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EXHIBIT 10.3
PHOENIX NETWORK, INC.
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SERIES F PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT
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OCTOBER 20, 1995
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PHOENIX NETWORK, INC.
SERIES F PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT
THIS SERIES F PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
("Agreement") is made as of October 20, 1995, by and among PHOENIX NETWORK,
INC., a Delaware corporation (the "Company"), and the investors listed on the
Schedule of Purchasers attached hereto as Exhibit A (the "Purchasers").
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
SECTION 1
PURCHASE AND SALE OF SERIES F PREFERRED STOCK AND WARRANTS
1.1 COMMITMENT TO PURCHASE SERIES F PREFERRED. Subject to the
terms and conditions hereof, at the Closing (as hereinafter defined) the
Company agrees to issue and sell to each Purchaser, and each Purchaser agrees,
severally and not jointly, to purchase from the Company, the number of shares
(collectively, the "Shares") of Series F Preferred Stock, par value $0.01 per
share, of the Company (the "Series F Preferred"), specified opposite such
Purchaser's name on the Schedule of Purchasers attached hereto as Exhibit A,
for the cash purchase price of Ten Dollars ($10.00) per share.
1.2 COMMITMENT TO PURCHASE WARRANTS. The Company agrees to issue
and sell to each Purchaser, and each Purchaser agrees, severally and not
jointly, to purchase a warrant (collectively, the "Warrants"), substantially in
the form attached hereto as Exhibit B, to purchase the number of shares of
common stock of the Company, par value $.001 per share (the "Common Stock"),
set forth opposite such Purchaser's name on the Schedule of Purchasers attached
hereto as Exhibit A at a purchase price of $0.01 per share. The exercise price
of each Warrant shall be $3.00 per share of Common Stock represented by such
Warrant, as adjusted pursuant to the terms of such Warrant.
SECTION 2
CLOSING DATE; DELIVERY
2.1 CLOSING DATE. The closing for the purchase and sale of the
Shares and the Warrants (the "Closing") shall be held at the offices of Xxxxxx
Godward Xxxxxx Xxxxxxxxx & Xxxxx, Xxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxxxxxx,
Xxxxxxxxxx on October 20, 1995 at 10:00 a.m., or at such other time and place as
the Company and a majority in interest of the Purchasers mutually agree (the
"Closing Date").
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2.2 CLOSING. At the Closing, the Company will deliver to each
Purchaser certificates registered in the name of such Purchaser or its designee
representing the number of Shares purchased by such Purchaser and a Warrant to
purchase the number of shares of Common Stock set forth opposite such
Purchaser's name in the Schedule of Purchasers attached hereto as Exhibit A,
against payment of the applicable purchase price therefor in the amount
specified in the Schedule of Purchasers by check or wire transfer payable to the
order of the Company.
2.3 ADDITIONAL CLOSINGS. If less than all of the authorized shares
of Series F Preferred are purchased at the Closing, the Company may, at any time
until thirty (30) days after the Closing, sell and issue the balance of the
authorized but unissued Series F Preferred, under purchase agreements
substantially similar to this Agreement, at an additional closing or closings
(hereinafter the "Additional Closing") at the same price per share as the Series
F Preferred purchased and sold at the Closing. The purchasers of such remaining
Series F Preferred shall be deemed "Purchasers" and such shares of Series F
Preferred purchased by them shall be deemed "Series F Preferred" for the
purposes of this Agreement. The Additional Closings of the purchase and sale of
the Series F Preferred hereunder shall take place at such time and place as the
Company and the additional Purchasers may agree. In the event that Additional
Closings pursuant to this Agreement occur, the term "Closing" with respect to
such later sales of Series F Preferred shall refer to such later closing or
closings and the term "Closing Date" shall refer to the date on which each such
closing or Closings occur.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser as
follows:
3.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware. The Company has all requisite corporate power to own and operate
its properties and assets and to carry on its business as presently conducted.
The Company is qualified to do business in all jurisdictions in which the
nature of the business conducted by it makes such qualification necessary.
3.2 CORPORATE POWER. The Company has all requisite legal and
corporate power and authority to execute and deliver this Agreement and the
Warrants, to perform its obligations under the terms of this Agreement and the
Warrants and to issue and sell the Shares, the shares of Common Stock issuable
upon conversion of the Shares (the "Conversion Shares"), the Warrants and the
shares of Common Stock issuable upon exercise of the Warrants (the "Warrant
Shares").
3.3 CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 30,000,000 shares of Common Stock of which 14,246,954 shares
are issued and outstanding as of the date hereof, and (ii) 5,000,000 shares of
Preferred Stock consisting of 300,000 authorized shares of Series A Preferred
Stock of which 101,750 shares are issued and outstanding, 200,000 authorized
shares of Series B Preferred Stock of which 126,250 shares are
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issued and outstanding, 1,000,000 authorized shares of Series C Preferred Stock
of which 1,000,000 shares are issued and outstanding, 666,666 shares of Series D
Preferred Stock of which 333,333 shares are issued and outstanding, 100,000
authorized shares of Series E Preferred Stock of which 55,893 shares are issued
and outstanding and 1,200,000 authorized shares of Series F Preferred Stock,
_________ of which will be issued and outstanding immediately after the Closing.
Each share of Series A Preferred Stock is convertible into 4.132 shares of
Common Stock, subject to certain antidilution provisions; each share of Series B
Preferred Stock is convertible into 6.667 shares of Common Stock, subject to
certain antidilution provisions; each share of Series C Preferred Stock is
convertible into two shares of Common Stock; each share of Series D Preferred is
convertible into one share of Common Stock and each share of Series E Preferred
Stock is convertible into four shares of Common Stock. All of the issued and
outstanding capital stock of the Company is duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. Except for the
Preferred Stock, the Warrants and as set forth on Schedule 3.3 hereto, there are
no options, warrants, calls, subscriptions, conversion or other rights or
agreements obligating the Company to issue any shares of its capital stock or
any other securities. All of the outstanding shares of Common Stock (and
options and warrants to purchase Common Stock), Preferred Stock and other
outstanding securities of the Company have been duly and validly issued in
compliance with federal and state securities laws.
3.4 AUTHORIZATION. The execution, delivery and performance of
this Agreement by the Company and the consummation of the transactions
contemplated hereby (including the authorization, sale and issuance of the
Shares, the Conversion Shares, the Warrants and the Warrant Shares) and the
adoption, execution and filing of the Certificate of Designations for the Series
F Preferred with the Secretary of State of the State of Delaware, in the form of
Exhibit C hereto (the "Certificate of Designations"), have been duly authorized
by all necessary corporate action on the part of the Company. This Agreement
has been duly and validly executed and delivered by the Company. This Agreement
is, and the Warrants upon execution and delivery will be, the legal, valid and
binding obligations of the Company, enforceable in accordance with their terms,
subject to enforceability as to laws of general application relating to
bankruptcy, insolvency, the relief of debtors and to general principles of
equity. The Shares, the Conversion Shares and the Warrant Shares, when issued
in compliance with the provisions of this Agreement, will be validly issued,
fully paid and nonassessable, and will be free of any liens, claims or
encumbrances; provided, however, that the Shares, the Conversion Shares and the
Warrant Shares may be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein. Neither the issuance, sale or
delivery of the Shares or the Warrants nor the issuance or delivery of the
Conversion Shares or the Warrant Shares is subject to any preemptive right of
stockholders of the Company or to any right of first refusal or other right in
favor of any person.
3.5 DISCLOSURE. The Company has previously delivered to each of
the Purchasers documents and other communications and information related to
the business of the Company. These documents have been prepared by the
management of the Company in a good faith effort to describe the Company's
business and markets. None of such documents, nor any representation or
warranty by the Company contained in this Agreement, nor any other statement
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or certificate furnished or to be furnished to the Purchasers pursuant hereto or
in connection with the transactions contemplated hereby by the Company (when
read together) contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make the statements
contained therein or herein not misleading in light of the circumstances under
which they were made; except that no representation whatsoever is made with
respect to any projections that have been or may be presented to any Purchaser.
3.6 VIOLATIONS. The Company is not in violation of, has not been
charged with violating, nor to the best of the Company's knowledge, is it under
investigation with respect to a possible violation of, any federal, state,
local or foreign law, statute, rule, governmental regulation, or order,
relating to the business and operations of the Company, to the extent such
violation would have a material adverse effect on the Company's business or
operations.
3.7 CONFLICTS. The execution and delivery of this Agreement and
the other documents to be executed and delivered in connection herewith do not,
and the fulfillment and compliance by the Company with the terms and conditions
hereof and thereof and the consummation of the transactions contemplated hereby
(including the issuance of the Shares, the Warrants, the Conversion Shares and
the Warrant Shares (collectively the "Securities")) will not (i) conflict with
any of the terms, conditions or provisions of the certificate of incorporation
or by-laws of the Company; (ii) violate any provisions of, or require any
consent, authorization or approval under, any law, rule or regulation or any
judicial decision, order, judgment, writ, injunction or decree applicable to, or
any governmental permit or license issued to, the Company; (iii) violate, result
in a breach of, or constitute a default under any of the terms, conditions or
provisions of any document, agreement or other instrument to which the Company
is a party or by which it or its properties are bound; or (iv) result in the
creation of any tax, charge, lien or encumbrance of any kind whatsoever on any
of the properties or assets of the Company.
3.8 OTHER REPRESENTATIONS AND WARRANTIES.
(a) The Company has filed all federal income tax returns
and all other federal and state tax returns which are required to have been
filed and has paid all taxes which are required to have been paid. The Company
has not been advised that any federal income tax returns of the Company have
been, or will be, examined or audited by the Internal Revenue Service.
(b) The Company is not in default or alleged default
under any lease, license, contract or agreement to which the Company is a party
or by which the Company is bound, to the extent such default would have a
material adverse effect on the Company's business or operations.
(c) The Company is not in default with respect to any
judgment, order, writ, injunction or decree of any court or governmental body
or entity, and the Company has complied with all laws, rules, regulations and
orders which are applicable to the Company or its business as presently
conducted, to the extent any such default or noncompliance would have a
material adverse effect on the Company's business or operations. The Company
has all
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necessary permits, licenses and other authorizations required to conduct its
business as conducted and proposed to be conducted. To the best of the
Company's knowledge, there is no existing law, rule, regulation or order, and
the Company after due inquiry is not aware of any proposed law, rule, regulation
or order, whether federal or state, which would prohibit or restrict the Company
from or otherwise materially adversely affect the Company in, conducting its
business in any jurisdiction in which it is now conducting business or in which
it proposes to conduct business.
(d) Except as set forth in Schedule 3.8(d) attached
hereto, no litigation, proceedings, investigations, arbitrations or claims are
pending or, to the best knowledge of the Company, threatened against the
Company, its officers or directors, or any of the Company's assets or
properties, or which question the validity of this Agreement or any action taken
or to be taken pursuant to or in connection with the provisions of this
Agreement, and the Company does not know of any basis for any such litigation,
proceedings, investigations, arbitrations or claims.
(e) For at least the past twenty-four (24) months, the
Company has filed all proxy statements, schedules and reports required to be
filed by it with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). None of such
reports when filed contained any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements or facts contained
therein not misleading, except to the extent any such report was corrected by a
subsequently filed report. The Company has delivered to the Purchasers true,
complete and accurate copies of all Forms 10-K and 10-Q.
(f) Assuming the truth and accuracy of certain
representations and warranties of the Purchasers contained herein, the issuance
of the Shares and the Warrants by the Company to the Purchasers complies with
all federal and state securities laws and is not required to be registered
under the Securities Act of 1933, as amended (the "Securities Act"), or any
other state or federal securities laws.
SECTION 4
INVESTMENT REPRESENTATION
Each Purchaser hereby represents and warrants (with respect to itself
only) to the Company as follows:
4.1 EXPERIENCE. Purchaser is experienced in evaluating and
investing in companies such as the Company.
4.2 INVESTMENT. Purchaser is acquiring the Shares and the Warrants
for investment for its own account and not with a view to, or for resale in
connection with, any distribution thereof, and it has no present intention of
selling or distributing any of the Securities in any transaction that would be
in violation of the securities laws of the United States of America or
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any state thereof, without prejudice, however, to such Purchaser's right at all
times to sell or otherwise dispose of all or any part of said Securities
pursuant to an effective registration statement under the Securities Act and
applicable state securities laws, or under an exemption from such registration
available under the Securities Act and applicable state securities laws.
Purchaser understands that the Securities have not been registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act that depends upon, among other things, the bona
fide nature of the investment intent as expressed herein.
4.3 RULE 144. Purchaser acknowledges that, because they have not
been registered under the Securities Act, the Securities may not be sold or
transferred unless subsequently registered under the Securities Act or an
exemption from such registration is available. Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of securities purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the existence
of a public market for the securities of the Company, the availability of
certain current public information about the Company, the resale occurring not
less than two years after a party has purchased and paid for the security to be
sold, the sale being through a "broker's transaction" or in transactions
directly with a "market maker" (as provided by Rule 144(f)) and the number of
shares being sold during any three-month period not exceeding specified
limitations (unless the sale is within the requirements of Rule 144(k)).
4.4 ACCESS TO DATA. Purchaser has been furnished with such
materials and has been given access to such information relating to the Company
as it or its professional advisor has requested and it has been afforded the
opportunity to ask questions regarding the Company and the Shares and Warrants,
all as it has found necessary to make an informed investment decision.
4.5 INVESTOR STATUS. Purchaser is either an "accredited investor"
within the meaning of Rule 501(a) of Regulation D as promulgated under the
Securities Act, or by reason of its business or financial experience, or the
business or financial experience of its professional advisor, it has the
capacity to protect its own interests in connection with this transaction, and
is able to bear the economic risk of losing its entire investment in the Shares
and the Warrants.
SECTION 5
CONDITIONS TO PURCHASERS' OBLIGATIONS AT CLOSING
The obligation of each Purchaser to purchase the Shares and the
Warrants at the Closing is subject to the fulfillment on or prior to the
Closing Date of the following conditions to the extent not waived by each
Purchaser:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties made by the Company in Section 3 hereof shall be true, correct
and complete when made, and shall be true, correct and complete on the Closing
Date with same force and effect as if made on and as of the Closing Date.
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5.2 COVENANTS. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the Closing
Date shall have been performed or complied with in all respects.
5.3 COMPLIANCE CERTIFICATE. The Company shall have delivered to
the Purchasers a certificate, executed by the President of the Company, dated
the Closing Date, certifying to the fulfillment of the conditions specified in
Sections 5.1 and 5.2 of this Agreement.
5.4 OPINION OF COUNSEL. The Purchasers shall have received an
opinion of Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx in substantially the form of
Exhibit C attached hereto.
5.5 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchasers and their
counsel, and the Purchasers and their counsel shall have received all such
counterpart originals or certified or other copies of such documents as they
may reasonably request.
5.6 LAWS AND REGULATIONS. At the Closing, the purchase of the
Shares and the Warrants to be purchased by such Purchaser hereunder (i) shall
not be prohibited or enjoined (temporarily or permanently) by any applicable
law or governmental regulation of which the Company or a Purchaser is aware,
(ii) shall not subject such Purchaser to any penalty, or in its reasonable
judgment, other onerous condition under or pursuant to any applicable law or
governmental regulation and (iii) shall be permitted by the laws and
regulations of the jurisdictions to which such Purchaser is subject.
5.7 CONSENTS AND PERMITS. The Company shall have obtained all
consents, permits and authorizations, and made all filings and declarations
required in connection with the performance by the Company of the transactions
to be performed at or prior to the time of Closing by the Company pursuant to
this Agreement.
5.8 NO MATERIAL JUDGMENT OR ORDER. There shall not be any
judgment or order of a court or competent jurisdiction or any ruling of any
governmental agency which would prohibit the sale or issuance of the Shares and
the Warrants or subject the Company or such Purchaser to any material penalty
in the event of the sale or issuance of the Shares and the Warrants.
5.9 CERTIFICATE OF DESIGNATION. The Certificate of Designations
shall have been duly filed with the Secretary of State of the State of
Delaware.
5.10 STOCKHOLDERS AGREEMENT. The Stockholders Agreement shall have
been executed by the Company and each Purchaser.
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SECTION 6
CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING
The Company's obligation to sell the Shares and the Warrants at the
Closing is subject to the fulfillment on or prior to the Closing Date of the
following conditions to the extent not waived by the Company:
6.1 REPRESENTATIONS CORRECT. The representations made by each
Purchaser in Section 4 hereof shall be true, correct and complete when made,
and shall be true, correct and complete on the Closing Date with the same force
and effect as if made on and as of the Closing Date.
6.2 NO MATERIAL JUDGMENT OR ORDER. There shall not be any
judgment or order of a court of competent jurisdiction or any ruling of any
governmental agency which would prohibit the sale or issuance of the Shares or
the Warrants or subject the Company or any Purchaser to any material penalty in
the event of the sale or issuance of the Shares or the Warrants.
6.3 STOCKHOLDERS AGREEMENT. The Stockholders Agreement shall have
been executed by each Purchaser.
SECTION 7
CONFIDENTIALITY
7.1 CONFIDENTIALITY. Each Purchaser agrees that, except as
required by law or regulation or legal or judicial process upon the advice of
counsel, he or it will keep confidential and will not disclose or divulge any
confidential, proprietary or secret information (which information shall be so
identified at the time of disclosure thereof to each Purchaser) that such
Purchaser has obtained in connection with this investment or may obtain after
the date hereof relating to the Company unless such information is or becomes
publicly known or unless the Company gives its written consent to the
Purchaser's release of such information, except that no such written consent
shall be required (and Purchaser shall be free to release such information) if
such information is to be provided to Purchaser's lawyer, accountant, or to an
officer, director or partner of a Purchaser, provided that the Purchaser shall
inform the recipient of the confidential nature of such information, and shall
cause the recipient to treat the information as confidential.
SECTION 8
REGISTRATION RIGHTS
8.1 CERTAIN DEFINITIONS. As used in this Section 8, the following
terms shall have the following respective meanings:
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"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"HOLDER" shall mean any holder of outstanding Shares or
Warrants or Registrable Securities.
The terms "REGISTER", "REGISTERED" and "REGISTRATION" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
"REGISTRABLE SECURITIES" means shares of the Company's Common
Stock (i) issued or issuable pursuant to the conversion of the Shares or
exercise of the Warrants or (ii) issued as a dividend or other distribution
with respect to, or in exchange or in replacement of, the Shares, the Warrant
Shares or such Common Stock, excluding in all cases, however (including
exclusion from the calculation of the number of outstanding Registrable
Securities), any Registrable Securities sold by a person in a transaction
registered under the Securities Act or a transaction pursuant to Rule 144, in
which his rights under this Section 8 are not transferred.
"REGISTRATION EXPENSES" shall mean all expenses incurred by
the Company in complying with Sections 8.2 hereof, including, without
limitation, all registration and filing fees, transfer taxes, fees of transfer
agents and registrars, fees and expenses of compliance with securities or blue
sky laws, fees of the National Association of Securities Dealers, Inc.,
printing expenses, messenger and delivery expenses, and fees and disbursements
of counsel for the Company, its independent certified public accountants,
underwriters (excluding discounts and commissions) and other persons retained
by the Company.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean any fees of counsel for the
Holder, and all underwriting discounts and selling commissions applicable to
the sale of such Registrable Securities.
8.2 DEMAND REGISTRATION AND DIVIDEND REGISTRATION.
(a) If at any time after six (6) months from the date
hereof, Holders in excess of fifty percent (50%) of the Registrable Securities
(an "Initiating Holder") request (a "Request") in writing that the Company
effect a registration, the Company will:
(1) give written notice of the proposed
registration to all other Holders within ten (10) days after a Request; and
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(2) use its best efforts to effect as soon as
practicable (but in no event later than sixty (60) days after the Request),
such registration (including, without limitation causing a registration
statement with respect thereto to be declared effective and obtaining
appropriate qualifications under blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder
or Holders joining in such request as are specified in a written request
received by the Company within twenty (20) days after receipt of such written
notice from the Company;
provided, however, that the Company shall not be obligated to
take any action to effect any such registration (or any related qualification
or compliance) pursuant to this Section 8.2(a):
(i) in any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance unless the
Company is already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(ii) if prior to receiving the Request,
the Board of Directors had determined to effect a registered underwritten
public offering of the Company's securities for the Company's account and the
Company had taken substantial steps (including, but not limited to, selecting a
managing underwriter for such offering) and is proceeding with reasonable
diligence and in good faith to effect such offering, in which case the Company
may defer the filing (but not the preparation) of a registration statement for
the requested registration and any required qualification or compliance in
connection therewith for a period of ninety (90) days after the effective date
of the Company's registration statement, provided, however, a deferral for
effecting a registration pursuant to this Section 8.2(a)(ii) shall be lifted,
and the requested registration shall be effected, if the proposed registration
for the Company's account is abandoned; or
(iii) after the Company has effected three
registrations pursuant to this Section 8.2(a), and each such registration has
been declared or ordered effective and no stop order, injunction, or other
order is issued interfering with such registration.
Subject to the foregoing clauses (i) through (iii), the
Company shall file a registration statement covering the Registrable Securities
so requested to be registered as soon as practicable (but in no event later
than thirty (30) days) after receipt of a Request.
(b) The Company may require, as a condition precedent to
its obligations under this Section 8.2, that all Holders participating in a
registration effected pursuant to this Section 8.2 so participate through a
single broker reasonably satisfactory to the Company.
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(c) The Company may include securities for its own
account (or for the account of other stockholders) in such registration if the
number of Registrable Securities that would otherwise have been included by the
Holders in such registration and underwriting will not thereby be limited.
8.3 REGISTRATION OF DIVIDEND SHARES. No later than ten (10) days
prior to the payment of a dividend to holders of Series F Preferred in shares
of the Company's Common Stock (a "Dividend Payment Date"), the Company shall
effect a registration (including, without limitation causing a registration
statement with respect thereto to be declared effective and obtaining
appropriate qualification under blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other government requirements or regulations) to permit and
facilitate the distribution of any and all of the shares of Common Stock to be
distributed on such Dividend Payment Date.
8.4 FURTHER LIMITATIONS ON REGISTRATIONS. All Holders proposing
to distribute their securities through an underwriting effected pursuant to
Section 8.2 shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by the Company. Notwithstanding Section 8.2(a), if the
Company and the underwriter determine that marketing factors require a
limitation of the number of shares to be underwritten in an offering pursuant to
Section 8.2(a), the underwriter may exclude some or all Registrable Securities
from any such registration and underwriting. In such case, the Company shall so
advise all Holders (except those Holders who have indicated to the Company their
decision not to distribute any of their Registrable Securities through such
underwriting), and the number of shares of Registrable Securities that may be
included in such registration and underwriting shall be allocated among such
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities owned by such Holders at the time of filing the
registration statement. No Registrable Securities excluded from any
underwriting pursuant to Section 8.2(a) by reason of the underwriter's marketing
limitation shall be included in such registration. If any Holder disapproves of
the terms of any such underwriting as a result of any such limitation imposed by
such underwriter, such person may elect to withdraw therefrom by written notice
to the Company and the underwriter. The Registrable Securities and/or other
securities so withdrawn from such underwriting shall also be withdrawn from such
registration; provided, however, that, if by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion used above in determining the
underwriter limitation.
8.5 PIGGYBACK REGISTRATION.
(a) If, at any time or from time to time, the Company
shall determine to register any of its securities, either for its own account or
the account of a security holder or holders exercising their respective demand
registration rights, other than a registration relating
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solely to employee benefit plans on Form S-8 or similar forms which may be
promulgated in the future or a registration on Form S-4 or similar forms which
may be promulgated in the future relating solely to Commission Rule 145 or a
similar transaction, the Company will (i) promptly give to each Holder written
notice thereof (which shall include a list of the jurisdictions in which the
Company intends to attempt to qualify such securities under the applicable blue
sky or other state securities laws) and (ii) include in such registration (and
any related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all Registrable Securities of such Holders as
specified in a written request or requests made within twenty (20) days after
receipt of such written notice from the Company.
(b) If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so indicate in the notice given pursuant to Section 8.5(a). In such event the
right of any Holder to registration pursuant to this Section 8.5 shall be
conditioned upon such Holder's agreeing to participate in such underwriting and
in the inclusion of such Holder's Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company and the
other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company or by other holders
exercising any demand registration rights. Notwithstanding any other provision
of this Section 8.5, if the underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the underwriter
may exclude some or all Registrable Securities or other securities from such
registration and underwriting (hereinafter an "Underwriter Cutback"). In the
event of an Underwriter Cutback, the Company shall so advise all Holders and the
other holders distributing their securities through such underwriting, and the
number of Registrable Securities and other securities that may be included in
the registration and underwriting shall be allocated among all holders thereof
(including those holders who are exercising their demand registration rights) on
the basis that the holders who are not Holders shall be cut back before any
cutback of Holders. If the limitation determined by the underwriter requires a
cut-back of the Holders, then the number of shares that may be included in the
Registration and underwriting shall be allocated among all Holders in
proportion, as nearly as practicable, to the respective amounts of securities
entitled to inclusion in such registration held by such Holders at the time of
filing the registration statement. If any Holder disapproves of the terms of
any such underwriting, such Holder may elect to withdraw therefrom by written
notice to the Company and the underwriter. Any securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration.
8.6 EXPENSES OF REGISTRATION. All Registration Expenses shall be
borne by the Company and all Selling Expenses shall be borne by the holders of
the securities so registered pro rata on the basis of the number of shares so
registered.
8.7 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to Sections 8.2,
8.3 or 8.5, the Company will keep each Holder advised in writing as to the
initiation of each registration (and any related
12.
14
qualification and compliance) and as to the completion thereof. At its expense
the Company will use its best efforts to:
(a) Keep such registration (and any related qualification
or compliance) effective for a period of ninety (90) days or until the Holder
or Holders have completed the distribution described in the registration
statement relating thereto, whichever first occurs; and
(b) Furnish such number of prospectuses and other
documents incident thereto as a Holder from time to time may reasonably
request.
8.8 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its
officers, directors, partners and legal counsel, and each person controlling
such Holder, with respect to which registration, qualification or compliance
has been effected pursuant to Sections 8.2, 8.3 or 8.5, and each underwriter,
if any, and each person who controls any underwriter against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on (i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other similar
document (including any related registration statement, notification or the
like) incident to any such registration (or related qualification or
compliance) or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made, or (ii) any violation by the Company of any federal, state or common law
rule or regulation applicable to the Company in connection with any such
registration (or related qualification or compliance), and will reimburse each
such Holder, each of its officers, directors, partners and legal counsel, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, as incurred, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by an
instrument duly executed by such Holder or underwriter and stated to be
specifically for use therein.
(b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration (or
related qualification or compliance) is being effected, indemnify the Company,
each of its directors and officers, each legal counsel and independent
accountant of the Company, each underwriter, if any, of the Company's
securities covered by such a registration statement (or related qualification or
compliance), each person who controls the Company or such underwriter within the
meaning of the Securities Act, and each other such Holder, each of its officers,
directors, and partners and each person controlling such Holder, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus,
offering circular or other similar document (or related qualification or
compliance documents), or any omission (or alleged
13.
15
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and will reimburse the Company, such
Holders, such directors, officers, persons, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, as
incurred, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such Holder and stated to be
specifically for use therein.
(c) Each party entitled to indemnification under this
Section 8.8 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has received written notice of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld). The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
shall bear the expense of such defense of the Indemnified Party if
representation of both parties by the same counsel would be inappropriate due
to actual or potential conflicts of interest. The failure of any Indemnified
Party to give notice as provided herein shall relieve the Indemnifying Party of
its obligations under this Section 8.8 only to the extent that such failure to
give notice shall materially adversely prejudice the Indemnifying Party in the
defense of any such claim or any such litigation. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
8.9 INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration (or related qualification or
compliance) referred to in this Section 8.
8.10 TRANSFER OF REGISTRATION RIGHTS. The rights granted under
Sections 8.2, 8.3 and 8.5 may be assigned or otherwise conveyed by any Holder
to its stockholders, partners or former partners (or their estates), or to any
transferee who acquires shares of Registrable Securities; provided in each
case, that the Company is given written notice by such transferee at the time
of or within a reasonable time after said transfer, stating the name and
address of said transferee and said transferee's agreement to be bound by the
provisions of Section 8 of this Agreement.
14.
16
SECTION 9
POST-CLOSING COVENANTS OF THE COMPANY
9.1 RESERVE SUFFICIENT SHARES FOR THE CONVERSION SHARES AND
WARRANT SHARES. The Company shall at all times reserve and keep available out
of its authorized but unissued shares of Common Stock, for the purpose of
effecting the conversion of the Series F Preferred and the exercise of the
Warrants and otherwise complying with the terms of this Agreement, the Warrants
and the Certificate of Designations, such number of its duly authorized shares
of Common Stock as shall be sufficient to effect the conversion of the Series F
Preferred and the exercise of the Warrants from time to time outstanding or
otherwise to comply with the terms of this Agreement. If at any time the
number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of the Series F Preferred and the exercise
of the Warrants or otherwise to comply with the terms of this Agreement, the
Company will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such numbers of shares as
shall be sufficient for such purposes. The Company agrees to obtain any
authorization, consent, approval or other action by or make any filing with any
court or administrative body that may be required under applicable state
securities laws in connection with the issuance of shares of Common Stock upon
conversion of the Series F Preferred or exercise of the Warrants or the
issuance of the Dividend Shares.
9.2 NEGATIVE COVENANTS. So long as 240,000 shares of Registrable
Securities are outstanding, the Company agrees that it will not take any of the
following actions set forth below without the consent of each of the Series F
Directors (as defined in the Stockholders Agreement); provided, however, if
such directorships remain vacant for a period of 30 days following notice of
such vacancy to the holders of the Registrable Securities, then no consent
shall be required.
(a) LIMITATION ON ADDITIONAL INDEBTEDNESS. The Company
will not and will not permit any subsidiary to, directly or indirectly, create,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable with respect to (collectively, "incur") any Indebtedness (as hereinafter
defined); provided, however, that the Company may incur up to an aggregate of
Twenty Million Dollars ($20,000,000) in Indebtedness. "Indebtedness" means (i)
any liability of the Company or any subsidiary (1) for borrowed money, or under
any reimbursement obligation relating to a letter of credit or a similar
instrument, (2) evidenced by a bond, note, debenture or similar instrument
(including a purchase money obligation), (3) for the balance deferred and
unpaid of the purchase price for any property (except for any such balance that
constitutes a trade payable in the ordinary course of business), or (4) for the
payment of money relating to a lease that is required to be classified as a
capital lease obligation in accordance with GAAP; and (ii) any liability of
others described in clause (i) that the Company or any subsidiary has
guaranteed, that is recourse to the Company or any subsidiary or that is
otherwise the legal liability of the Company or any subsidiary.
(b) LIMITATION ON SENIOR PREFERRED STOCK; PARI PASSU
STOCK; REDEEMABLE STOCK. The Company will not issue any Preferred Stock that
ranks prior to or on a parity with
15.
17
the Series F Preferred as to dividends or upon liquidation, dissolution or
winding up of the Company, and the Company will not issue or permit any
subsidiary to issue any redeemable capital stock.
(c) LIMITATION ON REPURCHASE. Except as contemplated
hereby, the Company will not, and will not permit any subsidiary to, directly
or indirectly, purchase, redeem or otherwise acquire or retire for value any
capital stock of the Company or any of the Company's subsidiaries, other than
capital stock that is acquired pursuant to an employee stock repurchase program
or other employee stock repurchase rights held by the Company.
(d) LIMITATIONS ON ACQUISITIONS, MERGER OR SALE OF
SUBSTANTIALLY ALL ASSETS. The Company shall not and shall not permit any
subsidiary to acquire all or substantially all of the assets or capital stock
or voting securities of, or equity interests in, any other Person or to
consolidate with, merge with or into, or transfer, directly or indirectly by
lease, assignment, sale or otherwise, all or substantially all of its assets,
in one transaction or a series of related transactions to, any Person or to
enter into any agreement to do any of the foregoing. Notwithstanding the
foregoing, the consent of the Series F Directors shall not be required in (i)
any acquisition of assets with an aggregate purchase price of less than
$500,000 provided such acquisition is not part of a series of transactions
which would require consent hereunder or (ii) any transaction where the holders
of Series F Preferred receive securities of the acquiring corporation with
substantially identical terms to the Series F Preferred outstanding immediately
prior to the completion of the transaction. "Person" as used herein shall mean
any individual, partnership, joint venture, firm, corporation, association,
trust or other enterprise or any affiliate group of the foregoing.
SECTION 10
MISCELLANEOUS
10.1 GOVERNING 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.
10.2 SURVIVAL. The representations, warranties, covenants and
agreements made by the parties herein shall survive any investigation made by
any Purchaser or the Company and shall survive the closing of the transactions
contemplated hereby indefinitely.
10.3 SUCCESSORS AND ASSIGNS. Except as otherwise 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.
10.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or
16.
18
in a particular instance and either retroactively or prospectively) with the
written consent of the Company and the holders of at least sixty-six and two
third percent (66 2/3%) in interest of the of the outstanding Registrable
Securities (including shares of Common Stock issuable upon conversion of the
Shares or exercise of the Warrants). Any amendment or waiver effected in
accordance with this section shall be binding upon each holder of any securities
purchased under this Agreement at the time outstanding (including securities
into which such securities have been converted), each future holder of all such
securities, and the Company.
10.5 EFFECT OF AMENDMENT OR WAIVER. Each Purchaser acknowledges
that by the operation of Section 10.4 hereof the holders of at least sixty-six
and two thirds percent (66 2/3%) in interest of the outstanding Registrable
Securities (including shares of Common Stock issuable upon conversion of the
Shares or exercise of the Warrants) will have the right and power to diminish
or eliminate all rights of such Purchaser under this Agreement.
10.6 RIGHTS OF PURCHASERS. Each holder of the Securities shall
have the absolute right to exercise or refrain from exercising any right or
rights that such holder may have by reason of this Agreement or such
Securities, including without limitation the right to consent to the waiver of
any obligation of the Company under this Agreement and to enter into an
agreement with the Company for the purpose of modifying this Agreement or any
agreement effecting any such modification, and such holder shall not incur any
liability to any other holder or holders of Securities with respect to
exercising or refraining from exercising any such right or rights.
10.7 EXCULPATION AMONG PURCHASERS. Except as set forth in Section
4.5, each Purchaser acknowledges that it is not relying upon any person, firm,
or corporation, other than the Company and its officers and directors, in
making its investment or decision to invest in the Company. Each Purchaser
agrees that no Purchaser nor the respective controlling person, officers,
directors, partners, agents, or employees of any Purchaser shall be liable for
any action heretofore or hereafter taken or omitted to be taken by any of them
in connection with the Shares.
10.8 NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be effective five (5) days
after mailed by first-class, registered, or certified mail, postage prepaid, or
upon delivery if delivered by hand or by messenger or a courier delivery
service or upon confirmation of receipt thereof if sent by facsimile or other
similar transmission, addressed (a) if to a Purchaser, at such Purchaser's
address set forth in the Schedule of Purchasers, or at such other address as
such Purchaser shall have furnished to the Company in writing, or (b) if to any
other holder of any Securities, at such address as such holder shall have
furnished the Company in writing, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last holder of such
Securities who has so furnished an address to the Company, or (c) if to the
Company, (i) at the address set forth below or at such other address as the
Company shall have furnished to each Purchaser and each such other holder in
writing and (ii) with a copy to Xxxxx X. Xxx, Xxxxxx Godward Xxxxxx Xxxxxxxxx &
Xxxxx, Xxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000.
17.
19
10.9 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any holder of any Securities, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval
of any kind or character on the part of any holder of any breach or default
under this Agreement, or any waiver on the part of any holder of any provisions
or conditions of this Agreement, must be in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
10.10 STATE CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED OR REGISTERED
WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA NOR WITH THE
APPLICABLE AUTHORITIES OF ANY OTHER STATE AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION OR REGISTRATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION OR REGISTRATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH
CONSIDERATION BY THE COMPANY AND NOTWITHSTANDING ANY OTHER PROVISION IN THIS
AGREEMENT, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION OR REGISTRATION BEING OBTAINED OR AN
EXEMPTION FROM SUCH QUALIFICATION OR REGISTRATION BEING AVAILABLE.
10.11 FINDERS' FEES. Each party represents that it has not retained
the services of any finder or broker, and that it neither is nor will be
obligated for any finders' fee or commission in connection with this
transaction. Each Purchaser agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of
a finders' fee (and the costs and expenses of defending against such liability
or asserted liability) for which the Purchaser or any of its officers,
partners, employees, or representatives is responsible. The Company agrees to
indemnify and hold harmless each Purchaser from any liability for any
commission or compensation in the nature of a finders' fee (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company or any of its officers, employees, or representatives is
responsible. Each party will indemnify the others for damages resulting from
claims arising from the non-payment or reporting of any brokers' or finders'
fees that should have been paid or reported by such party hereunder.
10.12 EXPENSES. Except where expressly provided otherwise, the
Company and each Purchaser shall bear its own expenses and legal fees incurred
on its behalf with respect to this Agreement and the transactions contemplated
hereby.
10.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Purchasers,
each of which shall be
18.
20
enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument.
10.14 SEVERABILITY. In the case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
19.
21
The foregoing Series F Preferred Stock and Warrant Purchase Agreement
is hereby executed as of the date first above written.
PHOENIX NETWORK, INC. PURCHASER:
----------------------------
By: By:
----------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxx
President and
Chief Executive Officer
ADDRESS:
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
20.
22
EXHIBIT A
SCHEDULE OF PURCHASERS
NAME AND ADDRESS OF NUMBER OF PURCHASE WARRANTS WARRANT
PURCHASER SHARES PRICE PRICE
Xxxxx X. Xxxxx 5,000 50,000
000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xx. Xxxx Xxxxxxxx 5,000 50,000
Xxxxxxxx Family Ltd.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxx Xxxxxxx 10,000 100,000
0000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxxx 10,000 100,000
X.X. Xxx 000
Xxxxxxxxxxxx, XX 00000
Xxxx Xxxxx 10,000 100,000
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000
Xx. Xxxxxx Xxxxx 2,500 25,000
X.X. Xxx 000
Xxxxxxxx, XX 00000
Xx. Xxxx Xxxxxx 10,000 100,000
000 Xxxxx Xxxxxxxx Xxx.
Xxxxxxxxxx, XX 00000
Xx. Xxxxx Xxxxxxxx 5,000 50,000
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
X.X. & X.X. Xxxxxx Rentals 5,000 50,000
Xx. Xxxxxxx Xxxxxx
South Prentis Shopping Center
Xxxxxxx 00
Xxxxxxxx, XX 00000
Xxxxxx Xxxxxxxxxx 5,000 50,000
0000 0xx Xxxxxx
Xxxxxx, XX 00000
1.
23
NAME AND ADDRESS OF NUMBER OF PURCHASE WARRANTS WARRANT
PURCHASER SHARES PRICE PRICE
X.X. Xxxxxxx, Xx. 2,500 25,000
000 Xxxxxxx 00 Xxxxx
Xxxxxxxxxx, XX 00000
Xxxx Xxxxx 5,000 50,000
X.X. Xxx 000
Xxxx, XX 00000
Xxxx X. Xxxxx 2,500 25,000
000 Xxxx Xxxxxxx Xx., #000
Xxxxxxx, XX 00000
Xxx X. Xxxx 5,000 50,000
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxx, Xx. 5,000 50,000
00000 Xxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Xxxxx X. Xxxxxx, Xx. 10,000 100,000
(via Xxxxx Xxxxxx/Chemical)
PAR Minerals Corp.
000 Xxxxxx Xxxxxx, Xxx. 000
Xxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx 20,000 200,000
0000 Xxxxxxxxx Xxxx.
Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx 5,000 50,000
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxxxxxx, D.D.S. 10,000 100,000
000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xx. Xxxx X. Xxxxxxxxx, M.D. 5,000 50,000
0000 00xx Xxxxxx
Xxxxxxx, XX 00000
Xxxx & Xxxx 13,500 135,000
000 Xxxx Xxxx
Xxxxxxxxxxx, XX 00000
2.
24
NAME AND ADDRESS OF NUMBER OF PURCHASE WARRANTS WARRANT
PURCHASER SHARES PRICE PRICE
Xxxxx Xxxxxxx 5,000 50,000
& Xxxx Xxxxxx
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Xxxxxxxxx & Co. 5,000 50,000
(via Xxxxx Xxxxxx)
(see Xxxx Xxxxxx)
Xxxxxx X. Xxxxxxxxxx 5,000 50,000
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxxx 5,000 50,000
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx, Xx. & 5,000 50,000
Xxxxxxx X. Xxxxxx, Xx.
00 Xxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Dr. Xxxxx Xxxxx 5,000 50,000
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxx Fleet Xxxxxx 5,000 50,000
Fleet Xxxxxx Petroleum
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Jo Xxx Xxxxxxx/Xxx Xxxxx 5,000 50,000
Jo Xxx Xxxxxx
0000 Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxx 10,000 100,000
000 Xxxxxx Xxx
Xxxxxxx, XX 00000
Xxx X. Xxxxxxxxx 110,000 1,100,000
Xxx X. Xxxxxxxxx 62,500 625,000
Xxxxxx X. Xxxxxxxxx 62,500 625,000
3.
25
NAME AND ADDRESS OF NUMBER OF PURCHASE WARRANTS WARRANT
PURCHASER SHARES PRICE PRICE
Xxx X. Xxxxxxxxx 50,000 500,000
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xx. Xxxxxx X. Xxxxxxxxx 5,000 50,000
000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxxxx Xxxx 2,500 25,000
(see Xxxx Construction)
Xxxx Construction 50,000 500,000
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Xxxxx Xxxxxx 15,000 150,000
Xxxxx X. Xxxxxx 5,000 50,000
Xxx Xxxxxx 5,000 50,000
119 Fontainbleu
Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxx 50,000 500,000
0000 Xxx Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Xx. Xxx Xxxxxxx 2,500 25,000
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xx. Xxxx Xxxxx Xxxxxxx 10,000 100,000
0000 Xxx Xxxxxx
Xxxxxx, XX 00000
Xx X. Xxxxxxxx 2,500 25,000
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxx, Xx. 5,000 50,000
(see Xxxx Real Estate)
Xxxx Real Estate Company 5,000 50,000
0000 Xxxxxxx 00 Xxxx
Xxxxxxxx, XX 00000
4.
26
NAME AND ADDRESS OF NUMBER OF PURCHASE WARRANTS WARRANT
PURCHASER SHARES PRICE PRICE
Xxxxxx Management Trust 6,000 60,000
00 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Xx. Xxxx Xxxxxx 5,000 50,000
1001 President
Xxxxxx, XX 00000
Xxxxx XxXxxxx 5,000 50,000
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxxxx Xxxx 10,000 100,000
0000 X. Xxxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Mr. & Xxx. Xxxxx Xxxxxxxx 5,000 50,000
000 Xxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx 10,000 100,000
0 Xxxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Mr. A. Xxxxx Xxxxxx 5,000 50,000
X.X. Xxx 000
Xxxxxx, XX 00000
FEDEX:
Xxxxxx Xxxxxx
c/o
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Mr. Xxxxxx Xxxxx 7,500 75,000
0000 Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Xx. Xxxxx Xxxxxxx 20,000 200,000
000 Xxxxxxx Xxxxxx Xxxxx Xxxx.
Xxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx 5,000 50,000
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
5.
27
NAME AND ADDRESS OF NUMBER OF PURCHASE WARRANTS WARRANT
PURCHASER SHARES PRICE PRICE
La Rue Xxxxxxxx 5,000 50,000
0000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Xx. Xxxxxx Xxx Xxxxxx 5,000 50,000
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Xxxxx Xxxxxxxxx & CRT 50,000 500,000
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Special Mailing Instructs:
Xxx. Xxxxxx Xxxxx,
Trust Officer
State Bank & Trust Co.
000 Xxxxx Xxxxxxxx Xxx.
Xxxxxxxxxx, XX 00000
Xxxxx X. Xxxxx 2,500 25,000
000 X. Xxxxxxx Xx.
Xxxxxxxxxx, XX 00000
Xxxxx Xxxx 5,000 50,000
0000 Xxx Xxxxxx, Xxx. 0000
Xxxxxxx, XX 00000
Xxx Xxxxxx, et al. 2,500 25,000
c/o Stifel Nicolous, Inc.
0000 X. 000xx Xx.
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
X'Xxxxxxxx Trusts 10,000 100,000
(see Xxxx Xxxxx Andover grp)
Xxxxxxxx Investments 3,000 30,000
(see Xxxx Xxxxx Andover grp)
Xxxx Xxxxx 10,000 100,000
Xxxxx X. Xxxxx
Andover Group, Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
6.
28
NAME AND ADDRESS OF NUMBER OF PURCHASE WARRANTS WARRANT
PURCHASER SHARES PRICE PRICE
Xxxxxx X. Xxxxxx, Xx. 10,000 100,000
0000 Xxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Xxxx XxXxxx 10,000 100,000
XxXxxx Investments
0000 Xxxxx Xx., Xxx. 000
Xxxxxxx, XX 00000
V. Xxxxx Xxxxxxx 2,000 20,000
Xxxx South Comm Syst.
0000 Xxxx Xxxxx Xx. X.X.
Xxxxxxx, XX 00000
Xx. Xxxxxx X. Xxxxxx 1,000 10,000
0000 Xxxxxxx Xx.
Xxxxxxxx Xxxx, XX 00000
Xxxxxxxxx X. Xxxxxxxx 10,000 100,000
Xxxx South Comm Syst.
0000 Xxxx Xxxxx Xx. X.X.
Xxxxxxx, XX 00000
Xxxx Xxxxxxxxxxx 2,500 25,000
0000 X.X. Xxxxxxx Xxxxx
Xxx'x Xxxxxx, XX 00000
Jupiter Partners
(see Xxxxxx Xxxxxx)
Xxxx X. Xxxxxx Pen. Plan
(see Xxxxxx Xxxxxx)
Xxxxxx Xxxxxx Pen. Plan 15,000 150,000
Xxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
ProActive Partners 5,000 50,000
ProActive Partners 30,000 300,000
ProActive Partners 65,000 650,000
Xx. Xxxxxx Xxxxxxx 10,000 100,000
Xxx Xxxxxxx
7.
29
NAME AND ADDRESS OF NUMBER OF PURCHASE WARRANTS WARRANT
PURCHASER SHARES PRICE PRICE
Xxx Xxxxxxx TTEE
(Profit Sharing Plan)
0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Xxxxxxx X. Xxxxxx 3,000 30,000
Counseling and Education Ctr.
000 Xx. Xxxxxxxx
Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx, et al. 50,000 500,000
0000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Sadac Inc. 15,000 150,000
c/o Xxx X. Xxxxxxx Xx. Pres.
Union Planters National Bank 3,000 30,000
Custodian of Xxx Xxxxxxx
family trust - #1400030005
0000 Xxxxxx
Xxxxxxx, XX 00000-0000
Xxxxxxx X. Xxxxxxx 2,500 25,000
Xxxx X. Xxxxxxx 2,500 25,000
Xxx Xxxxxxxxxxx Xxxxxxx, III 2,500 25,000
Revocable Living Trust
dated 6/14/95
Xxx X. Xxxxxx, Xx. 15,000 150,000
00000 Xxxxx Xxxxxx, #000
Xx. Xxxxx, XX 00000
00000 Xxxxx Xxxxxx, #000
Xx. Xxxxx XX 00000
Revocable Living Trust
dated 1/9/90 for benefit of
Xxx Xxxxxxx
Xxxx Xxxxxx CDL REF 1721-9
(rcv'd 9/13/95)
Xxxxxx Xxxxxx & Co.
(rcv'd 9/21/95)
8.
30
NAME AND ADDRESS OF NUMBER OF PURCHASE WARRANTS WARRANT
PURCHASER SHARES PRICE PRICE
Xxxxxxxx Xxxxxx 2,500 25,000
c/o Xxxxxx Xxxxxxxx, Inc.
0000 X. 000xx Xx.
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Xxxx Xxxxxxx 5,000 50,000
0000 X.X. Xxxxx Xxxxx
Xxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxxxx Xxxxxxxx 10,000 100,000
Xxxxxxx, Xxxxx & Co.
0000 Xxxxx Xxxx
Xxxxxxxxxxxxxxx, XX 00000
Xxxxx Xxxxxx 10,000 100,000
Xxxxxxx, Xxxxx & Co.
000 X. Xxxxx Xxx., 00xx Xx.
Xxx Xxxxxxx, XX 00000
Xxxxx Xxxxxx 5,000 50,000
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
Dennis W.P. Hallahane 5,000 50,000
Compass Investment Mgt.
Xxxxxx Xxxxx
00 Xxxxxxx Xxxxxx
Xxxxxx, X0X 0XX
Xxxx Xxxxxx Xxxxx, Jr. 5,000 50,000
000 Xxxxxx Xxxxxx
Xxxx 0000
Xxxxxx, XX 00000
Xxx X. Xxxx, Xx. M.D. 5,000 50,000
000 Xxxxxxx 00 Xxxxx
Xxxxx 0-X
Xxxxxxxxxx, XX 00000
Xxx X. Xxxx III 5,000 50,000
Xxxxxx Xxxxxx & Co.
Credcent Center - Suite 921
0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
9.
31
NAME AND ADDRESS OF NUMBER OF PURCHASE WARRANTS WARRANT
PURCHASER SHARES PRICE PRICE
Xxxxx Xxxxx 2,500 25,000
0000-X Xxxxxxxxx Xx.
Xxxxxxx, XX 00000
Xxx X. Xxxxxx, Xx. 5,000 50,000
000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Xxxxxxx X. Xxxxxxxx 10,000 100,000
00 X. Xxxxxxxx
Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx 5,000 50,000
00 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Xx. Xxxxxxx X. Xxxxxxxx 5,000 50,000
0000 Xxxxx Xxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Xxxx X. XxXxx 10,000 100,000
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Xxxxxxx X. Xxxx, M.D. 2,500 25,000
Brookhaven Internal Med.
000-X Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
C. Xxxxxx Xxxxxxx, III 5,000 50,000
0000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx, III 10,000 100,000
X.X. Xxx 00000
Xxxxxxxxxxxx, XX 00000-0000
Xxxxxxx X. Xxxxx 5,000 50,000
0000 Xxxxxx Xxxxx Xxxx Xxxx
Xxxxx Xxxxx Xxxxx, XX 00000
=============================================================================
10.
32
EXHIBIT B
FORM OF WARRANT
33
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. NO SALE
OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT
OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION.
Void after 5:00 p.m.
Pacific Time
October ____, 2000
PHOENIX NETWORK, INC.
WARRANT TO PURCHASE ___________ SHARES OF COMMON STOCK
THIS CERTIFIES THAT, for value received, ____________________ is
entitled to subscribe for and purchase _______________ shares (as adjusted
pursuant to Section 4 hereof, the "Shares") of the fully paid and nonassessable
Common Stock (as hereinafter defined) of PHOENIX NETWORK, INC., a Delaware
corporation (hereinafter called the "Company"), at a purchase price of three
dollars ($3.00) per share (as adjusted pursuant to Section 4 hereof) (the
"Warrant Price"), subject to the provisions and upon the terms and conditions
hereinafter set forth and set forth in the Preferred Stock and Warrant Purchase
Agreement dated October __, 1995 by and among the Company and the Purchasers
named therein (the "Purchase Agreement"). As used herein, the term "Common
Stock" shall mean the Company's presently authorized class of common stock, par
value $0.001 per share. The Company shall not create any class of common stock
which carries any rights to dividends or assets differing in any respect from
the rights of the Common Stock on the date hereof.
1. CONDITIONS TO EXERCISE.
(a) EXERCISABILITY. The purchase right represented by
this Warrant is exercisable, in whole or in part, at any time after the date
hereof until terminated pursuant to subsection (b) below.
(b) TERMINATION. This Warrant shall terminate at the
earlier of (i) 5:00 p.m., Pacific Time, on October ____, 2000, or (ii) 5:00
p.m., Pacific Time, on the day preceding the closing of the Company's sale of
all or substantially all of its assets to another entity that is not an
Affiliate (as defined in Rule 402 promulgated under the Securities Act of 1933,
as amended) or the acquisition of the Company by another entity that is not an
Affiliate by means of a merger
1.
34
or consolidation resulting in the holders of more than 50% of the outstanding
Common Stock of the Company receiving securities or consideration issued, or
caused to be issued, by the acquiring entity. The Company agrees to give the
holder hereof thirty (30) days prior written notice of the anticipated date of
termination of this Warrant pursuant to subsection (b)(ii) above.
2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. Subject
to Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part, by the surrender of this
Warrant (with a duly executed notice of exercise in the form attached hereto as
Annex 1) at the principal office of the Company (as set forth in Section 12
below) and by the payment to the Company, by check or wire transfer or
cancellation of indebtedness, of an amount equal to the then applicable Warrant
Price per share multiplied by the number of Shares then being purchased. In the
event of any exercise of the rights represented by this Warrant, certificates
for the Shares of stock so purchased shall be in the name of, and delivered to,
the holder hereof, or as such holder may direct (subject to the restrictions
upon transfer contained herein and upon payment by such holder hereof of any
applicable transfer taxes). Such delivery shall be made within 10 days after
exercise of the Warrant and at the Company's expense and, unless this Warrant
has been fully exercised or expired, a new Warrant representing the portion of
the Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof within 10 days after
exercise of the Warrant.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares which may
be issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable, and
free from all taxes, liens, and charges with respect to the issue thereof.
During the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized, and reserved for
issuance upon exercise of the purchase rights evidenced by this Warrant, a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number
and kind of securities purchasable upon the exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) RECLASSIFICATION OF OUTSTANDING SECURITIES. In case
of any reclassification or change of outstanding securities of the class
issuable upon exercise of this Warrant (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), the Company shall execute a new
Warrant, providing that the holder of this Warrant shall have the right to
exercise such new Warrant upon payment of the then applicable Warrant Price and
procure upon such exercise in lieu of each share of Common Stock theretofore
issuable upon exercise of this Warrant the kind and amount of shares of stock,
other securities, money, and property receivable upon such reclassification or
change by a holder of one share of Common Stock. Such new Warrant shall provide
for
2.
35
adjustments that shall be as nearly equivalent as may be practicable, as
determined by the Board of Directors of the Company in their good faith
discretion, to the adjustments (including adjustments in the Warrant Price)
provided for in this Section 4. The provisions of this subsection (a) shall
similarly apply to successive reclassifications or changes.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company
at any time while this Warrant remains outstanding and unexpired shall subdivide
or combine its Common Stock, the Warrant Price shall be proportionately
decreased in the case of a subdivision or increased in the case of a
combination.
(c) STOCK DIVIDENDS. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock (except any distribution specifically provided for in the foregoing
subsection (a) or (b)) of, Common Stock, then the Warrant Price shall be
adjusted, from and after the date of determination of shareholders entitled to
receive such dividend or distribution, to that price determined by multiplying
the Warrant Price in effect immediately prior to such date of determination by a
fraction (a), the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(b) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.
(d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment
in the Warrant Price, the number of shares of Common Stock purchasable hereunder
shall be adjusted, to the nearest whole share, to the product obtained by
multiplying the number of shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which shall be
the Warrant Price immediately prior to such adjustment and the denominator of
which shall be the Warrant Price immediately thereafter.
5. NOTICE OF ADJUSTMENTS. Whenever any Warrant Price shall be
adjusted pursuant to Section 4 hereof, the Company shall prepare a certificate
signed by its chief financial officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the Warrant Price and number of shares
issuable upon exercise of the Warrant after giving effect to such adjustment,
and shall cause copies of such certificate to be mailed (by certified or
registered mail, postage prepaid) to the holder of this Warrant as set forth in
Section 12 hereof.
6. FRACTIONAL SHARES. No fractional share of Common Stock will
be issued in connection with any exercise hereunder, but in lieu of such
fractional share the Company shall make a cash payment therefor upon the basis
of the fair market value of such Common Stock then in effect, as determined in
the good faith judgment of the Board of Directors.
3.
36
7. COMPLIANCE WITH SECURITIES ACT; NON-TRANSFERABILITY OF
WARRANT; DISPOSITION OF SHARES OF COMMON STOCK.
(a) COMPLIANCE WITH SECURITIES ACT. The holder of this
Warrant, by acceptance hereof, agrees that this Warrant and the shares of Common
Stock to be issued upon exercise hereof are being acquired for investment and
that he will not offer, sell, or otherwise dispose of this Warrant or any shares
of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Securities Act of 1933, as amended
(the "Act"). Upon exercise of this Warrant, the holder hereof shall confirm in
writing, in a form reasonably satisfactory to the Company, that the shares of
Common Stock so purchased are being acquired for investment and not with a view
toward distribution or resale. This Warrant and all shares of Common Stock
issued upon exercise of this Warrant (unless registered under the Act) shall be
stamped or imprinted with a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT PURSUANT TO RULE
144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR
RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION."
(b) TRANSFERABILITY OF WARRANT. This Warrant may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws; provided such compliance shall be evidenced
prior to such transfer or assignment in a form reasonably acceptable to the
Company.
(c) DISPOSITION OF SHARES OF COMMON STOCK. With respect
to any offer, sale, or other disposition of any shares of Common Stock acquired
pursuant to the exercise of this Warrant prior to registration of such shares,
the holder hereof and each subsequent holder of this Warrant agrees to give
written notice to the Company prior thereto, describing briefly the manner
thereof, together with a written opinion of such holder's counsel, if requested
by the Company, to the effect that such offer, sale, or other disposition may be
effected without registration or qualification (under the Act as then in effect
or any federal or applicable state securities law then in effect) of such shares
of Common Stock and indicating whether or not under the Act certificates for
such shares of Common Stock to be sold or otherwise disposed of require any
restrictive legend as to applicable restrictions on transferability in order to
ensure compliance with the Act. Promptly upon receiving such written notice and
satisfactory opinion, if so requested, the Company, as promptly as practicable,
shall notify such holder that such holder may sell or otherwise dispose of such
shares of Common Stock, all in accordance with the terms of the notice delivered
to the Company. If a determination has been made pursuant to this subsection
(c) that the opinion of counsel for the holder is not reasonably satisfactory to
4.
37
the Company, the Company shall so notify the holder promptly after such
determination has been made. Notwithstanding the foregoing, such shares of
Common Stock may be offered, sold, or otherwise disposed of in accordance with
Rule 144 under the Act, provided that the Company shall have been furnished with
such information as the Company may request to provide a reasonable assurance
that the provisions of Rule 144 have been satisfied. Each certificate
representing the shares of Common Stock thus transferred (except a transfer
pursuant to Rule 144) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with the Act, unless in the
aforesaid opinion of counsel for the holder, such legend is not required in
order to ensure compliance with the Act. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions.
8. REGISTRATION RIGHTS. The holder of this Warrant and any Shares
for which this Warrant is exercisable shall have the registration rights
provided for in the Purchase Agreement.
9. RIGHTS OF STOCKHOLDERS. Except as otherwise provided in the
Certificate of Designations of the Series F Preferred Stock of the Company, no
holder of the Warrant shall be entitled to vote or receive dividends or be
deemed the holder of Common Stock or any other securities of the Company which
may at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the holder of this
Warrant, as such, any of the rights of a stockholder of the Company or any right
to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
10. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment
of its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, or dilute or seek to dilute the effect of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company will take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of stock upon the exercise of this Warrant.
11. NOTICES OF RECORD DATE, ETC. In the event of:
(a) Any taking by the Company 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
5.
38
dividend or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right (other than the issuance of Shares on
the exercise of this Warrant and other than issuances that will not result in an
adjustment in the Warrant Price) (a "Distribution");
(b) Any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, or any
transfer, lease or otherwise dispose of all or substantially all of the assets
of the Company to or consolidation or merger of the Company with or into any
other person (a "Reorganization"); or
(c) Any voluntary or involuntary dissolution, liquidation,
or winding up of the Company (a "Dissolution");
then and in each such event the Company will mail or
cause to be mailed to the holder of this Warrant a notice specifying (i) the
date of any such Distribution stating the amount and character of such
Distribution, or (ii) the date on which any Reorganization is to take place, and
the time, if any is to be fixed, as of which the holders of Common Stock shall
be entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such Reorganization, or (iii) the date of any such
Dissolution and the assets and other property that will be distributed pursuant
to such Dissolution and shall, in each case, set forth such facts relating
thereto as shall be reasonably necessary to indicate the effect of such action
on the Common Stock. Such notice shall be mailed at least 30 days prior to the
date therein specified.
12. ADDRESSES. Any notice required or permitted hereunder shall
be in writing and shall be mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed to the
appropriate party as set forth below or at such other address as the Company or
the holder hereof shall have furnished to the other party.
If to the Company: Phoenix Network, Inc.
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Chief Financial Officer
With a copy to: Xxxxx X. Xxx, Esq.
Xxxxxx Godward Xxxxxx
Xxxxxxxxx & Xxxxx
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
6.
39
If to the Holder:
-------------------------------
-------------------------------
-------------------------------
13. GOVERNING LAW. This Warrant shall be governed by and construed
in accordance with the laws of the State of California.
14. AMENDMENT. Certain rights of the holders of this Warrant are
set forth in the Purchase Agreement and may be amended in accordance with the
terms of the Purchase Agreement. The terms specifically set forth in this
Warrant may not be amended except with consent of the Company and the holders of
sixty-six and two-thirds percent (66 2/3%) in interest of the outstanding
Warrants.
Date of Grant: October ____, 1995
PHOENIX NETWORK, INC.
By:
-----------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
7.
40
ANNEX 1
NOTICE OF EXERCISE
TO: PHOENIX NETWORK, INC.
1. The undersigned hereby elects to purchase ________ shares of
Common Stock of PHOENIX NETWORK, INC., pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full, together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing the
Shares in the name of the undersigned or in such other name as is specified
below:
-----------------------------------
(Name)
-----------------------------------
-----------------------------------
(Address)
-----------------------------------
(Signature)
---------------------------------------
(Date)
41
EXHIBIT C
CERTIFICATE OF DESIGNATION OF PREFERENCES OF
SERIES F PREFERRED STOCK
42
PHOENIX NETWORK, INC.
CERTIFICATE OF
DESIGNATIONS OF
SERIES F PREFERRED STOCK
-----------
The undersigned, XXXXXXX X. XXXXXXX, the President of PHOENIX NETWORK,
INC., a Delaware corporation (the "Corporation"), the Restated Certificate of
Incorporation of which was filed in the office of the Secretary of State of the
State of Delaware on December 12, 1990, acting pursuant to Section 151 of the
General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY that at a
meeting of the Board of Directors of the Corporation duly convened and held on
September 29, 1995 the following resolution was adopted:
RESOLVED, that pursuant to Article IV of the Corporation's
Restated Certificate of Incorporation relating to the shares of the
Corporation, the Board of Directors hereby authorizes, fixes and
creates a series of Preferred Stock, par value $.01 per share, having
the following powers, preferences, designations, rights and other
characteristics:
A. One Million Two Hundred Thousand (1,200,000) of the authorized
shares of Preferred Stock are hereby designated "Series F Preferred Stock."
B. The rights, preferences, privileges, restrictions and other
matters relating to the Series F Preferred Stock are as follows:
1. RANKING. The Series F Preferred Stock shall rank as to
dividends and upon liquidation, dissolution or winding up of the Corporation (i)
on a parity with the Corporations's Series A Preferred and Series B Preferred
Stock and with any class or series of Preferred Stock which by its express terms
provides that it ranks on a parity with the Series F Preferred Stock
(collectively, the "Pari Passu Stock"), and (ii) prior to any class of common
equity of the Corporation and any other class or series of capital stock which
by its express terms provides that it ranks junior to the Series F Preferred
Stock or which does not expressly provide for any ranking as to dividends,
liquidation, dissolution or winding up (collectively, the "Junior Stock").
1.
43
2. DIVIDENDS.
(a) The holders of Series F Preferred Stock shall
be entitled to receive cumulative dividends at the rate of nine percent (9%)
per annum per share (as adjusted for any combinations, consolidations, stock
distributions or dividends, stock splits, reverse stock splits or other similar
transactions with respect to such shares) payable, when, as and if declared by
the Board of Directors out of legally available funds therefor. Subject to
Section 2(b) below, such dividends shall be payable in cash annually on January
1st of each year (unless such day is not a business day, in which event on the
next succeeding business day) (each a "Dividend Payment Date"), commencing on
the next Dividend Payment Date succeeding the date of original issue of such
shares of Series F Preferred Stock, to holders of record as they appear on the
register of the Corporation for the Series F Preferred Stock on the 15th day
immediately preceding such Dividend Payment Date. Dividends on shares of
Series F Preferred Stock shall be computed on the basis of a 360-day year of
twelve 30-day months and shall accumulate from the date of original issue of
such shares. Any declaration of a dividend may be for a portion, or all, of
the then accumulated dividends. Any accumulated dividends that are not paid
will continue to cumulate in the manner described above.
(b) Solely at the option of the Corporation, dividends may
be paid, instead of in cash, on declaration of the Board of Directors, in shares
of the Corporation's common stock, par value $.001 per share (the "Common
Stock"), to the extent of legally available surplus of the Corporation, in
respect of any or all Dividend Payment Dates. The aggregate par value of Common
Stock issued in payment of any dividend shall be transferred from the legal
surplus of the Corporation to its capital at the time of such payment. If a
dividend is to be paid in Common Stock, the number of shares of Common Stock to
be issued in payment of the dividend with respect to each outstanding share of
Series F Preferred Stock shall be determined by dividing the amount of the
dividend to be paid with respect to such share of Series F Preferred Stock by an
amount equal to the Fair Market Value (as defined in Section 5(c) below) of the
Common Stock on the date such dividend is declared by the Board of Directors.
Any such shares distributed as a dividend shall first be registered on a
registration statement with the Securities and Exchange Commission (the "SEC")
and such registration statement shall have been declared effective by the SEC.
(c) No dividend or distribution in cash, shares of capital
stock or other property shall be paid or declared and set apart for payment on
any date on or in respect of (i) the Junior Stock (any such dividend or
distribution on such stock hereinafter referred to as a "Junior Stock
Distribution"), or (ii) any Pari Passu Stock (any such dividends or
distributions on such stock hereinafter referred to as a "Pari Passu Stock
Distribution"), unless, contemporaneously therewith or with respect to the
immediately preceding Dividend Payment Date for the Series F Preferred Stock, a
dividend or distribution is or was paid or declared and set apart for payment on
or in respect of the Series F Preferred Stock, payable at the rate set forth
herein and payable on a date no later than the payment date set forth for such
Junior Stock Distribution or Pari Passu Stock Distribution, as the case may be.
2.
44
(d) In no event may the Corporation (i) make a Junior
Stock Distribution or a Pari Passu Stock Distribution while there are dividends
in arrears on the Series F Preferred Stock or (ii) redeem, purchase or
otherwise acquire for value any Junior Stock or Pari Passu Stock unless, prior
to or contemporaneously with such redemption, purchase or acquisition the
Series F Preferred Stock is redeemed in full (in the case of redemption,
purchase or acquisition of Junior Stock) or on a pro rata basis based on
liquidation preference (in the case of redemption, purchase or acquisition of
Pari Passu Stock).
3. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntary or involuntary, the holders
of the Series F Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Junior Stock, the amount of Ten Dollars
($10.00) per share in cash (as adjusted for any stock subdivisions,
combinations or consolidations or any stock distributions or dividends with
respect to such shares) plus an amount in cash equal to all accrued but unpaid
dividends (the "Liquidation Preference") on each share of Series F Preferred
Stock then held by them and no more. If upon the occurrence of such event, the
assets and funds thus distributed among the holders of the Series F Preferred
Stock and the Pari Passu Stock shall be insufficient to permit the payment to
such holders of their Liquidation Preference, then the entire assets and funds
of the Corporation legally available for distribution shall be distributed
among the holders of the Series F Preferred Stock and the Pari Passu Stock
ratably in accordance with the respective amounts which would be payable on
such shares if all amounts payable thereon were paid in full.
(b) After payment to the holders of the Series F
Preferred Stock of the Liquidation Preference, the entire remaining assets and
funds of the Corporation legally available for distribution, if any, shall be
distributed among the holders of the Junior Stock in accordance with the
corporation's Certificate of Incorporation or any other Certificate of
Designation with respect to the Preferred Stock.
(c) For the purposes of this Section 3, neither
the merger or the consolidation of the Corporation into or with another
corporation, nor the merger or consolidation of any other corporation into or
with the Corporation, nor the voluntary sale, conveyance, exchange, transfer or
other disposition (for cash, shares of stock, securities or other
consideration) of all or substantially all the property or assets of the
Corporation, shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation.
4. VOTING RIGHTS.
(a) Except as otherwise expressly provided herein
or as required by law, the Series F Preferred Stock shall vote together with
the Series A Preferred Stock, Series B Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock and the Common Stock as a single class. The
holder of each share of Series F Preferred Stock shall be entitled to that
3.
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number of votes equal to the number of shares of Common Stock into which such
share could then be converted pursuant hereto and shall be entitled to notice
of all stockholders' meetings in accordance with the Bylaws of the Corporation.
(b) So long as at least Two Hundred Thousand
(200,000) shares of Series F Preferred Stock remain outstanding, the holders of
the Series F Preferred Stock then outstanding shall be entitled, voting
together as a class, to elect two (2) directors of the Corporation at each
election of directors. If there shall cease to be at least One Hundred Fifty
Thousand (150,000) shares of Series F Preferred Stock outstanding but there
shall remain at least Seventy Five Thousand (75,000) shares of such stock
outstanding, the holders of the Series F Preferred Stock then shall be entitled
voting as a class to elect one (1) director. Any vacancy occurring because of
the death, resignation or removal of a director elected by the holders of
Series F Preferred Stock shall be filled by the vote or written consent of the
holders of a majority of the shares of Series F Preferred Stock.
5. CONVERSION. The holders of the Series F Preferred
Stock shall have conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series F
Preferred Stock shall be convertible, at the option of the holder thereof, or,
with respect to all of the Series F Preferred Stock, upon the vote or written
consent of the holders of at least sixty-six and two thirds percent (66 2/3%) in
interest of the Series F Preferred Stock, at any time after the date of issuance
of such shares, at the office of the Corporation or any transfer agent for such
stock, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing ten dollars ($10.00) (the "Original Issue Price")
plus all accrued and unpaid dividends, on each share of Series F Preferred Stock
by the then applicable Conversion Price (as hereinafter defined) in effect on
the date the certificate is surrendered for conversion. The price at which
shares of Common Stock shall be deliverable upon conversion (the "Conversion
Price") shall initially be two dollars and fifty cents ($2.50) per share of
Common Stock. Such initial Conversion Price shall be adjusted as hereinafter
provided.
(b) MECHANICS OF CONVERSION. Before any holder
of Series F Preferred Stock shall be entitled to convert the same into shares
of Common Stock, he shall surrender the certificate or certificates thereof,
duly endorsed, at the office of the Corporation or of any transfer agent for
such stock, and shall give written notice to the Corporation at such office
that he elects to convert the same and shall state therein the name or names in
which he wishes the certificate or certificates for shares of Common Stock to
be issued. The Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Series F Preferred Stock, a
certificate or certificates for the number of shares of Common Stock to which
he shall be entitled as aforesaid. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of surrender
of the shares of Series F Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
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(c) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING
ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of
this Section 5(c), the following definitions shall apply:
(1) "OPTIONS" shall mean rights,
options, or warrants to subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities.
(2) "ORIGINAL ISSUE DATE" shall
mean the date on which a share of Series F Preferred Stock was first issued.
(3) "CONVERTIBLE SECURITIES"
shall mean any evidences of indebtedness, shares (other than Common Stock and
Series F Preferred Stock) or other securities convertible into or exchangeable
for Common Stock.
(4) "ADDITIONAL SHARES OF COMMON
STOCK" shall mean all shares of Common Stock issued (or, pursuant to Section
5(c)(iii), deemed to be issued) by the Corporation after the Original Issue
Date, other than shares of Common Stock issued or issuable:
(A) upon conversion of
shares of Series F Preferred Stock;
(B) to officers,
directors or employees of the Corporation, under a stock option plan approved by
the Board of Directors, to the extent such issuances do not exceed 15% of the
fully diluted Common Stock outstanding on the date of the original issue of
Series F Preferred Stock;
(C) as a dividend or
distribution on the Preferred Stock authorized and outstanding on the date
hereof in accordance with the terms of any applicable Certificate of
Designations; or
(D) for which
adjustment of the Conversion Price is made pursuant to Section 5(c)(vi).
(5) "FAIR MARKET VALUE" shall
mean the average closing price of the Company's Common Stock as listed on the
American Stock Exchange over the twenty (20) business days immediately preceding
the determination of Fair Market Value or in the event such Common Stock is not
listed on the American Stock Exchange then on any other recognized exchange
using the same twenty (20) day trading period or if not listed on any exchange,
then Fair Market Value shall be determined in good faith by the Board of
Directors of the Corporation.
(ii) NO ADJUSTMENT OF CONVERSION PRICE.
No adjustment in the Conversion Price of a particular share of Series F
Preferred Stock shall be made in respect
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of the issuance of Additional Shares of Common Stock unless the consideration
per share for an Additional Share of Common Stock issued or deemed to be issued
by the Corporation is less than the Fair Market Value in effect on the date of
such issuance.
(iii) DEEMED ISSUE OF ADDITIONAL SHARES
OF COMMON STOCK. Subject to paragraph 5(c)(i)(4)(B) herein, in the event the
Corporation at any time or from time to time after the Original Issue Date shall
issue any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities then entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein designed to protect against dilution) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common Stock issued as of the time of
such issue or, in case such a record date shall have been fixed, as of the close
of business on such record date, provided that Additional Shares of Common Stock
shall not be deemed to have been issued unless the consideration per share
(determined pursuant to Section 5(c)(v) hereof) of such Additional Shares of
Common Stock would be less than the Fair Market Value on the date of issuance,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(1) no further adjustments in
the Conversion Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(2) if such Options or
Convertible Securities by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable to the Corporation, or
decrease in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options or the rights of conversion or exchange under
such Convertible Securities (provided, however, that no such adjustment of the
Conversion Price shall affect Common Stock previously issued upon conversion of
the Series F Preferred Stock);
(3) upon the expiration of any
such Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Conversion Price computed
upon the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon such
expiration, be recomputed as if:
(A) in the case of
Convertible Securities or Options for Common Stock the only Additional Shares of
Common Stock issued were the shares of Common Stock, if any, actually issued
upon the exercise of such Options or the conversion
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or exchange of such Convertible Securities and the consideration received
therefor was the consideration actually received by the Corporation for the
issue of all such Options, whether or not exercised, plus the consideration
actually received by the Corporation upon such exercise, or for the issue of all
such Convertible Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Corporation upon such
conversion or exchange, and
(B) in the case of
Options for Convertible Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at the time of issue of
such Options and the consideration received by the Corporation for the
Additional Shares of Common Stock deemed to have been then issued was the
consideration actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration deemed to have been
received by the Corporation (determined pursuant to Section 5(c)(v)) upon the
issue of the Convertible Securities with respect to which such Options were
actually exercised;
(4) no readjustment pursuant to
clauses (2) or (3) above shall have the effect of increasing the Conversion
Price to an amount which exceeds the lower of (A) the Conversion Price on the
original adjustment date, or (B) the Conversion Price that would have resulted
from any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date;
(5) in the case of any Options
that expire by their terms not more than thirty (30) days after the date of
issue thereof, no adjustment of the Conversion Price shall be made, except as to
shares of Series F Preferred Stock converted in such period, until the
expiration or exercise of all such Options, whereupon such adjustment shall be
made in the same manner provided in clause (3) above; and
(6) if any such record date
shall have been fixed and such Options or Convertible Securities are not issued
on the date fixed thereof, the adjustment previously made in the Series F
Conversion Price which became effective on such record date shall be canceled as
of the close of business on such record date, and shall instead be made on the
actual date of issuance, if any.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event the Corporation
shall issue Additional Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to Section 5(c)(iii)) without
consideration or for a consideration per share less than the Fair Market Value
in effect on the date of and immediately prior to such issue, then and in such
event, such Conversion Price shall be adjusted, concurrently with such issue, to
the price (calculated to the nearest cent) determined by multiplying the
Conversion Price by a fraction (a) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of shares of Common Stock
which the aggregate consideration for the total number of such Additional Shares
of Common Stock so issued would purchase at the Fair Market Value, and
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(b) the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to the issuance of such Additional Shares of
Common Stock plus the number of such Additional Shares of common stock so
issued.
(v) DETERMINATION OF CONSIDERATION. For
purposes of this Section 5(c), the consideration received by the Corporation for
the issue of any Additional Shares of Common Stock shall be computed as follows:
(1) CASH AND PROPERTY. Such
consideration shall:
(A) insofar as it
consists of cash, be computed at the aggregate amount of cash received by the
Corporation excluding amounts paid or payable for accrued interest or accrued
dividends;
(B) insofar as it
consists of property other than cash, be computed at the fair value thereof at
the time of such issue, as determined in good faith by the Board of Directors;
and
(C) in the event
Additional Shares of Common Stock are issued together with other shares or
securities or other assets of the Corporation for consideration which covers
both, be the proportion of such consideration so received, computed as provided
in clauses (A) and (B) above, as determined in good faith by the Board of
Directors.
(2) OPTIONS AND CONVERTIBLE
SECURITIES. The consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued pursuant to Section
5(c)(iii), relating to Options and Convertible Securities, shall be determined
by dividing
(A) the total amount, if
any, received or receivable by the Corporation as consideration for the issue of
such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein designed to protect against
dilution) payable to the Corporation upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities by
(B) the maximum number
of shares of Common Stock (as set forth in the instruments relating thereto,
without regard to any provision contained therein designed to protect against
dilution) issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(vi) ADJUSTMENTS FOR COMBINATIONS OR
SUBDIVISIONS OF COMMON STOCK. In the event the Corporation at any time or from
time to time after the Original Issue Date shall declare or pay any dividend on
the Junior Stock in Common Stock or
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in any right to acquire Common Stock, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of Common
Stock (by stock split, reclassification or otherwise), or in the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
then the Conversion Price in effect immediately prior to such event shall,
concurrently with the effectiveness of such event, be proportionately decreased
or increased, as appropriate.
(d) REDEMPTION.
(i) RIGHT TO REDEEM AND VOLUNTARY
CONVERSION. Any or all of the outstanding shares of Series F Preferred Stock
shall be redeemable by the Corporation in the event that the market price of the
Corporation's outstanding Common Stock (as quoted on any national or regional
securities exchange or automated quotation system on which or through which the
Corporation's Common Stock is traded) has equaled or exceed for a period of at
least twenty (20) consecutive trading days 200% of the Conversion Price in
effect during such period. In the event that any holder of Series F Preferred
Stock has not responded to the Corporation's notice of redemption within ten
(10) days, then such Series F Preferred shall be deemed to be a voluntary
conversion of such Series F Preferred Stock into Common Stock by the holder
pursuant to Section 5(a) above.
(ii) MECHANICS OF REDEMPTION. Before
the Corporation shall be entitled to redeem any of the shares of Series F
Preferred Stock, it shall give written notice to each holder thereof whose
shares of Series F Preferred Stock are to be redeemed indicating the number of
shares of Series F Preferred Stock to be redeemed. Each holder thereof shall,
as soon as practicable thereafter, surrender its certificates for such shares,
duly endorsed, at the office of the Corporation or of any transfer agent for
such shares, at which time the Corporation shall pay to such holder the
Redemption Price (defined below) for each such share to be redeemed. The
Redemption Price shall be payable in cash or by check, which need not be
certified. Such redemption shall be deemed to have been made immediately prior
to the close of business on the date of tender of the Redemption Price for the
shares of Series F Preferred Stock to be redeemed.
(iii) REDEMPTION PRICE DEFINED. The
"Redemption Price" shall mean the Original Issue Price plus all accrued but
unpaid dividends on each share of Series F Preferred Stock to be redeemed.
(e) OTHER DISTRIBUTIONS. In the event the
Corporation shall at any time or from time to time make or issue, or fix a
record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the
Corporation or any of it subsidiaries other than Additional Shares of Common
Stock, then in each such event provision shall be made so that the holders of
Series F Preferred Stock shall receive, upon the conversion thereof, the
securities of the Corporation which they would have received had their stock
been converted into Common Stock on the date of such event.
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(f) NO IMPAIRMENT. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 5 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series F Preferred Stock against impairment.
(g) CERTIFICATES AS TO ADJUSTMENTS. Upon the
occurrence of each adjustment or readjustment of the Conversion Price pursuant
to this Section 5, the Corporation shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series F Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series F Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the 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 F Preferred Stock.
(h) NOTICES OF RECORD DATE. In the event of any
taking by the 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 (other than a cash dividend) or other distribution, any security or
right convertible into or entitling the holder thereof to receive Additional
Shares of Common Stock, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or property, or
to receive any other right, the Corporation shall mail to each holder of Series
F Preferred Stock at least twenty (20) days prior to the date specified therein,
a notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution, security or right, and the amount and
character of such dividend, distribution, security or right.
(i) ISSUE TAXES. The Corporation shall pay any
and all issue and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of shares of Series F Preferred
Stock pursuant hereto; provided, however, that the Corporation shall not be
obligated to pay any transfer taxes resulting from any transfer requested by any
holder in connection with any such conversion.
(j) RESERVATION OF STOCK ISSUABLE UPON
CONVERSION. The 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 the Series F Preferred Stock,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Series F
Preferred 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 F Preferred Stock, the Corporation will
take such corporate action as may, in the opinion of its counsel, be
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necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose, including, without
limitation, engaging in best efforts to obtain the requisite shareholder
approval of any necessary amendment to these Articles.
(k) FRACTIONAL SHARES. No fractional share shall
be issued upon the conversion of any share or shares of Series F Preferred
Stock. All shares of Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series F Preferred Stock by a holder
thereof shall be aggregated for purposes of determining whether the conversion
would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a share of Common Stock, the Corporation shall, in lieu of issuing
any fractional share, pay the holder otherwise entitled to such fraction a sum
in cash equal to the fair market value of such fraction on the date of
conversion (as determined in good faith by the Board of Directors of the
Corporation).
(l) NOTICES. Any notice required by the
provisions of this Section 4 to be given to the holders of shares of Series F
Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address
appearing on the books of the Corporation.
(m) ADJUSTMENTS. In case of any reorganization
or any reclassification of the capital stock of the Corporation, any
consolidation or merger of the Corporation with or into another corporation or
corporations, or the conveyance of all or substantially all of the assets of the
Corporation to another corporation, each share of Series F Preferred Stock shall
thereafter be convertible into the number of shares of stock or other securities
or property (including cash) to which a holder of the number of shares of Common
Stock deliverable upon conversion of such share of Series F Preferred Stock
would have been entitled upon the record date of (or date of, if no record date
is fixed) such reorganization, reclassification, consolidation, merger or
conveyance; and, in any case, appropriate adjustment (as determined by the Board
of Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the holders of such
Series F Preferred Stock, to the end that the provisions set forth herein shall
thereafter be applicable, as nearly as equivalent as is practicable, in relation
to any shares of stock or the securities or property (including cash) thereafter
deliverable upon the conversion of the shares of such Series F Preferred Stock.
6. RESTRICTIONS AND LIMITATIONS. So long as at least
Two Hundred Thousand (200,000) shares of Series F Preferred Stock remain
outstanding, the Corporation shall not, without the vote or written consent by
the holders of not less than sixty-six and two thirds percent (66 2/3%) in
interest of the then outstanding shares of Series F Preferred Stock voting
together as a single class, amend, repeal or waive any provision of, or add any
provision to, the Corporation's Certificate of Incorporation or Bylaws if such
action would materially and adversely alter the preferences, rights, privileges
or powers of, or the restrictions provided for the benefit of, the Preferred
Stock.
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7. AMENDMENT. Any term relating to the Series F
Preferred Stock may be amended only with the vote or written consent of holders
of not less than sixty-six and two thirds percent (66 2/3%) in interest of all
Series F Preferred Stock then outstanding. Any such amendment shall be binding
upon the Corporation and any holder of Series F Preferred Stock.
IN WITNESS WHEREOF, I have executed this Certificate this ____ day of
October, 1995.
----------------------------------
XXXXXXX X. XXXXXXX
President
ATTEST:
---------------------------------------
XXXXX X. XXX
Assistant Secretary
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SCHEDULE 3.8(d)
LITIGATION
On January 11, 1995, a company named Xxxxxxx House Industries
apparently filed a complaint in the Supreme Court, State of New York, Xxxxxxx
County, against the Company and NYNEX alleging breach of contract and seeking
$45,000 in damages. The Company received a Summons with notice from the court
in February which did not contain or explain the nature of the complaint. The
Company is unaware of who Xxxxxxx House Industries is or the nature of the
complaint. Their lawyer listed in the complaint was not communicative during
telephone conversations with the Company. The Company has retained an attorney
in New York who tried to obtain a copy of the complaint and recently filed a
Notice of Motion to Dismiss the case based upon the plaintiff not serving the
complaint within twenty days after demand.
In late April of this year the Company received a compliant filed in
the U.S. District Court, Southern District of New York by Sunrise Financial
Group, Inc. ("Sunrise") against Xxxxxx Xxxx and the Company. They allege that
Xx. Xxxx entered into an agreement with Sunrise to issue an option to purchase
125,000 shares of his personal Phoenix Network stock at $1.50 per share.
Sunrise alleges that they exercised that option and Xx. Xxxx refused to honor
the request. Their election to exercise would have resulted in a 98,214 net
share stock payment to Sunrise which was trading at $7.00 per share at the
time, they claim. Phoenix is included in the suit as a result of its failure
to register the shares. The Company has provided a copy of the complaint to
its counsel but has not taken any other action.
On September 21, 1995, Xxxxxxxx Paradise, the Company's former Regional Vice
President of Sales, filed a complaint against the Company alleging claims for
breach of an implied employment contract to terminate only for good cause, and
failure to pay commissions. This action arises out of the Company's
termination of Mr. Paradise's employment on December 31, 1993, and the alleged
failure of the Company to pay override commissions during Mr. Paradise's
employment. The complaint seeks damages in an unspecified amount in excess of
the jurisdictional minimum of $25,000. The Company's response to the complaint
is due on October 31, 1995. The Company believes the action is without merit
and intends to vigorously defend against it.
