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EXHIBIT 10.17
Let's Talk Cellular of America, Inc.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
Dated as of June 25, 1996
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INDEX
Page
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ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Preferred Stock .................................1
1.2 The Conversion Shares ................................................1
1.3 Initial Closing ......................................................1
1.4 Release of Funds From Escrow .........................................2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE PRINCIPAL SHAREHOLDERS
2.1 Organization and Corporate Power .....................................3
2.2 Authorization ........................................................3
2.3 Government Approvals .................................................4
2.4 Authorized and Outstanding Stock .....................................4
2.5 Subsidiaries .........................................................4
2.6 Financial Information ................................................5
2.7 Events Subsequent to the Date of the Financial
Statements ...........................................................5
2.8 Litigation ...........................................................6
2.9 Compliance with Laws and Other Instruments ...........................6
2.10 Taxes ................................................................7
2.11 Property .............................................................7
2.12 Governmental and Industrial Approvals ................................8
2.13 Contracts and Commitments ............................................8
2.14 Securities Act .......................................................8
2.15 Insurance Coverage ...................................................9
2.16 Employee Matters .....................................................9
2.17 No Brokers or Finders ...............................................10
2.18 Transactions with Affiliates ........................................10
2.19 Assumptions, Guarantees, etc. of Indebtedness of
Other Persons .......................................................10
2.20 Restrictions on Subsidiaries ........................................10
2.21 Disclosures .........................................................10
ARTICLE III
AFFIRMATIVE COVENANTS OF THE COMPANY
3.1 Accounts and Reports ................................................11
3.2 Payment of Taxes ....................................................12
3.3 Maintenance of Key Man Insurance ....................................12
3.4 Compliance with Laws, etc ...........................................12
3.5 Inspection ..........................................................13
(i)
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3.6 Corporate Existence; Ownership of Subsidiaries ......................13
3.7 Board Of Directors ..................................................13
3.8 Use of Proceeds .....................................................13
ARTICLE IV
NEGATIVE COVENANTS OF THE COMPANY
4.1 Investments in Other Persons ........................................14
4.2 Distributions .......................................................14
4.3 Dealings with Affiliates ............................................15
4.4 Merger ..............................................................15
4.5 Option Shares .......................................................15
4.6 Indebtedness ........................................................16
4 7 Limitation on Restrictions on Subsidiary Dividends
and Other Distributions .............................................16
4.8 No Conflicting Agreements ...........................................16
4.9 Compensation; Consulting and Other Agreements .......................16
4.10 Fundamental Changes .................................................16
4.11 Capital Expenditures ................................................17
ARTICLE V
PREEMPTIVE RIGHT
5.1 Right of Purchase ...................................................17
5.2 Definition of New Securities ........................................17
5.3 Notice from the Company .............................................17
5.4 Sale by the Company .................................................18
5.5 Termination of Rights ...............................................18
ARTICLE VI
PURCHASER'S REPRESENTATIONS
6.1 Representations and Warranties ......................................18
6.2 Permitted Sales; Legends ............................................19
ARTICLE VII
REGISTRATION RIGHTS
7.1 Certain Definitions .................................................19
7.2 Requested Registrations .............................................20
7.3 "Piggy Back" Registrations ..........................................21
7.4 Expenses of Registration ............................................22
7.5 Registration on Form S-3 ............................................22
7.6 Registration Procedures .............................................22
7.7 Indemnification .....................................................23
7.8 Limitations on Registration Rights ..................................26
7.9 Rule 144 Reporting ..................................................26
7.10 Listing Application .................................................26
(ii)
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7.11 Damages .............................................................27
ARTICLE VIII
CONDITIONS OF THE PURCHASER'S OBLIGATION
8.1 Effect of Conditions ................................................27
8.2 Representations and Warranties ......................................27
8.3 Performance .........................................................27
8.4 Board Election ......................................................27
8.5 Certified Documents, etc ............................................27
8.6 Amendment to Articles of Incorporation ..............................27
8.8 Redemption Agreement ................................................28
8.9 Opinion of Counsel ..................................................28
8.10 Employment Agreements ...............................................28
8.11 Consulting Agreement ................................................28
8.12 Shareholder Indebtedness ............................................28
ARTICLE IX
CONDITIONS OF THE COMPANY'S OBLIGATION ................28
ARTICLE X
CERTAIN DEFINITIONS ............................29
ARTICLE XI
MISCELLANEOUS
11.1 Survival of Representations .........................................31
11.2 Parties in Interest .................................................31
11.3 Shares Owned by Affiliates ..........................................31
11.4 Amendments and Waivers ..............................................31
11.5 Notices .............................................................32
11.6 Expenses ............................................................32
11.7 Counterparts ........................................................32
11.8 Effect of Headings ..................................................33
11.9 Adjustments .........................................................33
11.10 Governing Law .......................................................33
(iii)
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June 25, 1996
HIG Fund V, Inc.
c/o HIG Capital Management, Inc.
1001 South Bayshore Dr.
Suite 2310
Miami, Florida 33131
Re: Series A Preferred Stock
Gentlemen:
Let's Talk Cellular of America, Inc., a Florida corporation {the
"Company"), Nick Molina and Brett Beveridge (individually a "Principal
Shareholder" and collectively, the "Principal Shareholders") hereby agree with
you as follows (terms used herein and not otherwise defined shall have the
meanings as set forth in Article X hereof):
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Preferred Stock. At the Closing, the Company
will sell to you (the "Purchaser") an aggregate of 100,000 shares of the
Company's Series A Preferred Stock, par value $30 per share (the "Preferred
Stock"), at a price of $32.95 per share, for an aggregate purchase price of
$3,295,000 payable as provided in Section 1.3. The Preferred Stock shall have
the rights, terms and privileges set forth on Exhibit A attached hereto. The
shares of Preferred Stock purchased pursuant to this Section 1.1 are referred to
herein as the "Purchased Shares."
1.2 The Conversion Shares. The Company has authorized and reserved and
hereby covenants that it will continue to reserve, free of any preemptive rights
or encumbrances, a sufficient number of its authorized but previously unissued
shares of Common Stock to satisfy the rights of conversion of the holders of the
Purchased Shares. The shares of Common Stock issued or issuable upon conversion
of the Purchased Shares are referred to herein as the "Conversion Shares."
1.3 Initial Closing. Subject to the satisfaction or waiver of the
conditions set forth in Articles VIII and IX hereof, the purchase of the
Purchased Shares shall be made at a closing (the "Closings") to be held at the
offices of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., 1221
Brickell Avenue, Miami, Florida, at 10:00 A.M. on June 25, 1996, or at such
other time and on such other date as the Purchaser and the Company may mutually
agree. Payment at the Closing for the Purchased Shares shall be by wire transfer
payable in immediately available federal
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funds. At the Closing, (a) the Company shall deliver a certificate representing
33,334 shares of Preferred Stock to the Purchaser and two certificates, each
representing 33,333 shares of Preferred Stock issued in the name of the
Purchaser, to the Escrow Agent subject to the Escrow Agreement, and (b) the
Purchaser shall deliver $1,285,000 in immediately available funds to the Company
and deposit $2,000,000 in the escrow account subject to the Escrow Agreement.
For purposes of this Agreement and the Escrow Agreement, the $2,000,000 shall be
the property of the Company and the Escrowed Shares shall be validly issued,
fully paid and nonassessable shares of Preferred Stock issued in the name of the
Purchaser, in each case, subject only to the conditions subsequent of the
release of the escrowed funds set forth in Section 1.4 hereof.
1.4 Release of Funds From Escrow.
(a) The Company shall have the right at any time after the Closing
to draw the first and second $1 million held in the Escrow Account upon the
occurrence of each of the following events: (i) the Company shall have used
substantially all of the previous amounts funded at closing or at the first draw
from the Escrow Account in accordance with Schedule 3.8 or as otherwise agreed
to by the Purchaser in writing (ii) there shall have been no material adverse
change in the Company's condition or prospects which would result in a disaster,
(iii) the representations and warranties in Article II shall be true and correct
in all material respects such that the breach thereof has a disasterous effect
on the Company, (iv) the Company shall have complied in all material respects
with the covenants set forth in Articles III and IV and the Related Agreements
as of the date of the Draw Certificate, and (v) there shall have been no fraud
or embezzlement at the Company. The Company shall effect the second and third
draw by delivering (i) a certificate confirming the foregoing and showing the
use of the funds to the Purchaser, executed by one or more of the Principal
Shareholders in their capacity as officers of the Company (the "Draw
Certificate") and (ii) disbursement instructions to the Escrow Agent releasing
the corresponding certificate representing shares of Preferred Stock to the
Purchaser. Within two (2) business days of receiving the Draw Certificate, the
Purchaser shall confirm its contents and upon such confirmation issue
disbursement instructions to the Escrow Agent releasing the second or third $1
million to the Company. In each case, the disbursement instructions shall be in
the form provided for in the Escrow Agreement.
(b) The Purchaser shall have the unilateral right to release all
or a portion of the funds in the Escrow Account and receive the corresponding
number of shares of Preferred Stock (1 share for each $30 released) without any
action or notice required by the Company.
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(c) The Company and the Purchaser can agree in writing to any
other alternative arrangement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE PRINCIPAL SHAREHOLDERS
In order to induce the Purchaser to purchase the Purchased Shares, the
Company and the Principal Shareholders, acting jointly and severally, make the
following representations and warranties which shall be true, correct and
complete in all respects as of the Closing and on the date of each Draw
Certificate.
2.1 Organization and Corporate Power. The Company and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own its properties and to carry on
its business as presently conducted. The Company and each of its Subsidiaries is
duly licensed or qualified to do business as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on the operations or financial conditions of the Company and its
Subsidiaries, taken as a whole.
2.2 Authorization. The Company has all necessary corporate power
and has taken all necessary corporate action required for the due authorization,
execution, delivery and performance by the Company of this Agreement, the
Shareholders' Agreement referred to in Section 8.7, the Redemption Agreement
referred to in Section S.8, the Employment Agreements referred to in Section
8.10 and the Consulting Agreement referred to in Section 8.11 (collectively, the
"Related Aqreements"), and any other agreements or instruments executed by the
Company in connection herewith or therewith and the consummation of the
transactions contemplated herein or therein, and for the due authorization,
issuance and delivery of the Purchased Shares and the Conversion Shares issuable
upon conversion of the Purchased Shares. Sufficient shares of authorized but
unissued Common Stock have been reserved for issuance upon conversion of the
Purchased Shares. The issuance of the Purchased Shares hereunder does not, and
the issuance of the Conversion Shares upon conversion of the Purchased Shares
will not, require any further corporate action and is not and will not be
subject to any preemptive right, right of first refusal or the like. Assuming
the due execution and delivery by the Purchaser, this Agreement, the Related
Agreements and the other agreements and instruments executed by the Company in
connection herewith or therewith will each be a valid and binding obligation of
the Company enforceable in accordance with its respective terms. Based on the
representations made by the Purchaser in Article VI of this Agreement, the offer
and sale of the Purchased Shares will be
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exempt from the registration or qualification requirements of applicable federal
and state securities laws.
2.3 Government Approvals. No consent, approval, license or
authorization of, or designation, declaration or filing with, any court or
governmental authority is or will be required on the part of the Company in
connection with the execution, delivery and performance by the Company of this
Agreement, any of the Related Agreements and any other agreements or instruments
executed by the Company in connection herewith or therewith, or in connection
with the issuance of the Purchased Shares or the issuance of the Conversion
Shares upon conversion of the Purchased Shares, except for (i) those which have
already been made or granted and (ii) the filing of registration statements with
the Securities and Exchange Commission (the "Commission") and any applicable
state securities commission as specifically provided for in Article VII hereof.
2.4 Authorized and Outstanding Stock. The authorized capital stock
of the Company consists of (i) 50,000,000 shares of Common Stock, of which
650,000 shares are validly issued and outstanding on the date hereof and are
held of record and owned beneficially as set forth in Schedule 2.4 hereto; and
(ii) 150,000 shares of Preferred Stock, all of which have been designated as
Series A Preferred Stock with the rights, terms and privileges set forth in
Exhibit A, and of which no shares are issued or outstanding. There are no
treasury shares held by the Company. All issued and outstanding shares of
capital stock are, and when issued in accordance with the terms hereof, all
Purchased Shares and Conversion Shares issued upon conversion of the Purchased
Shares will be, duly and validly authorized, validly issued and fully paid and
non-assessable and free from any restrictions on transfer, except for
restrictions imposed by federal or state securities or "blue-sky" laws and
except for those imposed pursuant to this Agreement or any Related Agreement.
Except as set forth on Schedule 2.4 hereto, there are no outstanding warrants,
options, commitments, preemptive rights, rights to acquire or purchase,
conversion rights or demands of any character relating to the capital stock or
other securities of the Company.
2.5 Subsidiaries. Except as set forth in Schedule 2.5 hereto, the
Company has no Subsidiaries nor any investment or other interest in, or any
outstanding loan or advance to or from, any Person, including, without
limitation, any officer, director or shareholder. Except as set forth on
Schedule 2.5 hereto, (a) the Company owns of record and beneficially, free and
clear of all liens, charges, restrictions, claims and encumbrances of any
nature, all of the issued and outstanding capital stock of each of its
Subsidiaries and (b) no shares of capital stock of any subsidiary was redeemed
in violation of any laws or statutes or contract or other rights of any person.
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2.6 Financial Information. Attached hereto as Exhibit 2.6 are true
and complete copies of (x) the audited financial statements of the Company for
each of the fiscal years ended July 31, 1994 and July 31, 1995, certified by
Deloitte & Touche LLP, Company's independent certified public accountants, and
(y) the unaudited balance sheet of the Company at April 30, 1996, and the
related statements of income, retained earnings and statements cash flows for
the nine-months then ended (all of such financial statements being collectively
referred to herein as the "Financial Statements"). The Financial Statements are
complete and correct, are in accordance with the books and records of the
Company and present fairly in accordance with generally accepted account
principles applied on a basis consistent with prior periods the financial
condition and results of operations of the Company as of the dates and for the
periods shown except that the unaudited financial statements in (y) above have
no notes thereto and do not have any year end adjustments (all of which
adjustments are nonrecurring in nature). The Company does not have any
liability, contingent or otherwise, which is not adequately reflected in
reserved against in the Financial Statements that could materially and adversely
affect the financial or condition of the Company. Since the date of the
Financial Statements, (i) there has been no change in the business, assets,
liabilities, condition (financial or otherwise) or operations of the Company
except for changes in the ordinary course of business which, individually or in
the aggregate, have not been materially adverse, and (ii) none of the business,
prospects, condition (financial or otherwise), operations property or affairs of
the Company has been materially adversely affected by any occurrence or
development, individually or in the aggregate, whether or not insured against.
2.7 Events Subsequent to the Date of the Financial Statements.
Except as set forth on Schedule 2.7 hereto, since April 30, 1996, neither the
Company nor any Subsidiary has (i) issued any stock, bond or other corporate
security, (ii) borrowed any amount or incurred or become subject to any
liability (absolute, accrued or contingent), except liabilities under contracts
entered into in the ordinary course of business, (iii) discharged or satisfied
any lien or encumbrance or incurred or paid any obligation or liability
(absolute, accrued or contingent) other than current liabilities shown on the
Financial Statements and current liabilities incurred since July 31, 1995 in the
ordinary course of business, (iv) declared or made any payment or distribution
to stockholders or purchased or redeemed any shares of its capital stock or
other securities, (v) sold, assigned or transferred any of its tangible assets
or cancelled any debt or claim, in each case, except in the ordinary course of
business, (vi) sold, assigned, transferred or granted any license with respect
to any Intellectual Property (as defined in Section 2.11), except pursuant to
license or other agreements entered into in the ordinary course of business,
(vii) suffered any loss of property or waived any right of substantial value
whether or not in the
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ordinary course of business, (viii) made any change in officer compensation,
(ix) entered into any transaction except in the ordinary course of business or
as otherwise contemplated hereby or (x) entered into any commitment (contingent
or otherwise) to do any of the foregoing.
2.8 Litigation. Except as otherwise set forth on Schedule 2.8
hereto, there is no litigation or governmental proceeding or investigation
pending or, to the knowledge of the Company and the Principal Shareholders,
threatened, against the Company or any Subsidiary or affecting any of the
Company's or such Subsidiary's properties or assets, or against any officer,
employee or shareholder of the Company or any Subsidiary in his capacity as
such, which litigation, proceeding or investigation may have any substantial
chance of recovery where such recovery would likely have a material adverse
effect on the Company and its Subsidiaries, taken as a whole, nor, to the
knowledge of the Company and the Principal Shareholders, has there occurred any
event or does there exist any condition on the basis of which any litigation,
proceeding or investigation might properly be instituted with any substantial
chance of recovery where such recovery would likely have a material adverse
effect on the Company and its Subsidiaries, taken as a whole. Neither the
Company nor any Subsidiary, nor any officer, employee, or shareholder of the
Company or any Subsidiary in his capacity as such is, to the knowledge of the
Company and the Principal Shareholders, in default with respect to any order,
writ, injunction, decree, ruling or decision of any court, commission, board or
other government agency which may materially and adversely affect the business
or assets of the Company and its Subsidiaries, taken as a whole.
2.9 Compliance with Laws and Other Instruments. The Company and
its Subsidiaries are in compliance with all of the provisions of this Agreement
and of its charter and by-laws and the agreements set forth in Schedule 2.13
hereto and to the knowledge of the Company and the Principal Shareholders is in
compliance, in all material respects, with the provisions of each other
mortgage, indenture, lease, license, other agreement or instrument, judgment,
decree, judicial order, statute, law, and/or regulation by which any of them is
bound or to which any of them or any of their respective properties are subject.
Neither the execution, delivery or performance of this Agreement and the Related
Agreements, nor the offer, issuance, sale or delivery of the Purchased Shares,
or the Conversion Shares upon conversion of the Purchased Shares, or the
transactions contemplated hereby (including the use of the proceeds in the
manner contemplated by Section 3.8), with or without the giving of notice or
passage of time, or both, will violate, or result in any breach of, or
constitute a default under, or result in the imposition of any encumbrance upon
any asset of the Company or any Subsidiary pursuant to any provision of the
Company's or such Subsidiary's charter or by-laws, or any statute, rule or
regulation, material contract, judgment, decree or, to the
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knowledge of the Company and its Principal Shareholders, other document or
instrument by which the Company or any Subsidiary is bound or to which the
Company or any Subsidiary or any of their respective Properties are subject.
2.10 Taxes. The Company and each of its Subsidiaries has filed all
tax returns (including statements of estimated taxes owed) required to be filed
within the applicable periods for such filings and has paid all taxes required
to be paid, and has established adequate reserves (net of estimated tax payments
already made) for the payment of all taxes payable in respect to the period
subsequent to the last periods covered by such returns. No deficiencies for any
tax in excess of $1,000 are currently assessed against the Company or any
Subsidiary, and no tax returns of the Company or any Subsidiary have ever been
audited, and, to the knowledge of the Company and the Principal Shareholders,
there is no such audit pending or contemplated. There is no tax lien, whether
imposed by any federal, state or local taxing authority, outstanding against the
assets, properties or business of the Company. For the purposes of this
Agreement, the term "tax" shall include all federal, state and local taxes,
including income, franchise, property, sales, withholding, payroll and
employment taxes.
2.11 Property. (a) Schedule 2.11(a)(i) hereto sets forth the
addresses of all real property that the Company or any Subsidiary owns, leases
or subleases, and any material lien or encumbrance on any such owned real
property or the Company's or Subsidiary's leasehold interest therein. Except as
set forth on Schedule 2.11(a)(ii) hereto, the Company or its Subsidiary, as the
case may be, has good and marketable title to, and owns free and clear of all
liens and encumbrances, all real and personal, tangible and intangible property
shown as owned by the Company or any Subsidiary on the Financial Statements
except for such property as sold in the ordinary course of business. Except as
set forth on Schedule 2.11(a)(iii) hereto, there are no defaults by the Company
or any Subsidiary or, to the knowledge of the Company and the Principal
Shareholders, by any other party thereto, which might curtail in any material
respect the present use of the Company's and such Subsidiary's real and
personal, tangible and intangible property. The performance by the Company of
this Agreement and the Related Agreements will not result in the termination of,
or in any increase of any amounts payable under, any lease listed on Schedule
2.11 hereto.
(b) Set forth on Schedule 2.11(b) hereto is a list and brief
description of all material patents, patent rights, patent applications,
trademarks, trademark applications, service marks, service mark applications
trade names and copyrights, and all applications for such that are in the
process of being prepared, owned by or registered in the name of the Company or
any Subsidiary, or of which the Company or any Subsidiary is a licensor
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or licensee or in which the Company or any Subsidiary has any right
(collectively, the "Intellectual Property"). The Company and its Subsidiaries
own or possess adequate licenses or other rights to use all Intellectual
Property necessary or desirable to the conduct of their businesses as conducted
and as proposed to be conducted, and has taken all actions reasonably necessary
to protect the Intellectual Property and no claim is pending or, to the
knowledge of the Company and the Principal Shareholders, threatened to the
effect that the operations of the Company infringe upon or conflict with the
asserted rights of any other person under any Intellectual Property, which
claim, if successfully asserted, could have a material adverse effect on the
business of the Company or its Subsidiaries.
2.12 Governmental and Industrial Approvals. The Company and
each of its Subsidiaries has all the material permits, licenses, orders,
franchises and other rights and privileges of all federal, state, local or
foreign governmental or regulatory bodies necessary for the Company and such
Subsidiaries to conduct their respective businesses, the absence of which would
have a material adverse effect on the Company or its Subsidiaries. None of such
permits, licenses, orders, franchises or other rights and privileges will be
affected by the consummation of the transactions contemplated in this Agreement
and the Related Agreements.
2.13 Contracts and Commitments. Except as set forth on
Schedule 2.13 hereto, neither the Company nor any Subsidiary has any contract,
obligation or commitment which is material or which involves a potential
material commitment or any stock redemption or stock purchase agreement,
financing agreement, management agreement, services agreement, license, lease,
or stock option plan. For purposes of this Section 2.13, a contract, obligation
or commitment shall be deemed material if it requires future expenditures by the
Company or any Subsidiary in excess of $10,000 or might result in payments to
the Company or any Subsidiary in excess of $10,000. To the knowledge of the
Company and the Principal Shareholders, the Company and its Subsidiaries and
each other party to such agreement have performed all the obligations required
to be performed by them to date, have received no notice of default and are not
in default (with due notice or lapse of time or both) under the contracts,
obligations and commitments listed on Schedule 2.13 hereto which would have a
material adverse effect on the Company or its Subsidiaries, and such contracts,
obligations and commitments are in full force and effect on the date hereof.
2.14 Securities Act. The Company has complied and will comply
with all applicable federal or state securities laws in connection with the
issuance and sale of the Purchased Shares and the issuance of the Conversion
Shares upon conversion of the Purchased Shares. Neither the Company nor anyone
acting on its behalf has offered any of the Purchased Shares, or similar
securities, or solicited any offers to purchase any of such
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securities, so as to bring the issuance and sale of the Purchased Shares under
the registration provisions of the Securities Act. The Company has not granted
any rights relating to registration of its capital stock under the Securities
Act or state securities laws other than those contained in this Agreement.
2.15 Insurance Coverage. Schedule 2.15 hereto contains an accurate
summary of the insurance policies currently maintained by the Company and its
Subsidiaries. Except as described on Schedule 2.15, there are currently no
material claims pending against the Company or any Subsidiary under any
insurance policies currently in effect and covering the property, business or
employees of the Company and its Subsidiaries, and all premiums due and payable
with respect to the policies maintained by the Company and its Subsidiaries has
been paid to date.
2.16 Employee Matters. Except as set forth on Schedule 2.16 hereto,
neither the Company nor any Subsidiary has in effect any employment agreements,
consulting agreements, deferred compensation, pension or retirement agreements
or arrangements, bonus, incentive or profit-sharing plans or arrangements, or
labor or collective bargaining agreements, written or oral. Schedule 2.16 hereto
sets forth a true and complete list of the compensation paid to the Company's
three highest compensated employees for the two years ended July 31, 1994 and
1995. The Company and the Principal Shareholders have no knowledge that any of
the officers or other key employees of the Company or any Subsidiary presently
intends to terminate his employment. The Company and its Subsidiaries are in
compliance in all material respects with all applicable laws and regulations
relating to labor, employment, fair employment practices, terms and conditions
of employment, and wages and hours. The Company and each Subsidiary is in
material compliance with the terms of all plans, programs and agreements listed
on Schedule 2.16, and each such plan, program or agreement is in compliance with
all of the requirements and provisions of the Employee Retirement Income
Security Securities Act of 1974, as amended ("ERISA"). No such plan or program
has engaged in any "prohibited transaction" as defined in Section 4975 of the
Internal Revenue Code of 1986 (the "Code"), or has incurred any "accumulated
funding deficiency" as defined in Section 302 of ERISA, nor has any reportable
event as defined in Section 4043(b) of ERISA occurred with respect to any such
plan or program. Neither the Company nor any Subsidiary has or has maintained
any group health plan subject to Section 4980B of the Code or Section 162(i) or
(k) of the Code as amended by the Consolidated Omnibus Budget Reconciliation
Securities Act of 1985, as amended by the Technical and Miscellaneous Revenue
Securities Act of 1988. With respect to each plan listed on Schedule 2.16
hereto, to the knowledge of the Company and its Principal Shareholders all
required filings, including all filings required to be made with the United
States Department of Labor and Internal Revenue Service, have been timely filed.
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2.17 No Brokers or Finders. No person has or will have, as a result of
the transactions contemplated by this Agreement, any right, interest or claim
against or upon the Company or any of its Subsidiaries for any commission, fee
or other compensation as a finder or broker because of any act or omission by
the Company or and of its Subsidiaries.
2.18 Transactions with Affiliates. Except as set forth on Schedule 2.18
hereto, there are no loans, leases or other continuing transactions between the
Company or any Subsidiary on the one hand, and any officer or director of the
Company or any Subsidiary or any person owning five percent (5%) or more of the
Common Stock of the Company or any respective family member or affiliate of such
officer, director or shareholder on the other hand.
2.19 Assumptions. Guarantees etc. of Indebtedness of Other Persons.
Neither the Company nor any Subsidiary has assumed, guaranteed, endorsed or
otherwise become directly or contingently liable on or for any indebtedness of
any other Person, except guarantees by endorsement of negotiable instruments For
deposit or collection or similar transactions in the ordinary course of
business.
2.20 Restrictions on Subsidiaries. There are no restrictions on the
Company or any of its Subsidiaries which prohibit or otherwise restrict the
transfer of cash or other assets between the Company and any of its Subsidiaries
or between any Subsidiaries of the Company.
2.21 Disclosures. Neither this Agreement, any schedule or exhibit to this
Agreement, the Related Agreements, the Financial Statements, nor any other
agreement, document or written statement made by the Company or the Principal
Shareholders and furnished by the Company or the Principal Shareholders to the
Purchaser or the Purchaser's special counsel in connection with the transactions
contemplated hereby, contains any untrue statement of material fact or omits to
state any material fact necessary to make the statements contained herein or
therein not materially misleading. There is no material fact known to the
Company or the Principal Shareholders that has not been disclosed herein or in
any other material agreement, document or written statement furnished by the
Company or any of its Subsidiaries to the Purchaser or its special counsel in
connection with the transactions contemplated hereby which materially adversely
affects the business, properties, assets or financial condition of the Company
or any of its Subsidiaries.
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ARTICLE III
AFFIRMATIVE COVENANTS OF THE COMPANY
Without limiting any other covenants and provisions hereof, the Company
covenants and agrees that it will observe the following covenants on and after
the date hereof and until the consummation of the first Qualified Public
Offering:
3.1 Accounts and Reports. The Company will, and will cause each of its
Subsidiaries to, maintain a standard system of accounts in accordance with
generally accepted accounting principles consistently applied and the Company
will, and will cause each of its Subsidiaries to, keep full and complete
financial records. The Company will furnish to the Purchaser the information set
forth in this Section 3.1.
(a) Within ninety (90) days after the end of each fiscal year, a
copy of the consolidated and consolidating balance sheet of the Company and its
Subsidiaries as at the end of such year, together with consolidated and
consolidating statements of income, shareholders' equity and cash flow of the
Company and its Subsidiaries for such year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year, all in
reasonable detail and duly certified by a "big six" independent public
accountant of national recognition selected by the Board of Directors of the
Company.
(b) Within thirty (30) days after the end of each calendar month,
a preliminary consolidated and consolidating balance sheet of the Company and
its Subsidiaries as of the end of such month and preliminary consolidated and
consolidating statements of income, shareholders, equity and cash flow for such
month and for the period commencing at the end of the previous fiscal year and
ending with the end of such month, setting forth in each case in comparative
form the corresponding figures for the corresponding period of the preceding
fiscal year, all in reasonable detail.
(c) Prior to the end of each fiscal year, a copy of the operating
plan and budget for the next fiscal year required under Section 3.7, in form
consistent with good business practice.
(d) Promptly upon receipt thereof, any written report, so called
"management letter", and any other communication submitted to the Company or
any Subsidiary by its independent public accountants relating to the business,
prospects or financial condition of the Company and its Subsidiaries.
(e) Promptly after the commencement thereof, notice of (i) all
actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instru-
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mentality, domestic or foreign, affecting the Company (or any Subsidiary) which,
if successful, could have a material adverse effect on the Company and its
Subsidiaries, taken as a whole; (ii) all material defaults by the Company or any
Subsidiary (whether or not declared) under any agreement for money borrowed; and
(iii) any action, event or circumstance that is reasonably likely to have a
material adverse effect on the Company or any Subsidiary, taken as a whole.
(f) Promptly upon sending, making available, or filing the same,
all reports and financial statements as the Company (or any Subsidiary) shall
send or make available generally to the shareholders of the company as such or
to the commission.
(g) Such other information with regard to the business, properties
or the condition or operations, financial or otherwise, of the Company or its
Subsidiaries as the Purchaser may from time to time reasonably request.
3.2 Payment of Taxes. The Company will pay and discharge (and cause any
Subsidiary to pay and discharge) all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits, or upon any properties
belonging to it, prior to the date on which penalties attach thereto, and all
lawful claims which, if unpaid, might become a lien or charge upon any
properties of the Company (or any Subsidiary), provided that neither the Company
nor any Subsidiary shall be required to pay any such tax, assessment, charge,
levy or claim which is being contested in good faith and by proper proceedings
if the Company or such Subsidiary shall have set aside on its books adequate
reserves with respect thereto.
3.3 Maintenance of Key Man Insurance. The Company will, at its expense,
within sixty (60) days of the Closing Date maintain a life insurance policy with
a responsible and reputable insurance-company payable to the Company on the life
of each of Nick Molina and Brett Beveridge, each in the face amount of $2
million. The Company will maintain such policies and will not cause or permit
any assignment of the proceeds of such policies and will not borrow against such
policies. The Company will add one designee of the Purchaser as a notice party
to such policies, and will request that the issuer of such policies provide such
designee with ten (10) days, notice before either of such policy is terminated
(for failure to pay premium or otherwise) or assigned, or before any change is
made in the designation of the beneficiary thereof.
3.4 Compliance with Laws, etc. The Company will comply (and cause each
of its Subsidiaries to comply) with all applicable laws, rules, regulations and
orders of any governmental authority, the noncompliance with which could
materially adversely affect the
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business or condition, financial or otherwise, of the Company and its
Subsidiaries, taken as a whole.
3.5 Inspection. At any reasonable time during normal business hours and
from time to time upon five (5) days written notice, the Company (and each of
its Subsidiaries) will permit the Purchaser who then owns, of record or
beneficially, or has the right to acquire, at least twenty-five percent (25%) of
the Conversion Shares, or any transferee of a Purchaser who owns, of record or
Beneficially, or has the right to acquire, at least five percent (at) of the
then outstanding Common Stock, or any of the agents or representatives of the
foregoing Persons, to examine and make copies of and extracts from the records
and books of account of and visit the properties of the Company (and any of its
Subsidiaries) and to discuss the Company's affairs, finances and accounts with
any of its officers or directors. If the Purchaser or its transferee or any of
their agents or representatives exercise their inspection rights under this
Section 3.5, then such Person shall agree to execute an acceptable
confidentiality agreement with the Company or its Subsidiaries regarding the
matters or materials to Le reviewed pursuant to such inspection.
3.6 Corporate Existence: Ownership of Subsidiaries. The Company will,
and will cause its Subsidiaries to, at all times preserve and keep in full force
and effect their corporate existence, and rights and franchises material to the
business of the Company and its Subsidiaries, taken as a whole, and will
qualify, and will cause each of its Subsidiaries to qualify, to do business as a
foreign corporation in any jurisdiction where the failure to do so would have a
material adverse effect on the business, condition (financial or other), assets,
properties or operations of the Company and its Subsidiaries, taken as a whole.
3.7 Board Of Directors. Prior to the end of each fiscal year, the
Company will prepare and submit to its Board of Directors for its approval prior
to such year end an operating plan and budget, cash flow projections and profit
and loss projections, all itemized in reasonable month by month detail for the
immediately following year. The budget shall be in form and substance
satisfactory to a majority of the Board of Directors. The Directors shall
schedule regular meetings not less frequently than once every sixty days.
3.8 Use of Proceeds. The Company shall use the proceeds from the sale
of the Purchased Shares in the manner and for the purposes set forth in Schedule
3.8 hereto and for no other manner or purpose.
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ARTIVLE IV
NEGATIVE COVENANTS OF THE COMPANY
Without limiting any other covenants and divisions hereof, the Company
covenants and agrees that it will comply (and will cause each Subsidiary to
comply) with each of the provisions of this Article IV on and after the date
hereof and until the consummation of the first Qualified Public Offering;
provided, however, that the provisions of Section 4.2 shall continue in force
only so long as there are Purchased Shares outstanding.
4.1 Investments in Other Persons. The Company will not make or permit
any Subsidiary to make any loan or advance to any Person, or purchase, otherwise
acquire, or permit any Subsidiary to purchase or otherwise acquire, the capital
stock, assets comprising the business of, obligations of, or any interest in,
any Person, except:
(i) investments by the Company or a Subsidiary in evidences of
indebtedness issued or fully guaranteed by the United States of America
and having a maturity of not more than one year from the date of
acquisition;
(ii) investments by the Company or a Subsidiary in certificates of
deposit, notes, acceptances and repurchase agreements having a maturity of
not more than one year from the date of acquisition issued by (A) a bank
organized in the United States having capital, surplus and undivided
profits of at least $250,000,000 or (B) Republic National Bank;
(iii) loans or advances from a Subsidiary to the Company or from a
Subsidiary to another Subsidiary;
(iv) investments by the Company or a Subsidiary in A-rated or
better commercial paper having a maturity of not more than one year from
the date of acquisition;
(v) investments by the Company or a Subsidiary in "money market"
fund shares, or in "money market" accounts fully insured by the Federal
Deposit Insurance Corporation and sponsored by banks and other financial
institutions, provided that such Money market fund or "money market"
accounts invest principally in investments of the types described in
clauses (i), (ii) or (iv) of this subsection 4.1; and
(vi) loans to employees in the aggregate amount of up to $7,500 for
any individual employee and up to $50,000 to all employees at any one
time.
4.2 Distributions. The Company will not declare or pay any dividends,
purchase, redeem, retire, or otherwise acquire for value
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any of its capital stock (or rights, options or warrants to purchase such
shares) now or hereafter outstanding, return any capital to its shareholders as
such, or make any distribution of assets to its shareholders as such, or permit
any Subsidiary to do any of the foregoing, except that the Subsidiaries may
declare and make payment of cash and stock dividends, return capital and make
distributions of assets to the Company and except that nothing herein contained
shall prevent the Company from: (i) effecting a stock split or declaring or
paying any dividend consisting of shares of any class of capital stock to the
holders of shares of such class of capital stock; (ii) complying with any
specific provision of the terms of the Preferred Stock as contained in Exhibit A
hereto relating to the payment of dividends, liquidation preferences or
redemption payments on or with respect to the Preferred Stock or redemption of
the Preferred Stock; or (iii) repurchasing the Purchased Shares or shares of
Common Stock from the Purchaser in accordance with the Redemption Agreement
attached as Exhibit C hereto.
4.3 Dealings with Affiliates. Except for the Consulting Agreement with
HIG Capital Management, Inc., the Company will not enter into (or permit any
Subsidiary to enter into) any transaction including, without limitation, any
loans or extensions of credit or royalty or services agreements with any officer
or director of the Company or any Subsidiary or holder of any class of capital
stock of the Company, or any member of their respective immediate families or
any corporation or other entity directly or indirectly controlled by one or more
of such officers, directors or shareholders or members of their immediate
families.
4.4 Merger. The Company shall not, and shall not permit any Subsidiary
to, merge or consolidate with any other corporation, or sell, assign, lease or
otherwise dispose of or voluntarily part with the control of (whether in one
transaction or in a series of transactions) all, or substantially all, of its
assets (whether now owned or hereinafter acquired) or sell, assign or otherwise
dispose of (whether in one transaction or in a series of transactions) any of
its accounts receivable (whether now in existence or hereinafter created) at a
discount or with recourse, to any Person, or permit any Subsidiary to do any of
the foregoing, (i) except for sales or other dispositions of assets in the
ordinary course of business, and (ii) except that (a) any wholly owned
Subsidiary may merge into or consolidate with or transfer assets to any other
wholly owned Subsidiary and (b) any wholly owned Subsidiary may merge into or
transfer assets to the Company.
4.5 Option Shares. The Company will not issue shares of its capital
stock and will not grant any options, rights or warrants to acquire its capital
stock to employees and directors of, and consultants to, the Company and its
Subsidiaries, except that not more than 50,000 shares of Common Stock, which
number includes options previously granted, may be issued to employees of
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20
the Company (other than the Principal Shareholders), which options granted after
the date hereof have an exercise price per share that is not less than the
greater of (a) fair market value of the Common Stock on the date of grant and
(b) the purchase price for the Purchased Shares. Each grant of stock options
shall be approved by the Compensation Committee of the Company's Board of
Directors established pursuant to the Shareholders' Agreement.
4.6 Indebtedness. The Company shall not (a) be liable for Indebtedness
in excess of the amounts set forth on Schedule 4.6 hereto at any time, (b) issue
additional capital stock, in each case, without the prior written consent of the
Purchaser and (c) repay or prepay any Indebtedness owed the Principal
shareholders except as set forth in Exhibit hereto.
4.7 Limitation on Restrictions on Subsidiary Dividends and Other
Distributions. The Company shall not permit any of its Subsidiaries, directly or
indirectly, to create or suffer to exist or become effective any encumbrances or
restrictions on the ability of any of its Subsidiaries to (i) pay dividends or
make any other distributions on its capital stock or any other interest or
participation in its profit owned by any of the Company or any of its
Subsidiaries, or pay any indebtedness owed by any of the Subsidiaries, (ii) make
loans or advances to the Company, or (iii) transfer any of its properties or
assets to the Company.
4.8 No Conflicting Agreements. The Company agrees that neither it nor
any Subsidiary will, without the consent of the Purchaser, enter into or amend
any agreement, contract, commitment or understanding which would restrict or
prohibit the exercise by the Purchaser of any of their rights under this
Agreement or any of the Related Agreements.
4.9 Compensation; Consulting and Other Agreements. The Company shall not
pay to its management or consultants compensation in excess of that compensation
determined by the Compensation Committee of the Board of Directors established
pursuant to the Shareholders' Agreement.
4.10 Fundamental Changes. Without the consent of a majority of its Board
of Directors, the Company shall not (a) engage in any businesses other than the
businesses in which it is presently engaged or currently proposes to engage in
(including without limitation the business contemplated by the Kiosk Staffing
Agreement by and between Cellular Telephone Company and LTC Kiosk Corporation),
(b) sell, distribute, lease, manufacture or otherwise engage in the business of
new forms of wireless communications systems (including personal communications
systems) and (c) change cellular carriers within an existing geographic area
from the cellular carrier it is using as of the date of this Agreement in such
area Without the prior written consent of the Purchaser, the Company shall not
engage in any other business other than the sale
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and display of retail of communication devices and equipment including but not
limited to all types of cellular and mobile telephones, personal communicators,
long and short range cordless telephones, beepers and other types of paging
devices, radar detectors, facsimile machines, video and novelty telephones, any
device that transmits, receives or stores any type of data and any other types
of electronic devices and accessories related to all such devices and equipment;
provided, that any retail store may sell any other electric devices and
equipment so long as the sales of such other electric devices and equipment do
not exceed ten percent (10%) of such store's gross sales.
4.11 Capital Expenditures. The Company shall not make capital
expenditures in excess of the amounts set forth on Schedule 4.11 hereto without
the prior written consent of the Purchaser.
ARTICLE V
PREEMPTIVE RIGHT
5.1 Right of Purchase. The Company hereby grants to the Purchaser so
long as it shall own, of record or beneficially, or have the right to acquire,
any Purchased Shares, Conversion Shares or Common Stock, the right to purchase
all or part of its pro rata share of New Securities (as defined in Section 5.2)
which the Company, from time to time, proposes to sell and issue. A Purchaser's
pro rata share, for purposes of this preemptive right, is the ratio of the
number of Purchased Shares, Conversion Shares and shares of Common Stock which
such Purchaser owns or has the right to acquire to the total number of Purchased
Shares, Conversion Shares and shares of Common Stock then outstanding.
5.2 Definition of New Securities. "New Securities" shall mean any
capital stock of the Company whether now authorized or not, and rights, options
or warrants to purchase capital stock, and securities of any type whatsoever
that are, or may become convertible into or exchangeable for capital stock,
issued on or after the date hereof; provided that the term "New Securities" does
not include (I) securities purchased under this Agreement or Conversion Shares
issued upon conversion of the Purchased Shares, (ii) Common Stock issued as a
stock dividend to holders of Common Stock or upon any stock split, subdivision
or combination of shares of Common Stock, (iii) Preferred Stock issued as a
dividend to holders of Preferred Stock or upon any stock split, subdivision or
combination of Preferred Stock, (iv) the aggregate number of shares of Common
Stock issued upon exercise of options permitted under Section 4.5 hereof, and
(v) Common Stock issued to a new chief executive officer or President selected
by the Board of Directors and approved by the holders of a majority of the
Preferred Shares.
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5.3 Notice from the Company. In the event the Company proposes to
undertake an issuance of New Securities, it shall give the Purchaser written
notice of its intention, describing the type of New Securities and the price and
the terms upon which the Company proposes to issue the same. The Purchaser shall
have twenty (20) business days from the date of receipt of any such notice to
agree to purchase up to the Purchaser's pro rata share of such New Securities
for the price and upon the terms specified in the notice by giving written
notice to the Company and stating therein the quantity of New Securities to be
purchased.
5.4 Sale by the Company. In the event the Purchaser fails to exercise in
full its preemptive right, the Company shall have sixty (60) days thereafter to
sell the New Securities with respect to which and to the extent the Purchaser's
option was not exercised at a price and upon terms no more favorable to the
purchasers thereof than specified in the Company's notice. To the extent the
Company does not sell all the New Securities offered within said 60 day period,
the Company shall not thereafter issue or sell such New Securities without first
again offering such securities to the Purchaser in the manner provided above.
5.5 Termination of Rights. The rights granted to the Purchaser under
this Article V shall expire immediately prior to, and shall not apply in
connection with, the consummation of the first Qualified Public Offering.
ARTICLE VI
PURCHASER'S REPRESENTATIONS
6.1 Representations and Warranties. The Purchaser has all necessary
corporate power and has taken all necessary corporate action required for the
due authorization, execution, delivery and performance by the Purchaser of this
Agreement and the Related Agreements, and any other agreements or instruments
executed by the Purchaser in connection herewith or therewith and the
consummation of the transactions contemplated herein or therein. The Purchaser
hereby represents and warrants to the Company that, assuming due execution and
delivery by the Company of the Agreement and the Related Agreements, this
Agreement and the Related Agreements to which the Purchaser is a party
constitute legal, valid and binding obligations of the Purchaser, enforceable
against such Purchaser in accordance with their respective terms; the Purchaser
has been advised and understands that the Purchased Shares have not been
registered under the Securities Act, on the grounds that no distribution or
public offering of the Purchased Shares is to be effected, and that in this
connection, the Company is relying in part on the representations of the
Purchaser set forth in this Article VI; the Purchaser has been further advised
and understands that no public market now exists for any of the securities
issued
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23
by the Company and that a public market may never exist for the Purchased Shares
or Conversion Shares; the Purchaser is purchasing the Purchased Shares for
investment purposes, for its own account and not with a view to, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling the same; Purchaser has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or commitment
providing for the disposition thereof; and by reason of its business or
financial experience, the Purchaser has the capacity to protect its own interest
in connection with the transactions contemplated hereunder.
6.2 Permitted Sales; Legends. Notwithstanding the foregoing
representations, the Company agrees that it will permit a distribution of
Purchased Shares or Conversion Shares by the Purchaser to one or more of its
affiliates and Qualified Institutional Buyers, as defined in Rule 144A of the
Securities Act, if (i) the transfer is in accordance with the Shareholders
Agreement, (ii) the transferee agrees in writing to be subject to the terms
hereof and the Shareholders Agreement to the same extent as if it were an
original Purchaser hereunder and (iii) a sale or other transfer of any of the
Purchased Shares or Conversion Shares upon obtaining an opinion of counsel
satisfactory to the Company that such transaction is exempt from the
registration requirements of, or is covered by an effective registration
statement under, the Securities Act and applicable state securities or
"blue-sky" laws.
6.3 Current Shareholder Guaranties. HIG Fund V, Inc., so long as it is a
holder of Purchased Shares, shall use all reasonable efforts (other than the
extension of money or credit accommodations) to assist the Principal
Shareholders in removing themselves as guarantors of the Company's outstanding
indebtedness and leases; provided, however, that nothing in this Section 6.3
shall result in any liability to HIG Fund V, Inc. in the event the Principal
Shareholders are unable to remove themselves as sureties for the Company's
obligations.
ARTICLE VII
REGISTRATION RIGHTS
7.1 Certain Definitions. As used in this Article VII, the following
terms shall have the following respective meanings:
"Holder" means the person who is then the record owner of Registrable
Securities, which have not been sold to the public.
"Initiating Holders" means any Purchaser or its assignee who in the
aggregate are holders of at least twenty-five percent (25%) of the Registrable
Securities.
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"Registrable Securities" means (i) all of the Conversion Shares owned by
the Purchaser, (ii) all other shares of Common Stock now owned or hereafter
acquired by the Purchaser; (iii) all shares of Common Stock issuable with
respect to securities of the Company convertible into or exercisable for shares
of Common Stock now owned or hereafter acquired by the Purchaser; and (iv) any
Common Stock issued in respect of the shares described in clauses (i) through
(iii) upon any stock split, stock dividend, recapitalization other similar
event.
The term "registers" means to register under the Securities Act and
applicable state securities laws for the purpose of effecting a public sale of
securities.
"Registration Expenses" means all expenses incurred by the Company in
compliance with Sections 7.2, 7.3 or 7.5 hereof, including, without limitation,
all registration and filing fees, printing expenses, transfer taxes, fees and
disbursements of counsel for the Company, blue sky fees and expenses, reasonable
fees and disbursements of one counsel for all the selling Holders and other
security holders, and the expense of any special audits incident to or required
by any such registration.
"Selling Expenses" means all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities.
7.2 Requested Registrations.
(a) If after the earlier of (i) the fourth anniversary of the date
hereof and (ii) the consummation of a public offering by the Company, the
Company shall receive from one or more Initial Holders a written request that
the Company effect the registration of Registrable Securities representing at
least twenty five percent (25%) of the Registrable Securities then outstanding
or issuable and the reasonably anticipated aggregate price to the public of the
Registrable Securities to be included in such registration would exceed $5
million, in connection with a firm commitment underwriting financed by a
nationally recognized underwriter, the Company shall:
(i) promptly give written notice of the proposed registration to
all other Holders; and
(ii) as soon as practicable, use its best efforts to effect such
registration as may be so requested and as would permit or facilitate the
sale and distribution of such portion of such Registrable Securities as
are specified in such request, together with such portion of the
Registrable Securities of any Holder or Holders joining in such request as
are specified in a written request given within thirty (30) days after
receipt of such written notice from the Company. If
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the underwriter managing the offering advises the Holders who have
requested inclusion of their Registrable Securities in such registration
that marketing considerations require a limitation on the number of shares
offered, such limitation shall be imposed pro rata among such Holders who
requested inclusion of Registrable Securities in such registration
according to the number of Registrable Securities each such Holder
requested to be included in such registration. Neither the Company nor any
other shareholder may include shares in a registration effected under this
Section 7.2 without the consent of the Holders holding a majority of the
Registrable Securities sought to be included in such registration if the
inclusion of shares by the Company or the other shareholders would limit
the number of Registrable Securities sought to be included by the Holders
or reduce the offering price thereof. No registration initiated by
Initiating Holders hereunder shall count as a registration under this
Section 7.2 unless and until it shall have been declared effective.
(iii) the Holders of the Purchased Shares and the Conversion Shares
shall have the right to demand registration twice under this Section
7.2(a).
(b) Selection of Underwriter. The underwriter of any underwriting
requested under this Section 7.2 shall be selected by the Holders holding a
majority of the Registrable Securities included therein; provided that such
underwriter must be acceptable to the Company.
7.3 "Piggy Back" Registrations.
(a) If the Company shall determine to register any of its
securities, either for its own account or the account of a security holder or
holders exercising their registration rights, other than a registration relating
solely to employee benefit plans, or a registration on any registration form
which does not permit secondary sales or does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities, the Company shall:
(i) Promptly give to each Holder of Registrable Securities written
notice thereof (which shall include the number of shares the Company or
other security holder proposes to register and, if known, the name of the
proposed underwriter); and
(ii) Use its best efforts to include in such
registration all the Registrable Securities specified in a written request
or requests, made by any Holder within ten (10) days after the date of
delivery of the written notice from the Company described in clause (I)
above. If the
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underwriter advises the Company that marketing considerations require a
limitation on the number of shares offered pursuant. to any registration
statement, then the Company may offer all of the Securities it proposes to
register for its own account or the maximum amount that the underwriter
considers saleable and such limitation on any remaining securities that
may, in the opinion of the underwriter, be sold will be imposed pro rata
among all Shareholders who are entitled to include shares in such
Registration Statement according to the number of Registrable Securities
each such shareholder requested to be included In such registration
statement.
(b) The Company shall select the underwriter for an offering made
pursuant to this Section 7.3.
7.4 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 7.2, 7.3 or 7.5 shall be paid by the Company. All Selling Expenses
incurred in connection with any such registration, qualification or compliance
shall be borne by the holders of the securities registered, pro rata on the
basis of the number of their shares so registered.
7.5 Registration on Form S-3. The Company shall use its best efforts to
qualify for registration on Form S-3 or any comparable or successor form; and to
that end the Company shall register (whether or not required by law to do so)
the Common Stock under the Securities Exchange Act of 1934 (the "Exchange Act)
in Accordance with the provisions of the Exchange Act following the effective
date of the first registration of any securities of the Company on Form S-1 or
any comparable or successor form. After the Company has qualified for the use of
Form S-3, in addition to the rights contained in the foregoing provisions of
this Article VII, the Holders of Registrable Securities shall have the right to
request registrations on Form S-3 (such requests shall be in writing and shall
state the number of shares of Registrable Securities to be disposed of and the
intended methods of disposition of such shares by such Holder or Holders);
provided that in no event shall the Company be required to register shares with
an aggregate market value of less than $500,000.
7.6 Registration Procedures. In the case of each registration effected
by the Company pursuant to this Article VII, the Company shall keep each Holder
of Registrable Securities included in such registration advised in writing as to
the initiation of each registration and as to the completion thereof. At its
expense, the Company shall do the following for the benefit of such Holders:
(a) Use its best efforts to keep such registration effective for a
period of one hundred twenty (120) days or until the Holder or Holders have
completed the distribution described in the registration statement relating
thereto, whichever first
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occurs, and amend or supplement such registration statement and the prospectus
contained therein from time to time to the extent necessary to comply with the
Securities Act and applicable state securities laws;
(b) Use its best efforts to register or qualify the Registrable
Securities covered by such registration under the applicable securities or "blue
sky" laws of such jurisdictions as the selling shareholders may reasonably
request; provided, that the Company shall not be obligated to qualify to do
business in any jurisdiction where it is not then so qualified or otherwise
required to be so qualified or to take any action which would subject it to the
service of process in suits other than those arising out of such registration;
(c) Furnish such Number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request;
(d) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 7.2 hereof, the Company shall
enter into any underwriting agreement reasonably necessary to effect the offer
and sale of Common Stock, provided such underwriting agreement contains
customary underwriting provisions and is entered into by the Holders and
provided further that, if the underwriter so requests, the underwriting
agreement shall contain customary indemnification and contribution provisions on
the part of the Company;
(e) To the extent then permitted under applicable professional
guidelines and standards, obtain a comfort letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by comfort letters and an opinion from the Company's counsel
in customary form and covering such matters of the type customarily covered in a
public issuance of securities, in each case addressed to the Holders, and
provide copies thereof to the Holders; and
(f) Permit the counsel to the selling shareholders to inspect and
copy such corporate documents as he may reasonably request.
7.7 Indemnification.
(a) The Company shall, and hereby does, indemnify each Holder,
each of its officers and stockholders, and each person controlling such Holder
within the meaning of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Article VII, and
each underwriter, if any, and each person who controls such underwriter within
the meaning of the Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or
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based on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or: other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein of
necessary to make the statements therein not misleading, or an, violation by the
Company of the Securities Act or the Exchange Act or the securities act of any
state or any rule or regulation thereunder applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, qualification or compliance, and shall reimburse each such
Holder, each of its officers, directors and partners, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, whether or not resulting in any liability, provided that
the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement (or alleged untrue statement) or omission (or alleged omission)
based upon written information furnished to the Company by such Holder or
underwriter and stated to be specifically for use therein.
(b) Each Holder shall, if Registrable Securities held by him are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers and each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of the Securities Act and the rules and
regulations thereunder, each other such Holder and each of their officers,
directors and partners, and each person controlling such Holder, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and such
Holder's directors, officers, partners, persons, underwriters or control persons
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
whether or not resulting in liability, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in Conformity with
written information furnished to the Company by such Holder and stated to be
specifically for use therein;
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provided, however, that the obligations of each Holder hereunder shall be
limited to an amount equal to the net proceeds received by such Holder upon sale
of his securities.
(c) Each party entitled to indemnification under this Section 7.7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought, but
the failure of any Indemnifying Party to give such notice shall not relieve the
Indemnifying Party of its obligations under this Section 7.7 (except and to the
extent the Indemnifying Party has been prejudiced as a consequence thereof). The
Indemnifying Party shall be entitled to participate in, and to extent that it
may elect by written notice delivered to the Indemnified Party promptly after
receiving the aforesaid notice from such Indemnified Party, at its expense to
assume, the defense of any such claim or any litigation resulting therefrom,
with counsel reasonably satisfactory to such Indemnified Party, provided that
the Indemnified Party may participate in such defense at its expense,
notwithstanding the assumption of such defense by the Indemnifying Party, and
provided, further, that if the defendants in any such action shall include both
the Indemnified Party and the Indemnifying Party and the Indemnified Party shall
have reasonably concluded that there may be legal defenses available to it
and/or other Indemnified Parties which are different from or additional to those
available to the Indemnifying Party, the Indemnified Party or Parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
Indemnified Party or Parties and the fees and expenses of such counsel shall be
paid by the Indemnifying Party. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall (i) furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom and
(ii) shall reasonably assist the Indemnifying Party in any such defense,
provided that the Indemnified Party shall not be required to expend its funds in
connection with such assistance.
(d) No Holder shall be required to participate in a registration
pursuant to which it would be required to execute an underwriting agreement in
connection with a registration effected under Section 7.2 or 7.3 which imposes
indemnification or contribution obligations on such Holder more onerous than
those imposed hereunder; provided, however, that the Company shall not be deemed
to breach the provisions of Section 7.2 or 7.3 if a Holder
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is not permitted to participate in a registration on account of his refusal to
execute an underwriting agreement on the basis of this subsection (d).
7.8 Limitations on Registration Rights. From and after the date of
this Agreement, the Company shall not enter into any agreement with any holder
or prospective holder of any securities of the Company giving such holder or
prospective holder (a) the right to require the Company, upon any registration
of any of its securities, to include, among the securities which the Company is
then registering, securities owned by such holder, unless under the terms of
such agreement, such holder or prospective holder may include such securities in
any such registration only to the extent that the inclusion of its securities
will not limit the number of Registrable Securities sought to be included by the
Holders of Registrable Securities or reduce the offering price thereof; or (b)
the right to require the Company to initiate any registration of any securities
of the Company.
7.9 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit the
sale of restricted securities (as that term is used in Rule 144 under the
Securities Act) to the public without registration, the Company agrees to use
its best efforts to:
(a) make and keep public information available as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times from and after ninety days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act at any time after it has become subject to such reporting
requirements; and
(c) so long as a Purchaser owns any restricted securities,
furnish to the Purchaser forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at any
time from and after ninety days following the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed as a Purchaser may reasonably request in availing itself of
any rule or regulation of the Commission allowing a Purchaser to sell any such
securities without registration.
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7.10 Listing Application. If shares of any class of stock of the Company
shall be listed on a national securities exchange, the Company shall, at its
expense, include in its listing application all of the shares of the listed
class then owned by any Purchaser.
7.11 Damages. The Company recognizes and agrees that the holder of
Registrable Shares shall not have an adequate remedy if the Company fails to
comply with the provisions of this Article VII, and that damages will not be
readily ascertainable, and the Company expressly agrees that in the event of
such failure any Holder of Registrable Shares shall be entitled to seek specific
performance of the Company's obligations hereunder and that the Company will not
oppose an application seeking such specific performance.
ARTICLE VIII
CONDITIONS OF THE PURCHASER'S OBLIGATION
8.1 Effect of Conditions. The obligation of the Purchaser to purchase
and pay for the Purchased Shares at the Closing shall be subject to the
satisfaction of each of the conditions stated in the following Sections of this
Article.
8.2 Representations and Warranties. The representations and warranties
of the Company and the Principal Shareholders Contained in this Agreement shall
be true and correct on the date of the Closing, and the Purchaser shall have
received a certificate dated as of such Closing and signed on behalf of the
Company and the Principal Shareholders to that effect.
8.3 Performance. The Company and the Principal Shareholders shall have
performed and complied with all of the agreements, covenants and conditions
contained in this Agreement required to be performed or complied with by it and
him at or prior to the Closing, and the Purchaser shall have received a
certificate dated as of such Closing and signed on behalf of the Company and by
the Principal Shareholders to that effect.
8.4 Board Election. Concurrently with the Closing, the Board of
Directors of the Company shall have been expanded to comply with the provisions
of the Shareholders' Agreement.
8.5 Certified Documents. etc. Counsel for the Purchaser shall have
received a copy of the Company's Articles of Incorporation, as amended,
certified by the Secretary of State of the State of Florida and copies of the
Company's By-Laws certified by its Secretary, as well as any and all other
documents, including certificates as to votes adopted and incumbency of officers
and certificates from appropriate authorities as to the legal existence
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and tax good standing of the Company and its Subsidiaries, which the Purchaser
or its counsel may reasonably request.
8.6 Amendment to Articles of Incorporation. The Articles of
Incorporation of the Company shall have been amended to provide for the
authorization of the Preferred Stock with the terms set forth in Exhibit A
hereto.
8.7 Shareholders' Agreement. A Shareholders' Agreement in the form of
Exhibit B attached hereto shall have been executed by he Company and the
shareholders named therein.
8.8 Redemption Agreement. A Redemption Agreement in the form of Exhibit
C attached hereto shall have been executed by the Company.
8.9 Opinion of Counsel. The Purchaser shall have received an opinion,
dated the date of the Closing, from Steel, Hector & Davis, counsel to the
Company, substantially in the form attached as Exhibit D hereto.
8.10 Employment Agreements. The Principal Shareholders shall have
executed an Employment Agreement in the form of Exhibit E hereto.
8.11 Consulting Agreement. A Consulting Agreement in the form of Exhibit
F attached hereto shall have been executed by the Company.
8.12 Shareholder Indebtedness. The Company and the Principal Shareholders
shall have amended and restated all of the Company's indebtedness to the
Principal Shareholders on the terms and the conditions as set forth in the form
of promissory note attached as Exhibit G hereto.
8.13 Side Letters. Mr. Sorenson and Ms. Gozlan, Republic National Bank
and AT&T shall have executed their respective side letters as set forth in
Exhibit H hereto.
ARTICLE IX
CONDITIONS OF THE COMPANY'S OBLIGATION
The obligations of the Company under this Agreement are subject to the
fulfillment, or the waiver, of the following conditions on or before the
Closing:
(a) The representations and warranties of the Purchaser contained in
Article VI shall be true and correct on and as of the date of Closing with the
same effect as though such representations and warranties had been made on and
as of that date.
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(b) The Purchaser shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or complied
with by the Purchaser prior to or at the Closing.
ARTICLE X
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Agreement" means this Series A Preferred Stock Purchase Agreement as from
time to time amended and in effect between the parties.
"Applicable Conversion Value" shall mean the Applicable Conversion Value
of the Preferred Stock under Section 5(c) of Exhibit A.
"Closing" shall have the meaning set forth in Section 1.3.
"Commission" shall have the meaning set forth in Section 2.3.
"Common Stock" will include (a) the Company's Common Stock, par value
$1.00 per share, as authorized on the date of this Agreement, (b) any other
capital stock of any class or classes of the Company authorized on or after the
date hereof, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference, and (c) any other securities of the Company into
which or for which any of the securities described in (a) or (b) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
"Company" means and shall include Let's Talk Cellular of America, Inc., a
Florida corporation, and its successors and assigns.
"Conversion Shares" shall have the meaning set forth in Section 1.2.
"Escrow Accounts" shall mean the account established in the Custody of the
Escrow Agent pursuant to the Escrow Agreement.
"Escrow Agents" shall mean Greenberg, Traurig and its permitted successors
and assigns.
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"Escrow Agreement" shall mean that certain escrow agreement by and among
the Company, the Purchaser and the Escrow Agent in the form of Exhibit H hereto.
"Holders" shall have the meaning set forth in Section 7.1.
"Indebtedness" means all obligations, contingent and otherwise, for
borrowed money which are required to be reflected an indebtedness on a balance
sheet prepared in accordance with generally accepted accounting principles
including, without limitation, any current portion of long-term indebtedness,
capitalized leases and all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.
"Indemnified Party" shall have the meaning set forth in Section 7.7.
"Indemnifying Party" shall have the meaning set forth in Section 7.7.
"Initiating Holders" shall have the meaning set forth in Section 7.1.
"New Securities" shall have the meaning set forth in Section 5.2.
"Person" means an individual, corporation, partnership, joint venture,
trust or unincorporated organization or a government or agency or political
subdivision thereof.
"Preferred Stock" shall have the meaning set forth in Section 1.1
"Purchased Shares" shall have the meaning set forth in Section 1.1.
"Purchaser" shall have the meaning set forth in Section 1.1.
"Qualified Public Offerings" means the closing of an underwritten public
offering by the Company pursuant to a registration statement filed and declared
effective under the Securities Act covering the offer and sale of Common Stock
for the account of the Company in which the aggregate net proceeds to the
Company equal at least $10,000,000 and in which the price per share of Common
Stock equals or exceeds one point seven five (1.75) times the then Applicable
Conversion Value of the Preferred Stock under Section 5(c) of Exhibit A.
"Registrable Securities" shall have the meaning set forth in Section 7.1.
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"Registration Expense" shall have the meaning set forth in Section 7.1.
"Related Agreements" shall have the meaning set forth in Section 2.2.
"Securities Acts" means the Securities Act of 1933, as amended.
"Selling Expenses" shall have the meaning set forth in Section 7.1.
"Subsidiary" or "Subsidiaries" means any corporation, association or other
business entity of which the Company and/or any of its other Subsidiaries tan
herein defined) directly or indirectly owns at the time more than fifty percent
(50~) of the outstanding voting shares of every class of such corporation or
trust other than directors' qualifying shares.
ARTICLE XI
MISCELLANEOUS
11.1 Survival of Representations. The representations, warranties,
covenants and agreements made herein or in any certificates or documents
executed in connection herewith shall survive the execution and delivery hereof
and the closing of the transaction contemplated hereby for a period of six (6)
months from the date of Closing, or to the extent otherwise specifically set
forth herein.
11.2 Parties in Interest. Except as otherwise set forth herein, all
covenants, agreements, representations, warranties and undertakings contained in
this Agreement shall be binding on and shall inure to the benefit of the
respective successors and assigns of the parties hereto (including transferees
of any of the Purchased Shares or Conversion Shares); provided, however, that
the Company may not assign interests hereunder without the consent of the
Purchaser.
11.3 Shares Owned by Affiliates. For the purpose. of applying all
provisions of this Agreement which condition the receipt of information or
access to information or exercise of any rights upon ownership of a specified
number or percentage of shares, the shares owned of record by any affiliate of a
Purchaser shall be deemed to be owned by such Purchaser. For the purpose of this
Agreement, the term "affiliate" shall mean any Person controlling, controlled by
or under common control with, a Purchaser.
11.4 Amendments and Waivers. Amendments or additions to this Agreement
may be made, agreements with any decision of the
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Company may be made, and compliance with any term, covenant, agreement,
condition or provision net forth herein may be omitted or waived (either
generally or in a particular instance and either retroactively or prospectively)
upon the written consent of the company and the holders of a majority of the
issued and issuable conversion Shares. Prompt notice of any such amendment or
waiver shall be given to any Person who did not consent thereto. This Agreement
(including the schedules and exhibits annexed hereto, which are an integral part
of this Agreement) constitutes the full and complete agreement of the parties
with respect to the subject matter hereof.
11.5 Notices. All notices, requests, consents, reports and demands shall
be in writing and shall be hand delivered, sent by facsimile or other electronic
medium, or mailed, postage prepaid, to the Company or to the Purchaser at the
address net forth below or to such other address as may be furnished in writing
to the other parties hereto:
The Company: Let's Talk Cellular of America, Inc.
5200 N.W. 77th Court
Miami, Florida 33166
Attention: Mr. Nick Molina
with copy to: Steel, Hector & Davis
200 South Biscayne Blvd.
Miami, Florida
Attention: Harvey Goldman, Esquire
The Purchaser: HIG Fund V, Inc.
c/o HIG Capital Management, Inc.
1001 South Bayshore Drive
Suite 2310
Miami, Florida 33131
Attn: Mr. Anthony Tamer
with copy to: Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Guentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Jorge L. Freeland, Esquire
11.6 Expenses. The Company will pay its own expenses and the legal fees
and legal expenses of the Purchaser in connection with the transactions
contemplated hereby.
11.7 Counterparts. This Agreement and any exhibit hereto may be executed
in multiple counterparts, each of which shall constitute an original but all of
which shall constitute but one and the same instrument.
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11.8 Effect of Headings. The article and section headings herein are for
convenience only and "hall not affect the construction hereof
11.9 Adjustments. All provisions of thin Agreement shall be automatically
adjusted to reflect any stock dividend, stock split or other such form of
recapitalization.
11.10 Governing Law. This Agreement shall be deemed a contract made under
the internal laws of the State of Florida and together with the rights and
obligations of the parties hereunder, shall be construed under and governed by
the laws of such State.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Company, whereupon, this letter shall become a binding agreement among us.
Very truly yours,
PRINCIPAL SHAREHOLDERS: Let's Talk Cellular of America,
Inc.
/s/ Nick Molina
- ------------------------------- /s/ Nick Molina
Nick Molina -------------------------------
By: Nick Molina
----------------------------
/s/ Brett Beveridge Name:
- ------------------------------- Title: President
Brett Beveridge
PURCHASER:
HIG Fund V, Inc.
/s/ Anthony Tamer
-------------------------------
By: Anthony Tamer
----------------------------
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CONVERSION AGREEMENT, dated as of the 27th day of June, 1997, by and
between Let's Talk Cellular & Wireless, Inc., a Florida corporation f/k/a Let's
Talk Cellular of America Inc. ("LTC"), HIG Fund V, Inc., a Cayman Islands
corporation ("HIG"), and Texas Cellular Partners, L.P., a Delaware limited
partnership ("TCP").
WHEREAS, HIG currently owns 100,000 shares of Series A Preferred Stock of
LTC (the "Preferred Stock"), purchased pursuant to that certain Series A
Preferred Stock Purchase Agreement, dated as of June 25, 1996 (the "Purchase
Agreement"), by and between LTC and HIG.
WHEREAS, LTC has requested that HIG convert the Preferred Stock into
Common Stock of LTC, par value $.001 per share (the "Common Stock");
WHEREAS, LTC is willing to provide HIG with additional shares of Common
Stock as consideration for HIG's agreement to convert the Preferred Stock prior
to LTC's optional redemption date and for giving up certain rights and
privileges granted to HIG incident thereto;
WHEREAS, HIG has agreed to convert the Preferred Stock into Common Stock
and LTC has agreed to issue Common Stock to HIG on the terms and subject to the
conditions set forth herein; and
WHEREAS, the parties hereto have agreed to terminate certain provisions of
the Purchase Agreement and amend the Purchase Agreement to provide TCP with
registration rights equivalent to those of HIG.
NOW, THEREFORE, the parties hereby agree as follows:
1. Agreement to Convert. HIG agrees to convert its 100,000 shares of
Preferred Stock in return for 650,000 shares of Common Stock, and hereby
delivers to LTC HIG's stock certificates representing the Preferred Stock.
2. Issuance of Shares. LTC hereby agrees to issue to HIG on the date
hereof 650,000 shares of Common Stock as consideration for HIG's conversion of
its Preferred Stock on the date hereof and HIG's agreement to give up the rights
and privileges incident thereto prior to LTC's optional redemption date.
3. Termination of Purchase Agreement Provisions. Articles III, IV and V
of the Purchase Agreement are hereby terminated in their entirety.
4. Registration Rights. The definition of Registrable Securities in
Section 7.1 of the Purchase Agreement is hereby amended and restated in its
entirety as follows:
"Registrable Securities" means (i) all of the Conversion Shares owned by
the Purchaser, (ii) all other shares of Common Stock now owned or hereafter
acquired by the Purchaser or TCP; (iii) all shares of Common Stock issued with
respect to securities of the Company convertible into or exercisable for shares
of Common Stock now owned or hereafter acquired by
39
the Purchaser or TCP; and (iv) any Common Stock issued in respect of shares
described in clauses (i) through (iii) upon any stock split, stock dividend,
recapitalization or other similar event.
40
IN WITNESS WHEREOF, the undersigned have execute this Agreement as of the
date first above written.
LETS TALK CELLULAR & WIRELESS, INC.
By: /s/Nick Molina
---------------------------------
Name: Nick Molina
Title: Chief Executive Officer
HIG FUND V,INC.
By: /s/Anthony Tamer
---------------------------------
Name: Anthony Tamer
Title: President
TEXAS CELLULAR PARTNERS, L.P.
By: HIG TEXAS CELLULAR COMPANY
By: /s/Douglas Berman
---------------------------------
Name: Douglas Berman
Title: Vice President