FIRST AMENDMENT TO
PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AGREEMENT (the "Amendment") is made
as of June 10, 1994, by and among United USN, Inc., a Delaware corporation (the
"Company"), CIBC Wood Gundy Ventures, Inc., a Delaware corporation ("CIBC"),
Chemical Venture Capital Associates, a California limited partnership
("Chemical"), and Xxxxxxx Venture Partners IV - Direct Fund L.P., a Delaware
limited partnership ("Xxxxxxx" and, collectively with CIBC and Chemical, the
"Purchasers"), and amends that certain Purchase Agreement dated as of April 20,
1994 by and among the Company, CIBC and Chemical (the "Purchase Agreement").
WHEREAS, Xxxxxxx desires to purchase shares of Common Stock, par value
$.01 per share (the "Common Stock"), of the Company and Series A 10% Senior
Cumulative Preferred Stock, par value $1.00 per share (the "Preferred Stock"),
of the Company; and
WHEREAS, the Company and the Purchasers desire to enter into this
Amendment to make Xxxxxxx a party to the Purchase Agreement and to amend the
Purchase Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Xxxxxxx hereby agrees that by its execution of this Amendment it
shall become a party to and be bound by the terms and provisions of the Purchase
Agreement, as amended hereby.
2. At the closing of the transactions contemplated by this Amendment
(the "Closing"), the Company shall sell to Xxxxxxx and, subject to the terms and
conditions set forth herein, Xxxxxxx shall purchase from the Company the number
of shares of Preferred Stock set forth opposite Xxxxxxx'x name on the Tranche I
Schedule of Purchasers attached hereto at a price of $1,000 per share and the
number of shares of Common Stock set forth opposite Xxxxxxx'x name on the
Tranche I Schedule of Purchasers attached hereto at a price of $1.077 per share.
3. The Closing shall take place at the offices of the Company, 00
Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 at such date and time
as may be mutually agreeable to the Company and the Purchasers, or at such other
place as may be mutually agreeable to the Company and the Purchasers. At the
Closing, the Company shall deliver to Xxxxxxx stock certificates evidencing the
Preferred Stock and the Common Stock to be purchased by Xxxxxxx, registered in
Xxxxxxx'x or its nominee's name, upon payment of the purchase price thereof by a
cashier's or certified check, or by wire transfer of immediately available funds
to the
Company's account at Madison Bank & Trust, in the amount set forth opposite
Xxxxxxx'x name on the Tranche I Schedule of Purchasers.
4. The obligation of Xxxxxxx to purchase and pay for the Preferred
Stock and the Common Stock at the Closing is subject to the Company's tendering
to Xxxxxxx duly executed certificates for the Preferred Stock and Common Stock
to be purchased by Xxxxxxx hereunder at the Closing.
5. The obligation of the Company to issue the Preferred Stock and the
Common Stock to be purchased by Xxxxxxx hereunder at the Closing is subject to
Xxxxxxx'x tendering to the Company, by cashier's check or certified check, or by
wire transfer of immediately available funds to the Company's account at Madison
Bank & Trust of the purchase price thereof in the aggregate amount of
$2,500,000.
6. The Company shall authorize the issuance and sale to Xxxxxxx of an
aggregate of 4,950 shares of Preferred Stock and 44,949 shares of Common Stock.
7. The Company, CIBC and Chemical hereby agree that Xxxxxxx, by its
execution of this Amendment pursuant to which it has become a party to the
Purchase Agreement, shall be entitled to rely on the representations and
warranties contained in the Purchase Agreement and shall be afforded all rights
and benefits as a Purchaser under the Purchase Agreement as if Xxxxxxx
originally had been a party to the Purchase Agreement on the date of execution.
8. The Company hereby represents and warrants to Xxxxxxx that there
has been no material adverse change in the financial condition, operating
results, assets, operations, business prospects or employee relations of the
Company since the date of the Purchase Agreement.
9. Xxxxxxx hereby represents that it is acquiring the shares of Common
Stock and Preferred Stock purchased hereunder or acquired pursuant hereto for
its own account with the present intention of holding such securities for
purposes of investment, and that it has no intention of selling such securities
in a public distribution in violation of the federal securities laws or any
applicable state securities laws; provided that nothing contained herein shall
prevent Xxxxxxx from transferring such securities in compliance with the
provisions of Section 5 of the Purchase Agreement. Each certificate for such
shares shall be imprinted with a legend in substantially the following form:
"The securities represented by this certificate were originally issued on
June 10, 1994, and have not been
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registered under the Securities Act of 1933, as amended. The transfer of
the securities represented by this certificate is subject to the conditions
specified in the Purchase Agreement, dated as of April 20, 1994, as
amended, between the issuer (the "Company") and certain investors, and the
Company reserves the right to refuse the transfer of such securities until
such conditions have been fulfilled with respect to such transfer. A copy
of such conditions shall be furnished by the Company to the holder hereof
upon written request and without charge."
10. The Company hereby agrees that Xxxxxxx may rely on the Officer's
Certificate and Secretary's Certificate delivered by the Company at the closing
of the transactions contemplated by the Purchase Agreement on April 20, 1994.
11. CIBC and Chemical hereby waive any and all rights they may have
pursuant to Section 4J of the Purchase Agreement to purchase the Preferred Stock
and the Common Stock being sold to Xxxxxxx pursuant to the terms and provisions
of this Amendment.
12. Section 1D of the Purchase Agreement is amended and restated as
follows:
1D. Tranche II Participation.
(i) The board of directors of the Company shall issue a Tranche II
Notice indicating the number of shares of Stock, up to the number of shares
of Stock set forth opposite each Purchaser's name on the Tranche II
Schedule of Purchasers less the number of shares of such Stock which
previously have been purchased by the Purchasers or a Third Party Purchaser
in any Tranche II Closing, which the Company desires to sell to each
Purchaser in a Tranche II Purchase. If a Purchaser determines not to fully
participate in a Tranche II Purchase, such Declining Purchaser shall
deliver a Decline Notice to the Company and the other Purchasers within
five days after receipt of the Tranche II Notice. Upon receipt of a Decline
Notice, a Participating Purchaser, at its option, may within seven days
elect to purchase any or a11 of its Pro Rata Share of the Declined Stock.
To the extent the Participating Purchasers have determined not to purchase
all of their Pro Rata Share of the Declined Stock, the Declined Stock shall
be reoffered to a Participating Purchaser purchasing all of its Pro Rata
Share of the Declined Stock and such Participating Purchaser, at its
option, may within seven days elect to purchase any or all of the remaining
Declined Stock. If the Participating Purchasers determine not to purchase
all of the Declined Stock, the Participating Purchasers may invite
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a Third Party Purchaser to purchase any remaining shares of Declined Stock.
If a Third Party Purchaser determines to purchase any portion of the
Declined Stock, the Participating Purchasers shall deliver a Third Party
Purchaser Notice to the Company and the Declining Purchasers. Upon receipt
of a Third Party Purchaser Notice, the Declining Purchasers shall have the
right to purchase all of their Pro Rata Share of the Stock to be purchased
by the Third Party Purchaser as set forth in the Third Party Purchaser
Notice. In order to exercise their purchase rights hereunder, the Declining
Purchasers must within five days after receipt of the Third Party Purchaser
Notice deliver a written notice to the Company and the Participating
Purchasers describing their election hereunder.
(ii) The Company shall give each Purchaser written notice of a Change
of Control at least 30 days prior to the consummation of a Change of
Control. At any time within five days after the receipt by a Purchaser of
the written notice of a Change of Control or at any time within 30 days
after the fifth anniversary of the date of this Agreement, each of the
Purchasers shall have the option in a Tranche II Purchase to purchase from
the Company up to the number of shares of Stock set forth opposite each
Purchaser's name on the Tranche II Schedule of Purchasers less the number
of shares of such Stock which previously have been purchased by the
Purchasers or a Third Party Purchaser in any Tranche II Closing. A
Purchaser may exercise its purchase rights hereunder by delivering a
Tranche II Demand. If a Purchaser does not fully exercise its option
pursuant to this subparagraph lD(ii) or fails to deliver a Tranche II
Demand within the applicable option period specified above, a Participating
Purchaser may purchase any or all of its Pro Rata Share of the remaining
shares of Stock set forth on the Tranche II Schedule of Purchasers by
delivering an additional Tranche II Demand within five days after the
expiration of the applicable option period. To the extent the Participating
Purchasers have determined not to purchase all of their Pro Rata Share of
the remaining shares of Stock set forth on the Tranche II Schedule of
Purchasers, a Participating Purchaser purchasing all of its Pro Rata Share
of such remaining Stock may purchase any or all of the remaining shares of
Stock set forth on the Tranche II Schedule of Purchasers by delivering an
additional Tranche II Demand within ten days after the expiration of the
applicable option period.
13. Section 4A(iii) of the Purchase Agreement is amended and restated
as follows:
(iii) within 90 days after the end of each fiscal year, statements of
income and cash flows of each of the
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Company, Network and UTS and consolidating and consolidated statements of
income and cash flows of the Company and its Subsidiaries for such fiscal
year, and balance sheets of each of the Company, Network and UTS and
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such fiscal year, setting forth in each case
comparisons to the annual budget and to the preceding fiscal year, all
prepared in accordance with generally accepted accounting principles,
consistently applied, and accompanied by (a) with respect to the
consolidated portions of such statements, an opinion containing no
exceptions or qualifications (except for qualifications regarding specified
contingent liabilities) of an independent accounting firm of recognized
national standing acceptable to the holders of 66 2/3% of the Investor
Preferred Stock and the holders of 66 2/3% of the Investor Common Stock,
(b) a certificate from such accounting firm, addressed to the Company's
board of directors, stating that in the course of its examination nothing
came to its attention that caused it to believe that there was an Event of
Noncompliance in existence or that there was any other default by the
Company or any Subsidiary in the fulfillment of or compliance with any of
the terms, covenants, provisions or conditions of any other material
agreement to which the Company or any Subsidiary is a party or, if such
accountants have reason to believe any Event of Noncompliance or other
default by the Company or any Subsidiary exists, a certificate specifying
the nature and period of existence thereof, and (c) a copy of such firm's
annual management letter to the board of directors;
14. Section 4D(xix) of the Purchase Agreement is amended and restated
as follows:
(xix) increase the authorized size of its board of directors above 11
members or decrease the authorized size of its board of directors below 5
members;
15. Section 6E of the Purchase Agreement is amended and restated as
follows:
6E. Financial Statements. Attached hereto as the "Financial
Statements Schedule" is the unaudited consolidated balance sheet of Network
as of April 15, 1994 (the "Latest Balance Sheet"), and statements of income
and cash flows (or the equivalent) for the period from inception through
April 15, 1994. Each of the foregoing financial statements (including in
all cases the notes thereto, if any) is accurate and complete in all
material respects, is consistent with the books and records of Network
(which, in turn, are accurate and complete in all material respects) and
has been prepared in
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accordance with generally accepted accounting principles, consistently
applied.
16. Section 7A of the Purchase Agreement is amended and restated as
follows:
7A. The Put. At any time after the Put Trigger Date, Purchasers
holding 30% of the Investor Common Stock shall have the right to Put any or
all of the Investor Common Stock held by such Purchasers at the Put Price
by delivering the Put Notice; provided, however, that no Purchaser shall
have the right to Put an amount of Investor Common Stock which is less than
25% of the amount of Investor Common Stock held by such Purchaser on the
date hereof after giving effect to the Tranche I Closing or to deliver any
Put Notice within six months of the delivery of any previous Put Notice.
Within five days after receipt of a Put Notice, the Company shall deliver
the Exercise Notice to all other Purchasers. Each Purchaser receiving an
Exercise Notice may request to participate in the Put by delivering a
Participation Notice to the Company within five days after receipt of the
Exercise Notice. The right to exercise the Put will inure to the benefit of
all transferees of the Investor Common Stock.
16. The following definitions set forth in Section 8 of the Purchase
Agreement are amended and restated as follows:
"Decline Notice" means a written notice delivered by the
Declining Purchaser to the Company and the other Purchasers within five
days of the Declining Purchaser's receipt of the Tranche II Notice
specifying the number of shares of Stock the Declining Purchaser will
purchase in the Tranche II Purchase.
"Purchasers" means CIBC, Chemical and Xxxxxxx collectively and
"Purchaser" means CIBC, Chemical or Xxxxxxx individually.
"Required Approval" means the Company must have delivered a
written notice to the Purchasers stating the action proposed to be taken by
the Company and Purchasers holding at least 66 2/3% of the outstanding
Investor Common Stock must have approved such action by a written approval
delivered to the Company.
"Third Party Purchaser Notice" means a written notice delivered
by a Participating Purchaser to the Company and the Declining Purchasers
specifying the name of a proposed Third Party Purchaser and the number of
shares of Stock to be purchased by such Third Party Purchaser.
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"Tranche II Demand" means a written notice delivered by a
Purchaser to the Company and the other Purchasers exercising its option
pursuant to subparagraph lD(ii) and specifying the number of shares of
Stock to be purchased in a Tranche II Purchase and the time and place where
such Tranche II Closing shall occur.
17. The following definitions are added to Section 8 of the Purchase
Agreement:
"Xxxxxxx" means Xxxxxxx Venture Partners IV - Direct Fund L.P., a
Delaware limited partnership.
"Pro Rata Share" means each Purchaser's pro rata share based upon
such Purchaser's proportionate ownership of all Investor Common Stock on a
fully diluted basis, excluding for purposes of Section 1D the shares of
Investor Common Stock held by a Declining Purchaser.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the date first written above.
UNITED USN, INC.
/s/ Xxxxxx X. Xxxxxxxxxxx
----------------------------------
By: Xxxxxx X. Xxxxxxxxxxx
Its: Chief Executive Officer
CIBC WOOD GUNDY VENTURES, INC.
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
By: Xxxxxxx X. Xxxxxx
Its: President
CHEMICAL VENTURE CAPITAL ASSOCIATES
/s/ Xxxxxx X. Xxxxxxx, Xx.
----------------------------------
By:_______________________________
Its:______________________________
XXXXXXX VENTURE PARTNERS IV - DIRECT
FUND L.P.
By: BACK BAY PARTNERS XII L.P.
By: XXXXXXX VENTURE PARTNERS, INC.
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
By:_______________________________
Its:______________________________
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TRANCHE I SCHEDULE OF PURCHASERS
--------------------------------
Total Total
No. of Purchase No. of Purchase
Shares Price Shares Price
of for of for
Names and Preferred Preferred Common Common
Addresses Stock Stock Stock Stock
--------- --------- ---------- ------ -------
Chemical Venture Capital 2,475 $2,475,000 25,000 $25,000
Associates
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
CIBC Wood Gundy Ventures, Inc. 2,475 $2,475,000 25,000 $25,000
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxxxxxx Venture Partners IV - 2,475 $2,475,000 23,210 $25,000
Direct Fund L.P.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
--------- ---------- ------ -------
TOTAL 7,425 $7,425,000 73,210 $75,000
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TRANCHE II SCHEDULE OF PURCHASERS
---------------------------------
Total Total
No. of Purchase No. of Purchase
Shares Price Shares Price
of for of for
Names and Preferred Preferred Common Common
Addresses Stock Stock Stock Stock
--------- --------- ---------- ------ -------
Chemical Venture Capital 2,475 $2,475,000 23,210 $25,000
Associates
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
CIBC Wood Gundy Ventures, Inc. 2,475 $2,475,000 23,210 $25,000
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxxxxxx Venture Partners IV - 2,475 $2,475,000 21,739 $25,000
Direct Fund L.P.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
--------- ---------- ------ -------
TOTAL 7,425 $7,425,000 68,159 $75,000
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SCHEDULE OF PURCHASERS
----------------------
Purchaser Number of Shares
of Common Stock
Chemical Venture Capital Associates 20,784
CIBC Wood Gundy Ventures, Inc. 20,784
BT Capital Partners, Inc. 31,177
Xxxxxxx Venture Partners IV - Direct Fund, L.P. 20,784
Northwood Ventures 4,739
Northwood Capital Partners LLC 1,496
Enterprises and Transcommunications, L.P. 10,393
-------
TOTAL 110,157
