EXHIBIT 4.8
STOCK PURCHASE WARRANT
This Warrant is issued this 13th day of May, 1996, by ILD COMMUNICATIONS,
INC., a Delaware corporation (the "Company"), to XXXXX RIVER VENTURES LIMITED
PARTNERSHIP, a South Carolina limited partnership (XXXXX RIVER VENTURES LIMITED
PARTNERSHIP and any subsequent assignee or transferee hereof are hereinafter
referred to collectively as "Holder" or "Holders").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of XXXXX RIVER
VENTURES LIMITED PARTNERSHIP, making a loan to the Company in an amount of Five
Hundred Thousand and no/100ths Dollars ($500,000) pursuant to the terms of a
secured promissory note of even date herewith (the "Note") and related loan
agreement of even date herewith (the "Loan Agreement"), and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby grants to Holder the right to purchase 1,810
shares ("Base Amount") of the Company's common stock (the "Common Stock"),
provided that in the event that any portion of the indebtedness evidenced by the
Note is outstanding on the following dates, the Base Amount shall be increased
to the corresponding number set forth below:
DATE BASE AMOUNT
------------ -----------------
May 13, 1999 2,413 shares
May 13, 2000 3,028 shares
May 13, 2001 3,656 shares
The shares of Common Stock issuable upon exercise of this Warrant are
hereinafter referred to as the "Shares." This Warrant shall be exercisable at
any time and from time to time from the date hereof until June 30, 2001.
2. EXERCISE PRICE. The exercise price (the "Exercise Price") per share
for which all or any of the Shares may be purchased pursuant to the terms of
this Warrant shall be One Cent ($.01).
3. EXERCISE. This Warrant may be exercised by the Holder hereof (but
only on the conditions hereinafter set forth) as to all or any increment or
increments of One Hundred (100) Shares (or the balance of the Shares if less
than such number), upon delivery of written notice of intent to exercise to the
Company at the following address: 00000 Xxxxxxxx Xxxxxxx Xxxxxx, Xxxxx 0, Xxxxx
Xxxxxx Xxxxx, Xxxxxxx 00000 or such other address as the Company shall designate
in a
written notice to the Holder hereof, together with this Warrant and payment
to the Company of the aggregate Exercise Price of the Shares so purchased. The
Exercise Price shall be payable, at the option of the Holder, (i) by certified
or bank check, (ii) by the surrender of the Note or portion thereof having an
outstanding principal balance equal to the aggregate Exercise Price or (iii) by
the surrender of a portion of this Warrant where the Shares subject to the
portion of this Warrant that is surrendered have a fair market value (as
mutually agreed upon by the parties hereto) equal to the aggregate Exercise
Price. Upon exercise of this Warrant as aforesaid, the Company shall as
promptly as practicable, and in any event within fifteen (15) days thereafter,
execute and deliver to the Holder of this Warrant a certificate or certificates
for the total number of whole Shares for which this Warrant is being exercised
in such names and denominations as are requested by such Holder. If this
Warrant shall be exercised with respect to less than all of the Shares, the
Holder shall be entitled to receive a new Warrant covering the number of Shares
in respect of which this Warrant shall not have been exercised, which new
Warrant shall in all other respects be identical to this Warrant. The Company
covenants and agrees that it will pay when due any and all state and federal
issue taxes which may be payable in respect of the issuance of this Warrant or
the issuance of any Shares upon exercise of this Warrant.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered under
the Securities Act of 1933, as amended ("Securities Act") or any state
securities laws ("Blue Sky Laws"). This Warrant has been acquired for
investment purposes and not with a view to distribution or resale and may
not be sold or otherwise transferred without (i) an effective registration
statement for such Warrant under the Securities Act and such applicable
Blue Sky Laws, or (ii) an opinion of counsel, which opinion and counsel
shall be reasonably satisfactory to the Company and its counsel, that
registration is not required under the Securities Act or under any
applicable Blue Sky Laws (the Company hereby acknowledges that Wyche,
Burgess, Xxxxxxx & Xxxxxx, P.A. is acceptable counsel). Transfer of the
shares issued upon the exercise of this Warrant shall be restricted in the
same manner and to the same extent as the Warrant and the certificates
representing such Shares shall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION
STATEMENT UNDER THE ACT AND SUCH APPLICABLE STATE SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR
(II) IN THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY,
REGISTRATION UNDER SUCH SECURITIES ACTS AND SUCH APPLICABLE
STATE
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SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.
The Holder hereof and the Company agree to execute such other documents and
instruments as counsel for the Company reasonably deems necessary to effect
the compliance of the issuance of this Warrant and any shares of Common
Stock issued upon exercise hereof with applicable federal and state
securities laws.
(b) The Company covenants and agrees that all Shares which may be
issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes (other than income or an intangibles tax
owed by Holder), liens, charges and preemptive rights, if any, with respect
thereto or to the issuance thereof. The Company shall at all times reserve
and keep available for issuance upon the exercise of this Warrant such
number of authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of this Warrant.
(c) In the event the Company sells shares of the Company's voting
stock or options, warrants, or other securities exercisable into shares of
capital stock at a price per share (or exercise price per share) of less
than the higher of (i) $72.69 per share and (ii) the fair market value per
share of such shares as determined in good faith by the Board of Directors
of the Company (the "Trigger Price") (a "Dilutive Issuance"), then the
number of shares of Common Stock issuable upon exercise of this Warrant
shall be increased, without any action on the part of the holder(s) thereof
or the Company, into that number of shares of Common Stock which would have
been issued upon exercise of such Warrant if exercised immediately prior to
such Dilutive Issuance, multiplied by a fraction, the numerator of which is
the number of shares of Common Stock outstanding on a fully diluted basis
prior to such Dilutive Issuance plus the number of shares issued pursuant
to the Dilutive Issuance whether upon, the sale or issuance of the Common
Stock or upon exercise in full of all the conversion rights, options,
rights and warrants, and the denominator of which is the number of shares
of Common Stock outstanding on a fully diluted basis prior to such Dilutive
Issuance plus the number of shares that the gross proceeds of such Dilutive
Issuance could have purchased at the per share Trigger Price. If any
rights of conversion or exercise of convertible securities, options, rights
or warrants pursuant to a Dilutive Issuance shall expire without having
been exercised (except in the case where the Company has redeemed such
convertible security, option, right or warrant or made any payment on
account of the holder thereof not converting or exercising such convertible
security, option, right or warrant), the number of shares of Common Stock
to be issued upon exercise of the Warrant shall be equitably adjusted to be
the number of shares of Common Stock that would have been in effect had the
computation in this section 4(c) been made on the basis that the only
shares of Common Stock issued or sold pursuant to the Dilutive Issuance
were those actually issued upon the conversion or exercise of such
convertible securities, options, rights or warrants constituting the
Dilutive Issuance.
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Notwithstanding any other provisions herein to the contrary, the
following events shall not be deemed to constitute a Dilutive Issuance for
purposes of this warrant: (A) the issuance of any options, rights or
warrants, or the issuance of shares of Common Stock upon exercise thereof,
pursuant to options, rights or warrants granted to key employees of the
Company pursuant to management warrants or option agreements, as approved
by the Board of Directors of the Company, in an amount not to exceed 27,500
shares, including the options to Xxxxxxx X. Xxxxx and certain key employees
or consultants of the Company for 27,500 shares at $24.20 per share; (B)
the issuance of any warrants to be granted to Sirrom Capital Corporation
and Xxxxx River Ventures Limited Partnership in connection with a
$2,000,000 loan as approved by the Board of Directors of the Company; or
(C) the issuance of the warrants by the Company to Triad Capital Partners,
Inc., or affiliates thereof, to purchase up to 6,000 shares of Common Stock
at $90.00 per share, and the issuance of shares of Common Stock pursuant to
the exercise of any such warrant.
5. TRANSFER OF WARRANT. Subject to the provisions of Section 4 hereof,
this Warrant may be transferred, in whole or in part, to any person or business
entity, by presentation of the Warrant to the Company with written instructions
for such transfer. Upon such presentation for transfer, the Company shall
promptly execute and deliver a new Warrant or Warrants in the form hereof in the
name of the assignee or assignees and in the denominations specified in such
instructions. The Company shall pay all expenses incurred by it in connection
with the preparation, issuance and delivery of Warrants under this Section.
Holder shall give the Company ten (10) days prior written notice of its
intention to transfer this Warrant to a shareholder of the Company.
6. WARRANT HOLDER NOT SHAREHOLDER; RIGHTS OFFERING; PREEMPTIVE RIGHTS.
Except as otherwise provided herein, this Warrant does not confer upon the
Holder, as such, any right whatsoever as a shareholder of the Company.
Notwithstanding the foregoing, if the Company should offer to all of the
Company's shareholders the right to purchase any securities of the Company, then
all shares of Common Stock that are subject to this Warrant shall be deemed to
be outstanding and owned by the Holder and the Holder shall be entitled to
participate in such rights offering. The Company shall not grant any preemptive
rights with respect to any of its capital stock without the prior written
consent of the Holder.
7. OBSERVATION RIGHTS. The Holder of this Warrant shall receive
notice of and be entitled to attend or may send a representative (at Holder's
expense) to attend all meetings of the Company's Board of Directors in a
non-voting observation capacity and shall receive a copy of all
correspondence and information delivered to the Company's Board of Directors,
from the date hereof until such time as the indebtedness evidenced by the
Note has been paid in full.
8. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization,
combination of shares of the Company, or other
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similar event, occurring after the date hereof, then the Holder
exercising this Warrant shall receive, for the aggregate price paid upon
such exercise, the aggregate number and class of shares which such
Holder would have received if this Warrant had been exercised
immediately prior to such stock split, stock dividend, recapitalization,
combination of shares, or other similar event. If any adjustment under
this Section 8(a), would create a fractional share of Common Stock or a
right to acquire a fractional share of Common Stock, such fractional
share shall be disregarded and the number of shares subject to this
Warrant shall be the next higher number of shares, rounding all
fractions upward. Whenever there shall be an adjustment pursuant to
this Section 8(a), the Company shall forthwith notify the Holder or
Holders of this Warrant of such adjustment, setting forth in reasonable
detail the event requiring the adjustment and the method by which such
adjustment was calculated.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares, separation,
reorganization or liquidation of the Company, or other similar event,
occurring after the date hereof, as a result of which shares of Common
Stock shall be changed into the same or a different number of shares of the
same or another class or classes of securities of the Company or another
entity, or the holders of Common Stock are entitled to receive cash or
other property, then the Holder exercising this Warrant shall receive, for
the aggregate price paid upon such exercise, the aggregate number and class
of shares, cash or other property which such Holder would have received if
this Warrant had been exercised immediately prior to such merger,
consolidation, exchange of shares, separation, reorganization or
liquidation, or other similar event. If any adjustment under this Section
8(b) would create a fractional share of Common Stock or a right to acquire
a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares subject to this Warrant shall be the
next higher number of shares, rounding all fractions upward. Whenever
there shall be an adjustment pursuant to this Section 8(b), the Company
shall forthwith notify the Holder or Holders of this Warrant of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
9. PUT AGREEMENT.
(a) The Company hereby irrevocably grants and issues to Holder the
right and option to sell to the Company (the "Put") this Warrant for a
period of 30 days immediately prior to the expiration thereof, at a
purchase price (the "Purchase Price") equal to the Fair Market Value (as
hereinafter defined) of the shares of Common Stock issuable to Holder upon
exercise of this Warrant.
(b) The Purchase Price shall be paid to Holder by the Company, as
follows:
(i) one third of the Purchase Price shall be paid in cash
within thirty (30) days of the receipt of written notice from Holder
of its intention to exercise the Put (the "Closing Date"),
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(ii) On the Closing Date, the Company shall deliver a
promissory note to Holder, in substantially the form of the Note,
which evidences the remaining balance of the Purchase Price and
provides for: (A) two (2) equal installment payments of principal with
the first installment due on the six (6) month anniversary date of the
promissory note and the second installment due on the first
anniversary date of the promissory note; (B) interest to accrue on the
outstanding principal balance at thirteen and one half percent (13.5%)
per annum and payable monthly; (C) the promissory note to be secured
by all of the Shares transferred by the Holder pursuant to the Put;
and (D) the Company to have the right to prepay the promissory note in
part or in full at any time and from time to time.
The aggregate number of shares that may be sold to the Company
pursuant to this Section may be decreased to the extent that the
consideration to be paid by the Company for the shares would exceed
the "surplus" of the Company (as defined in Section 154 of the
Delaware General Corporation Law).
(c) The Fair Market Value of the shares of Common Stock of the
Company issuable pursuant to this Warrant shall be determined as follows:
(i) The Company and the Holder shall each appoint an
independent, experienced appraiser who is a member of a recognized
professional association of business appraisers. The two appraisers
shall determine the value of the shares of Common Stock which would be
issued upon the exercise of the Warrant, assuming that the sale would
be between a willing buyer and a willing seller, both of whom have
full knowledge of the financial and other affairs of the Company, and
neither of whom is under any compulsion to sell or to buy.
(ii) If the highest of the two appraisals is not more than
10% more than the lowest of the appraisals, the Fair Market Value
shall be the average of the two appraisals. If the highest of the two
appraisals is 10% or more than the lowest of the two appraisals, then
a third appraiser shall be appointed by the two appraisers, and if
they cannot agree on a third appraiser, the American Arbitration
Association shall appoint the third appraiser. The third appraiser,
regardless of who appoints him or her, shall have the same
qualifications as the first two appraisers.
(iii) The Fair Market Value after the appointment of the third
appraiser shall be the mean of the three appraisals.
(iv) The fees and expenses of the appraisers shall be paid
one-half by the Company and one-half by the Holder.
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(d) Notwithstanding Section 9(a) hereof, in the event that any
shareholder of the Company exercises its right to require the Company to
redeem its shares pursuant to the Shareholder Agreement of even date
herewith by and among the Company and the Founding Shareholders (as
hereinafter defined).
10. REGISTRATION.
(a) The Company and the holders of the Shares agree that if at any
time after the date hereof the Company shall propose to file a registration
statement with respect to any of its Common Stock on a form suitable for a
secondary offering, it will give notice in writing to such effect to the
registered holder(s) of the Shares at least thirty (30) days prior to such
filing, and, at the written request of any such registered holder, made
within ten (10) days after the receipt of such notice, will include therein
at the Company's cost and expense (including the fees and expenses of
counsel to such holder(s), but excluding underwriting discounts,
commissions and filing fees attributable to the Shares included therein)
such of the Shares as such holder(s) shall request; provided, however, that
if the offering being registered by the Company is underwritten and if the
representative of the underwriters certifies in writing that the inclusion
therein of the Shares would materially and adversely affect the sale of the
securities to be sold by the Company thereunder, then the Company shall be
required to include in the offering only that number of securities,
including the Shares, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities
so included to be apportioned pro rata among all selling shareholders
according to the total amount of securities entitled to be included therein
owned by each selling shareholder, but in no event shall the total amount
of Shares included in the offering be less than the number of securities
included in the offering by any other single selling shareholder unless all
of the Shares are included in the offering).
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(b) Whenever the Company undertakes to effect the registration of any
of the Shares, the Company shall, as expeditiously as reasonably possible:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement covering such
Shares and use its best efforts to cause such registration statement
to be declared effective by the Commission as expeditiously as
possible and to keep such registration effective until the earlier of
(A) the date when all Shares covered by the registration statement
have been sold or (B) a period of at least 90 days after the effective
date of such registration statement or for such longer period, not to
exceed 180 days, as may be required under the plan or plans of
distribution set forth in such registration statement; provided, that
before filing a registration statement or prospectus or any amendment
or supplements thereto, the Company will furnish to each Holder of
Shares covered by such registration statement and the underwriters, if
any, copies of all such documents proposed to be filed (excluding
exhibits, unless any such person shall specifically request exhibits),
which documents will be subject to the review of such Holders and
underwriters, and the Company will not file such registration
statement or any amendment thereto or any prospectus or any supplement
thereto (including any documents incorporated by reference therein)
with the Commission if (A) the underwriters, if any, shall reasonably
object to such filing or (B) if information in such registration
statement or prospectus concerning a particular selling Holder has
changed and such Holder or the underwriters, if any, shall reasonably
object.
(ii) Prepare and file with the Commission such amendments and
post-effective amendments to such registration statement as may be
necessary to keep such registration statement effective during the
period referred to in Section 10(b)(i) and to comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement, and cause the
prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed with the Commission pursuant to
Rule 424 under the Securities Act.
(iii) Furnish to the selling Holder(s) such numbers of copies
of such registration statement, each amendment thereto, the prospectus
included in such registration statement (including each preliminary
prospectus), each supplement thereto and such other documents as they
may reasonably request in order to facilitate the disposition of the
Shares owned by them.
(iv) Use its best efforts to register and qualify under such
other securities laws of such jurisdictions as shall be reasonably
requested by any selling Holder and do any and all other acts and
things which may be reasonably necessary or advisable to enable such
selling Holder to consummate the disposition of the Shares owned by
such Holder, in such jurisdictions; provided, however, that the
Company shall not
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be required in connection therewith or as a condition thereto to
qualify to transact business or to file a general consent to service
of process in any such states or jurisdictions.
(v) Promptly notify each selling Holder of the happening of
any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not
misleading and, at the request of any such Holder, the Company will
prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Shares, such prospectus
will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not
misleading.
(vi) Provide a transfer agent and registrar for all such
Shares not later than the effective date of such registration
statement.
(vii) Enter into such customary agreements (including
underwriting agreements in customary form for a primary offering) and
take all such other actions as the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such
Shares (including, without limitation, effecting a stock split or a
combination of shares).
(viii) Make available for inspection by any selling Holder or
any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent
retained by any such selling Holder or underwriter, all financial and
other records, pertinent corporate documents and properties of the
Company, and cause the officers, directors, employees and independent
accountants of the Company to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement.
(ix) Promptly notify the selling Holder(s) and the
underwriters, if any, of the following events and (if requested by any
such person) confirm such notification in writing: (A) the filing of
the prospectus or any prospectus supplement and the registration
statement and any amendment or post-effective amendment thereto and,
with respect to the registration statement or any post-effective
amendment thereto, the declaration of the effectiveness of such
documents, (B) any requests by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information, (C) the issuance or threat of issuance by the
Commission of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that
purpose and (D) the receipt by the Company of any notification with
respect to the suspension of the qualification
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of the Shares for sale in any jurisdiction or the initiation or
threat of initiation of any proceeding for such purposes.
(x) Make every reasonable effort to prevent the entry of any
order suspending the effectiveness of the registration statement and
obtain at the earliest possible moment the withdrawal of any such
order, if entered.
(xi) Cooperate with the selling Holder(s) and the
underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing the Shares to be sold and not
bearing any restrictive legends, and enable such Shares to be in such
lots and registered in such names as the underwriters may request at
least two (2) business days prior to any delivery of the Shares to the
underwriters.
(xii) Provide a CUSIP number for all the Shares not later than
the effective date of the registration statement.
(xiii) Prior to the effectiveness of the registration statement
and any post-effective amendment thereto and at each closing of an
underwritten offering, use its best efforts to satisfy all
requirements imposed on the Company (and its agents, attorneys, and
accountants) by the Underwriters as are customarily imposed on issuers
in primary underwritten offerings.
(xiv) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than
forty-five (45) days after the end of any twelve-month period (or
ninety (90) days, if such period is a fiscal year) (A) commencing at
the end of any fiscal quarter in which the Shares are sold to
underwriters in a firm or best efforts underwritten offering, or (B)
if not sold to underwriters in such an offering, beginning with the
first month of the first fiscal quarter of the Company commencing
after the effective date of the registration statement, which
statements shall cover such twelve-month periods.
(c) After the date hereof, the Company shall not grant to any holder
of securities of the Company any registration rights which have a priority
greater than or equal to those granted to Holders pursuant to this Warrant
without the prior written consent of the Holder(s).
(d) The Company's obligations under Section 10(a) above with respect
to each holder of Shares are expressly conditioned upon such holder's
furnishing to the Company in writing such information concerning such
holder and the terms of such holder's proposed offering as the Company
shall reasonably request for inclusion in the registration statement. If
any registration statement including any of the Shares is filed, then the
Company shall
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indemnify each holder thereof (and each underwriter for such holder and
each person, if any, who controls such underwriter within the meaning of
the Securities Act) from any loss, claim, damage or liability arising
out of, based upon or in any way relating to any untrue statement of a
material fact contained in such registration statement or any omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except for any
such statement or omission based on information furnished in writing by
such holder of the Shares expressly for use in connection with such
registration statement; and such holder shall indemnify the Company (and
each of its officers and directors who has signed such registration
statement, each director, each person, if any, who controls the Company
within the meaning of the Securities Act, each underwriter for the
Company and each person, if any, who controls such underwriter within
the meaning of the Securities Act) and each other such holder against
any loss, claim, damage or liability arising from any such statement or
omission which was made in reliance upon information furnished in
writing to the Company by such holder of the Shares expressly for use in
connection with such registration statement.
(e) For purposes of this Section 10, all of the Shares shall be
deemed to be issued and outstanding.
11. CERTAIN NOTICES. In case at any time the Company shall propose to:
(a) declare any cash dividend upon its Common Stock;
(b) declare any dividend upon its Common Stock payable in stock or
make any special dividend or other distribution to the holders of its
Common Stock;
(c) offer for subscription to the holders of any of its Common Stock
any additional shares of stock in any class or other rights;
(d) reorganize, or reclassify the capital stock of the Company, or
consolidate, merge or otherwise combine with, or sell of all or
substantially all of its assets to, another corporation;
(e) voluntarily or involuntarily dissolve, liquidate or wind up of
the affairs of the Company; or
(f) redeem or purchase any shares of its capital stock or securities
convertible into its capital stock;
then, in any one or more of said cases, the Company shall give to the
Holder of the Warrant, by certified or registered mail, (i) at least twenty
(20) days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in
respect
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of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, and (ii) in the case of
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least twenty (20) days' prior
written notice of the date when the same shall take place. Any notice
required by clause (i) shall also specify, in the case of any such
dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto, and any notice
required by clause (ii) shall specify the date on which the holders of
Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation
or winding up, as the case may be.
12. RIGHTS OF CO-SALE.
(a) CO-SALE RIGHT. Neither Intellicall, Inc., Triad-ILD Partners,
nor Xxxxxx Telecommunications, LLC ("Xxxxxx")(collectively, the "Founding
Shareholders") shall enter into any transaction that would result in the
sale by it of any capital stock now or hereafter owned by it, unless prior
to such sale such Founding Shareholder shall give notice to Holder of its
intention to effect such sale in order that Holder may exercise its rights
under this Section 12 as hereinafter described. Such notice shall set
forth (i) the number of shares to be sold by such Founding Shareholder,
(ii) the principal terms of the sale, including the price at which the
shares are intended to be sold, and (iii) an offer by such Founding
Shareholder to use his best efforts to cause to be included with the shares
to be sold by it in the sale, that number of Shares designated by Holder on
the same terms and conditions.
(b) REJECTION OF CO-SALE OFFER. If Holder has not accepted such
offer in writing within a period of ten (10) days from the date of receipt
of the notice, then such Founding Shareholder shall thereafter be free for
a period of ninety (90) days to sell the number of shares specified in such
notice, at a price no greater than the price set forth in such notice and
on otherwise no more favorable terms to such Founding Shareholder than as
set forth in such notice, without any further obligation to Holder in
connection with such sale. In the event that such Founding Shareholder
fails to consummate such sale within such ninety-day period, the shares
specified in such notice shall continue to be subject to this Section.
(c) ACCEPTANCE OF CO-SALE OFFER. If Holder accepts such offer in
writing within ten (10) day period, such acceptance shall be irrevocable
unless such Founding Shareholder shall be unable to cause to be included in
its sale the number of Shares requested to be included by Holder and set
forth in the written acceptance. In that event, such Founding Shareholder,
Holder and each other person or entity possessing co-sale rights with
respect to such sale shall participate in the sale equally, with such
Founding Shareholder, Holder and each other person or entity possessing
co-sale rights with respect to such sale each selling an equal number of
the shares to be sold in the sale.
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(d) EXCEPTION TO CO-SALE RIGHT. Notwithstanding anything to the
contrary contained herein, the right of co-sale set forth in this Section
12 shall not apply to sales of capital stock of the Company by Intellicall,
Inc. to Xxxxxx if following such sale Xxxxxx would not own more than 25% of
the outstanding capital stock of the Company.
13
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date
first above written.
COMPANY: ILD COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Title: President
--------------------------------
HOLDER: XXXXX RIVER VENTURES LIMITED PARTNERSHIP, a
South Carolina limited partnership
By: Emergent Equity Advisors, Inc., its
general partner
By: /s/ Capers X. Xxxxxxxx
-------------------------------------
Title: President
--------------------------------
FOUNDING
SHAREHOLDERS: TRIAD-ILD PARTNERS
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Title: President
---------------------------------
XXXXXX TELECOMMUNICATIONS, LLC
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Title: President
---------------------------------
INTELLICALL, INC.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Title: Vice President
---------------------------------
14
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