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EXHIBIT 10.3
SECURITIES PURCHASE AGREEMENT
AMONG
XXXXXXX COMMUNICATIONS, INC.
AND
THE PURCHASERS NAMED HEREIN
DATED AS OF MARCH 31, 2000
SERIES B CONVERTIBLE PREFERRED STOCK
AT $7.00 PER SHARE
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS...........................................................................................1
ARTICLE II. SALE AND PURCHASE OF SERIES B PREFERRED STOCK ON THE CLOSING DATE....................................9
Section 2.1. Sale and Purchase of Series B Preferred Stock..............................................9
Section 2.2. Purchase Price.............................................................................9
Section 2.3. Closing....................................................................................9
Section 2.4. Possible Subsequent Sales of Series B Preferred Stock......................................9
Section 2.5. Use of Proceeds............................................................................9
ARTICLE III. ADDITIONAL PURCHASES OF SERIES B PREFERRED STOCK...................................................10
Section 3.1. Additional Preferred Stock Subscription Obligation of Purchasers..........................10
Section 3.2. Conditions to Additional Preferred Stock Subscription Obligation...........................11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................11
Section 4.1. Organization and Good Standing............................................................11
Section 4.2. Authorization.............................................................................12
Section 4.3. Enforceability............................................................................12
Section 4.4. Consents..................................................................................12
Section 4.5. Capitalization............................................................................12
Section 4.6. Subsidiaries..............................................................................13
Section 4.7. Financial Statements; Undisclosed Liabilities.............................................13
Section 4.8. Absence of Certain Developments...........................................................14
Section 4.9. Indebtedness and Liens....................................................................15
Section 4.10. Indebtedness to and from Officers, Directors and Others..................................15
Section 4.11. Licenses, Etc............................................................................15
Section 4.12. Solvency.................................................................................16
Section 4.13. Title to Assets; Leases..................................................................16
Section 4.14. Litigation...............................................................................16
Section 4.15. Tax Returns..............................................................................16
Section 4.16. Defaults.................................................................................16
Section 4.17. Burdensome Obligations...................................................................17
Section 4.18. Employee Benefit Plans...................................................................17
Section 4.19. Representations and Warranties under Related Agreements..................................17
Section 4.20. Employment Contracts, Labor Relations....................................................17
Section 4.21. Location of Office.......................................................................18
Section 4.22. Necessary Property.......................................................................18
Section 4.23. Transaction Costs........................................................................18
Section 4.24. Governmental Regulations.................................................................18
Section 4.25. Small Business Concern...................................................................18
Section 4.26. Disclosure...............................................................................19
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Section 4.27. Governmental Licenses....................................................................19
Section 4.28. Compliance with Laws.....................................................................19
Section 4.29. Acquisition Agreements...................................................................19
Section 4.30. Material Contracts and Obligations.......................................................19
Section 4.31. Environmental and Safety Laws............................................................21
Section 4.32. Investments in Real Property Holding Interests...........................................21
Section 4.33. Unrelated Business Taxable Income........................................................21
ARTICLE V. PURCHASERS' INVESTMENT REPRESENTATIONS AND WARRANTIES................................................21
ARTICLE VI. CONDITIONS TO PURCHASE..............................................................................24
Section 6.1. Purchaser's Conditions....................................................................24
Section 6.1.1. Related Agreements............................................................24
Section 6.1.2. Charter Documents; Good Standing Certificate..................................24
Section 6.1.3. Proof of Corporate Action.....................................................24
Section 6.1.4. Incumbency Certificate........................................................24
Section 6.1.5. Legal Opinion.................................................................25
Section 6.1.6. Representations and Warranties; Officers' Certificates........................25
Section 6.1.7. Legality; Governmental and Other Authorizations...............................25
Section 6.1.8. Due Diligence.................................................................25
Section 6.1.9. Payment of Certain Fees and Disbursements.....................................25
Section 6.1.10. SBIC Documentation...........................................................26
Section 6.1.11. Certification of Securities Holdings.........................................26
Section 6.1.12. Minimum Investment...........................................................26
Section 6.1.13. General......................................................................26
Section 6.2. The Company's Conditions..................................................................26
Section 6.2.1. Related Agreements............................................................26
Section 6.2.2. Legality: Governmental and Other Authorizations..............................26
Section 6.2.3. General.......................................................................27
ARTICLE VII. COVENANTS APPLICABLE TO THE COMPANY WHILE ANY OF THE SERIES B PREFERRED STOCK IS OUTSTANDING........27
Section 7.1. Records and Accounts......................................................................27
Section 7.2. Corporate Existence; Subsidiaries; Maintenance of Properties..............................27
Section 7.3. Insurance.................................................................................27
Section 7.4. Taxes and Claims..........................................................................28
Section 7.5. Inspection of Properties and Books........................................................28
Section 7.6. Compliance with Laws, Contracts, Licenses and Permits.....................................29
Section 7.7. Employee Benefit Plans....................................................................29
Section 7.8. Further Assurances........................................................................30
Section 7.9. Notices...................................................................................30
Section 7.10. Restrictions on Indebtedness.............................................................30
Section 7.11. Restrictions on Liens....................................................................31
Section 7.12. Distributions............................................................................32
Section 7.13. Merger, Consolidation, Sale of Assets or Other Dispositions..............................32
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Section 7.14. Merger, Consolidation or Other Acquisitions..............................................32
Section 7.15. Transactions with Affiliates.............................................................32
Section 7.16. Investments..............................................................................32
Section 7.17. Joint Ventures...........................................................................33
Section 7.18. Payments on Permitted Indebtedness.......................................................33
Section 7.19. Response Actions.........................................................................33
Section 7.20. Dilution Protection......................................................................33
Section 7.21. Annual Statements........................................................................34
Section 7.22. Monthly Statements.......................................................................34
Section 7.23. Other Financial Information..............................................................35
Section 7.24. Officer's Certificates...................................................................35
Section 7.25. Notice of Litigation, Defaults, Etc......................................................35
Section 7.26. Charter and By-law Amendments............................................................35
Section 7.26. Proprietary Information and Inventions Agreement.........................................35
Section 7.28. SBIC Covenants...........................................................................36
ARTICLE VIII. DEFAULTS..........................................................................................36
Section 8.1. Events of Default.........................................................................36
Section 8.2. Remedies..................................................................................38
Section 8.3. Waivers...................................................................................38
ARTICLE IX. SUBSEQUENT HOLDERS OF SERIES B PREFERRED STOCK......................................................38
ARTICLE X. REGISTRATION AND TRANSFER OF SERIES B PREFERRED STOCK................................................38
Section 10.1. Transfer and Exchange of Series B Preferred Stock........................................39
Section 10.2. Replacement of Series B Preferred Stock..................................................39
ARTICLE XI. EXPENSES; INDEMNITY.................................................................................39
Section 11.1. Expenses.................................................................................39
Section 11.2. Indemnification..........................................................................40
Section 11.3. Brokers' Fees............................................................................40
Section 11.4. Survival of Obligations..................................................................40
ARTICLE XII. NOTICES............................................................................................40
ARTICLE XIII. SURVIVAL AND TERMINATION OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES..................41
ARTICLE XIV. AMENDMENTS AND WAIVERS.............................................................................42
ARTICLE XV. RIGHT TO PUBLICIZE..................................................................................42
ARTICLE XVI. WAIVER OF JURY TRIAL...............................................................................42
ARTICLE XVII. INCORPORATORS, SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES AND PARTNERS FREE FROM
PERSONAL LIABILITY......................................................................................42
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ARTICLE XVIII. SCHEDULES........................................................................................43
ARTICLE XIX. ENTIRE AGREEMENT; COUNTERPARTS; SECTION HEADINGS...................................................43
ARTICLE XX. GOVERNING LAW.......................................................................................43
ARTICLE XXI. SEVERABILITY.......................................................................................43
ARTICLE XXII. AMENDMENT OF SERIES A PURCHASE AGREEMENT..........................................................44
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LIST OF EXHIBITS
EXHIBIT A List of Purchasers
EXHIBIT B Amended and Restated Registration Rights Agreement
EXHIBIT C Amended and Restated Stockholders' Agreement
EXHIBIT D Amended and Restated Certificate of Incorporation
EXHIBIT E Form of Opinion of Special Counsel to Company
EXHIBIT F List of Founders' Warrants
EXHIBIT G 1998 Stock Incentive Plan
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SECURITIES PURCHASE AGREEMENT
XXXXXXX COMMUNICATIONS, INC.
00000 XXXXXXXX XXXXX XXXX, XXXXX 000
XXXXXXXXXXXX, XXXXXXXX 00000
As of March 31, 2000
The Purchasers Named
on Exhibit A Hereto
Ladies and Gentlemen:
The undersigned, Xxxxxxx Communications, Inc., a Delaware
corporation (the "Company"), hereby agrees with you as follows:
ARTICLE I. DEFINITIONS
For all purposes of this Agreement the following terms shall
have the meanings set forth in this Article I:
ACQUISITION. The term "Acquisition" shall mean an acquisition
by the Company of all or substantially all of the assets or equity interest of
another Person.
ADDITIONAL PREFERRED STOCK SUBSCRIPTION OBLIGATION. The term
"Additional Preferred Stock Subscription Obligation" shall mean, as to any
Purchaser, the obligation to purchase additional shares of Series B Preferred
Stock pursuant to Section 3.1 in an amount set forth opposite each Purchaser on
Exhibit A attached hereto, each such share to be purchased at a purchase price
of $7.00 per share.
ADDITIONAL PURCHASER. The term "Additional Purchaser" shall
have the meaning specified in Section 2.4 of this Agreement.
AFFILIATE. The term "Affiliate" shall mean any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with the Company (or other specified Person) and shall include (a) any
Person who is a director or beneficial owner of at least 10% of the then
outstanding capital stock of the Company (or other specified Person) and Family
Members of any such Person, (b) any Person in which the Company (or other
specified Person) or an Affiliate (as defined in clause (a) above) of the
Company (or other specified Person) shall, directly or indirectly, either
beneficially own at least 10% of its then outstanding equity securities
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or constitute at least a 10% equity participant, and (c) in the case of a
specified Person who is an individual, Family Members of such Person; provided,
however, that none of the Purchasers nor any of their designated members of the
Company's board of directors shall be deemed an Affiliate of the Company for
purposes of this Agreement.
BALANCE SHEET DATE. The term "Balance Sheet Date" shall have
the meaning specified in Section 4.7(a)(i) of this Agreement.
BOARD OF DIRECTORS. The term "Board of Directors" shall mean
the Board of Directors of the Company.
CAPITAL CALL. The term "Capital Call" shall have the meaning
specified in Section 3.1 of this Agreement.
CAPITAL CALL CLOSING DATE. The term "Capital Call Closing
Date" shall have the meaning specified in Section 3.1(b) of this Agreement.
CAPITAL TRANSACTION. The term "Capital Transaction" shall mean
any of the following: (i) one or more mergers, consolidations, liquidations,
sales of more than 50% of the assets of the Company in a single transaction or
series of related transactions, or other similar corporate actions pursuant to
which the Company or the holders of Common Stock receive cash, securities or
other property; and (ii) the sale by the Company of securities which upon
issuance constitute 50% or more of the Common Stock and the Preferred Stock of
the Company to a Person not an Affiliate of the Company (other than by operation
of such sale) by means of a public or private sale.
CHARTER. The term "Charter" shall include the articles or
certificate of incorporation, statute, constitution, joint venture or
partnership agreement or articles or other organizational document of any Person
other than an individual, each as from time to time amended or modified.
CLOSING. The term "Closing" shall have the meaning specified
in Section 2.3 of this Agreement.
CLOSING DATE. The term "Closing Date" shall have the meaning
specified in Section 2.3 of this Agreement.
CODE. The term "Code" shall mean the Internal Revenue Code of
1986, any successor statute of similar import, and the rules and regulations
thereunder, collectively and as from time to time amended and in effect.
COMMON STOCK. The term "Common Stock" shall have the meaning
specified in Section 4.5(a) of the Agreement.
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COMPANY. The term "Company" shall have the meaning specified
in the introduction to this Agreement.
CONSOLIDATED OR CONSOLIDATED. The term "Consolidated" or
"consolidated" shall mean, with reference to any term defined herein, that term
as applied to the accounts of the Company and all of its Subsidiaries, if any,
consolidated in accordance with generally accepted accounting principles.
CONVERSION STOCK. The term "Conversion Stock" shall mean the
shares of Common Stock issuable upon conversion of the Series A Preferred Stock,
the Series A-1 Preferred Stock and the Series B Preferred Stock.
DEFAULT. The term "Default" shall mean an event or condition
which with the passage of time or giving of notice, or both, would become an
Event of Default.
DEFAULTER'S PREFERRED STOCK. The term "Defaulter's Preferred
Stock" shall have the meaning specified in Section 3.1 of this Agreement.
DEFAULTING PURCHASER. The term "Defaulting Purchaser" shall
mean a Purchaser which fails to purchase any additional Series B Preferred Stock
pursuant to a Capital Call.
DELINQUENCY DATE. The term "Delinquency Date" shall mean the
date which is 15 days after the date when the payment is due for any additional
Series B Preferred Stock required to be purchased by a Purchaser pursuant to the
Purchaser's Additional Preferred Stock Subscription Obligation.
DISTRIBUTION. The term "Distribution" shall mean (a) the
declaration or payment of any dividend of cash or property on or in respect of
any shares of any class of capital stock of the Company; (b) the purchase,
redemption or other retirement of any shares of any class of capital stock of
the Company, directly or indirectly or otherwise; or (c) any other distribution
on or in respect of any shares of any class of capital stock of the Company.
EMPLOYEE BENEFIT PLAN. The term "Employee Benefit Plan" shall
mean any employee benefit plan within the meaning of ss.3(3) of ERISA maintained
or contributed to by the Company or any ERISA Affiliate, other than a
Multiemployer Plan.
ENVIRONMENTAL LAW. The term "Environmental Law" means any law,
regulation or ordinance relating to air or water quality, waste management,
hazardous or toxic substances or the protection of health or the environment.
ERISA. The term "ERISA" shall mean the federal Employee
Retirement Income Security Act of 1974, any successor statute of similar import,
and the rules and regulations thereunder, collectively and as from time to time
amended and in effect.
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ERISA AFFILIATE. The term "ERISA Affiliate" shall mean any
Person which is treated as a single employer with the Company under ss.414 of
the Code.
ERISA REPORTABLE EVENT. The term "ERISA Reportable Event"
shall mean a reportable event with respect to a Guaranteed Pension Plan within
the meaning of ss.4043 of ERISA and the regulations promulgated thereunder.
EVENTS OF DEFAULT. The term "Events of Default" shall have
the meaning specified in Section 8.1 of this Agreement.
EXCHANGE ACT. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, or any successor federal statute, and the rules
and regulations of the Securities and Exchange Commission thereunder, as may be
amended from time to time.
FAMILY MEMBERS. The term "Family Members" shall mean, as
applied to any individual, any spouse, child, grandchild, parent, brother or
sister thereof or any spouse of any of the foregoing, and each trust created for
the benefit of one or more of such Persons and each custodian of property of one
or more such Persons.
FCC. The term "FCC" shall mean the Federal Communications
Commission.
FINANCING AGREEMENTS. The term "Financing Agreements" shall
mean this Agreement, the Series A Purchase Agreement, the Series A-1 Purchase
Agreement, the Series B Preferred Stock, the Series A Preferred Stock, the
Series A-1 Preferred Stock, the Founders' Warrants, the Stockholders' Agreement,
the Registration Rights Agreement and any and every other present or future
instrument or agreement from time to time entered into between the Company and
the Purchasers or any other holder of the Series B Preferred Stock which relates
to this Agreement, all as from time to time amended or modified, and all
statements, reports or certificates delivered by or on behalf of the Company to
you or any other holder of the Series B Preferred Stock in connection herewith
or therewith.
FOUNDERS' WARRANTS. The term "Founders' Warrants" shall mean
the warrants issued to members of the Company's senior management team listed on
Exhibit F attached hereto to acquire during the ten-year period from the date of
issuance up to 260,000 shares of the Common Stock of the Company at $3.00 per
share.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR GAAP. The terms
"generally accepted accounting principles" or "GAAP" shall mean accounting
principles which are (a) consistent with the principles promulgated or adopted
by the Financial Accounting Standards Board and its predecessors, in effect from
time to time and (b) applied on a basis consistent with prior periods.
GUARANTEED PENSION PLAN. The term "Guaranteed Pension Plan"
shall mean any employee pension benefit plan within the meaning of ss. 3(2) of
ERISA maintained or contributed
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to by the Company or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.
XXXX-XXXXX-XXXXXX ACT. The term "Xxxx-Xxxxx-Xxxxxx Act" shall
mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
HAZARDOUS MATERIALS. The term "Hazardous Materials" shall
mean, collectively, (a) any petroleum or petroleum products, flammable
explosives, radioactive materials, friable asbestos, urea formaldehyde foam
insulation, and transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls (PCBs), (b) any chemicals or other
materials or substances as included in the definition of "hazardous substance",
"hazardous waste", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", toxic substances", "toxic pollutants",
"contaminants", "pollutants" or words of similar import under any Environmental
Law; and (c) any other chemical or other material or substance, exposure to
which is now prohibited, limited or regulated under any Environmental Law.
INDEBTEDNESS. The term "Indebtedness" shall mean all
obligations, contingent and otherwise, which in accordance with generally
accepted accounting principles should be classified on the obligor's balance
sheet as liabilities, or to which reference should be made by footnotes thereto,
including without limitation, in any event and whether or not so classified: (i)
all debt and similar monetary obligations, whether direct or indirect; (ii) all
liabilities secured by any Lien existing on Property, whether or not the
liability secured thereby shall have been assumed; (iii) all guaranties,
endorsements and other contingent obligations whether direct or indirect in
respect of Indebtedness or performance of others, including any obligation to
supply funds to or in any manner to invest in, directly or indirectly, the
debtor, to purchase Indebtedness, or to assure the owner of Indebtedness against
loss, through an agreement to purchase goods, supplies, or services for the
purpose of enabling the debtor to make payment of the Indebtedness held by such
owner or otherwise, and (iv) obligations to reimburse issuers of any letters of
credit.
INSTITUTIONAL DIRECTORS. The term "Institutional Directors"
shall mean those directors of the Company who are not also executive officers of
the Company.
INVESTMENT PERIOD. The term "Investment Period" shall mean
the period beginning with the Closing Date and ending on December 31, 2000.
INVESTMENTS. The term "Investments" shall mean (a) any
investment in shares of capital stock, evidence of Indebtedness or other
securities issued by any other Person, (b) any loan, advance, or extension of
credit to, or contribution to the capital of, any other Person, (c) any purchase
of the securities or business or integral part of the business of any other
Person, or commitment to make such purchase, and (d) any other investment in any
other Person; provided, however, that the term "Investment" shall not include
(i) trade and customer accounts receivable for services rendered in the ordinary
course of business and payable in accordance with customary trade terms, and all
letters of credit or other instruments securing the same, (ii) advances to
employees for travel expenses, drawing accounts and similar expenditures but
only to the extent that (A) each such advance is in an amount less than $2,000,
(B) the aggregate amount of such
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advances outstanding to any individual employee at any particular time does not
exceed $5,000, and (C) all such advances outstanding at any particular time do
not exceed $25,000, and (iii) stock or other securities acquired in connection
with the satisfaction or enforcement of Indebtedness or claims due or owing to
the Company or any of its Subsidiaries or as security for any such Indebtedness
or claim.
IRS. The term "IRS" shall have the meaning specified in
Section 4.18 hereof.
LIEN. The term "Lien" shall mean (a) any encumbrance,
mortgage, pledge, lien, charge or other security interest of any kind upon any
Property, or upon the income or profits therefrom; (b) any acquisition of or
agreement to have an option to acquire any Property or assets upon conditional
sale or other title retention agreement, device or arrangement (including a
capitalized lease); or (c) any sale, assignment, pledge or other transfer for
security by the Company or any of its Subsidiaries of any accounts, general
intangibles or chattel paper, with or without recourse.
MAJORITY HOLDERS. The term "Majority Holders" shall mean the
holders of at least 66-2/3% of the Preferred Stock.
MULTIEMPLOYER PLAN. The term "Multiemployer Plan" shall mean
any multiemployer plan within the meaning of ss. 3(37) of ERISA maintained or
contributed to by the Company or any ERISA Affiliate.
OPTION PLAN. The term "Option Plan" shall mean the Company's
1998 Stock Incentive Plan, as amended as of December 21, 1999, a copy of which
is attached as Exhibit G hereto, pursuant to which, as of the date hereof, an
aggregate of 5,000,000 shares of Common Stock have been authorized and allocated
for issuance pursuant to Awards granted thereunder, of which options and
warrants exercisable for up to 2,174,450 shares are outstanding as of February
29, 2000.
PBGC. PBGC shall mean the Pension Benefit Guaranty
Corporation created byss.4002 of ERISA and any successor entity or entities
having similar responsibilities.
PERMITTED INDEBTEDNESS. The term "Permitted Indebtedness"
shall have the meaning specified in Section 7.10 of this Agreement.
PERMITTED LIENS. The term "Permitted Liens" shall have the
meaning specified in Section 7.11 of this Agreement.
PERSON. The term "Person" shall mean an individual,
partnership, corporation, association, trust, joint venture, unincorporated
organization, and any government, governmental department or agency or political
subdivision thereof.
PREFERRED STOCK. The term "Preferred Stock" shall have the
meaning specified in Section 4.5(a) of this Agreement.
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PRIVATE PLACEMENT MEMORANDUM. The term "Private Placement
Memorandum" shall mean the Company's Confidential Private Placement Memorandum
dated as of March 24, 2000, which has been previously provided to each of the
Purchasers.
PROPERTY. The term "Property" shall mean the assets and
properties owned and/or operated by the Company and its Subsidiaries.
PUBLIC SALE. The term "Public Sale" shall mean any sale of
securities to the public pursuant to a public offering registered under the
Securities Act or to the public through a broker or market-maker pursuant to the
provisions of Rule 144 (or any successor rule) adopted under the Securities Act
or any other public offering not required to be registered under the Securities
Act.
PURCHASE PRICE. The term "Purchase Price" shall have the
meaning specified in Section 2.2 of this Agreement.
PURCHASERS. Each of the Persons listed on Exhibit A to this
Agreement, and any Person who becomes a party to this Agreement after the date
hereof pursuant to Article X of this Agreement.
REGISTRATION RIGHTS AGREEMENT. The term "Registration Rights
Agreement" shall mean the Amended and Restated Registration Rights Agreement
dated as of March 31, 2000 among the Company and the stockholders of the Company
in the form of Exhibit B hereto.
RELATED AGREEMENTS. The term "Related Agreements" shall mean
the Financing Agreements (other than this Agreement) and the Amended and
Restated Certificate of Incorporation of the Company substantially in the form
attached as Exhibit D hereto.
SBA. The term "SBA" shall have the meaning specified in
Section 6.1.10 of this Agreement.
SBIC INVESTOR. The term "SBIC Investor" shall have the meaning
specified in Section 6.1.10 of this Agreement.
SECURITIES ACT. The term "Securities Act" shall mean the
Securities Act of 1933, as amended, or any successor federal statute, and the
rules and regulations of the Securities and Exchange Commission thereunder, all
as the same shall be in effect at the time.
SERIES A HOLDERS. The term "Series A Holders" shall mean the
holders of the Company's Series A Preferred Stock.
SERIES A PREFERRED STOCK. The term "Series A Preferred Stock"
shall have the meaning specified in Section 4.5(a) of this Agreement.
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SERIES A PURCHASE AGREEMENT. The term "Series A Purchase
Agreement" shall mean the Securities Purchase Agreement among the Company and
the Series A Holders, dated as of November 18, 1998, as amended as of December
14, 1998, and as further amended pursuant to Article XXII hereof.
SERIES A-1 HOLDERS. The term "Series A-1 Holders" shall mean
the holders of the Company's Series A-1 Preferred Stock.
SERIES A-1 PREFERRED STOCK. The term "Series A-1 Preferred
Stock" shall have the meaning specified in Section 4.5(a) of this Agreement.
SERIES A-1 PURCHASE AGREEMENT. The term "Series A-1 Purchase
Agreement" shall mean the Securities Purchase Agreement dated as of December 13,
1999, among the Company and the Series A-1 Holders.
SERIES B PREFERRED STOCK. The terms "Series B Preferred Stock"
shall have the meaning specified in Section 4.5(a) of this Agreement.
SMALL BUSINESS ACT. The term "Small Business Act" shall have
the meaning specified in Section 6.1.10 of this Agreement.
STOCKHOLDERS' AGREEMENT. The term "Stockholders' Agreement"
shall mean the Amended and Restated Stockholders' Agreement dated as of March
31, 2000 among the Company and all of its stockholders in the form of Exhibit C
hereto.
SUBSEQUENT CLOSING. The term "Subsequent Closing" shall have
the meaning specified in Section 2.4 of this Agreement.
SUBSIDIARY. The term "Subsidiary" shall mean any Person in
which the Company shall at the time own directly or indirectly through another
Subsidiary at least a majority of its outstanding capital stock (or other shares
of beneficial interest) entitled to vote generally.
SUPERMAJORITY BOARD VOTE. The term "Supermajority Board Vote"
shall mean the affirmative vote of at least 66 2/3% of the members of the Board
of Directors present at a meeting at which a quorum is present, which vote shall
include the affirmative vote of at least four Institutional Directors, if there
are five Institutional Directors present at the meeting at which such vote
occurs or three Institutional Directors if there are four or three Institutional
Directors present at the meeting at which such vote occurs.
UNITED STATES BANKRUPTCY CODE. The term "United States
Bankruptcy Code" shall mean Title 11 of the United States Code as in effect from
time to time.
USRPHC. The term "USRPHC" shall have the meaning specified in
Section 4.32 of this Agreement.
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ARTICLE II. SALE AND PURCHASE OF SERIES B PREFERRED STOCK ON THE CLOSING DATE
SECTION 2.1. SALE AND PURCHASE OF SERIES B PREFERRED STOCK.
Subject to all of the terms and conditions hereof and in reliance on the
representations and warranties set forth or referred to herein, the Company
agrees to issue and sell to each Purchaser, and each Purchaser commits to
purchase, the shares of the Company's Series B Preferred Stock as set forth
opposite the name of such Purchaser on Exhibit A attached hereto. Exhibit A also
indicates the Series B Preferred Stock to be purchased on the Closing Date.
SECTION 2.2. PURCHASE PRICE. The per share purchase price for
the Series B Preferred Stock, whether purchased on the Closing Date or pursuant
to a Capital Call, is $7.00 (the "Purchase Price").
SECTION 2.3. CLOSING. The closing of the purchase and sale of
the Series B Preferred Stock initially to be purchased by the Purchasers
hereunder (the "Closing") will take place at the offices of the Company, 00000
Xxxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxx 00000, at 10:00 a.m.
C.S.T. on April 14, 2000, or at such other time, date and place as the parties
hereto may agree upon (the "Closing Date"). At the Closing, the Company will
deliver to the Purchasers certificates evidencing the shares of Series B
Preferred Stock to be purchased on the Closing Date against payment of the
Purchase Price for all such shares in immediately available funds. Each of the
Series B Preferred Stock to be purchased on the Closing Date will be issued to
the appropriate Purchaser on or before the Closing Date and registered in such
Purchaser's name in the Company's records in the amounts designated in Section
2.1 hereof.
SECTION 2.4. POSSIBLE SUBSEQUENT SALES OF SERIES B PREFERRED
STOCK. At any time on or before July 15, 2000 and subject to the prior approval
of the Board of Directors, the Company may sell, in one or more closings (each a
"Subsequent Closing") up to the balance of the authorized shares of Series B
Preferred Stock not sold or subscribed for at the Closing to lender participants
in the Company's proposed expanded secured credit facility. At any Subsequent
Closing, (i) the Person purchasing such shares (an "Additional Purchaser") shall
execute a counterpart signature page to this Agreement and the other Financing
Agreements to which the Purchasers are a party and thereupon would be deemed a
Purchaser hereunder, (ii) each Additional Purchaser shall purchase the same
portion of its aggregate subscription obligation as the original Purchasers have
purchased of their respective aggregate subscription obligations (as of the date
of such Subsequent Closing) and (iii) the Company shall cause the exhibits and
schedules to this Agreement and such other agreements to be amended to reflect
the purchase made by the Additional Purchaser(s) at each Subsequent Closing. All
such sales shall be made on the terms and conditions of this Agreement,
including satisfaction of the closing conditions set forth herein.
SECTION 2.5. USE OF PROCEEDS. The proceeds from the sale of
the Series B Preferred Stock purchased hereunder will be used as described under
the caption "Use of Proceeds" in the Private Placement Memorandum. The Company
covenants and agrees to
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provide the Purchasers with such information as they may reasonably request to
verify the use of the proceeds from the sale of the Series B Preferred Stock.
ARTICLE III. ADDITIONAL PURCHASES OF SERIES B PREFERRED STOCK
SECTION 3.1. ADDITIONAL PREFERRED STOCK SUBSCRIPTION
OBLIGATION OF PURCHASERS.
(a) Until the end of the Investment Period, each Purchaser
shall be required to satisfy, if, as and when from time to time requested by the
Company, in accordance with the terms and conditions of this Article III, its
Additional Preferred Stock Subscription Obligation. The Board of Directors may
request (a "Capital Call") each Purchaser to satisfy such Additional Preferred
Stock Subscription Obligations from time to time on a pro rata basis in two
substantially equal installments, to the extent funds are necessary to make any
Acquisitions by the Company, to pay operating, capital or other expenses of the
Company, to fund reasonable reserves which the Board of Directors deems
appropriate to establish or for such other purpose as the Board of Directors
deems necessary, consistent with the purposes of the Company and Section 2.5
hereof. No such request shall be made which would require a Purchaser to
purchase pursuant to its Additional Preferred Stock Subscription Obligation less
than a whole share of Series B Preferred Stock. The Board of Directors may not
make a Capital Call more than once in any 30-day period, and shall make both
Capital Calls prior to the end of the Investment Period.
(b) The Additional Preferred Stock Subscription Obligation
shall be satisfied by each such Purchaser, by wire transfer of immediately
available funds, in accordance with a written notice from the Company, which
notice shall state the amount required from each Purchaser and the date when
such Additional Preferred Stock Subscription Obligation is to be paid to the
Company (the "Capital Call Closing Date"). The Capital Call Closing Date shall
be a date which is not less than thirty-five (35) days after receipt of such
written notice, subject to the condition that all applicable waiting periods
(and any extensions thereof) applicable to any filing made by any such Purchaser
pursuant to the Xxxx-Xxxxx-Xxxxxx Act with respect to such Purchaser's
Additional Preferred Stock Subscription Obligation shall have expired or
otherwise been terminated.
(c) Subject to the provisions of this Section 3.1(c), if a
Purchaser who is required to do so fails to satisfy all or any portion of its
Additional Preferred Stock Subscription Obligation by the Delinquency Date, and
so long as all of the conditions set forth in Section 3.2 to such Purchaser's
obligations have been satisfied, such Purchaser shall be deemed a Defaulting
Purchaser, and the Board of Directors may elect in its sole discretion to (i)
bring an action to enforce such Purchaser's obligation to satisfy its Additional
Preferred Stock Subscription Obligation, including interest thereon from the
time such payment was due until paid at the lesser of (A) 18% per annum,
compounded on a monthly basis to the extent permitted by law, or (B) the highest
rate permitted by law, and/or (ii) require the Defaulting Purchaser to exchange
any shares of Common Stock or Preferred Stock then held by the Defaulting
Purchaser for shares of a new series of junior preferred stock of the Company
(the "Defaulter's Preferred Stock"). The
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Defaulter's Preferred Stock shall (i) be junior to all Preferred Stock in
liquidation, (ii) shall not be entitled to payment of any dividends, (iii) shall
have a liquidation value of $7.00 per share, (iv) unless and until the
Defaulting Purchaser shall have satisfied its Additional Preferred Stock
Subscription Obligation, together with interest thereon at the rate provided
above, shall not be convertible or exchangeable for any other shares of the
capital stock of the Company or redeemable for cash or otherwise, and (v) shall
have no voting rights or any rights as a holder of Series B Preferred Stock
hereunder, under the Stockholders' Agreement or under the Registration Rights
Agreement. All Purchasers hereby agree to vote their shares of stock of the
Company to carry out the provisions of this Section 3.1(c), including, without
limitation, voting to authorize and issue the Defaulter's Preferred Stock as
necessary.
SECTION 3.2. CONDITIONS TO ADDITIONAL PREFERRED STOCK
SUBSCRIPTION OBLIGATION. Each Purchaser's obligation to satisfy all or any
portion of its Additional Preferred Stock Subscription Obligation pursuant to
this Agreement is subject to satisfaction of the following conditions precedent
on or prior to the Capital Call Closing Date:
(a) Such Purchaser shall have received from the Company
copies, certified by a duly authorized officer thereof to be true and
complete as of the Capital Call Closing Date, of the resolutions
adopted by the Board of Directors approving the Capital Call;
(b) None of the representations of the Company contained in
Article IV of this Agreement shall have been untrue or incorrect as of
the date of this Agreement to the extent that such untrue or incorrect
representation has had or would reasonably be expected to have a
material adverse effect on the assets, liabilities, financial condition
or prospects of the Company and its Subsidiaries taken as a whole;
(c) The purchase of the Series B Preferred Stock by such
Purchaser shall not be prohibited by any applicable law or governmental
order or regulation;
(d) All applicable waiting periods (and any extensions
thereof) applicable to any filing made by such Purchaser pursuant to
the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated; and
(e) Such Purchaser shall have received duly executed stock
certificates representing the Series B Preferred Stock being purchased
pursuant to the Capital Call.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchasers to enter into this Agreement
and to purchase the Series B Preferred Stock, the Company hereby represents and
warrants as of the date hereof that:
SECTION 4.1. ORGANIZATION AND GOOD STANDING. The Company is
validly existing and in good standing under the laws of the State of Delaware
and in each jurisdiction in which it is required to be qualified as a foreign
corporation. The Company is not required to be
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qualified as a foreign corporation in any jurisdiction other than those listed
on Schedule 4.1. The Company has the power to own its properties and to carry on
its business as now conducted and as proposed to be conducted. Each of the
Subsidiaries is validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
SECTION 4.2. AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and each Related Agreement, the
issuance and sale by the Company of the Series B Preferred Stock hereunder and
the issuance of the Conversion Stock upon conversion of the Series B Preferred
Stock, (a) are within its corporate power and authority, (b) have been duly
authorized by all necessary corporate, shareholder and other proceedings, and
(c) do not conflict with or result in any breach of any provision of, or result
in the creation of any Lien upon any of the Property pursuant to, the
Certificate of Incorporation or by-laws of the Company or any law, regulation,
order, judgment, writ, injunction, license, permit, agreement or instrument, the
non-compliance with which would materially adversely affect the business,
operations or financial condition of the Company.
SECTION 4.3. ENFORCEABILITY. This Agreement and each of the
Related Agreements, the issuance and sale by the Company of the Series B
Preferred Stock hereunder and the issuance of the Conversion Stock upon
conversion of the Series B Preferred Stock, constitute legally binding
obligations of the Company enforceable against it in accordance with the
respective terms and provisions hereof and thereof, except to the extent (a)
such enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors' rights, (b) that the availability of the remedy of specific
performance or injunctive or other equitable relief is subject to the discretion
of the court before which any proceeding therefor may be brought and (c) the
enforceability of the indemnity and contribution provisions contained in the
Registration Rights Agreement may be limited under federal securities laws.
SECTION 4.4. CONSENTS. Except as set forth in Schedule 4.4
hereto, the execution, delivery and performance by the Company of this Agreement
and each Related Agreement, the purchase and sale of the Series B Preferred
Stock hereunder and the issuance of the Conversion Stock upon conversion of the
Series B Preferred Stock, do not require the approval or consent of, or any
filing with, any governmental authority or agency or any other Person.
SECTION 4.5. CAPITALIZATION. (a) Capital Stock. As of the
Closing Date, the authorized capital stock of the Company will consist solely of
200,000,000 shares of common stock, $.01 par value per share (the "Common
Stock"), and 100,000,000 shares of Preferred Stock, $.01 par value per share
(the "Preferred Stock"), of which 26,850,000 shares will be designated as Series
A Convertible Preferred Stock (the "Series A Preferred Stock"), 3,125,000 shares
will be designated as Series A-1 Convertible Preferred Stock (the "Series A-1
Preferred Stock") and 32,500,000 shares will be designated as Series B
Convertible Preferred Stock (the "Series B Preferred Stock"). Of such authorized
shares, as of February 29, 2000, 5,864,200 shares of Common Stock, 26,850,000
shares of Series A Preferred Stock and 3,125,000 shares of Series A-1 Preferred
Stock are issued and outstanding. Schedule 4.5 incorporates by reference to the
Private Placement Memorandum a table indicating the pro forma capitalization of
the
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Company as of December 31, 1999 after giving effect to the issuance of the
Series B Preferred Stock and the consummation of all other transactions
contemplated by this Agreement. All of such issued shares of Common Stock,
Series A Preferred Stock and Series A-1 Preferred Stock have been duly
authorized, are validly issued and outstanding, are fully paid and
non-assessable and were issued in compliance with applicable state and federal
securities laws. As of the Closing Date, all Series B Preferred Stock will have
been duly authorized, and, upon payment therefor pursuant to the terms of this
Agreement, will be validly issued and outstanding, fully paid and
non-assessable.
(b) Options, Etc. Except for each Purchaser's Additional
Preferred Stock Subscription Obligation and shares of Common Stock issuable (i)
upon conversion of the Series A Preferred Stock, Series A-1 Preferred Stock or
Series B Preferred Stock, (ii) pursuant to the Option Plan and (iii) pursuant to
the Founders' Warrants, there are no outstanding rights (either preemptive or
other) or options to subscribe for or purchase from the Company, or any warrants
or other agreements providing for or requiring the issuance by the Company of,
any capital stock or any securities convertible into or exchangeable for, or
exercisable into, its capital stock.
(c) Reservation, Etc. Sufficient shares of authorized but
unissued Series B Preferred Stock have been reserved by appropriate corporate
action for the Purchasers' Additional Preferred Stock Subscription Obligations.
The issuance of such additional shares will not be subject to preemptive rights
in any present or future stockholders of the Company and will not conflict with
any provision of any agreement to which the Company is a party or by which it is
bound, and such additional shares, when issued and paid for upon compliance with
a Capital Call, will be duly authorized, validly issued and outstanding, fully
paid and non-assessable. The Conversion Stock has been duly and validly reserved
for issuance.
SECTION 4.6. SUBSIDIARIES. Schedule 4.6 correctly sets forth
the name of each Subsidiary of the Company, the jurisdiction of its
incorporation and the Persons owning the outstanding capital stock of each such
Subsidiary. Each such Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to own its properties and carry on its businesses as
now being conducted and is qualified to do business in every jurisdiction in
which its ownership of its property or the conduct of its business requires such
qualification. All of the outstanding shares of capital stock of each such
Subsidiary are validly issued, fully paid and non-assessable. Except for such
Subsidiaries, the Company does not own any legal and/or beneficial interest in
any corporation, partnership, business trust, joint venture or other trade or
business enterprise.
SECTION 4.7. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) Each Purchaser has heretofore been furnished with complete and correct
copies of each of the following:
(i) the audited consolidated balance sheet of the
Company and its Subsidiaries as of December 31, 1999 ("Balance
Sheet Date"); and
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(ii) the pro forma consolidated balance sheet of the
Company and its Subsidiaries as of the Balance Sheet Date,
taking into account the issuance of all of the Series B
Preferred Stock as contemplated hereby.
(b) The Company's audited consolidated balance sheet as of the
Balance Sheet Date was prepared in accordance with generally accepted accounting
principles and fairly presents the financial condition of the Company and its
Subsidiaries as at the Balance Sheet Date. Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether absolute,
accrued, contingent or otherwise, which are not described in such audited
balance sheet except for liabilities that may have arisen in the ordinary and
usual course of business since the Balance Sheet Date and that individually or
in the aggregate do not have and could not reasonably be expected to have a
material adverse effect on the Company and its Subsidiaries, taken as a whole,
and other liabilities and obligations expressly disclosed in the Schedules to
this Agreement.
(c) The pro forma consolidated balance sheet of the Company
referred to in Section 4.7(a)(ii) has been prepared by management of the Company
on a reasonable basis taking into consideration the effect of the transactions
contemplated hereby as of the Closing Date and none of the Company and its
management is aware of any fact which casts doubt on the accuracy or
completeness thereof. After giving effect to the transactions contemplated
hereby and by the Related Agreements, neither the Company nor any of its
Subsidiaries will have any material liabilities, contingent or otherwise, which
are not referred to in such balance sheet or in the notes thereto other than
liabilities not required to be disclosed in accordance with generally accepted
accounting principles and liabilities arising under this Agreement or the
Related Agreements.
SECTION 4.8. ABSENCE OF CERTAIN DEVELOPMENTS. With respect to
the Company and its Subsidiaries, since the Balance Sheet Date, there has not
been:
(a) any material adverse change in the assets, properties,
liabilities, financial condition, operating results or business of the Company
and its Subsidiaries, taken as a whole;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results or business of the Company and its Subsidiaries,
taken as a whole;
(c) any waiver by the Company or any of its Subsidiaries of a
valuable right or of a debt owed to it, except in the ordinary course of
business and that does not materially and adversely affect the assets,
properties, financial condition, operating results or business of the Company
and its Subsidiaries, taken as a whole;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company or any of its
Subsidiaries, except in the ordinary course of business and that does not
materially and adversely affect the assets, properties, financial condition,
operating results or business of the Company and its Subsidiaries, taken as a
whole;
(e) any change or amendment to a material contract or
arrangement by which the Company or any of its Subsidiaries or any of their
assets or properties are bound or subject,
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except in the ordinary course of business and that does not materially and
adversely affect the assets, properties, financial condition, operating results
or business of the Company and its Subsidiaries, taken as a whole;
(f) any sale, assignment or transfer of any patents or patent
applications, trademarks or trademark applications, service marks, trade names,
corporate names, copyrights or copyright registrations, trade secrets or other
intangible assets, except those which are not material to the assets,
properties, financial condition, operating results or business of the Company
and its Subsidiaries, taken as a whole;
(g) any declaration, payment, setting aside or other
distribution of cash or other property to its stockholders with respect to its
capital stock or other equity securities (including, without limitation, any
warrants, options or other rights to acquire its capital stock or other equity
securities), except for repurchases of stock from employees whose employment has
been terminated;
(h) made capital expenditures or commitments therefor in
excess of those approved by the Board of Directors;
(i) any written agreement by the Company or any
Subsidiaries to do any of the things described in this Section 4.8.
SECTION 4.9. INDEBTEDNESS AND LIENS. Neither the Company nor
any of its Subsidiaries has any Indebtedness or Liens upon any of its Property
other than Permitted Indebtedness and Permitted Liens.
SECTION 4.10. INDEBTEDNESS TO AND FROM OFFICERS, DIRECTORS AND
OTHERS. Except as set forth on Schedule 4.10 hereto, neither the Company nor any
of its Subsidiaries is indebted to any director, officer, employee or consultant
of the Company or any of its Subsidiaries or to any other Affiliate of the
Company, except for amounts due as normal salaries, fees or reimbursement of
ordinary business expenses. Except as set forth on Schedule 4.10, no director,
officer, employee or consultant of the Company or any of its Subsidiaries and no
other Affiliate of the Company is now, or on the Closing Date will be, indebted
to the Company or any Subsidiary of the Company except for ordinary business
expense advances.
SECTION 4.11. LICENSES, ETC. Schedule 4.11 sets forth a
listing of all franchises, patents, patent applications, patent licenses, patent
rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, licenses, permits, authorizations, certificates of convenience and
necessity, operating rights and other rights as are necessary for the conduct of
the Company's business as currently conducted. All of the foregoing are in full
force and effect, and the Company is in compliance with the foregoing without
any known conflict with the valid rights of others which could affect or impair
in a material manner the business, assets, financial condition or prospects of
the Company. The Company does not believe it is or will be necessary to utilize
any inventions, trade secrets or proprietary information of any of its employees
made prior to their employment by the Company, except for such inventions, trade
secrets or proprietary information that have been assigned to the Company. To
the Company's knowledge, the conduct of the
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Company's business has not infringed or misappropriated and does not infringe or
misappropriate any proprietary rights of other persons or entities, nor to the
Company's knowledge, would any future conduct as presently contemplated infringe
any proprietary rights of other persons or entities, and, to the Company's
knowledge, no conduct of any other Person has infringed or misappropriated or
does infringe or misappropriate the proprietary rights of the Company.
SECTION 4.12. SOLVENCY. Prior to and taking into account the
consummation of the financing transactions contemplated by this Agreement and
the Related Agreements, the Company is solvent, and has tangible and intangible
assets having a fair value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured, and its
capital is not unreasonably small for the conduct of its business as presently
contemplated and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature.
SECTION 4.13. TITLE TO ASSETS; LEASES. The Company owns and
leases no real property except for its leases of office facilities described on
Schedule 4.13. Except as disclosed on Schedule 4.13, the Company enjoys peaceful
and undisturbed possession, and is in compliance with the terms, of such leases
and of all leases of personal property, except where failure to enjoy such
possession or such noncompliance would not have a material adverse effect upon
the business, assets, prospects or financial condition of the Company and all
such leases are valid and in full force and effect.
SECTION 4.14. LITIGATION. There is no litigation, action, suit
or proceeding, at law or in equity, or any proceeding before any court, board or
other governmental or administrative agency or any arbitrator pending or, to the
knowledge of the Company, after due inquiry, threatened, involving the Company
and its Subsidiaries. No judgment, decree or order of any court, board or other
governmental or administrative agency or arbitrator has been issued against or
binds the Company or its assets which has or may have any material adverse
effect on the business, assets, financial condition or prospects of the Company
and its Subsidiaries, taken as a whole.
SECTION 4.15. TAX RETURNS. The Company has filed all tax
returns and reports which are required to be filed by it with any foreign,
federal, state or local governmental authority or agency and has paid, or made
adequate provision for the payment of, all assessments received and all taxes
which have or may become due under applicable foreign, federal, state or local
governmental law or regulations with respect to the periods in respect of which
such returns and reports were filed. The Company knows of no additional
assessments since the date of such returns and reports for which adequate
reserves appearing on the balance sheet referred to in Section 4.7(a)(ii) have
not been established. The Company has made adequate provisions for all current
or past taxes.
SECTION 4.16. DEFAULTS. Except as set forth in Schedule 4.16
hereto, neither the Company nor any of its Subsidiaries is in default under any
provisions of its Certificate of Incorporation or by-laws or under any
provisions of any franchise, contract, agreement, lease or other instrument to
which it is a party or by which it or its property is bound, or in violation of
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any law, judgment, decree or governmental order, rule or regulation, which
default or violation could affect adversely in any material manner the business,
assets, prospects or financial condition of the Company and its Subsidiaries,
taken as a whole. Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor compliance with its
terms and conditions and with the terms and provisions of the Financing
Agreements, will conflict or result in breach of, or constitute a default under,
any of the material terms, obligations, covenants, conditions or provisions of
any restriction or of any material indenture, mortgage, deed of trust, pledge,
bank loan or credit agreement, charter, by-law or any other material agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective
properties may be bound or affected, or any judgment, order, writ, injunction,
decree or demand of any court, arbitrator, governmental agency or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any property or asset of the Company or any of its Subsidiaries.
SECTION 4.17. BURDENSOME OBLIGATIONS. Neither the Company nor
any of its Subsidiaries is party to or bound by any agreement, deed, lease or
other instrument which is so unusual or burdensome as to affect or impair
materially and adversely the business, assets, prospects or financial condition
of the Company and its Subsidiaries, taken as a whole, in the foreseeable
future.
SECTION 4.18. EMPLOYEE BENEFIT PLANS. Neither the Company nor
any of its Subsidiaries maintains any Employee Benefit Plan, except as set forth
on Schedule 4.18, and neither the Company nor any of its Subsidiaries has ever
maintained or contributed to any Employee Benefit Plan with respect to which the
Company is or was required to file Internal Revenue Service ("IRS") Form 5500,
and neither the Company nor any of its Subsidiaries contributes to or has ever
contributed to any "multiemployer plan," as such term is defined in Section 3 of
ERISA.
SECTION 4.19. REPRESENTATIONS AND WARRANTIES UNDER RELATED
AGREEMENTS. All representations and warranties made by the Company in any of the
Related Agreements or in the certificates delivered in connection therewith are
true and correct in all material respects as of the date hereof with the same
force and effect as though made on and as of the date hereof, and such
representations and warranties are hereby confirmed to you and made
representations and warranties of the Company hereunder as fully as if set forth
herein. To the best of the Company's knowledge, all representations and
warranties made in the Related Agreements by or on behalf of any party thereto
other than the Company and the Purchasers are true and correct in all material
respects.
SECTION 4.20. EMPLOYMENT CONTRACTS, LABOR RELATIONS. Except as
set forth on Schedule 4.20, neither the Company nor any of its Subsidiaries is a
party to any written employment agreement, arrangement or understanding with any
of its officers or employees and there are no collective bargaining agreements
covering any of the employees of the Company or any of its Subsidiaries. Neither
the Company, nor to the Company's knowledge, any of its employees, is subject to
any noncompete, nondisclosure, confidentiality, employment, consulting or
similar agreements relating to, affecting or in conflict with the present or
proposed business
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activities of the Company (other than agreements between the Company and its
present and former employees). No consent of any union (or any similar group or
organization) is required in connection with the consummation of the
transactions contemplated hereby or by the Related Agreements. Except as
disclosed in Schedule 4.20, there are no pending, threatened or anticipated (a)
employment discrimination charges or complaints against or involving the Company
or any of its Subsidiaries before any federal, state, or local board,
department, commission or agency, (b) unfair labor practice charges or
complaints, disputes or grievances affecting the Company or any of its
Subsidiaries, (c) union representation petitions respecting the employees of the
Company or any of its Subsidiaries, (d) efforts being made to organize any of
the employees of the Company or any of its Subsidiaries or (e) strikes, slow
downs, work stoppages, or lockouts or threats thereof affecting the Company or
any of its Subsidiaries.
SECTION 4.21. LOCATION OF OFFICE. The Company's executive
offices and the location where its books and records are kept is at the address
set forth above.
SECTION 4.22. NECESSARY PROPERTY. Except as may be set forth
in Schedule 4.22 hereto, the properties and assets owned, leased by or licensed
to the Company and its Subsidiaries constitute all of the real and personal
properties, tangible and intangible, which are necessary, used or useful in the
conduct of the businesses of the Company and its Subsidiaries in the manner and
to the extent presently conducted. Except as may be set forth in Schedule 4.22,
no other material real or personal properties are required for the conduct of
the businesses of the Company and its Subsidiaries as presently conducted.
SECTION 4.23. TRANSACTION COSTS. Except as set forth on
Schedule 4.23, there are no Transaction Costs (as defined below) that will be
payable by the Company with respect to the offer, issue and sale of the Series B
Preferred Stock. The Purchasers are not responsible for and have no obligation
to pay the Transaction Costs. The term "Transaction Costs" shall mean all of the
costs, fees, and expenses incurred by the Company in connection with the offer,
issue and sale of the Series B Preferred Stock, including without limitation,
broker's, finder's or placement fees or commissions, attorneys' fees and fees of
other professionals.
SECTION 4.24. GOVERNMENTAL REGULATIONS. The Company is not a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is the Company a "registered investment
company", or an "affiliated person" or a "principal underwriter" of a
"registered investment company", as such terms are defined in the Investment
Company Act of 1940, as amended.
SECTION 4.25. SMALL BUSINESS CONCERN. The Company, together
with its "affiliates" (as defined in 13 CFR 121.103), qualifies as a "small
business concern" within the meaning of the Small Business Investment Act of
1958, as amended, and as a "small concern" within the meaning of the rules and
regulations thereunder pertaining to financings by small business investment
companies (13 CFR 201). The Company conducts its business in all respects and
maintains its properties and facilities in such a manner that the financing and
financial assistance provided by the Purchasers will comply with 13 CFR 107.720.
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SECTION 4.26. DISCLOSURE. No representation, warranty or
statement made in this Agreement, any Related Agreement, or any agreement,
certificate, statement or document furnished by or on behalf of the Company in
connection herewith or therewith contains any untrue statement of material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which they were
made, not misleading.
SECTION 4.27. GOVERNMENTAL LICENSES. Schedule 4.27 describes
and refers to the types of licenses, consents, permits, approvals and
authorizations of public or governmental bodies including, without limitation,
the FCC, and the states, counties and municipalities in which the businesses of
the Company or its Subsidiaries are located, which are required in connection
with and are material to the installation, conduct and operation of the business
of the Company or its Subsidiaries (collectively referred to as the
"Authorizations").
SECTION 4.28. COMPLIANCE WITH LAWS. The Company and each of
its Subsidiaries are in compliance in all material respects with and have so
complied with, and are not in any material respect in default under or in
violation of, and the operation of the businesses of the Company and its
Subsidiaries do not contravene in any material respect, any statute, law
(including environmental or employment laws), ordinance, decree, order, rule or
regulation of any governmental body applicable to the Company or any of its
Subsidiaries or any of their respective businesses, including, without
limitation, the rules and regulations of the FCC.
SECTION 4.29. ACQUISITION AGREEMENTS. Except for the
transactions contemplated by this Agreement and the Related Agreements, and
except as set forth in Schedule 4.29, neither the Company nor any of its
Subsidiaries is a party to, bound by or the subject of, any agreement or
understanding relating to the purchase or investment by any Person in the assets
or stock of the Company or any of its Subsidiaries, and neither the Company nor
any of its Subsidiaries is a party to, bound by or the subject of, any agreement
or understanding relating to the purchase of or investment by the Company or any
of its Subsidiaries in the assets or stock of any Person.
SECTION 4.30. MATERIAL CONTRACTS AND OBLIGATIONS. Attached
hereto as Schedule 4.30 is a true, complete and accurate list, categorized by
subject matter, of all of the following outstanding contracts, agreements,
plans, leases and commitments entered into by the Company or any of its
Subsidiaries which are in writing or, to the best of the Company's knowledge,
have been orally agreed to by the Company or any of its Subsidiaries:
(i) all purchase orders or contracts for the
purchase of materials, products or supplies which are for a term of more than 6
months, or involve aggregate payments by the Company or any of its Subsidiaries
of more than $10,000, or which were entered into other than in the ordinary
course of business of the Company and its Subsidiaries;
(ii) all written employment, consulting or service
contracts with any stockholder, director, officer, consultant, advisor or
employee of the Company, any person related
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by blood or marriage to any such Person or any other Affiliate of the Company,
and any such oral contracts which are not terminable at will by the Company or
any of its Subsidiaries;
(iii) all plans, contracts or arrangements providing
for stock options or stock purchases, bonuses, pensions, deferred or incentive
compensation, retirement or severance payments, profit-sharing, insurance or
other benefit plans or programs for any stockholder, director, officer,
consultant, advisor or employee of the Company or any of its Subsidiaries;
(iv) all contracts for construction or for the
purchase of real estate, improvements, fixtures, equipment, machinery and other
items which under GAAP constitute capital expenditures;
(v) all contracts relating to the rental or use of
equipment, vehicles, other personal property or fixtures;
(vi) all contracts relating in any way to direct or
indirect Indebtedness for borrowed money or evidenced by a bond, debenture,note
or other evidence of Indebtedness (whether secured or unsecured) of or to the
Company or any of its Subsidiaries, and all Liens with respect to any Property
used or owned by the Company or any of its Subsidiaries;
(vii) all contracts substantially restricting the
Company or any of its Subsidiaries from engaging in any line of business or
competing with any Person or in any geographical area, or from using or
disclosing any information in its possession (other than routine supplier and
customer confidentiality agreements);
(viii) all license agreements, either as licensor
or licensee;
(ix) all joint venture contracts and agreements
involving a sharing of profits;
(x) all contracts, commitments or shared services
arrangement with any Affiliate and all contracts or commitments not made in the
ordinary course of its business; and
(xi) all other contracts, except those which are
(A) cancelable on 30 days' or less notice without any penalty or other financial
obligation or (B) if not so cancelable, involve annual aggregate payments by or
to the Company or any of its Subsidiaries of $5,000 or less.
Except as set forth on Schedule 4.30, all contracts,
agreements, plans, leases and commitments required to be disclosed to the
Purchasers pursuant to this Section 4.30 are valid, binding and in full force
and effect as to the Company and its Subsidiaries, and none of the Company or
any of its Subsidiaries or, to the best of the Company's knowledge, any other
party thereto, is in material breach or material violation of, or material
default under, nor is there any reasonable basis for a claim of material breach
or violation by the Company or any of its Subsidiaries of, or default by the
Company or any of its Subsidiaries under, the terms of any such
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contract, agreement, plan, lease or commitment, and no event has occurred which
constitutes or, with the lapse of time or the giving of notice or both, would
constitute such a material breach, violation or default by the Company or any of
its Subsidiaries thereunder.
SECTION 4.31. ENVIRONMENTAL AND SAFETY LAWS. To the Company's
knowledge, neither the Company nor any of its Subsidiaries is in violation of
any applicable Environmental Law or any applicable statute, law or regulation
relating to occupational health and safety and to the Company's knowledge, no
material expenditures are or will be required in order to comply with any such
existing statute, law or regulation.
SECTION 4.32. INVESTMENTS IN REAL PROPERTY HOLDING INTERESTS. The
Company's capital stock does not constitute a United States real property
interest as that term is defined in Section 897(c)(1)(A)(ii) of the Code. The
preceding representation is based on a determination by the Company that the
Company is not and, since its inception, has not been a United States real
property holding corporation (as that term is defined in Section 897(c)(2) of
the Code) (a "USRPHC"). From time to time, upon request of any Purchaser, the
Company shall make a determination as to its status as a USRPHC. If at any time
in the future the Company should become a USRPHC, the Company shall, as promptly
as possible, notify each Purchaser of such change in status.
SECTION 4.33. UNRELATED BUSINESS TAXABLE INCOME. Any gross income
derived by the Purchasers from the Series B Preferred Stock and the Conversion
Stock, as holders thereof, shall be in the form of dividends, if any, and
capital gains and losses from the disposition of property, but only such
dividends and capital gains and losses that are not included under Section
512(b)(4) of the Code in calculating unrelated business taxable income. This
Section 4.33 shall not be deemed to apply to (i) any compensation (in cash,
stock or other form), received by any designee of a Purchaser in his or her
capacity as a director of the Company, that is transferred to such Purchaser,
(ii) any income included under Section 512(b)(4) of the Code as a result of
acquisition indebtedness incurred by any Purchaser in connection with the
purchase of an interest in the Company, (iii) any income derived by any
Purchaser from the Company with respect to which such Purchaser has expressly
waived in writing the application of the provisions of this Section 4.33, or
(iv) any income derived by any Purchaser pursuant to the reimbursement of
expenses provisions hereof.
ARTICLE V. PURCHASERS' INVESTMENT REPRESENTATIONS AND WARRANTIES
Each Purchaser hereby represents and warrants to the Company and to
the directors and control persons (within the meaning of the Securities Act) of
the Company as follows:
(i) Such Purchaser recognizes that the Company has little
financial and operating history and that an investment in the Company is highly
speculative and involves significant risks, including, without limitation, those
disclosed on Schedule 5.1 hereto.
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(ii) Such Purchaser has been afforded the opportunity to ask
questions and to receive answers concerning the terms and conditions of the
purchase of Series B Preferred Stock and to obtain any additional information
which the Company possesses or can acquire without unreasonable effort or
expense that is necessary to verify the accuracy of the information set forth in
this Agreement. The Company has responded to all inquiries that such Purchaser
has made of it concerning the Company, its business, financial condition and
prospects or any other matter relating to the operations of the Company and the
offering and sale of the Series B Preferred Stock. No oral or written statement
or inducement which is contrary to the information set forth in this Agreement
has been made by or on behalf of the Company to such Purchaser.
(iii) Such Purchaser is an "accredited investor" (as defined in
Rule 501 of Regulation D promulgated under the Securities Act) and has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Series B Preferred
Stock.
(iv) Such Purchaser (a) has adequate means of providing for its
current needs and possible contingencies, (b) has no need for liquidity in its
investment, (c) is able to bear the economic risks of such investment in the
Series B Preferred Stock, and (d) at the present time, can afford a complete
loss of such investment.
(v) Such Purchaser is purchasing the Series B Preferred Stock for
its own account, for investment purposes, and not for distribution, assignment
or resale to others; provided, however, that nothing contained herein shall
prevent any Purchaser and subsequent holders of Series B Preferred Stock from
transferring such securities in compliance with the provisions of Article XI
hereof. No other Person has any direct or indirect beneficial interest in such
Series B Preferred Stock, except as disclosed by such Purchaser to the Company
and except investors in such Purchaser. Notwithstanding the foregoing,the
parties hereto acknowledge that X.X. Xxxxxxx XX, L.P. ("JHIV") shall acquire as
of the Closing Date a portion of the JHIV shares in its capacity as nominee for
Whitney Strategic Partners IV, L.P., an affiliated investment fund with the same
general partner entity as JHIV.
(vi) Such Purchaser understands that (a) there is and will be no
market for the Series B Preferred Stock, (b) the sale of the Series B Preferred
Stock has not been and will not be registered under the Securities Act or any
state securities laws in reliance on the exemption for nonpublic offerings
provided by Section 4(2) of the Securities Act and Regulation D promulgated
thereunder and analogous state securities law provisions, and must be held
indefinitely unless they are subsequently registered under the Securities Act
and applicable state securities laws or an exemption from such registration is
available, (c) except as expressly provided in the Registration Rights
Agreement, the Company is under no obligation to register the Series B Preferred
Stock on such Purchaser's behalf or to assist it in complying with any exemption
from registration, and (d) none of the Series B Preferred Stock may be sold
pursuant to Rule 144 promulgated by the Securities and Exchange Commission
pursuant to the Securities Act unless all of the conditions of that Rule are
met.
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(vii) Such Purchaser understands that no Federal or state agency
has passed upon the Series B Preferred Stock or made any finding or
determination as to the fairness of the investment or any recommendation or
endorsement of the Series B Preferred Stock. Such Purchaser will not transfer
the Series B Preferred Stock or the Conversion Stock without registering or
qualifying the same under applicable securities laws unless such transfer is
exempt under such laws.
(viii) Such Purchaser has not been furnished any offering
literature other than this Agreement, the written materials described in
Schedule 5.2 hereto and other materials which the Company may have provided at
the request of such Purchaser, and such Purchaser has relied only on the
information contained in this Agreement, the written materials described in
Schedule 5.2 hereto and the other information furnished or made available to
such Purchaser by the Company, as described in subparagraph (ii) above.
(ix) Such Purchaser has its principal place of business at the
address set forth on Exhibit A attached hereto.
(x) Such Purchaser certifies, under penalties of perjury, (a)
that the social security or federal taxpayer identification number shown on
Exhibit A is true and complete and (b) that such Purchaser is not subject to
backup withholding either because such Purchaser has not been notified that such
Purchaser is subject to backup withholding as a result of a failure to report
all interest or dividends, or the Internal Revenue Service has notified such
Purchaser that such Purchaser is no longer subject to backup withholding.
The representations and warranties of the Purchasers herein shall not
limit or modify the representations and warranties of the Company set forth in
this Agreement.
Each Purchaser, severally and not jointly, agrees to indemnify and
hold harmless the Company, its officers, directors, and control persons (within
the meaning of the Securities Act) from and against any and all damage, loss,
liability, cost and expense (including reasonable attorneys' fees) which any of
them may incur by reason of any breach of the representations and warranties
made by such Purchaser herein; provided, however, that each such Purchaser's
indemnification obligation pursuant to this Article V shall, with respect to
each such Purchaser, be limited to the aggregate Purchase Price of the Series B
Preferred Stock paid by such Purchaser pursuant to this Agreement. All
representations, warranties and covenants in this Agreement, and the
indemnification contained in this Article V, shall survive any closing
hereunder.
The certificates evidencing shares of the Series B Preferred Stock
shall be imprinted with a legend in substantially the following form:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
ACT, AND SUCH SHARES CANNOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO THE
REGISTRATION PROVISIONS OF SUCH ACTS OR AN EXEMPTION THEREFROM.
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THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER CONTAINED IN A CERTAIN SECURITIES PURCHASE
AGREEMENT BY AND AMONG THE COMPANY AND THE PURCHASER OF SUCH SHARES, A COPY OF
WHICH IS AVAILABLE AT THE PRINCIPAL OFFICES OF THE COMPANY."
ARTICLE VI. CONDITIONS TO PURCHASE
SECTION 6.1. PURCHASER'S CONDITIONS. Each Purchaser's obligation to
purchase the Series B Preferred Stock to be purchased on the Closing Date by
such Purchaser pursuant to this Agreement is subject to compliance by the
Company with its agreements herein contained, and to the satisfaction, on or
prior to the Closing Date, of the following conditions unless waived in writing
by such Purchaser:
SECTION 6.1.1. RELATED AGREEMENTS. Each of the Related Agreements
shall have been executed and delivered in the forms provided for herein
(including, without limitation, the Company's execution and delivery of
Instruments of Accession whereby each Purchaser shall become party to the
Stockholders' Agreement and the Registration Rights Agreement, in each case in
the form attached to such Instruments), and each of the Related Agreements shall
be in full force and effect and no term or condition thereof shall have been
amended, modified or waived except with the prior written consent of such
Purchaser. All covenants, agreements and conditions contained in the Related
Agreements which are to be performed or complied with by the Company on or prior
to the Closing Date shall have been performed or complied with in all material
respects (or waived with the prior written consent of such Purchaser).
SECTION 6.1.2. CHARTER DOCUMENTS; GOOD STANDING CERTIFICATE. Such
Purchaser shall have received from the Company (a) a copy, certified by the
Secretary of State of Delaware, of the Amended and Restated Certificate of
Incorporation of the Company, (b) a copy, certified by a duly authorized officer
of the Company to be true and complete as of the Closing Date, of the by-laws of
the Company; and (c) certificates, dated not more than ten days prior to the
Closing Date, of the Secretaries of State of Delaware and Missouri, as to the
Company's corporate good standing in such states.
SECTION 6.1.3. PROOF OF CORPORATE ACTION. Such Purchaser shall have
received from the Company copies, certified by a duly authorized officer thereof
to be true and complete as of the Closing Date, of the records of all corporate
action taken by the Company to authorize the execution, delivery and performance
of this Agreement and each of the Related Agreements.
SECTION 6.1.4. INCUMBENCY CERTIFICATE. Such Purchaser shall have
received from the Company an incumbency certificate, dated the Closing Date,
signed by a duly authorized officer thereof and giving the name and bearing a
specimen signature of each individual who shall be authorized to sign, in the
name and on behalf of the Company, this Agreement and each of the
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Related Agreements, and to give notices and to take other action on behalf of
the Company hereunder.
SECTION 6.1.5. LEGAL OPINION. The Purchasers shall have received from
Xxxxx Xxxx LLP, special counsel to the Company, a favorable opinion
substantially in the form of Exhibit E hereto, and covering such other matters
with respect to the transactions contemplated by this Agreement as the
Purchasers may reasonably request.
SECTION 6.1.6. REPRESENTATIONS AND WARRANTIES; OFFICERS' CERTIFICATES.
The representations and warranties of the Company contained or incorporated by
reference herein shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date, except for those representations and warranties which relate
specifically to a particular date, provided that such representations and
warranties were true and correct in all respects as of such date; no event or
condition shall have occurred or would result from the issuance of any of the
Series B Preferred Stock which would be a Default or an Event of Default, and
the Company shall have performed and complied with, in all material respects,
all conditions and agreements required to be performed or complied with by it
prior to the Closing; and such Purchaser shall have received on the Closing Date
a certificate to these effects signed by an authorized officer of the Company.
SECTION 6.1.7. LEGALITY; GOVERNMENTAL AND OTHER AUTHORIZATIONS. The
purchase of the Series B Preferred Stock by such Purchaser shall not be
prohibited by any law or governmental order or regulation. All necessary
consents, approvals, licenses, permits, orders and authorizations of, or
registrations, declarations and filings with, any governmental or administrative
agency or of or with any other Person, with respect to any of the transactions
contemplated by this Agreement or any of the Related Agreements, shall have been
duly obtained or made and shall be in full force and effect.
SECTION 6.1.8. DUE DILIGENCE. Such Purchaser shall have completed its
legal, financial, tax, environmental, accounting and business due diligence
review of the Company with the results thereof satisfactory to such Purchaser in
its sole discretion.
SECTION 6.1.9. PAYMENT OF CERTAIN FEES AND DISBURSEMENTS. The
Purchasers shall have been reimbursed by the Company pursuant to Section 11.1 of
this Agreement for all reasonable out-of-pocket costs and expenses (including,
but not limited to, the reasonable legal fees of one counsel to Purchasers,
which shall be Xxxxxx Godward, LLP) incurred by them through the Closing Date in
connection with the transactions contemplated by this Agreement.
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SECTION 6.1.10. SBIC DOCUMENTATION. The Company shall have executed
and delivered to each Purchaser that is a Federal licensee (an "SBIC Investor")
under the Small Business Investment Act of 1958, as amended (the "Small Business
Act"), upon request of such SBIC Investor, (i) a Size Status Declaration on Form
480 of the United States Small Business Administration ("SBA"), (ii) an
Assurance of Compliance on SBA Form 652, (iii) an SBA Certification in
substantially the form provided to the Company by such SBIC Investor and (iv)
the information required for such SBIC Investor to prepare a Portfolio Financing
Report on SBA Form 1031.
SECTION 6.1.11. CERTIFICATION OF SECURITIES HOLDINGS. The Company
shall have provided to Centennial Fund V, L.P. ("Centennial") a certification of
the direct and indirect holdings of securities of the Company by certain persons
designated by Centennial as required by Centennial's governing documents.
SECTION 6.1.12. MINIMUM INVESTMENT. The Purchasers shall purchase, or
subscribe to purchase, at least 19,047,619 shares of Series B Preferred Stock at
the Closing.
SECTION 6.1.13. GENERAL. All instruments and legal, governmental,
administrative and corporate proceedings in connection with the transactions
contemplated by this Agreement and the Related Agreements shall be reasonably
satisfactory in form and substance to the Purchasers, and the Purchasers shall
have received copies of all documents which Purchasers may have reasonably
requested in connection therewith, including, without limitation, records of
corporate proceedings, the opinion of counsel contemplated by Section 6.1.5 and
any consents, licenses, approvals, permits and orders required to be secured by
the Company in connection with the transactions contemplated hereby.
SECTION 6.2. THE COMPANY'S CONDITIONS. The Company's obligation to
issue and sell the Series B Preferred Stock to be purchased on the Closing Date
pursuant to this Agreement are subject to compliance by each Purchaser with its
agreements herein contained, and to the satisfaction, on or prior to the Closing
Date, of the following conditions:
SECTION 6.2.1. RELATED AGREEMENTS. The Stockholders' Agreement and the
Registration Rights Agreement shall have been executed and delivered by each of
the Purchasers and each of the stockholders of the Company in the forms provided
for herein, and each of the other Related Agreements shall be in full force and
effect and no term or condition thereof shall have been amended, modified or
waived except with the prior written consent of the Company. All covenants,
agreements and conditions contained in the Related Agreements which are to be
performed or complied with by the Purchasers on or prior to the Closing Date
shall have been performed or complied with in all material aspects (or waived
with the prior written consent of the Company).
SECTION 6.2.2. LEGALITY; GOVERNMENTAL AND OTHER AUTHORIZATIONS. The
sale of the Series B Preferred Stock by the Company shall not be prohibited by
any law or governmental order or regulation. All necessary consents, approvals,
licenses, permits, orders and authorizations of, or registrations, declarations
and filings with, any governmental or
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administrative agency or of or with any other Person, with respect to any of the
transactions contemplated by this Agreement or any of the Related Agreements,
shall have been duly obtained or made and shall be in full force and effect.
SECTION 6.2.3. GENERAL. All instruments and legal, governmental and
administrative and corporate proceedings in connection with the transactions
contemplated by this Agreement and the Related Agreements shall be reasonably
satisfactory in form and substance to the Company, and the Company shall have
received copies of any consents, licenses, approvals, permits and orders secured
by any Purchaser in connection with the transactions contemplated hereby.
ARTICLE VII. COVENANTS APPLICABLE TO THE COMPANY WHILE ANY OF THE SERIES B
PREFERRED STOCK IS OUTSTANDING
The Company covenants that, so long as any of the Series B Preferred
Stock is outstanding, the Company will comply and will cause each of its
Subsidiaries to comply with the following provisions unless otherwise consented
to in writing by the Majority Holders:
SECTION 7.1. RECORDS AND ACCOUNTS. Each of the Company and its
Subsidiaries will keep true and accurate records and books of account in which
full, true and correct entries will be made in accordance with generally
accepted accounting principles and maintain adequate accounts and reserves for
all taxes (including income taxes), all depreciation, depletion, obsolescence
and amortization of its Properties, all contingencies, and all other reserves,
all in accordance with GAAP.
SECTION 7.2. CORPORATE EXISTENCE; SUBSIDIARIES; MAINTENANCE OF
PROPERTIES. The Company and its Subsidiaries will not engage in any business
other than providing telecommunications services and those businesses reasonably
ancillary thereto. Unless authorized by the Board of Directors each of the
Company and its Subsidiaries will (a) preserve and keep in full force and effect
its corporate existence, rights and franchises, and (b) maintain all of its
Properties used or useful in the conduct of its business in good condition,
repair and working order (normal wear and tear excepted) and cause to be made
all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section 7.2
shall prevent the Company or any of its Subsidiaries from discontinuing the
operation and maintenance of any of such Properties if such discontinuance is,
in the judgment of the Company, desirable in the conduct of such Person's
business and does not in the aggregate materially adversely affect the business
of the Company and its Subsidiaries taken as a whole.
SECTION 7.3. INSURANCE. Each of the Company and its Subsidiaries will
maintain with financially sound and reputable insurance companies, funds or
underwriters insurance of the kinds, covering the risks and in the relative
proportionate amounts which, in the judgment of the
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Board of Directors, are usually carried by reasonable and prudent companies
conducting businesses similar to that of the Company and its Subsidiaries.
SECTION 7.4. TAXES AND CLAIMS. Each of the Company and its
Subsidiaries will pay and discharge, or cause to be paid and discharged, before
the same shall become overdue, all taxes, assessments and other governmental
charges imposed upon the Company and its Subsidiaries and their Properties,
sales and activities, or any part thereof, or upon the income or profits
therefrom, as well as all claims for labor, materials, or supplies, which if
unpaid might by law become a Lien upon any of their Properties; provided,
however, that any such tax, assessment, charge, levy or claim need not be paid
if the validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and if the Company or any of its Subsidiaries shall have
set aside on its books adequate reserves with respect thereto; and provided,
further, that the Company and its Subsidiaries will pay or cause to be paid all
such taxes, assessments, charges, levies or claims forthwith upon the
commencement of foreclosure on any Lien which may have attached as security
therefor.
SECTION 7.5. INSPECTION OF PROPERTIES AND BOOKS. Upon the request of
any holder of Series B Preferred Stock, the Company will furnish such
information regarding the business, affairs, prospects and financial condition
of the Company and its Subsidiaries as such holder may reasonably request. Each
of the Company and its Subsidiaries shall permit any holder of Series B
Preferred Stock or any of its designated representatives, at their respective
cost, to visit and inspect any of the properties of the Company and its
Subsidiaries, to examine the books of account of the Company and its
Subsidiaries (and to make copies thereof and extracts therefrom), and to discuss
the affairs, finances and accounts of each of the Company and its Subsidiaries
with, and to be advised as to the same by, officers of such Persons, all at such
reasonable times and intervals as the Purchaser may reasonably request. At least
three days prior to any interview of an officer of such Person, the chief
executive officer of the Company shall be notified of such interview and shall
be invited to attend such interview. Prior to making any such inspection or
conducting any such interviews, such holder of Series B Preferred Stock and its
representatives who are making the inspection or conducting the interviews shall
execute confidentiality and non-disclosure agreements reasonably acceptable to
the Company and its counsel and such holder and its counsel. Each Purchaser
shall be entitled to have one representative attend meetings of the Board of
Directors as a non-voting observer. In connection therewith, the Company shall
provide each such representative with a copy of all notices, minutes, consents
and other materials, financial or otherwise, which the Company provides to
members of its Board of Directors concurrently with the delivery of such
information to the members of its Board of Directors. Participation by observers
in any meeting of the Board of Directors shall be at the reasonable discretion
of the Chairman of the Board. Any observer may be excluded from all or any
portion of any meeting in which the Board of Directors is (i) considering
matters with respect to which such observer or any Affiliate of such observer
has a conflict of interest, (ii) when deemed reasonably advisable by the
Chairman of the Board and/or counsel for the Company to preserve an
attorney-client privilege or the confidentiality of any other significant matter
and (iii) when the Board of Directors by majority vote otherwise resolves to
conduct its proceedings in executive session. The Company shall reimburse
out-of-pocket expenses only for one representative of any Purchaser that has not
designated or nominated, and does not have a
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contractual right to designate or nominate, a member of the Board of Directors.
Each Purchaser that is required to be a "venture capital operating company" as
defined in the regulations promulgated under ERISA shall be entitled to consult
with and advise management of the Company on significant business issues,
including proposed annual operating plans, and to meet with management on a
regular basis to review the Company's progress in meeting such operating plans.
SECTION 7.6. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS.
The Company and each of its Subsidiaries will comply with (a) all applicable
laws and regulations, (b) the provisions of its Charter and by-laws, (c) all
agreements and instruments by which it or any of its Properties may be bound
(including, without limitation, the Related Agreements) (d) all applicable
decrees, orders, and judgments and (e) all required approvals, permits and
licenses. If at any time while any Series B Preferred Stock is outstanding, any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that any of the Company or its Subsidiaries may lawfully fulfill any of its
obligations hereunder, each of the Company and its Subsidiaries will immediately
take or cause to be taken all reasonable steps within its power to obtain such
authorization, consent, approval, permit or license and furnish Purchasers with
evidence thereof.
SECTION 7.7. EMPLOYEE BENEFIT PLANS. Neither of the Company nor any
ERISA Affiliate will:
(a) engage in any "prohibited transaction" within the meaning ofss.406
of ERISA orss.4975 of the Code;
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in ss.302 of ERISA, whether or not
such deficiency is or may be waived;
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could result
in the imposition of a lien or encumbrance on the assets of the Company or any
of its Subsidiaries pursuant to ss.302(f) or ss.4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of ss.4001 of ERISA) of all Guaranteed
Pension Plans exceeding the value of the aggregate assets of such Plans,
disregarding for this purpose the benefit liabilities and assets of any such
Plan with assets in excess of benefit liabilities.
The Company will (i) promptly upon filing the same with the Department
of Labor or Internal Revenue Service, furnish to each holder of Series B
Preferred Stock a copy of the most recent actuarial statement required to be
submitted under ss.103(d) of ERISA and Annual Report, Form 5500, with all
required attachments, in respect of each Guaranteed Pension Plan and (ii)
promptly upon receipt or dispatch, furnish to each holder of Series B Preferred
Stock a copy of any notice, report or demand sent or received in respect of a
Guaranteed Pension Plan
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under ss.302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in
respect of a Multiemployer Plan, under ss.4041A, 4202, 4219, 4242 or 4245 of
ERISA.
SECTION 7.8. FURTHER ASSURANCES. The parties will cooperate with each
other and execute such further instruments and documents as any party shall
reasonably request to carry out the transactions contemplated by this Agreement.
SECTION 7.9. NOTICES. The Company will promptly notify each holder of
Series B Preferred Stock in writing of the occurrence of any Default or Event of
Default or if any Person shall give any notice or take any other action in
respect of a claimed default (whether or not constituting a Default or an Event
of Default) under any of the Related Agreements or any other Default with
respect to a material agreement to which the Company or any of its Subsidiaries
is a party. The Company also covenants and agrees to promptly provide each
Purchaser with written notice: (a) upon the Company or any of its Subsidiaries'
obtaining knowledge of any violation of any Environmental Law regarding the
Property or the operations of the Company or any of its Subsidiaries; (b) upon
the Company or any of its Subsidiaries' obtaining knowledge of any potential or
known release, or threat of release, of any Hazardous Materials at, from, or
into the Property which it reports in writing or is reportable by it in writing
to any governmental authority; (c) upon the Company or any of its Subsidiaries'
receipt of any notice of violation of any Environmental Laws or of any release
or threatened release of Hazardous Materials at, from or into the Property,
including a notice or claim of liability or potential responsibility from any
third party (including without limitation any federal, state or local
governmental officials) and including notice of any formal inquiry, proceeding,
demand, investigation or other action with regard to (i) the Company, any of its
Subsidiaries or any other Person's operation of the Property or (ii)
contamination on, from or into the Property; (d) upon the Company or any of its
Subsidiaries' receipt of notice of any investigation or remediation of offsite
locations at which the Company, any of its Subsidiaries or any of their
predecessors are alleged to have directly or indirectly disposed of Hazardous
Materials; or (e) upon the Company or any of its Subsidiaries' obtaining
knowledge that any expense or loss has been incurred by such governmental
authority in connection with the assessment, containment, removal or remediation
of any Hazardous Materials with respect to which the Company or any of its
Subsidiaries may be liable or for which a Lien may be imposed on the property.
SECTION 7.10. RESTRICTIONS ON INDEBTEDNESS. Neither the Company nor
any of its Subsidiaries will create, incur, assume, guarantee or be or remain
liable, contingently or otherwise, with respect to any Indebtedness other than
the following ("Permitted Indebtedness"):
(i) Indebtedness as set forth in Schedule 7.10 hereto;
(ii)obligations, contingent and otherwise, which in accordance
with GAAP are classified on the obligor's balance sheet as liabilities or
referred to in the footnotes thereto, which are incurred in the ordinary course
of business and not incurred through (A) the borrowing of money, or (B) the
obtaining of credit except for credit on an open account basis customarily
extended in connection with normal purchases of goods and services; and
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(iii) any other Indebtedness of the Company and its Subsidiaries
which shall be approved by a Supermajority Board Vote.
SECTION 7.11. RESTRICTIONS ON LIENS. Neither the Company nor any of
its Subsidiaries will create or incur or suffer to be created or incurred or to
exist any Lien of any kind upon any of its Properties or assets of any character
whether now owned or hereafter acquired, or upon the income or profits
therefrom; or transfer any of such Property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; or acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; or suffer to exist for a period of more than
thirty days after the same shall have been incurred any Indebtedness or claim or
demand against it which if unpaid might by law or upon bankruptcy or insolvency,
or otherwise, be given any priority whatsoever over its general creditors (other
than those claims which the Company is contesting in good faith by appropriate
proceedings and as to which the Company shall have set aside on its books
adequate reserves with respect thereto); or sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles or chattel paper,
with or without recourse; provided, however, that the Company and its
Subsidiaries may create or incur or suffer to be created or incurred or to exist
any of the following ("Permitted Liens"):
(a) Liens to secure taxes, assessments and other government charges or
claims for labor, material or supplies in respect of obligations not overdue or
due but being contested to the extent permitted by Section 7.4;
(b) Deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or other
social security obligations;
(c) Liens in respect of final judgments or awards against the Company
or any of its Subsidiaries in an aggregate amount of not greater than $100,000
(in excess of available insurance recoveries);
(d) Liens of carriers, warehousemen, mechanics and materialmen, and
other like Liens;
(e) Encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and irregularities in the
title thereto, landlord's or lessor's Liens under leases to which the Company or
any of its Subsidiaries is a party, and other minor Liens or encumbrances none
of which interferes materially with the use of the property affected in the
ordinary conduct of the business of the Company and its Subsidiaries and which
defects do not individually or in the aggregate have a material adverse effect
on the business, assets, financial condition or prospects of the Company or any
of its Subsidiaries;
(f) Any Liens on the assets and Property of the Company or any of its
Subsidiaries from time to time securing Permitted Indebtedness;
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(g) Any Liens existing on the date of this Agreement; and
(h) Any other Liens which shall be approved by the Board of Directors
by a Supermajority Board Vote.
SECTION 7.12. DISTRIBUTIONS. Unless approved by a Supermajority Board
Vote, the Company shall not make any Distribution except that the Company may
repurchase the Series B Preferred Stock in accordance with the terms hereof.
SECTION 7.13. MERGER, CONSOLIDATION, SALE OF ASSETS OR OTHER
DISPOSITIONS. Without the approval of the Board of Directors by a Supermajority
Board Vote, neither the Company nor any of its Subsidiaries will become a party
to any merger or consolidation in which the Company and/or its Stockholders do
not hold a majority of the voting equity in, and do not control, the surviving
entity of such merger or consolidation, or sell, lease, sublease or otherwise
transfer or dispose of (including, but not limited to, any sale and leaseback
transactions) any substantial portion of its Property to any Person whether
directly or indirectly or in a single transaction or a series of related
transactions, other than sales of inventory and used equipment in the ordinary
course of business consistent with past practices; provided, that, the Company
or any wholly-owned Subsidiary may engage in any of the above transactions with
the Company or any other wholly-owned Subsidiary without such approval, so long
as in the case of any merger or consolidation to which it is a party the Company
is the surviving entity.
SECTION 7.14. MERGER, CONSOLIDATION OR OTHER ACQUISITIONS. Neither the
Company nor any Subsidiary shall directly or indirectly, by operation of law or
otherwise, become a party to a merger or consolidation in which the Company
and/or its Stockholders continue to hold in the aggregate a majority of the
voting equity in, or continue to control, the surviving entity of such merger or
consolidation, acquire all or substantially all of the assets (other than
purchases of inventory made in the ordinary course of the Company's business) or
capital stock of, or otherwise combine with, any Person, unless such acquisition
is approved by the Board of Directors by a Supermajority Board Vote, provided
that the Company or any wholly-owned Subsidiary may engage in any of the above
transactions with the Company or any other wholly-owned Subsidiary without such
approval, so long as in the case of any merger or consolidation to which it is a
party the Company is the surviving entity.
SECTION 7.15. TRANSACTIONS WITH AFFILIATES. Unless approved by the
Board of Directors by a Supermajority Board Vote, neither the Company nor any of
its Subsidiaries will engage in any transaction with any Affiliate except for
transactions contemplated by the Related Agreements and except for transactions
by the Company with any Subsidiary or by any Subsidiary with any other
Subsidiary.
SECTION 7.16. INVESTMENTS. Unless approved by the Board of Directors
by a Supermajority Board Vote, the Company will not, and will not permit any of
its Subsidiaries to, have outstanding or acquire or commit itself to acquire or
hold any Investment except Investments in: (a) marketable direct obligations
issued or guaranteed by the United States of
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America which mature within one year from the date of acquisition thereof or
which are subject to a repurchase agreement, exercisable within 90 days from the
date of acquisition of such agreement, with any commercial bank or trust company
incorporated under the laws of the United States of America or any State thereof
or the District of Columbia, (b) commercial paper maturing within one year from
the date of acquisition thereof and having, at the date of acquisition thereof,
the highest rating obtainable from Xxxxx'x Investors Service, Inc. or Standard &
Poor's Corporation, (c) bankers' acceptances eligible for rediscount under
Federal Reserve Board requirements accepted by any commercial bank or trust
company referred to in clause (a) hereof and (d) certificates of deposit
maturing within one year from the date of acquisition thereof issued by any
commercial bank or trust company referred to in clause (a) hereof and having
capital and surplus of at least $100,000,000.
SECTION 7.17. JOINT VENTURES. Neither the Company nor any Subsidiary
will cause or consent to any joint venture engaging in any activity which would
result in a breach of any representation, warranty, covenant or agreement set
forth in this Agreement or which would result in the joint venture being in
breach of any representation, warranty, covenant or agreement set forth in this
Agreement if the joint venture were a Subsidiary.
SECTION 7.18. PAYMENTS ON PERMITTED INDEBTEDNESS. Neither the Company
nor any of its Subsidiaries shall make (i) any payments of the Indebtedness
represented by the Permitted Indebtedness except as specifically required by the
terms of the Permitted Indebtedness or (ii) any prepayments (other than
mandatory prepayments) of such Permitted Indebtedness. In addition, the Company
shall not amend, alter or agree to any such amendment or alteration to the terms
and conditions of any of the documents representing the Permitted Indebtedness
if such amendment changes the principal amount outstanding, the interest rate or
the date of maturity of the Permitted Indebtedness.
SECTION 7.19. RESPONSE ACTIONS. The Company covenants and agrees that
if any release or disposal of Hazardous Materials shall occur or shall have
occurred on the Property, the Company will cause the prompt containment and
removal of such Hazardous Materials and remediation of the Property as necessary
to comply in all material respects with all Environmental Laws or to preserve in
all material respects the value of the Property.
SECTION 7.20. DILUTION PROTECTION. Except for the additional Series B
Preferred Stock to be issued pursuant to Articles II and III hereof, the shares
of Common Stock to be issued upon conversion of the Series A Preferred Stock,
the Series A-1 Preferred Stock and the Series B Preferred Stock, and upon
exercise of the Founders' Warrants and any options and warrants issued under the
Option Plan (including the stock purchase program established thereunder), and
any capital stock of the Company issued pursuant to Acquisitions approved by the
Board of Directors as provided in Section 7.14 hereof, without a Supermajority
Board Vote, neither the Company nor any of its Subsidiaries will (a) issue,
sell, give away, transfer, pledge, mortgage, assign or otherwise dispose of,
grant any rights (either preemptive or other) or options to subscribe for or
purchase, enter into any agreements, or issue any warrants, providing for the
issuance of any capital stock of the Company or any stock or securities
convertible into or exchangeable for any capital stock of the Company or (b)
designate any series of Preferred Stock
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of a class which has been authorized in the Company's Certificate of
Incorporation; provided that the foregoing approval shall not be required for
the issuance or transfer to the Company or any of its wholly-owned Subsidiaries
of securities of any wholly-owned Subsidiary of the Company. Without the
affirmative vote of 66-2/3% of the outstanding Common Stock and Preferred Stock,
voting as a class, the Company will not authorize any additional class of
capital stock or increase the number of shares of authorized capital stock from
that set forth in Section 4.5 hereof or Schedule 4.5 hereto. The Company shall
maintain such number of authorized and unissued shares of (w) Series B Preferred
Stock as shall be necessary to issue upon fulfillment of the Purchasers'
Additional Preferred Stock Subscription Obligations, (x) Common Stock to be
issued upon conversion of the Series A Preferred Stock, the Series A-1 Preferred
Stock and the Series B Preferred Stock, (y) Common Stock to be issued upon
exercise of the Founders' Warrants, and (z) Common Stock to be issued upon
exercise of any options or warrants issued under the Option Plan.
SECTION 7.21. ANNUAL STATEMENTS. As soon as available and in any event
within 90 days after the close of each fiscal year of the Company commencing
with the fiscal year ending December 31, 2000, the Company will deliver to each
holder of Series B Preferred Stock (a) an audited consolidated balance sheet and
statement of income and retained earnings and of cash flows of the Company and
its Subsidiaries audited to the extent so required by any "big five" independent
public accounting firm, as selected by the Company, and (b) consolidated
internal unaudited balance sheets and statements of income and retained earnings
and of cash flows of each Subsidiary of the Company, in each case showing the
financial condition of the Company and/or each Subsidiary of the Company as of
the close of such fiscal year and the results of the Company's and/or such
Subsidiary's operations during such fiscal year, all on a consolidated basis,
and setting forth in comparative form the comparable statements for the previous
fiscal year, if any. Each of the audited financial statements delivered
hereunder shall be certified by such accounting firm to have been prepared in
accordance with generally accepted accounting principles consistently applied,
accompanied by the written statement of such firm to the effect that such firm
does not know of the existence of any Default or Event of Default, or if such
firm shall have obtained knowledge of any such Default or Event of Default or
other event, setting forth the nature thereof.
SECTION 7.22. MONTHLY STATEMENTS. Within 30 days after the end of each
month commencing with the month ending March 31, 2000, the Company will deliver
to each holder of Series B Preferred Stock (a) a consolidated internal,
unaudited balance sheet and statement of income and retained earnings and of
cash flows of the Company as of the end of each such month, and (b) consolidated
internal unaudited balance sheets and statements of income and retained earnings
and of cash flows of each Subsidiary of the Company, in each case including a
comparison of such financial statements to the annual operating budget and
projected monthly balance sheets and statements of income delivered pursuant to
Section 7.23 hereof and certified by the chief financial officer of the Company
to be true and correct and to have been prepared in accordance with GAAP
consistently applied (other than such footnotes which may be required by GAAP),
subject to normal year-end adjustments described in reasonable detail.
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SECTION 7.23. OTHER FINANCIAL INFORMATION. The Company will deliver to
each holder of Series B Preferred Stock, within 30 days prior to the
commencement of each fiscal year, (i) an annual operating budget and projected
monthly balance sheets and statements of income, (ii) as soon as practical after
preparation thereof, complete and correct copies of all quarterly or annual
budgetary analyses or forecasts of the Company and its Subsidiaries (if any)
prepared by management for the use of the Board of Directors and (iii) updated
five-year projections of the Company and its Subsidiaries (if any) prepared by
management for the use of the Board of Directors. Promptly after the receipt
thereof, the Company will provide to each holder of Series B Preferred Stock
copies of any reports as to adequacies in accounting controls submitted by
independent accountants with respect to the Company and its Subsidiaries.
SECTION 7.24. OFFICER'S CERTIFICATES. Together with delivery of
consolidated financial statements of the Company pursuant to Section 7.22 above,
the Company shall deliver to each holder of Series B Preferred Stock a
certificate of the President, chief financial officer or Treasurer of the
Company, to the effect that such financial statements are true and correct and
were prepared in accordance with GAAP and that such officer has caused the
provisions of this Agreement and the Series B Preferred Stock to be reviewed and
has no knowledge of any Default or Event of Default, or if such officer has such
knowledge, specifying such Default or Event of Default and the nature thereof,
and what action the Company has taken, is taking or proposes to take with
respect thereto.
SECTION 7.25. NOTICE OF LITIGATION, DEFAULTS, ETC. The Company will
promptly give notice to each holder of Series B Preferred Stock of any
litigation or any administrative proceeding to which the Company or any of its
Subsidiaries may hereafter become a party which, after giving effect to
applicable insurance, may result in any adverse change in the business, assets,
prospects or financial condition of the Company and its Subsidiaries taken as a
whole. Forthwith upon any officer of the Company obtaining knowledge of any
Default or Event of Default hereunder or any default or event of default under
any Related Agreement or any agreement relating to any Indebtedness of the
Company or any of its Subsidiaries for borrowed money, the Company will furnish
a notice specifying the nature and period of existence thereof and what action
the Company or any of its Subsidiaries has taken, is taking or proposes to take
with respect thereto.
SECTION 7.26. CHARTER AND BY-LAW AMENDMENTS. Except as otherwise
specified in this Agreement, without the consent of the Majority Holders, the
Charter and By-laws of each of the Company and its Subsidiaries shall not be
amended or modified, whether by merger, dissolution or otherwise, if such
amendment or modification has, or would, directly or indirectly, adversely
affect the rights of holders of the Series B Preferred Stock or the rights or
remedies of such holders thereunder or under any of the Related Agreements.
SECTION 7.27. PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The
Company and its Subsidiaries shall each have and enforce a policy requiring each
employee with access to proprietary information of the Company or any Subsidiary
to enter into a proprietary information and confidentiality and assignment
agreement substantially in the form approved by the Board of Directors.
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SECTION 7.28. SBIC COVENANTS.
(a) The Company acknowledges that each Purchaser that is an SBIC
Investor is subject to regulation by the SBA as a small business investment
company.
(b) As a result of the SBIC Investor's status as Federal licensee, the
Company covenants and agrees that, for a period of one year after the Closing
Date, the Company shall not make a material change in its primary business
activity by becoming involved in real estate financing, project financing, farm
land purchasing, relender or reinvestor financing, foreign investment and other
businesses as described in 13 C.F.R. Section 107.720, which would make it
ineligible for financing as a portfolio company by a small business investment
company under 13 C.F.R. Section 107.760(b), a regulation promulgated by the SBA.
(c) The Company covenants and agrees that proceeds from the SBIC
Investor for its purchase of Series B Preferred Stock will be used for working
capital purposes or to otherwise finance the growth, modernization or expansion
of the Company. The Company shall provide the SBIC Investor and the SBA
reasonable access to the Company's books and records for the purpose of
confirming the use of such proceeds.
(d) The Company shall provide the SBIC Investor with sufficient
information to permit such SBIC Investor to comply with its obligations under
the Small Business Act, provided, however that the SBIC Investor agrees that it
will protect any information which the Company labels as confidential to the
extent permitted by law. For a period of two (2) years following the Closing
Date, any submission of financial information under Sections 7.21 and 7.22 to
the SBIC Investor shall be accompanied by a certificate of the president, chief
executive officer, treasurer or chief financial officer, which certificate shall
state that the Company is not in material default under any of its covenants set
forth in this Section 7.28.
ARTICLE VIII. DEFAULTS
SECTION 8.1. EVENTS OF DEFAULT. The Majority Holders will be entitled
to exercise the remedies provided in Section 8.2 hereof in accordance with the
terms thereof if any one or more of the following events ("Events of Default")
shall occur:
(a) the Company or any of its Subsidiaries shall fail in any material
respect to perform or observe any of the covenants, agreements or provisions to
be performed or observed by it under this Agreement or any of the Related
Agreements (except to the extent such failure is attributable to actions of any
holder of Preferred Stock) (other than covenants, agreements or provisions for
which a default in the performance or observance thereof is specifically dealt
with elsewhere in this Agreement or any Related Agreement) and the continuance
of such failure for a period of thirty days after written notice thereof has
been given to the Company by the Majority Holders; or
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(b) any material representation or warranty made by the Company or any
of its Subsidiaries to any Purchaser in or in connection with this Agreement or
any Related Agreement or any amendment thereto shall prove to have been
materially false on the date as of which it was made; or
(c) default under any Indebtedness of the Company or any of its
Subsidiaries in an amount outstanding which exceeds $1,000,000 in the aggregate,
and such default shall continue, without having been duly cured, waived or
consented to, beyond the period of grace, if any, therein specified and so as to
permit the acceleration thereof, if any acceleration is provided for therein; or
(d) a final judgment which in the aggregate with other outstanding
final judgments against the Company or any of its Subsidiaries exceeds $100,000
(in excess of available insurance recoveries) shall be rendered against such
Person and, within 60 days after entry thereof, such judgment shall not have
been satisfied and discharged or stayed pending appeal or bonded, or within 60
days after expiration of such stay such judgment shall not have been discharged;
or
(e) the Company or any of its Subsidiaries shall:
(i) commence a voluntary case under Title 11 of the United States
Bankruptcy Code as from time to time in effect, or authorize, by appropriate
proceedings of its board of directors or other governing body, the commencement
of such a voluntary case;
(ii) have filed against it a petition commencing an involuntary
case under said Title 11 and such petition shall not have been dismissed or
stayed within 60 days;
(iii) seek relief as a debtor under any applicable law, other
than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the rights of
creditors, or consent to or acquiesce in such relief;
(iv) have entered against it an order by a court of competent
jurisdiction (x) finding it to be bankrupt or insolvent, (y) ordering or
approving its liquidation, reorganization or any modification or alteration of
the rights of its creditors, or (z) assuming custody of, or appointing a
receiver or other custodian for, all or a substantial part of its property;
which order shall not be vacated, denied, set aside, or stayed within 60 days
from the date of entry; or
(v) make an assignment of all or a substantial part of its
Property for the benefit of, or enter into a composition with, its creditors, or
appoint or consent to the appointment of a receiver or other custodian for all
or a substantial part of its Property; or
(f) with respect to any Guaranteed Pension Plan, an ERISA Reportable
Event shall have occurred as a result of which a trustee shall have been
appointed by an appropriate United States District Court to administer such
Guaranteed Pension Plan or the PBGC shall have instituted proceedings to
terminate such Guaranteed Pension Plan, and the Majority Holders shall
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have determined in their reasonable discretion that such event reasonably could
be expected to result in liability of the Company or any of its Subsidiaries to
the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding
$100,000.
SECTION 8.2. REMEDIES. Upon the occurrence of any of the Events of
Default under Section 8.1 hereof, in each and every such case, the Majority
Holders may proceed to protect and enforce the rights of all such holders by
suit in equity, action at law and/or other appropriate proceeding either for
specific performance of any covenant, provision or condition contained or
incorporated by reference in this Agreement or in aid of the exercise of any
power granted in this Agreement, and in addition, at the option of the Majority
Holders, the Majority Holders shall have the right to hire an investment banker
to (i) commence an underwritten public offering of all of the Conversion Stock,
(ii) assist in obtaining a private buyer for all of the Conversion Stock, (iii)
assist in obtaining a buyer for all the outstanding stock of the Company or all
or substantially all of the assets of the Company or (iv) assist in effecting
any other similar transaction or series of transactions resulting in the
disposition of all the stock or all or substantially all of the assets and
business of the Company, in each case at a price solely acceptable to the
Majority Holders. The Majority Holders shall have the right to (A) to determine
the type of transaction to be effected, (B) to give direction to the investment
banker, (C) to negotiate and control the sale process and all documentation and
(D) to approve the terms and price of any such transaction. In furtherance of
the foregoing (and except for an Event of Default under Section 8.1(f) hereof
which shall be automatic), the remedies set forth in this Section 8.2 may only
be exercised by the action of the Majority Holders, and not by the action of any
single holder of Series B Preferred Stock.
SECTION 8.3. WAIVERS. Each of the Company and its Subsidiaries hereby
waives, to the extent not prohibited by applicable law, (a) all presentments,
demands for performance and notices of nonperformance (except to the extent
specifically required by the provisions hereof or any Related Agreement), and
(b) any requirement of diligence or promptness on the part of any holder of
Series B Preferred Stock in the enforcement of its rights under the provisions
of this Agreement or any Related Agreement.
ARTICLE IX. SUBSEQUENT HOLDERS OF SERIES B PREFERRED STOCK
The provisions of this Agreement, the Stockholders' Agreement and the
Registration Rights Agreement that are for the benefit of the Purchasers as the
holders of any Series B Preferred Stock are, except as otherwise specifically
provided in such agreement, also for the benefit of, and enforceable by and
binding upon, all subsequent holders of the Series B Preferred Stock who may
acquire such Series B Preferred Stock, and the provisions of this Agreement, the
Stockholders' Agreement and the Registration Rights Agreement that subject the
Purchasers to obligations as the holders of any Series B Preferred Stock also
subject all subsequent holders of Series B Preferred Stock thereto.
ARTICLE X. REGISTRATION AND TRANSFER OF SERIES B PREFERRED STOCK
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SECTION 10.1. TRANSFER AND EXCHANGE OF SERIES B PREFERRED STOCK. The
Company shall keep at its principal office a register in which shall be entered
the names and addresses of the holders of the Series B Preferred Stock and the
particulars (including without limitation the class thereof) of the respective
Series B Preferred Stock held by them and of all transfers of Series B Preferred
Stock. Upon surrender at such office of any certificate representing shares of
Series B Preferred Stock for registration of exchange or transfer, in accordance
with the terms hereof and of the Financing Agreements, the Company shall issue,
at its expense, one or more new certificates, in such denomination or
denominations as may be requested, for such shares of Series B Preferred Stock
and registered as such holder may request. Any certificate representing shares
of Series B Preferred Stock surrendered for registration of transfer shall be
duly endorsed, or accompanied by a written instrument of transfer duly executed
by the holder of such certificate or his attorney duly authorized in writing.
The Company shall not be responsible for payment of any transfer taxes due upon
any such exchange or transfer.
SECTION 10.2. REPLACEMENT OF SERIES B PREFERRED STOCK. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Series B Preferred Stock and, in the case of any such loss,
theft or destruction, upon receipt of indemnity reasonably satisfactory to the
Company, or, in the case of such mutilation, upon the surrender of such Series B
Preferred Stock for cancellation to the Company at its principal office, the
Company will execute and deliver, in lieu thereof, a new Series B Preferred
Stock of like tenor. Any Series B Preferred Stock in lieu of which any such new
Series B Preferred Stock has been so executed and delivered by the Company shall
not be deemed to be outstanding for any purpose of this Agreement.
ARTICLE XI. EXPENSES; INDEMNITY
SECTION 11.1. EXPENSES. Whether or not the transactions contemplated
by this Agreement shall be consummated, the Company shall pay on demand
(accompanied by reasonable supporting details and documentation) all reasonable
out-of-pocket fees, costs and expenses incurred by the Purchasers in connection
with such transactions hereunder, under any Related Agreements and in connection
with any amendments or waivers (whether or not the same become effective) hereof
or thereof and, following the occurrence of an Event of Default, all reasonable
out-of-pocket expenses incurred by the holders of Series B Preferred Stock in
connection with the enforcement of any rights hereunder or with respect to any
Series B Preferred Stock. Such fees, costs and expenses shall include without
limitation (i) the cost and expenses of preparing and duplicating this
Agreement, each Related Agreement and the Series B Preferred Stock; (ii) the
cost of delivering to each Purchaser's principal office, insured to such
Purchaser's satisfaction, the Series B Preferred Stock sold to such Purchaser
hereunder and any Common Stock delivered to such Purchaser upon any conversion
thereof; (iii) the reasonable fees and out-of-pocket expenses and disbursements
of one counsel to the Purchasers, which shall be Xxxxxx Godward, LLP, in
connection with the preparation, administration, interpretation or enforcement
of this Agreement and the Related Agreements and other instruments mentioned
herein, the Closing, any amendments, modifications, approvals, consents or
waivers hereto, thereto or
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hereunder requested by the Company; (iv) all taxes (other than taxes determined
with respect to income and taxes relating to any transfer of the Series B
Preferred Stock other than to the Company), including any recording fees and
filing fees and documentary stamp and similar taxes at any time payable in
respect of this Agreement, or the issuance of any of the Series B Preferred
Stock; (v) all reasonable out-of-pocket expenses associated with any rights of
board attendance, and travel and lodging expenses related thereto, incurred by
the board designees of the holders of the Series B Preferred Stock; and (vi)
filing fees for any filings required to be made by any Purchaser pursuant to the
Xxxx-Xxxxx-Xxxxxx Act as a result of the transactions contemplated by this
Agreement.
SECTION 11.2. INDEMNIFICATION. To the fullest extent permitted by
applicable law, the Company shall indemnify, exonerate and hold each Purchaser
and its (if applicable) general and limited partners and their respective
stockholders, officers, directors, employees and agents free and harmless from
and against any and all actions, causes of action, suits, losses, liabilities,
damages and expenses, including, without limitation, reasonable attorneys' fees
and disbursements, incurred by any of the indemnitees as a result of or relating
to (i) any transaction to which the Company is a party which is financed or to
be financed in whole or in part directly or indirectly with proceeds from the
sale of any of the Series B Preferred Stock, (ii) without duplication of the
reimbursed expenses paid under Section 11.1, the execution, delivery,
performance or enforcement of this Agreement (including, without limitation, the
breach by the Company of any of its representations or warranties contained in
Article IV of this Agreement and any failure by the Company or any of its
Subsidiaries to comply with any of its covenants hereunder), the Related
Agreements or any instrument contemplated hereby or thereby, (iii) any violation
of, or liability under, any Environmental Laws with respect to conditions at the
Property or the operations conducted thereon, or (iv) the investigation or
remediation of offsite locations at which the Company, any of its Subsidiaries
or their predecessors are alleged to have directly or indirectly disposed of
Hazardous Materials.
SECTION 11.3. BROKERS' FEES. The parties shall indemnify each other
against and agree that each will hold the others harmless from any claim, demand
or liability for any other broker's, finder's or placement fees or lender's
incentive fees alleged to have been incurred by it in connection with the
transactions contemplated by this Agreement or the Related Agreements.
SECTION 11.4. SURVIVAL OF OBLIGATIONS. The obligations of the parties
under this Article XI shall survive payment or transfer of the Series B
Preferred Stock and the termination of this Agreement.
ARTICLE XII. NOTICES
Any notice or other communication in connection with this Agreement,
any Related Agreement or the Series B Preferred Stock shall be deemed to be
received if in writing (or in the form of a telex or telecopy) addressed as
provided below (a) when actually delivered, in person, (b) when telexed or
telecopied to said address, confirmed by registered or certified mail, (c) when
received if delivered by overnight courier, or (d) in the case of delivery by
mail, three
40
47
business days shall have elapsed after the same shall have been deposited in the
United States mails, postage prepaid and registered or certified:
(i) If to the Company, at its principal executive offices, to the
attention of the Chief Executive Officer, or at such other address as
the Company shall have specified by notice actually received by the
addressor,
with copies to:
Xxxxxx Investments, L.P.
00000 Xxxxxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
and to: Xxxxx Xxxx LLP
One Metropolitan Square
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
(ii) If to any Purchaser, then to its address set forth on
Exhibit A hereto, or at such other address as such Purchaser shall
have specified by notice actually received by the addressor, with a
copy as provided on said Exhibit A; and
(iii)If to any other holder of record of any Series B Preferred
Stock, to it at its address set forth in the applicable register
referred to in Article X hereof.
ARTICLE XIII. SURVIVAL AND TERMINATION OF COVENANTS, AGREEMENTS, REPRESENTATIONS
AND WARRANTIES
All covenants, agreements, representations and warranties made herein
or in any Related Agreement shall be deemed to have been relied on by the
recipient, notwithstanding any investigation made by the recipient or on the
recipient's behalf, and shall survive the execution and delivery of this
Agreement and the issuance of the Series B Preferred Stock. Except for the
representations and warranties contained herein and as otherwise expressly
provided herein or in any such Related Agreement, such covenants, agreements,
representations and warranties, shall terminate and be of no further force or
effect upon the automatic conversion of the Series B Preferred Stock pursuant to
the Amended and Restated Certificate of Incorporation of the Company.
41
48
ARTICLE XIV. AMENDMENTS AND WAIVERS
Except as otherwise expressly provided herein, any term of this
Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and the Majority
Holders, respectively; provided that, no such amendment may increase or decrease
the amount of any Additional Preferred Stock Subscription Obligation or extend
the Investment Period without the consent of all holders of the Series B
Preferred Stock. Any amendment or waiver effected in accordance with this
Article XIV shall be binding upon the Company and each holder of any Series B
Preferred Stock. No course of dealing between the Company or any of its
Subsidiaries on the one hand, and the holder of any Series B Preferred Stock, on
the other hand, shall operate as a waiver of any rights under this Agreement. No
delay or omission in exercising any right under this Agreement shall operate as
a waiver of such right or any other right. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right or remedy on any other
occasion.
ARTICLE XV. RIGHT TO PUBLICIZE
Each of the parties hereby acknowledges that each party, at its own
expense, will have the right to publicly disclose the investments in the Company
contemplated hereby, provided, however, that no party may use in a public
disclosure the name of any other party without the prior approval by such other
party.
ARTICLE XVI. WAIVER OF JURY TRIAL
EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE TO A JURY
TRIAL IN ANY SUIT, ACTION OR PROCEEDING EXISTING UNDER OR RELATING TO THIS
AGREEMENT, THE SERIES B PREFERRED STOCK OR ANY OF THE RELATED AGREEMENTS.
ARTICLE XVII. INCORPORATORS, SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES AND
PARTNERS FREE FROM PERSONAL LIABILITY
No recourse under or upon any obligation, covenant or agreement of
this Agreement or of any Related Agreement will be had against any incorporator,
shareholder (except for obligations specific to any shareholder under this
Agreement or any Related Agreement), officer, director, employee, or partner as
such, past, present, or future, of the Company or any holder of Series B
Preferred Stock or any predecessor or successor entity, either directly or
through the Company or any holder of Series B Preferred Stock, whether by virtue
of any constitution, statute, or rule of law, or by the enforcement of any
assessment or penalty or otherwise, it being expressly understood that this
Agreement and the other Related Agreements
42
49
are solely corporate obligations, and no such personal liability whatsoever will
attach to, or is or will be incurred by, the incorporators, shareholders (except
for obligations specific to any shareholder under this Agreement or any Related
Agreement), officers, directors or employees, as such, of the Company or any
holder of Series B Preferred Stock or of any predecessor or successor entity, or
any of them, under or by reason of the obligations, covenants, or agreements
contained in this Agreement and the Related Agreements; provided that nothing in
this Article XVII shall eliminate or limit the liability of any incorporator,
shareholder, officer, director, employee or partner (i) for breach of fiduciary
duty, if any, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware or (iv) for any transaction
for which the individual derived an improper personal benefit.
ARTICLE XVIII. SCHEDULES
Any matter or item disclosed in any part of a particular Schedule
hereto shall be deemed to be disclosed in all parts of the Schedules hereto
where such matter is required to be disclosed.
ARTICLE XIX. ENTIRE AGREEMENT; COUNTERPARTS; SECTION HEADINGS
This Agreement and the Related Agreements set forth the entire
understanding of the parties hereto with respect to the subject matter hereof
and thereof and supersede any prior written or oral understandings with respect
thereto. This Agreement may be executed simultaneously in one or more
counterparts thereof, each of which shall be deemed as original but all of which
together shall constitute one and the same instrument. The headings in this
Agreement are for convenience of reference only and shall not alter or otherwise
affect the meaning hereof.
ARTICLE XX. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE
SUBSTANTIVE LAWS OF ANY OTHER STATE, EXCEPT THAT ALL MATTERS RELATIVE TO THE
INTERNAL AFFAIRS OF THE COMPANY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE.
ARTICLE XXI. SEVERABILITY
43
50
If any term or provision of this Agreement or the Series B Preferred
Stock, or the application thereof to any Person or circumstance, shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement or the
Series B Preferred Stock, as the case may be, or its application to other
Persons or circumstances, shall not be affected thereby and each term and
provision hereof shall be enforced to the fullest extent permitted by law.
ARTICLE XXII. AMENDMENT OF SERIES A PURCHASE AGREEMENT
The Purchasers, as parties to the Series A Purchase Agreement, and the
Company hereby amend Article I of the Series A Purchase Agreement by agreeing
that the term "Majority Holders" as used therein shall be defined as such term
is defined in Article I of this Agreement.
If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and the accompanying copies thereof in the appropriate
space below and return one counterpart of the same to the Company, at the
address first listed above.
Very truly yours,
XXXXXXX COMMUNICATIONS, INC.
By:
----------------------------------------------
Xxxxx X. Xxxxxxx, Chief Executive Officer
44
51
Accepted and agreed to as of the date first written above:
XXXXXX INVESTMENTS, L.P. RAB PARTNERSHIP, L.P.
By: Xxxxxx Investments, Inc. By:
Its: General Partner --------------------------------
Xxxxxx X. Xxxxxx
General Partner
By:
-------------------------------
Xxxxxx X. Xxxxxx,
President
ONELIBERTY FUND IV, L.P. ONELIBERTY ADVISORS FUND IV, L.P.
By: OneLiberty Partners IV, L.L.C. By: OneLiberty Partners IV, L.L.C.
Its: General Partner Its: General Partner
By: By:
-------------------------------- -----------------------------------
Managing Member Managing Member
GS CAPITAL PARTNERS III, L.P. GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS Advisors III, L.P. By: GS Advisors III (Cayman), L.P.
Its: General Partner Its: General Partner
By: GS Advisors III, L.L.C. By: GS Advisors III, L.L.C.
Its: General Partner Its: General Partner
By: By:
-------------------------------- -----------------------------------
XXXXXXX, SACHS & CO.
VERWALTUNGS GmbH
By:
-----------------------------
Managing Director
By:
-----------------------------
Registered Agent
XXXXX XXXXXX XXXX 0000, X.X. XXXXXX XXXXXX SPECIAL
By: Xxxxx Xxxxxx 0000, X.X.X. OPPORTUNITIES FUND 2000, L.P.
Its: General Partner By: Bridge Street Special Opportunities
2000, L.L.C.
Its:General Partner
By:
-----------------------------
By:
-----------------------------------
45
52
X. X. XXXXXXX XX, L.P. CENTENNIAL FUND V, L.P.
By: X. X. Xxxxxxx Equity Partners IV, LLC By: Centennial Holdings V, L.P.
Its: General Partner Its: General Partner
By: By:
------------------------------ ---------------------------------
Xxxxxx X. Xxxxxxxx
A General Partner
CHASE VENTURE CAPITAL ASSOCIATES, L.P. NORWEST EQUITY PARTNERS VI, L.P.
By: By:
Its: General Partner Its: General Partner
By: By:
------------------------------ ---------------------------------
TELECOM PARTNERS II, L.P. DON INVESTMENT GROUP, L.P.
By: Telecom Management II, L.L.C., By: BGC Investors, Inc.
Its: General Partner Its: General Partner
By: By:
------------------------------ ---------------------------------
Name and Title: Name and Title:
------------------ ---------------------
MERITAGE PRIVATE EQUITY FUND, L.P. MERITAGE PRIVATE EQUITY PARALLEL
FUND, L.P.
By: Meritage Investment Partners, LLC By: Meritage Investment Partners, LLC
Its: General Partner Its: General Partner
By: By:
------------------------------ ---------------------------------
MERITAGE ENTREPRENEURS FUND, L.P.
By: Meritage Investment Partners, LLC
Its: General Partner
By:
------------------------------
46
53
--------------------------------- ------------------------------------
Xxxx Xxxx Xxxxx X. Xxxxx
Xxxxx X. Xxxxxx and Xxxxx X. Xxxxxx
Joint Caring Trust dated July 7, 1988
---------------------------------
Xxxxxx X. Xxxxxx By:
---------------------------------
Trustee
--------------------------------- ------------------------------------
Xxxxxx Xxxxxxx Xxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx Individual Retirement Xxxxxxxxxx X. Xxxxxxx Revocable Trust
Account U/T/A dated August 11, 1998
By: By:
------------------------------ ---------------------------------
Name: Trustee
--------------------------------- ------------------------------------
Xxxxxxxx Xxxxxx Xxxxxx X. Xxxx
--------------------------------- ------------------------------------
Xxxxxxx X. Xxx Xxxxx X. Xxxxxxx
--------------------------------- ------------------------------------
Xxxxxxx Xxxxx Xxxxxxx X. Xxxxxx
Tettambel Investments LLC
---------------------------------
Xxxxx X. Xxxxxxx By:
---------------------------------
Name:
Title:
--------------------------------- ------------------------------------
Xxxxxxxxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
47
54
List of Schedules
4.1 States of Qualification
4.4 Third Party Consents
4.5 Capitalization
4.6 Subsidiaries
4.7(a)(i) and (ii) Financial Statements
4.10 Indebtedness to and from Affiliates
4.11 Licenses, etc.
4.13 Leases
4.16 Defaults
4.18 Employee Benefit Plans
4.20 Employment Contracts, Labor Relations
4.22 Necessary Property
4.23 Transaction Costs
4.27 Authorizations
4.29 Acquisition Agreements
4.30 Material Contracts and Obligations
5.1 Risk Factors
5.2 Written Materials
7.10 Additional Indebtedness
55
EXHIBIT A
LIST OF PURCHASERS
INITIAL CLOSING -APRIL , 2000
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
Xxxxxx Investments, L.P. 761,905 $5,333,335 1,523,809 $10,666,663 $15,999,998
00000 Xxxxxxxxxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
RAB Partnership, L.P. 71,429 $500,003 142,857 $999,999 $ 1,500,002
00000 Xxxxxxxxxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Xxxxx Xxxxxx Xxxx 0000, X.X. 150,000 $1,050,000 300,000 $2,100,000 $3,150,000
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Bridge Street Special Opportunities Fund 100,000 $700,000 200,000 $1,400,000 $2,100,000
2000, L.P
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
GS Capital Partners III, L.P. 1,703,155 $11,922,085 3,406,310 $23,844,170 $35,766,255
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
GS Capital Partners III Offshore, L.P. 468,217 $3,277,519 936,434 $6,555,038 $9,832,557
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxx & Co. Verwaltungs GmbH 78,628 $550,396 157,256 $1,100,792 $1,651,188
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Don Investment Group, L.P. 595,238 $4,166,666 1,190,476 $8,333,332 $12,499,998
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Centennial Fund V, L.P. 380,953 $2,666,671 761,904 $5,333,328 $7,999,999
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
56
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
Telecom Partners II, L.P. 238,095 $1,666,665 476,191 $3,333,337 $5,000,002
0000 Xxxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
OneLiberty Fund IV, L.P. 95,238 $666,666 190,476 $1,333,332 $1,999,998
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
OneLiberty Advisors
Fund IV, L.P. 11,904 $83,328 23,810 $166,670 $249,998
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
X. X. Xxxxxxx XX, L.P. 2,035,714 $14,249,998 4,071,429 $28,500,003 $42,750,001
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Norwest Equity Partners VI, L.P. 595,238 $4,166,666 1,190,476 $8,333,332 $12,499,998
2800 Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Chase Venture Capital Associates, L.P. 1,285,714 $8,999,998 2,571,429 $18,000,003 $27,000,001
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Meritage Private Equity Fund L.P. 1,002,057 $7,014,399 1,503,086 $10,521,602 $17,536,001
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Meritage Private Equity Parallel 122,514 $857,598 183,772 $1,286,404 $2,144,002
Fund L.P.
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Meritage Entrepreneur Fund L.P. 18,286 $128,002 27,428 $191,996 $319,998
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
A-2
57
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
Xx. Xxxxxx X. Xxxxxx 30,101 $210,707 60,201 $421,407 $632,114
00000 Xxxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Xx. Xxxxx X. Xxxxxxx 25,000 $175,000 50,000 $350,000 $525,000
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xx. Xxxxxx X. Xxxx 25,000 $175,000 50,000 $350,000 $525,000
00000 Xxxxxx Xxxxx
Xx. Xxxxx, XX 00000
Xx. Xxxx X. Xxxxxxx 25,000 $175,000 50,000 $350,000 $525,000
0000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
Xxxxxx X. Xxxxxxxx Individual 3,333 $23,331 6,667 $46,669 $70,000
Retirement Account
0000 Xxxxxxxx Xxxxxxx
Xx. Xxxxx, XX 00000
Xxxxxxxxxx X. Xxxxxxx Revocable Trust 68,505 $479,535 137,009 $959,063 $1,438,598
17603 Ailanthus
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxxx and Xxxxx X. Xxxxxx 10,000 $70,000 20,000 $140,000 $210,000
Joint Caring Trust
000 Xxxxxxxx Xxxxx
Xx. Xxxxxxx, XX 00000
Xx. Xxxxx Xxxxxx 3,333 $23,331 6,667 $46,669 $70,000
00000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Xx. Xxxxx X. Xxxxx 4,000 $28,000 8,000 $56,000 $84,000
0000 Xxxxxxx Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Xx. Xxxxx Xxxxxxx 2,667 $18,669 5,333 $37,331 $56,000
000 Xxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Xx. Xxxxxxx X. Xxxxxx 2,768 $19,376 5,536 $38,752 $58,128
0000 Xxxxxxxxxxxx Xxx.
Xxxxxxx, XX 00000
A-3
58
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
Xx. Xxxxxxx X. Xxx 1,564 $10,948 3,127 $21,889 $32,837
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Tettambel Investments LLC 3,333 $23,331 6,667 $46,669 $70,000
0000 Xxxxxxxx
Xx. Xxxxx, XX 00000
Xx. Xxxx Xxxx 2,076 $14,532 4,152 $29,064 $43,596
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xx. Xxxxxx Xxxxxxx 333 $2,331 667 $4,669 $7,000
000 Xxxx Xxxxx Xxxxx
Xx. Xxxxx, XX 00000
Xx. Xxxxxxx Xxxxx 2,768 $19,376 5,535 $38,745 $58,121
0000 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Xx. Xxxxxxxxxxx X. Xxxxxxxx 2,076 $14,532 4,152 $29,064 $43,596
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Ms. Xxxxxxxx Xxxxxx 2,076 $14,532 4,152 $29,064 $43,596
0000 X Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Xx. Xxxxxxx X. Xxxxxx 2,076 $14,532 4,152 $29,064 $43,596
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
SECOND CLOSING - , 2000
------------------------------------------
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
Xxxxxx Investments, L.P. 761,905 $5,333,335 761,904 $5,333,328 $10,666,663
00000 Xxxxxxxxxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
A-4
59
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
RAB Partnership, L.P. 71,429 $500,003 71,428 $499,996 $999,999
00000 Xxxxxxxxxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Xxxxx Xxxxxx Xxxx 0000, X.X. 150,000 $1,050,000 150,000 $1,050,000 $2,100,000
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Bridge Street Special Opportunities Fund 100,000 $700,000 100,000 $700,000 $1,400,000
2000, L.P
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
GS Capital Partners III, L.P. 1,703,155 $11,922,085 1,703,155 $11,922,085 $23,844,170
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
GS Capital Partners III Offshore, L.P. 468,217 $3,277,519 468,217 $3,277,519 $6,555,038
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxx & Co. Verwaltungs GmbH
00 Xxxxx Xxxxxx 78,628 $550,396 78,628 $550,396 $1,100,792
Xxx Xxxx, XX 00000
Don Investment Group, L.P. 595,238 $4,166,666 595,238 $4,166,666 $8,333,332
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Centennial Fund V, L.P. 380,953 $2,666,671 380,951 $2,666,657 $5,333,328
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Telecom Partners II, L.P. 238,095 $1,666,665 238,096 $1,666,672 $3,333,337
0000 Xxxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
OneLiberty Fund IV, L.P. 95,238 $666,666 95,238 $666,666 $1,333,332
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
A-5
60
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
OneLiberty Advisors
Fund IV, L.P. 11,905 $83,335 11,905 $83,335 $166,670
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
X. X. Xxxxxxx XX, L.P. 2,035,715 $14,250,005 2,035,714 $14,249,998 $28,500,003
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Norwest Equity Partners VI, L.P. 595,238 $4,166,666 595,238 $4,166,666 $8,333,332
2800 Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Chase Venture Capital Associates, L.P. 1,285,714 $8,999,998 1,285,715 $9,000,005 $18,000,003
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Meritage Private Equity Fund L.P. 751,543 $5,260,801 751,543 $5,260,801 $10,521,602
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Meritage Private Equity Parallel 91,886 $643,202 91,886 $643,202 $1,286,404
Fund L.P.
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Meritage Entrepreneur Fund L.P. 13,714 $95,998 13,714 $95,998 $191,996
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Xx. Xxxxxx X. Xxxxxx 30,101 $210,707 30,100 $210,700 $421,407
00000 Xxxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Xx. Xxxxx X. Xxxxxxx 25,000 $175,000 25,000 $175,000 $350,000
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xx. Xxxxxx X. Xxxx 25,000 $175,000 25,000 $175,000 $350,000
00000 Xxxxxx Xxxxx
Xx. Xxxxx, XX 00000
A-6
61
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
Xx. Xxxx X. Xxxxxxx 25,000 $175,000 25,000 $175,000 $350,000
0000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
Xxxxxx X. Xxxxxxxx Individual 3,333 $23,331 3,334 $23,338 $46,669
Retirement Account
0000 Xxxxxxxx Xxxxxxx
Xx. Xxxxx, XX 00000
Xxxxxxxxxx X. Xxxxxxx Revocable Trust 68,505 $479,535 68,504 $479,528 $959,063
17603 Ailanthus
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxxx and Xxxxx X. Xxxxxx 10,000 $70,000 10,000 $70,000 $140,000
Joint Caring Trust
000 Xxxxxxxx Xxxxx
Xx. Xxxxxxx, XX 00000
Xx. Xxxxx Xxxxxx 3,333 $23,331 3,334 $23,338 $46,669
00000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Xx. Xxxxx X. Xxxxx 4,000 $28,000 4,000 $28,000 $56,000
0000 Xxxxxxx Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Xx. Xxxxx Xxxxxxx 2,667 $18,669 2,666 $18,662 $37,331
000 Xxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Xx. Xxxxxxx X. Xxxxxx 2,768 $19,376 2,768 $19,376 $38,752
0000 Xxxxxxxxxxxx Xxx.
Xxxxxxx, XX 00000
Xx. Xxxxxxx X. Xxx 1,564 $10,948 1,563 $10,941 $21,889
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Tettambel Investments LLC 3,333 $23,331 3,334 $23,338 $46,669
0000 Xxxxxxxx
Xx. Xxxxx, XX 00000
Xx. Xxxx Xxxx 2,076 $14,532 2,076 $14,532 $29,064
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
A-7
62
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
Xx. Xxxxxx Xxxxxxx 333 $2,331 334 $2,338 $4,669
000 Xxxx Xxxxx Xxxxx
Xx. Xxxxx, XX 00000
Xx. Xxxxxxx Xxxxx 2,768 $19,376 2,767 $19,369 $38,745
0000 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Xx. Xxxxxxxxxxx X. Xxxxxxxx 2,076 $14,532 2,076 $14,532 $29,064
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Ms. Xxxxxxxx Xxxxxx 2,076 $14,532 2,076 $14,532 $29,064
0000 X Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Xx. Xxxxxxx X. Xxxxxx 2,076 $14,532 2,076 $14,532 $29,064
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
X-0
00
XXXXX XXXXXXX - , 0000
-----------------------------------------
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
Xxxxxx Investments, L.P. 761,904 $5,333,328 0 $0 $5,333,328
00000 Xxxxxxxxxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
RAB Partnership, L.P. 71,428 $499,996 0 $0 $499,996
00000 Xxxxxxxxxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Xxxxx Xxxxxx Xxxx 0000, X.X. 150,000 $1,050,000 0 $0 $1,050,000
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Bridge Street Special Opportunities Fund 2000, 100,000 $700,000 0 $0 $700,000
L.P
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
GS Capital Partners III, L.P. 1,703,155 $11,922,085 0 $0 $11,922,085
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
GS Capital Partners III Offshore, L.P. 468,217 $3,277,519 0 $0 $3,277,519
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxx & Co. Verwaltungs GmbH 78,628 $550,396 0 $0 $550,396
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Don Investment Group, L.P. 595,238 $4,166,666 0 $0 $4,166,666
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Centennial Fund V, L.P. 380,951 $2,666,657 0 $0 $2,666,657
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
A-9
64
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
Telecom Partners II, L.P. 238,096 $1,666,672 0 $0 $1,666,672
0000 Xxxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
OneLiberty Fund IV, L.P. 95,238 $666,666 0 $0 $666,666
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
OneLiberty Advisors Fund IV, L.P. 11,905 $83,335 0 $0 $83,335
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
X. X. Xxxxxxx XX, L.P. 2,035,714 $14,249,998 0 $0 $14,249,998
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Norwest Equity Partners VI, L.P. 595,238 $4,166,666 0 $0 $4,166,666
2800 Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Chase Venture Capital Associates, L.P. 1,285,715 $9,000,005 0 $0 $9,000,005
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Meritage Private Equity Fund L.P. 751,543 $5,260,801 0 $0 $5,260,801
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Meritage Private Equity Parallel 91,886 $643,202 0 $0 $643,202
Fund L.P.
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Meritage Entrepreneur Fund L.P. 13,714 $95,998 0 $0 $95,998
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Xx. Xxxxxx X. Xxxxxx 30,100 $210,700 0 $0 $210,700
00000 Xxxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
X-00
00
Xxxxxxxxx Xxxxxxxxx Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
Xx. Xxxxx X. Xxxxxxx 25,000 $175,000 0 $0 $175,000
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xx. Xxxxxx X. Xxxx 25,000 $175,000 0 $0 $175,000
00000 Xxxxxx Xxxxx
Xx. Xxxxx, XX 00000
Xx. Xxxx X. Xxxxxxx 25,000 $175,000 0 $0 $175,000
0000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
Xxxxxx X. Xxxxxxxx Individual 3,334 $23,338 0 $0 $23,338
Retirement Account
0000 Xxxxxxxx Xxxxxxx
Xx. Xxxxx, XX 00000
Xxxxxxxxxx X. Xxxxxxx Revocable Trust 68,504 $479,528 0 $0 $479,528
17603 Ailanthus
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxxx and Xxxxx X. Xxxxxx 10,000 $70,000 0 $0 $70,000
Joint Caring Trust
000 Xxxxxxxx Xxxxx
Xx. Xxxxxxx, XX 00000
Xx. Xxxxx Xxxxxx 3,334 $23,338 0 $0 $23,338
00000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Xx. Xxxxx X. Xxxxx 4,000 $28,000 0 $0 $28,000
0000 Xxxxxxx Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Xx. Xxxxx Xxxxxxx 2,666 $18,662 0 $0 $18,662
000 Xxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Xx. Xxxxxxx X. Xxxxxx 2,768 $19,376 0 $0 $19,376
0000 Xxxxxxxxxxxx Xxx.
Xxxxxxx, XX 00000
Xx. Xxxxxxx X. Xxx 1,563 $10,941 0 $0 $10,941
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
A-11
66
Remaining Preferred Stock Total
Purchases on Closing Date Subscription Obligations Amount
------------------------- ------------------------ ------
Purchaser Shares Amount Shares Amount
--------- ------ ------ ------ ------
Tettambel Investments LLC 3,334 $23,338 0 $0 $23,338
0000 Xxxxxxxx
Xx. Xxxxx, XX 00000
Xx. Xxxx Xxxx 2,076 $14,532 0 $0 $14,532
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xx. Xxxxxx Xxxxxxx 334 $2,338 0 $0 $2,338
000 Xxxx Xxxxx Xxxxx
Xx. Xxxxx, XX 00000
Xx. Xxxxxxx Xxxxx 2,767 $19,369 0 $0 $19,369
0000 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Xx. Xxxxxxxxxxx X. Xxxxxxxx 2,076 $14,532 0 $0 $14,532
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Ms. Xxxxxxxx Xxxxxx 2,076 $14,532 0 $0 $14,532
0000 X Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Xx. Xxxxxxx X. Xxxxxx 2,076 $14,532 0 $0 $14,532
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
TOTAL PROCEEDS: $204,536,178
A-12
67
EXHIBIT E
April , 2000
The Purchasers Named on Exhibit A hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 6.1.5 of
the Securities Purchase Agreement, dated as of March 31, 2000 (the "Purchase
Agreement"), by and between Xxxxxxx Communications, Inc., a Delaware corporation
(the "Company"), and the Purchasers named therein. The capitalized terms not
otherwise defined herein are used herein as defined in the Purchase Agreement.
In connection herewith, we have examined and relied as to
matters of fact upon such documents, certificates of public officials,
certificates and statements of officers of the Company, corporate records and
instruments, and have made such investigations of law, as we have deemed
necessary or appropriate for purposes of enabling us to render this opinion, and
we have relied upon the accuracy of the representations and warranties of the
Purchasers in Article V of the Purchase Agreement. In our examination of the
foregoing, we have assumed the genuineness of all signatures (except the
signatures of officers of the Company), the legal competence and capacity of
each Person executing documents (other than the capacity of officers of the
Company), the authenticity of all documents submitted to us as originals and the
conformity to original documents of all documents submitted to us as copies or
drafts of documents to be executed and the due authorization, execution and
delivery of all agreements (other than the due authorization, execution and
delivery on behalf of the Company of each of the Financing Agreements) where due
authorization, execution and delivery are a prerequisite to the effectiveness
thereof. Whenever this opinion refers to matters within our "knowledge" or
"known to us" such reference means that, during the course of our representation
of the Company, including in connection with the transactions referenced herein,
we have requested information of the Company concerning the matter referred to
and no information has come to the attention of Xxxx X. Xxxxxx or other
attorneys currently employed by our Firm devoting substantive attention thereto
during the past year, which has given us actual knowledge of the existence (or
absence) of facts to the contrary; we have not undertaken any other independent
investigation of such factual matters, and no inference should be drawn to the
contrary from the fact of our representation of the Company.
Based upon the foregoing and in reliance thereon, and subject
to the qualifications and limitations stated herein, it is our opinion that:
1. The Company is a corporation validly existing in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority to own its property and to carry on its business as now
being conducted and the Company is duly qualified to do business as a foreign
corporation and is in good standing in the State of Missouri; each of the
Subsidiaries is a corporation validly existing in good standing under the laws
of the state of its
68
incorporation and has the requisite power and authority to own its property and
to carry on its business as now being conducted;
2. The execution, delivery and performance by the Company of
each of the Financing Agreements, and the issuance and sale by the Company of
the Series B Preferred Stock under the Purchase Agreement (a) are within its
corporate power and authority, (b) have been duly authorized by all necessary
corporate action of the Company, and (c) do not (i) violate the Company's
Certificate of Incorporation or by-laws, (ii) breach or result in a default
under any provision of, or result in the creation of any Lien upon any Property
pursuant to, any license, permit, agreement or instrument to which the Company
is a party which is known to us, including those listed on any of the schedules
to the Purchase Agreement, (iii) violate any applicable law or regulation, or
(iv) violate any existing obligation of the Company under any order, judgment,
writ or injunction known to us which is applicable to the Company, the
non-compliance with which would materially adversely affect the consolidated
business, operations or financial condition of the Company and its Subsidiaries;
3. Each of the Financing Agreements has been duly executed and
delivered by the Company, and assuming due authorization, execution and delivery
of each of the Financing Agreements by each of the Purchasers, each of the
Financing Agreements is a valid and binding obligation of the Company
enforceable in accordance with its terms, except as such enforcement may be
limited by any bankruptcy, insolvency, reorganization, moratorium or other laws
now or hereafter in effect relating to or affecting creditors' rights generally,
and by general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law), including, without limitation,
concepts of materiality, good faith and fair dealing and the possible
unavailability of specific performance, injunctive relief or other equitable
remedies;
4. The execution, delivery and performance by the Company of
each of the Financing Agreements, and the issuance and sale by the Company of
the Series B Preferred Stock under the Purchase Agreement, do not require the
approval or consent of, or any filing with, any governmental authority or agency
or, to our knowledge, any other Person, except such filings as may be required
after the date hereof under the Securities Act or such approvals, consents and
filings as may be required under state securities laws in connection with the
issuance and sale by the Company of the Series B Preferred Stock.
5. The authorized capital stock of the Company consists solely
of 200,000,000 shares of Common Stock and 100,000,000 shares of Preferred Stock,
of which 26,850,000 shares have been designated as Series A Preferred Stock,
3,125,000 shares have been designated as Series A-1 Preferred Stock and
32,500,000 shares have been designated as Series B Preferred Stock, and based
solely upon a review of the stock records and minute book and a certificate of
an officer of the Company, shares of Common Stock, 26,850,000
shares of Series A Preferred Stock and 3,125,000 shares of Series A-1 Preferred
Stock are duly authorized, validly issued and outstanding, fully paid and
non-assessable;
6. The Series B Preferred Stock to be issued and sold to the
Purchasers pursuant to the Purchase Agreement and the Conversion Stock have been
duly authorized and, upon issuance in accordance with the terms of the Related
Agreements, will be validly issued and
69
outstanding, fully paid and non-assessable shares, and the Company has reserved
by appropriate corporate action up to 32,500,000 shares of Common Stock for such
issuance;
7. To our knowledge, there are no outstanding rights (either
preemptive or other) or options to subscribe for or purchase from the Company,
or outstanding warrants or other agreements providing for or requiring the
issuance by the Company of, any capital stock of the Company or any securities
convertible into or exchangeable for any capital stock of the Company except for
(a) the Series B Preferred Stock (including shares issuable on the date hereof)
and the shares of Common Stock issuable upon conversion of the Series B
Preferred Stock, (b) the Series A Preferred Stock and the shares of Common Stock
issuable upon conversion of the Series A Preferred Stock, (c) the Series A-1
Preferred Stock and the shares of Common Stock issuable upon conversion of the
Series A-1 Preferred Stock, (d) the Founders' Warrants and the shares of Common
Stock issuable upon exercise thereof, (e) shares of Common Stock authorized for
issuance pursuant to the Option Plan, and (f) rights provided in the
Stockholders' Agreement; and
8. The issuance and sale of the Series B Preferred Stock by
the Company to the Purchaser under the circumstances contemplated by the
Purchase Agreement will be exempt from the registration provisions of Section 5
of the Securities Act of 1933, as amended.
This will confirm that we are not aware of any action,
proceeding or investigation pending or overtly threatened against the Company
before any court or administrative agency other than as described in Schedule
4.27 to the Purchase Agreement.
Except as expressed in paragraph 8 above, no opinion is
expressed in paragraph 2(c)(iii) above with respect to securities laws or
regulations. No opinion is expressed in paragraph 3 above with respect to the
enforceability of the indemnity and contribution provisions contained in the
Purchase Agreement and the Registration Rights Agreement or of the waiver of
jury trial provisions contained in Article XVI of the Purchase Agreement. The
opinion expressed in paragraph 3 above with respect to Article XXI of the
Purchase Agreement, Section 7 of the Stockholders' Agreement and paragraph 12(j)
of the Registration Rights Agreement is subject to generally applicable rules of
law that may, if any provision of the Purchase Agreement, Stockholders'
Agreement or Registration Rights Agreement, as the case may be, is held to be
prohibited by or invalid under applicable law, limit the enforceability of the
remainder thereof to circumstances in which the prohibited or invalid portion
thereof is not an essential part of the parties' agreement.
We express no opinion as to any compliance by the Company and
its Subsidiaries with any federal, state or local statute, rule, regulation,
order or other requirement dealing with the regulation of telecommunications
carriers, per se.
This opinion is not rendered with respect to any laws other
than the federal laws of the United States, the laws of the States of Missouri
and New York and the General Corporation Law of the State of Delaware.
70
This opinion is furnished to you by us as special counsel for
the Company pursuant to Section 6.1.5 of the Purchase Agreement and is given
solely for your benefit, may not be relied upon by any other Person and shall
not be distributed to any other Person without our prior written consent.
Yours very truly,
XXXXX XXXX LLP