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EXHIBIT 10.2
INVESTMENT AGREEMENT
$3,500,000 OF CONVERTIBLE PREFERRED STOCK
THIS INVESTMENT AGREEMENT, dated as of March 10, 1999, is by
and between ACTEL INTEGRATED COMMUNICATIONS, INC. (the "Company") and XXXXXXX
COMMUNICATIONS CORPORATION (the "Investor").
1. Purchase and Sale of Securities. Subject to the terms,
covenants and conditions of this Agreement, the Company will issue and sell, and
the Investor shall buy, shares of the Company's Series A Convertible Preferred
Stock (the "Shares").
1.1 Consideration. The consideration to be paid by the
Investor for the Shares to be issued to and purchased by it is $1.00 per Share
("Share Price"). The Investor has already advanced $1,078,069.32 to the Company
to be applied to the purchase of 1,078,069.32 Shares to be issued, at the
Closing, to the Investor.
1.2 Requests for Funds. Upon any and all requests by the
President or the Board of Directors of the Company, the Investor will advance to
the Company additional funds up to an aggregate of $3,500,000, including funds
previously advanced, to be applied to the purchase of Shares at the Share Price
("Requests for Funds"). If the Investor fails to comply with any Request for
Funds within fourteen (14) days of such Request for Funds, (a) the Board of
Directors may elect not to sell the Investor any additional Shares, and may
issue all remaining Shares to raise capital from other sources, (b) Investor
shall be entitled to select only one member to the Board of Directors. The
Shares shall have the rights and preferences set forth in the Statement of Terms
attached hereto as Exhibit B to this Agreement (the "Statement of Terms"), which
is incorporated herein by reference.
1.3 Option. The President or the Board of Directors of the
Company may request funding in excess of $3,500,000 from Investor ("Additional
Requests for Funds"), and if Investor satisfies all such requests within
fourteen (14) days of each request, then upon the earliest of the following
events, the Company shall grant Investor at no additional cost or expense an
option ("Option") to acquire 3,900,000 shares of common stock ("Option Shares"):
(a) all shares of common stock of the Company are listed on a national
securities exchange, or (b) all of the common stock or substantially all of the
assets of the Company are acquired, assigned, or transferred to or exchanged for
the publicly traded stock of a third party. The date on which the Company is
required to grant the Option to Investor pursuant to this Paragraph 1.3 shall be
referred to herein as the "Option Date."
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1.3.1 Notice. The Company shall deliver to Investor forty-five
(45) days prior written notice of its intent to cause either of the events
described above in (a) and (b), with the Option in writing conditioned on the
occurrence of either such event and effective on the Option Date.
1.3.2 Exercise and Reservation of Shares. Investor may
exercise its option at any time on or after the Option Date. So long as Investor
timely complies with all Additional Requests for Funds before the Option Date,
the Company shall not issue or affect in any manner whatsoever the shares of
common stock necessary to permit Investor to exercise its Option and acquire the
Option Shares. However, if Investor elects to not satisfy any Additional Request
for Funds, the Company may issue all authorized but unissued shares of common
stock to any parties pursuant to terms and conditions it deems appropriate.
1.3.3 Reduction of Option Shares. If Investor elects to
satisfy any but not all Additional Requests for Funds before either of the
events described in 1.3(a) and (b) above, the Company shall grant Investor an
Option pursuant to the terms set forth in Sections 1.3. and 1.3.1, except that
the number of Option Shares shall be reduced from 3,900,000 to the number of
shares of common stock that are unissued and not committed for other purposes on
the Option Date.
2. The Closing. Subject to the conditions hereof, the
transactions described herein will be closed (the "Closing") at 9:00 A.M. at the
offices of the Company and/or at such other place as all the parties hereto may
agree on March 10, 1999 (the "Closing Date").
3. Conditions to Closing. All of the obligations of the
Investor to purchase the Shares are subject to the accuracy on the Closing Date
of all the representations and warranties by the Company contained herein, and
to the performance by the Company of all the terms, covenants and conditions on
its part to be performed hereunder on or prior to the Closing Date, and to the
satisfaction of the following additional conditions precedent:
3.1 Opinion of Counsel. The Investor shall have received
from counsel for the Company, a favorable opinion, dated the date hereof,
addressed to the Investor, confirming the Company's due organization, the
authorization and enforceability of this Investment Agreement and the valid
issuance of the Shares.
3.2 Charter Documents. The Investor shall have received a
copy of the Articles of Incorporation of the Company, as amended to incorporate
the Statement of Terms, certified by the Secretary of the Company. The Investor
shall also have received a copy of the Company's By-Laws.
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3.3 Corporate Resolutions. A copy of the resolutions
adopted by the Company's Board of Directors and shareholders (if necessary),
certified by the Secretary of the Company, authorizing and approving (a) the
execution, performance and delivery of this Investment Agreement, (b) the
issuance of the Shares, and (c) the other transactions contemplated hereby,
shall have been delivered to the Investor.
3.4 Proceedings and Documents. All proceedings taken or
to be taken in connection with the transactions contemplated by this Investment
Agreement to be consummated at, or prior to, the execution and Closing hereof
and all other documents, schedules, exhibits, opinions and certificates in
connection therewith shall each be satisfactory in form and substance to the
Investor, and the Investor shall have received copies of all such documents and
all other documents which the Investor has requested in connection with said
transactions and of all corporate proceedings in connection therewith, in form
and substance satisfactory to the Investor.
3.5 Board Agreement. The Company and the Investor shall
have entered into the Support, Voting, and Board Composition Agreement attached
hereto as Exhibit A.
4. Representations and Warranties. In order to induce the
Investor to purchase the Shares, the Company makes the following representations
and warranties as of the Closing Date :
4.1 Existence and Rights. The Company is a corporation
duly organized and validly existing under the laws of the State of Alabama. The
Company has delivered to the Investor a true, complete and correct copy of the
Articles of Incorporation and By-Laws, including all amendments thereto, in
effect or to be in effect as of the Closing. The Company has all corporate power
and authority to own and operate its assets and carry on its business. The
Company has the corporate power and adequate authority to enter into and perform
this Investment Agreement and to issue the Securities to be issued hereunder.
4.2 Agreement Authorized. The execution and delivery of
this Investment Agreement and the other agreements referred to herein and the
performance by the Company of each of their respective terms, covenants and
agreements are not in contravention of, or in conflict with, any law, ordinance,
regulation, governmental license, approval or tariff known to the Company or any
order or decision of any court, any term or provision of the Company's Articles
of Incorporation or By-Laws, or the terms of any agreement, restriction or
undertaking to which the Company is a party or by which it is bound. The
execution and performance of this Investment Agreement by the Company are
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duly authorized. All action on the part of the Company, and all necessary or
appropriate approvals and consents for the due execution, delivery and
performance of this Investment Agreement, including the creation, issuance and
sale of the Shares, have been duly and validly obtained or taken. This
Investment Agreement constitutes, and on the Closing Date will constitute, the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium and similar laws of general application affecting
creditors' rights, and except as enforcement may be limited by general equitable
principles.
4.3 Capitalization.
(a) Following issuance to the Investor of the Shares,
and immediately after the Closing: (i) the entire authorized capital stock of
the Company will consist of 10,000,000 shares of common stock of a par value of
$ per share (the "Common Stock") and 3,500,000 shares of Series A Convertible
Preferred Stock of a par value of $1.00 per share (the "Series A Preferred");
and (ii) the Company's issued and outstanding capital stock will consist of
1,000,000 shares of Common Stock and 1,078,069.32 shares of Series A Preferred.
Except for certain stock appreciation rights to be approved by the Company's
Board of Directors, the Company does not have, and on the Closing Date will not
have, any outstanding subscriptions, options, warrants or other rights for the
issuance or purchase of any stock or other securities, nor any securities
convertible or exchangeable for any of its stock or other securities, or any
understandings or commitments of any kind for the issuance of stock or
securities convertible into stock or other securities, and the Company is under
no contractual obligation to register under the Securities Act of 1933 any of
its presently outstanding securities or any of its securities that may
subsequently be issued. Assuming the payment by the Investor of the
consideration for the Shares, the Shares will be, when issued, duly and validly
issued, fully paid and nonassessable.
4.4 Subsidiaries, Other Investments. The Company has no
subsidiaries, or any investment in any other business or corporation. For the
purpose of this Agreement the term "Subsidiary" or "Subsidiaries" means any
corporation or other entity of which the securities having a majority of the
voting power in electing the Board of Directors are owned by the Company either
directly or by another subsidiary.
4.5 Litigation. To the knowledge of Company, there is no
litigation or other proceeding (including any government proceedings or
investigation) pending or, to the knowledge of the Company, threatened against
or affecting, the Company, or the assets of the Company, or which questions 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. Without limiting the
generality
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of the foregoing, to the knowledge of the Company, there is no pending or
threatened action, proceeding or investigation involving the prior employment or
consultancy of any of the Company's employees or consultants or their use of any
information or techniques alleged to be proprietary to any other person or
business. To the knowledge of the Company there is no basis for any of the
foregoing. Notwithstanding the foregoing, Investor acknowledges that the Company
has and will have from time to time transactional and adjudicatory matters
pending before state public service commissions and other regulatory bodies,
including without limitation, applications for certificates of authority and
requests for letters of nonopposition. Further, Investor is aware and has
possession of correspondence dated February 5, 1999 from ALLTEL Corporation and
a complaint filed by Alltel in the United States District Court for the Southern
District of Alabama demanding that the Company cease and desist its use of the
name "Actel."
4.6 Indebtedness. The Company has no outstanding
Indebtedness (as defined herein), except for liabilities reflected on the
balance sheet and accounts payable journals delivered to the Investor prior to
Closing. "Indebtedness" means all obligations which, in accordance with
generally accepted accounting principles, are normally classified upon a balance
sheet as liabilities, but excludes any and all indebtedness incurred in the
ordinary course of business between the date of the Balance Sheet and the
Closing.
4.7 Compliance with Laws, Instruments, Etc. To the
Company's knowledge, the Company is not in violation in any material respect of
its Articles of Incorporation or By-Laws, as amended, or, any applicable law,
statute or regulation of any federal, state, municipal or other governmental or
quasi-governmental agency, board, bureau or body relating to the conduct of its
business or maintenance, operation or use of the assets of the Company. To the
Company's knowledge, the Company is not in violation or default in any material
respect with respect to any order, license, regulation or demand of any court or
governmental agency, or in default in any material respect under any indenture,
mortgage, lease, agreement or other instrument under which it is bound. The
Company has complied with and performed each and every material obligation
required to be complied with and performed pursuant to each contract, lease,
license, mortgage, indenture, instrument and other agreement to which it is
bound or obligated, and there is no material default by the Company, and to its
knowledge, by any other party thereto, under any such contract, lease, license,
mortgage, indenture, instrument or other agreement now existing, or which would
come into existence with the passage of time, the giving of notice, or both.
4.8 Securities Laws. The sale and delivery of the Shares
(based upon the Investor's representations in section 8), are exempt from the
requirement of registration under the Securities Act of 1933, as amended
("Securities Act") and applicable state "Blue Sky" laws.
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4.9 Brokers. The Company has not incurred any liability
for any finders' fees, brokerage fees or similar fees or expenses in connection
with entering into this transaction with the Investor.
4.10 Related Transactions. Except for matters disclosed
on Schedule 4.10 and compensation to current employees, and disregarding any
relationship with the Investor or any subsidiary of the Investor, no current or
former officer or managerial employee of the Company (or any person actually or
constructively related to such director, officer, managerial employee or
shareholder within the meaning of section 267(a) of the Internal Revenue Code),
is presently:
(a) A party to any material transaction with the
Company (including, but not limited to, any contract, agreement or other
arrangement providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring payments to, any such officer or
employee or such associate);
(b) The direct or indirect owner of any interest of
greater than one (1%) percent in any corporation, firm, association or business
organization which is a competitor or a potential competitor or supplier of the
Company; or
(c) The recipient of income from any source other
than the Company which should properly accrue to the Company.
4.11 Employee Matters. To the Company's knowledge, no
officer or employee of the Company has entered into any agreement which is now
in effect with any person, corporation, partnership or business organization
other than the Company requiring such person to assign any interest in any
invention or trade secrets or to keep confidential any trade secrets or other
proprietary information or containing any prohibition or restriction on
competition or solicitation of customers.
4.12 Bank Accounts. Schedule 4.12 hereto contains a true,
complete and correct list of each bank or other depository account or safe
deposit box maintained by the Company, including the name of the bank or other
depository and the names and titles of all persons authorized to draw thereon or
having access thereto.
4.13 Disclosure. To the Company's knowledge, neither this
Agreement nor any of the schedules, attachments, written statements, documents,
certificates or other items required hereby contain any untrue statement of a
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material fact or omit a material fact necessary to make each such statement
contained herein or therein not misleading.
5. Affirmative Covenants. From and after the Closing Date and
so long as the Investor owns any of the Shares or at least fifty-one (51%)
percent of the outstanding Common Stock or the Company is indebted to the
Investor, the Company shall comply with each of the following actions:
5.1 Payment of Dividends. The Company shall duly make all
dividend payments on the Shares, as the same become due and payable, in
accordance with the Statement of Terms, and shall otherwise comply with the
Statement of Terms.
5.2 Taxes. The Company shall accurately prepare all tax
returns required by law to be filed on behalf of the Company. The Company
promptly shall pay and discharge all taxes, assessments and governmental charges
or levies imposed by applicable law upon it or upon its income or profit, or
upon its properties, real, personal or mixed.
5.3 Maintain Corporate Rights and Facilities. The Company
shall maintain and preserve its corporate existence and shall use its best
efforts to acquire, maintain and preserve all its rights, franchises and
qualifications adequate for the conduct of its business and the ownership of its
properties.
5.4 Insurance. The Company shall maintain insurance
against all such liabilities, hazards and risks (including without limitation
product liability claims), and in at least such amounts (in the case of property
casualty insurance at least replacement cost), as are usually carried by persons
engaged in the same or a similar business. All such insurance shall be effected
under valid and enforceable policies issued by insurers of recognized
responsibility, except that the Company may effect worker's compensation or
similar insurance in respect of operations in any state or other jurisdiction
through an insurance fund operated by such state or other jurisdiction.
5.5 Financial Reports. The Company shall provide the
Investor with monthly and annual financial statements. All such financial
statements will be prepared according to GAAP.
5.6 Budget. On or before 30 days prior to the end of each
fiscal year commencing with the fiscal year ending December 31, 1999, the
Company shall furnish to the Investor a business plan for the Company (including
an operating and capital budget) for each of the next two succeeding fiscal
years and projections of (i) the balance sheet of the Company at the end of each
such fiscal year, (ii) statements of income and expense and of shareholders'
equity of
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the Company for each of such fiscal years, (iii) statements of cash flow of the
Company for each such fiscal year, and (iv) a budget of capital expenditures to
be incurred by the Company for each such fiscal year. The Company shall,
promptly upon any material revision of the foregoing, provide such revisions to
the Investor. The business plan referred to above shall include management's
intentions with regard to anticipated significant business developments or
objectives of the Company.
5.7 Books and Records; Inspection. The Company shall keep
proper, complete and accurate books of record and account. The Investor upon
reasonable notice and during regular business hours shall have the right to
visit and inspect any of the properties, books and records of the Company (and
to make copies and take extracts therefrom), to discuss the Company's affairs,
finances and accounts with, and be advised of the same by, its directors,
officers, employees, consultants, legal counsel and independent accountants.
5.8 Maintain Properties. The Company shall keep its
properties in good repair, working order and condition, ordinary wear and tear
excepted, and from time to time make all prudent, needful or proper repairs,
replacements, extensions, additional betterments and improvements thereto, so
that the business carried on by the Company may be efficiently conducted at all
times in accordance with sound business management.
5.9 Compliance with Instruments, Laws, Etc. The Company
shall comply in all material respects with the terms, requirements, restrictions
and limitations of any applicable law, statute or regulation of any federal,
state, municipal or other governmental or quasi-governmental agency, board,
bureau or body materially relating to the conduct of its business and
maintenance and operation of its respective properties and shall further comply
with and perform the terms, conditions and covenants contained in any contract,
lease, license, mortgage, indenture, instrument or other agreement under which
the Company is obligated.
5.10 Notices. Upon the Company's obtaining knowledge of
any of the following, promptly notify in writing the Investor of the same and
what action the Company proposes to take, and shall thereafter keep the Investor
fully informed, with respect thereto:
(a) Any material breach of or default by the Company
in the fulfillment of any of the terms, covenants or conditions of this
Agreement or any loan agreement or material contract or governmental license,
permit or tariff by which it is bound or to which it is a party, or the
existence or occurrence of any condition, event, act or omission which, with the
giving of notice or the passage of time or both, would constitute an Event of
Default under
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this Agreement (as defined in section 7) or under any loan agreement or material
contract, or governmental license, permit or tariff by which it is bound or to
which it is a party.
(b) Any material litigation, investigation,
administrative proceeding or determination, fine, penalty or other materially
important dispute to which the Company is a party or by which it is affected.
(c) Any material change or modification in existing
contracts, agreements or commitments to which the Company is a party or is
bound.
(d ) Any inquiry, offer or proposal of whatever kind
(whether written or oral) which it receives from any person concerning the
possible sale, merger or other acquisition of the Company, or any portion
thereof, and which it deems to be bona fide. Promptly after the Company becomes
aware of any such offer or proposal made to any of its shareholders, it shall
advise the Investor of the same.
5.11 Board of Directors. The Company's Board of Directors
shall initially consist of four members, and meetings shall be held at least
monthly. Prior to September 30, 1999 providing Investor has complied with all
Requests for Funds, and thereafter providing that the Investor has purchased
3,500,000 shares of Series A Convertible Preferred Stock, the Board of Directors
shall be constituted in accordance with Exhibit A attached hereto and made a
part hereof. The By-Laws of the Company shall contain a provision for
indemnification of directors, to the extent permitted by applicable law and as
otherwise satisfactory to the Board of Directors . The Investor's
representatives shall be entitled to whatever director's fee and other
remunerations as are paid by the Company to outside directors and shall be
reimbursed promptly for all reasonable out-of-pocket expenses incurred in
connection with such representatives' service to the Company. The Company shall
furnish the Investor, at least 48 hours in advance, with copies of the agenda
for each Board of Directors and shareholders' meeting and shall furnish copies
of the minutes of all Board of Directors and shareholders' meetings within 7
days after such meeting. The Investor's nominees shall be entitled to submit
agenda items to meetings of the Board of Directors and any committees thereof,
and the Investor's nominees shall be entitled to be members of any committees of
the Board of Directors that are established.
6. Negative Covenants. From and after the Closing Date and so
long as the Investor holds any of the Shares or at least fifty-one ( 51%)
percent of the outstanding Common Stock or the Company is indebted to the
Investor, the Company will not do or take any of the following actions without
the consent of
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the Investor or the prior consent of a majority of the Company's Board of
Directors:
6.1 Stock Redemption. Purchase or otherwise acquire,
redeem or retire any Common Stock or preferred stock or other securities of the
Company, excluding (a) the purchase, pursuant to a buy/sell agreement approved
by the Board of Directors of the shares of Common Stock held by the current
shareholders of the company and (b) any rights granted pursuant to any employee
benefit plan approved by a majority of the Board of Directors, or agree or
commit to do any of the foregoing.
6.2 Investments, Loans and Advances. Make or have
outstanding any loans or advances to, or investments in (through the acquisition
of securities or stock or otherwise), any other person, firm, or corporation,
except:
(a) Advances in the ordinary course of business to
suppliers in respect to the purchase of supplies or equipment;
(b) By endorsement of negotiable instruments for
deposit or collection in the ordinary course of business;
(c) Investments in obligations of the United States
Government or deposits in or certificates of deposit issued by financial
institutions;
(d) Travel and other advances to employees in the
ordinary course of business; or
(e) Investments in commercial paper and/or money
market funds.
6.3 Acquisition or Sale of Business; Merger or
Consolidation. Purchase or otherwise acquire the stock, shares, or other
securities, or the assets or business, of any person or other entity; or
liquidate, dissolve, merge, consolidate, reorganize, recapitalize or otherwise
alter its legal status or commence any proceedings therefor; or sell, lease,
transfer, or dispose of, in any way, any personal or real property assets,
except assets sold or leased in the ordinary and normal course of business; or
assign or transfer any substantial part of its intangible business rights
necessary for the continuance of its business as now conducted or planned.
6.4 Change Capital Structure. Increase or decrease the
number of its authorized shares, or vary or alter the terms, par value or rights
of shares of any class or type of stock, or issue or agree to issue any stock or
other securities of the Company, or any options, warrants or other rights to
acquire such
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Common Stock or other equity securities, or securities convertible into Common
Stock or other equity securities of the Company or create any new class of stock
of the Company.
6.5 Officers' Salaries and Loans. Compensation for each
officer and managerial employee of the Company shall not exceed the amounts
established from time to time by the Board of Directors. The term
"compensation", for purposes of this section, shall include all remuneration for
services rendered, whether such payment be called salary, bonus, drawing
account, profit sharing, withdrawals or other form of recompense (but shall not
include fringe benefits, such as health and life insurance generally available
to all salaried employees). No loans or advances, either direct or indirect,
will be made by the Company to any officer, consultant, managerial employee,
director or shareholder, or to any person actually or constructively related to
any of the foregoing within the meaning of section 267(a) of the Internal
Revenue Code; provided, however, that the Company may make reasonable advances
to employees for documented, reimbursable travel and entertainment expenses to
be incurred with respect to business of the Company.
6.6 Amend, Violate Charter, Etc. Amend or change its
Articles of Incorporation or By-Laws, or violate or breach any of the provisions
thereof.
6.7 Dealings with Insiders. Allow or permit any director,
officer, managerial employee, consultant or shareholder (other than the
Investor), or persons actually or constructively related to such director,
officer, employee, consultant or shareholder (within the meaning of section
267(c) of the Internal Revenue Code) to have either directly or indirectly an
interest in any corporation, partnership, proprietorship, association or other
person or entity which furnishes, rents or sells services or products to the
Company or to which the Company furnishes, rents or sells services or products.
For the purposes of this section, there shall be disregarded any relationship
with the Investor, or any subsidiary of the Investor, or any interest which
arises solely from the ownership of less than a 1% equity interest in any
corporation whose stock is regularly traded on any national securities exchange
or quoted on the National Association of Securities Dealers Automated Quotation
System and in which such person has no other role.
6.8 Dividends. Declare or pay any dividends, or make
other distributions, in cash, property or stock, with respect to the Common
Stock.
6.9 Pension and Profit Sharing Plan or Arrangements.
Establish or make any contribution to any employee pension benefit plan, or
other pension or profit sharing plan or arrangement, whereby any part of the
profits or earnings of the Company is shared with any person, firm or
corporation.
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6.10 Permitted Indebtedness. Create, incur, assume or
suffer to exist any new indebtedness, liability, guaranty or indemnity of any
kind, whether accrued, absolute, contingent or otherwise, except: (a) borrowings
from financial institutions, not in excess of $100,000; (b) current trade
payables and expenses incurred in the ordinary course of business; (c) wages or
other compensation due to employees and agents of the Company for services
actually performed; (d) liabilities for customer deposits in reasonable amounts
obtained in the ordinary course of business; (e) liabilities for taxes not yet
due; and (f) purchase money indebtedness for capital expenditures allowed by
section 6.12, provided any security therefor complies with section 6.11(d).
6.11 Liens. Create or suffer to exist, any claim,
assessment, pledge, security interest, mortgage, encumbrance or other lien in
favor of any person, including the lien of a conditional seller, upon any of its
properties or assets, now owned or hereafter acquired, including treasury
shares; provided, however, that this restriction shall not be applicable to nor
prevent the following:
(a) Liens for taxes, assessments or governmental
charges not delinquent or being contested in good faith; undetermined liens and
charges incident to construction and not resulting from any delinquent
obligation for the payment of money on account of such construction; the
lessor's rights in leasehold property, and easements, restrictions, minor title
irregularities and similar matters which have no adverse effect as a practical
matter upon the ownership and use of the properties;
(b) Liens or deposits in connection with indebtedness
not in violation of section 6.10 above, workmen's compensation or other
insurance or to secure customs duties, public or statutory obligations or
mechanics or materialmen's claims not delinquent; or to secure performance of
contracts or bids (other than contracts for the payment of money borrowed), or
deposits required by law or governmental regulations or by a court order,
decree, judgment or rule as a condition to the transaction of business or the
exercise of any right, privilege or license or other liens of a like nature made
in the ordinary course of business;
(c) Liens in favor of the Investor; and
(d) Purchase money mortgages or liens on any property
acquired after the date hereof to be used by the Company in the normal course of
its business and created or incurred simultaneously with the acquisition of such
property, if such mortgage or lien is limited to the property so acquired and
the indebtedness secured by such mortgage or lien does not exceed 80% of the
purchase price of such property.
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6.12 Capital Expenditures. Make or incur any
expenditures, indebtedness, or lease obligations for fixed assets in excess of
$250,000 in the aggregate within any 12-month period.
6.13 Changes in Management or Business. Make any change
in the officers of the Company or make any significant change in the nature of
the Business. The Company will not enter into any agreements which would
restrict the Company's right or ability to perform under this Agreement or its
Articles of Incorporation or By-Laws.
6.14 Changes in Accounting Period or Methods. Change the
Company's fiscal year from the year ending December 31 or change any accounting
method employed in the preparation of its financial statements.
7. Events of Default and Remedies.
7.1 Events of Default. So long as any of the Shares are
still owned by the Investor, any one or more of the following shall constitute
an "Event of Default" as the term is used herein, provided the Company has not
cured such Event of Default within ten (10) days of written notice of same:
(a) Default in the payment on the required due date
of dividends declared on the Shares pursuant to section 2(b) of the Statement of
Terms;
(b) Default shall occur under the provision of any
indenture, loan agreement or other instrument under which any evidence of
indebtedness of the Company has been or may be issued;
(c) Default shall occur in the observance or
performance by the Company of any term, covenant or other provision of this
Investment Agreement, or any other agreement executed in connection herewith
which is not remedied to the Investor's satisfaction within 15 days after
written notice thereof to the Company;
(d) If any representation or warranty made by the
Company herein, or made by the Company in any exhibit, statement or certificate
attached to this Investment Agreement or furnished to the Investor in connection
with this Investment Agreement, proves untrue in any material respect on the
date as of which made or as of which the same is to be effective;
(e) The Company becomes bankrupt, or makes an
assignment for the benefit of creditors, or applies for or consents to the
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appointment of a trustee or receiver or for the major part of its properties.
Notwithstanding anything to the contrary in this Paragraph 7, the Company shall
not have any opportunity to cure any default occuring in this Sub-Paragraph
7.1(e);
(f) A trustee or receiver is appointed for the
Company or for a material part of its properties and the order of such
appointment is not discharged, vacated or stayed within 60 days after such
appointment;
(g) Any judgment, writ or warrant of attachment or of
any similar post-judgment process in an amount in excess of $25,000 shall be
entered or filed against the Company or against any of its properties or assets
and remains unpaid, unvacated, unbonded or unstayed for a period of 30 days; or
(h) Bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceedings, or other proceedings for relief under
any bankruptcy or similar law or laws for the relief of debtors, are instituted
by or against the Company and, if so instituted, are consented to by the
Company, or, if contested, are not dismissed by the adverse parties or by an
order, decree or judgment within 60 days after such institution. Notwithstanding
anything to the contrary in this Paragraph 7, the Company shall not have any
opportunity to cure any default occuring in this Sub-Paragraph 7.1(h).
7.2 Notice to Holder. When any condition, event or act
described in section 7.1 has occurred or exists, the Company agrees to give
notice thereof to the Investor within three business days of knowledge of such
condition, event or act.
7.3 Put. When any Event of Default described in section
7.1 has occurred and for so long as such Event of Default is continuing, the
Investor may at its option and without notice, put the Shares to the Company and
require the Company to immediately pay in cash therefor $1.00 per share plus any
accrued and unpaid dividends thereon.
7.4 Expenses; Audit. The Company agrees to pay to the
Investor all reasonable costs and expenses incurred by them (including
reasonable attorneys' fees) in connection with the enforcement or amendment of
any provisions of this Investment Agreement. In addition, when an Event of
Default has occurred, the Investors shall be entitled to retain, at the
Company's expense, an independent certified public accountant, chosen by the
Investors, to conduct an audit of the Company's financial statements.
7.5 Remedies Cumulative. The remedies provided in this
section 7 are in addition to, and not in limitation of, any other rights and
remedies
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the Investor may have upon an Event of Default. The Investor may exercise any or
all of the remedies provided by this section 7.
8. Representations and Warranties of Investor. The Investor
represents and warrants to the Company:
8.1 Capacity. The Investor has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of and to protect its own interest in connection with the
acquisition of the Shares.
8.2 Accredited Investor. The Investor is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act.
8.3 Restricted Securities. The Investor acknowledges and
is aware the Shares will be issued pursuant to applicable exemptions from
registration under the securities laws of the United States and certain states
in which the Shares may be offered and sold, and the regulations promulgated
thereunder and the Shares have not been registered under the Securities Act in
reliance upon the exemption from registration provided by sections 3(b) and 4(2)
thereof and Regulation D promulgated thereunder, and, in connection therewith,
the Investor covenants and agrees that it will not offer, sell or otherwise
transfer the Shares unless and until the Shares are registered pursuant to the
Securities Act and the laws of all jurisdictions, which in the opinion of the
Company may be applicable, or unless the Shares are otherwise exempt from
registration thereunder. Investor further acknowledges that it has committed no
act that could cause the sale and delivery of the Shares to not be exempt from
the requirement of registration under the Securities Act of 1933, as amended
("Securities Act") and applicable state "Blue Sky" laws.
8.4 Investment Purpose. The Investor is making this
investment for its own account and not for the account of others and not with a
view to the distribution of Shares, and has no present intention of reselling or
dividing any Shares so acquired.
8.5 Existence and Rights. The Investor is a corporation
duly organized and validly existing under the laws of the State of Iowa. The
Investor has the corporate power and corporate authority to enter into and
perform this Investment Agreement.
8.6 Agreement Authorized. The execution and delivery of
this Investment Agreement and the other agreements referred to herein and the
performance by the Investor of each of the respective terms, covenants and
agreements are not in contravention of, or in conflict with, any law, ordinance,
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regulation, governmental license, approval or tariff known to the Investor or
any known order or decision of any court, any term or provision of the
Investor's Articles of Incorporation or By-Laws, or the terms of any agreement,
restriction or undertaking to which the Investor is a party or by which it is
bound. All action on the part of the Investor, and all necessary or appropriate
approvals and consents for the due execution, delivery and performance of this
Investment Agreement, including the ability to provide the funding required
hereby have been duly and validly obtained or taken. This Investment Agreement
constitutes, and on the Closing Date will constitute, the valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium and similar laws of general application affecting creditors' rights,
and except as enforcement may be limited by general equitable principles.
8.7 Proceedings and Documents Satisfactory. By executing
this Investment Agreement, the Investor warrants that all proceedings taken in
connection with this Investment Agreement have been acceptable and that all
documents and other information desired or requested by the Investor have been
provided and were and are, in form and substance, satisfactory to the Investor.
8.8 Risks. Investor is aware of all material risks
associated with investments in start-up companies generally and start-up
telecommunications companies specifically, including without limitation
companies engaging in the competitive local exchange, long distance, and
internet markets of the Southeast United States of America. Except as
specifically set forth in this Agreement, Investor does not rely on any
statement or omission by any officer, agent, employee of the Company in
evaluating whether to invest in the Company.
8.9 Business Plan. Investor has reviewed and consents to
the Company's strategy, goals, and methods of execution of same as set forth in
the Company's current business plan ("Business Plan"). Investor does not rely on
any and understands that there has not and cannot be any representations,
warranties or assurances by the Company that the goals, projections, plans,
milestones, revenues, and intentions set forth in the Business Plan will be met,
achieved, successful, reached, received or realized in any manner or degree
whatsoever. The Company shall, however, use its best efforts to meet the goals
set forth in the Business Plan.
9. Transfer of Securities.
9.1 Transferability. Transfer of the Shares shall be made
only on the books of the Company, respectively, by the holder of record thereof
or by their legal representatives who shall furnish proper evidence of authority
to transfer, or by their attorney thereunto authorized by power of attorney duly
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executed and filed with the secretary of the Company. The holder in whose name
the Shares stands on the books of the Company shall be deemed by the Company to
be owner thereof for all purposes.
9.2 Restrictive Legends. Unless and until otherwise
permitted by this section, each instrument evidencing Shares issued or to be
issued under this Agreement shall contain or otherwise be imprinted with a
suitable legend in substantially the following form:
"This security has not been registered under the Securities
Act of 1933 or any state securities act, and has been acquired for investment
and not with view to, or for sale in connection with, any distribution thereof
within the meaning of the Securities Act of 1933, as amended. Also, this
security may be transferred only pursuant to an Investment Agreement dated as of
March 3, 1999 (the "Investment Agreement"). Notwithstanding any other provisions
contained herein, no transfer of this security shall be made unless the
conditions specified in section 9 of said Investment Agreement have been
fulfilled. A copy of the Investment Agreement is on file and available for
inspection at the principal offices of the Company."
10. Additional Provisions.
10.1 Survival of Representations and Warranties. All
representations and warranties contained herein or made by or on behalf of the
Company in writing in connection with the transactions contemplated herein shall
be true and correct as of the Closing and shall survive the consummation of the
transactions contemplated hereby for one year from the Closing.
10.2 Successors and Assigns. This Investment Agreement
shall be binding upon and inure to the benefit of the Investor and the Company
and their respective successors and assigns.
10.3 Notices. All notices, demands, and communications
provided for herein or made hereunder shall be hand-delivered, or sent by a
nationally recognized overnight courier, prepaid, addressed in each case as
follows, until some other address shall have been designated in a written notice
given in like manner, and shall be deemed to have been given or made when so
delivered or sent:
(a) if to the Company:
AcTel Integrated Communications, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
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Xxxxxx, XX 00000
(b) if to Investor:
Xxxxxxx Communications Corporation
0000 00xx Xxxxxx, X.X.
Xxxxx Xxxxxx, XX 00000
10.4 No Waiver, Remedies Cumulative. No delay on the part
of the Investor in exercising any right, power or privilege under this
Investment Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder or thereunder
preclude other or further exercise thereof, or the exercise of any other right,
power or privilege. The rights and remedies provided in this Investment
Agreement are cumulative and are in addition to all rights or remedies which the
Investor and such other holders otherwise may have in law or in equity or by
statute or otherwise.
10.5 Amendments and Waivers. This Investment Agreement
may not be changed or amended orally, and no waiver hereunder may be oral, but
any change or amendment hereto or any waiver hereunder must be in writing and
signed by the party or parties against whom such change, amendment or waiver is
sought to be enforced.
10.6 Integration. This Investment Agreement, the
appendices and exhibits annexed hereto and documents, schedules and certificates
referred to herein contain the entire agreement between the Company and the
Investor with respect to the transactions contemplated herein; and none of the
parties shall be bound by nor shall be deemed to have made any representations
and/or warranties except those contained herein and therein.
10.7 Separability. If any provision of this Investment
Agreement is held for any reason to be unenforceable by a court of competent
jurisdiction, the remainder of this Investment Agreement shall, nevertheless,
remain in full force and effect in such jurisdiction.
10.8 Headings. The headings in this Investment Agreement
are intended solely for convenience of reference and shall be given no effect in
the construction or interpretation of this Agreement.
10.9 Governing Law. This Investment Agreement is made in
the State of Alabama and shall be governed by and construed in accordance with
the internal laws of said State. The parties consent to the personal
jurisdiction of
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said state and the exclusive venue for any litigation concerning this Investment
Agreement shall be Mobile, Alabama.
10.10 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute the same instrument.
ACTEL INTEGRATED
COMMUNICATIONS, INC.
BY /s/ Xxxx Xxxx
-------------------------------------------
Its President
-------------------------------------------
XXXXXXX COMMUNICATIONS
CORPORATION
BY /s/ Xxxxxx X. Xxxxxxx
-------------------------------------------
Its Chief Executive Officer
-------------------------------------------
/s/ Xxxx Xxxx
---------------------------------------------
Xxxx Xxxx, Shareholder
/s/ Xxxxxxx Xxxxxxxx
---------------------------------------------
Xxxxxxx Xxxxxxxx, Shareholder
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