Exhibit 10.8
THE SECURITIES TO WHICH THIS STOCK PURCHASE AGREEMENT RELATES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS ("BLUE SKY LAWS"), AND MAY NOT BE OFFERED OR
SOLD WITHOUT REGISTRATION UNDER THE SECURITIES ACT, AND AS REQUIRED BY BLUE SKY
LAWS IN EFFECT AS TO SUCH OFFER AND SALE, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION UNDER FEDERAL AND STATE LAW IS AVAILABLE.
PHASECOM, INC.
FORM OF D98 SERIES B PREFERRED STOCK PURCHASE AGREEMENT
THIS D98 SERIES B PREFERRED STOCK PURCHASE AGREEMENT (this
"Agreement") is entered into as of the date set forth on the signature page to
this Agreement, by and between PHASECOM, INC., a Delaware corporation (the
"Corporation" or "PhaseCom"), and the purchaser whose name and address are shown
on the signature page to this Agreement (the "Purchaser").
RECITALS
A. PhaseCom has issued and outstanding forty-five (45) day notes in the
aggregate amount of Two Hundred Ninety-seven Thousand Dollars ($297,000)
(collectively, the "Demand Notes"), which PhaseCom issued under the
understanding that they would be converted into the next financing of PhaseCom.
B. In order to restructure PhaseCom's obligations under the Demand
Notes and to raise other financing, PhaseCom has duly authorized the issuance,
sale and delivery of up to one million (1,000,000) shares (the "Offered Shares")
of its Series B Preferred Stock, par value $0.001 per share (the "Series B
Stock") and having such rights as set forth in the Certificate of Incorporation
of PhaseCom, as amended and restated to date, attached hereto as Exhibit A (the
"Certificate"), for an aggregate investment of One Million Dollars ($1,000,000).
PhaseCom is reserving the right to accept over-subscriptions up to a total
aggregate issuance of three million (3,000,000) shares of Series B Stock, plus
any and all conversion of debt up to an additional eight million (8,000,000)
shares.
C. The Offered Shares are being offered and sold by PhaseCom to
Purchaser in reliance upon and in conformity with an exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to Regulation D under the Securities Act
("Regulation D").
D. PhaseCom desires to offer and sell to Purchaser, and Purchaser
desires to buy from PhaseCom, the Purchased Shares (as defined herein) in
accordance with the terms and conditions of this Agreement.
E. Additionally, in the event that a Purchaser also holds a promissory
note and the
amount paid by Purchaser under this Agreement is at least equal to the lesser of
One Hundred Thousand Dollars ($100,000), or ten percent (10%) of the principal
amount of that obligation, then the Purchaser may take advantage of conversion
rights set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
1. AGREEMENT TO SELL AND PURCHASE THE PURCHASED SHARES.
a. SALE AND PURCHASE OF PURCHASED SHARES. On the basis of the
representa tions, warranties and agreements contained in this Agreement, but
subject to the terms and condi tions hereof, the Corporation agrees to issue and
sell to Purchaser, and Purchaser agrees to purchase from the Corporation, on the
Closing Date (as defined in Section 1.c. herein), the number of shares set out
opposite Purchaser's address on the signature page to this Agreement (the
"Purchased Shares"). The price for the Purchased Shares shall be United States
One Dollar (US$1.00) per Purchased Share, and in exchange for receipt of the
Purchased Shares, Purchaser shall pay to the Corporation the amount set out
opposite Purchaser's address on the signature page to this Agreement (the
"Purchase Price"). Purchaser may provide the Purchase Price with delivery of
cash or cancellation of a Demand Note. The amount applied to the Purchase Price
for a Purchaser canceling a Demand Note shall equal the outstanding principal
balance and accrued interest of the Demand Note as of the Closing Date, unless
otherwise indicated on the signature page.
b. OTHER OFFERED SHARES. The Corporation intends to offer and
sell Offered Shares to other investors (together with Purchaser, the
"Purchasers") pursuant to separate substantially identical purchase agreements.
c. PAYMENT. Payment of the Purchase Price shall be made by
Purchaser on the Closing Date either by (i) wire transfer of immediately
available funds in United States Dollars, or (ii) by such other means as shall
be mutually agreed upon by the Corporation and Purchaser,
d. CLOSING. The closing of the sale and purchase of the
Purchased Shares (the "Closing") shall be held at the offices of the
Corporation's counsel, Venture Counsel Associates, LLP ("VCA"), located at 0000
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxxxx 00000 at 2:00 p.m. local time
on or about December 1, 1998, or at such other place and at such other time and
from time to time as shall be mutually agreed upon by the Corporation and
Purchaser (the "Closing Date").
e. DELIVERY. Within thirty (30) days after the Closing, the
Corporation shall deliver to Purchaser one or more certificates representing the
Purchased Shares, each registered in the name of Purchaser, or its nominee,
against payment of the Purchase Price therefor in immediately available funds to
the account of the Corporation designated in Section 2(b) of this
Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to Purchaser as follows:
a. CORPORATE ORGANIZATION AND STANDING. The Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and authority to carry on
its business as presently conducted.
b. ISSUANCE AND DELIVERY OF THE PURCHASED SHARES. As of the
Closing, the offer, issuance, sale and delivery of the Purchased Shares in
accordance with this Agreement will have been duly authorized by all requisite
corporate action of the Corporation. As of the Closing, the Purchased Shares
will be duly and validly issued and outstanding, fully paid and non-assessable.
This Agreement, when executed and delivered by the Corporation, shall constitute
a valid and binding obligation of the Corporation, enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or affecting creditors' rights generally and by general equitable principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
c. CAPITALIZATION PRIOR TO CLOSING. Immediately prior to the
Closing, the Corporation's authorized capital stock shall include only two (2)
authorized classes of capital stock consisting of (A) thirty-five million
(35,000,000) shares of Preferred Stock, six million (6,000,000) shares of which
have been designated as Series A Preferred Stock, and fifteen million
(15,000,000) shares of which have been designated as Series B Preferred Stock;
and (B) one hundred million (100,000,000) shares of Common Stock. Immediately
prior to the Closing Date (not taking into account the securities issued at the
Closing), the Corporation will have nine million sixty-nine thousand seven
hundred fifty-nine (9,069,759) shares of Common Stock outstanding; one million
six hundred five thousand two hundred thirty-three (1,605,233) shares of Series
A Preferred Stock outstanding; a total of three million two hundred ten thousand
four hundred sixty-six (3,210,466) Shares of Common Stock subject to issuance
upon conversion of the Series A Preferred Stock; and up to (V) one million two
hundred thirty-two thousand forty-two (1,232,042) shares of Common Stock subject
to issuance pursuant to outstanding options granted or pending options to be
granted to employees under stock plans, (W) three million five hundred
thirty-nine thousand four hundred seventy-nine (3,539,479) shares of Common
Stock subject to issuance pursuant to outstanding warrants issued to investors;
(X) one hundred forty-one thousand three hundred sixty-five (141,365) shares of
Series A Convertible Preferred Stock (the "Note Preferred Shares") subject to
issuance upon conversion of outstanding convertible notes; (Y) two hundred
eighty-two thousand seven hundred thirty-one (282,731) shares of Common Stock
subject to issuance upon conversion of the Note Preferred Shares; and (Z) three
million one hundred thirty-seven thousand seven hundred eighty-nine (3,137,789)
shares of Common Stock subject to issuance upon conversion of outstanding
convertible notes.
d. TAX IMPLICATIONS. The Corporation makes no representation
with respect to the tax implications to the Purchaser in connection with its
purchase of its Purchased Shares hereunder.
e. SUBSIDIARIES. The Corporation does not own any of the
issued and outstanding capital stock of any other company, other than PhaseCom,
Ltd., an Israeli company ("Subsidiary").
f. FINANCIAL STATEMENTS. The Corporation has furnished
Purchaser with the financial statements attached hereto in Exhibit B (the
"Financial Statements"). The Financial Statements are true and correct in all
material respects, are in accordance with the books and records of the
Corporation, and fairly and accurately present in all material respects the
financial position of the Corporation as of such dates and the results of its
operations for the periods then ended.
3. ADDITIONAL INFORMATION. The Corporation will make available to
Purchaser prior to the Closing Date the opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of the Purchased
Shares and to obtain any additional information that the Corporation possesses
or can acquire without unreasonable effort or expense that is necessary to
verify the accuracy of the information furnished in accordance herewith.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER. Purchaser
hereby represents, warrants and covenants to the Corporation as follows:
a. COMPLIANCE WITH SECURITIES LAWS. Purchaser understands and
acknowledges that the Purchased Shares have not been registered under the
Securities Act by reason of a specific exemption from the registration
provisions thereof which depends upon, among other things, the bona fide nature
of the investment as expressed herein.
b. STATUS OF PURCHASER.
i. ACCREDITED INVESTOR. Purchaser is an
"accredited investor" (as defined in Regulation D, which definition is set out
in Exhibit C attached hereto).
ii. INVESTMENT. Purchaser is purchasing the
Purchased Shares for its own account for investment purposes and not with a view
to, or for resale in connection with, any distribution thereof.
iii. KNOWLEDGE AND EXPERIENCE. Purchaser has
such knowledge and experience in financial and business matters, including
investments in companies in the development stage, that it is qualified to make
decisions with respect to investments in restricted securities such the
Purchased Shares, and has requested, received, reviewed and considered all
information it deems relevant in making a decision to execute this Agreement and
to purchase the Purchased Shares. Purchaser acknowledges that it is capable of
evaluating the merits and risks of the investment in the Purchased Shares and it
is able to bear the economic risk of such investment.
iv. ACCESS TO INFORMATION. Purchaser
acknowledges that the Corporation has made available to Purchaser the
opportunity to (A) discuss the Corporation's business, management and financial
affairs with its management, (B) ask questions and receive
answers concerning the terms and conditions of the offering of the Purchased
Shares, and (C) obtain any additional information that the Corporation possesses
or can acquire without unreasonable effort or expense that is necessary to
verify the accuracy of the information furnished in accordance herewith or to
decide whether or not to purchase the Purchased Shares. Purchaser acknowledges,
warrants and agrees that Purchaser has received sufficient information to enable
Purchaser to make the investment contemplated in this Agreement. Purchaser
acknowledges that no other representation or warranty has been made by the
Corporation or any agent thereof except as set forth in this Agreement.
v. RISK OF INVESTMENT. Purchaser understands
that an investment in the Corporation involves a high degree of risk and is
suitable only for investors who can afford a loss of their entire investment and
who have no need for liquidity from their investment.
vi. SUITABILITY. Purchaser has carefully
considered and has, to the extent Purchaser deems necessary, discussed with
Purchaser's own professional legal, tax and financial advisers the suitability
of an investment in the Purchased Shares for Purchaser's particular tax and
financial situation, and Purchaser has determined that the Purchased Shares are
a suitable investment.
vii. NO PUBLIC MARKET. Purchaser understands
that no public market now exists for the Purchased Shares or any of the
Corporation's securities and that it is uncertain whether a public market will
ever exist for any such Purchased Shares.
c. RESTRICTIONS ON RE-SALE.
i. RESTRICTIONS ON RE-SALES. Purchaser
understands and acknowledges that because the Purchased Shares have not been
registered under the Securities Act, such Purchased Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. Purchaser further understands and
acknowledges that the Securities Act prohibits resales of securities except
pursuant to an effective registration statement or an exemption from
registration for which such securities and Purchaser qualifies. Purchaser
understands and acknowledges that there can be no assurance that Purchaser will
be able to qualify for such an exemption from registration.
ii. COMPLIANCE WITH SECURITIES ACT. Purchaser
will not, directly or indirectly, voluntarily offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) its rights under this Agreement or the Purchased
Shares or any interest therein otherwise than in compliance with the Securities
Act, any applicable state securities or blue sky laws, and the rules and
regulations promulgated thereunder.
d. PUBLIC OFFERING LOCK-UP. In connection with any
underwritten public registration of the Corporation's securities, Purchaser (and
any transferee of Purchaser) agrees,
upon the request of the Corporation or the underwriter(s) managing such
underwritten offering of the Corporation's securities, not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any Purchased Share, or any other securities of the Corporation
heretofore or hereafter acquired by Purchaser (other than those included in
the registration) without the prior written consent of the Corporation and
such underwriter(s), as the case may be, for a period of time, not to exceed
one hundred eighty (180) days from the effective date of such registration.
Upon request by the Corporation, Purchaser shall enter into any further
agreement in writing in a form reasonably satisfactory to the Corporation and
such underwriter(s). The Corporation may impose stop-transfer instructions
with respect to the securities subject to the foregoing restrictions until
the end of said 180-day period. All Purchased Shares shall bear an
appropriate legend referencing this lock-up provision.
e. LEGENDS. Purchaser agrees that the instrument representing
the Purchased Shares shall bear the legends substantially in the form set forth
below:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN
THAT CERTAIN D98 STOCK PURCHASE AGREEMENT BETWEEN THE
CORPORATION AND THE ORIGINAL HOLDER HEREOF.
f. DUE AUTHORIZATION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT. Purchaser has full right, power, and authority to enter into this
Agreement and to consummate the transactions contemplated hereby; if Purchaser
is a company or corporation, the execution, delivery and performance of this
Agreement by Purchaser have been duly authorized by all requisite corporate
action of Purchaser. This Agreement, when executed and delivered by Purchaser,
shall constitute a valid and binding obligation of Purchaser, enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting creditors' rights generally and by general equitable
principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
g. GOVERNMENTAL CONSENTS. No consent, approval, order,
authorization or regis tration, qualification, designation, license, declaration
or filing with any governmental authority is required on the part of Purchaser
in connection with the consummation of the transactions contemplated herein.
h. IITSSA COMPLIANCE. Purchaser shall provide to the
Corporation all such
information as is necessary to complete the forms required to be filed by the
Corporation with the U.S. Department of Commerce, Bureau of Economic
Analysis, under the International Investment and Trade in Services Survey
Act, as amended ("IITSSA"), and regulations issued thereunder.
i. TAX IMPLICATIONS. Purchaser has consulted with its tax
advisors as to the tax implications of its investment hereunder. Purchaser
acknowledges that Purchaser is purchasing the Purchased Shares with full
knowledge and understanding of the tax implications of this investment.
j. RELIANCE. Purchaser understands and acknowledges that the
Corporation is relying on the accuracy of the representations and warranties of
Purchaser contained herein to establish compliance with federal and state
securities laws. Purchaser agrees that if any such representation or warranty is
not true and accurate in any respect as of the Closing Date or at any time
thereafter, Purchaser shall immediately notify the Corporation in writing and
shall be cause for recission by the Corporation, at its sole election.
k. REPRESENTATIONS AND WARRANTIES AT THE CLOSING. Each of the
representations and warranties contained in this Section 4 is true and correct
as of the date of this Agreement and will be true and correct as of the Closing
Date.
5. NOTE CONVERSION/WARRANT ISSUANCE.
a. NOTES. The Purchaser may be owed monies by PhaseCom
pursuant to obligations other than Demand Notes ("Debt"). If the Purchaser has
invested, pursuant to this Agreement, an amount equal to the lesser of ten
percent (10%) of the principal amount of such obligations, or One Hundred
Thousand Dollars ($100,000), then the Purchaser may choose to convert all of the
Debt at any time until March 31, 1999. If the Purchaser checks "yes" denoting
the Purchaser's desire to be granted the option to convert the Debt into shares
of Series B Stock on the signature page herein, the Purchaser is also agreeing
to extend the payment due dates of any principal or interest on the Debt owed by
PhaseCom to Purchaser by five (5) months.
b. WARRANTS. The Purchaser shall receive a warrant to purchase
shares of PhaseCom's Common Stock within fifteen (15) days after the Closing.
The warrant shall be in form and substance identical to the warrant attached
hereto as Exhibit D. The number of warrant shares shall be zero (0) if PhaseCom
is able to raise additional equity financing of Two Million Dollars
($2,000,000), or more ("Additional Equity Financing"), after December 15, 1998,
and on or before June 30, 1999. If the Additional Equity financing does not
timely occur, then the number of warrant shares shall be equal to the number of
shares of Series B Preferred Stock purchased hereunder (not including any note
conversions under Section 5.a (above)), multiplied by ten percent (10%), for
each portion of the months after June 30, 1999, that the Additional Equity
Financing has not been completed. The maximum amount of warrant shares is equal
to sixty percent (60%) of the number of shares of Series B Preferred Stock
purchased hereunder. The warrant exercise price shall initially be United States
One Dollar (US$1.00). The warrant may be exercised at any time from June 30,
1999, until December 31, 2001.
6. MISCELLANEOUS.
a. SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby.
b. EXECUTION AND DELIVERY OF OTHER DOCUMENTS. Purchaser agrees
that it will execute and deliver such other documents as may be reasonably
requested by the Corporation to complete the transactions contemplated hereby.
c. SEVERABILITY. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect or limit the validity or
enforceability of the remaining provisions of this Agreement.
d. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
e. INDEMNIFICATION OF AND RELIANCE BY VCA. To the extent that
VCA on behalf of and at the request of or instruction of the Corporation holds
and distributes funds received by Purchaser for purposes of purchasing the
Purchased Shares hereunder, the Corporation and Purchaser agree jointly and
severally to indemnify VCA and each of its agents for, and to hold each of them
harmless against, any loss, liability or expense, incurred without bad faith or
willful misconduct, arising out of or in connection with the holding and
distribution of such funds, as well as the reasonable costs and expenses of
defending against any claim of liability arising therefrom, including but not
limited to reasonable attorneys' fees, and for any interpleader action that the
Corporation and/or Purchaser might bring to resolve perceived or actual
conflicts. The obligations of the Corporation and Purchaser under this Section
shall survive the termination of this Agreement. VCA shall not be required to
expend or risk its own funds or otherwise incur personal financial liability in
holding and distributing such funds and shall have no related fiduciary duty to
either the Corporation or Purchaser. VCA shall be protected and shall incur no
liability for or in respect of any action taken or thing suffered by it in
reliance on any instruction, notice, direction, consent, certificate, affidavit,
statement, or other paper or document believed by it, in good faith and without
bad faith or willful misconduct, to be genuine and to have been passed or signed
by the proper parties.
f. ENTIRE AGREEMENT. This Agreement and the exhibits attached
hereto and the other documents delivered pursuant hereto constitute the full and
entire understanding and agreement between and among the parties with regard to
the subjects hereof and thereof.
g. NOTICE. Any notice, demand, consent or other communication
under this Agreement shall be in writing addressed to the other party at its
address on the signature page to this Agreement, or to such other address as
such party shall have theretofore furnished by like notice, and either served
personally, sent by express, registered or certified first class mail,
postage prepaid, sent by facsimile transmission, or delivered by reputable
commercial courier. Such notice shall be deemed given (i) when so personally
delivered, or (ii) if mailed as aforesaid, seven (7) days after the same
shall have been posted, or (iii) if sent by facsimile transmission, as soon
as the sender receives written or telephonic confirmation that the message
has been received and such facsimile is followed the same day by mailing by
prepaid express, registered or certified mail as set forth herein, or (iv) if
delivered by commercial courier, upon receipt.
h. FINDER'S AND BROKER'S FEES. Each party hereto represents
and warrants that it has retained no finder or broker in connection with the
transactions contemplated by this Agreement, and hereby agrees to indemnify and
to hold the other harmless from any liability for any finder's or broker's fee
to any broker or other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which such indemnifying
person, or any of its employees or representatives, are responsible.
i. CONFLICT OF INTEREST. PURCHASER ACKNOWLEDGES THAT VCA, IS
THE GENERAL CORPORATE COUNSEL TO THE CORPORATION AND WAIVES ANY CONFLICTS
ASSOCIATED THEREWITH, AND HEREBY CONSENTS TO VCA'S ROLE HEREUNDER
NOTWITHSTANDING ITS POSITION AS THE CORPORATION'S LAW FIRM IN NEGOTIATING THE
TERMS AND CONDITIONS OF THIS AGREEMENT AND ALL OTHER ANCILLARY DOCUMENTS IN
CONNECTION HEREWITH.
j. HEADINGS. The headings of the Sections and subsections of
this Agreement are for convenience of reference only and shall not affect the
meaning or interpretation of the contents of this Agreement.
k. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California applicable to
contracts between California residents entered into and to be performed entirely
within the State of California.
l. ARBITRATION. Any dispute between the parties arising out of
this Agreement shall be submitted to final and binding arbitration in the City
of Santa Xxxxx, County of Santa Xxxxx, State of California, under the Commercial
Arbitration Rules of the American Arbitration Association then in effect, upon
written notification and demand of either party therefor. In the event either
party demands such arbitration, the American Arbitration Association shall be
requested to submit a list of prospective arbitrators consisting of persons
experienced in matters involving securities offerings. The provisions of
California Code of Civil Procedure ss.1283.05 and the laws of the State of
California are incorporated herein and shall be applicable to the arbitration.
In making the award, the arbitrator shall award recovery of costs and expenses
of the arbitration and reasonable attorneys' fees to the prevailing party. Any
award may be entered as a judgment in any court of competent jurisdiction.
Should judicial proceedings be commenced to enforce or carry out this provision
or any arbitration award, the prevailing party in such proceedings shall be
entitled to reasonable attorneys' fees and costs in addition to other relief.
Either party shall have the right, prior to receiving an arbitration award, to
obtain preliminary relief from a court of competent jurisdiction to avoid injury
or prejudice to that party.
m. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one
instrument.
n. FACSIMILE SIGNATURES. The parties shall be entitled to rely
upon and enforce a facsimile of any authorized signature as if it were the
original.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of November 16, 1998.
PHASECOM, INC. PURCHASER'S NAME:
a Delaware corporation
By:
----------------------------------- ------------------------------
Xxxxxxx X. Xxxxxxx, Secretary ------------------------------
00000 Xxxxxxx Xxxxx Xxxx., 0xx Xx. ------------------------------
Xxxxxxxxx, XX 00000
Duly executed by:
------------------------------
(Signature)
------------------------------
(Print Name & Title)
Scheduled Closing Date: December 1, 1998
Purchase Price: PURCHASER'S ADDRESS:
$
------------------------------ ------------------------------
Number of Shares: ------------------------------
------------------------------
------------------------------ ------------------------------
DEFERRAL OF NOTES
The undersigned agrees to defer the principal and interest payments due
on all notes owed by PhaseCom to Purchaser by five (5) months, in exchange for
the right at any time between the date hereof and March 31, 1999, to convert all
of the principal and interest due under these obligations to Series B Stock.
Yes No
----- -----
CONVERSION OF 45-DAY DEMAND NOTE(S)
The undersigned agrees to cancel its Demand Note(s) (principal and
accrued interest) through December 1, 1998, in exchange for Series B Stock
pursuant to the foregoing.
Yes No
----- -----
Purchased Shares registration instructions:
Name of Shareholder:
-------------------------------------------------------
Address of Shareholder:
----------------------------------------------------
----------------------------------------------------
EXHIBIT A
TO
PURCHASE AGREEMENT
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The Amended and Restated Certificate of Incorporation of the
Corporation is set forth on the following pages.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PHASECOM, INC.
PHASECOM, INC., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), hereby certifies:
FIRST: The name of the Corporation is PHASECOM, INC., that the original
Certificate of Incorporation of the Corporation was filed with the Secretary of
State of the State of Delaware on March 21, 1996; that a Certificate of
Amendment of Certificate of Incorporation of PhaseCom, Inc. was filed on
February 13, 1998; and that a Certificate of Amendment of Certificate of
Incorporation of PhaseCom, Inc. was filed on September 15, 1998 (collectively,
"Certificate of Incorporation").
SECOND: Pursuant to Section 245 of the General Corporation Law of the
State of Delaware, this Amended and Restated Certificate of Incorporation amends
and restates the provisions of the Certificate of Incorporation. This Amended
and Restated Certif icate of Incorporation was duly approved by the
Corporation's Board of Directors, and was duly approved by the holders of the
requisite number of shares of the Corporation in accordance with Sections 242
and 245 of the Delaware General Corporation Law. The total number of outstanding
shares of Common Stock and Series A Preferred Stock entitled to vote with
respect to this amendment and restatement was nine million sixty-nine thousand
seven hundred fifty-nine (9,069,759) shares, and one million six hundred five
thousand two hundred thirty-three (1,605,233) shares, respectively. The number
of shares voting in favor of such amendment and restatement equaled or exceeded
the vote required, such required vote being a majority of the outstanding shares
of Common Stock and Series A Preferred Stock, each voting as a separate class.
THIRD: The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety
as follows:
"VI.
The name of this corporation is PHASECOM, INC. (this "Corporation").
VII.
The address of the registered office of this Corporation in the State
of Delaware and County of New Castle shall be 0000 Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxxxxxx, 00000. The name
of its registered agent at that address is PHS Corporate Services, Inc.
VIII.
The nature of the business or purposes to be conducted or promoted by
this Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
IX.
A. AUTHORIZED SHARES. This Corporation is authorized to issue two
classes of shares, to be designated Common Stock and Preferred Stock,
respectively. This Corporation is authorized to issue one hundred million
(100,000,000) shares of Common Stock with a par value of $0.0001 per share and
thirty-five million (35,000,000) shares of Preferred Stock with a par value of
$0.001 per share. The Preferred Stock authorized by this Certificate of
Incorporation shall be issued from time to time in one or more series.
B. AUTHORIZED SHARES - PREFERRED STOCK. Within the limits and
restrictions stated in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constitu ting any series of Preferred
Stock, the Board of Directors may increase or decrease (but neither above the
total number of authorized shares of the class, nor below the number of shares
of such series, then outstanding) the number of shares of any such series
subsequent to the issue of shares of that series. In addition, the Board of
Directors is authorized, subject to limita tions prescribed by law and the
provisions of Article D, to provide for the issuance of the shares of Preferred
Stock in series, and by filing a certificate pursuant to the applicable law of
the State of Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions thereof.
The authority of the Board with respect to each series shall include,
but not be limited to, determination of the following:
i) The number of shares constituting that series and the
distinctive designation of that series;
ii) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any,
of payment of dividends on shares of that series;
iii) Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such voting
rights;
iv) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;
v) Whether or not shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemp tion, including the date or
date upon or after which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under different conditions
and at different redemption dates;
vi) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
vii) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of this
Corporation, and the relative rights or priority, if any, of payment of shares
of that series; and
viii) Any other relative rights, preferences and limitations
of that series.
C. AUTHORIZED SHARES - SERIES A PREFERRED STOCK AND SERIES B PREFERRED
STOCK. The initial two series of Preferred Stock shall be comprised of an
aggregate total of twenty-one million (21,000,000) shares, of which six million
(6,000,000) shares shall be designated "Series A Convertible Preferred Stock"
(also referred to herein as "Series A Preferred Stock" or "Series A Stock"), and
fifteen million (15,000,000) shares shall be designated "Series B Convertible
Preferred Stock" (also referred to herein as "Series B Preferred Stock" or
"Series B Stock").
D. ATTRIBUTES OF SERIES A STOCK AND SERIES B STOCK. The rights,
preferences, privileges and restrictions of the Series A Stock and Series B
Stock and of the holders thereof shall be as follows:
1. DIVIDENDS.
a. SERIES A STOCK RIGHT TO CASH DIVIDENDS.
Each holder of outstanding shares of Series A Stock shall be entitled to
receive, when and if declared by the Board of Directors and out of any assets
legally available therefor, non-cumulative dividends in cash in an amount equal
to $0.0432 per share of
Series A Stock per annum (the "Series A Preferential Dividend"), payable in
cash during each fiscal year of this Corporation and in preference to any
declaration or payment (payable other than in Common Stock) to the Common
Stock (but not without the holders of Series B Stock first receiving the
Series B Preferential Dividend (as defined below).
b. SERIES B STOCK RIGHT TO CASH DIVIDENDS.
Each holder of outstanding shares of Series B Stock shall be entitled to
receive, when and if declared by the Board of Directors and out of any assets at
the time legally available therefor, non-cumulative dividends in cash in an
amount equal to $0.0800 per share of Series B Stock per annum (the "Series B
Preferential Dividend"), payable in cash during each fiscal year of this
Corporation and in preference to any declaration or payment (payable other than
in Common Stock) to the Common Stock and Series A Stock.
c. PARTIAL CASH PAYMENT. If the Board of
Directors shall declare a dividend on the Series A Stock or Series B Stock and
the amount available for payment thereof is insufficient to permit the payment
of the full preferential amounts required to be paid to the holders of
outstanding shares of Series A Stock and/or Series B Stock, then the amount
available for such dividend payments shall be distributed ratably first among
the holders of shares of Series B Stock according to the number of issued and
outstanding shares of Series B Stock held by each such holder until each such
holder has received its Series B Preferen tial Dividend in full, then the amount
available for such dividend payments shall be distributed ratably among the
holders of shares of Series A Stock according to the number of issued and
outstanding shares of Series A Stock held by each such holder until each such
holder has received its Series A Preferential Dividend in full.
d. DIVIDENDS AFTER PAYMENT OF PREFERENTIAL
DIVIDENDS. After the holders of record of the Series A Stock and Series B Stock
have been paid their Preferential Dividends in full, then the holders of record
of Series A Stock, Series B Stock and Common Stock shall share ratably in any
additional dividends during such fiscal year on an as converted basis (i.e, the
number of shares of Common Stock which would be outstanding if the Series A
Stock and Series B Stock were converted to Common Stock).
e. DIVIDEND ADJUSTMENT. The Series A
Preferential Dividend and Series B Preferential Dividend amounts shall be
appropriately adjusted for any stock dividends, combinations and splits, as
applicable.
2. PREFERENCE ON LIQUIDATION.
a. SERIES A STOCK PREFERENCE PRICE. In the
event of any liquidation, dissolution or winding up of this Corporation,
whether voluntary or involuntary (a "Liquidation Event") and after payment of
the "Series B Liquidation Price" (as defined below) and after payment of the
"Series B to Common Liquidation Price" (as defined below), the holders of the
outstanding shares of Series A Stock shall be entitled to be paid out of the
assets of this Corporation available for distribution to its shareholders,
whether from capital, surplus or earnings, before any payment is made in
respect of the outstanding shares of Common Stock or any other equity
security of this Corporation of a lesser priority than the Series A Stock in
an amount equal to Four Dollars and Sixty Cents ($4.60) per share plus any
declared but unpaid dividends on each such share (the "Series A Liquidation
Price").
b. SERIES B STOCK PREFERENCE PRICE. Before
payment of any portion of the Series A Liquidation Price or the Series B to
Common Stock Liquidation Price, in the event of a Liquidation Event, the holders
of the outstanding shares of Series B Stock shall be entitled to be paid out of
the assets of this Corporation available for distribution to its shareholders,
whether from capital, surplus or earnings, before any payment is made in respect
of the outstanding shares of Common Stock, Series A Stock or any other equity
security of this Corporation of a lesser priority than the Series B Stock in an
amount equal to One Dollar and Fifty Cents ($1.50) per share, plus any declared
but unpaid dividends on each such share (the "Series B Liquidation Price").
c. SERIES B TO COMMON STOCK LIQUIDATION PRICE.
Before payment of any portion of the Series A Liquidation Prefer ence Price, and
after payment of the Series B Liquidation Price, in the event of a Liquidation
Event, the holders of the outstanding shares of Series B Stock, Series A Stock,
and Common Stock shall each be entitled to be paid out of the assets of this
Corporation available for distribution to its shareholders, whether from
capital, surplus or earnings, before any further payment is made in respect of
the outstanding shares of Series A Stock or any other equity security of this
Corporation, an amount equal to Forty Cents ($0.40) per share (the "Series B to
Common Stock Liquidation Price"), as if all Series A Preferred Stock and all
Series B Preferred Stock had been converted into Common Stock as of the date of
the Liquidation Event.
d. PARTIAL PAYMENT. If, upon a Liquidation
Event, the assets of this Corporation available for distribution to its
shareholders shall be insufficient to pay the full Liquidation Prices required
to be paid to the holders of the
outstanding shares of Series A Stock, the holders of the outstanding shares
of Series B Stock, and the holders of the outstanding shares of Common Stock,
then all of the assets of this Corporation legally available for distribution
to the holders of equity securities shall be dis tributed ratably: first,
among the holders of the outstanding shares of Series B Stock based upon
their Liquidation Price until payment in full of the Series B Liquidation
Price on all Series B Stock; next, ratably to the holders of Series B Stock,
Series A Stock, and Common Stock based upon an as converted to Common Stock
basis, the payment in full of the Series B to Common Stock Liquidation Price;
and then ratably among the holders of the outstanding shares of Series A
Stock until payment in full of their Series A Liquidation Price on all Series
A Stock.
e. AFTER PAYMENT OF PREFERRED LIQUIDATION
PRICES. After the holders of record of the Series A Stock, Series B Stock, and
Common Stock have been paid their Series A Liquidation Price Series B to Common
Stock Liquidation Price, and Series B Liquidation Price, respectively, in full,
then the remaining assets of this Corporation shall be distributed to the
holders of shares of Common Stock, Series A Preferred Stock and Series B
Preferred Stock in an equal amount per share as if all Series A Preferred Stock
and Series B Preferred Stock had been converted into Common Stock as of the date
of the Liquidation Event.
f. LIQUIDATION ADJUSTMENT. Notwithstanding the
foregoing, the amount to be paid for each share of Series A Preferred Stock,
Series B Preferred Stock and Common Stock upon a Liquidation Event shall be
appropriately adjusted for any combination(s), stock split(s), stock
distribution(s) or divi dend(s) with respect to such shares.
3. CERTAIN TRANSACTIONS. Notwithstanding anything to the
contrary in Section D.2 (above), the following shall be deemed to be a
Liquidation Event within the meaning of this Section D with respect to the
Series A Stock, Series B Stock and Common Stock: (A) a sale of all or
substantially all of this Corporation's assets; or (B) a consolidation, merger
or reorganization of this Corporation with or into any other corporation or
corporations, unless such event results in the Common Stock equivalent value of
this Corporation's stock as a result of such event and determined as if all
Series A Stock and all Series B Stock had converted to Common Stock, is Three
Dollars ($3.00), or more, per share (adjusted for stock split(s),
combination(s), reclassification(s), and the like).
4. CONSENT TO CERTAIN DISTRIBUTIONS. Each holder of
outstanding shares of Series A Stock and Series B Stock, shall by virtue of its
acceptance of a stock certificate evidencing such shares, be treated as having
consented to distributions made, or to be made, by this Corporation for the
repurchase of shares of Common Stock from directors or employees of, or
consultants or advisers to, this Corporation upon the termination of employment
by, or service to, this Corporation or any subsidiary of this Corporation or
otherwise, if such repurchase is made in accordance with an agreement approved
by this Corporation's Board of Directors authorizing the right of said
repurchase.
E. VOTING. The holders of the outstanding shares of Common Stock
shall each have one (1) vote per each share owned of Common Stock owned by
such stockholder. The holders of the outstanding shares of Series A Preferred
Stock and Series B Preferred Stock shall be entitled to cast that number of
votes equal to the number of shares of Common Stock into which such holder's
shares of Series A Preferred Stock and Series B Preferred Stock are
convertible immediately after the close of business on the record date fixed
for such meeting or, if no such record date is established, the date such
vote is taken or the effective date of such written consent.
F. CONVERSION. The holders of the outstanding shares of
Series A Stock and Series B Stock shall have the conversion rights
set forth below (the "Conversion Rights"):
1. SERIES A STOCK CONVERSION RIGHTS. Each share of Series A
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, at the office of this Corporation or
any transfer agent for the shares of Series A Stock, or Common Stock, into that
number of fully paid and nonassessable shares of Common Stock which is equal to
the quotient obtained by dividing (A) Five Dollars and Forty Cents ($5.40), by
(B) the Series A Conversion Price, immediately prior to the time of such
conversion. The "Series A Conversion Price" shall initially be Two Dollars and
Seventy Cents ($2.70) (as adjusted from time to time as hereinafter provided).
2. SERIES B STOCK CONVERSION RIGHTS. Each share of Series B
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such shares, at the office of this Corporation or
any transfer agent for the shares of Series B Stock, or Common Stock, into that
number of fully paid and nonassessable shares of Common Stock which is equal to
the quotient obtained by dividing (A) One Dollar ($1.00), by (B) the Series B
Conversion Price, immediately prior to the time of such conversion. The "Series
B Conversion Price" shall initially be One Dollar ($1.00) (as adjusted from time
to time as hereinafter provided).
3. AUTOMATIC CONVERSION.
a. PREFERRED STOCK. Each outstanding share
of Series A Stock and Series B Stock shall automatically be converted into
shares of Common Stock based upon their respective Conversion Prices upon (i)
the closing of an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offering and sale of shares of Common Stock for the account of this
Corporation (other than a registration statement effected solely to implement
an employee benefit plan, a transaction in which Rule 145 of the Securities
and Exchange Commission is applicable or any other form or type of
registration in which the shares of Common Stock issuable upon conversion of
the shares of Series A Stock or Series B Stock cannot be included pursuant to
the Securities and Exchange Commission rules or practices) resulting in
aggregate proceeds to this Corporation (before the payment of underwriting
discounts and commissions and the expense of the offering) in excess of Seven
Million Five Hundred Thousand Dollars ($7,500,000), or (ii) a merger or
consolidation with or into another corporation or a sale of all the shares of
Common Stock or a sale of all or substantially all of this Corporation's
properties and assets in which the Common Stock equivalent value of this
Corporation's stock as a result of such event and determined as if all Series
A Stock and all Series B Stock had converted to Common Stock, is Three
Dollars ($3.00), or more, per share (adjusted for stock split(s),
combination(s), reclassification(s), and the like).
b. AUTOMATIC CONVERSION MECHANICS. Upon the
occurrence of any event specified in Section F.3.a (above), the outstanding
shares of Series A Stock and Series B Stock shall be converted into shares of
Common Stock, whether or not the certificates representing such shares are
surrendered to this Corporation or its transfer agent; PROVIDED, HOWEVER, that
this Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such conversion unless the certificates
evidencing such shares are either delivered to this Corporation or its transfer
agent as provided below or the holder notifies this Corporation or its transfer
agent that such certifi xxxxx have been lost, stolen or destroyed and executes
an agreement satisfactory to this Corporation indemnifying this Corporation from
any loss incurred by it in connection with the issuance of such certificate.
Upon the occurrence of such automatic conversion of the outstanding shares of
Series A Stock and Series B Stock, the holders of the outstanding shares of
Series A Stock and Series B Stock shall surrender the certificates representing
such shares at the office of this Corporation or to any transfer agent for the
shares of Series A Stock, Series B Stock or Common Stock. There upon, there
shall be issued and delivered to such holder, promptly at such
office and in its name as shown on such surrendered certificate or
certificates, a certificate or certificates for the number of shares of
Common Stock into which the surrendered shares of Series A Stock and Series B
Stock of such holder were con vertible on the date on which such automatic
conversion occurred, and this Corporation shall promptly, pay in cash all
declared but unpaid dividends on the shares of Series A Stock and Series B
Stock so converted.
4. MECHANICS OF NON-AUTOMATIC CONVERSION. Each holder of
outstanding shares of Preferred Stock shall convert, or at the option of the
holders of Preferred Stock, by surrendering the certificate or certificates
therefor, duly endorsed, at the office of this Corporation or of any transfer
agent for the shares of Preferred Stock or Common Stock and shall give
written notice to this Corporation at such office that such holder elects to
convert the same and shall state therein the number of shares of Preferred
Stock being converted. Thereupon, this Corporation shall issue and deliver at
such office to such holder a certificate or certificates for the number of
shares of Common Stock to which such holder is entitled and shall promptly
pay all declared but unpaid dividends on the shares being converted in cash
or, if this Corporation so elects or is legally or financially unable to, pay
in cash, shares of Common Stock (valued at the Common Stock's fair market
value at the time of surrender as determined in good faith by the Board of
Directors), subject to the limitations on the payment of accrued dividends as
set forth in Section D.1 (above). Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the certificate or certificates representing the shares to be
converted, and the person entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock on such date. If the con version is in
connection with an underwritten offer of securities registered pursuant to
the Securities Act of 1933, as amended, the conversion may, at the option of
any holder tendering Series A Stock or Series B Stock for conversion, be
conditioned upon the closing with the underwriter of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive
the Common Stock issuable upon such conversion of the Series A Stock or
Series B Stock shall not be deemed to have converted such Series A Stock or
Series B Stock until immediately prior to the closing of such sale of
securities.
5. ADJUSTMENTS TO SERIES A AND SERIES B CONVERSION
PRICE.
a. ADJUSTMENT FOR STOCK SPLITS AND
COMBINATIONS. If this Corporation at any time or from time to time after the
date this Amended and Restated Certificate of Incorporation is
filed with the Delaware Secretary of State (the "Filing Date") effects a
division of the outstanding shares of Common Stock, the Series A Conversion
Price and the Series B Conversion Price shall be proportionately decreased
and, conversely, if this Corporation at any time, or from time to time, after
the Filing Date combines the outstanding shares of Common Stock, the Series A
Conversion Price and the Series B Conversion Price shall be proportionately
increased. Any adjustment under this Section F.5.a shall be effective on the
close of business on the date such division or combination becomes effective.
b. ADJUSTMENT FOR CERTAIN DIVIDENDS AND
DISTRIBUTIONS. If this Corporation at any time or from time to time after the
Filing Date pays or fixes a record date for the determination of holders of
shares of Common Stock entitled to receive a dividend or other distribution
in the form of shares of Common Stock, or rights or options for the purchase
of, or securities convertible into, Common Stock, then in each such event the
Series A Conversion Price and the Series B Conversion Price shall be
decreased, as of the time of such payment or, in the event a record date is
fixed, as of the close of business on such record date, by multiplying the
Series A Conversion Price and the Series B Conversion Price by a fraction (i)
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the time of such payment or the close of
business on such record date and (ii) the denominator of which shall be (A)
the total number of shares of Common Stock outstanding immediately prior to
the time of such payment or the close of business on such record date plus
(B) the number of shares of Common Stock issuable in payment of such dividend
or distribution or upon exercise of such option or right of conversion;
PROVIDED, HOWEVER, that if a record date is fixed and such dividend is not
fully paid or such other distribution is not fully made on the date fixed
therefor, the Series A Conversion Price and the Series B Conversion Price
shall not be decreased as of the close of business on such record date as
hereinabove provided as to the portion not fully paid or distributed and
thereafter the Series A Conversion Price and the Series B Conversion Price
shall be decreased pursuant to this Section F.5.b as of the date or dates of
actual payment of such dividend or distribution.
c. ADJUSTMENTS FOR OTHER DIVIDENDS AND
DISTRIBUTIONS. If this Corporation at any time or from time to time after the
Filing Date pays, or fixes a record date for the determination of holders of
shares of Common Stock entitled to receive, a dividend or other distribution in
the form of securities of this Corporation other than shares of Common Stock or
rights or options for the purchase of, or securities convertible into, Common
Stock, then in each such event provision shall be made so that the holders of
the outstanding shares of Series A Stock and the holders of the outstanding
shares of
Series B Stock shall receive upon conversion thereof, in addition to the
number of shares of Common Stock receivable thereupon, the amount of
securities of this Corporation which they would have received had their
respective shares of Series A Stock and Series B Stock been converted into
shares of Common Stock on the date of such event and had such holders
thereafter, from the date of such event to and including the actual date of
conversion of their shares, retained such securities, subject to all other
adjustments called for during such period under this Section F with respect
to the rights of the holders of the outstanding shares of Series A Stock and
the holders of the outstanding shares of Series B Stock.
d. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE
AND SUBSTITUTION. If, at any time or from time to time after the Filing Date,
the number of shares of Common Stock issuable upon conversion of the shares
of Series A Stock and Series B Stock is changed into the same or a different
number of shares of any other class or classes of stock or other securities,
whether by recapitalization, reclassification or otherwise (other than a
recapitalization, division or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided for
elsewhere in this Section F), then, in any such event, each holder of
outstanding shares of Series A Stock and each holder of outstanding shares of
Series B Stock shall have the right thereafter to convert such shares of
Series A Stock and Series B Stock into the same kind and amount of stock and
other securities receivable upon such recapitalization, reclassification or
other change, as the maximum number of shares of Common Stock into which such
shares of Series A Stock and Series B Stock could have been converted
immediately prior to such recapitalization, reclassifica tion or change, all
subject to further adjustment as provided herein.
e. REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR
SALES OF ASSETS. If, at any time or from time to time after the Filing Date,
there is a capital reorganization of the Common Stock (other than a
recapitalization, division, combination, reclass ification or exchange of shares
provided for elsewhere in this Section F) or a merger or consolidation of this
Corporation into or with another corporation or a sale of all or substantially
all of this Corporation's properties and assets to any other person, then, as a
part of such capital reorganization, merger, consolidation or sale, provision
shall be made so that the holders of the outstanding shares of Series A Stock
and the holders of the outstanding shares of Series B Stock shall thereafter
receive upon conversion thereof the number of shares of stock or other
securities or property of this Corporation, or
of the successor corporation resulting from such merger or consolidation or
sale, to which a holder of the number of shares of Common Stock into which
their shares of Series A Stock and Series B Stock were convertible would have
been entitled on such capital reorganization, merger, consolidation or sale.
In any such case, appropriate adjustment shall be made in the application of
the provisions of this Section F with respect to the rights of the holders of
the outstanding shares of Series A Stock and Series B Stock after the capital
reorganization, merger, consolidation, or sale to the end that the provisions
of this Section F (including adjustment of the Series A Conversion Price and
Series B Conversion Price and the number of shares into which the shares of
Series A Stock and Series B Stock may be converted) shall be applicable after
that event and be as nearly equivalent to such Conversion Prices and number
of shares as may be practicable.
f. CERTIFICATE OF ADJUSTMENT. Upon the
occurrence of each adjustment or readjustment of the Series A Conversion Price
or Series B Conversion Price, this Corporation, at its sole expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of Series A Stock or Series B
Stock, as applicable, a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. This Corporation shall, upon the written request at any
time of any holder of Series A Stock or Series B Stock furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the applicable Conversion Price at the time in effect,
and (iii) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the conversion of
Series A Stock or Series B Stock, as the case may be.
g. NOTICES OF RECORD DATE. In the event of
(i) any taking by this Corporation of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution, or (ii) any capital
reorganization of this Corporation, any reclassification or recapitalization of
the capital stock of this Corporation, any merger or consolidation of this
Corporation with or into any other corporation, or any transfer of all or
substantially all of the assets of this Corporation, or any voluntary or
involuntary dissolution, liquidation or winding up of this Corporation, this
Corporation shall mail to each holder of shares of Series A Stock and Series B
Stock at least twenty (20) days prior to the record date specified therein, a
notice specifying (i) the date on which any such record is to be taken for the
purpose of such dividend or distribution and a description of such dividend or
distribution; (ii) the date on which any such reorganization, reclassification,
transfer, xxxxxxx dation, merger, dissolution, liquidation or winding up is
expected to become effective and the specific details thereof; and (iii) the
date, if any, that is to be fixed as to when the holders of record of shares of
Common Stock (or other securities) shall be entitled to exchange their shares of
Common Stock (or other securities) for securities or other property deliverable
upon such reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation or winding up.
h. FRACTIONAL SHARES. No fractional shares of
Common Stock shall be issued upon conversion of the shares of Series A Stock or
Series B Stock. In lieu of any fractional share to which the holder of such
shares would otherwise be entitled, this Corporation shall pay cash equal to the
product of (a) such fraction multiplied by (b) the fair market value of one
share of the Common Stock on the date of conversion. The fair market value shall
be determined by the average trading price of the Common Stock over the past
five (5) trading days, if such a price is available, otherwise it shall be as
determined in good faith by the Board of Directors.
i. RESERVATION OF STOCK ISSUABLE UPON
CONVERSION. This Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of Series A Stock and
Series B Stock, such number of shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares of
Series A Stock and Series B Stock; and if at any time the number of
authorized, but unissued, shares of Common Stock shall not be sufficient to
effect the conversion of all then-outstanding shares of the Series A Stock or
the Series B Stock, in addition to such other remedies as shall be available
to the holder of such stock, this Corporation will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its
authorized, but unissued, shares of Common Stock to such number of shares as
shall be sufficient for such purposes, without the necessity of any
stockholder vote or approval.
j. NOTICES. Any notice required by the
provisions of this Section F to be given to a holder of shares of Series A Stock
or Series B Stock, shall be deemed given upon the earlier of actual receipt or
seventy-two (72) hours after the same has been deposited in the United States
mail, certified or registered mail, return receipt requested, postage prepaid,
addressed to the holder at the address of such holder appearing on the books of
this Corporation.
G. RESTRICTIONS AND LIMITATIONS.
1. CORPORATE ACTION. Except as otherwise required by law, so
long as at least six hundred eighty thousand (680,000) shares of Series A Stock
remain outstanding (adjusted for stock split(s) and combination(s)), this
Corporation shall not, without the vote or written consent of the holders of a
majority of the shares of Series A Stock, voting as a separate class:
a. Increase the authorized number of shares of
Series A Stock,
b. Increase the authorized number of Preferred
Stock,
c. Create any new class or series of shares
having preference over the Series A Stock,
d. Merge, consolidate, or reorganize, where
such merger, consolidation, or reorganization would result, directly or
indirectly, in the change of a majority of the members of the Board of
Directors; or,
e. Sell all, or substantially all, of its
assets or issue more than fifty percent (50%) of this Corporation's Common Stock
in one transaction or series of related transactions.
2. DIVIDENDS. This Corporation shall not, without the vote or
written consent of the holders of a majority of the shares of Series A Stock,
take any action that would constitute the declaring of a dividend for holders of
Series A Stock or Common Stock.
H. REPLACEMENT OF CERTIFICATES. Upon receipt of evidence reasonably
satisfactory to this Corporation of the loss, theft, destruction, or
mutilation of a certificate representing any of the outstanding shares of
Preferred Stock or Common Stock, and, in the case of loss, theft, or
destruction, the execution of an agreement satisfactory to this Corporation
to indemnify this Corporation from any loss incurred by it in connection
therewith, this Corporation will issue a new certificate representing such
shares of Preferred Stock or Common Stock in lieu of such lost, stolen,
destroyed or mutilated certificate.
I. ARRANGEMENT WITH CREDITORS. Whenever a compromise or arrangement is
proposed between this Corporation and its creditors or any class of them and/or
between this Corporation and its stockholders or any class of them any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers
appointed for this Corporation under the provisions of Section 291 of Title 8
of the Delaware Code or on the application of trustees in dissolution or of
any receiver or receivers appointed for this Corporation under the provisions
of Section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths (3/4) in value of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of this Corporation, as the case
may be, agree to any compromise or arrangement and to any reorganization of
this Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
J. FIDUCIARY DUTY. A director of this Corporation shall not be
personally liable to this Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to this Corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; (iii) under Section
174 of the Delaware General Corporation Law; or (iv) for any transaction from
which the director derived an improper personal benefit. If the Delaware
General Corporation Law is amended after the filing of the Certificate of
Incorporation of which this Article V is a part to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of this Corporation shall be eliminated or limited to
the fullest extent permitted by the Delaware General Corporation Law, as so
amended. Any repeal or modification of the foregoing paragraph by the
stockholders of this Corporation shall not adversely affect any right or
protection of a director of this Corporation existing at the time of such
repeal or modification.
X.
A. INDEMNIFICATION.
1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party, or is threatened to be made a party to, or is
involved in, any action, suit or proceeding, whether civil, criminal,
administrative or investigative ("Proceeding"), including, without
limitation, Proceedings by or in the right of this Corporation to procure a
judgment in its favor, by reason of the fact that he or she, or a person for
whom he or she is the legal representative, is or was a director or officer,
employee or agent of this Corporation, or is or was serving at the request of
this Corporation as a director or officer, employee or agent of another
corporation, or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis
of such Proceeding is alleged action in an official capacity as a director,
officer, employee or agent, or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless
by this Corporation to the fullest extent authorized by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent such
amendment permits this Corporation to provide broader indemnification rights
than said law permitted this Corporation to provide prior to such amendment)
against all expenses, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amount paid or to be
paid in settlement) reasonably incurred or suffered by such person in
connection therewith. Such right shall be a contract right and shall include
the right to be paid by this Corporation for expenses incurred in defending
any such Proceeding in advance of its final disposition; PROVIDED, HOWEVER,
that the payment of such expenses incurred by a director or officer of this
Corporation in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of such Pro ceeding, shall
be made only upon delivery to this Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if it
should be determined ultimately that such director or officer is not entitled
to be indemnified under this section, or otherwise.
2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under
Section 1 (above) is not paid in full by this Corporation within ninety (90)
days after a written claim has been received by this Corporation, the
claimant may at any time thereafter bring suit against this Corporation to
recover the unpaid amount of the claim, and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
Proceeding in advance of its final disposition where the required undertaking
has been tendered to this Corporation), that the claimant has not met the
standards of conduct which make it permissible under the General Corporation
Law of the State of Delaware for this Corporation to indemnify the claimant
for the amount claimed, but the burden of proving such defense shall be on
this Corporation. Neither the failure of this Corporation (includ ing its
Board of Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in the General
Corporation Law of the State of Delaware, nor an actual determination by this
Corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that
claimant had not met the applicable standard of conduct.
B. NON-EXCLUSIVITY OF RIGHTS. The rights conferred by Section A.1 and
A.2 (above) shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors, or otherwise.
C. AMENDMENT OR REPEAL. Neither any amendment nor repeal of this
Article V, nor the adoption of any provision of this Corporation's Certificate
of Incorporation inconsistent with this Article V, shall eliminate or reduce the
effect of this Article V, in respect of any matter occurring, or any action or
Proceeding accruing or arising, or that, but for this Article V would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent provision.
XI.
A. DIRECTORS' POWERS. The Directors of this Corporation shall have the
power to adopt, amend or repeal the Bylaws of this Corporation. The management
of the business and the conduct of the affairs of this Corporation shall be
vested in its Board of Directors. The number of directors which shall constitute
the whole Board of Directors shall be fixed exclusively by, or in the manner
provided in, the Bylaws of this Corporation or this Certificate of
Incorporation.
B. CORPORATION EXISTENCE. This Corporation is to have
perpetual existence.
C. ELECTION OF DIRECTORS. The election of the Directors of
this Corporation need not be by written ballot, unless the Bylaws
of this Corporation so shall provide.
XII.
For the management of the business, and for the conduct of the affairs
of this Corporation, and in further definition, limitation and regulation of the
powers of this Corporation, of its directors and of its stockholders or any
class thereof, as the case may be, it is further provided that, effective upon
the closing of a Qualified Public Offering:
A. BOARD CLASSES AND TERMS. The Board of Directors shall be divided
into three (3) classes, designated at Class I, Class II, and Class III,
respectively. Directors shall be assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors. At the first annual
meeting of stockholders following the date of the Qualified Public Offering, the
term of office of the Class I directors shall expire, and Class I directors
shall be elected for a full term of three (3) years. At the second annual
meeting of stockholders following the date of the Qualified Public Offering, the
term of office of the Class II directors shall expire, and Class II directors
shall be elected for a full term of three (3) years). At the third annual
meeting of stockholders following the date of the Qualified Public Offering, the
term of office of the Class III directors shall expire, and Class III directors
shall be elected for a full term of three (3) years). At each succeeding annual
meeting of stockholders, directors shall be elected for a full term of three (3)
years to succeed the directors of the class whose terms expire at such annual
meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his or her successor is duly elected and qualified, or under
his or her death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
B. BOARD VACANCIES. Any vacancies on the Board of Directors resulting
from death, resignation, disqualification, removal, or other causes shall be
filled by either (i) the affirmative vote of the holders of a majority of the
voting power of the then-outstanding shares of voting stock of this Corporation
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class; or (ii) by the affirmative vote of a majority
of the remaining directors then in office, even though less than a quorum of the
Board of Directors. Newly created directorships resulting from any increase in
the number of directors shall, unless the Board of Directors determines by
resolution that any such newly-created directorship shall be filled by the
stockholders, be filled only by the affirmative vote of the
directors then in office, even though less than a quorum of the Board of
Directors. Any director elected in accordance with the preceding sentence shall
hold office for the remainder of the full term of the class of directors in
which the new directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified.
C. BYLAWS. In furtherance, and not in limitation, of the
powers conferred by statute, the Board of Directors is expressly
authorized to make, alter, amend, or repeal the Bylaws of this
Corporation.
1. VOTE.
a. The affirmative vote of sixty-six and two-
thirds percent (66-2/3%) of the voting power of the then-outstanding shares of
Voting Stock, voting together as a single class, shall be required for the
adoption, amendment or repeal of Sections 2.2 (Annual Meeting) and 2.3 (Special
Meeting) of this
Corporation's Bylaws.
b. Any director, or the entire Board of
Directors, may be removed from office at any time (i) with cause by the
affirmative vote of the holders of at least a majority of the voting power of
all of the then-outstanding shares of the voting stock, voting together as a
single class; or (ii) without cause by the affirmative vote of the holders of at
least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of
the then-outstanding shares of the Voting Stock.
2. NO ACTION. No action shall be taken by the stock holders of
this Corporation, except at an annual or special meeting of the stockholders
called in accordance with the Bylaws. The Stockholders shall not take any action
by written consent.
3. STOCKHOLDER NOMINATION. Advance notice of stock holder
nomination for the election of directors and of business to be brought by
stockholders before any meeting of the stockholders of this Corporation shall be
given in the manner provided in the Bylaws of this Corporation.
4. AMENDMENT. Notwithstanding any other provisions of this
Certificate of Incorporation, or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote of the
holders of any particular class or series of the Voting Stock required by law,
this Certificate of Incorporation or any Preferred Stock Designation, the
affirmative vote of the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the voting power of all of the
then-outstanding shares of the Voting Stock, voting together as a single
class, shall be required to alter, amend or repeal this Article VII.
XIII.
This Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in this Certificate, and
all rights conferred upon the stockholders herein are granted subject to this
right."
IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Certificate of Incorporation to be signed and attested by XXXXX XXXXXX,
its Chief Executive Officer, and XXXXXXX X. XXXXXXX, its Secretary, as of
November 30, 1998.
PHASECOM, INC.
BY: ,
----------------------
XXXXX XXXXXX,
Chief Executive Officer
ATTEST: ,
-------------------
XXXXXXX X. XXXXXXX,
Secretary
EXHIBIT B
TO
PURCHASE AGREEMENT
FINANCIAL STATEMENTS
The Financial Statements of the Corporation are set forth on the
following pages.
EXHIBIT C
TO
STOCK PURCHASE AGREEMENT
DEFINITION OF ACCREDITED INVESTOR
ACCREDITED INVESTOR. "Accredited investor" shall mean any person who comes
within any of the following categories as at the Closing Date:
(1) Any bank as defined in section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined in section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); any insurance
company as defined in section 2(13) of the Securities Act; any investment
company registered under the Investment Company Act of 1940 or a business
development company as defined in section 2(a)(48) of that Act; Small Business
Investment Company licensed by the U.S. Small Business Administration under
section 301(c) or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess of $5,000,000; employee
benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974 if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decision made solely by persons that are accredited investors;
(2) Any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
(4) Any director or executive officer of the Corporation;
(5) Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;
(6) Any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the securities offered, whose purchase is
directed by a person who has such
knowledge and experience in financial and business matters that he is capable
of evaluating the merits and risks of the prospective investment; and
(8) Any entity in which all of the equity owners are accredited
investors.
EXHIBIT D
TO
PURCHASE AGREEMENT
WARRANT #98B-3-1__
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR AN OPINION
OF COUNSEL SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH HEREIN AND IN THAT CERTAIN 1998 SERIES B
PREFERRED STOCK PURCHASE AGREEMENT BETWEEN THE CORPORATION AND THE ORIGINAL
HOLDER HEREOF ("PURCHASE AGREEMENT").
1998 SERIES B-3 WARRANT
FOR PAYMENT VALUE RECEIVED, PHASECOM, INC., a Delaware corporation
(the "Corporation"), hereby grants to _________________________ ("Holder"),
subject to the terms herein, the right to purchase from the Corporation up to
the number of shares of the Corporation's Common Stock equal to sixty percent
(60%) of the number of shares of Series B Preferred Stock issued to the
Holder pursuant to the Purchase Agreement (the "Maximum Warrant Shares"). The
number of shares of Series B Preferred Stock purchased by the Holder was .
1. SERIES. This Warrant is one of a duly authorized series of warrants
of the Corporation (which are identical except for the variations necessary to
express the identification numbers, names of the holder, number of common shares
issuable upon exercise thereof and warrant issue dates) designated as its "1998
Series B-3 Warrants."
2. TERM. This Warrant may be exercised in whole, or in part at any
time, and from time to time, from June 30, 1999, through December 31, 2001 (the
"Exercise Period").
3. PURCHASE PRICE/NUMBER OF SHARES. The Warrant Exercise Price for each
Warrant Share purchasable hereunder shall be equal to United States One Dollar
(US$1.00). The number of Warrant Shares shall be zero (0) if PhaseCom is able to
raise additional equity financing of Two Million Dollars ($2,000,000), or more
("Additional Equity Financing"), after December 15, 1998, and on or before June
30, 1999. If the Additional Equity Financing does not timely occur, then the
number of Warrant Shares shall be equal to the number of shares of Series B
Preferred Stock purchased pursuant to the Purchase Agreement (not including any
note conversions under Section 5.a of the Purchase Agreement), multiplied by ten
percent (10%), for each month or portion of a month after June 30, 1999, that
the Additional Equity Financing has not been completed, up to the Maximum
Warrant Shares.
4. EXERCISE OF WARRANT. The purchase rights represented by this Warrant
may be
exercised by the Holder, in whole or in part, in accordance with paragraph 2,
herein before the end of the Exercise Period by surrender of this Warrant at
the principal office of the Corporation in Cupertino, California (or such
other office or agency of the Corporation as may be designated by notice in
writing to the Holder at the address of the Holder appearing on the books of
the Corporation), together with the Notice of Exercise annexed hereto duly
completed and executed on behalf of the Holder accompanied by payment in full
of the amount of the aggregate Warrant Exercise Price in immediately
available funds in United States Dollars. Certificates for shares purchased
hereunder shall be delivered to the Holder within thirty (30) business days
after the date on which this Warrant shall have been exercised as aforesaid,
but Holder shall be deemed the record owner of such Warrant Shares as of and
from the close of business on the date on which this Warrant shall be
surrendered.
5. FRACTIONAL INTEREST. The Corporation shall not be required to issue
any fractional shares on the exercise of this Warrant.
6. WARRANT CONFERS NO RIGHTS OF SHAREHOLDER. Holder shall not have any
rights as a shareholder of the Corporation with regard to the Warrant Shares
prior to actual exercise resulting in the purchase of the Warrant Shares.
7. INVESTMENT REPRESENTATION. Neither this Warrant nor the Warrant
Shares issuable upon the exercise of this Warrant have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under any
applicable state securities laws. Holder acknowledges by acceptance of this
Warrant that (a) it has acquired this Warrant for investment and not with a view
toward distribution; (b) it has a pre-existing personal or business relationship
with the Corporation, or its executive officers, or by reason of its business or
financial experience it has the capacity to protect its own interests in
connection with the transaction; and (c) it is an accredited investor as that
term is defined in Regulation D promulgated under the Securities Act or is note
a U.S. Person as that term is defined in Regulation S promulgated under the
Securities Act. Holder agrees that any Warrant Shares issuable upon exercise of
this Warrant will be acquired for investment and not with a view toward
distribution; and acknowledges that to the extent such Warrant Shares will not
be registered under the Securities Act and applicable state securities laws,
that such Warrant Shares may have to be held indefinitely unless they are
subsequently registered or qualified under the Securities Act and applicable
state securities laws; or, based on an opinion of counsel reasonably
satisfactory to the Corporation, an exemption from such registration and
qualification is available. Holder, by acceptance hereof, consents to the
placement of the following restrictive legends, or similar legends, on each
certificate to be issued to Holder by the Corporation in connection with the
issuance of such Warrant Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH IN THAT CERTAIN 1998 SERIES B-3 NOTE
AND WARRANT PURCHASE AGREEMENT BETWEEN THE CORPORATION AND THE ORIGINAL
HOLDER HEREOF.
8. RESERVATION OF SHARES. The Corporation agrees at all times during
the Exercise Period
to have authorized and reserved, for the exclusive purpose of issuance and
delivery upon exercise of this Warrant, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented hereby.
9. ADJUSTMENT FOR RE-CLASSIFICATION OF CAPITAL STOCK. If the
Corporation at any time during the Exercise Period shall, by subdivision,
combination or re-classification of securities, change any of the securities
to which purchase rights under this Warrant exist under the same or different
number of securities of any class or classes, this Warrant shall thereafter
entitle the Holder to acquire such number and kind of securities as would
have been issuable as a result of such change with respect to the Warrant
Shares immediately prior to such subdivision, combination or
re-classification. If shares of the Corporation's common stock are subdivided
into a greater number of shares of common stock, the purchase price for the
Warrant Shares upon exercise of this Warrant shall be proportionately reduced
and the Warrant Shares shall be proportionately increased; and conversely, if
shares of the Corporation's common stock are combined into a smaller number
of common stock shares, the price shall be proportionately increased, and the
Warrant Shares shall be proportionately decreased.
10. PUBLIC OFFERING LOCK-UP. In connection with any public registration
of this Corporation's securities, the Holder (and any transferee of Holder)
agrees, upon the request of the Corporation or the underwriter(s) managing such
underwritten offering of the Corporation's securities, not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of this Warrant, any of the shares of Common Stock issuable upon exercise of
this Warrant or any other securities of the Corporation heretofore or hereafter
acquired by Holder (other than those included in the registration) without the
prior written consent of the Corporation and such underwriter(s), as the case
may be, for a period of time not to exceed on hundred eighty (180) days from the
effective date of the registration. Upon request by the Corporation, Holder (and
any transferee of Holder) agrees to enter into any further agreement in writing
in a form reasonably satisfactory to the Corporation and such underwriter(s).
The Corporation may impose stop-transfer instructions with respect to the
securities subject to the foregoing restrictions until the end of said 180-day
period. Any shares issued upon exercise of this Warrant shall bear an
appropriate legend referencing this lock-up provision.
11. ASSIGNMENT. With respect to any offer, sale or other disposition of
this Warrant or any underlying securities, the Holder will give written notice
to the Corporation prior thereto, describing briefly the manner thereof,
together with a written opinion of such Holder's counsel, to the effect that
such offer, sale or other distribution may be effected without registration or
qualification (under any applicable federal or state law then in effect).
Furthermore, no such transfer shall be made unless the transferee meets the same
investor suitability standards set forth in Section 7 of this Warrant. Promptly
upon receiving such written notice and reasonably satisfactory opinion, if so
requested, the Corporation, as promptly as practicable, shall notify such Holder
that such Holder may sell or otherwise dispose of this Warrant or the underlying
securities, as the case may be, all in accordance with the terms of the written
notice delivered to the Corporation. If a determination has been made pursuant
to this Section 11 that the opinion of counsel for the Holder is not reasonably
satisfactory to the Corporation, the Corporation shall so notify the Holder
promptly after such determination has been made. Each Warrant thus transferred
shall bear the same legends appearing on this Warrant, and underlying securities
thus transferred shall bear the legends required by Section 7. The Corporation
may impose stop-transfer instructions in connection with such restrictions.
Subject to any restrictions on transfer described elsewhere herein, the rights
and obligations of the Corporation and the Holder of this Warrant shall be
binding upon and benefit the successors, assigns, heirs, administrators and
transferees of the parties hereto.
12. NOTICE. Any notice, demand, consent or other communication
hereunder shall be in writing addressed to the other party at its principal
office or, in respect of Holder, as its address as shown on the books of the
Corporation, or to such other address as such party shall have theretofore
furnished by like notice, and either served personally, sent by express,
registered or certified first class mail, postage prepaid, sent by facsimile
transmission, or delivered by reputable commercial courier. Such notice shall be
deemed given (i) when so personally delivered, or (ii) if mailed as aforesaid,
seven (7) days after the same shall have been posted, or (iii) if sent by
facsimile transmission, as soon as sender receives written or telephonic
confirmation that the message has been received and such facsimile is followed
the same day by mailing by prepaid express, registered or certified mail as set
forth herein, or (iv) if delivered by commercial courier, upon receipt.
13. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, applicable to contracts
between California residents entered into and to be performed entirely within
the State of California.
14. ATTORNEYS' FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and disbursements in addition to
any other relief to which such party may be entitled.
15. DESCRIPTIVE HEADINGS. The headings used herein are descriptive only
and for the convenience of identifying provisions, and are not determinative of
the meaning or effect of any such provisions.
Dated: ______________, 1998 PHASECOM, INC.
By:
---------------------------
Xxxxx Xxxxxx, President
NOTICE OF EXERCISE
1998 SERIES B-3 WARRANT
TO: PHASECOM, INC.
(1) The undersigned hereby elects to purchase ________________
shares of Common Stock of PhaseCom, Inc., pursuant to the terms of the
attached 1998 Series B-3 Warrant, and tenders herewith payment in full of the
purchase price for such shares.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party, for
investment, and that the undersigned will not offer, sell or otherwise dispose
of any such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws.
(3) Please issue a certificate representing said shares of Common Stock
in the name of the undersigned.
(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned.
Date: , 199
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(Name)
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(Signature)
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(Print Address)
