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Exhibit 5.4
CLOUD KOENIG & OWEN
ATTORNEYS AT LAW
5354 NORTH HIGH STREET, SUITE 3-D
COLUMBUS, OHIO 43214
(614)221-3621 COPY
FAX (614) 221-2698
CLIFFORD R. CLOUD WRITER'S VOICE MAIL
CHARLES A. KOENIG
JAMES D. OWEN
--------------
CRAIG M. JAQUITH June 15, 1994
To the Investors
Listed on Exhibit A to this Letter:
We have acted as counsel to Partech Holdings Corporation (the "Company") (all
references herein to "the Company" shall include all subsidiaries, direct and
indirect, of the Company). This opinion is being rendered to you at the request
of the Company in connection with its issuance of Units pursuant to your
execution of a Subscription Ageement dated as of June 15, 1994. Except as
otherwise provided herein, capitalized terms shall have the meanings assigned
to such terms in the Subscription Agreement and exhibits thereto.
For purposes of rendering the opinions set forth below, we have examined the
Subscription Ageement, the Unit Note, the Unit Warrant, the Rayl Pledge
Agreement, the PCG Stock Pledge Agreement and the exhibits attached thereto,
the Company's Confidential Offering Memorandum dated June 15, 1994, the
Company's Articles of Incorporation, By-Laws, minute books and resolutions,
and certain documents and agreements which we believed to be necessary and
appropriate for the purposes of rendering these opinions. Further, we have
relied upon the representations made to us by officers of the Company
regarding, inter alia, the conduct of the Company's business, the status of
required filings with various federal and state regulatory authorities and
other information we believed to be necessary and appropriate for the purposes
of rendering these opinions. In connection with our examination, we have
assumed that all signatures on executed documents are genuine and that the
parties so executing have the requisite power, authority and legal capacity
necessary therefor, and further, that all documents submitted to us are
authentic. We have further assumed the accuracy and veracity of all
representations made to us by officers of the Company, but we have conducted
no independent investigation to confirm same.
Whenever we use the words "to our knowledge" or words of like import referring
to the knowledge of attorneys of this firm, such language shall mean that during
the course of our representation of the Company no information has come to our
attention that would cause us to believe that any facts material to our
opinions expressed herein are incorrect or that any reliance thereon is
unwarranted. We have not, however, examined any public records or undertaken any
special or independent investigation in connection with any such opinion to
determine the existence or absence of such facts.
This opinion is rendered with respect to the law and facts as they exist or
otherwise pertain on the date hereof, and no opinion or representation is made
with respect to changes or events occurring thereafter.
Based upon, and subject to the foregoing, we are of the opinion that:
(i) the Company has been duly organized and is validly existing as a
corporation in good standing under the laws of its incorporation and is duly
qualified to do business and is in good standing in all jurisdictions in which
the failure to so qualify would have a material adverse effect on the business
of the Company; the Company has the full power and all necessary authorizations
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to enter into the Subscription Agreement, the Rayl Pledge Agreement and the PCG
Stock Pledge Agreement and to execute and issue the Unit Note and Unit Warrant;
and, to our knowledge, the Company has full power and authority and all
necessary authorizations, approvals, licenses, certificates and permits of and
from all governmental regulatory officials and bodies (including, without
limitation, the Federal Communications Commission ("FCC")) to own or lease its
properties and conduct its business, present and proposed, as described in the
Subscription Agreement and the Disclosure Documents and, to our knowledge, is
in compliance with all such authorizations, approvals, orders, licenses,
certificates and permits and with all federal, state and local laws, rules and
regulations applicable to the business in which it is engaged, except where the
failure so to conduct its business would not have a material adverse impact on
its business. No consent, authorization or order of, and no filing with, any
court, government agency or other body is required for the issuance of the Unit
Notes or the Unit Warrants by the Company, or for the issuance by the Company
of the underlying Note Securities or Warrant Securities upon conversion of the
Units or such Unit Notes, exercise of such Unit Warrants or otherwise in
accordance with the terms of the Subscription Agreement, the Unit Notes, the
Unit Warrants, the Rayl Pledge Agreement or the PCG Stock Pledge Agreement
(except to the extent FCC consent to transfer the Pledged Shares is required);
(ii) the Subscription Agreement, the Unit Notes, the Unit Warrants, the
Rayl Pledge Agreement and the PCG Stock Pledge Agreement have each been duly and
validly authorized, executed and delivered by the Company and are valid and
legally binding ageements of the Company, enforceable in accordance with their
terms, except to the extent that the enforceability thereof may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws from
time to time in effect and affecting the rights of creditors generally, (b)
limitations upon the power of a court to grant specific performance or any
other equitable remedy, and (c) a finding by a court of competent jurisdiction
that the indemnification provisions therein are in violation of public policy;
(iii) the Unit Notes, the Unit Warrants, the Note Securities and the
Warrant Securities have been duly authorized and are, or in the case of the
Note Securities and Warrant Securities, will be, upon the exercise of and
payment therefor, validly issued, fully paid and non-assessable and the
holders thereof are not and will not be subject to personal liability solely
by reason of being such holders; the Unit Notes, the Unit Warrants, the Note
Securities and the Warrant Securities are not and will not be subject to the
preemptive rights of any stockholder of the Company and all corporate action
required to be taken for the authorization, issue and sale of such securities
have been duly and validly taken; the Unit Notes and the Unit Warrants
constitute valid and binding obligations of the Company to issue and sell, upon
conversion or exercise thereof, the securities of the Company called for
thereby; the certificates representing such securities are in due and proper
form;
(iv) the authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, par value $.05 per share, of which 5,636,906 shares are
issued and 5,629,706 shares are outstanding as of January 31, 1994, and
1,000,000 shares of Preferred Stock, par value $1.00 per share, of which none
are issued and outstanding; all issued and outstanding securities of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission with respect
thereto, and are not subject to personal liability solely by reason of being
such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company. To the best of
our knowledge, except as described in Schedule D(ii), and except for the
transactions contemplated by the Subscription Agreement, the Unit Notes, the
Unit Warrants, the Ray Pledge Agreement, the PCG Stock Pledge Agreement and the
Disclosure Documents, there are (A) no outstanding
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warrants, options or rights to subscribe for or purchase any capital stock or
other securities from the Company, (B) no voting trusts or voting ageements
among, or irrevocable proxies executed by, stockholders of the Company, (C) no
existing rights of stockholders to require the Company to register any
securities of the Company or to participate with the Company in any
registration by the Company of its securities, and (D) no agreements among
stockholders providing for the purchase or sale of the Company's capital
stock;
(v) to the best of our knowledge, there is no litigation or governmental
proceeding pending or threatened against, or involving the properties or
business of, the Company which might materially and adversely affect the value
or the operation of the properties or the business of the Company except as
set forth in Schedule D(iv) and except as referred to in the Subscription
Agreement and the Disclosure Documents;
(vi) the Unit Notes, the Unit Warrants, the Note Securities and the
Warrant Securities conform in all material respects to all statements in
relation thereto contained in the Disclosure Documents;
(vii) neither the execution and delivery of the Subscription Agreement,
the Unit Notes, the Unit Warrants, the Rayl Pledge Agreement or the PCG Stock
Pledge Agreement, nor the issue and sale of the Unit Notes, the Unit Warrants,
the Note Securities or the Warrant Securities, nor the consummation of any of
the transactions contemplated therein, nor the compliance by the Company with
the terms and provisions thereof, has conflicted with or will conflict with, or
has resulted in or will result in a breach of, any of the terms and provisions
of, or has constituted or will constitute a default under, or has resulted in
or will result in the creation or imposition of any lien, charge or encumbrance
upon any material property or assets of the Company pursuant to the terms of any
indenture, mortgage, deed of trust, note, loan or credit agreement known to
such counsel or any other agreement or instrument evidencing an obligation for
borrowed money known to such counsel, or any other agreement or instrument
known to such counsel to which the Company is a party or by which the Company
may be bound or to which any of the property or assets of the Company is
subject; nor will such action result in any violation of the provisions of the
Certificate or Incorporation or the By-Laws of the Company or any statute or
any order, rule or regulation known to us to be applicable to the Company of
any court or of any federal, state or, to our knowledge, other regulatory
authority or other governmental body having jurisdiction over the Company
(including, without limitation, the FCC);
(viii) we have participated in the preparation of the Subscription
Agreement, the Unit Notes, the Unit Warrants, the Rayl Pledge Agreement, the
PCG Stock Pledge Agreement and the Disclosure Documents and nothing has come to
our attention to lead us to believe that any of the Subscription Agreement, the
Unit Notes, the Unit Warrants, the Rayl Pledge Agreement, the PCG Stock Pledge
Agreement and the Disclosure Documents or any amendment or supplement thereto
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
In rendering the foregoing opinion, we have relied upon the representations
made by the Investors as set forth in Exhibit C;
(ix) based upon our knowledge, without independent investigation, other
than matters of public record, the Company owns or possesses, free and clear of
all liens or encumbrances and rights thereto or therein by third parties, the
requisite licenses or other rights to use all trademarks, service marks,
copyrights, service names, trade names, patents, patent applications and
licenses necessary to conduct its business (including, without limitation, any
FCC licenses or such licenses or rights described in the Subscription Agreement
and the Disclosure Documents as being owned
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or possessed by the Company), and there is no claim or action by any person
pertaining to, or proceeding, pending, or, to our knowledge, threatened, which
challenges the exclusive rights of the Company with respect to any trademarks,
service marks, copyrights, service names, trade names, patents, patent
applications and licenses used in the conduct of the Company's businesses
(including, without limitation, any FCC licenses or such licenses or rights
described in the Subscription Agreement and the Disclosure Documents as being
owned or possessed by the Company); the Company's current products, services
and processes do not and will not infringe on the patents currently held by
third parties to the extent known to us;
(x) except as and to the extent set forth in the Subscription Agreement
and the Disclosure Documents, to the best of our knowledge, the Company is not
under any obligation to pay to any third party royalties or fees of any kind
whatsoever with respect to any technology or intellectual properties developed,
employed or used;
(xi) to the best of our knowledge, neither the Company, nor any of its
respective officers, employees or agents, nor any other person acting on
behalf of the Company has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or official or employee of any
governmental agency or instrumentality of any government (domestic or foreign)
or any political party or candidate for office (domestic or foreign) or other
person who is or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed transaction)
which (A) might subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (B) if not given in the
past, might have had a materially adverse effect on the assets, business or
operations of the Company as reflected in any of the financial statements
contained in the Disclosure Documents, or (C) if not continued in the future,
might adversely affect the assets, business, operations or prospects of the
Company;
(xii) to the best of our knowledge, the minute books of the Company
contain a complete summary of all meetings and actions of the directors and
stockholders of the Company since the time of its incorporation (and of any
predecessor to the Company) and reflect all transactions referred to in such
minutes accurately in all respects;
(xiii) 217,704 shares of the Company's common stock owned by John E.
Rayl, evidenced by certificate number CS00600 and dated November 16, 1992 (the
"217,704 Shares"), being a part of the shares pledged by Mr. Rayl under the
Rayl Pledge Agreement, were acquired by Mr. Rayl on or about October 10, 1992,
solely in exchange for a note (the "Note") of the Company held by Mr. Rayl and
surrendered by Mr. Rayl for the 217,704 Shares. The Note had been acquired by
Mr. Rayl on or about July 1, 1991, and the full consideration paid by Mr. Rayl
for said Note was paid by him on or about the date of such acquisition.
Accordingly, for purposes of paragraph (d)(3)(ii) of Rule 144 promulgated under
the Securities Act of 1933, Mr. Rayl is deemed to have acquired the 217,704
Shares at the same time as he acquired the Note, or, in this case, on or about
July 1, 1991. In rendering the foregoing opinion, we have relied upon the
representations made by Mr. Rayl with respect to his acquisition of the Note
and the 217,704 Shares and have examined the Company's minute book and
documents underlying Mr. Rayl's acquisition of the Note, but have not made
any independent verification of said transaction;
(xiv) 100,000 shares of the Company's common stock owned by John E.
Rayl, evidenced by certificates number CS00412 through CS00416, inclusive, and
each dated June 12, 1992 (the "100,000 Shares"), being a part of the shares
pledged by Mr. Rayl under the Rayl Pledge Agreement, were acquired by Mr. Rayl
on or about May 29, 1992, in a transaction involving his
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exercise of registered warrants of the Company. Accordingly, for purposes of
Rule 144, Mr. Rayl has owned the 100,000 Shares for more than two but less than
three years; and
(xv) 382,601 shares of the Company's common stock owned by John E. Rayl,
evidenced by certificates number CS00397 through CS00411, inclusive, and each
dated June 12, 1992, and by certificates number CS00603 through CS00607,
inclusive, and each dated November 16, 1992 (the "382,601 Shares"), being a
part of the shares pledged by Mr. Rayl under the Rayl Pledge Agreement, were
acquired by Mr. Rayl in a series of transactions each of which were completed
more than three years prior to the date of this letter. Accordingly, for
purposes of Rule 144, Mr. Rayl has owned the 382,601 Shares for more than three
years. In rendering the foregoing opinion, we have relied solely upon the
representations made by Mr. Rayl with respect to his acquisition of the 382,601
Shares, and have not made any independent verification of said transactions;
however, nothing has come to our attention which would lead us to believe that
any portion or all of the 382,601 Shares may have been owned by Mr. Rayl for
less than three years.
In closing, we call your attention to the fact that the members of this firm
are licensed to practice law in the State of Ohio. Accordingly, we express no
opinion with respect to the laws of any jurisdiction other than the laws of
the State of Ohio and the United States of America.
/s/ Cloud Koenig & Owen
Cloud Koenig & Owen