PATTCO, INC./TELECOMMUTE SOLUTIONS
FINANCING AGREEMENT
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This Agreement, made and entered into this ________day of August, 1998,
among PATTCO, INC. a Kentucky corporation with its principal office located at
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Purchaser"), TELECOMMUTE SOLUTIONS GP, INC., a Texas corporation with its
principal office located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Company") and CHARTER COMMUNICATIONS INTERNATIONAL, INC., a Nevada
corporation with its principal office located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Charter").
W I T N E S S E T H:
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WHEREAS, Purchaser intends to purchase from the Company and the Company
intends to sell and issue to Purchaser, on the terms and conditions set forth
herein, 2,000 shares of the one ($1.00) dollar par value preferred stock of the
Company, which stock shall have certain conversion features; and
WHEREAS, Purchaser and the Company intend to set forth the terms and
conditions relating to Purchaser's right to purchase 2,000 additional shares of
preferred stock of the Company, such shares also to have certain conversion
features; and
WHEREAS, the parties intend to set forth herein additional terms and
conditions relating to the foregoing transactions
WHEREAS, the Company and its shareholders desire to set forth certain terms
relating to the ownership of the Company's capital stock;
NOW, THEREFORE, for and in consideration of the premises and mutual
promises herein set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. DEFINITIONS.
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1.1 First Tranche Preferred Stock. The term "First Tranche Preferred
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Stock" shall mean the 2,000 shares of Series A preferred stock of the Company
("Series A Preferred Stock") issued to Purchaser pursuant to Section 2.1 hereof.
1.2 Second Tranche Preferred Stock. The term "Second Tranche Preferred
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Stock" shall mean the 2,000 shares of Series B preferred stock of the Company
("Series B Preferred Stock") which Purchaser shall have the right and option to
purchase pursuant to Section 3.1 hereof.
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1.3 Second Tranche Purchase Period. The term "Second Tranche Purchase
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Period" shall mean the time period commencing on the date of this Agreement and
terminating on the first anniversary of this Agreement.
1.4 Conversion Period. The term "Conversion Period" shall mean the
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time period commencing on the date of this Agreement and terminating on the
third anniversary of this Agreement.
1.5 Preferred Shares. The term "Preferred Shares" shall mean the
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shares of preferred stock of the Company constituting the First Tranche
Preferred Stock and, if issued, the Second Tranche Preferred Stock.
1.6 Company Common Stock. The term "Company Common Stock" shall mean
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the shares of $1.00 par value capital common stock of the Company into which the
Preferred Shares may be converted pursuant to the terms of Sections 2.3 or 3.3
hereof.
1.7 Charter Common Stock. The term "Charter Common Stock" shall mean
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the shares of $.00001 par value capital common stock of Charter into which the
Preferred Shares may be converted pursuant to the terms of Sections 2.3 or 3.3
hereof.
2. FIRST TRANCHE PREFERRED STOCK. Purchaser hereby subscribes for and
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purchases, and the Company hereby sells and issues to Purchaser, the First
Tranche Preferred Stock on the following terms and conditions:
2.1 Purchase Price and Issuance. Upon execution of this Agreement,
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Purchaser has paid, by bank check or wire transfer, and the Company hereby
acknowledges receipt of, the purchase price for the First Tranche Preferred
Stock in the aggregate amount of $2,000,000. In exchange for such purchase
price, the Company has issued the First Tranche Preferred Stock to Purchaser and
has delivered to Purchaser the certificate reflecting such Preferred Shares (the
"Closing").
2.2 Rights and Privileges of First Tranche Preferred Stock. The
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Preferred Shares constituting the First Tranche Preferred Stock have the rights,
privileges, preferences and restrictions set forth on Exhibit A attached hereto
and made a part hereof.
2.3 First Tranche Conversion Rights. At any time during the Conversion
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Period, Purchaser may give written notice to the Company and to Charter of its
election to exercise the conversion of the First Tranche Preferred Stock for
either, at Purchaser's sole discretion: (i) 2,643 shares of Company Common
Stock, or (ii) 666,667 shares of Charter Common Stock.
2.4 Conversion Procedure. Set forth below is the conversion procedure
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which shall be applicable to the conversion of the First Tranche Preferred Stock
pursuant to Section 2.3 and the conversion of the Second Tranche Preferred Stock
pursuant to Section 3.3:
(i) in order to exercise such conversion rights, Purchaser must tender
written notice to the Company and to Charter during the Conversion Period
setting forth the number of the Preferred Shares to be converted, and
designating whether the conversion shall be to Company Common Stock or Charter
Common Stock;
(ii) such conversion rights may be exercised for less than all of the
Preferred Shares constituting the First Tranche Preferred Stock or the Second
Tranche Preferred Stock, as the case may be, in exchange for a pro rata number
of shares of Company Common Stock or Charter Common Stock; in addition, the
conversion can be effectuated partially for Company Common Stock and partially
for Charter Common Stock, again on a pro rata basis; and
(iii) within thirty (30) days of the giving of such conversion notice,
Purchaser shall deliver to the Company the stock certificate for the Preferred
Shares to be converted (with proper endorsement transferring title thereto to
the Company) and, in exchange therefor, the Company or Charter, as the case may
be, shall as soon as possible issue to Purchaser the Company Common Stock or
Charter Common Stock, as the case may be, and shall deliver a stock certificate
reflecting same. If the conversion is effectuated for less than all of the
First Tranche Preferred Stock or Second Tranche Preferred Stock, as the case may
be, the Company shall redeliver to Purchaser a replacement stock certificate
reflecting the remaining unconverted Preferred Shares.
3. SECOND TRANCHE PREFERRED STOCK. Purchaser shall have the right and
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option to purchase the Second Tranche Preferred Stock on the following basis:
3.1 Purchase of Second Tranche Preferred Stock. At any time during the
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Second Tranche Purchase Period, Purchaser may give written notice to the Company
exercising its right to purchase all (but not less than all) of the Second
Tranche Preferred Stock and, together with such written election, Purchaser
shall tender by bank check or wire transfer the purchase price for the Second
Tranche Preferred Stock in the amount of $2,000,000. Upon timely receipt of
such notice and purchase price, the Company shall issue the Second Tranche
Preferred Stock to Purchaser and shall, as soon thereafter as practicable,
deliver to Purchaser a certificate reflecting such Preferred Shares (the "Second
Closing").
3.2 Rights and Preferences of Second Tranche Preferred Stock. The
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Preferred Shares constituting the Second Tranche Preferred Stock shall have
rights, preferences, privileges and restrictions identical to the First Tranche
Preferred Stock, except with respect to the conversion rights set forth in
Section 3.3.
3.3 Second Tranche Conversion Rights. At any time during the remaining
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portion of the Conversion Period, Purchaser may give written notice to the
Company and to Charter of its election to exercise the conversion of the Second
Tranche Preferred Stock for either: (i) 1,057 shares of Company Common Stock,
or (ii) 500,000 shares of Charter Common Stock. The procedure for the exercise
of such conversion shall be as set forth in Section 2.4 hereof.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
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represent and warrant to Purchaser as follows, as of the date of this Agreement
and as of the date of the Second Closing:
4.1 Organization; Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Texas. The Company has all requisite corporate power and authority to conduct
its business and operations as presently conducted and to own and hold the
property and assets that it owns or holds. The Company is duly qualified to
transact business in each jurisdiction where the ownership and operation of the
Company's properties requires such qualification.
4.2 Corporate Power; Authorization. The Company has all requisite
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legal and corporate power and authority to execute, deliver and perform this
Agreement. The Company has duly taken all corporate actions necessary to
authorize the execution, delivery and performance by the Company of this
Agreement. This Agreement has been duly executed and delivered by the Company
and is the valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other laws relating to the enforcement
of creditors' rights generally.
4.3 No Breach. The Company is not in violation of any term of its
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articles of incorporation or bylaws. The execution, delivery and performance of
this Agreement do not and will not contravene the articles of incorporation or
bylaws of the Company and do not and will not (with the passage of time or the
giving of notice or both) conflict with or result in a breach or violation by
the Company of, or constitute a default by the Company under or pursuant to, any
law, judgment, contract, arrangement or understanding to which the Company is a
party or by which the Company is subject or bound.
4.4 Valid Issuance. The First Tranche Preferred Stock and Second
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Tranche Preferred Stock, when purchased and issued in accordance with the
provisions of this Agreement, will be validly issued, fully paid and
nonassessable shares of the Company's preferred stock. The issuance of the
Preferred Shares pursuant to this Agreement will comply with all applicable
laws, including federal and state securities laws, and will not violate the
preemptive rights of any person. The Company Common Stock and/or Charter Common
Stock issuable upon conversion of the Preferred Shares being purchased under
this Agreement will be, upon issuance and delivery in accordance with the terms
of this Agreement, duly and validly issued, fully paid and nonassessable and
free from restrictions on transfer other than restrictions on transfer under
applicable federal and state securities laws. The issuance of the Company
Common Stock and/or Charter Common Stock upon conversion of the Preferred Shares
will comply with all applicable laws, including federal and state securities
laws, and will not violate the preemptive rights of any person.
4.5 Finders and Brokers. The Company has not entered into any
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contract, arrangement or understanding with any person or entity which will
result in the obligation of Purchaser or the Company to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
transactions contemplated hereby.
4.6 Books and Records. All books, records and financial statements
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pertaining to the Company have been made available for review by Purchaser and
its representatives and are correct and complete in all material respects, have
been maintained by the Company in accordance with good business practices and
accurately reflect the basis for the financial condition and results of
operations of the Company set forth in the financial statements.
4.7 Capitalization.
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(a) The authorized capital stock of the Company consists of [i] 100,000
Common Shares with $1.00 par value per share ("Common Shares"), of which at the
date hereof 5,100 shares are validly issued and outstanding, fully paid and
nonassessable, and owned, beneficially and of record, by Charter, and [ii]
100,000 shares of preferred stock, $1.00 per share par value, none of which at
the date hereof are validly issued and outstanding. Of the 100,000 shares of
preferred stock, 2,000 shares have been designated as Series A Preferred Stock,
and 2,000 shares have been designated as Series B Preferred Stock (together, the
Series A Preferred Stock and Series B Preferred Stock are referred to as
"Preferred Shares"). The Series A Preferred Stock has the rights and privileges
set forth in Section 2.2 and the Series B Preferred Stock has the rights and
privileges set forth in Section 3.2. 3,700 Common Shares have been duly and
validly reserved for issuance upon conversion of the Preferred Shares issued to
the Purchaser. Except for Charter's ownership of 5,100 shares of Company Common
Stock and the provision for 1,200 shares of Company Common Stock to be subject
to the equity plan for the Company's management pursuant to Section 6.3 hereof,
and except for the conversion rights relating to the Preferred Shares as set
forth herein, there are no other parties with any subscription, calls,
commitments, ownership, option, warrant or other rights (including conversion or
preemptive rights and rights of first refusal) to the capital stock of the
Company, or proxy or stockholder agreements or agreements of any character
relating to shares of the Company's capital stock or the Preferred Shares to be
issued hereunder or any instruments that can be converted into shares of the
Company's capital stock or the Preferred Shares to be issued hereunder, except
for the provision for 1,200 shares of Company Common Stock to be subject to the
equity plan for the Company's management pursuant to Section 6.3 hereof. None
of the shares of the Company's capital stock have been issued in violation of
any preemptive rights. All issuances, transfers, or purchases of the capital
stock of the Company have been in compliance with all applicable agreements and
all applicable laws, including federal and state securities laws, and all taxes
thereon, if any, have
been paid. There are no contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company.
(b) The authorized capital stock of Charter is as described in the
Subscription Agreement dated July 15, 1998, between Charter and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇.
4.8 Financial Statements. The Company has delivered to Purchaser a
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complete and correct copy of the audited balance sheet of the Company as at June
30, 1998 and the related statements of operations and cash flows compiled by the
Company and reviewed as described in such Balance Sheet, and the unaudited
balance sheet (the "Balance Sheet") of the Company as at the date set forth on
such Balance Sheet (the "Balance Sheet Date") and the related statement of
operations and cash flows compiled by the Company (collectively, the "Financial
Statements"), copies of which are attached as Exhibit E. The Financial
Statements are complete and correct, are in accordance with the books and
records of the Company and present fairly the financial condition and results of
operations of the Company, as at the dates and for the periods indicated, and
have been prepared in accordance with generally accepted accounting principles
consistently applied, except that the Financial Statements that have been
prepared for the internal use of management may not be in accordance with
generally accepted accounting principles because of the absence of footnotes
normally contained herein and are subject to normal year-end audit adjustments
which in the aggregate will not be material.
4.9 Absence of Liabilities. The Company did not have, at the Balance
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Sheet Date, any liabilities of any type which in the aggregate exceeded $50,000,
whether absolute or contingent, which were not fully reflected on the Balance
Sheet, and, since the Balance Sheet Date, the Company has not incurred or
otherwise become subject to any such liabilities or obligations except in the
ordinary course of business.
4.10 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of the Company
in connection with the execution and delivery of this Agreement, the offer,
issue, sale and delivery of the Preferred Shares, or the other transactions to
be consummated pursuant to this Agreement. Based on the representations made by
Purchaser in written documents provided to the Company, the offer and sale of
the Preferred Shares to Purchaser will be in compliance with applicable federal
and state securities laws.
4.11 Litigation. There is no action, suit, proceeding or investigation
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pending, or, to the best of the Company's knowledge, any basis thereof or threat
thereof, against the Company or Charter, which questions the validity of this
Agreement or the right of the Company or Charter to enter into it, or which
might result, either individually or in the aggregate, in any material adverse
change in the assets, condition (financial or otherwise), business or prospects
of the Company.
4.12 Ordinary Course of Business. Since the Balance Sheet Date, there
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has been no material adverse change in the condition, financial or otherwise,
net worth or results of operations of the Company, other than changes occurring
in the ordinary course of business which changes have not, individually or in
the aggregate, had a materially adverse effect on the business, prospects,
properties or condition, financial or otherwise, of the Company.
4.13 Taxes. The amount shown on the Balance Sheet as provision for
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taxes is sufficient in all material respects for payment of all accrued and
unpaid federal, state, county, local and foreign taxes for the period then ended
and all prior periods. The Company has filed or has obtained presently
effective extensions with respect to all federal, state, county, local and
foreign tax returns which are required to be filed by it, such returns are true
and correct and all taxes shown thereon to be due have been timely paid with
exceptions not material to the Company. Federal income tax returns of the
Company have not been audited by the Internal Revenue Service, and no
controversy with respect to taxes of any type is pending or, to the knowledge of
the Company, threatened.
4.14 Property and Assets. The Company has good title to all of its
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material properties and assets, including all properties and assets reflected in
the Balance Sheet, except those disposed of since the date thereof in the
ordinary course of business, and none of such properties or assets is subject to
any mortgage, pledge, lien, security interest, lease, charge or encumbrance
other than those the material terms of which are described in the Balance Sheet,
except as described on Schedule 4.14.
4.15 Material Contracts and Obligations. Schedule 4.15 sets forth a
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list of all material agreements of any nature to which the Company is a party or
by which it is bound.
4.16 Compliance. The Company has, in all material respects, complied
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with all laws, regulations and orders applicable to its present and proposed
business and has all material permits and licenses required thereby. The
Company is not in breach or violation of any term or provision of any material
mortgage, indenture, contract, agreement or instrument to which the Company is a
party or by which it is bound, or, to the knowledge of the Company, of any
provision of any state or federal judgement, decree, order, statute, rule or
regulation applicable to or binding upon the Company, which breach or violation
materially adversely affects or, so far as the Company may now foresee, in the
future is reasonably likely to materially adversely affect, the business,
prospects, condition, affairs or operations of the Company or any of its
properties or assets.
4.17 Disclosures. Neither this Agreement nor any schedule or exhibit
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hereto, nor any report, certificate, or instrument furnished to Purchaser or
their counsel in connection with the transactions contemplated by this
Agreement, including without limitation, the Business Plan of the Company, a
copy of which has been provided to Purchaser (the "Plan") and attached as
Exhibit D, when read together, contains or will contain any material
misstatement of fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading. The Company
knows of no information or fact which has or would have a material adverse
effect on the financial condition, business or prospects of the Company which
has not been disclosed to Purchaser. Each projection furnished in the Plan was
prepared with due care based on reasonable assumptions and represents the
Company's best estimate of future results based on information available as of
the date of the Plan. No projection referred to in the preceding sentence shall
be deemed to be misleading unless it is shown that any such projection was made
without a reasonable basis or was disclosed other than in good faith.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby represents
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and warrants to the Company and Charter as follows as of the date of this
Agreement and as of the date of the Second Closing:
5.1 Corporate Action. All corporate action on the part of Purchaser
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for the authorization, execution, delivery and performance of this Agreement by
the Purchaser have been fully taken.
5.2 No Registration. Purchaser has been advised and acknowledges that
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neither the Preferred Shares to be issued hereunder nor the Company Common Stock
nor the Charter Common Stock issuable upon conversion of the Preferred Shares
have been or will be registered pursuant to the Securities Act of 1933 and,
therefore, none of them can be resold unless they are registered pursuant to the
Securities Act of 1933 or unless an exemption from registration is available.
5.3 Purchase for Investment, etc.. Purchaser represents and warrants
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to the Company and Charter, their representatives and agents, that:
(a) Purchaser is aware that no federal or state agency has made any
finding or determination as to the fairness of an investment in the Preferred
Shares nor any recommendation nor endorsement with respect thereto.
(b) Purchaser recognizes that an investment in the Preferred Shares
involves a high degree or risk;
(c) any information Purchaser has supplied to the Company, its
representatives or agents in connection with the transactions described herein
is true and correct;
(d) Purchaser has such knowledge and experience in financial and
business matters as to be capable of evaluating the risks and merits of
participating in this investment and protecting Purchaser's interests in
connection with this investment;
(e) Purchaser is able to bear the economic risk of the investment in
the Preferred Shares, including the risk of total loss of the investment;
(f) Purchaser has received and has thoroughly reviewed the Company's
financial statements and no statement, printed material or inducement given or
made by any person is contrary to the information contained in the financial
statements;
(g) Purchaser has had an opportunity to ask questions of the officers
and directors of the Company and to receive answers from them concerning this
investment and the Company and its officers and directors have made all relevant
information available to Purchaser, including materials, books and records of
the Company.
(h) Purchaser represents and warrants that it was not organized or
reorganized for the specific purpose of acquiring the Preferred Shares;
(i) Purchaser is aware that it must bear the economic risk of its
investment in the Preferred Shares for an indefinite period of time because
neither the Preferred Shares nor the Company Common Stock nor Charter Common
Stock issuable upon conversion thereof have been or will be registered under the
Securities Act of 1933 or the securities laws of any state and, therefore, none
of them can be resold unless subsequently registered under the Securities Act of
1933 and any applicable state securities laws or an exemption from registration
is available;
(j) Purchaser acknowledges that a legend will be placed on the
certificates for the Preferred Shares and on the certificates for the shares of
Company Common Stock and Charter Common Stock issuable upon conversion thereof
in substantially the following form;
"THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. WITHOUT SUCH REGISTRATION, THIS SECURITY MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON DELIVERY TO THE ISSUER OF
THIS CERTIFICATE OF AN OPINION OF COUNSEL SATISFACTORY TO COUNSEL FOR THE ISSUER
THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO COUNSEL
FOR THE ISSUER OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL FOR THE
ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR ANY
RULE OR REGULATION PROMULGATED THEREUNDER."; and
(k) Purchaser acknowledges that stop transfer instructions will be
implemented with respect to the Preferred Shares and the shares of Company
Common Stock and Charter Common Stock issuable upon conversion thereof to
restrict the resale, pledge, hypothecation or other transfer thereof.
6. AFFIRMATIVE COVENANTS OF THE COMPANY AND COVENANT.
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6.1 Key Management Employment Agreements. Simultaneously with or prior
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to the execution of this Agreement, upon approval by the new board of directors
referenced in Section 6.2 hereof, the Company shall enter into the employment
agreements with Messrs. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ substantially in the
form attached hereto as Exhibit B and made a part hereof.
6.2 Board Members. The board of directors of the Company shall be
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composed of five members, two of whom shall be designated (chosen, removed or
replaced, as the case may be) by Messrs. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
The Articles of Incorporation and Bylaws of the Company will contain provisions
authorizing no more than five directors and indemnifying its directors to the
fullest extent permitted under applicable law. The Board of Directors will hold
regular meetings at least once every three months. These covenants shall
constitute an agreement among shareholders, and therefore cannot be abrogated or
frustrated by contrary votes or actions by the majority members of the board of
directors or by majority shareholder vote.
6.3 Management Equity Incentive Plan. The parties acknowledge and
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consent to the implementation by the Company as soon as practicable after the
date hereof of an equity incentive plan for management of the Company; such plan
shall provide for the issuance of up to 1,200 shares of Company Common Stock to
key management personnel of the Company, with the "vesting" of such stock to
occur over a three year period based upon the achievement of financial and
operating goals established by the Company.
6.4 Additional Financing. In the event the Company intends to procure
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additional equity capital financing (to be distinguished from vendor or
equipment financing, or traditional operating debt) during the Second Tranche
Purchase Period, the Company shall so notify Purchaser and give Purchaser a
reasonable opportunity to negotiate for the provision of such additional capital
before obtaining such capital from third parties.
6.5 Conversion Adjustments. The provisions concerning conversion of
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the Preferred Shares pursuant to Sections 2.3 and 3.3 hereunder shall be subject
to adjustment from time to time as follows, with the term "Issuer" as used below
to mean the Company or Charter, or both, as the case may be, with respect to
conversion rights relating to the Company Common Stock or Charter Common Stock:
(a) Reorganization, Merger, Etc. If any capital reorganization or
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reclassification of the Issuer, or any consolidation or merger of the Issuer
with another entity is effected in such a way that holders of the Issuer's
common stock receive stock, securities or assets with respect to or in exchange
for their shares, then provision shall be made whereby the conversion rights of
Purchaser shall be adjusted such that, upon conversion, Purchaser shall have the
right to receive in exchange for the Preferred Shares such securities or assets
as were issued or payable with respect to or in exchange for the Company Common
Stock or Charter Common Stock, as the case may be, which Purchaser would have
otherwise received if the conversion had occurred immediately prior to such
reorganization, reclassification, consolidation or merger.
(b) Stock Dividends, Etc. In addition to those adjustments set forth
----------------------
in Section 6.5(a), but without duplication of the adjustments to be made under
such Section, if the Issuer:
(i) pays a dividend or makes a distribution on its common stock in shares of
its common stock;
(ii) subdivides its outstanding shares of common stock into a greater number
of shares;
(iii) combines its outstanding shares of common stock into a smaller number
of shares;
(iv) makes a distribution on its common stock in shares of its capital stock
other than common stock; and/or
(v) issues, by reclassification of its common stock, any shares of its
capital stock;
then the number and kind of shares receivable upon conversion of the Preferred
Shares shall be adjusted so that Purchaser, upon conversion of the Preferred
Shares, shall be entitled to receive the kind and number of shares or other
securities of the Issuer that Purchaser would have owned or been entitled to
receive after the happening of any of the events described above had the
conversion of the Preferred Shares been exercised immediately prior to the
happening of such event.
6.6 Opinion to be Delivered as of the date of this Agreement and as of
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the date of the Second Closing. At the closing of the transactions
-----------------------------------
contemplated by this Agreement, and as of the Second Closing, Purchaser will
receive an opinion from Cushing, Morris, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel for
the Company, dated as of the date hereof, addressed to Purchaser, the form of
which is attached as Exhibit C.
6.7 Accounting Systems. The Company will maintain a system of
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accounting established and administered in accordance with generally accepted
accounting principles consistently applied.
6.8 Periodic Reports; Budgets
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(a) The Company will furnish Purchaser as soon as practicable, and in
any event within 90 days after the end of each fiscal year of the Company, an
annual report of the Company, including an audited balance sheet as at the end
of such fiscal year and audited statements of operations, income, and statement
of cash flows for such fiscal year, setting forth in each case in comparative
form corresponding figures for the preceding fiscal year and for the budget for
the fiscal year completed (provided, however, that information as to the
budgeted figures will not be audited), all of which will be materially correct
and complete and will fairly present the financial condition of the Company at
the date shown and the results of its operations for the period then ended.
Such financial statements shall be accompanied by the report thereon of
nationally recognized independent public accountants engaged by Charter for its
other businesses to the effect that such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a basis
consistent with prior years (except as otherwise specified in such report). The
Company will use its best efforts to conduct its business so that such report of
the independent public accountants will not contain any qualifications as to the
scope of the audit, the continuance of the Company, or with respect to the
Company's compliance with generally accepted accounting principles consistently
applied, except for changes in methods of accounting in which such accountants
concur.
(b) The Company will furnish to Purchaser as soon as practicable and in
any event within 30 days after the end of each calendar quarter, a quarterly
report of the Company consisting of an unaudited balance sheet as at the end of
such quarter and an unaudited statement of operations and statement of changes
in final position for such quarter and for the fiscal year to date, setting
forth in each case in comparative form the corresponding figures for the
preceding year and for the budget. All such reports shall be certified to by
the chief financial officer of the Company to be correct and complete, to fairly
present the financial condition of the Company at the date shown and the results
of its operations for the period then ended and to have been prepared in
accordance with generally acceptable accounting principles consistently applied,
except for normal year-end adjustments. The reports for each calendar quarter
shall include a narrative discussion prepared by the Company describing the
business operations of the Company during the preceding calendar quarter.
(c) The Company will furnish to Purchaser, as soon as practicable and
in any event not less than 30 days prior to the end of each fiscal year of the
Company, an annual operating budget and business plan for the Company for [i]
the succeeding fiscal year, containing projections of profit and loss, cash flow
and ending balance sheets for each month of such fiscal year and [ii] the
succeeding three (3) fiscal years, containing projections of profit and loss,
cash flow and ending balance sheets for each of such years. Promptly upon
preparation thereof, the Company will furnish to Purchaser any other budgets
that the Company may prepare and any revisions of such previously furnished
budgets.
(d) If any accountant's management letter or other reports are
submitted to the Company by its independent public accountants in connection
with an annual or interim audit of the books of the Company, the Company will
furnish Purchaser, promptly after receipt, such letter or other reports and any
responses of the Company thereto.
(e) The Company will furnish to Purchaser as of the date of this
Agreement a Plan, setting forth a business plan for the Company and budget for
the 12 month period following the date thereof, including a detailed statement
of the uses of the proceeds from the Preferred Shares. For so long as Purchaser
holds Preferred Shares or Company Common Stock, the Company will provide
Purchaser with a revised Plan on an annual basis.
6.9 Certificates of Compliance. Concurrently with the furnishing of
--------------------------
the reports pursuant to Sections 6.8(a) and 6.8(b) hereof, the Company will
furnish to Purchaser a certificate of an officer stating that the Company is not
in material default under, and has not materially breached, any agreements or
obligations, including, without limitation, this Agreement, or if any such
default or breach exists, specifying the nature thereof and what actions the
Company has taken and proposes to take with respect thereto. Concurrently with
the furnishing of the reports pursuant to Section 6.8(a) hereof, the Company
will cause to be furnished to Purchaser a statement of the independent public
accountants of the Company to the effect that they have caused the provisions of
this Agreement to be reviewed and that in the course of their audit of the
Company nothing has come to their attention to lead them to believe that any
default hereunder exists or, if such is not the case, specifying such default or
possible default and the nature thereof. The Company covenants that promptly
after the occurrence of any default hereunder or any default hereunder or breach
of any material agreement or any other material adverse event or circumstance
affecting the Company, it will deliver to Purchaser a certificate of an officer
specifying in detail the nature and period of existence thereof, and what
actions the Company has taken and proposes to take with respect thereto.
6.10 Other Reports and Inspection.
-------------------------------
(a) The Company will furnish to Purchaser as soon as practicable after
issuance, copies of any financial statements or reports prepared by the Company
for or otherwise furnished to its shareholders, or to any other person or
entity. The Company will furnish promptly to Purchaser such other documents,
reports and financial data as Purchaser may reasonably request. The Company
will, upon reasonable prior notice, make available to Purchaser or designees
during normal business hours [a] all assets, properties and business records of
the Company for inspection and copying and [b] the directors, officers and
employees of the Company for interviews concerning the business, affairs and
finances of the Company.
(b) Charter will furnish to Purchaser as soon as reasonably possible
copies of all filing made with the Securities and Exchange Commission.
6.11 Licenses. The Company will obtain and keep in full force and
--------
effect all material licenses, permits and other authorizations from governmental
authorities which shall be necessary to the conduct of its business. The
Company covenants and agrees to use its best efforts, and Charter covenants and
agrees to use its best efforts to cause the Company, to maintain and keep in
full force and effect all licenses, permits and authorizations from governmental
authorities, including all licenses, permits and authorizations from government
authorities.
6.12 Material Changes. The Company will promptly notify Purchaser of
-----------------
any material adverse change in the business, properties, assets or condition,
financial or otherwise, of the Company, and of any litigation or governmental
proceeding pending or, to the best knowledge of the Company or of Charter,
threatened against the Company or against any officer or key employee of the
Company.
6.13 Compliance with Law. The Company will comply with all applicable
--------------------
laws, statutes, rules, regulations, ordinances, decisions and orders of the
United States, of the states thereof and their counties and municipalities and
other subdivisions and of any other jurisdiction or governmental authority
applicable to the Company, the violation of which would have a material adverse
effect on the business, operations, properties, assets, liabilities or
condition, financial or otherwise, or the results of operations or prospects, of
the Company. The Company covenants and agrees to use its best efforts, and
Charter covenants and agrees to use its best efforts to cause the Company, to
comply with the laws, statutes, rules, regulations, ordinances, decisions and
orders of the United States, of the states thereof and their counties,
municipalities and other subdivisions and of any other jurisdiction or
governmental authority applicable to the Company.
6.14 Use of Proceeds. The Company will use the proceeds from the sale
----------------
of the Preferred Shares for working capital.
6.15 Reservation of Preferred Shares and Common Stock. The Company
----------------------------------------------------
shall reserve and keep available out of its authorized but unissued Preferred
Shares and Company Common Stock at least the number of shares of Preferred
Shares and Company Common Stock required for issuance upon the exercise of
Purchaser's rights with respect to the Second Tranche Preferred Stock and the
conversion of all of the Preferred Shares (including any additional shares of
Common Stock which may become so issuable by reason of the operation of
anti-dilution provisions of the Preferred Shares). Charter shall reserve and
keep available out of its authorized but unissued Charter Common Stock at least
the number of shares of Charter Common Stock required for issuance upon the
exercise of Purchaser's rights with respect to the conversion of all of the
Preferred Shares (including any additional shares of Common Stock which may
become so issuable by reason of the operation of anti-dilution provisions of the
Preferred Shares).
6.16 Compensation and Audit Committees. The Company will at all times
----------------------------------
maintain a Compensation Committee and an Audit Committee of the Board of
Directors of the Company. At least a majority of the members of each such
committee shall consist of directors who are not members of management of the
Company. The Compensation Committee shall make recommendations to the Board of
Directors regarding all matters of compensation, including matters pertaining to
reserved employee shares and stock options for officers and employees of the
Company.
6.17 Conflicting Agreements. The Company will not enter into any
-----------------------
agreement which by its terms might restrict the performance of the Company's
obligations pursuant to the terms of this Agreement or with respect to the
rights and preferences of the Preferred Shares, or any other agreements attached
as exhibits hereto, including but not limited to, registration rights, the
payment of dividends on, or the redemption, voting or conversion of, the
Preferred Shares.
6.18 Opinion to be Delivered as of the date of this Agreement and as
-----------------------------------------------------------------
of the date of the Second Closing. As of the Closing and the Second Closing,
----------------------------------
Purchaser will receive an opinion from Cushing, Morris, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP,
counsel for the Company, dated as of the Closing or the Second Closing, as
applicable, addressed to Purchaser, and substantially in the form of the opinion
letter attached as Exhibit C.
7. NEGATIVE COVENANTS OF THE COMPANY. So long as Purchaser retains all
---------------------------------
of the Preferred Shares, the Company agrees and covenants with Purchaser that,
without the prior approval of Purchaser, which shall not be unreasonably
withheld:
7.1 Merger; Sale of Assets. The Company will not become a party to any
----------------------
merger or consolidation, or sell, lease or otherwise dispose of any of its
assets, other than sales and leases of assets in the ordinary course of business
and other than the replacement of outmoded or damaged equipment with new
equipment. The Company will not voluntarily dissolve, liquidate or wind up the
Company or carry out any partial liquidation of the Company.
7.2 Business. The Company will engage only in the business of
--------
providing telecommuting and related services and any and all activities
appropriate or necessary in connection therewith.
7.3 Stock Repurchases. Except with respect to the Preferred Shares,
------------------
the Company will not purchase or redeem any shares of its capital stock other
than pursuant to agreements with officers or employees of the Company relating
to the repurchase of stock after termination of employment.
7.4 Dividends. The Company shall not declare or pay any dividend or
---------
make any distribution in cash or property to the shareholders of the Company.
7.5 Amendments. The Company will not amend its Certificate of
----------
Incorporation or Bylaws.
7.6 Other Series of Preferred Shares. The Company will not authorize,
---------------------------------
create or issue any series or shares of preferred stock senior or pari passu to
---- -----
the Preferred Shares.
7.7 Indebtedness. The Company will not create, incur or assume or
------------
otherwise become or, remain liable with respect to indebtedness to be incurred
in any one year or make or commit to make capital expenditures in any one year
in excess of the amounts set forth in the Company's annual budget prepared
pursuant to the provisions of Section 6.8 hereof
7.8 Stock. The Company will not [a] authorize, create or issue any
-----
series or shares of Preferred Shares or any other shares of capital stock (or
options, warrants or other rights to purchase or acquire any capital stock or
any security convertible into or exchangeable or exercisable for any capital
stock) except that the Company may issue reserved employee shares, as
contemplated by Section 6.3 hereof, or [b] take any action which would alter or
adversely affect the rights of the holders of Preferred Shares.
8. EXPENSES. The Company agrees, in the event the transactions
--------
contemplated hereby are consummated, to pay, and save Purchaser harmless against
liability for the payment of the costs of filing any instruments contemplated
hereby, any stamp and other transfer taxes which may be payable in respect of
the execution and delivery of this Agreement or the issuance of Preferred
Shares, and any fees and expenses (including, without limitation, reasonable
attorneys' fees) incurred by Purchaser if Purchaser prevails in respect of the
enforcement by Purchaser of the rights granted to Purchaser hereunder upon any
breach of the terms hereof.
9. RIGHT OF FIRST REFUSAL.
-------------------------
(a) Before a Shareholder (the "Transferring Shareholder") may Transfer
any Securities to any person, the Transferring Shareholder shall have received a
bona fide offer from a proposed transferee to acquire the Transferring
---- ----
Shareholder's Securities, shall first deliver a written notice to each of the
other Shareholders at least twenty (20) days prior to the proposed Transfer
stating the proposed terms and conditions of such Transfer, including, without
limitation, the name and address of the prospective transferee, the purchase
price and other terms and conditions of payment, the date on or about which such
Transfer is to be made, and the conditions of payment, the date on or about
which such Transfer is to be made, and the number of Subject Securities to be
disposed of by the Transferring Shareholder, and shall comply with the terms of
this Agreement. The notice will also contain an offer by the Transferring
Shareholder to transfer all of the Subject Securities to the Company and the
other Shareholders on the basis of their then current respective holdings of
Common Shares (as if all of the Preferred Shares were fully converted) upon the
same terms and conditions as the proposed Transfer. For a period of twenty (20)
days after receipt of the notice, the Company shall have the right to purchase
any of the Subject Securities. The other Shareholders shall have a period of
twenty (20) days after expiration of the Company's option to give to the
Transferring Shareholder written notice of their election to purchase the
proportionate number of Subject Securities not purchased by the Company in
accordance with this Section 9. If a Shareholder elects not to purchase all of
such Shareholder's proportionate number of the Subject Securities within the
twenty (20) day period, then the other Shareholders may have an additional five
(5) day period to elect to purchase the remaining Securities on the basis of
their then current respective holdings of Common Shares (as if all the Preferred
Shares were fully converted.) If the Company and the Shareholders collectively
elect not to purchase all of the Subject Securities within the additional five
(5) day period, the Transferring Shareholder may proceed to Transfer the
Securities to the proposed transferee on the same terms offered the
Shareholders, subject to the co-sale rights set forth in Section 10, provided
that the proposed transferee consents, in form and substance satisfactory to the
Company's counsel, to be bound by all the applicable terms of Sections 9 and 10
of this Agreement and provided such Transfer can be effected in compliance with
an exemption from the registration rights of applicable securities laws. If
such Transfer is not consummated within sixty (60) days after the expiration of
the period in which the Shareholders could have elected to purchase the Subject
Securities, or if the terms of the Transfer are materially altered, the
Transferring Shareholder must re-offer the Subject Securities to the Company and
the other Shareholders in accordance with this Section 9 before any Transfer may
be consummated.
(b) Notwithstanding Section 9(a), a Shareholder may Transfer Shares to
an Affiliate (as hereinafter defined) without complying with Section 9(a),
provided that any Affiliate receiving, holding or owning Shares shall receive,
hold and own such Shares subject to the terms of this Agreement and such
Transferee or Transferees shall become a signatory hereto by executing this
Agreement or a conformed counterpart of this Agreement. For purposes of this
Agreement, an "Affiliate" shall mean any person or entity, directly or
indirectly, controlling, controlled by or under common control with such person
or entity and, in the case of a natural person that is a Shareholder, means
members of his or her immediate family or a trust for their benefit.
(c) The term "Transfer" shall mean and include any assignment,
transfer, pledge or other disposition, for cash or cash equivalent
consideration, to any person for any purpose whether direct or indirect,
voluntary or involuntary, and shall include but shall not be limited to a
private or public sale. "Transfer" shall not include exchanges of securities as
a result of a merger, consolidation, or reorganization.
(d) The term "Securities" shall mean any issued and outstanding shares
of Company Common Stock and Preferred Shares.
(e) The term "Subject Securities" shall mean and include any Securities
proposed to be Transferred by a Shareholder pursuant to this Section 9.
(f) The term "Shareholder" shall mean any holder of Company capital
stock, including without limitation, Company Common Stock or Preferred Shares.
The Company shall cause each and every Shareholder to be bound by the terms of
Section 9 and 10 of this Agreement.
10. SALE OF SHARES. In addition to the rights set forth in Section
---------------
9, whenever a Transferring Shareholder intends to sell Company Common Stock to a
person other than another Shareholder or to another Shareholder's Affiliate,
each Shareholder shall have the option to participate in such sale in the manner
hereinafter set forth. To exercise the option, each Shareholder shall give
written notice of election to the Transferring Shareholder within 10 days after
the Shareholder has declined to purchase the Subject Securities in accordance
with the provisions of Section 9. Thereupon, each Shareholder shall have the
right to sell his or its Company Common Stock then owned or resulting from the
conversion of Preferred Shares to the proposed purchaser upon the same terms and
conditions specified in the notice containing the initial offer, pro rata with
the Transferring Shareholder on the basis of his or its then current holding of
Company Common Stock then owned or resulting from the conversion of Preferred
Shares. The number of Subject Securities to be sold by Transferring Shareholder
shall be reduced by the number of Securities all the Shareholders elect to sell.
If the Shareholders exercise such option, they shall bear their pro rata portion
of the expenses incident to such sale. Failure by a Shareholder to exercise the
option within the 10 day period (or the 15 day period if extended five days
pursuant to Section 9) shall be deemed a declination of his or its right to
participate in such sale. However, if the sale to the third party is not
consummated within sixty (60) days after the expiration of the 10 day period (or
the 15 day period, if applicable), or if the terms of sale are materially
altered, then the Shareholders must be given another opportunity to participate
pursuant to the provisions of this Section 10.
11. SUBSCRIPTION RIGHTS.
--------------------
(a) If at any time and from time to time after the date of the
Agreement, the Company proposes to issue equity securities of any kind (the term
"equity securities" shall include for these purposes any warrants, options or
other rights to acquire equity securities and debt securities convertible into
equity securities) of the Company (other than the issuance of securities (i)
upon conversion of any Preferred Shares issued pursuant to this Agreement), (ii)
to the public in a firm commitment underwriting pursuant to a registration
statement filed under the Securities Act of 1933, as amended, (iii) pursuant to
the acquisition of another corporation or other business entity by the Company
by merger, purchase of substantially all of the assets or other form of
reorganization or (iv) pursuant to an employee stock option plan, stock bonus
plan, stock purchase plan, employment agreement, or other management equity
program), then, as to each Shareholder, the Company shall: (i) give written
notice setting forth in reasonable detail (1) the designation and all of the
terms and provisions of the securities proposed to be issued (the "Proposed
Securities"), (2) the price and other terms of the proposed sale of such
securities, (3) the amount of such securities proposed to be issued and (4) such
other information as Shareholder may reasonably request in order to evaluate the
proposed issuance; and (ii) offer to issue to each such Shareholder a portion of
the Proposed Securities equal to a percentage determined by dividing (x) the
number of Company Common Shares held by such Shareholder and issuable to such
Shareholder, assuming conversion in full of the Preferred Shares, by (y) the
total number of Company Common Stock then outstanding, including for purposes of
this calculation all Company Common Stock issuable upon conversion in full of
any then outstanding convertible Securities.
(b) Each such Shareholder must exercise its purchase rights hereunder
within 10 days after receipt of such notice from the Company. If all of the
Proposed Securities offered to such Shareholder are not fully subscribed by such
Shareholder, the remaining Proposed Securities will be re-offered to the other
Shareholders purchasing their full allotment. To the extent that the Company
offers two or more securities in units, Shareholders must purchase such units as
a whole and will not be given the opportunity to purchase only one of the
Securities making up such unit.
(c) Upon the expiration of the offering periods described in this
Section 11, the Company may sell such Proposed Securities that the Shareholders
have not elected to purchase during the 180 days following such expiration on
terms and conditions not more favorable to the purchasers thereof than those
offered to such holders. Any Proposed Securities offered or sold by the Company
after such 180 day period must be re-offered to the Shareholders pursuant to the
terms of this Section 11.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
----------------------------------------------------------------
12.1 Survival. All representations and warranties in Sections 4 and 5
--------
hereof shall survive the date hereof for a period of eighteen months or until
the date of any conversion by Purchaser of the Preferred Shares hereunder,
whichever is earlier (the "Claim Period"). No claim for breach of a
representation or warranty, indemnity or otherwise may be asserted after the
expiration of the Claim Period; provided that the written assertion of any claim
by a party against the other hereunder with respect to the breach or alleged
breach of any representation or warranty (or a series of facts which would
support such breach) shall extend the Claim Period with respect to such claim
through the date such claim is conclusively resolved. No investigation by
either party shall relieve the other party from any liability for any
misrepresentation or breach of warranty made by such other party in this
Agreement.
12.2 Indemnification by the Company and by Charter. The Company and
------------------------------------------------
Charter shall jointly and severally indemnify, defend and hold Purchaser
harmless from and against any and all claims, losses, liabilities, damages
(including without limitation, fines, penalties, and criminal or civil
judgements and settlements), costs (including, without limitation, court costs)
and expenses (including without limitation, attorneys' and accountants' fees)
(collectively, "Loss" or "Losses") suffered or incurred by Purchaser or any
successor or assigns thereto directly or indirectly resulting from:
(a) Any material breach or inaccuracy of any representation or warranty
of the Company or Charter set forth in Section 4;
(b) Any breach of or noncompliance by the Company or Charter with any
covenant or agreement of the Company or Charter contained in this Agreement; or
(c) Any and all actions, suits proceedings, claims, demands,
assessments and judgments incident to any of the foregoing;
12.3 Indemnification by Purchaser. Purchaser shall indemnify, defend
------------------------------
and hold the Company and Charter harmless from and against any and all claims,
losses, liabilities, damages (including without limitation, fines, penalties,
and criminal or civil judgements and settlements), costs (including, without
limitation, court costs) and expenses (including without limitation, attorneys'
and accountants' fees) (collectively, "Loss" or "Losses") suffered or incurred
by the Company or Charter or any successor or assigns thereto directly or
indirectly resulting from:
(a) Any material breach or inaccuracy of any representation or warranty
of the Purchaser set forth in Section 5;
(b) Any breach of or noncompliance by Purchaser with any covenant or
agreement of the Purchaser contained in this Agreement; or
(c) Any and all actions, suits proceedings, claims, demands,
assessments and judgments incident to any of the foregoing.
13. MISCELLANEOUS PROVISIONS.
-------------------------
13.1 Governing Law; Amendment. This Agreement shall be governed by and
------------------------
construed and enforced in accordance with the laws of the State of Georgia,
without regard to principles of conflicts of law. This Agreement cannot be
changed orally, and can be changed only by an instrument in writing signed by
the party against whom enforcement of any waiver, change, modification or
discharge is sought.
13.2 Complete Agreement; Counterparts. This Agreement constitutes the
---------------------------------
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior discussions, agreements and understandings of
any and every nature among them. This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
13.3 Assignment. This Agreement is not assignable by the parties
----------
hereto except by operation of law.
13.4 Notices. Any notice or other communication given hereunder shall
-------
be deemed sufficient if in writing and sent by registered or certified mail,
return receipt requested, or delivered by hand against written receipt therefor,
by facsimile transmission or by overnight courier, addressed as follows:
if to the Purchaser:
PATTCO, INC.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
with a copy to:
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
if to the Company or Charter,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to,
Cushing, Morris, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇ International Tower
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Mailed notices shall be deemed to have been given on the third business day
after being so mailed with proper postage.
13.5 Assignment; Successors. This Agreement shall be binding upon and
-----------------------
inure to the benefit of the parties hereto and to their respective permitted
successors and assigns. The Company may not assign any of its rights and
obligations under this Agreement without obtaining the prior consent of
Purchaser, except that the Company may assign all of its rights and obligations
under this Agreement without the prior consent of Purchaser in connection with
the merger, consolidation or sale of substantially all of its assets and
business to another entity which specifically agrees to be bound by the terms of
this Agreement and which is capable of performing the Company's obligations
under this Agreement; provided that the Company shall not be relieved of its
obligations arising under this Agreement. No Transfer of any Securities shall
be valid unless the terms and conditions of this Agreement have been complied
with prior to any such Transfer and the transferee shall hold such Securities
subject to the terms of this Agreement.
13.6. Severability. The holding of any provision of this Agreement to
------------
be invalid or unenforceable by a court of competent jurisdiction shall not
affect any other provision of this Agreement, which shall remain in full force
and effect.
13.7 Waiver. A waiver by any party of a breach of any provision of
------
this Agreement shall not operate, or be construed, as a waiver of any subsequent
breach by that same party.
13.8 Further Agreements. The parties agree to execute and deliver all
-------------------
such further documents, agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out the purposes and
intent of this Agreement.
13.9 Expenses. Each party shall be responsible for its own legal and
--------
other out-of-pocket expenses incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement.
13.10 Legend on Certificates. All certificates representing the
------------------------
Securities now owned by the Shareholders shall contain the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND MAY BE
TRANSFERRED ONLY IN COMPLIANCE WITH A CERTAIN FINANCING AGREEMENT MADE BY AND
AMONG CERTAIN HOLDERS OF SECURITIES OF THE COMPANY.
All certificates evidencing the Securities issued after the date hereof to
any of the Shareholders for any reason or purpose shall, when issued, contain a
similar legend.
13.11 Recovery of Expenses by Prevailing Party. The party prevailing
------------------------------------------
in any civil action, arbitration or other proceeding shall be entitled to
recover from the nonprevailing party in addition to any damages the prevailing
party may have been awarded, all reasonable expenses that the prevailing party
may have incurred in connection with such proceeding, including accounting fees,
reasonable attorneys' fees and expert witnesses fees.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
PURCHASER:
PATTCO, INC.
By:
Name:
Title:
COMPANY:
TELECOMMUTE SOLUTIONS GP, INC.
By:
Name:
Title:
CHARTER COMMUNICATIONS
INTERNATIONAL, INC.
By:
Name:
Title:
EXHIBIT A
---------
RIGHTS, PRIVILEGES, PREFERENCES AND
RESTRICTIONS OF PREFERRED SHARES
------
EXHIBIT B
---------
FORM OF KEY MANAGEMENT EMPLOYMENT AGREEMENT
28
EXHIBIT C
---------
FORM OF OPINION LETTER
EXHIBIT D
---------
BUSINESS PLAN
EXHIBIT E
---------
FINANCIAL STATEMENTS
