1
EXHIBIT 10.27
SERIES C 7% CUMULATIVE CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
BETWEEN
PARK 'N VIEW, INC.
AND
THE PURCHASERS LISTED ON EXHIBIT A
DATED AS OF AUGUST 22, 1997
2
TABLE OF CONTENTS
Page
SECTION 1. SALE AND PURCHASE OF THE SERIES C PREFERRED STOCK.............................................1
SECTION 2. THE CLOSING...................................................................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................2
3.1 Corporate Existence, Power and Authority..................................................2
3.2 Capitalization............................................................................3
3.3 Subsidiary................................................................................5
3.4 No Defaults or Conflicts..................................................................5
3.5 Authorization of Securities...............................................................6
3.6 Securities Exemptions.....................................................................6
3.7. Disclosure Materials; Other Information..................................................7
3.8 Certain Events............................................................................7
3.9 Contracts, Agreements.....................................................................8
3.10 Title to Properties; Leasehold Interests.................................................9
3.11 Litigation...............................................................................9
3.12 Licenses, Permits and Approvals..........................................................9
3.13 Taxes ...................................................................................10
3.14 Employees; ERISA.........................................................................10
3.15. Disaster................................................................................11
3.16 Books and Records........................................................................11
3.17 Material Changes.........................................................................11
3.18 Registration Rights......................................................................11
3.19 Indebtedness.............................................................................12
3.20 Insurance................................................................................12
3.21 Brokers..................................................................................12
3.22 Proprietary Rights.......................................................................12
3.23 Related Party Transactions...............................................................13
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..............................................14
4.1 Purchaser Authority; Accredited Investor Status...........................................14
4.2 Reliance on Representations and Warranties by the Company and the Agent...................15
SECTION 5. COVENANTS OF THE COMPANY......................................................................16
5.1 Use of Proceeds...........................................................................16
5.2 Financial Information.....................................................................16
5.3 Notice of Events of Default; Litigation...................................................17
-i-
3
5.4 Access to Information..........................................................................17
5.5 Maintenance of Existence; Properties and Franchises; Compliance with Law; Taxes; Insurance.....18
5.6 No Change in Business..........................................................................19
5.7 Restrictive Agreements Prohibited..............................................................19
5.8 No Dividends; No Redemption....................................................................19
5.9 Consolidation, Merger and Sale.................................................................19
5.10 Transactions with Affiliates...................................................................20
5.11 Superior Classes or Series of Capital Stock; Amendment of Series C Certificate of Designation,
Certificate of Incorporation or By-Laws........................................................20
5.12 No Dilution or Impairment; No Changes in Capital Stock.........................................21
5.13 Reservation of Shares..........................................................................22
5.14 Private Placement Status.......................................................................22
5.15 Regulation D Filing............................................................................22
5.16 Access to Information and Documents............................................................22
5.17 Further Assurances.............................................................................23
5.18 Fees...........................................................................................23
5.19 Notices........................................................................................23
5.20 Redemption Obligations.........................................................................23
5.21 Board Nominee..................................................................................23
SECTION 6. CONDITIONS TO PURCHASERS' OBLIGATIONS...............................................................24
6.1 Series C Certificate of Designation............................................................24
6.2 Certificates for Shares........................................................................24
6.3 Accuracy of Representations and Warranties.....................................................24
6.4 Compliance with Agreements.....................................................................24
6.5 Officers' Certificates.........................................................................25
6.6 Material Adverse Change........................................................................25
6.7 Proceedings....................................................................................25
6.8 Legality; Governmental and Other Authorization.................................................25
6.9 Time of Purchase...............................................................................25
6.10 No Change in Law, etc..........................................................................26
6.11 Opinion of Counsel.............................................................................26
6.12 Other Documents and Opinions...................................................................26
6.13 Payment of Fees and Expenses...................................................................26
6.14 Issuance of the Agent's Warrant(s).............................................................26
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS.................................................................27
7.1 Payment.........................................................................................27
7.2 Representations and Warranties Correct..........................................................27
-ii-
4
SECTION 8. BROKERS............................................................................................27
SECTION 9. BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS................................................27
SECTION 10. SPECIFIC PERFORMANCE...............................................................................28
SECTION 11. EXPENSES...........................................................................................28
SECTION 12. AMENDMENTS AND WAIVERS.............................................................................29
SECTION 13. EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED
SHARES; REPLACEMENT................................................................................29
SECTION 14. NOTICES............................................................................................30
SECTION 15. MISCELLANEOUS......................................................................................31
EXHIBIT A PURCHASER'S SIGNATURE PAGE
EXHIBIT B SERIES C CERTIFICATE OF DESIGNATION
Schedule 3.2(a) Registered Owners of the Company's Capital Stock
Schedule 3.8 Certain Events
Schedule 3.9 Material Contracts
Schedule 3.10 Real Property: Title to Properties
Schedule 3.14 Employee Benefits
Schedule 3.17 Material Changes
Schedule 3.19 Indebtedness
Schedule 3.20 Insurance
Schedule 3.22 Proprietary Rights
-iii-
5
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement") dated as of August 22, 1997
by and between Park `N View, Inc., a Delaware corporation (the "Company"), and
those persons and entities listed on Exhibit A hereto (collectively, the
"Purchasers" and each, individually, a "Purchaser").
W I T N E S S E T H :
WHEREAS, the Company desires to sell to the Purchasers and the
Purchasers desire to purchase from the Company up to 3,750,000 shares of its
authorized but unissued 7% Series C Cumulative Convertible Preferred Stock, par
value $.01 per share (the "Series C Preferred Stock"), upon the terms and
provisions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1. SALE AND PURCHASE OF THE SERIES C PREFERRED STOCK
(a) Subject to the terms and conditions hereof and in
reliance upon the representations and warranties contained herein, the Company
agrees to sell to the Purchasers, and each Purchaser agrees to purchase from the
Company on the Closing Date specified in Section 2 hereof, the number of shares
of Series C Preferred Stock set forth opposite such Purchaser's name on Exhibit
A hereto (being an aggregate of up to a maximum of 3,750,000 shares of Series C
Preferred Stock) at a price of $8.00 per share for a maximum aggregate purchase
price of Thirty Million Dollars and No Cents ($30,000,000). The sales of the
shares of Series C Preferred Stock to the Purchasers as aforesaid are several
and separate sales and none of the Purchasers shall be responsible for, or
obligated with respect to, any act or default by any other Purchaser. The
obligation of each Purchaser to purchase any of the Shares (as hereinafter
defined) is subject to purchase by one or more other Purchasers at the Initial
Closing (as hereinafter defined) of not less than 1,875,000 shares of Series C
Preferred Stock in the aggregate at a price of $8.00 per share. The shares of
Series C Preferred Stock being purchased pursuant to this Agreement are
collectively referred to herein as the "Shares", containing rights and
privileges as more fully set forth in the Certificate of Designation for the
Series C Preferred Stock (the "Series C Certificate of Designation") attached
hereto as Exhibit B.
(b) The aggregate purchase price to be paid to the
Company by each Purchaser for the Shares to be purchased by such Purchaser
pursuant to this Agreement shall be the amount set forth opposite that
Purchaser's name on Exhibit A hereto. No further payment shall be required from
the Purchaser for the Shares.
-1-
6
SECTION 2. THE CLOSING
(a) Subject to the terms and conditions hereof, the
initial closing hereunder with respect to the purchase and sale of the Shares
shall take place at the offices of Piper & Marbury L.L.P., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 1:00 p.m. Baltimore time, on August 21,
1997, or such other location, time and date as the parties hereto shall mutually
agree upon (the "Initial Closing"). The Company and Alex. ▇▇▇▇▇ & Sons
Incorporated (the "Agent") may, in one or more additional closings under this
Agreement (the "Additional Closings", each of the Additional Closings and the
Initial Closing being sometimes referred to herein individually as a "Closing"
and collectively as the "Closings" and the date of each such Closing shall be
referred to herein as the "Closing Date") sell additional shares of Series C
Preferred Stock (up to a total of 3,750,000 shares in the Initial and all
Additional Closings) at a purchase price of not less than $8.00 per share, so
long as Shares sold at any Additional Closing are sold on the same terms and
conditions as the Shares sold at the Initial Closing. Any Additional Closings
shall be held at such time and place as the Company and the Agent shall mutually
agree upon.
(b) Subject to the terms and conditions hereof, the
escrow agent (the "Escrow Agent") for the Purchaser's funds previously deposited
in an escrow account will release from such escrow account and deliver to the
Company an amount equal to the purchase price for the Shares to be purchased by
the Purchaser except as set forth in Section 5.18. As soon as practicable
following each Closing, the Company will deliver to each Purchaser purchasing
Shares a certificate registered in the Purchaser's name (or the name of its
nominee, if any, as specified on Exhibit A hereto) evidencing the number of
Shares set forth opposite the Purchaser's name on Exhibit A dated as of the
Closing Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Purchasers as
follows as of the date hereof and as of the Closing as follows:
3.1 CORPORATE EXISTENCE, POWER AND AUTHORITY
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company is duly qualified, licensed and authorized to do business and is in
good standing in each jurisdiction in which it owns or leases any material
property or in which the conduct of its business requires it to so qualify or be
so licensed, except where the failure to so qualify or be licensed would not
have a material adverse effect on the Company. The Company has all requisite
corporate power, authority and legal right to own or to hold under lease and to
operate the properties it owns or holds and to conduct its business as it is now
being conducted and as it is proposed to be conducted except
-2-
7
where the failure to have such requisite power, authority and legal right would
not have a material adverse effect on the Company.
(b) Subject to (x) obtaining the approval of the
Company's existing stockholders to the amendment of the Company's Amended
Certificate of Incorporation (the "Certificate of Amendment"), (y) filing of the
Certificate of Amendment, the Certificate of Amendment to the Certificate of
Designation relating to the Series A Preferred Stock, the Certificate of
Amendment to the Certificate of Designation relating to the Series B Preferred
Stock, and the Series C Certificate of Designation, and (z) obtaining all
necessary waivers and consents of stockholders of, and lenders to, the Company
under other agreements, the Company has all requisite power and authority to
enter into this Agreement, the Securities Restriction Agreement, as amended, by
and among the Company, the purchasers of the 7% Series B Cumulative Convertible
Preferred Stock ("Series B Preferred Stock"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and a group of
investment funds managed by Patricof & Co. Ventures, Inc. (the "Patricof-Managed
Funds"), the Company's original investors (the "Original Investors"), Alex.
▇▇▇▇▇ & Sons Incorporated (the "Agent") as the holder of a warrant to purchase
shares of the Company's Common Stock and the Purchasers (the "Securities
Restriction Agreement"), the Amended and Restated Securityholders' Agreement and
Exchange Agreement, as amended (the "Securityholders' Agreement"), and the
Registration Rights Agreement, as amended (as such agreement is defined in
Section 3.18 below, together with this Agreement, the Securities Restriction
Agreement, the Securityholders' Agreement and the Series C Certificate of
Designation, collectively, the "Transaction Documents"), to sell the Series C
Preferred Stock hereunder and to carry out and perform its obligations under the
terms of the Transaction Documents. Each of the Transaction Documents has been
duly executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
3.2 CAPITALIZATION
(a) As of the date hereof, the authorized
capital stock of the Company consists of 17,750,000 shares of capital stock, of
which 12,000,000 shares are classified as common stock (the "Common Stock"), of
which 4,318,182 shares are issued and outstanding, and 5,750,000 shares are
classified as preferred stock (the "Preferred Stock"), of which (i) 627,630
shares are designated as Series A Preferred Stock, of which 388,065 shares are
issued and outstanding, (ii) 1,372,370 shares are designated as Series B
Preferred Stock, of which 1,372,370 shares are issued and outstanding; and (iii)
3,750,000 shares are designated as Series C Preferred Stock, none of which are
issued and outstanding. As of the Initial Closing, all outstanding shares of
Common Stock and Preferred Stock will have been duly authorized and validly
issued, will be fully paid and non-assessable, and will have been issued in
compliance with all applicable state and federal laws concerning the issuance of
securities. As of the date hereof, there will be reserved for issuance: (i)
1,875,000 shares of Common Stock which may be issued upon conversion of shares
of Series B Preferred Stock; (ii) 3,750,000 shares of Common Stock which may be
issued upon conversion of shares of Series C Preferred Stock; (iii) 409,846
shares of
-3-
8
Common Stock which may be issued pursuant to the exercise of options
previously granted to present and former employees of the Company; (iv) 115,154
shares of Common Stock which are available for future grants of options under
the Company's Stock Option Plan and (v) up to 186,750 shares of Common Stock
which may be issued pursuant to the exercise of a warrant or warrants to be
granted to the Agent at the Initial Closing and the Additional Closings, if any
(the "Agent's Warrant"). A complete list of all persons who are registered
owners of the capital stock of the Company as indicated in the Company's stock
ledger and similar records as of the date of this Agreement is attached hereto
as Schedule 3.2(a).
(b) Immediately after the Initial Closing, the
authorized capital stock of the Company will consist of 17,750,000 shares of
capital stock, comprised of 12,000,000 shares of Common Stock, of which
4,318,182 shares of Common Stock will be issued and outstanding and 5,750,000
shares of Preferred Stock, of which (i) 627,630 shares are designated as Series
A Preferred Stock, of which 388,065 shares will be issued and outstanding, (ii)
1,372,370 shares are designated as Series B Preferred Stock, of which 1,372,370
shares will be issued and outstanding and (iii) 3,750,000 shares are designated
as Series C Preferred Stock, of which 2,275,412 shares will be issued and
outstanding. As of immediately after the Initial Closing, there will be reserved
for issuance: (i) 1,875,000 shares of Common Stock which may be issued upon
conversion of shares of Series B Preferred Stock; (ii) 2,275,412 shares of
Common Stock which may be issued upon conversion of shares of Series C Preferred
Stock; (iii) 409,846 shares of Common Stock which may be issued pursuant to the
exercise of options previously granted to present and former employees of the
Company; (iv) 115,154 shares of Common Stock which are available for future
grants of options under the Company's Stock Option Plan; and (v) up to 186,750
shares of Common Stock which may be issued pursuant to the exercise of the
Agent's Warrant.
(c) Except as contemplated by (i) the Company's
Stock Option Plan; (ii) that certain Securities Restriction Agreement dated as
of November 13, 1996, relating to the sale and purchase of Shares of Common
Stock of the Company by and among the purchasers of Series B Preferred Stock,
the Patricof-Managed Funds, the Original Investors and the Company; (iii) that
certain Securities Restriction Agreement dated November 2, 1995 by and among the
Original Investors, the Patricof-Managed Funds and the Company; (iv) that
certain Amended and Restated Securityholders' Agreement and Exchange Agreement
dated as of November 13, 1996 by and among the purchasers of Series B Preferred
Stock, the Patricof-Managed Funds, the Original Investors and the Company, and
(v) those certain Securities Purchase Agreements dated November 2, 1995 and
November 13, 1996, respectively, by and among the Company and certain investors,
there are no outstanding rights, options, calls, warrants, conversion rights,
anti-dilution protections or other adjustment provisions, agreements or
preemptive rights to purchase or otherwise acquire shares of capital stock of
the Company and/or obligations of the Company to grant, extend or enter into any
such right, option, call, warrant, conversion right or agreement.
(d) Except as contemplated by (i) that certain
Securities Restriction Agreement dated as of November 13, 1996, relating to the
sale and purchase of Shares of
-4-
9
Common Stock of the Company by and among the purchasers of Series B Preferred
Stock, the Patricof-Managed Funds, the Original Investors and the Company; (ii)
that certain Securities Restriction Agreement dated November 2, 1995 by and
among the Original Investors, the Patricof-Managed Funds and the Company; (iii)
that certain Amended and Restated Securityholders' Agreement and Exchange
Agreement dated as of November 13, 1996 by and among the purchasers of Series B
Preferred Stock, the Patricof-Managed Funds, the Original Investors and the
Company, and (iv) those certain Securities Purchase Agreements dated November 2,
1995 and November 13, 1996, respectively, by and among the Company and certain
investors, there is no agreement, restriction or encumbrance (including, without
limitation, any right of first refusal, right of first offer or voting trust
agreement) with respect to the sale or voting of any shares of the Company's
capital stock (whether outstanding or issuable upon conversion or exercise of
outstanding securities).
3.3 SUBSIDIARY
Other than as disclosed in the Confidential Private
Placement Memorandum dated as of June 4, 1997, as supplemented (the
"Memorandum"), the Company (i) does not control or own, directly or indirectly,
any shares or proprietary interest in any corporation or business entity, (ii)
is not under common control with, or controlled by, any other corporation or
other business entity and (iii) does not have any letter of intent, agreement in
principle or other binding or non-binding agreement to acquire any control of,
or equity interest in, any other corporation or other business entity.
3.4 NO DEFAULTS OR CONFLICTS
(a) The Company is not in violation or default
under any indenture, agreement or instrument to which it is a party or by which
it or its properties may be bound, which violation or default would have a
material adverse effect on the Company. The Company is not in violation of or
default under any law, rule, regulation, order, writ, injunction, judgment,
decree, award or other action of any court or governmental authority or
arbitrator(s), which violation or default would have a material adverse effect
on the Company. The Company is not restricted from carrying out its business
anywhere in the continental United States by any agreement or administrative or
judicial order, decree or process in any action or proceeding in which the
Company or any of its predecessors is a party. The Company is not in violation
of its Amended Certificate of Incorporation or By-Laws.
(b) The execution, delivery and performance by
the Company of the Transaction Documents and any of the transactions
contemplated hereby or thereby does not and will not (i) violate or conflict
with any provision of (A) the Amended Certificate of Incorporation or By-Laws of
the Company, subject to obtaining the approval of the existing stockholders of
the Company to the Certificate of Amendment, or (B) any law, rule, regulation or
order of any federal, state, county, municipal or other governmental authority,
or any judgment, writ, injunction, decree, award or other action of any court or
governmental authority or arbitrator(s),
-5-
10
or any agreement, indenture or other instrument applicable to any of the
properties or assets of the Company, (ii) result in the creation of any lien,
charge, security interest or encumbrance upon any of the Company's properties,
assets or revenues, (iii) require the consent, waiver, approval, order or
authorization of, or declaration, registration, qualification or filing with,
any person or entity (whether or not a governmental authority and including,
without limitation, any shareholder approval) except for required securities law
filings, and board of director and stockholder approvals and certain consents
which approvals, consents and waivers have been obtained or (iv) cause
anti-dilution clauses of any outstanding securities to become operative or give
rise to any preemptive or similar rights of purchase which have not been waived
by the holders thereof prior to the date hereof.
3.5 AUTHORIZATION OF SECURITIES
(a) All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the sale and
issuance of the Series C Preferred Stock and the performance by the Company of
its obligations under the Transaction Documents has been taken or will be taken
prior to the Initial Closing. The Company has or will have prior to the Initial
Closing duly reserved an aggregate of not less than 2,275,412 shares of Common
Stock for issuance upon conversion of the Series C Preferred Stock included in
the Initial Closing.
(b) The Series C Preferred Stock, when issued,
sold and delivered in accordance herewith, will be duly authorized, validly
issued and outstanding, fully paid and non-assessable and will not be subject to
any preemptive or other preferential rights or similar statutory or contractual
rights of others arising pursuant to any statute, rule or regulation or
agreement or instrument to which the Company is a party, except as disclosed in
the Memorandum. The issuance and delivery of shares of Common Stock to be issued
pursuant to the exercise of the Agent's Warrant will have been duly authorized
by all requisite corporate action on the part of the Company, and, when so
issued, such shares of Common Stock will be duly authorized, validly issued and
outstanding, fully paid and non-assessable and will not be subject to any
preemptive or other preferential rights or similar statutory or contractual
rights of others arising pursuant to any statute, rule or regulation or
agreement or instrument to which the Company is a party or otherwise, except as
disclosed in the Memorandum.
3.6 SECURITIES EXEMPTIONS
Assuming the accuracy of the representations and
warranties of the Purchasers, the Shares will be issued in transactions exempt
from registration under Regulation D under the Securities Act of 1933, as
amended (the "Securities Act"), and will not require registration or
qualification or filings under the Securities Act or any state securities or
"Blue Sky" law or any regulation thereunder, except for such registration or
qualification or filings under any such state securities or "Blue Sky" laws or
regulations thereunder which shall have been obtained or made on or prior to the
Initial Closing or which the Company shall obtain or make within the requisite
time period following each Closing.
-6-
11
3.7. DISCLOSURE MATERIALS; OTHER INFORMATION
(a) The Company has previously furnished the
Memorandum to the Purchasers. The audited historical financial statements which
accompanied the Memorandum are true and correct, in accordance with the books
and records of the Company, fairly present the financial condition of the
Company, as of the respective dates thereof, and the results of operations of
the Company for such periods, and have been prepared in accordance with
generally accepted accounting principles consistently applied, except that any
unaudited statements may omit footnotes and may be subject to normal year-end
adjustments which in the aggregate are not material. The portions of the
Memorandum containing financial projections and other forward-looking statements
were prepared by the Company in good faith based upon assumptions which the
Company believes to be reasonable in light of facts known to the Company.
(b) Except as otherwise described in the
Memorandum, since March 31, 1997 (i) the business of the Company has been
conducted in the ordinary course, and (ii) there has been no material adverse
change in the assets, properties, liabilities, business, affairs, results of
operations, condition (financial or otherwise) or prospects of the Company. As
of each Closing and as of the date hereof, there are no material liabilities of
the Company which would be required to be provided for in a balance sheet of the
Company as of either such date prepared in accordance with generally accepted
accounting principles consistently applied, other than liabilities provided for
in the financial statements referred to in Section 3.7(a) above and other than
liabilities incurred in the ordinary course of business.
(c) The Company is not aware of any material
liabilities, contingent or otherwise, of the Company that have not been
disclosed in the financial statements (including the footnotes thereto) referred
to in Section 3.7(a) above or otherwise disclosed in the Memorandum other than
liabilities incurred in the ordinary course of business.
(d) Nothing has come to the attention of the
Company that would cause it to believe that the Memorandum contained or contains
a false or misleading statement of a material fact or omits to state any
material fact necessary in order to make the statements made therein not
misleading in light of the circumstances under which they were made; provided
that, with respect to projections and other forward-looking statements, the
Company represents only that such portions of the Memorandum were prepared by
the Company in good faith based upon assumptions which the Company believes to
be reasonable in light of facts known to the Company.
3.8 CERTAIN EVENTS
Except as disclosed in Schedule 3.8 hereto or the
Memorandum, since March 31, 1997, to the best of the Company's knowledge, there
has been no material adverse legislative or regulatory change relating to the
Company's business, and the Company has not to any material
-7-
12
extent: (a) borrowed any funds or incurred or become subject to any obligations
or liabilities (absolute or contingent), except as incurred in the ordinary
course of business (in amounts consistent with prior operations); (b) discharged
or satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent) other than current liabilities reflected in or shown on
the financial statements contained in the Memorandum; (c) declared or paid any
dividends or distributions to its shareholders of any kind whatsoever; (d)
entered into any agreements or arrangements granting any preferential rights to
purchase any of the assets, properties or rights of the Company, or requiring
the consent of any party to a transfer or assignment of such assets, properties
or rights, or providing for the merger or consolidation of the Company into or
with another corporation or other business entity; (e) except in the ordinary
course of business, made or permitted any amendment or termination of any
material contract, agreement or license to which it is a party; (f) changed any
accounting methods or practice, including, without limitation, any change in
depreciation or amortization policies or rates; (g) made any loan to any person
or entity, including, without limitation, to any officer, director or employee
of the Company, or increased the compensation or benefits payable, or to become
payable, to any of the officers, directors or employees of the Company,
including, without limitation, in respect of any bonus payment or deferred
compensation; (h) entered into any transaction other than in the ordinary course
of business; or (i) entered into an agreement to do any of the foregoing
described in clauses (a) through (h) above.
3.9 CONTRACTS, AGREEMENTS
Except as disclosed in Schedule 3.9 hereto or the
Memorandum, the Company is not a party to any material written or oral (a)
contract for employment which may not be terminated by the Company, as the case
may be, on not more than ninety (90) days' notice without liability to the
Company; (b) pension or profit-sharing plans, retirement plans, bonus plans,
stock purchase or stock option plans or any similar plans, formal or informal,
whether covering one or more directors, officers or present or former employees;
(c) contracts involving payment by or to the Company of more than $100,000 in
the aggregate or in any one year or the performance of which may extend more
than ninety (90) days from the date hereof; or (d) other contracts, agreements
or understandings material to the Company. All such material contracts,
agreements and understandings are in full force and effect except as disclosed
in the Memorandum, and the Company or any other party thereto has not received
any notice of default or is in default, and no condition now exists which, with
notice or the lapse of time or both, would render the Company or, to the
knowledge of the Company, any other party, in default under any material
contracts, understandings or agreements to which the Company is or may be a
party. Except as disclosed in Schedule 3.9 hereto or in the Memorandum, there
are no disputes or proceedings relating to any such material contract,
understanding or agreement and the Company has not received any notice or
indication that any party to any such material contract, understanding or
agreement intends to cancel or terminate such contract, understanding or
agreement or intends to exercise or not exercise any options under such material
contract, understanding or agreement.
-8-
13
3.10 TITLE TO PROPERTIES; LEASEHOLD INTERESTS
The Company has good and marketable title to each of
the properties and assets owned by it. The Company does not own any real
property. Certain real property used by the Company in the conduct of its
business is held under lease, and the Company is not aware of any pending or
threatened claim or action by any lessor of any such property to terminate or
materially alter any such lease. Except as set forth on Schedule 3.10, none of
the properties owned or leased by the Company is subject to any security
interest, mortgage, lien, encumbrance or charge which could reasonably be
expected to materially and adversely affect the assets, properties, liabilities,
business, affairs, results of operations, condition (financial or otherwise) or
prospects of the Company. Each lease or agreement to which the Company is a
party and pursuant to which the Company holds properties and assets is a valid
and subsisting agreement without any material default of the Company thereunder
and, to the best of the Company's knowledge, without any material default
thereunder of any other party thereto. No event has occurred and is continuing
which, with due notice or lapse of time or both, would constitute a default or
event of default by the Company under any such lease or, to the best of the
Company's knowledge, by any party thereto, except for such defaults that would
not individually or in the aggregate have a material adverse effect on the
Company. The Company's possession of such property has not been disturbed and,
to the best of the Company's knowledge, no claim adverse to its rights in such
leasehold interests has been asserted against it.
3.11 LITIGATION
Except as disclosed in the Memorandum, there is no
action, suit, proceeding, investigation or claim pending against the Company or,
to the knowledge of the Company, threatened against the Company in law, equity
or otherwise before any federal, state, municipal or local court, administrative
agency, commission, board, bureau, instrumentality or arbitrator which (i)
questions the validity of any of the Transaction Documents or any action taken
or to be taken pursuant hereto or thereto, (ii) might reasonably be expected to
adversely affect the right, title or interest of any Purchaser to the Shares, or
(iii) might reasonably be expected to result in a material adverse change in the
assets, properties, liabilities, business, affairs, results of operations,
condition (financial or otherwise) or prospects of the Company. Except as
disclosed in the Memorandum, there is no action or suit by the Company currently
pending or that the Company intends to initiate against others.
3.12 LICENSES, PERMITS AND APPROVALS
The Company owns or possesses and holds free from
restrictions or conflicts with the rights of others all franchises, licenses,
permits, consents, approvals and other authority (governmental or otherwise),
and all rights and privileges with respect to the foregoing, as are necessary
for the conduct of its business as it is now being conducted, and as proposed to
be conducted, except where the failure to own or possess and hold such
franchises, licenses, permits, consents, approvals and other authority
(governmental or otherwise) would not have a
-9-
14
material adverse effect upon the Company. The Company is not in default in any
material respects under any of such franchises, licenses, permits, consents,
approvals or other authority.
3.13 TAXES
Except as disclosed in the Memorandum, (a) the
Company has filed all federal, state, local and other tax returns and reports,
and any other material returns and reports with any governmental authorities
(federal, state or local), required to be filed by it, (b) the Company has paid
or caused to be paid all taxes (including interest and penalties) that are due
and payable, except those which are being contested by it in good faith by
appropriate proceedings and in respect of which adequate reserves are being
maintained on its books in accordance with generally accepted accounting
principles consistently applied, and (c) the Company does not have any material
liabilities for taxes other than those incurred in the ordinary course of
business and in respect of which adequate reserves are being maintained by it in
accordance with generally accepted accounting principles consistently applied.
Federal and state income tax returns for the Company have not been audited by
the Internal Revenue Service or state authorities. No deficiency assessment with
respect to, or proposed adjustment of, the Company's federal, state, local or
other tax returns is pending or, to the best of the Company's knowledge,
threatened. There is no tax lien, whether imposed by any federal, state, local
or other tax authority outstanding against the assets, properties or business of
the Company. There are no applicable taxes, fees or other governmental charges
payable by the Company in connection with the execution and delivery of this
Agreement, except for governmental fees paid in connection with state and
federal securities law filings.
3.14 EMPLOYEES; ERISA
The Company has no knowledge of any pending or
threatened work stoppage, or union organizing effort involving the employees of
the Company. The Company has no knowledge as to any intention of any key
employee or any group of employees to leave the employ of the Company. Other
than as disclosed in Schedule 3.14 hereto or in the Memorandum, the Company has
not established, sponsored, maintained, made any contributions to or been
obligated by law to establish, maintain, sponsor or make any contributions to
any "employee pension benefit plan" or "employee welfare benefit plan" (as such
terms are defined in the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), including, without limitation, any "multi-employer plan".
Any such plans have been established and are being operated in compliance with
ERISA, and there exist no unfunded obligations of the Company with respect to
any such plan, except as could not reasonably be expected to have a material
adverse effect on the Company. The Company has complied with all applicable laws
relating to the employment of labor, including provisions relating to wages,
hours, equal opportunity, collective bargaining and the payment of Social
Security and other taxes, and with ERISA except to the extent that noncompliance
would not reasonably be expected to have a material adverse effect on the
Company, and the Company is not aware of any pending or threatened claim against
the Company with respect to the foregoing.
-10-
15
3.15 DISASTER
Neither the business nor the properties of the
Company are currently affected (or has been affected at any time since December
31, 1996) by any fire, explosion, accident, strike, lockout or other dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance), of a kind which
(individually or in the aggregate) has materially adversely affected, or could
reasonably be expected to materially adversely affect, the assets, properties,
liabilities, business, affairs, results of operations, condition (financial or
otherwise) or prospects of the Company.
3.16 BOOKS AND RECORDS
The books and records of the Company, including,
without limitation, all stock ledgers and minute books containing minutes of
Board of Directors and stockholders meetings, are complete and correct in all
material respects. No action has been taken which requires the approval of the
Board of Directors or the stockholders of the Company which has not been so
approved and is not accurately reflected in the Company's minute books.
3.17 MATERIAL CHANGES
Except as disclosed in Schedule 3.17 hereto, since
the date of the Memorandum, there has been no material change in the information
set forth therein, except to the extent described in this Agreement or as
disclosed in the Exhibits and the Schedules hereto, and there have been no
material changes in the employment of personnel or in the condition (financial
or otherwise), operations or prospects of the Company, except changes occurring
in the ordinary course of business which have not had (and are not reasonably
anticipated to have) a material adverse effect on the Company.
3.18 REGISTRATION RIGHTS
Except as contemplated in the Registration Rights
Agreement dated as of November 13, 1996 (and amended as of the date hereof)
between the Company, the Original Investors, the Patricof-Managed Funds, the
purchasers of Series B Preferred Stock, the Agent and the Purchasers (the
"Registration Rights Agreement") or as disclosed in the Memorandum, no person,
other than certain holders of Common Stock, the holders of Series B Preferred
Stock, and the Agent, as holder of the Agent's Warrant, has the right to cause
the Company to effect the registration under the Securities Act of any shares of
capital stock or any other securities (including debt securities) of the
Company.
-11-
16
3.19 INDEBTEDNESS
Schedule 3.19 hereto sets forth (i) the amount of all
indebtedness of the Company outstanding as of the Closing (excluding
indebtedness in individual amounts of less than $25,000, but not exceeding an
aggregate excluded amount of $100,000), (ii) any lien, charge, security interest
or encumbrance with respect to such indebtedness and (iii) a brief description
of each instrument or agreement governing such indebtedness. The Company has
provided counsel to the Agent a complete and correct copy of each such
instrument or agreement (including all amendments, supplements or modifications
thereto). No default exists with respect to or under any such indebtedness or
any instrument or agreement relating thereto which default would reasonably be
expected to have a material adverse effect on the Company.
3.20 INSURANCE
The Company holds valid policies with reputable
insurers covering insurance in the amounts and type that the Company reasonably
believes is appropriate and customary for entities in the same or similar
businesses to that of the Company or that are otherwise required to be
maintained by it and with such deductibles or coinsurance as is customary, and
such policies are in full force and effect. Schedule 3.20 lists all insurance
policies presently in effect for which the Company is a named beneficiary. The
Company has timely filed claims with its insurers with respect to all material
matters and occurrences for which it believes it has coverage.
3.21 BROKERS
Except for the Agent, the Company has no contract,
arrangement or understanding with any broker, finder or similar agent with
respect to the transactions contemplated by this Agreement.
3.22 PROPRIETARY RIGHTS
(a) The Company owns or possesses, or has
adequate and enforceable licenses or other rights to use and license for all
purposes, all proprietary rights necessary for its business (as now conducted
and as proposed to be conducted) without any conflict with or infringement of
the rights of others. Schedule 3.22 attached hereto contains an accurate and
complete list of all proprietary rights which the Company owns or is licensed or
authorized to use by others. The Company has the rights to use and/or own and/or
develop and license the proprietary rights as such rights are set forth on such
Schedule 3.22, and, except as set forth on such Schedule 3.22, (i) no other
person has been granted, by the Company or otherwise, any rights, or has any
interest, in such proprietary rights and (ii) to the knowledge of the Company,
with respect to any proprietary rights which have been assigned to the Company,
the assigning party is fully authorized to assign such rights to the Company
without thereby creating an obligation of the Company to any person. All
proprietary rights held by the Company under licenses have been
-12-
17
duly licensed to the Company, and, except as set forth in such Schedule 3.22,
the Company has rights to its proprietary rights free and clear of any liens or
other encumbrances. No claim has been asserted or, to the knowledge of the
Company, threatened, by any Person regarding the use or licensing of any of the
Company's proprietary rights by the Company or challenging or questioning the
validity, enforceability or effectiveness of any licenses or agreements
(including, without limitation, assignments) relating to proprietary rights or
asserting any rights in such proprietary rights. The use of its proprietary
rights by the Company does not violate or infringe, and has not in the past
violated or infringed, the rights of any person. No claims have been asserted by
the Company against any other person claiming infringement of the Company's
proprietary rights. The Company has not granted any licenses to the Company's
proprietary rights (other than those granted as a result of the sales of any
proprietary product of the Company in the ordinary course of business), and is
not aware of the third parties who are infringing or violating any of such
proprietary rights. Neither the Company nor, to the knowledge of the Company,
any other person is in default under any license or other agreement relating to
the Company's proprietary rights (including without limitation, assignments),
and all such licenses and agreements are valid, enforceable and in full force
and effect.
(b) Except as set forth on Schedule 3.22
attached hereto, the Company has not granted rights to manufacture, produce,
assemble, license, market, or sell its products to any other person and is not
bound by any agreement that affects the Company's exclusive right to develop,
manufacture, assemble, distribute, market, or sell its products. No supplier of
components to the Company is a sole source of such components, except for those
components that can be obtained from another supplier at substantially the same
cost and quantities in a similar time frame.
3.23 RELATED PARTY TRANSACTIONS
(a) No holder of the Company's Common Stock,
Series A Preferred Stock or Series B Preferred Stock (an "Existing Investor"),
employee, officer or director of the Company, no affiliate of any Existing
Investor, employee, officer or director of the Company, and no member of the
immediate family of any Existing Investor, employee, officer or director of the
Company (any of the foregoing, a "Related Party") is indebted to the Company,
with the exception of ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President - Truckstop Sales and
Business Development and ▇▇▇▇ ▇▇▇▇▇, Vice President - Product Development, as
described more fully in the Memorandum under the heading "Certain Transactions"
and Schedule 3.8 attached hereto.
(b) The Company is not indebted and is not
committed to make loans or extend or guarantee credit, to any Related Party.
(c) No Related Party is interested, directly or
indirectly, in any contract with the company except by reason of their ownership
interest in the Company and/or their membership on the company's Board of
Directors.
-13-
18
(d) No Existing Investor or party to this
Agreement is presently, directly or indirectly through such party's affiliation
with any other person, a party to any transaction with the Company providing for
the furnishing of services by, or rental of real or personal property from, or
otherwise requiring cash payments to, any such person pursuant to an agreement
that is material.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby severally represents and warrants to the Company
as follows as of the date hereof and as of the Closing:
4.1 PURCHASER AUTHORITY; ACCREDITED INVESTOR STATUS
(a) The Purchaser has all requisite power,
authority and legal right to execute, deliver, enter into, consummate and
perform this Agreement. The execution, delivery and performance of this
Agreement by the Purchaser have been duly authorized by all required corporate,
partnership or other actions on the part of the Purchaser. The Purchaser has
duly executed and delivered this Agreement, and this Agreement constitutes the
legal, valid and binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms.
(b) The Purchaser hereby represents to the
Company that it has substantial knowledge, skill and experience in making
investment decisions of this type, it is capable of evaluating the risk of its
investment in the Shares being purchased by it and is able to bear the economic
risk of such investment, including the risk of losing the entire investment,
that (except as the Purchaser has otherwise advised the Company and the
Purchaser's counsel in writing) it is purchasing the Shares to be purchased by
it for its own account, and that the Shares are being purchased by it for
investment and not with a present view to any distribution thereof in violation
of applicable securities laws. It is understood that the disposition of the
Purchaser's property shall at all times be within the Purchaser's control. If
the Purchaser should in the future decide to dispose of any of its Shares, it is
understood that it may do so only in compliance with the Securities Act,
applicable state securities laws and this Agreement. The Purchaser represents
that it is an "accredited investor" as defined in Rule 501(a) under the
Securities Act and that its investment in the Shares does not represent more
than 5% of such Purchaser's net worth. For purposes hereof, "net worth" means
total assets in excess of total liabilities, exclusive of home, home furnishings
and automobiles.
(c) The Purchaser has received (i) audited
financial statements for the nine month period ending March 31, 1997 and (ii)
the Memorandum and has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's management.
-14-
19
(d) The Purchaser understands that (i) the
Shares have not been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) and Rule 506 promulgated under the
Securities Act, (ii) the Shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act and any applicable
state securities laws or is exempt from such registration or registrations (and
evidence satisfactory to the Company is provided by such Purchaser of the
availability of such exemptions, including the delivery, upon request, to the
Company of an opinion of counsel to such Purchaser, which opinion and counsel
are satisfactory to the Company), and (iii) the Shares will bear a legend to
such effect.
(e) The Purchaser represents that at no time was
the Purchaser presented with or solicited by or through any leaflet, public
promotional meeting, advertisement or any other form of general or public
advertising or solicitation. In addition, the Purchaser acknowledges that there
has never been any representation, guaranty or warranty made by the Company or
any agent or representative of the Company as to the amount of or type of
consideration or profit, if any, to be realized as a result of any investment by
the Purchaser in the Series C Preferred Stock or the Common Stock issuable upon
conversion of the Series C Preferred Stock.
(f) The Purchaser has discussed with his legal,
tax and financial advisors the suitability of an investment in the Company for
his particular tax and financial situation. All information which he has
provided to the Company concerning him and his financial position is correct and
complete as of the date of this Agreement, and if there should be any material
change in such information prior to the Closing Date, the Investor agrees
immediately to provide such information to the Company and the Agent.
(g) The information provided in the Investor
Questionnaire submitted to the Company by such Investor, is true, complete and
correct as of the date hereof.
(h) The Purchaser is a bona fide resident and
domiciliary of, or legal entity of, the state of address as set forth on Exhibit
A hereto.
(i) If the Purchaser is not a resident of the
United States, he understands that it is his responsibility to satisfy himself
as to the full observance of the laws of any relevant territory outside the
United States relating to his purchase of the Shares, including obtaining any
required governmental or other consents or observing any other applicable
formalities.
4.2 RELIANCE ON REPRESENTATIONS AND WARRANTIES BY THE
COMPANY AND THE AGENT
Each Purchaser hereby acknowledges that the Company
and the Agent are relying on the foregoing representations and warranties in
connection with the sale to such Purchaser of the Shares, and thereby agrees to
indemnify and hold harmless the Company and the Agent
-15-
20
and their respective officers, directors, control persons, agents, partners and
affiliates harmless from and against any and all liabilities, losses, claims,
costs, damages, judgments, settlements and expenses (including reasonable
attorneys' fees and all expenses reasonably incurred in investigating, preparing
or defending against any litigation commenced or threatened or any claim
whatsoever) suffered or incurred by any of them as a result of the breach of any
of such representation and warranty. In no event, however, shall the liability
of any Purchaser for indemnification under this Section 4.2 exceed the purchase
price paid by the Purchaser to the Company in connection with such Purchaser's
purchase of the Shares.
SECTION 5. COVENANTS OF THE COMPANY
The Company covenants and agrees, so long as 20% or more of the Shares
issued hereunder are held of record by the Purchasers and have not been
converted into shares of the Common Stock, unless some other period is expressly
provided in any subsections of this Section 5, in which case such specific
period will govern, as follows:
5.1 USE OF PROCEEDS
The Company will use the proceeds from the sale of
the Shares as described in the section of the Memorandum entitled "Use of
Proceeds."
5.2 FINANCIAL INFORMATION
The Company will maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in accordance with generally accepted
accounting principles consistently applied. The Company will deliver the
following to each Purchaser thereof:
(i) as soon as practicable but in any event
within 120 days after the close of each fiscal year of the Company, (A) a
balance sheet of the Company as of the end of such fiscal year and (B)
statements of operations and cash flows of the Company for such fiscal year, in
each case setting forth in comparative form the corresponding financial
information for the immediately preceding fiscal year, all such balance sheets
and statements to be audited by an independent public accounting firm of
recognized national standing selected by the Company, and such statements shall
be accompanied by management's discussion and analysis of the differences
between the results for such fiscal year and the corresponding financial
information for the preceding fiscal year and between the budgeted amounts (as
supplied pursuant to paragraph (ii) below) and the results for such year and a
narrative discussion of the Company's liquidity and capital resources as of the
end of such year conforming in all material respects to the requirements
contained in Item 303 of Regulation S-K under the Securities Act. All financial
statements provided under this Section 5.2(i) shall be prepared in accordance
with GAAP,
-16-
21
consistently applied, and shall be certified as to accuracy and completeness by
the Vice President of Finance or the President of the Company.
(ii) as soon as reasonably practicable, and in
any event within 60 days after the close of each of the Company's first three
(3) fiscal quarters, (A) an unaudited balance sheet of the Company as of the end
of such fiscal quarter and (B) unaudited statements of operations and cash flows
of the Company for the quarter just ended and for the portion of the fiscal year
ended with the end of such quarter, in each case in reasonable detail, certified
as to accuracy and completeness by the Vice President - Finance or the President
and Chief Executive Officer of the Company and setting forth in comparative form
the corresponding amounts for the comparable period one year prior thereto
(subject to normal year-end adjustments), together with a management's
discussion and analysis of differences between such results and the
corresponding financial information for the prior period; and
(iii) as soon as reasonably practicable, such
other information as may reasonably be requested by a holder of Shares (unless
reasonably objected to by the Company), regarding the assets, properties,
liabilities, business, affairs, results of operations or conditions (financial
or otherwise) of the Company. As a condition to receiving such information from
the Company, each holder (other than any parties that are (i) agencies,
instrumentalities or entities affiliated with any state government or (ii) a
government sponsored retirement system) of Shares requesting such information
shall, if requested by the Company, execute an appropriate confidentiality
agreement.
The obligation of the Company to furnish such financial information shall
terminate when the Company becomes subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended.
5.3 NOTICE OF EVENTS OF DEFAULT; LITIGATION
Promptly, but in any event within ten (10) days after
notice thereof is received by the Company, the Company will deliver to each
holder of Shares any notice of (i) a default by the Company in the observance or
performance of any material contract or agreement to which the Company is a
party, including, without limitation, any Transaction Document, and (ii) the
commencement of any investigation, action or proceeding at law or in equity or
before any federal or state court or governmental agency to which the Company is
a party an adverse result of which would, either individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business or financial condition of the Company.
5.4 ACCESS TO INFORMATION
At the request of holders of 20% or more of the
outstanding Shares, the Company will permit such Purchasers and any authorized
representative of such Purchasers, subject to (if requested by the Company)
execution by such Purchasers of a reasonable confidentiality
-17-
22
agreement, full and complete access at the Company during normal business hours
and in a manner that will not unreasonably interfere with the conduct of the
Company's business, to the properties and books and records of the Company. The
Purchasers requesting such access shall bear all costs and expenses they or
their representatives incur in connection with such request and such access.
5.5 MAINTENANCE OF EXISTENCE; PROPERTIES AND FRANCHISES;
COMPLIANCE WITH LAW; TAXES; INSURANCE
The Company will:
(a) maintain its corporate existence, rights and
other franchises in full force and effect; provided, that the Company may
terminate or permit the termination or abandonment of rights or other
franchises, if in the opinion of the Company it is no longer in the Company's
best interests to maintain such rights or other franchises and such termination
or abandonment will not be prejudicial in any material respect to the holders of
the Shares;
(b) maintain its tangible assets in good repair,
working order and condition, ordinary wear and tear excepted, so far as
necessary to the proper carrying on of its business;
(c) comply with each provision of all leases to
which it occupies real or personal property if the breach of such provision
would reasonably be expected to have a material adverse effect on the condition,
financial or otherwise, or operations of the Company;
(d) comply with all applicable laws and with all
applicable orders, rules, rulings, certificates, licenses, regulations, demands,
judgments, writs, injunctions and decrees, the violation of which would
reasonably be expected to have a material adverse effect on the Company,
provided, that such compliance shall not be necessary so long as the
applicability or validity of any such law, order, rule, ruling, certificate,
license, regulation, demand, judgment, writ, injunction or decree shall be
contested in good faith by appropriate proceedings;
(e) pay when due all taxes, fees, assessments
and other government charges imposed upon its properties, assets or income and
all claims or indebtedness (including, without limitation, materialmen's,
vendor's, workmen's and like claims) prior to such claims becoming a lien upon
such properties or assets; provided, that payment of any such tax, fee,
assessment, charge, claim or indebtedness shall not be necessary so long as (i)
the applicability or validity thereof shall be contested in good faith by
appropriate proceedings and a reserve, if appropriate, shall have been
established with respect thereto and (ii) failure to make such payment will not
have a material adverse effect on the business or financial condition of the
Company; and
(f) keep adequately insured all of its
respective properties of a character customarily insured by entities in the
same or similar business as that of the Company, against
-18-
23
loss or damage of the kinds and in amounts customarily insured against by such
entities and with such deductibles or coinsurance as is customary.
5.6 NO CHANGE IN BUSINESS
The Company will not, without the prior written
consent of holders owning a majority in interest of the Shares, engage in any
business other than the provision of certain advertising, entertainment and
communication services to long-haul professional truck drivers as described in
the Memorandum or reasonable extensions or expansions thereof.
5.7 RESTRICTIVE AGREEMENTS PROHIBITED
The Company shall not become a party to any agreement
which by its terms restricts the Company's ability to comply with and perform
its obligations under the Transaction Documents and the Series C Certificate of
Designation and the By-Laws of the Company.
5.8 NO DIVIDENDS; NO REDEMPTION
Subject to the provisions of the Transaction
Documents, the Company's Series C Certificate of Designation and the Company's
existing debt instruments, the Company will not (i) declare or make or permit to
be declared or made any payment of cash dividends on the Common Stock unless
equal cash dividends are declared and paid on the Series C Preferred Stock on
the same date or (ii) redeem or repurchase outstanding shares of Common Stock.
5.9 CONSOLIDATION, MERGER AND SALE
Without the consent of the holders of a majority of
the outstanding Shares, the Company will not do any of the following (or agree
to do any of the following): (a) wind up, liquidate or dissolve its affairs; (b)
sell, lease, transfer or otherwise dispose of 20% or more of its assets to any
other person other than in the ordinary course of business unless the proceeds
of such disposition are reinvested in assets of the general type used in the
business of the Company; (c) consolidate with, merge into or enter into a share
exchange with any other person; or (d) permit any other person (other than a
wholly-owned subsidiary on the date hereof) to merge into or sell, lease or
transfer all or substantially all of its property, assets or capital stock to
the Company, unless:
(i) the surviving entity is an entity incorporated
under the laws of a State of the United States of America;
(ii) immediately after such purchase, merger or
transfer, no default with respect to any material contracts,
understandings or agreements to which the Company is or may be
a party shall have occurred and be continuing;
-19-
24
(iii) the consolidated net worth of the surviving
entity shall be equal to or greater than the net worth of the
Company immediately preceding such purchase, merger or
consolidation; and
(iv) either:
(A) the merger or consolidation is between
two or more wholly-owned subsidiaries of the Company
or between the Company and one or more wholly-owned
subsidiaries of the Company; or
(B) following the merger or consolidation,
the shareholders immediately prior to the transaction
hold as a group the right to cast at least 20% of the
votes of all holders of voting securities of the
resulting or surviving entity.
5.10 TRANSACTIONS WITH AFFILIATES
The Company will not, directly or indirectly, enter
into any transaction, series of transactions or agreement (including, without
limitation, the purchase, sale, distribution, lease or exchange of any property
or the rendering of any service) with any affiliate of the Company, other than a
wholly-owned subsidiary of the Company, unless such transaction, series of
transactions or agreement involves less than $100,000 per calendar year
individually or less than $500,000 per year in the aggregate and is on terms
that are no less favorable to the Company, as the case may be, than those which
might be obtained at the time of such transaction from a person who is not such
an affiliate; provided, however, that this Section 5.10 shall not limit, or be
applicable to, (i) contractual commitments of the Company that were entered into
prior to the date hereof; (ii) employment arrangements with any individual who
is an employee of the Company if such arrangements are approved by the Board of
Directors of the Company; (iii) the payment of reasonable and customary regular
fees to directors who are not employees of the Company and (iv) options
previously issued to present and former employees of the Company and options and
warrants to purchase up to 115,154 and 186,750 shares of Common Stock,
respectively, to be granted in the future (with fair market value exercise
prices).
5.11 SUPERIOR CLASSES OR SERIES OF CAPITAL STOCK;
AMENDMENT OF SERIES C CERTIFICATE OF DESIGNATION,
CERTIFICATE OF INCORPORATION OR BY-LAWS
Without the consent of the holders of at least 66
2/3% of the then outstanding Shares, the Company shall not (i) authorize,
create, issue or sell any class or series of equity security (other than Series
A or Series B Preferred Stock) having rights that are senior to, or pari passu
with, the Series C Preferred Stock except as authorized in the Series C
Certificate of Designation, or (ii) amend, waive or repeal any provisions of, or
add any provision to, the Series C Certificate of Designation, the Certificate
of Incorporation or any other certificate of
-20-
25
designation filed with the Secretary of State of Delaware by the Company with
respect to its preferred stock, and/or By-Laws of the Company.
5.12 NO DILUTION OR IMPAIRMENT; NO CHANGES IN CAPITAL
STOCK
The Company will not, without the prior consent of
holders owning a majority of the outstanding Shares, by amendment of its Series
C Certificate of Designation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issuance or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of the Transaction Documents or impair or reduce
the rights of the holders of the Shares as a class. The Company 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 holders of Shares as such rights are set forth in the
Transaction Documents and the Company's Series C Certificate of Designation,
against impairment. Without limiting the generality of the foregoing, the
Company: (a) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
non-assessable shares of the Company's Common Stock free from all taxes, liens
and charges with respect to the issue thereof, upon the conversion of the
Shares, from time to time, (b) will not take any action which results in any
adjustment of the basis of conversion of the shares described in the Company's
Series C Certificate of Designation if the total number of shares of the
Company's Common Stock issuable upon the conversion of all of the then
outstanding Shares would exceed the total number of shares of the Company's
Common Stock then designated under the Company's Series C Certificate of
Designation and authorized for the purpose of issuance upon such conversion, (c)
will not have any authorized Common Stock other than its existing authorized
class of Common Stock, (d) will not amend its Certificate of Incorporation to
change any terms of its Common Stock, (e) will not amend its Series C
Certificate of Designation in any manner to alter or change the powers,
privileges or preferences of the holders of the Series C Preferred Stock
(including without limitation amendments to its Series C Certificate of
Designation after any Shares have been called for redemption), (f) will not
create or authorize any obligation or security convertible into shares of Series
C Preferred Stock or into shares of any other class or series of stock unless
the same ranks junior to the Series C Preferred Stock as to the payment of
dividends and the distribution of assets on the liquidation, dissolution or
winding up of the Company, whether any such creation, authorization or increase
shall be by means of amendment to the Series C Certificate of Designation or by
merger, consolidation or otherwise and (g) after the date hereof, (i) will not
increase the number of shares of Common Stock covered under its Stock Option
Plan or any other option plan above 525,000 shares in the aggregate and (ii)
will not create or establish (or make any grants or awards under) any stock,
phantom stock, stock appreciation rights or other equity equivalent plan for
employees, officers, directors, agents or consultants of the Company whereby the
Company agrees to pay any person a percentage of, or an amount otherwise
determined by reference to, the earnings of the Company, the value of their
stock or the proceeds from a sale of their stock or upon their liquidation. Any
of the foregoing may be amended or waived with the consent of a majority in
interest of the outstanding Shares.
-21-
26
5.13 RESERVATION OF SHARES
There have been reserved, and the Company shall at
all times keep reserved, free from preemptive rights, out of its authorized
Common Stock, a number of shares of Common Stock sufficient to provide for the
exercise of (i) the conversion rights of the Shares provided in the Company's
Series C Certificate of Designation and (ii) the Agent's Warrant. If at any time
the number of authorized but unissued shares of Common Stock of the Company
shall not be sufficient to effect the conversion of the Shares and the exercise
of the Agent's Warrant or otherwise to comply with the terms of this Agreement,
the Company will forthwith take such corporate and stockholder 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. The Company will
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 federal or state securities laws in connection with the issuance of
shares of Common Stock upon conversion of the Shares or exercise of the Agent's
Warrant.
5.14 PRIVATE PLACEMENT STATUS
Neither the Company nor any agent nor other person
acting on the Company's behalf will do or cause to be done (or will omit to do
or to cause to be done) any act which act (or which omission) would result in
bringing the issuance or sale of the Shares, and the issuance of Common Stock
upon conversion of the Shares, within the provisions of Section 5 of the
Securities Act or the filing, notification or reporting requirements of any
state securities law, except for filings, notices or reports pursuant to state
securities laws which have already been made or which are contemplated in
connection with the private offering and sale of the Shares.
5.15 REGULATION D FILING
The Company will file on a timely basis a Form D
"Notice of Sale of Securities Pursuant to Regulation D" and any amendments
thereto required to be filed with the Securities and Exchange Commission
pursuant to Regulation D under the Securities Act, and all notices, filings and
registrations, and amendments to any thereof as shall be required under any
state securities or "Blue Sky" law or any regulation thereunder, and will
simultaneously furnish copies of such Form D or amendment thereto and each such
notice, filing registration or amendment thereof to the Agent and counsel to the
Purchasers on behalf of Purchasers.
5.16 ACCESS TO INFORMATION AND DOCUMENTS
Prior to each Closing, the Company shall give the
Purchasers and their respective counsel, accountants and other representatives,
reasonable access, during normal business hours and upon reasonable notice, to
all the properties, documents, contracts, records and appropriate personnel of
the Company. Prior to each Closing, the Company shall furnish the Purchasers
with
-22-
27
copies of such documents and with such information with respect to the affairs
of the Company as the Purchasers may from time to time reasonably request.
5.17 FURTHER ASSURANCES
Subject to the terms and conditions of this
Agreement, the parties hereto shall use best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the sale of the Series C Preferred Stock pursuant to this Agreement.
5.18 FEES
The Company and each of the Purchasers shall bear
their own legal and other expenses with respect to this transaction, except that
upon each Closing, the Company shall pay (i) the fees, expenses and
disbursements of Piper & Marbury L.L.P., counsel to the Purchasers, and the
out-of-pocket expenses of the Agent in an aggregate amount not to exceed $75,000
without the prior approval of the Company, which approval shall not be
unreasonably withheld or delayed, and (ii) the Agent's cash commission, each as
provided in the engagement letter dated March 31, 1997, between the Company and
the Agent (the "Engagement Letter").
5.19 NOTICES
The Company will give to all holders of Shares copies
of all notices given by the Company to holders of its Common Stock concurrently
with the giving of such notices to the holders of Common Stock.
5.20 REDEMPTION OBLIGATIONS
The Company acknowledges its obligation to redeem for
cash 50% of the Shares on or before each of November 13, 2002 and November 13,
2003, respectively, in accordance with the terms of the Company's Series C
Certificate of Designation. If, the Company has insufficient capital resources
to redeem all such Shares, the Company covenants to use its reasonable best
efforts to obtain the funds necessary to effect such redemption in full as soon
as practicable, including engaging a nationally-known investment banking or
financial advisory firm reasonably acceptable to the holders of the Shares to
assist the Board of Directors and management in either (i) a recapitalization of
the Company or (ii) the sale of all or a portion of the Company's assets, in
order to generate sufficient funds to fully redeem such Shares.
5.21 BOARD NOMINEE
The Board of Directors of the Company shall consist
of no more than seven persons on the date hereof. Prior to the completion of a
Series C Qualifying Offering, as defined in the
-23-
28
Memorandum, the Purchasers shall be entitled to elect one director of the
Company. Pursuant to the Purchasers' right to elect a director of the Company,
the Agent, on behalf of the Purchasers, shall, within three months after the
date hereof, provide the Company the name of an individual to be elected or
nominated to the Company's Board of Directors within six months after the date
hereof. By execution of this Agreement, the Purchasers agree that the Company
may rely upon this procedure for purposes of satisfying its obligations with
respect to the Series C director under the Series C Certificate of Designation.
SECTION 6. CONDITIONS TO PURCHASERS' OBLIGATIONS
The Purchasers' obligation to purchase Shares
hereunder is subject to satisfaction of the following conditions (any of which
may be waived by the Purchasers) as of the Closing:
6.1 SERIES C CERTIFICATE OF DESIGNATION
The Company's Series C Certificate of Designation, in
form and substance reasonably satisfactory to counsel to the Purchasers, shall
have been filed with the Delaware Secretary of State in substantially the form
attached hereto as Exhibit B and shall be in effect for the Company on and as of
the date of such Closing and the Purchasers shall have received evidence thereof
satisfactory to counsel to the Purchasers, and the Amendment to the Company's
Certificate of Incorporation to provide for an increased number of authorized
shares of the Company's capital stock shall have been duly approved in
accordance with Delaware law.
6.2 CERTIFICATES FOR SHARES
Each Purchaser shall concurrently receive the
certificate(s) for Shares as contemplated by Section 2(b) hereof.
6.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company in
this Agreement or in any certificate or document delivered pursuant hereto or
thereto shall be true and correct in all material respects on and as of the
Closing with the same effect as though made on and as of the Closing (after
giving effect to transactions contemplated by this Agreement).
6.4 COMPLIANCE WITH AGREEMENTS
The Company shall have performed under, obtained all
necessary consents and/or waivers with respect to and complied with all
agreements, covenants and conditions contained in the Transaction Documents and
any other document contemplated hereby or thereby which are required to be
performed or complied with by the Company on or before the Closing.
-24-
29
6.5 OFFICERS' CERTIFICATES
The Purchasers shall have received a certificate
dated the Closing Date and signed by the President and Chief Executive Officer
and by the Vice President - Finance of the Company, to the effect that the
conditions of this Section 6 have been satisfied.
6.6 MATERIAL ADVERSE CHANGE
Except as disclosed in this Agreement or in any
Schedule or Exhibit hereto or in the Memorandum, there shall have been no
material adverse change in the business or financial condition or results of
operations of the Company since March 31, 1997.
6.7 PROCEEDINGS
All corporate and other proceedings in connection
with the transactions contemplated by the Transaction Documents (including the
issuance of the Agent's Warrant), and all documents incident thereto, shall be
in form and substance satisfactory to the Purchasers and Piper & Marbury L.L.P.,
their counsel, and the Purchasers shall have received all such originals or
certified or other copies of such documents as the Purchasers or their counsel
may reasonably request.
6.8 LEGALITY; GOVERNMENTAL AND OTHER AUTHORIZATION
The purchase of and payment for the Shares shall not
be prohibited by any law or governmental order, rule, ruling, regulation,
release, interpretation or opinion applicable to the Purchasers and shall not
subject the Purchasers to any penalty, tax, liability or other onerous
condition. Any necessary consents, approvals, licenses, permits, orders and
authorizations of, and any filings, registrations or qualifications with, any
governmental or administrative agency or other person with respect to the
transactions contemplated by this Agreement shall have been obtained or made and
shall be in full force and effect. The Company shall have delivered to the
Purchasers upon their reasonable request factual certificates or other evidence,
in form and substance satisfactory to the Purchasers and their counsel, setting
forth what is required to enable the Purchasers to establish compliance with
this condition.
6.9 TIME OF PURCHASE
Unless extended in writing by the Company and the
Agent, the final Closing shall not be later than 5:00 p.m., Baltimore, Maryland
time, on September 30, 1997.
-25-
30
6.10 NO CHANGE IN LAW, ETC.
No legislation, order, rule, ruling or regulation
shall have been proposed, enacted or made by or on behalf of any governmental
body, department (including, but not limited to, the U.S. Department of
Transportation) or agency, and no legislation shall have been introduced in
either House of Congress, and no investigation by any governmental authority
shall have been commenced or threatened, and no action, suit or proceeding shall
have been commenced before, and no decision shall have been rendered by, any
court, other governmental body or arbitrator, which, in any such case, in the
reasonable judgment of the Purchasers or their counsel could adversely affect,
restrain, prevent or change the transactions contemplated by this Agreement
(including without limitation the issuance of the Shares hereunder and
thereunder) or materially and adversely affect the assets, properties,
liabilities, business, affairs, results of operations, condition (financial or
otherwise) or prospects of the Company.
6.11 OPINION OF COUNSEL
The Purchasers shall have received an opinion of
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, dated the Closing Date and
addressed to the Purchasers, which opinion shall be in form and substance
reasonably satisfactory to the Agent and, on behalf of the Purchasers, Piper &
Marbury L.L.P.
6.12 OTHER DOCUMENTS AND OPINIONS
The Purchasers shall have received such other
documents and opinions, in form and substance satisfactory to the Purchasers and
their counsel, relating to matters incident to the transactions contemplated
hereby as the Purchasers may reasonably request.
6.13 PAYMENT OF FEES AND EXPENSES
Each of Piper & Marbury L.L.P. and the Agent shall
have received payment in cash via wire transfer of its fees, commissions and
expenses, as provided in the Engagement Letter.
6.14 ISSUANCE OF THE AGENT'S WARRANT(S)
The Company shall have issued to the Agent a five
year noncancelable warrant or warrants acceptable to the Company and the Agent
to purchase up to 186,750 shares of the Company's Common Stock for an exercise
price of $8.00 per share, subject to adjustment in certain circumstances.
-26-
31
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS
The Company's obligation to sell and issue the Shares at the
Closing is, at the option of the Company, subject to the fulfillment or waiver
of the following conditions:
7.1 PAYMENT
Simultaneously with each Closing and as described in
Section 2(b) hereof, the Company shall receive payment of $8.00 per share of
Series C Preferred Stock being purchased at such Closing by certified or
official bank check(s) or wire transfer(s) from the escrow agent for the
previously deposited funds of the Purchaser(s) except as provided in Section
5.18.
7.2 REPRESENTATIONS AND WARRANTIES CORRECT
The representations and warranties made by the
Purchasers in Section 5 hereof shall be true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of said date.
SECTION 8. BROKERS
Except for certain fees payable to the Agent (all of which fees will be
paid by the Company subject to the terms of the Engagement Letter), the Company
represents and warrants to the Purchasers that there is no liability for (and
the Company will pay and indemnify the Purchasers against) any fees or expenses
(or claims therefor) of any investment banker, finder or broker retained by the
Company or its affiliates (or that claims it was retained by the Company or its
affiliates) in connection with this Agreement or sale of the Series C Preferred
Stock. The Company will indemnify the Purchasers against all such fees or
expenses payable to the enumerated persons in the preceding sentence and against
any other such fees, expenses or claims of any person, unless such person was
engaged by the Purchasers in connection with this Agreement or any of the
transactions contemplated hereby.
SECTION 9. BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) The representations and warranties (as of the date hereof and as of
the Closing), covenants and agreements of the Company and of the Purchasers
contained in this Agreement or in any document or certificate delivered pursuant
hereto or in connection herewith shall survive, and shall continue in effect
following (i) the execution and delivery of this Agreement, (ii) the closings
hereunder and thereunder, (iii) any investigation at any time made by the
Purchasers or on their behalf or by any other person, and (iv) the issuance,
sale and delivery of the Shares, any disposition thereof and any payment,
conversion or cancellation of
-27-
32
the Shares except, that Sections 3 and 5 shall terminate upon the earlier of (i)
the consummation of a Series C Qualifying Offering (as defined in the Series C
Certificate of Designation) or (ii) when less than 20% of the Shares remain
outstanding. All statements contained in any certificate delivered to the
Purchasers by or on behalf of the Company pursuant hereto shall constitute
representations and warranties by the Company hereunder.
(b) The Company agrees to indemnify and hold the
Purchasers harmless from and against, and will pay to the Purchasers the full
amount of, any loss, damage, liability or expense (including amounts paid in
settlement and reasonable attorneys' fees and expenses) incurred by the
Purchaser resulting directly or indirectly from any material breach of the
representations, warranties, covenants or agreements of the Company contained in
this Agreement or any certificate delivered to the Purchasers pursuant hereto or
in connection herewith; provided that the Company shall only be required to
indemnify the Purchasers for attorneys' fees of one counsel to the Purchasers
and provided, further, that in no event shall the Company be liable for any
amount in excess of the proceeds received by the Company from the sale of the
Shares.
SECTION 10. SPECIFIC PERFORMANCE
The parties (other than any parties that are (i) agencies,
instrumentalities or entities affiliated with any state government or (ii) a
government sponsored retirement system) agree that irreparable damage will
result in the event that this Agreement is not specifically enforced, and the
parties agree that any damages available at law for a breach of this Agreement
would not be an adequate remedy. Therefore, the provisions hereof and the
obligations of the parties hereunder shall be enforceable in a court of equity,
or other tribunal with jurisdiction, by a decree of specific performance, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies and all other remedies provided for in this Agreement
shall, however, be cumulative and not exclusive and shall be in addition to any
other remedies which a party may have under this Agreement or otherwise.
SECTION 11. EXPENSES
(a) Whether or not the transactions herein contemplated are
consummated, the Company will pay (i) the costs and expenses of the preparation
and production of the Memorandum, the issuance of the Shares and the furnishing
of all opinions by counsel for the Company, (ii) the fees and expenses of Piper
& Marbury L.L.P. in connection with this Agreement and the transactions
contemplated hereby, as provided in the Engagement Letter and, when combined
with the out-of-pocket expenses of the Agent referred to in subsection (iii)
below, not to exceed an aggregate amount of $75,000 without the Company's prior
consent (whether or not a closing occurs hereunder, and if a closing occurs, the
Company will make such payment on the Initial Closing Date and, if applicable,
each subsequent Closing Date), (iii) subject to the Engagement Letter, the fees
and out-of-pocket expenses of the Agent, and (iv) the
-28-
33
fees and expenses (including reasonable attorneys' fees and expenses of one
counsel for all Purchasers) of any Purchaser in enforcing its rights against the
Company if the Company materially defaults in its obligations hereunder or under
the Series C Certificate of Designation.
(b) The Company agrees to pay, or to cause to be
paid, all documentary, stamp and other similar taxes levied under the laws of
the United States of America or any state or local taxing authority thereof or
therein in connection with the issuance and sale of the Shares and the execution
and delivery of this Agreement and any other documents or instruments
contemplated hereby or thereby and any modification of the Series C Certificate
of Designation or this Agreement or any such other documents or instruments and
will hold the Purchasers harmless without limitation as to time against any and
all liabilities with respect to all such taxes.
(c) The obligations of the Company under this
Section 11 shall survive the Closing hereunder and any termination of this
Agreement.
SECTION 12. AMENDMENTS AND WAIVERS
(a) The terms and provisions of this Agreement may be amended, waived,
modified or terminated only with the written consent of the holders of a
majority of the outstanding Shares. Each Purchaser acknowledges that by
operation hereof, the holders of a majority of the outstanding Shares (which may
not include such Purchaser) will have the right and power to diminish or
eliminate certain rights of such Purchaser under this Agreement.
(b) The Company agrees that it will make reasonable efforts to notify
all holders of Shares in advance of any proposed amendment, waiver, modification
or termination, but failure to give such notice shall not in any way affect the
validity of any such amendment, waiver, modification or termination. In
addition, promptly after obtaining the written consent of the holders as herein
provided, the Company shall transmit a copy of any amendment, waiver,
modification or termination which has been adopted to all holders of Shares then
outstanding, but failure to transmit copies shall not in any way affect the
validity of any such amendment, waiver, modification or termination.
SECTION 13. EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED SHARES; REPLACEMENT
(a) At any time at the request of any holder of Shares to the
Company at its address provided under Section 14 hereof, the Company at its
expense (except for any transfer tax arising out of the exchange) will issue and
deliver to or upon the order of the holder in exchange therefor a new
certificate or certificates therefor in such amount or amounts as such holder
may request in the aggregate representing the number of Shares represented by
such surrendered certificates, and registered in the name of such holder or
otherwise as such holder may direct.
-29-
34
(b) Any Share certificate which is converted into shares of Common
Stock in whole or in part shall be canceled by the Company, and no new Share
certificates shall be issued in lieu of any Shares which have been converted
into shares of Common Stock. The Company shall issue a new certificate with
respect to any Shares which were not converted into shares of Common Stock and
were represented by a certificate which was converted or exercised in part.
(c) Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of any Share certificate and, in the case
of any such loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender of such Share certificate (which surrendered Share certificate
shall be canceled by the Company), the Company will issue a new Share
certificate of like tenor in lieu of such lost, stolen, destroyed or mutilated
Share certificate as if the lost, stolen, destroyed or mutilated Share
certificate were then surrendered for exchange.
SECTION 14. NOTICES
All notices, requests, demands, consents and other communications
hereunder shall be in writing and shall be delivered by hand or shall be sent by
telex or telecopy (confirmed by registered, certified or overnight mail or
courier, postage and delivery charges prepaid), if to the Company at the address
indicated below, or if to a Purchaser at the address indicated on Exhibit A
hereto, or at such other address as a party may from time to time designate as
its address in writing to the other party to this Agreement. Whenever any notice
is required to be given hereunder, such notice shall be deemed given and such
requirement satisfied only when such notice is delivered or, if sent by telex or
telecopier, when received.
(a) If to the Company:
Park 'N View, Inc.
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, President and Chief Executive Officer
FAX: ▇▇▇-▇▇▇-▇▇▇▇
-30-
35
with a copy to:
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to the Purchaser, at the address
of the Purchaser set forth on Exhibit A.
with copies to:
▇▇▇▇▇▇▇ ▇. Berkeley
Managing Director
Alex. ▇▇▇▇▇ & Sons Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Principal
Alex. ▇▇▇▇▇ & Sons Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Piper & Marbury L.L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
SECTION 15. MISCELLANEOUS
(a) This Agreement (including all schedules and exhibits hereto)
and, upon the closing hereunder, the Series C Certificate of Designation,
together with any further
-31-
36
agreements entered into by the Purchasers and the Company at the Closing
hereunder, contain the entire agreement between the Purchasers and the Company,
and supersede any prior oral or written agreements, commitments, terms or
understandings regarding the subject matter hereof.
(b) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
(other than any parties that are (i) agencies, instrumentalities or entities
affiliated with any state government or (ii) a government sponsored retirement
system) hereby waive any provision of law which may render any provision hereof
prohibited or unenforceable in any respect.
(c) Unless otherwise expressly provided herein, any provision of
this Agreement relating to the consent, determination, decision or waiver of a
holder or holders of Shares means such holder's consent, determination, decision
or waiver in such holder's sole discretion.
(d) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, whether so
expressed or not; provided, that the Company may not assign any of its rights,
duties or obligations under this Agreement, except in connection with a
transaction permitted by Section 5.9 or with the Purchasers' written consent.
(e) In addition to any assignment by operation of law, a Purchaser
may assign, in whole or in part, any or all of its rights (and/or obligations)
under this Agreement to any permitted transferee of any or all of its Shares,
except as provided under the terms of the Registration Rights Agreement, and
(unless such assignment expressly provides otherwise) any such assignment shall
not diminish the rights the Purchaser would otherwise have under this Agreement
or with respect to any remaining Shares held by such Purchaser.
(f) No course of dealing and no delay on the part of any party
hereto in exercising any right, power, or remedy conferred by this Agreement
shall operate as a waiver thereof or otherwise prejudice such party's rights,
powers and remedies. No single or partial exercise of any rights, powers or
remedies conferred by this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
(g) The headings and captions in this Agreement are for
convenience of reference only and shall not define, limit or otherwise affect
any of the terms or provisions hereof.
-32-
37
(h) The Company hereby agrees that the Agent may rely upon the
Company's representations and warranties made to the Purchasers in Section 3
hereof as if such representations and warranties were made directly to the
Agent.
(i) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (other than any conflict of
laws rule which might result in the application of the laws of any other
jurisdiction). Each of the parties (other than any parties that are (i)
agencies, instrumentalities or entities affiliated with any state government or
(ii) a government sponsored retirement system) hereby irrevocably submits to the
jurisdiction of the state courts of the State of Delaware or any Federal court
sitting in the State of Delaware for purposes of any controversy, claim or
dispute arising out of or related to this Agreement.
(j) This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument, and all signatures need not appear on any one counterpart. The
authentic signature of any party received by facsimile transmission shall
constitute a valid and binding signature of such party.
-33-
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ATTEST: PARK 'N VIEW
/s/ ▇.▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
-34-
39
EXHIBIT A
Purchaser's Signature Page
to
Stock Purchase Agreement
with
Park 'N View, Inc.
Dated August 22, 1997
Number of Shares Purchase
Name of Purchaser Purchased Price
----------------- ---------------- ---------
Venhill Limited Partnership 187,500 $1,500,000
Juliet Challenger, Inc. 625,000 $5,000,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇▇, Trustees of the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Trust U/A dated 11/18/85
187,500 $1,500,000
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustees
U/A/T dated 8/28/68 for Juliet ▇▇▇ ▇▇▇▇▇▇▇
62,500 $ 500,000
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustees
U/A/T dated 8/28/68 for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
62,500 $ 500,000
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustees
U/A/T dated 8/28/68 for ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
62,500 $ 500,000
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustees
U/A/T dated 8/28/68 for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
62,500 $ 500,000
Winfield Capital Corp. 93,750 $ 750,000
ABS Employees' Venture Fund Limited Partnership
17,662 $ 141,296
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 15,750 $ 126,000
Arundel Lumber Company, Inc. 15,625 $ 125,000
E. ▇▇▇▇ ▇▇▇▇▇▇ 375 $ 3,000
▇▇▇▇▇ ▇▇▇▇ Family Foundation 15,625 $ 125,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 12,500 $ 100,000
-1-
40
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 12,500 $ 100,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 3,125 $ 25,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Trust #2 12,500 $ 100,000
▇▇▇▇▇ ▇. ▇▇▇▇▇ 31,250 $ 250,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 15,625 $ 125,000
▇▇▇▇ ▇▇▇▇▇▇ 16,000 $ 128,000
▇▇▇▇▇▇ ▇▇▇▇▇ and/or ▇▇▇▇▇▇ ▇▇▇▇▇, as Tenants - by -
Entirety 16,250 $ 130,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Tenants - by -
Entirety 6,256 $ 50,048
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 12,500 $ 100,000
▇▇▇▇ ▇▇▇▇▇▇▇ 37,500 $ 300,000
Spiegel Enterprises 15,625 $ 125,000
Tampsco Partnership XII 125,000 $ 1,000,000
Foundation Partners Fund, G.P. 125,000 $ 1,000,000
Tennyson Private Placement Fund, LLC 62,500 $ 500,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 25,000 $ 200,000
Tri Ventures 15,625 $ 125,000
Benefit Capital Management Corporation as
Investment Manager for The Prudential Insurance
Company of America, Separate Account No. VCA-GA-5298
125,000 $ 1,000,000
State Treasurer of the State of Michigan, Custodian
of the Michigan Public School Employees' Retirement
System, State Employees' Retirement System,
Michigan State Police Retirement System, and
Michigan Judges Retirement System
125,000 $ 1,000,000
APA Excelsior IV, L.P. 92,500 $ 740,000
▇▇▇▇▇▇ & Co. (Cayman) LTD., Custodians for
APA/Excelsior IV/Offshore, L.P. 16,250 $ 130,000
The P/A Fund, L.P. 16,250 $ 130,000
--------- -----------
Total 2,328,543 $18,628,344
========= ===========
-2-
41
See Omnibus Signature Page for Signature of Purchaser
Date executed: August 22, 1997
-3-
42
EXHIBIT A
OMNIBUS SIGNATURE PAGE
CORPORATE INVESTOR
Park `N View, Inc. Alex. ▇▇▇▇▇ & Sons Incorporated
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' Agreement and Exchange Agreement, as amended (the
"Securityholders' Agreement") and (f) Securities Restriction Agreement, as
amended (the "Securities Restriction Agreement"). The undersigned represents and
agrees that THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE
EXECUTION OF EACH OF THE FOREGOING DOCUMENTS and, in addition, acknowledges,
certifies, represents and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the
Investor Questionnaire, including the undersigned's taxpayer identification
number, is complete and accurate as of the date hereof and may be relied upon by
you, and the undersigned will immediately notify you of any material change in
any of such information which may occur prior to the acceptance of the
undersigned's subscription and will promptly send you written confirmation
thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
Number of Shares Subscribed for:
---------
Aggregate purchase price (number of Shares x $8.00): $
----------
Amount of wire transfer: $
----------
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
------------------------------------------------------------------------------------------
-4-
43
Address to which Stock Certificates
should be delivered:
---------------------------------------
---------------------------------------
---------------------------------------
3. INVESTMENT AUTHORIZATION. The undersigned corporation has all
requisite authority to acquire the Shares hereby subscribed for, and to enter
into the Subscription Agreement, the Stock Purchase Agreement, the Registration
Rights Agreement, the Securityholders' Agreement and the Securities Restriction
Agreement; and further, the undersigned officer of the subscribing entity has
been duly authorized by all requisite action on the part of such entity to
execute this Omnibus Signature Page and on its behalf.
IN WITNESS WHEREOF, the undersigned represents, under penalty of
perjury, that the foregoing statements are true and correct and that it has
caused the Investor Questionnaire, the Subscription Agreement, the Stock
Purchase Agreement, the Registration Rights Agreement, the Securityholders'
Agreement and the Securities Restriction Agreement to be duly executed this ___
day of _______, 1997.
---------------------------------------
Name of Investor
By:
------------------------------------
Signature of Authorized Person
------------------------------------
Print name and title
NAME AND LOCATION OF YOUR ALEX. ▇▇▇▇▇ INVESTMENT REPRESENTATIVE:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-5-
44
OMNIBUS SIGNATURE PAGE
INDIVIDUAL INVESTOR
Park `N View Alex. ▇▇▇▇▇ & Sons Incorporated
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' and Exchange Agreement, as amended (the "Securityholders'
Agreement") and (f) Securities Restriction Agreement, as amended (the
"Securities Restriction Agreement"). The undersigned represents and agrees that
THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE EXECUTION OF EACH
OF THE FOREGOING DOCUMENTS and, in addition, acknowledges, certifies, represents
and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the Investor
Questionnaire, including the undersigned's taxpayer identification number, is
complete and accurate as of the date hereof and may be relied upon by you, and
the undersigned will immediately notify you of any material change in any of
such information which may occur prior to the acceptance of the undersigned's
subscription and will promptly send you written confirmation thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
Number of Shares Subscribed for: __________
Aggregate purchase price (number of Shares x $8.00): $__________
Amount of wire transfer: $__________
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
--------------------------------------------------------------------
-1-
45
Form of joint ownership (if applicable). (If one of these
boxes is checked, subscriber and co-subscriber must both sign
all documents):
[ ] Tenants-by-Entirety
[ ] Tenants-In-Common
[ ] Joint Tenants
If the Shares hereby subscribed for are to be owned by more
than one person in any manner, the undersigned understands and
agrees that each of the co-investors in such Shares must sign
this Omnibus Signature Page and complete an Investor
Questionnaire in order for this subscription to be accepted.
Address to which Stock Certificates
should be delivered:
-----------------------
-----------------------
-----------------------
IN WITNESS WHEREOF, the undersigned represent(s), under penalty of
perjury, that the foregoing statements are true and correct and that he, she, or
they have executed the Investor Questionnaire, the Subscription Agreement, the
Stock Purchase Agreement, the Registration Rights Agreement, the
Securityholders' Agreement and the Securities Restriction Agreement on his, her
or their behalf this ___ day of __________, 1997.
------------------------------------------ --------------------------------
Please Print Name of Investor Signature of Investor
------------------------------------------ --------------------------------
Please Print Name of Co-Investor, if any Signature of Co-Investor, if any
--------------------------------------------------------------------------------
NAME AND LOCATION OF YOUR ALEX. ▇▇▇▇▇ INVESTMENT REPRESENTATIVE:
-----------------------------------------------------------------
-----------------------------------------------------------------
--------------------------------------------------------------------------------
- 2 -
46
OMNIBUS SIGNATURE PAGE
TRUST INVESTOR
Park `N View, Inc. Alex. ▇▇▇▇▇ & Sons Incorporated
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' Agreement and Exchange Agreement, as amended (the
"Securityholders' Agreement") and (f) Securities Restriction Agreement, as
amended (the "Securities Restriction Agreement"). The undersigned represents and
agrees that THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE
EXECUTION OF EACH OF THE FOREGOING DOCUMENTS and, in addition, acknowledges,
certifies, represents and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the Investor
Questionnaire, including the undersigned's taxpayer identification number, is
complete and accurate as of the date hereof and may be relied upon by you, and
the undersigned will immediately notify you of any material change in any of
such information which may occur prior to the acceptance of the undersigned's
subscription and will promptly send you written confirmation thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
Number of Shares Subscribed for: __________
Aggregate purchase price (number of Shares x $8.00): $__________
Amount of wire transfer: $__________
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
--------------------------------------------------------------------
-1-
47
Address to which Stock Certificates
should be delivered:
-----------------------------
-----------------------------
-----------------------------
3. INVESTMENT AUTHORIZATION. The undersigned trust has all requisite
authority to acquire the Shares hereby subscribed for, and to enter into the
Subscription Agreement, the Stock Purchase Agreement, the Registration Rights
Agreement, the Securityholders' Agreement and the Securities Restriction
Agreement; and further, the undersigned trustee of the subscribing trust has
been duly authorized by all requisite action on the part of such trust to
execute this Omnibus Signature Page and on its behalf.
IN WITNESS WHEREOF, the undersigned represents, under penalty of
perjury, that the foregoing statements are true and correct and that it has
caused the Investor Questionnaire, the Subscription Agreement, the Stock
Purchase Agreement, the Registration Rights Agreement, the Securityholders'
Agreement and the Securities Restriction Agreement to be duly executed this ___
day of _______, 1997.
---------------------------------
Name of Investor
By:
---------------------------------
Signature of Authorized Trustee
---------------------------------
Print name
--------------------------------------------------------------------------------
NAME AND LOCATION OF YOUR ALEX. ▇▇▇▇▇ INVESTMENT REPRESENTATIVE:
----------------------------------------------------------------
----------------------------------------------------------------
--------------------------------------------------------------------------------
-2-
48
OMNIBUS SIGNATURE PAGE
PARTNERSHIP INVESTOR
Park `N View, Inc. Alex. ▇▇▇▇▇ & Sons Incorporated
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' Agreement and Exchange Agreement, as amended (the
"Securityholders' Agreement") and (f) Securities Restriction Agreement, as
amended (the "Securities Restriction Agreement"). The undersigned represents and
agrees that THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE
EXECUTION OF EACH OF THE FOREGOING DOCUMENTS and, in addition, acknowledges,
certifies, represents and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the Investor
Questionnaire, including the undersigned's taxpayer identification number, is
complete and accurate as of the date hereof and may be relied upon by you, and
the undersigned will immediately notify you of any material change in any of
such information which may occur prior to the acceptance of the undersigned's
subscription and will promptly send you written confirmation thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
Number of Shares Subscribed for: __________
Aggregate purchase price (number of Shares x $8.00): $__________
Amount of wire transfer: $__________
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
--------------------------------------------------------------------
-1-
49
Address to which Stock Certificates
should be delivered:
-----------------------------
-----------------------------
-----------------------------
3. INVESTMENT AUTHORIZATION. The undersigned partnership has all
requisite authority to acquire the Shares hereby subscribed for, and to enter
into the Subscription Agreement, the Stock Purchase Agreement, the Registration
Rights Agreement, the Securityholders' Agreement and the Securities Restriction
Agreement; and further, the undersigned general partner of the subscribing
entity has been duly authorized by all requisite action on the part of such
entity to execute this Omnibus Signature Page and on its behalf.
IN WITNESS WHEREOF, the undersigned represents, under penalty of
perjury, that the foregoing statements are true and correct and that it has
caused the Investor Questionnaire, the Subscription Agreement, the Stock
Purchase Agreement, the Registration Rights Agreement, the Securityholders'
Agreement and the Securities Restriction Agreement to be duly executed this ___
day of _______, 1997.
--------------------------------
Name of Investor
By:
--------------------------------
Signature of General Partner
--------------------------------
Print name and title
--------------------------------------------------------------------------------
NAME AND LOCATION OF YOUR ALEX. ▇▇▇▇▇ INVESTMENT REPRESENTATIVE:
----------------------------------------------------------------
----------------------------------------------------------------
--------------------------------------------------------------------------------
-2-
50
OMNIBUS SIGNATURE PAGE
LIMITED LIABILITY COMPANY INVESTOR
Park `N View, Inc. Alex. ▇▇▇▇▇ & Sons Incorporated
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' Agreement and Exchange Agreement, as amended (the
"Securityholders' Agreement") and (f) Securities Restriction Agreement, as
amended (the "Securities Restriction Agreement"). The undersigned represents and
agrees that THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE
EXECUTION OF EACH OF THE FOREGOING DOCUMENTS and, in addition, acknowledges,
certifies, represents and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the Investor
Questionnaire, including the undersigned's taxpayer identification number, is
complete and accurate as of the date hereof and may be relied upon by you, and
the undersigned will immediately notify you of any material change in any of
such information which may occur prior to the acceptance of the undersigned's
subscription and will promptly send you written confirmation thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
Number of Shares Subscribed for: __________
Aggregate purchase price (number of Shares x $8.00): $__________
Amount of wire transfer: $__________
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
--------------------------------------------------------------------
-3-
51
Address to which Stock Certificates
should be delivered:
----------------------------
----------------------------
----------------------------
3. INVESTMENT AUTHORIZATION. The undersigned limited liability company
has all requisite authority to acquire the Shares hereby subscribed for, and to
enter into the Subscription Agreement, the Stock Purchase Agreement, the
Registration Rights Agreement, the Securityholders' Agreement and the Securities
Restriction Agreement; and further, the undersigned officer of the subscribing
entity has been duly authorized by all requisite action on the part of such
entity to execute this Omnibus Signature Page and on its behalf.
IN WITNESS WHEREOF, the undersigned represents, under penalty of
perjury, that the foregoing statements are true and correct and that it has
caused the Investor Questionnaire, the Subscription Agreement, the Stock
Purchase Agreement, the Registration Rights Agreement, the Securityholders'
Agreement and the Securities Restriction Agreement to be duly executed this ___
day of _______, 1997.
------------------------------
Name of Investor
By:
------------------------------
Signature of Authorized Person
------------------------------
Print name and title
--------------------------------------------------------------------------------
NAME AND LOCATION OF YOUR ALEX. ▇▇▇▇▇ INVESTMENT REPRESENTATIVE:
----------------------------------------------------------------
----------------------------------------------------------------
--------------------------------------------------------------------------------
-4-
52
OMNIBUS SIGNATURE PAGE
GOVERNMENT SPONSORED RETIREMENT SYSTEM INVESTOR
Park `N View, Inc. Alex. ▇▇▇▇▇ & Sons Incorporated
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' Agreement and Exchange Agreement, as amended (the
"Securityholders' Agreement") and (f) Securities Restriction Agreement, as
amended (the "Securities Restriction Agreement"). The undersigned represents and
agrees that THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE
EXECUTION OF EACH OF THE FOREGOING DOCUMENTS and, in addition, acknowledges,
certifies, represents and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the Investor
Questionnaire, including the undersigned's taxpayer identification number, is
complete and accurate as of the date hereof and may be relied upon by you, and
the undersigned will immediately notify you of any material change in any of
such information which may occur prior to the acceptance of the undersigned's
subscription and will promptly send you written confirmation thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
Number of Shares Subscribed for: __________
Aggregate purchase price (number of Shares x $8.00): $__________
Amount of wire transfer: $__________
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
--------------------------------------------------------------------
-5-
53
Address to which Stock Certificates
should be delivered:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
-----------------------------
3. INVESTMENT AUTHORIZATION. The undersigned government sponsored
retirement system has all requisite authority to acquire the Shares hereby
subscribed for, and to enter into the Subscription Agreement, the Stock Purchase
Agreement, the Registration Rights Agreement, the Securityholders' Agreement and
the Securities Restriction Agreement; and further, the undersigned agent of the
subscribing entity has been duly authorized by all requisite action on the part
of such entity to execute this Omnibus Signature Page and on its behalf.
IN WITNESS WHEREOF, the undersigned represents, under penalty of
perjury, that the foregoing statements are true and correct and that it has
caused the Investor Questionnaire, the Subscription Agreement, the Stock
Purchase Agreement, the Registration Rights Agreement, the Securityholders'
Agreement and the Securities Restriction Agreement to be duly executed this ___
day of _______, 1997.
------------------------------
Name of Investor
By:
------------------------------
Signature of Authorized Agent
------------------------------
Print name and title
-6-
54
--------------------------------------------------------------------------------
NAME AND LOCATION OF YOUR ALEX. ▇▇▇▇▇ INVESTMENT REPRESENTATIVE:
---------------------------------------------------------------
---------------------------------------------------------------
--------------------------------------------------------------------------------
7
55
The following persons have executed the Omnibus Signature Page
Number of Shares Purchase
Name of Purchaser Purchased Price
----------------- ---------------- ----------
Venhill Limited Partnership 187,500 $1,500,000
Juliet Challenger, Inc. 625,000 $5,000,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and ▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇, Trustees of the
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust U/A dated
11/18/85 187,500 $1,500,000
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Trustees U/A/T dated 8/28/68 for Juliet
▇▇▇ ▇▇▇▇▇▇▇ 62,500 $ 500,000
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Trustees U/A/T dated 8/28/68 for ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 62,500 $ 500,000
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Trustees U/A/T dated 8/28/68 for ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇. 62,500 $ 500,000
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Trustees U/A/T dated 8/28/68 for ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 62,500 $ 500,000
Winfield Capital Corp. 93,750 $ 750,000
ABS Employees' Venture Fund Limited
Partnership 17,662 $ 141,296
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 15,750 $ 126,000
Arundel Lumber Company, Inc. 15,625 $ 125,000
E. ▇▇▇▇ ▇▇▇▇▇▇ 375 $ 3,000
▇▇▇▇▇ ▇▇▇▇ Family Foundation 15,625 $ 125,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 12,500 $ 100,000
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 12,500 $ 100,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 3,125 $ 25,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Trust #2 12,500 $ 100,000
▇▇▇▇▇ ▇. ▇▇▇▇▇ 31,250 $ 250,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 15,625 $ 125,000
-8-
56
▇▇▇▇ ▇▇▇▇▇▇ 16,000 $ 128,000
▇▇▇▇▇▇ ▇▇▇▇▇ and/or ▇▇▇▇▇▇ ▇▇▇▇▇, as
Tenants - by - Entirety 16,250 $ 130,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as
Tenants - by - Entirety 6,256 $ 50,048
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 12,500 $ 100,000
▇▇▇▇ ▇▇▇▇▇▇▇ 37,500 $ 300,000
Spiegel Enterprises 15,625 $ 125,000
Tampsco Partnership XII 125,000 $ 1,000,000
Foundation Partners Fund, G.P. 125,000 $ 1,000,000
Tennyson Private Placement Fund, LLC 62,500 $ 500,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 25,000 $ 200,000
Tri Ventures 15,625 $ 125,000
Benefit Capital Management Corporation as
Investment Manager for The Prudential
Insurance Company of America, Separate
Account No. VCA-GA-5298 125,000 $ 1,000,000
State Treasurer of the State of Michigan,
Custodian of the Michigan Public School
Employees' Retirement System, State
Employees' Retirement System,
Michigan State Police Retirement System, and
Michigan Judges Retirement System 125,000 $ 1,000,000
APA Excelsior IV, L.P. 92,500 $ 740,000
▇▇▇▇▇▇ & Co. (Cayman) LTD., Custodians
for APA/Excelsior IV/Offshore, L.P. 16,250 $ 130,000
The P/A Fund, L.P. 16,250 $ 130,000
--------- -----------
Total 2,328,543 $18,628,344
========= ===========
-9-
57
EXHIBIT B
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES C 7% CUMULATIVE CONVERTIBLE
PREFERRED STOCK OF PARK 'N VIEW, INC.
Park `N View, Inc., a Delaware corporation (the "Corporation"), hereby
certifies that pursuant to the authority contained in Article Seventh of the
Corporation's Certificate of Incorporation, and in accordance with Section 242
of the General Corporation Law of the State of Delaware (the "DGCL"), the
following resolution was duly adopted by the Board of Directors of the
Corporation, amending a series of its Preferred Stock designated as Series C 7%
Cumulative Convertible Preferred Stock:
WHEREAS, the amendment of the designations herein certified has been
duly adopted by the Corporation's Board of Directors and Holders of the Series A
Preferred Stock (the "Series A Stock"), the Holders of the Series B 7%
Cumulative Convertible Preferred Stock (the "Series B Stock"), and the Holders
of the Series C 7% Cumulative Convertible Preferred Stock (the "Series C
Stock"); and
WHEREAS, the Certificate of Incorporation of the Corporation provides
for two classes of shares known as common stock, $.001 par value per share (the
"Common Stock"), and preferred stock, $.01 par value per share ("Preferred
Stock"); and
WHEREAS, the Corporation has created: (i) a series of Preferred Stock
designated as Series A Preferred Stock; (ii) a series of Preferred Stock
designated as Series B 7% Cumulative Convertible Preferred Stock; and (iii) a
series of Preferred Stock designated as Series C 7% Cumulative Convertible
Preferred Stock; and
WHEREAS, the Board of Directors of the Corporation is authorized by the
Certificate of Incorporation to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in such series and to fix the designations,
preferences and rights of the shares of each such series and the qualifications,
limitations and restrictions thereof.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors deems it
advisable to, and hereby does, designate a Series C 7% Cumulative Convertible
Preferred Stock and fixes and determines the rights, preferences,
qualifications, limitations and restrictions relating to the Series C 7%
Cumulative Convertible Preferred Stock as follows:
-10-
58
1. Designation. The shares of such series of Preferred Stock shall be
designated "Series C 7% Cumulative Convertible Preferred Stock" (referred to
herein as the "Series C Stock").
2. Authorized Number. The number of shares constituting the Series C
Stock shall be 3,750,000.
3. Dividends. The holders of shares of Series C Stock shall be entitled
to receive, when and as declared by the Board of Directors of the Corporation,
out of assets legally available for such purpose, dividends at the rate of $0.56
(i.e., 7%) per share per annum, which shall be payable when and if declared by
the Board of Directors or shall accrue quarterly on the last day of January,
April, July and October in each year, commencing on August 31, 1997; provided,
however, that upon an Event of Default (as hereinafter defined) and so long as
it shall continue, such dividend rate shall be $.72 (i.e., 9%) per share per
annum. Dividends on the Series C Stock shall be cumulative so that if, for any
dividend accrual period, cash dividends at the rate hereinabove specified are
not declared and paid or set aside for payment, the amount of accrued but unpaid
dividends shall accumulate and shall be added to the dividends payable for
subsequent dividend accrual periods and upon any redemption or conversion of
shares of Series C Stock. If any shares of Series C Stock are issued on a date
which does not coincide with a dividend payment date, then the initial dividend
accrual period applicable to such shares shall be the period from the date of
issuance thereof through whichever of January 31, April 30, July 31, or October
31 next occurs after the date of issuance. If the date fixed for payment of a
final liquidating distribution on any shares of Series C Stock, or the date on
which any shares of Series C Stock are redeemed or converted into Common Stock
does not coincide with a dividend payment date, then subject to the provisions
hereof relating to such payment, redemption or conversion, the final dividend
accrual period applicable to such shares shall be the period from whichever of
February 1, May 1, August 1 or November 1 most recently precedes the date of
such payment, conversion or redemption through the effective date of such
payment, conversion or redemption. Dividends paid in cash on the shares of
Series C Stock (or Series A Stock or Series B Stock, which shall rank pari passu
with the Series C Stock) in an amount less than the total amount of such
dividends shall be allocated pro rata so that the total value of dividends paid
on the Preferred Stock shall in all cases bear to each other the same ratio that
the total value of accrued and unpaid dividends on the Series A Stock, the
Series B Stock and Series C Stock bear to each other. Without the written
consent of the holders of at least 66 2/3% of the then outstanding Series C
Stock, the Corporation shall not declare or pay any cash dividend on, or redeem
or repurchase or make any other cash distribution in respect of any other equity
Securities (as defined herein) of the Corporation unless at the time of such
declaration, payment or distribution all dividends on the Series C Stock accrued
for all past dividend accrual periods shall have been paid and the full
dividends thereon for the current dividend period shall be paid or declared and
set aside for payment.
-11-
59
4. Liquidation.
(a) Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the
shares of Series C Stock shall be entitled, before any distribution or
payment is made upon any Common Stock or any other class or series of
stock ranking junior to the Series C Stock as to distribution of assets
upon liquidation (other than the Series A Preferred Stock and the
Series B Preferred Stock of the Corporation which shall rank pari passu
with the Series C Stock), to be paid an amount equal to $8.00 per share
(as adjusted for Recapitalization Events (as hereinafter defined)) plus
all accrued and unpaid dividends to such date (collectively, the
"Liquidation Payments"). If upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the
assets to be distributed among the holders of Series C Stock shall be
insufficient to permit payment in full to the holders of Series C Stock
of the Liquidation Payments, then the entire assets of the Corporation
shall be distributed ratably among such holders and the holders of any
class of preferred stock ranking on a parity with the Series C Stock in
proportion to the full respective distributive amounts to which they
are entitled.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after the holders of Series C Stock shall have been paid
in full the Liquidation Payments, the remaining assets of the
Corporation may be distributed ratably per share in order of preference
to the holders of Common Stock and any other class or series of stock
ranking junior to the Series C Stock as to distribution of assets upon
liquidation.
(c) Written notice of a liquidation, dissolution or winding
up, stating a payment date, the amount of the Liquidation Payments and
the place where said Liquidation Payments shall be payable, shall be
given by mail, postage prepaid, not less than 30 days prior to the
payment date stated therein, to each holder of record of Series C Stock
at its post office address as shown by the records of the Corporation.
5. Conversion.
The holders of the Series C Stock shall have the following
conversion rights:
(a) Optional Conversion. Each share of Series C Stock shall be
convertible at any time, at the option of the holder of record thereof,
into fully paid and nonassessable shares of Common Stock at the
"conversion rate" (as defined in paragraph (c) below) then in effect
upon surrender to the Corporation or its transfer agent of the
certificate or certificates representing the Series C Stock to be
converted, as provided below, or if the holder notifies the Corporation
or its transfer agent that such certificate or certificates have been
lost, stolen or destroyed, upon the execution and delivery of an
agreement satisfactory to the Corporation to indemnify the Corporation
from any losses incurred by it in connection therewith.
-12-
60
(b) Conversion on Qualifying Offering. Upon the consummation
of a Qualifying Offering (as defined below), upon not less than ten
(10) days prior written notice by the Corporation of the anticipated
consummation of such offering, each share of Series C Stock shall be
converted into fully paid and nonassessable shares of Common Stock at
the conversion rate. A "Qualifying Offering" means (i) the Corporation
shall have consummated a firm commitment underwritten public offering
of its Common Stock by a nationally recognized investment banking firm
pursuant to an effective registration under the Securities Act of 1933,
as amended, covering the offering and sale of both primary and
secondary shares of Common Stock which results in gross proceeds of at
least $20,000,000, (ii) the Common Stock is quoted or listed by either
The Nasdaq Stock Market (National Market) ("Nasdaq"), the New York
Stock Exchange or the American Stock Exchange, and (iii) the price at
which the Common Stock is sold in such offering is at least equal to an
amount which (x) is 200% of the then effective conversion price or (y)
would represent, on an as converted basis, a compound annual rate of
return of 35% based upon the original issuance price of the Series C
Stock, and (iv) all outstanding shares of the Series B Preferred Stock
shall have been converted into shares of common stock of the Company in
accordance with the Certificate of Designation relating to the Series B
Preferred Stock and all outstanding shares of the Series A Preferred
Stock shall have been redeemed in accordance with the Certificate of
Designation relating to the Series A Preferred Stock. Upon the
achievement of (i), (ii), (iii) and (iv) above and the giving of the
mandatory conversion notice by the Corporation, the outstanding shares
of Series C Stock to be converted shall be converted automatically
without any further action by the holders of such shares and whether or
not the certificates representing such shares are surrendered to the
Corporation or its transfer agent.
(c) Basis For Conversion; Converted Shares. The basis for any
conversion under this Section 5 shall be the "conversion rate" in
effect at the time of conversion, which for the purposes hereof shall
mean the number of shares of Common Stock issuable for each share of
Series C Stock surrendered for conversion under this Section 5.
Initially, the conversion rate shall be 1.0, i.e., 1.0 share of Common
Stock for each share of Series C Stock being converted. Such conversion
rate shall be subject to adjustment as provided in Section 7 below. As
used herein, the term "conversion price" shall be an amount computed by
dividing $8.00 by the conversion rate then in effect. Initially, the
conversion price shall be $8.00 per share of Common Stock. If any
fractional interest in a share of Common Stock would be deliverable
upon conversion of Series C Stock, the Corporation shall pay in lieu of
such fractional share an amount in cash equal to the conversion price
of such fractional share (computed to the nearest one hundredth of a
share) in effect at the close of business on the date of conversion.
Any shares of Series C Stock which have been converted shall be
canceled and all dividends on converted shares shall cease to accrue
and the certificates representing shares of Series C Stock so converted
shall represent the right to receive (i) such number of shares of
Common Stock into which such shares of Series C Stock are convertible,
plus (ii) cash payable for any fractional share plus (iii) all accrued
but unpaid dividends relating to such shares through
-13-
61
the immediately preceding dividend payment date. Upon the conversion of
shares of Series C Stock as provided in this Section 5, the Corporation
shall promptly pay all then accrued but unpaid dividends to the holder
of the Series C Stock being converted. The Board of Directors of the
Corporation shall at all times reserve a sufficient number of
authorized but unissued shares of Common Stock to be issued in
satisfaction of the conversion rights and privileges aforesaid.
(d) Mechanics of Conversion. In the case of an optional
conversion, before any holder of Series C Stock shall be entitled to
convert the same into shares of Common Stock, it shall surrender the
certificate or certificates therefor, duly endorsed, at the office of
the Corporation or its transfer agent for the Series C Stock, and shall
give written notice to the Corporation of the election to convert the
same and shall state therein the name or names in which the certificate
of certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver
at such office to such holder of Series C Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as
aforesaid. A certificate or certificates will be issued for the
remaining shares of Series C Stock in any case in which fewer than all
of the shares of Series C Stock represented by a certificate are
converted.
(e) Issue Taxes. The Corporation shall pay all issue taxes, if
any, incurred in respect of the issue of shares of Common Stock on
conversion. If a holder of shares surrendered for conversion specifies
that the shares of Common Stock to be issued on conversion are to be
issued in a name or names other than the name or names in which such
surrendered shares stand, the Corporation shall not be required to pay
any transfer or other taxes incurred by reason of the issuance of such
shares of Common Stock to the name of another, and if the appropriate
transfer taxes shall not have been paid to the Corporation or the
transfer agent for the Series C Stock at the time of surrender of the
shares involved, the shares of Common Stock issued upon conversion
thereof may be registered in the name or names in which the surrendered
shares were registered, despite the instructions to the contrary.
6. Adjustment of Conversion Price and Conversion Rate. The number and
kind of securities issuable upon the conversion of the Series C Stock, the
conversion price and the conversion rate shall be subject to adjustment from
time to time in accordance with the following provisions:
(a) Certain Definitions. For purposes of this
Certificate:
(i) The term "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued, or deemed to be
issued by the Corporation pursuant to paragraph (g) of this
Section 6, after the Original Issue Date except:
-14-
62
(A) shares of Common Stock issuable upon
conversion of, or distributions with respect to, the
Series B Stock or the Series C Stock now or hereafter
issued by the Corporation;
(B) up to 800,000 shares of Common Stock
issuable upon the exercise of options issued to
officers, directors and employees of the Corporation
under stock option plans maintained from time to time
by the Corporation and approved by the Board of
Directors, subject to adjustment for all subdivisions
and combinations;
(C) up to 186,750 shares of Common Stock
issuable upon the exercise of the Warrant held by
Alex. ▇▇▇▇▇ & Sons Incorporated;
(D) up to 505,375 shares of Common Stock
issuable upon the exercise of warrants to be granted
to lenders in connection with loans to the
Corporation or to guarantors or purchasers of such
loans; and
(E) shares of Common Stock issued with
respect to adjustments of the conversion price
hereunder.
(ii) The term "Common Stock" shall be deemed to mean
(i) the Common Stock, $.001 par value, and (ii) the stock of
the Corporation of any class, or series within a class,
whether now or hereafter authorized, which has the right to
participate in the distribution of either earnings or assets
of the Corporation without limit as to the amount or
percentage.
(iii) The term "Convertible Securities" shall mean
any evidence of indebtedness, shares (other than Series B
Stock and Series C Stock) or other securities convertible into
or exchangeable for Common Stock.
(iv) The term "Options" shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire
Common Stock or Convertible Securities.
(v) The term "Original Issue Date" shall mean the
date of the initial issuance of the Series C Stock.
(vi) The term "Fair Market Price" shall mean with
respect to a share of Common Stock (i) prior to the first
anniversary of the Original Issue Date, the conversion price
in effect on the Original Issue Date, and (ii) subsequent to
the first anniversary of the Original Issue Date, the average
closing bid price of the Common Stock as reported by Nasdaq
(or the last sale price if the Common Stock is traded on an
exchange) for a period of thirty (30) consecutive trading days
-15-
63
ending on the third day prior to the date of determination,
or, if the Common Stock is not listed on Nasdaq or an
exchange, the fair market value as determined by the vote of
66 2/3% of the Corporation's Board of Directors or if the
Board of Directors cannot reach such agreement, as determined
by a qualified independent investment banker appointed by the
vote of 66 2/3% of the Corporation's Board of Directors.
(b) Reorganization, Reclassification. In the event of a
reorganization, share exchange, or reclassification, other than a
change in par value, or from par value to no par value, or from no par
value to par value or a transaction described in subsection (c) or (d)
below, each share of Series C Stock shall, after such reorganization,
share exchange or reclassification (a "Reclassification Event"), be
convertible at the option of the holder into the kind and number of
shares of stock or other securities or other property of the
Corporation which the holder of Series C Stock would have been entitled
to receive if the holder had held the Common Stock issuable upon
conversion of his Series C Stock immediately prior to such
reorganization, share exchange, or reclassification.
(c) Consolidation, Merger. In the event of a merger or
consolidation to which the Corporation is a party each share of Series
C Stock shall, after such merger or consolidation, be convertible at
the option of the holder into the kind and number of shares of stock
and/or other securities, cash or other property which the holder of
such share of Series C Stock would have been entitled to receive if the
holder had held the Common Stock issuable upon conversion of such share
of Series C Stock immediately prior to such consolidation or merger.
(d) Subdivision or Combination of Shares. In case outstanding
shares of Common Stock shall be subdivided, the conversion price shall
be proportionately reduced as of the effective date of such
subdivision, or as of the date a record is taken of the holders of
Common Stock for the purpose of so subdividing, whichever is earlier.
In case outstanding shares of Common Stock shall be combined, the
conversion price shall be proportionately increased as of the effective
date of such combination, or as of the date a record is taken of the
holders of Common Stock for the purpose of so combining, whichever is
earlier.
(e) Stock Dividends. In case shares of Common Stock are issued
as a dividend or other distribution on the Common Stock (or such
dividend is declared), then the conversion price shall be adjusted, as
of the date a record is taken of the holders of Common Stock for the
purpose of receiving such dividend or other distribution (or if no such
record is taken, as at the earliest of the date of such declaration,
payment or other distribution), to that price determined by multiplying
the conversion price in effect immediately prior to such declaration,
payment or other distribution by a fraction (i) the numerator of which
shall be the number of shares of Common Stock outstanding immediately
prior to the declaration or payment of such dividend or other
distribution,
-16-
64
and (ii) the denominator of which shall be the total number of shares
of Common Stock outstanding immediately after the declaration or
payment of such dividend or other distribution. In the event that the
Corporation shall declare or pay any dividend on the Common Stock
payable in any right to acquire Common Stock for no consideration, then
the Corporation shall be deemed to have made a dividend payable in
Common Stock in an amount of shares equal to the maximum number of
shares issuable upon exercise of such rights to acquire Common Stock.
(f) Issuance of Additional Shares of Common Stock. If the
Corporation shall issue any Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued
pursuant to paragraph (g) below) after the Original Issue Date (other
than as provided in the foregoing subsections (b) through (e)), for no
consideration or for a consideration per share less than the greater of
(i) the Fair Market Price in effect on the date of and immediately
prior to such issue or (ii) the conversion price in effect on the date
of and immediately prior to such issue, then in such event, the
conversion price shall be reduced as follows:
(i) For issuances of Additional Shares of Common
Stock on or before 9 months after the Original Issue Date, if
the issuance or sales price of the Additional Shares of Common
Stock is below $8.00, the conversion price shall be reduced so
as to equal such issuance or sales price.
(ii) For issuances of Additional Shares of Common
Stock at any time after 9 months after the Original Issue
Date, the conversion price shall be reduced concurrently with
any such issuance to a price equal to the quotient obtained by
dividing:
(A) an amount equal to (x) the total number of
shares of Common Stock outstanding immediately prior to such
issuance or sale multiplied by the conversion price in effect
immediately prior to such issuance or sale, plus (y) the
aggregate consideration received or deemed to be received by
the Corporation upon such issuance or sale, by
(B) the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
For purposes of the formulas expressed in paragraph 6(e) and
6(f), all shares of Common Stock issuable upon the exercise of
outstanding Options or issuable upon the conversion of the
Series B Stock and the Series C Stock or outstanding
Convertible Securities (including Convertible Securities
issued upon the exercise of outstanding Options), shall be
deemed outstanding shares of Common Stock both immediately
before and after such issuance or sale.
-17-
65
(g) Deemed Issue of Additional Shares of Common Stock. 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 of Options or
Convertible Securities or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided that
in any such case in which Additional Shares of Common Stock are deemed
to be issued:
(i) 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 the issue of Common Stock upon the conversion or
exchange of such Convertible Securities;
(ii) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise,
for any increase or decrease in the consideration payable to
the Corporation, or increase 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 issuance of such Options or Convertible Securities
(or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, upon
any such increase or decrease becoming effective, shall 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 C
Stock);
(iii) 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 of such Options or
Convertible Securities (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 Options or Convertible
Securities, 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 or exchange of
such Convertible Securities and the consideration received
therefor was the consideration actually received by the
Corporation (x) for the issue of all
-18-
66
such Options, whether or not exercised, plus the consideration
actually received by the Corporation upon exercise of the
Options or (y) 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 the conversion or exchange of the Convertible
Securities; 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 upon the issue of the
Convertible Securities with respect to which such Options were
actually exercised.
(iv) No readjustment pursuant to clause (ii) or
(iii) above shall have the effect of increasing the conversion
price to an amount which exceeds the lower of (x) the
conversion price on the original adjustment date or (y) 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.
(v) In the case of any Options which expire by
their terms not more than 30 days after the date of issue
thereof, no adjustment of the conversion price shall be made
until the expiration or exercise of all such Options,
whereupon such adjustment shall be made in the same manner
provided in clause (iii) above.
(h) Determination of Consideration. For purposes of this
Section 6, the consideration received by the Corporation for the issue
of any Additional Shares of Common Stock shall be computed as follows:
(i) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be the
aggregate amount of cash received by the Corporation; and
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of the
issue, as determined by the vote of 66 2/3% of the
Corporation's Board of Directors or if the Board of Directors
cannot reach such agreement, by a qualified independent public
accounting firm, other than the accounting firm then engaged
as the Corporation's independent auditors, agreed upon by the
Corporation on the one hand and the holders of 66 2/3% of the
outstanding shares of Series C Stock on the other hand.
-19-
67
(ii) 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 paragraph (g) above, 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 conversion or exchange of such Convertible Securities.
(i) Adjustments Based Upon EBITDA for Fiscal Year Ending June 30,
2000.
(i) If the Corporation reports earnings before
interest, taxes, depreciation, and amortization, as determined
in accordance with generally accepted accounting principles
("EBITDA") for the fiscal year ending June 30, 2000 (the
"Period"), of greater than or equal to Twenty-seven Million
Six Hundred Fourteen Thousand and Five Hundred Dollars
($27,614,500), then the conversion price of the Series C Stock
will not be adjusted (except as otherwise provided in this
Certificate of Designations).
(ii) If the Corporation reports EBITDA for the
Period of less than or equal to Sixteen Million Five Hundred
Sixty Eight Thousand and Seven Hundred Dollars ($16,568,700),
then the conversion price of the Series C Stock will be
reduced to equal Five Dollars ($5.00); provided, however, that
if, prior to the end of the Period, the conversion price of
the Series C Stock has been reduced as otherwise provided in
this Certificate of Designations to less than Five Dollars
($5.00), the conversion price of the Series C Stock will not
be adjusted pursuant to this Section 6(i)(ii).
(iii) If the Corporation reports EBITDA for the
Period of less than Twenty Seven Million Six Hundred Fourteen
Thousand and Five Hundred Dollars ($27,614,500), but more than
Sixteen Million Five Hundred Sixty Eight Thousand and Seven
Hundred Dollars ($16,568,700), then the conversion price of
the Series
-20-
68
C Stock will be reduced to equal: (i) the then-current
conversion price, less (ii) the product of (A) a fraction, the
numerator of which will be Twenty Seven Million Six Hundred
Fourteen Thousand and Five Hundred Dollars ($27,614,500),
minus the EBITDA reported by the Corporation for the Period,
and the denominator of which will be Twenty Seven Million Six
Hundred Fourteen Thousand and Five Hundred Dollars
($27,614,500), minus Sixteen Million Five Hundred Sixty Eight
Thousand and Seven Hundred Dollars ($16,568,700), multiplied
by (B) the then-current conversion price minus Five Dollars
($5.00); provided, however, that if, prior to the end of the
Period, the conversion price of the Series C Stock has been
reduced as otherwise provided in this Certificate of
Designations to less than Five Dollars ($5.00), the conversion
price of the Series C Stock will not be adjusted pursuant to
this Section 6(i)(iii).
(iv) Notwithstanding the foregoing provisions of this
Section 6(i), if, on or before December 31, 2000, the
Corporation sells all or substantially all of its assets,
merges or consolidates with any other business entity where
the Corporation is not the surviving corporation, or completes
a public offering of the Corporation's Common Stock pursuant
to an effective registration under the Securities Act of 1933,
as amended, then: (A) the provisions described in subsections
(i), (ii) and (iii) of this Section 6(i) (and the adjustments
described therein) will terminate immediately and the
conversion price of the Series C Stock will be immediately
adjusted as if subsections (i), (ii) and (iii) of this Section
6(i) (and the adjustments described therein) were of no force
or effect, and (B) if necessary to cause the holders of the
Series C Stock to obtain an internal rate of return ("IRR")
(as defined below) equal to thirty-five one hundredths
(35/100), calculated as if each such holder purchased such
shares of Series C Stock at the purchase price per share paid
by such holder on the date such holder purchased such shares,
the then-current conversion price will be reduced concurrently
with any such transaction to an amount that results in the
holders of the Series C Stock obtaining such an IRR in
connection with the purchase of the Series C Stock. For the
purposes of this Section 6(i)(iv), "IRR" will equal the number
that satisfies the following expression:
0 = C(0) + (C(1)/1+IRR) + (C(2)/(1+IRR)(2)) + . . . +
(CT/(1+IRR)(T))
where:
C = cash flows, including the purchase of shares of
Series C Stock and all dividends and other distributions paid
by the Corporation; provided, however, that for the purposes
of calculating IRR pursuant to the foregoing expression, the
fair market value of any consideration held or received by the
holders of the Series C Stock, including, without limitation,
shares of Series C Stock, in connection with or at the time of
-21-
69
any transaction(s) that results in adjustment pursuant to this
Section 6(i)(iv), shall be deemed to constitute a cash flow
and shall be treated as if paid on the date of such
transaction; and
T = the number of years (which may be expressed as
a fraction to the nearest one-twelfth based upon completed
calendar months) since the purchase of shares of Series C
Stock.
(v) The Corporation shall prepare (or shall cause
its accountants to prepare) its financial statement and
calculate EBITDA for the Period on or before September 30,
2000.
(vi) The provisions of this Section 6(i) shall be
adjusted to reflect any prior or concurrent adjustment of the
conversion price and the conversion rate pursuant to any other
provision of Section 6.
(j) Adjustment of Conversion Rate. Upon each adjustment
of the conversion price under the provisions of this Section 6, the
conversion rate shall be adjusted to an amount determined by dividing
(x) the conversion price in effect immediately prior to the event
causing such adjustment by (y) such adjusted conversion price.
(k) Other Provisions Applicable to Adjustment Under this
Section. The following provisions will be applicable to the adjustments
in conversion price and conversion rate as provided in this Section 6:
(i) Treasury Shares. The number of shares of Common
Stock at any time outstanding shall not include any shares
thereof then directly or indirectly owned or held by or for
the account of the Corporation.
(ii) Other Action Affecting Common Stock. In case
the Corporation shall take any action affecting the
outstanding number of shares of Common Stock other than an
action described in any of the foregoing subsections 6(b) to
6(g) hereof, inclusive, which would have an inequitable effect
on the holders of Series C Stock, the conversion price shall
be adjusted in such manner and at such time as the Board of
Directors of the Corporation on the advice of the
Corporation's independent public accountants may in good faith
determine to be equitable in the circumstances.
(iii) Minimum Adjustment. No adjustment of the
conversion price shall be made if the amount of any such
adjustment would be an amount less than one percent (1%) of
the conversion price then in effect, but any such amount shall
be carried forward and an adjustment with respect thereof
shall be made at the time of and together with any subsequent
adjustment which, together with such amount
-22-
70
and any other amount or amounts so carried forward, shall
aggregate an increase or decrease of one percent (1%) or more.
(iv) Certain Adjustments. The conversion price shall
not be adjusted upward except in the event of a combination of
the outstanding shares of Common Stock into a smaller number
of shares of Common Stock or in the event of a readjustment of
the conversion price pursuant to Section 6(g)(ii) or (iii).
(l) Notices of Adjustments. Whenever the conversion rate and
conversion price is adjusted as herein provided, an officer of the
Corporation shall compute the adjusted conversion rate and conversion
price in accordance with the foregoing provisions and shall prepare a
written certificate setting forth such adjusted conversion rate and
conversion price and showing in detail the facts upon which such
adjustment is based, and such written instrument shall promptly be
delivered to the recordholders of the Series C Stock.
7. Redemption.
(a) Mandatory Redemption. On the date six (6) months
immediately after the payment in full and satisfaction of all of the
obligations of the Corporation to the lenders who provide financing to
the Corporation in the aggregate principal amount of Seventy-five
Million Dollars ($75,000,000.00) (referred to herein as the "Mandatory
Redemption Date") the Corporation shall redeem all the shares of Series
C Stock originally issued hereunder (or such lesser amount as shall
then be outstanding) at the "Redemption Price" per share defined in
paragraph (c) below, payable in each case in cash on the Mandatory
Redemption Date.
(b) Redemption on Change of Control. Upon a "Change of
Control" of the Corporation, each holder of the then outstanding shares
of Series C Stock may elect to have the Corporation redeem all (but not
less than all) outstanding shares of Series C Stock owned by such
holder at the "Redemption Price" per share defined in paragraph (c)
below, payable in cash on any date within 100 days of the effective
date of the Change of Control (such date being herein referred to as
the "Change of Control Redemption Date"). The election shall be made by
delivering written notice to the Corporation at least thirty (30) but
no more than sixty (60) days prior to the Change of Control Redemption
Date. The Corporation will then be required to redeem all the shares of
Series C Stock owned by such holder on the Change of Control Redemption
Date. For purposes of this Section 7, "Change of Control" means any one
or more of the following events:
(i) The Corporation shall consolidate with or merge into
any another person or any person shall consolidate with or
merge into the Corporation (other than a consolidation or
merger of the Corporation and a wholly-owned subsidiary of the
Corporation in which all shares of the Corporation's Common
Stock
-23-
71
outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration), in
either event pursuant to a transaction in which any of the
Corporation's common stock outstanding immediately prior to
the effectiveness thereof is changed into or exchanged for
cash, securities or other property; or
(ii) the Corporation shall directly or indirectly
convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all of its assets to any
person or "group" (within the meaning of Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the "1934
Act") (other than to a wholly-owned subsidiary of the
Corporation); or
(iii) there shall be a reorganization, share
exchange, or reclassification, other than a change in par
value, or from par value to no par value, or from no par value
to par value; or
(iv) any person (other than the Corporation, any
subsidiary of the Corporation or an Existing Investor (as
defined in the Purchase Agreement (as hereinafter defined))),
including a "group" (within the meaning of Section 13(d) and
14(D)(2) of the ▇▇▇▇ ▇▇▇) that includes such person, shall
purchase or otherwise acquire, directly or indirectly,
beneficial ownership of securities of the Corporation and, as
a result of such purchase or acquisition, such person
(together with its associates and affiliates) shall directly
or indirectly beneficially own in the aggregate (1) more than
50% of the Common Stock, or (2) securities representing more
than 50% of the combined voting power of the Corporation's
voting securities, in each case under subclause (1) or (2),
outstanding on the date immediately prior to the date of such
purchase or acquisition (or, if there be more than one, the
last such purchase or acquisition).
(c) The Redemption Price per share of Series C Stock
shall equal the sum of (x) $8.00 (as adjusted for Recapitalization
Events) plus (y) all accrued and unpaid dividends on such share of
Series C Stock to the Mandatory Redemption Date or Change of Control
Redemption Date, as the case may be.
(d) The term "Redemption Date" as used in this paragraph
(d) shall refer to whichever of the Mandatory Redemption Date or the
Change of Control Redemption Date is applicable in a particular
circumstance. On or prior to the Redemption Date, the Corporation shall
deposit the Redemption Price of all outstanding shares of Series C
Stock to be redeemed with a bank or trust corporation having aggregate
capital and surplus in excess of $100,000,000 as a trust fund for the
benefit of the holders of the shares of Series C Stock, with
irrevocable instructions and authority to the bank or trust corporation
to pay the Redemption Price for such shares to their respective holders
on or after the Redemption Date upon receipt of the certificate or
certificates of the shares of
-24-
72
Series C Stock to be redeemed. From and after the Redemption Date,
unless there shall have been a default in payment of the Redemption
Price, all rights of the holders of shares of Series C Stock as holders
of Series C Stock (except the right to receive the Redemption Price
upon surrender of their certificate or certificates) shall cease as to
those shares of Series C Stock redeemed, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed
to be outstanding for any purpose whatsoever. If on the Redemption Date
the funds of the Corporation legally available for redemption of shares
of Series C Stock (or Series A Stock and Series B Stock which shall
rank pari passu with the Series C Stock) are insufficient to redeem the
total number of shares of Preferred Stock to be redeemed on such date,
the Corporation will use those funds which are legally available
therefor to redeem the maximum possible number of shares of Preferred
Stock ratably among the holders of such shares to be redeemed based
upon their holdings of Series C Stock, Series B Stock and Series A
Stock. Payments shall first be applied against accrued and unpaid
dividends and thereafter against the remainder of the Redemption Price.
The shares of Series C Stock not redeemed shall remain outstanding and
entitled to all the rights and preferences provided herein. At any time
thereafter when additional funds of the Corporation are legally
available for the redemption of shares of Series C Stock such funds
will immediately be used to redeem the balance of the shares of Series
C Stock to be redeemed. No dividends or other distributions shall be
declared or paid on, nor shall the Corporation redeem, purchase or
acquire any shares of, the Common Stock or any other class or series of
stock of the Corporation unless the Redemption Price of all shares
elected to be redeemed shall have been paid in full. Until the
Redemption Price for a share of Series C Stock elected to be redeemed
shall have been paid in full, such share of Series C Stock shall remain
outstanding for all purposes and entitle the holder thereof to all the
rights and privileges provided herein, including, without limitation,
that dividends and interest thereon shall continue to accrue and, if
unpaid prior to the date such shares are redeemed, shall be included as
part of the Redemption Price as provided in paragraph (c) above.
Notwithstanding anything in this Section 7 to the contrary, even if a
notice of redemption was delivered under paragraph (a) or (b) of this
Section 7, all shares of Series C Stock shall be convertible pursuant
to Section 5 at all times prior to the Redemption Date.
(e) Notwithstanding any other term of this Certificate of
Designation, the Corporation shall not redeem (or have any obligation
to redeem) any shares of Series C Stock under any circumstances,
whether upon a Change of Control or otherwise, prior to the payment in
full and satisfaction of all of the obligations of the Corporation to
the lenders who provide financing to the Corporation in the aggregate
principal amount of $75,000,000.00. If the Corporation shall not have
paid in full or satisfied all of its obligations to such lenders on or
before any Redemption Date, upon such payment and satisfaction the
Corporation will immediately use any funds legally available therefor
to redeem the shares of Series C Stock to be redeemed.
-25-
73
8. Notices of Record Dates and Effective Dates. In case: (a) the
Corporation shall declare a dividend (or any other distribution) on the Common
Stock payable otherwise than in shares of Common Stock; or (b) the Corporation
shall authorize the granting to the holders of Common Stock of rights to
subscribe for or purchase any shares of capital stock of any class or any other
rights; or (c) of any reorganization, share exchange or reclassification of the
capital stock of the Corporation (other than a subdivision or combination of
outstanding shares of Common Stock), or of any consolidation or merger to which
the Corporation is party or of the sale, lease or exchange of all or
substantially all of the property of the Corporation; or (d) of the voluntary or
involuntary dissolution, liquidation or winding up of the Corporation; or (e) of
a Change of Control, then the Corporation shall cause to be mailed to the
recordholders of the Series C Stock at least 20 days prior to the applicable
record date or effective date hereinafter specified, a notice stating (i) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights, or, if a record is not to be taken, the date as of which
the holders of record of Common Stock to be entitled to such dividend,
distribution or rights are to be determined or (ii) the date on which such
reclassification, reorganization, share exchange, consolidation, merger, sale,
lease, exchange, dissolution, liquidation, winding up or Change of Control is
expected to become effective, and the date as of which it is expected that
holders of record of Common Stock shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, reorganization share exchange, consolidation, liquidation,
merger, sale, lease, exchange, dissolution, liquidation, winding up or Change of
Control.
9. Voting Rights.
(a) Holders of Series C Stock shall be entitled to notice of
any stockholder's meeting. Except as otherwise required by law or
provided herein, at any annual or special meeting of the Corporation's
stockholders, or in connection with any written consent in lieu of any
such meeting, each outstanding share of Series C Stock shall be
entitled to the number of votes equal to the number of full shares of
Common Stock into which such share of Series C Stock is then
convertible. Except as otherwise required by law or provided herein,
the Series C Stock and the Common Stock shall vote together on each
matter submitted to stockholders, and not by class or series.
(b) Prior to the consummation of a Qualifying Offering by the
Corporation of its Common Stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended, the holders of
the Series C Stock, voting together as a class, shall be entitled to
elect one (1) director to the Corporation's Board of Directors.
Subsequent to such Qualifying Offering, the holders of a majority of
the Common Stock issuable upon conversion of the Series C Stock shall
be entitled to nominate one (1) director for election to the
Corporation's Board of Directors which the Corporation shall nominate
to management's slate for election; provided, however, that the right
provided for in this last sentence of subsection 9(b) shall be
effective only for so long as at least 66 2/3% of the shares of Common
Stock issuable upon conversion of the Series C Stock are held of
-26-
74
record by the original Purchasers (as defined in the Purchase
Agreement) of the Series C Stock.
Notwithstanding the foregoing, upon an Event of Default and so
long as it shall continue, the holders of the Series B Stock and the
Series C Stock, voting together as a class, shall be entitled at any
annual meeting of the stockholders or special meeting held in place
thereof, or at a special meeting of the holders of the Series B Stock
and the Series C Stock called as hereinafter provided, to elect a
majority of the Board of Directors and such right to elect a majority
of the Board of Directors shall be in lieu of the right of the holders
of Series B Stock and the Series C Stock to each elect one director.
Such right of the holders of the Series B Stock and the Series C Stock
to elect a majority of the Board of Directors may be exercised until an
Event of Default shall be cured, if curable, or waived, and when so
cured or waived, the right of the holders of the Series B and the
Series C Stock to elect a majority of the Board of Directors shall
cease and the right of the holders of the Series B Stock and the
holders of the Series C Stock to each elect one director shall resume,
but subject always to the same provisions for the vesting of such
special voting rights in the case of any such future Event of Default.
At any time when such special voting rights shall have so vested in the
holders of the Series B and the Series C Stock, the Secretary of the
Corporation may, and upon the written request of the holders of 10% or
more of the number of shares of the Series B Stock and the Series C
Stock then outstanding addressed to him at the principal office of the
Corporation, shall, call a special meeting of the holders of the Series
B Stock and the Series C Stock for the election of a majority of the
Board of Directors to be elected by them as provided herein, to be held
in the case of such written request as soon as practicable after
delivery of such request, and in either case to be held at the place
and upon the notice provided by law and in the by-laws for the holding
of meetings of stockholders. If at any such annual or special meeting
or adjournment thereof the holders of at least a majority of the Series
B Stock and the Series C Stock then outstanding shall be present or
represented at such meeting, the then authorized number of directors of
the Corporation shall be increased to the extent necessary to provide a
majority of new directors to be elected and the holders of the Series B
Stock and the Series C Stock shall be entitled to elect the additional
directors so provided for. The directors so elected shall serve until
the next annual meeting or until their successors shall be elected and
qualified, provided, however, that whenever the holders of the
Preferred Stock shall be divested of the special rights to elect a
majority of the Board of Directors as above provided, the term of
office of the persons so elected as directors by the holders of the
Series B Stock and the Series C Stock as a class, or elected to fill
any vacancies resulting from the death, resignation or removal of the
directors so elected by the holders of the Series B Stock and the
Series C Stock, shall forthwith terminate and the authorized number of
directors shall be reduced accordingly.
If during any interval between any special meeting of the
holders of the Series B Stock and the Series C Stock for the election
of directors to be elected by them as provided above and the next
ensuing annual meeting of stockholders, or between annual
-27-
75
meetings of stockholders for the election of directors, and while the
holders of the Series B Stock and the Series C Stock shall be entitled
to elect a majority of the Board of Directors, any of the directors who
have been elected by the holders of the Series B Stock and the Series C
Stock shall, by reason of resignation, death or removal, have departed
from the Board, the Secretary of the Corporation shall call a special
meeting of the holders of the Series B Stock and the Series C Stock and
such vacancy or vacancies shall be filled at such special meeting.
No director elected by the holders of Series C Stock as a
class, or elected by other directors to fill a vacancy resulting from
the death, resignation or removal of a director elected by such class
vote, may be removed from office by the vote or written consent of
stockholders unless such vote or written consent includes that of the
holders of a majority of the outstanding shares of Series C Stock.
(c) In addition to any other vote or consent of stockholders
provided by law or by the Corporation's Certificate of Incorporation,
the Corporation shall not, without the approval by vote or written
consent of the holders of not less than 66 2/3% of the then outstanding
shares of Series C Stock:
(i) amend, waive or repeal any provisions of, or add
any provision to, (i) this Certificate of Designation or (ii)
any provision of the Corporation's Certificate of
Incorporation or any other certificate of designation filed
with the Secretary of State of Delaware by the Corporation
with respect to its preferred stock;
(ii) amend, waive or repeal any provisions of, or add
any provision to, the Corporation's By-Laws;
(iii) authorize, create, issue or sell any shares of
Equivalent Stock or Superior Stock (other than Series A Stock
and Series B Stock); except as authorized in this Certificate
of Designation;
(iv) issue any shares of Series C Stock other than
pursuant to the Purchase Agreement or upon transfers of
outstanding shares of Series C Stock;
(v) enter into any agreement, indenture or other
instrument which contains any provisions restricting the
Corporation's obligation to pay dividends on or make
redemptions of the Series C Stock in accordance herewith;
(vi) dissolve the Corporation;
-28-
76
(vii) enter into any agreement(s) that would restrict
the Corporation's ability to perform its obligations pursuant
to the Purchase Agreements (as defined in Section 11 below);
(viii) sell, lease or otherwise dispose of 20% or
more of the assets of the Corporation, other than in the
ordinary course of business, unless the proceeds of such sale,
lease or other disposition are reinvested in assets of the
general type used in the business of the Corporation;
(ix) issue equity securities to employees, officers or
directors of the Corporation, except (a) securities issuable
upon the exercise of outstanding options and warrants and
pursuant to existing contractual commitments and (b) options
to purchase up to 390,514 shares of Common Stock, together
with the Common Stock issuable upon exercise thereof;
(x) issue any securities for a price less than fair
market value, other than as may be required by existing
contractual commitments or as permitted by clause (ix) hereof;
(xi) enter into any transactions (or series of
transactions), including loans, with any officer or director
of the Corporation or to or with their affiliates and family
members involving $100,000.00 or more per year individually or
$500,000.00 or more per year in the aggregate except (a) as
may be contemplated by existing contractual commitments, (b)
reasonable compensation payable to officers and directors, and
(c) for options and warrants issued in compliance with clause
(ix) hereof; or
(xii) engage in any transaction (or series of
transactions) that would impair or reduce the rights and
preferences of the holders of the Series C Stock as a class
relative to the rights and preferences of the holders of any
other class of the Corporation's capital stock.
"Assets" shall mean an interest in any kind of property or
assets, whether real, personal or mixed, or tangible or intangible.
"Equivalent Stock" shall mean any shares of any class or
series of Stock of the Corporation having any preference or priority as to
dividends or Assets on a parity with any such preference or priority of the
Series C Stock and no preference or priority as to dividends or Assets superior
to any such preference or priority of the Series C Stock and any instrument or
Security convertible into or exchangeable for Equivalent Stock. Without limiting
the generality of the foregoing, a dividend rate, mandatory or optional sinking
fund payment amounts or schedules or optional redemption provisions, the
existence of a conversion right or the existence of a liquidation preference of
up to 100% of the original issue price plus unpaid accrued
-29-
77
dividends plus a premium of up to the dividend rate or up to the percentage of
the equity of the Corporation represented by such Stock, with respect to any
class or series of Stock, differing from that of the Series C Stock, shall not
prevent such class of Stock from being Equivalent Stock.
"Securities" shall mean any debt or equity securities of the
Corporation, whether now or hereafter authorized, and any instrument convertible
into or exchangeable for Securities or Security. The term "Security" shall mean
one of the Securities.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, corporate stock.
"Superior Stock" shall mean any shares of any class or series
of Stock of the Corporation having any preference or priority as to dividends or
Assets superior to any such preference or priority of the Series C Stock and any
instrument or security convertible into or exchangeable for Superior Stock.
(d) Notwithstanding anything else contained herein, the
affirmative vote or written consent of the holders of not less than 90%
of the then outstanding shares of Series C Stock shall be necessary to
amend, alter or repeal any of the provisions of the Corporation's
Certificate of Incorporation or the Certificate of Designation creating
this Series C Stock which would alter or change (i) the dividend rate,
(ii) redemption provisions, (iii) anti-dilution provisions, (iv) the
place or currency of payments hereunder, (v) the right to institute
suit for the enforcement of any payment hereunder, (vi) the conversion
provisions, or (vii) provisions of this Section 9, so as to affect any
of the foregoing adversely.
10. Preemptive Rights.
(a) The Corporation shall not issue or sell any shares of
Common Stock, Preferred Stock or other securities convertible into or
exchangeable for shares of Common Stock, other than any such issuance
or sale (i) pursuant to a Qualifying Offering, (ii) pursuant to a stock
option plan approved by the Board of Directors, (iii) as a form of
consideration in connection with mergers or acquisitions where the
Corporation is the surviving entity or (iv) where the aggregate gross
proceeds are less than $500,000 in any single transaction, provided
that the sale price per share is not less than the then applicable
conversion price and, provided further, that the aggregate gross
proceeds of all such transactions shall not exceed $1,500,000 (the
securities issued in such transactions being referred to as the "Newly
Issued Securities"), unless prior to the issuance or sale of such Newly
Issued Securities each holder of Series C Stock shall have been given
the opportunity (such opportunity being herein referred to as the
"Preemptive Right") to purchase (on the same terms as such Newly Issued
Securities are proposed to be sold) the same proportion of such Newly
Issued Securities being issued or offered for sale by the
-30-
78
Corporation as (x) the number of shares of Common Stock (calculated
solely on account of outstanding shares of Series C Stock on an as
converted basis) held by such holder on the day preceding the date of
the Preemptive Notice (as defined herein), as the case may be, bears to
(y) the total number of shares of Common Stock (calculated on a fully
diluted basis) outstanding on that day.
(b) Prior to the issuance or sale by the Corporation of any
Newly Issued Securities, the Corporation shall give written notice
thereof (the "Preemptive Notice") to each holder of Series C Stock. The
Preemptive Notice shall specify (i) the name and address of the bona
fide investor to whom the Corporation proposes to issue or sell Newly
Issued Securities, (ii) the total amount of capital to be raised by the
Corporation pursuant to the issuance or sale of Newly Issued
Securities, (iii) the number of Securities of such Newly Issued
Securities proposed to be issued or sold, (iv) the price and other
terms of their proposed issuance or sale, (v) the number of such Newly
Issued Securities which such holder is entitled to purchase (determined
as provided in subsection (a) above), and (vi) the period during which
such holder may elect to purchase such Newly Issued Securities, which
period shall extend for at least thirty (30) days following the receipt
by such holder of the Preemptive Notice (the "Preemptive Acceptance
Period"). Each holder of Series C Stock who desires to purchase Newly
Issued Securities shall notify the Corporation within the Preemptive
Acceptance Period of the number of Newly Issued Securities he wishes to
purchase, as well as the number, if any, of additional Newly Issued
Securities he would be willing to purchase in the event that all of the
Newly Issued Securities subject to the Preemptive Right are not
subscribed for by the other holders of Series C Stock.
(c) In the event a holder of Series C Stock declines to
subscribe for all or any part of its pro rata portion of any Newly
Issued Securities which are subject to the Preemptive Right (the
"Declining Preemptive Purchaser") during the Preemptive Acceptance
Period, then the other holders of Series C Stock shall have the right
to subscribe for all (or any declined part) of the Declining Preemptive
Purchaser's pro rata portion of such Newly Issued Securities (to be
divided among the other holders of Series C Stock desiring to exercise
such right on a ratable basis).
(d) Any such Newly Issued Securities which none of the holders
elect to purchase in accordance with the provisions of this Section 10,
may be sold by the Corporation, within a period of three (3) months
after the expiration of the Preemptive Acceptance Period, to any other
person or persons at not less than the price and upon other terms and
conditions not less favorable to the Corporation than those set forth
in the Preemptive Notice.
(e) The preemptive rights afforded by this Section 10, and any
obligation for the Corporation to offer such shares of Common Stock,
Preferred Stock or other securities convertible into or exchangeable
for shares of Common Stock may be waived
-31-
79
by a written instrument signed by the holders of sixty-six and
two-thirds percent (66 2/3 %) of the Series C Stock.
11. Events of Default. An Event of Default shall mean any of the
following:
(i) Any failure by the Corporation to pay in cash any
dividend, if and when declared by the Board of Directors, on the
payment due dates and in the amounts provided pursuant to Section
3 hereof, if such failure shall continue for any two quarterly
periods;
(ii) Any failure by the Corporation to satisfy its
redemption obligations pursuant to Section 7 hereof if any such
failure shall continue for a period of five days from the
appropriate redemption date;
(iii) Any failure by the Corporation to comply with the
provisions of Sections 4, 5, 6, 8, 9 or 10 hereof;
(iv) If any representation or warranty made by the
Corporation in the Stock Purchase Agreement dated as of August
22, 1997 or the exhibits or schedules thereto (the "Purchase
Agreements") is or shall be untrue in any material respect at the
time it was made, if such representation or warranty remains
untrue after 10 days' written notice, with such notice delivered
by hand or by first-class, certified or overnight mail, postage
prepaid, or by telecopier, from any holder of Series C Stock,
unless waived in writing by holders of not less than 66 2/3% of
the outstanding shares of Series C Stock;
(v) Any failure by the Corporation to comply with, or
any breach by the Corporation of, any of the covenants,
agreements or obligations of the Corporation contained in the
Purchase Agreements which continues for a period of 10 days after
written notice, with such notice delivered by hand or by
first-class, certified or overnight mail, postage prepaid, or by
telecopier, from any holder of Series C Stock, unless waived in
writing by holders of not less than 66 2/3% of the outstanding
shares of Series C Stock;
(vi) Default by the Corporation in the performance or
observance of any obligation or condition with respect to any
Indebtedness of the Corporation that is not cured or waived
within 90 days or if the effect of such default is to accelerate
the maturity of such Indebtedness or cause such Indebtedness to
be prepaid, purchased or redeemed or to permit the holder or
holders thereof, or any trustee or agent for such holders, to
cause such Indebtedness to become due and payable prior to its
expressed maturity or to cause such Indebtedness to be prepaid,
purchased or redeemed or to realize upon any collateral or
security for such Indebtedness, unless such default shall have
been waived by the appropriate
-32-
80
person. Indebtedness of any corporation shall mean the principal
of (and premium, if any) and unpaid interest on (i) indebtedness
which is for money borrowed from others; (ii) indebtedness
guaranteed, directly or indirectly, in any manner by such
corporation, or in effect guaranteed, directly or indirectly, by
such corporation through an agreement, contingent or otherwise,
to supply funds to or in any manner invest in the debtor or to
purchase indebtedness, or to purchase assets or services
primarily for the purpose of enabling the debtor to make payment
of the indebtedness or of assuring the owner of the indebtedness
against loss; (iii) all indebtedness secured by any mortgage,
lien, pledge, charge or other encumbrance upon assets owned by
such corporation, even if such corporation has not in any manner
become liable for the payment of such indebtedness; (iv) all
indebtedness of such corporation created or arising under any
conditional sale, lease or other title retention agreement with
respect to assets acquired by such corporation even though the
rights and remedies of the seller, lessor or lender under such
agreement or lease in the event of default are limited to
repossession or sale of such assets and provided that obligations
for the payment of rent under a lease of premises from which the
business of such corporation will be conducted shall not
constitute indebtedness; and (v) renewals, extensions and
refunding of any such indebtedness;
(vii) If the Corporation shall:
(a) become insolvent or generally fail to pay, or
admit in writing its inability to pay, its debts as they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian for the
Corporation or any property thereof, or make a general assignment for the
benefit of creditors (any of which shall be referred to herein as a "Receiver");
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a Receiver, and such
Receiver shall not be discharged within 60 calendar days;
(d) commit any act of bankruptcy, permit or suffer
to exist the commencement of any bankruptcy reorganization, debt arrangement or
other case or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding in respect of the Corporation,
and, if any such case or proceeding is not commenced by the Corporation, such
case or proceeding shall be consented to or acquiesced in by the Corporation, or
shall result in the entry of an order for relief and shall remain for 30
calendar days undismissed; or
-33-
81
(e) take any corporate or other action authorizing,
or in furtherance of, any of the foregoing.
B. The recitals and resolutions contained herein have not been
modified, altered or amended and are presently in full force and effect.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this ____ day of __________________, 1998.
PARK'N VIEW, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
Attest:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
-▇▇-
▇▇
▇▇▇▇▇▇▇▇ ▇.▇(▇)
▇▇▇▇ 'N VIEW, INC.
SERIES A PREFERRED STOCK, PAR VALUE $.01 PER SHARE
AUTHORIZED 627,630 SHARES
ISSUED 388,065 SHARES
===================================================================================================================================
NO.
NEW SHARES
NAME AND ADDRESS OF DATE CERT. NO. OF FROM WHOM DATE OF CERT. TRANS- BALANCE
SHAREHOLDER ISSUED NO. SHARES TRANSFERRED TRANSFER TO WHOM TRANSFERRED NO. FERRED HELD
-----------------------------------------------------------------------------------------------------------------------------------
APA Excelsior IV, L.P. 11/02/95 PA-1 23,656 Original Issue 23,656
c/o Patricof & Co. Ventures, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ & Co. (Cayman) Ltd. 11/02/95 PA-2 4,175 Original Issue 4,175
Custodian for APA Excelsior
IV/Offshore, L.P.
c/o Patricof & Co. Ventures, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
The P/A Fund, L.P. 11/02/95 PA-3 4,154 Original Issue 4,154
c/o Patricof & Co. Ventures, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 11/02/95 PA-4 215 Original Issue 215
Insight Communications
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 03/29/96 PA-5 252 Original Issue 252
Insight Communications
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
===================================================================================================================================
-35-
83
===================================================================================================================================
NO.
NEW SHARES
NAME AND ADDRESS OF DATE CERT. NO. OF FROM WHOM DATE OF CERT. TRANS- BALANCE
SHAREHOLDER ISSUED NO. SHARES TRANSFERRED TRANSFER TO WHOM TRANSFERRED NO. FERRED HELD
-----------------------------------------------------------------------------------------------------------------------------------
The P/A Fund, L.P. 03/29/96 PA-6 4,876 Original Issue 4,876
c/o Patricof & Co. Ventures, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ & Co. (Cayman), Ltd. 03/29/96 PA-7 4,901 Original Issue 4,901
Custodian for APA Excelsior
IV/Offshore, L.P.
c/o Patricof & Co. Ventures, Inc.
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
APA Excelsior IV, L.P. 03/29/96 PA-8 27,771 Original Issue 27,771
c/o Patricof & Co. Ventures, Inc.
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
APA Excelsior IV, L.P. 11/13/96 PA-9 233,778 Original Issue 233,778
c/o Patricof & Co. Ventures, Inc.
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ & Co. (Cayman) Ltd. 11/13/96 PA-10 41,243 Original Issue 41,243
Custodian for APA Excelsior
IV/Offshore, L.P.
c/o Patricof & Co. Ventures, Inc.
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
The P/A Fund, L.P. 11/13/96 PA-11 40,924 Original Issue 40,924
c/o Patricof & Co. Ventures, Inc.
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 11/13/96 PA-12 2,120 Original Issue 2,120
Insight Communications
===================================================================================================================================
-36-
84
===================================================================================================================================
NO.
NEW SHARES
NAME AND ADDRESS OF DATE CERT. NO. OF FROM WHOM DATE OF CERT. TRANS- BALANCE
SHAREHOLDER ISSUED NO. SHARES TRANSFERRED TRANSFER TO WHOM TRANSFERRED NO. FERRED HELD
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL 388,065
===================================================================================================================================
-37-
85
Schedule 3.8
Certain Events
1. On June 10, 1997 the Company granted ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ an option to
purchase 30,000 shares of common stock at $3.00 per share pursuant to
the terms of the Park'N View Stock Option Plan.
2. On June 10, 1997 the Company granted ▇▇▇▇▇▇▇ ▇▇▇▇▇ an option to
purchase 30,000 shares of common stock at $3.00 per share pursuant to
the terms of the Park'N View Stock Option Plan.
3. On June 10, 1997 the Company granted ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ an option to
purchase 5,000 shares of common stock at $3.00 per share pursuant to
the terms of the Park `N View Stock Option Plan.
4. On June 10, 1997 the Company granted ▇▇▇▇▇▇ ▇▇▇▇▇ an option to purchase
5,000 shares of common stock at $3.00 per share pursuant to the terms
of the Park "N View Stock Option Plan.
5. On June 10, 1997 the Company granted ▇▇▇▇▇▇ ▇▇▇▇▇ an option to purchase
5,000 shares of common stock at $3.00 per share pursuant to the terms
of the Park "N View Stock Option Plan.
6. Within the next 30 to 60 days the Company may make a loan of up to
$25,000 to ▇▇▇▇ ▇▇▇▇▇ pursuant to the relocation of ▇▇. ▇▇▇▇▇ and his
family from Nashville, Tennessee to the Company's headquarters in Ft.
Lauderdale, Florida. The loan will bear interest at the prime rate
announced in the Wall Street Journal and will be payable upon the
earlier of (i) sale of his residence in Nashville, Tennessee or (ii) 6
months from the date of the loan.
7. The Company is in the process of negotating a two year sublease for
25,000 square feet of warehouse/office space in the Ft. Lauderdale,
Florida. The lease payments are at a graduating rate of between $7.00
and $8.00 per square foot for the terms of the sublease.
-38-
86
Schedule 3.9
Material Contracts
1. Contract with Natural Microsystems with respect to the purchase of
phone switches.
2 Contract with Multicom with respect to the purchase of cable headend
equipment and electronics. 3. Contract with Henkles and ▇▇▇▇▇ with
respect to construction of new sites.
4. Contract with Line Tech with respect to construction of new sites.
5. Contract with Red Line Construction with respect to construction of new
sites.
6. In negotiation with Echo Star with respect to the purchase of cable
programming.
7. In negotiation with Intermedia with respect to the purchase of long
distance backbone and frame relay services.
-39-
87
Schedule 3.10
Real Property: Title to Properties
1. Certain lessors of equipment to the Company may currently have in
effect UCC-1 financing statements on the leased equipment.
-40-
88
Schedule 3.14
Employee Benefits
1. Employee Pension Benefit Plans
The Company has not established, maintained or contributed to an
"employee pension benefit plan" within the meaning of ERISA.
2. Employee Welfare Benefit Plans
Park `N View, Inc. Medical and Dental Plan
Park `N View, Inc. Severance Program
-41-
89
Schedule 3.14
Employee Benefits
1. Employee Pension Benefit Plans
The Company has not established, maintained or contributed to an
"employee pension benefit plan" within the meaning of ERISA.
2. Employee Welfare Benefit Plans
Park `N View, Inc. Medical and Dental Plan
Park `N View, Inc. Severance Program
-42-
90
Schedule 3.17
MATERIAL CHANGES
None
-43-
91
Schedule 3.19
Indebtedness
1. The Company has the obligation to redeem its Series A Stock on the
terms described in the Memorandum.
2. The Company has the obligation to redeem its Series B Stock on the
terms set forth in the Memorandum.
-44-
92
Schedule 3.20
Insurance
ANNUAL
PREMIUM
POLICY TYPE COMPANY LIMITS INCEPTION PAID
----------- ------- ------ --------- ----------
General Liability Mt. ▇▇▇▇▇▇ Fire $1,000,000.00 2/12/97 $19,219.00
Insurance
Property/Contents Lloyd's of London Florida 2/12/97 $10,080.00
$750,000.00
Tennessee
$200,000.00
Prop/Installation Floater GRE Insurance Group Per Site 2/12/97 $ 2,500.00
$100,000.00
Per Occasion
$200,000.00
In Transit
$200,000.00
Property/On Site Sphere Drake Scheduled to Value: 5/17/97 $ 8,000.00
$3,250,000.00
Commercial Auto Package Progressive $300,000.00CLS 1/12/97 $34,101.00
$ 10,000.00PIP
$ 20,000.00UM
Physical Damage
Scheduled by Vehicle
Workers Comp. Legion Insurance All States except 4/8/97 $30,053.37
Monopolistic
Employers Liability
$100,000.00 Each
Accident
$500,000.00 Disease
Limit
$100,00.00 Disease
Each Employer
Life Insurance Metropolitan Life $1,000,000.00 10/16/96 $12,280.00
Insurance Company
-45-
93
SCHEDULE 3.22
Proprietary Rights
1. Trademark Application pending with the U.S. Patent and Trademark
Office, filed April 30, 1996, Serial Number 75/096457, for the ▇▇▇▇ PNV
DRIVE.
2. U.S. Trademark Registration, Reg. No. 1,948,428, issued January 16,
1996 for Park `N View (and Design) for entertainment services;
Registrant Park `N View, Ltd., assigned of record to Park `N View, Inc.
effective November 12, 1996.
3. The Company is in the process of filing service ▇▇▇▇ applications with
the U.S. Patent and Trademark for the following marks: (i) INCAB PNV
(038); (ii) INCAB PNV (042); (iii) PNV USA (038); (iv) PNV USA (042);
(v) YOUR CAB. YOUR CABLE. YOUR CALL. (038); and (vi) YOUR CAB. YOUR
CABLE. YOUR CALL. (042).
-46-