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Exhibit 99.1
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
THIS PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT is made and entered
into as of the ____ day of February, 1998, by and between COMPRESSENT CORP., a
Florida corporation maintaining its principal offices at 0000 Xxxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000 (the "Company"), and CALL NOW, INC., a Florida corporation
maintaining its principal offices at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxx
00000 (the "Purchaser").
WHEREAS, Purchaser desires to purchase and hold certain equity
securities of the Company and the Company desires to sell such securities to
Purchaser, all in accordance with, and subject to, the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. AUTHORIZATION AND SALE OF THE SHARES AND WARRANT.
1.1 AUTHORIZATION. The Company has authorized the issuance pursuant to
the terms and conditions hereof: (i) 56,000 shares (the "Shares") of its
convertible preferred stock, par value $0.001 per share (the "Preferred Stock")
and (ii) the Company's Warrant to purchase 500,000 shares of the Company's
Common Stock (the "Warrant"). Such Shares and Warrant are further described in
Exhibit A hereto.
1.2 PURCHASE AND SALE. Subject to the terms and conditions hereof, the
Company will issue and sell to Purchaser, and Purchaser will purchase from the
Company, the Shares and the Warrant (collectively, the "Securities") at an
aggregate purchase price of $3,500,500 (the "Purchase Price"), of which
$3,500,000 shall be allocated to the Shares and $500 shall be allocated to the
Warrant.
2. CLOSING AND DELIVERY.
2.1 CLOSING. The closing of the purchase and sale of the Securities
(the "Closing") shall be held at the offices of Purchaser on February __, 1998
(the "Closing Date") or at such other time and place as the Company and
Purchaser may agree in writing.
2.2 DELIVERY. At the Closing, subject to the terms and conditions of
this Agreement, the Company will deliver to Purchaser the Shares and the Warrant
against payment by Purchaser of the Purchase Price in the form of the securities
specified in Exhibit B hereto. In the event of any redemption of the Preferred
Stock, such securities may be utilized as valued herein.
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2.3 CONDITIONS. The obligations of each of the parties to this
Agreement to be performed by it shall be subject to the satisfaction, on or
before the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made in this Agreement by the other parties hereto, when
construed as representations and warranties made as of the Closing Date, shall
be true and correct as of the Closing Date except for any changes required,
permitted or contemplated by this Agreement or other transactions consented to
by the parties to whom the representations and warranties are made, and except
for other changes, the aggregate cumulative effect of which upon its financial
condition, results of operations, business and financial position, taken as a
whole, is not materially adverse.
(b) PERFORMANCE OF AGREEMENTS. The other parties and their
subsidiaries shall have substantially performed and complied with all material
agreements, obligations and restrictions required by this Agreement to be
performed or complied with by them or their subsidiaries at or prior to the
Closing Date.
(c) APPROVAL OF SHAREHOLDERS AND OTHERS. The shareholders of
the Company shall have authorized the issuance of the Shares in the manner
required by applicable law; all material consents from third parties required to
consummate the sale shall have been obtained, and the Company shall have
obtained all authorizations and approvals of regulatory bodies or officials
necessary to permit the consummation of the sale.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in Exhibit C attached hereto, the Company hereby
represents and warrants to Purchaser as follows (unless the context otherwise
requires or admits, references herein to the Company include any Subsidiaries of
the Company):
3.1 ORGANIZATION AND STANDING, ARTICLES AND BYLAWS. The Company is a
corporation duly organized and existing under the laws of the State of Florida
and its status under such laws is active. The Company has the requisite
corporate power to own and operate its properties and assets and to carry on its
business as presently conducted and as proposed to be conducted. The Company has
furnished Purchaser with copies of its Articles of Incorporation and Bylaws.
Said copies are true, correct and complete and contain all amendments through
the date of this Agreement.
3.2 CORPORATE POWER. The Company has now, or will have at the Closing
Date, all requisite legal authority and corporate power to enter into this
Agreement, to sell the Securities hereunder and to perform its obligations under
this Agreement.
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3.3 SUBSIDIARIES. The Company has no subsidiaries other than Softlink,
Inc. The Company does not own, directly or indirectly, any shares of stock or
other equity interests in any other corporation, association, joint venture or
business organization.
3.4 CAPITALIZATION. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, of which there are issued and
outstanding 5,612,000 shares and 150,000 shares of Preferred Stock of which none
are issued and outstanding. All such outstanding shares of Common Stock have
been duly authorized and validly issued, and are fully paid and nonassessable.
There are no outstanding rights, options, warrants, conversion rights or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock except as set forth in Exhibit C hereto. All shares heretofore
issued have been issued in full compliance with all applicable federal and state
securities laws.
3.5. SEC AND FINANCIAL STATEMENTS. (a) The Company has filed with the
SEC all reports, forms, schedules and statements and other documents required to
be filed by it (the "SEC Documents"). As of their respective filing dates, (i)
the SEC Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC Documents,
and (ii) none of the SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements included in
the SEC Documents complied, as of their respective filing dates as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present, in all material respects, the
consolidated financial position of the Company and its Subsidiaries as of the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). Except as set forth on Schedule 3.5 and except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the date of the most recent consolidated
balance sheet included in the SEC Documents filed and publicly available prior
to the date hereof, neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a balance sheet or in the
notes thereto.
3.6 TAXES. The amount of the provision for liability for taxes on the
Company's Balance Sheet is sufficient for the payment of all unpaid federal,
state and local income, franchise and property taxes of the Company accrued for
or applicable to the period ended on the date of said Balance Sheet and all
years and periods prior thereto. The Company has collected or paid all
applicable local tax returns, intangible tax returns and other tax returns which
are required to be filed by it, and such returns and reports are true and
correct. The Company has prepared and filed all Federal, State and County and
local income, excise and other tax returns required to be filed by it
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and all such returns are true and correct. The Company has paid all taxes which
have become due pursuant to such returns or pursuant to any assessment received
by it. The Federal income tax returns of the Company have not been examined by
the Internal Revenue Service. The Company has not incurred any tax liabilities
other than in the ordinary course of business; there are no tax liens upon any
of the properties or assets, real, personal or mixed, tangible or intangible, of
the Company, (except for liens of taxes not yet due); and, except as reflected
in the Balance Sheet, there are no pending questions relating to, or claims
asserted for, taxes or assessments against the Company, and there is no basis
for any such question or claim.
3.7 INSURANCE. The Company has in force and effect and is covered under
policies of insurance covering such risks and in amounts adequate for the size
and scope of its business.
3.8 OTHER MATERIAL CONTRACTS AND COMMITMENTS. Set forth in Exhibit 3.18
and delivered to Purchaser are copies of all material contracts, agreements,
instruments and other commitments to which the Company is a party and which are
not included in other exhibits hereto. Except as included in said Exhibit 3.8
and such other exhibits to this Agreement, the Company is not a party to or
bound by any written or oral (a) material contract, agreement or other
instrument or understanding creating a liability; (b) material lease, mortgage,
pledge, conditional sales contract, security agreement, factoring agreement or
other similar agreement with respect to any real or personal property, whether
as lessor or lessee or otherwise; (c) material agreement or arrangement for the
borrowing of money or for a line of credit; (e) agreement or arrangement any for
the sale of the assets of the Company or for the grant of any preferential
rights to purchase any of the assets, property or rights of the Company or for
the transfer or the assignment thereof other than the ordinary course of
business of the Company; (f) guarantee, surety, subordination or other agreement
for related type of agreement or arrangement; (g) agreement of any kind with any
director or officer or with any associate of any such person; (h) material
agreement or commitment for capital expenditures or for the acquisition of fixed
assets. As used in this Section 3.18, the term "material" refers to any
contract, agreement, commitment, instrument or understanding involving a
liability, actual or potential, in excess of $5,000.
3.9 PERFORMANCE OF OBLIGATIONS. The Company has performed all of the
material obligations required to be performed by it and is not in material
default under any of the agreements, leases, contracts, or other documents to
which it is a party. No party with whom the Company has an agreement or
commitment is in material default thereof. As used in this Section 3.9, the term
"material" refers to a default involving more than $500 or which, when
aggregated with other defaults, would exceed $2,000, or which would give the
nondefaulting party a right to cancel or terminate such defaulted agreement or
obligation.
3.10 CONFLICT. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will conflict with or
result in a breach of, or give rise to, or termination of, or accelerate the
maturity of or the performance required by any terms of the Articles of
Incorporation or By-laws or any indenture, loan agreement, lease or other
agreement or arrangement of the Company, or constitute a default thereunder, or
result in the creation of any lien, charge or encumbrance upon any of the assets
or properties of the Company.
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3.11 LITIGATION, ETC. There is no investigation by any governmental
agency or any legal proceedings pending, or to the best knowledge of the Seller,
threatened against the Company, or the property, assets or good will thereof,
and there is no out-standing order, writ, injunction or decree of any court or
governmental agency against or affecting the Company, or against or affecting
its business, property, assets, good will or common stock.
3.12 COMPLIANCE WITH LAWS. The Company has complied in all material
respects with all laws, regulations and orders applicable to the conduct of its
business, and the Company possesses all permits, licenses and other approvals
and authorizations of all governmental agencies which are necessary to the
conduct of its business and all said permits, licenses and other approvals and
authorizations are in full force and effect. The Company has not received any
notice of, and is not aware of any material violation of, any law, rule,
regulation or ordinance concerning zoning, environmental regulation, hazardous
substances or of any law, order, regulation or requirement relating to the
operation of its business which remains uncured or which has not been dismissed.
3.13 RECENT TRANSACTIONS. Except as shown on the Exhibits delivered in
connection herewith, the business of the Company has been conducted diligently
and only in the ordinary course and the Company has not (a) incurred or become
subject to any obligation or liability (absolute or contingent) except current
liabilities incurred in the ordinary course of business of the Company and under
contracts entered into in the ordinary course of business of the Company, none
of which involves potential liability in excess of $5,000 or is not cancelable
in thirty days or less notice without penalty or liquidated damages; (b)
discharged or satisfied any lien or encumbrance or paid any obligation (tangible
or intangible) other than liabilities shown on the Balance Sheet and current
liabilities incurred since the date of the said Balance Sheet in the ordinary
course of business of the Company; (c) mortgaged, pledged or subjected to lien,
charge or any other encumbrance, any of its assets, real or personal tangible or
intangible; (d) sold or transferred any of its assets, property or rights or
cancelled any debts or claims except in each case in the ordinary course of
business of the Company, or entered into any agreement or arrangement granting
any preferential rights to purchase any of its assets, property or rights or
which requires consent of any third party to the transfer and assignment of any
of its assets, property or rights; (e) suffered any extraordinary losses
(whether or not covered by insurance) or waived any rights of substantial value;
(f) made or permitted any amendment or termination of any contract, agreement or
license to which it is a party, otherwise than in the ordinary course of
business; (g) through negotiation or otherwise, made any commitment or incurred
any liability to any labor organization; (h) made capital expenditures or
entered into agreements therefor aggregating more than $5,000; (i) issued any
stock, bonds or any other corporate securities or granted any options, warrants
or other rights calling for the issuance thereof; (j) amended its Articles of
Incorporation or By-Laws.
3.14 WARRANTIES. There are no pending claims against the Company or its
insurers for breach of any warranty or with respect to liability for defective
products or services.
3.15 BROKERS AND FINDER. The Company has not entered into an agreement
with any person, firm or corporation, or become indirectly a party to any such
agreement nor has it taken any action or is it aware of any facts which would
result in the assertion of any liability or claim for the
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payment of any commission, brokerage or finder's fee in connection with the
execution of this Agreement or the consummation of transactions contemplated
herein.
3.16 DISCLOSURE. All material facts regarding the assets, business,
operations, financial condition and prospects of the Company are reflected in
the Balance Sheet, or have been disclosed herein, or have been disclosed to
Purchaser in writing set forth as Exhibit 3.16 hereto. No representation or
warranty by the Company contained in this agreement and no statement contained
in any certificate, schedule, exhibit, list or other writing furnished to
Purchaser pursuant to the provisions hereof or in connection with the
negotiation hereof, contains any untrue statement of any material fact or omits
to state a material fact necessary in order to make the statements herein not
misleading.
3.17 UPDATE. The Company will promptly advise the Purchaser in writing
of any changes in any of the representations, warranties or Exhibits herein and
these representations and warranties shall be true and correct as of the date of
the Closing as well as the date hereof, and the Company will provide Purchaser
with quarterly and annual balance sheets and income statements of the Company
from the date hereof until the Purchaser no longer owns any securities of the
Company.
4. SECURITIES ACT.
4.01 INVESTMENT REPRESENTATION. Purchaser acknowledges that the
Company's Securities issuable pursuant to this Agreement will not have been
registered under the Securities Act of 1933 (the Securities Act") and that the
Securities must be held indefinitely unless subsequently registered thereunder
or an exemption from registration is available. Purchaser represents and
warrants to Company that (i) Purchaser will acquire such Securities for
investment, and not with a view to the distribution thereof within the meaning
of the Securities Act, (ii) Purchaser will acquire such Securities for its own
account and has not offered, and as of the Closing Date will not have offered
and does not intend to offer any participation or interest of any kind in such
Securities to any other person and (iii) the purchase of the Securities
constitutes an investment decision of an amount and type consistent with such
Purchaser's investment practices and objectives. Purchaser acknowledges that the
Company has offered it access to all information, financial and otherwise,
regarding the Company deemed relevant by Purchaser to its investment decision
and an opportunity to discuss such information with officers and employees of
the Company and to examine the Company's books and records.
4.02 LEGENDING OF SECURITIES. The Securities issuable hereunder shall
not be transferable except upon the conditions specified in this Section 4,
which conditions are intended to insure compliance with the provisions of the
Securities Act in respect of the transfer of any such Securities.
Each certificate for a Security issued to Purchaser, and each
certificate for a Security issued to subsequent transferees of Purchaser, shall
(unless otherwise permitted by this Section 4) be stamped or otherwise imprinted
in substantially the following form:
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"The transfer of the shares represented by this certificate is
subject to compliance with the conditions specified in an
Agreement, a copy of which is on file at the office of the
Corporation, and no transfer of such shares shall be valid or
effective until such conditions have been fulfilled."
4.03 RESTRICTIONS ON TRANSFERABILITY. Purchaser and any subsequent
holder of a certificate of Securities bearing the restrictive legend set forth
in Section 4.02 (hereinafter in this Section 4 called the "Holder") by
acceptance thereof agrees, prior to any transfer or attempted transfer of such
Security, to give written notice to the Company of such Holder's intention to
effect such transfer (the "notice of transfer"). Each such notice of transfer
shall describe the manner and circumstances of the proposed transfer in
reasonable detail and shall contain an undertaking by the person giving such
notice to furnish such further information as may reasonably be required by the
Company or counsel referred to below. Promptly upon receiving any such notice of
transfer, the following provisions shall apply:
(i) If such notice of transfer does not include an opinion of
counsel for the Holder concerning the transferability of the Securities
without registration under the Securities Act, the Company shall
promptly submit copies of the notice of transfer to its counsel. If in
the opinion of such counsel, the proposed transfer of such Security may
be effected without registration under the Securities Act, the Company
shall as promptly as is practicable so notify the Holder and the
transfer agent of such Security and such Holder shall thereupon be
entitled to transfer such Security in accordance with the terms of the
notice delivered by such Holder to the Company. Each certificate
representing a Security issued upon the transfer of any such Security
shall bear the restrictive legend set forth above if in the opinion of
such counsel such legend is required in order to insure compliance with
the applicable provisions of the Securities Act;
(ii) If, in the opinion of such counsel, the proposed transfer
of such Security may not be effected without registration under the
Securities Act, the Company shall as promptly as is practicable so
notify the Holder. The Holder thereof, agrees, as to such Security, by
acceptance thereof, that if the proposed transfer cannot, in the
reasonable opinion of such counsel, be effected without registration
under the Securities Act, such Holder will not transfer such Security
unless it has been registered under the Securities Act, or unless the
staff of the Securities and Exchange Commission has stated in writing
that it would raise no objection with respect to the proposed transfer.
The restrictions imposed by this Section 4 upon the transferability of
any particular Security shall cease and terminate concurrently with the
sale or other disposition thereof pursuant to and in the manner
contemplated by an effective registration statement under the
Securities Act, or pursuant to and in accordance with Rule 144
promulgated under the Securities Act (or any similar rule or regulation
hereafter promulgated). Whenever the restrictions imposed by the
Section 4 shall terminate, as hereinabove provided, the Holder of any
Security as to which such restrictions shall have terminated shall be
entitled to receive from the Company one or more new certificates of
such Security not bearing the restrictive legend set forth above and
not containing any other reference to the restrictions imposed by this
Section 4.
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(iii) If the Holder delivers with the notice of transfer an
opinion of Holder's counsel confirming the transferability of the
Securities without registration under the Securities Act, the Company
shall as promptly as is practicable so notify the transfer agent, if
any, of such Security and such Holder shall thereupon be entitled to
immediately receive from the Company one or more new certificates of
such Security not bearing the restrictive legend set forth above and
not containing any other reference to the restrictions imposed by this
Section
4. REGISTRATION RIGHTS. Upon request of purchaser the Company will
register under the Securities Act for sale by purchaser or its assignees of the
Securities (including Common Stock issuable on exercise of the Warrant). All
expenses of such registration, other than commissions of broker/dealers shall be
paid by the Company.
5. CONDUCT OF THE BUSINESS OF THE COMPANY.
5.01 As long as the Purchaser owns any of the Securities, including any
Common Stock issuable on exercise of the Warrant the Company will:
(i) Establish and maintain adequate internal accounting
controls.
(ii) Give Purchaser and its counsel, accountants and other
representatives full access during normal business hours to all of the
properties, personnel, books, tax returns, contracts, commitments and records of
the Company and the Purchaser shall be furnished with all such documents and
information with respect to the affairs of the Company as Purchaser or its
counsel or accountants may from time to time reasonably request. Such inspection
shall not extend to the confidential product development areas which the Company
protects as trade secrets.
(iii) Give the Purchaser five (5) days' prior written notice
of all meetings of the Board of Directors and any committee of the Board of the
Company and allow the Purchaser through its authorized representative to attend
and observe at any such meeting. Copies of the minutes of all such meetings
shall be delivered to the Purchaser within ten (10) days after the date of each
such meeting. Company will not amend its Articles of Incorporation of By-laws
without the consent of the holders of a majority of the outstanding Preferred
Stock.
(iv) Deliver to the Purchaser copies of all actions of the
Board of Directors and any committee of the Board or the shareholders taken by
written consent without a meeting within five (5) days after the effective date
of such action.
(v) Utilize the funds of the Company only for valid business
purposes on behalf of the Company. Deliver a copy of the Company's check
register showing disposition of the funds of the Company in reasonable detail to
the Purchaser upon request. All disbursements of funds of the Company in excess
of $250 shall require two signatures authorized by the Board of Directors and
approved by Purchaser.
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(vi) Provide Purchaser with quarterly and annual balance
sheets and income statements of the Company from the date hereof within 45 days
after the end of the first three fiscal quarters of each fiscal year and within
90 days after the end of each fiscal year and file all statements and reports
with the SEC required under the Securities Exchange Act of 1934.
(vii) Company will not issue any additional shares of its
Common Stock or any warrants, options or securities convertible into its Common
Stock without the written consent of Purchaser.
6. MISCELLANEOUS.
6.01 NOTICES. All notices, requests, demands, or other communications
hereunder shall be in writing and shall be deemed to have been duly given when
sent by certified mail, return receipt requested:
(i) If to Purchaser, addressed to:
Call Now, Inc.
X.X. Xxx 000000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
(ii) If to Company, addressed to:
Compressent Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000-0000
or such other address as the parties shall designate by notice given as provided
herein.
6.02 PUBLIC ANNOUNCEMENTS. The parties shall consult with each other
with respect to any public announcement of the transactions provided for herein
and no such public announcement shall be made by the Company unless the same
shall be approved in advance in writing by Purchaser.
6.03 EXPENSES. Except as otherwise expressly provided herein, each of
the parties hereto shall pay its own fees and expenses incident to the
negotiation, preparation, execution and consummation of this Agreement,
including all fees and expenses of their respective counsel and accountants
incurred in connection with this Agreement and all other agreements, documents,
certificates, applications and other instruments prepared in connection
herewith.
6.04 SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns, and Purchaser and its
successors and assigns.
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6.05 LAW TO APPLY. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida, and the parties hereby agree
that any action, suit or other legal proceeding by any party concerning this
Agreement or the construction or enforcement thereof shall be brought only in a
court of appropriate jurisdiction in the State of Florida.
6.06 ASSIGNMENT. This Agreement shall not be assignable by any party
hereto without the prior written consent of the other parties hereto.
6.07 ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes any and all prior arrangements, proposals or understandings, written
or oral, by or among any of the parties hereto with respect to such purchase and
sale or other transactions, which arrangements, proposals and understandings
shall be of no further force and effect. No waiver, amendment or modification of
this Agreement shall be effective for any purpose unless the same shall be in
writing signed by all of the parties hereto or their successors in interest.
6.08 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
6.09 SECTION HEADINGS. The section headings herein are for convenience
only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
CALL NOW, INC.
By:
---------------------------------
Xxxxxxx X. Xxxxx
Chairman
COMPRESSENT CORP.
By:
---------------------------------
Won Xxx Xxxx
President
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CERTIFICATE OF DESIGNATION OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
COMPRESSENT CORPORATION
It is hereby certified that:
1. The name of the Company (hereinafter called the "Company") is
COMPRESSENT CORPORATION.
2. The Certificate of Incorporation of the Company (the "Certificate of
Incorporation") authorize the issuance of One Hundred Fifty Thousand (150,000)
shares of preferred stock, $.001 par value per share, and expressly vests in the
Board of Directors of the Company the authority provided therein to issue any or
all undesignated preferred shares in one or more series and by resolution or
resolutions to establish the designation and number and to fix the relative
rights and preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a series of preferred stock to be designated as "Series A Convertible
Preferred Stock":
RESOLVED, that 56,000 authorized but undesignated shares of preferred
stock of the Company shall be designated Series A Convertible Preferred Stock,
$.001 par value per share, and shall possess the rights and preferences set
forth below:
Section 1. Designation and Amount. 80,000 shares of the Company's
authorized but undesignated preferred stock shall be designated as Series A
Convertible Preferred Stock (the "Series A Convertible Preferred Stock") par
value $.001 per share. The Series A Convertible Preferred Stock shall have a
stated value of $62.50 per share (the "Original Series A Convertible Issue
Price").
Section 2. Rank. The Series A Convertible Preferred Stock shall rank
prior to all of the Company's Common Stock ("Common Stock") and prior to any
class or series of capital stock of the Company (collectively with the Common
Stock, the "Junior Securities") in each case as to distributions of assets upon
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary (all such distributions being referred to collectively as
"Distributions").
Section 3. Dividends. The holders of the then outstanding Series A
Convertible Preferred Stock shall be entitled to receive, when and as declared
by the Board of Directors, out of any funds legally available therefor,
cumulative dividends at the annual rate of $3.72 per share, payable in cash
annually on each January 1, April 1, July 1, October 1, commencing on April 1,
1998. Such dividends shall accrue on each share from original issue date and
shall accrue from day to day, whether or not earned or declared. Such dividends
shall be cumulative so that if such dividends in respect of any previous or
current annual dividend period, at the annual rate specified above, shall
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not have been paid or declared and a sum sufficient for the payment thereof set
apart, the deficiency shall first be fully paid before any dividend or other
distribution shall be paid on or declared and set apart for the Junior
Securities. Any accumulation of dividends on the Series A Convertible Preferred
Stock shall not bear interest.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of the Company ("Liquidation Event"), either voluntary or involuntary, the
Holders of shares of Series A Convertible Preferred Stock shall be entitled to
receive, immediately after any distributions to Senior Securities required by
the Company's Certificate of Incorporation or any certificate of designation,
and prior in preference to any distribution to Junior Securities but in parity
with any distribution to Parity Securities, an amount per share equal to the sum
of (i) $62.50 and (ii) all accrued and unpaid dividends thereon, whether or not
earned or declared, and no more. If upon the occurrence of such event, and after
payment in full of the preferential amounts with respect to the Senior
Securities, the assets and funds available to be distributed among the Holders
of the Series A Convertible Preferred Stock shall be insufficient to permit the
payment to such Holders of the full preferential amounts due to the Holders of
the Series A Convertible Preferred Stock then the entire assets and funds of the
Company legally available for distribution shall be distributed among the
Holders of the Series A Convertible Preferred Stock, pro rata, based on the
respective liquidation amounts to which the Holders of each such series are
entitled by the Company's Articles of Incorporation and any certificate(s) of
designation relating thereto. A Business Combination Event shall be considered a
Liquidation Event unless otherwise agreed by the Holders of the Series A
Convertible Preferred Stock.
(b) Upon the completion of the distribution required by
subsection 4(a), if assets remain in this Company, they shall be distributed to
holders of Junior Securities in accordance with the Company's Articles of
Incorporation including any duly adopted certificate(s) of designation.
Section 5. Conversion. The record Holders of this Series A Convertible
Preferred Stock shall have conversion rights as follows (the "Conversion
Rights"):
(a) Right to Convert. Each record Holder of Series A
Convertible Preferred Stock shall be entitled (at the times set forth below) to
convert (in multiples of one preferred share) any or all of the shares of Series
A Convertible Preferred Stock held by such Holder at any time into ten (10)
fully-paid and non-assessable shares of Common Stock of the Company.
(b) Mechanics of Conversion. Before any holder of Series A
Convertible Preferred Stock shall be entitled to convert the same into shares of
Common Stock, he shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Company or of any transfer agent for the Common
Stock, and shall give written notice to the Company at such office that he
elects to convert the same and shall state therein the number of shares of
Series A Convertible Preferred Stock being converted. Thereupon the Company
shall promptly issue and deliver at such office to such holder of
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Series A Convertible Preferred Stock a certificate or certificates for the
number of shares of Common Stock to which he shall be entitled. Such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of such surrender of the shares of Series A Convertible 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.
(i) Lost or Stolen Certificates. Upon receipt by the Company
of evidence of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates, and (in the case of loss, theft or destruction) of indemnity or
security reasonably satisfactory to the Company and its Transfer Agent, and upon
surrender and cancellation of the Preferred Stock Certificate(s), if mutilated,
the Company shall execute and deliver new Preferred Stock Certificate(s) of like
tenor and date. However, Company shall not be obligated to re-issue such lost or
stolen Preferred Stock Certificates if Holder contemporaneously requests Company
to convert such Series A Convertible Preferred Stock into Common Stock.
(ii) No Fractional Shares. If any conversion of the Series A
Convertible Preferred Stock would create a fractional share of Common Stock to a
holder or a right to acquire a fractional share of Common Stock, such fractional
share shall be disregarded and the number of shares of Common Stock issuable
upon conversion, shall be the next higher number of shares, or the Company may
at its option pay cash equal to fair value of the fractional share based on the
fair market value of one share of the Company's Common Stock on the date of
conversion, as determined in good faith by the Board of Directors.
(c) Reservation of Stock Issuable Upon Conversion. The Company
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 Series A Convertible Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
then outstanding Series A Convertible 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 Series A Convertible
Preferred Stock, the Company will immediately take such corporate action as may
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
(d) Adjustment to Conversion Rate.
(i) Adjustment Due to Stock Split, Stock Dividend, Etc. If, prior
to the conversion of all of the Series A Convertible Preferred Stock, the number
of outstanding shares of Common Stock is increased by a stock split, stock
dividend, or other similar event, the Conversion Rate shall be proportionately
reduced, or if the number of outstanding shares of Common Stock is decreased by
a combination or reclassification of shares, or other similar event, the
Conversion Rate shall be proportionately increased.
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(ii) Adjustment Due to Merger, Consolidation, Etc. If, prior to
the conversion of all Series A Convertible Preferred Stock, there shall be any
merger, consolidation, exchange of shares, recapitalization, reorganization, or
other similar event, as a result of which shares of Common Stock of the Company
shall be changed into the same or a different number of shares of the same or
another class or classes of stock or securities of the Company or another entity
or, as a result of any such transaction the outstanding shares of Common Stock
is increased by 20% or more (each a "Business Combination Event"), then the
Holders of Series A Convertible Preferred Stock shall thereafter have the right
to receive upon conversion of Series A Convertible Preferred Stock, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon conversion, such
stock, securities and/or other assets which the Holder would have been entitled
to receive in such transaction had the Series A Convertible Preferred Stock been
converted immediately prior to such transaction, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
the Holders of the Series A Convertible Preferred Stock to the end that the
provisions hereof (including, without limitation, provisions for the adjustment
of the Conversion Rate and of the number of shares issuable upon conversion of
the Series A Convertible Preferred Stock) shall thereafter be applicable, as
nearly as may be practicable in relation to any securities thereafter
deliverable upon the exercise hereof.
(iii) No Fractional Shares. If any adjustment under this Section
5(e) would require the issuance of a fractional share of Common Stock to a
holder, such fractional share shall be disregarded and the number of shares of
Common Stock issuable upon conversion shall be the next higher full number of
shares.
(e) Effect on Accrued and Unpaid Dividends. In the event that any
shares of Series A Convertible Preferred Stock shall be converted into Common
Stock, no accrued and unpaid dividends on such converted Series A Convertible
Preferred Stock shall be paid upon or after such conversion.
Section 6. Redemption by Company.
(a) Company's Right to Redeem at its Election. At any time, commencing
after ninety (90) days after the Last Closing Date, the Company shall have the
right, in its sole discretion, to redeem ("Redemption at Company's Election"),
from time to time, any or all of the Series A Convertible Preferred Stock;
provided (i) Company shall first provide thirty (30) days advance written notice
as provided in subparagraph 6(b)(ii) below (which can be given beginning on the
ninety first (91st) day after the Last Closing Date). If the Company elects to
redeem some, but not all, of the Series A Convertible Preferred Stock, the
Company shall redeem a pro-rata amount from each Holder of the Series A
Convertible Preferred Stock.
(i) Redemption Price At Company's Election. The "Redemption
Price at Company's Election" shall be an amount per share equal to the sum of
(i) $100.00 and (ii) all accrued and unpaid dividends thereon, whether or not
earned or declared
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(ii) Mechanics of Redemption at Company's Election. The
Company shall effect each such redemption by giving at least thirty (30) days
prior written notice ("Notice of Redemption At Company's Election") to the
Holders of the Series A Convertible Preferred Stock selected for redemption, by
first class, mail, postage prepaid at the address. Election shall indicate (i)
the number of shares of Series A Convertible Preferred Stock that have been
selected for redemption, (ii) the date which such redemption is to become
effective (the "Date of Redemption At Company's Election") and (iii) the
applicable Redemption Price At Company's Election, as defined in (a)(i) above.
Notwithstanding the above, Holder may convert into Common Stock, prior to the
close of business on the Date of Redemption at Company's Election, any Series A
Convertible Preferred Stock which it is otherwise entitled to convert.
(c) Company Must Have Immediately Available Funds or Credit Facilities.
The Company shall not be entitled to effect any redemption or begin any
redemption procedure (including the delivery of any notice required by this
Section 6) under Section 6(a) or Section 6(b) unless it has:
(i) the full amount of the redemption price in cash, available
in a demand or other immediately available account in a bank or similar
financial institution; or
(ii) immediately available credit facilities, in the full
amount of the redemption price with a bank or similar financial institution; or
(iii) an agreement with any underwriter willing to purchase
from the Company a sufficient number of shares of stock to provide proceeds
necessary to redeem any stock that is not converted prior to redemption; or
(iv) a combination of the items set forth in (i), (ii) and
(iii) above, aggregating the full amount of the redemption price.
(d) Payment of Redemption Price.
Each Holder submitting Preferred Stock being redeemed under this
Section 6 shall send its Series A Convertible Preferred Stock Certificates so
redeemed to the Transfer Agent, and the Company shall pay the applicable
redemption price to that Holder by within five (5) business days of the
Company's receipt of Preferred Stock Certificates representing the Series A
Convertible Preferred Stock to be redeemed. The Company shall not be obligated
to deliver the redemption price unless the Preferred Stock Certificates so
redeemed are delivered to the Transfer Agent, or, in the event one or more
certificates have been lost, stolen, mutilated or destroyed, the Holder has
complied with Section 5(b)(i).
Section 7. Voting Rights. The Holders of the Series A Convertible
Preferred Stock shall initially have no voting power whatsoever, and no Holder
of Series A Convertible Preferred Stock shall vote or otherwise participate in
any proceeding in which actions shall be taken by the Company or the
shareholders thereof or be entitled to notification as to any meeting of the
shareholders except
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as otherwise provided by the Florida Business Corporation Act ("Florida Law");
provided, however, the holders of the shares of Series A Convertible Preferred
Stock shall be entitled to elect two members of the Board of Directors of the
Company.
To the extent that under Florida Law the vote of the Holders of the
Series A Convertible Preferred Stock, voting separately as a class, is required
to authorize a given action of the Company, the affirmative vote or consent of
the Holders of at least a majority of the shares of the Series A Convertible
Preferred Stock represented at a duly held meeting at which a quorum is present
or by written consent of a majority of the shares of Series A Convertible
Preferred Stock (except as otherwise may be required under Florida Law) shall
constitute the approval of such action by the class. To the extent that under
Florida Law the Holders of the Series A Convertible Preferred Stock are entitled
to vote on a matter with holders of Common Stock, voting together as one class,
each share of Series A Convertible Preferred Stock shall be entitled to a number
of votes equal to the number of shares of Common Stock into which it is then
convertible using the record date for the taking of such vote of stockholders as
the date as of which the Conversion Rate is calculated. Holders of the Series A
Convertible Preferred Stock shall be entitled to notice of all shareholder
meetings or written consents with respect to which they would be entitled to
vote, which notice would be provided pursuant to the Company's by-laws and
applicable statutes.
Section 8. In the event Holders of at least seventy five percent (75%)
of the then outstanding shares of Series A Convertible Preferred Stock and at
least seventy five percent (75%) of the then outstanding Holders agree to allow
the Corporation to alter or change the rights, preferences or privileges of the
shares of Series A Convertible Preferred Stock, pursuant to subsection (a)
above, so as to affect the Series A Convertible Preferred Stock, then the
Corporation will deliver notice of such approved change to the Holders of the
Series A Convertible Preferred Stock that did not agree to such alteration or
change (the "Dissenting Holders") and Dissenting Holders shall have the right
for a period of thirty (30) days to convert pursuant to the terms of this
Certificate of Designation as they exist prior to such alteration or change
(notwithstanding the holding requirements set forth in Section 5(a) hereof), or
continue to hold their shares of Series A Convertible Preferred Stock subject to
the altered rights, preferences or privileges.
Signed on , 1998.
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THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLIANCE WITH THE ACT.
Void after 5:00 P.M., West Coast Time, on February 3, 2001
STOCK PURCHASE WARRANT
For the purchase of 500,000 shares of common stock of COMPRESSENT
CORPORATION, par value $.001 per share (a Florida corporation).
This is to certify that, for value received, CALL NOW, INC., or
assigns, are entitled, subject to the terms and conditions hereinafter set
forth, at or before 5:00 P.M. on February 3, 2001, to purchase 500,000 shares of
the common stock of COMPRESSENT CORPORATION, $.001 par value per share, from the
said corporation, for the purchase price of $6.25 per share, and to receive a
certificate or certificates for the common stock so purchased upon presentation
and surrender to the corporation of this warrant with payment of the purchase
price for each share purchased; provided, however, that in the event that this
warrant is exercised more than one (1) year after the original issue date, the
exercise price shall be the lower of the foregoing price or the average of the
closing bid and asked price of such common stock for the three (3) trading days
immediately preceding such exercise.
(a) The Corporation covenants and agrees that all shares which may be
delivered upon the exercise of this warrant will, upon delivery, be free from
all taxes, liens, and charges with respect to the purchase thereof, and shall be
fully paid and nonassessable.
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(b) The purchase rights represented by this warrant are exercisable at
the option of the holder hereof in whole or in part from time to time within the
period specified above. In case of the purchase of less than all of the shares
purchasable under this warrant, the corporation will cancel this warrant upon
the surrender hereof and shall execute and deliver a new warrant for the balance
of the shares purchasable hereunder.
(c) The number of shares purchasable upon the exercise of this warrant
and the purchase price per share shall be subject to adjustment from time to
time as set forth herein.
(d) If the outstanding shares of common stock of the corporation are
increased, decreased, or changed into, or exchanged for a different number or
kind of shares or securities through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation, or
otherwise, an appropriate and proportionate adjustment shall be made in the
number and kind of shares as to which this warrant relates. Such adjustment
shall be made without change in the total price applicable to the unexercised
portion of this warrant, but with a corresponding adjustment in the price of
each share subject to the warrant.
(e) If there shall be any adjustment as provided above, the corporation
shall forthwith cause written notice to be sent to the initial holder of this
warrant at the address of such holder shown on the books of the corporation,
which notice shall be accompanied by a statement setting forth in reasonable
detail the facts requiring any such adjustment and the warrant price and number
of shares purchasable after such adjustment, as the case may be.
(f) This warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the corporation unless and until this
warrant shall be exercised.
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IN WITNESS WHEREOF, the corporation has caused this warrant to be
executed by the signatures of its duly authorized officers and its corporate
seal hereunto affixed.
COMPRESSENT CORPORATION
By:
-----------------------------
President
Attest:
Dated: February 3, 1998 ----------------------------------
Secretary
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