EXHIBIT 1
Conformed Execution Copy
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RESTRUCTURING AGREEMENT
AMONG
TLL PARTNERS, L.L.C.,
GM HOLDINGS, LLC
AND
TELETOUCH COMMUNICATIONS, INC.
DATED AS OF MAY 17, 2002
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS .................................................. 1
1.1 Definitions ....................................................... 1
1.2 Other Terms ....................................................... 4
ARTICLE 2 DEBT RESTRUCTURING ........................................... 4
2.1 Advancing Term Note ............................................... 4
2.2 Agreement of Holdings Regarding the Holdings Note ................. 5
2.3 Agreement of Purchaser Regarding the Purchaser Notes .............. 5
2.4 Authorization and Delivery of Warrant ............................. 5
ARTICLE 3 SECURITIES RESTRUCTURING ..................................... 5
3.1 Distributions with Respect to Series A Preferred .................. 5
3.2 Grant and Purchase of Option ...................................... 6
3.3 Exchange of Capital Stock ......................................... 6
3.4 No Further Ownership Rights in Purchaser Securities ............... 6
3.5 Exchange Procedures ............................................... 6
3.6 Lost Certificate .................................................. 7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF HOLDINGS ................... 7
4.1 Title ............................................................. 7
4.2 Organization and Qualification .................................... 7
4.3 Power and Authority ............................................... 7
4.4 Enforceability .................................................... 7
4.5 No Default or Consents ............................................ 7
4.6 Litigation ........................................................ 8
4.7 Brokers, etc ...................................................... 8
4.8 Bankruptcy ........................................................ 8
4.9 Disposition and Investment Decision ............................... 8
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER .............. 8
5.1 Title ............................................................. 8
5.2 Organization and Qualification .................................... 8
5.3 Power and Authority ............................................... 8
5.4 Enforceability .................................................... 9
5.5 No Default or Consents ............................................ 9
5.6 Litigation ........................................................ 9
5.7 Brokers, etc ...................................................... 9
5.8 Bankruptcy ........................................................ 9
5.9 Investment ........................................................ 9
5.10 Nature of Purchaser ............................................... 9
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................ 10
6.1 Organization and Qualification .................................... 10
6.2 Power and Authority ............................................... 10
6.3 Enforceability .................................................... 10
6.4 No Default or Consents ............................................ 10
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TABLE OF CONTENTS
(continued)
Page
6.5 Brokers, etc .................................................... 10
ARTICLE 7 COVENANTS OF THE PARTIES ................................... 10
7.1 Mutual Covenants ................................................ 11
7.2 Covenants of Company ............................................ 11
7.3 Covenants of Purchaser and Holdings ............................. 14
ARTICLE 8 CLOSING; CONDITIONS TO CLOSING ............................. 14
8.1 Closing ......................................................... 14
8.2 Conditions to this Agreement .................................... 14
8.3 Mutual Conditions ............................................... 15
8.4 Conditions to Obligations of Company ............................ 16
8.5 Conditions to Obligations of Purchaser .......................... 16
8.6 Conditions to Obligations of Holdings ........................... 17
ARTICLE 9 TERMINATION AND AMENDMENT .................................. 17
9.1 Termination ..................................................... 17
9.2 Amendment ....................................................... 18
9.3 Extension; Waiver ............................................... 18
9.4 Effect of Termination ........................................... 18
ARTICLE 10 MISCELLANEOUS .............................................. 19
10.1 Survival of Provisions .......................................... 19
10.2 No Waiver; Modifications in Writing ............................. 19
10.3 Notices ......................................................... 19
10.4 Execution in Counterparts ....................................... 20
10.5 Binding Effect; Assignment ...................................... 20
10.6 Entire Agreement ................................................ 20
10.7 Public Announcements ............................................ 20
10.8 Governing Law ................................................... 20
10.9 Further Assurances .............................................. 20
10.10 Severability of Provisions ...................................... 20
10.11 Headings ........................................................ 21
10.12 Time ............................................................ 21
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RESTRUCTURING AGREEMENT
This RESTRUCTURING AGREEMENT dated as of May 17, 2002 (the
"Agreement"), is by and among TLL Partners, L.L.C., a Delaware limited liability
company (the "Purchaser"), GM Holdings, LLC, a Tennessee limited liability
company ("Holdings") and Teletouch Communications, Inc., a Delaware corporation
(the "Company").
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
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requires a different meaning:
"Action" means any lawsuit, action, proceeding, investigation or
complaint before any Governmental Authority (as defined below), mediator, judge
or arbitrator.
"Advancing Term Loan" has the meaning set forth in Section 2.1.
"Affiliate" means, when used with respect to any specified Person (as
defined below), any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person, and as to any Person who is an individual, that Person's relatives who
are a spouse, parent, child, grandparent or sibling. For the purposes of this
definition, "control", when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified from time to time in accordance with the terms hereof.
"Amendment" means the Amendment to the Company's Charter (as defined
below) in the form attached hereto as Exhibit A.
"AMEX" means the American Stock Exchange.
"Applicable Laws" means all applicable laws, statutes, orders, rules,
regulations, policies or guidelines promulgated, or judgments, decisions or
orders entered by, any Governmental Authority.
"Assignment of Interest" means an instrument to be executed and
delivered at Closing by Holdings assigning and transferring its interest in the
Holdings Securities and in such form as is usual and customary for the type of
transactions contemplated by this Agreement.
"Business Day" means a day that is not a Saturday or Sunday, or any
other day on which banking institutions in Dallas, Texas are obligated or
permitted by law, regulation or executive order to be closed.
"CIVC Agreement" means the Option and Securities Purchase Agreement
dated as of August 24, 2001, together with the letter agreement relating thereto
dated as of May 15, 2002, among Purchaser and the other signatories thereto
pursuant to which Purchaser is purchasing the Purchaser Securities and the
Purchaser Notes.
"Certificates" has the meaning set forth in Section 3.5.
"Charter" means the Company's Certificate of Incorporation filed with
the Secretary of State of Delaware on July 19, 1994, as amended from time to
time.
"Closing" has the meaning set forth in Section 8.1.
"Closing Date" has the meaning set forth in Section 8.1.
"Co-Sale Agreement" shall mean the Co-Sale Agreement between Purchaser
and Holdings dated as of the date hereof in the form attached hereto as Exhibit
I.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" shall mean the common stock, $0.001 par value per share,
of the Company.
"Company" means Teletouch Communications, Inc., a Delaware corporation.
"Company Stockholder Authorizations" means authorization by the holders
of the Common Stock of: (a) the adoption of the Restatement (as defined below);
(b) the approval of the issuance to Holdings of the Warrant (as defined below);
and (c) the issuance of the Series C Preferred (as defined below) to Purchaser
in exchange for the Purchaser Securities (as defined below) and the Holdings
Securities (as defined below), in each case as set forth in this Agreement.
"Company Stockholders" means the holders of the Company's capital
stock.
"Company Stockholders Meeting" has the meaning set forth in Section
7.2.2.
"Constituent Documents" has the meaning set forth in Section 10.6.
"Credit Agreement" means the Second Amended and Restated Credit
Agreement by and between the Company and ING Prime Rate Trust, a Massachusetts
business trust (formerly known as Pilgrim America Prime Rate Trust) ("Pilgrim"),
dated as of the date hereof (including the notes issued thereunder, as in effect
on the date of the execution thereof as amended from time to time in accordance
with its terms).
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"Governmental Authority" means any federal, native American Indian,
state, province, county, city, municipal, tribal or other political subdivision
or government, department, commission, board, bureau, court, agency or any other
instrumentality of any of them, including, without limitation, the Federal
Communications Commission.
"Holdings" means GM Holdings, LLC, a Tennessee limited liability
company.
"Holdings Note" means the 14% Junior Subordinated Note dated August 3,
1995, as amended and restated, issued by the Company to Holdings and payable in
the original principal amount of $1,200,000.
"Holdings Securities" means the shares of Series A Preferred (as
defined below) and Series B Preferred (as defined below) held by Holdings as set
forth on Part A of Schedule 1.1 attached hereto.
"Option" has the meaning set forth in Section 3.2.1.
"Option Payment" has the meaning set forth in Section 3.2.2.
"Person" means any individual, partnership, corporation, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other legal entity of
any kind.
"Principal Stockholders Agreement" shall mean the Principal
Stockholders Agreement among the Purchaser, Holdings and the other signatories
thereto, dated of even date herewith, a copy of which is attached hereto as
Exhibit C.
"Purchase Price" has the meaning set forth in Section 3.2.1.
"Purchaser" has the meaning set forth in the introductory paragraph to
this Agreement.
"Purchaser Notes" shall mean each of the 14% Junior Subordinated Notes
dated August 3, 1995, as amended and restated, issued by the Company acquired by
Purchaser pursuant to the CIVC Agreement, all as set forth on Part B of Schedule
1.1 attached hereto.
"Purchaser Securities" means the issued and outstanding shares of
Series A Preferred Stock, Series B Preferred and Series B Preferred Stock
Warrants acquired by Purchaser pursuant to the CIVC Agreement, all as set forth
on Part C of Schedule 1.1 attached hereto.
"Restatement" shall mean the Company's Restated and Amended Certificate
of Incorporation in the form attached hereto as Exhibit D.
"Rights Agreement" means the Investor Rights Agreement among the
Company, Purchaser and Holdings, in the form attached hereto as Exhibit E.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.
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"Series A Preferred" shall mean the Series A 14% Cumulative Preferred
Stock, $0.001 par value per share, of the Company.
"Series B Preferred" shall mean the Series B Preferred Stock, $0.001
par value per share, of the Company.
"Series B Preferred Stock Warrants" shall mean all outstanding warrants
to purchase Series B Preferred Stock.
"Series C Preferred" shall mean the Series C Preferred Stock, $0.001
par value per share, of the Company to be issued in exchange for the Purchaser
Securities and the Holdings Securities as contemplated by this Agreement, the
voting powers, designations, preferences and relative, participating and other
rights of which are set forth in Article IV of the Restatement.
"State" means each of the states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
"Stock Powers" shall mean the instruments evidencing the assignment and
transfer of any portion of the Holdings Securities in such form as is usual and
customary for the transfer of securities.
"Termination Agreement" means the Termination Agreement among the
Company, Purchaser, Holdings and the other parties thereto, in the form attached
hereto as Exhibit F.
"Termination Date" has the meaning set forth in Section 10.1.
"Warrant" has the meaning set forth in Section 2.4.1.
1.2 Other Terms. Whenever the context requires, the words used herein
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shall include the masculine, feminine and the neuter gender, and the singular
and plural. All references to sections and articles shall be to sections or
articles of this Agreement, except as otherwise specified.
ARTICLE 2
DEBT RESTRUCTURING
2.1 Advancing Term Note. Subject to the terms and conditions of this
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Agreement, the Purchaser agrees to make loans to the Company during the period
from and including the date of the execution of this Agreement through the fifth
anniversary of the date of execution of this Agreement in an aggregate principal
amount of Two Million Two Hundred Thousand Dollars ($2,200,000) (the "Advancing
Term Loan"). The Advancing Term Loan made by Purchaser shall be evidenced by a
single promissory note of the Company substantially in the form of Exhibit G,
which shall be subordinate in all respects to the interests of Pilgrim under the
Credit Agreement as set forth in the Subordination Agreement between Purchaser
and Pilgrim dated of even date herewith.
2.2 Agreement of Holdings Regarding the Holdings Note. Subject to the
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terms and conditions of this Agreement, upon execution of this Agreement,
Holdings shall deliver or cause
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to be delivered to the Company the Holdings Note, appropriately marked
"cancelled", and the indebtedness thereunder shall be deemed to have been repaid
in full and the Company shall be deemed to have been fully, freely and
completely released and discharged from any and all of its obligations
thereunder whatsoever. Notwithstanding anything herein to the contrary, the
cancellation of such indebtedness by Holdings shall be full, final and complete,
and Holdings shall have no recourse with respect thereto, on and after the date
hereof.
2.3 Agreement of Purchaser Regarding the Purchaser Notes. Subject to
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the terms and conditions of this Agreement, upon execution of this Agreement,
Purchaser shall deliver or cause to be delivered to the Company the Purchaser
Notes, each appropriately marked "cancelled", and the indebtedness thereunder
shall be deemed to have been repaid in full and the Company shall be deemed to
have been fully, freely and completely released and discharged from any and all
of its obligations thereunder whatsoever. Notwithstanding anything herein to the
contrary, the cancellation of such indebtedness by Purchaser shall be full,
final and complete, and Purchaser shall have no recourse with respect thereto,
on and after the date hereof.
2.4 Authorization and Delivery of Warrant.
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2.4.1 Subject to the terms and conditions of this Agreement and
the receipt of the Company Stockholder Authorizations, the Company shall
authorize the issuance and delivery to Holdings or its designated assigns stock
purchase warrants to purchase an aggregate of a minimum of 6,000,000 shares of
Common Stock, in the form attached hereto as Exhibit H (individually, a
"Warrant" and collectively the "Warrants"), in exchange for Holdings'
cancellation of the indebtedness represented by the Holdings Note. At the
Closing, Seller shall issue to Holdings or its designated assigns such Warrant
or Warrants, as the case may be.
2.4.2 In connection with the foregoing, and as an inducement to,
and in further consideration of, Holdings' entering into this Agreement: (a)
Purchaser shall enter into the Principal Stockholders Agreement; and (b)
Purchaser shall cause each of Rainbow Resources, Inc., Xxxxxx X. XxXxxxxx, and
J. Xxxxxx Xxxxxx to enter into the Principal Stockholders Agreement.
2.4.3 Notwithstanding anything in this Agreement to the
contrary, in the event the Company Stockholder Authorizations are not obtained
at the Company Stockholders Meeting, under no circumstances shall the Company be
obligated to issue the Warrants until such Company Stockholder Authorizations
have been obtained.
ARTICLE 3
SECURITIES RESTRUCTURING
3.1 Distributions with Respect to Series A Preferred. Notwithstanding
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any other provision of this Agreement or any of the terms set forth in the
Charter with respect to the Series A Preferred or Series B Preferred, Purchaser,
Holdings and the Company agree that no dividends or other distributions shall
accrue, be declared or be made with respect to the Series A Preferred or the
Series B Preferred from and after the date hereof.
3.2 Grant and Purchase of Option.
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3.2.1 Subject to the terms and conditions hereof, Holdings grants
to Purchaser an option to purchase, for the aggregate consideration of $74,000
payable to Holdings (the "Purchase Price"), the Holdings Securities (the
"Option"). Unless terminated earlier in accordance with the terms of this
Agreement, the Option shall be exercised at the Closing.
3.2.2 In consideration for the grant of the Option in Section
3.2.1 above, upon execution of this Agreement, Purchaser shall pay Holdings the
aggregate sum of $59,000 (the "Option Payment"). Payment of the Option Payment
shall be made by wire transfer in same-day funds to the account of Holdings as
set forth on Schedule 3.2.2 hereto.
3.2.3 Subject to the terms and conditions hereof, Purchaser shall
exercise the Option by paying (by wire transfer of same-day funds) the Purchase
Price to Holdings. The amount of the Option Payment shall be credited to the
Purchase Price payable to Holdings and the amount of the wire transfer made on
the Closing reduced accordingly.
3.3 Exchange of Capital Stock.
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3.3.1 Immediately following the acquisition of the Holdings
Securities by Purchaser, at the Closing, the Company shall acquire from
Purchaser all of the Purchaser Securities and Holdings Securities in exchange
for one million (1,000,000) shares of Series C Preferred, which shall thereupon
be fully paid and non-assessable.
3.3.2 In connection with the foregoing, and as an inducement to,
and in further consideration of, Purchaser's entering into this Agreement
Holdings shall enter into the Principal Stockholders Agreement.
3.4 No Further Ownership Rights in Purchaser Securities. All shares of
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Series C Preferred issued upon surrender of Certificates (as defined below) by
Purchaser in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Purchaser
Securities and Holdings Securities represented thereby.
3.5 Exchange Procedures. Promptly, and in any event within three
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business days after the Closing Date, the Company shall deliver to Purchaser:
(a) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates or agreements
(collectively, the "Certificates") that immediately prior to the Closing Date
represented outstanding Purchaser Securities and Holdings Securities, which were
exchanged for shares of Series C Preferred pursuant to Section 3.3, shall pass
only upon delivery of the Certificates to the Company and shall be in such form
and have such other provisions as Company may reasonably specify); and (b)
instructions for effecting the surrender of the Certificates in exchange for
certificates representing shares of Series C Preferred. Upon surrender by
Purchaser of the Certificates for cancellation to the Company, together with a
duly executed letter of transmittal, the Purchaser shall be entitled to receive
from the Company in exchange therefor a certificate representing shares of
Series C Preferred which Purchaser has the right to receive.
3.6 Lost Certificate. If any Certificate shall have been lost, stolen
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or destroyed, upon the making of an affidavit of that fact by the Purchaser
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Company, the posting by the Purchaser of a bond, in such
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reasonable amount as the Company may direct, as indemnity against any claim
that may be made with respect to such Certificate, Company will issue in
exchange for such lost, stolen or destroyed Certificate the Series C Preferred
to be delivered in respect of the Series A Preferred, Series B Preferred and
Series B Warrants represented by such Certificates as contemplated by this
Article 3.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Holdings represents and warrants as follows:
4.1 Title. Holdings has good and valid title to the Holdings Note
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and the Holdings Securities held by it, and owns such Holdings Note and Holdings
Securities free and clear from all liens, security interests, options, charges,
claims, mortgages, deeds of trusts, or other encumbrances of any kind. The
Holdings Note and the Holdings Securities constitute all of the interests,
rights or ownership of Holdings in any equity or debt securities or debt
instruments of the Company other than 405,276 shares of Common Stock.
4.2 Organization and Qualification. Holdings is duly formed,
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validly existing and in good standing under the laws of the state of its
formation.
4.3 Power and Authority. Holdings has all requisite power and
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authority to enter into this Agreement and all other agreements, conveyances,
documents, instruments and certificates to be delivered by Holdings pursuant to
this Agreement and to perform its obligations hereunder and thereunder, and the
execution, delivery and performance of this Agreement and such documents by
Holdings have been duly and validly authorized by all necessary action
4.4 Enforceability. This Agreement and the Constituent Documents
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to which Holdings is a party have been duly and validly executed and delivered
by Holdings and constitute the legal, valid and binding obligations of Holdings
enforceable against Holdings in accordance with their terms, except as
enforcement may be limited by laws affecting the rights of creditors generally
and legal and equitable limitations on the availability of specific remedies.
4.5 No Default or Consents. Neither the execution and delivery of
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this Agreement or any document or instrument executed and delivered in
connection therewith, nor the consummation of the transactions contemplated
herein will: (a) conflict with or result in a breach, default or violation of or
require consent under (i) the organizational documents of Holdings, or (ii) any
material contract, lease, instrument or mortgage to which Holdings is a party or
by which Holdings is bound; or (b) result in the creation of any lien or
security interest upon the Holdings Note or the Holdings Securities, including
but not limited to, a right to purchase the Holdings Note or the Holdings
Securities. Except for the authorizations and approvals to be obtained as
contemplated in this Agreement, the failure of any person not a party hereto to
authorize or approve this Agreement will not give any person the right to
enjoin, rescind or otherwise prevent or impede the sale of the Holdings
Securities to Purchaser in accordance with the terms of this Agreement or to
obtain damages from, or any other judicial relief against, Purchaser as a result
of the transactions carried out by Holdings in accordance with the provisions of
this Agreement.
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4.6 Litigation. There is not now pending or, to the knowledge of
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Holdings, threatened, any suit, action, arbitration, demand, investigation or
legal, administrative or other governmental proceeding against or affecting
Holdings in connection with Holdings' execution and delivery of this Agreement
or the consummation by Holdings of the transactions contemplated herein.
4.7 Brokers, etc. No broker or investment banker acting on behalf
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of Holdings or under the authority of Holdings is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from Holdings in connection with any of the transactions contemplated
herein.
4.8 Bankruptcy. There are no bankruptcy, reorganization or
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arrangement proceedings pending against, being contemplated by, or to Holdings'
knowledge, threatened against Holdings.
4.9 Disposition and Investment Decision. Holdings represents and
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warrants to Purchaser and the Company that Holdings: (a) is an "accredited
investor" within the meaning of Rule 501 under the Securities Act; (b) by reason
of its business and financial experience (or that of its owners) has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating a decision to forgive the Holdings Note and to sell
the Holdings Securities and the consent to the Amendment and Restatement; and
(c) has had available to it such information regarding the Company as it deems
appropriate and necessary in order to enter into this Agreement for the sale and
transfer of the foregoing, receipt of the Warrant and the execution of this
Agreement and the consent to the Amendment and Restatement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants as follows:
5.1 Title. Purchaser has good and valid title to the Purchaser
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Notes and the Purchaser Securities, and owns such Purchaser Notes and Purchaser
Securities free and clear from all liens, security interests, options, charges,
claims, mortgages, deeds of trusts, or other encumbrances of any kind. Parts B
and C of Schedule 1.1 set forth all of the interests, rights or ownership of
Purchaser in any equity or debt securities or debt instruments of the Company
other than 295,649 shares of Common Stock and warrants to purchase 2,660,840
shares of Common Stock.
5.2 Organization and Qualification. Purchaser is duly formed,
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validly existing and in good standing under the laws of the state of its
formation.
5.3 Power and Authority. Purchaser has all requisite power and
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authority to enter into this Agreement and all other agreements, conveyances,
documents, instruments and certificates to be delivered by it pursuant to this
Agreement and to perform its obligations hereunder and thereunder, and the
execution, delivery and performance of this Agreement and such documents by it
have been duly and validly authorized by all necessary action.
5.4 Enforceability. This Agreement and the Constituent Documents
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to which Purchaser is a party have been duly and validly executed and delivered
by Purchaser, constitutes
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the legal, valid and binding obligations of Purchaser enforceable against
Purchaser in accordance with their terms, except as enforcement may be limited
by applicable laws affecting the rights of creditors generally and legal and
equitable limitations on the availability of specific remedies.
5.5 No Default or Consents. Neither the execution and delivery of
----------------------
this Agreement or any document or instrument executed and delivered in
connection therewith, nor the consummation of the transactions contemplated
herein will: (a) conflict with or result in a breach, default or violation of or
require consent under (i) the organizational documents of Purchaser, or (ii) any
material contract, lease, instrument, mortgage or agreement to which Purchaser
is a party or by which it is bound; or (b) result in the creation of any lien or
security interest upon the Purchaser Notes or the Purchaser Securities,
including but not limited to, a right to purchase the Purchaser Notes or
Purchaser Securities. The failure of any person not a party hereto to authorize
or approve this Agreement will not give any person the right to enjoin, rescind
or otherwise prevent or impede the forgiveness of the Purchaser Notes or the
exchange of Purchaser Securities in accordance with the terms of this Agreement
or to obtain damages from, or any other judicial relief against, Purchaser as a
result of the transactions carried out by Purchaser in accordance with the
provisions of this Agreement.
5.6 Litigation. There is not now pending or, to the knowledge of
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Purchaser, threatened, any suit, action, arbitration, demand, investigation or
legal, administrative or other governmental proceeding against or affecting
Purchaser in connection with Purchaser's execution and delivery of this
Agreement or the consummation of the transactions contemplated herein.
5.7 Brokers, etc. No broker or investment banker acting on behalf
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of Purchaser or under the authority of Purchaser is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from Purchaser in connection with any of the transactions
contemplated herein.
5.8 Bankruptcy. There are no bankruptcy, reorganization or
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arrangement proceedings pending against, being contemplated by, or to
Purchaser's knowledge, threatened against Purchaser.
5.9 Investment. The Purchaser understands that the Holdings
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Securities have not been registered under the Securities Act and, therefore,
cannot be resold unless registered under the Securities Act or unless an
exemption from such registration is available. Purchaser represents and warrants
to Holdings that the Holdings Securities are being acquired for investment
purposes, for its own account and with no intention other than as set forth
herein of distributing or reselling the Holdings Securities in violation of
federal or State securities laws.
5.10 Nature of Purchaser. The Purchaser represents and warrants to
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Holdings and the Company that: (a) it is an "accredited investor" within the
meaning of Rule 501 under the Securities Act; (b) by reason of its business and
financial experience (or that of its owners) it has such knowledge,
sophistication and experience in business and financial matters, so as to be
capable of evaluating the merits and risks of the prospective investment in the
Holdings Securities and to consent to the Amendment and the Restatement and the
exchange of the Purchaser Securities and the Holdings Securities for the Series
C Preferred; (c) has had available to it such information regarding the Company
as it deems appropriate and necessary in order to
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enter into this Agreement for the purchase of the Holdings Securities and the
execution of this Agreement and the consent to the Amendment and Restatement and
the exchange of the Purchaser Securities and the Holdings Securities for the
Series C Preferred; and (d) is able to bear the economic risk of such
investment.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Holdings and the Purchaser
as follows, which representations and warranties shall and hereby are made again
as of Closing, and which shall survive Closing:
6.1 Organization and Qualification. Company is a corporation,
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duly formed, validly existing and in good standing under the laws of the State
of Delaware.
6.2 Power and Authority. Company has all requisite power and
-------------------
authority to enter into this Agreement and all other agreements, conveyances,
documents, instruments and certificates to be delivered by it pursuant to this
Agreement and to perform its obligations hereunder and thereunder, and the
execution, delivery and performance of this Agreement and such documents by it
have been duly and validly authorized by all necessary action.
6.3 Enforceability. This Agreement has been duly and validly
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executed and delivered by Company, constitutes the legal, valid and binding
obligation of Company enforceable against Company in accordance with its terms,
except as enforcement may be limited by applicable laws affecting the rights of
creditors generally and legal and equitable limitations on the availability of
specific remedies.
6.4 No Default or Consents. Neither the execution and delivery of
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this Agreement nor the consummation of the transactions contemplated herein will
conflict with or result in a breach, default or violation of or require consent
under (a) the organizational documents of Company, or (b) any material contract
or agreement to which Company is a party or by which it is bound.
6.5 Brokers, etc. No broker or investment banker acting on behalf
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of Company or under the authority of Company is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from Company in connection with any of the transactions contemplated
herein.
ARTICLE 7
COVENANTS OF THE PARTIES
The parties hereto agree as follows with respect to the period from
and after the execution of this Agreement.
7.1 Mutual Covenants.
----------------
7.11 General. Company, Purchaser and Holdings shall use,
respectively, their best commercial efforts to take all action and to do all
things necessary, proper or advisable to
-10-
consummate the transactions contemplated by this Agreement; including, without
limitation, using, respectively, their reasonable commercial efforts to cause
the conditions set forth in Article 8 to the other's obligations to be satisfied
as soon as reasonably practicable and will not take or fail to take any action
that could reasonably be expected to result in non-fulfillment of such
condition, and to prepare, execute and deliver such further instruments and take
or cause to be taken such other and further action as any other party hereto
shall reasonably request to consummate the transactions contemplated herein.
7.1.2 Other Governmental Matters. Company, Purchaser and
Holdings shall use their best commercial efforts to take any additional action
that may be necessary, proper or advisable in connection with any other notices
to, filings with, and authorizations, consents and prior approvals of any
Governmental Authority and any third parties that it may be required to give,
make or obtain.
7.1.3 Tax-Free Treatment. Company, Purchaser and Holdings shall
not knowingly take or fail to take any action that would cause the transactions
contemplated by this Agreement not to constitute a tax-free "reorganization"
under Section 368(a) of the Code.
7.1.4 Public Announcements. Unless otherwise required by
Applicable Laws or requirements of the National Association of Securities
Dealers or AMEX (and in that event only if time does not permit), at all times
prior to the earlier of the Closing or termination of this Agreement pursuant to
Article 9, Company, Purchaser and Holdings shall not issue any press release
with respect to this Agreement without the consent of the other, whose consent
shall not be unreasonably withheld.
7.1.5 Fees. Each party hereto shall indemnify and hold the
others harmless from and against any and all claims, liabilities or obligations
with respect to any legal, tax, brokerage, finders or similar fee or commission
or expenses incurred in connection with the transactions contemplated by this
Agreement, or asserted by any person on the basis of any act or statement
alleged to have been made by such party or its affiliate.
7.2 Covenants of Company.
--------------------
7.2.1 Certain Actions. During the period from the date of this
Agreement to the Closing or the earlier termination of this Agreement pursuant
to Article 9, the Company shall not, except as otherwise expressly contemplated
by this Agreement and the transactions contemplated hereby, without the prior
written consent of the other parties hereto, which consent shall not be
unreasonably withheld:
(a) do or effect any of the following actions with
respect to its securities: (A) adjust, split, combine or reclassify its capital
stock; (B) make, declare or pay any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock (except in connection with the use of shares of
capital stock to pay the exercise price or tax withholding in connection with
stock-based employee benefit plans of the Company); (C) grant any person any
right or option to acquire any shares of its capital stock other than pursuant
to a currently authorized stock option plan; (D) issue, deliver or sell or agree
-11-
to issue, deliver or sell any additional shares of its capital stock or such
securities (except pursuant to the exercise of outstanding convertible
securities, warrants, options or rights to purchase Common Stock); or (E) enter
into any agreement, understanding or arrangement with respect to the sale or
voting of its preferred stock other than pursuant to the provisions of this
Agreement;
(b) make or propose any changes in its Charter (or other
similar organizational documents), each as amended and restated, or other
organizational documents, other than the Amendment and the Restatement;
(c) merge or consolidate with any other Person or
acquire a material amount of assets or capital stock of any other Person;
(d) take any action to exempt under or make not subject
to any applicable state takeover law or state law that purports to limit or
restrict business combinations or the ability to acquire or vote shares, any
Person (other than between the parties or their subsidiaries) or any action
taken thereby, which Person or action would have otherwise been subject to the
restrictive provisions thereof and not exempt therefrom;
(e) permit or cause any subsidiary to do any of the
foregoing or agree or commit to do any of the foregoing; or
(f) agree in writing or otherwise to take any of the
foregoing actions.
7.2.2 Company Stockholders Meeting. The Company shall take all
action in accordance with Applicable Laws and the Charter necessary to convene a
meeting of Company Stockholders (the "Company Stockholders Meeting") as promptly
as practicable to consider and vote, but in any event no later than August 31,
2002 upon the Company Stockholder Authorizations.
7.2.3 Preparation of Proxy Statement. The Company shall, as soon
as is reasonably practicable, but in any event no later than June 14, 2002,
prepare and file a proxy statement and all required amendments and supplements
with the Commission and shall use all reasonable efforts to respond to comments
and to satisfy all conditions precedent to have the proxy statement mailed to
the Company Stockholders as promptly as practicable. Company shall use its best
commercial efforts to mail at the earliest practicable date to Company
Stockholders the proxy statement, which shall include all information required
under Applicable Laws to be furnished to Company Stockholders in connection with
the transactions contemplated thereby and the Company Stockholder
Authorizations. Company shall advise Purchaser promptly after it receives notice
of: (i) the satisfaction of all conditions precedent to the proxy statement
being mailed to the Company Stockholders; (ii) the issuance of any stop order in
respect of the proxy statement; and (iii) the receipt of any correspondence,
comments or requests from the Commission in respect of the proxy statement
(copies of which it shall furnish to Purchaser). Company shall give Purchaser
and its counsel the opportunity to review the proxy statement and all responses
to requests for additional information by and replies to comments of the SEC (as
defined below) before the definitive proxy statement being filed with or sent to
the Securities Exchange Commission ("SEC"). The Company also shall cooperate
with Purchaser to, and shall,
-12-
take such other reasonable actions (other than qualifying to do business
in any jurisdiction in which it is not so qualified) required to be taken under
any applicable state securities laws in connection with the issuance of shares
of Series C Preferred pursuant to the terms of this Agreement.
7.2.4 Notification of Certain Matters. Company shall give prompt
notice to Purchaser of and will use all commercially reasonable efforts to cure:
(a) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any Company representation or warranty
contained in this Agreement to be untrue or inaccurate at or prior to the
Closing Date; and (b) any material failure of Company to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 7.2.4 shall not limit or otherwise affect the remedies available
hereunder to Purchaser.
7.2.5 Company Stockholders' Authorization.
(a) The Company shall, as promptly as practicable, submit
the issuance of Series C Preferred in connection with the transactions
contemplated in this Agreement as required by AMEX for the approval of its
stockholders at the Company Stockholders' Meeting and shall use its reasonable
best efforts to obtain the Company Stockholder Authorizations. The Company
shall, through its Board of Directors (subject to the fiduciary duties of the
members thereof under Delaware law), recommend to its stockholders approval of
Company Stockholder Authorizations.
(b) The Company shall, as promptly as practicable, submit
the issuance of the Warrant in connection with the transactions contemplated in
this Agreement as required by AMEX for the approval of its stockholders at the
Company Stockholders' Meeting and shall use its reasonable best efforts to
obtain the Company Stockholder Authorizations. The Company shall, through its
Board of Directors (subject to the fiduciary duties of the members thereof under
Delaware law), recommend to its stockholders approval of the Warrant.
(c) The Company shall, as promptly as practicable, submit
the Restatement in connection with the transactions contemplated in this
Agreement as required by AMEX and Delaware law for the approval of its
stockholders at the Company Stockholders' Meeting and shall use its reasonable
best efforts to obtain the Company Stockholder Authorizations. The Company
shall, through its Board of Directors (subject to the fiduciary duties of the
members thereof under Delaware law), recommend to its stockholders approval of
the Restatement.
7.2.6 Amendment to Certificate. On the date hereof, the Company
shall file with the Secretary of State of Delaware the Amendment and make all
other filings or recordings required by Delaware law in connection therewith,
and each of the parties hereto hereby consents to such Amendment, such consent
evidenced by their signature hereto.
7.3 Covenants of Purchaser and Holdings.
-----------------------------------
7.3.1 Information for the Preparation of Proxy Statement.
Purchaser and Holdings shall promptly furnish Company with all information
concerning it as may be required
-13-
for inclusion in the proxy statement. Purchaser and Holdings shall cooperate
with Company in the preparation of the proxy statement in a timely fashion and
in Company's efforts to have the proxy statement mailed to Company Stockholders
as promptly as practicable. If at any time prior to the Closing Date, any
information pertaining to each of Purchaser or Holdings contained in or omitted
from the proxy statement makes such statements contained in the proxy statement
false or misleading, Purchaser or Holdings, as the case may be, shall promptly
so inform Company and provide Company with the information necessary to make
statements contained therein not false and misleading.
7.3.2 Notification of Certain Matters. Purchaser or Holdings, as
the case may be, shall give prompt notice to the Company of: (a) the occurrence
or non-occurrence of any event the occurrence or non-occurrence of which would
cause any Purchaser or Holdings, as the case may be, representation or warranty
contained in this Agreement to be untrue or inaccurate at or prior to the
Closing Date; and (b) any material failure of Purchaser or Holdings to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 7.3.2 shall not limit or otherwise affect the remedies
available hereunder to Company.
ARTICLE 8
CLOSING; CONDITIONS TO CLOSING
8.1 Closing. Unless this Agreement shall have been terminated and the
-------
transactions herein contemplated shall have been abandoned pursuant to Section
9.1, and subject to satisfaction or, to the extent permitted hereunder, waiver
(where applicable) of the conditions set forth in this Article 8, the closing of
the transactions contemplated hereby (the "Closing") will take place at the
offices of Xxxxxxxxx & Xxxxxxxxx, L.L.P., South Tower Pennzoil Place, Suite
2900, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000-0000, at 10:00 a.m., local
time, on the third business day following satisfaction of the conditions set
forth in Section 8.2 and the satisfaction or waiver (when applicable) of the
conditions set forth in Sections 8.3, 8.4 and 8.5, unless another date, time or
place is agreed to in writing by the parties hereto, which agreement will not be
unreasonably withheld ("Closing Date").
8.2 Conditions to this Agreement. On or prior to this Agreement, the
----------------------------
following conditions were met:
8.2.1 The Amendment shall have been filed with the Secretary of
State of Delaware on the date hereof;
8.2.2 Each of the parties to the Principal Stockholders
Agreement shall have duly executed and delivered to each of the parties hereto
counterparts of the Principal Stockholders Agreement effective as of the date
hereof;
8.2.3 Each of the parties to the Termination Agreement shall
have duly executed and delivered to each of the parties hereto counterparts of
the Termination Agreement effective as of the date hereof;
-14
8.2.4 Each of the parties to the Rights Agreement shall have
duly executed and delivered to each of the parties hereto counterparts of the
Rights Agreement effective as of the date hereof;
8.2.5 The Purchaser shall have advanced to the Company Five
Hundred Thousand Dollars ($500,000) under the Advancing Term Loan.
8.2.6 The Company shall execute and deliver such documents as
the Purchaser reasonably deems necessary in connection with the Advancing Term
Loan;
8.2.7 Purchaser and Holdings shall execute and deliver the
Co-Sale Agreement.
8.3 Mutual Conditions. The obligations of Purchaser, Holdings and the
-----------------
Company to consummate the transactions contemplated by this Agreement shall be
subject to fulfillment of the following conditions:
8.3.1 No temporary restraining order, preliminary or permanent
injunction or other order or decree which prevents the consummation of the
transactions contemplated hereby shall have been issued and remain in effect,
and no statute, rule or regulation shall have been enacted by any Governmental
Authority which prevents the consummation of the transactions contemplated
hereby;
8.3.2 All consents, approvals, permits or authorizations
required to be obtained prior to the Closing from any Governmental Authority in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been obtained,
failure to obtain which would reasonably be expected to have a material adverse
effect on the Company following the Closing Date;
8.3.3 The Company Stockholder Authorizations shall have been
approved by the Company Stockholders in the manner required by any Applicable
Law;
8.3.4 The AMEX shall not have notified the Company that in its
view the consummation of the transactions contemplated hereby would result in
violation of its rules, regulations, or listing maintenance criteria; and
8.3.5 The Restatement shall have been duly filed with the
Secretary of State of Delaware on or prior to the Closing Date.
8.4 Conditions to Obligations of Company. The obligations of Company
------------------------------------
to consummate the transactions contemplated hereby shall be subject to the
fulfillment of the following conditions unless waived by Company:
8.4.1 The representations and warranties of each of Holdings and
Purchaser set forth in Article 4 and Article 5, respectively, shall be true and
correct on the date hereof and the representations and warranties of Purchaser
set forth in Article 5 shall be true and correct on and as of the Closing Date
as though made on and as of the Closing Date (except for representations and
warranties made as of a specified date, which need be true and correct only as
of the specified date), except as affected by the transactions contemplated by
this Agreement and
-15-
except for such inaccuracies which have not had a material adverse effect on
Purchaser or Holdings, respectively;
8.4.2 Each of Purchaser and Holdings shall have performed in all
material respects each obligation and agreement and shall have complied in all
material respects with each covenant to be performed and complied with by it
hereunder at or prior to the Closing Date;
8.4.3 Purchaser shall have furnished Company with a certificate dated
the Closing Date signed on behalf of it by the Chairman, President or any Vice
President thereof to the effect that the conditions set forth in Sections 8.3.1
and 8.3.2, respectively, have been satisfied; and
8.5 Conditions to Obligations of Purchaser. The obligations of Purchaser
--------------------------------------
to consummate the transactions contemplated hereby shall be subject to the
fulfillment of the following conditions unless waived by Purchaser:
8.5.1 The representations and warranties of Holdings and Company set
forth in Article 4 and Article 6, respectively, shall be true and correct on the
date hereof and on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a specified
date, which need be true and correct only as of the specified date), except as
affected by the transactions contemplated by this Agreement and except for such
inaccuracies which have not had and would not reasonably be expected to have in
the reasonably foreseeable future a material adverse effect on Holdings or the
Company, respectively;
8.5.2 The Company shall have performed in all material respects each
obligation and agreement and shall have complied in all material respects with
each covenant to be performed and complied with by it hereunder at or prior to
the Closing Date;
8.5.3 The sale of the Holdings Securities to Purchaser: (i) shall not
be prohibited or enjoined (temporarily or permanently) by any Governmental
Authority pursuant to any applicable law or governmental regulation nor shall
any Action seeking such prohibition or injunction be pending; and (ii) shall not
subject Purchaser to any material penalty or, in its reasonable judgment, other
onerous conditions under or pursuant to any applicable law or governmental
regulation;
8.5.4 All certificates and instruments representing the Holdings
Securities shall have been duly transferred to Purchaser and delivered by
Holdings in accordance with the terms of the Assignments of Interest and/or
Stock Powers; and
8.5.5 Holdings shall have executed and delivered applicable
Assignments of Interest and/or Stock Powers.
8.6 Conditions to Obligations of Holdings. The obligations of Holdings to
-------------------------------------
consummate the transactions contemplated hereby shall be subject to the
fulfillment of the following conditions unless waived by Holdings:
8.6.1 The representations and warranties of Purchaser and Company set
forth in Article 5 and Article 6, respectively, shall be true and correct on the
date hereof and on and as of
-16-
the Closing Date as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, which need be true
and correct only as of the specified date), except as affected by the
transactions contemplated by this Agreement and except for such inaccuracies
which have not had and would not reasonably be expected to have in the
reasonably foreseeable future a material adverse effect on Purchaser or the
Company, respectively
8.6.2 Company shall have performed in all material respects each
obligation and agreement and shall have complied in all material respects with
each covenant to be performed and complied with by it hereunder at or prior to
the Closing Date.
8.6.3 The sale of the Purchaser Securities and the issuance of the
Warrant: (i) shall not be prohibited or enjoined (temporarily or permanently) by
any Governmental Authority pursuant to any applicable law or governmental
regulation, nor shall any Action seeking such prohibition or injunction be
pending; and (ii) shall not subject Holdings to any material penalty or, in its
reasonable judgment, other onerous condition under or pursuant to any applicable
law or governmental regulation;
8.6.4 Purchaser shall have paid to Holdings the Purchase Price;
8.6.5 The Company shall have issued and delivered to Holdings or its
designated assigns the Warrant or Warrants as contemplated in this Agreement;
and
8.6.6 The Company shall have delivered to Holdings an opinion of
counsel satisfactory to Holdings which shall include, without limitation, an
opinion that the Warrant or Warrants have been duly authorized and validly
issued and constitute valid and binding obligations of the Company enforceable
in accordance with their terms.
ARTICLE 9
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing Date, whether before or after the Company Stockholder Authorizations
have been obtained:
9.1.1 by mutual consent of the parties hereto;
9.1.2 by any party hereto if any permanent injunction or other order
or decree of a court or other competent Governmental Authority preventing the
consummation of the the transactions contemplated hereby shall have become final
and non-appealable, provided that the party seeking to terminate this Agreement
under Section 9.1.2 shall have used its best commercial efforts to remove such
injunction, order or decree;
9.1.3 by any party hereto if the Closing Date shall not have been
consummated before September 30, 2002, unless extended by the mutual written
agreement of the parties hereto (provided that the right to terminate this
Agreement under this Section 9.1.3 shall not be available to any party whose
failure or whose affiliate's failure to perform any material covenant or
obligation under this Agreement has been the cause of or resulted in the failure
of the transactions contemplated hereby to occur on or before such date);
-17-
9.1.4 by any party hereto if at the meeting of Company Stockholders
held for such purpose (including any adjournment or postponement thereof) the
requisite vote of the Company Stockholders necessary to approve the Company
Stockholder Authorizations shall not have been obtained;
9.1.5 by any party hereto (provided that such terminating party is
not then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach of any of
the covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of the other parties, which breach is not
cured within thirty (30) days following written notice given by the terminating
party to the party committing such breach, or which breach, by its nature,
cannot be cured prior to the Closing;
9.2 Amendment. This Agreement may be amended by the parties hereto at any
---------
time before or after adoption of this Agreement by Company Stockholders, but
after each such approval or authorization, no amendment shall be made which by
law requires further approval or authorization by the Company Stockholders
without such further approval or authorization. Notwithstanding the foregoing,
this Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
9.3 Extension; Waiver. At any time prior to the Closing Date, the
-----------------
parties, by mutual agreement, may, to the extent legally allowed: (i) extend the
time for the performance of any of the obligations or other acts of such party;
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
9.4 Effect of Termination. If this Agreement is terminated pursuant to
---------------------
Section 9.1, this Agreement shall become void and of no effect with no liability
on the part of any party hereto, except that such termination shall not relieve
any party hereto of any liability for any willful breach by that party of its
covenants, agreements or other obligations under this Agreement occurring prior
to such termination; provided, however, notwithstanding anything to the contrary
contained herein, the transactions set forth in Section 2.1, 2.2, 2.3 and 8.2
shall be final and binding on the parties hereto from and after the date hereof.
ARTICLE 10
MISCELLANEOUS
10.1 Survival of Provisions. The representations and warranties of the
----------------------
parties set forth in this Agreement shall survive the Closing Date for a period
of four years. Notwithstanding the preceding survival period, no representation
or warranty shall expire as to any claim for breach thereof made prior to the
expiration of such survival period.
10.2 No Waiver; Modifications in Writing. No failure or delay on the part
-----------------------------------
of a party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or
-18-
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are exclusive of any remedies that may be
available to such party at law or in equity or otherwise. Any amendment,
supplement or modification of or to any provision of this Agreement, any waiver
of any provision of this Agreement, and any consent to any departure by the from
the terms of any provision of this Agreement, shall be effective only in the
specific instance and for the specific purpose for which made or given.
10.3 Notices. All notices and demands provided for hereunder shall be in
-------
writing, and shall be given by telecopy (confirmed by overnight courier), air
courier guaranteeing overnight delivery or personal delivery. Notice shall be
sent to the following addresses:
If to the Purchaser:
TLL Partners, L.L.C.
000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxx, Xxxxx 00000
Attention: Xxxxxx X. XxXxxxxx
Telecopier: 000-000-0000
If to Holdings:
GM Holdings, LLC
c/o Xxxx X. Xxxxxxx
Aintree Capital
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopier: 000-000-0000
If to the Company:
Teletouch Communications, Inc.
000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: J. Xxxxxx Xxxxxx
Telecopier: 000-000-0000
or to such other address as Purchaser, Holdings or the Company may designate in
writing. All such notices and communications and all notices and communications
shall be deemed to have been duly given: (a) at the time delivered by hand, if
personally delivered; (b) when receipt acknowledged, if telecopied; and (c) on
the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.
10.4 Execution in Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts and by different parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.
-19-
10.5 Binding Effect; Assignment. This Agreement shall be binding upon the
--------------------------
parties hereto and their respective successors and permitted assigns. Except as
expressly provided in this Agreement, this Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the parties to this
Agreement and ING Prime Rate Trust, a Massachusetts business trust, and their
respective successors and permitted assigns. No party hereto may assign any or
all of its rights, privileges and obligations hereunder without the prior
written consent of the other parties.
10.6 Entire Agreement. This Agreement (including the schedules and
----------------
exhibits hereto) and the documents delivered pursuant to this Agreement (the
"Constituent Documents") constitute the entire agreement and understanding
between the parties hereto related to the subject matter hereof and supersede
any prior agreement, document or understanding related to the subject matter
hereof. Each party to this Agreement agrees that: (a) the other party to this
Agreement (including its agents and representatives) has made no representation,
warranty, covenant or agreement to or with such party relating to the
transactions contemplated hereby, other than those expressly set forth in the
Constituent Documents; and (b) such party has not relied upon any
representation, warranty, covenant or agreement relating to the transactions
contemplated hereby, other than those expressly set forth in the Constituent
Documents.
10.7 Public Announcements. The parties to this Agreement shall consult
--------------------
with each other regarding any public announcement or statement with respect to
this Agreement or the transactions contemplated hereby and no party shall issue
any public announcement or other statement with respect to the existence of this
Agreement or the transactions contemplated hereby without the prior consent,
which shall not be withheld unreasonably, of the other party, unless required by
applicable law or regulation or order of a court of competent jurisdiction.
10.8 Governing Law. THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THIS
-------------
AGREEMENT WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
10.9 Further Assurances. After the Closing, the Company, Holdings and
------------------
Purchaser will execute any documents, instruments or conveyances that may be
reasonably necessary to effectuate the transactions contemplated by this
Agreement.
10.10 Severability of Provisions. Any provision of this Agreement which is
--------------------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting or impairing the
validity or enforceability of such provision in any other jurisdiction.
10.11 Headings. The Article and Section headings used or contained in this
--------
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.
10.12 Time. Time is of the essence in this Agreement.
----
-20-
[Signature page follows.]
-21-
IN WITNESS WHEREOF, the parties hereto execute this Agreement,
effective as of the date first above written.
TELETOUCH COMMUNICATIONS,
INC.
/s/ J. Xxxxxx Xxxxxx
-------------------------------
Name: J. Xxxxxx Xxxxxx
Title: President:
TLL PARTNERS, L.L.C.
/s/ Xxxxxx X. XxXxxxxx
-------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: President
GM HOLDINGS, LLC
/s/ Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
Title: Manager
-22-
SCHEDULE 1.1
Part A - Holdings Securities
--------------------------------------------------------------------------------
Series A Preferred Series B Preferred
--------------------------------------------------------------------------------
1,800 49,375
--------------------------------------------------------------------------------
Part B - Purchaser Notes
1. 14% Subordinated Note ($7,878,600) - Acquired from CIVC
2. 14% Subordinated Note ($875,400) - Acquired from CIVC Partners I
3. 14% Subordinated Note ($6,000) - Acquired from Xxxxx Xxxxxx XXX FBO:
Xxxxx X. Xxxxxxx
4. 14% Subordinated Note ($6,000) - Acquired from Xxxxx Xxxxxx XXX FBO:
Xxxxxxx X Xxxxxxx
5. 14% Subordinated Note ($10,000) - Acquired from Xxxxxxxx X. Xxxxxxx Trust
6. 14% Subordinated Note ($10,000) - Acquired from Xxxx X. Xxxxxxx
7. 14% Subordinated Note ($10,000) - Acquired from Xxxxxxx X. Xxxxxxx
8. 14% Subordinated Note ($4,000) - Acquired from Xxxxxx X. Xxxxxxxxx
Part C - Purchaser Securities
--------------------------------------------------------------------------------
Number of Shares
--------------------------------------------------------------------------------
Series A Preferred Series B Preferred Series B Warrants
--------------------------------------------------------------------------------
13,200 36,019 324,173
--------------------------------------------------------------------------------
SCHEDULE 3.3.2
GM HOLDINGS WIRE TRANSFER INSTRUCTIONS
Am South Bank
ABA Number: 000000000
Account Number: 1001157964
Account Name: GM Holdings, LLC
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
TELETOUCH COMMUNICATIONS, INC.
Conformed Execution Copy
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
TELETOUCH COMMUNICATIONS, INC.
* * * * *
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
* * * * *
TELETOUCH COMMUNICATIONS, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware
(hereinafter, the "Corporation"), DOES HEREBY CERTIFY:
FIRST: That by unanimous written consent of the Board of Directors of the
Corporation (the "Board") resolutions were duly adopted setting forth proposed
amendments to the Certificate of Incorporation of the Corporation (the
"Certificate"), declaring said amendments to be advisable, and directing that
said amendments be considered by the holders of the Corporation's Series A 14%
Convertible Preferred Stock (the "Series A Preferred") and Series B Preferred
Stock (the "Series B Preferred"). The resolution setting forth the proposed
amendments is as follows:
RESOLVED, that the Board hereby declares it advisable that the
Certificate be amended as follows:
That the terms of the Certificate of Designation, Preferences and
Rights of Preferred Stock filed with the Secretary of State of the State of
Delaware on August 3, 1995 be and hereby is amended as follows:
1. Article I, Section 2A.(iv)(b) is hereby deleted in its entirety,
and in its place the following is substituted:
"(b) payment in the amount payable under subparagraph (ix) below
with respect to such conversion; and"
2. Article I is hereby amended by inserting a new Section 4
immediately following Article I, Section 3 as follows:
"Section 4. Impermissible Payments.
----------------------
Notwithstanding any other provisions of the Certificate of
Designation, Preferences, and Rights of Preferred Stock, as amended, until
all amounts due
under the Credit Agreement are paid in full, the holders of the Preferred
Stock shall not receive or accept any payment from the Corporation related
to such Preferred Stock (other than cash in lieu of fractional shares as
set forth herein and other than Common Stock issued in exchange therefor).
If the holders of the Preferred Stock receive any payment on the Preferred
Stock (other than cash in lieu of fractional shares as set forth herein and
other than Common Stock issued in exchange therefor) that the holders of
the Preferred Stock are not entitled to receive hereunder, the holders of
the Preferred Stock will hold the amount so received in trust for the under
the Credit Agreement and will forthwith turn over such payment to the
lenders under the Credit Agreement in the form received (except for the
endorsement of the holders of the Preferred Stock where necessary) for
application to then-existing amounts due under the Credit Agreement
(whether or not due), in such manner of application as the lenders under
the Credit Agreement may deem appropriate. If the holders of the Preferred
Stock fail to make any endorsement required hereunder, the lenders under
the Credit Agreement, or any of their officers or employees or agents on
behalf of the lenders under the Credit Agreement, are hereby irrevocably
appointed as the attorney-in-fact (which appointment is coupled with an
interest) for the holders of the Preferred Stock to make such endorsement
in the holders of the Preferred Stock's name. For purposes hereof, the
lenders under the Credit Agreement shall be third-party beneficiaries
hereunder.
3. Article II, Section 2A. is hereby amended by deleting the word
"The" at the beginning of the first sentence and inserting in its place the
following:
"Except to the extent prohibited by the Credit Agreement, the"
4. Article III, Section 3 is hereby amended by deleting the phrase
"the first to occur of the second anniversary of the Closing Date and an
Event of Default (as defined in the Purchase Agreement)" in its entirety
and inserting in its place the following "August 3, 1997."
5. The definitions of each of "Closing Date", "Consolidated Debt",
"Credit Agreement", "EBITDA", "FCC" and "Purchase Agreement" contained in
Article IV, Section 3 are hereby deleted in their entirety and each of the
following definitions are hereby added to Article IV, Section 3 and
inserted therein in alphabetical order:
"Closing Date" means August 3, 1995.
------------
"Consolidated Debt" means all: (i) indebtedness of the
-----------------
Corporation and its Subsidiaries in respect of money borrowed
(including indebtedness which represents the unpaid amount of the
purchase price of any property but not amounts constituting an account
payable or expense accrual incurred or assumed in the ordinary course
of business of the Corporation or its Subsidiaries); (ii) all
indebtedness of the Corporation or its Subsidiaries evidenced by a
promissory note, bond or similar written
-2-
obligation to pay money; (iii) all such indebtedness guaranteed by the
Corporation or its Subsidiaries or for which the Corporation or its
Subsidiaries is otherwise contingently liable, including guarantees in
the form of an agreement to purchase or reimburse, and any commitment
by which the Corporation or its Subsidiaries assures a creditor
against loss, including contingent reimbursement of obligations with
respect to letters of credit; (iv) all monetary obligations of the
Corporation or its Subsidiaries under a lease or similar arrangement,
which obligations would be classified and accounted for as capital
obligations on a consolidated balance sheet of the Corporation under
generally accepted accounting principles in the United States as in
effect from time to time ("GAAP"), consistently applied, taken at the
face amount thereof accounted for as indebtedness (net of interest
expense) in accordance with such principles; (v) any commitment by
which the Corporation or its Subsidiaries assures a creditor against
loss, including the face amount of all letters of credit and without
duplication all drafts drawn thereunder; (vi) obligations under
acceptance facilities; (vii) obligations of the Corporation or its
Subsidiaries secured by any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including any conditional
sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction and including
any lien or charge arising by statute or other laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions, acts or
decrees of any governmental entity, which secures the payment of a
debt (including any tax) or the performance of an obligation; (viii)
any unsatisfied obligations of the Corporation or its Subsidiaries for
"withdrawal liability" to a "multiemployer plan" as such terms are
defined under the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time and
any regulations promulgated thereunder; and (ix) any indebtedness
issued or obligation incurred in substitution or exchange for any
indebtedness; in each case calculated on a consolidated basis in
accordance with applicable principles of consolidation under GAAP,
applied in a manner consistent with that used in preparing the
Corporation's financial statements.
"Credit Agreement" means the Second Amended and Restated Credit
----------------
Agreement dated as of May 17, 2002 by and among the Corporation, ING
Prime Rate Trust, a Massachusetts business trust (formerly known as
Pilgrim America Prime Rate Trust), and any other person which becomes
a party thereto.
"EBITDA" means the net income of the Corporation and its
------
Subsidiaries (before extraordinary or non-recurring items) for any
period plus, in each case only to the extent deducted in determining
----
such net income: (i) the amount of provision for federal, state and
local income taxes for such period; (ii) the amount of interest
expense during such
-3-
period with respect to indebtedness referred to in clauses (i), (ii),
(iii), (iv), and (vii) of the definition of Consolidated Debt and
clause (ix) with respect thereto; and (iii) depreciation, amortization
and other non-cash charges (including amounts attributable to purchase
accounting) for such period, all determined on a consolidated basis in
accordance with GAAP, consistently applied.
"FCC" means the United States Federal Communications Commission
---
or any governmental body or agency succeeding to the functions
thereof.
SECOND: That in lieu of a meeting and vote of the Series A Preferred
stockholders and the Series B Preferred stockholders, such stockholders have
given written consent to said amendments in accordance with the provisions of
Section 228 of the General Corporation Law of the State of Delaware.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 228 and 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said TELETOUCH COMMUNICATIONS, INC. has caused this
certificate to be duly signed by its President and attested to by its Secretary
this 17th day of May, 2002.
TELETOUCH COMMUNICATIONS, INC.
/s/ J. Xxxxxx Xxxxxx
-----------------------------------
By: J. Xxxxxx Xxxxxx, President
ATTEST:
/s/ Xxxxx X. Xxxxxx
----------------------------------
Xxxxx X. Xxxxxx, Secretary
-4-
EXHIBIT C
PRINCIPAL STOCKHOLDERS AGREEMENT
Conformed Execution Copy
PRINCIPAL STOCKHOLDERS AGREEMENT
CONTAINING A VOTING AGREEMENT
BY AND AMONG
TLL PARTNERS, L.L.C.
GM HOLDINGS, LLC
RAINBOW RESOURCES, INC.
XXXXXX X. XXXXXXXX
AND
J. XXXXXX XXXXXX
DATED AS OF MAY 17, 2002
Conformed Execution Copy
PRINCIPAL STOCKHOLDERS AGREEMENT
This PRINCIPAL STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of
May 17, 2002, by and among TLL Partners, L.L.C., a Delaware limited liability
company (the "Purchaser"), GM Holdings, LLC, a Tennessee limited liability
company ("Holdings"), Rainbow Resources, Inc., a Delaware corporation
("Rainbow"), Xxxxxx X. XxXxxxxx, an individual resident in the State of Texas,
and J. Xxxxxx Xxxxxx, an individual resident in the State of Texas, each being
stockholders (each of the foregoing are sometimes referred to herein
individually as a "Stockholder" and collectively as "Stockholders") of Teletouch
Communications, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Purchaser, Holdings and the Company propose to enter into a
Restructuring Agreement dated as of the date hereof (the "Restructuring
Agreement"); and
WHEREAS, prior to the execution and delivery of this Agreement by any
party hereto, Purchaser has purchased: (a) from CIVC Partners I, a Delaware
partnership, 295,649 shares of Common Stock and (b) from Continental Illinois
Venture Corporation, a Delaware corporation, warrants to purchase 2,660,840
shares of Common Stock (collectively, the "Purchased Shares"); and
WHEREAS, as of the date hereof, each Stockholder "beneficially owns"
(as such term is defined in Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended) and each Stockholder is entitled to dispose of (or to
direct the disposition of) and to vote (or to direct the voting of) the number
of shares of common stock, par value $0.001 per share of the Company (the
"Common Stock") set forth opposite the Stockholder's name on Annex A hereto, as
such shares may be adjusted by stock dividend, stock split, recapitalization,
combination, merger, consolidation, reorganization or other change in the
capital structure of the Company affecting the Common Stock (such shares of
Common Stock, together with any other shares of Common Stock the voting power
over which is acquired by the Stockholders during the period from and including
the date hereof through and including the date on which this Agreement is
terminated in accordance with its terms, are collectively referred to herein as
the Stockholder's "Subject Shares"); and
WHEREAS, as a condition to the willingness of the Purchaser, Holdings
and the Company to enter into the Restructuring Agreement, and as an inducement
and in consideration therefor, each of the parties thereto has required that
each Stockholder agree, and each Stockholder has agreed, to enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, capitalized terms used
-----------
and not defined herein shall have the respective meanings ascribed to them in
the Restructuring Agreement.
ARTICLE 2
VOTING AGREEMENT
2.1 Agreement to Vote the Subject Shares. Each Stockholder, in its
------------------------------------
capacity as such, hereby agrees that during the period commencing on the date
hereof and continuing until the termination of this Agreement (such period, the
"Voting Period"), at any meeting (or any adjournment or postponement thereof) of
the holders of any class or classes of the capital stock of the Company, however
called, or in connection with any written consent of the holders of any class or
classes of the capital stock of the Company, the Stockholders shall vote (or
cause to be voted) their Subject Shares (x) in favor of the approval of the
terms of the Company Stockholder Authorizations and each of the other
transactions contemplated by the Restructuring Agreement (and any actions
required in furtherance thereof) at every meeting of the stockholders of the
Company (or in connection with any written consent) at which such matters are
considered and at every adjournment thereof, (y) against any action, proposal,
transaction or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Restructuring Agreement or of the Stockholders under this
Agreement, and (z) except as otherwise agreed to in writing in advance by the
parties hereto, against the following actions or proposals (other than the
transactions contemplated by the Restructuring Agreement): (i) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or any of its subsidiaries; (ii) a sale, lease
or transfer of a significant part of the assets of the Company or any of its
subsidiaries, or a reorganization, recapitalization, dissolution or liquidation
of the Company or any of its subsidiaries (each of the actions in clauses (i) or
(ii), a "Business Combination"); and (iii) (A) any change in the persons who
constitute the board of directors of the Company that is not approved in advance
by at least a majority of the persons who were directors of the Company as of
the date of this Agreement (or their successors who were so approved); (B) any
change in the present capitalization of the Company or any amendment of the
Company's certificate of incorporation or bylaws; (C) any other material change
in the Company's corporate structure or business; or (D) any other action or
proposal involving the Company that is intended, or could reasonably be
expected, to prevent, impede, interfere with, delay, postpone, or adversely
affect the transactions contemplated by the Restructuring Agreement. Any such
vote shall be cast or consent shall be given in accordance with such procedures
relating thereto as shall ensure that it is duly counted for purposes of
determining that a quorum is present and for purposes of recording the results
of such vote or consent. Each of the Stockholders agrees not to enter into any
agreement, letter of intent, agreement in principle or understanding with any
person that violates or conflicts with or could reasonably be expected to
violate or conflict with the provisions and agreements contained in this
Agreement or the Restructuring Agreement. For the avoidance of doubt, this
Agreement is intended to constitute a voting agreement entered into under
Section 2.18(c) of the Delaware General Corporation Law for the duration of the
Voting Period.
-2-
2.2 Legend. Each Stockholder shall promptly cause the following legend to
------
be conspicuously noted on each certificate representing its Subject Shares:
"The shares represented by this certificate are subject to a Principal
Stockholders Agreement dated as of May 17, 2002. The Principal Stockholders
Agreement restricts the transferability of the shares represented by this
certificate and includes a voting agreement to vote the shares represented
by this certificate."
ARTICLE 3
COVENANTS
3.1 Generally. During the Voting Period, except for pledges in existence
---------
as of the date hereof, each Stockholder agrees that, except as contemplated by
the terms of this Agreement, it shall not: (i) sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract, option or
other agreement with respect to, or consent to, the sale, transfer, tender,
pledge, encumbrance, assignment or other disposition of, any or all of its
Subject Shares; (ii) grant any proxies or powers of attorney in respect of the
Subject Shares, deposit any of its Subject Shares into a voting trust or enter
into a voting agreement with respect to any of its Subject Shares; and (iii)
take any action that would have the effect of preventing, impeding, interfering
with or adversely affecting its ability to perform its respective obligations
under this Agreement. Notwithstanding the foregoing, nothing herein shall
prevent a Stockholder from assigning or transferring any Subject Shares
beneficially owned by such Stockholder to any trust, estate, family partnership,
foundation or charitable organization or any of its members (a "Permitted
Transferee") if such Permitted Transferee agrees in writing to be bound by all
of the provisions of this Agreement as a Stockholder hereunder.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each of the Stockholders hereby represents and warrants (such
representations and warranties being made by each such Stockholder as to such
Stockholder and such Stockholder's Subject Shares only and not as to any other
Stockholder or any other Stockholder's Subject Shares)to each other Stockholder
as follows (provided, however, that the representation and warranty made in
Section 4.5 is made only by Purchaser):
4.1 Due Authority. Each Stockholder has the capacity to execute and
-------------
deliver this Agreement and to consummate the transactions contemplated hereby.
4.2 Ownership of Shares. Each Stockholder legally or beneficially owns the
-------------------
number of shares of Common Stock set forth opposite such Stockholder's name on
Annex A hereto. The number of shares of Common Stock set forth opposite such
Stockholder's name on Annex A hereto are all of the shares of Common Stock
legally or beneficially owned by such Stockholder. Each Stockholder has sole
voting power and sole power of disposition, in each case with respect to all of
shares of Common Stock set forth opposite such Stockholder's name on Annex A
hereto, with no limitations, qualifications or restrictions on such rights,
subject only to applicable securities laws and the terms of this Agreement and
as otherwise noted on Annex A.
-3-
4.3 No Conflicts. (i) No filing with any governmental authority, and no
------------
authorization, consent or approval of any other person is necessary for the
execution of this Agreement by the Stockholders and the consummation by the
Stockholders of the transactions contemplated hereby and (ii) none of the
execution and delivery of this Agreement by the Stockholders, the consummation
by the Stockholders of the transactions contemplated hereby or compliance by the
Stockholders with any of the provisions hereof shall (A) result in, or give rise
to, a violation or breach of or a default under any of the terms of any material
contract, understanding, agreement or other instrument or obligation to which
either Stockholder is a party or by which either Stockholder or any of his or
her Subject Shares or assets may be bound, or (B) violate any applicable order,
writ, injunction, decree, judgment, statute, rule or regulation which could
reasonably be expected to adversely affect the Stockholder's ability to perform
its obligations under this Agreement.
4.4 Reliance. Each Stockholder understands and acknowledges that the
--------
Company and each other Stockholder party to the Restructuring Agreement is
entering into the Restructuring Agreement in reliance upon the execution and
delivery of this Agreement by such Stockholder.
4.5 Title to Purchased Shares. Purchaser represents and warrants that the
-------------------------
transfer by CIVC Partners I of the Purchased Shares to Purchaser has passed to
and unconditionally vested in Purchaser good and valid title to all of the
Purchased Shares, free and clear of all claims, liens, restrictions, limitations
and encumbrances whatsoever, other than as contemplated by this Agreement or the
Restructuring Agreement.
ARTICLE 5
MISCELLANEOUS
5.1 Stockholder Capacity. No Stockholder executing this Agreement who is
--------------------
or becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. Each such Stockholder executes this Agreement solely in his or her
capacity as the record holder or beneficial owner of his or her Subject Shares
and nothing herein shall limit or affect any actions taken by a Stockholder in
his or her capacity as an officer or director of the Company.
5.2 Publication. Each Stockholder hereby permits the Company to publish
-----------
and disclose in the proxy statement (including all documents and schedules filed
with the Securities and Exchange Commission) such Stockholder's identity and
ownership of shares of Common Stock and the nature of its commitments,
arrangements, and understandings pursuant to this Agreement.
5.3 Further Actions. Each of the parties hereto agrees that it will use
---------------
its best commercial efforts to do all things necessary to effectuate this
Agreement.
5.4 Entire Agreement. This Agreement contains the entire understanding of
----------------
the parties hereto with respect to the subject matter contained herein and
supersedes all prior agreements and understandings, oral and written, with
respect thereto.
-4-
5.5 Binding Effect; Benefit; Assignment. This Agreement shall inure to the
-----------------------------------
benefit of and be binding upon the parties hereto and their Permitted
Transferees, heirs, estates and successors. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, except by will or by the laws of descent and distribution,
without the prior written consent of each of the other parties. Nothing in this
Agreement, expressed or implied, is intended to confer on any person, other than
the parties hereto, any rights or remedies.
5.6 Amendments, Waivers, etc. This Agreement may not be amended, changed,
------------------------
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by all of the relevant
parties hereto.
5.7 Notices. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
mailed, certified or registered mail with postage prepaid, or sent by facsimile
(upon confirmation of receipt), to the address set forth immediately beside such
Stockholder's name on Annex A or to such other person or address as any party
shall specify by notice in writing to each of the other parties. All such
notices, requests, demands, waivers and communications shall be deemed to have
been received on the date of delivery, except for a notice of a change of
address, which shall be effective only upon receipt thereof.
5.8 Specific Enforcement. The parties agree that irreparable damage would
--------------------
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement, this being in addition to any other remedy to
which they are entitled at law or in equity.
5.9 Remedies Cumulative. All rights, powers and remedies provided under
-------------------
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
5.10 No Waiver. The failure of any party hereto to exercise any right,
---------
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof shall not constitute a waiver by such party of
its right to exercise any such or other right, power or remedy or to demand such
compliance.
5.11 Governing Law. This agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
5.12 Headings. The descriptive headings of this Agreement are inserted for
--------
convenience only, do not constitute a part of this Agreement and shall not
affect in any way the meaning or interpretation of this Agreement.
-5-
5.13 Counterparts; Facsimiles. This Agreement may be executed in several
------------------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument. A signature
transmitted by facsimile shall be treated for all purposes by the parties hereto
as an original and shall be binding upon the party transmitting such signature
without limitation.
5.14 Termination. This Agreement shall terminate, and no Stockholder shall
-----------
have any rights or obligations hereunder and this Agreement shall become null
and void and have no effect upon the earliest to occur of: (a) the mutual
consent of the Stockholders; (b) the first anniversary of the date of this
Agreement; (c) the Closing; or (d) the termination of the Restructuring
Agreement; provided that termination of this Agreement shall not prevent any
party hereunder from seeking any remedies (at law or in equity) against any
other party hereto for such party's breach of any of the terms of this
Agreement.
[Signature page follows]
-6-
IN WITNESS WHEREOF, each Stockholder has caused this Agreement to be
duly executed as of the day and year first above written.
TLL PARTNERS, L.L.C.
By: /s/ Xxxxxx X. XxXxxxxx
-------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: President
GM HOLDINGS, LLC
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
Title: Manager
RAINBOW RESOURCES, INC.
By: /s/ Xxxxxx X. XxXxxxxx
-------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: President
/s/ Xxxxxx X. XxXxxxxx
-----------------------------------
Xxxxxx X. XxXxxxxx
/s/ J. Xxxxxx Xxxxxx
-----------------------------------
J. Xxxxxx Xxxxxx
-7-
ANNEX A
LIST OF STOCKHOLDERS AND OWNERSHIP
OF COMMON STOCK
-----------------------------------------------------------------------------------------------
Stockholders Address Number of Shares of
Common Stock as of
May 17, 2002
-----------------------------------------------------------------------------------------------
TLL Partners, L.L.C. TLL Partners, L.L.C. 295,649
000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Attn: Xxxxxx X. XxXxxxxx
-----------------------------------------------------------------------------------------------
GM Holdings, LLC GM Holdings, LLC 405,276
c/o Xxxx X. Xxxxxxx
Aintree Capital
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopier: 000-000-0000
-----------------------------------------------------------------------------------------------
Rainbow Resources, Inc. Rainbow Resources, Inc. 1,200,000
c/o Teletouch Communications, Inc.
000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Attn: Xxxxxx X. XxXxxxxx
-----------------------------------------------------------------------------------------------
Xxxxxx X. XxXxxxxx Xxxxxx X. XxXxxxxx 38,942
c/o Teletouch Communications, Inc.
000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
-----------------------------------------------------------------------------------------------
J. Xxxxxx Xxxxxx J. Xxxxxx Xxxxxx 49,000
c/o Teletouch Communications, Inc.
000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
-----------------------------------------------------------------------------------------------
-8-
EXHIBIT D
RESTATED AND AMENDED
OF
CERTIFICATE OF INCORPORATION
OF
TELETOUCH COMMUNICATIONS, INC.
Conformed Execution Copy
RESTATED CERTIFICATE OF INCORPORATION
OF
TELETOUCH COMMUNICATIONS, INC.
* * * * *
Pursuant to Section 242 and Section 245
of the General Corporation Law of the State of Delaware
* * * * *
TELETOUCH COMMUNICATIONS, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(hereinafter, the "Corporation"), DOES HEREBY CERTIFY:
FIRST: The name of the corporation is TELETOUCH COMMUNICATIONS, INC.
The original certificate of incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware on July 19, 1994 under the name of
TELETOUCH COMMUNICATIONS, INC.
SECOND: That by unanimous written consent of the Board of Directors of
the Corporation resolutions were duly adopted setting forth this proposed
Restated Certificate of Incorporation of the Corporation, declaring said
amendment and restatement to be advisable, and directing that said amendment and
restatement be considered at a special meeting of the stockholders of the
Corporation.
THIRD: That this Restated Certificate of Incorporation restates and
amends the certificate of incorporation of the Corporation, and was approved by
written consent of the stockholders of the Corporation given in accordance with
the provisions of Section 212 of the General Corporation Law of the State of
Delaware.
FOURTH: The text of the Certificate of Incorporation of the
Corporation, as previously amended, is hereby further amended and restated to
read in its entirety as follows:
ARTICLE I
NAME
The name of the Corporation is TELETOUCH COMMUNICATIONS, INC.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the Corporation's registered office in the State of
Delaware is 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000,
located in New Castle County. The
name of the registered agent of the Corporation at such address is The
Xxxxxxxx-Xxxx Corporation System, Inc.
ARTICLE III
PURPOSE
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
CAPITALIZATION
The total number of shares of stock which the Corporation shall have
authority to issue is one hundred million (100,000,000). The total number of
shares of common stock which the Corporation is authorized to issue is
ninety-five million (95,000,000) and the par value of each such share of common
stock is one-tenth of a cent ($.001) (the "Common Stock"). The total number of
shares of preferred stock which the Corporation is authorized to issue is five
million (5,000,000) and the par value of each such share of preferred stock is
one-tenth of a cent ($.001) (the "Preferred Stock").
The voting powers, designations, preferences and relative,
participating, optional or other rights, if any, and the qualifications,
limitations or restrictions, if any, of the preferred stock, in one or more
series, shall be fixed by one or more resolutions providing for the issue of
such stock adopted by the Corporation's Board of Directors, in accordance with
the provisions of Section 151 of the General Corporation Law of Delaware and the
Board of Directors is expressly vested with authority to adopt one or more such
resolutions.
Section 1. Designation. Shares of Preferred Stock are designated as
follows: 1,000,000 shares as the "Series C Preferred Stock" (the "Series C").
Each share of Series C shall be identical in all respects to every other share
of Series C.
Section 2. Definitions. As used herein with respect to Series C, the
following terms shall have the following meanings:
(a) The term "accrued dividends," with respect to any share of any
class or series, shall mean an amount computed at the annual dividend rate for
the class or series of which the particular share is a part, from the date on
which dividends on such share became cumulative to and including the date to
which such dividends are to be accrued (whether or not such dividends have been
declared), less the aggregate amount of all dividends theretofore paid thereon.
(b) The term "anniversary date" shall, mean each date that is the
anniversary of May 17, 2002 or,if not a business day, the next following
business day.
-2-
(c) The term "business day" shall mean each Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in Dallas, Texas are
not authorized or obligated by law, regulation or executive order to close.
(d) The term "Credit Agreement" means the Second Amended and
Restated Credit Agreement dated as of May 17, 2002 by and among the Corporation,
ING Prime Rate Trust, a Massachusetts business trust (formerly known as Pilgrim
America Prime Rate Trust), and any other lender becoming a party thereto.
(e) The term "FCC" means the United States Federal Communications
Commission or any governmental body or agency succeeding to the functions
thereof.
(f) The term "junior stock" shall mean the Common Stock and any
other class or series of stock of the Corporation hereafter authorized over
which preferred stock has preference or priority in the payment of dividends or
in the distribution of assets on any liquidation, dissolution or winding up of
the Corporation.
(g) The term "parity stock" shall mean any other class or series of
stock of the Corporation hereafter authorized which ranks on a parity with
Series C in the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
Section 3. Dividends. Only after all amounts due under the Credit
Agreement have been fully paid, the holders of shares of Series C shall be
entitled to participate, when, as and if declared by the Board of Directors, but
only out of funds legally available therefor, pro rata with the holders of the
shares of junior stock as though the Series C had been converted into such
shares of junior stock with respect to any dividends declared and paid by the
Corporation on junior stock.
Section 4. Liquidation Rights. Only after all amounts due under the
Credit Agreement have been fully paid, in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, then, the assets of the Corporation shall be distributed among the
holders of junior stock and Series C on an as converted basis and in each case
according to their respective numbers of shares. For the purposes of this
Section 4, the merger or consolidation of the Corporation with any other
corporation, including a merger in which the holders of the shares of Series C
receive cash or property for their shares, or the sale of all or substantially
all of the assets of the Corporation, or the reduction of the capital stock of
the Corporation or any other form of recapitalization or reorganization
affecting the Corporation shall not constitute a liquidation, dissolution or
winding up of the Corporation.
Section 5. Conversion Rights. Only after all amounts due under the
Credit Agreement have been fully paid, each holder of shares of Series C shall
have the right, at such holder's option, to convert all, but not less than all,
such shares into shares of Common Stock of the Corporation at any time following
the third anniversary date, and subject to the following terms and conditions:
(a) The Series C shall be convertible at the principal office of the
Corporation, and at such other office or offices, if any, as the Board of
Directors may designate, into fully paid and
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non-assessable shares (calculated as to each conversion to the nearest 1/100th
of a share) of Common Stock of the Corporation into a number of shares of Common
Stock computed by dividing (1) the product of (A) the number of shares of Series
C to be converted and (B) 22 by (2) the conversion price, determined as
hereinafter provided, in effect at the time of conversion.
(b) The price at which shares of Common Stock shall be delivered upon
conversion of the shares of Series C shall initially be $0.50 (herein called the
"conversion price") per share of Common Stock. The conversion price shall be
adjusted in certain instances as provided in paragraph (e) below.
(c) In order to convert shares of Series C into Common Stock the holder
thereof shall surrender at the office or offices hereinabove mentioned the
certificate or certificates therefor, duly endorsed or assigned to the
Corporation or in blank, and give written notice to the Corporation at said
office or offices that such holder elects to convert such shares. Shares of
Series C surrendered for conversion during the period from the close of business
on any record date for the payment of a dividend on the shares of Series C to
the opening of business on the date for payment of such dividend shall (except
in the case of shares of Series C which have been called for redemption on a
redemption date within such period) be accompanied by a payment of an amount
equal to the dividend payable on such dividend payment date on the shares of
Series C being surrendered for conversion. Except as provided in the preceding
sentence, no payment or adjustment shall be made upon any conversion on account
of any unpaid or accrued dividends on the shares of Series C surrendered for
conversion or on account of any dividends on the Common Stock issued upon
conversion.
Shares of Series C shall be deemed to have been converted immediately
prior to the close of business on the day of the surrender of the certificates
for such shares for conversion in accordance with the foregoing provisions, and
the person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock at such time. As promptly as practicable on or after the
conversion date, the Corporation shall issue and deliver at such office a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with payment in lieu of any fraction of
a share, as hereinafter provided, to the person or persons entitled to receive
the same.
(d) No fractional shares of Common Stock shall be issued upon
conversion of shares of Series C, but, instead of any fraction of a share which
would otherwise be issuable, the Corporation shall pay cash in respect of such
fraction in an amount equal to the same fraction of the Closing Price (as
hereinafter defined) on the date on which the certificate or certificates for
such shares were duly surrendered for conversion, or, if such date is not a
Trading Day (as hereinafter defined), on the next Trading Day.
(e) The conversion price and the number and kind of shares of capital
stock of the Corporation issuable on conversion of the shares of Series C shall
be adjusted from time to time as follows:
(i) Stock Splits and Combinations. In case the Corporation shall
subdivide its outstanding Common Stock into a greater number of shares, or
combine its outstanding
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Common Stock into a smaller number of shares, the conversion price in effect
immediately before the time when such subdivision or combination becomes
effective shall be adjusted so that the holder of each share of Series C
converted thereafter shall be entitled to receive the number of shares of Common
Stock that such holder would have received if such shares of Series C had been
converted immediately prior thereto at the conversion price then in effect. Such
adjustment shall be made successively whenever any such event shall occur.
(ii) Stock Dividends in Common Stock. In case the Corporation shall pay a
dividend or make a distribution in shares of Common Stock on any class of
capital stock of the Corporation, the conversion price in effect immediately
before the close of business on the record date fixed for determination of
stockholders entitled to receive such dividend or distribution shall be reduced
by multiplying such conversion price by a fraction of which the numerator shall
be the number of shares of Common Stock theretofore outstanding and of which the
denominator is the sum of such number of shares and the total number of shares
issued in such dividend or other distribution.
(iii) Issuance of Rights or Warrants. In case the Corporation shall issue
to holders of Common Stock rights or warrants entitling such holders to
subscribe for or purchase Common Stock at a price per share less than the
Current Market Price (as determined pursuant to clause (vii) below), the
conversion price in effect immediately before the close of business on the
record date fixed for the determination of stockholders entitled to receive such
rights or warrants shall be reduced by multiplying such conversion price by a
fraction, of which the numerator is the sum of the number of shares of Common
Stock outstanding at the close of business on such record date and the number of
shares of Common Stock which the aggregate offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase at
such Current Market Price and of which the denominator is the sum of the number
of shares of Common Stock outstanding at the close of business on such record
date and the number of additional shares of Common Stock so offered for
subscription or purchase. For the purpose of this clause (iii), the issuance of
rights or warrants to subscribe for or purchase securities convertible into
Common Stock shall be deemed to be the issuance of rights or warrants to
purchase the Common Stock into which such securities are convertible at an
aggregate offering price equal to the sum of the aggregate offering price of
such securities and the minimum aggregate amount (if any) payable upon
conversion of such securities into Common Stock. Such adjustment shall be made
successively whenever any such event shall occur. In case such rights or
warrants are not issued after such a record date has been fixed, the conversion
price shall be readjusted to the conversion price which would have been in
effect if such record date had not been fixed.
(iv) Distribution of Indebtedness, Securities or Assets. In case the
Corporation shall distribute to holders of Common Stock (whether pursuant to a
merger or consolidation or otherwise) evidences of indebtedness, shares of
capital stock of any class or series, other securities, cash or assets (other
than Common Stock, rights or warrants referred to in paragraph (iii) above or a
dividend payable exclusively in cash and other than as a result of a Fundamental
Change), the conversion price in effect immediately
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before the close of business on the record date fixed for the determination
of stockholders entitled to receive such distribution shall be reduced by
multiplying such conversion price by a fraction, of which the numerator is
the Current Market Price (determined as provided in clause (vii) below) on
such record date less the fair market value (as determined by the Board of
Directors, whose determination in good faith shall be conclusive) of the
portion of such indebtedness, shares of capital stock, other securities,
cash and assets so distributed applicable to one share of Common Stock and
the denominator is such Current Market Price. Such adjustment shall be made
successively whenever any such event shall occur. In case such distribution
is not made after such a record date has been fixed, the conversion price
shall be readjusted to the conversion price that would have been in effect
if such record date had not been fixed.
(v) Extraordinary Dividends; Certain Tender and Exchange Offers.
In case the Corporation shall pay a cash dividend to holders of Common
Stock (other than pursuant to a Fundamental Change) in an aggregate amount
that, when combined with the aggregate amount paid in respect of cash
dividends within the preceding 12 months to the extent such amount has not
already been applied in a prior adjustment pursuant to this paragraph,
exceeds 10% of the product of the Current Market Price on the date fixed
for payment of such dividend and the number of shares of Common Stock
outstanding on such payment date, the conversion price in effect
immediately before the close of business on such payment date shall be
reduced by multiplying such conversion price by a fraction, of which the
numerator is the Current Market Price on such payment date less the amount
by which the amount of such dividend per share exceeds the Current Market
Price and the denominator is such Current Market Price, such reduction to
become effective immediately prior to the opening of business on the day
following such payment date, and the holder of each share of Series C
converted after the close of business on the record date fixed for
determination of stockholders entitled to receive such dividend and prior
to the close of business on such payment date shall also be entitled to
receive, for each share of Common Stock received upon such conversion, the
amount of such dividend per share of Common Stock. In case the Corporation,
directly or indirectly, shall consummate a tender offer or exchange offer
for all or any portion of the Common Stock and the sum of the amount of
cash and the fair market value (as determined by the Board of Directors,
whose determination in good faith shall be conclusive) of property paid in
respect thereof is in excess of the product of the Current Market Price on
the expiration date of such tender or exchange offer and the number of
shares of Common Stock theretofore outstanding, such excess amount shall be
treated as a cash dividend for purposes of the foregoing sentence. Such
adjustment shall be made successively whenever any such event shall occur.
(vi) Fundamental Change. In case any transaction or event (including
without limitation any merger, consolidation, sale of assets, tender or
exchange offer, reclassification, compulsory share exchange or liquidation)
shall occur in which all or substantially all outstanding Common Stock is
converted into or exchanged for stock, other securities, cash or assets (a
"Fundamental Change"), the holder of each share of shares of Series C
outstanding immediately before such Fundamental Change shall have the right
upon any subsequent conversion to receive (but only out of legally
available funds, to the extent required by applicable law) the kind and
amount of stock, other
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securities, cash and assets that such holder would have received if such
share had been converted immediately prior thereto; provided, however, that
if more than 80% of the value (as determined by the Board of Directors,
whose determination in good faith shall be conclusive) of such stock, other
securities, cash and assets consists of common stock of any corporation,
such holder shall have the right to receive such number of shares of such
common stock that such holder would have received if all of such value had
consisted solely of such common stock. The Corporation agrees that it will
not be a party to or permit any Fundamental Change to occur unless the
foregoing provisions are included in the terms thereof. This paragraph
shall similarly apply to any subsequent Fundamental Change.
(vii) Current Market Price. For purposes of any computation under
clauses (iii), (iv) and (v) above, the Current Market Price on any date
means the average of the daily Closing Prices for five consecutive Trading
Days selected by the Board of Directors commencing not more than 20 Trading
Days before, and ending not later than, the earlier of such date and the
day before the record date fixed for determination of stockholders entitled
to receive any rights or warrants referred to in clause (iii), any
distribution referred to in clause (iv) or any dividend referred to in
clause (v) or, in the case of a tender or exchange offer referred to in
clause (v), the expiration date thereof. Notwithstanding the foregoing, in
the event there is no public market for the Common Stock, the Current
Market Price per share of Common Stock on any date shall be established by
the unanimous agreement of the Board of Directors of the Corporation in its
sole discretion.
(viii) Deferral of Certain Conversions Requiring Adjustment. In any
case in which this paragraph (e) requires that an adjustment as a result of
any event become effective from and after a record date, the Corporation
may elect to defer until after the occurrence of such event (A) issuing to
the holder of any shares of Series C converted after such record date and
before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion over and above the shares issuable on the
basis of the conversion price in effect immediately before adjustment and
(B) paying to such holder any amount in cash in lieu of a fractional share
of Common Stock pursuant to paragraph (c) above. In any such case, the
Corporation shall issue or cause a transfer agent to issue due bills or
other appropriate evidence of the right to receive the shares the issuance
of which is so deferred.
(ix) Deferral of Small Adjustments. Any adjustment in the conversion
price otherwise required by this Section 5 (except clause (ii) above) may
be postponed until the date of the next adjustment otherwise required to be
made if such adjustment (together with any other adjustments postponed
pursuant to this clause (ix) and not theretofore made) would not require an
increase or decrease of more than 1% in such conversion price and would
not, if made, entitle the holders of all then outstanding shares of Series
C upon conversion to receive additional shares of Common Stock equal in the
aggregate to one-tenth of one percent (0.1%) or more of the then issued and
outstanding shares of Common Stock. All calculations under this paragraph
(e) shall be made to the nearest cent or to the nearest 1/100th of a share,
as the case may be.
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(x) Provisions Applicable to Other Classes of Stock. In the event
that at any time, as a result of an adjustment made pursuant to clause (iv)
or (vi) above, the holder of any shares of Series C becomes entitled to
receive any shares of capital stock other than Common Stock of the
Corporation, the number and kind of such other shares so receivable shall
thereafter be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions concerning the
Common Stock contained in clauses (i) through (ix) above, and the other
provisions of this paragraph (e) concerning the Common Stock shall apply on
like terms to any such shares.
(xi) Voluntary Reduction in Conversion Price. The Board of Directors
may make such reductions in the conversion price, in addition to those
required by this paragraph (e), as shall be determined by the Board of
Directors to be advisable in order to avoid taxation so far as practicable
of any dividend or distribution of stock or rights to acquire stock or any
event treated as such for Federal income tax purposes to the recipients.
(xii) Authority of the Board of Directors. The Board of Directors
shall have the power to resolve any ambiguity or correct any error in this
paragraph (e), and its action in so doing shall be final and conclusive.
(f) Whenever the conversion price is adjusted as herein provided:
(i) the Corporation shall compute and file with each transfer agent
for the shares of Series C, if any, the adjusted conversion price in
accordance with this Section 5 and shall prepare a certificate signed by
the Corporation's treasurer setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such adjustment is based;
and
(ii) a notice stating that the conversion price has been adjusted
and setting forth the adjusted conversion price shall be mailed, as soon as
practicable, to the holders of record of outstanding shares of Series C at
their respective last addresses appearing on the books of the Corporation.
(g) In case:
(i) the Corporation declares a dividend or other distribution on
its Comm on Stock payable otherwise than in cash out of its retained
earnings which will result in an adjustment of the conversion price;
(ii) the Corporation authorizes the issuance to the holders of its
Common Stock of rights or warrants entitling them to subscribe for or
purchase any shares of capital stock of any class or any other subscription
rights or warrants; or
(iii) of any reclassification of the capital stock of the Corporation
(other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Corporation
is a party and for which approval of any stockholders of the Corporation is
required, or of the sale, transfer or other
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disposition of all or substantially all of the assets of the Corporation,
or of any other transaction or event that would constitute or result in a
Fundamental Change; or
(iv) of the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation;
then the Corporation shall file with each transfer agent for the shares of
Series C, if any, and mail to the holders of record of the outstanding shares of
Series C, at their respective last addresses appearing on the books of the
Corporation, at least 20 days (or 10 days in any case specified in clause (i) or
(ii) above) prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date as of which the holders of record of
Common Stock to be entitled to such dividend, distribution, rights or warrants
are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, disposition, liquidation, dissolution,
winding up or Fundamental Change is expected to become effective, and the date
as of which it is expected that holders of record of Common Stock shall be
entitled to exchange their shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
disposition, liquidation, dissolution, winding up or Fundamental Change. Failure
to give notice as required by this paragraph (g), or any defect therein, shall
not affect the validity of any such dividend, distribution, right, warrant,
reclassification, consolidation, merger, sale, transfer, disposition,
liquidation, dissolution, winding up or Fundamental Change, or the vote on any
action authorizing such.
(h) The Corporation shall at all times reserve and keep available, free
frompreemptive rights, out of its authorized but unissued Common Stock, for the
purpose of issuance upon conversion of shares of Series C, the full number of
shares of Common Stock then deliverable upon the conversion of all shares of
Series C then outstanding.
If any shares of Common Stock required to be reserved for issuance upon
conversion of shares of Series C require registration with or approval of any
governmental authority under any Federal or State law before such shares may be
issued or freely transferred upon conversion, the Corporation will in good faith
and as expeditiously as possible endeavor to cause such shares to be duly
registered or approved, as the case may be. If the Common Stock is quoted on the
American Stock Exchange or any other national securities exchange, the
Corporation will, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all shares of Common
Stock issuable upon conversion of shares of Series C. The requirements of this
paragraph shall apply only when shares of Series C shall have become freely
transferable under the Federal securities laws.
(i) The Corporation shall pay any and all taxes that may be payable in
respect of the issuance or delivery of shares of Common Stock on conversion of
shares of Series C pursuant hereto, other than any tax in respect of any
transfer involved in the issuance and delivery of shares of Common Stock in a
name other than that in which the shares of Series C so converted were
registered. No such issuance or delivery in a name other than that in which the
shares of Series C were registered shall be made unless and until the person
requesting such issuance or delivery has paid to the Corporation the amount of
any such tax or has established to the satisfaction of the Corporation that such
tax has been paid.
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(j) For the purpose of this Section 5, "Common Stock" includes any stock
of any class or series of the Corporation which has no preference or priority in
the payment of dividends or in the distribution of assets in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and are not subject to redemption by the Corporation. Shares
issuable upon conversion of shares of Series C, however, shall include only
shares of the class designated as Common Stock as of the first date of issuance
of shares of Series C or shares of the Corporation of any classes or series
resulting from any reclassification or reclassifications thereof and that have
no preference or priority in the payment of dividends or in the distribution of
assets in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation and that are not subject to redemption by the
Corporation, provided that if at any time there shall be more than one such
resulting class or series, the shares of each such class or series then so
issuable shall be substantially in the proportion which the total number of
shares of such class and series resulting from all such reclassifications bears
to the total number of shares of all such classes and series resulting from all
such reclassifications.
(k) As used in this Section 5, the term "Closing Price" on any day shall
mean the reported last sale price per share of Common Stock on such day or, in
case no such sale takes place on such day, the average of the reported closing
bid and asked prices, in each case on the American Stock Exchange, or if the
Common Stock is not listed or admitted to trading on such exchange, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the average of the closing bid and
asked prices in the over-the-counter market as reported by the National
Association of Securities Dealers' Automated Quotation System, or, if not so
reported, as reported by the National Quotation Bureau, Incorporated, or any
successor thereof, or, if not so reported, the average of the closing bid and
asked prices as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the Corporation for that
purpose; and the term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business or, if the Common Stock is not
listed or admitted to trading on any national securities exchange, a Monday,
Tuesday, Wednesday, Thursday or Friday on which banking institutions in Dallas,
Texas are not authorized or obligated by law or executive order to close.
(l) The certificate of any independent firm of public accountants of
recognized standing selected by the Board of Directors shall be presumptive
evidence of the correctness of any computation made under this Section 5.
(m) Upon any conversion that might, within the reasonable opinion of any
holder of shares of Series C, be considered a change in control by the FCC or
for the purposes of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
the Corporation will seek any necessary approvals for such proposed change in
control at its sole expense. If for any reason the FCC or any governmental
instrumentality prohibits or enjoins the conversion that may result in such
change of control, the Corporation will, at its sole expense, take all steps
reasonably necessary or desirable to effect such change in control and obtain
all necessary or desirable approvals with respect thereto.
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Section 6. Voting Rights.
(a) Except as otherwise provided herein and as otherwise required by
applicable law, the shares of Series C shall have no voting rights; provided
that each holder of shares of Series C shall be entitled to notice of all
stockholders meetings at the same time and in the same manner as notice is given
to all stockholders entitled to vote at such meetings.
(b) So long as any shares of Series C are outstanding, in addition to any
other vote or consent of stockholders required by law or by this certificate of
incorporation, the vote or consent of the holders of at least a majority of the
shares of Series C calculated on an as converted basis voting separately as a
single class regardless of series, given in person or by proxy, either in
writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:
(i) any amendment, alteration or repeal of any of the provisions of
the certificate of incorporation of the Corporation, which would alter or
change the voting powers, preferences or special rights of shares of Series
C so as to effect them adversely; provided, however, that the amendment of
the certificate of incorporation so as to authorize or create, or to
increase the authorized amount of, any junior stock or any shares of any
class or series or any securities convertible into shares of any class or
series of capital stock of the Corporation ranking junior to any shares of
Series C in the payment of dividends or in the distribution of assets on
any liquidation, dissolution or winding up of the Corporation shall not be
deemed to affect adversely the voting powers, preferences or special rights
of the shares of Series C;
(ii) any amendment or alteration of the certificate of incorporation
of the Corporation to authorize or create or increase the authorized amount
of, any shares of any class or series or any securities convertible into
shares of any class or series of capital stock of the Corporation ranking
prior to or in parity with shares of Series C in the payment of dividends
or in the distribution of assets on any liquidation, dissolution or winding
up of the Corporation; or
(iii) any merger or consolidation of the Corporation with or into any
other entity other than a corporation, or any merger or consolidation of
the Corporation with or into any other corporation unless the surviving or
resulting corporation, or a corporation controlling such corporation that
issues shares or securities in such merger or consolidation, will
thereafter have no class or series of shares or other securities either
authorized or outstanding ranking prior to the shares of Series C in the
payment of dividends or in the distribution of assets on any liquidation,
dissolution or winding up, except the same number of shares and the same
amount of other securities with the same voting powers, preferences and
special rights as the shares and securities of the Corporation respectively
authorized and outstanding immediately before such merger or consolidation,
and each share of Series C outstanding immediately before such merger or
consolidation is changed thereby into the same number of shares, with the
same voting powers, preferences and special rights, of such corporation;
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provided, however, that if any such amendment, alteration or repeal would
adversely effect the voting powers, preferences or special rights of the shares
of Series C and any other series of preferred stock similarly entitled to vote
upon the matters specified herein in substantially the same manner, it shall be
sufficient if the holders of shares of Series C and all such other series of
preferred stock so adversely effect vote thereon together as a single class,
regardless of series.
Section 7. Other Rights. The shares of Series C shall not have any voting
powers, preferences or relative, participating, optional or other special
rights, or qualifications, limitations or restrictions thereof, other than as
set forth in the certificate of incorporation.
Section 8. Impermissible Payments. Until all amounts due under the Credit
Agreement are paid in full, the holders of the Series C shall not receive or
accept any payment from the Corporation related to such Series C (other than
cash in lieu of fractional shares as set forth herein and other than Common
Stock issued in exchange therefor). If the holders of the Series C receive any
payment on the Series C (other than cash in lieu of fractional shares as set
forth herein and other than Common Stock issued in exchange therefor) that the
holders of the Series C are not entitled to receive hereunder, the holders of
the Series C will hold the amount so received in trust for the benefit of the
lenders party to the Credit Agreement and will forthwith turn over such payment
to the lenders under the Credit Agreement in the form received (except for the
endorsement of the holders of the Series C where necessary) for application to
then-existing amounts due under the Credit Agreement (whether or not due), in
such manner of application as the lenders under the Credit Agreement may deem
appropriate. If the holders of the Series C fail to make any endorsement
required hereunder, the lenders under the Credit Agreement, or any of their
officers or employees or agents on behalf of the lenders under the Credit
Agreement, are hereby irrevocably appointed as the attorney-in-fact (which
appointment is coupled with an interest) for the holders of the Series C to make
such endorsement in the holders of the Series C's name. For purposes hereof, the
lenders under the Credit Agreement shall be third-party beneficiaries hereunder.
ARTICLE V
DIRECTORS
Section 1. Number of Directors. The number of directors of the Corporation
shall be set forth in the by-laws of the Corporation, which number may be
increased or decreased pursuant to the by-laws of the Corporation. The Board of
Directors is authorized to make, alter or repeal the by-laws of the Corporation.
Section 2. Classified Board. The Board of Directors shall be classified, in
respect solely to the time for which they shall severally hold office, by
dividing them into three (3) classes, each such class to be as nearly as
possible equal in number of directors to each other class. The first term of
office of directors of the first class shall expire at the first annual meeting
after their election, and thereafter such terms shall expire on each three (3)
year anniversary of such date; the term of office of the directors of the second
class shall expire on the one (1) year anniversary of the first annual meeting
after their election, and thereafter such terms shall expire on each three (3)
year anniversary of such one (1) year anniversary; and the term of office of the
directors of the third class shall expire on the two (2) year anniversary of the
first annual meeting
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after their election, and thereafter such terms shall expire on each three (3)
year anniversary of such two (2) year anniversary. At each succeeding annual
meeting, the stockholders shall elect directors for a full term or the remainder
thereof, as the case may be, to succeed those whose terms have expired. Each
director shall hold office for the term for which elected and until his
successor shall be elected and qualify.
Section 3. Removal. Pursuant to the authority granted by Section 141(k)(i)
of the General Corporation Law of the State of Delaware, and notwithstanding
anything to the contrary in the Corporation's by-laws, any director of this
Corporation, or the entire Board of Directors of this Corporation, may be
removed, with or without cause, by the vote of the holders of not less than
two-thirds of the shares of stock then entitled to vote in an election of
directors of this Corporation.
ARTICLE VI
LIABILITY OF DIRECTORS
No director of the Corporation shall be personally liable to the
Corporation or the stockholders for monetary damages for breach of fiduciary
duty as a director, provided that this provision shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) arising under Section 174 of the General Corporation Law of Delaware, or
(iv) for any transaction from which the director derived an improper personal
benefit.
ARTICLE VII
DURATION
The duration of the Corporation shall be perpetual.
ARTICLE VIII
INDEMNIFICATION
The Corporation, by action of its Board of Directors, shall indemnify
its directors, officers, agents and/or employees to the fullest extent allowed
by the General Corporation Law of Delaware, as such law is amended from time to
time.
ARTICLE IX
AMENDMENTS
Any amendment of this certificate of incorporation shall be made and
effected only as set forth herein. The Board of Directors shall adopt a
resolution, by affirmative vote of at least a majority of the directors then in
office, at a meeting called for that purpose, setting forth the proposed
amendment, declaring its advisability, and either calling a special meeting of
the stockholders entitled to vote in respect thereof for the consideration of
such amendment or
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directing that the proposed amendment be considered at the next annual meeting
of stockholders. In order to be adopted, each proposed amendment to this
certificate of incorporation must be approved by the affirmative vote of a
majority of the outstanding shares of each class and series, if any, entitled to
vote thereon.
ARTICLE X
ELECTION REGARDING SECTION 203
The Corporation expressly elects to be governed by Section 203 of the
General Corporation Law of Delaware, regarding business combinations with
interested stockholders.
ARTICLE XI
DISQUALIFIED HOLDERS
Section 4. Subject to Redemption. Notwithstanding any other provision of
this certificate of incorporation to the contrary, outstanding shares of stock
of this Corporation held by Disqualified Holders (as hereinafter defined in
paragraph (b) of Section 2 of this Article XI) shall always be subject to
redemption by the Corporation, by action of the Board of Directors, to the
extent necessary, in the sole judgment of the Board of Directors, to prevent the
loss or secure the renewal or reinstatement of any license or franchise from any
governmental agency held by the Corporation or any of its subsidiaries to
conduct any portion of the business of the Corporation or any of its
subsidiaries, which license or franchise is conditioned upon some or all of the
holders of the stock of this Corporation possessing prescribed qualifications.
The terms and conditions of this redemption shall be as follows:
(a) the redemption price of the shares to be redeemed pursuant to this
Article XI shall be equal to the lesser of (A) the Fair Market Value (as
hereinafter defined in paragraph (a) of Section 2 of this Article XI) of such
shares and (B) the price paid for such shares by the Disqualified Holder,
provided that such Holder purchased such shares within the year preceding the
Redemption Date;
(b) the redemption price of such shares may be paid in cash, Redemption
Securities (as hereinafter defined in paragraph (d) of Section 2 of this Article
XI) or any combination thereof;
(c) If less than all of the shares held by Disqualified Holders are to
be redeemed, the shares to be redeemed shall be selected in such manner as shall
be determined by the Board of Directors, which may include selection first of
the most recently purchased shares thereof, selection by lot, on a pro rata
basis, or selection in any other manner determined by the Board of Directors;
(d) at least ten days' written notice of the Redemption Date (as
hereinafter defined in paragraph (c) of Section 2 of this Article XI) shall be
given to the record holders of the shares selected to be redeemed (unless waived
in writing by such holder), provided that the Redemption Date may be the date on
which written notice shall be given to such record holders if cash or Redemption
Securities necessary to effect the redemption shall have been deposited in trust
for
-14-
the benefit of such record holders and subject to immediate withdrawal by them
upon surrender of the stock certificates for their shares to be released;
(e) on the Redemption Date, unless the Corporation shall have defaulted
in paying or setting aside for payment the cash or Redemption Securities payable
upon such redemption, any and all rights of Disqualified Holders in respect of
the shares so redeemed (including without limitation any rights to vote or
participate in dividends) shall cease and terminate, and from and after such
Redemption Date such Disqualified Holders shall be entitled only to receive the
cash or Redemption Securities payable upon redemption of the shares so redeemed;
and
(f) such other terms and conditions as the Board of Directors shall
determine.
Section 5. Definitions. For purposes of this Article XI:
(a) "Fair Market Value" of a share of stock of this Corporation shall
mean the definition of "Closing Price" as set forth in Section 5 of Article IV.
(b) "Disqualified Holder" shall mean any holder of shares of any class
or series of stock of the Corporation whose continued holding of such stock,
either individually or taken together with the holding of shares of stock of the
Corporation by any other holder or holders of shares of stock of the
Corporation, may result, in the sole judgment of the Board of Directors of the
Corporation, in the loss of, or the failure to secure the renewal or
reinstatement of, any license or franchise from any governmental agency held by
this Corporation or any of its subsidiaries to conduct any portion of the
business of this Corporation or any of its subsidiaries.
(c) "Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of any shares of stock of this Corporation pursuant
to this Article XI.
(d) "Redemption Securities" shall mean any debt or equity securities of
this Corporation, any of its subsidiaries or any other corporation, or any
combination thereof, having such terms and conditions as shall be approved by
the Board of Directors and which, together with any cash to be paid as part of
the redemption price, in the sole opinion of the Board of Directors has a value,
at the time notice of redemption is given pursuant to paragraph (d) of Section 1
of this Article XI, at least equal to the redemption price required to be paid
pursuant to paragraph (a) of Section 1 of this Article XI.
(e) Any determination made in good faith by the Board of Directors of
the Corporation as to any matter arising under this Article XI shall be final
and conclusive as to all persons.
[Signature page follows]
-15-
(f)
IN WITNESS WHEREOF, said TELETOUCH COMMUNICATIONS, INC. has caused this
certificate to be duly signed by its President and attested to by its Secretary
this _____ day of _________, 2002.
TELETOUCH COMMUNICATIONS, INC.
_______________________________
By: J. Xxxxxx Xxxxxx, President
ATTEST:
_____________________________________
Xxxxx X. Xxxxxx, Secretary
-16-
EXHIBIT E
RIGHTS AGREEMENT
Conformed Execution Copy
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is made as of May 17,
2002 by and among TLL Partners, L.L.C., a Delaware limited liability company
(the "TLL Partners"), GM Holdings, LLC, a Tennessee limited liability company
("Holdings") and Teletouch Communications, Inc., a Delaware corporation (the
"Company"). TLL Partners and Holdings and, except as otherwise expressly
provided herein, their successors and assigns are sometimes referred to herein
individually as an "Investor" and collectively as the "Investors".
RECITALS
WHEREAS, pursuant to the restructuring of certain of the Company's
outstanding debt and equity securities contemplated by the Restructuring
Agreement dated as of the date hereof (the "Restructuring Agreement") by and
among the parties hereto, the Investors may acquire shares of the Company's
capital stock, par value $0.001 per share ("Company Common Stock"); and
WHEREAS, Company is granting Investors certain demand and piggyback
registration rights in connection with Investors' receipt of the Shares (as
defined below) pursuant to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms shall
-------------------
have the following respective meanings:
"Affiliate" shall mean, with respect to any person, each of such person's
---------
officers, directors, employees and agents, and each other person controlling
such person within the meaning of the Securities Act.
"Commission" shall mean the Securities and Exchange Commission or any other
----------
federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
------------
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Register", "registered" and "registration" refer to a registration
-------- ---------- ------------
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean the Shares and any shares of Company
----------------------
Common Stock issued or issuable in respect of the Shares upon any stock split,
stock dividend, recapitalization, or similar event and held by Investors until
such time as: (a) a registration statement covering such securities has been
declared effective by the Commission and such
securities have been disposed of pursuant to such effective registration
statement; or (b) such securities may be sold pursuant to Rule 145 or Rule 144
(or any successor or similar rule) under the Securities Act without regard to
the volume of sale restrictions referred to therein; or (c) such securities have
been transferred and may be sold by the transferee without registration under
the Securities Act, after which such securities shall no longer be Registrable
Securities.
"Registration Expenses" shall mean all expenses incurred by Company in
---------------------
complying with Sections 2 and 3 hereof, including all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel and of the accountants for Company, blue sky fees and
expenses and the expense of any special audits incident to or required by any
such compliance.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
--------------
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
----------------
commissions and stock transfer taxes applicable to the Registrable Securities
registered by Investors and all fees and disbursements of counsel for Investors.
"Shares" shall mean all of the Company Common Stock held by any Investor
and all of the Company Common Stock issuable upon: (a) conversion of the issued
and outstanding shares of Series A Preferred Stock of the Company, par value
$0.001 per share, and Series B Preferred Stock of the Company, par value $0.001
per share; (b) conversion of the Series C Preferred Stock of the Company, par
value $0.001 per share, to be issued pursuant to the Restructuring Agreement
dated as of the date hereof; and (c) exercise of the Warrant or Warrants to be
issued pursuant to the Restructuring Agreement dated as of the date hereof.
Capitalized terms used and not defined herein shall have the respective
meanings ascribed to them in the Restructuring Agreement.
2. Requested Registration.
----------------------
2.1 In case Company shall receive from an Investor a written request that
Company effect any registration with respect to any of the Registrable
Securities, Company shall, as soon as practicable, use reasonable best efforts
to effect such registration (including appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) on Form S-3 or, if Form S-3 is not
available, then on Form S-1 (or any successor forms of registration statements
to such Forms S-3 or S-1 or other available registration statements) and as
would permit or facilitate the sale and distribution of the Registrable
Securities for which registration is requested as promptly as possible and in
any event within 60 days of the request for registration. The registration
statement filed pursuant to the request of an Investor under this Section 2.1
may include securities of Company held by other securityholders of Company who,
by virtue of agreements with Company, are entitled to include their securities
in any such registration, but Company shall have no absolute right to include
securities for its own account in any such registration. Within ten days after
receipt of
-2-
any such request, the Company shall give written notice of such requested
registration to all other holders of Registrable Securities and shall include in
such registration all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within 15 days after the
receipt of the Company's notice.
2.2 Notwithstanding the foregoing, Company shall not be obligated to file
a registration statement to effect any such registration pursuant to this
Section 2:
(a) unless the amount of Registrable Securities for which
registration is requested is at least 500,000 shares (as adjusted for any stock
split, stock dividend, recapitalization or similar event); provided, however,
that if the total number of Registrable Securities held a requesting Investor
(but not a transferee of Investors other than a member of Holdings) is less than
500,000 shares (as adjusted to give effect to any stock split, reverse stock
split, stock dividend, recapitalization or any similar event or transaction),
then such Investor (but not a transferee of Investors other than a member of
Holdings) may request registration under this Section 2 as to all but not less
than all of such Registrable Securities as may then be held by such requesting
Investor;
(b) after Company has initiated two registrations on S-1 pursuant to
this Section 2 (counting for these purposes only registrations that have been
declared effective); provided that the Company shall, subject to Section 2.2(a),
be obligated to file (i) unlimited registration statements on S-3 and (ii)
unlimited additional registration statements on S-1 to the extent all
Registration Expenses incurred in connection with such S-1 registration are
borne by the requesting Investors.
2.3 Any offering of securities made under this Section 2 may, at the
option of the requesting Investors, be pursuant to a "firm commitment"
underwriting. In such event, Company (together with the requesting Investors)
shall enter into an underwriting agreement in customary form with the managing
underwriter selected for such underwriting by the requesting Investors with the
consent of Company, which consent shall not be unreasonably withheld.
Notwithstanding any other provision of this Section 2, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the number of
Registrable Securities to be included in such registration to the extent
required by such limitation as follows:
(a) if the registration was initiated for the account of any
Investors (the "Initiating Holders"), the number of shares reduced shall be: (A)
first, any shares sought to be registered by Company for its own account; (B)
second, if further reductions are required, any shares sought to be registered
by holders of securities other than the Initiating Holders who have requested to
include their securities in such registration, pro rata based on the number of
shares requested to be included in such registration; and (C) third, if still
further reductions are required, any securities sought to be registered by the
Initiating Holders pro rata based on the number of Shares requested to be
included in such registration; and
(b) if the managing underwriter has not limited the number of
Registrable Securities to be included in such registration, Company may include
securities for its own
-3-
account or for the account of others in such registration if the number of
Registrable Securities to be included in such registration will not thereby be
limited.
3. Company Registration.
--------------------
3.1 If Company shall determine to register any of its securities, either
for its own account or the account of a security holder or holders exercising
their respective registration rights, other than: (i) a registration relating
solely to employee benefit plans on Form S-8 (or similar successor form); or
(ii) a registration on Form S-4 (or similar successor form) relating solely to a
Commission Rule 145 transaction, Company will:
(a) promptly give Investors written notice thereof; and
(b) use its reasonable best efforts to include in such registration
(and any related qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all Registrable Securities specified in a
written request to Company made within 15 business days after receipt of such
written notice by Investors.
3.2 If the registration of securities pursuant to this Section 3 is
underwritten, Company shall so advise Investors as a part of the written notice
given under Section 3.1(a). In such event, Investors' right to registration
pursuant to this Section 3 shall be conditioned upon Investors' participation in
such underwriting and the inclusion of Registrable Securities in the
underwriting shall be subject to the limitations provided herein. Company
(together with the participating Investors) shall enter into an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by Company. Notwithstanding any other provision of this Section 3,
if the managing underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, Company shall so advise
the holders of securities who have requested to include their securities in such
registration, and the number of shares to be included in such registration shall
be reduced by such minimum number of shares as is necessary to comply with such
limitation, as follows:
(a) if the registration was initiated for the account of any security
holder or holders other than Investors (the "Initiating Holders"), the number of
shares reduced shall be (A) first, any shares sought to be registered by Company
for its own account, (B) second, if further reductions are required, any shares
sought to be registered by holders of securities other than the Initiating
Holders who have requested to include their securities in such registration, pro
rata based on the number of shares requested to be included in such
registration, and (C) third, if still further reductions are required, any
securities sought to be registered by the Initiating Holders.
(b) if the registration was initiated by Company for its own account,
the number of shares reduced shall be: (A) first, any shares sought to be
registered by holders of securities who have requested to include their
securities in such registration, pro rata based on the number of shares
requested to be included in such registration; and (B) second, if further
reductions are required, shares sought to be registered by Company for its own
account.
4. Black Out. In the event the Board of Directors of the Company determines,
---------
after a request for registration has been received from an Investor and prior to
the completion of such registered offering, that it may be in possession of
material undisclosed information with respect
-4-
to Company or its securities: (a) Company shall notify such requesting Investors
and request that such requesting Investors refrain from selling any Registrable
Securities, and such requesting Investors shall refrain from selling any
Registrable Securities; and (b) Company shall not be obligated to file a
registration statement or effect any registration, qualification or compliance
of Registrable Securities under Section 2 for a period of not more than 60 days
from the date of such notice (the "Black Out Period"). A Black Out Period shall
end upon the earlier to occur of: (i) the full public disclosure of the material
information giving rise to such Black Out Period; (ii) Company notifying
Investors in writing that the Black Out Period is terminated; and (iii) the 60th
day after the date of Company's notice of the commencement of the Black Out
Period. Notwithstanding the foregoing, Company shall not be entitled to declare
a Black Out Period prior to twelve months from the end of a previous Black Out
Period if more than 90 days of the immediately preceding 365 days have been
subject to a Black Out Period, and Company shall only exercise its rights under
this Section 4 in good faith and shall not exercise such rights in an effort to
frustrate Investors' ability to offer to sell and sell their Registrable
Securities.
5. Expenses of Registration. Except as otherwise set forth herein, all
------------------------
Registration Expenses incurred in connection with a registration pursuant to
Sections 2 and 3 shall be borne by Company. All Selling Expenses relating to the
Registrable Securities which are registered shall be borne by Investors.
6. Registration Procedures. In the case of each registration effected by
-----------------------
Company pursuant to this Agreement, Company will keep Investors advised in
writing, if Investors are participating in such registration, as to the
initiation of each registration and as to the completion thereof. At its
expense, Company will:
6.1 prepare and file with the Commission a registration statement with
respect to such securities and use reasonable best efforts to cause such
registration statement to become and remain effective for at least 180 days or
until the distribution described in the registration statement has been
completed, whichever first occurs;
6.2 furnish to Investors, if Investors are participating in such
registration, such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as Investors
may reasonably request, including correspondence with the Commission and any
exchanges on which Registrable Securities are listed;
6.3 notify Investors, if Investors are participating in such registration,
of any updates or amendments to the prospectus and furnish to Investors any such
updated and/or amended prospectuses;
6.4 cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed and,
if not so listed, to be listed on the Nasdaq Stock Market and, if listed on the
Nasdaq Stock Market, use its best efforts to secure designation of all such
Registrable Securities covered by such registration statement as a Nasdaq
"national market system security" within the meaning of Rule 11Aa2-1 of the
Securities and Exchange Commission or, failing that, to secure Nasdaq
authorization for such Registrable
-5-
Securities and, without limiting the generality of the foregoing, to arrange for
at least two market makers to register as such with respect to such Registrable
Securities with the NASD;
6.5 provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
6.6 obtain a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters as the holders of a majority of the Registrable
Securities being sold reasonably request; and
6.7 provide a legal opinion of the Company's outside counsel, dated the
effective date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), with respect to the registration statement, each
amendment and supplement thereto, the prospectus included therein (including the
preliminary prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions
of such nature.
7. Indemnification.
---------------
7.1 Company will indemnify Investors with respect to any registration,
qualification or compliance which has been effected pursuant to this Agreement,
and each underwriter, if any, and each person who controls any underwriter
within the meaning of the Securities Act (the "Underwriters"), against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation commenced or threatened arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration, or based on
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by
Company of the Securities Act or any state securities law, or any rule or
regulation promulgated thereunder, applicable to Company in connection with any
such registration, and Company will reimburse Investors and the Underwriters for
any legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action; provided, however, that Company will not be liable in any such case to
the extent that any such expense, claim, loss, damage or liability arises out of
or is based on any untrue statement or omission, or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to Company by Investors specifically for use therein.
7.2 Investors, severally as to actions of an individual Investor and not
jointly or jointly and severally, will, if Registrable Securities are included
in a registration being effected, indemnify Company and each of its Affiliates
and the Underwriters, if any, of Company's securities covered by such a
registration against all expenses, claims, losses, damages and liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation commenced or threatened arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any registration statement, prospectus,
-6-
offering circular or other document, or any amendment or supplement thereto,
incident to any such registration, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by Investors of the Securities
Act or any state securities law, or any rule or regulation promulgated
thereunder, applicable in connection with any such registration, and Investors
will reimburse Company, such Affiliates and the Underwriters for any legal and
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, but in each case
only to the extent that such untrue statement or omission, or alleged untrue
statement or omission, is made in such registration statement, prospectus,
offering circular or other document incident to any such registration in
reliance upon and in conformity with written information furnished to Company by
Investors specifically for use therein. Notwithstanding the foregoing, the
liability of Investors under this Section 7.2 shall be limited in an amount
equal to the public offering price of the Shares sold by an Investor, unless
such liability arises out of or is based on willful misconduct by such Investor.
7.3 Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and the
Indemnifying Party shall have the option to assume the defense of any such claim
or any litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld); and provided, further, that the Indemnified Party may
participate in such defense at such party's own expense. The failure of an
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. The Indemnifying Party shall not assume such defense for
matters as to which there is a conflict of interest or separate and different
defenses. In the event of a conflict of interest or separate or different
defenses, as determined in the reasonable opinion of counsel to the Indemnified
Party, the Indemnifying Party will pay the reasonable legal fees and expenses of
one counsel to the Indemnified Party. No claim may be settled without the
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld). No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
7.4 If the indemnification provided for in Section 7.1 or 7.2 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7.1 or 7.2 in respect of any expenses, claims, losses, damages or
liabilities (or actions in respect thereof), then, subject to the provisions of
the last sentence of Section 7.2, each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such
expenses, claims, losses, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other hand
in connection with the statements or omissions which resulted in such expenses,
-7-
claims, losses, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations.
8. Information from Investors. Investors shall furnish to Company such
--------------------------
information regarding Registrable Securities being included in any registration
and the distribution proposed by Investors as Company may request in writing and
as shall be required in connection with any registration referred to in this
Agreement.
9. Rule 144 Reporting. With a view to making available the benefits of certain
------------------
rules and regulations of the Commission which may at any time permit the sale of
Registrable Securities to the public without registration, Company agrees to use
its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 (or any successor or similar rule)
promulgated by the Securities and Exchange Commission under the Securities Act;
(b) file with the Commission in a timely manner all reports and other
documents required of Company under the Securities Act and the Exchange Act; and
(c) so long as Investors own any Registrable Securities, promptly
furnish to Investors upon request: (i) a statement by Company as to its
compliance with the reporting requirements of Rule 144 (or any successor or
similar rule), the Securities Act and the Exchange Act; (ii) a copy of the most
recent annual or quarterly report of Company, and such other publicly filed
reports and documents of Company; and (iii) such other information in the
possession of Company as Investors may reasonably request in availing themselves
of any rule or regulation of the Commission allowing Investors to sell any
Shares without registration.
10. Amendment. Any provision of this Agreement may be amended or the observance
---------
thereof may be waived (either generally or in particular instance and either
retroactively or prospectively) only with the written consent of the Company and
all Investors.
11. Termination. This Agreement shall terminate at such time following the
-----------
Restructuring as Investors are the beneficial owners of less than one hundred
thousand Shares.
12. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
13. Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties regarding rights to
registration.
14. Notices and Dates. Any notice required to be given hereunder shall be
-----------------
sufficient if in writing, and sent by facsimile transmission or by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
-8-
If to TLL Partners:
TLL Partners, L.L.C.
000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxx, Xxxxx 00000
Attention: Xxxxxx X. XxXxxxxx
Telecopier: 000-000-0000
If to Holdings:
GM Holdings, LLC
c/o Xxxx X. Xxxxxxx
Aintree Capital
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopier: 000-000-0000
If to the Company:
Teletouch Communications, Inc.
000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: J. Xxxxxx Xxxxxx
Telecopier: 000-000-0000
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered, if
delivered personally, by messenger or by courier, or upon confirmation of
receipt if sent by facsimile.
15. Counterparts; Facsimiles. This Agreement may be executed in several
------------------------
counterparts (by facsimile or original signature), each of which shall be deemed
to be an original, but all of which together shall be deemed to be one and the
same instrument. A signature transmitted by facsimile shall be treated for all
purposes by the parties hereto as an original and shall be binding upon the
party transmitting such signature without limitation.
16. Further Assurances. The parties hereto shall do and perform or cause to be
------------------
done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments or documents as any
other party may reasonably request from time to time in order to carry out the
intent and purposes of this Agreement and the consummation of the transactions
contemplated thereby. Neither Company nor Investors shall voluntarily undertake
any course of action inconsistent with satisfaction of the requirements
applicable to them set forth in this Agreement, and each shall promptly do all
such acts and take all such measures as may be appropriate to enable them to
perform as early as practicable the obligations herein and therein required to
be performed by them.
17. Severability. Any term or provision of this Agreement which is invalid or
------------
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions
-9-
of this Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
18. Binding Effect; Assignment. This Agreement shall be binding upon the
--------------------------
parties hereto and their respective successors and assigns. Except as expressly
provided in this Agreement, this Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement, and their respective successors and assigns. The parties hereto
recognize that Holdings intends to transfer to its members its Shares or the
right to receive such Shares and it is expressly acknowledged that, from and
after such transfer, such members shall be "Investors" under this Agreement.
Upon any assignment as contemplated in this paragraph, the assignor shall
provide written notice of such assignment to the Company.
19. Interpretation. When a reference is made in this Agreement to Sections,
--------------
such references shall be to a Section to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
Use of any gender herein to refer to any Person shall be deemed to comprehend
masculine, feminine, and neuter unless the context clearly requires otherwise.
20. Specific Performance. The parties hereto agree that monetary damages and
--------------------
any other remedy at law will not be adequate to compensate for any breach or
failure to consummate the transactions contemplated hereby because, inter alia,
the assessment of monetary damages is impractical and too speculative, and that
any party shall be entitled to specific performance or other injunctive relief
as the remedy for such breach without the necessity of proving inadequacy of
legal remedies or irreparable harm, or posting bond, or in order to prevent the
violation of the provisions of this Agreement.
[Signature page follows.]
-10-
IN WITNESS WHEREOF, the undersigned have executed this Investor Rights
Agreement as of the date set forth above.
TELETOUCH COMMUNICATIONS, INC.
/s/ J. Xxxxxx Xxxxxx
-------------------------------------
Name: J. Xxxxxx Xxxxxx
Title: President:
TLL PARTNERS, L.L.C.
/s/ Xxxxxx X. XxXxxxxx
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Manager
GM HOLDINGS, LLC
/s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Manager
EXHIBIT F
TERMINATION AGREEMENT
Conformed Execution Copy
TERMINATION AGREEMENT
This Termination Agreement dated as of May 17, 2002 (this "Agreement"), is
among Teletouch Communications, Inc., a Delaware corporation (the "Company"),
each of the investors listed on the Schedule of Investors attached hereto (the
"Investors") and those other stockholders listed on the signature page hereto
(the "Other Stockholders"). Continental Illinois Venture Corporation, a Delaware
corporation ("CIVC"), CIVC Partners I, a Delaware limited partnership ("CIVC
Partners"), the other Investors and the Other Stockholders are collectively
referred to as the "Stockholders" and individually as a "Stockholder".
A. The Company and the Investors are parties to the Amended and Restated
Subordinated Note, Preferred Stock and Warrant Purchase Agreement dated as of
August 3, 1995 (as amended from time to time, the "Purchase Agreement").
B. The Company and the Stockholders are parties to the Stockholders
Agreement dated as of August 3, 1995 (the "Stockholders Agreement"). G. Xxxxx
Xxxxxxxxxxxx and Finova Capital Corporation no longer hold any shares of capital
stock subject to the Stockholders Agreement and no longer have any interest
therein.
C. The Company and CIVC are parties to the Warrant Agreement dated as of
August 3, 1995 (the "Warrant Agreement").
D. The Company, CIVC, CIVC I and the Stockholders are parties to the
Registration Agreement dated as of August 3, 1995 (the "Registration
Agreement").
E. The Company, CIVC, CIVC I and the Stockholders (other than Xxxxxx X.
XxXxxxxx and GM Holdings, LLC) are parties to the Option and Securities Purchase
Agreement date August 24, 2001 (the "Option Agreement").
F. It is a condition precedent to the consummation of the transactions
contemplated by the Option Agreement that the Stockholders Agreement be
terminated; and, in connection therewith, it is the desire of the various
parties thereto and the additional parties hereto to terminate each of the
Purchase Agreement, Stockholders Agreement, Warrant Agreement and Registration
Agreement (such agreements referred to collectively herein as the "Investment
Agreements") in accordance with and subject to the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Upon the execution of this Agreement, the Investment Agreements shall
be and hereby are terminated. The termination of the Investment Agreements is
not intended to, and does not, affect any document or instrument executed and
delivered as contemplated by such Investment Agreements other than as set forth
herein, and such termination shall have no effect on any claims arising from
obligations under those provisions of the Investment Agreements that by their
terms expressly state that they survive termination of such Investment
Agreements,
including, without limitation, the Release delivered pursuant to the Option and
Securities Purchase Agreement
2. This Agreement shall be binding upon and shall inure to the benefit of
the Company, the Stockholders and each of their respective heirs, successors and
assigns.
3. This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and construed in accordance with, the laws of the State of
Delaware. This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.
Signature page follows.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first written above.
TELETOUCH COMMUNICATIONS, INC.
By: /s/ J. Xxxxxx Xxxxxx
---------------------------------
Name: J. Xxxxxx Xxxxxx
Title: President
INVESTORS:
CONTINENTAL ILLINOIS
VENTURE CORPORATION
By: /s/Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Its Managing Director
CIVC PARTNERS I
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Partner
GM HOLDINGS, LLC
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: Manager
OTHER STOCKHOLDERS
/s/ Xxxxxx X. XxXxxxxx
-----------------------------------
Xxxxxx X. XxXxxxxx
/s/Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
XXXXXXX X. XXXXXXX TRUST
By: /s/ Xxxx D, Xxxxxxx
--------------------------------
Xxxx X. Xxxxxxx
Trustee
XXXXX XXXXXX INDIVIDUAL
RETIREMENT ACCOUNT FBO:
Xxxxx X. Xxxxxxx
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx
By: /s/ Xxxxxxxx X. Xxxxxx
--------------------------------
Xxxxx Xxxxxx Representative
-3-
XXXXX XXXXXX INDIVIDUAL
RETIREMENT ACCOUNT FBO:
Xxxxxxx X. Xxxxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxx
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Xxxxx Xxxxxx Representative
RAINBOW RESOURCES, INC.
By: /s/ Xxxxxx X. XxXxxxxx
-------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: President
-4-
SCHEDULE OF INVESTORS
Name and Address
----------------
Continental Illinois Venture Corporation
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
CIVC Partners I
c/o Continental Illinois Venture Corporation
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
GM Holdings, LLC
000 Xxxxxx Xxxxxx Xxxxx
00/xx/ Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
-5-
EXHIBIT G
SUBORDINATED NOTE
OF
TELETOUCH COMMUNICATIONS, INC.
Conformed Execution Copy
SUBORDINATED PROMISSORY NOTE
$2,200,000 Houston, Texas May 17, 2002
TELETOUCH COMMUNICATIONS, INC., a Delaware corporation ("Maker"), for value
received, hereby promises to pay to the order of TLL PARTNERS, L.L.C., a
Delaware limited liability company ("Payee"), the principal sum of TWO MILLION
TWO HUNDRED THOUSAND AND NO/100ths DOLLARS ($2,200,000) or, if less, the
outstanding principal amount advanced under this Subordinated Promissory Note
(this "Note"), all in accordance with the terms of this Note.
1. Principal.
---------
Payee may from time to time on or after May 17, 2002 advance principal
under this Note to Maker, not to exceed the face amount of this Note. Payee's
records shall be presumptive evidence of the amounts advanced.
Maker may from time to time prepay the outstanding principal amount of this
Note in whole or in part without premium or penalty; provided, however, that no
payment or prepayment shall be made until such time as the Senior Debt (as
defined below) is paid in full. Each prepayment of principal shall be
accompanied by payment of all accrued but unpaid interest on the principal
amount prepaid.
Maker shall pay to Payee the outstanding principal amount of this Note on
the later of (a) the date on which the Pilgrim Debt is paid in full and (b) May
17, 2007 (the "Maturity Date").
2. Interest.
--------
The outstanding principal amount of this Note shall bear interest at 10.00%
per annum calculated on the basis of a 365/366-day year for the actual number of
days elapsed.
Maker shall pay to Payee all accrued but unpaid interest on principal
amounts prepaid as required in Section 1. Maker shall pay to Payee all accrued
but unpaid interest on the outstanding principal amount of this Note on the
Maturity Date.
3. Payments Generally.
------------------
Unless otherwise stated, all monetary amounts expressed under this Note and
all payments due under this Note are expressed in and shall be due in U.S.
Dollars. Maker shall make all payments required under this Note not later than
1:00 p.m., Houston,
Texas, time on any date when due at such location as is specified by Payee in
writing in immediately available funds. Whenever any payment to be made under
this Note shall be stated to be due on a day other than a day on which the banks
in Houston, Texas, and New York, New York, are required to be open (a "Business
Day"), such payment shall be due and payable on the next succeeding Business
Day. If the date for payment of any obligation is not specified in this Note,
such obligation shall be payable upon demand. Any payments not made when due as
a result of the application of Section 5 shall be deemed not paid when due for
the purposes of this Note.
4. Default and Remedies.
--------------------
It shall be an "Event of Default" under this Note if Maker fails to pay
when due any principal, interest, or other amount due under this Note.
During the continuation of any Event of Default, Payee may declare by
written notice to Maker all amounts payable by Maker under this Note to be
immediately due and payable, whereupon such amounts shall become immediately due
and payable. Except as expressly provided for in this Note, Maker waives notice
of any default or event of default (however denominated), notice of intent to
accelerate, notice of acceleration, presentment, demand, notice of dishonor,
notice of setoff, notice of the initiation of any suit, notice of any action
against any credit support or collateral, and notice of any other action or
remedy.
If Maker fails to pay when due any amount payable under this Note, the
amount not paid when due shall bear interest beginning on the date due until
paid in full at a rate per annum equal to 14.00% per annum, calculated on the
basis of a 365/366-day year for the actual number of days elapsed.
As used herein, "Highest Lawful Rate" means the maximum lawful interest
rate that may be contracted for, charged, or received under the laws applicable
to this Note which are presently in effect or, to the extent allowed by law,
under such applicable laws which may hereafter be in effect and which allow a
higher maximum lawful interest rate.
NOTWITHSTANDING the foregoing or any other term in this Note to the
contrary, it is the intention of Payee and Maker to conform strictly to any
applicable usury laws. Accordingly, if Payee contracts for, charges, or receives
any consideration in connection with this Note which constitutes interest in
excess of the Highest Lawful Rate, then any such excess shall be canceled
automatically and, if previously paid, shall at Payee's option be applied to the
outstanding principal amount of this Note or be refunded to Maker. In
determining whether any interest exceeds the Highest Lawful Rate, such interest
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread in equal parts throughout the term of this Note.
-2-
During the continuation of an Event of Default, Payee is authorized at any
time, to the fullest extent permitted by law, to setoff and apply any
indebtedness owed by Payee to Maker against any obligations of Maker under this
Note, irrespective of whether or not Payee shall have made any demand under this
Note and although such obligations may be contingent or unmatured.
During the continuation of an Event of Default, Payee may exercise all of
its rights under this Note and all other rights at law or in equity.
During the continuation of an Event of Default, all payments received in
respect of obligations under this Note shall be applied in the order determined
by Payee.
No right, power, or remedy conferred to Payee in this Note or in any
documents securing or supporting this Note or now or hereafter existing at law,
in equity, by statute, or otherwise shall be exclusive, and each such right,
power, or remedy shall to the full extent permitted by law be cumulative and in
addition to every other such right, power, or remedy. No course of dealing and
no delay in exercising any right, power, or remedy conferred to Payee shall
operate as a waiver of or otherwise prejudice any such right, power, or remedy.
No notice to or demand upon Maker shall entitle Maker to similar notices or
demands in the future.
5. Subordination.
-------------
5.1 Notwithstanding the foregoing provisions, the payment of any
principal, interest or other amounts under this Note (collectively, the
"Subordinated Debt") is subordinated, on the terms set forth in this Section 5,
to the payment of (a) any amounts (including interest accruing after the filing
of a petition initiating any Insolvency Proceeding (as defined below) with
respect to Maker or its assets) owing under the terms of the Accounts Receivable
Security Agreement and the Promissory Note, each dated as of the date hereof,
between Maker and First Community Financial Corporation ("FCFC"), as such
amounts and such agreement may be increased, extended, rearranged, amended,
supplemented, or otherwise modified from time to time (collectively, the "FCFC
Debt"), and (b) any principal, interest, or other amounts (including interest
accruing after the filing of a petition initiating any Insolvency Proceeding
with respect to Maker or its assets) owing under the terms of the Promissory
Note, Loan Modification Agreement and Second Amended and Restated Credit
Agreement dated as of the date hereof, made by Maker and payable to ING Prime
Rate Trust, f/k/a Pilgrim America Prime Rate Trust ("Pilgrim"), as such amounts
and related agreements may be increased, extended, rearranged, amended,
supplemented, or otherwise modified from time to time (collectively, the
"Pilgrim Debt") (collectively, the FCFC Debt and the Pilgrim Debt are referred
to as "Senior Debt," unless, in the case of any particular obligation, the
agreements creating or evidencing the same or pursuant to which the same is
outstanding expressly provide that such obligation shall not be Senior Debt
under this Note). The
-3-
provisions of this Section 5 shall take precedence over any conflicting
provisions in this Note.
5.2 No payment of principal, interest or other amount may be made by
Maker upon the Subordinated Debt until all principal, interest, and other
amounts (including interest accruing after the filing of a petition initiating
any Insolvency Proceeding with respect to Maker or its assets) owing under the
terms of the Senior Debt have been paid in full.
5.3 If there shall exist a default in the payment of any principal,
interest or other amounts under the Subordinated Debt (a "Payment Default") or
any other event of default with respect to the Subordinated Debt (a "Nonpayment
Default"), Payee shall not take any Remedial Action (as defined below) with
respect to such Payment Default or Nonpayment Default until the date all Senior
Debt is paid in full and all commitments to fund additional Senior Debt have
been terminated. As used herein, "Remedial Action" means any action to (a) take
or receive from Maker or any other Person or its or their assets any payments
on, or assets securing, all or any portion of the Subordinated Debt, whether by
collection, foreclosure, setoff, or any other judicial or nonjudicial action, or
(b) commence, or join with any Person in commencing, any suit, action, or
proceeding (including an Insolvency Proceeding) against Maker or any other
Person or its or their assets to enforce payment of any portion of the
Subordinated Debt or enforce any of the rights and remedies under this Note or
applicable law with respect to the Subordinated Debt.
5.4 Upon any distribution to creditors of Maker in a liquidation or
dissolution of Maker or in any bankruptcy, reorganization, insolvency,
receivership, or other similar proceeding (an "Insolvency Proceeding") with
respect to Maker or any of its assets, (a) the holders of the Senior Debt shall
be entitled to receive payment in full in cash, or to have such payment duly
provided for, of all amounts payable under or in respect of the Senior Debt
(including interest accrued after the commencement of such Insolvency Proceeding
in accordance with the terms of the Senior Debt) before Payee shall be entitled
to receive from Maker or its assets any payment under or in respect of the
Subordinated Debt and (b) until the holders of the Senior Debt have received
such payment in full in cash, or such payment is duly provided for, any
distribution from Maker or its assets to which Payee would otherwise be entitled
shall be made to the holders of the Senior Debt.
5.5 Payee shall be obligated to hold in trust for, and to pay over
promptly to, the holders of the Senior Debt all payments, set-offs and
distributions received by Payee in contravention of the restrictions contained
in this Note.
5.6 Payee shall not create, assume, or suffer to exist any Liens (as
defined below) on any collateral securing repayment of the Subordinated Debt.
Any Liens existing in violation of the foregoing shall be fully subordinate to
any Liens in favor of
-4-
any holders of Senior Debt which secures any Senior Debt. At the request of the
holders of any Senior Debt, Maker and Payee shall take any steps necessary to
fully effect the release of any such Lien. As used herein, "Liens" means any
mortgage, lien, pledge, charge, deed of trust, security interest, encumbrance,
or other type of preferential arrangement to secure or provide for the payment
of any obligation, whether arising by contract, operation of law, or otherwise
(including any title retention for such purposes under any conditional sale
agreement, any capital lease, or any other title transfer or retention
agreement)
5.7 Subject to the applicable provisions of the instruments
evidencing, securing or otherwise relating to all or any portion of the Senior
Debt, the provisions of this Section 5 are irrevocable and the holders of all or
any portion of the Senior Debt may, without notice to any of the parties hereto
and without impairing or releasing the obligations of Maker and Payee hereunder,
(i) create additional or extend or otherwise modify Senior Debt; (ii) change the
terms of or increase the amount of the Senior Debt by increasing, extending,
rearranging, amending, supplementing, or otherwise modifying any agreement
creating Senior Debt; (iii) sell, exchange, release, take possession of, dispose
of, or otherwise deal with any collateral securing any Senior Debt; (iv) release
anyone, including Maker or any guarantor, liable in any manner for the payment
or collection of any Senior Debt; (v) exercise or refrain from exercising any
rights against the collateral, Maker or any other Person; or (vi) apply any sums
received by any holders of the Senior Debt, from whatever source, to the payment
of the Senior Debt.
5.8 Whenever in this Note reference is made to notices or payments to
or from the holders of Senior Debt or Payee, such notices or payments may be
made to any respective agent, trustee, or representative thereof. The provisions
of this Section 5 shall be enforceable against Maker or Payee by any holder of
Senior Debt. Specifically, any holder of Senior Debt is a third-party
beneficiary under this Note.
5.9 Any holder of Senior Debt shall have no duty to preserve, protect,
care for, insure, take possession of, collect, dispose of or otherwise realize
upon any collateral, and in no event shall the holder of any Senior Debt be
deemed to be the agent of the holder of any Subordinated Debt with respect to
any collateral. All proceeds received by the holder of any Senior Debt with
respect to any collateral may be applied, first, to pay or reimburse the holder
of any Senior Debt for all costs and expenses (including reasonable attorneys'
fees and costs) incurred by the holder of any Senior Debt in connection with the
collection of such proceeds, and, second, to any Senior Debt, in any order that
it may choose.
5.10 In the event of any receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization or arrangement with
creditors, whether or not pursuant to bankruptcy law, the sale of all or
substantialy all of the assets of the Maker, dissoultion, liquidation or any
other marshalling of the assets or liabilities of the Maker,
-5-
the Payee will file all claims, proofs of claim or other instruments of similar
character necessary to enforce the obligations of Maker in respect of the Senior
Debt and will hold in trust for the holders of the Senior Debt and promptly pay
over to the holders of the Senior Debt in the form received (except for the
endorsement of the Payee where necessary) for application to the then-existing
Senior Debt, any and all moneys, dividends or other asets received in any such
proceeding on account of the Subordinated Debt, unless and until the Senior Debt
has been paid in full. If the Payee shall fail to take any such action, the
holders of the Senior Debt, as attorney-in-fact for the Payee, may take such
action on the Payee's behalf. The Payee hereby irrevocably appoints the holders
of the Senior Debt, or any of their officers or employees on behalf of the
holders of the Senior Debt, as the attorney-in-fact for the Payee (which
appointment is coupled with an interest) with the power but not the duty to
demand, xxx for, collect and receive any and all such moneys, dividends or other
assets and give acquittance therefor and to file any claim, proof of claim or
other instrument or similar character, to vote claims comprising the
Subordinated Debt to accept or reject any plan of partial or complete
liquidation, reorganization, arrangement, composition or extension and to take
such other action in the holders of the Senior Debt's own name or in the name of
the Payee as the holder of the Senior Debt may deem necessary or advisable for
the enforcement of the agreements contained herein; and the Payee will execute
and deliver to the holders of the Senior Debt such other and further
powers-of-attorney or insturments as the holders of the Senior Debt may request
in order to accomplish the foregoing. If the holders of the Senior Debt desrie
to permit the use of cash collateral or to provide post-petition financing to
the Maker, the Payee shall not object to the same or assert that its intersts
are not adequartely protected.
5.11 The Payee is the lawful holder of the Subordinated Debt and has not
transferred any interest therein to any other person. Without the prior written
consent of the holders of the Senior Debt, the Payee will not assign, transfer,
pledge to any other person any of the Subordinated Debt or agree to a discharge
or forgiveness of the same.
6. Miscellaneous.
-------------
This Note shall be governed by the laws of the State of Texas without
regard to conflicts of law principles which would select another law.
EXECUTED as of the date first above written.
TELETOUCH COMMUNICATIONS, INC. TLL PARTNERS, L.L.C.
By: /s/ J. Xxxxxx Xxxxxx By: /s/ Xxxxxx X. XxXxxxxx
-------------------------------- -------------------------------
Name: J. Xxxxxx Xxxxxx Name: Xxxxxx X. XxXxxxxx
------------------------------ -----------------------------
Title: President Title: President
----------------------------- ----------------------------
-6-
EXHIBIT H
WARRANT AGREEMENT
Conformed Execution Copy
THE SECURITY REPRESENTED BY THIS CERTIFICATE WAS ORIGINALLY ISSUED ON
[_________________, 2002], AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF SUCH SECURITY IS
SUBJECT TO THE CONDITIONS SPECIFIED HEREIN AND THE ISSUER HEREOF (THE
"COMPANY") RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY
UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER.
TELETOUCH COMMUNICATIONS, INC.
COMMON STOCK PURCHASE WARRANT
Date of Issuance: [____________, 2002]
Certificate No. W-CS01
FOR VALUE RECEIVED, Teletouch Communications, Inc., a Delaware
corporation (the "Company"), hereby grants to GM Holdings, LLC, a Tennessee
limited liability company, or its registered assigns (the "Registered Holder")
the right to purchase from the Company the number of shares obtained by dividing
$3,000,000 by the conversion price, determined as hereinafter provided in
Section 2, in effect at the time of exercise, at a price per share of $.01 (the
"Exercise Price"). This Warrant is one of the Warrants (collectively, the
"Warrants") issued pursuant to the terms of the Restructuring Agreement. Certain
capitalized terms used herein are defined in Section 2 and in Section 8 hereof.
The Company acknowledges that of the consideration paid for this
Warrant pursuant to the Restructuring Agreement, $.01 per share of Warrant Stock
issuable hereunder shall be deemed to have been paid by the Registered Holder
hereof as a nonrefundable payment for Warrant Stock from time to time issued
hereunder and Registered Holder shall receive a credit in such amount against
the Exercise Price otherwise payable upon exercise of this Warrant.
The amount and kind of securities obtainable pursuant to the rights
granted hereunder and the purchase price for such securities are subject to
adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
-------------------
1A. Exercise Period. Subject to the terms and conditions hereof, the
---------------
Registered Holder may exercise, in whole or in part, the purchase rights
represented by this Warrant at any time and from time to time after the third
anniversary of the Date of Issuance to and including the eighth anniversary of
the Date of Issuance (the "Exercise Period"). The Company shall give the
Registered Holder written notice of the expiration of the Exercise Period at
least 30 days but not more than 90 days prior to the end of tie Exercise Period.
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in
paragraph 1C below, executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "Purchaser");
(b) this Warrant; and
(c) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form set forth in Exhibit A
hereto evidencing the assignment of this Warrant with respect to the number
of shares of Warrant Stock described therein to the Purchaser, in which
case the Registered Holder shall have complied with the provisions set
forth in Section 9 hereof.
(ii) Certificates for shares of Warrant Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Purchaser
within five business days after the date of the Exercise Time. Unless all of the
purchase rights represented hereby have been exercised, the Company shall
prepare a new Warrant, substantially identical hereto, representing the rights
formerly represented by this Warrant which have not been exercised and shall,
within such five day period, deliver such new Warrant to the Person designated
for delivery in the Exercise Agreement.
(iii) The Warrant Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Warrant Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Warrant Stock
upon exercise of this Warrant shall be made without charge to the Registered
Holder or the Purchaser for any issuance tax in respect thereof or other cost
incurred by the Company in connection with such exercise and the related
issuance of shares of Warrant Stock. Each share of Warrant Stock issuable upon
exercise of this Warrant shall be fully paid and nonassessable and free from all
Liens and charges with respect to the issuance thereof.
(v) The Company shall not close its books against the transfer
of this Warrant or of any share of Warrant Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant.
(vi) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company) and will bear all expenses in connection therewith.
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a registered
public offering or the sale of the
-2-
Company, the exercise of any portion of this Warrant may, at the election of the
holder hereof, be conditioned upon the consummation of the public offering or
sale of the Company in which case such exercise shall not be deemed to be
effective until the consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Warrant Stock solely for the
purpose of issuance upon the exercise of this Warrants, such number of shares of
Warrant Stock issuable upon the exercise of all outstanding Warrants. All shares
of Warrant Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, Liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Warrant Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Warrant Stock may be listed (except for
official notice of issuance which shall be immediately delivered by the Company
upon each such issuance). The Company shall from time to time take all such
action as may be necessary to assure that the par value of the unissued Warrant
Stock acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price. The Company shall not take any action which would cause
the number of authorized but unissued shares of Warrant Stock to be less than
the number of such shares required to be reserved hereunder for issuance upon
exercise of the Warrants.
(ix) If the shares of Warrant Stock issuable by reason of
exercise of this Warrant are convertible into or exchangeable for any other
stock or securities of the Company, the Company shall, at the exercising
holder's option and upon surrender of this Warrant by such holder as provided
above together with any notice, statement or payment required to effect such
conversion or exchange of Warrant Stock, deliver to such holder (or as otherwise
specified by such holder) a certificate or certificates representing the stock
or securities into which the shares of Warrant Stock issuable by reason of such
conversion are convertible or exchangeable, registered in the name or names and
in such denomination or denominations as such holder has specified.
(x) Upon any exercise of this Warrant, the holders of the shares
of Warrant Stock issued upon such exercise shall in all cases be entitled to the
benefits of Sections 5B., 5C., and 7D. of this Warrant.
1C. Exercise Agreement. Upon any exercise of this Warrant, the Exercise
------------------
Agreement shall be substantially in the form set forth in Exhibit B hereto,
except that if the shares of Warrant Stock are not to be issued in the name of
the Person in whose name this Warrant is registered, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the shares
of Warrant Stock are to be issued, and if the number of shares of Warrant Stock
to be issued does not include all the shares of Warrant Stock purchasable
hereunder, it shall also state the name of the Person to whom a new Warrant for
the unexercised portion of the rights hereunder is to be delivered. Such
Exercise Agreement shall be dated the actual date of execution thereof.
1D. Fractional Shares. No fractional shares of Common Stock shall be
issued upon exercise of the rights represented by this Warrant, but, instead of
any fraction of a share which
-3-
would otherwise be issuable, the Company shall pay cash in respect of such
fraction in an amount equal to the same fraction of the Closing Price (as
hereinafter defined) on the date on which the Exercise Time occurs, or, if such
date is not a Trading Day (as hereinafter defined), on the next Trading Day.
1E. FCC Approval. Upon any exercise that might, within the reasonable
------------
opinion of the Registered Holder, be considered a change in control by the FCC
or for the purposes of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
the Company will seek any necessary approvals for such proposed change in
control at its sole expense. If for any reason the FCC or any governmental
instrumentality prohibits or enjoins the exercise that may result in such change
of control, the Company will, at its sole expense, take all steps reasonably
necessary or desirable to effect such change in control and obtain all necessary
or desirable approvals with respect thereto.
Section 2. Adjustment of Number of Shares. In order to prevent dilution of
------------------------------
the rights granted under this Warrant, the number of shares of Warrant Stock
obtainable upon exercise of this Warrant shall be subject to adjustment from
time to time as provided in this Section 2.
2A. Conversion Price. Warrant Stock will be issued and delivered upon
----------------
the exercise of this Warrant based upon a price per share (the "conversion
price"), which conversion price shall initially be $0.50 per share, subject to
adjustment as provided herein.
2B. Conversion Adjustments. The conversion price and the number and
----------------------
kind of shares of capital stock of the Company issuable on exercise of this
Warrant shall be adjusted from time to time as follows:
(i) Stock Splits and Combinations. In case the Company shall
subdivide its outstanding Common Stock into a greater number of shares, or
combine its outstanding Common Stock into a smaller number of shares, the
conversion price in effect immediately before the time when such subdivision or
combination becomes effective shall be adjusted so that the Registered Holder
shall be entitled to receive the number of shares of Common Stock that the
Registered Holders would have received if such Warrant had been exercised
immediately prior thereto. Such adjustment shall be made successively whenever
any such event shall occur.
(ii) Stock Dividends in Common Stock. In case the Company shall
pay a dividend or make a distribution in shares of Common Stock on any class of
capital stock of the Company, the conversion price in effect immediately before
the close of business on the record date fixed for determination of stockholders
entitled to receive such dividend or distribution shall be reduced by
multiplying such conversion price by a fraction of which the numerator shall be
the number of shares of Common Stock theretofore outstanding and of which the
denominator is the sum of such number of shares and the total number of shares
issued in such dividend or other distribution.
(iii) Issuance of Rights or Warrants. In case the Company shall
issue Common Stock or rights or warrants entitling the holders thereof to
subscribe for or purchase Common Stock at a price per share less than the
Current Market Price (as determined pursuant to clause (vii) below), the
conversion price in effect immediately before the close of business on the
record
-4-
date fixed for the determination of Persons entitled to receive such Common
Stock, rights or warrants shall be reduced by multiplying such conversion price
by a fraction, of which the numerator is the sum of the number of shares of
Common Stock outstanding at the close of business on such record date and the
number of shares of Common Stock which the aggregate offering price of the total
number of shares of Common Stock so offered for subscription or purchase would
purchase at such Current Market Price and of which the denominator is the sum of
the number of shares of Common Stock outstanding at the close of business on
such record date and the number of additional shares of Common Stock so offered
for subscription or purchase. For the purpose of this clause (iii), the issuance
of rights or warrants to subscribe for or purchase securities convertible into
Common Stock shall be deemed to be the issuance of rights or warrants to
purchase the Common Stock into which such securities are convertible at an
aggregate offering price equal to the sum of the aggregate offering price of
such securities and the minimum aggregate amount (if any) payable upon
conversion of such securities into Common Stock. Such adjustment shall be made
successively whenever any such event shall occur. In case such rights or
warrants are not issued after such a record date has been fixed, the conversion
price shall be readjusted to the conversion price which would have been in
effect if such record date had not been fixed.
(iv) Distribution of Indebtedness, Securities or Assets. In case
the Company shall distribute to holders of Common Stock (whether pursuant to a
merger or consolidation or otherwise) evidences of indebtedness, shares of
capital stock of any class or series, other securities, cash or assets (other
than Common Stock, rights or warrants referred to in paragraph (iii) above or a
dividend payable exclusively in cash and other than as a result of a Fundamental
Change), the conversion price in effect immediately before the close of business
on the record date fixed for the determination of stockholders entitled to
receive such distribution shall be reduced by multiplying such conversion price
by a fraction, of which the numerator is the Current Market Price (determined as
provided in clause (vii) below) on such record date less the fair market value
(as determined by the Board of Directors, whose determination in good faith
shall be conclusive) of the portion of such indebtedness, shares of capital
stock, other securities, cash and assets so distributed applicable to one share
of Common Stock and the denominator is such Current Market Price. Such
adjustment shall be made successively whenever any such event shall occur. In
case such distribution is not made after such a record date has been fixed, the
conversion price shall be readjusted to the conversion price that would have
been in effect if such record date had not been fixed.
(v) Extraordinary Dividends; Certain Tender and Exchange Offers.
In case the Company shall pay a cash dividend to holders of Common Stock (other
than pursuant to a Fundamental Change) in an aggregate amount that, when
combined with the aggregate amount paid in respect of cash dividends within the
preceding 12 months to the extent such amount has not already been applied in a
prior adjustment pursuant to this paragraph, exceeds 10% of the product of the
Current Market Price on the date fixed for payment of such dividend and the
number of shares of Common Stock outstanding on such payment date, the
conversion price in effect immediately before the close of business on such
payment date shall be reduced by multiplying such conversion price by a
fraction, of which the numerator is the Current Market Price on such payment
date less the amount by which the amount of such dividend per share exceeds the
Current Market Price and the denominator is such Current Market Price, such
reduction to become effective immediately prior to the opening of business on
the day following
-5-
such payment date, and the Registered Holder shall be entitled to receive, for
each share of Common Stock received upon such conversion, the amount of such
dividend per share of Common Stock. In case the Company, directly or indirectly,
shall consummate a tender offer or exchange offer for all or any portion of the
Common Stock and the sum of the amount of cash and the fair market value (as
determined by the Board of Directors, whose determination in good faith shall be
conclusive) of property paid in respect thereof is in excess of the product of
the Current Market Price on the expiration date of such tender or exchange offer
and the number of shares of Common Stock theretofore outstanding, such excess
amount shall be treated as a cash dividend for purposes of the foregoing
sentence. Such adjustment shall be made successively whenever any such event
shall occur.
(vi) Fundamental Change. In case any transaction or event (including
without limitation any merger, consolidation, sale of assets, tender or exchange
offer, reclassification, compulsory share exchange or liquidation) shall occur
in which all or substantially all outstanding Common Stock is converted into or
exchanged for stock, other securities, cash or assets (a "Fundamental Change"),
the Registered Holder shall have the right upon any subsequent exercise to
receive (but only out of legally available funds, to the extent required by
applicable law) the kind and amount of stock, other securities, cash and assets
that such holder would have received if this Warrant had been exercised
immediately prior thereto; provided, however, that if more than 80% of the value
(as determined by the Board of Directors, whose determination in good faith
shall be conclusive) of such stock, other securities, cash and assets consists
of common stock of any Company, such holder shall have the right to receive such
number of shares of such common stock that such holder would have received if
all of such value had consisted solely of such common stock. The Company agrees
that it will not be a party to or permit any Fundamental Change to occur unless
the foregoing provisions are included in the terms thereof. This paragraph shall
similarly apply to any subsequent Fundamental Change.
(vii) Current Market Price. For purposes of any computation under
clauses (iii), (iv) and (v) above, the Current Market Price on any date means
the average of the daily Closing Prices for five consecutive Trading Days
selected by the Board of Directors commencing not more than 20 Trading Days
before, and ending not later than, the earlier of such date and the day before
the record date fixed for determination of Persons entitled to receive any
Common Stock, rights or warrants referred to in clause (iii), any distribution
referred to in clause (iv) or any dividend referred to in clause (v) or, in the
case of a tender or exchange offer referred to in clause (v), the expiration
date thereof. Notwithstanding the foregoing, in the event there is no public
market for the Common Stock, the Current Market Price per share of Common Stock
on any date shall be established by the unanimous agreement of the Board of
Directors of the Company in its sole discretion.
(viii) Deferral of Certain Conversions Requiring Adjustment. In any
case in which this Section 2B requires that an adjustment as a result of any
event become effective from and after a record date, the Company may elect to
defer until after the occurrence of such event (A) issuing to the holder of any
Warrants exercised after such record date and before the occurrence of such
event the additional shares of Common Stock issuable upon such exercise over and
above the shares issuable on the basis of the conversion price in effect
immediately before adjustment and (B) paying to such holder any amount in cash
in lieu of a fractional share
-6-
of Common Stock pursuant to Section 1D above. In any such case, the Company
shall issue or cause a transfer agent to issue due bills or other appropriate
evidence of the right to receive the shares the issuance of which is so
deferred.
(ix) Deferral of Small Adjustments. Any adjustment in the conversion
price otherwise required by this Section 2B (except clause (ii) above) may be
postponed until the date of the next adjustment otherwise required to be made if
such adjustment (together with any other adjustments postponed pursuant to this
clause (ix) and not theretofore made) would not require an increase or decrease
of more than 1% in such conversion price and would not, if made, entitle the
Registered Holders upon exercise to receive additional shares of Common Stock
equal in the aggregate to one-tenth of one percent (0.1%) or more of the then
issued and outstanding shares of Common Stock. All calculations under this
Section 2B shall be made to the nearest cent or to the nearest 1/100th of a
share, as the case may be.
(x) Provisions Applicable to Other Classes of Stock. In the event
that at any time, as a result of an adjustment made pursuant to clause (iv) or
(vi) above, the Registered Holder becomes entitled to receive any shares of
capital stock other than Common Stock of the Company, the number and kind of
such other shares so receivable shall thereafter be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions concerning the Common Stock contained in clauses (i) through (ix)
above, and the other provisions of this Section 2B concerning the Common Stock
shall apply on like terms to any such shares.
(xi) Voluntary Reduction in Conversion Price. The Board of Directors
may make such reductions in the conversion price, in addition to those required
by this Section 2B, as shall be determined by the Board of Directors to be
advisable in order to avoid taxation so far as practicable of any dividend or
distribution of stock or rights to acquire stock or any event treated as such
for Federal income tax purposes to the recipients.
(xii) Authority of the Board of Directors. The Board of Directors
shall have the power to resolve any ambiguity or correct any error in this
Section 2B, and its action in so doing shall be final and conclusive.
2C. Certificate of Adjustment. Whenever the conversion price is adjusted
-------------------------
as herein provided:
(i) the Company shall prepare a certificate signed by the Company's
treasurer setting forth the adjusted conversion price and showing in reasonable
detail the facts upon which such adjustment is based, including the number of
shares of Warrant Stock into which this Warrant is then exercisable; and
(ii) a notice stating that the conversion price has been adjusted
and setting forth the adjusted conversion price shall be mailed, as soon as
practicable, to the Registered Holder at its last address appearing on the books
of the Company.
-7-
2D. Certain Notices. In case:
---------------
(i) the Company declares a dividend or other distribution on its
Common Stock payable otherwise than in cash out of its retained earnings which
will result in an adjustment of the conversion price;
(ii) the Company authorizes the issuance to the holders of its
Common Stock of rights or warrants entitling them to subscribe for or purchase
any shares of capital stock of any class or any other subscription rights or
warrants; or
(iii) of any reclassification of the capital stock of the Company
(other than a subdivision or combination of its outstanding shares of Common
Stock), or of any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required, or of the
sale, transfer or other disposition of all or substantially all of the assets of
the Company, or of any other transaction or event that would constitute or
result in a Fundamental Change; or
(iv) of the voluntary or involuntary liquidation, dissolution or
winding up of the Company;
then the Company shall mail to the Registered Holder, at its last address
appearing on the books of the Company, at least 20 days (or 10 days in any case
specified in clause (i) or (ii) above) prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date as of which
the holders of record of Common Stock to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, disposition,
liquidation, dissolution, winding up or Fundamental Change is expected to become
effective, and the date as of which it is expected that holders of record of
Common Stock shall be entitled to exchange their shares for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, disposition, liquidation, dissolution, winding up or Fundamental
Change. Failure to give notice as required by this Section 2D, or any defect
therein, shall not affect the validity of any such dividend, distribution,
right, warrant, reclassification, consolidation, merger, sale, transfer,
disposition, liquidation, dissolution, winding up or Fundamental Change, or the
vote on any action authorizing such.
2E. Reservation of Shares. If any shares of Common Stock required to be
---------------------
reserved for issuance upon exercise of this Warrant require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be issued or freely transferred upon exercise, the Company will
in good faith and as expeditiously as possible endeavor to cause such shares to
be duly registered or approved, as the case may be. If the Common Stock is
quoted on the American Stock Exchange or any other national securities exchange,
the Company will, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all shares of Common
Stock issuable upon exercise of this Warrant.
2F. Taxes. The Company shall pay any and all taxes that may be payable
-----
in respect of the issuance or delivery of shares of Common Stock on exercise of
this Warrant pursuant
-8-
hereto, other than any tax in respect of any transfer involved in the issuance
and delivery of shares of Common Stock in a name other than that in which this
Warrant so exercised was registered. No such issuance or delivery in a name
other than that in which this Warrant was registered shall be made unless and
until the person requesting such issuance or delivery has paid to the Company
the amount of any such tax or has established to the satisfaction of the Company
that such tax has been paid.
2G. Other Definitions.
-----------------
(i) For the purpose of this Section 2, "Common Stock" includes any
stock of any class or series of the Company which has no preference or priority
in the payment of dividends or in the distribution of assets in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and are not subject to redemption by the Company. Shares issuable upon exercise
of this Warrant, however, shall include only shares of the class designated as
Common Stock as of the first date of issuance of this Warrant or shares of the
Company of any classes or series resulting from any reclassification or
reclassifications thereof and that have no preference or priority in the payment
of dividends or in the distribution of assets in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and that are
not subject to redemption by the Company, provided that if at any time there
shall be more than one such resulting class or series, the shares of each such
class or series then so issuable shall be substantially in the proportion which
the total number of shares of such class and series resulting from all such
reclassifications bears to the total number of shares of all such classes and
series resulting from all such reclassifications.
(ii) As used in this Section 2, the term "Closing Price" on any day
shall mean the reported last sale price per share of Common Stock on such day
or, in case no such sale takes place on such day, the average of the reported
closing bid and asked prices, in each case on the American Stock Exchange, or if
the Common Stock is not listed or admitted to trading on such exchange, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the average of the closing bid and
asked prices in the over-the-counter market as reported by the National
Association of Securities Dealers' Automated Quotation System, or, if not so
reported, as reported by the National Quotation Bureau, Incorporated, or any
successor thereof, or, if not so reported, the average of the closing bid and
asked prices as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose; and the term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business or, if the Common Stock is not
listed or admitted to trading on any national securities exchange, a Monday,
Tuesday, Wednesday, Thursday or Friday on which banking institutions in Dallas,
Texas are not authorized or obligated by law or executive order to close.
2H. Accountant's Certificate. The certificate of any independent firm of
------------------------
public accountants of recognized standing selected by the Board of Directors
shall be presumptive evidence of the correctness of any computation made under
this Section 2.
-9-
Section 3. Dividends. The Registered Holder shall be entitled to
---------
participate, when, as and if declared by the Board of Directors, but only out of
funds legally available therefor, pro rata with the holders of the shares of
junior stock as though this Warrant had been exercised so that the Registered
Holder obtained such shares of junior stock with respect to any dividends
declared and paid by the Company on junior stock.
Section 4. Liquidation Rights. In the event of any voluntary or
------------------
involuntary liquidation, dissolution or winding up of the affairs of the
Company, then, the assets of the Company shall be distributed among the holders
of junior stock and this Warrant as if this Warrant had been exercised so that
the Registered Holder obtained shares of junior stock and in each case according
to their respective numbers of shares. For the purposes of this Section 4, the
merger or consolidation of the Company with any other company, including a
merger in which the holders of the Warrant Stock receive cash or property for
their shares, or the sale of all or substantially all of the assets of the
Company, or the reduction of the capital stock of the Company or any other form
of recapitalization or reorganization affecting the Company shall not constitute
a liquidation, dissolution or winding up of the Company.
Section 5. Voting Rights.
-------------
5A. Except as otherwise provided herein and as otherwise required by
applicable law, the Registered Holder shall have no voting rights; provided that
the Registered Holder shall be entitled to notice of all stockholders meetings
at the same time and in the same manner as notice is given to all stockholders
entitled to vote at such meetings.
5B. So long as this Warrant is outstanding, in addition to any other vote
or consent of stockholders required by law or by this Warrant, the vote or
consent of the holders of at least a majority of the Warrants or the shares of
Warrant Stock calculated on an as-exercised basis voting separately as a single
class, given in person or by proxy, either in writing without a meeting or by
vote at any meeting called for the purpose, shall be necessary for effecting or
validating:
(i) any amendment, alteration or repeal of any of the provisions of
the certificate of incorporation of the Company, which would alter or change the
voting powers, preferences or special rights of shares Warrant Stock so as to
effect them adversely; or
(ii) any merger or consolidation of the Company with or into any other
entity or any sale or disposition by the Company of all or substantially all of
the Company's assets (or any transaction having a similar effect).
5C. The Registered Holder and any successor thereto which does not have a
representative sitting on the Company's Board of Directors, and is a
corporation, general or limited partnership, limited liability company or trust
engaged primarily in investment activities or is otherwise an institutional
investor or is an individual or entity who holds at least 100,000 shares of
Common Stock calculated on an as-exercised basis (all as adjusted for stock
splits, stock dividends, stock combinations or stock reclassifications), shall
be entitled to have an observer present at any scheduled meeting of the
Company's Board of Directors, and to receive copies of all notices, minutes,
consents and other material provided to members of the
-10-
Company's Board of Directors. On reasonable notice at a scheduled meeting of the
Board of Directors such observer may address the Board of Directors with respect
to such Registered Holder's concerns about significant business issues facing
the Company. The Company shall afford to the Registered Holder or its designated
representative free and full access, at all reasonable times, and with
reasonable prior notice, to all of the books, records and properties of the
Company or any of its subsidiaries and to all officers and employees of the
Company for any reasonable purpose whatsoever, including but not limited to, the
opportunity to consult with and advise management of the Company on the affairs,
finances, accounts and significant business issues and management's proposed
annual operating plans. The Registered Holder and its representative shall use
their reasonable best efforts to maintain the confidentiality of any
confidential and proprietary information so obtained by such Person which is not
otherwise available from other sources which are free from similar restrictions
(and, if requested by the Company, sign an appropriate agreement evidencing that
obligation); provided, however, that the foregoing shall in no way limit or
otherwise restrict the ability of such Person to disclose any such information
concerning the Company which they may be required to disclose to their partners,
officers or shareholders for the purpose of evaluating its investment in the
Company or to the extent required to satisfy their fiduciary obligations to such
persons or otherwise pursuant to or as required by law; provided, further that
the Registered Holder shall promptly provide the Company with notice of any
request for such disclosure required by law and the Company may take such legal
action at its own expense as it deems necessary to prevent such disclosure under
the applicable laws. Nothing contained herein shall prohibit the Registered
Holder from making any disclosures required by law if a failure to do so would
result in a fine or other penalty to the Registered Holder.
5D. The Registered Holder shall not have any voting powers, preferences or
relative, participating, optional or other special rights, or qualifications,
limitations or restrictions thereof, other than as set forth herein.
Section 6. Impermissible Payments. Until all amounts due under the Credit
----------------------
Agreement are paid in full, the Registered Holder shall not receive or accept
any payment from the Company related to this Warrant (other than cash in lieu of
fractional shares as set forth herein and other than Common Stock issued
pursuant to this Warrant). If the Registered Holder receives any payment on this
Warrant (other than cash in lieu of fractional shares upon exercise as set forth
herein and other than Common Stock issued pursuant to this Warrant) that the
Registered Holder is not entitled to receive hereunder, the Registered Holder
will hold the amount so received in trust for the lenders under the Credit
Agreement and will forthwith turn over such payment to the lenders under the
Credit Agreement in the form received (except for the endorsement of the
Registered Holder where necessary) for application to then-existing amounts due
under the Credit Agreement (whether or not due), in such manner of application
as the lenders under the Credit Agreement may deem appropriate. If the
Registered Holder fails to make any endorsement required hereunder, the lenders
under the Credit Agreement, or any of their officers or employees or agents on
behalf of the lenders under the Credit Agreement, are hereby irrevocably
appointed as the attorney-in-fact (which appointment is coupled with an
interest) for the Registered Holder to make such endorsement in the Registered
Holder's name. For purposes hereof, ING Prime Rate Trust shall be a third-party
beneficiary hereunder.
-11-
Section 7. Redemption of Warrant. Provided that all amounts under the
---------------------
Credit Agreement have been repaid, (i) the Company, at the option of the Board
of Directors, may redeem in whole or in part this Warrant, at any time or from
time to time after the third anniversary of the date hereof, upon notice given
as hereinafter specified, at the redemption price in effect at the redemption
date as provided in this Section 7, and (ii) the Company shall redeem this
Warrant upon the earlier of: (A) a Change in Control; or (B) receipt by the
Company of written request of the holder of this Warrant delivered to the
Company at any time after the fifth anniversary of the date hereof, at the
redemption price in effect at the redemption date as provided in this Section 7.
Any partial redemption at the option of the Company will be pro rata among the
outstanding Warrants based on the number of shares of Warrant Stock into which
the Warrants to be redeemed are exercisable calculated on an as exercised basis.
Any redemption at the option of the Company will occur on the redemption date
specified on the notice of optional redemption, any redemption as a result of a
Change in Control shall occur no later than five (5) days following such Change
in Control, and any redemption at the request of the holder of a Warrant shall
occur within ten (10) days of the request. Upon receipt by the Company of any
request by the holder of any Warrant to redeem such Warrant, the Company shall
promptly provide written notice thereof to the holders of all other Warrants.
7A. Redemption Price. The redemption price for this Warrant shall be the
----------------
equal to the conversion price multiplied by the number of underlying shares of
Warrant Stock into which this Warrant is exercisable.
7B. Notice of Redemption. Notice of redemption of this Warrant at the
--------------------
option of the Company shall be mailed by first class mail, postage prepaid,
addressed to the Registered Holder at its last address appearing on the books of
the Company. Such mailing shall be at least 10 days and not more than 60 days
prior to the date fixed for redemption. Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the Registered Holder receives such notice. If such notice of redemption
shall have been duly given and if on or before the redemption date specified
therein all funds necessary for such redemption shall have been set aside by the
Company, separate and apart from its other funds, in trust for the benefit of
Registered Holder, so as to be and continue to be available therefor, then,
notwithstanding that this Warrant shall not have been surrendered for
cancellation, on and after such redemption date, this Warrant shall no longer be
deemed to be outstanding and all rights with respect to such Warrant shall
forthwith on such redemption date cease and terminate, except only the right of
the Registered Holder to receive the amount payable on redemption thereof
without interest. Any funds unclaimed at the end of three years from the
redemption date shall, to the extent permitted by law, be released to the
Company, after which time the holders of the Warrants so called for redemption
shall look only to the Company for payment thereof. Any funds so set aside by
the Company which shall not be required for such redemption because of the
subsequent exercise of any right of purchase hereunder shall be released or
repaid to the Company forthwith.
7C. Pro-Rata Redemption. In the event of any redemption hereunder, all
-------------------
Warrants to be redeemed shall be redeemed pro rata according to the number of
shares of Warrant Stock into which the Warrants to be redeemed are exercisable
calculated on an as exercised basis. All requests for redemption made by the
holders of Warrants, to the extent payment of the
-12-
redemption price has not been made, shall be considered the same redemption for
purposes of this section.
7D. Mergers of Consolidations; Change in Control. In the event the Company
--------------------------------------------
proposes to enter into any transaction with any Person likely to result in a
merger, consolidation or Change in Control, the holders of at least a majority
of the Warrants or the shares of Warrant Stock calculated on an as-exercised
basis voting separately as a single class, given in person or by proxy, either
in writing without a meeting of by vote at any meeting called for that purpose,
shall have the right to select a financial advisor to consult with such holders
in connection with such proposed transaction and to receive their own
independent fairness opinion with respect to the proposed transaction should
such holders deem such action necessary. In the event that the fairness opinion
delivered to the holders of the Warrants or shares of Warrant Stock is different
than that of any fairness opinion delivered to the Company in connection with
such proposed transaction, the differing amounts shall be averaged and the
holders of the Warrants or shares of Warrant Stock shall be entitled to
consideration in such transaction equal to such average amount. The reasonable
costs of such financial advisor shall be borne by the Company.
Section 8. Definitions. The following terms have meanings set forth below:
-----------
"anniversary date" shall, mean each date that is the anniversary of the
----------------
Date of Issuance of this Warrant or, if not a business day, the next following
business day.
"business day" shall mean each Monday, Tuesday, Wednesday, Thursday or
------------
Friday on which banking institutions in Dallas, Texas are not authorized or
obligated by law, regulation or executive order to close.
"Board of Directors" shall mean members of the Board of Directors of
------------------
Teletouch Communications, Inc., as constituted from time to time.
"Change in Control" means the occurrence of one or more of the following
-----------------
events:
(a) any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") (other than the
Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any corporation owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities; or
(b) during any period of two consecutive years (not including any
period prior to the Date of Issuance of this Warrant), individuals who at
the beginning of such period constitute the Board of Directors, and any new
director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election
was previously
-13-
so approved, cease for any reason other than normal retirement, death or
disability to constitute at least a majority thereof; or
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other person, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or being converted into voting securities for the surviving
entity) more than fifty percent (50%) of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation in substantially the same
proportion as the ownership of voting securities of the Company immediately
prior thereto; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
"Credit Agreement" means the Second Amended and Restated Credit Agreement
----------------
dated as of May 17, 2002 by and among the Company, ING Prime Rate Trust, a
Massachusetts business trust (formerly known as Pilgrim America Prime Rate
Trust), and any other lender becoming a party thereto.
"FCC" means the United States Federal Communications Commission or any
---
governmental body or agency succeeding to the functions thereof.
"junior stock" shall mean the Common Stock and any other class or series of
------------
stock of the Company hereafter authorized over which preferred stock has
preference or priority in the payment of dividends or in the distribution of
assets on any liquidation, dissolution or winding up of the Company.
"Liens" means any mortgage, pledge, security interest, encumbrance, lien or
-----
charge of any kind, including any conditional sale or other title retention
agreement, any lease in the nature thereof and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction and including any lien or charge arising by statute or other laws,
which secured payment of a debt (including any tax) or the performance of an
obligation.
"Person" shall mean any individual, partnership, corporation, limited
------
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company or other legal entity of any kind.
"Restructuring Agreement" shall mean the Restructuring Agreement dated May
-----------------------
17, 2002, between the Company, GM Holdings, LLC and TLL Partners, L.L.C.
"Warrant Stock" means the Common Stock issued or issuable upon exercise of
-------------
any Warrant; provided, that if there is a change such that the securities
issuable upon exercise of the Warrants are issued by an entity other than the
Company or there is a change in the type or class of securities so issuable,
then the term "Warrant Stock" shall mean one share of the security issuable upon
exercise of the Warrants if such security is issuable in shares, or shall mean
the
-14-
smallest unit in which such security is issuable if such security is not
issuable in shares. A Share will cease to be Warrant Stock when it ceases to be
Underlying Stock.
Section 9. Warrant Transferable. Subject to the transfer conditions
--------------------
referred to in the legend endorsed hereon, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of Exhibit A hereto) at the principal office of the Company.
Section 10. Warrant Exchangeable for Different Denominations. This Warrant
------------------------------------------------
is exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for a new Warrant of like tenor representing in
the aggregate the purchase rights hereunder, and each such new Warrant shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. The term "Warrants"
shall include all Warrants issued and delivered by the Company hereafter
representing a portion of the rights evidenced by this Warrant.
Section 11. Replacement. Upon receipt of evidence reasonably satisfactory
-----------
to the Company (an affidavit of the Registered Holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company (provided, that
if the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 12. Notices. Except as otherwise expressly provided herein, all
-------
notices referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid
and shall be deemed to have been given when so delivered, sent or deposited in
the U.S. Mail (i) to the Company, at its principal executive offices and (ii) to
the Registered Holder of this Warrant, at such holder's address as it appears in
the records of the Company (unless otherwise indicated by any such holder).
Section 13. Amendment and Waiver. Except as otherwise provided herein, the
--------------------
provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Registered
Holder; provided, that no such action may change the Exercise Price of the
Warrants or the number of shares or class of stock obtainable upon exercise of
each Warrant without the written consent of the Registered Holder of Warrants
representing at least two-thirds of the shares of Warrant Stock obtainable upon
exercise of such Warrants; and provided, that any Warrants held by the Company
or any subsidiary thereof will not be deemed to be outstanding for any purpose
hereof.
-15-
Section 14. Descriptive Headings. The descriptive headings of this Warrant
--------------------
are inserted for convenience only and do not constitute a substantive part of
this Warrant. Whenever the term "including" is used in this Agreement (whether
or not that term is followed by the phrase "but not limited to" or "without
limitation" or words of similar effect) in connection with a listing of items
within a particular classification, that listing will be interpreted to be
illustrative only and will not be interpreted as a limitation on, or an
exclusive listing of, the items within that classification.
Section 15. Governing Law. All issues and questions concerning the
-------------
construction, validity, enforcement and interpretation of this Warrant and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
-16-
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
TELETOUCH COMMUNICATIONS, INC.
By:________________________________
Its:_______________________________
[Corporate Seal]
Attest:
_____________________________
Secretary
-17-
EXHIBIT A
---------
ASSIGNMENT
----------
FOR VALUE RECEIVED, hereby sells, assigns and transfers all of the rights
of the undersigned under the attached Warrant (Certificate No. W-CS01) with
respect to the number of shares of the Warrant Stock covered thereby set forth
below, unto:
Names of Assignee Address No. of Shares
----------------- ------- -------------
Dated:________________________________ Signature: _________________________
_________________________
Witness: _________________________
EXHIBIT B
---------
EXERCISE AGREEMENT
------------------
To: Teletouch Communications, Inc. Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-CS01), hereby agrees to subscribe for the purchase of
shares of the Warrant Stock covered by such Warrant and to the extent not
previously paid or deemed paid as proviced in the attached Warrant, makes
payment herewith in full therefor at the price per share provided by such
Warrant.
Signature: ___________________________
___________________________
Address:
___________________________
___________________________
EXHIBIT I
CO-SALE AGREEMENT
Conformed Execution Copy
CO-SALE AGREEMENT
This Co-Sale Agreement (the "Agreement") is entered into as of May 17,
2002, by and between TLL Partners, L.L.C., a Delaware limited liability company
("TLL Partners"), and GM Holdings, LLC, a Tennessee limited liability company
("Holdings"). Holdings and, except as otherwise expressly provided herein, its
successors and assigns, are sometimes referred to herein individually as an
"Investor" and collectively as the "Investors".
RECITALS
WHEREAS, TLL Partners, Holdings and Teletouch Communications, Inc. (the
"Company") propose to enter into a Restructuring Agreement dated as of the date
hereof (the "Restructuring Agreement"); and
WHEREAS, prior to the execution and delivery of this Agreement by any party
hereto, TLL Partners has purchased: (a) from CIVC Partners I, a Delaware
partnership, 295,649 shares of Common Stock and (b) from Continental Illinois
Venture Corporation, a Delaware corporation, warrants to purchase 2,660,840
shares of Common Stock ; and
WHEREAS, as of the date hereof, each party "beneficially owns" (as such
term is defined in Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended) and each Stockholder is entitled to dispose of (or to direct
the disposition of) and to vote (or to direct the voting of) (a) the number of
shares of common stock, par value $0.001 per share of the Company (the "Common
Stock") and (b) the number of shares of Common Stock that may be issued upon
exercise of any options, warrants and other rights of any kind that are then
exercisable, and all shares of Common Stock that may be issued upon conversion
or exchange of any convertible securities which are by their terms then
convertible into or exchangeable for Common Stock, including without limitation,
warrants to purchase common stock and preferred stock, in each case set forth
opposite the party's name on Annex A hereto, as such shares may be adjusted by
stock dividend, stock split, recapitalization, combination, merger,
consolidation, reorganization or other change in the capital structure of the
Company affecting the Common Stock (such shares of Common Stock, together with
any other shares of Common Stock the voting power over which is acquired by TLL
Partners or the Investors during the period from and including the date hereof
through and including the date on which this Agreement is terminated in
accordance with its terms, together with the underlying securities which are
convertible into such shares of Common Stock, are collectively referred to
herein as the "Subject Shares"); and
--------------
WHEREAS, as a condition to the willingness of Holdings to enter into the
Restructuring Agreement, and as an inducement and in consideration therefor,
Holdings has required that TLL Partners agree, and TLL Partners has agreed, to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Rights of Co-Sale.
-----------------
1.1 Investors' Rights. Each time TLL Partners (the "Transferring Investor")
-----------------
proposes to sell, transfer or otherwise dispose of Subject Shares other
than to any wholly owned subsidiary or parent of, or to any corporation
that is, within the meaning of the Securities Act of 1933, as amended (the
"Act"), controlling, controlled by or under common control with, such
Transferring Investor, in the case of a limited liability company, to its
members, or gift transfers to its family members or one or more trusts
(each, a "Permitted Transferee") for the benefit of the foregoing (in each
case a "Transfer"), each Investor (referred to herein individually as an
"Other Investor" and collectively as the "Other Investors") shall have a
right of co-sale with respect to the sale of Subject Shares owned by such
Other Investor in accordance with the provisions of this Section 1.
Notwithstanding anything contained herein to the contrary, the parties
hereto expressly agree that provisions of this Agreement shall continue and
be binding against TLL Partners and any Permitted Transferee holding
Subject Shares.
1.2 Notice of Proposed Transfer. Before the Transferring Investor may Transfer
---------------------------
its Subject Shares, the Transferring Investor shall provide notice (a
"Transferring Investor Notice") to the Other Investor stating: (a) its bona
fide intention to Transfer such Subject Shares: (b) the number of Subject
Shares proposed to be transferred (the "Offered Stock"); (c) the name of
each proposed transferee; and (d) the cash price or other consideration
(including the cash equivalent value of any non-cash consideration) per
share for which the Transferring Investor proposes to transfer the Offered
Stock (the "Offered Price").
1.3 Right of Co-Sale.
----------------
(a) Exercise of Right of Co-Sale. The Other Investors shall have the right to
----------------------------
participate in the Transferring Investor's transfer of the Offered Stock to
the proposed transferee pursuant to the specified terms and conditions of
the Transfer as set forth in the Transferring Investor Notice and in
accordance with the terms and conditions of the Transfer as set forth in
this Section 1.3 (the "Right of Co-Sale"). For purposes of the preceding
sentence, the participation of the Other Investor shall be on the same
terms as the Transferring Investor. To the extent an Other Investor
exercises his, her or its Right of Co-Sale, the number of shares of Offered
Stock that the Transferring Investor may transfer pursuant to the
Transferring Investor Notice shall be correspondingly reduced. Each Other
Investor shall be responsible for its pro rata share of the reasonable fees
and expenses of the Transferring Investor relating to the negotiation of
the transaction. The Right of Co-Sale of the Other Investors shall be
subject to the following terms and conditions:
(i) Each Other Investor may transfer all or any part of such Other Investor's
Subject Shares that is not in excess of the number obtained by multiplying
the aggregate number of shares of Subject Shares constituting the Offered
Stock by a fraction (A) the numerator of which is the
2
number of shares of such Other Investor's Subject Shares, and (B) the
denominator of which is the total number of Subject Shares then owned by
the Transferring Investor, the Other Investors and investors, if any, who
are parties to any other similar co-sale agreement with the Transferring
Investor which is in existence at the time of the Transfer.
(ii) By written notice received by TLL Partners within fifteen (15) calendar
days of the mailing of the Transferring Investor Notice by the Transferring
Investor to the Other Investors, each Other Investor may effect its
election to participate in the transfer subject to this Section 1.3. Such
written notice shall contain the Other Investor's election to participate
in the Transfer of the Offered Stock setting forth the number and type of
shares that the Other Investor elects to include in the Transfer,
accompanied by one or more certificates or other documentation, properly
endorsed for transfer, representing those shares (if the Other Investor so
elects, then such Other Investor shall be referred to in this Agreement as
a "Participant").
(b) Delivery of Stock Certificates and Proceeds. Upon the closing of the
-------------------------------------------
Transfer subject to this Section 1.3, the stock certificate(s) or other
documentation representing the Subject Shares to be transferred shall be
transferred and delivered to the investor or transferee pursuant to the
terms and conditions specified in the Transferring Investor Notice, and
there shall be promptly thereafter remitted to the Participant that portion
of the proceeds from the Transfer to which it is entitled by reason of
participating in the Transfer.
1.4 Offering Investor's Right to Transfer. The Transferring Investor may
-------------------------------------
transfer that portion of the Offered Stock permitted to be transferred by
the Transferring Investor, after application of the Right of Co-Sale
contained in Section 1.3 hereof, to any person named as an investor or
other transferee in the Transferring Investor Notice, at the Offered Price,
provided that the transfer: (a) is consummated within ninety (90) days
after the date of the Transferring Investor Notice; and (b) is in
accordance with all the terms of this Agreement. If the Offered Stock is
transferred in accordance with the terms and conditions of this Agreement,
then the transferee(s) of the Offered Stock shall thereafter hold the
Offered Stock free of this Agreement and the Right of Co-Sale set forth
herein. If the Offered Stock is not so transferred during such ninety (90)
day period, then the Transferring Investor shall not transfer any of the
Offered Stock without complying again in full with the provisions of this
Agreement.
1.5 Effect of Prohibited Transfer. In the event TLL Partners should sell any
-----------------------------
Subject Shares in contravention of the co-sale rights of the Investors
under this Agreement (TLL Partners in such capacity a "Violating Investor";
such a transaction a "Prohibited Transfer"), the Investors, in addition to
all other remedies available at law, in equity or hereunder, shall have the
put option provided below, and the Violating Investor shall be bound by the
applicable provisions of that option. Any attempt by a Violating Investor
to transfer Subject Shares in violation of Section 1 hereof shall be void.
1.6 Put Option. Notwithstanding Section 1.5 hereof, in the event of a
----------
Prohibited Transfer, the other Investor shall have the right to sell to the
Violating Investor the type and number of shares of Subject Shares equal to
the number of shares such Investor would have been entitled to sell to the
Violating Investor or transferee under Section 1.3 hereof had the
3
Prohibited Transfer been effected pursuant to and in compliance with the
terms hereof. This sale shall be made on the following terms and
conditions:
(a) The price per share at which the Subject Shares are to be sold to the
Violating Investor shall be equal to the price per share (on an
as-converted basis) paid by the transferee to the Violating Investor in the
Prohibited Transfer. The Violating Investor shall also reimburse the
Investors for any and all fees and expenses, including legal fees and
expenses, incurred pursuant to the exercise or the attempted exercise of
the Investors' rights under Section 1.
(b) Within ninety (90) days after the later of the dates on which the
Investors: (i) receive notice of the Prohibited Transfer; or (ii) otherwise
become aware of the Prohibited Transfer, the Investors, if exercising the
option created hereby, shall deliver to the Violating Investor the
certificate or certificates representing shares to be sold, each
certificate to be properly endorsed for transfer.
(c) The Violating Investor shall, upon receipt of the certificate or
certificates for the shares to be sold by the Investors pursuant to this
Section 1.6, pay the aggregate purchase price therefor and the amount of
reimbursable fees and expenses, as specified in Section 1.6(a), in cash or
by other means acceptable to the other Investor.
2. Exceptions, Termination.
-----------------------
2.1 Exceptions. Notwithstanding anything in this Agreement to the contrary, the
----------
Right of Co-Sale set forth in this Agreement shall not apply to any
Transfer or series of Transfers of Subject Shares by TLL Partners: (a)
pursuant to a reorganization or merger of the Company with or into any
other corporation or entity, or a sale of all or substantially all of the
assets of the Company, in which the Investors and TLL Partners in the
aggregate own immediately after such transaction less than 5% of the voting
equity securities of the surviving entity; or (b) pursuant to the winding
up and dissolution of the Company.
2.2 Termination of Rights. The Right of Co-Sale set forth herein shall
---------------------
terminate the date on which this Agreement is terminated by a written
agreement to such effect executed by TLL Partners and the Investors.
3. Restrictive Legend and Stop-Transfer Orders.
-------------------------------------------
3.1 Legend. TLL Partners shall cause the legend set forth below, or a legend
------
substantially equivalent thereto, to be placed upon any certificate(s)
evidencing ownership of its Subject Shares:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN A AGREEMENT
ENTERED INTO BY THE ORIGINAL HOLDER OF THESE SHARES, AND
OTHER PERSONS, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY. SUCH
4
RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES
UNDER SOME CIRCUMSTANCES.
3.2 Stop Transfer Instructions. TLL Partners agrees, to ensure compliance with
--------------------------
the restrictions referred to herein, that the Company may issue appropriate
"stop transfer" certificates or instructions with respect to the Subject
Shares and that, the Company may make appropriate notations to the same
effect in its records.
4. Miscellaneous Provisions.
------------------------
4.1 Notices. All notices, requests, demands and other communications which are
-------
required to be or may be given under this Agreement to any party by any of
the other parties shall be in writing and shall be deemed to have been duly
given when: (a) delivered in person; (b) the day following dispatch by a
nationally recognized overnight courier service (such as Federal Express or
UPS, etc.) for next day delivery; (c) five (5) days after dispatch by
certified or registered first class mail, postage prepaid, return receipt
requested, to the party to whom the same is so given or made; or (d) in the
case of notice sent by telecopy, on the date of dispatch, provided that the
report generated by the sender's telecopy machine shows that all pages of
such notice or other communication were properly transmitted to each
recipient's telecopy number. Any notice or other communication given
hereunder shall be addressed to TLL Partners, at its principal offices as
set forth below or to the Investors at their addresses indicated on the
signature page hereto; or to such other address as the parties hereto may
designate by delivering notice thereof to such the other parties in
accordance herewith.
4.2 Severability. If one or more of the provisions of this Agreement should,
------------
for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, and such invalid, illegal or
unenforceable provision shall be enforced to the extent permissible.
4.3 Amendment. Any amendment, modification or waiver of this Agreement shall be
---------
effective only with the written consent of TLL Partners and Investors
holding more than seventy five percent (75%) of the then outstanding
Subject Shares of all Investors (calculated on a fully diluted basis as if
such Subject Shares had been converted into Common Stock); provided,
however, that any person may waive, reduce or release (in whole or in part)
any of its rights hereunder without the consent of any other parties
hereto. Any waiver by a party of its rights hereunder shall be effective
only if evidenced by a written instrument executed by a duly authorized
representative of such party.
4.4 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws (and not the laws pertaining to choice of
conflict of laws) of the State of Delaware.
4.5 Expenses. If any action at law or in equity is necessary to enforce or
--------
interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements
in addition to any other relief to which such party may be entitled.
5
4.6 Counterparts. This Agreement may be executed in any number of counterparts,
------------
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
4.7 Facsimile Signatures. Any signature page delivered by a fax machine or
--------------------
telecopy machine shall be binding to the same extent as an original
signature page, with regard to any agreement subject to the terms hereof or
any amendment thereto. Any party who delivers such a signature page agrees
to later deliver an original counterpart to any party which requests it.
4.8 Binding Effect; Assignment. This Agreement shall be binding upon the
---------------------------
parties hereto and their respective successors and assigns. Except as
expressly provided in this Agreement, this Agreement shall not be construed
so as to confer any right or benefit upon any person other than the parties
to this Agreement, and their respective successors and assigns. The parties
hereto recognize that Holdings intends to transfer to its members its
Subject Shares or the right to receive such Subject Shares and it is
expressly acknowledged that, from and after such transfer, such members
shall be "Investors" under this Agreement. Upon any assignment as
contemplated in this paragraph, the assignor shall provide written notice
of such assignment to TLL Partners.
[Signature pages follow.]
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
TLL PARTNERS, L.L.C.
By: /s/ Xxxxxx X. XxXxxxxx
--------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: President
GM HOLDINGS, LLC
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: Manager
S-1
ANNEX A
LIST OF STOCKHOLDERS AND OWNERSHIP
OF SUBJECT SHARES
(as of May 17, 2002)
-------------------------------------------------------------------------------------------------------------------
Stockholders Address Common Stock Series A Series B Series B
Preferred Preferred Warrants
-------------------------------------------------------------------------------------------------------------------
TLL Partners, TLL Partners, L.L.C. 2,956,509(1) 13,200 36,019 324,173
L.L.C. 000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Attn: Xxxxxx X. XxXxxxxx
-------------------------------------------------------------------------------------------------------------------
GM Holdings, GM Holdings, LLC 405,276 1,800 49,375 -0-
LLC c/o Xxxx X. Xxxxxxx
Aintree Capital
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopier: 000-000-0000
-------------------------------------------------------------------------------------------------------------------
(1) Includes warrants to purchase 2,660,860 shares of Common Stock.
S-2
