, etc.
4.13 Leases
4.16 Defaults
4.18 Employee Benefit Plans
4.20 Employment Contracts, Labor Relations
4.22 Necessary Property
4.23 Transaction Costs
4.27 Authorizations
4.29 Acquisition Agreements
4.30 Material Contracts and Obligations
5.1 Risk Factors
5.2 Written Materials
7.10 Additional Indebtedness
52
EXHIBIT A
LIST OF PURCHASERS
INITIAL CLOSING - NOVEMBER 18, 1998
Additional Preferred Stock
Purchases on Closing Date Subscription Obligations
------------------------- ------------------------ Total
Purchaser Shares Amount Shares Amount Amount
--------- ------ ------ ------ ------ ------
Xxxxxx Investments, L.P. 444,445 $1,333,335 888,888 $2,666,664 $ 3,999,999
00000 Xxxxxxxxxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
RAB Partnership, L.P. 111,111 $ 333,333 222,222 $ 666,666 $ 999,999
00000 Xxxxxxxxxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Xxxxx Xxxxxx Xxxx 0000, X.X. 128,028 $ 384,084 256,057 $ 768,171 $ 1,152,255
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxx Xxxx 0000, L.P 38,638 $ 115,914 77,277 $ 231,831 $ 347,745
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
GS Capital Partners III, L.P. 1,135,436 $3,406,308 2,270,874 $6,812,622 $10,218,930
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
GS Capital Partners III Offshore, L.P. 312,145 $ 936,435 624,290 $1,872,870 $ 2,809,305
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxx & Co.
Verwaltungs GmbH
00 Xxxxx Xxxxxx 52,418 $ 157,254 104,837 $ 314,511 $ 471,765
Xxx Xxxx, XX 00000
Don Investment Group, L.P. 555,556 $1,666,668 1,111,111 $3,333,333 $ 5,000,001
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Centennial Fund V, L.P. 1,111,111 $3,333,333 2,222,222 $6,666,666 $ 9,999,999
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
53
Additional Preferred Stock
Purchases on Closing Date Subscription Obligations
------------------------- ------------------------ Total
Purchaser Shares Amount Shares Amount Amount
--------- ------ ------ ------ ------ ------
Centennial Entrepreneurs 33,333 $ 99,999 66,667 $ 200,001 $ 300,000
Fund V, L.P.
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Telecom Partners II, L.P. 1,111,111 $3,333,333 2,222,222 $6,666,666 $ 9,999,999
0000 Xxxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
OneLiberty Fund IV, L.P. 555,556 $1,666,668 1,111,111 $3,333,333 $ 5,000,001
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
OneLiberty Advisors
Fund IV, L.P. 27,777 $ 83,331 55,556 $ 166,668 $ 249,999
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
--------- ----------- ---------- ----------- -----------
Totals 5,616,665 $16,849,995 11,233,334 $33,700,002 $50,549,997
SUBSEQUENT CLOSING - DECEMBER 17, 1998
Purchases on Additional Preferred Stock
Subsequent Closing Date Subscription Obligations
----------------------- ------------------------ Total
Additional Purchaser Shares Amount Shares Amount Amount
-------------------- ------ ------ ------ ------ ------
Norwest Equity Partners VI, L.P. 555,556 $1,666,668 1,111,111 $3,333,333 $5,000,001
2800 Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Chase Venture Capital Associates, L.P. 555,556 $1,666,668 1,111,111 $3,333,333 $5,000,001
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
A-2
54
Additional Preferred Stock
Purchases on Closing Date Subscription Obligations
------------------------- ------------------------ Total
Additional Purchaser Shares Amount Shares Amount Amount
-------------------- ------ ------ ------ ------ ------
X. X. Xxxxxxx III, L.P. 1,627,451 $4,882,353 3,254,902 $9,764,706 $14,647,059
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Whitney Strategic Partners III, L.P. 39,216 $ 117,648 78,431 $ 235,293 $ 352,941
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxx Xxxxxx Xxxx 0000, X.X. 42,676 $ 128,028 85,352 $ 256,056 $ 384,084
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxx Xxxx 0000, X.X. 12,879 $ 38,637 25,759 $ 77,277 $ 115,914
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
GS Capital Partners III, L.P. 378,480 $1,135,440 756,958 $2,270,874 $ 3,406,314
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
GS Capital Partners III Offshore, L.P. 104,048 $ 312,144 208,096 $ 624,288 $ 936,432
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxx & Co. 17,473 $ 52,419 34,946 $ 104,838 $ 157,257
Verwaltungs GmbH
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
--------- ----------- --------- ----------- -----------
Totals 3,333,335 $10,000,005 6,666,666 $19,999,998 $30,000,003
Additional Preferred Stock
Initial Closings Subscription Obligations
---------------- ------------------------ Total
TOTAL INVESTMENTS Shares Amount Shares Amount Amount
----------------- ------ ------ ------ ------ ------
8,950,000 $26,850,000 17,900,000 $53,700,000 $80,550,000
A-3
