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EXHIBIT 10.1
CONTRIBUTION AGREEMENT
by and among
HIGH SPEED ACCESS CORP.,
OPM SERVICES, INC.,
▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP,
COLORADO LIMITED PARTNERSHIP,
▇▇▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP
▇▇▇▇▇▇ ▇. ▇▇▇▇, III,
▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and
BROADBAND SOLUTIONS, LLC
April 3, 1998
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT ("Agreement") is made and entered
into as of the 3rd day of April, 1998, by and among (i) HIGH SPEED ACCESS CORP.,
a Delaware corporation ("Holding Company"), (ii) BROADBAND SOLUTIONS, LLC, a
Kentucky limited liability company ("Investor"), (iii) OPM SERVICES, INC., a
Kentucky corporation ("OPM"), COLORADO LIMITED PARTNERSHIP, a Georgia limited
partnership ("CLP"), and ▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP, a Georgia limited
partnership ("GFLP") (collectively, the "CATV Shareholders"); and (iv) ▇▇▇▇▇▇▇
FAMILY LIMITED PARTNERSHIP, a Georgia limited partnership ("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇.
▇▇▇▇, III, an individual ("▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇, an individual, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, an individual, ▇▇▇▇ ▇▇▇▇▇▇, an individual, and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an
individual (collectively, the "HSA Shareholders").
WITNESSETH:
Investor and the CATV Shareholders own 100% of the issued and
outstanding shares of capital stock of ▇▇▇▇.▇▇▇, Inc. ("CATV") as set forth on
Schedule 1 hereto.
Investor and the HSA Shareholders own 100% of the issued and
outstanding shares of capital stock of High Speed Access Network, Inc. ("HSA")
as set forth on Schedule 2 hereto.
Holding Company desires to issue, and Investor and each of the
CATV Shareholders and the HSA Shareholders desire to acquire, the number of
shares of Holding Company's authorized but unissued Preferred Stock and Common
Stock set forth opposite its or his name on Schedule 3 hereto.
Holding Company desires to sell and issue, and Investor
desires to purchase and acquire the Additional Holding Company Shares (as
defined below), if any, upon the terms and subject to the conditions contained
herein.
It is intended that, for federal income tax purposes, the
transactions contemplated by Section 1.A of this Agreement shall qualify as an
exchange governed by Section 351 of the Internal Revenue code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties herein contained, and intending to be legally
bound, Holding Company, Investor, the CATV Shareholders and the HSA Shareholders
agree as follows:
1. Contribution; Post Closing Capital Calls .
A. Subject to the terms and conditions of this
Agreement, at the Closing, as hereinafter defined:
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[1] [a] Investor agrees that it shall contribute, convey,
transfer, assign and deliver to Holding Company the number of shares of
CATV Preferred Stock set forth opposite its name on Schedule 1 attached
hereto and the number of shares of HSA Preferred Stock set forth
opposite its name on Schedule 2 attached hereto, [b] each of the CATV
Shareholders agrees that it shall contribute, convey, transfer, assign
and deliver to Holding Company the number of shares of CATV Common
Stock set forth opposite its name on Schedule 1 attached hereto, and
[c] each of the HSA Shareholders agrees that he shall contribute,
convey, transfer, assign and deliver to Holding Company the number of
shares of HSA Common Stock set forth opposite his name on Schedule 2
attached hereto; and
[2] [a] Holding Company agrees to sell, issue and deliver to
Investor the number of shares of Preferred Stock of Holding Company set
forth opposite Investor's name on Schedule 3 attached hereto in
consideration of Investor contributing to Holding Company the number of
shares of CATV Preferred Stock and HSA Preferred Stock set forth
opposite its name on Schedule 1 and Schedule 2;
[b] Holding Company agrees to sell, issue and deliver to
each CATV Shareholder the number of shares of Common Stock of Holding
Company set forth opposite each such CATV Shareholder's name on
Schedule 3 attached hereto in consideration of each such CATV
Shareholder's contributing to Holding Company the number of shares of
CATV stock set forth opposite its name on Schedule 1; and [c] Holding
Company agrees to sell, issue and deliver to each HSA Shareholder the
number of shares of Common Stock of Holding Company set forth opposite
each such HSA Shareholder's name on Schedule 3 attached hereto in
consideration of each such HSA Shareholder's contributing to Holding
Company the number of shares of HSA stock set forth opposite his name
on Schedule 2.
B. Subject to the terms and conditions of this Agreement, at
any time and from time to time after the Closing, at the option of Holding
Company, evidenced by a resolution of its Board of Directors and upon ten (10)
days prior written notice given by Holding Company to Investor, Investor agrees
to purchase from Holding Company, and Holding Company agrees to sell, issue and
deliver to Investor, up to 4,000,000 shares of Holding Company Preferred Stock
("Additional Holding Company Shares") at a price of One Dollar ($1.00) per
share, resulting in an additional total purchase price to Investor not to exceed
Four Million Dollars ($4,000,000) in the aggregate for such additional shares of
Holding Company Preferred Stock (the "Post Closing Capital Calls"). There may be
one or more Post Closing Capital Calls, provided that pursuant thereto [i]
Investor shall be, under no circumstances, obligated to purchase more than
4,000,000 shares of Preferred Stock in the aggregate, and [ii] Investor shall
be, under no circumstances, obligated to purchase any shares of Preferred Stock
pursuant to a Post Closing Capital Call if, as of the date of such Post Closing
Capital Call, Holding Company has not met the monthly performance projections
set out in Holding Company's Confidential Business Plan dated March 31, 1998
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("Confidential Business Plan"), a copy of which is attached hereto as Schedule
4, as determined by Investor in its sole discretion.
2. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 a.m. on April 3, 1998, at
the offices of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, or at such other time, date, or place as shall be mutually agreed upon
by the parties hereto in writing (the "Closing Date"). Each of the Post Closing
Capital Calls, if any, shall be consummated at Holding Company's option as
contemplated by Section 1.B above by delivery of a certificate representing the
shares of Preferred Stock Investor is purchasing against payment of the purchase
price therefor in immediately available funds.
3. Closing Items.
A. At the Closing, Holding Company shall deliver, or
cause to be delivered, the following items:
[1] certificates representing the shares of Preferred
Stock that Investor is purchasing against delivery of shares of CATV
Preferred Stock and HSA Preferred Stock as set forth on Schedule 1 and
Schedule 2;
[2] certificates representing the shares of Common
Stock that each of the CATV Shareholders is purchasing against delivery
of shares of CATV Common Stock as set forth on Schedule 1;
[3] certificates representing the shares of Common
Stock that each of the HSA Shareholders is purchasing against delivery
of shares of HSA Common Stock as set forth on Schedule 2;
[4] the Certificate of Incorporation of Holding
Company ("Certificate") in the form attached hereto as Exhibit A
certified by the Delaware Secretary of State;
[5] the Bylaws of Holding Company ("Bylaws"),
certified as to their due adoption and continued validity by the
Secretary of Company;
[6] the Registration Rights Agreement in the form
attached hereto as Exhibit B ("Registration Rights Agreement") duly
executed by Holding Company;
[7] the Shareholders Agreement in the form attached
hereto as Exhibit C ("Shareholders Agreement") duly executed by Holding
Company;
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[8] the 1998 Stock Option Plan in the form attached
hereto as Exhibit D (the "Stock Option Plan") duly executed by Holding
Company; and
[9] resolutions of the Board of Directors of Holding
Company authorizing the execution, delivery and consummation of this
Agreement, the issuance of the shares of Preferred Stock and Common
Stock, and the other matters contemplated hereby, certified as to their
due adoption and continued validity by the Secretary of Company.
B. At the Closing, Investor shall deliver, or cause to be
delivered the following items:
[1] certificates representing shares of CATV
Preferred Stock or HSA Preferred Stock set forth opposite its name on
Schedules 1 and 2, duly endorsed for transfer, free and clear of any
liens, claims and encumbrances;
[2] the Registration Rights Agreement executed by
Investor; and
[3] the Shareholders Agreement executed by Investor.
C. At the Closing, each of the CATV Shareholders shall
deliver, or cause to be delivered the following items:
[1] certificates representing shares of CATV Common
Stock set forth opposite its name on Schedule 1, duly endorsed for
transfer, free and clear of any liens, claims and encumbrances; and
[2] the Shareholders Agreement executed by each CATV
Shareholder.
D. At the Closing, each of the HSA Shareholders shall deliver,
or cause to be delivered the following items:
[1] certificates representing shares of HSA Common
Stock set forth opposite its name on Schedule 2, duly endorsed for
transfer, free and clear of any liens, claims and encumbrances; and
[2] the Shareholders Agreement executed by each HSA
Shareholder.
4. Further Assurances. Each party shall execute such additional
documents and take such other actions as the other party or parties may
reasonably request to consummate the transactions contemplated hereby and
otherwise as may be necessary to effectively carry out the terms and provisions
of this Agreement.
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5. Representations and Warranties of Holding Company. Holding Company
hereby represents and warrants to Investor, as of the date hereof and as of the
date of each additional issuance of Preferred Shares to Investor pursuant to
Post Closing Capital Calls, and to the CATV Shareholders and the HSA
Shareholders as of the date hereof, as follows:
A. Corporate Standing. Holding Company is a corporation duly
organized, validly existing, and in good standing under the laws of the
Delaware. Holding Company has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being conducted
and as presently proposed to be conducted, to execute, deliver and perform this
Agreement, the Shareholders Agreement, the Registration Rights Agreement and any
other agreement to which Holding Company is a party, the execution and delivery
of which is contemplated hereby (the "Ancillary Agreements"). True and accurate
copies of the articles of incorporation, and all amendments thereto, bylaws (and
all amendments thereto) and minute book (containing the records of all meetings
and written consents of the stockholders, the board of directors and any
committees of the board of directors) of Holding Company have previously been
delivered to counsel to Investor.
B. Authorization. The execution and delivery of this
Agreement, the Shareholders Agreement, the Registration Rights Agreement, and
any Ancillary Agreement and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action
on the part of Holding Company. Each of this Agreement, the Shareholders
Agreement, the Registration Rights Agreement, and any Ancillary Agreement have
been duly executed and delivered by Holding Company, and constitutes the legal,
valid and binding obligation of Holding Company, enforceable against it in
accordance with its terms.
C. Capitalization. The authorized capital stock of Holding
Company consists of [i] 9,900,000 Common Shares with $.01 par value per share
("Common Shares"), none of which is outstanding as of the date hereof and [ii]
5,000,000 Preferred Shares, no par value per share ("Preferred Shares"), none of
which is outstanding at the date hereof. 5,000,000 Common Shares have been duly
and validly reserved for issuance upon conversion of the Preferred Shares, and
900,000 Common Shares have been duly and validly reserved for issuance under
Holding Company's Stock Option Plan. Except for (i) the conversion and other
privileges of the Preferred Shares, and (ii) the rights provided in Section 11.A
hereof and in the Registration Rights Agreement and the Shareholders Agreement,
there are outstanding no subscriptions, options, warrants, calls, commitments or
rights (including conversion or preemptive rights and rights of first refusal),
proxy or stockholder agreements or agreements of any character relating to
shares of Holding Company's capital stock or the Common Stock or Preferred Stock
to be issued hereunder or any instruments that can be converted into shares of
Holding Company's capital stock or the Common Stock or Preferred Stock to be
issued hereunder. None of the shares of Holding Company's capital stock have
been issued in violation of any preemptive right. All issuances, transfers or
purchases of the capital stock of Holding Company have been in compliance
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with all applicable agreements and all applicable laws, including federal and
state securities laws, and all taxes thereon, if any, have been paid. No former
or present holder of any of the shares of capital stock of Holding Company has
any legally cognizable claim against Holding Company based on any issuance,
sale, purchase, redemption or involvement in any transfer of any shares of
capital stock by Holding Company. Except for obligations of Holding Company to
redeem Preferred Shares as contemplated by Section 11.A hereof, there are no
contractual obligations of Holding Company to repurchase, redeem or otherwise
acquire any shares of capital stock of Holding Company. No bonds, debentures,
notes or other indebtedness having the right to vote (or convertible into or
exercisable for securities having the right to vote) on any matters on which
shareholders of Holding Company may vote are issued or outstanding. Holding
Company is not a party or subject to any agreement or understanding, and, to
Holding Company's best knowledge, there is no agreement or understanding between
any persons that affects or relates to the voting or giving of written consents
with respect to any security or the voting by any director of Holding Company.
D. Validly Issued Shares. The shares of Common Stock and
Preferred Stock to be issued, sold and delivered in accordance with the terms of
this Agreement for the consideration set out herein, will, upon issuance in
accordance with the terms hereof, be duly and validly issued, fully paid and
nonassessable, free of restrictions on transfer other than restrictions on
transfer under this Agreement, the Shareholders Agreement and under applicable
federal and state securities laws. The issuance of the Common Stock and
Preferred Stock to Investor 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 Common Shares issuable upon
conversion of the Preferred Stock being purchased under this Agreement will be,
upon issuance and delivery in accordance with the terms of the Certificate, duly
and validly issued, fully paid and nonassessable and free of restrictions on
transfer other than restrictions on transfer under this Agreement and the
Shareholders Agreement and under applicable federal and state securities laws.
The issuance of the Common Shares upon conversion of the Preferred Stock will
comply with all applicable laws, including federal and state securities laws
(assuming the accuracy of the representations set forth in Sections 6.B through
6.E of this Agreement as of the date of issuance of such Common Shares), and
will not violate the preemptive rights of any person.
E. No Conflict. The execution and delivery of this Agreement,
the Shareholders Agreement and the Registration Rights Agreement, and any
Ancillary Agreement do not, and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or the creation of a
lien, pledge, security interest, charge or other encumbrance on assets (any such
conflict, violation, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation") pursuant to, any provision of the
Certificate or Bylaws, or result in any Violation of any material lease,
agreement, obligation, instrument, permit, concession, franchise,
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license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Holding Company or Holding Company's properties or assets.
F. Contracts and Other Commitments; Compliance. No event or
condition has occurred or exists, or, to the knowledge of Holding Company, is
alleged by any of the other parties thereto to have occurred or existed, which
constitutes, or with lapse of time or giving of notice or both might constitute,
a default or breach under any contract, agreement, lease, loan, commitment or
proposed transaction, judgment, order, writ or decree, written or oral, absolute
or contingent to which Holding Company is a party, which default is reasonably
likely to result in a material adverse change in the financial condition,
results of operation or business of Holding Company. Holding Company is not in
violation or default of any provision of its Certificate or Bylaws or in any
respect of any provision of any contract.
G. Subsidiaries. Holding Company does not own or control,
directly or indirectly, any interest in any other corporation, partnership,
limited liability company, association or other business entity. Holding Company
is not a participant in any joint venture, partnership or similar arrangement.
H. Consents. No consent, approval, qualification, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, or other third party is required by or
with respect to Holding Company in connection with the execution and delivery of
this Agreement, or the consummation by Holding Company of the transactions
contemplated hereby, which has not already been obtained, except for notices of
sale required to be filed with the Securities and Exchange Commission under
Regulation D of the Securities Act of 1933, as amended (the "Securities Act"),
or such post closing filings as may be required under applicable state
securities laws which will be timely filed within the applicable periods
therefor.
I. Financial Statements. On and after the Closing, Holding
Company shall deliver to Investor the financial statements required by Section
11.B of this Agreement (the "Financial Statements"). The Financial Statements,
including any footnotes thereto, will be true, correct and complete and present
fairly the financial condition of Holding Company as of and for the respective
dates set forth therein.
J. Indebtedness for Borrowed Money; No Undisclosed
Liabilities. Holding Company has no direct or indirect indebtedness for borrowed
money, indebtedness by way of lease-purchase arrangements, guarantees,
undertakings, chattel mortgages or other security arrangements with any bank,
financial institution or other third party. Except as and to the extent
reflected and adequately reserved against in the Financial Statements or
incurred in the ordinary course of business since the date of the Financial
Statements,
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Holding Company will not have any liability or obligation whatsoever, whether
accrued, absolute, contingent or otherwise.
K. Absence of Changes. As of the date of each Post Closing
Capital Call, there shall not have been:
[1] any change in the assets, liabilities, financial condition
or operating results of Holding Company from that reflected in the
Financial Statements, except changes in the ordinary course of business
that have not been, in the aggregate, materially adverse;
[2] any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of Holding Company (as such business
is presently conducted and as it is presently proposed to be
conducted);
[3] any waiver or compromise by Holding Company of a valuable
right or of a material debt owed to it;
[4] any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by Holding Company, except in
the ordinary course of business and that is not material to the
business, properties, or financial condition of Holding Company (as
such business is presently conducted and as it is presently proposed to
be conducted);
[5] any material change to a material contract or arrangement
by which Holding Company or any of its assets is bound or subject;
[6] any material change in any compensation arrangement or
agreement with any employee or officer;
[7] any sale, assignment, or transfer of any intangible
assets;
[8] any resignation or termination of employment of any key
officer of Holding Company;
[9] any mortgage, pledge, transfer of a security interest in,
or lien, created by Holding Company, with respect to any of its
material properties or assets, except liens for taxes not yet due or
payable;
[10] any declaration, setting aside or payment of any dividend
or other distribution of Holding Company's assets in respect of any of
Holding Company's
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capital stock, or any direct or indirect redemption, purchase, or
other acquisition of any of such stock by Holding Company;
[11] to the best of Holding Company's knowledge, any other
event or condition of any character that might materially and adversely
affect the business, properties, prospects or financial condition of
Holding Company (as such business is presently conducted and as it is
presently proposed to be conducted); or
[12] any agreement or commitment by Holding Company to do any
of the things described in this Section 5.K.
L. Title to Property and Assets; Leases.
[1] Holding Company is not bound or committed to make any
capital improvement or expenditure with respect to its owned or leased
real or personal property.
[2] Holding Company owns no real property in fee simple.
Holding Company has good, valid and marketable title to all the
personal and mixed, tangible and intangible properties and assets which
it purports to own, free and clear of all liens, restrictions, claims,
charges, security interests, easements or other encumbrances of any
nature whatsoever, except for liens for current taxes not yet due and
payable. With respect to the property and assets that it leases,
Holding Company is in compliance with such leases and, to Holding
Company's best knowledge, holds a valid leasehold interest, free and
clear of any liens, claims and encumbrances. All properties and assets
of Holding Company are in the possession or control of Holding Company,
and no other person is entitled to possession of any such properties
and assets.
M. Legal Proceedings. There are no claims of any kind or any
actions, suits, proceedings, arbitrations or investigations pending or, to
Holding Company's best knowledge, threatened against or affecting Holding
Company or against any asset, interest or right of either of them or which
questions the validity of the transactions contemplated by this Agreement and
Holding Company does not know of any facts which may constitute a basis
therefor.
N. Environmental Matters. Holding Company is not in violation
of any applicable statute, law or regulation relating to the environment or
occupational health and safety (the "Environmental Laws"), and, to Holding
Company's best knowledge, as of the date hereof no material expenditures are
required to be made by Holding Company in order to comply with any of the
Environmental Laws.
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O. Licenses and Permits; Compliance with Laws. Holding Company
holds all franchises, permits, licenses, variances, exemptions, orders and
approvals of all governmental entities which are material to the operation of
Holding Company's business and is in compliance with the terms thereof. Holding
Company has complied with and is not in any default under (and has not been
charged with or received notice with respect to, nor is threatened with or under
investigation with respect to, any charge concerning any violation of any
provision of) any federal, state or local law, regulation, ordinance, rule or
order (whether executive, judicial, legislative or administrative) or any order,
writ, injunction or decree of any court, agency or instrumentality and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failures to comply.
P. Employee Benefit Plans. Each employee benefit plan of
Holding Company, including any profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical or
other plan, arrangement or understanding (whether or not legally binding)
providing benefits to any current or former employee, officer or director of
Holding Company (collectively "Benefit Plans"), or any employment, consulting,
severance, termination or indemnification agreement, arrangement or
understanding between Holding Company and any officer, director or employee of
Holding Company, has been administered in all material respects in accordance
with its terms and all applicable laws.
Q. Labor Relations.
[1] Holding Company is in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours and
occupational safety and health;
[2] There is no unfair labor practice charge or
complaint or any other matter against or involving Holding Company
pending or, to Holding Company's best knowledge, threatened before the
National Labor Relations Board or any court of law;
[3] There is no labor strike, dispute, slowdown or
stoppage actually pending or, to Holding Company's best knowledge,
threatened against Holding Company;
[4] Holding Company is not a party to or bound by any
collective bargaining agreement or any similar labor union arrangement;
[5] There are no charges, investigations,
administrative proceedings or formal complaints of discrimination
(including discrimination based upon sex,
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age, marital status, race, color, religion, national origin, sexual
preference, disability, handicap or veteran status) pending or, to
Holding Company's best knowledge, threatened, before the Equal
Employment Opportunity Commission or any federal, state or local agency
or court against Holding Company. There have been no governmental
audits of the equal employment opportunity practices of Holding Company
and, to Holding Company's best knowledge, no basis for any such claim
exists; and
[6] Holding Company is in compliance in all material
respects with the requirements of the Americans With Disabilities Act.
R. Insurance. Holding Company is not liable for any material
retroactive premium adjustments with respect to any of its insurance policies or
bonds. All such policies and bonds are legal, valid and enforceable and in full
force and effect and Holding Company is not in breach or default (including with
respect to the payment of premiums or the giving of notices) and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination, modification or acceleration under the policy
received any notice of premium increases or cancellations with respect to any of
such policies and bonds. Holding Company believes the amount and type of Holding
Company's insurance coverage is adequate for Holding Company's business and is
consistent with good business practice.
S. Tax Matters. Holding Company has timely filed or caused to
be filed all federal, state, foreign and local income, franchise, gross
receipts, payroll, sales, use, withholding, occupancy, excise, real and personal
property, employment and other tax returns, tax information returns and reports
("Tax Returns") required to be filed and all such Tax Returns were correct and
complete in all respects. Holding Company has paid, or made adequate provisions
for the payment of, all taxes, duties or assessments of any nature whatsoever,
interest payments, penalties and additions (whether or not reflected in the
returns as filed) due and payable (and/or properly accruable for all periods
ending on or before the date of this Agreement) to any city, county, state,
foreign country, the United States or any other taxing authority. There are no
security interests on any of the assets of Holding Company that arise in
connection with any failure (or alleged failure) to pay any tax. Holding Company
has withheld and paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party. No material deficiencies for any
taxes have been proposed, asserted or assessed against Holding Company that are
not adequately reserved for.
T. Related Party Transactions. No employee, officer or holder
of Holding Company's Common Shares or member of his or her immediate family is
indebted to Holding Company, nor is Holding Company indebted (or committed to
make loans or extend or guarantee credit) to any of them, other than (i) for
payment of salary for services
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rendered, (ii) reimbursement for reasonable expenses incurred on behalf of
Holding Company, and (iii) for other standard employee benefits made generally
available to all employees (including stock option agreements outstanding under
any stock option plan approved by the Board of Directors of Holding Company). To
the best of Holding Company's knowledge, none of such persons has any direct or
indirect ownership interest in any firm or corporation with which Holding
Company has a business relationship, or any firm or corporation that competes
with Holding Company, except that employees, stockholders, and officers of
Holding Company and members of their immediate families may own stock in
publicly traded companies that may compete with Holding Company.
U. Brokers' and Finders' Fees. Holding Company has not
employed any broker, finder or financial advisor or incurred any liability for
fees or commissions payable to any broker, finder or financial advisor in
connection with the negotiations relating to or the transactions contemplated by
this Agreement.
V. Registration Rights. Holding Company is presently not under
any obligation and has not granted any rights to register under the Securities
Act any of is outstanding securities or any of its securities that may be
subsequently issued.
W. Small Business Concern. Holding Company, together with any
"affiliates" (as that term is defined in Section 121.103 of Title 13 of the Code
of Federal Regulations), is a "small business concern" within the meaning of the
Small Business Investment Act of 1958, as amended (the "SBIA"), and the
regulations thereunder, including Section 121.301 of Title 13 of the Code of
Federal Regulations. Holding Company does not presently engage in, and it shall
not hereafter engage in, any activities, nor shall it use, directly or
indirectly, the proceeds from the sale of the Preferred Shares hereunder for any
purpose for which a small business investment company is prohibited from
providing funds by the SBIA and the Regulations thereunder.
X. Material Facts. Holding Company has provided Investor with
all the information reasonably available to it that Investor has requested for
deciding whether to purchase the Preferred Stock. This Agreement, the
Confidential Business Plan and the documents or written statements furnished by
Holding Company to Investor in connection with the transactions contemplated
hereby, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements contained herein or therein,
in light of the circumstances in which they are made, not misleading.
6. Representations and Warranties of Investor. Investor hereby
represents and warrants to Holding Company, as of the date hereof and as of the
date of each additional issuance of Preferred Shares to such Investor pursuant
to Post Closing Capital Calls, as follows:
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A. Authorization; Binding Agreement. This Agreement, the
Registration Rights Agreement and the Shareholders Agreement have been duly
authorized, executed and delivered by Investor and each constitutes the legal,
valid and binding obligation of Investor enforceable against it in accordance
with its terms.
B. Investment Representations. Investor is acquiring the
Preferred Stock and the Common Stock issuable upon conversion thereof
(collectively the "Securities") solely for its own account as principal, for
investment purposes only and not with a view to resale or distribution thereof
in whole or in part, and Investor has no present intention of selling, granting
any participation in, or otherwise distributing the Securities. No other person
has a direct or indirect beneficial interest in the Securities to be acquired by
Investor hereunder and Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to any third person, with respect to any of the Securities.
C. Accredited Investor; Residence. Investor is a Kentucky
limited liability company and is an "accredited investor" as such term is
defined under Regulation D of the Securities Act.
D. Receipt of Information; Restricted Securities. Investor
acknowledges receipt of the Confidential Business Plan. Investor acknowledges
that the Securities are not being and will not be registered under the
Securities Act or the securities laws of any other jurisdiction in reliance on
exemptions thereunder. The Securities have not been and will not be approved or
disapproved by the Securities and Exchange Commission or any other governmental
authority or agency of any jurisdiction. Investor represents that Investor has
had an opportunity to ask questions and receive answers from Holding Company
regarding the terms and conditions of the offering of the Preferred Stock and
the business, properties, prospects, and financial condition of Holding Company
and to obtain additional information (to the extent Holding Company possessed
such information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to Investor or to
which Investor had access. Investor's representations under this Section 6,
however, shall not limit or modify the representations and warranties of Holding
Company in Section 5 of this Agreement or the right of Investor to rely thereon.
E. Investment Experience. Investor is experienced in
evaluating and investing in private placement transactions of securities of
companies in a similar stage or development and acknowledges that such Investor
is able to fend for itself, can bear the economic risk of its investment, and
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the investment in the Preferred
Stock.
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7. Representations and Warranties of CATV Shareholders. The CATV
Shareholders hereby, jointly and severally, represent and warrant to Holding
Company and Investor as follows:
A. Authorization. Each of this Agreement and the Shareholders
Agreement have been duly executed and delivered by the CATV Shareholders, and
constitutes the legal, valid and binding obligation of the CATV Shareholders,
enforceable against them in accordance with its terms.
B. Capitalization. The authorized capital stock of CATV
consists of [i] 495,000 Common Shares with no par value per share ("CATV Common
Shares"), of which at the date hereof 200,000 shares are validly issued and
outstanding, fully paid and nonassessable and owned, beneficially and of record,
as set forth on Schedule 1 attached hereto, and [ii] 250,000 Preferred Shares,
no par value per share ("CATV Preferred Shares"), of which at the date hereof
50,000 shares are validly issued and outstanding, fully paid and nonassessable.
250,000 CATV Common Shares have been duly and validly reserved for issuance upon
conversion of the CATV Preferred Shares, and 45,000 CATV Common Shares have been
duly and validly reserved for issuance under CATV's Stock Option Plan. Except
for (i) the conversion and other privileges of the CATV Preferred Shares, and
(ii) the rights provided in Section 9.A of the CATV Purchase Agreement and in
the CATV Registration Rights Agreement and the CATV Shareholders Agreement (each
as defined in the CATV Purchase Agreement), there are outstanding no
subscriptions, options, warrants, calls, commitments or rights (including
conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements or agreements of any character relating to shares of
CATV's capital stock or any instruments that can be converted into shares of
CATV's capital stock. None of the shares of CATV's capital stock have been
issued in violation of any preemptive right. All issuances, transfers or
purchases of the capital stock of CATV (and any predecessor in interest to CATV)
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. No former or present holder of any of the shares of capital stock of
CATV (or any predecessor in interest to CATV) has any legally cognizable claim
against CATV based on any issuance, sale, purchase, redemption or involvement in
any transfer of any shares of capital stock by CATV (or any predecessor in
interest to CATV). Except for obligations of CATV to redeem CATV Preferred
Shares as contemplated by Section 9.A of the CATV Purchase Agreement, there are
no contractual obligations of CATV to repurchase, redeem or otherwise acquire
any shares of capital stock of CATV. No bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into or exercisable for
securities having the right to vote) on any matters on which shareholders of
CATV may vote are issued or outstanding. CATV is not a party or subject to any
agreement or understanding, and, to the CATV Shareholders' best knowledge, there
is no agreement or understanding between any persons that affects or relates to
the voting or giving of written consents with respect to any security or the
voting by any director of CATV.
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C. No Conflict. The execution and delivery of this Agreement
and the Shareholders Agreement do not, and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or the creation of a
lien, pledge, security interest, charge or other encumbrance on assets (any such
conflict, violation, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation") pursuant to, any provision of the
Articles of IncorporatiOn or Bylaws of CATV or result in any Violation of any
material lease, agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to CATV or the CATV Shareholders, or their respective
properties or assets.
D. Consents. No consent, approval, qualification, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, or other third party is required by or
with respect to the CATV Shareholders in connection with the execution and
delivery of this Agreement, or the consummation by the CATV Shareholders of the
transactions contemplated hereby, which has not already been obtained.
E. Reaffirmation of Representations. The representations and
warranties made by the CATV Shareholders to Investor in the Convertible
Preferred Stock Purchase Agreement dated as of February 23, 1998 (the "CATV
Purchase Agreement") by and among Investor and the CATV Shareholders are true
and correct as of the date hereof as if made on and as of the date hereof.
F. Investment Representations. Each CATV Shareholder is
acquiring the the shares of Holding Company Common Stock pursuant to this
Agreement solely for its own account as principal, for investment purposes only
and not with a view to resale or distribution thereof in whole or in part, and
such CATV Shareholder has no present intention of selling, granting any
participation in, or otherwise distributing such shares. No other person has a
direct or indirect beneficial interest in the shares of Holding Company Common
Stock to be acquired by the CATV Shareholders hereunder and such CATV
Shareholders do not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participation to any third person,
with respect to any of the shares of Holding Company Common Stock. Each CATV
Shareholder acknowledges that the shares of Holding Company Common Stock are not
being and will not be registered under the Securities Act or the securities laws
of any other jurisdiction in reliance on exemptions thereunder. Shares of
Holding Company Common Stock have not been and will not be approved or
disapproved by the Securities and Exchange Commission or any other governmental
authority or agency of any jurisdiction. Each CATV Shareholder represents that
it has had an opportunity to ask questions and receive answers from Holding
Company regarding the terms and conditions of the offering of the Common Stock
and the business,
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properties, prospects, and financial condition of Holding Company and to obtain
additional information (to the extent Holding Company possessed such information
or could acquire it without unreasonable effort or expense) necessary to verify
the accuracy of any information furnished to such CATV Shareholder or to which
such CATV Shareholder had access.
8. Representations and Warranties of HSA Shareholders. The HSA
Shareholders hereby, jointly and severally, represent and warrant to Investor
and Holding Company, as follows:
A. Authorization. Each of this Agreement and the Shareholders
Agreement have been duly executed and delivered by the HSA Shareholders, and
constitutes the legal, valid and binding obligation of the HSA Shareholders,
enforceable against them in accordance with its terms.
B. Capitalization. The authorized capital stock of HSA
consists of [i] 4,950,000 Common Shares with no par value per share ("HSA Common
Shares"), of which at the date hereof 2,000,000 shares are validly issued and
outstanding, fully paid and nonassessable and owned, beneficially and of record,
as set forth on Schedule 2 attached hereto, and [ii] 2,500,000 Preferred Shares,
no par value per share ("HSA Preferred Shares"), of which at the date hereof
500,000 shares are validly issued and outstanding, fully paid and nonassessable.
2,500,000 HSA Common Shares have been duly and validly reserved for issuance
upon conversion of the HSA Preferred Shares, and 450,000 HSA Common Shares have
been duly and validly reserved for issuance under HSA's Stock Option Plan.
Except for (i) the conversion and other privileges of the HSA Preferred Shares,
and (ii) the rights provided in Section 10.A of the HSA Purchase Agreement and
in the HSA Registration Rights Agreement and the HSA Shareholders Agreement
(each as defined in the HSA Purchase Agreement), there are outstanding no
subscriptions, options, warrants, calls, commitments or rights (including
conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements or agreements of any character relating to shares of
HSA's capital stock or any instruments that can be converted into shares of
HSA's capital stock. None of the shares of HSA's capital stock have been issued
in violation of any preemptive right. All issuances, transfers or purchases of
the capital stock of HSA (and any predecessor in interest to HSA) 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. No former or present holder of any of the shares of capital stock of HSA
(or any predecessor in interest to HSA) has any legally cognizable claim against
HSA based on any issuance, sale, purchase, redemption or involvement in any
transfer of any shares of capital stock by HSA (or any predecessor in interest
to HSA). Except for obligations of HSA to redeem HSA Preferred Shares as
contemplated by Section 10.A of the HSA Purchase Agreement, there are no
contractual obligations of HSA to repurchase, redeem or otherwise acquire any
shares of capital stock of HSA. No bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into or exercisable for
securities having the right
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to vote) on any matters on which shareholders of HSA may vote are issued or
outstanding. HSA is not a party or subject to any agreement or understanding,
and, to the HSA Shareholders' best knowledge, there is no agreement or
understanding between any persons that affects or relates to the voting or
giving of written consents with respect to any security or the voting by any
director of HSA.
C. No Conflict. The execution and delivery of this Agreement
and the Shareholders Agreement do not, and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or the creation of a
lien, pledge, security interest, charge or other encumbrance on assets (any such
conflict, violation, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation") pursuant to, any provision of the
Articles of IncorporatiOn or Bylaws of HSA or result in any Violation of any
material lease, agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to HSA or the HSA Shareholders, or their respective
properties or assets.
D. Consents. No consent, approval, qualification, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, or other third party is required by or
with respect to the HSA Shareholders in connection with the execution and
delivery of this Agreement, or the consummation by the HSA Shareholders of the
transactions contemplated hereby, which has not already been obtained.
E. Reaffirmation of Representations. The representations and
warranties made by ▇▇▇▇▇▇▇ and ▇▇▇▇ to Investor in the Convertible Preferred
Stock Purchase Agreement dated as of April 3, 1998 (the "HSA Purchase
Agreement") by and among Investor and the HSA Shareholders are true and correct
as of the date hereof as if made on and as of the date hereof.
F. Investment Representations. Each HSA Shareholder is
acquiring the the shares of Holding Company Common Stock pursuant to this
Agreement solely for its own account as principal, for investment purposes only
and not with a view to resale or distribution thereof in whole or in part, and
such HSA Shareholder has no present intention of selling, granting any
participation in, or otherwise distributing such shares. No other person has a
direct or indirect beneficial interest in the shares of Holding Company Common
Stock to be acquired by the HSA Shareholders hereunder and such HSA Shareholders
do not have any contract, undertaking, agreement or arrangement with any person
to sell, transfer or grant participation to any third person, with respect to
any of the shares of Holding Company Common Stock. Each HSA Shareholder
acknowledges that the shares of Holding Company Common Stock are not being and
will not be registered under the Securities Act
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or the securities laws of any other jurisdiction in reliance on exemptions
thereunder. Shares of Holding Company Common Stock have not been and will not be
approved or disapproved by the Securities and Exchange Commission or any other
governmental authority or agency of any jurisdiction. Each HSA Shareholder
represents that it has had an opportunity to ask questions and receive answers
from Holding Company regarding the terms and conditions of the offering of the
Common Stock and the business, properties, prospects, and financial condition of
Holding Company and to obtain additional information (to the extent Holding
Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify the accuracy of any information furnished
to such HSA Shareholder or to which such HSA Shareholder had access.
9. Survival of Representations and Warranties. All representations and
warranties contained in this Agreement by any party to this Agreement and any
certificate or other instrument delivered by or on behalf of any party pursuant
to this Agreement shall be continuous and shall survive the Closing and the
issuance of all shares of Holding Company's capital stock as contemplated
hereunder for a period of two (2) years. Each party shall have the right to rely
on each other party's representations and warranties made herein,
notwithstanding any investigation conducted by such party.
10. Indemnification.
A. Indemnification by Holding Company. Holding Company shall
indemnify and reimburse Investor for any and all claims, losses, liabilities,
damages (including, without limitation, fines, penalties, and criminal or civil
judgments and settlements), costs (including, without limitation, court costs)
and expenses (including, without limitation, attorneys' and accountants' fees)
(hereinafter "Loss" or "Losses") suffered or incurred by Investor, any
successors or assigns thereto as a result of, or with respect to:
[1] Any breach or inaccuracy of any representation
or warranty of Holding Company set forth in Section 5;
[2] Any breach of or noncompliance by Holding Company
with any covenant or agreement of Holding Company contained in this
Agreement, unless such breach or noncompliance results from any action
or failure to act by the Board of Directors of the Holding Company, a
majority of which has been elected by Investor;
[3] Any act or omission of Holding Company or its
employees, agents or representatives, or of Holding Company's
predecessors in interest, occurring prior to the Closing Date which
results in any Loss arising under the Environmental Laws, or the
ownership, use, control or operation by Holding Company or its
predecessors in interest of any of the current or former properties of
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Holding Company which results in any Loss arising under the
Environmental Laws or the release of any substance into the environment
prior to the Closing Date; and
[4] any and all actions, suits, proceedings, claims,
demands, assessments and judgments incident to any of the foregoing.
B. Indemnification by Investor. Investor shall indemnify and
reimburse Holding Company for any and all claims, losses, liabilities, damages
(including, without limitation, fines, penalties, and criminal or civil
judgments and settlements), costs (including, without limitation, court costs)
and expenses (including, without limitation, attorneys' and accountants' fees)
suffered or incurred by Holding Company or any successors or assigns thereto as
a result of, or with respect to:
[1] Any breach or inaccuracy of any representation
or warranty of Investor set forth in Section 6;
[2] Any breach of or noncompliance by Investor with
any covenant or agreement of Investor contained in this Agreement; and
[3] any and all actions, suits, proceedings, claims,
demands, assessments and judgments incident to any of the foregoing.
C. Indemnification by CATV Shareholders. The CATV Shareholders
shall indemnify and reimburse Investor and Holding Company for any and all
claims, losses, liabilities, damages (including, without limitation, fines,
penalties, and criminal or civil judgments and settlements), costs (including,
without limitation, court costs) and expenses (including, without limitation,
attorneys' and accountants' fees) suffered or incurred by Investor or Holding
Company or any successors or assigns thereto as a result of, or with respect to:
[1] Any breach or inaccuracy of any representation
or warranty of the CATV Shareholders set forth in Section 7;
[2] Any breach of or noncompliance by the CATV
Shareholders with any covenant or agreement of the CATV Shareholders
contained in this Agreement; and
[3] any and all actions, suits, proceedings, claims,
demands, assessments and judgments incident to any of the foregoing.
D. Indemnification by HSA Shareholders. HSA Shareholders shall
indemnify and reimburse Holding Company and Investor for any and all claims,
losses, liabilities, damages (including, without limitation, fines, penalties,
and criminal or civil
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judgments and settlements), costs (including, without limitation, court costs)
and expenses (including, without limitation, attorneys' and accountants' fees)
suffered or incurred by Investor or Holding Company or any successors or assigns
thereto as a result of, or with respect to:
[1] Any breach or inaccuracy of any representation
or warranty of the HSA Shareholders set forth in Section 8;
[2] Any breach of or noncompliance by the HSA
Shareholders with any covenant or agreement of the HSA Shareholders
contained in this Agreement; and
[3] any and all actions, suits, proceedings, claims,
demands, assessments and judgments incident to any of the foregoing.
11. Covenants.
A. Redemption Rights. At any time and from time to time from
and after April 3, 2003 but prior to the Holding Company's completed
underwritten initial public offering, Investor shall have the right and option
to sell to Holding Company, and Holding Company shall buy, Investor's shares of
capital stock of Holding Company (the "Put") at a price per share (the "Put
Purchase Price") equal to the greater of (a) the initial purchase price per
share of Investor's shares, plus accrued but unpaid dividends through the date
of the Put Closing (as defined below), or (b) the fair market value per share
(without application of any discount for lack of marketability or minority
position) as determined by a qualified, independent appraiser experienced in
valuation of shares of companies similar to Holding Company (the "Qualified
Appraiser") acceptable to both Holding Company and Investor. If the Investor and
Holding Company are unable to agree upon a Qualified Appraiser, each of them
shall separately designate a Qualified Appraiser. Such Qualified Appraisers
shall jointly designate a definitive Qualified Appraiser, and such definitive
Qualified Appraiser's determination shall be the fair market value of Investor's
shares of Holding Company stock and shall be conclusive and binding upon the
parties. The fees and expenses of the definitive Qualified Appraiser shall be
borne equally by Holding Company and the Investor. The closing (the "Put
Closing") shall take place at a time and place mutually agreed upon by Investor
and Holding Company on or before the 180th day after written notice of exercise
of the Put is given to Holding Company by Investor, or if Investor and Holding
Company shall not agree on the time and place, the Put Closing shall take place
at the principal office of Holding Company in Louisville, Kentucky at 10:00 a.m.
on the 180th day after written notice of exercise is given, unless such day is a
Saturday, Sunday or holiday, in which case it shall occur on the next business
day. The Put Purchase Price shall be paid in cash at Closing.
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B. Financial Reporting. For periods commencing on or after the
Closing Date, Holding Company shall deliver or cause to be delivered to Investor
monthly and year-to-date balance sheets and income and cash flow statements
(each as compared to budget and the comparable prior year period), a monthly
written summary of operations and such other information and data with respect
to Holding Company as Investor may reasonably request. Such monthly reports
shall be provided on or before fifteen (15) days following the end of each
month. Not later than thirty (30) days prior to the end of each fiscal year,
Holding Company shall provide a business plan and projections for the next
fiscal year. Annual audits of the Holding Company's financial statements for
periods commencing on or after January 1, 1998 shall be performed by an
independent accounting firm acceptable to a majority of the holders of the
Preferred Stock and copies thereof shall be delivered to Investor on or before
the 120th day following the end of Holding Company's fiscal year.
C. Indebtedness for Borrowed Money. Holding Company shall not,
without the prior consent of a majority of Holding Company's directors, incur in
any fiscal year any obligations for borrowed money or leases in excess of One
Hundred Thousand Dollars ($100,000) in the aggregate.
D. Board of Directors. Effective as of the Closing, the
directors of Holding Company shall be ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, W. ▇▇▇▇ ▇▇▇▇▇, III and ▇▇▇▇▇▇
▇. ▇▇▇▇, III. The directors of the Holding Company shall appoint a Compensation
Committee composed of non-management directors of Holding Company, which
Committee shall determine management compensation and awards of stock options.
In addition, Investor shall have "observer" rights pursuant to which it (or its
representatives) shall be entitled to attend and observe all meetings of the
Board of Directors of the Holding Company. Such observers, if any, shall have no
right to vote on any matter brought before the Board of Directors. Holding
Company shall pay the reasonable expenses of any Preferred Director (as defined
in the Certificate) and of Investor and its representatives incurred in
attending meetings of the Board of Directors or other business of Holding
Company.
E. Reservation of Shares. On and after the Closing Date,
Holding Company will reserve and keep reserved at all times sufficient shares of
Common Stock for issuance upon conversion of the Preferred Stock pursuant to
Paragraph B.4(a) of Article IV of the Certificate. Immediately prior to the
occurrence of any event that would cause the number of shares of Common Stock
into which the Preferred Stock would be convertible to be determined in
accordance with Paragraph B.4(b) of Article IV of the Certificate, the Holding
Company shall take any and all actions necessary to permit such conversion. Upon
conversion of any shares of Preferred Stock, Holding Company will promptly issue
and deliver the shares of Common Stock required to be delivered.
F. Use of Proceeds. The proceeds from the sale of the
Preferred Stock pursuant to this Agreement shall be used by Holding Company for
working capital or for any other purpose approved by the Board of Directors of
the Holding Company.
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G. Prohibited Matters. From and after the date hereof, Holding
Company shall not, without the consent of the holders of the majority of the
then outstanding Preferred Shares:
[1] Effect any transaction that results in a change of
control of the Holding Company;
[2] Materially change the nature of the Holding Company's
business;
[3] Effect a liquidation, dissolution, merger or sale of the
Holding Company or sell substantially all of its assets;
[4] Amend its articles of incorporation or bylaws;
[5] Redeem or pay any dividend or distribution on its common
stock;
[6] Issue any class or series of equity securities or
equivalents thereof except pursuant to a management stock option plan
approved by the Board of Directors of Holding Company or upon
conversion of the Preferred Shares;
[7] Except for transactions with Investor, engage in any
transactions with "affiliates", which for the purposes of this
Agreement, shall mean (i) any director or officer of Holding Company or
holder of Holding Company's capital stock, (ii) any person or entity,
directly or indirectly, controlling, controlled by or under common
control with any such person or entity, and (iii) in the case of a
natural person, members of his or her immediate family or a trust for
their benefit; or
[8] Take any other actions that would materially affect the
holders of the Preferred Shares.
H. Consulting Fee. Holding Company shall accrue $20,000
quarterly as a consulting fee to Chrysalis Ventures, LLC. Such consulting fees
shall be accrued but not paid until the earlier of (i) a determination by
Holding Company's board of directors that Holding Company has sufficient cash
flow to pay such fees, or (ii) Holding Company produces after-tax quarterly
profits in excess of $100,000 for two consecutive quarters. Each of the parties
hereto acknowledges and agrees that such consulting fees shall be paid by
Holding Company in lieu of consulting fees payable to Chrysalis Ventures, LLC
pursuant to the CATV Purchase Agreement or the HSA Purchase Agreement.
12. Post-Closing Capital Calls. In consideration of the mutual
covenants and agreements contained herein, [i] Investor, CATV and the CATV
Shareholders agree that the rights and obligations of CATV and Investor pursuant
to the Post Closing Capital Calls provided for in Section 1 of the CATV Purchase
Agreement shall, at the Closing, terminate
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and be of no further force or effect; and [ii] Investor, HSA and the HSA
Shareholders agree that the rights and obligations of HSA and Investor pursuant
to the Post Closing Capital Calls provided for in Section 1 of the HSA Purchase
Agreement shall, at the Closing, terminate and be of no further force or effect.
13. Public Statements. None of the parties hereto shall, without the
prior written approval of the other parties hereto, make any press release or
other public announcement concerning the transactions contemplated by this
Agreement.
14. Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be mailed by first class,
registered, or certified mail, postage prepaid, or sent via overnight courier
service, or delivered personally:
If to Holding Company, to: High Speed Access Corp.
1850 National City Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Investor, to: Broadband Solutions, LLC
1850 National City Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇, Tarrant & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the HSA Shareholders, to: ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the CATV Shareholders, to: W. ▇▇▇▇ ▇▇▇▇▇, III
Suite 210
1000 West ▇▇▇▇▇▇ Avenue
Louisville, Kentucky 40210
or to such other address of which the addressee shall have notified the sender
in writing. Notices mailed in accordance with this section shall be deemed given
when mailed, and notices sent by overnight courier service shall be deemed given
when placed in the hands of a representative of such service.
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15. Parties in Interest; Assignment. Except as otherwise provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties to this Agreement shall bind and inure to the benefit of
their respective heirs, executors, successors, and assigns, whether so expressed
or not. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto and their respective successors and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement. This Agreement is not assignable and any other purported
assignment shall be null and void, provided that Investor may assign its rights
and obligations under this Agreement to any of its affiliates that may purchase
any of the Preferred Stock held by Investor. Notwithstanding such permitted
assignment, Investor shall not be released from its obligations hereunder. The
term "affiliate" as used in this Section 15 shall include, without limitation,
[i] any director or executive officer of such person or of an affiliate of such
person, [ii] a parent, spouse or child (a "relative") of such director or
executive officer, [iii] any group, acting in concert, of such director,
executive officer or relative (a "group"), [iv] any person controlled by any
such director, executive officer, relative or group, and [v] any person or group
which beneficially owns or holds 5% or more of any class of voting securities or
a 5% or greater equity or profits interest in such person.
16. Construction; Governing Law. The section headings contained in this
Agreement are inserted as a matter of convenience and shall not affect in any
way the construction of the terms of this Agreement. This Agreement shall be
governed by and interpreted in accordance with the laws of the Commonwealth of
Kentucky as applied to agreements among Kentucky residents entered into and
performed entirely within Kentucky.
17. Entire Agreement; Amendment and Waiver. This Agreement, including
the Schedules and Exhibits hereto, constitutes and contains the entire agreement
between the parties hereto with respect to the transactions contemplated hereby
and supersedes any prior writing by the parties. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of Holding Company and Investor
(or its permitted assigns). Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding (including securities into which
such securities have been converted), each future holder of all such securities,
and Holding Company.
18. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of the
remaining provisions.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
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20. Expenses. Holding Company agrees, upon consummation of the
transactions contemplated by this Agreement, to pay all reasonable legal and
out-of-pocket expenses incurred by Investor in connection with this Agreement
and the transactions contemplated hereunder, including, without limitation: (i)
all fees and expenses of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, in connection with this
Agreement and the transactions contemplated hereunder, and (ii) all expenses,
including reasonable attorneys' fees and expenses, incurred by Investor with
respect to the enforcement of any rights or provisions of this Agreement, or in
responding to any subpoena or other legal process issued in connection with this
Agreement or the transactions contemplated hereunder.
21. Time of Essence. Time is of the essence to the performance of the
obligations set forth in this Agreement.
22. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the Shareholders Agreement,
the Registration Rights
25
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Agreement, any Ancillary Agreement or the Certificate, the prevailing party
shall be entitled to reasonable attorneys' fees, costs, and disbursements in
addition to any other relief to which such party may be entitled.
23. Rights of Investor. Each holder of Preferred Stock (and Common
Stock issued upon conversion thereof) shall have the absolute right to exercise
or refrain from exercising any right or rights that such holder may have by
reason of this Agreement or any Preferred Stock, including without limitation
the right to consent to the waiver of any obligation of Holding Company under
this Agreement and to enter into an agreement with Holding Company for the
purpose of modifying this Agreement or any agreement effecting any such
modification, and such holder shall not incur any liability to any other holder
or holders of Preferred Stock (or Common Stock issued upon conversion thereof)
with respect to exercising or refraining from exercising any such right or
rights.
IN WITNESS WHEREOF, Holding Company and Investor have caused
this Agreement to be executed as of the day and year first written above.
"HOLDING COMPANY"
HIGH SPEED ACCESS CORP.
By: /s/ W. ▇▇▇▇ ▇▇▇▇▇, III
________________________________
Title: CEO
_____________________________
26
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"CATV SHAREHOLDERS"
COLORADO LIMITED PARTNERSHIP
By /s/ W. ▇▇▇▇ ▇▇▇▇▇, III
________________________________
Title G.P.
_____________________________
Address: __________________________
__________________________
OPM SERVICES, INC.
By /s/ W. ▇▇▇▇ ▇▇▇▇▇, III
________________________________
Title President
_____________________________
Address: __________________________
__________________________
▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________
Title G.P.
_____________________________
Address: __________________________
__________________________
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"HSA SHAREHOLDERS"
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇ ▇▇▇▇▇▇▇, on behalf of ▇▇▇▇▇▇▇
Family Limited Partnership
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, III
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, III
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
"INVESTOR"
BROADBAND SOLUTIONS, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
________________________________
Title: Member
_____________________________
A-i
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AMENDMENT TO CONTRIBUTION AGREEMENT
THIS AMENDMENT TO CONTRIBUTION AGREEMENT ("Amendment") is
dated as of the 25th day of November, 1998 by and between HIGH SPEED ACCESS
CORP., a Delaware corporation (the "Company") and BROADBAND SOLUTIONS, LLC, a
Kentucky limited liability company ("Broadband").
WITNESSETH:
WHEREAS, the Company, Broadband and certain others are parties to a
Contribution Agreement (the "Agreement") dated as of April 3, 1998; and
WHEREAS, the Agreement provides that it may be amended with the consent
of the Company and Broadband; and
WHEREAS, the Company and Broadband desire to amend the Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is acknowledged,
the Company and Broadband do hereby agree as follows:
1. Amendment. Section 11.G of the Agreement is hereby amended to read
in its entirety as follows:
11.G Prohibited Matters.
[1] From and after the date hereof, Company shall
not, without the consent of the holders of a majority of each
class or series of the then outstanding Preferred Stock voting
as a separate class or series (with each share having one
vote):
(a) Effect a liquidation or dissolution or
winding up of business or a substantial change in the nature
of Company's business;
(b) Amend the Amended Certificate or the
Bylaws, except for an amendment to the Amended Certificate to
increase the number of authorized Common Shares in connection
with a (x) Qualified Public Offering, or (y) stock option
plans approved by the Board of Directors of Company (such
increase not to exceed in the aggregate 3,000,000 shares) or
(z) an issuance upon conversion of the Preferred Stock;
(c) Redeem or pay any dividend or
distribution on the Common Shares or any capital stock of
Company ranking junior to the Series A Preferred
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Stock and, if ranking pari passu, without redeeming and or
paying an equal dividend on the Series A Preferred Stock;
(d) Issue any class or series of equity
securities or additional shares of existing classes or series,
or equivalents thereof or rights convertible thereinto or
exchangeable therefor except (i) pursuant to employee or
director stock option plans approved by the Board of Directors
of Company, any such issuances in this subsection (i) not to
exceed in the aggregate 3,000,000 shares, (ii) upon conversion
of the Preferred Stock, (iii) in a Qualified Public Offering,
or (iv) pursuant to the exercise of Warrants;
(e) Repay or make any shareholder loans
except as set forth in Section 9.5 of the Disclosure Letter;
(f) Except for (x) transactions in the
ordinary course of business between Company and its officers,
directors and employees relating to compensation (such amount
to be commercially reasonable and generally consistent with
the Business Plan), (y) transactions pursuant to the Systems
Agreements and any amendments, extensions, revisions or other
agreements made pursuant thereto, or (z) as set forth in
Section 5.20 of the Disclosure Letter, engage in any
transactions with "affiliates", which for the purposes of this
Section 11.G[1](f) only shall mean (A) any director or officer
of Company or holder of Company's capital stock, (B) any
person or entity, directly or indirectly, controlling,
controlled by or under common control with any such person or
entity, and (C) in the case of a natural person, members of
his or her immediate family or a trust for their benefit;
(g) Effect any transaction, including,
without limitation, the issuance of any shares of stock or
rights to acquire shares of stock, which would result in a
change in ownership of more than fifty percent (50%) of
Company's outstanding Common Shares on an as-if fully
converted basis, except for a Qualified Public Offering, or
effect any merger or sale of Company or substantially all its
assets;
(h) Acquire any assets not in the ordinary
course or capital stock, partnership, membership or any other
equity interest, or any interest convertible thereinto or
exchangeable therefor, in any entity for a purchase price in
excess of $2.5 million, or engage in more than one of any of
such transactions for an aggregate purchase price in excess of
$7.5 million; or
(i) Take any other action that, individually
or together with any other action, would materially and
adversely affect the holders of the Preferred Stock, it being
acknowledged that a Qualified Public Offering shall not
materially and adversely affect the holders of the Preferred
Stock.
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[2] Notwithstanding the provisions of Section 11.G[1]
above:
(a) In the event there has been one or more
transfers by Broadband (defined as Broadband Solutions, LLC
("Broadband I") and Broadband Solutions II, LLC ("Broadband
II") considered together) of more than, in the aggregate, 30%
of the Preferred Stock owned by Broadband immediately after
giving effect to the Closing (and, if and when purchased, any
shares of Series C Preferred Stock purchased by Broadband
subsequent to the Closing, in the aggregate, less any shares
of Preferred Stock transferred to non-Affiliates of Broadband
prior to the purchase of such shares of Series C Preferred
Stock), to one or more non-Affiliates of Broadband I or
Broadband II, then Company shall no longer require the consent
of the holders of the majority of the Series A Preferred Stock
to effect any of the "prohibited matters" referred to in
Section 11.G[1]. For purposes of this paragraph, any transfer
by Broadband I or Broadband II to River Cities Capital Fund
("River Cities") shall not constitute a transfer to a
non-Affiliate of Broadband I or Broadband II if River Cities
grants an irrevocable proxy to Broadband to vote on all
matters, but any subsequent transfer by River Cities (other
than to its partners and so long as they grant a proxy to
Broadband) shall constitute a transfer, unless such subsequent
transferee is an Affiliate of Broadband.
(b) In the event that there has been one or
more transfers by Investor of more than, in the aggregate, 30%
of the Preferred Stock owned by Investor immediately after
giving effect to the Closing (and, if and when purchased, any
shares of Series C Preferred Stock purchased by Investor
subsequent to the Closing, in the aggregate, less any shares
of Preferred Stock transferred to non-Affiliates of Investor
prior to the purchase of such shares of Series C Preferred
Stock), to one or more non-Affiliates of Investor, then
Company shall not require the consent of holders of the
majority of shares of any class or series of Preferred Stock
controlled by Investor to effect any of the "prohibited
matters" referred to in Section 11.G[1].
[3] For the purposes of this Section 11.G, unless
otherwise provided in this Section 11.G, an Affiliate shall
mean [i] with respect to Broadband, any entities or persons
controlling, controlled by or under common control with
Broadband I or Broadband II or any or all of its members, each
existing as of the date hereof, directly or indirectly, either
individually or as a group, or any member of Broadband I or
Broadband II, each existing as of the date hereof, or such
person's lineal descendants, ancestors or spouses of any of
them, or a trust or family limited partnership or any estate
or tax planning vehicle established for it or their benefit,
and [ii] with respect to Investor, any entities or persons
controlled, directly, by ▇▇▇▇ ▇. ▇▇▇▇▇, or any entities or
persons in which ▇▇▇▇ ▇. ▇▇▇▇▇ holds or owns an equity
investment of not less than One Hundred Million Dollars
($100,000,000) in value.
2. Capitalized terms used in Section 1of this Amendment shall have the
meanings
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ascribed to them in the Series B Convertible Preferred Stock Purchase Agreement
between the Company and Vulcan Ventures, Incorporated dated as of November 25,
1998.
3. Except as amended hereby, the provisions of the Agreement shall
remain in full force and effect, unmodified and unrevoked.
IN WITNESS WHEREOF, the Company and Broadband have executed
this Agreement as of the date and year first above written.
HIGH SPEED ACCESS CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Title: Assistant Secretary/General Counsel
------------------------------------
BROADBAND SOLUTIONS, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Title: Member
------------------------------------