As filed with the Securities and Exchange Commission on January 17, 1997
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------------------
FORM SB-2
Registration Statement
Under the Securities Act of 1933
------------------------------------
EAGLE TELECOM INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
3669
(Primary Standard Industrial
Classification Code Number)
TEXAS 76-0494995
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
910 GEMINI H. DEAN CUBLEY
HOUSTON, TEXAS 77058 EAGLE TELECOM INTERNATIONAL, INC.
(713)280-0488 910 GEMINI
(Address and telephone HOUSTON, TEXAS 77058
number of principal (713) 280-0488
executive offices) (Name, address and
telephone number of
agent for service)
COPIES TO:
THOMAS C. PRITCHARD
BREWER & PRITCHARD, P.C.
1111 BAGBY, 24TH FLOOR
HOUSTON, TEXAS 77002
PHONE (713) 659-1744
FACSIMILE (713) 659-5302
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [X]
-----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Each Class of Amount Maximum Maximum Amount of
Securities To Be Being Offering Price Aggregate Registration
Registered Registered Per Share(1) Offering Price(1) Fee
- ------------------------------------- ---------- ------------ ----------------- ------------
<S> <C> <C> <C> <C>
Shares Underlying Class A Warrants (2) 5,065,000 $4.00 $20,260,000 $ 6,753.33
Shares Underlying Class B Warrants (2) 5,065,000 $6.00 30,390,000 10,130.00
Shares Underlying Class C Warrants (2) 800,000 $2.00 1,600,000 533.33
Shares Underlying $.01 Warrants(2) 700,000 $ .01 7,000 2.12
Shares Underlying $.05 Warrants(2) 1,050,000 $ .05 52,500 159.09
Shares Underlying $.50 Warrants(2) 1,375,000 $ .50 687,500 208.33
Shares Underlying $5.00 Warrants(2) 425,000 $5.00 2,125,000 643.94
Common Stock to be Resold(3)...... 10,473,000 .42 $4,398,660 1,466.22
Class A Warrants to be Resold..... 5,065,000 (4) (4) (4)
Class B Warrants to be Resold..... 5,065,000 (4) (4) (4)
Class C Warrants to be Resold..... 800,000 (4) (4) (4)
TOTAL - - - $19,896.36
</TABLE>
(1) This registration statement also covers any additional securities which
may become issuable pursuant to anti-dilution and adjustment provisions.
(2) The exercise price of the warrants, calculated pursuant to Rule 457(g).
(3) The book value of the Common Stock, calculated pursuant to Rule 457 (f)
(4) Fee paid as described in Rule 457(g)
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE. <PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
Cross-Reference Sheet
showing location in the Prospectus of
Information Required by Items of Form SB-2
<TABLE>
<CAPTION>
FORM SB-2 ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
<S> <C>
1. Front of Registration Statement and
Outside Front Cover of Prospectus......................... Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus....................................... Inside Front Cover Page; Outside Back Cover
Page
3. Summary Information and Risk Factors...................... Prospectus Summary; Risk Factors; The
Company
4. Use of Proceeds........................................... Use of Proceeds
5. Determination of Offering Price........................... Outside Front Cover Page; Risk Factors; Plan
of Distribution and Selling Stockholders
6. Dilution.................................................. Dilution
7. Selling Security-Holders.................................. Plan of Distribution and Selling Stockholders
8. Plan of Distribution...................................... Outside Front Cover Page; Risk Factors; Plan
of Distribution and Selling Stockholders
9. Legal Proceedings......................................... Business
10. Directors, Executive Officers, Promoters
and Control Persons....................................... The Company; Management -- Executive
Officers and Directors
11. Security Ownership of Certain Beneficial
Owners and Management..................................... Principal Stockholders
12. Description of Securities................................. Description of Capital Stock
13. Interest of Named Experts and Counsel..................... Experts
14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................................... *
15. Organization Within Last Five Years....................... The Company
16. Description of Business................................... Business
17. Management's Discussion and Analysis
or Plan of Operation...................................... Management's Discussion and Analysis of
Financial Condition and Results of
Operations
18. Description of Property................................... Business
19. Certain Relationships and Related
Transactions.............................................. Management -- Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters....................................... Risk Factors; Description of Capital Stock;
Shares Eligible for Future Sale; Dividend
Policy
21. Executive Compensation.................................... Management -- Executive Compensation
22. Financial Statements...................................... Financial Statements
23. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure................................................ Experts
</TABLE>
- -----------------------------
(*) None or Not Applicable
ii
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 17, 1997
EAGLE TELECOM INTERNATIONAL, INC.
RESALE OF 24,953,000 SHARES OF COMMON STOCK
This Prospectus relates to the resale of 24,953,000 shares of Common
Stock of Eagle Telecom International, Inc. (the "Company"), which may be sold by
the holders thereof ("Selling Stockholders") from time to time as market
conditions permit in the market, or otherwise, at prices and terms then
prevailing or at prices related to the then current market price, or in
negotiated transactions. The shares of Common Stock to be resold include
10,473,000 shares currently issued and outstanding and up to 14,480,000 shares
to be issued upon (i) the exercise of class A warrants outstanding to purchase
an aggregate of 5,065,000 shares of Common Stock at $4.00 per share, which
expire in August 2001 (" Class A Warrants"), (ii) the exercise of class B
warrants outstanding to purchase an aggregate of 5,065,000 shares of Common
Stock at $6.00 per share, which expire in August 2001 ("Class B Warrants"),
(iii) the exercise of warrants to purchase 700,000 shares of Common Stock at
$.01 per share which expire no later than July 2001 ("$.01 Warrants"), (iv) the
exercise of warrants to purchase 1,050,000 shares of Common Stock at $.05 per
share which expire in July 1999 ("$.05 Warrants"), (v) the exercise of warrants
to purchase 1,375,000 shares of Common Stock at $.50 per share which expire in
July 1999 ("$.50 Warrants"), (vi) the exercise of class C warrants to purchase
800,000 shares of Common Stock at $2.00 per share which expire in August 2001
each, and (vii) the exercise of warrants to purchase 425,000 shares of Common
Stock at $5.00 per share which expire in September 1999 ("$5.00 Warrants") (such
Class A Warrants, Class B Warrants, Class C Warrants, $.01 Warrants, $.05
Warrants, $.50 Warrants and $5.00 Warrants collectively, "Warrants"). Of the
24,953,000 shares, the resale of which is being registered hereby, (i) 6,048,000
shares currently outstanding and 1,920,000 shares underlying the $.05 Warrants
and $.50 Warrants are subject to a three-year contractual lock-up with Tuschner
& Company, Inc. ("Tuschner"), restricting the resale of such shares for nine
months after the date of this Prospectus, with 25% freely tradeable after nine
months after the date of this Prospectus, 25% freely tradeable after the next
nine months, 25% freely tradeable after the next nine months, and 25% freely
tradeable after the next nine months and (ii) 644,000 shares underlying the $.01
Warrants are subject to a contactual lock-up with Tuschner providing for 12.5%
of such underlying shares ("Class C Warrants") becoming freely tradeable per
successive month after the date of this Prospectus. This Prospectus also relates
to the resale of the Class A Warrants, Class B Warrants and Class C Warrants.
The $.05 Warrants (except for 50,000 $.05 Warrants) and $.50 Warrants (except
for 375,000 $.50 Warrants) are not exercisable until and unless the shares of
Common Stock trade at a minimum of $5.50 per share for 20 consecutive trading
days. If the closing bid price of the Common Stock shall equal or exceed $5.50
per share for a period of 20 consecutive trading days, the Company may redeem
the Class A Warrants by paying holders $.05 per Class A Warrants provided that
such notice is mailed not later than 20 days after the end of such period and
prescribes a redemption date at least 30 days but not more than 60 days
thereafter. If the closing bid price of the Common Stock shall equal or exceed
$7.50 per share for a period of 20 consecutive trading days, the Company may
redeem the Class B Warrants by paying holders $.05 per Class B Warrants provided
that such notice is mailed not later than 20 days after the end of such period
and prescribes a redemption date at least 30 days but not more than 60 days
thereafter. If the closing bid price of the Common Stock shall equal or exceed
$5.50 per share for a period of 20 consecutive trading days, the Company may
redeem the Class C Warrants by paying holders $.05 per Class C Warrants provided
that such notice is mailed not later than 20 days after the end of such period
and prescribes a redemption date at least 30 days but not more than 60 days
thereafter. Shares offered by the Selling Stockholders may be sold by one or
more of the following methods without limitation: (i) ordinary brokerage
transactions in which a broker solicits purchases; and (ii) face to face
transactions between the Selling Stockholders and purchasers without a
broker-dealer. A current prospectus must be in effect at the time of the sale of
the shares of Common Stock to which this Prospectus relates. Each Selling
Stockholder or dealer effecting a transaction in the registered securities,
whether or not participating in a distribution, is required to deliver a current
prospectus upon such sale. See "Description of Capital Stock" and "Plan of
Distribution and Selling Stockholders." The Company will retain all proceeds
from the exercise of the Warrants, regardless of the number exercised. Such
gross proceeds (a maximum amount of approximately $55,122,000) will be used for
working capital and general corporate purposes. The Company will not receive any
proceeds from the resale of Common Stock by the Selling Stockholders.
--------------------------------
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE
A HIGH DEGREE OF RISK AND SHOULD NOT BE PURCHASED BY
ANYONE WHO CANNOT AFFORD THE LOSS OF HIS ENTIRE
INVESTMENT. THERE IS CURRENTLY NO MARKET FOR
THE COMMON STOCK OR WARRANTS. THERE IS NO
ASSURANCE THAT ANY MARKET WILL DEVELOP.
IF A MARKET DEVELOPS FOR THE COMPANY
SECURITIES, IT WILL LIKELY BE LIMITED,
SPORADIC AND HIGHLY VOLATILE. SEE
"RISK FACTORS" BEGINNING ON PAGE 5.
----------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------------
The date of this Prospectus is , 1997
******************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR *
* SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH *
* OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR *
* QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. *
* *
******************************************************************************
1
<PAGE>
TABLE OF CONTENTS
PAGE
Available Information........................................................ 2
Prospectus Summary........................................................... 3
Risk Factors.................................................................. 5
Use of Proceeds............................................................... 8
Dilution.......................................................................8
Dividend Policy............................................................... 9
Capitalization................................................................ 9
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................ 10
Business..................................................................... 11
Management................................................................... 17
Principal Stockholders....................................................... 20
Description of Capital Stock................................................. 20
Plan of Distribution and Selling Stockholders................................ 23
Legal Matters................................................................ 38
Experts...................................................................... 38
Index to Financial Statements............................................... F-1
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OFFERED HEREBY, OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OFFERED HEREBY TO OR FROM ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE BUSINESS OR AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION IN THIS PROSPECTUS IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE AS OF WHICH SUCH INFORMATION IS
FURNISHED.
AVAILABLE INFORMATION
Prior to the date of this Prospectus, the Company was not subject to the
information and reporting requirements of the Securities Exchange Act of 1934,
as amended ("Exchange Act"). As a result, the Company will become subject to
such requirements and, in accordance therewith, the Company will file periodic
reports, proxy materials and other information with the Securities and Exchange
Commission (the "SEC"). The Company will provide its shareholders with annual
reports containing audited financial statements and, if determined to be
feasible, quarterly reports for the first three quarters of each fiscal year
containing unaudited financial information. The Company has filed a registration
statement on Form SB-2 ("Registration Statement") under the Securities Act of
1933, as amended ("Act"), with respect to the securities being registered. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits and schedules thereto, to which reference is hereby
made. Copies of the Registration Statement and its exhibits are on file at the
offices of the Commission and may be obtained upon payment of the fees
prescribed by the Commission or may be examined, without charge, at the public
reference facilities of the Commission. The Company will provide without charge
to each person who receives a copy of this Prospectus, upon written or oral
request of such person, a copy of any of the information that is incorporated by
reference in this Prospectus (not including exhibits to the information that is
incorporated by reference unless the exhibits are themselves specifically
incorporated by reference). Such request should be directed to the Company,
attention Dr. Cubley, at 910 Gemini, Houston, Texas 77058.
The Commission maintains a Web site on the Internet that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission. The address of the site is
http://www.sec.gov. Visitors to the site may access such information by
searching the EDGAR data base on the site.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL DATA (INCLUDING FINANCIAL STATEMENTS AND NOTES
THERETO) APPEARING ELSEWHERE IN THIS PROSPECTUS.
THE COMPANY
Eagle Telecom International, Inc. (the "Company " or "Eagle") is a
worldwide supplier of telecommunications equipment and related software used by
service providers in the paging and other wireless personal communications
markets. The Company designs, manufactures, markets and services its products
under the Eagle name. These products include transmitters, receivers,
controllers, software and other equipment used in personal communications
systems (including paging, voice messaging, cellular and message management and
mobile data systems) and radio and telephone systems. The Company's products are
primarily purchased by its customers on an order by order basis, and not
pursuant to any long-term contracts. Company customers include Motorola
Communications and Electronics, Inc., Ericsson, Inc., Mobil-Media, Inc.,
Pac-Tel, Paging Network, Inc., Glenayre Technologies, Inc., Norwegian Telecom,
Inc., and Link-Two Communications, Inc. ("Link II"). The Company has a broad
line of products covering the paging spectrum as well as specific personal
communication systems ("PCS") and specialized mobile radio ("SMR") products, and
products that have been tested and approved by the Federal Communications
Commission ("FCC").
The Company was incorporated in May 1993, but did not conduct any
substantive business operations until April 1996. In September 1996, the Company
amended its articles of incorporation and changed its name to its current name.
Unless otherwise indicated, all information in this Prospectus has been adjusted
to reflect the amended articles of incorporation. The Company's principal place
of business is located at 910 Gemini, Houston, Texas 77058 and its telephone
number is (713) 280-0488.
THE OFFERING
Common Stock Outstanding
Prior to Offering............ 10,842,000(1)
Common Stock to be Issued Upon
Exercise of the Warrants..... 14,480,000(2)
Common Stock to be Resold...... 24,953,000 (3)
Use of Proceeds................ Working capital. See "Use of Proceeds."
Risk Factors................... Prospective purchasers are urged to carefully
review the factors set forth in "Risk Factors."
Lack of Market................. (4)
- -----------------
(1) Does not include the shares of Common Stock underlying the Class A Warrants,
Class B Warrants, Class C Warrants, $.01 Warrants, $.05 Warrants, $.50
Warrants and $5.00 Warrants.
(2) Consists of the shares of Common Stock underlying the Class A Warrants,
Class B Warrants, Class C Warrants, $.01 Warrants, $.05 Warrants, $.50
Warrants and $5.00 Warrants.
(3) Includes all the shares of Common Stock outstanding, except for 369,000
shares, and all of the shares of Common Stock underlying the Warrants.
(4) There is currently no market for the Common Stock or Warrants; there is no
assurance that any market will develop; if a market develops for the
Company's securities, it will likely be limited, sporadic and highly
volatile. See "Risk Factors."
3
<PAGE>
SUMMARY FINANCIAL INFORMATION
The Company did not conduct any significant business operations until it
required cash, and certain inventory and assets, both of which ocurred in March,
1996 resulting in business operations commencing in April 1996 and its fiscal
year is August 31.
FOR THE PERIOD ENDED
NOVEMBER 30, AUGUST 31,
1996 1996
STATEMENT OF EARNINGS UNAUDITED AUDITED
- --------------------- --------- -------
Net sales ................................ $1,138,852 $1,018,441
Cost of goods sold ....................... 591,077 644,271
Operating expenses ....................... 308,695 343,888
Earning before income tax ................ 261,604 37,887
Net Earnings ............................. 172,658 32,204
BALANCE SHEET DATA
Working capital .......................... $3,256,803 $1,657,320
Total assets ............................. 4,393,284 3,446,992
Long-term debt, net ...................... 35,208 22,387
Shareholders equity ...................... 3,693,225 2,077,006
4
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE COMPANY SECURITIES INVOLVES CERTAIN RISKS.
PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW THE FOLLOWING FACTORS TOGETHER
WITH THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS PRIOR TO MAKING AN
INVESTMENT DECISION.
LIMITED OPERATING HISTORY OF THE COMPANY
The Company has a limited operating history and, accordingly, is subject
to all the substantial risks inherent in the commencement of a new business
enterprise. There can be no assurance that the Company will be able to
successfully market its products, generate revenues or operate profitably.
Additionally, the Company has a very limited business history that investors can
analyze to aid them in making an informed judgement as to the merits of an
investment in the Company. Any investment in the Company should be considered a
high risk investment because the investor will be placing funds at risk in a
start-up company with unforeseen costs, expenses, competition and other problems
to which start-up ventures are often subject. As the Company is a development
stage company, its prospects must be considered in light of the risks, expenses
and difficulties encountered in establishing a new business in a highly
competitive industry characterized by rapid technological development. The
Company had net sales of $1,018,441 and net earnings of $32,204 for the period
ended August 31, 1996, net sales of $1,138,852 and net earnings of $204,863 for
the three month period ended November 30, 1996, may incur losses in the future,
and there can be no assurance when or if the Company will sustain long-term
profitability. The Company's financial statements for the period ended August
31, 1996 reflect the commencement of manufacturing and sales since April 1996.
CAPITAL REQUIREMENTS; LIMITED SOURCES OF LIQUIDITY
The Company requires substantial capital to pursue its operating
strategy. To date, the Company has primarily funded its capital requirements
through the private issuance for cash of 4,065,000 shares of Common Stock,
5,065,000 Class A Warrants to purchase 5,065,000 shares of Common Stock,
5,065,000 Class B Warrants to purchase 5,065,000 shares of Common Stock and
800,000 Class C Warrants to purchase 800,000 shares of Common Stock grossing
$6,097,500. For the three months ended November 30, 1996, the Company obtained
$986,653 of cash provided by financing activities and used $588,460 of cash in
operations. At August 31, 1996, the Company had working capital of $1,657,320,
and for the three month period ended November 30, 1996, working capital of
$3,256,803. As the Company has limited internal sources of liquidity, it will
continue to rely on external sources of liquidity, and for the foreseeable
future, the Company's principal source of working capital will be from proceeds
from the issuance of its securities. The Company has not established any lines
of credit or financing with financial institutions or other unrelated third
parties. The Company believes that its current working capital, along with
revenues from operations, will satisfy the Company's capital requirements
through the current fiscal year; however, such time may be shorter or longer
depending on the actual amount of proceeds raised, revenues generated, and
expenses incurred. There is no assurance that the Company will generate
sufficient cash in future periods to satisfy its capital requirements. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
DEPENDENCE ON CERTAIN CUSTOMERS
The Company's three largest customers accounted for approximately 33%,
19% and 11% of the Company's revenue during the three months ended November 30,
1996. Link II accounted for approximately 33% of the Company's revenue in such
period and owed the Company $552,741 at November 30, 1996, approximately 63.5%
of the accounts receivable at November 30, 1996. Certain principal stockholders
of the Company are also principal stockholders of Link II and the Company has
certain rights to earn up to less than ten percent of Link II, the terms of such
rights are being negotiated as of the date hereof. Substantially all of the
Company's customers contract with the Company on a purchase order basis. The
lack of any material long-term contracts may result in fluctuations of revenue
during various periods. The sudden loss of a significant customer could have a
material adverse effect on the Company's business. See "Business -- Customers."
TECHNOLOGY CHANGE
The design, development and manufacturing of PCS and SMR products is
highly competitive and characterized by rapid technology changes. The Company
will compete with other existing products and may compete
5
<PAGE>
against other development technology. Development by others of new or improved
products or technologies may make the Company's products obsolete or less
competitive. While management believes that the Company's products are based on
established state-of-the-art technology, there can be no assurance that they
will not be obsolete in the near future or that the Company will be able to
develop a commercial market for its products in response to future technology
advances and developments. See "Business -- Research and Development."
DEPENDENCE ON KEY PERSONNEL
The success of the Company is dependent upon, among other things, the
services of H. Dean Cubley, president and chief executive officer and James
Futer, executive vice-president and chief operating officer. The loss of the
services of Dr. Cubley or Mr. Futer, for any reason, could have a material
adverse effect on the prospects of the Company. The Company has not entered into
employment agreements with Dr. Cubley and Mr. Futer nor does it maintain
insurance on their lives. The Company has enlisted experienced personnel in
several key positions; however, there can be no assurance that the Company will
be able to continue to attract and retain qualified employees to implement its
business plan. See "Management."
LACK OF PATENT PROTECTION
The Company's success depends upon its proprietary technologies. The
Company relies on certain non- disclosure agreements with employees, and common
law remedies with respect to certain of its proprietary technology. The Company
has not completed filing for or obtained patents on its key technology, and
there can be no assurance that the patents will be issued if applied for in the
future. There can be no assurance that others will not misappropriate the
Company's proprietary technologies or develop competitive technologies or
products that could adversely affect the Company. In addition, although the
Company is not aware of any infringement claims against it or any circumstances
which could lead to such claims, there can be no assurance that such a claim
could not be made which could adversely affect the Company.
FEDERAL REGULATION
The paging and PCS industry is heavily regulated, and the Company's
activities are regulated beyond those applicable to most business activities.
Although compliance with such laws and regulations historically has not had a
material adverse effect on the Company's competitive position, operations or
financial condition or required material capital expenditures, there is no
assurance that the implementation of new or amended laws or regulations in the
future would not have such an effect or require such expenditures.
COMPETITION
The wireless personal communications industry includes equipment
manufacturers that serve many of the same customers served by the Company.
Substantially all of the Company's competitors have significantly greater
resources, including financial, technical and marketing, than the Company, and
there can be no assurance that the Company will be able to compete successfully
in the future. See "Business -- Competition."
LACK OF CASH DIVIDENDS
It is not anticipated that any cash dividends will be paid to stockholders
in the foreseeable future. See "Dividend Policy."
CONTINUED CONTROL BY CURRENT SHAREHOLDERS
Management owns or controls approximately 48% of the issued and
outstanding Common Stock of the Company (giving effect only to Warrants that are
deemed exercisable within 60 days of the date hereof and excluding other
outstanding Warrants that may be exercisable in the future). Therefore,
management of the Company has significant voting power to elect members of the
Company's Board of Directors and to exert certain control over corporate actions
and decisions. See "Principal Stockholders."
6
<PAGE>
IMMEDIATE DILUTION; DISPROPORTIONATE RISK OF LOSS
Assuming an average exercise price of the Warrants of $3.81 per share,
purchasers will incur immediate and substantial dilution of $1.37 per share in
the pro forma net tangible book value per share of their investment. In
addition, assuming the exercise of all of the Warrants, such purchasers will be
contributing approximately 89.4% of the total capital consideration to the
Company, but will receive only 57% of the shares outstanding. Accordingly, in
the aggregate, purchasers exercising the Warrants will bear a greater risk of
loss than the current stockholders. See "Dilution."
NON-REGISTRATION IN CERTAIN JURISDICTIONS OF SHARES UNDERLYING THE WARRANTS
Although the Warrants will not knowingly be sold to purchasers in
jurisdictions where the securities are not registered or otherwise qualified for
sale, purchases may buy Warrants in the aftermarket or may move to jurisdictions
in which the shares underlying the Warrants are not registered or qualified
during the period that the Warrants are exercisable. The Company would be unable
to issue shares to persons in such jurisdictions desiring to exercise their
Warrants unless and until the shares were registered or qualified for sale,
unless an exemption from such qualification were available in such jurisdiction.
The Company will use its best efforts to register or qualify shares underlying
the Warrants in all jurisdictions where the cost and expense or conditions of
such registration or qualification are not unduly burdensome.
LACK OF PUBLIC MARKET
The resale of the shares of Common Stock, Class A Warrants, Class B
Warrants and Class C Warrants have been registered with the SEC pursuant to the
Act and, as such, these securities will be freely tradeable under the federal
securities laws. The shares of Common Stock, Class A Warrants, Class B Warrants
and Class C Warrants have been registered in certain jurisdictions and may only
be sold to residents of those jurisdictions, and any subsequent transfer can
only be effected if such shares are subsequently registered in such jurisdiction
or there exists an exemption from the applicable state's registration
requirements with respect to such sale or transfer.
As of the date of this Prospectus, there has been no public trading
market for the Company's Common Stock, Class A Warrants, Class B Warrants or
Class C Warrants. As of the date of this Prospectus, the Common Stock, Class A
Warrants, Class B Warrants and Class C Warrants will not be listed on a national
securities exchange, Nasdaq, or on the OTC electronic bulletin board.
Management's strategy is to list the Common Stock, Class A Warrants, Class B
Warrants and Class C Warrants on the OTC electronic bulletin board as soon as
practicable. The current strategy of management is to develop a public market
for its Common Stock, Class A Warrants, Class B Warrants and Class C Warrants by
soliciting brokers to become market-makers of the shares. However, to date the
Company has not solicited any such securities brokers to become market-makers.
Accordingly, an investment in the Company's Common Stock, Class A Warrants,
Class B Warrants and Class C Warrants should be considered highly illiquid and
there can be no assurance that a market for the Company Common Stock will ever
develop or if developed, sustained.
PENNY STOCK REGULATION
The SEC has adopted rules that regulate broker-dealer practices in
connection with transactions in "penny stocks." Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange system). The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document prepared by the SEC that provides information about penny stocks and
the nature and level of risks in the penny stock market. The broker-dealer also
must provide the customer with bid and offer quotations for the penny stock, the
compensation of the broker-dealer, and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules require that prior to
a transaction in a penny stock not otherwise exempt from such rules, the
broker-dealer must make a special written determination that a penny stock is a
suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in any secondary market for a stock
that becomes subject to the penny stock rules, and accordingly, investors in
Company securities may find it difficult to sell their securities, if at all.
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AUTHORIZED STOCK
The Board of Directors of the Company has the authority to issue up to
5,000,000 shares of "blank check" preferred stock with such designations, rights
and preferences as may be determined by the Board of Directors. Accordingly, the
Board of Directors of the Company is empowered, without further shareholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the Company's Common Stock. Certain companies have used
the issuance of preferred stock as an anti-takeover device and the Board of
Directors could, without further shareholder approval, issue preferred stock
with certain rights that could discourage an attempt to obtain control of the
Company in a transaction not approved by the Board of Directors. The Board of
Directors of the Company also has authority to issue up to 100,000,000 shares of
Common Stock. See "Description of Capital Stock."
LACK OF DISINTERESTED, INDEPENDENT DIRECTORS
All of the directors of the Company have a direct financial interest in
the Company. While management believes that its current directors will be able
to exercise their fiduciary duties as directors, the Company intends to add an
independent, disinterested director to serve on the Board of Directors in the
near future. See "Management."
POSSIBLE VOLATILITY OF STOCK PRICE; SHARES ELIGIBLE FOR SALE
In the event that any market develops for the Company securities, the
market price of the Common Stock, Class A Warrants and Class B Warrants may
experience fluctuations that are unrelated to the operating performance of the
Company. In particular, the price of the securities may be affected by general
market price movements as well as developments specifically related to the
wireless personal communications industry. In addition, the Company's revenues
on a quarterly basis is significantly dependent upon the successful completion
of the Company's equipment sales in the market, and the inability of the Company
to complete significant equipment sales in a particular quarter may have a
material adverse impact on the Company's results of operations for that quarter
and could, therefore, negatively impact the price of the Common Stock, Class A
Warrants or Class B Warrants. Upon the date of this Prospectus and upon
exercise of the Warrants, there will be 16,341,000 shares of Common Stock
immediately freely tradeable in the public market pursuant to this Prospectus,
another 8,612,000 shares of Common Stock will be freely tradeable, subject to
contractual lock-ups, and to the extent that these or other additional shares of
Common Stock enter the public market, the trading price and value of the
previously outstanding Common Stock, as well as the Class A Warrants and Class B
Warrants, may be reduced and holders of such securities may find it increasingly
difficult to sell the shares held by them at a price satisfactory to them, if at
all. See "Plan of Distribution and Selling Stockholders."
USE OF PROCEEDS
Assuming exercise of all the Warrants, the Company will receive
aggregate gross proceeds of approximately $55,122,000 ($20,260,000 from the
Class A Warrants, $30,390,000 from the Class B Warrants, $1,600,000 from the
Class C Warrants and $2,872,000 from the other Warrants), prior to deducting
estimated offering expenses of approximately $125,000. The Company will use
these proceeds for working capital and will have broad discretion in the
application of such proceeds. As there are no commitments from the holders of
the Warrants to exercise such securities, there can be no assurance that any of
the Warrants will be exercised. The Company will receive no proceeds from the
resale of shares of Common Stock by the Selling Stockholders.
DILUTION
Set forth below is a description of dilution to purchasers of the
Company Common Stock, assuming the exercise of all of the Warrants.
As of November 30, 1996, the pro-forma net tangible book value of the
Company's Common Stock was $6,558,225 or $.60 per share, giving effect to the
issuance of 1,910,000 shares of Common Stock in December 1996 and January 1997
for gross proceeds of $2,865,000. "Net Tangible book value per share" represents
the amount of total tangible assets less total liabilities of the Company.
Without taking into account any changes in net tangible book value after
November 30, 1996, other than to give effect to the issuance of 1,910,000 shares
of Common Stock in December 1996 and January 1997 for gross proceeds of
$2,865,000, the pro-forma book value of the Common Stock after the exercise of
all Warrants will be $2.44 per share. Consequently, the purchasers of the shares
of Company Common Stock issued upon exercise of all of the Warrants will sustain
an immediate substantial dilution (i.e., the difference between the average
exercise
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price of $3.81 and the pro forma net tangible book value per share) after such
exercise of $1.37 per share. The following table illustrates such dilution:
Pro forma Net Tangible Book Value of Outstanding
Common Stock............................................... $ .60
Average Exercise Price of the Common Stock
Underlying the Warrants.................................... $3.81
Increase Attributable to Exercise of Warrants................ $1.84
Pro forma Net Tangible Book Value After Exercise of Warrants. $2.44
Per Share Dilution to New Investors.......................... $1.37
The following table sets forth, as of the date of this Prospectus, the
total number of shares of Common Stock purchased from the Company, the total
consideration recorded and the average price per share for (i) existing holders
of Common Stock for shares acquired since inception and (ii) the investors
exercise all of the Warrants.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ------------------------ PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ---- ------------- ------ ------
<S> <C> <C> <C> <C> <C>
Existing shareholders(1) 10,842,000 43% $ 6,558,225(1) 10.6% $ .60
New shareholders ....... 14,480,000 57% 55,122,000(1) 89.4% $ 3.81
Total .................. 25,322,000 100% $ 61,680,225 100.0%
</TABLE>
- -------
(1) Prior to dedu cting any expenses associated with the issuances
subsequent to November 30, 1996.
DIVIDEND POLICY
It is the present policy of the Company not to pay cash dividends and to
retain future earnings to support the Company's growth. Any payment of cash
dividends in the future will be dependent upon the amount of funds legally
available therefor, the Company's earnings, financial condition, capital
requirements and other factors that the Board of Directors may deem relevant.
The Company does not anticipate paying any cash dividends in the foreseeable
future.
CAPITALIZATION
The following table sets forth the unaudited capitalization of the
Company as of November 30, 1996.
ACTUAL
Stockholder's Equity:
Preferred Stock, par value $.001 per share;
5,000,000 shares authorized, 0 shares
outstanding................................... --
Common Stock, par value $.001 per share;
100,000,000 shares authorized, 8,829,000
shares issued and outstanding(1)(2)........... $ 8,829
Additional Paid-In Capital........................... 3,479,533
Retained Earnings.................................... 204,863
-------
Total Stockholders' Equity........................... $3,693,225
=========
- -------------------
(1) In December 1996 and January 1997, 1,900,000 shares of Common Stock,
1,900,000 Class A Warrants to purchase 1,900,000 shares of Common Stock,
1,900,000 Class B Warrants to purchase 1,900,000 shares of Common Stock, and
800,000 Class C Warrants to purchase 800,000 shares of Common Stock, were
issued by the Company for gross proceeds of $2,850,000, none of which are
reflected herein.
(2) Does not reflect 14,480,000 shares underlying the Warrants.
9
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Company and accompanying Notes to the
Consolidated Financial Statements.
GENERAL
The Company was incorporated in May 1993, but did not conduct any
significant business operations until it acquired cash, certain inventory and
assets, both of which occurred at the end of March 1996 resulting in business
operations commencing in April 1996. There exists limited historic operations
with respect to the operation of the Company. The Company's fiscal year is
August 31. The financial information contained in this Prospectus is for the
five month period ended August 31, 1996 and for the three month period ended
November 30, 1996.
FIVE MONTHS COMPRISING FISCAL YEAR ENDED AUGUST 31, 1996
For the period ended August 31, 1996, the Company had net sales of
$1,018,441, cost of goods sold was $644,271, resulting in a gross profit of
$374,170. For this period, total operating expenses for such period were
$343,888 resulting in net earnings of $32,204. For the period ended August 31,
1996, the Company had total current assets of $3,004,919, working capital of
$1,657,320, long-term debt of $22,387, and total shareholders' equity of
$2,077,006.
THREE MONTHS ENDED NOVEMBER 30, 1996
For the three months ended November 30, 1996, the Company had net sales of
$1,138,852, total cost of goods sold was $591,077, resulting in a gross profit
of $547,775. For this period, total operating expenses were $308,695, resulting
in net earnings of $172,659. For the three months ended November 30, 1996, the
Company had a total current assets of $3,921,657, working capital of $3,252,979,
long-term debt of $32,205 and shareholders' equity of $3,693,226.
LIQUIDITY AND CAPITAL RESOURCES
As of November 30, 1996, the Company's primarily source of equity was
$2,456,098 of cash, $870,530 of accounts receivable, and $588,981 of
inventories. To date, the Company has primarily funded its capital requirements
through the private issuance for cash of 4,065,000 shares of Common Stock,
5,065,000 Class A Warrants to purchase 5,065,000 shares of Common Stock, and
5,065,000 Class B Warrants to purchase 5,065,000 shares of Common Stock and
800,000 Class C Warrants to purchase 800,000 shares of Common Stock, grossing
$6,097,500. Net cash used by operating activities for the period ended August
31, 1996, was $275,220 compared with $558,460 for the three months ended
November 30, 1996. This increase is primarily due to an increase in accounts
receivable and a decrease in customer deposits. Net cash provided by financing
activities was $2,854,782 for the period ended August 31, 1996 compared with
$986,653 for the three months ended November 30, 1996. The Company expects
negative cash flow from its operations to continue which will be funded
primarily from working capital and secondarily from proceeds from the exercise
of Warrants, if any.
The Company believes that its working capital is sufficient to fund
operations through the end of the current fiscal year. The Company has not
established a line of credit or other similar financing arrangements with any
lenders. There can be no assurance that the Company will be able to obtain any
funding from any external sources on suitable terms, if at all. Management
believes, however, that proceeds from the exercise of the Warrants (of which
there can be no assurance) will assist in meeting its capital requirements for
the foreseeable future. However, a decrease in expected revenues resulting from
adverse economic conditions or otherwise, unforeseen costs, insufficient market
penetration and any new product introductions could shorten the period during
which the current working capital may be expected to satisfy the Company's
capital requirements. As of November 30, 1996, the Company had no material
capital commitments.
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BUSINESS
THE FOLLOWING IS A SUMMARY OF THE COMPANY'S CURRENT BUSINESS PLAN. THERE
CAN BE NO ASSURANCE THAT SUCH A PLAN WILL BE ACHIEVED, OR THAT THE PLAN WILL NOT
BE MODIFIED BY MANAGEMENT FROM TIME TO TIME.
The Company is a worldwide supplier of telecommunications equipment and
related software used by service providers in the paging and other wireless
personal communications markets. The Company designs, manufactures, markets and
services its products under the Eagle name. These products include transmitters,
receivers, controllers, software and other equipment used in personal
communications systems (including paging, voice messaging, cellular and message
management and mobile data systems) and radio and telephone systems. The Company
has a broad line of products covering the paging spectrum as well as specific
PCS and SMR products, and products that have been tested and approved by the
FCC. Eagle provides service and support for its products.
CURRENT PRODUCTS
The principal products and enhancements manufactured by the Company relate
to its wireless messaging products and include the following:
LICENSE STARTER
This is a new product which was developed to provide new paging license
holders a method to install a system that will keep them in compliance with FCC
regulations. The product is expandable, giving the license holder the ability to
fund the expansion from revenues. Installation of this product requires 110VAC
power and a standard telephone line.
STEALTH SERIES SLIMLINE BASE STATIONS
This product is very attractive where space has a high dollar cost. The
product has the same specifications as a full size base station but takes up
much less floor space and can be stacked for even higher density.
FULL SIZE BASE STATION
This product line can be configured for substantially all domestic and
international paging frequencies.
R.F. POWER AMPLIFIERS
The high, medium and low power base station and link transmitter power
amplifiers are designed to operate with any FCC type accepted exciter or may be
combined with Eagle optional plug-in base station in the same volume as the
power amplifier. All Eagle power amplifiers above 100 watts are equipped with
Eagle "Heat Trap"(TM) design to provide the user with long life high reliability
performance.
EXTEND-A-PAGE
Extend-a-Page is designed to provide fill-in coverage in those locations
where normal paging service from a wide area paging system is not adequate.
Extend-a-Page receives the paging data on either a RF control link or wireline
link and converts this information into low power simulcast compatible paging
transmissions on any of the common paging frequencies. The Extend-a-Page
transmits the paging information at a one to two watt level directly into hard
to reach locations such as hospitals, underground structures, large industrial
plants, and many locations near the outer coverage contour of paging systems.
LINK PRODUCTS
Major competitors have elected to license the Eagle Telecom 20x Control
software and have it resident on their terminals. However, the customer can
elect to purchase the same Link software directly from Eagle as part of an Eagle
system at a lesser cost. Management believes that its software allows the user
to mix and match the products of different vendors on a common system.
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MICROBEEP
Management believes this to be the only small terminal resident in an
IBM PC taking power from the PC and giving the user POCSAG numeric and
alphanumeric flexibility at 512 and 1200 baud rate.
ARBITRATOR
Management believes this to be the only product that can reliably
adjudicate and allow up to eight terminals to share the same transmitter,
particularly in PCP (Private Carrier Paging) applications.
KAR-STOPPER 950
The KS-950 offers safer personal protection during possible car-jacking
situations. When a thief demands and then takes possession, the driver is left
behind, safe but without his or her vehicle. The driver may go to any phone in
the U.S. or Canada and dial a special number, where a person will answer and
proceed to assist them. In some instances the vehicle owner can, also using a
touch tone phone, page the vehicle directly. A signal is then transmitted to the
vehicle via satellite to a paging system which sends out a signal to immediately
trigger a built in anti car-jacking device. Lights flash and a siren or horn
sound is initiated causing immediate attention to the vehicle and concern to the
thief. A shrill sounding 180db interior siren (optional) is also triggered. If
the thief attempts to turn off the ignition or open any door or open the hood,
the engine dies along with all functions of the ignition key switch. If the
thief attempts to stop the system by removing the battery cables, the KS-950
memory system goes into effect, and when the cables are re-connected, the system
resumes where it left off. The system can also be used to unlock vehicle doors
when the driver is accidentally locked out or to lock the vehicle doors. Among
the Kar-Stopper 950 features are: can be initiated from any phone i.e. (land,
cellular, pay phone, etc.); works all over the world; audible and visual alerts;
ignition disable circuit; four separate activation codes available; memory
back-up; and short circuit protection.
ENERGY WIZARD 2000
The Energy Wizard 2000 is a new product being developed for use by
Public Utility Companies to control switching in their sub-stations remotely
using the low-cost paging infrastructure. At the present time, the utilities use
existing voice channels on their radio communications system to control these
Sub-Stations. Unfortunately, when switching is necessary and voice channels are
being used, it reduces the capabilities and traffic capacity of the
communications systems at a time when maximum communications capabilities are
required to monitor emergencies on the system. The unit will be intelligent,
being capable of detecting over voltages in excess of 125VAC and turning the
system OFF activating various safety modes to avoid overloading sub-station or
blacking out of consumers served by the controlled sub-station. Counters will
register the activations and aborts of the controlled system. This system can be
modified to control any process, water, gas, oil, electrical power or any other
process that can be controlled by an ON/OFF relay.
PRODUCT CATEGORIES
WIRELESS MESSAGING PRODUCTS
For the fiscal year ended August 31, 1996 and the three months ended
November 30, 1996, infrastructure equipment, which includes License Starter,
Base Stations, power amplifiers, L20X, arbitrator, EAP, and Micro Beep, is
projected to account for a significant portion of the Company's net sales.
Pagers, including numeric, numeric + and alphanumeric, are projected to account
for a lesser portion of the Company's net sales as the pager product line has
only recently been initiated.
Paging is a method of wireless telecommunication which uses an assigned
radio frequency to contact a paging subscriber anywhere within a service area. A
paging system is generally operated by a service provider which incurs the cost
of building and operating the system. Each service provider in the United States
licenses spectrum from the FCC and elsewhere from the authorized government body
to operate a paging frequency within either a local, regional, or national
geographical area. Each paging subscriber is assigned a distinct telephone
number which a caller dials to activate the subscriber's pager (a pocket-sized
radio receiver carried by the subscriber). Telephone calls by the subscriber are
received by a paging switch. A network of transmitters, that broadcast a signal
over a specific geographical area, then receives the information from the paging
switch through the controller and a radio signal is sent by the transmitters via
antennae to the subscriber's pager. The transmitters manufactured by Eagle are
specifically
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designed to simulcast, which is the transmission of the same signal over two or
more transmitters on the same channel at the same time in an overlap area,
resulting in superior voice and data quality and coverage area. The radio signal
causes the pager to emit a beep or to vibrate, and to provide the subscriber
with information from the caller in the form of a voice, tone, numeric or
alphanumeric message.
A pager has an advantage over a landline telephone in that the pager's
reception is not restricted to a single location, and has an advantage over a
cellular portable telephone in that a pager is smaller, has a much longer
battery life, has excellent coverage, and is less expensive to use.
Historically, the principal disadvantage of traditional paging service in
comparison to landline telephones or cellular portable telephones has been that
paging provided only one-way communication capabilities.
However, this limitation may have been overcome in the United States as
a result of the auction in 1994 by the FCC of nationwide and regional licenses
for designated narrowband personal communication services ("NPCS") radio
frequencies or spectrum to service providers. Many of the nationwide license
holders and many of the regional license holders are current Eagle customers,
directly or indirectly. Additional licenses may be auctioned in 1996. The cost
of the licenses to the NPCS auction winners in 1994 was approximately $1
billion. The FCC anticipates that these NPCS licenses will be used to provide
such new services as pager location, two-way acknowledgment paging, advanced
voice paging and data services.
The NPCS radio frequencies or spectrum are located at three separate
points within the total radio spectrum, at 902-928 MHZ, 930-931 MHZ and 940-941
MHZ. Initially, the radio frequencies located at 930-931 MHZ and 940- 941 MHZ
have been designated for outbound message transmission (to the pager) and the
902-928 MHZ have been designated response channels (from the pager). This
application is similar to traditional paging except that these license holders
have been granted wider frequency band width permitting the user to transmit
substantially more information. In addition, Eagle manufactures other paging
infrastructure products that cater to the VHF and UHF paging frequencies in the
United States and other areas of the world as well as supporting most
international paging brands.
The NPCS nationwide licenses cover all fifty states, the District of
Columbia, American Samoa, Guam, the Northern Marianas Islands, Puerto Rico and
the United States Virgin Islands. These licenses are divided into 50 KHz paired
and unpaired channel categories. Paired channels permit both outbound and
inbound signals while unpaired channels are limited to only outbound signals.
Currently, there are 11 nationwide licenses and 6 additional licenses which were
auctioned on a regional basis that cover the nation. Remaining to be auctioned
are 7 licenses available on a major trading area ("MTA") basis and 2 licenses on
a basic trading area ("BTA") basis.
The FCC has imposed infrastructure construction or buildout requirements
on all NPCS license holders. Each NPCS license holder must establish a minimum
service availability for at least 37.5% of the population in its geographic
region within five years after receiving the license. After ten years, each NPCS
license holder must make the service available to at least 75% of the area's
population. If a NPCS license holder fails to achieve these build-out
requirements, it risks cancellation by the FCC of its NPCS license and a
forfeiture of any auction monies paid.
Eagle manufactures products that will enable paging license holders to
legally put their systems into operation, at a low cost, a strategy adopted by
the Company to create a "captive" customer in terms of future build out.
Eagle offers its customers an end-to-end solution for NPCS applications.
The Company has developed and introduced, at the September 1996 PCS show in San
Francisco, new technology based products with enhanced architecture and
technology from its existing paging systems to accommodate the advanced services
available through paging and PCS. This system approach includes full product
lines of radio frequency network controllers, transmitters, receivers, and a
special satellite receiver system (to receive the response message from the
end-user). The Company will begin shipment of its NPCS products in the first
half of 1997 to various beta test sites, based on product development schedules
and the build-out requirements of the NPCS license holders.
The design of a paging system is customer specific and depends on (i)
the number of paging subscribers the service provider desires to accommodate,
(ii) the operating radio frequency, (iii) the geography of the service area,
(iv) the expected system growth, and (v) specific features desired by the
customer. Paging equipment hardware and software developed by the Company may be
used with all types of paging service, including voice, tone numeric (telephone
number display) or alphanumeric messaging (words and numbers display).
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SWITCHES
The Company is involved at an early stage in the development of industry
wide technology standards and is familiar with developments in paging protocol
standards throughout the world. The Company works closely with its customers in
the design of large, complex paging networks. Eagle believes that its customers'
purchasing decisions are based, in large part, on the quality and technological
capabilities of such networks. The Company has strategic agreements to purchase
switches from major switch manufacturers. The Company believes that the advanced
hardware and software features of its switches ensure high reliability and high
volume call processing.
RADIO FREQUENCY "RF" EQUIPMENT, TRANSMITTERS AND RECEIVERS
Transmitters are available in frequency ranges of 70 MHZ to 960 MHZ and
in power levels of 2 watts to 500 watts. Radio link receivers are available in
frequency ranges of 70 MHZ to 960 MHZ. Satellite link receivers are available
for integration directly with the transmitters at both Ku- and C- band
frequencies.
The Company's range of receivers detects the responses back from the
two-way NPCS subscriber devices. The receivers take advantage of DSP
demodulation techniques that maximize receiver performance.
Depending upon frequency, antenna height, topography and power, Eagle
transmitter systems are designed to cover broadcast cells with a diameter from 3
to 100 miles. Typical simulcast systems have broadcast cells which vary from 3
to 15 miles in diameter. Eagle transmitters are designed specifically for the
high performance and reliability required for high speed simulcast networks.
CONTROLLERS
The Company currently offers products for transmitter control known as
Eagle's L20TX transmitter control system, which is a medium-feature transmitter
control system used in domestic and international markets, and new advanced
products (Car Stoppper and Energy Wizard) were introduced at the September 1996
show in San Francisco.
MANUFACTURE OF NEW PRODUCTS
The Company has identified several new products that would complement
existing products and broaden its product base. The Company's strategy is to
develop upgrades on existing products to enable it to obtain increased market
share or extend the life of those products by several years.
SERVICE AND SUPPORT
Eagle provides service to customers on a regular basis including
installation, project management of turnkey systems, training, service or
extended warranty contracts with the Company. The Company believes that it is
essential to provide reliable service to customers in order to solidify customer
relationships and to be the vendor of choice when new services or system
expansions are sought by a customer. This relationship is further developed as
customers come to depend upon the Company for installation, system optimization,
warranty and post-warranty services.
The Company has a warranty and maintenance program for both its hardware
and software products and maintains a customer service network in its operating
locations. Eagle's standard warranty provides its customers with repair or
replacement of any defective Eagle manufactured equipment. The warranty is valid
on all products for the period of one year from the later of the date of
shipment or the installation by an Eagle qualified technician.
CUSTOMERS
Eagle sells to a range of customers worldwide. In the United States,
customers include the regional Bell operating companies, medical paging
operators, and public and private radio common carriers. Internationally,
customers include public telephone and telegraph companies, as well as private
telecommunication service providers. Company customers include: Motorola
Communications and Electronics, Inc., Ericsson, Inc., Mobil-Media, Inc., Pac-
Tel, Paging Network, Inc., Glenayre Technologies, Inc., Norwegian Telecom, Inc.,
and Link-Two Communications, Inc. ("Link")
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The Company's three largest customers, Link II, Houston Telephone and
Petro Com accounted for approximately 33%, 19% and 11% of the Company's sales
for the three months ended November 30, 1996. Link II is a common carrier of
exclusively wholesale one-way paging network services. Its customers purchase
paging network services as an aggregator and resell Link's network services to
individual subscribers and other communications providers. Link II has secured
the rights to use or options to purchase five PCP frequencies, three of which
provide coverage in ten of the top ten markets, and several RCC frequencies
providing regional coverage in two of the top ten markets. Link II will provide
high-quality network services by utilizing regional network operational centers
("NOC") that will enable it to utilize a star network topology to control paging
networks in multiple local markets within a wide geographical region. Link II
intends to build its first NOC in metro New York City followed by Chicago, Los
Angeles, Dallas and Atlanta. Link II then intends to expand operations
nationwide by constructing five additional NOCs in top markets to allow for
nationwide, local and national paging services. See "Management -- Certain
Transactions."
MARKETING AND SALES
The Company markets its products and services in the United States
through representative organizations and internationally through agents. As the
Company's business is highly technical, and a majority of sales are complete
systems with technical support. A large percentage of the Company's marketing
comes from direct sales by the employees. The Company also utilizes distributors
and agents to sell its products in certain countries and geographic regions to
market outside of the Company's core markets.
As part of the Company's integrated marketing and sales efforts, Eagle
encourages a philosophy of open communication between the Company and its
customers.
INTERNATIONAL BUSINESS RISKS
In 1996, the Company generated net sales in markets outside of the
United States. International sales are subject to the customary risks associated
with international transactions, including political risks, local laws and
taxes, the potential imposition of trade or currency exchange restrictions,
tariff increases, transportation delays, difficulties or delays in collecting
accounts receivable, and, to a lesser extent, exchange rate fluctuations. To
protect its interests, the Company only services international business using
letters of credit drawn on American or limited foreign corresponding banks.
RESEARCH AND DEVELOPMENT
The Company believes that a strong commitment to research and
development is essential to the continued growth of its business. One of the key
components of the Company's development strategy is the promotion of a close
relationship between its development staff, internally with Eagle's
manufacturing and marketing personnel, and externally with Eagle's customers.
This strategy has allowed Eagle to develop and bring to market customer-driven
products.
The Company has extensive expertise in the technologies required to
develop wireless communications systems and products including high power high
frequency RF design digital signal processing ("DSP"), real-time software,
high-speed digital logic, radio frequency and data network design. The Company
believes that by having a research and development staff with expertise in these
key areas, it is well positioned to develop enhancements for its existing
products as well as the next generation of personal communication products.
Investment in advanced computer-aided design tools for simulation and analysis
has allowed Eagle to reduce the time for bringing new products to market.
MANUFACTURING
Eagle currently manufactures its products at Company facilities in
Houston, Texas. The Company's manufacturing expertise resides in assembling
sub-assemblies and final systems that are configured to its customers'
specifications. The components and assemblies used in the Company's products
include electronic components such as resistors, capacitors, transistors, and
semiconductors such as field programmable gate arrays, digital signal processors
and microprocessors, and mechanical materials such as cabinets in which the
systems are built. Substantially all of the components and parts used in the
Company's products are available from multiple sources. In those instances where
components are purchased from a single source, the supplier is reviewed
frequently for stability and performance. Additionally, as necessary, the
Company purchases sufficient quantities of certain components which
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<PAGE>
have long-lead requirements in the world market. The Company ensures that all
products are tested, tuned and verified prior to shipment to the customer.
The Company plans to implement a total quality management philosophy
throughout all of its operations, which it believes will eventually lead to ISO
9001 qualification. The Company is in the process of implementing a computerized
system which will be used to control and monitor all areas of the Company from
sales to shipping.
COMPETITION
The Company supplies transmitters, receivers, controllers and software
used in paging, voice messaging and message management systems. While the
services from the foregoing products represent a significant portion of the
wireless personal communications industry today, the industry is expanding to
include new services and new markets. The wireless personal communications
industry includes equipment manufacturers that serve many of the same personal
communications services markets served by the Company. Certain of the Company's
competitors, and all competitors that have publicly tradeable securities, have
significantly greater resources than the Company, and their can be no assurance
that Eagle will be able to compete successfully in the future. In addition,
manufacturers of wireless telecommunications equipment, including those in the
cellular telephone industry, certain of which are larger and have significantly
greater resources than the Company, could elect to enter into the Company's
markets and compete with Eagle's products. There can be no assurance that the
Company will be able to increase its market share in the future.
PROPRIETARY INFORMATION
The Company attempts to protect its proprietary technology through a
combination of trade secrets, non- disclosure agreements, technical measures,
and common law remedies with respect to certain proprietary technology. Such
protection may not preclude competitors from developing products with features
similar to the Company's products. The laws of some foreign countries in which
the Company sells or may sell its products do not protect the Company's
proprietary rights in the products to the same extent as do the laws of the
United States. Although the Company believes that its products and technology do
not infringe on the proprietary rights of others, there can be no assurance that
third parties will not assert infringement claims against the Company in the
future. If such litigation resulted in the Company's inability to use
technology, the Company might be required to expend substantial resources to
develop alternative technology. There can be no assurance that the Company could
successfully develop alternative technology on commercially reasonable terms.
REGULATION
Many of the Company's products operate on radio frequencies. Radio
frequency transmissions and emissions, and certain equipment used in connection
therewith, are regulated in the United States and internationally. Regulatory
approvals generally must be obtained by the Company in connection with the
manufacture and sale of its products, and by customers to operate the Company's
products. There can be no assurance that appropriate regulatory approvals will
continue to be obtained, or that approvals required with respect to products
being developed for the personal communications services market will be
obtained. The enactment by federal, state, local or international governments of
new laws or regulations or a change in the interpretation of existing
regulations could affect the market for the Company's products. Although recent
deregulation of international telecommunications industries along with recent
radio frequency spectrum allocations made by the FCC have increased the demand
for the Company's products by providing users of those products with
opportunities to establish new paging and other wireless personal communications
services, there can be no assurance that the trend toward deregulations and
current regulatory developments favorable to the promotion of new and expanded
personal communications services will continue or that future regulatory changes
will have a positive impact on the Company. On February 9, 1996, the FCC
released a notice of proposed rule making covering a licensing rule and
procedure change on the 929 MHZ and 931 MHZ as well as certain other paging
frequencies which included a freeze on its acceptance of new applications for
paging system licenses. As the issuance of new paging system licenses stimulates
demand for the Company's products, this freeze may adversely affect sales and
the timing of sales of the Company's product.
EMPLOYEES
At December 1, 1996 the Company employed approximately 42 persons. The
Company believes its employee relations to be good.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Company's directors and executive officers are:
NAME AGE POSITION
H. Dean Cubley 55 Chairman of the Board of Directors,
President and Chief Executive Officer
Christopher W. "James" Futer 57 Director, Executive Vice President
and Chief Operating Officer
A. L. Clifford 53 Director
Richard Royall 50 Chief Financial Officer
- --------------------
H. DEAN CUBLEY has served as chairman of the board, president and chief
executive officer of the Company since March 1996. Prior to that, Dr. Cubley
served as vice-president of Eagle Aerospace, Inc. from 1993 to March 1996. Dr.
Cubley is also a member of the Oversight Committee for the University of Houston
Epitaxy Center which managed the Wake Shield Flight aboard the Shuttle in
September 1995. During 1996, Dr. Cubley entered into negotiations to settle a
prior disputed tax matter with the Internal Revenue Service unrelated to the
Company. Dr. Cubley has over 35 years of extensive experience in the field of
telecommunications. From 1965 to 1984, Dr. Cubley worked for the NASA Manned
Spacecraft Center in the Electromagnetic Systems Branch of the Engineering and
Development Directorate. For a five year portion of that period, Dr. Cubley was
the Antenna Subsystems Manager for all spacecraft antennas for the Shuttle
Program. His duties included overall responsibility for the design, development,
costs schedules and testing of the antennas and hardware for all Shuttle
flights. Throughout his career, Dr. Cubley has authored or co-authored over
fifty publications. In addition, he has a total of eight patents and
patents-pending registered in his name. Dr. Cubley received a bachelor of
science degree in electrical engineering from the University of Texas in 1964
and a masters degree in from the University of Texas in 1965. In 1970 Dr. Cubley
received his Ph D in Electrical Engineering from the University of Houston.
Since 1977, Dr. Cubley has been actively engaged in the commercial
telecommunications industry and has been instrumental in many of its
technological advancements. Dr. Cubley has also been a founding partner in seven
new high technology companies since his resignation from NASA. Many of these
companies have been acquired by larger companies and are currently operating in
the telecommunications industry.
JAMES FUTER has served as a director, chief operating officer and vice
president of the Company since March 1996. Prior to that, Mr. Futer served as
general manager of Eagle Aerospace, Inc. Telecom Division from November 1994
until February 1996. From May 1993 to November 1994, Mr. Futer was employed as a
vice president of operations with Starcom, Inc. Prior thereto, he was employed
with Paging Products International. Mr. Futer was a manager of Universal
Cellular, Inc., a California corporation ("UCI") from October 1990 until
February 1991. Mr. Futer resigned from UCI in February 1991 due to his
disagreement with UCI management over its business policy and practices. In June
1993, UCI filed for protection under the federal bankruptcy laws. Mr. Futer's
spectrum of experience has included work in the fields of hi-tech flight
simulation and display technologies (especially those of light emitting diodes
and liquid crystal displays), and in consumer electronics, i.e. electronic
watches, pocket calculators, and electronic games. Most recently, he has been
involved in pager design, manufacture and marketing, as well as the wider field
of paging equipment. His international background includes work with Hatfield
Instrument (in England, where he was born), Canadian Aviation Electronics,
located in Montreal, Canada, General Instruments (in Canada and the United
States), Litronix (in California) and Siemens (living in California and England
and commuting to the head office in Munich, as well as Berlin, Paris and Milan).
In 1975, he was instrumental in implementing a major "turn-key" technology
transfer from Canada to the (then) Soviet Union for the manufacture of hand-held
electronic calculators, an operation which the Soviets then improved from the
consumer level and adapted to suit their particular requirements. Since 1975,
Mr. Futer has had extensive in-depth experience of interfacing with Pacific Rim
countries. In 1992 and 1993, he spent time in the People's Republic of China
co-ordinating a successful technology transfer for one of the first pager
manufacturing facilities.
A. L. CLIFFORD has served as a director since December 1996. Mr.
Clifford has served as president of Clifford & Associates for over five years.
His company is involved in the distribution of electrical and electronic
products and
17
<PAGE>
has been serving the Midwest since 1920. Mr. Clifford is a graduate of the
University of Miami, where he studied business and attended law school.
RICHARD R. ROYALL has been a certified public accountant since 1971.
From 1971 to 1976, Mr. Royall was employed with Haskins & Sells, Laventhol &
Horwath (a partner from 1976 to 1986), and Bracken, Krutilek & Royall (1986). In
1986, Mr. Royall practiced accounting as a sole proprietor. Since 1987, Mr.
Royall has been a partner in Royall & Fleschler, certified public accountants.
In addition to the foregoing, Mr. Royall serves as financial officer and
director of companies operating in the oil and gas industry, software industry
and chemical industries.
The directors of the Company hold office until the next annual meeting
of stockholders of the Company and until their successors in office are elected
and qualified. None of the directors receive any compensation or reimbursement
of out-of-pocket expenses to attend Board meetings. The Company has not
established and does not maintain any compensation, audit, executive or
nominating committees. All officers serve at the discretion of the Board of
Directors. There are no family relationships between or among any of the
directors and executive officers of the Company.
EXECUTIVE COMPENSATION
Dr. Cubley is currently paid $70,000 per year, which amount will likely
be increased in the near future. For the fiscal year ended August 31, 1996, Dr.
Cubley was paid $30,000. No other executive officer received in excess of
$100,000 in compensation during the fiscal year ended August 31, 1996. The
Company has not entered into employment agreements with any of its executive
officers.
STOCK OPTIONS
In July 1996, the Board of Directors and majority stockholders adopted a
stock option plan under which 400,000 shares of Common Stock have been reserved
for issuance. As of the date of this Memorandum, no options have been granted
pursuant to such plan and the Company has no present plans for the issuance
thereof. The Company does not have a defined benefit plan or any retirement or
long-term incentive plans.
CERTAIN TRANSACTIONS
The Company was incorporated in May 1993, but did not conduct any
substantive business operations until it acquired cash, certain inventory and
test equipment from Dr. Cubley totaling approximately $500,000 and concurrently
acquired certain assets and liabilities from an affiliate of Dr. Cubley totaling
approximately $260,000, both of which occurred in April 1996. The Company is
obligated to pay assumed liabilities owed to certain principal stockholders and
founders as follows: (i) $145,000 to an affiliate of Dr. Cubley, (ii) $34,000 in
sales commissions to pay certain stockholders ($16,000 to Dr. Cubley, $16,000 to
Ms. Mize and $2,000 to Mr. Futer), and (iii) $155,000 to Dr. Cubley for
equipment contributed to the Company. Promoters of the Company are Dr. Cubley,
Mr. Futer, Mr. Clifford, Mr. Barton and Re-alt Group, LLC.
In connection with the organization of the Company, 3,150,000 shares of
Common Stock were issued to the Cubley Family Partnership, 990,000 shares of
Common Stock were issued to the Futer Family Partnership, 180,000 shares of
Common Stock were issued to Billie Mize, and 180,000 shares of Common Stock were
issued to John Nagel, such issuances were for nominal services rendered,
contribution of certain net assets and cash valued at approximately $345,000. In
July 1996, the Company issued: $.05 Warrants to purchase 350,000, 110,000,
20,000 and 20,000 shares, respectively, to the Cubley Family Partnership, the
Futer Family Partnership, Ms. Mize and Mr. Nagel, respectively; and $.50
Warrants to purchase 350,000, 110,000, 20,000 and 20,000 shares, respectively,
to the Cubley Family Partnership, the Futer Family Partnership, Ms. Mize and Mr.
Nagel, respectively. Neither of these $.05 Warrants or $.50 Warrants are
exercisable until and unless the shares of Common Stock trade at a minimum of
$5.50 per share for 20 consecutive trading days. The Company issued, for
services rendered, to the Cubley Family Partnership, the Futer Family
Partnership, Ms. Mize and Mr. Nagel: Class A Warrants to purchase 350,000
shares, 110,000 shares, 20,000 shares, and 20,000 shares, respectively; and
Class B Warrants to purchase 350,000 shares, 110,000 shares, 20,000 shares, and
20,000 shares, respectively.
On August 30, 1996, the Company issued to Messrs. Clifford and Barton
and Re-alt Group, LLC the following securities: 278,675, 441,235 and 441,235
shares of Common Stock, respectively; $.05 Warrants to purchase 129,016 shares,
129,016 shares and 129,016 shares of Common Stock, respectively; and $.50
Warrants to purchase 129,017
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<PAGE>
shares, 129,017 shares and 129,017 shares of Common Stock, respectively. In
November 1996, the Company issued Messrs. Clifford and Barton and Re-alt Group,
LLC. an additional 87,325 shares, 125,765 shares and 125,765 shares of Common
Stock, respectively; $.05 Warrants to purchase 37,650 shares, 37,650 shares and
37,650 shares of Common Stock, respectively; and $.50 Warrants to purchase
37,650 shares, 37,650 shares and 37,650 shares of Common Stock, respectively.
Neither of these $.05 Warrants or $.50 Warrants are exercisable until and unless
the shares of Common Stock trade at a minimum of $5.50 per share for 20
consecutive trading days. The Company issued, for services rendered, to Messrs.
Clifford and Barton and Re-alt Group, LLC: Class A Warrants to purchase 166,666
shares, 166,667 shares, 166,666 shares, respectively; and Class B Warrants to
purchase 166,666 shares, 166,667 shares, and 166,666 shares, respectively. In
December 1996, the Company issued 17,000, 17,000 and 17,000 shares of Common
Stock to Messrs. Clifford and Barton and Re-alt Group, LLC. All of these
issuances were for services rendered.
The Company issued $.01 Warrants to purchase an aggregate of 700,000
shares of Common Stock to the following individuals: $.01 Warrants to purchase
490,000 shares to the B and F Trust, Bill and Francis Cubley Grantors, $.01
Warrants to purchase 154,000 shares to the Futer Family Partnership, $.01
Warrants to purchase 28,000 shares to Billie Mize and $.01 Warrants to purchase
28,000 shares to John Nagel. The warrants are currently exercisable and expire
the earlier of: (i) July 2001, or (ii) the date the last sales price or closing
bid price of the Common Stock is $6.50 per share for 20 consecutive trading
days. Upon the date of original issuance, the $.01 Warrants vested only if the
above captioned individuals' collective ownership, on a fully diluted basis
assuming exercise of all outstanding warrants whether exercisable within 60 days
of the date hereof or not (excluding these warrants), was less than 51% of the
outstanding Company Common Stock. This event occurred effective December 1,
1996.
Certain principal stockholders of the Company are also principal
stockholders of Link II and the Company has certain rights to earn up to less
than ten percent of Link II, the terms of such rights are being negotiated as of
the date hereof. As of November 30, 1996, Link II owed the Company $552,741,
comprising approximately 63.5% of the accounts receivable at such date.
In September 1996, Richard Royall was issued $.05 Warrants to purchase
12,500 shares of Common Stock, and $5.00 Warrants to purchase 12,500 shares of
Common Stock. Three other unaffiliated parties each own $.05 Warrants to
purchase 12,500 shares of Common Stock, and $5.00 Warrants to purchase 12,500 of
Common Stock. The $.05 Warrants are not exercisable until and unless the shares
of Common Stock trade at a minimum of $5.50 per share for 20 consecutive trading
days.
LIMITATION OF DIRECTORS' LIABILITY
The Company's Articles of Incorporation eliminates, subject to certain
exceptions, the personal liability of directors of the Company or its
stockholders for monetary damages for breaches of fiduciary duty by such
directors. The Articles of Incorporation do not provide for the elimination of
or any limitation on the personal liability of a director for (i) any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) acts or
omissions not in good faith that constitutes a breach of duty of the director or
which involve intentional misconduct or a knowing violation of law, (iii) any
transaction from which such director derives an improper personal benefit,
whether or not the benefit resulted from an action taken within the scope of the
director's office, or (iv) an act or omission for which the liability of a
director is expressly provided by an applicable statute. This provision of the
Articles of Incorporation will limit the remedies available to the stockholder
who is dissatisfied with a decision of the Board of Directors protected by this
provision; such stockholder's only remedy may be to bring a suit to prevent the
action of the Board. This remedy may not be effective in many situations,
because stockholders are often unaware of a transaction or an event prior to
Board action in respect of such transaction or event. In these cases, the
stockholders and the Company could be injured by a Board's decision and have no
effective remedy.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date of this Prospectus, the
number and percentage of outstanding shares of Company Common Stock owned by (i)
each person known to the Company to beneficially own more than 5% of its
outstanding Common Stock, (ii) each director, (iii) each named executive
officer, and (iv) all officers and directors as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON
BENEFICIALLY OUTSTANDING PERCENTAGE OF OWNERSHIP
---------------------------------- -----------------------
UPON EXERCISE UPON EXERCISE
NAME AND ADDRESS OF OF ALL OF ALL
BENEFICIAL OWNERS(1) ACTUAL(2) WARRANTS ACTUAL(2) WARRANTS
- ----------------- ------------ --------- ------ --------
<S> <C> <C> <C> <C>
Cubley Family Partnership .............................. 3,850,000(3) 4,550,000 33.4% 18.0%
H. Dean Cubley(4) ...................................... -- -- -- --
Philippe Caland(5) ..................................... 3,200,000 3,200,000 24.2% 12.6%
Futer Family Partnership ............................... 1,364,000(6) 1,584,000 12.2% 6.3%
Christopher W. "James" Futer(7) ........................ -- -- -- --
Wallington Investment, Ltd. ............................ 1,020,000(8) 1,020,000 8.9% 4.0%
Barton Family Trust(9) ................................. 900,334(10) 1,233,668 8.1% 4.9%
Re-alt Group, LLC ...................................... 900,334(11) 1,233,668 8.1% 4.9%
A. L. Clifford ......................................... 699,334(12) 1,032,668 6.3% 4.1%
All officers and directors (4 persons) ................. 5,925,834(13) 7,191,668 48.3% 28.4%
</TABLE>
- ----
(1) Each address is the Company, except for (i) Barton Family Trust at 45
Alhambra Plaza, Coral Cables, Florida, 33134, (ii) Re-alt Group, LLC at
8692 M-32 Highway, Elmira Michigan 49730, (iii) A. L. Clifford at 1801
W. 18th Street, Indianapolis, IN 46202, (iv) Wallington Investment, Ltd.
at 6 Walmannstrasse, Zurich, Switzerland CH-8024(7) and (v) Philippe
Caland at 951 Napoli, Pacific Palisades, CA 90272.
(2) Does not give effect to the $.05 Warrants and $.50 Warrants as these
warrants are not exercisable until and unless the shares of Common Stock
trade at a minimum of $5.50 per share for 20 consecutive trading days.
It is assumed, for purposes of this table, that this will not occur
within 60 days of the date of this Prospectus. See "Management --
Certain Transactions" and "Description of Capital Stock -- Other
Warrants."
(3) Includes (i) 350,000 shares underlying Class A Warrants and (ii) 350,000
shares underlying Class B Warrants. See "Management -- Certain
Transactions."
(4) Dr. Cubley disclaims beneficial ownership of these shares and warrants,
as well as voting and disposition power of the shares of Common Stock
and warrants owned by Cubley Family Partnership.
(5) Includes (i) 800,000 shares underlying Class A Warrants, (ii) 800,000
shares underlying Class B Warrants, and (iii) 800,000 shares underlying
Class C Warrants.
(6) Includes (i) 110,000 shares underlying Class A Warrants, (ii) 110,000
shares underlying Class B Warrants, and (iii) 154,000 shares underlying
the $.01 Warrants. See "Management -- Certain Transactions."
(7) Mr. Futer disclaims beneficial ownership of these shares and warrants,
as well as voting and disposition power of the shares of Common Stock
and warrants owned by Futer Family Partnership
(8) Includes 340,000 shares underlying Class A Warrants and 340,000 shares
underlying Class B Warrants, which securities were purchased in a
private offering, which shares of Common Stock were purchased at a
purchase price of $1.50 per share.
(9) An affiliate of Porter Barton.
(10) Includes 166,667 shares underlying Class A Warrants and 166,667 shares
underlying Class B Warrants. See "Management-- Certain Transactions."
(11) Includes 166,667 shares underlying Class A Warrants and 166,667 shares
underlying Class B Warrants. See "Management -- Certain Transactions."
(12) Includes 166,666 shares underlying Class A warrants and 166,666 shares
underlying Class B Warrants. See "Management -- Certain Transactions."
(13) Includes warrants to purchase 1,419,834 shares of Common Stock that are
currently exercisable.
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Company is authorized to issue up to 100,000,000 shares of Common
Stock, of which 10,842,000 shares of Common Stock are issued and outstanding,
and up to 14,480,000 are reserved for issuance upon exercise of the Warrants, of
which 5,065,000 shares are reserved for issuance upon exercise of the Class A
Warrants, 5,065,000 shares
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<PAGE>
are reserved for issuance upon exercise of the Class B Warrants, 800,000 shares
are reserved for issuance upon exercise of the Class C Warrants, 700,000 shares
are reserved for issuance upon exercise of the $.01 Warrants, 1,050,000 shares
re reserved for issuance upon exercise of the $.05 Warrants, 1,375,000 shares
are reserved for issuance upon exercise of the $.50 Warrants, and 425,000
shares are reserved for issuance upon exercise of the $5.00 Warrants.
The holders of shares of Common Stock are entitled to one vote per share
on each matter submitted to a vote of stockholders. In the event of liquidation,
holders of Common Stock are entitled to share ratably in the distribution of
assets remaining after payment of liabilities. Holders of Common Stock have no
cumulative voting rights, and, accordingly, the holders of a majority of the
outstanding shares have the ability to elect all of the directors. Holders of
Common Stock have no preemptive or other rights to subscribe for shares. Holders
of Common Stock are entitled to such dividends as may be declared by the Board
of Directors out of funds legally available therefor.
CLASS A WARRANTS
The following statements and summaries of certain provisions of the
Class A Warrant Agreement are subject to the more detailed provisions of the
Class A Warrant Agreement, a copy of which is filed as an exhibit to this
Registration Statement.
Each Class A Warrant will entitle the holder to purchase from the
Company one share of Common Stock of the Company at an exercise price of $4.00
per share prior to August 31, 2001. The exercise price of the Class A Warrants
was arbitrarily determined by the Company.
Each holder of the Class A Warrants may exercise such Class A Warrant by
surrendering the certificate evidencing such Class A Warrant, with the form of
election to purchase on the reverse side of such certificate properly completed
and executed, together with the payment of the exercise price to the Company.
The exercise price will be payable in cash or by certified or official bank
check payable to the Company. Subject to certain limited exceptions, no
adjustment as to any dividends with respect to the shares of Common Stock of the
Company will be made upon any exercise of Class A Warrants. If less than all of
the Class A Warrants evidenced by a warrant certificate are exercised, a new
certificate will be issued for the remaining number of Class A Warrants.
Certificates evidencing the Class A Warrants may be exchanged for new
certificates of different denominations by presenting the Class A Warrant
certificate to the Company.
The exercise price and the number of shares of Common Stock purchasable
upon exercise of any Class A Warrants and the number of Class A Warrants are
subject to adjustment upon the occurrence of certain events, including stock
dividends, reclassifications, reorganizations, consolidations, mergers and
certain issuances and redemptions of Common Stock and securities convertible or
exchangeable for Common Stock. No adjustment in the exercise price will be
required to be made with respect to the Class A Warrants until cumulative
adjustments amount to $.05. In the event of any capital reorganization, certain
reclassifications of the Common Stock, any consolidation or merger involving the
Company (other than a consolidation or merger which does not result in any
reclassification or change in the outstanding shares of Common Stock), or sale
of the properties and assets of the Company, as, or substantially as, an
entirety to any other corporation, Class A Warrants would thereupon become
exercisable only for the number of shares of stock or other securities, assets
or cash to which a holder of the number of shares of Common Stock of the Company
purchasable (at the time of such reorganization, reclassification,
consolidation, merger or sale) upon exercise of such Class A Warrants, would
have been entitled upon such reorganization, reclassification consolidation,
merger or sale.
Class A Warrant holders do not have any voting or any other rights as
stockholders of the Company and are not entitled to dividends.
If the closing bid price of the Common Stock shall have equaled or
exceeded $5.50 per share for a period of 20 consecutive trading days at any
time, the Company may redeem the Class A Warrants by paying holders $.05 per
Class A Warrant provided that such notice is mailed not later than 20 days after
the end of such period and prescribes a redemption date at least 30 days but not
more than 60 days thereafter. Class A Warrant holders will be entitled to
exercise Class A Warrants at any time up to the business day next preceding the
redemption date. The Class A Warrants provide for the payment, by the Company,
of a 3% solicitation fee.
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<PAGE>
A total of 4,065,000 Class A Warrants to purchase 4,065,000 shares of
Common Stock were issued in a private offering for cash and an additional
1,000,000 Class A Warrants are outstanding to purchase 1,000,000 shares of
Common Stock which were issued to management, certain promoters and other third
parties.
CLASS B WARRANTS
The following statements and summaries of certain provisions of the
Class B Warrant Agreement are subject to the more detailed provisions of the
Class B Warrant Agreement, a copy of which is filed as an exhibit to the
Registration Statement.
Each Class B Warrant will entitle the holder to purchase from the
Company one share of Common Stock of the Company at an exercise price of $6.00
per share prior to August 31, 2001. The exercise price of the Class B Warrants
was determined by the Company.
Each holder of the Class B Warrants may exercise such Class B Warrant by
surrendering the certificate evidencing such Class B Warrant, with the form of
election to purchase on the reverse side of such certificate properly completed
and executed, together with the payment of the exercise price to the Company.
The exercise price will be payable in cash or by certified or official bank
check payable to the Company. Subject to certain limited exceptions, no
adjustment as to any dividends with respect to the shares of Common Stock of the
Company will be made upon any exercise of Class B Warrants. If less than all of
the Class B Warrants evidenced by a warrant certificate are exercised, a new
certificate will be issued for the remaining number of Class B Warrants.
Certificates evidencing the Class B Warrants may be exchanged for new
certificates of different denominations by presenting the Class B Warrant
certificate to the Company.
The exercise price and the number of shares of Common Stock purchasable
upon exercise of any Class B Warrants and the number of Class B Warrants are
subject to adjustment upon the occurrence of certain events, including stock
dividends, reclassifications, reorganizations, consolidations, mergers and
certain issuances and redemptions of Common Stock and securities convertible or
exchangeable for Common Stock. No adjustment in the exercise price will be
required to be made with respect to the Class B Warrants until cumulative
adjustments amount to $.05. In the event of any capital reorganization, certain
reclassifications of the Common Stock, any consolidation or merger involving the
Company (other than a consolidation or merger which does not result in any
reclassification or change in the outstanding shares of Common Stock), or sale
of the properties and assets of the Company, as, or substantially as, an
entirety to any other corporation, Class B Warrants would thereupon become
exercisable only for the number of shares of stock or other securities, assets
or cash to which a holder of the number of shares of Common Stock of the Company
purchasable (at the time of such reorganization, reclassification,
consolidation, merger or sale) upon exercise of such Class B Warrants, would
have been entitled upon such reorganization, reclassification consolidation,
merger or sale.
Class B Warrant holders do not have any voting or any other rights as
stockholders of the Company and are not entitled to dividends.
If the closing bid price of the Common Stock shall have equaled or
exceeded $7.50 per share for a period of 20 consecutive trading days at any
time, the Company may redeem the Class B Warrants by paying holders $.05 per
Class B Warrant provided that such notice is mailed not later than 20 days after
the end of such period and prescribes a redemption date at least 30 days but not
more than 60 days thereafter. Class B Warrant holders will be entitled to
exercise Class B Warrants at any time up to the business day next preceding the
redemption date. The Class B Warrants provide for the payment, by the Company,
of a 3% solicitation fee.
A total of 4,065,000 Class B Warrants were issued to purchase 4,065,000
shares of Common Stock in a private offering for cash and an additional
1,000,000 Class B Warrants are outstanding to purchase 1,000,000 shares of
Common Stock which were issued to certain management, promoters and other third
parties. See Management -- Certain Transactions."
CLASS C WARRANTS
The following statements and summaries of certain provisions of the
Class C Warrant Agreement are subject to the more detailed provisions of the
Class C Warrant Agreement, a copy of which is filed as an exhibit to this
Registration Statement.
Each Class C Warrant will entitle the holder to purchase from the
Company one share of Common Stock of the Company at an exercise price of $2.00
per share prior to August 31, 2001. The exercise price of the Class C Warrants
was arbitrarily determined by the Company.
Each holder of the Class C Warrants may exercise such Class C Warrant by
surrendering the certificate evidencing such Class C Warrant, with the form of
election to purchase on the reverse side of such certificate properly completed
and executed, together with the payment of the exercise price to the Company.
The exercise price will be payable in cash or by certified or official bank
check payable to the Company. Subject to certain limited exceptions, no
adjustment as to any dividends with respect to the shares of Common Stock of the
Company will be made upon any exercise of Class C Warrants. If less than all of
the Class C Warrants evidenced by a warrant certificate are exercised, a new
certificate will be issued for the remaining number of Class C Warrants.
Certificates evidencing the Class C Warrants may be exchanged for new
certificates of different denominations by presenting the Class C Warrant
certificate to the Company.
The exercise price and the number of shares of Common Stock purchasable
upon exercise of any Class C Warrants and the number of Class C Warrants are
subject to adjustment upon the occurrence of certain events, including stock
dividends, reclassifications, reorganizations, consolidations, mergers and
certain issuances and redemptions of Common Stock and securities convertible or
exchangeable for Common Stock. No adjustment in the exercise price will be
required to be made with respect to the Class C Warrants until cumulative
adjustments amount to $.05. In the event of any capital reorganization, certain
reclassifications of the Common Stock, any consolidation or merger involving the
Company (other than a consolidation or merger which does not result in any
reclassification or change in the outstanding shares of Common Stock), or sale
of the properties and assets of the Company, as, or substantially as, an
entirety to any other corporation, Class C Warrants would thereupon become
exercisable only for the number of shares of stock or other securities, assets
or cash to which a holder of the number of shares of Common Stock of the Company
purchasable (at the time of such reorganization, reclassification,
consolidation, merger or sale) upon exercise of such Class C Warrants, would
have been entitled upon such reorganization, reclassification consolidation,
merger or sale.
Class C Warrant holders do not have any voting or any other rights as
stockholders of the Company and are not entitled to dividends.
If the closing bid price of the Common Stock shall have equaled or
exceeded $5.50 per share for a period of 20 consecutive trading days at any
time, the Company may redeem the Class C Warrants by paying holders $.05 per
Class C Warrant provided that such notice is mailed not later than 20 days after
the end of such period and prescribes a redemption date at least 30 days but not
more than 60 days thereafter. Class C Warrant holders will be entitled to
exercise Class C Warrants at any time up to the business day next preceding the
redemption date. The Class C Warrants provide for the payment, by the Company,
of a 3% solicitation fee.
A total of 800,000 Class C Warrants to purchase 800,000 shares of Common
Stock were issued in a private offering for cash.
OTHER WARRANTS
Other warrants currently outstanding include: (i) the $.01 Warrants to
purchase 700,000 shares of Common Stock which expire the earlier of July 2001 or
the date the last sales price or closing bid price of the Common Stock is $6.50
per share for 20 consecutive trading days; (ii) the $.05 Warrants to purchase
1,050,000 shares of Common
22
<PAGE>
Stock which expire in July 1999; (iii) the $.50 Warrants to purchase 1,375,000
shares of Common Stock which expire in July 1999; and the $5.00 Warrants to
purchase 425,000 shares of Common Stock which expire in September 1999.
Additionally, in May 1996, the Company received an aggregate of $375,000 in
bridge financing in the form of interest-free convertible notes from 15
unaffiliated individuals. Holders of $369,000 of these notes converted into
369,000 shares of Company Common Stock, and the balance of $6,000 was retired in
November 1996. In connection with the issuance of such indebtedness, the Company
has agreed to issue such investors $.50 Warrants to purchase 375,000 shares of
Common Stock, and $5.00 warrants to purchase 375,000 shares of Common Stock.
TRANSFER AGENT
Registrar & Transfer Company serves as the transfer agent for the shares
of Common Stock, Class A Warrants, Class B Warrants and Class C Warrants.
PLAN OF DISTRIBUTION AND SELLING STOCKHOLDERS
This Prospectus relates to the resale of 24,953,000 shares of Common
Stock by the Selling Shareholders, of which 10,473,000 shares are currently
issued and outstanding and up to 14,480,000 shares to be issued upon (i)
exercise of Class A Warrants outstanding to purchase up to 5,065,000 shares,
(ii) exercise of Class B Warrants outstanding to purchase up to 5,065,000
shares, (iii) exercise of the $.01 Warrants to purchase up to 700,000 shares,
(iv) exercise of the $.05 Warrants to purchase up to 1,050,000 shares, (v)
exercise of the $.50 Warrants to purchase up to 1,375,000 shares, (vi) exercise
of the $5.00 Warrants to purchase up to 425,000 shares, and (vii) exercise of
Class C Warrants to purchase 800,000 shares of Common Stock. This Prospectus
also relates to the resale of 5,065,000 Class A Warrants, 5,065,500 Class B
Warrants and 800,000 Class C Warrants.
The table below sets forth information with respect to the resale of
Common Stock by the Selling Stockholders, including the resale of shares of
Common Stock issued upon exercise of outstanding Warrants. The Company will not
receive any proceeds from the resale of Common Stock by the Selling Stockholders
for shares currently outstanding (nor from the resale of Class A Warrants, Class
B Warrants or Class C Warrants); however, the Company will receive the exercise
price per share upon issuance of shares underlying the Warrants.
RESALE OF COMMON STOCK BY SELLING STOCKHOLDERS
FOR SHARES CURRENTLY OUTSTANDING ("S"),
SHARESTO BE ISSUED UPON EXERCISE OF CLASS A WARRANTS ("A")
CLASS B WARRANTS ("B"), CLASS C WARRANTS ("C"), $.01 WARRANTS ("$.01"),
$.05 WARRANTS ("$.05"), $.50 WARRANTS ("$.50") AND $5.00 WARRANTS ("$5.00")
<TABLE>
<CAPTION>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
<S> <C> <C> <C> <C>
Cubley Family Trust 3,150,000 S 3,150,000 S 0 0.0
350,000 ($.05) 350,000 ($.05) 0 0.0
350,000 ($.50) 350,000 ($.50) 0 0.0
350,000 A 350,000 A 0 0.0
350,000 B 350,000 B 0 0.0
Philippe Caland 800,000 S 800,000 S 0 0.0
800,000 A 800,000 A 0 0.0
800,000 B 800,000 B 0 0.0
800,000 C 800,000 C 0 0.0
B & F Trust 490,000 ($.01) 490,000 ($.01) 0 0.0
Futer Family Trust 990,000 S 990,000 S 0 0.0
110,000 ($.05) 110,000 ($.05) 0 0.0
110,000 ($.50) 110,000 ($.50) 0 0.0
110,000 A 110,000 A 0 0.0
110,000 B 110,000 B 0 0.0
154,000 ($.01) 154,000 ($.01) 0 0.0
23
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Billie B. Mize 180,000 S 180,000 S 0 0.0
20,000 ($.05) 20,000 ($.05) 0 0.0
20,000 ($.50) 20,000 ($.50) 0 0.0
20,000 A 20,000 A 0 0.0
20,000 B 20,000 B 0 0.0
28,000 ($.01) 28,000 ($.01) 0 0.0
John Nagel 180,000 S 180,000 S 0 0.0
20,000 ($.05) 20,000 ($.05) 0 0.0
20,000 ($.50) 20,000 ($.50) 0 0.0
20,000 A 20,000 A 0 0.0
20,000 B 20,000 B 0 0.0
28,000 ($.01) 28,000 ($.01) 0 0.0
A. L. Clifford 366,000 S 366,000 S 0 0.0
166,666 ($.05) 166,666 ($.05) 0 0.0
166,667 ($.50) 166,667 ($.50) 0 0.0
166,666 A 166,666 A 0 0.0
166,666 B 166,666 B 0 0.0
Porter Barton 567,000 S 567,000 S 0 0.0
166,667 ($.05) 166,667 ($.05) 0 0.0
166,667 ($.50) 166,667 ($.50) 0 0.0
166,667 A 166,667 A 0 0.0
166,667 B 166,667 B 0 0.0
Re-alt Group, LLC 567,000 S 567,000 S 0 0.0
166,666 ($.05) 166,666 ($.05) 0 0.0
166,667 ($.50) 167,667 ($.50) 0 0.0
166,667 A 167,667 A 0 0.0
166,667 B 167,667 B 0 0.0
Richard Royall 12,500 ($.05) 12,500 ($.05) 0 0.0
12,500 ($5.00) 12,500 ($5.00) 0 0.0
Sammy Fleschler 12,500 ($.05) 12,500 ($.05) 0 0.0
12,500 ($5.00) 12,500 ($5.00) 0 0.0
Brewer & Pritchard, P.C. 12,500 ($.05) 12,500 ($.05) 0 0.0
12,500 ($5.00) 12,500 ($5.00) 0 0.0
William J. Bippus 12,500 ($.05) 12,500 ($.05) 0 0.0
12,500 ($5.00) 12,500 ($5.00) 0 0.0
Dominic Severini 10,000 S 10,000 S 0 0.0
Kerrjie Aida Severini 10,000 A 10,000 A 0 0.0
10,000 B 10,000 B 0 0.0
Fred Severini, Jr. 15,000 S 15,000 S 0 0.0
15,000 A 15,000 A 0 0.0
15,000 B 15,000 B 0 0.0
24
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Vincent J. Severini, Jr. 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Larry J. Kinney 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Wanda E. Matelski 10,000 S 10,000 S 0 0.0
Carl D. Parker 10,000 A 10,000 A
10,000 B 10,000 B
Daniel L. Keczmer 20,000 S 20,000 S 0 0.0
Lisa A. Keczmer 20,000 A 20,000 A
20,000 B 20,000 B
Walter A. Kaufman TTE 10,000 S 10,000 S 0 0.0
u/t/a Dated 3/12/80 10,000 A 10,000 A
10,000 B 10,000 B
George Matelski 20,000 S 20,000 S 0 0.0
Matelski Lumber Co. 20,000 A 20,000 A
20,000 B 20,000 B
Henry T. Siwecki 60,000 S 60,000 S 0 0.0
Marie Siwecki 60,000 A 60,000 A
60,000 B 60,000 B
Norbert Franckowiak 10,000 S 10,000 S 0 0.0
Mary Franckowiak 10,000 A 10,000 A
10,000 B 10,000 B
James C. VanOverbeke 10,000 S 10,000 S 0 0.0
Michaline A. VanOverbeke 10,000 A 10,000 A
10,000 B 10,000 B
Roland Jack Derrer 20,000 S 20,000 S 0 0.0
Kay Jean Derrer 20,000 A 20,000 A
20,000 B 20,000 B
Norbert Franckowiak 10,000 S 10,000 S 0 0.0
Janet Franckowiak 10,000 S 10,000 S
10,000 A 10,000 A
Mary Ciszewski 20,000 S 20,000 S 0 0.0
Mary H. Ciszewski 20,000 A 20,000 A
Self Trusteed Revocable
Trust 20,000 B 20,000 B
William Horsell 10,000 S 10,000 S 0 0.0
Cheryl Horsell 10,000 A 10,000 A
10,000 B 10,000 B
25
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Henry A. Siwecki 10,000 S 10,000 S 0 0.0
Christine F. Siwecki 10,000 A 10,000 A
10,000 B 10,000 B
Lawrence C. Fowler 10,000 S 10,000 S 0 0.0
Dianne K. Fowler 10,000 A 10,000 A
10,000 B 10,000 B
Jodie Brown 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
D. C. Hoffmann 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Wayne H. Larson 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
David L. Cole 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
David L. Cole 20,000 S 20,000 S 0 0.0
Pension Plan & Trust 20,000 A 20,000 A
20,000 B 20,000 B
Ted Bestgen 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Robert L. Bach 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
E. Robie Wayne 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
James E. Lauerman 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Mark J. Benson 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Roger A. Klein 10,000 S 10,000 S 0 0.0
Darlene C. Klein 10,000 A 10,000 A
10,000 B 10,000 B
26
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
William E. Hanneman 15,000 S 15,000 S 0 0.0
15,000 A 15,000 A
15,000 B 15,000 B
Larry W. Holberg 40,000 S 40,000 S 0 0.0
40,000 A 40,000 A
40,000 B 40,000 B
David S. Lilja 40,000 S 40,000 S 0 0.0
40,000 A 40,000 A
40,000 B 40,000 B
Wallace F. Miller, IRA 40,000 S 40,000 S 0 0.0
40,000 A 40,000 A
40,000 B 40,000 B
John M. Tuschner 5,000 S 5,000 S 0 0.0
Julie K. Havlicek 5,000 A 5,000 A
5,000 B 5,000 B
Wallace F. Miller 60,000 S 60,000 S 0 0.0
DeLois J. Miller 60,000 A 60,000 A
60,000 B 60,000 B
John M. Tuschner 5,000 S 5,000 S 0 0.0
Cust. for Jeni Tuschner 5,000 A 5,000 A
5,000 B 5,000 B
Richard J. Hafiz 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Frederic K. Azbell 20,000 S 20,000 S 0 0.0
Barbara A. Azbell 20,000 A 20,000 A
20,000 B 20,000 B
Jeffery L. Buchanan 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Srinivasa R. Peddireddi 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Lydell Gayken 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Stephen Port 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
27
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Wayne A. Brutger 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Valerie A. Garrison 10,000 S 10,000 S 0 0.0
Lynn R. Garrison 10,000 A 10,000 A
10,000 B 10,000 B
Celine Kammerer 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Gloria J. Barrett 20,000 S 20,000 S 0 0.0
James L. Barrett 20,000 A 20,000 A
20,000 B 20,000 B
James W. Crook 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
David Dahlbeg 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Michael A. Tesch 35,000 S 35,000 S 0 0.0
Carmen M. Tesch 35,000 A 35,000 A
35,000 B 35,000 B
Jay D. Coatta 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Eye Guys, Inc. 10,000 S 10,000 S 0 0.0
Profit Sharing Plan 10,000 A 10,000 A
Jay Coatta, Administrator 10,000 B 10,000 B
William F. Mahon 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Roger H. Goetz, Jr. 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Scott T. Zbikowski 50,000 S 50,000 S 0 0.0
50,000 A 50,000 A
50,000 B 50,000 B
Robert H. Tucker Trust 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
28
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Lewis H. Kaufman 40,000 S 40,000 S 0 0.0
40,000 A 40,000 A
40,000 B 40,000 B
Gerald M. Mitchell 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Norman M. Glutzer 10,000 S 10,000 S 0 0.0
Barbara Glutzer 10,000 A 10,000 A
10,000 B 10,000 B
Daniel Patrick Keczmer, Sr. 20,000 S 20,000 S 0 0.0
Alice Keczmer 20,000 A 20,000 A
20,000 B 20,000 B
Barbara J. Moriarty 10,000 S 10,000 S 0 0.0
Maurice F. Moriarty 10,000 A 10,000 A
10,000 B 10,000 B
Robert J. Sanderman 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Edward G. Monty 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
R. Dwight Nyquist 5,000 S 5,000 S 0 0.0
Marie Ann B. Nyquist 5,000 A 5,000 A
5,000 B 5,000 B
Gerald A. Auchstetter 15,000 S 15,000 S 0 0.0
15,000 A 15,000 A
15,000 B 15,000 B
Harlan J. Vatland 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Thomas D. Miller 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
John Tancheff 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Derek K. Vehling 10,000 S 10,000 S 0 0.0
Karen A. Robinson 10,000 A 10,000 A
10,000 B 10,000 B
29
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Vern J. Langer, IRA 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Roger H. Klein, Sr. 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Nelson D. Hooe, Jr. 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
August M. Stoffel 20,000 S 20,000 S 0 0.0
Ann M. Stoffel 20,000 A 20,000 A
20,000 B 20,000 B
Jan Silletto 20,000 S 20,000 S 0 0.0
Donna Silletto 20,000 A 20,000 A
20,000 B 20,000 B
Roger L. Chrisholm 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Michael Langer 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Ronald Pellerito 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Mark Estrich 5,000 S 5,000 S 0 0.0
Terry Estrich 5,000 A 5,000 A
5,000 B 5,000 B
Walter Estrich 5,000 S 5,000 S 0 0.0
Florence Estrich 5,000 A 5,000 A
5,000 B 5,000 B
Charles M. Stein 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Joseph Geraci IRA 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Joseph A. Geraci 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
30
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Charles V. Gross 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Bernard Kosar, Sr. 20,000 S 20,000 S 0 0.0
Geraldine Kosar 20,000 A 20,000 A
20,000 B 20,000 B
Bernie J. Kosar, Jr. 60,000 S 60,000 S 0 0.0
60,000 A 60,000 A
60,000 B 60,000 B
Noel D. Collis, M.D. 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Russell E. Erkkila 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
First Trust Corp. TTEE 10,000 S 10,000 S 0 0.0
Donald M. Robinson IRA 10,000 A 10,000 A
10,000 B 10,000 B
Robert J. McKeehan 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
David Sexton 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Judith F. Van Alen 70,000 S 70,000 S 0 0.0
70,000 A 70,000 A
70,000 B 70,000 B
Myung C. Park, M.D. 100,000 S 100,000 S 0 0.0
100,000 A 100,000 A
100,000 B 100,000 B
Mark Joseph Traut 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
William T. Gustafson 10,000 S 10,000 S 0 0.0
Barbara J. Gustafson 10,000 A 10,000 A
10,000 B 10,000 B
Gary L. Pechota 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
31
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Gene A. Fransen 20,000 S 20,000 S 0 0.0
Lois J. Fransen 20,000 A 20,000 A
20,000 B 20,000 B
Gilbert Villavicencio 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
James L. Franckowiak 10,000 S 10,000 S 0 0.0
Deborah H. Sparks 10,000 A 10,000 A
10,000 B 10,000 B
Julian S. Jensen 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Bennett Goldberg 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Marcia & Peter Asbeck 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Robert J. Corliss 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Raymond Rieman 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Jan H. Magnusson 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
James August Bloom 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Prudential Securities C/F 10,000 S 10,000 S 0 0.0
James Ericson, Sr. 10,000 A 10,000 A
10,000 B 10,000 B
Joseph P. Hennen, Jr. 40,000 S 40,000 S 0 0.0
40,000 A 40,000 A
40,000 B 40,000 B
John Laritson 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
32
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Thomas S. Shoopman IRA 20,000 S 20,000 S 0 0.0
First Trust Nat'l TTEE 20,000 A 20,000 A
20,000 B 20,000 B
40,000 S 40,000 S 0 0.0
Randy Segal 40,000 A 40,000 A
40,000 B 40,000 B
Mark Perman 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
David J. Kelly 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
John B. Coatta 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Jean E. Coatta 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Arlene A. Rohkohl 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
August M. Stoffel 10,000 S 10,000 S 0 0.0
Michelle L. Stoffel 10,000 A 10,000 A
10,000 B 10,000 B
Robert C. Hewitt 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Norman A. Allen 10,000 S 10,000 S 0 0.0
Pamela Holberg-Allen 10,000 A 10,000 A
10,000 B 10,000 B
Pamela Keczmer 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Ralph Robarge 10,000 S 10,000 S 0 0.0
Patricia Robarge 10,000 A 10,000 A
10,000 B 10,000 B
Bruce Westman 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
33
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Mark Victor Redman 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Rita Graybow 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Ed Simmons 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Scott A. Quam 5,000 S 5,000 S 0 0.0
Kristine S. Quam 5,000 A 5,000 A
5,000 B 5,000 B
Lester Goetzke 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Scott T. Zbikowski IRA 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Steven Graybow 30,000 S 30,000 S 0 0.0
30,000 A 30,000 A
30,000 B 30,000 B
John C. Clifford 40,000 S 40,000 S 0 0.0
40,000 A 40,000 A
40,000 B 40,000 B
Bryon G. Shaffer 100,000 S 100,000 S 0 0.0
100,000 A 100,000 A
100,000 B 100,000 B
Irene R. Huot 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Betty Geislinger 1,340 S 1,340 S 0 0.0
1,340 A 1,340 A
1,340 B 1,340 B
Irving J. Geislinger IRA 3,660 S 3,660 S 0 0.0
First Trust National TTEE 3,660 A 3,660 A
3,660 B 3,660 B
John Hillen & Assoc., Inc. 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
34
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Mark J. Zurek 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Robert J. Dillon, Jr. 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Oscar R. Mangini 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Robert A. Jones 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Eugene Hennen 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
John R. Powell 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
James G. Barrett 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Hollye J. Barrett-Nelson 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Janine Leckrone 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Gary Kaatz 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Eric J. Overvig IRA 9,000 S 9,000 S 0 0.0
9,000 A 9,000 A
9,000 B 9,000 B
Robert N. Klein 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Irv Geislinger 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
35
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Darlyne L. Holberg 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Rene Dompnier 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Daniel Meyer 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Michael W. Lease 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Gerald A. Klein 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Craig Stelton 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Scott Basche 10,000 S 10,000 S 0 0.0
Lori Basche 10,000 A 10,000 A
10,000 B 10,000 B
Wallington Investment Ltd. 340,000 S 340,000 S 0 0.0
340,000 A 340,000 A
340,000 B 340,000 B
Daniel J. Schank 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Gregory A. Nagel 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
John Gabos 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
James E. Ericson 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Thomas Tautges 5,000 S 5,000 S 0 0.0
Mary Jo Tautges 5,000 A 5,000 A
5,000 B 5,000 B
36
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Jeffrey J. Geislinger 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Bryan T. Johnson 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Ronald K. Lehrke 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Gerald Stoltz P/S Plan 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A
10,000 B 10,000 B
Tapan K. Adhikary 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Frank W. Griner, Jr. 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Richard Patzer 70,000 S 70,000 S 0 0.0
70,000 A 70,000 A
70,000 B 70,000 B
Robert J. Corliss 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
Dick Cravens 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A
20,000 B 20,000 B
J. B. Mitroo 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
Eldean Pearson 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
John M. Tuschner 1,000 S 1,000 S 0 0.0
1,000 A 1,000 A
1,000 B 1,000 B
MJK 5,000 S 5,000 S 0 0.0
5,000 A 5,000 A
5,000 B 5,000 B
37
<PAGE>
SHARES AMOUNT SHARES
BENEFICIALLY OFFERED BENEFICIALLY
OWNED (ASSUMING ALL OWNED
BEFORE SHARES IMMEDIATELY AFTER
STOCKHOLDER RESALE SOLD) RESALE PERCENTAGE
- -------------- ------------- ----------------- ----------- ----------
Fulvia Casella Nicolodi 60,000 S 60,000 S 0 0.0
60,000 A 60,000 A 0 0.0
60,000 B 60,000 B 0 0.0
Bruce Graybow 40,000 S 40,000 S 0 0.0
40,000 A 40,000 A 0 0.0
40,000 B 40,000 B 0 0.0
Larry W. Holberg 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A 0 0.0
10,000 B 10,000 B 0 0.0
John Tanchepp 10,000 S 10,000 S 0 0.0
10,000 A 10,000 A 0 0.0
10,000 B 10,000 B 0 0.0
Zaremba Group LLC 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A 0 0.0
20,000 B 20,000 B 0 0.0
Don M. Schaffer 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A 0 0.0
20,000 B 20,000 B 0 0.0
Robert A. Gill 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A 0 0.0
20,000 B 20,000 B 0 0.0
SRMI 20,000 S 20,000 S 0 0.0
20,000 A 20,000 A 0 0.0
20,000 B 20,000 B 0 0.0
Jon T. Brown 200,000 S 200,000 S 0 0.0
Tuschner & Co., Inc. 92,000 S 92,000 S 0 0.0
Bob Fowler 74,500 S 74,500 S 0 0.0
Richard Duell 13,200 S 13,200 S 0 0.0
Casimer Zaremba 28,300 S 28,300 S 0 0.0
CLFS Equities 25,000 ($.50) 25,000 ($.50) 0 0.0
James Lustig 25,000 ($5.00) 25,000 ($5.00) 0 0.0
Donald F. Francis 12,500 ($.50) 12,500 ($.50) 0 0.0
Barbara J. Francis 12,500 ($5.00) 12,500 ($5.00) 0 0.0
Gary Hart 25,000 ($.50) 25,000 ($.50) 0 0.0
25,000 ($5.00) 25,000 ($5.00) 0 0.0
Robert T. Kolb 25,000 ($.50) 25,000 ($.50) 0 0.0
25,000 ($5.00) 25,000 ($5.00) 0 0.0
Richard L. Mount 25,000 ($.50) 25,000 ($.50) 0 0.0
25,000 ($5.00) 25,000 ($5.00) 0 0.0
Cressey H. Nakagawa 25,000 ($.50) 25,000 ($.50) 0 0.0
25,000 ($5.00) 25,000 ($5.00) 0 0.0
James H. Nicksa 25,000 ($.50) 25,000 ($.50) 0 0.0
25,000 ($5.00) 25,000 ($5.00) 0 0.0
Robert J. Sanderman 25,000 ($.50) 25,000 ($.50) 0 0.0
25,000 ($5.00) 25,000 ($5.00) 0 0.0
Henry T. Siwecki 25,000 ($.50) 25,000 ($.50) 0 0.0
25,000 ($5.00) 25,000 ($5.00) 0 0.0
Solo One LLC 6,000 ($.50) 6,000 ($.50) 0 0.0
6,000 ($5.00) 6,000 ($5.00) 0 0.0
Cecilia Sulak 12,500 ($.50) 12,500 ($.50) 0 0.0
12,500 ($5.00) 12,500 ($5.00) 0 0.0
Gordon Tulgestke 6,250 ($.50) 6,250 ($.50) 0 0.0
6,250 ($5.00) 6,250 ($5.00) 0 0.0
Walter Zaremba 25,000 ($.50) 25,000 ($.50) 0 0.0
25,000 ($5.00) 25,000 ($5.00) 0 0.0
Zaremba Group LLC 62,750 ($.50) 62,750 ($.50) 0 0.0
62,750 ($5.00) 62,750 ($5.00) 0 0.0
Casz LLC 50,000 ($.50) 50,000 ($.50) 0 0.0
50,000 ($5.00) 50,000 ($5.00) 0 0.0
</TABLE>
The 24,953,000 shares offered by the Selling Stockholders, as well as
the 5,065,000 of Class A Warrants, 5,065,000 Class B Warrants and 800,000 Class
C Warrants may be sold by one or more of the following methods, without
limitation: (i) ordinary brokerage transactions and transactions in which the
broker solicits purchases; and (ii) face-to-face transactions between sellers
and purchasers without a broker-dealer. In effecting sales, brokers or dealers
engaged by the Selling Stockholders may arrange for other brokers or dealers to
participate. Such brokers or dealers may receive commissions or discounts from
the Selling Stockholders in amounts to be negotiated. Such brokers and dealers
and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Act, in connection with such sales. The
Selling Stockholder or dealer effecting a transaction in the registered
securities, whether or not participating in a distribution, is required to
deliver a Prospectus. Of the 24,953,000 shares, the resale of which is being
registered hereby, (i) 6,048,000 shares currently outstanding, and 1,920,000
shares underlying the $.05 Warrants and $.50 Warrants are subject to a
three-year contractual lock-up with Tuschner & Company, Inc., restricting the
resale of such shares for nine months after the date of this Prospectus, with
25% freely tradeable after nine months after the date of this Prospectus, 25%
freely tradeable after the next nine months, 25% freely tradeable after the next
nine months, and 25% freely tradeable after the next nine months and 644,000
shares underlying the $.01 Warrants are subject to a contractual lock-up with
Tuschner providing for 12.5% of such underlying shares each becoming freely
tradeable per successive month after the date of this Prospectus. This
Prospectus also relates to the resale of the Class A Warrants, Class B Warrants
and Class C Warrants.
LEGAL MATTERS
Certain legal matters relating to the resale of shares of Common Stock,
Class A Warrants and Class B Warrants hereby will be passed upon for the Company
by Brewer & Pritchard, P.C., Houston, Texas. Members of Brewer & Pritchard, P.C.
beneficially own $.05 Warrants and $5.00 Warrants, each to purchase 12,500
shares of Common Stock.
EXPERTS
The financial statements as of August 31, 1996 included in this
Prospectus have been included herein in reliance upon the report of McManus &
Co., P.C., independent accountants, given on the authority of said firm as
experts in auditing and accounting.
38
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Independent Accountant's Report..............................................F-2
Balance Sheet................................................................F-3
Statement of Earnings........................................................F-4
Statement of Cash Flows......................................................F-5
Shareholder's Equity.........................................................F-6
Notes to the Financial Statements............................................F-7
F-1
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Stockholders of
Eagle Telecom International, Inc.
We have reviewed the accompanying balance sheet of Eagle Telecom International,
Inc. as of November 30, 1996, and the related statements of earnings,
shareholder's equity, and cash flows for the period September 1, 1996 through
November 30, 1996 in accordance with statements on standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants. All information included in these financial Statements is the
representation of the management of Eagle Telecom International, Inc.
A review consists principally of company personnel and analytical procedures
applied to financial data. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with general accepted accounting principles.
The financial statements for the year ended August 31, 1996, were audited by us,
and we expressed an unqualified opinion on them in our report dated September
25, 1996, but we have not performed any auditing procedures since that date.
/s/ MCMANUS & CO., P.C.
McManus & Co., P.C.
Certified Public Accountants
December 16, 1996
F-2
<PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
BALANCE SHEET
ASSETS
November 30, August 31,
1996 1996
(Unaudited) (Audited)
----------- -----------
Current Assets:
Cash and Cash Equivalents (Note 1) ........... $ 2,456,098 $ 2,104,052
Accounts receivable .......................... 870,530 358,933
Inventories (Note 1) ......................... 588,981 525,311
Prepaid Expenses ............................ 6,048 16,623
----------- -----------
Total Current Assets ................... 3,921,657 3,004,919
Property and Equipment (Note 1):
Operating Equipment ......................... 507,764 425,735
Less: Accumulated Depreciation ............. (49,531) (33,104)
----------- -----------
Total Property and Equipment .......... 458,233 392,631
Other Assets:
Security Deposits ........................... 10,568 8,950
Deferred Financing Fees .................... -- 37,500
Organization Expense ........................ 2,826 2,992
----------- -----------
Total Other Assets ..................... 13,394 49,442
----------- -----------
Total Assets ................................ $ 4,393,284 $ 3,446,992
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable - trade .................... $ 70,475 $ 168,013
Accrued Expenses ............................ 55,027 173,527
Customer Deposits ........................... 125,857 211,783
Officer's Loan .............................. 290,000 290,000
Subscriptions Payable ....................... -- 97,500
Notes Payable (Note 2) ...................... 4,478 386,082
Current Portion of Long - Term
Debt (Note 4) ............................ 33,896 20,694
Federal Income Taxes Payable .............. 83,421 --
Deferred Taxes (Note 3) ...................... 1,700 --
----------- -----------
Total Current Liabilities .............. 664,854 1,347,599
Long - Term Liabilities:
Long - Term Debt - Net of Current
Maturities (Note 4) ...................... 25,698 16,704
Deferred Taxes (Note 3) ...................... 9,507 5,683
----------- -----------
Total Long - Term Liabilities .......... 35,205 22,387
Commitments and Contingent Liabilities (Note 4)
Shareholders' Equity:
Preferred Stock - $.001 par value
Authorized 5,000,000 shares
Issued -0- shares ........................ -- --
Common Stock - $.001 par value
Authorized 100,000,000 shares
Issued 8,829,000 and 6,946,145
shares respectively ...................... 8,829 6,946
Paid in Capital ............................ 3,479,533 2,037,856
Retained Earnings ........................... 204,863 32,204
----------- -----------
Total Shareholders' Equity ............. 3,693,225 2,077,006
----------- -----------
Total Liabilities and Shareholders' Equity $ 4,393,284 $ 3,446,992
=========== ===========
See accompanying accountant's report and notes to the financial statements.
F-3
<PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
STATEMENT OF EARNINGS
For the Periods Ended
------------------------
November 30, August 31,
1996 1996
(Unaudited) (Audited)
---------- ----------
Net Sales ........................................... $1,138,852 $1,018,441
Cost of Goods Sold
Materials and Supplies ......................... 280,246 228,765
Direct Labor and Related Costs ............... 125,628 290,743
Depreciation and Amortization .................. 9,856 19,986
Other Manufacturing Costs ...................... 175,347 104,776
---------- ----------
Total Cost of Goods Sold ................. 591,077 644,271
---------- ----------
Gross Profit ........................................ 547,775 374,170
---------- ----------
Operating Expenses
Selling, General and Administrative
Salaries and Related Costs ................ 137,238 181,338
Advertising and Promotion .................. 56,790 65,461
Depreciation and Amortization .............. 6,737 13,451
Other Support Costs ........................ 107,930 83,638
---------- ----------
Total Operating Expenses ................... 308,695 343,888
---------- ----------
Earnings From Operations before other
revenues and taxes ............................ 239,080 30,282
Other Revenues
Interest Income - Net ........................... 22,524 7,605
---------- ----------
Total Other Revenues ....................... 22,524 7,605
---------- ----------
Earnings Before Income Taxes ....................... 261,604 37,887
Provision For Income Taxes ........................ 88,945 5,683
---------- ----------
Net Earnings ........................................ 172,659 32,204
Retained Earnings - Beginning of Period .............. 32,204 --
---------- ----------
Retained Earnings - End of Period .................... $ 204,863 $ 32,204
========== ==========
Net Earnings Per Share
Net Earnings ......................................... $ 0.027 $ 0.0046
Weighted Average Number of Common Shares Outstanding . 7,573,763 6,946,145
See accompanying accountant's report and notes to the financial statements.
F-4
<PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Periods Ended
------------------------------
November 30, August 31,
1996 1996
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities
Net earnings ...................................... $ 172,658 $ 32,204
Adjustments To Reconcile Net Earnings To
Net Cash Used By Operating Activities:
Depreciation and Amortization ............... 16,593 33,437
(Increase) / Decrease in Accounts Receivable (511,597) (357,933)
(Increase) / Decrease in Inventories ........ (63,670) (525,311)
(Increase) / Decrease in Prepaid Expenses .. 10,575 (16,623)
Increase / (Decrease) in Accounts Payable .. (97,538) 168,013
Increase / (Decrease) in Accrued Expenses .. (118,500) 173,527
Increase / (Decrease) in Deferred Taxes ....... -- 5,683
Increase / (Decrease) in Customer Deposits . (85,926) 211,783
Increase / (Decrease) in Federal Income
Taxes Payable .............................. 88,945 --
----------- -----------
Total Adjustments ............................ (761,118) (307,424)
----------- -----------
Net Cash Used By Operating Activities ........ (588,460) (275,220)
Cash Flows From Investing Activities
(Purchase) / Disposal of Property and Equipment (82,029) (425,735)
(Increase) / Decrease in Other Assets ...... 35,882 (49,775)
----------- -----------
Net Cash Used By Investing Activities ........ (46,147) (475,510)
Cash Flows From Financing Activities
Proceeds From Sale of Common Stock ............ 1,443,561 2,043,802
Proceeds From Notes Payable
and Long - Term Obligations ................. (359,408) 423,480
Increase / (Decrease) in Officer's Loans ...... -- 290,000
Increase / (Decrease) in Subscriptions Payable (97,500) 97,500
----------- -----------
Net Cash Provided By Financing Activities ......... 986,653 2,854,782
Net Increase in Cash ........................... 352,046 2,104,052
Cash at the Beginning of the Period ................... 2,104,052 --
----------- -----------
Cash at the End of the Period ......................... $ 2,456,098 $ 2,104,052
=========== ===========
</TABLE>
See accompanying accountant's report and notes to the financial statements.
F-5
EAGLE TELECOM INTERNATIONAL, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Total
September 1, 1995 Common Preferred Paid In Retained Shareholders'
To November 30, 1996 Stock Stock Capital Earnings Equity
- -------------------------------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Shareholders' Equity
As Of August 31, 1995 .......... $ 1,000 $ -- $ -- $ -- $ 1,000
Net Earnings 1996 .............. -- -- -- 32,204 32,204
Common Stock Relinquished ...... (1,000) -- -- -- --
New Stock Issued to Shareholders 4,500 -- 340,895 -- --
Private Placement .............. 2,446 -- 1,926,254 -- --
Syndication Costs .............. -- -- (229,293) -- --
----------- --------- ----------- ----------- -----------
Total Shareholders' Equity
As Of August 31, 1996 .......... $ 6,946 $ -- $ 2,037,856 $ 32,204 $ 2,077,006
Net Earnings As of Nov 30, 1996 -- -- -- 172,659 172,659
Private Placement .............. 1,883 -- 1,670,956 -- 1,672,839
Syndication Costs .............. -- -- (229,279) -- (229,279)
----------- --------- ----------- ----------- -----------
Total Shareholders' Equity
As Of November 30, 1996 ........ $ 8,829 $ -- $ 3,479,533 $ 204,863 $ 3,693,225
=========== ========= =========== =========== ===========
</TABLE>
See accompanying accountant's report and notes to the financial statements.
F-6
<PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Eagle Telecom International, Inc., (the Company), incorporated as a Texas
corporation on May 24, 1993 and commenced business in March of 1996. The
Company is a worldwide supplier of telecommunications equipment and related
software used by service providers in the paging and other wireless
personal communications markets. The Company designs, manufactures, markets
and services its products under the Eagle name. These products include
transmitters, receivers, controllers, software and other equipment used in
personal communications systems (including paging, voice messaging,
cellular and message management and mobile data systems) and radio and
telephone systems.
Prior to March, 1996, the Company was inactive. During March, 1996, the
Company commenced operations by issuance of stock for inventories,
equipment and other assets to its principal shareholder. Concurrent with
this transaction, the Company entered into an asset purchase agreement with
a company to acquire certain other production equipment, inventories and
furniture and equipment.
A) Cash and Cash Equivalents
The Company has $2,140,667 invested in an interest bearing account.
B) Property and Equipment
Property and equipment are carried at cost less accumulated depreciation.
Depreciation is calculated by using the straight-line method for financial
reporting and accelerated methods for income tax purposes. The recovery
classifications for these assets are listed as follows:
Years
-----
Machinery and equipment 7
Furniture and Fixtures 7
Expenditures for maintenance and repairs are charged against income as
incurred.
F-7
<PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C) Inventories
Inventories are valued at the lower of cost or market. The cost is
determined by using the FIFO method. Inventories consist of the following
items:
1996
----
Raw materials $ 290,741
Work in process 298,240
-----------
$ 588,981
===========
D) Income Taxes
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes", which requires a
change from the deferral method to assets and liability method of
accounting for income taxes. Timing differences exist between book income
and tax income which relate primarily to depreciation methods.
E) Net Income Per Common Share
Net income per common share is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the
period.
NOTE 2 - NOTES PAYABLE
Unsecured note to the insurance company bearing interest
at 8.75%, due $2,265 monthly until January 1997. $ 4,478
=======
F-8
<PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3 - INCOME TAXES
As discussed in note 1, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes". Implementation of SFAS 109 did not have a material cumulative
effect on prior periods nor did it result in a change to the current year's
provision.
A) The effective tax rate for the Company is reconcilable to statutory tax
rates as follows:
November 30, August 31,
1996 1996
------ ------
% %
U.S. Federal statutory Tax Rate 34 34
Effective Timing Difference (34) (34)
------ ------
Effective Tax Rate -- --
B) Deferred income taxes are provided for differences between financial
statement and income tax reporting. Principal difference is the manner in
which depreciation is computed for financial and income tax reporting
purposes.
F-9
<PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 4 - LONG - TERM LEASES
The Company leases its primary office space for $7,931 per month under a
non-cancelable lease expiring on March 31, 1999.
In addition the Company has three equipment leases which are used for
manufacturing operations. The Company's obligations under these capital
leases totals $59,954 and expire in May, June and August of 1998. The
current portion of these leases amounts to $33,896.
Future obligations under the lease terms are:
Period Ending
Nov. 30 Amount
1997 $120,870
1998 129,068
1999 31,724
---------
Total $281,662
=========
NOTE 5 - PREFERRED STOCK, STOCK OPTIONS AND WARRANTS
In July, 1996, the Board of Directors and majority shareholders authorized
5,000,000 shares of Preferred Stock with a par value of $.001. As of
November 30, 1996, no Preferred Stock has been issued.
In July, 1996, the Board of Directors and majority shareholders adopted a
stock option plan under which 400,000 shares of Common Stock have been
reserved for issuance. As of November 30, 1996, no options have been
granted pursuant to such plan.
The Company has issued and outstanding the following warrants which have
not been exercised as of November 30, 1996:
700,000 stock purchase warrants which expire July, 2001. The warrants
are to purchase fully paid and non-assessable shares of the common
stock, par value $.001 per share at a purchase price of $.01 per
share. These warrants are exercisable only in the event that the
original founding shareholders collective percentage of ownership is
less than fifty-one percent.
F-10
<PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 5 - PREFERRED STOCK, STOCK OPTIONS AND WARRANTS (CONTINUED)
1,050,000 stock purchase warrants which expire July, 1999. The
warrants are to purchase fully paid and non-assessable shares of the
common stock, par value $.001 per share at a purchase price of $.05
per share. These warrants are subject to restrictions regarding the
timing of exercise, the ability of the Company to become a public
company and future marketability of the common stock.
1,375,000 stock purchase warrants which expire July, 1999. The
warrants are to purchase fully paid and non-assessable shares of the
common stock, par value $.001 per share at a purchase price of $.50
per share. These warrants are subject to restrictions regarding the
timing of exercise, the ability of the Company to become a public
company and future marketability of the common stock.
425,000 stock purchases warrants which expire July, 1999. The warrants
are to purchase fully paid and non-assessable shares of the common
stock, par value $.001 per share at a purchase price of $5.00 per
share. These warrants are subject to restrictions regarding the timing
of exercise, the ability of the Company to become a public company and
future marketability of the common stock.
4,165,000 Class A stock purchase warrants which expire August, 2000.
The warrants are to purchase fully paid and non-assessable shares of
the common stock, par value $.001 per share at a purchase price of
$4.00 per share. These warrants are subject to restrictions regarding
the timing of exercise, the ability of the Company to become a public
company and future marketability of the common stock.
4,165,000 Class B stock purchase warrants which expire August, 2000.
The warrants are to purchase fully paid and non-assessable shares of
the common stock, par value $.001 per share at a purchase price if
$6.00 per share. These warrants are subject to restrictions regarding
the timing of exercise, the ability of the Company to become a public
company and future marketability of the common stock.
F-11
<PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6 - SEGMENT INFORMATION AND RELATED PARTY TRANSACTIONS
The Company had gross revenues of $1,138,852 for the period September 1,
1996 through November 30, 1996. The following parties individually
represent a greater than ten percent of these revenues.
Customer Amount Percentage
-------- ------ ----------
Link Two Communications, Inc. $ 371,866 32.65 %
Houston Telephone 215,000 18.88 %
Petro Com 124,476 10.93 %
----------- ---------
$ 711,342 62.46 %
=========== =========
The Company has the right to earn a minority interest in Link Two
Communications, Inc. based upon future events. As of the date of this
report, such events to transfer ownership has not yet occurred.
NOTE 7 - SUBSEQUENT EVENTS
Subsequent to November 30, 1996, under the terms of a Private Placement
Memorandum, the Company has sold an additional 1,010,000 shares of common
stock at $1.50 per share totaling $1,515,000. The purchase of each share of
common stock includes one Class A warrant and one Class B warrant
convertible into one share of common stock at $4 and $6, respectively.
F-12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
A. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
B. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
C. To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (A) and (B), or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
D. Any indemnification under subsections (A) and (B) (unless ordered
by a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (A) and (B). Such
determination shall be made (i) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a quorum, or
(ii) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (iii) by the stockholders.
E. Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized by the Certificate of Incorporation. Such expenses
(including attorneys' fees) incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the Board of Directors deems
appropriate.
F. The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
G. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his
II-1
<PAGE>
status as such, whether or not the Corporation would have the power to indemnify
him against such liability under the Certificate of Incorporation.
H. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred
in connection with the distribution of the securities being registered. The
expenses shall be paid by the Registrant.
SEC Registration Fee............................................ $20,000
Printing and Engraving Expenses................................. 5,000
Legal Fees and Expenses......................................... 50,000
Accounting Fees and Expenses.................................... 10,000
Blue Sky Fees and Expenses...................................... 20,000
Transfer Agent Fees............................................. 5,000
Miscellaneous................................................... 15,000
TOTAL...................................................... $125,000
- --------------------
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In May 1996, the Company issued $375,000 of convertible indebtedness
of which $369,000 was converted into $375,000 worth of shares of Common Stock
and, in connection with the original issuance of such indebtedness, the Company
issued such investors 375,000 $.50 Warrants and 375,000 $5.00 Warrants. The
Company believes that the above-captioned transactions are exempt from
registration pursuant to Section 4(2) of the Act as a transaction by an issuer
not involving any public offering.
In July 1996, the Company issued an aggregate of 4,500,000 shares of
Common Stock to the founders of the Company for nominal consideration. The
Company believes that the transactions herein are exempt from registration
pursuant to Section 4(2) of the Act as a transaction by an issuer not involving
any public offering.
In July 1996, the Company issued the founders $.05 Warrants to
purchase an aggregate of 500,000 shares of Common Stock at an exercise price of
$.05 per share. The Company believes that the above captioned transaction is
exempt from registration pursuant to Section 4(2) of the Act as a transaction by
an issuer not involving any public offering.
In July 1996, the Company issued the founders $.50 Warrants to
purchase an aggregate of 500,000 shares of Common Stock at an exercise price of
$.50 per share. The Company believes that the above captioned transaction is
exempt from registration pursuant to Section 4(2) of the Act as a transaction by
an issuer not involving any public offering.
In July 1996, the Company issued the founders warrants to purchase an
aggregate of 700,000 shares of Common Stock at an exercise price of $.01 per
share. The Company believes that the above captioned transaction is exempt from
registration pursuant to Section 4(2) of the Act as a transaction by an issuer
not involving any public offering.
In July 1996, the Company issued three individuals and one entity
three year warrants to purchase an aggregate of 50,000 shares of Common Stock at
an exercise price of $.05 per share for services rendered. The Company believes
that the above captioned transaction is exempt from registration pursuant to
Section 4(2) of the Act as a transaction by an issuer not involving any public
offering.
In July 1996, the Company issued three individuals and one entity
three year warrants to purchase an aggregate of 50,000 shares of Common Stock at
an exercise price of $5 per share for services rendered. The Company believes
that the above captioned transaction is exempt from registration pursuant to
Section 4(2) of the Act as a transaction by an issuer not involving any public
offering.
In August 1996, the Company issued 1,285,000 shares of Common Stock,
1,285,000 Class A Warrants to purchase 1,285,000 shares of Common Stock at an
exercise price of $4 per share, and 1,285,000 Class B Warrants to purchase
1,285,000 shares of Common Stock at an exercise price of $6 per share to a
limited number of investors
II-2
<PAGE>
pursuant to a private offering. The Company believes that the above captioned
transaction is exempt from registration pursuant to Section 4(2) of the Act as a
transaction by an issuer not involving any public offering.
In November 1996, the Company issued 1,908,000 shares of Common Stock
to two individuals and an entity for services rendered in connection with the
above captioned private offering. The Company believes that the above captioned
transaction is exempt from registration pursuant to Section 4(2) of the Act as a
transaction by an issuer not involving any public offering.
In November 1996, the Company issued two individuals and one entity
three year warrants to purchase an aggregate of 500,000 shares of Common Stock
at an exercise price of $.05 per share for services rendered. The Company
believes that the above captioned transaction is exempt from registration
pursuant to Section 4(2) of the Act as a transaction by an issuer not involving
any public offering.
In November 1996, the Company issued two individuals and one entity
three year warrants to purchase an aggregate of 500,000 shares of Common Stock
at an exercise price of $.50 per share for services rendered. The Company
believes that the above captioned transaction is exempt from registration
pursuant to Section 4(2) of the Act as a transaction by an issuer not involving
any public offering.
In November 1996, the Company issued 870,000 shares of Common Stock,
870,000 Class A Warrants to purchase 870,000 shares of Common Stock at an
exercise price of $4.00 per share and 870,000 Class B Warrants to purchase
870,000 shares of Common Stock at an exercise price of $6.00 per share to a
limited number of investors pursuant to a private offering. The Company believes
that the above-captioned transactions are exempt from registration pursuant to
Section 4(2) of the Act as a transaction by an issuer not involving any public
offering.
In December 1996, the Company issued 1,110,000 shares of Common Stock,
1,110,000 Class A Warrants to purchase 1,110,000 shares of Common Stock at an
exercise price of $4.00 per share and 1,110,000 Class B Warrants to purchase
1,110,000 shares of Common Stock at an exercise price of $6.00 per share to a
limited number of investors pursuant to a private offering. The Company believes
that the above-captioned transactions are exempt from registration pursuant to
Section 4(2) of the Act as a transaction by an issuer not involving any public
offering.
In December 1996, the Company issued 1,000,000 Class A Warrants to
purchase 1,000,000 shares of Common Stock at a purchase price of $4.00 per share
and 1,000,000 Class B Warrants to purchase 1,000,000 shares of Common Stock at a
purchase price of $6.00 per share to certain insiders for services rendered. The
Company believes that the above-captioned transactions are exempt from
registration pursuant to Section 4(2) of the Act as a transaction by an issuer
not involving any public offering.
In January 1997, the Company issued 800,000 shares of Common Stock,
800,000 Class A Warrants to purchase 800,000 shares of Common Stock at an
exercise price of $4.00 per share, 800,000 Class B Warrants to purchase 800,000
shares of Common Stock at an exercise price of $6.00 per share and 800,000 Class
C Warrants to purchase 800,000 shares of Common Stoch at an exercise price of
$2.00 per share to a limited number of investors pursuant to a private offering.
The Company believes that the above-captioned transactions are exempt from
registration pursuant to Section 4(2) of the Act as a transaction by an issuer
not involving any public offering.
ITEM 27. EXHIBITS
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
3.1(1) Articles of Incorporation of the Company, as amended
3.2(1) By-laws
4.1(2) Form of Common Stock Certificate
4.2(1) Class A Warrant Agreement and Form of Warrant
4.3(1) Class B Warrant Agreement and Form of Warrant
4.4(1) Form of $.01 Warrant
4.5(1) Form of $.05 Warrant
4.6(1) Form of $.50 Warrant
4.7(1) Form of $5.00 Warrant
5.1(2) Legal Opinion of Brewer & Pritchard, P.C.
10.1(1) Asset Purchase Agreement
10.2(1) Stock Option Plan
10.3(1) Form of Purchase Order
23.1(1) Consent of McManus & Co., Inc.
23.2(3) Consent of Brewer & Pritchard, P.C.
- ---------------
(1) Filed herewith.
(2) To be filed by amendment.
(3) Included as Exhibit 5.
II-3
<PAGE>
ITEM 28. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:
i. To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
ii. To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the registration statement; and
iii. To include any additional or changed material
information with respect to the plan of
distribution.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(4) i. That, for the purpose of determining liability
under the Securities Act of 1933, the
information omitted from the form of prospectus
filed as part of this registration statement in
reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4), or 497(h) under the
Securities Act of 1933 shall be deemed to be
part of this registration statement as of the
time it was declared effective.
ii. That, for the purpose of determining liability
under the Securities Act of 1933, each
post-effective amendment that contains a form of
prospectus shall be deemed to be a new
registration statement relating to the
securities offered therein, and the offering of
such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on the 17th day of January,
1997.
Eagle Telecom International, Inc.
By/S/ H. DEAN CUBLEY
H. Dean Cubley,
President, Chief Executive Officer and
Director
----------------------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ H. DEAN CUBLEY President, Chief Executive Officer January 17, 1997
H. Dean Cubley and Director
/S/RICHARD ROYALL Chief Financial Officer (Principal January 17, 1997
Richard Royall Financial and Accounting Officer)
/S/CHRISTOPHER W. FUTER Director January 17, 1997
Christopher W. Futer
II-5
EXHIBIT 3.1
[SEAL]
THE STATE OF TEXAS
SECRETARY OF STATE
JULY 29, 1996
EAGLE TELECOM INTERNATIONAL
910 GEMINI
HOUSTON, TX 77058
RE:
EAGLE TELECOM INTERNATIONAL, INC.
CHARTER NUMBER 01272189-00
IT HAS BEEN OUR PLEASURE TO APPROVE AND PLACE ON RECORD YOUR ARTICLES OF
AMENDMENT.
THE APPROPRIATE EVIDENCE IS ATTACHED FOR YOUR FILES AND THE ORIGINAL HAS BEEN
FILED IN THIS OFFICE.
PAYMENT OF THE FILING FEE IS ACKNOWLEDGED BY THIS LETTER.
IF WE CAN BE OF FURTHER SERVICE AT ANY TIME, PLEASE LET US KNOW.
/s/ ANTONIO O. GARZA, JR.
[SEAL] Antonio O. Garza, Jr., Secretary of State
<PAGE>
[SEAL]
THE STATE OF TEXAS
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
FOR
EAGLE TELECOM INTERNATIONAL, INC.
FORMERLY
WAGER-DATA, INC.
CHARTER NUMBER 01272189
THE UNDERSIGNED, AS SECRETARY OF STATE OF THE STATE OF TEXAS, HEREBY CERTIFIES
THAT THE ATTACHED ARTICLES OF AMENDMENT FOR THE ABOVE NAMED ENTITY HAVE BEEN
RECEIVED IN THIS OFFICE AND ARE FOUND TO CONFORM TO LAW.
ACCORDINGLY THE UNDERSIGNED, AS SECRETARY OF STATE, AND BY VIRTUE OF THE
AUTHORITY VESTED IN THE SECRETARY BY LAW, HEREBY ISSUES THIS CERTIFICATE OF
AMENDMENT.
DATED JULY 18, 1996
EFFECTIVE JULY 18, 1996
/s/ ANTONIO O. GARZA, JR.
[SEAL] Antonio O. Garza, Jr., Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
AMENDING MAY 24, 1993
ARTICLES OF INCORPORATION
OF WAGER-DATA, INC.
CHANGING THE NAME OF THE CORPORATION TO
EAGLE TELECOM INTERNATIONAL, INC.
AND CHANGING
REGISTERED ADDRESS AND REGISTERED AGENT
OF THE CORPORATION
------------------------------------------------------------------------------
ARTICLE I
The name of the corporation is Wager-Data, Inc.
ARTICLE II
Article I of the Articles of Incorporation reading:
"The name of the corporation is WAGER-DATA, INC."
is hereby amended to read as follows:
"The name of the corporation is Eagle Telecom International, Inc."
ARTICLE III
Article VI of the Articles of Incorporation reading:
"The office address of its initial registered office is 1331 Lamar, Suite
1375, Houston, Texas 77010, and the name of the registered agent at such
address is Richard Royall."
is hereby amended to read as follows:
"The office address of the Corporation's registered office is 910 Gemini,
Houston, Texas 77058, and the name of the registered agent at such address
is H. Dean Cubley."
<PAGE>
ARTICLE IV
Article VII of the Articles of Incorporation reading:
"SECTION 1. INITIAL BOARD OF DIRECTORS. The number of directors constituting
the initial Board of Directors of the Corporation is two (2) who need not be
residents of the State of Texas or shareholders of the Corporation.
"SECTION 2. NAMES AND ADDRESSES. The names and addresses of the persons who
are elected to serve as directors until the first annual meeting of the
shareholders, or until their successors have been elected and qualified are:
NAME ADDRESS
---- -------
Sammy Fleschler 1331 Lamar, Suite 1375
Houston, Texas 77010
Richard Royall 1331 Lamar, Suite 1375
Houston, Texas 77010
"SECTION 3. INCREASE OR DECREASE OF DIRECTORS. The number of directors may be
increased or decreased from time to time by amendment to the Bylaws; but no
decrease shall have the effect of shortening the term of any incumbent
director, and the number of directors shall not be decreased to less than two
(2) directors. In the absence of a Bylaw fixing the number of directors, the
number shall be two (2)."
is hereby amended to read as follows:
"SECTION 1. BOARD OR DIRECTORS. The number of directors constituting the Board
of Directors of the Corporation is three (3) who need not be residents of the
State of Texas or shareholders of the Corporation.
"SECTION 2. NAMES AND ADDRESSES. The names and addresses of the persons who
are elected to serve as directors until their successors have been elected and
qualified are:
NAME ADDRESS
---- -------
H. Dean Cubley 910 Gemini
Houston, Texas 77058
Christopher W. Futer 910 Gemini
Houston, Texas 77058
<PAGE>
"SECTION 3. INCREASE OR DECREASE OF DIRECTORS. The number of directors may be
increased or decreased from time to time by amendment to the Bylaws; but no
decrease shall have the effect of shortening the term of any incumbent
director, and the number of directors shall not be decreased to less than two
(2) directors. In the absence of a Bylaw fixing the number of directors, the
number shall be three (3)."
ARTICLE V
The directors and shareholders unanimously adopted a resolution authorizing
the change of the name of the Corporation to Eagle Telecom International, Inc.
on March 22, 1996. The number of shares of the Corporation issued and
outstanding at the adoption of the resolution authorizing changing the name of
the Corporation to Eagle Telecom International, Inc. was 1,000, all of which
voted in favor of such name change.
IN WITNESS WHEREOF: I have hereunto set my hand this __________ day of
_________________, 1996.
/s/ H. DEAN CUBLEY
H. Dean Cubley
President of Eagle Telecom International, Inc.
f/k/a Wager-Data Inc.
<PAGE>
CONSENT RESOLUTION OF THE SHAREHOLDERS OF
WAGER-DATA, INC.
The Board of Directors of Wager-Data, Inc. adopted on March 22, 1996, a
resolution approving and recommending the name of the Corporation be changed to
Eagle Telecom International, Inc. and the Registered Agent be changed from
Richard Royall to H. Dean Cubley, and the office address of the Registered
Office be changed to 910 Gemini, Houston, Texas 77058.
It is in the best interest of the Corporation that such resolution be adopted.
WHEREAS, the shareholders of Wager-Data, Inc. common stock represented by its
President, H. Dean Cubley, as specifically authorized by its Board of Directors,
took the following action.
IT IS RESOLVED, that the name of the Corporation be and hereby is changed to
Eagle Telecom International, Inc., and the Registered Agent is H. Dean Cubley,
and the office address of the Registered Office is 910 Gemini, Houston, Texas
77058.
BE IT FURTHER RESOLVED, that the officers of the Corporation are directed to
file the appropriate documents with the Secretary of State of Texas reflecting
such change.
The shareholders of the Corporation adopted this resolution by unanimous
consent on March 22, 1996, in accordance with Article 9.10 of the Texas Business
Corporation Act, and that any written notice required by such article has been
given.
Signed and dated this __________ day of _____________________, 1996.
/s/ H. DEAN CUBLEY
H. Dean Cubley, President
Wager-Data, Inc.
<PAGE>
[SEAL]
THE STATE OF TEXAS
SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
WAGER-DATA, INC.
CHARTER NUMBER 01272189
THE UNDERSIGNED, AS SECRETARY OF STATE OF THE STATE OF TEXAS, HEREBY CERTIFIES
THAT THE ATTACHED ARTICLES OF INCORPORATION FOR THE ABOVE NAMED CORPORATION HAVE
BEEN RECEIVED IN THIS OFFICE AND ARE FOUND TO CONFORM TO LAW.
ACCORDINGLY, THE UNDERSIGNED, AS SECRETARY OF STATE, AND BY VIRTUE OF THE
AUTHORITY VESTED IN THE SECRETARY BY LAW, HEREBY ISSUES THIS CERTIFICATE OF
INCORPORATION.
ISSUANCE OF THIS CERTIFICATE OF INCORPORATION DOES NOT AUTHORIZE THE USE OF A
CORPORATE NAME IN THIS STATE IN VIOLATION OF THE RIGHTS OF ANOTHER UNDER THE
FEDERAL TRADEMARK ACT OF 1946, THE TEXAS TRADEMARK LAW, THE ASSUMED BUSINESS OR
PROFESSIONAL NAME ACT OR THE COMMON LAW.
DATED MAY 24, 1993
EFFECTIVE MAY 24, 1993
[SEAL] /s/ JOHN HANNAH JR.
John Hannah Jr.
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
WAGER-DATA, INC.
I, the undersigned natural person of the age of eighteen (18) years or
more, a resident of the State of Texas, acting as an incorporator of a
corporation under the Texas Business Corporation Act (hereinafter referred to as
the "Act"), do hereby adopt the following Articles of Incorporation for such
corporation.
ARTICLE I
The name of the Corporation is WAGER-DATA, INC.
ARTICLE II
The period of its duration is perpetual.
ARTICLE III
The purpose or purposes for which the Corporation is organized are:
(a) To manufacture, repair, buy, sell, service, install, deal in, and to
engage in, conduct and carry on the business of manufacturing,
repairing, buying, selling, servicing, installing, importing,
exporting, and dealing in goods, wares and merchandise of every class
and description throughout the world.
(b) To contract for erection, construction, repair, or improvement of any
building, structure or improvement, public or private, and to erect,
construct, repair or improve same or any part thereof, and to acquire,
own and prepare for use any materials for said purposes.
(c) To do any or all things necessary or incident to the business of the
Corporation and to exercise and possess the powers herein set forth as
fully as natural persons, whether as principal, agent or otherwise.
(d) To engage in the transaction of any and all lawful business for which
corporations may be incorporated under the Act.
ARTICLE IV
The aggregate number of shares of common stock which the Corporation shall
have authority to issue is 100,000, with a par value of $1.00 per share.
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<PAGE>
ARTICLE V
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of One Thousand Dollars
($1,000.00), consisting of money, labor done, or property actually received,
which sum is not less than One Thousand Dollars ($1,000.00).
ARTICLE VI
The office address of its initial registered office is 1331 Lamar, Suite
1375, Houston, Texas 77010, and the name of the registered agent at such address
is Richard Royall.
ARTICLE VII
SECTION 1. INITIAL BOARD OF DIRECTORS. The number of directors constituting
the initial Board of Directors of the Corporation is two (2) who need not be
residents of the State of Texas or shareholders of the Corporation.
SECTION 2. NAMES AND ADDRESSES. The names and addresses of the persons who
are elected to serve as directors until the first annual meeting of the
shareholders, or until their successors have been elected and qualified are:
NAME ADDRESS
---- -------
Sammy Fleschler 1331 Lamar, Suite 1375
Houston, Texas 77010
Richard Royall 1331 Lamar, Suite 1375
Houston, Texas 77010
SECTION 3. INCREASE OR DECREASE OF DIRECTORS. The number of directors may
be increased or decreased from time to time by amendment to the Bylaws; but no
decrease shall have the effect of shortening the term of any incumbent director,
and the number of directors shall not be decreased to less than two (2)
directors. In the absence of a Bylaw fixing the number of directors, the number
shall be two (2).
ARTICLE VIII
The shareholders of the Corporation shall have preemptive rights to acquire
additional, unissued, or treasury shares of the Corporation, or securities of
the Corporation convertible into or carrying a right to subscribe to or acquire
shares.
2
<PAGE>
ARTICLE IX
Provisions for the regulations of the internal affairs of the Corporation
are:
SECTION 1. VOTING RIGHTS, VOTING FOR DIRECTORS. Upon each matter submitted
to a vote at every meeting of the shareholders of the Corporation, every holder
of common stock shall be entitled to one (1) vote for each share of common stock
standing in his name on the books of the Corporation. At each election for
directors every shareholder entitled to vote at such election shall have the
right to vote, in person or by proxy, the number of shares owned by him for as
many persons as there are directors to be elected and for whose election he has
a right to vote. It is expressly prohibited for any shareholder to cumulate his
votes in any election of directors.
SECTION 2. BYLAWS. The initial Bylaws of the Corporation shall be adopted
by its Board of Directors. The Board of Directors shall have the power to alter,
amend or repeal the Bylaws from time to time, subject to the reserved power of
the shareholders at any meeting of the shareholders to alter, amend or repeal
any provision of the Bylaws or to adopt new Bylaws.
ARTICLE X
Any person who at any time shall serve or shall have served, as a director,
officer or employee of the Corporation, or of any other enterprise at the
request of the Corporation, and the heirs, executors, and administrators of such
person, shall be indemnified by the Corporation against all costs, and expenses
(including but not limited to counsel fees, amounts or judgments paid, and
amounts paid in settlement) reasonably incurred in connection with the defense
of any claim, action, suit, or proceeding, whether civil, criminal,
administrative, or other, in which he may be involved by virtue of such person
being or having been such director, officer, or employee, provided, however,
that such indemnity shall not be operative with respect to (i) any matter as to
which such person shall have been finally adjudged in such action, suit or
proceeding to be liable for negligence or misconduct in the performance of his
duties as such director, officer, or employee, or (ii) any matter settled or
comprised, unless in the opinion of independent counsel selected by or in a
manner determined by the Board of Directors, there is not reasonable ground for
such person being adjudged liable for negligence or misconduct in the
performance of his duties as such director, officer, or employee, or (iii) any
amount paid or payable to the Corporation or such other enterprise. The
foregoing indemnification shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any Bylaw, agreement, vote of
shareholders, or otherwise.
3
<PAGE>
ARTICLE XI
The name and address of the incorporator of the Corporation is:
NAME ADDRESS
Norman T. Reynolds Two Houston Center
909 Fannin, Suite 1125
Houston, Texas 77010-1006
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of May, 1993.
/s/ NORMAN T. REYNOLDS
Norman T. Reynolds
THE STATE OF TEXAS }
}
COUNTY OF HARRIS }
I, the undersigned, a Notary Public in and for Harris County, Texas, do
hereby certify that on this 21st day of May, 1993, personally appeared before
me, NORMAN T. REYNOLDS, who, being by me duly sworn, declared that he is the
person who signed the foregoing document as incorporator, and that the
statements therein contained are true.
/s/ DIANA B. BRESK
Diana B. Bresk
Notary Public in and for
the State of Texas
(SEAL)
4
<PAGE>
(LOGO)
EAGLE TELECOM INTERNATIONAL TEXAS COMMERCE BANK 1809
910 Gemini HOUSTON, TX 77062
Houston, Texas 77058
(713) 280-0488 32-115/1110 7/16/96
PAY TO THE ORDER OF Secretary of State $150.00
One hundred fifty and 00/100 DOLLARS
Secretary of State - Corporation Division
P. O. Box 13697
Austin, TX 78711
COPY NOT NEGOTIABLE
MEMO 76-0494995 SIGNATURE ILLEGIBLE
EAGLE TELECOM INTERNATIONAL 1809
7/16/96 Secretary of State $150.00
Filing fee for name change
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporations Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
ARTICLE ONE
The name of the corporation is Eagle Telecom International, Inc.
ARTICLE TWO
The following amendments and additions were adopted by the shareholders of
the corporation on August 8, 1996.
The amendment alters in full Article IV of the original Articles of
Incorporation to read as follows:
ARTICLE IV.
The total number of shares of stock which the Corporation shall have
authority to issue is 100,000,000 shares of common stock, par value $.001 per
share ("Common Stock"), and 5,000,000 shares of preferred stock, par value $.001
per share ("Preferred Stock").
Shares of Preferred Stock of the Corporation may be issued from time to
time in one or more classes or series, each of which class or series shall have
such distinctive designation or title as shall be determined by the Board of
Directors of the Corporation ("Board of Directors") prior to the issuance of any
shares thereof. Each such class or series of Preferred Stock shall have such
voting powers, full or limited, or no voting powers, and such preferences and
relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, shall be stated in such
resolution or resolutions providing for the issue of such class or series of
Preferred Stock as may be adopted from time to time by the Board of Directors
prior to the issuance of any shares thereof pursuant to the authority hereby
expressly vested in it, all in accordance with the laws of the State of Texas.
Subject to all of the rights of the Preferred Stock or any series thereof
described in appropriate articles of incorporation, the holders of the Common
Stock shall be entitled to receive, when, as, and if declared by the Board of
Directors, out of funds legally available therefore, the dividends payable in
cash, common stock, or otherwise.
-1-
<PAGE>
The amendment alters in full Article VIII of the original Articles of
Incorporation to read as follows:
ARTICLE VIII.
Preemptive rights shall not be permitted.
The amendment alters in full Article X of the original Articles of
Incorporation to read as follows:
ARTICLE X.
No director of the Corporation shall be liable to the Corporation or its
shareholders or members for monetary damages for any act or omission in such
director's capacity as a director, except for (i) a breach of such director's
duty of loyalty to the Corporation or its shareholders or members; (ii) an act
or omission not in good faith that constitutes a breach of duty of the director
to the Corporation, or an act or omission that involves intentional misconduct
or a knowing violation of the law; (iii) a transaction from which a director
received an improper benefit, whether or not the benefit resulted from an action
taken within the scope of the director's office; or (iv) an act or omission for
which the liability of a director is expressly provided by an applicable
statute.
The amendment alters in full Article XI of the original Articles of
Incorporation to read as follows:
ARTICLE XI.
The Corporation shall indemnify all current and former directors and
officers of the Corporation to the fullest extent of the applicable law,
including, without limitation, Article 2.02-1 of the Texas Business Corporation
Act.
The amendment is an addition to the original Articles of Incorporation,
and the full text of the provision added reads as follows.
ARTICLE XII.
Any action required by the Texas Business Corporation Act, as amended, to
be taken at any annual or special meeting of shareholders of the Corporation, or
any action which may be taken at any annual or special meeting of shareholders
of the Corporation, may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holder or holders of shares having not less than
the minimum number of votes that would be necessary to take such action at a
meeting at which the holders of all shares entitled to vote on the action were
present and voted.
-2-
<PAGE>
The amendment is an addition to the original Articles of Incorporation,
and the full text of the provision added reads as follows.
ARTICLE XIII.
Special meetings of the stockholders of the Corporation for any purpose or
purposes may be called at any time by the Board of Directors or a committee
thereof, the Chairman of the Board, President, or by the holders of at least 30%
of all the shares entitled to vote at the proposed special meeting.
The amendment is an addition to the original Articles of Incorporation,
and the full text of the provision added reads as follows.
ARTICLE XIV.
Without necessity for action by its shareholders, the Corporation may
purchase, directly or indirectly, its own shares to the extent of the aggregate
of unrestricted capital surplus available therefor and unrestricted reduction
surplus available therefor.
The amendment is an addition to the original Articles of Incorporation,
and the full text of the provision added reads as follows.
ARTICLE XV.
Section a. The holders of at least a majority of the shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at any meeting of the shareholders of the Corporation.
Section b. No contract or other transaction between the Corporation and
one or more of its directors, officers or security holders or between the
Corporation and another corporation, partnership, joint venture, trust or other
enterprise of which one or more of the Corporation's direc tors, officers or
security holders are security holders, members, officers, directors or employees
or in which they are otherwise interested, directly or indirectly, shall be
invalid solely because of such relationship or solely because such a director,
officer or security holder is present or participates in any meeting of the
Board of Directors or Committee thereof authorizing the contract or other
transaction or solely because his or their votes are counted for such purpose if
(a) the material facts as to his relationship or interest and as to the contract
or other transaction are known or disclosed to the Board of Directors or
committee thereof, and such board or committee in good faith authorizes the
contract or other transaction by the affirmative vote of a majority of the
disinterested directors even though the disinterested directors are less than a
quorum; or (b) the material facts as to his or their relationship or interest
and as to the contract or other transaction are known or disclosed to the
shareholders entitled to vote thereon, and the contract or other transaction is
approved in good faith
-3-
<PAGE>
by a vote of the shareholders; or (c) the contract or other transaction is fair
as to the Corporation as of the time the Corporation enters into such contract
or other transaction.
ARTICLE THREE
Each statement made by these Amended Articles of Incorporation has been
effected in conformity with the provisions of the Texas Business Corporations
Act. These Articles of Amendment to the Articles of Incorporation were adopted
by the Shareholders of the corporation on July 31, 1996. In connection with
these Articles of Amendment, the Company is effecting a 10,000- for-one forward
split; accordingly, the current shareholders with own 4,500,000 shares of Common
Stock after the split is effected. The 450 shares currently outstanding will be
cancelled and new certificates will be issued reflecting 4,500,000 shares of
Common Stock to be outstanding. This will result in no change to the percentage
ownership in the Corporation by the current shareholders. Also, these Articles
of Amendment will reduce the par value from $1.00 per share to $.001 per share.
Accordingly, the stated capital of the Corporation will be increased from $450
to $4,500 with the balance of the consideration reflected in surplus.
ARTICLE FOUR
The number of shares of the Company outstanding at the time of the
adoption was 450 and the number of shares entitled to vote on the amendment was
450.
ARTICLE FIVE
The holders of all of the shares outstanding entitled to vote on the
amendment have signed a consent in writing adopting the amendment.
EAGLE TELECOM, INC.
By: _____________________________________
Name: H. Dean Cubley
Title:President
-4-
<PAGE>
STATE OF TEXAS ss.
COUNTY OF HARRIS ss.
Before me, a notary public, on this day personally appeared, H. Dean
Cubley, known to me to be the person whose name is subscribed to the foregoing
document and, being by me first duly sworn, declared that the statements therein
contained are true and correct.
Given under my hand and seal this __________ day of __________, 1996.
-------------------------------
Notary Public, State of Texas
My commission expires:
______________________, 1996
-5-
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
EAGLE TELECOM INTERNATIONAL, INC.
A TEXAS CORPORATION
ARTICLE 1.
DEFINITIONS
1.1 DEFINITIONS. Unless the context clearly requires otherwise, in these
Bylaws:
(a) "BOARD" means the board of directors of the Company.
(b) "BYLAWS" means these bylaws as adopted by the Board and
includes amendments subsequently adopted by the Board or by the
Stockholders.
(c) "ARTICLES OF INCORPORATION" means the Articles of
Incorporation of Eagle Telecom International, Inc., as filed with the
Secretary of State of the State of Texas and includes all amendments
thereto and restatements thereof subsequently filed.
(d) "COMPANY" means Eagle Telecom International, Inc., a Texas
corporation.
(e) "SECTION" refers to sections of these Bylaws.
(f) "STOCKHOLDER" means stockholders of record of the Company.
1.2 OFFICES. The title of an office refers to the person or persons who
at any given time perform the duties of that particular office for the Company.
ARTICLE 2.
OFFICES
2.1 PRINCIPAL OFFICE. The Company may locate its principal office within
or without the state of incorporation as the Board may determine.
2.2 REGISTERED OFFICE. The registered office of the Company required by
law to be maintained in the state of incorporation may be, but need not be, the
same as the principal place
1
<PAGE>
of business of the Company. The Board may change the address of the registered
office from time to time.
2.3 OTHER OFFICES. The Company may have offices at such other places,
either within or without the state of incorporation, as the Board may designate
or as the business of the Company may require from time to time.
ARTICLE 3.
MEETINGS OF STOCKHOLDERS
3.1 ANNUAL MEETINGS. The Stockholders of the Company shall hold their
annual meetings for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings at such time, date
and place as the Board shall determine by resolution.
3.2 SPECIAL MEETINGS. The Board, the Chairman of the Board, the
President or a committee of the Board duly designated and whose powers and
authority include the power to call meetings may call special meetings of the
Stockholders of the Company at any time for any purpose or purposes. Special
meetings of the Stockholders of the Company may also be called by the holders of
at least 30% of all shares entitled to vote at the proposed special meeting.
3.3 PLACE OF MEETINGS. The Stockholders shall hold all meetings at such
places, within or without the State of Texas, as the Board or a committee of the
Board shall specify in the notice or waiver of notice for such meetings.
3.4 NOTICE OF MEETINGS. Except as otherwise required by law, the Board
or a committee of the Board shall give notice of each meeting of Stockholders,
whether annual or special, not less than 10 nor more than 50 days before the
date of the meeting. The Board or a
2
<PAGE>
committee of the Board shall deliver a notice to each Stockholder entitled to
vote at such meeting by delivering a typewritten or printed notice thereof to
him personally, or by depositing such notice in the United States mail, in a
postage prepaid envelope, directed to him at his address as it appears on the
records of the Company, or by transmitting a notice thereof to him at such
address by telegraph, telecopy, cable or wireless. If mailed, notice is given on
the date deposited in the United States mail, postage prepaid, directed to the
Stockholder at his address as it appears on the records of the Company. An
affidavit of the Secretary or an Assistant Secretary or of the Transfer Agent of
the Company that he has given notice shall constitute, in the absence of fraud,
prima facie evidence of the facts stated therein.
Every notice of a meeting of the Stockholders shall state the
place, date and hour of the meeting and, in the case of a special meeting, also
shall state the purpose or purposes of the meeting. Furthermore, if the Company
will maintain the list at a place other than where the meeting will take place,
every notice of a meeting of the Stockholders shall specify where the Company
will maintain the list of Stockholders entitled to vote at the meeting.
3.5 STOCKHOLDER NOTICE. Subject to the Articles of Incorporation, the
Stockholders who intend to nominate persons to the Board of Directors or propose
any other action at an annual meeting of Stockholders must timely notify the
Secretary of the Company of such intent. To be timely, a Stockholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Company not less than 50 days nor more than 90 days prior to the date of
such meeting; provided, however, that in the event that less than 75 days'
notice of the date of the meeting is given or made to Stockholders, notice by
the Stockholder to be timely must be received not later than the close of
business on the 15th day following the date on which such
3
<PAGE>
notice of the date of the annual meeting was mailed. Such notice must be in
writing and must include a (i) a brief description of the business desired to
the brought before the annual meeting and the reasons for conducting such
business at the meeting; (ii) the name and record address of the Stockholder
proposing such business; (iii) the class, series and number of shares of capital
stock of the Company which are beneficially owned by the Stockholder; and (iv)
any material interest of the Stockholder in such business. The Board of
Directors reserves the right to refuse to submit any such proposal to
stockholders at an annual meeting if, in its judgment, the information provided
in the notice is inaccurate or incomplete.
3.6 WAIVER OF NOTICE. Whenever these Bylaws require written notice, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall constitute the equivalent of notice.
Attendance of a person at any meeting shall constitute a waiver of notice of
such meeting, except when the person attends the meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. No written
waiver of notice need specify either the business to be transacted at, or the
purpose or purposes of any regular or special meeting of the Stockholders,
directors or members of a committee of the Board.
3.7 ADJOURNMENT OF MEETING. When the Stockholders adjourn a meeting to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Stockholders may transact any business
which they may have transacted at the original meeting. If the adjournment is
for more than 30 days or, if after the adjournment, the Board or a committee of
the Board fixes a new record date for the adjourned meeting, the Board or a
committee of the
4
<PAGE>
Board shall give notice of the adjourned meeting to each Stockholder of record
entitled to vote at the meeting.
3.8 QUORUM. Except as otherwise required by law, the holders of a
majority of all of the shares of the stock entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum for all purposes at any
meeting of the Stockholders. In the absence of a quorum at any meeting or any
adjournment thereof, the holders of a majority of the shares of stock entitled
to vote who are present, in person or by proxy, or, in the absence therefrom of
all the Stockholders, any officer entitled to preside at, or to act as secretary
of, such meeting may adjourn such meeting to another place, date or time.
If the chairman of the meeting gives notice of any adjourned
special meeting of Stockholders to all Stockholders entitled to vote thereat,
stating that the minimum percentage of stockholders for a quorum as provided by
Texas law shall constitute a quorum, then, except as otherwise required by law,
that percentage at such adjourned meeting shall constitute a quorum and a
majority of the votes cast at such meeting shall determine all matters.
3.9 ORGANIZATION. Such person as the Board may have designated or, in
the absence of such a person, the highest ranking officer of the Company who is
present shall call to order any meeting of the Stockholders, determine the
presence of a quorum, and act as chairman of the meeting. In the absence of the
Secretary or an Assistant Secretary of the Company, the chairman shall appoint
someone to act as the secretary of the meeting.
3.10 CONDUCT OF BUSINESS. The chairman of any meeting of Stockholders
shall determine the order of business and the procedure at the meeting,
including such regulations of the manner of voting and the conduct of discussion
as he deems in order.
5
<PAGE>
3.11 LIST OF STOCKHOLDERS. At least 10 days before every meeting of
Stockholders, the Secretary shall prepare a list of the Stockholders entitled to
vote at the meeting or any adjournment thereof, arranged in alphabetical order,
showing the address of each Stockholder and the number of shares registered in
the name of each Stockholder. The Company shall make the list available for
examination by any Stockholder for any purpose germane to the meeting, during
ordinary business hours, for a period of at least 10 days prior to the meeting,
either at a place within the city where the meeting will take place or at the
place designated in the notice of the meeting.
The Secretary shall produce and keep the list at the time and
place of the meeting during the entire duration of the meeting, and any
Stockholder who is present may inspect the list at the meeting. The list shall
constitute presumptive proof of the identity of the Stockholders entitled to
vote at the meeting and the number of shares each Stockholder holds.
A determination of Stockholders entitled to vote at any meeting
of Stockholders pursuant to this Section shall apply to any adjournment thereof.
3.12 FIXING OF RECORD DATE. For the purpose of determining Stockholders
entitled to notice of or to vote at any meeting of Stockholders or any
adjournment thereof, or Stockholders entitled to receive payment of any
dividend, or in order to make a determination of Stockholders for any other
proper purpose, the Board or a committee of the Board may fix in advance a date
as the record date for any such determination of Stockholders. However, the
Board shall not fix such date, in any case, more than 50 days nor less than 10
days prior to the date of the particular action.
If the Board or a committee of the Board does not fix a record
date for the determination of Stockholders entitled to notice of or to vote at a
meeting of Stockholders, the
6
<PAGE>
record date shall be at the close of business on the day next preceding the day
on which notice is given or if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held or the date on which the
Board adopts the resolution declaring a dividend.
3.13 VOTING OF SHARES. Each Stockholder shall have one vote for every
share of stock having voting rights registered in his name on the record date
for the meeting. The Company shall not have the right to vote treasury stock of
the Company, nor shall another corporation have the right to vote its stock of
the Company if the Company holds, directly or indirectly, a majority of the
shares entitled to vote in the election of directors of such other corporation.
Persons holding stock of the Company in a fiduciary capacity shall have the
right to vote such stock. Persons who have pledged their stock of the Company
shall have the right to vote such stock unless in the transfer on the books of
the Company the pledgor expressly empowered the pledgee to vote such stock. In
that event, only the pledgee, or his proxy, may represent such stock and vote
thereon.
A plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote shall determine all
elections and, except when the law or Articles of Incorporation requires
otherwise, the affirmative vote of a majority of the shares present in person or
represented by proxy at the meeting and entitled to vote shall determine all
other matters.
Where a separate vote by a class or classes is required, a
majority of the outstanding shares of such class or classes, present in person
or represented by proxy, shall constitute a quorum entitled to take action with
respect to that vote on that matter and the
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affirmative vote of the majority of shares of such class or classes present in
person or represented by proxy at the meeting shall be the act of such class.
The Stockholders may vote by voice vote on all matters. Upon
demand by a Stockholder entitled to vote, or his proxy, the Stockholders shall
vote by ballot. In that event, each ballot shall state the name of the
Stockholder or proxy voting, the number of shares voted and such other
information as the Company may require under the procedure established for the
meeting.
3.14 INSPECTORS. At any meeting in which the Stockholders vote by
ballot, the chairman may appoint one or more inspectors. Each inspector shall
take and sign an oath to execute the duties of inspector at such meeting
faithfully, with strict impartiality, and according to the best of his ability.
The inspectors shall ascertain the number of shares outstanding and the voting
power of each; determine the shares represented at a meeting and the validity of
proxies and ballots; count all votes and ballots; determine and retain for a
reasonable period a record of the disposition of any challenges made to any
determination by the inspectors; and certify their determination of the number
of shares represented at the meeting, and their count of all votes and ballots.
The certification required herein shall take the form of a subscribed, written
report prepared by the inspectors and delivered to the Secretary of the Company.
An inspector need not be a Stockholder of the Company, and any officer of the
Company may be an inspector on any question other than a vote for or against a
proposal in which he has a material interest.
3.15 PROXIES. A Stockholder may exercise any voting rights in person or
by his proxy appointed by an instrument in writing, which he or his authorized
attorney-in-fact has subscribed
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and which the proxy has delivered to the secretary of the meeting pursuant to
the manner prescribed by law.
A proxy is not valid after the expiration of 13 months after the
date of its execution, unless the person executing it specifies thereon the
length of time for which it is to continue in force (which length may exceed 12
months) or limits its use to a particular meeting. Each proxy is irrevocable if
it expressly states that it is irrevocable and if, and only as long as, it is
coupled with an interest sufficient in law to support an irrevocable power.
The attendance at any meeting of a Stockholder who previously has
given a proxy shall not have the effect of revoking the same unless he notifies
the Secretary in writing prior to the voting of the proxy.
3.16 ACTION BY CONSENT. Any action required to be taken at any annual or
special meeting of stockholders of the Company or any action which may be taken
at any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be delivered to the
Company by delivery to its registered office, its principal place of business,
or an officer or agent of the Company having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Company's registered office shall be by hand or by certified or registered mail,
return receipt requested.
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Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be effective to
take the corporate action referred to therein unless, within 50 days of the
earliest dated consent delivered in the manner required by this section to the
Company, written consents signed by a sufficient number of holders to take
action are delivered to the Company by delivery to its registered office, its
principal place of business or an officer or agent of the Company having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Company's registered office shall be by hand or by
certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE 4.
BOARD OF DIRECTORS
4.1 GENERAL POWERS. The Board shall manage the property, business and
affairs of the Company.
4.2 NUMBER. The number of directors who shall constitute the Board shall
equal not less than two nor more than 10, as the Board may determine by
resolution from time to time.
4.3 ELECTION OF DIRECTORS AND TERM OF OFFICE. The Stockholders of the
Company shall elect the directors at the annual or adjourned annual meeting
(except as otherwise provided herein for the filling of vacancies). Each
director shall hold office until his death, resignation, retirement, removal, or
disqualification, or until his successor shall have been elected and qualified.
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4.4 RESIGNATIONS. Any director of the Company may resign at any time by
giving written notice to the Board or to the Secretary of the Company. Any
resignation shall take effect upon receipt or at the time specified in the
notice. Unless the notice specifies otherwise, the effectiveness of the
resignation shall not depend upon its acceptance.
4.5 REMOVAL. Stockholders holding a majority of the outstanding shares
entitled to vote at an election of directors may remove any director or the
entire Board of Directors at any time, with or without cause.
4.6 VACANCIES. A majority of the remaining directors, although less than
a quorum, or a sole remaining director may fill any vacancy on the Board,
whether because of death, resignation, disqualification, an increase in the
number of directors, or any other cause. Any director elected to fill a vacancy
shall hold office until his death, resignation, retirement, removal, or
disqualification, or until his successor shall have been elected and qualified.
4.7 CHAIRMAN OF THE BOARD. At the initial and annual meeting of the
Board, the directors may elect from their number a Chairman of the Board of
Directors. The Chairman shall preside at all meetings of the Board and shall
perform such other duties as the Board may direct. The Board also may elect a
Vice Chairman and other officers of the Board, with such powers and duties as
the Board may designate from time to time.
4.8 COMPENSATION. The Board may compensate directors for their services
and may provide for the payment of all expenses the directors incur by attending
meetings of the Board or otherwise.
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ARTICLE 5.
MEETINGS OF DIRECTORS
5.1 REGULAR MEETINGS. The Board may hold regular meetings at such
places, dates and times as the Board shall establish by resolution. If any day
fixed for a meeting falls on a legal holiday, the Board shall hold the meeting
at the same place and time on the next succeeding business day. The Board need
not give notice of regular meetings.
5.2 PLACE OF MEETINGS. The Board may hold any of its meetings in or out
of the State of Texas, at such places as the Board may designate, at such places
as the notice or waiver of notice of any such meeting may designate, or at such
places as the persons calling the meeting may designate.
5.3 MEETINGS BY TELECOMMUNICATIONS. The Board or any committee of the
Board may hold meetings by means of conference telephone or similar
telecommunications equipment that enable all persons participating in the
meeting to hear each other. Such participation shall constitute presence in
person at such meeting.
5.4 SPECIAL MEETINGS. The Chairman of the Board, the President, or
one-half of the directors then in office may call a special meeting of the
Board. The person or persons authorized to call special meetings of the Board
may fix any place, either in or out of the State of Texas as the place for the
meeting.
5.5 NOTICE OF SPECIAL MEETINGS. The person or persons calling a special
meeting of the Board shall give written notice to each director of the time,
place, date and purpose of the meeting of not less than three business days if
by mail and not less than 24 hours if by telegraph or in person before the date
of the meeting. If mailed, notice is given on the date deposited in the
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United States mail, postage prepaid, to such director. A director may waive
notice of any special meeting, and any meeting shall constitute a legal meeting
without notice if all the directors are present or if those not present sign
either before or after the meeting a written waiver of notice, a consent to such
meeting, or an approval of the minutes of the meeting. A notice or waiver of
notice need not specify the purposes of the meeting or the business which the
Board will transact at the meeting.
5.6 WAIVER BY PRESENCE. Except when expressly for the purpose of
objecting to the legality of a meeting, a director's presence at a meeting shall
constitute a waiver of notice of such meeting.
5.7 QUORUM. A majority of the directors then in office shall constitute
a quorum for all purposes at any meeting of the Board. In the absence of a
quorum, a majority of directors present at any meeting may adjourn the meeting
to another place, date or time without further notice. No proxies shall be given
by directors to any person for purposes of voting or establishing a quorum at a
directors meetings.
5.8 CONDUCT OF BUSINESS. The Board shall transact business in such order
and manner as the Board may determine. Except as the law requires otherwise, the
Board shall determine all matters by the vote of a majority of the directors
present at a meeting at which a quorum is present. The directors shall act as a
Board, and the individual directors shall have no power as such.
5.9 ACTION BY CONSENT. The Board or a committee of the Board may take
any required or permitted action without a meeting if all members of the Board
or committee consent thereto in writing and file such consent with the minutes
of the proceedings of the Board or committee.
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ARTICLE 6.
COMMITTEES
6.1 COMMITTEES OF THE BOARD. The Board may designate, by a vote of a
majority of the directors then in office, committees of the Board. The
committees shall serve at the pleasure of the Board and shall possess such
lawfully delegable powers and duties as the Board may confer.
6.2 SELECTION OF COMMITTEE MEMBERS. The Board shall elect by a vote of a
majority of the directors then in office a director or directors to serve as the
member or members of a committee. By the same vote, the Board may designate
other directors as alternate members who may replace any absent or disqualified
member at any meeting of a committee. In the absence or disqualification of any
member of any committee and any alternate member in his place, the member or
members of the committee present at the meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may appoint by unanimous
vote another member of the Board to act at the meeting in the place of the
absent or disqualified member.
6.3 CONDUCT OF BUSINESS. Each committee may determine the procedural
rules for meeting and conducting its business and shall act in accordance
therewith, except as the law or these Bylaws require otherwise. Each committee
shall make adequate provision for notice of all meetings to members. A majority
of the members of the committee shall constitute a quorum, unless the committee
consists of one or two members. In that event, one member shall constitute a
quorum. A majority vote of the members present shall determine all matters. A
committee may take action without a meeting if all the members of the committee
consent in writing and file the consent or consents with the minutes of the
proceedings of the committee.
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6.4 AUTHORITY. Any committee, to the extent the Board provides, shall
have and may exercise all the powers and authority of the Board in the
management of the business and affairs of the Company, and may authorize the
affixation of the Company's seal to all instruments which may require or permit
it. However, no committee shall have any power or authority with regard to
amending the Articles of Incorporation, adopting an agreement of merger or
consolidation, recommending to the Stockholders the sale, lease or exchange of
all or substantially all of the Company's property and assets, recommending to
the Stockholders a dissolution of the Company or a revocation of a dissolution
of the Company, or amending these Bylaws of the Company. Unless a resolution of
the Board expressly provides, no committee shall have the power or auth ority to
declare a dividend, to authorize the issuance of stock, or to adopt a
certificate of ownership and merger.
6.5 MINUTES. Each committee shall keep regular minutes of its
proceedings and report the same to the Board when required.
ARTICLE 7.
OFFICERS
7.1 OFFICERS OF THE COMPANY. The officers of the Company shall consist
of a Chief Executive Officer, a President, a Chief Financial Officer, a
Secretary and such Vice Presidents, Assistant Secretaries, Assistant Treasurers,
and other officers as the Board may designate and elect from time to time. The
same person may hold at the same time any two or more offices, except the
offices of President and Secretary.
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7.2 ELECTION AND TERM. The Board shall elect the officers of the
Company. Each officer shall hold office until his death, resignation,
retirement, removal or disqualification, or until his successor shall have been
elected and qualified.
7.3 COMPENSATION OF OFFICERS. The Board shall fix the compensation of
all officers of the Company. No officer shall serve the Company in any other
capacity and receive compensation, unless the Board authorizes the additional
compensation.
7.4 REMOVAL OF OFFICERS AND AGENTS. The Board may remove any officer or
agent it has elected or appointed at any time, with or without cause.
7.5 RESIGNATION OF OFFICERS AND AGENTS. Any officer or agent the Board
has elected or appointed may resign at any time by giving written notice to the
Board, the Chairman of the Board, the President, or the Secretary of the
Company. Any such resignation shall take effect at the date of the receipt of
such notice or at any later time specified. Unless otherwise specified in the
notice, the Board need not accept the resignation to make it effective.
7.6 BOND. The Board may require by resolution any officer, agent, or
employee of the Company to give bond to the Company, with sufficient sureties
conditioned on the faithful performance of the duties of his respective office
or agency. The Board also may require by resolution any officer, agent or
employee to comply with such other conditions as the Board may require from time
to time.
7.7 PRESIDENT. The President shall be the chief operating officer of the
Company and, subject to the Board's control, shall supervise and direct all of
the business and affairs of the Company. When present, he shall sign (with or
without the Secretary, an Assistant Secretary, or any other officer or agent of
the Company which the Board has authorized) deeds, mortgages,
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bonds, contracts or other instruments which the Board has authorized an officer
or agent of the Company to execute. However, the President shall not sign any
instrument which the law, these Bylaws, or the Board expressly require some
other officer or agent of the Company to sign and execute. In general, the
President shall perform all duties incident to the office of President and such
other duties as the Board may prescribe from time to time.
7.8 VICE PRESIDENTS. In the absence of the President or in the event of
his death, inability or refusal to act, the Vice Presidents in the order of
their length of service as Vice Presidents, unless the Board determines
otherwise, shall perform the duties of the President. When acting as the
President, a Vice President shall have all the powers and restrictions of the
Presidency. A Vice President shall perform such other duties as the President or
the Board may assign to him from time to time.
7.9 SECRETARY. The Secretary shall (a) keep the minutes of the meetings
of the Stockholders and of the Board in one or more books for that purpose, (b)
give all notices which these Bylaws or the law requires, (c) serve as custodian
of the records and seal of the Company, (d) affix the seal of the corporation to
all documents which the Board has authorized execution on behalf of the Company
under seal, (e) maintain a register of the address of each Stockholder of the
Company, (f) sign, with the President, a Vice President, or any other officer or
agent of the Company which the Board has authorized, certificates for shares of
the Company, (g) have charge of the stock transfer books of the Company, and (h)
perform all duties which the President or the Board may assign to him from time
to time.
7.10 ASSISTANT SECRETARIES. In the absence of the Secretary or in the
event of his death, inability or refusal to act, the Assistant Secretaries in
the order of their length of service as
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Assistant Secretary, unless the Board determines otherwise, shall perform the
duties of the Secretary. When acting as the Secretary, an Assistant Secretary
shall have the powers and restrictions of the Secretary. An Assistant Secretary
shall perform such other duties as the President, Secretary or Board may assign
from time to time.
7.11 TREASURER. The Treasurer shall (a) have responsibility for all
funds and securities of the Company, (b) receive and give receipts for moneys
due and payable to the corporation from any source whatsoever, (c) deposit all
moneys in the name of the Company in depositories which the Board selects, and
(d) perform all of the duties which the President or the Board may assign to him
from time to time.
7.12 ASSISTANT TREASURERS. In the absence of the Treasurer or in the
event of his death, inability or refusal to act, the Assistant Treasurers in the
order of their length of service as Assistant Treasurer, unless the Board
determines otherwise, shall perform the duties of the Treasurer. When acting as
the Treasurer, an Assistant Treasurer shall have the powers and restrictions of
the Treasurer. An Assistant Treasurer shall perform such other duties as the
Treasurer, the President, or the Board may assign to him from time to time.
7.13 DELEGATION OF AUTHORITY. Notwithstanding any provision of these
Bylaws to the contrary, the Board may delegate the powers or duties of any
officer to any other officer or agent.
7.14 ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS. Unless the
Board directs otherwise, the President shall have the power to vote and
otherwise act on behalf of the Company, in person or by proxy, at any meeting of
stockholders of or with respect to any action of stockholders of any other
corporation in which the Company holds securities. Furthermore, unless
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the Board directs otherwise, the President shall exercise any and all rights and
powers which the Company possesses by reason of its ownership of securities in
another corporation.
7.15 VACANCIES. The Board may fill any vacancy in any office because of
death, resignation, removal, disqualification or any other cause in the manner
which these Bylaws prescribe for the regular appointment to such office.
ARTICLE 8.
CONTRACTS, LOANS, DRAFTS,
DEPOSITS AND ACCOUNTS
8.1 CONTRACTS. The Board may authorize any officer or officers, agent or
agents, to enter into any contract or execute and deliver any instrument in the
name and on behalf of the Company. The Board may make such authorization general
or special.
8.2 LOANS. Unless the Board has authorized such action, no officer or
agent of the Company shall contract for a loan on behalf of the Company or issue
any evidence of indebtedness in the Company's name.
8.3 DRAFTS. The President, any Vice President, the Treasurer, any
Assistant Treasurer, and such other persons as the Board shall determine shall
issue all checks, drafts and other orders for the payment of money, notes and
other evidences of indebtedness issued in the name of or payable by the Company.
8.4 DEPOSITS. The Treasurer shall deposit all funds of the Company not
otherwise employed in such banks, trust companies, or other depositories as the
Board may select or as any officer, assistant, agent or attorney of the Company
to whom the Board has delegated such power may select. For the purpose of
deposit and collection for the account of the Company, the
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President or the Treasurer (or any other officer, assistant, agent or attorney
of the Company whom the Board has authorized) may endorse, assign and deliver
checks, drafts and other orders for the payment of money payable to the order of
the Company.
8.5 GENERAL AND SPECIAL BANK ACCOUNTS. The Board may authorize the
opening and keeping of general and special bank accounts with such banks, trust
companies, or other depositor ies as the Board may select or as any officer,
assistant, agent or attorney of the Company to whom the Board has delegated such
power may select. The Board may make such special rules and regulations with
respect to such bank accounts, not inconsistent with the provisions of these
Bylaws, as it may deem expedient.
ARTICLE 9.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
9.1 CERTIFICATES FOR SHARES. Every owner of stock of the Company shall
have the right to receive a certificate or certificates, certifying to the
number and class of shares of the stock of the Company which he owns. The Board
shall determine the form of the certificates for the shares of stock of the
Company. The Secretary, transfer agent, or registrar of the Company shall number
the certificates representing shares of the stock of the Company in the order in
which the Company issues them. The President or any Vice President and the
Secretary or any Assistant Secretary shall sign the certificates in the name of
the Company. Any or all certificates may contain facsimile signatures. In case
any officer, transfer agent, or registrar who has signed a certificate, or whose
facsimile signature appears on a certificate, ceases to serve as such officer,
transfer agent, or registrar before the Company issues the certificate, the
Company may issue the certificate with the same effect as though the person who
signed such certificate, or whose
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facsimile signature appears on the certificate, was such officer, transfer
agent, or registrar at the date of issue. The Secretary, transfer agent, or
registrar of the Company shall keep a record in the stock transfer books of the
Company of the names of the persons, firms or corporations owning the stock
represented by the certificates, the number and class of shares represented by
the certificates and the dates thereof and, in the case of cancellation, the
dates of cancellation. The Secretary, transfer agent, or registrar of the
Company shall cancel every certificate surrendered to the Company for exchange
or transfer. Except in the case of a lost, destroyed, stolen or mutilated
certificate, the Secretary, transfer agent, or registrar of the Company shall
not issue a new certificate in exchange for an existing certificate until he has
cancelled the existing certificate.
9.2 TRANSFER OF SHARES. A holder of record of shares of the Company's
stock, or his attorney-in-fact authorized by power of attorney duly executed and
filed with the Secretary, transfer agent or registrar of the Company, may
transfer his shares only on the stock transfer books of the Company. Such person
shall furnish to the Secretary, transfer agent, or registrar of the Company
proper evidence of his authority to make the transfer and shall properly endorse
and surrender for cancellation his existing certificate or certificates for such
shares. Whenever a holder of record of shares of the Company's stock makes a
transfer of shares for collateral security, the Secretary, transfer agent, or
registrar of the Company shall state such fact in the entry of transfer if the
transferor and the transferee request.
9.3 LOST CERTIFICATES. The Board may direct the Secretary, transfer
agent, or registrar of the Company to issue a new certificate to any holder of
record of shares of the Company's stock claiming that he has lost such
certificate, or that someone has stolen, destroyed or mutilated
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such certificate, upon the receipt of an affidavit from such holder to such
fact. When authorizing the issue of a new certificate, the Board, in its
discretion may require as a condition precedent to the issuance that the owner
of such certificate give the Company a bond of indemnity in such form and amount
as the Board may direct.
9.4 REGULATIONS. The Board may make such rules and regulations, not
inconsistent with these Bylaws, as it deems expedient concerning the issue,
transfer and registration of certificates for shares of the stock of the
corporation. The Board may appoint or authorize any officer or officers to
appoint one or more transfer agents, or one or more registrars, and may require
all certificates for stock to bear the signature or signatures of any of them.
9.5 HOLDER OF RECORD. The Company may treat as absolute owners of shares
the person in whose name the shares stand of record as if that person had full
competency, capacity and authority to exercise all rights of ownership, despite
any knowledge or notice to the contrary or any description indicating a
representative, pledge or other fiduciary relation, or any reference to any
other instrument or to the rights of any other person appearing upon its record
or upon the share certificate. However, the Company may treat any person
furnishing proof of his appointment as a fiduciary as if he were the holder of
record of the shares.
9.6 TREASURY SHARES. Treasury shares of the Company shall consist of
shares which the Company has issued and thereafter acquired but not canceled.
Treasury shares shall not carry voting or dividend rights.
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ARTICLE 10.
INDEMNIFICATION
10.1 DEFINITIONS. In this Article:
(a) "INDEMNITEE" means (i) any present or former Director,
advisory director or officer of the Company, (ii) any person who while
serving in any of the capacities referred to in clause (i) hereof served
at the Company's request as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, and (iii) any person
nominated or designated by (or pursuant to authority granted by) the
Board of Directors or any committee thereof to serve in any of the
capacities referred to in clauses (i) or (ii) hereof.
(b) "OFFICIAL CAPACITY" means (i) when used with respect to a
Director, the office of Director of the Company, and (ii) when used with
respect to a person other than a Director, the elective or appointive
office of the Company held by such person or the employment or agency
relationship undertaken by such person on behalf of the Company, but in
each case does not include service for any other foreign or domestic
corporation or any partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise.
(c) "PROCEEDING" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, any appeal in such an action, suit or
proceeding, and any inquiry or investigation that could lead to such an
action, suit or proceeding.
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10.2 INDEMNIFICATION. The Company shall indemnify every Indemnitee
against all judgments, penalties (including excise and similar taxes), fines,
amounts paid in settlement and reasonable expenses actually incurred by the
Indemnitee in connection with any Proceeding in which he was, is or is
threatened to be named defendant or respondent, or in which he was or is a
witness without being named a defendant or respondent, by reason, in whole or in
part, of his serving or having served, or having been nominated or designated to
serve, in any of the capacities referred to in Section 10.1, if it is determined
in accordance with Section 10.4 that the Indemnitee (a) conducted himself in
good faith, (b) reasonably believed, in the case of conduct in his Official
Capacity, that his conduct was in the Company's best interests and, in all other
cases, that his conduct was at least not opposed to the Company's best
interests, and (c) in the case of any criminal proceeding, had no reasonable
cause to believe that his conduct was unlawful; provided, however, that in the
event that an Indemnitee is found liable to the Company or is found liable on
the basis that personal benefit was improperly received by the Indemnitee the
indemnification (i) is limited to reasonable expenses actually incurred by the
Indemnitee in connection with the Proceeding and (ii) shall not be made in
respect of any Proceeding in which the Indemnitee shall have been found liable
for willful or intentional misconduct in the perfor mance of his duty to the
Company. Except as provided in the immediately preceding proviso to the first
sentence of this Section 10.2, no indemnification shall be made under this
Section 10.2 in respect of any Proceeding in which such Indemnitee shall have
been (x) found liable on the basis that personal benefit was improperly received
by him, whether or not the benefit resulted from an action taken in the
Indemnitee's Official Capacity, or (y) found liable to the Company. The
termination of any Proceeding by judgment, order, settlement or conviction, or
on a plea of
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nolo contendere or its equivalent, is not of itself determinative that the
Indemnitee did not meet the requirements set forth in clauses (a), (b) or (c) in
the first sentence of this Section 10.2. An Indemnitee shall be deemed to have
been found liable in respect of any claim, issue or matter only after the
Indemnitee shall have been so adjudged by a court of competent jurisdiction
after exhaustion of all appeals therefrom. Reasonable expenses shall, include,
without limitation, all court costs and all fees and disbursements of attorneys
for the Indemnitee. The indemnification provided herein shall be applicable
whether or not negligence or gross negligence of the Indemnitee is alleged or
proven.
10.3 SUCCESSFUL DEFENSE. Without limitation of Section 10.2 and in
addition to the indemnification provided for in Section 10.2, the Company shall
indemnify every Indemnitee against reasonable expenses incurred by such person
in connection with any Proceeding in which he is a witness or a named defendant
or respondent because he served in any of the capacities referred to in Section
10.1, if such person has been wholly successful, on the merits or otherwise, in
defense of the Proceeding.
10.4 DETERMINATIONS. Any indemnification under Section 10.2 (unless
ordered by a court of competent jurisdiction) shall be made by the Company only
upon a determination that indemnification of the Indemnitee is proper in the
circumstances because he has met the applicable standard of conduct. Such
determination shall be made (a) by the Board of Directors by a majority vote of
a quorum consisting of Directors who, at the time of such vote, are not named
defendants or respondents in the Proceeding; (b) if such a quorum cannot be
obtained, then by a majority vote of a committee of the Board of Directors, duly
designated to act in the matter by a majority vote of all Directors (in which
designated Directors who are named defendants or
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respondents in the Proceeding may participate), such committee to consist solely
of two (2) or more Directors who, at the time of the committee vote, are not
named defendants or respondents in the Proceeding; (c) by special legal counsel
selected by the Board of Directors or a committee thereof by vote as set forth
in clauses (a) or (b) of this Section 10.4 or, if the requisite quorum of all of
the Directors cannot be obtained therefor and such committee cannot be
established, by a majority vote of all of the Directors (in which Directors who
are named defendants or respondents in the Proceeding may participate); or (d)
by the shareholders in a vote that excludes the shares held by Directors that
are named defendants or respondents in the Proceeding. Determination as to
reasonableness of expenses shall be made in the same manner as the determination
that indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, determination
as to reasonableness of expenses must be made in the manner specified in clause
(c) of the preceding sentence for the selection of special legal counsel. In the
event a determination is made under this Section 10.4 that the Indemnitee has
met the applicable standard of conduct as to some matters but not as to others,
amounts to be indemnified may be reasonably prorated.
10.5 ADVANCEMENT OF EXPENSES. Reasonable expenses (including court costs
and attorneys' fees) incurred by an Indemnitee who was or is a witness or was,
is or is threatened to be made a named defendant or respondent in a Proceeding
shall be paid by the Company at reasonable intervals in advance of the final
disposition of such Proceeding, and without making any of the determinations
specified in Section 10.4, after receipt by the Company of (a) a written
affirmation by such Indemnitee of his good faith belief that he has met the
standard of conduct necessary for indemnification by the Company under this
Article and (b) a written undertaking by
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or on behalf of such Indemnitee to repay the amount paid or reimbursed by the
Company if it shall ultimately be determined that he is not entitled to be
indemnified by the Company as authorized in this Article. Such written
undertaking shall be an unlimited obligation of the Indemnitee but need not be
secured and it may be accepted without reference to financial ability to make
repayment. Notwithstanding any other provision of this Article, the Company may
pay or reimburse expenses incurred by an Indemnitee in connection with his
appearance as a witness or other participation in a Proceeding at a time when he
is not named a defendant or respondent in the Proceeding.
10.6 EMPLOYEE BENEFIT PLANS. For purposes of this Article, the Company
shall be deemed to have requested an Indemnitee to serve an employee benefit
plan whenever the performance by him of his duties to the Company also imposes
duties on or otherwise involves services by him to the plan or participants or
beneficiaries of the plan. Excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall be deemed fines.
Action taken or omitted by an Indemnitee with respect to an employee benefit
plan in the performance of his duties for a purpose reasonably believed by him
to be in the interest of the participants and beneficiaries of the plan shall be
deemed to be for a purpose which is not opposed to the best interests of the
Company.
10.7 OTHER INDEMNIFICATION AND INSURANCE. The indemnification provided
by this Article shall (a) not be deemed exclusive of, or to preclude, any other
rights to which those seeking indemnification may at any time be entitled under
the Company's Articles of Incorporation, any law, agreement or vote of
shareholders or disinterested Directors, or otherwise, or under any policy or
policies of insurance purchased and maintained by the Company on behalf of any
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Indemnitee, both as to action in his Official Capacity and as to action in any
other capacity, (b) continue as to a person who has ceased to be in the capacity
by reason of which he was an Indemnitee with respect to matters arising during
the period he was in such capacity, (c) inure to the benefit of the heirs,
executors and administrators of such a person and (d) not be required if and to
the extent that the person otherwise entitled to payment of such amounts
hereunder has actually received payment therefor under any insurance policy,
contract or otherwise.
10.8 NOTICE. Any indemnification of or advance of expenses to an
Indemnitee in accordance with this Article shall be reported in writing to the
shareholders of the Company with or before the notice or waiver of notice of the
next shareholders' meeting or with or before the next submission to shareholders
of a consent to action without a meeting and, in any case, within the 12-month
period immediately following the date of the indemnification or advance.
10.9 CONSTRUCTION. The indemnification provided by this Article shall be
subject to all valid and applicable laws, including, without limitation, Article
2.02-1 of the Texas Business Company Act, and, in the event this Article or any
of the provisions hereof or the indemnification contemplated hereby are found to
be inconsistent with or contrary to any such valid laws, the latter shall be
deemed to control and this Article shall be regarded as modified accordingly,
and, as so modified, to continue in full force and effect.
10.10 CONTINUING OFFER, RELIANCE, ETC. The provisions of this Article
(a) are for the benefit of, and may be enforced by, each Indemnitee of the
Company, the same as if set forth in their entirety in a written instrument duly
executed and delivered by the Company and such Indemnitee and (b) constitute a
continuing offer to all present and future Indemnitees. The Company, by its
adoption of these Bylaws, (x) acknowledges and agrees that each Indemnitee of
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the Company has relied upon and will continue to rely upon the provisions of
this Article in becoming, and serving in any of the capacities referred to in
Section 10.1(a) of this Article, (y) waives reliance upon, and all notices of
acceptance of, such provisions by such Indemnitees and (z) acknowledges and
agrees that no present or future Indemnitee shall be prejudiced in his right to
enforce the provisions of this Article in accordance with their terms by any act
or failure to act on the part of the Company.
10.11 EFFECT OF AMENDMENT. No amendment, modification or repeal of this
Article or any provision hereof shall in any manner terminate, reduce or impair
the right of any past, present or future Indemnitees to be indemnified by the
Company, nor the obligation of the Company to indemnify any such Indemnitees,
under and in accordance with the provisions of the Article as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
ARTICLE 11.
TAKEOVER OFFERS
In the event the Company receives a takeover offer, the Board of
Directors shall consider all relevant factors in evaluating such offer,
including, but not limited to, the terms of the offer, and the potential
economic and social impact of such offer on the Company's stockholders,
employees, customers, creditors and community in which it operates.
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ARTICLE 12.
NOTICES
12.1 GENERAL. Whenever these Bylaws require notice to any Stockholder,
director, officer or agent, such notice does not mean personal notice. A person
may give effective notice under these Bylaws in every case by depositing a
writing in a post office or letter box in a postpaid, sealed wrapper, or by
dispatching a prepaid telegram addressed to such Stockholder, director, officer
or agent at his address on the books of the Company. Unless these Bylaws
expressly provide to the contrary, the time when the person sends notice shall
constitute the time of the giving of notice.
12.2 WAIVER OF NOTICE. Whenever the law or these Bylaws require notice,
the person entitled to said notice may waive such notice in writing, either
before or after the time stated therein.
ARTICLE 13.
MISCELLANEOUS
13.1 FACSIMILE SIGNATURES. In addition to the use of facsimile
signatures which these Bylaws specifically authorize, the Company may use such
facsimile signatures of any officer or officers, agents or agent, of the Company
as the Board or a committee of the Board may authorize.
13.2 CORPORATE SEAL. The Board may provide for a suitable seal
containing the name of the Company, of which the Secretary shall be in charge.
The Treasurer, any Assistant Secretary, or any Assistant Treasurer may keep and
use the seal or duplicates of the seal if and when the Board or a committee of
the Board so directs.
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13.3 FISCAL YEAR. The Board shall have the authority to fix and change
the fiscal year of the Company.
ARTICLE 14.
AMENDMENTS
Subject to the provisions of the Articles of Incorporation, the
Stockholders or the Board may amend or repeal these Bylaws at any meeting.
The undersigned hereby certifies that the foregoing constitutes a true
and correct copy of the Bylaws of the Company as adopted by the Directors on the
31st day of July, 1996.
Executed as of this 31st day of July, 1996.
------------------------------------
JAMES FUTER, Secretary
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EXHIBIT 4.2
EAGLE TELECOM INTERNATIONAL, INC.
WARRANT AGREEMENT
FOR CLASS A COMMON STOCK PURCHASE WARRANTS
DATED AS OF ___________
<PAGE>
TABLE OF CONTENTS
Page
PARTIES................................................................ 1
RECITALS............................................................... 1
ARTICLE I ISSUANCE AND EXECUTION OF CLASS A WARRANTS
1.01 Appointment of Warrant Agent.................... 1
1.02 Form of Warrant................................. 1
ARTICLE II EXERCISE PRICE, TERM, METHOD OF EXERCISE
2.01 Exercise Price.................................. 2
2.02 Warrant Rights and Term......................... 2
2.03 Expiration...................................... 2
2.04 Method of Exercise.............................. 2
2.05 Extension of Expiration Date.................... 3
2.06 Method of Redemption............................ 3
2.07 Reduction of Exercise Price .................... 3
2.08 Solicitation Fee................................ 3
ARTICLE III ADJUSTMENTS TO CLASS A WARRANTS UPON CERTAIN EVENTS
3.01 Adjustment of Purchase Price and Number of
Shares Purchasable.......................... 3
3.02 Notice of Adjustment............................ 5
3.03 Notice of Certain Events........................ 5
3.04 Effect of Adjustment on Warrant
Certificate................................. 6
3.05 Company Not Responsible for
Adjustment.................................. 6
ARTICLE IV RIGHTS OF WARRANT HOLDERS
4.01 No Right of Stockholders........................ 6
4.02 Lost Warrants................................... 7
4.03 Maintenance of Sufficient and Proper
Shares of Common Stock...................... 7
4.04 Fractional Shares of Warrants................... 8
4.05 Registered Holder as Owner...................... 9
4.06 Exchange and Transfer of
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Warrants................................... 9
ARTICLE V THE WARRANT AGENT
5.01 Additional Warrant Agents....................... 10
ARTICLE VI GENERAL
6.01 Canceled Warrants............................... 10
6.02 Taxes on Issuance of Shares of
Common Stock............................... 10
6.03 Dates and Times................................. 10
6.04 Amendments to Warrant Agreement................. 10
6.05 Binding Agreement............................... 10
6.06 Copies of Agreement with Warrant
Agent...................................... 11
6.07 Notices......................................... 11
6.08 Governing Law................................... 11
6.09 Headings........................................ 11
6.10 Counterparts.................................... 11
SIGNATURES............................................................. 12
Form of Warrant Certificate....................................... Exhibit A
ii
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CLASS A WARRANT AGREEMENT
THIS AGREEMENT is dated as of ___________, 1996, by and between EAGLE
TELECOM INTERNATIONAL, INC., a Texas corporation (the "Company"), and the
holders listed on Schedule 1 hereto, with reference to the following recitals:
W I T N E S S E T H:
WHEREAS, pursuant to a Private Placement Memorandum dated August 1, 1996,
the Company is selling units, each unit consisting of 20,000 shares of common
stock, par value $.001 per share ("Common Stock"), 20,000 four-year redeemable
class A warrants to purchase 20,000 shares of Common Stock at a purchase price
of $4.00 per share ("Class A Warrants"), and 20,000 four year redeemable class B
warrants to purchase 20,000 shares of Common Stock at a purchase price of $6.00
per share ("Class B Warrants").
WHEREAS, Owners of the Class A Warrants shall have certain rights as
specified herein; and
WHEREAS, each Class A Warrant issued under this Agreement entitles the
holder thereof to purchase one share of Common Stock at the price designated as
the "Exercise Price" herein (subject to adjustment hereunder);
NOW THEREFORE, in consideration of the mutual agreements contained
herein and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
ISSUANCE AND EXECUTION OF CLASS A WARRANTS
Section 1.01.APPOINTMENT OF WARRANT AGENT. The Company shall act as
Warrant Agent in accordance with the terms hereof.
Section 1.02.FORM OF WARRANT. Each Class A Warrant shall be evidenced by a
certificate ("Warrant Certificate"). The text of each Warrant Certificate (and
the related forms of exercise and assignment) shall be substantially in the form
attached hereto as Exhibit "A" and may have such identification, designation,
and information thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of the National Association of Securities Dealers, Inc.,
or any stock exchange on which the Class A Warrants may be listed, or to conform
to usage.
Warrant Certificates shall be executed on behalf of the Company by its
President or any Vice President and by its Secretary or an Assistant Secretary.
Each Warrant Certificate shall be dated the date of its initial issuance.
Warrant Certificates shall be executed on behalf of the Company manually and
shall have the Company's seal or a facsimile thereof affixed or imprinted
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thereon. In case any officer whose signature has been placed upon any Warrant
Certificate ceases to be such before such Warrant Certificate is issued, it may
be issued with the same effect as if such officer had not ceased to be such at
the date of issuance.
ARTICLE II
EXERCISE PRICE, TERM, AND METHOD OF EXERCISE
Section 2.01.EXERCISE PRICE. Unless adjusted as otherwise provided herein,
the exercise price ("Exercise Price") of each Warrant issued hereunder shall be
$4.00 per share. The Exercise Price may be adjusted by the Company upon any
extension of the Expiration Date (as hereinafter defined) pursuant to Section
2.05 and shall be adjusted upon the occurrence of certain events as set forth in
Article III hereof.
Section 2.02WARRANT RIGHTS AND TERM. Each Class A Warrant shall entitle
the person in whose name the Warrant Certificate shall then be registered on the
books maintained by the Company ("Warrant Holder"), upon exercise thereof and
subject to the provisions thereof and of this Agreement, including provisions
relating to adjustments, to purchase from the Company one fully paid and
non-assessable share of Common Stock at the then Exercise Price, at any time on
and after the date hereof until the expiration of the Warrant at 5:00 p.m.,
Houston time, on ______, 2000, or such later date as may be established pursuant
to Section 2.05 ("Expiration Date").
Section 2.03.EXPIRATION. Each Class A Warrant not exercised by 5:00 p.m.,
Houston time, on the Expiration Date shall become void, and all rights
thereunder and all rights in respect thereof under this Agreement shall
thereupon cease.
Section 2.04.METHOD OF EXERCISE. The Warrant Holder may exercise his
rights with respect to all or any whole number of Class A Warrants evidenced by
a Warrant Certificate, provided that (except as provided in Section 4.04), Class
A Warrants shall not be exercisable for other than a whole number of shares of
Common Stock. Exercise shall be effected by surrender of the Warrant
Certificate, with the exercise form thereon duly executed, to the Company at its
offices as designated in Section 6.07 hereof, together with the Exercise Price
for each share of Common Stock to be purchased. Payment of the Exercise Price
shall be made in lawful money of the United States of America by cashier's
check, certified check, federal funds or clearing house check, payable to the
order of the Company.
Upon receipt of a Warrant Certificate with the exercise form duly executed
and accompanied by full and proper payment of the Exercise Price for the shares
of Common Stock purchased thereby, the Company (after requisitioning any
certificates for shares of Common Stock from the Company's transfer agent, if
necessary) shall deliver to the Warrant Holder certificates for the total number
of whole shares of Common Stock for which the Class A Warrants evidenced by such
Warrant Certificate are being exercised in such names and denominations as the
Warrant Holder has directed; provided, however, that if, on the date of
surrender of such Warrant
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Certificate and payment of the Exercise Price, the transfer books for the Common
Stock shall be closed, the certificates for the shares of Common Stock shall be
issuable as of the date on which such books shall next be open (whether before,
on, or after the Expiration Date) at the Exercise Price and upon the other
conditions in effect on the date of such surrender.
In the event that any Warrant Holder shall exercise rights with respect to
less than all of the Class A Warrants evidenced by a Warrant Certificate
surrendered upon the exercise of Class A Warrants, a new Warrant Certificate for
the balance of such Class A Warrants shall be countersigned and delivered to, or
in accordance with the instructions of, such Warrant Holder.
Section 2.05.EXTENSION OF EXPIRATION DATE. At any time or from time to
time prior to the Expiration Date then in effect, the Company may, in its sole
discretion, extend the Expiration Date to provide for an additional period or
periods during which the Class A Warrants may be exercised as the Company, in
its sole discretion, may elect. In connection with any such extension of the
Expiration Date, the Company may, in its sole discretion, increase or decrease
the Exercise Price payable during any such extension.
Section 2.06.METHOD OF REDEMPTION. If the closing bid price of the Common
Stock shall have equaled or exceeded $5.50 per share for a period of twenty (20)
consecutive trading days at any time during the term hereof, the Company may, in
its sole discretion, redeem the Class A Warrants by paying Warrant Holders $.05
per Warrant, provided such notice is mailed to all Warrant holders not later
than twenty (20) days after the end of such period and prescribes a redemption
date at least thirty (30) days but not more than sixty (60) days thereafter.
Warrant Holders will be entitled to exercise Class A Warrants at any time up to
the business day next preceding the redemption date.
Section 2.07REDUCTION OF EXERCISE PRICE. The Board of Directors retains
the right to reduce the Exercise Price of the Class A Warrants.
Section 2.08. SOLICITATION FEE. The Company has the right to pay
soliciting dealers a solicitation fee equal to three percent of the exercise
price of the Warrants.
ARTICLE III
ADJUSTMENTS TO CLASS A WARRANTS UPON CERTAIN EVENTS
Section 3.01. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
PURCHASABLE. The Purchase Price and the number of Shares are subject to
adjustment from time to time as set forth in this Section 3.01.
(a) In case the Company shall at any time after the date of this Agreement
(i) declare a dividend on the Common Stock in shares of its capital stock, (ii)
subdivide the outstanding shares, (iii) combine the outstanding Common Stock
into a smaller number of Common Stock, or (iv) issue any shares of its capital
stock by reclassification of the Common Stock (including any
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such reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each case the Purchase Price,
and the number and kind of shares receivable upon exercise, in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination, or reclassification shall be proportionately adjusted
so that the holder of any Warrant exercised after such time shall be entitled to
receive the aggregate number and kind of shares which, if such Warrant had been
exercised immediately prior to such time, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination, or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) No adjustment in the Purchase Price shall be required if such
adjustment is less than $.05; PROVIDED, HOWEVER, that any adjustments which by
reason of this subsection (b) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 3.01 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(c) Upon each adjustment of the Purchase Price as a result of the
calculations made in subsection (a) of this Section 3.01, each Warrant
outstanding prior to the making of the adjustment in the Purchase Price shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of Shares (calculated to the nearest thousandth) obtained by (i)
multiplying the number of Shares purchasable upon exercise of a Warrant
immediately prior to adjustment of the number of Shares by the Purchase Price in
effect prior to adjustment of the Purchase Price and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(d) In case of any capital reorganization of the Company, or of any
reclassification of the Common Stock (other than a reclassification of the
Common Stock referred to in subsection (a) of this Section 3.01), or in the case
of the consolidation of the Company with or the merger of the Company into any
other corporation or of the sale, transfer, or lease of the properties and
assets of the Company as, or substantially as, an entirety to any other
corporation, each Warrant shall after such capital reorganization,
reclassification of the Common Stock, consolidation, merger, sale, transfer, or
lease be exercisable, upon the terms and conditions specified in this Agreement,
for the number of shares of stock or other securities, assets, or cash to which
a holder of the number of shares of Common Stock purchasable (at the time of
such capital reorganization, reclassification of shares, consolidation, merger,
sale, transfer, or lease) upon exercise of such Warrant would have been entitled
upon such capital reorganization, reclassification of the Common Stock,
consolidation, merger, sale, transfer, or lease; and in any such case, if
necessary, the provisions set forth in this Section 3.01 with respect to the
rights and interests thereafter of the holders of the Class A Warrants shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably be,
to any shares of stock or other securities, assets, or cash thereafter
deliverable upon the exercise of the Class A Warrants. The subdivision or
combination of the Common Stock at any time outstanding into a greater or lesser
number of shares shall not be deemed to be a reclassification of the Common
Stock for the purposes of this paragraph. The
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Company shall not effect any such consolidation, merger, transfer, or lease,
unless prior to or simultaneously with the consummation thereof, the successor
corporation (if other than the Company) resulting from such consolidation or
merger or the corporation purchasing, receiving, or leasing such assets or other
appropriate corporation or entity shall assume, by written instrument executed
and delivered to the Warrant holder, the obligation to deliver to the Warrant
holder such shares of stock, securities, or assets as, in accordance with the
foregoing provisions, such holders may be entitled to purchase, and to perform
the other obligations of the Company under this Warrant Agreement.
Section 3.02.NOTICE OF ADJUSTMENT. Whenever the Exercise Price is adjusted
as provided in this Warrant Agreement:
(a) the Company shall compute the adjusted Exercise Price and the number
of shares of Common Stock issuable upon exercise of a Warrant and shall prepare
a notice signed by its Treasurer or Secretary setting forth the adjusted
Exercise Price and the adjusted number of shares of Common Stock issuable upon
the exercise of a Warrant or the number of Class A Warrants into which each
outstanding Warrant will be changed, if applicable. Such notice shall show in
reasonable detail the facts (and computations) upon which such adjustment are
based.
(b) the Company shall cause to be mailed to each Warrant Holder in
accordance with the provisions of Section 6.07 a notice stating that the
Exercise Price has been adjusted and setting forth the adjusted Exercise Price
and the adjusted number of shares of Common Stock issuable upon the exercise of
a Warrant or the number of Class A Warrants into which each outstanding Warrant
will be changed, if applicable.
Section 3.03.NOTICE OF CERTAIN EVENTS. In the event that any time after
the date of this Agreement:
(a) the Company shall adopt a dividend policy, change a previously adopted
dividend policy, or declare a dividend in the absence of, or in conflict with, a
dividend policy or declare any distribution with respect to the Common Stock; or
(b) the Company shall offer for subscription to the holders of the Common
Stock any additional shares of stock of any class or any other securities
convertible into Common Stock or any rights to subscribe thereto; or
(c) the Company shall declare any stock split, stock dividend,
subdivision, combination, or similar distribution with respect to the Common
Stock, regardless of the effect of any such event on the outstanding number of
shares of Common Stock; or
(d) there shall be any Capital Change in the Company or any merger of the
Company with another corporation (other than a merger with a subsidiary in which
merger the Company is
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the continuing corporation and which does not result in any reclassification or
change of the shares of Common Stock issuable upon exercise of the Warrant); or
(e) there shall be a voluntary or involuntary dissolution, liquidation,
or winding up of the Company;
(each such event hereinafter being referred to as a "Notification Event"), the
Company shall cause to be mailed to each Warrant Holder, not later than the
earlier of the date public announcement of the Notification Event is first made
or the date 20 days prior to the record date, if any, in connection with such
Notification Event, written notice specifying the nature of such event and the
effective date of, or the date on which the books of the Company shall close or
a record shall be taken with respect to, such event. Such notice shall also set
forth facts indicating the effect of such action (to the extent such effect may
be known at the date of such notice) on the Exercise Price and the kind and
amount of the shares of stock or other securities or property deliverable upon
exercise of the Class A Warrants. The failure to give the notice required by
this Section 3.03 shall not affect the legality or validity of any such
Notification Event.
Section 3.04.EFFECT OF ADJUSTMENT ON WARRANT CERTIFICATES. The form of
Warrant Certificate need not be changed because of any change in the Exercise
Price, the number of shares of Common Stock issuable upon the exercise of a
Warrant, or the number of Class A Warrants outstanding pursuant to this Article
and Warrant Certificates issued before or after such change may state the same
Exercise Price, the same number of Class A Warrants, and the same number of
shares of Common Stock issuable upon exercise of Class A Warrants as are stated
in the Warrant Certificates theretofore issued pursuant to this Agreement. The
Company may, however, at any time, in its sole discretion, make any change in
the form of Warrant Certificate that it may deem appropriate and that does not
affect the substance thereof, and any Warrant Certificates thereafter issued or
countersigned, whether in exchange or substituted for an outstanding Warrant
Certificate or otherwise, may be in the form as so changed.
Section 3.05.COMPANY NOT RESPONSIBLE FOR ADJUSTMENT. The Company shall
have the right, but shall not at any time be under any duty or responsibility to
any Warrant Holder, to determine whether such facts exist which may require any
adjustment in the Exercise Price of, or the shares of Common Stock issuable upon
exercise of, the Class A Warrants or to make inquiry or take other action with
respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Company shall not be
accountable with respect to the validity or value or the kind or amount of any
shares of Common Stock or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant, and makes no
representation with respect thereto.
ARTICLE IV
RIGHTS OF WARRANT HOLDERS
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SECTION 4.01. NO RIGHTS OF STOCKHOLDERS. No Warrant Holder, as such, shall
be entitled to vote or to receive dividends or shall otherwise be deemed to be
the holder of shares of Common Stock for any purpose, nor shall anything
contained herein or in any Warrant Certificate be construed to confer upon any
Warrant Holder, as such, any of the rights of a stockholder of the Company or
any right to vote upon or give or withhold consent to any action of the Company
(whether upon any reorganization, issuance of securities, reclassification or
conversion of Common Stock, consolidation, merger, sale, lease, conveyance, or
otherwise), receive notice of meetings or other action affecting stockholders
(except for notices expressly provided for in this Agreement) or receive
dividends or subscription rights, until such Warrant Certificate shall have been
surrendered for exercise accompanied by full and proper payment of the Exercise
Price as provided in this Agreement and shares of Common Stock thereunder shall
have become issuable and until such person shall have been deemed to have become
a holder of record of such shares. If, the date of surrender of such Warrant
Certificate and payment of such Exercise Price, the transfer books for the
Common Stock shall be closed, certificates for the shares of Common Stock shall
be issuable on the date on which such books shall next be open (whether before,
on, or after the Expiration Date) and until such date, the Company shall be
under no duty to deliver any certificate for such shares of Common Stock. No
Warrant Holder shall, upon the exercise of Class A Warrants, be entitled to any
dividends if the record date with respect to payment of such dividends shall be
a date prior to the date such shares of Common Stock became issuable upon the
exercise of such Class A Warrants.
Section 4.02.LOST CLASS A WARRANTS. If any Warrant Certificate is lost,
stolen, mutilated, or destroyed, the Company may, upon receipt of evidence
satisfactory to the Company of such loss, theft, mutilation, or destruction and
on such terms as to indemnity or otherwise as the Company may in its discretion
impose (which shall, in the case of a mutilated Warrant Certificate, include the
surrender thereof), issue a new Warrant Certificate of like denomination and
tenor as the lost, stolen, mutilated, or destroyed Certificate. Applicants for
such substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay any such reasonable charges as the Company may
prescribe. In the event any Warrant Certificate is lost, stolen, mutilated, or
destroyed, and the owner thereof desires to exercise the Class A Warrants
evidenced thereby, the Company may, in lieu of issuing a substitute Warrant
Certificate, exercise or authorize the exercise thereof upon receipt of the
above evidence and on such terms of indemnity as it may require.
Section 4.03.MAINTENANCE OF SUFFICIENT AND PROPER SHARES OF COMMON STOCK.
(a) The Company shall at all times reserve and keep available a number of
authorized shares of Common Stock sufficient to permit the exercise in full of
all outstanding Class A Warrants and will cause to be available a sufficient
number of certificates therefor.
(b) If at any time hereafter the Common Stock shall become listed on a
national securities exchange, prior to the issuance of any shares of Common
Stock upon the exercise of
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Class A Warrants, the Company shall use its best efforts to secure the listing
of such shares of Common Stock upon any and all such securities exchanges.
(c) If at any time the taking of any action would cause an adjustment in
the Exercise Price so that the exercise of a Warrant while such Exercise Price
is in effect would cause a share of Common Stock to be issued at a price below
its then par value, the Company shall take such action as may, in the opinion of
its counsel, be necessary in order that it may validly and legally issue fully
paid and non-assessable shares of Common Stock upon the exercise of the Class A
Warrants at such Exercise Price.
(d) Subject to the restrictions on transfer referred to in Section 4.06,
if any shares of Common Stock issuable upon the exercise of the Class A Warrants
require registration or approval of any governmental authority, or the taking of
any other action under the laws of the United States or any political
subdivision thereof or any other jurisdiction before such shares of Common Stock
may be legally and validly issued, then the Company shall in good faith and with
reasonable diligence endeavor to secure such registration or approval or to take
such other actions as may be appropriate to allow for the lawful issuance of
shares of Common Stock upon exercise of the Class A Warrants, provided that no
shares of Common Stock shall be issued for the period during which the Company
is endeavoring to obtain such registration or approval or is taking such other
action. Warrant Holders may exercise Class A Warrants during any such period as
provided herein and shall be entitled to the issuance of the shares of Common
Stock on such date as the shares of Common Stock may be legally and validly
issued, at the Exercise Price and upon the other conditions in effect on the
date of surrender of the Warrant Certificates accompanied by full and proper
payment for the shares of Common Stock.
Section 4.04.FRACTIONAL SHARES OF CLASS A WARRANTS.
(a) Anything contained herein to the contrary notwithstanding, the Company
shall not be required to issue any fraction of a share of Common Stock in
connection with the exercise of Class A Warrants. Class A Warrants may not be
exercised in such number as would result (except for the provisions of this
Section) in the issuance of a fraction of a share of Common Stock, unless the
Warrant Holder is presenting for exercise Warrant Certificates representing all
Class A Warrants then owned of record by such Warrant Holder. In such event, the
Company shall, upon the exercise of all of such Class A Warrants, issue to such
Warrant Holder the largest aggregate whole number of shares of Common Stock
called for thereby upon receipt of the Exercise Price for all of such Class A
Warrants and pay a sum in cash equal to the remaining fraction of a share of
Common Stock, multiplied by its fair market value as of the first business day
preceding the date on which the Class A Warrants are presented for exercise.
Such fair market value shall be (1) the average of the high and low bid prices
of the Common Stock, as reported by the National Association of Securities
Dealers Automated Quotation System on such date, or (2) if the Common Stock is
then listed on a national securities exchange or the national market system of
the over-the-counter market, the closing price of the Common Stock on such
exchange on such date, or (3) if the Common Stock is not trading on an exchange,
or an over-the-counter market,
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<PAGE>
then as determined by the Board of Directors. Every Warrant Holder, by the
acceptance of the Warrant Certificate, expressly waives any right to exercise
Class A Warrants for a fractional share of Common Stock except as provided in
this subsection.
(b) Anything herein to the contrary notwithstanding, the Company shall not
be required to issue fractions of Class A Warrants on any distribution of Class
A Warrants to Warrant Holders or to distribute Warrant Certificates that
evidence fractional Class A Warrants nor shall the Company be required to make
any cash adjustment with respect to a fractional interest in a Warrant. Any
person entitled to a fractional interest in a Warrant may elect, during such
period of time (not in excess of 90 days) from the date such fractional interest
is acquired, as the Company shall determine, to purchase the additional
fractional interest required to make up a full Warrant or to sell the fractional
interest to which such person is entitled. Such election shall be made on the
form provided for such purpose by the Company. If such election is not made in
the time prescribed by the Company, the fractional interest to which such person
is entitled shall be sold. Such purchase or sale shall be effected in the manner
set forth in subsection (c) of this Section by the Company, acting as agent for
the person entitled to such fractional interest.
(c) The Company shall bill each person entitled to a fractional interest
in Class A Warrants for the cost of any such fractional interest purchased by it
as agent for such person or shall remit to such person the proceeds of the sale
of any such fractional interest sold by it as such agent. In the case of a
purchase, the Company may sell the Warrant to which such person is entitled if
payment is not received by the Company within 30 days after the mailing of such
bill and, after deducting the amount of such bill and any other charges, shall
remit the balance, if any, to such person. Fractional interests in Class A
Warrants shall be nontransferable except by or to the Company acting as herein
authorized. The Company may purchase or sell fractional interests on the basis
of market prices of the Class A Warrants, as determined by the Company in its
sole discretion, and it is expressly authorized to value fractional interests
without actual purchase or sale on the basis of the market price of the Class A
Warrants as determined by it in its sole discretion. Purchase and sales of
fractional interests by the Company may, in its sole discretion, be set off
against each other on the basis of market prices of the Class A Warrants, as
determined by the Company in its sole discretion.
Section 4.05.REGISTERED HOLDER AS OWNER. Every holder of a Warrant
Certificate, by accepting the same, consents and agrees with the Company, and
every subsequent holder of such Warrant Certificate that until the Warrant
Certificate is transferred on the books of the Company, the Company may treat
the registered Warrant Holder as the absolute owner thereof for all purposes,
notwithstanding any notice to the contrary.
Section 4.06.EXCHANGE AND TRANSFER OF CLASS A WARRANTS. Warrant
Certificates may be split-up, combined, or exchanged at any time for other
Warrant Certificates evidencing a like aggregate whole number of Class A
Warrants and may be transferred in whole or in part. Any Warrant Holder desiring
to split-up, combine, or exchange Warrant Certificates shall make such request
in writing delivered to the Company as provided by Section 6.07 and shall
surrender
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therewith the Warrant Certificate or Certificates to be so split-up, combined,
or exchanged. Subject to the restrictions on transfer of the Class A Warrants
contained in the applicable federal or state securities laws, transfers of
outstanding Warrant Certificates may be effected by the Company, from time to
time, upon the books to be maintained by the Company for that purpose, upon
surrender of the Warrant Certificates to the Company as provided by Section
6.07, which Certificates must be properly endorsed or accompanied by appropriate
instruments of transfer and written instructions for transfer, all in form
satisfactory to the Company. Upon any such surrender for a split-up,
combination, exchange, or transfer, the Company shall countersign and deliver to
the person entitled thereto a Warrant Certificate or Warrant Certificates as so
requested. The Company shall not be required to effect any transfer, split-up,
or exchange that will result in the issuance of a Warrant Certificate evidencing
other than a whole number of Class A Warrants.
ARTICLE V
THE WARRANT AGENT
Section 5.01.ADDITIONAL WARRANT AGENTS. The Company may designate one or
more corporations as a successor Warrant Agent, or as additional Warrant Agents
to perform, either jointly or in place of the Company.
ARTICLE VI
GENERAL
Section 6.01.CANCELED CLASS A WARRANTS. The Company shall cancel any
Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, or for split-up, combination, exchange, or
substitution and shall deliver to the Company, in a manner satisfactory to the
Company, such canceled Warrant Certificates.
Section 6.02.TAXES ON ISSUANCE OF SHARES OF COMMON STOCK. The Company
shall from time to time promptly pay all taxes and charges that may be imposed
upon the Company with respect to the issuance or delivery of shares of Common
Stock upon the exercise of Class A Warrants, but the Company shall not be
obligated to pay any transfer taxes with respect to the issuance or delivery of
the Warrant Certificates or shares of Common Stock in a name other than that of
the Warrant Holder. The Company shall be authorized to charge Warrant Holders a
transfer fee of up to $7.50 per certificate.
Section 6.03.DATES AND TIMES. If any date set forth in this Warrant
Agreement shall fall on a day other than a full business day in Houston, said
date shall be deemed to be the next business day succeeding that date. All times
shall be the legal time then in effect in Houston.
Section 6.04.AMENDMENTS TO WARRANT AGREEMENT. The Company may, without
the consent or concurrence of the Warrant Holders, by supplemental agreement or
otherwise, make
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any amendments, alterations, deletions, or corrections in this Agreement that it
deem necessary or desirable: (a) to cure any ambiguity or correct any defect,
inconsistency, clerical omission or mistake, or manifest error contained herein;
(b) to confer additional rights upon the Warrant Holders; or (c) in any other
respect that does not adversely affect the rights of the Warrant Holders
hereunder.
Section 6.05. BINDING AGREEMENT. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of the respective successors and assigns hereunder. Nothing expressed in
this Agreement and nothing that may be implied from any of the provisions hereof
is intended, or shall be construed, to confer upon or give to any person or
corporation, other than the Company and the Warrant Holders, any legal or
equitable right, remedy, or claim under or by reason of this Agreement or of any
covenant, condition, stipulation, promise, or agreement herein, and all
covenants, conditions, stipulations, promises, and agreements contained in this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Holders, and their respective successors and assigns.
Section 6.06.COPIES OF AGREEMENT. A copy of this Agreement, as such may be
amended from time to time, shall be available for inspection by any Warrant
Holder at the office of the Company, as designated in Section 6.07, during
normal business hours. As a condition of such inspection, the Company may
require any such Warrant Holder to submit his or her Warrant Certificate for
inspection.
Section 6.07.NOTICES. Any communication, notice, or demand to be given
hereunder shall be duly given if in writing and delivered, or sent by first
class mail, certified or registered, postage prepaid and addressed as follows:
(a) If to the Company:
H. Dean Cubley, Chief Executive Officer
Eagle Telecom International, Inc.
901 Gemini
Houston, Texas 77058
(b) If to a Warrant Holder: at such person's last known address as such
shall appear on the registration books maintained by the Company.
Any party may change the address to which any communication, notice,
or demand shall be given by giving notice of such change in conformity with the
provisions of this Section.
Section 6.08.GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
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Section 6.09.HEADINGS. The Article and Section headings herein are for
convenience only and are not part of this Agreement and shall not affect the
interpretation thereof.
Section 6.10.COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original and
all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the day and year first above written.
EAGLE TELECOM INTERNATIONAL, INC.
By__________________________________________
H. DEAN CUBLEY
Chief Executive Officer
12
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----------
EXHIBIT A
----------
(Form of Warrant Certificate)
No. Number of Class A Warrants
- ---------- --------
VOID AFTER ______ P.M., HOUSTON TIME,
___________ (UNLESS EXTENDED)
EAGLE TELECOM INTERNATIONAL, INC.
WARRANT TO PURCHASE COMMON STOCK
This Warrant Certificate certifies that
__________________________________, _______________________, or, subject to
certain restrictions on transfer described in the Warrant Agreement (as
hereinafter defined), registered assigns, is the registered holder of the number
indicated above of warrants ("Class A Warrants") to purchase shares of common
stock, $.001 par value ("Common Stock"), of Eagle Telecom International, Inc., a
Texas corporation ("Company"). Each Warrant entitles the holder thereof to
purchase from the Company, on or before _________ (subject to extension by the
Company), one fully paid and nonassessable share of Common Stock, upon
presentation and surrender of this Warrant Certificate, with the Subscription
Form duly executed, at the corporate office of the Company (as defined below)
and upon proper payment of the Exercise Price. Subject to adjustment as provided
in the warrant agreement between the Company and the holder hereof ("Warrant
Agreement"), the exercise price ("Exercise Price") for each Warrant evidenced
hereby shall be $4.00 per share. Payment of the Exercise Price shall be made in
lawful money of the United States of America by cashier's check, certified
check, federal funds or clearing house check payable to the Company. This
Warrant may be redeemed by the Company as provided for in the Warrant Agreement.
As provided in the Warrant Agreement, the Exercise Price and the number of
shares of Common Stock purchasable upon the exercise of the Class A Warrants
are, upon the happening of certain events, subject to modification or
adjustment.
References to the Warrant Agent herein shall mean the Company, and any
successor or additional Warrant Agent designated as provided in the Warrant
Agreement.
This Warrant Certificate is subject to all of the terms, provisions, and
conditions of the Warrant Agreement, including the provisions of such Agreement
relating to the amendment
A-1
<PAGE>
thereof, which Warrant Agreement is hereby incorporated herein by reference and
made a part hereof. Reference is hereby made to the Warrant Agreement for a full
description of the rights, limitations of rights, obligations, duties, and
immunities of the Company, and the holder of this Warrant Certificate. Copies of
the Warrant Agreement, as such may be amended from time to time, are available
for inspection at the offices of the Company.
This Warrant Certificate, with or without other Warrant Certificates, upon
surrender to the Company or any successor or additional Warrant Agent, may be
exchanged for another Warrant Certificate or Warrant Certificates evidencing a
like aggregate number of Class A Warrants. If this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Warrant Certificates evidencing the number
of Class A Warrants not exercised.
No holder of this Warrant Certificate shall be deemed to be the holder of
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained in
the Warrant Agreement or herein be construed to confer upon the holder of this
Warrant Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any reorganization, issuance of stock,
reclassification or conversion of stock, change of par value, or exchange of
stock to no par value, consolidation, merger, conveyance, or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise, until this Warrant Certificate shall have been exercised and the
Common Stock purchasable upon the exercise hereof shall have become issuable as
provided in the Warrant Agreement.
Every holder of this Warrant Certificate, by accepting the same, consents
and agrees with the Company and with every other holder of a Warrant Certificate
that:
(a) subject to the restrictions on transfer described in the Warrant
Agreement, this Warrant Certificate is transferable by the registered holder
hereof in person or by attorney duly authorized in writing, at the principal
corporate office of the Company, in whole or in part;
(b) anything herein to the contrary notwithstanding, in no event shall the
Company be obligated to issue Warrant Certificates evidencing other than a whole
number of Class A Warrants or issue certificates evidencing other than a whole
number of shares of Common Stock upon the exercise of this Warrant Certificate;
and
(c) the Company may deem and treat the person in whose name this Warrant
Certificate is registered as the absolute, true, and lawful owner hereof for all
purposes whatsoever, and the Company shall not be affected by any notice to the
contrary.
A-2
<PAGE>
WITNESS the signatures of the proper officers of the Company.
Date:_______________________ EAGLE TELECOM INTERNATIONAL, INC.
By__________________________________________
H. DEAN CUBLEY, Chief Executive Officer
Attest:______________________
Secretary
Countersigned:
A-3
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised, in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement pursuant to which the Warrant was granted, may be
delivered upon exercise.
<PAGE>
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY UPON ASSIGNMENT OF WARRANT)
For value received and subject to the restrictions on transfer described
in the Warrant Agreement under which this Warrant was issued,
___________________________________ hereby sells, assigns, and transfers unto
_________________________________________ Class A Warrants represented by the
within Warrant Certificate, together with all right, title, and interest
therein, and does hereby irrevocably constitute and appoint
____________________________ attorney, to transfer such Class A Warrants on the
books of the within named corporation, with full power of substitution.
Dated _________________________, 199_____
--------------------------------------------
Signature of Warrant Holder
--------------------------------------------
Printed Name of Warrant Holder
Note: The above signature must correspond with the name as written upon the face
of this Warrant in every particular, without any change whatsoever.
TRANSFER FEE: $__________ Per Certificate
EXHIBIT 4.3
EAGLE TELECOM INTERNATIONAL, INC.
WARRANT AGREEMENT
FOR CLASS B COMMON STOCK PURCHASE WARRANTS
DATED AS OF ___________
<PAGE>
TABLE OF CONTENTS
Page
PARTIES................................................................ 1
RECITALS............................................................... 1
ARTICLE I ISSUANCE AND EXECUTION OF CLASS B WARRANTS
1.01 Appointment of Warrant Agent.................... 1
1.02 Form of Warrant................................. 1
ARTICLE II EXERCISE PRICE, TERM, METHOD OF EXERCISE
2.01 Exercise Price.................................. 2
2.02 Warrant Rights and Term......................... 2
2.03 Expiration...................................... 2
2.04 Method of Exercise.............................. 2
2.05 Extension of Expiration Date.................... 3
2.06 Method of Redemption............................ 3
2.07 Reduction of Exercise Price .................... 3
ARTICLE III ADJUSTMENTS TO CLASS B WARRANTS UPON CERTAIN EVENTS
3.01 Adjustment of Purchase Price and Number of
Shares Purchasable.......................... 3
3.02 Notice of Adjustment............................ 5
3.03 Notice of Certain Events........................ 5
3.04 Effect of Adjustment on Warrant
Certificate................................. 6
3.05 Company Not Responsible for
Adjustment.................................. 6
ARTICLE IV RIGHTS OF WARRANT HOLDERS
4.01 No Right of Stockholders........................ 6
4.02 Lost Warrants................................... 7
4.03 Maintenance of Sufficient and Proper
Shares of Common Stock...................... 7
4.04 Fractional Shares of Warrants................... 8
4.05 Registered Holder as Owner...................... 9
4.06 Exchange and Transfer of
Warrants................................... 9
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ARTICLE V THE WARRANT AGENT
5.01 Additional Warrant Agents....................... 10
ARTICLE VI GENERAL
6.01 Canceled Warrants............................... 10
6.02 Taxes on Issuance of Shares of
Common Stock............................... 10
6.03 Dates and Times................................. 10
6.04 Amendments to Warrant Agreement................. 10
6.05 Binding Agreement............................... 10
6.06 Copies of Agreement with Warrant
Agent...................................... 11
6.07 Notices......................................... 11
6.08 Governing Law................................... 11
6.09 Headings........................................ 11
6.10 Counterparts.................................... 11
SIGNATURES............................................................. 12
Form of Warrant Certificate....................................... Exhibit A
ii
<PAGE>
CLASS B WARRANT AGREEMENT
THIS AGREEMENT is dated as of ___________, 1996, by and between EAGLE
TELECOM INTERNATIONAL, INC., a Texas corporation (the "Company"), and the
holders listed on Schedule 1 hereto, with reference to the following recitals:
W I T N E S S E T H:
WHEREAS, pursuant to a Private Placement Memorandum dated August 1, 1996,
the Company is selling units, each unit consisting of 20,000 shares of common
stock, par value $.001 per share ("Common Stock"), 20,000 four-year redeemable
class A warrants to purchase 20,000 shares of Common Stock at a purchase price
of $4.00 per share ("Class A Warrants"), and 20,000 four year redeemable class B
warrants to purchase 20,000 shares of Common Stock at a purchase price of $6.00
per share ("Class B Warrants").
WHEREAS, Owners of the Class B Warrants shall have certain rights as
specified herein; and
WHEREAS, each Class B Warrant issued under this Agreement entitles the
holder thereof to purchase one share of Common Stock at the price designated as
the "Exercise Price" herein (subject to adjustment hereunder);
NOW THEREFORE, in consideration of the mutual agreements contained herein
and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
ISSUANCE AND EXECUTION OF CLASS B WARRANTS
Section 1.01.APPOINTMENT OF WARRANT AGENT. The Company shall act as
Warrant Agent in accordance with the terms hereof.
Section 1.02.FORM OF WARRANT. Each Class B Warrant shall be evidenced by a
certificate ("Warrant Certificate"). The text of each Warrant Certificate (and
the related forms of exercise and assignment) shall be substantially in the form
attached hereto as Exhibit "A" and may have such identification, designation,
and information thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of the National Association of Securities Dealers, Inc.,
or any stock exchange on which the Class B Warrants may be listed, or to conform
to usage.
Warrant Certificates shall be executed on behalf of the Company by its
President or any Vice President and by its Secretary or an Assistant Secretary.
Each Warrant Certificate shall be dated the date of its initial issuance.
Warrant Certificates shall be executed on behalf of the Company manually and
shall have the Company's seal or a facsimile thereof affixed or imprinted
thereon. In case any officer whose signature has been placed upon any Warrant
Certificate ceases to be such before such
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Warrant Certificate is issued, it may be issued with the same effect as if such
officer had not ceased to be such at the date of issuance.
ARTICLE II
EXERCISE PRICE, TERM, AND METHOD OF EXERCISE
Section 2.01.EXERCISE PRICE. Unless adjusted as otherwise provided herein,
the exercise price ("Exercise Price") of each Warrant issued hereunder shall be
$6.00 per share. The Exercise Price may be adjusted by the Company upon any
extension of the Expiration Date (as hereinafter defined) pursuant to Section
2.05 and shall be adjusted upon the occurrence of certain events as set forth in
Article III hereof.
Section 2.02WARRANT RIGHTS AND TERM. Each Class B Warrant shall entitle
the person in whose name the Warrant Certificate shall then be registered on the
books maintained by the Company ("Warrant Holder"), upon exercise thereof and
subject to the provisions thereof and of this Agreement, including provisions
relating to adjustments, to purchase from the Company one fully paid and
non-assessable share of Common Stock at the then Exercise Price, at any time on
and after the date hereof until the expiration of the Warrant at 5:00 p.m.,
Houston time, on ______, 2000, or such later date as may be established pursuant
to Section 2.05 ("Expiration Date").
Section 2.03.EXPIRATION. Each Class B Warrant not exercised by 5:00 p.m.,
Houston time, on the Expiration Date shall become void, and all rights
thereunder and all rights in respect thereof under this Agreement shall
thereupon cease.
Section 2.04.METHOD OF EXERCISE. The Warrant Holder may exercise his
rights with respect to all or any whole number of Class B Warrants evidenced by
a Warrant Certificate, provided that (except as provided in Section 4.04), Class
B Warrants shall not be exercisable for other than a whole number of shares of
Common Stock. Exercise shall be effected by surrender of the Warrant
Certificate, with the exercise form thereon duly executed, to the Company at its
offices as designated in Section 6.07 hereof, together with the Exercise Price
for each share of Common Stock to be purchased. Payment of the Exercise Price
shall be made in lawful money of the United States of America by cashier's
check, certified check, federal funds or clearing house check, payable to the
order of the Company.
Upon receipt of a Warrant Certificate with the exercise form duly executed
and accompanied by full and proper payment of the Exercise Price for the shares
of Common Stock purchased thereby, the Company (after requisitioning any
certificates for shares of Common Stock from the Company's transfer agent, if
necessary) shall deliver to the Warrant Holder certificates for the total number
of whole shares of Common Stock for which the Class B Warrants evidenced by such
Warrant Certificate are being exercised in such names and denominations as the
Warrant Holder has directed; provided, however, that if, on the date of
surrender of such Warrant Certificate and payment of the Exercise Price, the
transfer books for the Common Stock shall be closed, the certificates for the
shares of Common Stock shall be issuable as of the date on which such books
shall next be open
2
<PAGE>
(whether before, on, or after the Expiration Date) at the Exercise Price and
upon the other conditions in effect on the date of such surrender.
In the event that any Warrant Holder shall exercise rights with respect to
less than all of the Class B Warrants evidenced by a Warrant Certificate
surrendered upon the exercise of Class B Warrants, a new Warrant Certificate for
the balance of such Class B Warrants shall be countersigned and delivered to, or
in accordance with the instructions of, such Warrant Holder.
Section 2.05.EXTENSION OF EXPIRATION DATE. At any time or from time to
time prior to the Expiration Date then in effect, the Company may, in its sole
discretion, extend the Expiration Date to provide for an additional period or
periods during which the Class B Warrants may be exercised as the Company, in
its sole discretion, may elect. In connection with any such extension of the
Expiration Date, the Company may, in its sole discretion, increase or decrease
the Exercise Price payable during any such extension.
Section 2.06.METHOD OF REDEMPTION. If the closing bid price of the Common
Stock shall have equaled or exceeded $7.50 per share for a period of twenty (20)
consecutive trading days at any time during the term hereof, the Company may, in
its sole discretion, redeem the Class B Warrants by paying Warrant Holders $.05
per Warrant, provided such notice is mailed to all Warrant holders not later
than twenty (20) days after the end of such period and prescribes a redemption
date at least thirty (30) days but not more than sixty (60) days thereafter.
Warrant Holders will be entitled to exercise Class B Warrants at any time up to
the business day next preceding the redemption date.
Section 2.07REDUCTION OF EXERCISE PRICE. The Board of Directors retains
the right to reduce the Exercise Price of the Class B Warrants.
ARTICLE III
ADJUSTMENTS TO CLASS B WARRANTS UPON CERTAIN EVENTS
Section 3.01. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
PURCHASABLE. The Purchase Price and the number of Shares are subject to
adjustment from time to time as set forth in this Section 3.01.
(a) In case the Company shall at any time after the date of this Agreement
(i) declare a dividend on the Common Stock in shares of its capital stock, (ii)
subdivide the outstanding shares, (iii) combine the outstanding Common Stock
into a smaller number of Common Stock, or (iv) issue any shares of its capital
stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each case the Purchase Price,
and the number and kind of shares receivable upon exercise, in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination, or reclassification shall be proportionately adjusted
so that the holder of any Warrant exercised after such time shall be entitled to
receive the aggregate number and kind of shares which, if such Warrant had been
exercised immediately prior to such time, he would have
3
<PAGE>
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination, or reclassification. Such adjustment shall
be made successively whenever any event listed above shall occur.
(b) No adjustment in the Purchase Price shall be required if such
adjustment is less than $.05; PROVIDED, HOWEVER, that any adjustments which by
reason of this subsection (b) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 3.01 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(c) Upon each adjustment of the Purchase Price as a result of the
calculations made in subsection (a) of this Section 3.01, each Warrant
outstanding prior to the making of the adjustment in the Purchase Price shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of Shares (calculated to the nearest thousandth) obtained by (i)
multiplying the number of Shares purchasable upon exercise of a Warrant
immediately prior to adjustment of the number of Shares by the Purchase Price in
effect prior to adjustment of the Purchase Price and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(d) In case of any capital reorganization of the Company, or of any
reclassification of the Common Stock (other than a reclassification of the
Common Stock referred to in subsection (a) of this Section 3.01), or in the case
of the consolidation of the Company with or the merger of the Company into any
other corporation or of the sale, transfer, or lease of the properties and
assets of the Company as, or substantially as, an entirety to any other
corporation, each Warrant shall after such capital reorganization,
reclassification of the Common Stock, consolidation, merger, sale, transfer, or
lease be exercisable, upon the terms and conditions specified in this Agreement,
for the number of shares of stock or other securities, assets, or cash to which
a holder of the number of shares of Common Stock purchasable (at the time of
such capital reorganization, reclassification of shares, consolidation, merger,
sale, transfer, or lease) upon exercise of such Warrant would have been entitled
upon such capital reorganization, reclassification of the Common Stock,
consolidation, merger, sale, transfer, or lease; and in any such case, if
necessary, the provisions set forth in this Section 3.01 with respect to the
rights and interests thereafter of the holders of the Class B Warrants shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably be,
to any shares of stock or other securities, assets, or cash thereafter
deliverable upon the exercise of the Class B Warrants. The subdivision or
combination of the Common Stock at any time outstanding into a greater or lesser
number of shares shall not be deemed to be a reclassification of the Common
Stock for the purposes of this paragraph. The Company shall not effect any such
consolidation, merger, transfer, or lease, unless prior to or simultaneously
with the consummation thereof, the successor corporation (if other than the
Company) resulting from such consolidation or merger or the corporation
purchasing, receiving, or leasing such assets or other appropriate corporation
or entity shall assume, by written instrument executed and delivered to the
Warrant holder, the obligation to deliver to the Warrant holder such shares of
stock, securities, or assets as, in accordance with the
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foregoing provisions, such holders may be entitled to purchase, and to perform
the other obligations of the Company under this Warrant Agreement.
Section 3.02.NOTICE OF ADJUSTMENT. Whenever the Exercise Price is adjusted
as provided in this Warrant Agreement:
(a) the Company shall compute the adjusted Exercise Price and the number
of shares of Common Stock issuable upon exercise of a Warrant and shall prepare
a notice signed by its Treasurer or Secretary setting forth the adjusted
Exercise Price and the adjusted number of shares of Common Stock issuable upon
the exercise of a Warrant or the number of Class B Warrants into which each
outstanding Warrant will be changed, if applicable. Such notice shall show in
reasonable detail the facts (and computations) upon which such adjustment are
based.
(b) the Company shall cause to be mailed to each Warrant Holder in
accordance with the provisions of Section 6.07 a notice stating that the
Exercise Price has been adjusted and setting forth the adjusted Exercise Price
and the adjusted number of shares of Common Stock issuable upon the exercise of
a Warrant or the number of Class B Warrants into which each outstanding Warrant
will be changed, if applicable.
Section 3.03.NOTICE OF CERTAIN EVENTS. In the event that any time after
the date of this Agreement:
(a) the Company shall adopt a dividend policy, change a previously adopted
dividend policy, or declare a dividend in the absence of, or in conflict with, a
dividend policy or declare any distribution with respect to the Common Stock; or
(b) the Company shall offer for subscription to the holders of the Common
Stock any additional shares of stock of any class or any other securities
convertible into Common Stock or any rights to subscribe thereto; or
(c) the Company shall declare any stock split, stock dividend,
subdivision, combination, or similar distribution with respect to the Common
Stock, regardless of the effect of any such event on the outstanding number of
shares of Common Stock; or
(d) there shall be any Capital Change in the Company or any merger of the
Company with another corporation (other than a merger with a subsidiary in which
merger the Company is the continuing corporation and which does not result in
any reclassification or change of the shares of Common Stock issuable upon
exercise of the Warrant); or
(e) there shall be a voluntary or involuntary dissolution, liquidation, or
winding up of the Company;
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(each such event hereinafter being referred to as a "Notification Event"), the
Company shall cause to be mailed to each Warrant Holder, not later than the
earlier of the date public announcement of the Notification Event is first made
or the date 20 days prior to the record date, if any, in connection with such
Notification Event, written notice specifying the nature of such event and the
effective date of, or the date on which the books of the Company shall close or
a record shall be taken with respect to, such event. Such notice shall also set
forth facts indicating the effect of such action (to the extent such effect may
be known at the date of such notice) on the Exercise Price and the kind and
amount of the shares of stock or other securities or property deliverable upon
exercise of the Class B Warrants. The failure to give the notice required by
this Section 3.03 shall not affect the legality or validity of any such
Notification Event.
Section 3.04.EFFECT OF ADJUSTMENT ON WARRANT CERTIFICATES. The form of
Warrant Certificate need not be changed because of any change in the Exercise
Price, the number of shares of Common Stock issuable upon the exercise of a
Warrant, or the number of Class B Warrants outstanding pursuant to this Article
and Warrant Certificates issued before or after such change may state the same
Exercise Price, the same number of Class B Warrants, and the same number of
shares of Common Stock issuable upon exercise of Class B Warrants as are stated
in the Warrant Certificates theretofore issued pursuant to this Agreement. The
Company may, however, at any time, in its sole discretion, make any change in
the form of Warrant Certificate that it may deem appropriate and that does not
affect the substance thereof, and any Warrant Certificates thereafter issued or
countersigned, whether in exchange or substituted for an outstanding Warrant
Certificate or otherwise, may be in the form as so changed.
Section 3.05.COMPANY NOT RESPONSIBLE FOR ADJUSTMENT. The Company shall
have the right, but shall not at any time be under any duty or responsibility to
any Warrant Holder, to determine whether such facts exist which may require any
adjustment in the Exercise Price of, or the shares of Common Stock issuable upon
exercise of, the Class B Warrants or to make inquiry or take other action with
respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Company shall not be
accountable with respect to the validity or value or the kind or amount of any
shares of Common Stock or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant, and makes no
representation with respect thereto.
ARTICLE IV
RIGHTS OF WARRANT HOLDERS
SECTION 4.01. NO RIGHTS OF STOCKHOLDERS. No Warrant Holder, as such, shall
be entitled to vote or to receive dividends or shall otherwise be deemed to be
the holder of shares of Common Stock for any purpose, nor shall anything
contained herein or in any Warrant Certificate be construed to confer upon any
Warrant Holder, as such, any of the rights of a stockholder of the Company or
any right to vote upon or give or withhold consent to any action of the Company
(whether upon any reorganization, issuance of securities, reclassification or
conversion of Common Stock, consolidation, merger, sale, lease, conveyance, or
otherwise), receive notice of meetings or
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other action affecting stockholders (except for notices expressly provided for
in this Agreement) or receive dividends or subscription rights, until such
Warrant Certificate shall have been surrendered for exercise accompanied by full
and proper payment of the Exercise Price as provided in this Agreement and
shares of Common Stock thereunder shall have become issuable and until such
person shall have been deemed to have become a holder of record of such shares.
If, the date of surrender of such Warrant Certificate and payment of such
Exercise Price, the transfer books for the Common Stock shall be closed,
certificates for the shares of Common Stock shall be issuable on the date on
which such books shall next be open (whether before, on, or after the Expiration
Date) and until such date, the Company shall be under no duty to deliver any
certificate for such shares of Common Stock. No Warrant Holder shall, upon the
exercise of Class B Warrants, be entitled to any dividends if the record date
with respect to payment of such dividends shall be a date prior to the date such
shares of Common Stock became issuable upon the exercise of such Class B
Warrants.
Section 4.02.LOST CLASS B WARRANTS. If any Warrant Certificate is lost,
stolen, mutilated, or destroyed, the Company may, upon receipt of evidence
satisfactory to the Company of such loss, theft, mutilation, or destruction and
on such terms as to indemnity or otherwise as the Company may in its discretion
impose (which shall, in the case of a mutilated Warrant Certificate, include the
surrender thereof), issue a new Warrant Certificate of like denomination and
tenor as the lost, stolen, mutilated, or destroyed Certificate. Applicants for
such substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay any such reasonable charges as the Company may
prescribe. In the event any Warrant Certificate is lost, stolen, mutilated, or
destroyed, and the owner thereof desires to exercise the Class B Warrants
evidenced thereby, the Company may, in lieu of issuing a substitute Warrant
Certificate, exercise or authorize the exercise thereof upon receipt of the
above evidence and on such terms of indemnity as it may require.
Section 4.03.MAINTENANCE OF SUFFICIENT AND PROPER SHARES OF COMMON STOCK.
(a) The Company shall at all times reserve and keep available a number of
authorized shares of Common Stock sufficient to permit the exercise in full of
all outstanding Class B Warrants and will cause to be available a sufficient
number of certificates therefor.
(b) If at any time hereafter the Common Stock shall become listed on a
national securities exchange, prior to the issuance of any shares of Common
Stock upon the exercise of Class B Warrants, the Company shall use its best
efforts to secure the listing of such shares of Common Stock upon any and all
such securities exchanges.
(c) If at any time the taking of any action would cause an adjustment in
the Exercise Price so that the exercise of a Warrant while such Exercise Price
is in effect would cause a share of Common Stock to be issued at a price below
its then par value, the Company shall take such action as may, in the opinion of
its counsel, be necessary in order that it may validly and legally issue fully
paid and non-assessable shares of Common Stock upon the exercise of the Class B
Warrants at such Exercise Price.
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(d) Subject to the restrictions on transfer referred to in Section 4.06,
if any shares of Common Stock issuable upon the exercise of the Class B Warrants
require registration or approval of any governmental authority, or the taking of
any other action under the laws of the United States or any political
subdivision thereof or any other jurisdiction before such shares of Common Stock
may be legally and validly issued, then the Company shall in good faith and with
reasonable diligence endeavor to secure such registration or approval or to take
such other actions as may be appropriate to allow for the lawful issuance of
shares of Common Stock upon exercise of the Class B Warrants, provided that no
shares of Common Stock shall be issued for the period during which the Company
is endeavoring to obtain such registration or approval or is taking such other
action. Warrant Holders may exercise Class B Warrants during any such period as
provided herein and shall be entitled to the issuance of the shares of Common
Stock on such date as the shares of Common Stock may be legally and validly
issued, at the Exercise Price and upon the other conditions in effect on the
date of surrender of the Warrant Certificates accompanied by full and proper
payment for the shares of Common Stock.
Section 4.04.FRACTIONAL SHARES OF CLASS B WARRANTS.
(a) Anything contained herein to the contrary notwithstanding, the Company
shall not be required to issue any fraction of a share of Common Stock in
connection with the exercise of Class B Warrants. Class B Warrants may not be
exercised in such number as would result (except for the provisions of this
Section) in the issuance of a fraction of a share of Common Stock, unless the
Warrant Holder is presenting for exercise Warrant Certificates representing all
Class B Warrants then owned of record by such Warrant Holder. In such event, the
Company shall, upon the exercise of all of such Class B Warrants, issue to such
Warrant Holder the largest aggregate whole number of shares of Common Stock
called for thereby upon receipt of the Exercise Price for all of such Class B
Warrants and pay a sum in cash equal to the remaining fraction of a share of
Common Stock, multiplied by its fair market value as of the first business day
preceding the date on which the Class B Warrants are presented for exercise.
Such fair market value shall be (1) the average of the high and low bid prices
of the Common Stock, as reported by the National Association of Securities
Dealers Automated Quotation System on such date, or (2) if the Common Stock is
then listed on a national securities exchange or the national market system of
the over-the-counter market, the closing price of the Common Stock on such
exchange on such date, or (3) if the Common Stock is not trading on an exchange,
or an over-the-counter market, then as determined by the Board of Directors.
Every Warrant Holder, by the acceptance of the Warrant Certificate, expressly
waives any right to exercise Class B Warrants for a fractional share of Common
Stock except as provided in this subsection.
(b) Anything herein to the contrary notwithstanding, the Company shall not
be required to issue fractions of Class B Warrants on any distribution of Class
B Warrants to Warrant Holders or to distribute Warrant Certificates that
evidence fractional Class B Warrants nor shall the Company be required to make
any cash adjustment with respect to a fractional interest in a Warrant. Any
person entitled to a fractional interest in a Warrant may elect, during such
period of time (not in excess of 90 days) from the date such fractional interest
is acquired, as the Company shall determine, to purchase the additional
fractional interest required to make up a full Warrant or to sell the
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<PAGE>
fractional interest to which such person is entitled. Such election shall be
made on the form provided for such purpose by the Company. If such election is
not made in the time prescribed by the Company, the fractional interest to which
such person is entitled shall be sold. Such purchase or sale shall be effected
in the manner set forth in subsection (c) of this Section by the Company, acting
as agent for the person entitled to such fractional interest.
(c) The Company shall bill each person entitled to a fractional interest
in Class B Warrants for the cost of any such fractional interest purchased by it
as agent for such person or shall remit to such person the proceeds of the sale
of any such fractional interest sold by it as such agent. In the case of a
purchase, the Company may sell the Warrant to which such person is entitled if
payment is not received by the Company within 30 days after the mailing of such
bill and, after deducting the amount of such bill and any other charges, shall
remit the balance, if any, to such person. Fractional interests in Class B
Warrants shall be nontransferable except by or to the Company acting as herein
authorized. The Company may purchase or sell fractional interests on the basis
of market prices of the Class B Warrants, as determined by the Company in its
sole discretion, and it is expressly authorized to value fractional interests
without actual purchase or sale on the basis of the market price of the Class B
Warrants as determined by it in its sole discretion. Purchase and sales of
fractional interests by the Company may, in its sole discretion, be set off
against each other on the basis of market prices of the Class B Warrants, as
determined by the Company in its sole discretion.
Section 4.05.REGISTERED HOLDER AS OWNER. Every holder of a Warrant
Certificate, by accepting the same, consents and agrees with the Company, and
every subsequent holder of such Warrant Certificate that until the Warrant
Certificate is transferred on the books of the Company, the Company may treat
the registered Warrant Holder as the absolute owner thereof for all purposes,
notwithstanding any notice to the contrary.
Section 4.06.EXCHANGE AND TRANSFER OF CLASS B WARRANTS. Warrant
Certificates may be split-up, combined, or exchanged at any time for other
Warrant Certificates evidencing a like aggregate whole number of Class B
Warrants and may be transferred in whole or in part. Any Warrant Holder desiring
to split-up, combine, or exchange Warrant Certificates shall make such request
in writing delivered to the Company as provided by Section 6.07 and shall
surrender therewith the Warrant Certificate or Certificates to be so split-up,
combined, or exchanged. Subject to the restrictions on transfer of the Class B
Warrants contained in the applicable federal or state securities laws, transfers
of outstanding Warrant Certificates may be effected by the Company, from time to
time, upon the books to be maintained by the Company for that purpose, upon
surrender of the Warrant Certificates to the Company as provided by Section
6.07, which Certificates must be properly endorsed or accompanied by appropriate
instruments of transfer and written instructions for transfer, all in form
satisfactory to the Company. Upon any such surrender for a split-up,
combination, exchange, or transfer, the Company shall countersign and deliver to
the person entitled thereto a Warrant Certificate or Warrant Certificates as so
requested. The Company shall not be required to effect any transfer, split-up,
or exchange that will result in the issuance of a Warrant Certificate evidencing
other than a whole number of Class B Warrants.
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ARTICLE V
THE WARRANT AGENT
Section 5.01.ADDITIONAL WARRANT AGENTS. The Company may designate one or
more corporations as a successor Warrant Agent, or as additional Warrant Agents
to perform, either jointly or in place of the Company.
ARTICLE VI
GENERAL
Section 6.01.CANCELED CLASS B WARRANTS. The Company shall cancel any
Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, or for split-up, combination, exchange, or
substitution and shall deliver to the Company, in a manner satisfactory to the
Company, such canceled Warrant Certificates.
Section 6.02.TAXES ON ISSUANCE OF SHARES OF COMMON STOCK. The Company
shall from time to time promptly pay all taxes and charges that may be imposed
upon the Company with respect to the issuance or delivery of shares of Common
Stock upon the exercise of Class B Warrants, but the Company shall not be
obligated to pay any transfer taxes with respect to the issuance or delivery of
the Warrant Certificates or shares of Common Stock in a name other than that of
the Warrant Holder. The Company shall be authorized to charge Warrant Holders a
transfer fee of up to $7.50 per certificate.
Section 6.03.DATES AND TIMES. If any date set forth in this Warrant
Agreement shall fall on a day other than a full business day in Houston, said
date shall be deemed to be the next business day succeeding that date. All times
shall be the legal time then in effect in Houston.
Section 6.04.AMENDMENTS TO WARRANT AGREEMENT. The Company may, without the
consent or concurrence of the Warrant Holders, by supplemental agreement or
otherwise, make any amendments, alterations, deletions, or corrections in this
Agreement that it deem necessary or desirable: (a) to cure any ambiguity or
correct any defect, inconsistency, clerical omission or mistake, or manifest
error contained herein; (b) to confer additional rights upon the Warrant
Holders; or (c) in any other respect that does not adversely affect the rights
of the Warrant Holders hereunder.
Section 6.05. BINDING AGREEMENT. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of the respective successors and assigns hereunder. Nothing expressed in
this Agreement and nothing that may be implied from any of the provisions hereof
is intended, or shall be construed, to confer upon or give to any person or
corporation, other than the Company and the Warrant Holders, any legal or
equitable right, remedy, or claim under or by reason of this Agreement or of any
covenant, condition, stipulation, promise,
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or agreement herein, and all covenants, conditions, stipulations, promises, and
agreements contained in this Agreement shall be for the sole and exclusive
benefit of the Company, the Warrant Holders, and their respective successors and
assigns.
Section 6.06.COPIES OF AGREEMENT. A copy of this Agreement, as such may be
amended from time to time, shall be available for inspection by any Warrant
Holder at the office of the Company, as designated in Section 6.07, during
normal business hours. As a condition of such inspection, the Company may
require any such Warrant Holder to submit his or her Warrant Certificate for
inspection.
Section 6.07.NOTICES. Any communication, notice, or demand to be given
hereunder shall be duly given if in writing and delivered, or sent by first
class mail, certified or registered, postage prepaid and addressed as follows:
(a) If to the Company:
H. Dean Cubley, Chief Executive Officer
Eagle Telecom International, Inc.
901 Gemini
Houston, Texas 77058
(b) If to a Warrant Holder: at such person's last known address as such
shall appear on the registration books maintained by the Company.
Any party may change the address to which any communication, notice,
or demand shall be given by giving notice of such change in conformity with the
provisions of this Section.
Section 6.08.GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
Section 6.09.HEADINGS. The Article and Section headings herein are for
convenience only and are not part of this Agreement and shall not affect the
interpretation thereof.
Section 6.10.COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original and
all such counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the day and year first above written.
EAGLE TELECOM INTERNATIONAL, INC.
By__________________________________________
H. DEAN CUBLEY
Chief Executive Officer
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EXHIBIT A
(Form of Warrant Certificate)
No. Number of Class B Warrants
- ---------- --------
VOID AFTER ______ P.M., HOUSTON TIME,
___________ (UNLESS EXTENDED)
EAGLE TELECOM INTERNATIONAL, INC.
WARRANT TO PURCHASE COMMON STOCK
This Warrant Certificate certifies that
__________________________________, _______________________, or, subject to
certain restrictions on transfer described in the Warrant Agreement (as
hereinafter defined), registered assigns, is the registered holder of the number
indicated above of warrants ("Class B Warrants") to purchase shares of common
stock, $.001 par value ("Common Stock"), of Eagle Telecom International, Inc., a
Texas corporation ("Company"). Each Warrant entitles the holder thereof to
purchase from the Company, on or before _________ (subject to extension by the
Company), one fully paid and nonassessable share of Common Stock, upon
presentation and surrender of this Warrant Certificate, with the Subscription
Form duly executed, at the corporate office of the Company (as defined below)
and upon proper payment of the Exercise Price. Subject to adjustment as provided
in the warrant agreement between the Company and the holder hereof ("Warrant
Agreement"), the exercise price ("Exercise Price") for each Warrant evidenced
hereby shall be $6.00 per share. Payment of the Exercise Price shall be made in
lawful money of the United States of America by cashier's check, certified
check, federal funds or clearing house check payable to the Company. This
Warrant may be redeemed by the Company as provided for in the Warrant Agreement.
As provided in the Warrant Agreement, the Exercise Price and the number of
shares of Common Stock purchasable upon the exercise of the Class B Warrants
are, upon the happening of certain events, subject to modification or
adjustment.
References to the Warrant Agent herein shall mean the Company, and any
successor or additional Warrant Agent designated as provided in the Warrant
Agreement.
This Warrant Certificate is subject to all of the terms, provisions, and
conditions of the Warrant Agreement, including the provisions of such Agreement
relating to the amendment thereof, which Warrant Agreement is hereby
incorporated herein by reference and made a part hereof.
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Reference is hereby made to the Warrant Agreement for a full description of the
rights, limitations of rights, obligations, duties, and immunities of the
Company, and the holder of this Warrant Certificate. Copies of the Warrant
Agreement, as such may be amended from time to time, are available for
inspection at the offices of the Company.
This Warrant Certificate, with or without other Warrant Certificates, upon
surrender to the Company or any successor or additional Warrant Agent, may be
exchanged for another Warrant Certificate or Warrant Certificates evidencing a
like aggregate number of Class B Warrants. If this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Warrant Certificates evidencing the number
of Class B Warrants not exercised.
No holder of this Warrant Certificate shall be deemed to be the holder of
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained in
the Warrant Agreement or herein be construed to confer upon the holder of this
Warrant Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any reorganization, issuance of stock,
reclassification or conversion of stock, change of par value, or exchange of
stock to no par value, consolidation, merger, conveyance, or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise, until this Warrant Certificate shall have been exercised and the
Common Stock purchasable upon the exercise hereof shall have become issuable as
provided in the Warrant Agreement.
Every holder of this Warrant Certificate, by accepting the same, consents
and agrees with the Company and with every other holder of a Warrant Certificate
that:
(a) subject to the restrictions on transfer described in the Warrant
Agreement, this Warrant Certificate is transferable by the registered holder
hereof in person or by attorney duly authorized in writing, at the principal
corporate office of the Company, in whole or in part;
(b) anything herein to the contrary notwithstanding, in no event shall the
Company be obligated to issue Warrant Certificates evidencing other than a whole
number of Class B Warrants or issue certificates evidencing other than a whole
number of shares of Common Stock upon the exercise of this Warrant Certificate;
and
(c) the Company may deem and treat the person in whose name this Warrant
Certificate is registered as the absolute, true, and lawful owner hereof for all
purposes whatsoever, and the Company shall not be affected by any notice to the
contrary.
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WITNESS the signatures of the proper officers of the Company.
Date:_______________________ EAGLE TELECOM INTERNATIONAL, INC.
By__________________________________________
H. DEAN CUBLEY, Chief Executive Officer
Attest:______________________
Secretary
Countersigned:
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FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised, in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement pursuant to which the Warrant was granted, may be
delivered upon exercise.
<PAGE>
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY UPON ASSIGNMENT OF WARRANT)
For value received and subject to the restrictions on transfer described
in the Warrant Agreement under which this Warrant was issued,
___________________________________ hereby sells, assigns, and transfers unto
_________________________________________ Class B Warrants represented by the
within Warrant Certificate, together with all right, title, and interest
therein, and does hereby irrevocably constitute and appoint
____________________________ attorney, to transfer such Class B Warrants on the
books of the within named corporation, with full power of substitution.
Dated _________________________, 199_____
--------------------------------------------
Signature of Warrant Holder
--------------------------------------------
Printed Name of Warrant Holder
Note: The above signature must correspond with the name as written upon the face
of this Warrant in every particular, without any change whatsoever.
TRANSFER FEE: $__________ Per Certificate
EXHIBIT 4.4
EAGLE TELECOM INTERNATIONAL, INC.
WARRANT AGREEMENT
July 31, 1996
To the Persons Named on
the Signature Page Hereof
Lady and Gentlemen:
Eagle Telecom International, Inc., a Texas corporation (the "Company"),
for value received, hereby agrees to issue stock purchase warrants entitling the
persons whose names appear on the signature page of this Agreement to purchase
an aggregate of 700,000 shares of the Company's common stock (the "Common
Stock"). Such warrants are evidenced by warrant certificates in the form
attached hereto as EXHIBIT A (each such instrument being hereinafter referred to
as a "Warrant," and each Warrant and all instruments hereafter issued in
replacement, substitution, combination or subdivision thereof being hereinafter
collectively referred to as the "Warrants"). The Warrants will be issued in
consideration of service to the Company by the person whose name appears on the
signature page of this Agreement in the amounts opposite their names. The number
of shares of Common Stock purchasable upon exercise of the Warrants is subject
to adjustment as provided in Section 5 below. The Warrants will be exercisable
by each you or any other Warrant holder (as defined below) as to all or any
lesser number of shares of Common Stock covered thereby, at an initial Purchase
Price of $.01 per share, subject to adjustment as provided in Section 5 below,
for the exercise period defined in Section 3(a) below. The term "Warrant holder"
refers to each person whose name appears on the signature page of this agreement
and any transferee or transferees of any of them permitted by Section 2(a)
below. Such term, when used in this Warrant Agreement in reference to or in the
context of a person who holds or owns shares of Common Stock issued upon
exercise of a Warrant, refers where appropriate to such person who holds or owns
such shares of Common Stock.
1. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to you as follows:
(a) CORPORATE AND OTHER ACTION. The Company has all requisite power and
authority (corporate and other), and has taken all necessary corporate action,
to authorize, execute, deliver and perform this Warrant Agreement, to execute,
issue, sell and deliver the Warrants and a certificate or certificates
evidencing the Warrants, to authorize and reserve for issue and, upon payment
from time to time of the Purchase Price, to issue, sell and deliver, the shares
of the Common Stock issuable upon exercise of the Warrants (the "Shares"), and
to perform all of its obligations under this Warrant Agreement and the Warrants.
The Shares, when issued in accordance with this Agreement, will be duly
authorized and validly issued and outstanding, fully paid and nonassessable and
free of all liens, claims, encumbrances and preemptive rights. This Warrant
Agreement and, when issued, each Warrant issued pursuant hereto, has been or
will be duly executed and delivered by the Company and is or will be a legal,
valid and binding agreement of the Company, enforceable in accordance with its
WARRANT AGREEMENT PAGE 1
<PAGE>
terms. No authorization, approval, consent or other order of any governmental
entity, regulatory authority or other third party is required for such
authorization, execution, delivery, performance, issue or sale.
(b) NO VIOLATION. The execution and delivery of this Warrant Agreement,
the consummation of the transactions herein contemplated and the compliance with
the terms and provisions of this Warrant Agreement and of the Warrants will not
conflict with, or result in a breach of, or constitute a default or an event
permitting acceleration under, any statute, the Articles of Incorporation or
Bylaws of the Company or any indenture, mortgage, deed of trust, note, bank
loan, credit agreement, franchise, license, lease, permit, or any other
agreement, understanding, instrument, judgment, decree, order, statute, rule or
regulation to which the Company is a party or by which it is or may be bound.
2. TRANSFER.
(a) TRANSFERABILITY OF WARRANTS. You agree that the Warrants are being
acquired as an investment and not with a view to distribution thereof and that
the Warrants may not be transferred, sold, assigned or hypothecated except as
provided herein and in compliance with all applicable securities and other laws.
(b) REGISTRATION OF SHARES. You agree not to make any sale or other
disposition of the Shares except pursuant to a registration statement which has
become effective under the Securities Act of 1933, as amended (the "Act"),
setting forth the terms of such offering, the underwriting discount and
commissions and any other pertinent data with respect thereto, unless you have
provided the Company with an opinion of counsel reasonably acceptable to the
Company that such registration is not required. Certificates representing the
Shares, which are not registered as provided in Section 2, shall bear an
appropriate legend and be subject to a "stop-transfer" order.
3. EXERCISE OF WARRANTS, PARTIAL EXERCISE.
(a) EXERCISE PERIOD. Subject to the terms of this Section 3(a), each
Warrant is exercisable only if the collective ownership, on a fully diluted
basis (excluding these warrants), of the individuals listed on the signature
page, is less than 51% of the outstanding Company common stock. Notwithstanding
the foregoing, the warrants expire the earlier of: (i) July 31, 2001, or (ii)
the date the last sales price or closing bid price of the common stock is $6.50
per share for twenty consecutive days.
(b) EXERCISE IN FULL. Subject to Section 3(a), Warrants may be exercised
in full by the Warrant holder by surrender of the Warrants, with the form of
subscription at the end thereof duly executed by such Warrant holder, to the
Company at its principal office at 910 Gemini, Houston, Texas 77058, Attention:
Chief Executive Officer, accompanied by payment, in cash or by certified or bank
cashier's check payable to the order of the Company, in the amount obtained by
multiplying
WARRANT AGREEMENT PAGE 2
<PAGE>
the number of shares of the Common Stock represented by the respective Warrant
or Warrants by the Purchase Price per share (after giving effect to any
adjustments as provided in Section 5 below).
(c) PARTIAL EXERCISE. Subject to Section 3(a), each Warrant may be
exercised in part by the Warrant holder by surrender of the Warrant, with the
form of subscription at the end thereof duly executed by such Warrant holder, in
the manner and at the place provided in Section 3(b) above, accompanied by
payment, in cash or by certified or bank cashier's check payable to the order of
the Company, in amount obtained by multiplying the number of shares of the
Common Stock designated by the Warrant holder in the form of subscription
attached to the Warrant by the Purchase Price per share (after giving effect to
any adjustments as provided in Section 5 below). Upon any such partial exercise,
the Company at its expense will forthwith issue and deliver to or upon the order
of the Warrant holder a new Warrant of like tenor, in the name of the Warrant
holder thereof or as the Warrant holder (upon payment by such Warrant holder of
any applicable transfer taxes) may request, subject to Section 2(a), calling in
the aggregate for the purchase of the number of shares of the Common Stock equal
to the number of such shares called for on the face of the respective Warrant
(after giving effect to any adjustment herein as provided in Section 5 below)
minus the number of such shares designated by the Warrant holder in the
aforementioned form of subscription.
(d) COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at the time of any
exercise of any Warrant, upon the request of the Warrant holder, acknowledge in
writing its continuing obligation to afford to such Warrant holder any rights to
which such Warrant holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant Agreement; PROVIDED, HOWEVER,
that if the Warrant holder shall fail to make any such request, such failure
shall not affect the continuing obligation of the Company to afford to such
Warrant holder any such right.
4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE.
Any exercise of the Warrants pursuant to Section 3 shall be deemed to have
been effected immediately prior to the close of business on the date on which
the Warrants together with the subscription form and the payment for the
aggregate Purchase Price shall have been received by the Company. At such time,
the person or persons in whose name or names any certificate or certificates
representing the Shares or Other Securities (as defined below) shall be issuable
upon such exercise shall be deemed to have become the holder or holders of
record of the Shares or Other Securities so purchased. As soon as practicable
after the exercise of any Warrant in full or in part, and in any event within 10
days thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of, and delivered to
the purchasing Warrant holder, a certificate or certificates representing the
number of fully paid and nonassessable shares of Common Stock or Other
Securities to which such Warrant holder shall be entitled upon such exercise,
plus in lieu of any fractional share to which such Warrant holder would
otherwise be entitled, cash in an amount determined pursuant to Section 6(g),
together with any other stock or other securities and property (including cash,
where applicable). The term "Other Securities" refers to any stock (other than
Common Stock), other securities or assets (including cash) of the Company or any
other person (corporate or otherwise) which the holders of the Warrants at any
time shall be entitled to receive, or shall have received, upon the exercise of
the Warrants, in lieu of or in addition to Common Stock,
WARRANT AGREEMENT PAGE 3
<PAGE>
or which at any time shall be issuable or shall have been issued in exchange for
or in replacement of Common Stock or Other Securities pursuant to Section 5
below or otherwise.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES PURCHASABLE.
The Purchase Price and the number of Shares are subject to adjustment from
time to time as set forth in this Section 5.
(a) In case the Company shall at any time after the date of this Agreement
(i) declare a dividend on the Common Stock in shares of its capital stock, (ii)
subdivide the outstanding Shares, (iii) combine the outstanding Common Stock
into a smaller number of Common Stock, or (iv) issue any shares of its capital
stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each case the Purchase Price,
and the number and kind of Shares receivable upon exercise, in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination, or reclassification shall be proportionately adjusted
so that the holder of any Warrant exercised after such time shall be entitled to
receive the aggregate number and kind of Shares which, if such Warrant had been
exercised immediately prior to such time, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination, or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) No adjustment in the Purchase Price shall be required if such
adjustment is less than $.05; PROVIDED, HOWEVER, that any adjustments which by
reason of this subsection (h) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 5 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(c) Upon each adjustment of the Purchase Price as a result of the
calculations made in any of subsection (a) of this Section 5, each Warrant
outstanding prior to the making of the adjustment in the Purchase Price shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of Shares (calculated to the nearest thousandth) obtained by (i)
multiplying the number of Shares purchasable upon exercise of a Warrant
immediately prior to adjustment of the number of Shares by the Purchase Price in
effect prior to adjustment of the Purchase Price and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(d) In case of any capital reorganization of the Company, or of any
reclassification of the Common Stock (other than a reclassification of the
Common Stock referred to in subsection (a) of this Section 5), or in the case of
the consolidation of the Company with or the merger of the Company into any
other corporation or of the sale, transfer, or lease of the properties and
assets of the Company as, or substantially as, an entirety to any other
corporation, each Warrant shall after such capital reorganization,
reclassification of the Common Stock, consolidation, merger, sale, transfer, or
lease be exercisable, upon the terms and conditions specified in this Agreement,
for the
WARRANT AGREEMENT PAGE 4
<PAGE>
number of shares of stock or other securities, assets, or cash to which a holder
of the number of shares of Common Stock purchasable (at the time of such capital
reorganization, reclassification of shares, consolidation, merger, sale,
transfer, or lease) upon exercise of such Warrant would have been entitled upon
such capital reorganization, reclassification of the Common Stock,
consolidation, merger, sale, transfer, or lease; and in any such case, if
necessary, the provisions set forth in this Section 5 with respect to the rights
and interests thereafter of the holders of the Warrants shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be, to any shares
of stock or other securities, assets, or cash thereafter deliverable upon the
exercise of the Warrants. The subdivision or combination of the Common Stock at
any time outstanding into a greater or lesser number of shares shall not be
deemed to be a reclassification of the Common Stock for the purposes of this
paragraph. The Company shall not effect any such consolidation, merger,
transfer, or lease, unless prior to or simultaneously with the consummation
thereof, the successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing, receiving, or
leasing such assets or other appropriate corporation or entity shall assume, by
written instrument executed and delivered to the Warrant holder, the obligation
to deliver to the Warrant holder such shares of stock, securities, or assets as,
in accordance with the foregoing provisions, such holders may be entitled to
purchase, and to perform the other obligations of the Company under this Warrant
Agreement.
6. FURTHER COVENANTS OF THE COMPANY.
(a) DILUTION OR IMPAIRMENTS. The Company will not, by amendment of its
certificate or articles of incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the Warrants or of this Warrant Agreement, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Warrant holders against dilution or other impairment. Without
limiting the generality of the foregoing, the Company:
(i) shall at all times reserve and keep available, solely for
issuance and delivery upon the exercise of the Warrants, all shares of
Common Stock (or Other Securities) from time to time issuable upon the
exercise of the Warrants and shall take all necessary actions to ensure
that the par value per share, if any, of the Common Stock (or Other
Securities) is at all times equal to or less than the then effective
Purchase Price per share;
(ii) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock or Other Securities upon the exercise
of the Warrants from time to time outstanding;
(iii) will not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets upon
voluntary or involuntary dissolution, liquidation or winding-up, unless
the rights of the holders thereof shall be limited to a fixed sum or
percentage of par value in respect of participation in dividends and in
any such distribution of assets; and
WARRANT AGREEMENT PAGE 5
<PAGE>
(iv) will not transfer all or substantially all of its properties
and assets to any person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to consolidate with
or merge into the Company (if the Company is not the surviving
corporation), unless such other person shall expressly assume in writing
and will be bound by all the terms of this Warrant Agreement and the
Warrants.
(b) TITLE TO STOCK. All shares of Common Stock delivered upon the exercise
of the Warrants shall be validly issued, fully paid and nonassessable; each
Warrant holder shall, upon such delivery, receive good and marketable title to
the Shares, free and clear of all voting and other trust arrangements, liens,
encumbrances, equities and claims whatsoever; and the Company shall have paid
all taxes, if any, in respect of the issuance thereof.
(c) REMEDIES. The Company stipulates that the remedies at law of the
Warrant holder or any holder of Shares in the event of any default or threatened
default by the Company in the performance of or compliance with any of the terms
of this Warrant Agreement or the Warrants are not and will not be adequate and
that such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or in the Warrants or by an
injunction against a violation of any of the terms hereof or thereof or
otherwise.
(d) EXCHANGE OF WARRANTS. Subject to Section 2(a) hereof, upon surrender
for exchange of any Warrant to the Company, the Company at its expense will
promptly issue and deliver to or upon the order of the holder thereof a new
Warrant or like tenor, in the name of such holder or as such holder (upon
payment by such Warrant holder of any applicable transfer taxes) may direct,
calling in the aggregate for the purchase of the number of shares of the Common
Stock called for on the face or faces of the Warrant or Warrants so surrendered.
The Warrants and all rights thereunder are transferable in whole or in part upon
the books of the Company by the registered holder thereof, subject to the
provisions of Section 2(a), in person or by duly authorized attorney, upon
surrender of the Warrant, duly endorsed, at the principal office of the Company.
(e) REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company, at the expense of the Warrant holder, will execute
and deliver, in lieu thereof, a new Warrant of like tenor.
(f) REPORTING BY THE COMPANY. The Company agrees that during the term of
the Warrants it will use its best efforts to keep current in the filing of all
forms and other materials, if any, which it may be required to file with the
appropriate regulatory authority pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and all other forms and reports required
to be filed with any regulatory authority having jurisdiction over the Company.
(g) FRACTIONAL SHARES. No fractional Shares are to be issued upon the
exercise of any Warrant, but the Company shall pay a cash adjustment in respect
of any fraction of a share which
WARRANT AGREEMENT PAGE 6
<PAGE>
would otherwise be issuable in an amount equal to such fraction multiplied by
the closing price which shall be the last reported sales price regular way or,
in case no such reported sales takes place on such day, the average of the
closing bid and asked prices regular way, on the principal national securities
exchange in the United States on which the Common Stock is listed or admitted to
trading, or if the Common Stock is not listed or admitted to trading on any such
national securities exchange, the average of the highest reported bid and lowest
reported asked price as furnished by the National Association of Securities
Dealers, Inc. through its automated quotation system ("Nasdaq") or a similar
organization if Nasdaq is no longer reporting such information.
7. OTHER WARRANT HOLDERS: HOLDERS OF SHARES.
The Warrants are issued upon the following terms, to all of which each
Warrant holder by the taking thereof consents and agrees: (a) any person who
shall become a transferee, within the limitations on transfer imposed by Section
2(a) hereof, of a Warrant properly endorsed shall take such Warrant subject to
the provisions of Section 2(a) hereof and thereupon shall be authorized to
represent himself as absolute owner thereof and, subject to the restrictions
contained in this Warrant Agreement, shall be empowered to transfer absolute
title by endorsement and delivery thereof to a permitted BONA FIDE purchaser for
value; (b) any person who shall become a holder or owner of Shares shall take
such shares subject to the provisions of Section 2(b) hereof; (c) each prior
taker or owner waives and renounces all of his equities or rights in such
Warrant in favor of each such permitted BONA FIDE purchaser, and each such
permitted BONA FIDE purchaser shall acquire absolute title thereto and to all
rights presented thereby; and (d) until such time as the respective Warrant is
transferred on the books of the Company, the Company may treat the registered
holder thereof as the absolute owner thereof for all purposes, notwithstanding
any notice to the contrary.
8. MISCELLANEOUS.
All notices, certificates and other communications from or at the request
of the Company to any Warrant holder shall be mailed by first class, registered
or certified mail, postage prepaid, to such address as may have been furnished
to the Company in writing by such Warrant holder, or, until an address is so
furnished, to the address of the last holder of such Warrant who has so
furnished an address to the Company, except as otherwise provided herein. This
Warrant Agreement and any of the terms hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This
Warrant Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Texas. The headings in this Warrant
Agreement are for purposes of reference only and shall not limit or otherwise
affect any of the terms hereof. This Warrant Agreement, together with the forms
of instruments annexed hereto as exhibits, constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be
executed on this the 31st day of July, 1996, in Houston, Texas, by its proper
corporate officers, thereunto duly authorized.
WARRANT AGREEMENT PAGE 7
<PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
H. DEAN CUBLEY,
Chief Executive Officer
The above Warrant Agreement is confirmed as of this 31st day of July, 1996.
NAME NUMBER OF SHARES
UNDERLYING WARRANTS
CUBLEY FAMILY PARTNERSHIP 490,000
By:
H. Dean Cubley
FUTER FAMILY PARTNERSHIP 154,000
By:
Christopher W. "James" Futer
28,000
Billie Mize
28,000
John Nagel
EXHIBIT A
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 1 To Purchase
490,000 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
A-1
<PAGE>
This certifies that, for value received, the hereafter named registered
owner is entitled, subject to the terms and conditions of this Warrant, until
the expiration date, to purchase the number of shares set forth above of the
common stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of July 31, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: Cubley Family Partnership Date: July 31, 1996
Purchase Price
Per Share: $.01
Expiration Date: Subject to Section 3(a) of the Warrant Agreement, the
earlier of 5:00 p.m. Houston, Texas time on July 31, 2001, or
the date the last sales price or closing bid price of the
common stock is $6.50 per share for 20 consecutive trading
days.
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
CHRISTOPHER W. "JAMES" FUTER
Chief Operating Officer
A-2
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised, in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement pursuant to which the Warrant was granted, may be
delivered upon exercise.
A-3
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the enclosed
Warrant is permitted by the terms of the Warrant Agreement pursuant to which the
enclosed Warrant has been issued, and the transferee hereof, by his acceptance
of this Agreement, represents and warrants that he is familiar with the terms of
said Warrant Agreement and agrees to be bound by the terms thereof with the same
force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
EXHIBIT A
A-4
<PAGE>
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 2 To Purchase
154,000 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
This certifies that, for value received, the hereafter named registered
owner is entitled, subject to the terms and conditions of this Warrant, until
the expiration date, to purchase the number of shares set forth above of the
common stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of July 31, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: Futer Family Partnership Date: July 31, 1996
Purchase Price
Per Share: $.01
Expiration Date: Subject to Section 3(a) of the Warrant Agreement, the
earlier of 5:00 p.m. Houston, Texas time on July 31, 2001, or
the date the last sales price or closing bid price of the
common stock is $6.50 per share for 20 consecutive trading
days.
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
H. DEAN CUBLEY
Chief Executive Officer
A-5
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised, in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement pursuant to which the Warrant was granted, may be
delivered upon exercise.
A-6
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the enclosed
Warrant is permitted by the terms of the Warrant Agreement pursuant to which the
enclosed Warrant has been issued, and the transferee hereof, by his acceptance
of this Agreement, represents and warrants that he is familiar with the terms of
said Warrant Agreement and agrees to be bound by the terms thereof with the same
force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
EXHIBIT A
A-7
<PAGE>
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 3 To Purchase
28,000 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
This certifies that, for value received, the hereafter named registered
owner is entitled, subject to the terms and conditions of this Warrant, until
the expiration date, to purchase the number of shares set forth above of the
common stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of July 31, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: Billie Mize Date: July 31, 1996
Purchase Price
Per Share: $.01
Expiration Date: Subject to Section 3(a) of the Warrant Agreement, the
earlier of 5:00 p.m. Houston, Texas time on July 31, 2001, or
the date the last sales price or closing bid price of the
common stock is $6.50 per share for 20 consecutive trading
days.
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
H. DEAN CUBLEY
Chief Executive Officer
A-8
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised, in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement pursuant to which the Warrant was granted, may be
delivered upon exercise.
A-9
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the enclosed
Warrant is permitted by the terms of the Warrant Agreement pursuant to which the
enclosed Warrant has been issued, and the transferee hereof, by his acceptance
of this Agreement, represents and warrants that he is familiar with the terms of
said Warrant Agreement and agrees to be bound by the terms thereof with the same
force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
A-10
<PAGE>
EXHIBIT A
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 4 To Purchase
28,000 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
This certifies that, for value received, the hereafter named registered
owner is entitled, subject to the terms and conditions of this Warrant, until
the expiration date, to purchase the number of shares set forth above of the
common stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of July 31, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: John Nagel Date: July 31, 1996
Purchase Price
Per Share: $.01
Expiration Date: Subject to Section 3(a) of the Warrant Agreement, the
earlier of 5:00 p.m. Houston, Texas time on July 31, 2001, or
the date the last sales price or closing bid price of the
common stock is $6.50 per share for 20 consecutive trading
days.
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
H. DEAN CUBLEY
Chief Executive Officer
A-11
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised, in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement pursuant to which the Warrant was granted, may be
delivered upon exercise.
A-12
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the enclosed
Warrant is permitted by the terms of the Warrant Agreement pursuant to which the
enclosed Warrant has been issued, and the transferee hereof, by his acceptance
of this Agreement, represents and warrants that he is familiar with the terms of
said Warrant Agreement and agrees to be bound by the terms thereof with the same
force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
A-13
EXHIBIT 4.5
EAGLE TELECOM INTERNATIONAL, INC.
WARRANT AGREEMENT
November 25, 1996
Persons Listed on the
Signature Page Hereof
Gentlemen:
Eagle Telecom International, Inc., a Texas corporation (the "Company"),
for value received, hereby agrees to issue a stock purchase warrant entitling
you to purchase 500,000 shares of the Company's common stock (the "Common
Stock"). Such warrants are evidenced by warrant certificates in the form
attached hereto as EXHIBIT A (each such instrument being hereinafter referred to
as a "Warrant," and each Warrant and all instruments hereafter issued in
replacement, substitution, combination or subdivision thereof being hereinafter
collectively referred to as the "Warrants"). The Warrants will be issued in
consideration of an investment in the Company by you. The number of shares of
Common Stock purchasable upon exercise of the Warrants is subject to adjustment
as provided in Section 5 below. The Warrants will be exercisable by each you or
any other Warrant holder (as defined below) as to all or any lesser number of
shares of Common Stock covered thereby, at an initial Purchase Price of $.05 per
share, subject to adjustment as provided in Section 5 below, for the exercise
period defined in Section 3(a) below. The term "Warrant holder" refers to each
person whose name appears on the signature page of this agreement and any
transferee or transferees of any of them permitted by Section 2(a) below. Such
term, when used in this Warrant Agreement in reference to or in the context of a
person who holds or owns shares of Common Stock issued upon exercise of a
Warrant, refers where appropriate to such person who holds or owns such shares
of Common Stock.
1. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to you as follows:
(a) CORPORATE AND OTHER ACTION. The Company has all requisite power and
authority (corporate and other), and has taken all necessary corporate action,
to authorize, execute, deliver and perform this Warrant Agreement, to execute,
issue, sell and deliver the Warrants and a certificate or certificates
evidencing the Warrants, to authorize and reserve for issue and, upon payment
from time to time of the Purchase Price, to issue, sell and deliver, the shares
of the Common Stock issuable upon exercise of the Warrants (the "Shares"), and
to perform all of its obligations under this Warrant Agreement and the Warrants.
The Shares, when issued in accordance with this Agreement, will be duly
authorized and validly issued and outstanding, fully paid and nonassessable and
free of all liens, claims, encumbrances and preemptive rights. This Warrant
Agreement and, when issued, each Warrant issued pursuant hereto, has been or
will be duly executed and delivered by the Company and
<PAGE>
is or will be a legal, valid and binding agreement of the Company, enforceable
in accordance with its terms. No authorization, approval, consent or other order
of any governmental entity, regulatory authority or other third party is
required for such authorization, execution, delivery, performance, issue or
sale.
(b) NO VIOLATION. The execution and delivery of this Warrant Agreement,
the consummation of the transactions herein contemplated and the compliance with
the terms and provisions of this Warrant Agreement and of the Warrants will not
conflict with, or result in a breach of, or constitute a default or an event
permitting acceleration under, any statute, the Articles of Incorporation or
Bylaws of the Company or any indenture, mortgage, deed of trust, note, bank
loan, credit agreement, franchise, license, lease, permit, or any other
agreement, understanding, instrument, judgment, decree, order, statute, rule or
regulation to which the Company is a party or by which it is or may be bound.
2. TRANSFER.
(a) TRANSFERABILITY OF WARRANTS. You agree that the Warrants are being
acquired as an investment and not with a view to distribution thereof and that
the Warrants may not be transferred, sold, assigned or hypothecated except as
provided herein and in compliance with all applicable securities and other laws.
(b) REGISTRATION OF SHARES. You agree not to make any sale or other
disposition of the Shares except pursuant to a registration statement which has
become effective under the Securities Act of 1933, as amended (the "Act"),
setting forth the terms of such offering, the underwriting discount and
commissions and any other pertinent data with respect thereto, unless you have
provided the Company with an opinion of counsel reasonably acceptable to the
Company that such registration is not required. Certificates representing the
Shares, which are not registered as provided in Section 2, shall bear an
appropriate legend and be subject to a "stop-transfer" order.
3. EXERCISE OF WARRANTS, PARTIAL EXERCISE.
(a) EXERCISE PERIOD. Subject to the terms of this Section 3(a), each
Warrant is exercisable only if the shares of common stock of the Company trade
at a minimum of $5.50 per share for twenty consecutive trading days.
Notwithstanding the foregoing, the warrants shall expire May 3, 1999.
(b) EXERCISE IN FULL. Subject to Section 3(a), Warrants may be exercised
in full by the Warrant holder by surrender of the Warrants, with the form of
subscription at the end thereof duly executed by such Warrant holder, to the
Company at its principal office at 910 Gemini, Houston, Texas 77058, Attention:
Chief Executive Officer, accompanied by payment, in cash or by certified or bank
cashier's check payable to the order of the Company, in the amount obtained by
multiplying the number of shares of the Common Stock represented by the
respective Warrant or Warrants by the Purchase Price per share (after giving
effect to any adjustments as provided in Section 5 below).
WARRANT AGREEMENT PAGE 2
<PAGE>
(c) PARTIAL EXERCISE. Subject to Section 3(a), each Warrant may be
exercised in part by the Warrant holder by surrender of the Warrant, with the
form of subscription at the end thereof duly executed by such Warrant holder, in
the manner and at the place provided in Section 3(b) above, accompanied by
payment, in cash or by certified or bank cashier's check payable to the order of
the Company, in amount obtained by multiplying the number of shares of the
Common Stock designated by the Warrant holder in the form of subscription
attached to the Warrant by the Purchase Price per share (after giving effect to
any adjustments as provided in Section 5 below). Upon any such partial exercise,
the Company at its expense will forthwith issue and deliver to or upon the order
of the Warrant holder a new Warrant of like tenor, in the name of the Warrant
holder thereof or as the Warrant holder (upon payment by such Warrant holder of
any applicable transfer taxes) may request, subject to Section 2(a), calling in
the aggregate for the purchase of the number of shares of the Common Stock equal
to the number of such shares called for on the face of the respective Warrant
(after giving effect to any adjustment herein as provided in Section 5 below)
minus the number of such shares designated by the Warrant holder in the
aforementioned form of subscription.
(d) COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at the time of
any exercise of any Warrant, upon the request of the Warrant holder, acknowledge
in writing its continuing obligation to afford to such Warrant holder any rights
to which such Warrant holder shall continue to be entitled after such exercise
in accordance with the provisions of this Warrant Agreement; PROVIDED, HOWEVER,
that if the Warrant holder shall fail to make any such request, such failure
shall not affect the continuing obligation of the Company to afford to such
Warrant holder any such right.
4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE.
Any exercise of the Warrants pursuant to Section 3 shall be deemed to
have been effected immediately prior to the close of business on the date on
which the Warrants together with the subscription form and the payment for the
aggregate Purchase Price shall have been received by the Company. At such time,
the person or persons in whose name or names any certificate or certificates
representing the Shares or Other Securities (as defined below) shall be issuable
upon such exercise shall be deemed to have become the holder or holders of
record of the Shares or Other Securities so purchased. As soon as practicable
after the exercise of any Warrant in full or in part, and in any event within 10
days thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of, and delivered to
the purchasing Warrant holder, a certificate or certificates representing the
number of fully paid and nonassessable shares of Common Stock or Other
Securities to which such Warrant holder shall be entitled upon such exercise,
plus in lieu of any fractional share to which such Warrant holder would
otherwise be entitled, cash in an amount determined pursuant to Section 6(g),
together with any other stock or other securities and property (including cash,
where applicable). The term "Other Securities" refers to any stock (other than
Common Stock), other securities or assets (including cash) of the Company or any
other person (corporate or otherwise) which the holders of the Warrants at any
time shall be entitled to receive, or shall have received, upon the exercise of
the Warrants, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 5 below or otherwise.
WARRANT AGREEMENT PAGE 3
<PAGE>
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES PURCHASABLE.
The Purchase Price and the number of Shares are subject to adjustment
from time to time as set forth in this Section 5.
(a) In case the Company shall at any time after the date of this
Agreement (i) declare a dividend on the Common Stock in shares of its capital
stock, (ii) subdivide the outstanding Shares, (iii) combine the outstanding
Common Stock into a smaller number of Common Stock, or (iv) issue any shares of
its capital stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each case the Purchase Price,
and the number and kind of Shares receivable upon exercise, in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination, or reclassification shall be proportionately adjusted
so that the holder of any Warrant exercised after such time shall be entitled to
receive the aggregate number and kind of Shares which, if such Warrant had been
exercised immediately prior to such time, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination, or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) No adjustment in the Purchase Price shall be required if such
adjustment is less than $.05; PROVIDED, HOWEVER, that any adjustments which by
reason of this subsection (h) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 5 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(c) Upon each adjustment of the Purchase Price as a result of the
calculations made in any of subsection (a) of this Section 5, each Warrant
outstanding prior to the making of the adjustment in the Purchase Price shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of Shares (calculated to the nearest thousandth) obtained by (i)
multiplying the number of Shares purchasable upon exercise of a Warrant
immediately prior to adjustment of the number of Shares by the Purchase Price in
effect prior to adjustment of the Purchase Price and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(d) In case of any capital reorganization of the Company, or of any
reclassification of the Common Stock (other than a reclassification of the
Common Stock referred to in subsection (a) of this Section 5), or in the case of
the consolidation of the Company with or the merger of the Company into any
other corporation or of the sale, transfer, or lease of the properties and
assets of the Company as, or substantially as, an entirety to any other
corporation, each Warrant shall after such capital reorganization,
reclassification of the Common Stock, consolidation, merger, sale, transfer, or
lease be exercisable, upon the terms and conditions specified in this Agreement,
for the number of shares of stock or other securities, assets, or cash to which
a holder of the number of shares of Common Stock purchasable (at the time of
such capital reorganization, reclassification of shares, consolidation, merger,
sale, transfer, or lease) upon exercise of such Warrant would have been
WARRANT AGREEMENT PAGE 4
<PAGE>
entitled upon such capital reorganization, reclassification of the Common Stock,
consolidation, merger, sale, transfer, or lease; and in any such case, if
necessary, the provisions set forth in this Section 5 with respect to the rights
and interests thereafter of the holders of the Warrants shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be, to any shares
of stock or other securities, assets, or cash thereafter deliverable upon the
exercise of the Warrants. The subdivision or combination of the Common Stock at
any time outstanding into a greater or lesser number of shares shall not be
deemed to be a reclassification of the Common Stock for the purposes of this
paragraph. The Company shall not effect any such consolidation, merger,
transfer, or lease, unless prior to or simultaneously with the consummation
thereof, the successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing, receiving, or
leasing such assets or other appropriate corporation or entity shall assume, by
written instrument executed and delivered to the Warrant holder, the obligation
to deliver to the Warrant holder such shares of stock, securities, or assets as,
in accordance with the foregoing provisions, such holders may be entitled to
purchase, and to perform the other obligations of the Company under this Warrant
Agreement.
6. FURTHER COVENANTS OF THE COMPANY.
(a) DILUTION OR IMPAIRMENTS. The Company will not, by amendment of its
certificate or articles of incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the Warrants or of this Warrant Agreement, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Warrant holders against dilution or other impairment. Without
limiting the generality of the foregoing, the Company:
(i) shall at all times reserve and keep available, solely for
issuance and delivery upon the exercise of the Warrants, all shares of
Common Stock (or Other Securities) from time to time issuable upon the
exercise of the Warrants and shall take all necessary actions to ensure
that the par value per share, if any, of the Common Stock (or Other
Securities) is at all times equal to or less than the then effective
Purchase Price per share;
(ii) will take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock or Other Securities upon the
exercise of the Warrants from time to time outstanding;
(iii) will not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets upon
voluntary or involuntary dissolution, liquidation or winding-up, unless
the rights of the holders thereof shall be limited to a fixed sum or
percentage of par value in respect of participation in dividends and in
any such distribution of assets; and
(iv) will not transfer all or substantially all of its properties
and assets to any person (corporate or otherwise), or consolidate with
or merge into any other person or permit any
WARRANT AGREEMENT PAGE 5
<PAGE>
such person to consolidate with or merge into the Company (if the
Company is not the surviving corporation), unless such other person
shall expressly assume in writing and will be bound by all the terms of
this Warrant Agreement and the Warrants.
(b) TITLE TO STOCK. All shares of Common Stock delivered upon the
exercise of the Warrants shall be validly issued, fully paid and nonassessable;
each Warrant holder shall, upon such delivery, receive good and marketable title
to the Shares, free and clear of all voting and other trust arrangements, liens,
encumbrances, equities and claims whatsoever; and the Company shall have paid
all taxes, if any, in respect of the issuance thereof.
(c) REMEDIES. The Company stipulates that the remedies at law of the
Warrant holder or any holder of Shares in the event of any default or threatened
default by the Company in the performance of or compliance with any of the terms
of this Warrant Agreement or the Warrants are not and will not be adequate and
that such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or in the Warrants or by an
injunction against a violation of any of the terms hereof or thereof or
otherwise.
(d) EXCHANGE OF WARRANTS. Subject to Section 2(a) hereof, upon surrender
for exchange of any Warrant to the Company, the Company at its expense will
promptly issue and deliver to or upon the order of the holder thereof a new
Warrant or like tenor, in the name of such holder or as such holder (upon
payment by such Warrant holder of any applicable transfer taxes) may direct,
calling in the aggregate for the purchase of the number of shares of the Common
Stock called for on the face or faces of the Warrant or Warrants so surrendered.
The Warrants and all rights thereunder are transferable in whole or in part upon
the books of the Company by the registered holder thereof, subject to the
provisions of Section 2(a), in person or by duly authorized attorney, upon
surrender of the Warrant, duly endorsed, at the principal office of the Company.
(e) REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company, at the expense of the Warrant holder, will execute
and deliver, in lieu thereof, a new Warrant of like tenor.
(f) REPORTING BY THE COMPANY. The Company agrees that during the term of
the Warrants it will use its best efforts to keep current in the filing of all
forms and other materials, if any, which it may be required to file with the
appropriate regulatory authority pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and all other forms and reports required
to be filed with any regulatory authority having jurisdiction over the Company.
(g) FRACTIONAL SHARES. No fractional Shares are to be issued upon the
exercise of any Warrant, but the Company shall pay a cash adjustment in respect
of any fraction of a share which would otherwise be issuable in an amount equal
to such fraction multiplied by the closing price which shall be the last
reported sales price regular way or, in case no such reported sales takes place
on such
WARRANT AGREEMENT PAGE 6
<PAGE>
day, the average of the closing bid and asked prices regular way, on the
principal national securities exchange in the United States on which the Common
Stock is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on any such national securities exchange, the average of the
highest reported bid and lowest reported asked price as furnished by the
National Association of Securities Dealers, Inc. through its automated quotation
system ("Nasdaq") or a similar organization if Nasdaq is no longer reporting
such information.
7. OTHER WARRANT HOLDERS: HOLDERS OF SHARES.
The Warrants are issued upon the following terms, to all of which each
Warrant holder by the taking thereof consents and agrees: (a) any person who
shall become a transferee, within the limitations on transfer imposed by Section
2(a) hereof, of a Warrant properly endorsed shall take such Warrant subject to
the provisions of Section 2(a) hereof and thereupon shall be authorized to
represent himself as absolute owner thereof and, subject to the restrictions
contained in this Warrant Agreement, shall be empowered to transfer absolute
title by endorsement and delivery thereof to a permitted BONA FIDE purchaser for
value; (b) any person who shall become a holder or owner of Shares shall take
such shares subject to the provisions of Section 2(b) hereof; (c) each prior
taker or owner waives and renounces all of his equities or rights in such
Warrant in favor of each such permitted BONA FIDE purchaser, and each such
permitted BONA FIDE purchaser shall acquire absolute title thereto and to all
rights presented thereby; and (d) until such time as the respective Warrant is
transferred on the books of the Company, the Company may treat the registered
holder thereof as the absolute owner thereof for all purposes, notwithstanding
any notice to the contrary.
8. MISCELLANEOUS.
All notices, certificates and other communications from or at the
request of the Company to any Warrant holder shall be mailed by first class,
registered or certified mail, postage prepaid, to such address as may have been
furnished to the Company in writing by such Warrant holder, or, until an address
is so furnished, to the address of the last holder of such Warrant who has so
furnished an address to the Company, except as otherwise provided herein. This
Warrant Agreement and any of the terms hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This
Warrant Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Texas. The headings in this Warrant
Agreement are for purposes of reference only and shall not limit or otherwise
affect any of the terms hereof. This Warrant Agreement, together with the forms
of instruments annexed hereto as exhibits, constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof.
WARRANT AGREEMENT PAGE 7
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be
executed on this the 25th day of November, 1996, in Houston, Texas, by its
proper corporate officers, thereunto duly authorized.
EAGLE TELECOM INTERNATIONAL, INC.
By__________________________________
H. DEAN CUBLEY,
Chief Executive Officer
The above Warrant Agreement is confirmed as of this 25th day of November, 1996.
- -------------------------------
A. L. CLIFFORD
- -------------------------------
PORTER BARTON
RE-ALT GROUP, LLC
By:_____________________________
Name:__________________________
Title:___________________________
WARRANT AGREEMENT PAGE 8
<PAGE>
EXHIBIT A
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 1 To Purchase
166,667 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
This certifies that, for value received, the hereafter named registered
owner is entitled, subject to the terms and conditions of this Warrant, until
the expiration date, to purchase the number of shares set forth above of the
common stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of November 25, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: A. L. Clifford Date: November 25, 1996
Purchase Price
Per Share: $.05
Expiration Date: Subject to Section 3(a) of the Warrant Agreement,
November 25, 1996
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By_________________________________
H. DEAN CUBLEY
Chief Executive Officer
A-1
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant
or, in the case of a partial exercise, the portion thereof as to which
the Warrant is being exercised, in either case without making any
adjustment for additional Common Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment
provisions of the Warrant Agreement pursuant to which the Warrant was
granted, may be delivered upon exercise.
A-2
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the
enclosed Warrant is permitted by the terms of the Warrant Agreement pursuant to
which the enclosed Warrant has been issued, and the transferee hereof, by his
acceptance of this Agreement, represents and warrants that he is familiar with
the terms of said Warrant Agreement and agrees to be bound by the terms thereof
with the same force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
A-3
<PAGE>
EXHIBIT A
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 2 To Purchase
166,667 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
This certifies that, for value received, the hereafter named registered
owner is entitled, subject to the terms and conditions of this Warrant, until
the expiration date, to purchase the number of shares set forth above of the
common stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of November 25, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: Porter Barton Date: November 25, 1996
Purchase Price
Per Share: $.05
Expiration Date: Subject to Section 3(a) of the Warrant Agreement,
November 25, 1996.
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By__________________________________
H. DEAN CUBLEY
Chief Executive Officer
A-4
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant
or, in the case of a partial exercise, the portion thereof as to which
the Warrant is being exercised, in either case without making any
adjustment for additional Common Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment
provisions of the Warrant Agreement pursuant to which the Warrant was
granted, may be delivered upon exercise.
A-5
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the
enclosed Warrant is permitted by the terms of the Warrant Agreement pursuant to
which the enclosed Warrant has been issued, and the transferee hereof, by his
acceptance of this Agreement, represents and warrants that he is familiar with
the terms of said Warrant Agreement and agrees to be bound by the terms thereof
with the same force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
A-6
<PAGE>
EXHIBIT A
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 3 To Purchase
166,666 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
This certifies that, for value received, the hereafter named registered
owner is entitled, subject to the terms and conditions of this Warrant, until
the expiration date, to purchase the number of shares set forth above of the
common stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of November 25, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: Re-alt Group, LLC Date: November 25, 1996
Purchase Price
Per Share: $.05
Expiration Date: Subject to Section 3(a) of the Warrant Agreement,
November 25, 1996
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By_________________________________
H. DEAN CUBLEY
Chief Executive Officer
A-7
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant
or, in the case of a partial exercise, the portion thereof as to which
the Warrant is being exercised, in either case without making any
adjustment for additional Common Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment
provisions of the Warrant Agreement pursuant to which the Warrant was
granted, may be delivered upon exercise.
A-8
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the
enclosed Warrant is permitted by the terms of the Warrant Agreement pursuant to
which the enclosed Warrant has been issued, and the transferee hereof, by his
acceptance of this Agreement, represents and warrants that he is familiar with
the terms of said Warrant Agreement and agrees to be bound by the terms thereof
with the same force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
A-9
EXHIBIT 4.6
EAGLE TELECOM INTERNATIONAL, INC.
WARRANT AGREEMENT
July 31, 1996
Persons Listed on the
Signature Page Hereof
Ladies and Gentlemen:
Eagle Telecom International, Inc., a Texas corporation (the "Company"),
for value received, hereby agrees to issue a stock purchase warrant entitling
you to purchase 500,000 shares of the Company's common stock (the "Common
Stock"). Such warrants are evidenced by warrant certificates in the form
attached hereto as EXHIBIT A (each such instrument being hereinafter referred to
as a "Warrant," and each Warrant and all instruments hereafter issued in
replacement, substitution, combination or subdivision thereof being hereinafter
collectively referred to as the "Warrants"). The Warrants will be issued in
consideration of an investment in the Company by you. The number of shares of
Common Stock purchasable upon exercise of the Warrants is subject to adjustment
as provided in Section 5 below. The Warrants will be exercisable by each you or
any other Warrant holder (as defined below) as to all or any lesser number of
shares of Common Stock covered thereby, at an initial Purchase Price of $.50 per
share, subject to adjustment as provided in Section 5 below, for the exercise
period defined in Section 3(a) below. The term "Warrant holder" refers to each
person whose name appears on the signature page of this agreement and any
transferee or transferees of any of them permitted by Section 2(a) below. Such
term, when used in this Warrant Agreement in reference to or in the context of a
person who holds or owns shares of Common Stock issued upon exercise of a
Warrant, refers where appropriate to such person who holds or owns such shares
of Common Stock.
1. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to you as follows:
(a) CORPORATE AND OTHER ACTION. The Company has all requisite power and
authority (corporate and other), and has taken all necessary corporate action,
to authorize, execute, deliver and perform this Warrant Agreement, to execute,
issue, sell and deliver the Warrants and a certificate or certificates
evidencing the Warrants, to authorize and reserve for issue and, upon payment
from time to time of the Purchase Price, to issue, sell and deliver, the shares
of the Common Stock issuable upon exercise of the Warrants (the "Shares"), and
to perform all of its obligations under this Warrant Agreement and the Warrants.
The Shares, when issued in accordance with this Agreement, will be duly
authorized and validly issued and outstanding, fully paid and nonassessable and
free of all liens, claims, encumbrances and preemptive rights. This Warrant
Agreement and, when issued, each Warrant issued pursuant hereto, has been or
will be duly executed and delivered by the Company and
WARRANT AGREEMENT PAGE 1
<PAGE>
is or will be a legal, valid and binding agreement of the Company, enforceable
in accordance with its terms. No authorization, approval, consent or other order
of any governmental entity, regulatory authority or other third party is
required for such authorization, execution, delivery, performance, issue or
sale.
(b) NO VIOLATION. The execution and delivery of this Warrant Agreement,
the consummation of the transactions herein contemplated and the compliance with
the terms and provisions of this Warrant Agreement and of the Warrants will not
conflict with, or result in a breach of, or constitute a default or an event
permitting acceleration under, any statute, the Articles of Incorporation or
Bylaws of the Company or any indenture, mortgage, deed of trust, note, bank
loan, credit agreement, franchise, license, lease, permit, or any other
agreement, understanding, instrument, judgment, decree, order, statute, rule or
regulation to which the Company is a party or by which it is or may be bound.
2. TRANSFER.
(a) TRANSFERABILITY OF WARRANTS. You agree that the Warrants are being
acquired as an investment and not with a view to distribution thereof and that
the Warrants may not be transferred, sold, assigned or hypothecated except as
provided herein and in compliance with all applicable securities and other laws.
(b) REGISTRATION OF SHARES. You agree not to make any sale or other
disposition of the Shares except pursuant to a registration statement which has
become effective under the Securities Act of 1933, as amended (the "Act"),
setting forth the terms of such offering, the underwriting discount and
commissions and any other pertinent data with respect thereto, unless you have
provided the Company with an opinion of counsel reasonably acceptable to the
Company that such registration is not required. Certificates representing the
Shares, which are not registered as provided in Section 2, shall bear an
appropriate legend and be subject to a "stop-transfer" order.
3. EXERCISE OF WARRANTS, PARTIAL EXERCISE.
(a) EXERCISE PERIOD. Subject to the terms of this Section 3(a), each
Warrant is exercisable only if the shares of common stock of the Company trade
at a minimum of $5.50 per share for twenty consecutive trading days.
Notwithstanding the foregoing, the warrants shall expire May 3, 1999.
(b) EXERCISE IN FULL. Subject to Section 3(a), Warrants may be exercised
in full by the Warrant holder by surrender of the Warrants, with the form of
subscription at the end thereof duly executed by such Warrant holder, to the
Company at its principal office at 910 Gemini, Houston, Texas 77058, Attention:
Chief Executive Officer, accompanied by payment, in cash or by certified or bank
cashier's check payable to the order of the Company, in the amount obtained by
multiplying the number of shares of the Common Stock represented by the
respective Warrant or Warrants by the Purchase Price per share (after giving
effect to any adjustments as provided in Section 5 below).
WARRANT AGREEMENT PAGE 2
<PAGE>
(c) PARTIAL EXERCISE. Subject to Section 3(a), each Warrant may be
exercised in part by the Warrant holder by surrender of the Warrant, with the
form of subscription at the end thereof duly executed by such Warrant holder, in
the manner and at the place provided in Section 3(b) above, accompanied by
payment, in cash or by certified or bank cashier's check payable to the order of
the Company, in amount obtained by multiplying the number of shares of the
Common Stock designated by the Warrant holder in the form of subscription
attached to the Warrant by the Purchase Price per share (after giving effect to
any adjustments as provided in Section 5 below). Upon any such partial exercise,
the Company at its expense will forthwith issue and deliver to or upon the order
of the Warrant holder a new Warrant of like tenor, in the name of the Warrant
holder thereof or as the Warrant holder (upon payment by such Warrant holder of
any applicable transfer taxes) may request, subject to Section 2(a), calling in
the aggregate for the purchase of the number of shares of the Common Stock equal
to the number of such shares called for on the face of the respective Warrant
(after giving effect to any adjustment herein as provided in Section 5 below)
minus the number of such shares designated by the Warrant holder in the
aforementioned form of subscription.
(d) COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at the time of any
exercise of any Warrant, upon the request of the Warrant holder, acknowledge in
writing its continuing obligation to afford to such Warrant holder any rights to
which such Warrant holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant Agreement; PROVIDED, HOWEVER,
that if the Warrant holder shall fail to make any such request, such failure
shall not affect the continuing obligation of the Company to afford to such
Warrant holder any such right.
4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE.
Any exercise of the Warrants pursuant to Section 3 shall be deemed to have
been effected immediately prior to the close of business on the date on which
the Warrants together with the subscription form and the payment for the
aggregate Purchase Price shall have been received by the Company. At such time,
the person or persons in whose name or names any certificate or certificates
representing the Shares or Other Securities (as defined below) shall be issuable
upon such exercise shall be deemed to have become the holder or holders of
record of the Shares or Other Securities so purchased. As soon as practicable
after the exercise of any Warrant in full or in part, and in any event within 10
days thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of, and delivered to
the purchasing Warrant holder, a certificate or certificates representing the
number of fully paid and nonassessable shares of Common Stock or Other
Securities to which such Warrant holder shall be entitled upon such exercise,
plus in lieu of any fractional share to which such Warrant holder would
otherwise be entitled, cash in an amount determined pursuant to Section 6(g),
together with any other stock or other securities and property (including cash,
where applicable). The term "Other Securities" refers to any stock (other than
Common Stock), other securities or assets (including cash) of the Company or any
other person (corporate or otherwise) which the holders of the Warrants at any
time shall be entitled to receive, or shall have received, upon the exercise of
the Warrants, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 5 below or otherwise.
WARRANT AGREEMENT PAGE 3
<PAGE>
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES PURCHASABLE.
The Purchase Price and the number of Shares are subject to adjustment from
time to time as set forth in this Section 5.
(a) In case the Company shall at any time after the date of this Agreement
(i) declare a dividend on the Common Stock in shares of its capital stock, (ii)
subdivide the outstanding Shares, (iii) combine the outstanding Common Stock
into a smaller number of Common Stock, or (iv) issue any shares of its capital
stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each case the Purchase Price,
and the number and kind of Shares receivable upon exercise, in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination, or reclassification shall be proportionately adjusted
so that the holder of any Warrant exercised after such time shall be entitled to
receive the aggregate number and kind of Shares which, if such Warrant had been
exercised immediately prior to such time, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination, or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) No adjustment in the Purchase Price shall be required if such
adjustment is less than $.50; PROVIDED, HOWEVER, that any adjustments which by
reason of this subsection (h) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 5 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(c) Upon each adjustment of the Purchase Price as a result of the
calculations made in any of subsection (a) of this Section 5, each Warrant
outstanding prior to the making of the adjustment in the Purchase Price shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of Shares (calculated to the nearest thousandth) obtained by (i)
multiplying the number of Shares purchasable upon exercise of a Warrant
immediately prior to adjustment of the number of Shares by the Purchase Price in
effect prior to adjustment of the Purchase Price and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(d) In case of any capital reorganization of the Company, or of any
reclassification of the Common Stock (other than a reclassification of the
Common Stock referred to in subsection (a) of this Section 5), or in the case of
the consolidation of the Company with or the merger of the Company into any
other corporation or of the sale, transfer, or lease of the properties and
assets of the Company as, or substantially as, an entirety to any other
corporation, each Warrant shall after such capital reorganization,
reclassification of the Common Stock, consolidation, merger, sale, transfer, or
lease be exercisable, upon the terms and conditions specified in this Agreement,
for the number of shares of stock or other securities, assets, or cash to which
a holder of the number of shares of Common Stock purchasable (at the time of
such capital reorganization, reclassification of shares, consolidation, merger,
sale, transfer, or lease) upon exercise of such Warrant would have been
WARRANT AGREEMENT PAGE 4
<PAGE>
entitled upon such capital reorganization, reclassification of the Common Stock,
consolidation, merger, sale, transfer, or lease; and in any such case, if
necessary, the provisions set forth in this Section 5 with respect to the rights
and interests thereafter of the holders of the Warrants shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be, to any shares
of stock or other securities, assets, or cash thereafter deliverable upon the
exercise of the Warrants. The subdivision or combination of the Common Stock at
any time outstanding into a greater or lesser number of shares shall not be
deemed to be a reclassification of the Common Stock for the purposes of this
paragraph. The Company shall not effect any such consolidation, merger,
transfer, or lease, unless prior to or simultaneously with the consummation
thereof, the successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing, receiving, or
leasing such assets or other appropriate corporation or entity shall assume, by
written instrument executed and delivered to the Warrant holder, the obligation
to deliver to the Warrant holder such shares of stock, securities, or assets as,
in accordance with the foregoing provisions, such holders may be entitled to
purchase, and to perform the other obligations of the Company under this Warrant
Agreement.
6. FURTHER COVENANTS OF THE COMPANY.
(a) DILUTION OR IMPAIRMENTS. The Company will not, by amendment of its
certificate or articles of incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the Warrants or of this Warrant Agreement, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Warrant holders against dilution or other impairment. Without
limiting the generality of the foregoing, the Company:
(i) shall at all times reserve and keep available, solely for
issuance and delivery upon the exercise of the Warrants, all shares of
Common Stock (or Other Securities) from time to time issuable upon the
exercise of the Warrants and shall take all necessary actions to ensure
that the par value per share, if any, of the Common Stock (or Other
Securities) is at all times equal to or less than the then effective
Purchase Price per share;
(ii) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock or Other Securities upon the exercise
of the Warrants from time to time outstanding;
(iii) will not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets upon
voluntary or involuntary dissolution, liquidation or winding-up, unless
the rights of the holders thereof shall be limited to a fixed sum or
percentage of par value in respect of participation in dividends and in
any such distribution of assets; and
(iv) will not transfer all or substantially all of its properties
and assets to any person (corporate or otherwise), or consolidate with or
merge into any other person or permit any
WARRANT AGREEMENT PAGE 5
<PAGE>
such person to consolidate with or merge into the Company (if the Company
is not the surviving corporation), unless such other person shall
expressly assume in writing and will be bound by all the terms of this
Warrant Agreement and the Warrants.
(b) TITLE TO STOCK. All shares of Common Stock delivered upon the exercise
of the Warrants shall be validly issued, fully paid and nonassessable; each
Warrant holder shall, upon such delivery, receive good and marketable title to
the Shares, free and clear of all voting and other trust arrangements, liens,
encumbrances, equities and claims whatsoever; and the Company shall have paid
all taxes, if any, in respect of the issuance thereof.
(c) REMEDIES. The Company stipulates that the remedies at law of the
Warrant holder or any holder of Shares in the event of any default or threatened
default by the Company in the performance of or compliance with any of the terms
of this Warrant Agreement or the Warrants are not and will not be adequate and
that such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or in the Warrants or by an
injunction against a violation of any of the terms hereof or thereof or
otherwise.
(d) EXCHANGE OF WARRANTS. Subject to Section 2(a) hereof, upon surrender
for exchange of any Warrant to the Company, the Company at its expense will
promptly issue and deliver to or upon the order of the holder thereof a new
Warrant or like tenor, in the name of such holder or as such holder (upon
payment by such Warrant holder of any applicable transfer taxes) may direct,
calling in the aggregate for the purchase of the number of shares of the Common
Stock called for on the face or faces of the Warrant or Warrants so surrendered.
The Warrants and all rights thereunder are transferable in whole or in part upon
the books of the Company by the registered holder thereof, subject to the
provisions of Section 2(a), in person or by duly authorized attorney, upon
surrender of the Warrant, duly endorsed, at the principal office of the Company.
(e) REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company, at the expense of the Warrant holder, will execute
and deliver, in lieu thereof, a new Warrant of like tenor.
(f) REPORTING BY THE COMPANY. The Company agrees that during the term of
the Warrants it will use its best efforts to keep current in the filing of all
forms and other materials, if any, which it may be required to file with the
appropriate regulatory authority pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and all other forms and reports required
to be filed with any regulatory authority having jurisdiction over the Company.
(g) FRACTIONAL SHARES. No fractional Shares are to be issued upon the
exercise of any Warrant, but the Company shall pay a cash adjustment in respect
of any fraction of a share which would otherwise be issuable in an amount equal
to such fraction multiplied by the closing price which shall be the last
reported sales price regular way or, in case no such reported sales takes place
on such
WARRANT AGREEMENT PAGE 6
<PAGE>
day, the average of the closing bid and asked prices regular way, on the
principal national securities exchange in the United States on which the Common
Stock is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on any such national securities exchange, the average of the
highest reported bid and lowest reported asked price as furnished by the
National Association of Securities Dealers, Inc. through its automated quotation
system ("Nasdaq") or a similar organization if Nasdaq is no longer reporting
such information.
7. OTHER WARRANT HOLDERS: HOLDERS OF SHARES.
The Warrants are issued upon the following terms, to all of which each
Warrant holder by the taking thereof consents and agrees: (a) any person who
shall become a transferee, within the limitations on transfer imposed by Section
2(a) hereof, of a Warrant properly endorsed shall take such Warrant subject to
the provisions of Section 2(a) hereof and thereupon shall be authorized to
represent himself as absolute owner thereof and, subject to the restrictions
contained in this Warrant Agreement, shall be empowered to transfer absolute
title by endorsement and delivery thereof to a permitted BONA FIDE purchaser for
value; (b) any person who shall become a holder or owner of Shares shall take
such shares subject to the provisions of Section 2(b) hereof; (c) each prior
taker or owner waives and renounces all of his equities or rights in such
Warrant in favor of each such permitted BONA FIDE purchaser, and each such
permitted BONA FIDE purchaser shall acquire absolute title thereto and to all
rights presented thereby; and (d) until such time as the respective Warrant is
transferred on the books of the Company, the Company may treat the registered
holder thereof as the absolute owner thereof for all purposes, notwithstanding
any notice to the contrary.
8. MISCELLANEOUS.
All notices, certificates and other communications from or at the request
of the Company to any Warrant holder shall be mailed by first class, registered
or certified mail, postage prepaid, to such address as may have been furnished
to the Company in writing by such Warrant holder, or, until an address is so
furnished, to the address of the last holder of such Warrant who has so
furnished an address to the Company, except as otherwise provided herein. This
Warrant Agreement and any of the terms hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This
Warrant Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Texas. The headings in this Warrant
Agreement are for purposes of reference only and shall not limit or otherwise
affect any of the terms hereof. This Warrant Agreement, together with the forms
of instruments annexed hereto as exhibits, constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof.
WARRANT AGREEMENT PAGE 7
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be
executed on this the 31st day of July, 1996, in Houston, Texas, by its proper
corporate officers, thereunto duly authorized.
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
H. DEAN CUBLEY,
Chief Executive Officer
The above Warrant Agreement is confirmed as of this 31st day of July, 1996.
CUBLEY FAMILY PARTNERSHIP
By:
FUTER FAMILY PARTNERSHIP
By:___________________________
- -------------------------------
BILLIE MIZE
- -------------------------------
JOHN NAGEL
WARRANT AGREEMENT PAGE 8
<PAGE>
EXHIBIT A
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 1 To Purchase
350,000 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
This certifies that, for value received, the hereafter named registered
owner is entitled, subject to the terms and conditions of this Warrant, until
the expiration date, to purchase the number of shares set forth above of the
common stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of July 31, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: Cubley Family Partnership Date: July 31, 1996
Purchase Price
Per Share: $.50
Expiration Date: Subject to Section 3(a) of the Warrant Agreement, July 31,
1996.
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
H. DEAN CUBLEY
Chief Executive Officer
A-1
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised, in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement pursuant to which the Warrant was granted, may be
delivered upon exercise.
A-2
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the enclosed
Warrant is permitted by the terms of the Warrant Agreement pursuant to which the
enclosed Warrant has been issued, and the transferee hereof, by his acceptance
of this Agreement, represents and warrants that he is familiar with the terms of
said Warrant Agreement and agrees to be bound by the terms thereof with the same
force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
A-3
<PAGE>
EXHIBIT A
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 2 To Purchase
110,000 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
This certifies that, for value received, the hereafter named registered
owner is entitled, subject to the terms and conditions of this Warrant, until
the expiration date, to purchase the number of shares set forth above of the
common stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of July 31, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: Futer Family Partnership Date: July 31, 1996
Purchase Price
Per Share: $.50
Expiration Date: Subject to Section 3(a) of the Warrant Agreement, July 31,
1996.
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
H. DEAN CUBLEY
Chief Executive Officer
A-4
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised, in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement pursuant to which the Warrant was granted, may be
delivered upon exercise.
A-5
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the enclosed
Warrant is permitted by the terms of the Warrant Agreement pursuant to which the
enclosed Warrant has been issued, and the transferee hereof, by his acceptance
of this Agreement, represents and warrants that he is familiar with the terms of
said Warrant Agreement and agrees to be bound by the terms thereof with the same
force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
A-6
<PAGE>
EXHIBIT A
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 3 To Purchase
20,000 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
This certifies that, for value received, the hereafter named registered
owner is entitled, subject to the terms and conditions of this Warrant, until
the expiration date, to purchase the number of shares set forth above of the
common stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of July 31, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: Billie Mize Date: July 31, 1996
Purchase Price
Per Share: $.50
Expiration Date: Subject to Section 3(a) of the Warrant Agreement, July 31,
1996.
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
H. DEAN CUBLEY
Chief Executive Officer
A-7
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised, in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement pursuant to which the Warrant was granted, may be
delivered upon exercise.
A-8
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the enclosed
Warrant is permitted by the terms of the Warrant Agreement pursuant to which the
enclosed Warrant has been issued, and the transferee hereof, by his acceptance
of this Agreement, represents and warrants that he is familiar with the terms of
said Warrant Agreement and agrees to be bound by the terms thereof with the same
force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
A-9
<PAGE>
EXHIBIT A
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 4 To Purchase
20,000 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
This certifies that, for value received, the hereafter named registered
owner is entitled, subject to the terms and conditions of this Warrant, until
the expiration date, to purchase the number of shares set forth above of the
common stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of July 31, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: John Nagel Date: July 31, 1996
Purchase Price
Per Share: $.50
Expiration Date: Subject to Section 3(a) of the Warrant Agreement, July 31,
1996.
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
H. DEAN CUBLEY
Chief Executive Officer
A-10
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*) Insert here the number of shares called for on the face of the Warrant or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised, in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement pursuant to which the Warrant was granted, may be
delivered upon exercise.
A-11
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the enclosed
Warrant is permitted by the terms of the Warrant Agreement pursuant to which the
enclosed Warrant has been issued, and the transferee hereof, by his acceptance
of this Agreement, represents and warrants that he is familiar with the terms of
said Warrant Agreement and agrees to be bound by the terms thereof with the same
force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
A-12
EXHIBIT 4.7
EAGLE TELECOM INTERNATIONAL, INC.
WARRANT AGREEMENT
May 3, 1996
James Lustig
CLFS Equities
410 17th Street, Suite 1705
Denver, Colorado 80202
Dear Mr. Lustig:
Eagle Telecom International, Inc., a Texas corporation (the "Company"),
for value received, hereby agrees to issue a stock purchase warrant entitling
you to purchase 25,000 shares of the Company's common stock (the "Common
Stock"). Such warrants are evidenced by warrant certificates in the form
attached hereto as EXHIBIT A (each such instrument being hereinafter referred to
as a "Warrant," and each Warrant and all instruments hereafter issued in
replacement, substitution, combination or subdivision thereof being hereinafter
collectively referred to as the "Warrants"). The Warrants will be issued in
consideration of an investment in the Company by you. The number of shares of
Common Stock purchasable upon exercise of the Warrants is subject to adjustment
as provided in Section 5 below. The Warrants will be exercisable by each you or
any other Warrant holder (as defined below) as to all or any lesser number of
shares of Common Stock covered thereby, at an initial Purchase Price of $5.00
per share, subject to adjustment as provided in Section 5 below, for the
exercise period defined in Section 3(a) below. The term "Warrant holder" refers
to each person whose name appears on the signature page of this agreement and
any transferee or transferees of any of them permitted by Section 2(a) below.
Such term, when used in this Warrant Agreement in reference to or in the context
of a person who holds or owns shares of Common Stock issued upon exercise of a
Warrant, refers where appropriate to such person who holds or owns such shares
of Common Stock.
1. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to you as follows:
(a) CORPORATE AND OTHER ACTION. The Company has all requisite power and
authority (corporate and other), and has taken all necessary corporate action,
to authorize, execute, deliver and perform this Warrant Agreement, to execute,
issue, sell and deliver the Warrants and a certificate or certificates
evidencing the Warrants, to authorize and reserve for issue and, upon payment
from time to time of the Purchase Price, to issue, sell and deliver, the shares
of the Common Stock issuable upon exercise of the Warrants (the "Shares"), and
to perform all of its obligations under this Warrant Agreement and the Warrants.
The Shares, when issued in accordance with this Agreement, will be duly
authorized and validly issued and outstanding, fully
WARRANT AGREEMENT PAGE 1
<PAGE>
paid and nonassessable and free of all liens, claims, encumbrances and
preemptive rights. This Warrant Agreement and, when issued, each Warrant issued
pursuant hereto, has been or will be duly executed and delivered by the Company
and is or will be a legal, valid and binding agreement of the Company,
enforceable in accordance with its terms. No authorization, approval, consent or
other order of any governmental entity, regulatory authority or other third
party is required for such authorization, execution, delivery, performance,
issue or sale.
(b) NO VIOLATION. The execution and delivery of this Warrant Agreement,
the consummation of the transactions herein contemplated and the compliance with
the terms and provisions of this Warrant Agreement and of the Warrants will not
conflict with, or result in a breach of, or constitute a default or an event
permitting acceleration under, any statute, the Articles of Incorporation or
Bylaws of the Company or any indenture, mortgage, deed of trust, note, bank
loan, credit agreement, franchise, license, lease, permit, or any other
agreement, understanding, instrument, judgment, decree, order, statute, rule or
regulation to which the Company is a party or by which it is or may be bound.
2. TRANSFER.
(a) TRANSFERABILITY OF WARRANTS. You agree that the Warrants are being
acquired as an investment and not with a view to distribution thereof and that
the Warrants may not be transferred, sold, assigned or hypothecated except as
provided herein and in compliance with all applicable securities and other laws.
(b) REGISTRATION OF SHARES. You agree not to make any sale or other
disposition of the Shares except pursuant to a registration statement which has
become effective under the Securities Act of 1933, as amended (the "Act"),
setting forth the terms of such offering, the underwriting discount and
commissions and any other pertinent data with respect thereto, unless you have
provided the Company with an opinion of counsel reasonably acceptable to the
Company that such registration is not required. Certificates representing the
Shares, which are not registered as provided in Section 2, shall bear an
appropriate legend and be subject to a "stop-transfer" order.
3. EXERCISE OF WARRANTS, PARTIAL EXERCISE.
(a) EXERCISE PERIOD. This Warrant is exercisable from the date hereof and
expires May 3, 1999.
(b) EXERCISE IN FULL. Subject to Section 3(a), Warrants may be exercised
in full by the Warrant holder by surrender of the Warrants, with the form of
subscription at the end thereof duly executed by such Warrant holder, to the
Company at its principal office at 910 Gemini, Houston, Texas 77058, Attention:
Chief Executive Officer, accompanied by payment, in cash or by certified or bank
cashier's check payable to the order of the Company, in the amount obtained by
multiplying the number of shares of the Common Stock represented by the
respective Warrant or
WARRANT AGREEMENT PAGE 2
<PAGE>
Warrants by the Purchase Price per share (after giving effect to any adjustments
as provided in Section 5 below).
(c) PARTIAL EXERCISE. Subject to Section 3(a), each Warrant may be
exercised in part by the Warrant holder by surrender of the Warrant, with the
form of subscription at the end thereof duly executed by such Warrant holder, in
the manner and at the place provided in Section 3(b) above, accompanied by
payment, in cash or by certified or bank cashier's check payable to the order of
the Company, in amount obtained by multiplying the number of shares of the
Common Stock designated by the Warrant holder in the form of subscription
attached to the Warrant by the Purchase Price per share (after giving effect to
any adjustments as provided in Section 5 below). Upon any such partial exercise,
the Company at its expense will forthwith issue and deliver to or upon the order
of the Warrant holder a new Warrant of like tenor, in the name of the Warrant
holder thereof or as the Warrant holder (upon payment by such Warrant holder of
any applicable transfer taxes) may request, subject to Section 2(a), calling in
the aggregate for the purchase of the number of shares of the Common Stock equal
to the number of such shares called for on the face of the respective Warrant
(after giving effect to any adjustment herein as provided in Section 5 below)
minus the number of such shares designated by the Warrant holder in the
aforementioned form of subscription.
(d) COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at the time of any
exercise of any Warrant, upon the request of the Warrant holder, acknowledge in
writing its continuing obligation to afford to such Warrant holder any rights to
which such Warrant holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant Agreement; PROVIDED, HOWEVER,
that if the Warrant holder shall fail to make any such request, such failure
shall not affect the continuing obligation of the Company to afford to such
Warrant holder any such right.
4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE.
Any exercise of the Warrants pursuant to Section 3 shall be deemed to have
been effected immediately prior to the close of business on the date on which
the Warrants together with the subscription form and the payment for the
aggregate Purchase Price shall have been received by the Company. At such time,
the person or persons in whose name or names any certificate or certificates
representing the Shares or Other Securities (as defined below) shall be issuable
upon such exercise shall be deemed to have become the holder or holders of
record of the Shares or Other Securities so purchased. As soon as practicable
after the exercise of any Warrant in full or in part, and in any event within 10
days thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of, and delivered to
the purchasing Warrant holder, a certificate or certificates representing the
number of fully paid and nonassessable shares of Common Stock or Other
Securities to which such Warrant holder shall be entitled upon such exercise,
plus in lieu of any fractional share to which such Warrant holder would
otherwise be entitled, cash in an amount determined pursuant to Section 6(h),
together with any other stock or other securities and property (including cash,
where applicable). The term
WARRANT AGREEMENT PAGE 3
<PAGE>
"Other Securities" refers to any stock (other than Common Stock), other
securities or assets (including cash) of the Company or any other person
(corporate or otherwise) which the holders of the Warrants at any time shall be
entitled to receive, or shall have received, upon the exercise of the Warrants,
in lieu of or in addition to Common Stock, or which at any time shall be
issuable or shall have been issued in exchange for or in replacement of Common
Stock or Other Securities pursuant to Section 5 below or otherwise.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES PURCHASABLE.
The Purchase Price and the number of Shares are subject to adjustment from
time to time as set forth in this Section 5.
(a) In case the Company shall at any time after the date of this Agreement
(i) declare a dividend on the Common Stock in shares of its capital stock, (ii)
subdivide the outstanding Shares, (iii) combine the outstanding Common Stock
into a smaller number of Common Stock, or (iv) issue any shares of its capital
stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each case the Purchase Price,
and the number and kind of Shares receivable upon exercise, in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination, or reclassification shall be proportionately adjusted
so that the holder of any Warrant exercised after such time shall be entitled to
receive the aggregate number and kind of Shares which, if such Warrant had been
exercised immediately prior to such time, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination, or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) No adjustment in the Purchase Price shall be required if such
adjustment is less than $.05; PROVIDED, HOWEVER, that any adjustments which by
reason of this subsection (h) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 5 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(c) Upon each adjustment of the Purchase Price as a result of the
calculations made in any of subsection (a) of this Section 5, each Warrant
outstanding prior to the making of the adjustment in the Purchase Price shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of Shares (calculated to the nearest thousandth) obtained by (i)
multiplying the number of Shares purchasable upon exercise of a Warrant
immediately prior to adjustment of the number of Shares by the Purchase Price in
effect prior to adjustment of the Purchase Price and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(d) In case of any capital reorganization of the Company, or of any
reclassification of the Common Stock (other than a reclassification of the
Common Stock referred to in subsection
WARRANT AGREEMENT PAGE 4
<PAGE>
(a) of this Section 5), or in the case of the consolidation of the Company with
or the merger of the Company into any other corporation or of the sale,
transfer, or lease of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation, each Warrant shall after
such capital reorganization, reclassification of the Common Stock,
consolidation, merger, sale, transfer, or lease be exercisable, upon the terms
and conditions specified in this Agreement, for the number of shares of stock or
other securities, assets, or cash to which a holder of the number of shares of
Common Stock purchasable (at the time of such capital reorganization,
reclassification of shares, consolidation, merger, sale, transfer, or lease)
upon exercise of such Warrant would have been entitled upon such capital
reorganization, reclassification of the Common Stock, consolidation, merger,
sale, transfer, or lease; and in any such case, if necessary, the provisions set
forth in this Section 5 with respect to the rights and interests thereafter of
the holders of the Warrants shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of stock or other
securities, assets, or cash thereafter deliverable upon the exercise of the
Warrants. The subdivision or combination of the Common Stock at any time
outstanding into a greater or lesser number of shares shall not be deemed to be
a reclassification of the Common Stock for the purposes of this paragraph. The
Company shall not effect any such consolidation, merger, transfer, or lease,
unless prior to or simultaneously with the consummation thereof, the successor
corporation (if other than the Company) resulting from such consolidation or
merger or the corporation purchasing, receiving, or leasing such assets or other
appropriate corporation or entity shall assume, by written instrument executed
and delivered to the Warrant holder, the obligation to deliver to the Warrant
holder such shares of stock, securities, or assets as, in accordance with the
foregoing provisions, such holders may be entitled to purchase, and to perform
the other obligations of the Company under this Warrant Agreement.
6. FURTHER COVENANTS OF THE COMPANY.
(a) DILUTION OR IMPAIRMENTS. The Company will not, by amendment of its
certificate or articles of incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the Warrants or of this Warrant Agreement, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Warrant holders against dilution or other impairment. Without
limiting the generality of the foregoing, the Company:
(i) shall at all times reserve and keep available, solely for
issuance and delivery upon the exercise of the Warrants, all shares of
Common Stock (or Other Securities) from time to time issuable upon the
exercise of the Warrants and shall take all necessary actions to ensure
that the par value per share, if any, of the Common Stock (or Other
Securities) is at all times equal to or less than the then effective
Purchase Price per share;
WARRANT AGREEMENT PAGE 5
<PAGE>
(ii) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock or Other Securities upon the exercise
of the Warrants from time to time outstanding;
(iii)will not issue any capital stock of any class which is preferred
as to dividends or as to the distribution of assets upon voluntary or
involuntary dissolution, liquidation or winding-up, unless the rights of
the holders thereof shall be limited to a fixed sum or percentage of par
value in respect of participation in dividends and in any such
distribution of assets; and
(iv) will not transfer all or substantially all of its properties and
assets to any person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to consolidate with
or merge into the Company (if the Company is not the surviving
corporation), unless such other person shall expressly assume in writing
and will be bound by all the terms of this Warrant Agreement and the
Warrants.
(b) TITLE TO STOCK. All shares of Common Stock delivered upon the exercise
of the Warrants shall be validly issued, fully paid and nonassessable; each
Warrant holder shall, upon such delivery, receive good and marketable title to
the Shares, free and clear of all voting and other trust arrangements, liens,
encumbrances, equities and claims whatsoever; and the Company shall have paid
all taxes, if any, in respect of the issuance thereof.
(c) REMEDIES. The Company stipulates that the remedies at law of the
Warrant holder or any holder of Shares in the event of any default or threatened
default by the Company in the performance of or compliance with any of the terms
of this Warrant Agreement or the Warrants are not and will not be adequate and
that such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or in the Warrants or by an
injunction against a violation of any of the terms hereof or thereof or
otherwise.
(d) EXCHANGE OF WARRANTS. Subject to Section 2(a) hereof, upon surrender
for exchange of any Warrant to the Company, the Company at its expense will
promptly issue and deliver to or upon the order of the holder thereof a new
Warrant or like tenor, in the name of such holder or as such holder (upon
payment by such Warrant holder of any applicable transfer taxes) may direct,
calling in the aggregate for the purchase of the number of shares of the Common
Stock called for on the face or faces of the Warrant or Warrants so surrendered.
The Warrants and all rights thereunder are transferable in whole or in part upon
the books of the Company by the registered holder thereof, subject to the
provisions of Section 2(a), in person or by duly authorized attorney, upon
surrender of the Warrant, duly endorsed, at the principal office of the Company.
(e) REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and
WARRANT AGREEMENT PAGE 6
<PAGE>
cancellation of such Warrant, the Company, at the expense of the Warrant holder,
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
(f) REPORTING BY THE COMPANY. The Company agrees that during the term of
the Warrants it will use its best efforts to keep current in the filing of all
forms and other materials, if any, which it may be required to file with the
appropriate regulatory authority pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and all other forms and reports required
to be filed with any regulatory authority having jurisdiction over the Company.
(g) FRACTIONAL SHARES. No fractional Shares are to be issued upon the
exercise of any Warrant, but the Company shall pay a cash adjustment in respect
of any fraction of a share which would otherwise be issuable in an amount equal
to such fraction multiplied by the closing price which shall be the last
reported sales price regular way or, in case no such reported sales takes place
on such day, the average of the closing bid and asked prices regular way, on the
principal national securities exchange in the United States on which the Common
Stock is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on any such national securities exchange, the average of the
highest reported bid and lowest reported asked price as furnished by the
National Association of Securities Dealers, Inc. through its automated quotation
system ("Nasdaq") or a similar organization if Nasdaq is no longer reporting
such information.
7. OTHER WARRANT HOLDERS: HOLDERS OF SHARES.
The Warrants are issued upon the following terms, to all of which each
Warrant holder by the taking thereof consents and agrees: (a) any person who
shall become a transferee, within the limitations on transfer imposed by Section
2(a) hereof, of a Warrant properly endorsed shall take such Warrant subject to
the provisions of Section 2(a) hereof and thereupon shall be authorized to
represent himself as absolute owner thereof and, subject to the restrictions
contained in this Warrant Agreement, shall be empowered to transfer absolute
title by endorsement and delivery thereof to a permitted BONA FIDE purchaser for
value; (b) any person who shall become a holder or owner of Shares shall take
such shares subject to the provisions of Section 2(b) hereof; (c) each prior
taker or owner waives and renounces all of his equities or rights in such
Warrant in favor of each such permitted BONA FIDE purchaser, and each such
permitted BONA FIDE purchaser shall acquire absolute title thereto and to all
rights presented thereby; and (d) until such time as the respective Warrant is
transferred on the books of the Company, the Company may treat the registered
holder thereof as the absolute owner thereof for all purposes, notwithstanding
any notice to the contrary.
8. MISCELLANEOUS.
All notices, certificates and other communications from or at the request
of the Company to any Warrant holder shall be mailed by first class, registered
or certified mail, postage prepaid, to such address as may have been furnished
to the Company in writing by such Warrant holder, or, until an address is so
furnished, to the address of the last holder of such Warrant who has so
WARRANT AGREEMENT PAGE 7
<PAGE>
furnished an address to the Company, except as otherwise provided herein. This
Warrant Agreement and any of the terms hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This
Warrant Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Texas. The headings in this Warrant
Agreement are for purposes of reference only and shall not limit or otherwise
affect any of the terms hereof. This Warrant Agreement, together with the forms
of instruments annexed hereto as exhibits, constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be
executed on this the 3rd day of May, 1996, in Houston, Texas, by its proper
corporate officers, thereunto duly authorized.
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
H. DEAN CUBLEY,
Chief Executive Officer
The above Warrant Agreement is confirmed as of this 3rd day of May, 1996.
CLFS EQUITIES
By:____________________________________
Printed Name: James Lustig
Title:________________________________
WARRANT AGREEMENT PAGE 8
<PAGE>
EXHIBIT A
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN
SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY
STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
WARRANTS MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANTS NOR THE UNDERLYING STOCK MAY BE TRANSFERRED OR
EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE SECURITIES AND OTHER LAWS.
Warrant No. 16 To Purchase
25,000 Shares of
Common Stock
EAGLE TELECOM INTERNATIONAL, INC.
Incorporated Under the Laws of Texas
This certifies that, for value received, the hereafter named registered owner
is entitled, subject to the terms and conditions of this Warrant, until the
expiration date, to purchase the number of shares set forth above of the common
stock (the "Common Stock"), of Eagle Telecom International, Inc. (the
"Corporation") from the Corporation at the purchase price per share hereafter
set forth, on delivery of this Warrant to the Corporation with the exercise form
duly executed and payment of the purchase price (in cash or by certified or bank
cashier's check payable to the order of the Corporation) for each share
purchased. This Warrant is subject to the terms of the Warrant Agreement between
the parties thereto dated as of May 3rd, 1996, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for a
further statement of the rights of the holder of this Warrant.
Registered Owner: James Lustig Date: May 3, 1996
CLFS Equities
Purchase Price
Per Share: $5.00
Expiration Date: Subject to Section 3(a) of the Warrant Agreement,
May 3, 1999.
WITNESS the signature of the Corporation's authorized officer:
EAGLE TELECOM INTERNATIONAL, INC.
By________________________________________
H. DEAN CUBLEY
Chief Executive Officer
A-1
<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To Eagle Telecom International, Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Eagle Telecom
International, Inc. and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
- ---------------------------
(*)Insert here the number of shares called for on the face of the Warrant or, in
the case of a partial exercise, the portion thereof as to which the Warrant
is being exercised, in either case without making any adjustment for
additional Common Stock or any other stock or other securities or property or
cash which, pursuant to the adjustment provisions of the Warrant Agreement
pursuant to which the Warrant was granted, may be delivered upon exercise.
A-2
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
__________________________________ the right represented by the enclosed Warrant
to purchase _________________ shares of Common Stock of Eagle Telecom
International, Inc. to which the enclosed Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of Eagle
Telecom International, Inc. with full power of substitution in the premises.
The undersigned represents and warrants that the transfer of the enclosed
Warrant is permitted by the terms of the Warrant Agreement pursuant to which the
enclosed Warrant has been issued, and the transferee hereof, by his acceptance
of this Agreement, represents and warrants that he is familiar with the terms of
said Warrant Agreement and agrees to be bound by the terms thereof with the same
force and effect as if a signatory thereto.
Dated:_________________________
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
--------------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------
A-3
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of February 28, 1996, is by and between Eagle
Telecom International, Inc., a Delaware corporation (the "Purchaser") and Eagle
Telecom International, Inc. a Texas corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller desires to sell, and Purchaser desires to purchase,
certain of Seller's assets;
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants herein contained, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 SALE AND PURCHASE OF ASSETS. Subject to and upon the terms and
conditions contained herein, at the Closing (as hereinafter defined), Seller
shall sell, transfer, assign, convey and deliver to Purchaser all of the Assets
(as defined in this section below) set forth in the location (or attributed to
the location) described in EXHIBIT 1.01(A), free and clear of all liens, claims
and encumbrances, except for the liabilities set forth in Section 1.04, and
Purchaser shall purchase, accept and acquire from Seller, the following:
(a) Fixed Assets. All of Seller's fixed assets, furniture,
equipment, leasehold improvements and supplies necessary and desirable for the
continued operation of Seller's business, as set forth in Exhibit 1.01(b)
("Fixed Assets").
(b) Inventory. All of Seller's inventory necessary and
desirable for the continued operation of Seller's business, as set forth in
EXHIBIT 1.01(C).
(c) Intellectual Property. All of Seller's intellectual
property necessary and desirable for the continued operation of Seller's
business ("Intellectual Property"), including, but not limited to, (i) patents,
patent applications, patent disclosures, and improvements thereto, (ii)
licenses, trademarks, service marks, trade dress, logos, trade names, and
corporate and company names and registrations and applications for registration
thereof, (iii) copyrights and registrations and applications for registration
thereof, (iv) computer software, data, and documentation, (v) trade secrets and
confidential business information (including ideas, formulas, compositions,
inventions [whether patentable or unpatentable and whether or not reduced to
practice], know-how, processes and techniques, plans, proposals, technical data,
copyrightable works, financial,
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marketing, and business data, pricing and cost information, business and
marketing plans, and customer and supplier lists and information), (vi) other
proprietary rights, and (vii) copies and tangible embodiments thereof (in
whatever form or medium) and (viii) licenses, permits and registrations issued
by the FCC.
(d) Contracts, Agreements, Instruments. All of Seller's
contracts, agreements and instruments necessary and desirable for the continued
operation of Seller's business, as set forth in Section 1.01(d) ("Properties and
Contracts").
(e) Prepayments. All of Seller's prepayments less actual
materials purchased and paid for. All deposits in place as listed in Section
1.01(e).
(f) Accounts. All of Seller's accounts receivable, subject to
Section 1.03(b), as set forth in Exhibit 1.01(f).
(g) Records. All of Seller's current and active records, files
and papers pertaining to the assets described in Subsections (a) through (f)
above, including customer files, customer credit histories and other data
necessary and desirable for the continued operation of Seller's business (the
"Records").
All of the assets described in Subsections (a) through (g) above are
hereinafter collectively referred to as the "Assets."
1.02 CLOSING. The closing of the transactions contemplated hereby (the
"Closing") shall only occur at such place and time as the parties agree, but no
later than 5 days after the signature of this agreement.
1.03 TERMS OF ACQUISITION. On the basis of the representations,
warranties, covenants, and agreements contained in this Agreement and subject to
the terms and conditions of this Agreement, the total purchase price for the
Assets ("Total Purchase Price") shall be:
a. Purchaser shall deliver at the Closing a cashiers check or
immediately available funds in the amount of $250,000 payable
to Seller, less all prepayments and adjustments as defined in
Section 1.01(e).
b. Purchaser shall utilize its best efforts to collect all
accounts receivable specified in Exhibit 1.01(f) outstanding
at Closing in full, without discount or offset of any kind or
character, and shall remit to Seller, within seven days of
receipt of good funds, sixty percent (60%) of same, net of 60%
of sales commission, if any, if, as and when received.
Purchaser shall provide Seller, at Seller's request, with a
monthly report of the status of such accounts receivable.
Seller, at its sole cost and expense, shall have the right to
audit the books and records of Purchaser to determine the
status of such accounts
2
<PAGE>
receivable until all have been paid. Purchaser's obligation
shall be secured by a properly executed and recorded financing
statement.
c. Seller will bring all accounts payable (materials as well as
other normal accounts payable) specified in Exhibit 1.03(c),
to a net-30 basis as of February 29, 1996.
d. Purchaser shall pay to Seller three percent (3%) of all gross
sales actually collected by Purchaser (including any affiliate
of Purchaser, as such term is defined in the Securities Act of
1933) to Lucent Technology, its predecessor, successors and
assigns, in connection with business currently conducted by
Seller, or contemplated to be conducted by Purchaser, and
Lucent Technology, within thirty days of receipt of good funds
from any such sale and continuing for a period of two years
from the date of the first such collection. Purchaser shall
provide Seller with a quarterly report of the status of such
sales, upon Seller's request. Seller, at its sole cost and
expense, shall have the right to audit the books and records
of Purchaser to determine the status of such sales until all
have been paid. This purchaser's obligation shall be secured
by a properly executed and recorded financing statement.
e. At closing, Eagle Aerospace, Inc. will assign to Purchaser the
UBEL contract for no cash consideration other than the
assumption of all obligations under such contract.
1.04 ASSUMPTION OF LIABILITIES. Purchaser shall assume and timely
perform those liabilities and obligations which are not disputed in good faith
that are listed in EXHIBIT 1.04 hereto, and Seller shall assign its rights
associated therewith ("Assumed Liabilities").
1.05 INSTRUMENTS OF TRANSFER; FURTHER ASSURANCES. In order to consummate
the transactions contemplated hereby, the following documents shall be
delivered:
(a) At the Closing, Seller shall deliver to Purchaser a Bill of
Sale in the form attached as EXHIBIT 1.05(A) hereto.
(b) At the Closing, Purchaser shall deliver to Seller appropriate
documentation to reflect the security interests described in
Section 1.03(b) and (d), attached as EXHIBIT 1.05(B) hereto.
(c) At the Closing, all officers and directors of Seller, except
for H. Dean Cubley, shall enter into a non-competition
agreement in the form attached hereto as EXHIBIT 1.05(C).
3
<PAGE>
(d) At Closing, Seller shall file an amendment to its Articles of
Incorporation with the State of Texas changing its name to
exclude the phrase "Eagle Telecom International."
1.06 SELLER'S INDEMNITY AGAINST LIABILITIES.
a. Seller agrees to indemnify and hold harmless the
Purchaser and its respective officers, directors,
,employees, counsel, agents, and , in each case past,
present, or as they may exist at any time after the
date of this Agreement ("Purchaser Indemnitees")
against and in respect of any and all claims, suits,
actions, proceedings (formal or informal),
investigations, judgments, deficiencies (including
federal, state and local tax liabilities, penalties and
interest), damages, settlements, liabilities,
negligence and reasonably incurred legal and other
expenses (including legal fees and expenses of counsel
chosen by any Purchaser Indemnitee) as and when
incurred arising out of or based upon any material
breach of any representation, warranty, condition,
covenant, or agreement of Seller contained in this
Agreement.
b. The Purchaser Indemnitee shall give Seller prompt
notice of any claim asserted or threatened against any
Purchaser Indemnitee on the basis of which such
Purchaser Indemnitee intends to seek indemnification
from Seller as herein provided.
1.07 PURCHASER INDEMNITY AGAINST LIABILITIES.
a. Purchaser agrees to indemnify and hold harmless the
Seller and its officers, directors, employees, counsel,
agents, stockholders, in any case past, present, or as
they may exist any time after the date of this
Agreement ("Seller's Indemnitees") against and in
respect of any and all claims, suits, actions,
proceedings (formal or informal), investigations,
judgments, deficiencies, damages, settlements,
liabilities, and legal and other expenses (including
legal fees and expenses of counsel chosen by Seller) as
and when incurred arising out of or based upon any
material breach of any representation, warranty,
condition, covenant, or agreement of Purchaser.
b. The Seller shall give Purchaser prompt notice of any
claim asserted or threatened against Seller on the
basis of which such Seller intends to seek
indemnification from Purchaser as herein provided.
1.08 RIGHT OF PURCHASER TO SET-OFF. Without limiting such other rights
as the Purchaser may have, if, prior to the time all consideration is delivered
pursuant to Section 1.03,
4
<PAGE>
the Purchaser has learned of a material and indemnifiable breach of any
representation, warranty, condition, covenant, or agreement of Seller contained
in this Agreement or exhibit hereto, the Purchaser in its discretion can by
written notice to Seller deduct from the amount of the consideration set forth
in 1.03 at such time an amount the value of which is equal to the aggregate of
the amount of losses, deficiencies, damages, and legal and other expenses
(including legal fees and expenses of counsel chosen by any Purchaser)
reasonably incurred by Purchaser in connection with claims, suits, actions,
proceedings (formal or informal), investigations, judgments, or settlements as a
result of, or to remedy a situation or circumstance caused by, such breach.
Purchaser shall make no such settlement without seller's written approval, which
approval may not be unreasonably witheld.
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to Seller and Stockholder that the
following are true and correct as of this date and will be true and correct
through the Closing Date as if made on that date:
2.01 PURCHASER'S ORGANIZATION AND QUALIFICATION. Purchaser is a Delaware
Corporation duly organized, validly existing, with all requisite power and
authority to conduct its business and is not in breach of, or in default with
respect to, any term of its Delaware company organizational documents, except
where such breach would not have a material adverse effect. As identified in
exhibit 2.01 purchaser has obtained all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other governmental
authorities and all courts and other tribunals, to own, lease, license, and use
its properties and assets and to carry on the business in which it is now
engaged and the business in which it contemplates engaging, except where the
failure to do so would not have a material adverse effect. Purchaser is duly
qualified to transact the business in which it is engaged in every jurisdiction
in which its ownership, leasing, licensing, or use of property or assets or the
conduct of its business makes such qualification necessary, except where the
failure to do so would not have a material adverse effect.
2.02 AUTHORITY. Purchaser has all requisite corporate power and
authority to execute, deliver, and perform this Agreement. All necessary
corporate proceedings of Purchaser have been duly taken to authorize the
execution, delivery, and performance of this Agreement by Purchaser. This
Agreement and all exhibits hereto have been duly authorized, executed, and
delivered by Purchaser, constitutes the legal, valid, and binding obligation of
Purchaser and is enforceable as to it in accordance with its terms. No consent,
authorization, approval, order, license, certificate, or permit of or from, or
declaration or filing with, any federal, state, local, or other governmental
authority or any court or other tribunal is required by Purchaser for the
execution, delivery, or performance of this Agreement and exhibits by Purchaser.
No consent of any party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to
5
<PAGE>
which Purchaser is a party, or to which it or any of its properties or assets
are subject, is required for the execution, delivery or performance of this
Agreement and exhibits; and, except where such breach would not have a material
adverse effect, the execution, delivery, and performance of this Agreement and
exhibits will not violate, result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time or both) entitle any party
to terminate or call a default under any term of any such contract, agreement,
instrument, lease, license, arrangement, or understanding, or violate or result
in a breach of any term of the certificate of incorporation (or other charter
document) or bylaws of Purchaser, or violate, result in a breach of, or conflict
with any law, rule, regulation, order, judgment, or decree binding on Purchaser
or to which any of its operations, business, properties, or assets are subject.
2.03 DUE DILLIGENCE
Purchaser has conducted due dilligence on the affairs, books, and records
requested of seller and is not aware of any mistatement, misrepresentation or
default of seller relevent to the subject matter of this agreement.
2.04 FINANCIAL CONDITION
2.05 ARTICLES OF INCORPORATION AND BYLAWS
The articles of incorporation and by-laws of Purchaser and all
amendments thereto; (See Exhibit 2.05)
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants that the following are true and correct
as of this date and will be true and correct through the Closing Date as if made
on that date:
3.01 ORGANIZATION AND QUALIFICATION. Seller does not own any interest in
any other business enterprise or legal entity, except as disclosed in Exhibit
3.01. Exhibit 3.01 also correctly sets forth as to Seller its place of
formation, principal place of business, and jurisdictions in which it is
qualified to do business. Seller is a Texas company duly organized, validly
existing, with all requisite power and authority to conduct its business and is
not in breach of, or in default with respect to, any term of its Texas company
organizational documents, except where such breach would not have a material
adverse effect. Seller has obtained all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other governmental
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authorities and all courts and other tribunals, to own, lease, license, and use
its properties and assets and to carry on the business in which it is now
engaged and the business in which it contemplates engaging, except where the
failure to do so would not have a material adverse effect. Seller is duly
qualified to transact the business in which it is engaged in every jurisdiction
in which its ownership, leasing, licensing, or use of property or assets or the
conduct of its business makes such qualification necessary, except where the
failure to do so would not have a material adverse effect.
3.02 FINANCIAL CONDITION. Seller has delivered to Purchaser true and
correct copies of the following: the unaudited balance sheet, statement of
income, and statement of cash flows of Seller for the fiscal years ended
December 31, 1995 and 1994; and an unaudited balance sheet ("Seller Last Balance
Sheet"), statement of income for the one month ended January 31, 1996 ("Seller
Last Balance Sheet Date"). Each such balance sheet presents fairly the financial
condition, assets and liabilities of Seller as of its date; each such statement
of income presents fairly the results of operations of Seller for the period
indicated and each statement of cash flows represents fairly the information
purported to be shown therein. The financial statements referred to in this
Section 3.02 have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved,and except as
specified in Exhibit 3.02, and, except for statement of cashflows which is
omitted in the one month ending January 31,1996 time periods, and to the
Seller's knowledge are correct and complete in all material respects, and are in
accordance with the books and records of Seller. Since January 31, 1996:
(a) There has been no material adverse change in the financial
condition, results of operations, business, properties,
assets, accounts receivable, accounts payable, liabilities, or
future prospects of Seller;
(b) Seller has not authorized, declared, paid or effected any
dividend or liquidation or other distribution in respect of
its capital stock or other equity interest or any direct or
indirect redemption, purchase or other acquisition of any
equity interest of Seller, out of the ordinary course of
business;
(c) The operations of Seller have been conducted in all respects
only in the ordinary course of business;
(d) Seller has not suffered an extraordinary loss (whether or not
covered by insurance) or waived any right of substantial
value; and
(e) There has been no accepted purchase order or quotation,
arrangement or understanding for future sale of the products
or services of Seller out of the ordinary course of business.
Except as identified herein and in the attached Exhibits, there is no fact,
circumstance or event known to Seller which could have a material adverse
effect, or in the future may have a material
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adverse effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of Seller; provided,
however, that Seller express no opinion as to political, business or economic
matters of general applicability.
3.03 TAX AND OTHER LIABILITIES. Seller does not have any present
liability of any nature, accrued or contingent, including, without limitation,
liabilities for federal, state, local, or foreign taxes , which could have a
material adverse effect upon Seller, other than the following:
(a) Liabilities for which full provision has been made on the
Seller Last Balance Sheet as of the Seller Last Balance Sheet
Date; and
(b) Other liabilities arising since the Seller Last Balance Sheet
Date and prior to the Closing in the ordinary course of
business which are not inconsistent with the representations
and warranties of Seller or any other provision of this
Agreement.
(c) Liabilities to customers and suppliers identified herein.
Without limiting the generality of the foregoing, the amounts set forth as
provisions for taxes on the Seller Last Balance Sheet are sufficient for all
accrued and unpaid taxes of Seller, whether or not due and payable and whether
or not disputed, under tax laws, as in effect on the Seller Last Balance Sheet
Date or now in effect, for the period ended on such date and for all fiscal
years prior thereto. Seller has filed all applicable tax returns required to be
filed by it or has obtained applicable extensions and are not delinquent with
respect to such extensions; have paid (or have established on the Seller Last
Balance Sheet a reserve for) all taxes, assessments, and other governmental
charges payable or remittable by it or levied upon it or its properties, assets,
income, or franchises, which are due and payable and have delivered to Seller a
true and correct copy of any report as to adjustments received by Seller from
any taxing authority during the past five years and a statement as to any
litigation, governmental or other proceeding (formal or informal), or
investigation pending.
3.04 LITIGATION AND CLAIMS. There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation pending,
or to Seller's knowledge, threatened (or any basis therefor known to Seller )
with respect to Seller, (as it relates to the business of Seller), or any of its
business, properties, or assets, except as set forth on Exhibit 3.04. Seller is
not affected by any present or threatened strike or other labor disturbance nor
to the knowledge of Seller, is any union attempting to represent any employee of
Seller as collective bargaining agent. To the knowledge of Seller, Seller is not
in material violation of, or in material default with respect to, any law, rule,
regulation, order, judgment, or decree, nor is Seller, , required to take any
action in order to avoid such violation or default.
3.05 PROPERTIES. Seller has good and marketable title to all properties
and assets used in its business or owned by it (except such real and other
property and assets as are held
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pursuant to leases or licenses described in Exhibit 3.05), free and clear of all
liens, mortgages, security interests, pledges, charges, and encumbrances (except
such as are disclosed in Exhibit 3.05 or disclosed on the Seller Last Balance
Sheet).
(a) Attached as Exhibits 3.05, and 1.01(b). 1.01(c), 1.01(d),
1.01(e), 1.01(f), ) is a true and complete list of all
properties and assets owned, leased, or licensed by Seller
having an individual or aggregate value of $10,000 or more,
including with respect to such properties and assets leased or
licensed by Seller, a description of such lease or license.
All such properties and assets owned by Seller are reflected
on the Seller Last Balance Sheet. All properties and assets
owned, leased, or licensed by Seller are in good and usable
condition (reasonable wear and tear, which is not such as to
have a material adverse effect on the operation of the
business of Seller, excepted);
(b) The properties and assets owned, leased, or licensed by Seller
constitute all such properties and assets currently used to
conduct the business of Seller; and
(c) Except as identified in exhibit 3.05 item 1, no real property
owned, leased or licensed by Seller lies in an area which is,
to the knowledge of Seller or will be subjected to zoning, use
or building code restrictions which would prohibit, and no
stated facts relating to the actions or inaction of another
person or entity of his or its ownership, licensing, leasing,
or use of any real or personal property exists or will exist
which would prevent, the continued effective ownership,
leasing, licensing or use of such real property in the
business in which Seller is now engaged or the business in
which it contemplates engaging.
3.06 CONTRACTS, AGREEMENTS AND INSTRUMENTS. Exhibit 1.01(d) accurately
and completely sets forth the information required to be contained therein.
Seller has furnished to Purchaser:
(a) The articles of incorporation and by-laws of Seller and all
amendments thereto; (See Exhibit 3.01)
(b) True and correct copies of all material contracts (Exhibit
1.01(d)), firm customer purchase orders (Exhibit 3.06),
quotations (Exhibit 3.08), breakdown of accounts receivable
(Exhibit 1.01(f)), accounts payable (Exhibit 1.03(c)),
agreements and other instruments referred to in Exhibit
1.01(d);
(c) True and correct copies of all material leases (Exhibit 3.05)
and licenses referred to in Exhibits 3.12; and
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(d) True and correct written descriptions of all service, material
supply, distribution, agency, financing, or other arrangements
or understandings referred to in Exhibit 1.01(d).
Except for matters which, in the aggregate, would not have a material adverse
effect or are otherwise disclosed in this Agreement, to the knowledge of Seller,
, no other party to any such contract, agreement, instrument, lease, or license
is now in violation or breach of, or in default with respect to complying with,
any material provision thereof, and each such contract, agreement, instrument,
lease, or license contained in exhibits hereto is in full force and effect and
is the legal, valid, and binding obligation of the parties thereto and is
enforceable as to them in accordance with its terms. Each such service, supply,
distribution, agency, financing, or other arrangement or understanding contained
in the exhibits hereto is a valid and continuing arrangement or understanding,
except for matters which, in the aggregate, would not have a material adverse
effect; neither Seller, nor any other party to any such arrangement or
understanding has given notice of termination or taken any action inconsistent
with the continuance of such arrangement or understanding; and the execution,
delivery, and performance of this Agreement will not prejudice any such
arrangement or understanding in any way contained in the exhibits hereto, except
for matters which, in the aggregate, would not have a material adverse effect.
Except as disclosed in appropriate exhibits attached hereto, Seller has not
engaged since its formation in, is engaging in, or intends to engage in any
transaction with, or has had since its formation, now has, or intends to have
any contract, agreement, lease, license, arrangement, or understanding with, any
Stockholder or employee of Seller (except for employment agreements listed in
Exhibit 1.01(d) in each case with such Stockholder and employees who are not
relatives or affiliates described in the next clause), any relative or affiliate
of any Stockholder or of any employee of Seller, or any other partnership or
enterprise in which any Stockholder or employee of Seller, or any such relative
or affiliate then had or now has a 5% or greater interest or other substantial
interest, other than contracts and agreements listed and so specified in Exhibit
1.01(d). Seller is not a member of a customer or user organization or of a trade
association which relationship would be materially affected by the execution and
Closing of this Agreement.
3.07 INTELLECTUAL PROPERTY. Seller does not own or have pending, or is
licensed under, any patent, patent application, trademark, trademark
application, trade name, service mark, copyright, franchise, license, permit,
Intellectual Property or operating licenses, intangible property or asset, other
than as described in Exhibit 3.07, all of which are in good standing and
uncontested. Neither any Stockholder, any employee of Seller, any relative or
affiliate of any Stockholder or of any such employee, nor any other partnership
or enterprise in which any Stockholder, any such employee, or any such relative
or affiliate had or now has a five percent or greater Stockholder Interest or
other substantial interest, possesses any Intellectual Property, Operating
License, licenses, permits, intangible property or asset which relates to the
business of Seller. There is no right under any Intellectual Property, Operating
License, licenses, permits, intangible property or assets reasonably necessary
to the business of Seller as presently conducted or as it contemplates
conducting, except such as are so designated in Exhibit 3.07. To
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the knowledge of Seller , Seller has not infringed, is not infringing, or has
not received notice of infringement on the Intellectual Property of others. To
the knowledge of Seller, there is no infringement by others of the Intellectual
Property of Seller.
3.08 QUESTIONABLE PAYMENTS. To the knowledge of Seller, neither Seller,
its agents, employees, or any other persons associated with or acting on behalf
of Seller has, directly or indirectly:
(a) Used any Seller funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to
political activity;
(b) Made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political
parties or campaigns from corporate funds;
(c) Violated any provision of the Foreign Corrupt Practices Act of
1977;
(d) Established or maintained any unlawful or unrecorded fund of
corporate monies or other assets;
(e) Made any false or fictitious entry on the books or records of
Seller;
(f) Made any bribe, rebate, payoff, influence payment, kickback,
or other unlawful payment; or
(g) Made any bribe, kickback, or other payment of a similar or
comparable nature, whether lawful or not, to any person or
entity, private or public, regardless of form, whether in
money, property, or services, to obtain favorable treatment in
securing business or to obtain special concessions, or to pay
for favorable treatment for business secured or for special
concessions already obtained.
3.09 AUTHORITY. Seller has all requisite power and authority to execute,
deliver, and perform this Agreement. All necessary corporate proceedings of
Seller have been duly taken to authorize the execution, delivery, and
performance of this Agreement by Seller. This Agreement and all exhibits hereto
have been duly authorized, executed, and delivered by Seller, have been duly
executed and delivered, and constitutes the legal, valid, and binding obligation
of Seller , and is enforceable as to them in accordance with its terms. No
consent, authorization, approval, order, license, certificate, or permit of or
from, or declaration or filing with, any federal, state, local, or other
governmental authority or any court or other tribunal is required by Seller, for
the execution, delivery, or performance of this Agreement and exhibits by Seller
. No consent of any party to any contract, agreement, instrument, lease,
license, arrangement, or understanding to which Seller is a party, or to which
it or they or any of its or their properties or assets are subject, is required
for the execution, delivery, or performance of this Agreement and exhibits
(except (i)
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such consents referred to in Exhibit 1.01(d) as having been obtained at or prior
to the date of this Agreement, true and correct copies of which have been
delivered to Purchaser or (ii) where the failure to obtain such consents would
not have a material adverse effect); and, except where such breach would not
have a material adverse effect, the execution, delivery, and performance of this
Agreement and exhibits will not violate, result in a breach of, conflict with,
or (with or without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under any term of any such contract,
agreement, instrument, lease, license, arrangement, or understanding, or violate
or result in a breach of any term of the articles of incorporation or by-laws,
as amended, of Seller or violate, result in a breach of, or conflict with any
law, rule, regulation, order, judgment, or decree binding on Seller. Upon the
Closing, Purchaser will have good title, free and clear of all liens,
encumbrances and charges, to all of the Assets except as identified herein.
3.10 ENVIRONMENT, HEALTH, AND SAFETY.
(a) To the knowledge of the Seller, Seller has complied with all
environmental, health and safety laws, except where such
non-compliance would not have a material adverse effect, and
no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to
comply. Without limiting the generality of the preceding
sentence, Seller has obtained and been in compliance with all
of the terms and conditions of all permits, licenses, and
other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules,
and timetables which are contained in, all environmental,
health and safety laws, except where such non-compliance would
not have a material adverse effect; and
(b) To the knowledge of the Seller, Seller does not have any
material liability for damage to any site, location or body of
water (surface or subsurface), for any illness of or personal
injury to any employee or other individual, or for any reason
under any environmental, health and safety law, except such
damage that would not have a material adverse effect.
3.11 COMPLETENESS OF DISCLOSURE. To the best knowledge of the Seller, no
representation or warranty by Seller in this Agreement contains or on the date
of the Closing will contain any untrue statement of a material fact or omits or
on the Closing Date will omit to state a material fact necessary to make the
statements made not misleading, except for changes beyond the control of Seller
or unless disclosed by Seller prior to Closing.
3.12 OPERATING LICENSES. Set forth on Exhibit 3.12 hereto is a
description of each Operating License or permit required for the conduct of the
business of Seller, together with the name of the government agency or entity
issuing such license or permit. Such licenses and
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permits are valid and in full force and effect, and will not be terminated or
otherwise adversely affected by the consummation of the transactions
contemplated hereby. Set forth on Exhibit 3.12 is a description of work in
progress for which FCC licenses must be obtained.
ARTICLE IV
PURCHASER'S CONDITIONS PRECEDENT
Except as may be waived in writing by Purchaser, the obligations of
Purchaser hereunder are subject to the fulfillment at or prior to the Closing of
each of the following conditions:
4.01 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller contained herein shall be true and correct in all material respects as
of the Closing, and Purchaser shall not have discovered any material error,
misstatement or omission therein.
4.02 COVENANTS. Seller shall have performed and complied with all
covenants or conditions required by this Agreement to be performed and complied
with by them prior to the Closing.
4.03 PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
ARTICLE V
SELLER'S CONDITIONS PRECEDENT
Except as may be waived in writing by Seller the obligations of Seller
hereunder are subject to fulfillment at or prior to the Closing of each of the
following conditions:
5.01 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Purchaser contained herein shall be true and correct in all material respects
as of the Closing, subject to any changes contemplated by this Agreement, and
Seller shall not have discovered any material error, misstatement or omission
therein.
5.02 COVENANTS. Purchaser shall have performed and complied in all
material respects with all covenants or conditions required by this Agreement to
be performed and complied with by it prior to the Closing.
5.03 PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
ARTICLE VI
MISCELLANEOUS
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6.01 AMENDMENT. This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by the party against which enforcement
of the amendment, modification or supplement is sought.
6.02 ASSIGNMENT. This Agreement and any right created hereby shall be
assignable by Purchaser and Seller.
6.03 NOTICE. Any notice or communication must be in writing and given by
depositing the same in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person. Such notice shall be deemed
received on the date on which it is hand-delivered or on the third business day
following the date on which it is so mailed.
6.04 CONFIDENTIALITY. The parties shall keep this Agreement and its
terms confidential, but any party may make such disclosure after the Closing as
it reasonably considers prudent, but each party will notify the other parties in
advance of any such disclosure. In the event that the transactions contemplated
by this Agreement are not consummated for any reason whatsoever, the parties
hereto agree not to disclose or use any confidential information they may have
concerning the affairs of the other parties, except for information which is
required by law to be disclosed.
6.05 ENTIRE AGREEMENT. This Agreement and the exhibits hereto supersede
all prior agreements and understandings relating to the subject matter hereof,
except that the obligations of any party under any agreement executed pursuant
to this Agreement shall not be affected by this Section.
6.06 COSTS, EXPENSES AND LEGAL FEES. Whether or not the transactions
contemplated hereby are consummated, each party hereto shall bear its own costs
and expenses (including attorney fees).
6.07 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom, provided the
same can be done without materially altering the purposes and intent of the
parties. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable, provided this
does not materially alter the purposes and intent of the parties
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6.08 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants contained herein shall survive the
Closing and all statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of Seller or Purchaser pursuant to this
Agreement shall be deemed to have been representations and warranties by Seller
or Purchaser, as the case may be, and shall survive the Closing and any
investigation made by any party hereto or on its behalf.
6.09 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereto shall be governed, construed and enforced in accordance with the
laws of the State of Texas.
6.10 BULK TRANSFER LAWS. The parties hereto waive compliance in all
respects with any applicable bulk transfer laws.
6.11 TERMINATION. Prior to closing, this Agreement may be terminated on
the earlier to occur of: (i) mutual agreement of the Board of Directors of
Seller and Purchaser; (ii) the unilateral decision of the Board of Directors of
Seller and Purchaser; or (iii) 5 days after the signing of the agreement. Any
such termination will be without fault, damage or penalty, monetarily or
otherwise, to any Party to this Agreement.
6.12 LIMITATIONS OF PRESENTATIONS AND WARRANTIES
Not Withstanding anything expressed or implied in or by this
agreement to the contrary, all representations and warranties of the parties
contained herein are limited to "the best of the parties respective knowledge
and belief, after having made a reasonable review of relevant matters.
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SELLER:
EAGLE TELECOM INTERNATIONAL, INC.
a Texas corporation
By: /s/ J. THOMAS MILTON
Name: J. Thomas Milton
Title: President
PURCHASER:
EAGLE TELECOM INTERNATIONAL, INC.,
a Delaware Company
By: /s/ H. DEAN CUBLEY
Name: H. Dean Cubley
Title: Preisdent/CEO
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LIST OF EXHIBITS
Exhibit
NO.
-------
List of Locations......................................................1.01(a)
List of Fixed Assets...................................................1.01(b)
List of Inventory......................................................1.01(c)
List of Contracts, Agreements, Instruments.............................1.01(d)
Employee Contracts.....................................................1.01(da)
List of Prepayments and Adjustments.....................................1.01(e)
List of Accounts Receivable.............................................1.01(f)
List of Accounts Payable................................................1.03(c)
Assumed Liabilities.....................................................1.04
Bill of Sale............................................................1.05(a)
UCC Documentation.......................................................1.05(b)
Non-Competition Agreement...............................................1.05(c)
Organization and Qualification - Purchaser..............................2.01
Financial Condition-Purchaser...........................................2.04
Articles of Incorporation and Bylaws....................................2.05
Organization and Qualification - Seller.................................3.01
Financial Condition - Seller............................................3.02
Litigation and Claims...................................................3.04
Potentially Adverse Matters.............................................3.04 (a)
Properties and Leases (held by lease or license)........................3.05
Firm Customer Purchase Orders...........................................3.06
<PAGE>
Intellectual Property...................................................3.07
Quotations..............................................................3.08
Operating Licenses......................................................3.12
EXHIBIT 10.2
EAGLE TELECOM INTERNATIONAL, INC.
1996 INCENTIVE STOCK OPTION PLAN
<PAGE>
EAGLE TELECOM INTERNATIONAL, INC.
1996 INCENTIVE STOCK OPTION PLAN
1. ADOPTION AND PURPOSE
Eagle Telecom International, Inc., a Texas corporation (the "Company"),
hereby adopts this Eagle Telecom International, Inc. 1996 Incentive
Stock Option Plan, as hereinafter set forth (the "Plan"), subject to
stockholder approval. The purpose of the Plan is to foster and promote
the financial success of the Company and materially increase stockholder
value by (a) strengthening the Company's capability to develop and
maintain an outstanding management team, (b) motivating superior
performance by the management team, (c) encouraging and providing for
obtaining an ownership interest in the Company, (d) attracting and
retaining outstanding executive talent by providing incentive
compensation opportunities competitive with other companies, and (e)
enabling key employees to participate in the long-term growth and
financial success of the Company. The Plan is intended to provide
"incentive stock options" within the meaning of that term under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). Any
proceeds of cash or property received by the Company for the sale of
Eagle Telecom International, Inc. common stock, $.001 par value (the
"Common Stock") pursuant to options granted under this Plan will be used
for general corporate purposes.
2. ADMINISTRATION
2.1 The Plan shall be administered by a committee (the "Compensation
Committee") appointed by the Board of Directors of the Company
(the "Board") and composed of at least two Board members or the
Board of Directors. If the Plan is administered by the
Compensation Committee, it shall meet the plan administration
requirements described under Rule 16b-3(c)(2) promulgated under
the Securities Exchange Act of 1934 [see 17 CFR Section
240.16b-3(c)(2)] or any similar rule which may subsequently be
in effect. Any vacancy on the Compensation Committee shall be
filled by the Board.
2.2 Subject to the express provisions of the Plan, the Compensation
Committee shall have the sole and complete authority to (a)
determine key employees to whom awards hereunder shall be
granted, (b) make awards in such form and amounts as it shall
determine, (c) impose such limitations and conditions upon such
awards as it shall deem appropriate, (d) interpret the Plan,
prescribe, amend and rescind rules and regulations relating to
it, (e) determine the terms and provisions of the respective
participants' agreements (which need not be identical), and (f)
make such other determinations as it deems necessary or
advisable for the administration of the Plan. The decisions of
the Compensation Committee on matters within their jurisdiction
under the Plan shall be conclusive and binding on the Company
and all other persons. No members of the Board or the
Compensation Committee shall be liable for any action taken or
determination made in good faith.
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2.3 All expenses associated with the Plan shall be paid by the
Company or its Subsidiaries.
2.4 As used in this Section and wherever used in this Plan, the term
"Subsidiary" shall mean a corporation (other than the Company)
in which the Company directly or indirectly controls 50% or more
of the combined voting power of all stock of that corporation.
3. ELIGIBILITY
The Compensation Committee may grant options to purchase Common Stock
under this Plan (referred to as "Options") only to key employees and
executive officers of the Company or its Subsidiaries. The Compensation
Committee shall determine, within the provisions of the Plan, those key
employees to whom, and the times at which, Options shall be granted. In
making such determinations, the Compensation Committee may take into
account the nature of the services rendered by the employee, his or her
present and potential contributions to the Company's success, and such
other factors as the Compensation Committee in its discretion shall deem
relevant. Grants may be made to the same individual on more than one
occasion. An employee of the Company who is granted Options pursuant to
this Plan shall be referred to as a "Participant."
4. GRANTING OF OPTIONS
4.1 POWERS OF THE COMPENSATION COMMITTEE. The Compensation Committee
shall determine, in accordance with the provisions of the Plan,
the duration of each Option, the exercise price (i.e. Option
price) under each Option, the time or times within which (during
the term of the Option) all or portions of each Option may be
exercised, and whether cash, Common Stock, or other property may
be accepted in full or partial payment upon exercise of an
Option.
4.2 NUMBER OF OPTIONS. As soon as practicable after the date an
employee is determined to be eligible under Section 3 hereof,
the Compensation Committee may, in its discretion, grant to such
eligible employee a number of Options determined by the
Compensation Committee.
5. COMMON STOCK
Each Option granted under the Plan shall be convertible into one (1)
share(s) of Common Stock, unless adjusted in accordance with the
provisions of Section 7 hereof. Options may be granted for a number of
shares not to exceed, in the aggregate, 400,000 shares of Common Stock,
subject to adjustment pursuant to Section 7 hereof. For purposes of
calculating the maximum number of shares of Common Stock that may be
issued under the Plan, (i) all the shares issued (including the shares,
if any, withheld for tax withholding requirements) shall be counted when
cash is used as full payment for shares issued upon the exercise of an
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Option, and (ii) shares tendered by a Participant as payment for shares
issued upon exercise of an Option shall be available for issuance under
the Plan. Upon the exercise of an Option, the Company may deliver either
authorized but unissued shares, treasury shares, or any combination
thereof. In the event that any Option granted under the Plan expires
unexercised, or is surrendered by a Participant for cancellation, or is
terminated or ceases to be exercisable for any other reason without
having been fully exercised, the Common Stock theretofore subject to
such Option shall again become available for new Options to be granted
under the Plan to any eligible employee (including the holder of such
former Option) at an Option price determined in accordance with Section
6.2 hereof, which price may then be greater or less than the Option
price of such former Option. No fractional shares of Common Stock shall
be issued, and the Compensation Committee shall determine the manner in
which fractional share value shall be treated.
6. REQUIRED TERMS AND CONDITIONS OF OPTIONS
6.1 AWARD OF OPTIONS. The Compensation Committee may, from time to
time and subject to the provisions of the Plan and such other
terms and conditions as the Compensation Committee may
prescribe, grant to any Participant in the Plan one or more
"incentive stock options" (intended to qualify as such under the
provisions of Section 422 of the Code) to purchase for cash or
shares the number of shares of Common Stock allotted by the
Compensation Committee. The date an Option is granted shall mean
the date selected by the Compensation Committee as of which the
Compensation Committee allots a specific number of shares to a
Participant pursuant to the Plan. Except as otherwise provided
in Section 6.4, Options shall not be granted to any owner of 10%
or more of the total combined voting power of the Company and
its Subsidiaries.
6.2 OPTION PRICE. Except as otherwise provided in Section 6.4, the
option price per share of Common Stock deliverable upon the
exercise of an Option shall be 100% of the "Fair Market Value"
of a share of Common Stock on the date the Option is granted.
For purposes of this Plan, Fair Market Value shall mean as of
any date and in respect of any share of Common Stock, the
closing price on such date or on the next business day, if such
date is not a business day, of a share of Common Stock last
reported on the principal national securities exchange on which
the Common Stock is listed or admitted to trade, provided that,
if shares of Common Stock shall not have been traded on such
securities exchange for more than 10 days immediately preceding
such date or if deemed appropriate by the Compensation Committee
for any other reason, the Fair Market Value of shares of Common
Stock shall be as determined by the Compensation Committee in
such other manner as it may deem appropriate. In no event shall
the Fair Market Value of any share of Common Stock be less than
its par value.
6.3 TERM AND EXERCISE. Each Option shall be fully exercisable six
months from the date of its grant except in the event of the
Participant's death or "disability" (within the
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meaning of Section 22(e)(3) of the Code) or unless a shorter
period is provided by the Compensation Committee or another
Section of this Plan. Except as otherwise provided in Section
6.4, each Option may be exercised during a period of 10 years
from the date of grant thereof.
6.4 TEN PERCENT SHAREHOLDER. Notwithstanding anything to the
contrary in this Plan, Options may be granted to any owner of
10% or more of the total combined voting power of the Company
and its Subsidiaries (i) if the Option price is at least 110% of
the Fair Market Value of a share of Common Stock on the date the
Option is granted, and (ii) the Option by its terms is not
exercisable after the expiration of five years from the date
such Option is granted.
6.5 MAXIMUM AMOUNT OF OPTION GRANT. The aggregate Fair Market Value
(determined on the date the Option is granted) of Common Stock
subject to an Option granted to a Participant by the
Compensation Committee in any calendar year shall not exceed
$100,000.
6.6 METHOD OF EXERCISE. Options may be exercised by giving written
notice to the President of the Company, stating the number of
shares of Common Stock with respect to which the Option is being
exercised and tendering payment thereof. In lieu of part or all
of a cash payment, the Compensation Committee may permit payment
in Common Stock, valued at fair market value (as determined by
the Compensation Committee) on the date of exercise. Payment for
Common Stock, whether in cash or in other shares of Common
Stock, shall be made in full at the time that an Option, or any
part thereof, is exercised.
7. ADJUSTMENTS
7.1 The aggregate number or type of shares of Common Stock with
respect to which Options may be granted hereunder, the number or
type of shares of Common Stock subject to each outstanding
Option, and the Option price per share for each such Option may
all be appropriately adjusted, as the Compensation Committee may
determine, for any increase or decrease in the number of shares
of issued Common Stock resulting from a subdivision or
consolidation of shares whether through reorganization,
recapitalization, consolidation, payment of a share dividend, or
other similar increase or decrease.
7.2 Subject to any required action by the stockholders, if the
Company shall be a party to a transaction involving a sale of
substantially all its assets, a merger, or a consolidation, any
Option granted hereunder shall pertain to and apply to the
securities to which a holder of Common Stock would be entitled
to receive as a result of such transaction; provided, however,
that all unexercised Options under the Plan may be canceled by
the Company as of the effective date of any such transaction by
4
<PAGE>
giving notice to the holders of such Options of its intention to
do so, and by permitting the exercise of such Options during the
30-day period immediately after the date such notice is given.
7.3 In the case of dissolution of the Company, every Option
outstanding hereunder shall terminate; provided, however, that
each Option holder shall have 30 days' prior written notice of
such event, during which time he shall have a right to exercise
his partly or wholly unexercised Options.
7.4 On the basis of information known to the Company, the
Compensation Committee shall make all determinations under this
Section 7, including whether a transaction involves a sale of
substantially all the Company's assets; and all such
determinations shall be conclusive and binding on the Company
and all other persons.
8. OPTION AGREEMENTS
Each award of Options shall be evidenced by a written agreement,
executed by the employee and the Company, which shall contain such
restrictions, terms and conditions as the Compensation Committee may
require in accordance with the provisions of this Plan. Option
agreements need not be identical. The certificates evidencing the shares
of Common Stock acquired upon exercise of an Option may bear a legend
referring to the terms and conditions contained in the respective Option
agreement and the Plan, and the Company may place a stop transfer order
with its transfer agent against the transfer of such shares. If
requested to do so by the Compensation Committee at the time of exercise
of an Option, each Participant shall execute a certificate indicating
that he is purchasing the Common Stock under such Option for investment
and not with any present intention to sell the same.
9. LEGAL AND OTHER REQUIREMENTS
The obligation of the Company to sell and deliver Common Stock under
Options shall be subject to all applicable laws, regulations, rules and
approvals, including, but not by way of limitation, the effectiveness of
a registration statement under the Securities Act of 1933, if deemed
necessary or appropriate by the Board, of the Common Stock reserved for
issuance upon exercise of Options. In the case of officers or other
persons subject to Section 16(b) of the Securities Exchange Act of 1934,
the Compensation Committee may at any time impose any limitations upon
the exercise, delivery and payment of any Option which, in the
Compensation Committee's discretion, are necessary in order to comply
with Section 16(b) and the rules and regulations thereunder. A
participant shall have no rights as a stockholder with respect to any
shares covered by an Option, or exercised by him,
5
<PAGE>
until the date of delivery of a stock certificate to him for such
shares. No adjustment other than pursuant to Section 7 hereof shall be
made for dividends or other rights for which the record date is prior to
the date such stock certificate is delivered.
10. NON-TRANSFERABILITY
During the lifetime of an optionee, any Option granted to him shall be
exercisable only by him or by his guardian or legal representative. No
Option shall be assignable or transferable, except by will, by the laws
of descent and distribution, or pursuant to certain divorce decrees. The
granting of an Option shall impose no obligation upon the optionee to
exercise such Option or right.
11. NO CONTRACT OF EMPLOYMENT
Neither the adoption of this Plan nor the grant of any Option shall be
deemed to obligate the Company or any subsidiary of the Company to
continue the employment of any employee for any particular period, nor
shall the granting of an Option constitute a request or consent to
postpone the retirement date of any employee.
12. INDEMNIFICATION OF COMPENSATION COMMITTEE
In addition to such other rights of indemnification as they may have as
members of the Board or the Compensation Committee, the members of the
Compensation Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees actually and necessarily
incurred in connection with the defense of any action, suit or
proceeding (or in connection with any appeal therein), to which they or
any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any Option granted
hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as
to which it shall be adjudged in such action, suit or proceeding that
such Compensation Committee member is liable for gross negligence or
misconduct in the performance of his duties; provided that within 60
days after institution of any such action, suit or proceeding a
Compensation Committee member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
13. WITHHOLDING TAXES
Whenever the Company proposes or is required to issue or transfer shares
of Common Stock under the Plan, the Company shall have the right to
require the grantee to remit to the Company an amount sufficient to
satisfy any federal, state and/or local withholding tax requirements
prior to the delivery of any certificate or certificates for such
shares.
6
<PAGE>
Alternatively, the Company may issue or transfer such shares of Common
Stock net of the number of shares sufficient to satisfy the withholding
tax requirements. For withholding tax purposes, the shares of Common
Stock shall be valued on the date the withholding obligation is
incurred.
14. LEAVES OF ABSENCE
The Compensation Committee shall be entitled to make such rules,
regulations and determinations as it deems appropriate under the Plan in
respect of any leave of absence taken by the recipient of any Option.
Without limiting the generality of the foregoing, the Compensation
Committee shall be entitled to determine (i) whether or not any such
leave of absence shall constitute a termination of employment within the
meaning of the Plan and (ii) the impact, if any, of any such leave of
absence on Options under the Plan theretofore made to any recipient who
takes such leave of absence.
15. NEWLY ELIGIBLE EMPLOYEES
Except as otherwise provided herein, the Compensation Committee shall be
entitled to make such rules, regulations, determinations and awards as
it deems appropriate in respect of any employee who becomes eligible to
participate in the Plan.
16. TERMINATION AND AMENDMENT OF PLAN
The Board, acting by a majority of its members (exclusive of Board
members who are not eligible to be appointed to the Compensation
Committee as described in Section 2.1) without further action on the
part of the stockholders, may from time to time alter, amend or suspend
the Plan or any Option granted hereunder or may at any time terminate
the Plan; provided, however, that the Board may not:
(a) change the total number of shares of Common Stock available for
Options under the Plan (except as provided in Section 7 hereof);
(b) extend the duration of the Option;
(c) increase the maximum term of Options;
(d) decrease the Option price or otherwise materially increase the
benefits accruing to Participants under the Plan; or
(e) materially modify the eligibility requirements of the Plan;
and provided further that no such action shall materially and adversely
affect any outstanding Options without the consent of the respective
optionees.
7
<PAGE>
17. GENDER AND NUMBER
Except when otherwise indicated by the context, words in the masculine
gender when used in the Plan shall include the feminine gender and vice
versa, and the singular shall include the plural and the plural shall
include the singular.
18. GOVERNING LAW
The Plan, and all agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of Texas.
19. EFFECTIVE DATE OF PLAN
The Plan shall become effective upon adoption by the Board.
8
EAGLE TELECOM INTERNATIONAL PURCHASE ORDER
910 GEMINI
HOUSTON, TEXAS 77058
P.O. NUMBER:
PHONE: (713) 280-048FAX: 280-0381 DATE: _______________________________
- --------------------------------------
TO: _________________________________DEPARTMENT:________________________
_________________________________ACCOUNTING CODE_______________-100
_________________________________PROJECT OR JOB#:_____________________
Contact________________________________TERMS:______ NET 30__________________
Phone: ____________________________ ***
Fax #:________________________________VIA:____UPS___________________________
SHIP TO: PROMISED SHIP DATE:
EAGLE TELECOM INTERNATIONAL
910 GEMINI ______________________________________
HOUSTON, TEXAS 77058
CUST #: TAXABLE:____ EXEMPT:____ XXX
QUANTITY DESCRIPTION UNIT PRICE PRICE
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***RECEIVING CLERK: BILLIE B. MIZE
NOTIFY
IMMEDIATELY UPON ARRIVAL ____________________________________________
AT ETI SHIPPING DOCK PURCHASING
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion in this SB-2 Registration Statement of our report
dated December 16, 1996 on our review of the financial statements of Eagle
Telecom International, Inc. We also consent to the reference to our firm
under the captions "Selected Financial Data" and "Experts".
/s/ MCMANUS & CO., P.C.
McManus & Co., P.C.
Certified Public Accountants
January 17, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM EAGLE TELECOM INTERNATIONAL AS OF NOVEMBER 30, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> NOV-30-1997
<CASH> 2,456,098
<SECURITIES> 0
<RECEIVABLES> 870,530
<ALLOWANCES> 0
<INVENTORY> 588,981
<CURRENT-ASSETS> 3,921,657
<PP&E> 507,764
<DEPRECIATION> 49,531
<TOTAL-ASSETS> 4,393,284
<CURRENT-LIABILITIES> 664,854
<BONDS> 0
0
0
<COMMON> 8,829
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,393,284
<SALES> 1,138,852
<TOTAL-REVENUES> 1,161,376
<CGS> 591,077
<TOTAL-COSTS> 591,077
<OTHER-EXPENSES> 308,695
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 172,659
<INCOME-TAX> 88,945
<INCOME-CONTINUING> 204,863
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 204,863
<EPS-PRIMARY> .027
<EPS-DILUTED> .027
</TABLE>
