EXHIBIT 10.6
ORGANIZATION AGREEMENT
This Organization Agreement is entered into this 10th day of May, 1996 by
and among Intellicall, Inc., a Delaware corporation ("Intellicall"), Triad-ILD
Partners, L.P, a Georgia limited partnership ("Triad"), Xxxxxx
Telecommunications LLC, a Georgia limited liability company ("Xxxxxx") and ILD
Communications, Inc., a Delaware corporation ("ILD").
WHEREAS, Intellicall is in the business, principally through its
wholly-owned subsidiary, Intellicall Operator Services, Inc., a Delaware
corporation ("IOS"), of providing long distance and operator assisted
telephone services (the "Business"); and
WHEREAS, the parties have formed ILD as a new company for the purpose of
acquiring IOS and raising additional capital to (i) pay the cash portion of the
Consideration (as hereinafter defined) to Intellicall and (ii) fund ILD's
initial working capital requirements; and
WHEREAS, the parties desire to set forth their understanding herein
regarding the establishment of ILD, the acquisition of IOS and the initial
capitalization and funding of ILD;
NOW, THEREFORE, for and in consideration of the mutual understandings and
covenants contained herein, the parties hereto agree as follows:
ARTICLE 1
ESTABLISHMENT OF ILD
1.1 ESTABLISHMENT OF ILD. Intellicall and Triad have caused the
establishment and incorporation of ILD as a Delaware corporation. ILD has an
initial capital structure of 300,000 shares of common stock, $.01 par value (the
"Common Stock") and 200,000 shares of preferred stock, $.01 par value (the
"Preferred Stock"), which Preferred Stock shall be issued in one or more series
as contemplated in this Agreement or as determined in accordance with the
General Corporation Law of the State of Delaware.
1.2 INITIAL STOCK ISSUANCES. The initial Common Stock of ILD shall be
issued as follows:
Name Number of Shares
---- ----------------
Intellicall 725
Triad 183
Xxxxxx 92
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The parties shall pay $10.00 per share for the initially issued Common
Stock, which Common Stock upon issuance will be fully paid and non-assessable.
1.3 DIRECTORS AND OFFICERS. The directors and officers of ILD as of the
Closing Date shall be as follows:
Name Office
---- ------
Xxxxxx X. Xxxxxxxxxxxx Director
Xxxx X. Xxxxxxxxx Director
Xxxxxxx X. Xxxxx Director
H. Xxxxxx Xxxxxx Director
Xxxxxxx X. Xxxxxxxx Director
Xxxxxxx X. Xxxxx Chairman of the Board,
Chief Executive Officer,
and President
C. Read Xxxxxx Secretary
From and after the Closing Date all directors and officers of ILD shall be
elected in accordance with the Certificate of Incorporation and Bylaws of ILD
subject to any provisions related thereto in the Shareholders Agreement
described in Section 8.3.
ARTICLE 2
CAPITALIZATION OF ILD
2.1 CONTRIBUTION OF THE BUSINESS. On the Closing Date (as hereinafter
defined) and upon satisfaction of the conditions precedent set forth in Article
7 hereof, Intellicall shall contribute, transfer, sell and assign to ILD one
hundred (100) shares of common stock of IOS constituting all of the issued and
outstanding capital stock of IOS. Immediately prior to the Closing Date
Intellicall (i) shall have transferred to IOS all of Intellicall's rights and
obligations under those certain contracts and agreements relating to the
provision by Intellicall of long distance services through Sprint Communications
Company L.P. as more specifically identified on SCHEDULE "2.1A" attached hereto
and any other contracts relating to the Business (the "Contracts"), and (ii)
shall have caused IOS to distribute to Intellicall all cash, accounts receivable
and payables arising as a result of the operation of the Business prior to the
Closing Date. Intellicall agrees that it will be responsible for all accounts
payable of IOS generated as a result of the operation of the Business prior to
the Closing Date.
Notwithstanding any provision contained herein to the contrary
Intellicall is not selling, assigning or transferring any of its right, title
and interest in and to any of Intellicall's tradenames, trademarks,
servicenames, servicemarks or copyrights.
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2.2 COLLECTION OF ACCOUNTS RECEIVABLE. As contemplated in Section 2.1
Intellicall is to retain all accounts receivable arising as a result of the
operation of the Business prior to the Closing Date (herein, "Retained Accounts
Receivable") and shall be responsible for payment of all accounts payable of IOS
generated as a result of the operation of the business prior to the Closing Date
(herein, "Retained Accounts Payable").
In the event ILD or IOS collects after the Closing Date any amounts,
in the form of cash, checks, wire transfers, offsets, deductions or otherwise,
comprising Retained Accounts Receivable, ILD or IOS shall promptly remit all
such amounts to Intellicall; provided, however, ILD or IOS, as applicable, may
hold for the benefit of Intellicall any such amounts less than $1,000 until such
amounts shall aggregate $1,000 or more at which time they shall be promptly
remitted. In the event Intellicall collects after the Closing Date any amounts
of IOS or ILD not representing Retained Accounts Receivable, Intellicall agrees
to promptly remit all such amounts to IOS subject to the same dollar
considerations set forth in the preceding sentence.
In the event ILD or IOS shall receive invoices from third parties
from and after the Closing Date representing Retained Accounts Payable, ILD
shall forward such invoices to Intellicall for payment in the ordinary course of
business.
2.3 CONSIDERATION. A.) The consideration (the "Consideration") to be
paid to Intellicall at the Closing shall be the following: (i) ILD will pay
Intellicall $2,000,000 in cash by wire transfer to an account designated in
writing by Intellicall; (ii) ILD will issue and deliver to Intellicall 72,500
shares of Series A Preferred Stock (the "Series A Preferred Stock") at a deemed
issue price of $72.627 per share which Series A Preferred Stock will contain the
powers, preferences and relative rights, qualifications, limitations and
restrictions as set forth on EXHIBIT "2.3A" attached hereto; (iii) ILD will
issue and deliver to Intellicall 5,000 shares of Series B Preferred Stock at a
deemed issue price of $100 per share which Series B Preferred Stock will contain
the powers, preferences and relative rights, qualifications, limitations and
restrictions as set forth on EXHIBIT "2.3B" attached hereto; and (iv) ILD will
execute and deliver to Intellicall a subordinated convertible note (the "Junior
Note") in the original principal amount of $1,000,000, such junior convertible
note to be substantially in the form attached hereto as EXHIBIT "2.3C". The
shares of Series A Preferred Stock and Series B Preferred Stock to be issued
under this Section 2.3 will be, upon issuance, fully paid and non-assessable.
B.) In addition to the Consideration as contemplated in subsection 2.3(A)
above, on the Closing Date ILD will pay to Intellicall such amounts as set forth
on SCHEDULE "2.3D" as reimbursements for performance bonds previously posted by
Intellicall for IOS for the operations of IOS in the states as set forth on such
SCHEDULE "2.3D".
2.4 EQUITY FINANCING ACTIVITIES. On the Closing Date and upon
satisfaction of the conditions precedent set forth in Article 8 hereof, Triad
and Xxxxxx shall collectively (i) purchase from ILD 27,500 shares of Series A
Preferred Stock at a purchase price of $72.627 per share or $1,997,250 in the
aggregate and (ii) loan $1,000,000 in exchange for the execution and delivery to
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Triad and Xxxxxx of two Junior Notes in the aggregate original principal amount
of $1,000,000. The Junior Notes to be delivered to Triad and Xxxxxx shall
contain the same terms and conditions as the Junior Note to be delivered to
Intellicall pursuant to Section 2.3 above. The amounts purchased and loaned,
respectively, by Triad and Xxxxxx are set forth on SCHEDULE 2.4 hereto.
2.5 THIRD PARTY FINANCING ACTIVITIES. The parties anticipate that on
the Closing Date Sirrom Capital Corporation and Xxxxx River Ventures, L.P.
(collectively, "Sirrom") will loan $2,000,000 (the "Loan") to ILD effective as
of the Closing Date. The Loan will be on terms and conditions acceptable to
Intellicall and Triad. The proceeds of the Loan will be utilized to pay the
cash portion of the Consideration to Intellicall. The parties hereto agree to
use their collective best efforts to cause ILD to repay the Loan on or prior to
April 30, 1999.
2.6 INSTRUMENTS OF TRANSFER. The sale, conveyance, transfer, assignment
and delivery of the common stock of IOS from Intellicall to ILD, as provided in
Section 2.1 above, shall be effected by delivery to ILD on the Closing Date of
such bills of sale, endorsements, assignments, certificates or other instruments
of transfer and conveyance as counsel to Intellicall and Triad shall reasonably
deem necessary to vest in ILD good and marketable title to such common stock of
IOS. Such instruments of transfer and conveyance shall be in form reasonably
satisfactory to Intellicall and Triad and their respective counsel and shall
contain warranties as to marketable title and that such Common Stock free and
clear of all pledges, liens, options, security interests, mortgages, claims,
charges or other encumbrances of any kind whatsoever.
2.7 TRANSFER TAXES. Any and all transfer, stamp, recording and other
taxes (other than income taxes) payable upon or in connection with the sale,
transfer, conveyance, assignment and transfer of the hereunder or the
instruments of transfer in conveyance with utilized in connection therewith
and the issuance and delivery of the Series A Preferred Stock, the Series B
Preferred Stock, the junior convertible notes and the Loan shall be paid by
ILD.
2.8 FURTHER ASSURANCES. After the Closing (as hereinafter defined)
Intellicall, Triad and Xxxxxx shall take such other actions and execute and
deliver such other documents, and shall cause ILD to take such other actions and
execute and deliver such other documents, as may be reasonably requested by any
party hereto from time to time to effectuate, facilitate and confirm the
implementation of the agreements and covenants contemplated herein.
2.9 EXPENSES. The parties acknowledge that certain legal, accounting or
other expenses or fees have been incurred in connection with the transactions
contemplated by this Agreement. A description of certain of such expenses or
fees are set forth on SCHEDULE "2.9" hereto. Each of ILD, Intellicall, Triad
and Xxxxxx agree that except for the items described as "Shareholder Expenses"
set forth on SCHEDULE "2.9", all expenses and fees incident to the organization
of ILD and the transactions contemplated by this Agreement shall be paid for, or
reimbursed by, ILD in the normal course of its business.
2.10 RECAPITALIZATION OF ILD BASED ON SIRROM WARRANTS. In connection
with the loan from Sirrom described in Section 2.5 hereof, it is contemplated
that ILD will issue to Sirrom certain
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warrants (the "Sirrom Warrants") for an aggregate of 7,239 shares of Common
Stock of ILD. In the event that Sirrom Warrants are exercised on their terms
by the holders thereof then Intellicall shall return to ILD for redemption at
a redemption price of $.01 per share that number of the shares of Series A
Preferred Stock which are convertible into such number of shares of Common
Stock exercised by the holders of the Sirrom Warrant (or if such shares of
Series A Preferred Stock have been converted by Intellicall into shares of
Common Stock, then the shares of Common Stock thereby issued upon such
conversion); provided, however, such number shall not exceed 7,239 shares of
Common Stock. Intellicall agrees that the certificate representing 7,239
shares of Series A Preferred Stock to be issued to Intellicall shall bear a
legend satisfactory to ILD and Intellicall representing the redemption right
contained herein.
ARTICLE 3
CLOSING
3.1 TIME AND PLACE. The closing hereunder (the "Closing") shall be held
via exchange of documents through overnight carriers and shall be deemed
effective as of May 10, 1996 at 2:00 p.m. local time (Atlanta), or at such
other time and place as the parties may agree upon in writing (the "Closing
Date").
3.2 DELIVERIES OF INTELLICALL. At the Closing Intellicall will execute
and deliver or cause to be executed and delivered to ILD: (a) certificate or
certificates representing the shares of common stock of IOS endorsed over to ILD
or accompanied by duly executed stock powers; (b) a certificate of good standing
dated not more than fifteen (15) days prior to the Closing Date, with respect to
IOS; (c) a release and all appropriate UCC-3 termination statements from Nomura
America Holding Company, Inc. ("Nomura") relating to a release of Nomura's
security interest in and to the common stock of IOS; (d) all of the minute books
and similar corporate records of IOS; (e) an opinion of counsel in substantially
the form as set forth on EXHIBIT "3.2A"; (f) executed copies of all the
documents constituting Exhibits hereto which contemplate the signature of
Intellicall or IOS; and (g) such other documents and instruments as Triad and
ILD shall deem necessary to consummate the transactions contemplated hereby.
3.3 DELIVERIES OF ILD. At the Closing ILD will deliver to Intellicall
simultaneously with the delivery of the items referred to in Section 3.2 above:
(a) bank wire transfer of the cash portion of the Consideration as provided in
Section 2.3(i); (b) one or more certificates representing 72,500 shares of
Series A Preferred Stock as contemplated in Section 2.3(ii); (c) one or more
certificates representing 5,000 shares of Series B Preferred Stock as
contemplated in Section 2.3(iii); (d) one or more certificates representing 725
shares of Common Stock as contemplated in Section 1.2, (e) the Junior Note in
the original principal amount of $1,000,000 as contemplated in Section 2.3(iv);
and (f) such other documents and instruments as Intellicall shall deem necessary
to consummate the transactions contemplated hereby. Additionally, at the
Closing ILD will deliver to Triad and Xxxxxx simultaneously with the delivery of
the items referred to in Section 3.2 above (x) one or more certificates
representing 275 shares of Common Stock as contemplated in Section 1.2 and an
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aggregate of 27,500 shares of Series A Preferred Stock as contemplated in
Section 2.4(i) against receipt of an aggregate of $2,000,000; and (y) one or
more Junior Notes in the aggregate principal amount of $1,000,000 as
contemplated in Section 2.4(ii) against receipt of an aggregate of $1,000,000.
ILD shall also deliver to Sirrom such agreements, promissory notes, warrants,
documents and instruments as may be necessary or advisable in connection with
obtaining the Loan as contemplated in Section 2.5.
3.4 DELIVERIES OF TRIAD OR XXXXXX. At the Closing Triad and Xxxxxx
shall fund the payments contemplated in Sections 1.2 and 2.4 hereof and will
execute or cause to be executed and delivered to ILD: (a) executed copies of all
the documents constituting Exhibits hereto which contemplate the signature of
Triad or Xxxxxx and (b) such other documents as Intellicall or ILD shall deem
necessary to consummate the transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF INTELLICALL
Intellicall represents and warrants to Triad, Xxxxxx and ILD as follows:
4.1 CORPORATE STATUS. Each of Intellicall and IOS are corporations duly
organized, validly existing and in good standing under the laws of the state of
Delaware and has all necessary corporate power and authority to carry on its
business as now conducted and to own or lease and operate its properties, and to
execute, deliver and perform its obligations hereunder. Each of Intellicall and
IOS are duly qualified to do business in all jurisdictions in which the nature
of its business or the ownership or leasing of property requires such
qualification in order to avoid any material disadvantage or liability.
4.2 AUTHORITY FOR AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Intellicall. Intellicall's execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of the board of
directors of Intellicall and will not conflict with or result in any violation
of or default under any provisions of the certificate of incorporation or bylaws
of Intellicall and, except as set forth on SCHEDULE "4.2", will not conflict
with or result in any violation of or default with respect to any mortgage,
indenture, lease, agreement or other instrument affecting the common stock of
IOS, or to which Intellicall, or any of its affiliates, is a party, or by which
Intellicall or any of its affiliates is bound. No consent, approval, order or
authorization of, or registration, declaration or filing with, any persons or
entities, or with any governmental authority is required in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby by Intellicall or its affiliates, except (i) such approvals
or filings listed on SCHEDULE "4.2" hereto, (ii) such disclosures, filings,
statements and reports to be made by Intellicall under the Securities Exchange
Act of 1934, and (iii) such other consents, authorizations, filings, approvals
and registrations which if not obtained or made would not have a material
adverse effect on ILD or the Business or Intellicall's ability to consummate the
transactions hereunder.
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4.3 PROPERTIES. Except as set forth in SCHEDULE "4.3" hereto,
Intellicall has good, valid and marketable title to the common stock of IOS
subject to no liens, encumbrances, security interests or mortgages. Except as
set forth in SCHEDULE "4.3", the legal and beneficial interests in the common
stock of IOS is owned exclusively by Intellicall. After the transfer of the
Contracts as contemplated in Section 2.1, IOS shall have all contracts and
agreements with third parties necessary for IOS to operate the Business (except
to the extent of services to be provided by Intellicall in the Operating
Agreement described in Section 7.6 hereof). The transfer of any such Contracts
from Intellicall to IOS as contemplated in Section 2.1 will not violate the
terms of, or cause a default under, any such Contracts except any such default
that will not materially affect the Business.
4.4 LITIGATION. There are no claims or judicial or administrative
actions, suits, judgments, proceedings or investigations pending or threatened
against Intellicall which might result in any material adverse change in the
financial condition, properties, assets, business or operations of Intellicall,
or which might interfere with any part of the business currently conducted by
Intellicall, or which question the validity of this Agreement or of any action
taken or to be taken pursuant to or in connection with the provisions of this
Agreement including the exhibits hereto.
4.5 BROKERS, FINDERS, ETC. All negotiations relating to this Agreement
and the transactions contemplated hereby (as they affect Intellicall and ILD)
have been carried on by Intellicall with representatives of Triad, Xxxxxx and
Sirrom without the intervention of any person (other than as disclosed on
SCHEDULE "4.5" ) acting on behalf of Intellicall in such manner as to give rise
to any valid claim against Triad or ILD for any brokerage or finder's
commission, fee or similar compensation.
4.6 OPERATING FEES. To the best knowledge of Intellicall, IOS has paid
or Intellicall has paid on behalf of IOS all fees and complied with all written
orders imposed on IOS by the public service commission of any state to whose
jurisdiction it is subject. IOS has paid or Intellicall has paid on behalf of
IOS all charges, fees, tariff rates, access charges and other amounts billed to
it by long distance suppliers due in the normal course of business, and, to the
best of Intellicall's knowledge, there does not exist any liability for back
billing for any such charges, other than for access charges which such long
distance suppliers are entitled to xxxx for but have not billed for.
4.7 NO LIABILITIES. As of the Closing, except its obligations as
co-borrower for the Loan described in Section 2.5 or in connection with
certain regulatory approvals in connection with the transactions contemplated
by this Agreement, IOS shall have no liabilities, obligations and
indebtedness of any kind and nature, including, without limitation, any
obligations to trade creditors, whether heretofore, now or hereafter owing,
arising, due or payable from IOS to any third party or and howsoever, now or
hereafter owing, arising, due or payable from IOS to any third party or and
howsoever evidenced, created, incurred, acquired or owing, whether primary,
secondary, direct, contingent, fixed, or otherwise. Without in any way
limiting the generality of the foregoing, obligations specifically include
the following: (a) all obligations or liabilities of any third party that are
secured by any lien, claim, encumbrance, or security interest upon property
owned by IOS, even
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though IOS has not assumed or become liable for the payment thereof; (b) any
obligations or liabilities created or arising under any lease of real or
personal property, or conditional sale under any lease of real or personal
property, or conditional sale or other title retention agreement with respect
to property used and/or acquired by IOS, even though the rights and remedies
of the lessor, seller and/or lender thereunder are limited to repossession of
such property; (c) any unfunded pension fund obligations and liabilities; and
(d) any taxes.
4.8 CUSTOMERS. There exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, (i) the
proposed business relationship of IOS with any customer or group of customers of
the Business constituting, either individually or in the aggregate 1% of the
revenues of the Business, or (ii) the proposed business relationship of IOS with
any material supplier to the Business, including, without limitation, the long
distance suppliers, and Intellicall reasonably anticipates that all such
customers and suppliers will continue a business relationship with IOS on a
basis no less favorable to IOS than that heretofore conducted with Intellicall;
and there exists no other condition or state of facts or circumstances which
would materially adversely affect the businesses of IOS or prevent IOS from
conducting its businesses after the consummation of the transactions
contemplated by this Agreement.
4.9 INVESTMENT REPRESENTATIONS. In connection with the acquisition of
the Series A Preferred Stock, the Series B Preferred Stock and the Junior Note,
Intellicall represents and warrants that the Common Stock, the Series A
Preferred Stock, the Series B Preferred Stock and the Junior Note are being
purchased for investment purposes only and not with a view to distribution or
other transfer and will be held for its own individual account. Further, it is
understood that such Common Stock, the Series A Preferred Stock, the Series B
Preferred Stock and the Junior Note have not been registered under the Federal
Securities Act of 1933, as amended (the "1933 Act"), or under the state
securities acts or blue sky laws and regulations of the State of Delaware or any
other State (collectively, the "State Securities Laws"), in reliance upon
exemption from registration contained in those acts. Intellicall acknowledges
that ILD's reliance upon such exemptions is based in part on the
representations, warranties, and agreements of Intellicall contained in this
Agreement. Intellicall acknowledges and agrees that it may not sell, transfer,
assign or otherwise dispose of the Common Stock, the Series A Preferred Stock,
the Series B Preferred Stock or the Junior Note unless there is in effect a
registration statement under the 1933 Act and all applicable state securities
laws covering such transfer or unless such transfer is exempt from the
registration requirements of the 1933 Act and all applicable State Securities
Laws and subject to certain transfer restrictions in the Shareholders Agreement
described in Section 8.3..
It is further agreed and understood by Intellicall that
stop-transfer instructions will be noted on the appropriate records of ILD
and that a restrictive legend shall be affixed to the Common Stock, the
Series A Preferred Stock, the Series B Preferred Stock and the Junior Note,
reading as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER ANY SECURITIES LAWS IN RELIANCE OF
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EXEMPTION(S) THEREFROM AND THE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH TRANSFER OR SALE IS MADE IN COMPLIANCE WITH
ALL FEDERAL AND APPLICABLE STATE SECURITIES LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE HELD SUBJECT
TO, AND THEIR TRANSFER IS RESTRICTED UNDER, THE TERMS OF A
SHAREHOLDERS' AGREEMENT DATED AS OF MAY ___, 1996 BY AND AMONG THE
CORPORATION AND CERTAIN OF ITS SHAREHOLDERS, A COPY OF WHICH IS ON
FILE AND IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
CORPORATION.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TRIAD
Triad represents and warrants to Intellicall, Xxxxxx and ILD as follows:
5.1 CORPORATE STATUS. Triad is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Georgia.
Triad has full power and authority to execute and deliver this Agreement on
Triad's behalf and to perform its obligations hereunder.
5.2 AUTHORITY FOR AGREEMENT. Triad has all necessary power and
authority to execute and deliver this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the
partnership agreement, and the Board of Directors of the general partner, of
Triad. No consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental authority is required in connection
with the execution and delivery of this Agreement or the consummation by Triad
of the transactions contemplated hereby or thereby.
5.3 BROKERS, FINDERS, ETC. All negotiations relating to this Agreement
and the transactions contemplated hereby (as they affect Triad and ILD) have
been carried on by Triad without the intervention of any person (other than as
disclosed on SCHEDULE "4.5") acting on behalf of Triad in such manner as to give
rise to any valid claim against Intellicall or ILD for any brokerage or finder's
commission, fee or similar compensation.
5.4 LITIGATION. There are no judicial or administrative actions, suits,
proceedings or investigations pending against Triad which question the validity
of this Agreement or of any action taken pursuant to or in connection with the
provisions of this Agreement.
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5.5 INVESTMENT REPRESENTATIONS. In connection with the acquisition of
the Common Stock, the Series A Preferred Stock and the Junior Note, Triad
represents and warrants that the Common Stock, the Series A Preferred Stock and
the Junior Note are being purchased for investment purposes only and not with a
view to distribution or other transfer and will be held for its own individual
account. Further, it is understood that such Common Stock, the Series A
Preferred Stock and the Junior Note have not been registered under the Federal
Securities Act of 1933, as amended (the "1933 Act"), or under the State
Securities Laws, in reliance upon exemption from registration contained in those
acts. Triad acknowledges that ILD's reliance upon such exemptions is based in
part on the representations, warranties, and agreements of Triad contained in
this Agreement. Triad acknowledges and agrees that it may not sell, transfer,
assign or otherwise dispose of the Common Stock, the Series A Preferred Stock or
the Junior Note unless there is in effect a registration statement under the
1933 Act and all applicable state securities laws covering such transfer or
unless such transfer is exempt from the registration requirements of the 1933
Act and all applicable State Securities Laws.
Triad further represents and warrants to ILD that ILD has made
available to Triad, prior to the date hereof, the opportunity to ask questions
of and to receive answers from representatives of ILD and Intellicall and to
obtain any additional information to the extent ILD or Intellicall possesses
such information or could acquire it without unreasonable effort or expense: (i)
relative to ILD and an investment in the Common Stock, the Series A Preferred
Stock and the Junior Note; and (ii) necessary to verify the accuracy of any
information, documents, books or records furnished. All such materials and
information requested by Triad, including any information requested to verify
any information furnished, has been made available and examined.
Triad further represents and warrants to ILD that Triad, together
with such other persons, if any, with whom Triad has found it necessary to
consult, has sufficient knowledge and experience in business and financial
matters to evaluate ILD, and the risk of an investment in the Series A Preferred
Stock and the Junior Note, without need for the additional information which
would be required to be included in a registration statement effective under the
1933 Act or any other applicable State Securities Laws.
Triad further represents and warrants to ILD that Triad's investment
in the Common Stock, the Series A Preferred Stock and the Junior Note shall be
in accord with the nature and size of Triad's investments and net worth, and
Triad is and shall be financially able to bear the economic risk of its
investment, including the ability to afford holding the Series A Preferred Stock
and the Junior Note for an indefinite period or to afford a complete loss of
Triad's investment therein. Triad has sufficient liquid assets to pay the fully
purchase price of the Series A Preferred Stock and the Junior Note.
It is further agreed and understood by Triad that stop-transfer
instructions will be noted on the appropriate records of ILD and that a
restrictive legend shall be affixed to each Common Stock, the Series A Preferred
Stock and the Junior Note purchased in accordance with this Agreement, reading
as follows:
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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER ANY SECURITIES LAWS IN RELIANCE OF EXEMPTION(S) THEREFROM AND
THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH TRANSFER
OR SALE IS MADE IN COMPLIANCE WITH ALL FEDERAL AND APPLICABLE STATE
SECURITIES LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE HELD SUBJECT
TO, AND THEIR TRANSFER IS RESTRICTED UNDER, THE TERMS OF A
SHAREHOLDERS' AGREEMENT DATED AS OF MAY ___, 1996 BY AND AMONG THE
CORPORATION AND CERTAIN OF ITS SHAREHOLDERS, A COPY OF WHICH IS ON
FILE AND IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
CORPORATION.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF XXXXXX
Xxxxxx represents and warrants to Intellicall, Triad and ILD as follows:
6.1 CORPORATE STATUS. Xxxxxx is a limited liability corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia. Xxxxxx has full power and authority to execute and deliver this
Agreement on Xxxxxx' behalf and to perform its obligations hereunder.
6.2 AUTHORITY FOR AGREEMENT. Xxxxxx has all necessary power and
authority to execute and deliver this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the Manager
and Members of Xxxxxx. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority is required
in connection with the execution and delivery of this Agreement or the
consummation by Xxxxxx of the transactions contemplated hereby or thereby.
6.3 BROKERS, FINDERS, ETC. All negotiations relating to this Agreement
and the transactions contemplated hereby (as they affect Xxxxxx and ILD) have
been carried on by Xxxxxx without the intervention of any person (other than as
disclosed on SCHEDULE "4.5") acting on behalf of Xxxxxx in such manner as to
give rise to any valid claim against Intellicall or ILD for any brokerage or
finder's commission, fee or similar compensation.
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6.4 LITIGATION. There are no judicial or administrative actions, suits,
proceedings or investigations pending against Xxxxxx which question the validity
of this Agreement or of any action taken pursuant to or in connection with the
provisions of this Agreement.
6.5 INVESTMENT REPRESENTATION. In connection with the acquisition of
the Common Stock, the Series A Preferred Stock and the Junior Note, Xxxxxx
represents and warrants that the Common Stock, the Series A Preferred Stock and
the Junior Note are being purchased for investment purposes only and not with a
view to distribution or other transfer and will be held for its own individual
account. Further, it is understood that such Common Stock, the Series A
Preferred Stock and the Junior Note have not been registered under the Federal
Securities Act of 1933, as amended (the "1933 Act"), or under the State
Securities Laws, in reliance upon exemption from registration contained in those
acts. Xxxxxx acknowledges that ILD's reliance upon such exemptions is based in
part on the representations, warranties, and agreements of Xxxxxx contained in
this Agreement. Xxxxxx acknowledges and agrees that it may not sell, transfer,
assign or otherwise dispose of the Common Stock, the Series A Preferred Stock or
the Junior Note unless there is in effect a registration statement under the
1933 Act and all applicable state securities laws covering such transfer or
unless such transfer is exempt from the registration requirements of the 1933
Act and all applicable State Securities Laws.
Xxxxxx further represents and warrants to ILD that ILD has made
available to Xxxxxx, prior to the date hereof, the opportunity to ask questions
of and to receive answers from representatives of ILD and Intellicall and to
obtain any additional information to the extent ILD or Intellicall possesses
such information or could acquire it without unreasonable effort or expense: (i)
relative to ILD and an investment in the Common Stock, the Series A Preferred
Stock and the Junior Note; and (ii) necessary to verify the accuracy of any
information, documents, books or records furnished. All such materials and
information requested by Xxxxxx, including any information requested to verify
any information furnished, has been made available and examined.
Xxxxxx further represents and warrants to ILD that Xxxxxx, together
with such other persons, if any, with whom Xxxxxx has found it necessary to
consult, has sufficient knowledge and experience in business and financial
matters to evaluate ILD, and the risk of an investment in the Common Stock, the
Series A Preferred Stock and the Junior Note, without need for the additional
information which would be required to be included in a registration statement
effective under the 1933 Act or any other applicable State Securities Laws.
Xxxxxx further represents and warrants to ILD that Xxxxxx'
investment in the Common Stock, the Series A Preferred Stock and the Junior Note
shall be in accord with the nature and size of Xxxxxx' investments and net
worth, and Xxxxxx is and shall be financially able to bear the economic risk of
its investment, including the ability to afford holding the Series A Preferred
Stock and the Junior Note for an indefinite period or to afford a complete loss
of Xxxxxx' investment therein. Xxxxxx has sufficient liquid assets to pay the
fully purchase price of the Series A Preferred Stock and the Junior Note.
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It is further agreed and understood by Xxxxxx that stop-transfer
instructions will be noted on the appropriate records of ILD and that a
restrictive legend shall be affixed to each Common Stock, the Series A Preferred
Stock and the Junior Note purchased in accordance with this Agreement, reading
as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER ANY SECURITIES LAWS IN RELIANCE OF EXEMPTION(S) THEREFROM AND
THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH TRANSFER
OR SALE IS MADE IN COMPLIANCE WITH ALL FEDERAL AND APPLICABLE STATE
SECURITIES LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE HELD SUBJECT
TO, AND THEIR TRANSFER IS RESTRICTED UNDER, THE TERMS OF A
SHAREHOLDERS' AGREEMENT DATED AS OF MAY ___, 1996 BY AND AMONG THE
CORPORATION AND CERTAIN OF ITS SHAREHOLDERS, A COPY OF WHICH IS ON
FILE AND IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
CORPORATION.
ARTICLE 7
CONDITIONS PRECEDENT TO INTELLICALL'S OBLIGATIONS
All obligations of Intellicall under this Agreement are subject to the
fulfillment to the reasonable satisfaction of Intellicall prior to or at the
Closing of each of the following conditions, any of which may be waived in
writing by Intellicall:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Triad and Xxxxxx in this Agreement, or in any exhibit, schedule,
statement, list or certificate furnished pursuant hereto, shall be true and
correct when made and shall be true and correct at and as of the time of the
Closing.
7.2 PERFORMANCE BY OTHERS. Triad and Xxxxxx shall have performed and
complied with all agreements, conditions and covenants required by this
Agreement including the exhibits and schedules hereto to be performed or
complied with by it prior to or at the Closing.
7.3 CLAIMS, ETC. There shall not have been instituted or threatened in
writing any claim, suit, action, proceeding or investigation against or
involving Intellicall, Triad, Xxxxxx or ILD, the outcome of which would, in
Intellicall's judgment, have a material and adverse effect on the common stock
of IOS or the ability of the ILD to consummate the transactions contemplated by
this Agreement or to continue as an ongoing profitable enterprise, or
threatening the legality, validity or enforceability of this Agreement.
13
7.4 FULFILLMENT OF FINANCING OBLIGATIONS. Triad and Xxxxxx shall have
funded the amounts as contemplated by Section 2.4 of this Agreement.
Furthermore, Sirrom shall have funded the Loan in the original principal amount
of $2,000,000 as contemplated in Section 2.5 of this Agreement all on terms and
conditions satisfactory to Intellicall.
7.5 NOMURA APPROVAL. Intellicall shall have received all necessary
approvals and consents from Nomura to consummate the terms of this Agreement.
7.6 OPERATING AGREEMENT. Intellicall and ILD shall have executed and
delivered a Operating Agreement substantially in the form attached hereto as
EXHIBIT "7.6".
7.7 REGISTRATION RIGHTS AGREEMENT. Intellicall, Triad, Xxxxxx and ILD
shall have executed and delivered a Registration Rights Agreement substantially
in the form attached hereto as EXHIBIT "7.7".
ARTICLE 8
CONDITIONS PRECEDENT TO TRIAD'S AND XXXXXX' OBLIGATIONS
All obligations of Triad and Xxxxxx under this Agreement are subject to the
fulfillment to the reasonable satisfaction of Triad and Xxxxxx prior to or at
the Closing of each of the following conditions, any of which may be waived in
writing by Triad and Xxxxxx:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Intellicall in this Agreement, or in any statement, list or certificate
furnished pursuant hereto, shall be true and correct when made and shall be true
and correct at and as of the time of Closing.
8.2 PERFORMANCE OF INTELLICALL. Intellicall shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing, including, without
limitation, the documents or instruments described on Schedule 3.2.
8.3 SHAREHOLDER AGREEMENTS. Intellicall, Triad, Xxxxxx and ILD will
have executed and delivered a Shareholder Agreement substantially in the form
attached hereto as EXHIBIT "8.3".
8.4 MANAGEMENT INCENTIVE STOCK OPTIONS. ILD shall have established and
adopted an employee stock option plan relating to the purchase of up to 27,500
shares of Common Stock at a purchase price of not less than $24.20 per share.
Such options will be subject to such performance objectives and other terms and
conditions as set forth on EXHIBIT "8.4" hereto.
8.5 WARRANTS. ILD shall have issued and delivered to Triad a warrant
(the "Triad Warrant") to purchase 6,000 shares of Common Stock at a purchase of
$90.00 per share, such Triad Warrant to be in the form substantially as attached
hereto as EXHIBIT "8.5".
14
8.6 CLAIMS, ETC. There shall not have been instituted or threatened in
writing any claim, suit, action, proceeding or investigation against or
involving Triad, Intellicall, Xxxxxx or ILD, the outcome of which would, in
Triad's judgment, have a material and adverse effect on the common stock of IOS
or the ability of the ILD to consummate the transactions contemplated by this
Agreement or to continue as an ongoing profitable enterprise, or threatening the
legality, validity or enforceability of this Agreement.
8.7 LOAN. Triad and Xxxxxx shall have funded the amounts as
contemplated by Section 2.4 of this Agreement. Furthermore, Sirrom shall have
Loan in the original principal amount of $2,000,000 as contemplated in Section
2.5 of this Agreement all on terms and conditions satisfactory to Triad.
8.8 FAIRNESS OPINION. ILD shall have received a written opinion from an
independent financial appraiser that the consideration to be paid to Intellicall
for the Business is fair to ILD from a financial point of view.
8.9 REGISTRATION RIGHTS AGREEMENT. Intellicall, Triad, Xxxxxx and ILD
shall have executed and delivered a Registration Rights Agreement substantially
in the form attached hereto as EXHIBIT "7.7".
ARTICLE 9
TERMINATION
9.1 TERMINATION BY INTELLICALL. This Agreement may be terminated and
canceled at any time prior to the Closing Date by Intellicall, upon written
notice to Triad and Xxxxxx, if (a) any of the representations and warranties of
Triad or Xxxxxx contained herein or in any exhibit or schedule hereto shall
prove to be inaccurate or untrue in any material respect and Triad or Xxxxxx
fails to cure within five (5) days of the written notice thereof but in no event
later than the Closing Date; (b) any obligation, term or condition to be
performed or observed hereunder by Triad or Xxxxxx has not been so performed or
observed in any material respect at or prior to the time specified herein; (c)
the conditions precedent to Intellicall's obligations hereunder as set forth in
Article 7 have not been satisfied or waived by Intellicall in writing; or (d) if
the Closing Date shall not have occurred on or before May 15, 1996.
9.2 TERMINATION BY TRIAD. This Agreement may be terminated and
canceled at any time prior to the Closing Date by Triad or Xxxxxx, upon
written notice to Intellicall, if (a) any of the representations and
warranties of Intellicall contained herein or in any exhibit or schedule
hereto shall prove to be inaccurate or untrue in any material respect and
Intellicall fails to cure within five (5) days of the written notice thereof
but in no event later than the Closing Date; (b) any obligation, term or
condition to be performed or observed by Intellicall hereunder has not been
so performed or observed in any material respect at or prior to the time
specified herein; (c) the conditions
15
precedent to Triad's and Xxxxxx' obligations hereunder as set forth in Article 8
have not been satisfied or waived by Triad and Xxxxxx in writing; or (d) if the
Closing Date shall not have occurred on or before May 15, 1996.
9.3 TERMINATION BY AGREEMENT. This Agreement may also be terminated at
any time by mutual written agreement of Intellicall, Triad and Xxxxxx.
ARTICLE 10
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement, together with all the schedules
and exhibits hereto, constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth herein.
10.2 AMENDMENT. This Agreement may be amended by the parties hereto at
any time, but only by an instrument in writing duly executed and delivered on
behalf of each of the parties hereto.
10.3 HEADINGS. The section headings are not to be considered part of
this Agreement and are included solely for convenience and are not intended to
be full or accurate descriptions of the contents thereof. References to
sections or articles are to portions of this Agreement unless the context
requires otherwise.
10.4 EXHIBITS, ETC. Exhibits and schedules referred to in this Agreement
are an integral part of and are incorporated in this Agreement by reference.
10.5 ASSIGNMENT; SUCCESSORS AND ASSIGNS. All of the terms and provisions
of this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
10.6 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered or sent by reputable overnight courier, postage prepaid or by
certified mail, return receipt requested:
(a) if to Intellicall:
Intellicall, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
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Attn: Chief Financial Officer
(b) if to Triad:
Triad-ILD Partners, L.P.
c/o Triad-ILD Partners, Inc.
0 Xxxxx Xxxxxxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
(c) if to Xxxxxx:
Xxxxxx Telecommunications, LLC
00 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
10.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
10.8 SEVERABILITY. The provisions of this Agreement are severable, and
in the event that any one or more provisions are deemed illegal or
unenforceable, the remaining provisions shall remain in full force and effect.
10.9 COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereby have duly executed this Agreement as
of the day and year first above written.
INTELLICALL, INC.
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------------
Its: Vice President of Finance
------------------------------------------
TRIAD-ILD PARTNERS, L.P.
By: Triad-ILD, Inc., general partner
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Its: President of the General Partner
------------------------------------------
17
XXXXXX TELECOMMUNICATIONS, LLC
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Its: President
------------------------------------------
ILD COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Its: President
------------------------------------------
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SCHEDULES
NUMBER DESCRIPTION
------ -----------
2.1A List of Contracts to be contributed to IOS by
Intellicall
2.3D Performance bonds posted by Intellicall to be
reimbursed by ILD
2.4 Investments by Triad and Xxxxxx
2.9 Expenses
4.2 Conflicting agreements; approvals required
4.3 Liens on IOS Common Stock
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EXHIBITS
NUMBER DESCRIPTION
------ -----------
2.3A Series A Preferred Stock
2.3B Series B Preferred Stock
2.3C Form of Junior Convertible Note
3.2A Opinion of Counsel
7.6 Intellicall/ILD Operating Agreement
7.7 Registration Rights Agreement
8.3 Shareholder Agreement
8.4 Employee Stock Option Plan
8.5 Triad Warrant
20
