EXHIBIT 4.2
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is entered
into as of this 22nd day of April, 2002 by and among Xxxx Communications
Systems, Inc., a Georgia corporation (the "Company"), and each of the other
entities set forth on the signature pages hereto (each, a "Purchaser" and,
collectively, the "Purchasers").
WITNESSETH THAT:
WHEREAS, each Purchaser desires to purchase from the Company, and the
Company desires to issue and sell to each Purchaser, shares of the Company's
Series C Convertible Preferred Stock, no par value, having the terms set forth
in the Company's Articles of Amendment to its Articles of Incorporation (the
"Articles"), the form of which is attached hereto as Exhibit A ("Series C
Preferred Stock").
NOW, THEREFORE, in consideration of the agreements and obligations
contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
SALE AND PURCHASE
1.1. Authorization of the Shares. The Company has, or before the
Closing (as defined in Section 1.2) will have, authorized the issue and sale of
4,000 shares of Series C Convertible Preferred Stock, having the terms set forth
in the Articles.
1.2. Purchase and Sale of Series C Preferred Stock. Subject to the
terms and conditions hereof, and in reliance upon the representations,
warranties and agreements contained herein, at the closing of the transactions
contemplated by this Agreement (the "Closing"), the Company shall issue and sell
to each Purchaser, and each Purchaser shall purchase from the Company, the
number of shares of Series C Preferred Stock set forth next to such Purchaser's
name on Exhibit B hereto (the shares to be purchased by each Purchaser hereunder
being hereinafter referred to as the "Shares") for the purchase price set forth
next to such Purchaser's name on Exhibit B hereto (the purchase price to be paid
by each Purchaser hereunder for the Shares being hereinafter referred to as the
"Purchase Price"). At the Closing, the Company shall deliver to each Purchaser,
against receipt of the Purchase Price, a certificate representing the Shares,
which certificate each Purchaser agrees shall bear a legend in substantially the
form specified below, it being agreed that the Company shall promptly remove
such legend upon the satisfaction of the requirements set forth in clause (1) or
(2) of such legend, to the extent appropriate:
"The securities represented by this certificate
have been acquired for investment only and have
not been registered
under the Georgia Securities Act of 1973, as
amended (the "Georgia Act"), in reliance on the
exemption contained in Section 9(13) of the
Georgia Act, have not been registered under the
Securities Act of 1933, as amended (the
"Securities Act"), and have not been registered
under any other applicable securities laws.
Accordingly, the securities are "restricted
securities" within the meaning of said laws.
The securities may not be offered, sold,
exchanged, pledged, hypothecated or otherwise
disposed of in the absence of (1) a
registration statement being then in effect
under the Securities Act, the Georgia Act
and/or any other applicable securities laws; or
(2) an opinion of counsel to the shareholder
(including any in-house counsel of the
shareholder), which counsel must be, and the
form and substance of which opinion are,
reasonably satisfactory to the issuer, that the
transaction is exempt from registration under
said laws or is in compliance with said laws.
The securities shall not be transferred upon
the issuer's books and records except upon
compliance with the foregoing. The issuer will
furnish without charge to each shareholder who
so requests the powers, designations,
preferences and relative, participating,
optional or other special rights of each class
or series of shares authorized to be issued and
the qualifications, limitations or restrictions
of such preferences and/or rights."
At the Closing, each Purchaser shall deliver to the Company the
Purchase Price by wire transfer of immediately available funds to an account
specified in writing by the Company. The Closing shall take place at 10:00 a.m.,
local time (or as soon thereafter as practicable), on the date hereof or on such
other business day on or prior to April 23, 2002 as may be agreed upon by the
Company and the Purchasers at the offices of the Company at 0000 Xxxxxxxxx Xxxx,
XX, Xxxxxxx, XX 00000 or such other location as the parties hereto may agree.
The date at which the Closing shall occur is hereinafter referred to as the
"Closing Date". If the Closing does not occur by April 23, 2002, this Agreement
will be terminated forthwith and the parties hereto will have no further
obligations to each other under this Agreement, except that the Company shall
nevertheless be obligated to make such payments as provided for in Section 8.7
hereof.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Purchasers that:
2.1. Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted
and as contemplated by the Confidential Private Placement Memorandum of the
Company, dated April 19, 2002 (the "Offering Memorandum"), heretofore furnished
to the Purchasers. The Company is duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties makes such qualification and
being in good standing necessary, other than where the failure to be so
qualified and in good standing would not have a "Company Material Adverse
Effect," which shall be defined as a material adverse effect on the Company and
its subsidiaries taken as a whole, their business, assets, financial condition
or results of operations.
2.2. Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 15,000,000 shares of Class A Common Stock, no
par value ("Class A Common Stock"), 15,000,000 shares of Class B Common Stock,
no par value ("Class B Common Stock"), and 20,000,000 shares of preferred stock,
no par value ("Preferred Stock"), of which 1,000 shares have been designated as
Series A Preferred Stock, 2,500 shares have been designated as Series B
Preferred Stock and 5,000 shares have been designated as Series C Preferred
Stock. As of the date hereof, (a) 6,848,467 shares of Class A Common Stock and
8,808,552 shares of Class B Common Stock were issued and outstanding, all of
which are duly authorized, validly issued, fully paid and non-assessable and not
subject to preemptive rights and have been offered, issued, sold and delivered
by the Company in compliance with all applicable federal and state securities
laws; (b) 500 shares of Series A Preferred Stock and 360.5788 shares of Series B
Preferred Stock were issued and outstanding, all of which are duly authorized,
validly issued, fully paid and non-assessable, and not subject to preemptive
rights and have been offered, issued, sold and delivered by the Company in
compliance with all applicable federal and state securities laws; and (c)
1,517,000 shares of Class A Common Stock and 5,294,457 shares of Class B Common
Stock were reserved for future issuance pursuant to stock options, warrants and
other rights issued to certain officers, employees and other persons including
2,200,000 shares of Class B Common Stock reserved for future issuance upon
conversion of the Shares. Except as set forth in Schedule 2.2 hereto or this
Section 2.2, there are no (a) preemptive, conversion or other rights (including
registration rights), options, warrants, agreements, restrictions on transfer,
arrangements or commitments of any character to which the Company is a party
relating to the issued or
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unissued capital stock of, or other equity interests in, the Company, except
with respect to the Series C Preferred Stock in accordance with the provisions
of this Agreement, the Registration Rights Agreement and the Articles, (b)
phantom equity, equity appreciation or similar rights which permit the holder
thereof to participate in the residual equity value of, or appreciation in the
equity value of, the Company, (c) securities, instruments or rights which permit
the holder thereof, under any circumstances, to vote for the election of members
of the Company's board of directors, except for the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock, or (d) securities,
instruments or rights which are, directly or indirectly, convertible into or
exercisable or exchangeable for any of the securities, instruments or rights
described in clauses (a), (b) or (c) above. The shares of Series C Preferred
Stock, when issued in accordance with this Agreement, will be duly authorized,
validly issued, fully paid and non-assessable and not subject to preemptive
rights and free of any liens and encumbrances, other than those created by any
Purchaser. The shares of Class B Common Stock issuable upon conversion of the
Series C Preferred Stock (the "Conversion Shares") have been duly authorized and
validly reserved, are not and will not be subject to any preemptive rights or
rights of first refusal, and when issued in accordance with the terms of the
Series C Preferred Stock, will be validly issued, fully paid, nonassessable and
free of any liens and encumbrances, other than those created by any Purchaser.
2.3. Authority. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby to be
consummated by the Company (including the issuance and sale of the Shares and
the issuance of the Conversion Shares). The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby (including the issuance and sale of the Shares and the
issuance of the Conversion Shares) have been duly authorized by all necessary
corporate action on the part of the Company, its directors and shareholders and
no other corporate proceedings on the part of the Company, its directors and
shareholders are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (including the issuance and sale of the Shares
and the issuance of the Conversion Shares). This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by each Purchaser, constitutes the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited or
affected by (a) bankruptcy, insolvency, reorganization, moratorium, liquidation,
arrangement, fraudulent transfer, fraudulent conveyance and other similar laws
(including court decisions) now or hereafter in effect and affecting the rights
and remedies of creditors generally or providing for the relief of debtors, (b)
the refusal of a particular court to grant equitable remedies, including,
without limitation, specific performance and injunction relief, and (c) general
principles of equity (regardless of whether such remedies are sought in a
proceeding in equity or at law).
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2.4. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company
does not, and the performance by the Company of its obligations hereunder
(including the issuance and sale of the Shares and the issuance of the
Conversion Shares) will not, (i) conflict with, breach or violate the Restated
Articles of Incorporation or By-Laws of the Company or any of its subsidiaries,
(ii) conflict with or violate any laws in effect as of the date of this
Agreement applicable to the Company or any of its subsidiaries or by which any
of their respective properties or assets is bound or (iii) result in any breach
of, constitute a default (or an event that with notice or lapse of time or both
would become a default) under, give to any other entity any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation 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 or assets is bound, except those with respect to which the
Company has obtained any required consent, waiver, approval or authorization. No
shareholder of the Company has any preemptive right or rights of first refusal
which will be triggered by reason of the issuance of the Shares. Without
limiting the generality of the foregoing, no Georgia state takeover statute or
similar Georgia statute or regulation applies or purports to apply to this
Agreement or any of the transactions contemplated by this Agreement (including
the issuance and sale of the Shares and the issuance of the Conversion Shares).
(b) The execution and delivery of this Agreement by the Company
does not, and the performance by the Company of its obligations hereunder
(including the issuance and sale of the Shares and the issuance of the
Conversion Shares) will not, require the Company to obtain any consent,
registration, approval, authorization or permit of, to make any filing with, or
to give any notification to, any governmental entities (or stock exchange) based
on any law in effect as of the date of this Agreement except those which have
been or will be timely obtained, made or given or as may be required in
connection with the Registration Rights Agreement attached hereto as Exhibit C
(the "Registration Rights Agreement").
2.5. Reports; Financial Statements.
(a) The Company has timely filed all forms, reports, statements
and schedules required to be filed with the Securities and Exchange Commission
(the "SEC") since January 1, 2000. The Company has made available to the
Purchasers copies of all reports, registration statements and other filings,
together with any amendments thereto, filed by the Company with the SEC since
January 1, 2001 through the date immediately prior to the date of this Agreement
(the "Company SEC Reports"). As of the respective
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dates of their filing with the SEC, the Company SEC Reports complied in all
material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the applicable rules and regulations of the
SEC promulgated thereunder, and did not at the time they were filed with the SEC
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The consolidated financial statements (including, in each
case, any related notes thereto) contained (or incorporated by reference) in the
Company SEC Reports (the "Financial Statements") (i) have been prepared in
accordance with the published rules and regulations of the SEC and generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and show
all material liabilities, absolute or contingent, of the Company required to be
recorded thereon in accordance with generally accepted accounting principles as
at the respective dates thereof and (ii) fairly present in all material respects
the consolidated financial position of the Company and its subsidiaries as of
the respective dates thereof and their consolidated results of operations,
stockholder equity and cash flows for the periods indicated, except that any
unaudited interim financial statements were subject to normal and recurring
year-end adjustments and may omit footnote disclosure as permitted by
regulations of the SEC.
2.6. Absence of Certain Changes. Since December 31, 2001, except to
the extent specified in Schedule 2.6, there has not been:
(a) Any Company Material Adverse Effect;
(b) Any damage, destruction or loss of any of the properties or
assets of the Company (whether or not covered by insurance) materially adversely
affecting the business of the Company;
(c) Any declaration, setting aside for payment or other
distribution in respect of any of the Company's capital stock, or any direct or
indirect redemption, purchase or other acquisition of any of such stock by the
Company; or
(d) Any labor trouble materially adversely affecting the business
of the Company.
2.7. No Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission from any Purchaser in
connection with the sale of the Series C Preferred Stock provided for in this
Agreement based upon arrangements made by or on behalf of the Company.
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2.8. Subsidiaries. Other than as specified in Schedule 2.8, the
Company has no subsidiaries and does not own, directly or indirectly, of record
or beneficially any capital stock or equity interest or investment in any
corporation, association or business entity. Each of the subsidiaries of the
Company is a form of entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and is in good
standing in each jurisdiction in which the failure to so qualify would have a
Company Material Adverse Effect. Each of the subsidiaries of the Company has all
requisite power and authority to own the properties owned by it and to carry on
its business as now conducted and as presently proposed to be conducted. Except
as specified in the Company SEC Reports, all of the issued and outstanding
capital stock of, or other equity interests in, each of the subsidiaries of the
Company is owned beneficially and of record by the Company, one of its other
wholly-owned subsidiaries, or any combination of the Company and/or one or more
of its other subsidiaries, in each case free and clear of any liens, charges,
restrictions, claims or encumbrances of any nature whatsoever, except for those
arising under the Third Amended and Restated Loan Agreement, dated as of
September 25, 2001, by and among the Company, the financial institutions
signatory thereto and Bank of America, N.A. (the "Senior Credit Facility"); and
there are no outstanding subscriptions, warrants, options, convertible
securities, or other rights (contingent or other) pursuant to which any of the
subsidiaries of the Company is or may become obligated to issue any shares of
its capital stock or other equity interests to any person other than the Company
and/or one or more of its other wholly-owned subsidiaries. As used in this
Section 2 (unless the context otherwise requires), the term "Company" shall mean
the Company and each of its subsidiaries (other than Xxxxxx Xxxxxxx, Inc.).
2.9. Outstanding Debt. Neither the Company nor any of its
subsidiaries has any outstanding indebtedness for borrowed money except as
reflected on the Financial Statements and is not a guarantor or otherwise
contingently liable for any such indebtedness, except that the subsidiaries of
the Company are guarantors (i) of the Company's 9.25% Senior Subordinated Notes
due 2011 (the "Notes") and (ii) under the Senior Credit Facility. There exists
no default in any material respect under the provisions of any instrument
evidencing any such indebtedness or of any agreement relating thereto.
2.10. Absence of Liabilities. Other than in connection with the
transactions contemplated by this Agreement, neither the Company nor any of its
subsidiaries has any liabilities (fixed or contingent, including without
limitation any tax liabilities due or to become due), except those which (i) are
fully reflected or provided for on the Financial Statements, except as specified
in Schedule 2.10, or (ii) were incurred in the ordinary course of business (and
which remain outstanding), none of which would, individually or in the
aggregate, have a Company Material Adverse Effect.
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2.11. Taxes. The Company has duly filed within the time prescribed
by law (including extensions of time approved by the appropriate taxing
authority) all tax returns and reports required to be filed with the Internal
Revenue Service and (except to the extent that the failure to file would not
have a Company Material Adverse Effect) with all other jurisdictions where such
filing is required by law; all such tax returns are true and correct in all
material respects; and the Company has paid all taxes, interest, penalties,
assessments or deficiencies shown to be due or claimed to be due or in respect
of such tax returns and reports.
2.12. Employee Benefits; ERISA. (a) With respect to each employee
benefit plan (as such term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) maintained by the Company or
an "ERISA Affiliate" (as defined below), (i) such plan has been administered and
operated in all material respects in compliance with its terms and the
applicable requirements of ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"), and (ii) no "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) which is not covered by an
applicable exemption and which has resulted in or would result in a Company
Material Adverse Effect has occurred. As used herein, the term "ERISA Affiliate"
refers to any organization that is (x) a member of a "controlled group" of which
the Company is a member or (y) under "common control" with the Company within
the meaning of Section 414(b) and (c) of the Code. (b) Neither the approval or
execution of this Agreement nor the consummation of the transactions
contemplated by this Agreement (including the issuance and sale of the Shares
and the issuance of the Conversion Shares) will (i) entitle any individual to
severance pay or (ii) accelerate the time of payment or vesting of, or
materially increase the amount of, compensation due to any individual.
2.13. Contracts. The Company has complied in all material respects
with all the material provisions of each currently existing binding contract,
obligation, license, agreement, plan, arrangement, commitment or the like
(written or oral) of any material nature ("Contract"), and is not in default
thereunder or in breach thereof in any material respect nor in receipt of any
written claim of default or breach in any material respect by it thereof. The
Company does not have any knowledge of any breach or anticipated breach in any
material respect by the other parties to any such Contract.
2.14. Insurance. The Company maintains insurance which is adequate
to protect the Company and its financial condition against the risks involved in
the business conducted by the Company.
2.15. Litigation. Except as specified in Schedule 2.15, there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim, whether or not purportedly on behalf of the Company, against the Company
or its business or assets and in which an unfavorable outcome, ruling or finding
in any such
8
matter or for all such matters taken as a whole would have a Company Material
Adverse Effect; and the Company has no knowledge of any unasserted claim, the
assertion of which is likely and which, if asserted, will seek damages, an
injunction or other legal, equitable, monetary or nonmonetary relief which claim
individually or collectively with other such unasserted claims if granted would
have a Company Material Adverse Effect.
2.16. Properties; Liens and Encumbrances. Schedule 2.16 contains a
complete and correct list of the material real property owned by the Company.
The Company has a valid and indefeasible ownership interest in all such real
property and all its other material property and assets, free from all
mortgages, pledges, liens, security interests, conditional sale agreements,
encumbrances or charges, except (i) tax, materialmen's or like liens for
obligations not yet due or payable or being contested in good faith by
appropriate proceedings and for which an adequate reserve (if required by GAAP)
has been made on the Financial Statements; and (ii) for those arising under the
Senior Credit Facility. The assets, properties, contracts and rights of the
Company include all of the assets, properties, contracts and rights necessary or
material to the conduct of its business in the manner as it is currently
conducted and that are reflected in the consolidated balance sheet of the
Company as at December 31, 2001 (other than assets reflected on such balance
sheet that have been sold or disposed of in the ordinary course of business
since the date thereof).
2.17. Leases. The Company enjoys peaceful and undisturbed possession
under all material leases, whether for real or personal property (including
cable and telecommunication lines), under which the Company is a lessee. All of
such leases are valid and subsisting and neither the Company nor, to the
knowledge of the Company, the lessor thereunder is in default thereof in any
material respect.
2.18. Intentionally Omitted.
2.19. Communications Licenses and Regulations. (a) All of the
material certificates, licenses, permits, franchises and other authorizations
(collectively, the "Communications Licenses") issued to the Company by the
communications regulatory authorities of any federal, state or local government,
including, but not limited to, the Federal Communications Commission and state
public utility commissions or like agencies (collectively, the "Regulatory
Authorities"), are in full force and effect; (b) the Communications Licenses
constitute all of the material certificates, licenses, permits, franchises and
authorizations necessary or legally required for the conduct of the Company's
respective businesses as now being conducted by it, or as it presently intends
to conduct in the future; (c) the Company is in compliance in all material
respects with any and all applicable material federal, state and municipal
statutes, rules, regulations, policies, orders or ordinances (collectively, the
"Communications Laws") governing or relating to the Communications Licenses; and
(d) the Company has not received notice of any complaints, charges,
investigations, renewal or revocation hearings, or other
9
proceedings that have been initiated or, to the knowledge of the Company,
threatened against the Company, nor, to the knowledge of the Company, has any
Regulatory Authority proposed, announced, issued or adopted any amendment,
modification or change to any Communications Law or Communications License, that
would have a material adverse effect on the Company's ability to continue to
hold and/or renew or extend any of the Communications Licenses, or would
otherwise have a Company Material Adverse Effect. Without limiting the
generality of the foregoing, the Company has received no notice of denial or
intended denial by the Federal Communications Commission of the Company's
request for a six-month extension for digital broadcasting compliance (referred
to in the Company's report on Form 10-K for the year ended December 31, 2001).
2.20. Intellectual Property, etc. The Company has all franchises,
permits, licenses and other similar authority necessary for the conduct of its
business as now being conducted by it and as presently planned to be conducted,
including, but not limited to, all domain names and licenses with respect to
third party software or materials, the lack of which would have a Company
Material Adverse Effect, and it is not in default in any material respect under
any of such franchises, permits, licenses or other similar authority. The
Company is the exclusive owner of all right, title and interest in and /or has
the valid and legal right to use all material intellectual property and
proprietary rights owned or used by the Company, including, without limitation,
all material franchises, permits, licenses, software, trademarks, service marks,
domain names, trade rights, trade dress, patents, patent applications,
copyrights, inventions, know-how and other confidential information, necessary
to conduct its business as now being conducted and as presently planned to be
conducted, without conflict with or infringement upon any valid rights of others
except for infringements or conflicts which would not have a Company Material
Adverse Effect. The Company has not received any notice that the conduct of its
business infringes upon or conflicts with the asserted rights of others and has
no knowledge that any person is infringing upon or in conflict with its asserted
rights.
2.21. Affiliate Arrangements. Schedule 2.21 sets forth all material
transactions between the Company and any of its affiliates (as defined in Rule
12b-2 under the Exchange Act).
2.22. Compliance with Other Instruments and Laws. The Company is not
in violation of any term of its Restated Articles of Incorporation or By-Laws,
in each case, as in effect on the date hereof. The Company is not in violation
of any term of any mortgage, indenture, contract, agreement, instrument,
judgment, decree, order, statute, rule or regulation to which the Company is
subject and a violation of which would have a Company Material Adverse Effect.
The Company has all franchises, permits, licenses and other rights and
privileges from governmental authorities necessary to permit it to own its
property and to conduct its business as it is presently conducted and as
presently contemplated to be conducted, except where the failure to have any
such franchises,
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permits, licenses or other rights or privileges would not have a Company
Material Adverse Effect.
2.23. Environmental and Safety Laws. The Company is not in violation
in any material respect of any applicable material statute, law or regulation
relating to the environment or occupational health and safety, and to its
knowledge, no material expenditures are or will be required in order to comply
with any such existing statute, law or regulation. To the knowledge of the
Company, no violation by the Company is being alleged of any such existing
statute, law or regulation that, if substantiated, would have a Company Material
Adverse Effect. The Company is not subject to any material liability or
obligation relating to the environmental conditions on, under, or about the real
property or other properties or assets owned, leased, operated or used by the
Company, including without limitation, the air, soil and groundwater conditions
at such properties.
2.24. Registration Rights. Except as will be provided for in the
Registration Rights Agreement, the Company is not under any obligation to
register under the Securities Act any of its currently outstanding securities or
any of its securities which may hereafter be issued, except for the Notes. The
Company's obligation to register the Notes will not delay (except in connection
with any review by the SEC of any filings of the Company) or prevent the
Purchasers' ability to exercise the rights granted to them under the
Registration Rights Agreement in accordance with the terms set forth therein.
2.25. Disclosure. Neither this Agreement nor the Offering Memorandum
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
3. Representations and Warranties of Each Purchaser. Each
Purchaser, severally and not jointly, hereby represents and warrants to the
Company that:
3.1. Organization and Qualification. Such Purchaser is a form of
entity duly organized, validly existing and in good standing under the laws of
its state of organization and has all requisite power and authority to carry on
its business as it is now being conducted.
3.2. Authority. Such Purchaser has all requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby to be
consummated by such Purchaser. The execution
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and delivery of this Agreement by such Purchaser and the consummation by such
Purchaser of the transactions contemplated hereby have been duly authorized by
all necessary action on the part of such Purchaser and no other proceedings on
the part of such Purchaser are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by such Purchaser and, assuming the due authorization,
execution and delivery hereof by the Company and each of the other Purchasers,
constitutes the legal, valid and binding obligation of such Purchaser
enforceable against such Purchaser in accordance with its terms, except as such
enforceability may be limited or affected by (a) bankruptcy, insolvency,
reorganization, moratorium, liquidation, arrangement, fraudulent transfer,
fraudulent conveyance and other similar laws (including court decisions) now or
hereafter in effect and affecting the rights and remedies of creditors generally
or providing for the relief of debtors, (b) the refusal of a particular court to
grant equitable remedies, including, without limitation, specific performance
and injunction relief, and (c) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law).
3.3. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Purchaser
does not, and the performance by the Purchaser of its obligations hereunder will
not, (i) conflict with, breach or violate the organizational documents of the
Purchaser, (ii) conflict with or violate any laws in effect as of the date of
this Agreement applicable to the Purchaser or by which any of its properties or
assets is bound or (iii) result in any material breach of, or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Purchaser is a party or by which the Purchaser or any of
its properties or assets is bound.
(b) The execution and delivery of this Agreement by the Purchaser
does not, and the performance by the Purchaser of its obligations hereunder will
not, require the Purchaser to obtain any consent, registration, approval,
authorization or permit of, to make any filing with, or to give any notification
to, any governmental entities based on any law in effect as of the date of this
Agreement, except those which have been or will be timely obtained, made or
given.
3.4. Acquisition of Shares for Investment. Such Purchaser has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its purchase of the Shares hereunder. Such
Purchaser is an "accredited investor" within the meaning of Rule 501 promulgated
under the Securities Act. Such Purchaser confirms that it has reviewed the
Company SEC Reports and the Offering Memorandum, including the documents
attached thereto, and that the
12
Company has made available to such Purchaser the opportunity to ask questions of
the officers and management of the Company and to acquire additional information
about the business and financial condition of the Company. Such Purchaser is
acquiring the Shares for investment and not with a view toward or for sale in
connection with any distribution thereof in violation of any federal or state
securities or "blue sky" laws, or with the present intention of distributing or
selling such Shares or the Conversion Shares in violation of any federal or
state securities or "blue sky" laws. Such Purchaser understands and agrees that
neither the Shares nor the Conversion Shares may be sold, transferred, offered
for sale, assigned, pledged, hypothecated or otherwise disposed of without
registration under the Securities Act or pursuant to an exemption therefrom, and
without compliance with state, local and foreign securities laws (in each case
to the extent applicable). Such Purchaser understands and agrees that the Shares
and the Conversion Shares are "restricted securities" within the meaning of Rule
144 promulgated under the Securities Act ("Rule 144").
3.5. No Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission from the Company in
connection with the purchase of the Series C Preferred Stock by such Purchaser
provided for in this Agreement based upon arrangements made by or on behalf of
such Purchaser.
ARTICLE IV
COVENANTS
4.1. Filing of Articles. On or prior to the Closing Date, the
Company shall file with the Secretary of State of the State of Georgia the
Articles and they shall be in full force and effect as of the Closing.
4.2. Listing of Conversion Shares. Prior to the Closing, the
Company shall file with the New York Stock Exchange a supplemental listing
application relating to the Conversion Shares. The Company shall use best
efforts to cause the Conversion Shares to be listed on the New York Stock
Exchange as soon as practicable, subject only to official notice of issuance,
evidence of which shall be delivered by the Company to each of the Purchasers
promptly following receipt thereof.
4.3. Exchange Act Filings. The Company shall deliver to each
Purchaser, as soon as practicable after the filing thereof, all Forms 10-K and
10-Q and proxy statements (and amendments thereto) filed by the Company with the
SEC.
4.4. Reporting Requirements Under the Exchange Act. The Company
shall timely file such information, documents and reports as the SEC may require
or prescribe under Section 13 of the Exchange Act. The Company acknowledges and
agrees that the purposes of the requirements contained in this Section 4.4 are
(a) to enable the Purchasers
13
to comply with the current public information requirement contained in paragraph
(c) of Rule 144 should any such Purchaser ever wish to dispose of any of the
Conversion Shares without registration under the Securities Act in reliance upon
Rule 144 (or any other similar exemptive provision) and (b) to qualify the
Company for the use of registration statements on Form S-3 (which the Company
represents that it is qualified to use as of the date hereof).
4.5. Availability of Common Stock for Conversion. The Company will
reserve 2,200,000 shares of Class B Common Stock for issuance upon conversion of
the Shares. The Company will not issue or agree to issue any shares of Class B
Common Stock or options, rights or warrants to purchase Class B Common Stock or
securities convertible into or exchangeable for Class B Common Stock or take any
other action if, after giving effect thereto, the number of shares of Class B
Common Stock remaining unissued and duly reserved for issuance upon conversion
of the Shares shall be insufficient to permit conversion of all of the Shares.
4.6. Use of Proceeds. The Company will use the proceeds from the
sale of the Shares to repay current amounts outstanding under the Company's
revolving credit facility, to pay fees and expenses associated with the offering
and sale of the Shares and for other general corporate purposes.
4.7. Best Efforts. Each of the Company and the Purchasers shall use
its best efforts to satisfy the applicable conditions to Closing set forth in
Section 5 hereof.
ARTICLE V
CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATIONS
5. Conditions to Closing.
5.1. Conditions Precedent to Obligation of the Company. The
obligation of the Company to consummate the Closing shall be subject to the
satisfaction (or waiver in writing by the Company) of the following conditions
on or prior to the Closing Date:
(a) the representations and warranties of each Purchaser
contained in this Agreement shall be true and correct in all respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing
Date (except to the extent such representations and warranties
specifically relate to a prior date);
(b) all covenants, agreements and conditions contained in
this Agreement to be performed or complied with by each Purchaser on or
prior to the Closing shall have been performed or complied with in all
respects and at such time such
14
Purchaser shall not be in default in the performance of or compliance
with any of the provisions of this Agreement;
(c) at the time of the Closing, the purchase and sale of
the Shares to be purchased by each Purchaser hereunder shall be legally
permitted by all laws and regulations to which such Purchaser and the
Company are subject;
(d) all governmental and regulatory approvals necessary
to consummate the Closing shall have been obtained; (e) the
Registration Rights Agreement shall have been executed by each of the
Purchasers and duly delivered; and
(f) except in connection with the Registration Rights
Agreement, all authorizations, approvals or permits, if any, of any
governmental authority or regulatory body that are now required in
connection with the lawful issuance and sale of the Shares pursuant to
this Agreement, the conversion of the Shares into Conversion Shares and
the issuance of such Conversion Shares upon such conversion shall have
been duly obtained and shall be in full force and effect on and as of
the Closing.
5.2. Conditions Precedent to Obligation of Each Purchaser. The
obligation of each Purchaser to consummate the Closing shall be subject to the
satisfaction (or waiver in writing by such Purchaser) of the following
conditions on or prior to the Closing Date:
(a) the representations and warranties of the Company
contained in this Agreement shall be true and correct in all respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing
Date (except to the extent such representations and warranties
specifically relate to a prior date);
(b) all covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or
prior to the Closing shall have been performed or complied with in all
respects and at such time the Company shall not be in default in the
performance of or compliance with any of the provisions of this
Agreement or of the Articles;
(c) at the time of the Closing, the purchase and sale of
the Shares to be purchased by each Purchaser hereunder shall be legally
permitted by all laws and regulations to which such Purchaser and the
Company are subject;
(d) all governmental and regulatory approvals necessary
to consummate the Closing shall have been obtained;
15
(e) all corporate and other proceedings in connection
with the transactions contemplated hereby shall be reasonably
satisfactory in substance and form to such Purchaser and the Company
shall have delivered a check or made a wire transfer to the Purchaser's
outside counsel to satisfy its obligations under Section 8.7, if so
requested, prior to the Closing;
(f) the Registration Rights Agreement shall have been
executed by the Company and each other Purchaser and duly delivered;
(g) all outstanding shares of Series A Preferred Stock
and Series B Preferred Stock shall have been exchanged on a one-for-one
basis for shares of Series C Preferred Stock;
(h) each of the other Purchasers shall have funded the
portion of the Purchase Price payable by such Purchaser at the Closing
in accordance with Section 1.2;
(i) except in connection with the Registration Rights
Agreement, all authorizations, approvals or permits, if any, of any
governmental authority or regulatory body that are now required in
connection with the lawful issuance and sale of the Shares pursuant to
this Agreement, the conversion of the Shares into Conversion Shares and
the issuance of such Conversion Shares upon such conversion shall have
been duly obtained and shall be in full force and effect on and as of
the Closing;
(j) the Company shall have duly filed with the Secretary
of State of the State of Georgia the Articles and the Articles shall be
in full force and effect and shall not have been further amended; and
(k) all taxes imposed by law in connection with the
issuance, sale and delivery of the Shares shall have been fully paid,
and all laws imposing such taxes shall have been fully complied with.
ARTICLE VI
CLOSING DELIVERIES
6. Closing Deliveries.
6.1. Deliveries of the Company. At the Closing, the Company shall
deliver, or shall cause to be delivered, to each Purchaser:
(a) a stock certificate of the Company representing the Shares
registered in the name of such Purchaser or its nominee;
16
(b) written evidence of the filing of the Articles with the
Secretary of State of the State of Georgia;
(c) an opinion addressed to the Purchasers from Xxxxxxxx Xxxxxxx
LLP, special counsel to the Company, dated the Closing Date, and in
substantially the form attached as Exhibit D hereto;
(d) a certificate of the President or a Vice President of the
Company, dated the date of the Closing, certifying to the fulfillment of the
conditions specified in Section 5.2 (a) and (b);
(e) if requested, reasonable evidence of the satisfaction of the
closing conditions set forth in Section 5.2; and
(f) an executed counterpart of the Registration Rights Agreement.
6.2. Deliveries of Each Purchaser. At the Closing, each Purchaser
shall deliver, or shall cause to be delivered, to the Company:
(a) a certificate of a senior officer of such Purchaser, dated the
date of the Closing, certifying to the fulfillment of the conditions specified
in Section 5.1(a) and (b);
(b) the Purchase Price; and
(c) an executed counterpart of the Registration Rights Agreement.
ARTICLE VII
INDEMNIFICATION
7.1. Indemnification by the Company. The Company shall indemnify,
defend and hold harmless each Purchaser and its shareholders, partners, members,
directors, managers, officers, employees, agents, representatives and
affiliates, without duplication (such Purchaser and the foregoing related
parties, collectively, the "Purchaser Indemnitees") from and against all
damages, losses, liabilities, claims, actions, suits, proceedings, judgments,
taxes, penalties, fines, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses), whether or not resulting from a third
party claim (all of the foregoing hereinafter collectively referred to as a
"Loss") incurred by any of the Purchaser Indemnitees arising out of or as a
result of: (i) any misrepresentation or breach of warranty made by the Company
herein or in any document or certificate delivered pursuant hereto; and (ii) any
breach or nonfulfillment of any agreement or covenant made by the Company herein
or in any document or certificate delivered pursuant hereto.
17
7.2. Indemnification by the Purchasers. Each Purchaser shall
indemnify, defend and hold harmless the Company and its shareholders, directors,
officers, employees, agents, representatives and affiliates, without duplication
(the "Company Indemnitees") from and against all Losses incurred by any of the
Company Indemnitees arising out of or as a result of: (i) any misrepresentation
or breach of warranty made by such Purchaser herein or in any document or
certificate delivered pursuant hereto; and (ii) any breach or nonfulfillment of
any agreement or covenant made by such Purchaser herein or in any document or
certificate delivered pursuant hereto.
7.3. Limitations on Indemnification.
(a) No payment shall be required to be made by the
Company pursuant to clause (i) of Section 7.1 hereof, or by any
Purchaser pursuant to clause (i) of Section 7.2 hereof, unless, and
except to the extent that, the amount of Loss suffered by the party
claiming indemnification in connection with such claim, together with
all claims asserted therewith or previously asserted under clause (i)
of Section 7.1 or clause (i) of Section 7.2, as the case may be, by
such party and/or the indemnitee group to which such party belongs
(i.e., the Purchaser Indemnitees or the Company Indemnitees, as
applicable), exceeds three percent (3%) of the Purchase Price paid by
the Purchaser who is the indemnitee (directly or on behalf of a member
of its indemnitee group) or indemnitor of such claim, it being
understood that for purposes of measuring the amount of Losses suffered
by a Company Indemnitee under clause (i) of Section 7.2 as of any given
time, the Company Indemnitee may only include Losses attributable to
the Purchaser from whom the Company Indemnitee is seeking to recover at
such time. By way of illustration, the percentage referred to in the
preceding sentence applicable to Teachers Insurance and Annuity
Association of America would be $450,000.
(b) Notwithstanding anything to the contrary herein, the
maximum amount of Loss suffered, other than out-of-pocket Loss
attributable to third-party claims or in respect of breach or
nonfulfillment of agreements or covenants, for which a Purchaser (or a
member of its indemnitee group) may be indemnified or from whom
indemnification may be sought by a Company Indemnitee shall not exceed
the total Purchase Price paid by such Purchaser.
(c) No right to indemnification may be asserted under
clause (i) of Section 7.1 or clause (i) of Section 7.2 after the
expiration of 18 months following the Closing Date, except any such
rights to indemnification arising out of or in connection with any
claim as to which notice has been given on or prior to the expiration
of 18 months following the Closing Date. Notwithstanding anything
herein to the contrary, a right to indemnification for breach of the
representations and warranties set forth in Sections 2.1, 2.3, 2.4,
3.1, 3.2, 3.3 and 3.4 may be asserted under this Article VII
indefinitely.
18
(d) Notwithstanding anything herein to the contrary, the
rights of indemnification under this Article VII shall not include any
matters relating to the rights and obligations of the parties hereto
under the Registration Rights Agreement.
(e) In each case in which a breach of any representation
or warranty creates entitlement to indemnification under this Article
VII, the amount of any Loss shall be determined without taking into
account any qualification as to materiality or Company Material Adverse
Effect contained in any such representation or warranty. The provisions
of this Article VII, subject to the limitations set forth herein, shall
constitute the sole remedy for breach of any party hereto of any
representation, warranty, covenant or agreement by any other party
hereto. Notwithstanding anything to the contrary herein, nothing in
this Agreement shall limit in any way any party's remedies in respect
of fraud or intentional misrepresentation or omission or an intentional
breach of this Agreement.
7.4. Notice and Defense of Claims. The following provisions shall
only apply in the event of a third-party claim.
(a) If any action or proceeding be commenced, or if any claim,
demand or assessment be asserted, in respect of which any party (the
"Indemnitee") proposes to hold any other party (the "Indemnitor") liable under
the indemnity provisions of this Article VII (a "Claim"), the Indemnitee shall
notify the Indemnitor in writing of such Claim in a timely manner and, in any
event, within any applicable time period specified in Section 7.3; provided,
however, that, so long as such notice is given within any applicable time period
specified in Section 7.3, an Indemnitee's failure to give timely notice to an
Indemnitor shall not constitute a defense (in whole or in part) to any claim for
indemnification by such Indemnitee unless, and only to the extent that, such
failure results in material prejudice to the Indemnitor. Such Indemnitor shall
be entitled, at its sole cost and expense, to contest or defend the same with
counsel of its own choosing, reasonably acceptable to Indemnitee, and Indemnitee
shall not admit any liability with respect thereto or settle, compromise, pay or
discharge the same without the prior written consent of the Indemnitor so long
as any Indemnitor is contesting or defending the same in good faith, and
Indemnitee (and its successors and assigns) shall cooperate with the Indemnitor
in the contest or defense thereof (and the Indemnitor shall reimburse Indemnitee
for the Indemnitee's reasonable actual out-of-pocket expenses incurred in
connection with such cooperation) and Indemnitee shall enter into any settlement
with respect thereto recommended by Indemnitor so long as (x) the amount of such
settlement is paid by the Indemnitor (subject to the limitations in Section
7.3), (y) no obligation to perform or refrain from performing any act or to
admit to any fault shall be imposed upon Indemnitee by reason thereof and (z)
such settlement otherwise is reasonable under the applicable circumstances.
19
(b) If (x) the Indemnitee shall have given the Indemnitor at least
thirty (30) days prior written notice that, in the event the Indemnitor fails to
assume the defense of any Claims as provided in Section 7.4(a), the Indemnitee
intends to assume the defense of such Claim and (y) the Indemnitor fails to
assume the defense of such Claim as provided in Section 7.4(a) by the end of
such thirty (30) day period or such later reasonable time (which shall be such
period of time as will not result in material prejudice to the rights of the
Indemnitee), then the Indemnitee shall have the right to prosecute and conduct
its own defense by a single counsel of its choice (in addition to appropriate
local counsel as may be required by the local rules of the applicable
jurisdiction), and in connection therewith shall have full right to conduct the
defense thereof and to enter into any compromise or settlement thereof with the
consent of the Indemnitor (which shall not unreasonably be withheld, conditioned
or delayed). Such defense shall be at the reasonable cost and expense of the
Indemnitor and the Indemnitor shall reimburse the Indemnitees promptly and
periodically for the reasonable costs of defending against such Claim.
Notwithstanding Section 7.4(a) and the foregoing sentence, any Indemnitee shall
be entitled to conduct its own defense at the reasonable cost and expense of the
Indemnitor if not doing so would materially prejudice the Indemnitee by virtue
of a conflict between the interest of the Indemnitee and the Indemnitor, and
provided further that in any event the Indemnitee may participate in such
defense at its own expense.
ARTICLE VIII
MISCELLANEOUS
8.1. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflict of law doctrines.
8.2. Survival. Subject to Section 7.3, the representations,
warranties, covenants and agreements made herein shall survive (i) any
investigation made by the Purchasers and the Company and (ii) the Closing.
8.3. Amendment. Any term, covenant, agreement or condition of this
Agreement may be amended (either generally or in a particular circumstance and
either retroactively or prospectively) by a written instrument signed by the
Company and the holders of 50% or more of the Conversion Shares issued or
issuable upon conversion of the Shares, but in no event shall the obligations of
any Purchaser hereunder be increased, nor shall any right of a Purchaser in
respect of a post-Closing covenant under Article V, or any right of a Purchaser
(or a member of its indemnitee group) under Article VII be decreased, except
upon such Purchaser's written consent. The foregoing shall not limit the right
of any single Purchaser to seek to enforce on its behalf or on behalf of all
Purchasers in respect of any agreement or covenant of the Company hereunder.
20
8.4. Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party hereto, upon any breach or default
of any other party hereto under this Agreement, shall impair any such right,
power or remedy of such party nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party hereto of any breach or default under this
Agreement, or any waiver on the part of any party hereto of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing.
8.5. Binding Effect; Assignment. This Agreement shall be binding on
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither this Agreement nor any rights or obligations
hereunder shall be assigned or delegated by the Company without the prior
written consent of the Purchasers. Prior to the Closing, any Purchaser may
assign or delegate this Agreement or any rights or obligations hereunder to any
affiliate of such Purchaser, provided that such assignee assumes all of the
obligations of such assigning Purchaser hereunder and executes a joinder
agreement to this Agreement. After the Closing, any Purchaser may assign or
delegate this Agreement or any rights or obligations hereunder to any permitted
transferee or assignee of such Purchaser's Shares that is an "accredited
investor" or a "qualified institutional buyer" (as defined in Rule 501 and Rule
144A, respectively, promulgated under the Securities Act) and otherwise in
compliance with applicable federal and state securities laws and exemptions
therefrom. In any of the foregoing events, such Purchaser shall remain obligated
under this Agreement. Nothing in this Agreement, express or implied, is intended
to confer upon any person, other than the parties hereto and their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein. For purposes of this Agreement, each of (x) the Gabelli Funds and (y)
the Capital Research and Management Company entities listed on the signature
pages hereto shall be treated as one Purchaser, unless the context otherwise
requires.
8.6. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be personally delivered,
mailed by registered or certified mail, postage prepaid, return receipt
requested, delivered by a nationally recognized overnight courier or sent by
facsimile transmission with receipt confirmed, addressed to the applicable party
at its address set forth next to its name on the signature page hereto (or such
other address as such party shall hereafter specify by written notice in writing
to the other parties hereto). Any such notice or communication shall be deemed
to have been received (A) in the case of personal delivery or facsimile
transmission, on the date of such delivery or transmission, (B) in the case of a
nationally recognized overnight courier, on the next business day after the date
when sent, and (C)
21
in the case of mailing, on the third business day following that on which the
piece of mail containing such communication is posted.
8.7. Expenses. The Company shall bear its own expenses and legal
fees incurred on its behalf with respect to this Agreement and the transactions
contemplated hereby, and the Company will pay (at Closing, if requested, or upon
any termination of this Agreement as contemplated by Section 1.2) all the
reasonable fees, charges and disbursements of one firm of outside counsel
representing the Purchasers, with respect to this Agreement and the transactions
contemplated hereby.
8.8. Entire Agreement. This Agreement (including the schedules and
exhibits hereto) and the documents referred to herein or delivered pursuant
hereto or pursuant to such documents, including all exhibits and schedules
thereto, contain the entire understanding of the parties with respect to their
subject matter and supersede all prior agreements and understandings among the
parties with respect to their subject matter. References herein to schedules to
this Agreement shall refer to the schedules contained in the Disclosure Letters
provided by the Company and the Purchasers, respectively, immediately prior to
the execution of this Agreement. The Company's schedules may cross-reference
applicable sections or pages of the Company SEC Reports.
8.9. Severability. Each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Agreement.
The obligations of the Purchasers hereunder are several. No Purchaser shall be
responsible for the obligations of, or any action taken or omitted by, any other
Purchaser hereunder or under the Registration Rights Agreement.
8.10. Headings. The section and other headings contained in this
Agreement are for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
8.11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
[remainder of page intentionally left blank]
22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXX COMMUNICATIONS SYSTEMS, INC. 0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx
By: /s/ Xxxxx X. Xxxx
------------------------------
Name: X.X. Xxxx
Title: V.P. - CFO
23
TEACHERS INSURANCE AND ANNUITY Teachers Insurance and Annuity
ASSOCIATION OF AMERICA Association of America
Attn: Xxxx Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
By: /s/ Xxxx Xxxxxxxx Facsimile: (000) 000-0000
------------------------------
Name: Xxxx Xxxxxxxx
Title: Associate Director - Private
Placements
24
CONTINENTAL CASUALTY COMPANY Attn: Investments
000 Xxxxx Xxxxxx Xxxxxx
CNA Plaza - 00 Xxxxx
Xxxxxxx, XX 00000
By: /s/ Xxxxxxx X. XxXxxx Facsimile: (000) 000-0000
------------------------------
Name: Xxxxxxx X. XxXxxx
Title: Vice President
25
AMERICAN HIGH INCOME TRUST Capital Research and
Management Company
Attn: Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxx Xxxxxx, 00xx Floor
By: CAPITAL RESEARCH AND MANAGEMENT COMPANY Xxx Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Secretary
AMERICAN FUNDS INSURANCE SERIES-
HIGH YIELD BOND FUND Capital Research and
Management Company
Attn: Xxxxxxx X. Xxxxxx
By: CAPITAL RESEARCH AND 000 Xxxxx Xxxx Xxxxxx, 00xx Floor
MANAGEMENT COMPANY Xxx Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Secretary
26
THE GABELLI EQUITY INCOME FUND Gabelli Funds
Attn: Xxx XxXxx
0 Xxxxxxxxx Xxxxxx
Xxx, XX 00000
By: /s/ Xxxxx Xxxxxx Facsimile: (000) 000-0000
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
THE GABELLI SMALL CAP GROWTH FUND Gabelli Funds
Attn: Xxx XxXxx
0 Xxxxxxxxx Xxxxxx
Xxx, XX 00000
By: /s/ Xxxxx Xxxxxx Facsimile: (000) 000-0000
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
THE GABELLI GLOBAL MULTIMEDIA TRUST INC. Gabelli Funds
Attn: Xxx XxXxx
0 Xxxxxxxxx Xxxxxx
Xxx, XX 00000
By: /s/ Xxxxx Xxxxxx Facsimile: (000) 000-0000
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
THE GABELLI CONVERTIBLE SECURITIES FUND, INC. Gabelli Funds
Attn: Xxx XxXxx
0 Xxxxxxxxx Xxxxxx
Xxx, XX 00000
By: /s/ Xxxxx Xxxxxx Facsimile: (000) 000-0000
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
THE GABELLI EQUITY TRUST INC. Gabelli Funds
Attn: Xxx XxXxx
0 Xxxxxxxxx Xxxxxx
Xxx, XX 00000
By: /s/ Xxxxx Xxxxxx Facsimile: (000) 000-0000
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
27
EXHIBIT B
PURCHASER NUMBER OF SHARES PURCHASE PRICE
Teachers Insurance and 1,500 $15,000,000
Annuity Association of
America
Continental Casualty Company 550 $ 5,500,000
American High Income Trust 300 $ 3,000,000
American Funds Insurance Series, 300 $ 3,000,000
----- -----------
High Yield Bond Fund
Capital Research and 600 $ 6,000,000
Management Company Subtotal
The Gabelli Equity Income Fund 100 $ 1,000,000
The Gabelli Small Cap 100 $ 1,000,000
Growth Fund
The Gabelli Global 100 $ 1,000,000
Multimedia Trust Inc.
The Gabelli Convertible 100 $ 1,000,000
Securities Fund, Inc.
The Gabelli Equity Trust Inc. 90 $ 900,000
----- -----------
Gabelli Subtotal 490 $ 4,900,000
----- -----------
TOTAL 3,140 $31,400,000
28
XXXX COMMUNICATIONS SYSTEMS, INC.
DISCLOSURE SCHEDULES TO
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
Schedule 2.2
SEE ATTACHED SCHEDULE OF OPTIONS AND WARRANTS.
The Company is authorized to issue 50,000,000 shares of all classes of
stock, of which, 15,000,000 shares are designed Class A Common Stock,
15,000,000 shares are designated Class B Common Stock, and 20,000,000 shares
are designated "blank check" preferred stock for which the Board of Directors
has the authority to determine the rights, powers, limitations and restrictions.
The rights of the Company's Class A and Class B Common Stock are identical,
except that the Class A Common Stock has 10 votes per share and the Class B
Common Stock has one vote per share. The Class A and B Common Stock receive
cash dividends on an equal per share basis.
The Series A Preferred Stock includes detachable warrants issued to
Bull Run Corporation ("Bull Run") to purchase 731,250 shares of Class A Common
Stock for $11.92 per share. Of these warrants, 450,000 vested upon issuance,
with the remaining warrants vesting in five equal annual installments
commencing January 3, 1997, providing the Series A Preferred Stock remains
outstanding. The Series A Preferred Stock was originally issued to Bull Run;
however, these shares were sold by Bull Run to one of its affiliates in 2001.
The holder of the Series A Preferred Stock receives cash dividends at an annual
rate of $800 per share. During 2000, the Company redeemed 500 shares of
Series A Preferred Stock at a cost of $5.0 million. The liquidation or
redemption price of the Series A Preferred Stock is $10,000 per share.
The Series B Preferred Stock includes warrants to purchase an
aggregate of 750,000 shares of Class A Common Stock at an exercise price of
$16.00 per share. Of these warrants 450,000 vested upon issuance, with the
remaining warrants vesting in five equal annual installments commencing on
September 24, 1997. The shares of Series B Preferred Stock were originally
issued to Bull Run and to J. Xxxx Xxxxxxxx, Chairman of the Board of Bull Run
and President and Chief Executive Officer of the Company, and certain of his
affiliates. The Company obtained a written opinion from an investment banker as
to the fairness of the terms of the sale of such Series B Preferred Stock with
warrants. During 2001, Bull Run sold its shares of Series B Preferred Stock to
one of the other original Series B Preferred Stock shareholders. The holders of
the Series B Preferred Stock receive dividends at an annual rate of $600 per
share, with the Company having the option to pay these dividends in cash or in
additional shares. The liquidation or redemption price of the Series B
Preferred Stock is $10,000 per share. During 2000, the Company issued 11 shares
of Series B Preferred Stock as payment of dividends to the holders of its then
outstanding Series B Preferred Stock. The liquidation or redemption price of
the Series B Preferred Stock is $10,000 per share.
In addition to the $13.2 million paid for the shares of Xxxxxx Xxxxxxx,
Inc., the Company granted warrants to Bull Run to purchase up to 100,000 shares
of the Company's Class B Common Stock at $13.625 per share. These warrants are
fully vested and will expire in 10 years if not exercised.
The Company is authorized by its Board of Directors to purchase up to
two million
shares of the Company's Class A or Class B Common stock to either be retired or
reissued in connection with the Company's benefit plans, including its Capital
Accumulation Plan and long-term incentive plan. During 2000 and 1999, the
Company purchased 11,361 shares and 20,000 shares of its Class B Common Stock,
respectively, under this authorization. The 2000 and 1999 treasury shares were
purchased at prevailing market prices with an average effective price of $12.55
and $12.85 per share, respectively, and were funded from operating cash flow.
SCHEDULE 2.6
See page 4 of the Company's Registration Statement on Form S-4 (File No.
333-86068) filed on April 12, 2002 (the "Form S-4")
SCHEDULE 2.8
See the cover page and pages 3 and 4 of the Form S-4
SCHEDULE 2.10
See pages 4, 25 and 26 of the Form S-4
SCHEDULE 2.15
See pages 4, 25 and 26 of the Form S-4 and Item 3 (pages 25-26) of the
Company's Annual Report on Form 10-K for the year ended December 31, 2001 (the
"Form 10-K")
SCHEDULE 2.16
See Item 2 (pages 22-25) of the Form 10-K
SCHEDULE 2.21
See pages 3, 4 and 25 of the Form S-4 and page 40, Item 11 (pages 72-78), Item
12 (pages 79-80), Item 13 (pages 81-82), Note B (pages 54-55) and Note D (page
59) of the Form 10-K
SUMMARY
XXXX COMMUNICATIONS SYSTEMS, INC.
STOCK OPTION OUTSTANDING
NUMBER OF OPTIONS - SUMMARY - CLASS A
OPTION FORFEITURES UPDATED AS OF DECEMBER 31, 2002
OPTIONS OPTIONS
XXXXX XXXX EXPIRATION STRIKE OUTSTANDING OPTIONS OPTIONS OPTIONS OPTIONS OUTSTANDING
DATE DATE DATE PRICE @12/31/01 AWARDED EXERCISED FORFEITED EXPIRED @ 3/31/02
-------- -------- ---------- -------- ----------- ------- --------- --------- ------- -----------
3/30/95 03/30/97 03/30/00 $ 8.8889 0 0 0 0 0 0
11/19/98 11/19/00 11/19/03 $17.8125 19,337 0 0 0 0 19,337
--------------------------------------------------------------------------------
19,337 0 0 0 0 19,337
================================================================================
SUMMARY
XXXX COMMUNICATIONS SYSTEMS, INC.
STOCK OPTIONS OUTSTANDING
NUMBER OF OPTIONS - SUMMARY - CLASS B
Option Forfeitures updated as of December 31, 2002
OPTIONS OPTIONS
XXXXX XXXX EXPIRATION STRIKE OUTSTANDING OPTIONS OPTIONS OPTIONS OPTIONS OUTSTANDING
DATE DATE DATE PRICE @12/31/01 AWARDED EXERCISED FORFEITED EXPIRED @ 3/31/02
-------- -------- ---------- --------- ----------- ------- --------- --------- ------- -----------
12/12/96 12/12/98 12/12/01 $ 10.5833 0 0 0 0 0 0
02/12/97 02/12/99 02/12/02 $ 12.5000 10,500 0 0 0 (10,500) 0
9/25/97 9/25/99 9/25/02 $ 14.5000 343,545 0 0 0 0 343,545
02/12/98 02/12/00 02/12/03 $ 14.5000 10,500 0 0 0 0 10,500
10/5/98 10/5/00 10/5/03 $ 14.5000 11,250 0 0 0 0 11,250
11/19/98 11/19/00 11/19/03 $ 14.0000 106,750 0 0 0 0 106,750
2/12/99 2/12/01 2/12/04 $ 14.1875 10,500 0 0 0 0 10,500
11/18/99 11/18/01 11/18/04 $ 12.7500 168,700 0 0 0 0 168,700
2/11/00 2/11/02 2/11/05 $ 13.0000 10,500 0 0 0 0 10,500
02/21/00 02/21/02 02/21/05 $ 13.0000 2,500 0 0 0 0 2,500
5/25/00 5/25/00 5/25/05 $ 10.1250 771,185 0 0 0 0 771,185
09/21/00 09/21/00 09/20/05 $ 10.7500 80,000 0 0 0 0 80,000
10/26/00 10/26/02 10/26/05 $ 13.0000 10,500 0 0 0 0 10,500
10/11/01 10/11/03 10/11/06 $ 12.7400 6,000 0 0 0 0 6,000
12/6/01 12/6/03 12/6/06 $ 9.9500 29,500 0 0 0 0 29,500
01/07/02 01/07/04 01/07/07 $ 11.2300 0 325,700 0 0 0 325,700
Directors:
11/18/99 01/01/00 01/31/01 $ 12.7500 0 0 0 0 0 0
10/26/00 1/1/01 1/31/02 $ 13.0000 37,500 0 0 (37,500) 0 0
12/06/01 01/01/02 01/31/03 $ 9.9500 25,000 0 0 0 0 25,000
----------------------------------------------------------------------------
1,634,430 325,700 0 (37,500) (10,500) 1,912,130
============================================================================
SUMMARY
XXXX COMMUNICATIONS SYSTEMS, INC.
WARRANTS OUTSTANDING
NUMBER OF WARRANTS -- SUMMARY -- CLASS A
Warrant Forfeitures updated as of December 31, 2000
WARRANTS WARRANTS
XXXXX XXXX EXPIRATION STRIKE OUTSTANDING WARRANTS WARRANTS WARRANTS WARRANTS OUTSTANDING
DATE DATE DATE PRICE @ 12/31/01 AWARDED EXERCISED FORFEITED EXPIRED @ 3/31/02
--------------------------------------------------------------------------------------------------------------------
1/3/96 $ 11.92 731,250 731,250
9/24/96 $ 16.00 750,000 750,000
-------------------------------------------------------------------------
1,281,250 0 0 0 0 1,481,250
=========================================================================
XXXX COMMUNICATIONS SYSTEMS, INC.
WARRANTS OUTSTANDING
NUMBER OF WARRANTS -- SUMMARY -- CLASS B
Warrant Forfeitures updated as of December 31, 2000
WARRANTS WARRANTS
XXXXX XXXX EXPIRATION STRIKE OUTSTANDING WARRANTS WARRANTS WARRANTS WARRANTS OUTSTANDING
DATE DATE DATE PRICE @ 12/31/01 AWARDED EXERCISED FORFEITED EXPIRED @ 3/31/02
--------------------------------------------------------------------------------------------------------------------
3/1/99 $ 13.63 100,000 100,000
-------------------------------------------------------------------------
100,000 0 0 0 0 100,000
=========================================================================
These warrants are associated with the Xxxxxx Xxxxxxx option and they will vest
upon exercise of that option.