<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
August 26, 1998
------------------------------------------------
Date of Report (Date of earliest event reported)
FIRSTLINK COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
OREGON 01-14271 93-1197477
- -------------------- -------------------- --------------------
(State or other (Commission file (I.R.S. Employer
jurisdiction number) Identification
of incorporation) Number)
190 S.W. HARRISON, PORTLAND, OREGON 97201
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(Address of principal executive offices) (Zip Code)
(503) 306-4444
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year
if changed since last report)
<PAGE>
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
On August 26, 1998, the Company signed a definitive agreement (the
"Agreement") with Web Service Company, Inc. ("WEB"), one of the largest
operators of coin operated laundry equipment and other services in apartment
and condominium complexes in the United States.
Under terms of the Agreement, WEB will exclusively market the Company's
services to properties with which WEB has an existing relationship that have
more than 150 units in Dallas, Denver, Seattle and the San Francisco Bay Area
(the "Exclusive Territories"). As compensation for WEB's sales of the
Company's services, the Company has granted WEB a warrant to purchase
2,000,000 shares of its common stock, subject to vesting requirements
requiring WEB to deliver one customer for each 25 shares. In other words, in
order to earn the 2,000,000 warrants, WEB must, by May 22, 2004, deliver
80,000 phone and cable customers who subscribe to the Company's services. If
WEB is unable to deliver a certain number of subscribers each year (which
number increases over the life of the contract), a portion of the unvested
warrants expire. The maximum number of vested shares that can be exercised by
WEB cannot exceed 20% of the issued and outstanding common stock of the
Company regardless of the number of shares vested. The warrants are
exercisable at $5.40 per share for five years after they are issued, but no
later than May 22, 2012.
The Company will also pay WEB a commission of 1.75% on collected revenues
for WEB customers (2.25% for customers in any property in which the Company
has achieved a penetration rate in excess of 60%). The commission is paid for
the life of the Company's contract with the property.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exclusive Marketing Agreement by and between FirstLink Communications,
Inc. and Web Service Company dated August 26, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRSTLINK COMMUNICATIONS, INC.
(Registrant)
September 10, 1998 By: /s/ Jeffrey S. Sperber
- ------------------ ----------------------------------------
(Date) Jeffrey S. Sperber, Chief Financial Officer
<PAGE>
EXCLUSIVE MARKETING AGREEMENT
This Exclusive Marketing Agreement (herein "Agreement") is entered into
this 26th day of August, 1998 by and between FirstLink Communications, Inc.,
an Oregon corporation ("Company"), and WEB Service Company, Inc., a California
corporation ("WEB").
WITNESSETH:
WHEREAS, Company is an integrated telecommunications service company
providing local telephone, long distance telephone, enhanced calling features
and cable television services to residents of multi-family apartment and
condominium complexes, and
WHEREAS, WEB is an operator of coin-operated laundry equipment and
ancillary services to residents of multi-family apartment and condominium
complexes, and
WHEREAS, The parties desire to enter into this Agreement regarding an
exclusive marketing arrangement whereby WEB will, in the Exclusive
Territories, market Company Services.
NOW, THEREFORE, for and in consideration of the mutual premises,
agreements and covenants hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which is acknowledged
by each party hereto, the parties do hereby agree as follows:
ARTICLE I
Exclusive Marketing Agreement
------------------------------
1.1 EXCLUSIVE MARKETING AGREEMENT. In the following territories
("Exclusive Territories"), WEB and Company will exclusively work together to
jointly develop, offer and market Services (as defined herein) to tenants of
apartment complexes with 150 or more living units ("Properties").
The Exclusive Territories to which this Agreement shall initially apply
shall be Seattle, WA, Denver, CO, Dallas, TX, and the San Francisco Bay Area,
CA., as defined in Exhibit A.
Additional Exclusive Territories shall be added by amendment to this
Agreement, from time to time upon the mutual decision of WEB and Company.
An Exclusive Territory may be removed from the list of Exclusive
Territories at any time upon the mutual agreement of WEB and the Company or,
if either party has not met its performance requirements as defined in Exhibit
B.
1.2 SERVICES. For the purposes of this Agreement the term "Company
Services" shall mean:
The provision of any telecommunications services to Properties having at
least 150 living units. Telecommunications services include but are not
limited to: telephone, long distance telephone, Internet access, cable or
satellite television services, television internet access, cellular or other
personal communication service, prepaid calling cards, television, radio,
electronic surveillance or security, Specifically excluded from this
definition is the right to provide payphone services to a Property.
1.3 DUTIES OF THE PARTIES. Pursuant to this Agreement, the respective
duties of the parties shall be as follows:
A. WEB. WEB shall conduct all sales and marketing activities for
Company Services to Properties and tenants within each of the
Exclusive Territories. Such sales and marketing activities
shall include all responsibilities for obtaining signed
telecommunications services agreements which shall be between
FirstLink and the property owner (the "Telecommunication
Services Agreements"), supporting tenant sign-ups, including
but not limited to initial tenant promotion, training, support
and incentives to the leasing agents, managing and compensating
the sales and marketing personnel in the Exclusive Territories,
and the supply and distribution of certain sales and marketing
materials, as further described in Exhibit C, related to the
acquisition of properties and customers.
B. FIRSTLINK. Company shall be responsible for providing and
maintaining all equipment and negotiating all contracts
necessary for providing the Company Services, managing and
compensating all personnel responsible for fulfillment of the
Company Services, including but not limited to, managing and
compensating all personnel associated with billing and customer
care, providing the billing and customer care system, the
purchase and distribution of certain sales and marketing
materials, as further defined in Exhibit C, and paying the
property commission share to the party specified by the
Telecommunication Services Agreements.
1.4 COMMISSIONS TO WEB. WEB shall be paid a commission of 1.75% of all
collected revenues (excluding taxes, regulatory fees and surcharges) generated
from the provision of Company Services to a Property pursuant to this
Agreement. Such commission rate shall increase to 2.25% for any service at a
Property with a Penetration Rate(defined herein) exceeding 60%. Penetration
Rate shall be defined as the number of Customer Subscriptions (defined herein)
in a building complex expressed as a percentage of the total number of living
units in the building complex. Such commission shall continue to be paid for
the entire duration of a signed Telecommunication Services Agreement provided
that Services are being provided to a Property. Commissions shall be payable
quarterly, for each calendar quarter, no later than thirty (30) days after the
last day of the quarter.
1.5 EARNOUT SHARES. The Company will issue to WEB a warrant entitling
WEB to purchase up to 2,000,000 shares of the common stock of the Company
("Earnout Warrant") subject to adjustment as set forth in the Earnout Warrant.
The exercise price per share shall be $5.40.
The Earnout Warrant shall be subject to the following vesting schedule:
The Earnout Warrant shall vest at the rate of 25 shares of Company Common
Stock per Customer Subscription obtained from a Property in an Exclusive
Territory marketed by WEB pursuant to this Agreement. As used in this
Agreement, a "Customer Subscription" is equal to 1/3 of a cable
television subscription; that is, each three cable television
subscriptions equals one Customer Subscription. Additionally, each
Customer Subscription is equal to 2/3 of a telephone subscription; that
is, each three telephone subscriptions equals two Customer Subscriptions.
The Earnout Warrant will be subject to a minimum vesting schedule as
follows:
<TABLE>
<CAPTION>
Minimum Required Vested
Vesting Date Shares for Period
------------------- --------------------------
<S> <C> <C>
December 31, 1999 100,000
December 31, 2000 150,000 additional
December 31, 2001 200,000 additional
December 31, 2002 300,000 additional
December 31, 2003 500,000 additional
May 22, 2004 750,000 additional
</TABLE>
Any portion of the minimum required vested shares for each year that is
not vested by the Vesting Date for that year is lost and may never be
exercised.
Notwithstanding the foregoing, the maximum number of vested shares that
can be exercised is the lesser of twenty percent (20%) of the Company's
issued and outstanding Common Stock as of the Vesting Date or 2,000,000
shares (as adjusted pursuant to the Earnout Warrant) less any previously
vested shares. Any shares which may not be exercised by reason of the
foregoing limitation shall remain exercisable until such time as, by
reason of additional issuances, the shares may be exercised. The Earnout
Warrant must be exercised as to each share within five (5) years of the
date the share is vested or the Earnout Warrant will expire as to that
share. The Earnout Warrant shall be in substantially the form attached
hereto as Exhibit E. Notification of vested Earnout Warrants for each
calendar quarter will be sent by the Company to WEB no later than thirty
(30) days after the last day of the quarter.
1.6 BUYOUT PROTECTION. In the event that, at any time during the term
of this Agreement there is (i) a merger of the Company or its parent or (ii)
an event resulting in a change of the ownership of at least fifty percent
(50%) of the outstanding voting securities of the Company or its parent or
(iii) the individuals who constitute the board of directors as of the date
hereof cease, for any reason, to constitute a majority of the board and,
following any of the foregoing, this Agreement is terminated, WEB, at its
election and sole discretion, shall be entitled to either option "A" or "B"
set forth below. In addition to the aforementioned choice, WEB will also be
entitled to option "C" set forth below:
A. Immediate vesting of shares exercisable under the Earnout
Warrant in an amount equal to 2,000,000 shares times the number
of units in Properties signed by WEB at the date the contract
if rescinded divided by 120,000 units, less any previously
vested shares; for example, if an acquisition is consummated in
the ninth month of the Agreement and the Agreement is
rescinded, and if WEB has signed Properties with 12,000 units,
and if 40,000 Shares have previously vested, then 160,000
Shares (12,000/120,000 x 2,000,000 = 200,000 - 40,000 =
160,000) will vest immediately,
B. A lump sum payment of $200,000.00;
C. A buyout of future commissions equal to $0.55 per unit in each
housing complex under contract multiplied by the number of
months remaining under the term of each property contract,
discounted at an annual rate of 8%. For purposes of this
calculation, "unit in each housing complex" shall mean the
total number of units at a property, not the number of
FirstLink subscribers.
ARTICLE II
SECURITIES COMPLIANCE
----------------------
2.1 OREGON SECURITIES LAW AND CALIFORNIA SECURITIES ACT. The parties
acknowledge that the offer, sale and issuance of the Earnout Warrant, shares
obtainable upon exercise thereof and Shares to WEB and the delivery by Company
of Securities to WEB is intended to be exempt from the registration
requirements of the Oregon Securities Law pursuant to one or more exemptions
therefrom, including, but not limited to, the transactional exemption provided
by ORS 59.035(2) and from the qualification requirements of the California
Corporate Securities Act pursuant to Section 25102(f) of the California
Corporations Code.
2.2 SECURITIES ACT OF 1933. The parties acknowledge that the offer,
sale, issuance, and delivery of the Securities is intended to be exempt from
the registration requirements of the Securities Act of 1933 ("1933 Act"), by
virtue of one or more exemptions therefrom.
2.3 LEGEND REQUIREMENTS. All certificates representing the Company
Shares issued pursuant to the Earnout Warrant to WEB shall be stamped or
otherwise imprinted with a legend substantially in the following form:
"Any securities represented hereby have not been registered under
the Securities Act of 1933, as amended ("1933 Act"). Such
securities have been acquired by the holder for investment and may
not be pledged, hypothecated, sold, transferred or otherwise
disposed of in the absence of (1) an effective Registration
Statement as to the securities under the 1933 Act; (2) an opinion of
counsel satisfactory to Company that such registration is not
required or (3) a 'no action' letter is received from the Securities
and Exchange Commission to the effect that the Staff of the
Commission will not recommend that any action be taken under the
1933 Act against Company or the holder if such proposed sale is
consummated without registration under the 1933 Act.
"In addition, the securities represented by this certificate are
subject to restrictions on transfer under the provisions of the
Oregon Securities Law, and any attempted pledge, hypothecation, sale
or other transfer of these securities must be in compliance with an
exemption or registration under the Oregon Securities Law."
Proper stop transfer instructions will be issued by Company to the
transfer agent with respect to the Company Shares issued to WEB in accordance
with this Agreement.
2.4 SECURITIES COMPLIANCE. The Company Shares to be acquired by WEB are
being acquired for investment purposes only, and not with a view toward the
resale or distribution of any part thereof. The Earnout Warrant and Company
Shares are being acquired for WEB's own account and not as nominee or agent
for any other person or entity, and WEB has no present intention of selling,
granting any right or participation in, or otherwise distributing or disposing
of the Company Shares. WEB further represents that it is aware that the
Company Shares are subject to restrictions under state and federal securities
laws and that it must bear the economic risk of this investment indefinitely.
In particular, WEB is aware that the Company Shares may not be sold pursuant
to Rule 144 promulgated under the 1933 Act unless all of the conditions of
that Rule are met at the time of an attempted sale. WEB is an accredited
investor as that term is used in Rule 501 under the Securities Act of 1933.
ARTICLE III
MISCELLANEOUS
--------------
3.1 TERMINATION. This agreement shall expire on May 22, 2004 unless
extended by mutual consent of the Parties. Anything herein or elsewhere to
the contrary notwithstanding, this Agreement may be terminated as follows:
(a) At any time by mutual written consent of both the Company and
WEB; or
(b) In the event that, at any time during the term of this
Agreement (i) a merger of the Company or its parent, or (ii) there is a
change of fifty percent (50%) of the outstanding voting securities of the
Company or its parent or (iii) the individuals who constitute the board of
directors as of the date hereof cease, for any reason, to constitute a
majority of the board subject to the Buyout Protection provision of Section
1.6 hereof.
(c) May 22, 2004
In the event of termination of this Agreement as provided in this
Paragraph, written notice shall be given forthwith to the other party; and
this Agreement shall become null and void with no further effect, and, other
than as provided elsewhere herein, there shall be no liability on the part of
any party hereto or their respective officers, directors, employees, agents or
stockholders.
3.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of any party to this Agreement shall survive any investigation by
another party and the execution hereof.
3.3 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and if by facsimile
transmission, telecopy, telex, or personal delivery shall be deemed to have
been given when sent; if sent by Federal Express or Express Mail shall be
deemed to have been given the next succeeding day; and if mailed shall be
deemed to have been given three days after the date when sent by registered or
certified mail, postage prepaid and addressed to a party at its address as
shown below:
(a) If to Company, to:
FirstLink Communications, Inc.
190 SW Harrison Street
Portland, Oregon 97201
Fax: (503)306-4333
Attn: Chief Financial Officer
(b) If to WEB to:
WEB Service Company, Inc.
3690 Redondo Beach Ave.
Redondo Beach, CA 90278-1165
Attn: President
Copy to: General Counsel
Fax: (310) 297-9450
or to such other address as it may, by written notice received by the other
parties, have designated as its address for such purpose. The failure of any
person to give a notice or copy thereof required hereunder to all parties
entitled to receive such notice shall not constitute valid notice for purposes
of commencement of an option period under this Agreement, and, in such event,
any party hereto may give such notice or copy thereof in lieu of the person
required to give the notice stating the requisite information to the extent
known. Any party hereto shall be entitled to assume upon receipt of a notice
commencing an option period that all required notices and copies thereof have
been given unless he or it shall actually receive notice prior to the closing
of any purchase pursuant to the exercise of an option hereunder that all
required notices shall not have been given. Any person giving notice shall
provide evidence of the mailing of all required notices and copies thereof to
any party hereto promptly upon demand.
3.4 APPLICABLE LAW. This Agreement shall be construed under the laws of
the State of Oregon.
3.5 ARBITRATION. Except as expressly provided elsewhere in this
Agreement or any Exhibit hereto, any controversy or claim arising out of or
relating to this Agreement, or the breach hereof or thereof, shall be resolved
by binding arbitration in accordance with the rules applicable to arbitration
by JAMS or any other private arbitration service mutually acceptable to the
Company and WEB (except the rules relating to appeal), as such rules shall
exist at the date of the controversy or claim and except as such rules may be
modified herein or as otherwise agreed by the parties in such controversy.
The forum for arbitration shall be San Francisco, California and the
governing law for such arbitration shall be the laws of the State of Oregon.
Following thirty (30) days' written notice by any party of intention to
invoke arbitration, any dispute arising under this Agreement or other exhibits
hereto and not mutually resolved within such thirty (30) day period shall be
determined by a single arbitrator upon whom the parties agree or, if the
parties cannot agree on a single arbitrator within five (5) business days
following such thirty (30) day period, then by a board of three (3)
arbitrators, which arbitrator(s) shall be selected for each such controversy
so arising hereunder. If three (3) arbitrators are necessary, each party
shall have the right to pick one arbitrator and the two arbitrators so chosen
shall have the right to select a third arbitrator. Any party who is unable or
unwilling to so select an arbitrator in a timely manner, shall forfeit its
right to participate in the selection process. If a selected arbitrator is
unable or unwilling to act, or if for any other reason an appointment of the
requisite number or arbitrators cannot be made, then any party, on behalf of
all the parties, may request appointment of arbitrator(s) by the presiding
judge of the Multnomah County, Oregon Courts.
The arbitrator or arbitrators shall be guided, but not bound, by the
Rules of Evidence then in effect in the Circuit Courts of Oregon and by the
discovery rules of the Rules of Civil Procedure then in effect in the Circuit
Courts of Oregon. Any discovery shall be limited to information directly
relevant to the controversy or claim in arbitration.
The arbitrator or board of arbitrators shall determine the matters
submitted pursuant to the provisions of this Agreement and render a decision
thereon no later than sixty (60) days after such board (or single arbitrator,
as the case may be) has been appointed. The action of the sole arbitrator, or
of a majority of the members of the board of arbitrators, as the case may be,
shall govern and their decisions in writing shall be final, nonappealable, and
binding on the parties hereto.
Any decisions by the arbitrator or arbitrators shall include, a written
statement specifying the basis for the decision and the computation of any
monetary award. The prevailing party, as designated by the arbitrator or
arbitrators shall be awarded costs and attorneys fees as shall be determined
by the arbitrator or arbitrators. Judgment upon the arbitration award shall
be entered in the Multnomah County, Oregon courts.
3.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.7 ENTIRE AGREEMENT. This Agreement (including the exhibits) sets
forth the entire understanding of the parties with respect to the subject
matter of this Agreement and supersedes any and all prior understandings and
agreements, whether written or oral, between the parties with respect to such
subject matter.
3.8 AMENDMENT. This Agreement may be amended only by a written
instrument signed by each party hereto.
3.9 GENDER AND NUMBER. Whenever required by the context of this
Agreement, the singular includes the plural, and the masculine includes the
feminine.
3.10 SEVERABILITY. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement, or the
application thereof to any person or circumstance, is for any reason or to any
extent invalid or unenforceable, the remainder of the Agreement and the
application of such provision to the other persons or circumstances shall not
be affected thereby, but rather is to be enforced to the greatest extent
permitted by law.
3.11 LIMITATION. No provision of this Agreement shall be construed to
apply in any case where its application would be void under any applicable
rule against perpetuities, rule limiting suspension of the power of alienation
or other similar rules.
3.12 CAPTIONS. The captions used in this Agreement are for convenience
only and are not to be construed in interpreting this Agreement.
3.13 NO ASSIGNMENT. The rights and obligations of any party hereto under
this Agreement may not be assigned without the prior written consent of all
parties hereto subject to the continuing obligation under section 1.6.
3.14 NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
exclusive benefit of the parties to this Agreement and their respective
personal representatives, successors and permitted assigns, and nothing
contained in this Agreement shall be construed as creating any rights or
benefits in or to any third party.
3.15 EXPENSES. Each party shall bear its own expenses in connection with
this Agreement and the transactions contemplated by this Agreement.
3.16 EXHIBITS. The exhibits referenced in this Agreement are a part of
this Agreement as if fully set forth in this Agreement.
3.17 TIME IS OF THE ESSENCE. Unless times and dates specified herein are
modified in writing, said times and dates shall be binding on the parties.
Time is of the essence of this Agreement.
3.18 LIMITATION OF REMEDY. Notwithstanding any other provision of this
Agreement, in the event of nonperformance or breach, including willful
nonperformance or breach, of any provision of this Agreement, the sole and
exclusive remedy of the aggrieved party shall be the removal of the Exclusive
Territory or Territories, as applicable, from the provisions of this
Agreement, and the aggrieved party shall have no other right as a result of
any such non-performance or breach to pursue any other remedy at law or equity
including, without limitation, any action for negligent or willful breach in
tort or contract, or any action for damages or specific performance.
IN WITNESS WHEREOF, the parties hereto having read, adopted, approved,
ratified and consented to the provisions contained herein, have executed this
Agreement effective as of the date and year first above written.
Company: WEB:
FirstLink Communications, Inc. WEB Service Company, Inc.
- ------------------------------ ------------------------------
By: A. Roger Pease, By: William E. Bloomfield, Jr.,
Chief Executive Officer President
<PAGE>
EXHIBIT A
The exclusive territories shall be as follows; However should a county herein
listed not be serviced within 12 months after the first service is offered in
a specific exclusive market, then either party may remove that county from the
exclusive list. To remove a county from the exclusive list, A party must give
formal notice to the other party and allow 90 days for the other party to
initiate service.
Seattle, WA, shall be the counties of:
KING, PIERCE, AND SNOHOMISH
Dallas, TX, shall be the counties of:
DALLAS, TARRANT, AND COLLIN
Denver, CO, shall be the counties of:
DENVER, JEFFERSON, ARAPAHOE, ADAMS, BOULDER AND DOUGLAS
San Francisco Bar Area, shall be the counties of:
SAN FRANCISCO, ALAMEDA, SAN MATEO, AND SANTA CLARA
<PAGE>
<PAGE>
EXHIBIT B
DEFINITION OF PERFORMANCE STANDARDS
PERFORMANCE STANDARDS OF WEB
Minimum Number of Subscribers
- -----------------------------
WEB shall be held to the following performance criteria throughout the
duration of the exclusive marketing agreement of which this exhibit is
attached thereto.
WEB shall make all reasonable efforts to deliver to FirstLink a minimum number
of units passed (defined as total units in properties under contract) as
follows on an overall market basis by the following dates:
<TABLE>
<CAPTION>
MINIMUM NUMBER
MONTHS OF UNITS PASSED
--------- ----------------------
<S> <C> <C>
6 12,000
7 - 15 18,000 additional
16 - 28 26,000 additional
29 - 40 36,000 additional
41 - 60 46,000 additional
-----------------------
138,000
</TABLE>
Additionally, the above stated minimum number of units passed on an overall
basis shall be allocated among the Exclusive Territories. Such allocation
shall be calculated by taking the total number of units serviced by WEB (coin
operated laundry services) in properties of 150 units or more in an Exclusive
Territory divided by the total number of units serviced by WEB in properties
of 150 units or more in all of the Exclusive Territories multiplied by the
minimum number of units passed stated above. For example, if Dallas has
50,000 units serviced in WEB properties of 150 units or more and WEB services
150,000 units in all of the Exclusive Territories combined in properties of
150 units or more the calculation will be as follows in the first 6 months for
Dallas: (50,000/150,000 X 12,000 = 4,000). Notwithstanding the
aforementioned, at such point in time that 80,000 subscribers are delivered to
FirstLink, the minimum number of units passed requirement shall cease for all
territories. For purposes of calculating the minimum number of units passed
in an individual territory, the time period for attaining such units passed
shall commence on the date that marketing activities commence in the Exclusive
Territory. On an overall basis, the time period for measuring minimum number
of units passed shall commence on the date that marketing activities commence
in the last Exclusive Territory to be activated.
Thirty days (30) from the date of this exclusive marketing agreement, WEB
shall provide FirstLink with a schedule listing the total number of units
serviced in each Exclusive Territory for properties of 150 units or more for
purposes of calculating the minimum number of unites passed by Exclusive
Territory. Such calculation, once agreed upon by both WEB and FirstLink,
shall become an amendment to this exclusive marketing agreement.
Definition of Non-Performance
- -----------------------------
If the minimum number of units passed on an overall basis is not achieved in
any given period, all markets become non-performing. In the event of WEB non-
performance, WEB shall have 90 days to correct the non-performance or provide
a plan acceptable to FirstLink to correct the non-performance. If not,
FirstLink has the right to proceed with its own sales effort. If FirstLink
elects to proceed with its own sales effort, FirstLink also has the right to
reduce the WEB commission as defined in section of 1.4 of the
exclusive marketing agreement for those properties obtained subsequent to the
non-performance or continue the WEB commission in return for WEB continuing to
service properties FirstLink contracts with directly. In the event that
FirstLink reduces WEB's commission, the Exclusive Territories shall become
non-exclusive. If the Exclusive Territory becomes non-exclusive, then WEB
shall have the right to compete with FirstLink after a twelve month waiting
period (commencing from the date WEB is notified by FirstLink that their
commission is being reduced). If an Exclusive Territory becomes non-exclusive
and WEB decides to compete in such territory, then WEB shall not vest shares
under the Earnout Warrant provision for subscribers in properties obtained
directly by FirstLink.
If the minimum number of units passed on an overall basis is achieved, but the
minimum number of units passed is not achieved in a given Exclusive Territory,
then that Exclusive Territory becomes non-performing. All provisions stated
in the paragraph above become effective for each non-performing Exclusive
Territory.
If WEB refrains from selling FirstLink services in an Exclusive Territory(ies)
due to FirstLink non performance (see definition below), the dates set forth
above for achieving minimum number of units passed shall be extended by a
number of days equal to the period of time from when FirstLink is notified of
the non-performance until such time that the non-performance is cured.
PERFORMANCE STANDARDS OF FIRSTLINK
Quantity and Quality of Services
- --------------------------------
Unless prohibited or required by local regulation, FirstLink shall provide
Company Services (as defined in section 1.2 of the exclusive marketing
agreement) in the Exclusive Territories, including all pricing, customer
service, billing, field fulfillment, and network operations on a basis that is
comparable in quantity and quality to that of the Company Services being
provided in Portland, Oregon. Any significant failure to do so by FirstLink
shall be considered non-performance.
In the event of non-performance in an Exclusive Territory, WEB must notify
FirstLink of such non-performance. FirstLink will have 90 days to correct the
non-performance. In the event that the non-performance is not corrected
within the 90 period, or if a plan acceptable to WEB has not been put into
place to correct the non-performance, then WEB has the right remove the
Exclusive Territory from the exclusive marketing agreement. If FirstLink
disputes the non-performance, both parties agree to utilize an independent
arbitrator (as provided for in section 3.6 of the exclusive marketing
agreement) to determine whether non-performance exists and/or whether such
non-performance is significant.
If FirstLink or WEB believes that FirstLink cannot provide Company services in
an Exclusive Territory on a level comparable in quantity and quality to that
of Portland prior to commencing activities in an Exclusive Territory,
FirstLink must notify WEB or WEB must notify FirstLink, of the modifications
or changes that are necessary for acceptance or mitigation prior to commencing
activities in that Exclusive Territory. Acceptance or mitigation shall not
be unreasonably withheld by WEB, however should WEB not accept the mitigation
offered, then FirstLink for that Exclusive Territory shall be considered non
performing.
In addition, should FirstLink be unwilling or unable to start delivery of the
Company Services in an Exclusive Territory within 12 months from the date of
this agreement, WEB has the right to remove that Exclusive Territory from the
Exclusive Marketing Agreement.
<PAGE>
<PAGE>
EXHIBIT C
DEFINITION OF MARKETING RESPONSIBILITIES
WEB
1. Property Owner Materials and Activities, including proposals and contracts
2. Open Houses and Related Materials, including but not limited to the
following:
- Letters to residents
- Displays
- Invitations
- Food and Beverages
3. Other special promotions related to property owners and open houses
FIRSTLINK
1. Resident brochures
2. Resident service agreements
3. Special promotion collateral directed to property residents.
4. Provide, at no cost, two phone lines and expanded basic cable at each MDU
to each leasing agent or property manager living at the property.
Additionally, FirstLink will sell to WEB additional lines and services at
FirstLink's incremental cost at WEB's request to provide to property
management, leasing office, and for smart card communications and pay
phones, if possible.
5. Supply a toll free number for each MDU leasing office to contact
FirstLink.
6. Supply to WEB, moneys for incentives for leasing management to obtain
tenant sign ups. FirstLink shall pay the first $10 of incentives paid to
the leasing agent, provided that the leasing agent is paid at least $10
per subscriber.
Additionally, FirstLink retains the right to approve all materials created by
WEB that utilizes the FirstLink name.
<PAGE>
This Warrant and the underlying shares of Common Stock represented by this
Warrant have not been registered under the Securities Act of 1933 (the "Act"),
and are "restricted securities" as that term is defined in Rule l44 under the
Act. The securities may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration statement under the
Act, a "no-action" letter from the Securities and Exchange Commission and any
applicable State securities administrator as to such sale or offer, or an
opinion of counsel to the corporation that neither State nor Federal
registration is required as to such sale or offer.
Warrant No. ______
***FirstLink Communications, Inc.***
EARNOUT WARRANT TO PURCHASE SHARES OF COMMON STOCK
Warrant to Purchase 2,000,000 Shares
(subject to adjustment and vesting as set forth herein)
Exercise Price $5.40 Per Share
(subject to adjustment as set forth herein)
VOID AFTER 5:00 P.M., PACIFIC STANDARD TIME, ON May 22, 2012
THIS CERTIFIES THAT WEB Service Company, Inc., a California corporation
is entitled to purchase from FirstLink Communications, Inc., an Oregon
corporation (hereinafter called the "Company") with its principal office
located in Portland, Oregon, at any time before 5:00 p.m., Pacific Standard
Time (PST), on May 22, 2012 (the "Termination Date"), at the purchase price of
$5.40 per share (the "Exercise Price"), the number of shares (the "Shares") of
the Company's Common Stock (the "Common Stock") then available for exercise as
set forth herein. The number of Shares purchasable upon exercise of this
Warrant and the Exercise Price per Share shall be subject to vesting as set
forth in Section 2.5 and to adjustment from time to time as set forth in
Section 5 below.
Section 1. Definitions.
-----------
The following terms used in this agreement shall have the following
meanings (unless otherwise expressly provided herein):
1.1 THE "ACT." The Securities Act of 1933, as amended.
1.2 THE "COMMISSION." The Securities and Exchange Commission
1.3 "EARNOUT WARRANT." This Warrant.
1.4 "HOLDER" OR "WARRANTHOLDER." The person to whom this Warrant is
issued.
1.5 "NASD." NASD Regulation, Inc.
1.6 "NASDAQ." The automated quotation system operated by Nasdaq, Inc.
1.7 "TERMINATION OF BUSINESS." Any sale, lease or exchange of all, or
substantially all, of the Company's assets or business or any dissolution,
liquidation or winding up of the Company.
1.8 "WARRANTS." The warrants issued in accordance with the terms of
this Agreement and any Warrants issued in substitution for or replacement of
such warrants, including those evidenced by a Warrant or Warrants issued upon
division exchange, substitution or transfer pursuant to this Warrant.
1.9 "WARRANT SECURITIES." The Common Stock purchasable upon exercise of
a Warrant, including the Common Stock underlying unexercised portions of a
Warrant.
2.0 "EXCLUSIVE MARKETING AGREEMENT." The exclusive marketing agreement
between FirstLink Communications, Inc. and WEB Service Company, Inc. date
August 26, 1998.
Section 2. Term of Warrants; Exercise of Warrant; Vesting.
----------------------------------------------
2.1 EXERCISE OF WARRANT. Subject to the terms of this Agreement, the
Holder shall have the right, at any time prior to 5:00 p.m., PST, on the
Termination Date, to purchase from the Company up to the number of fully paid
and nonassessable Shares to which the Holder may at the time be entitled to
purchase pursuant to this Agreement, upon surrender to the Company, at its
principal office, of the Warrant to be exercised, together with the purchase
form on the reverse thereof, duly filled in and signed, and upon payment to
the Company of the Exercise Price for the number of Shares in respect of which
such Warrants are then exercised, but in no event for less than 100 Shares
(unless fewer than an aggregate of 100 shares are then purchasable under all
outstanding Warrants held by a Holder; such number being subject to adjustment
as provided herein). Notwithstanding the foregoing, except as provided in
Section 2.5 (b), the Warrant must be exercised as to a Share that has become
vested within not more than five (5) years of the date on which it has vested
as to that Share.
2.2 PAYMENT OF EXERCISE PRICE. Payment of the aggregate Exercise Price
shall be made in cash or by check or any combination thereof.
2.3 ISSUANCE OF SHARES. Upon such surrender of the Warrants and payment
of such Exercise Price as aforesaid, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as the Holder may designate, a certificate or
certificates for the number of full Shares so purchased upon the exercise of
the Warrant, together with cash, as provided in Section (9) hereof, in respect
of any fractional Shares otherwise issuable upon such surrender.
2.4 STATUS OF HOLDER UPON EXERCISE. Upon receipt of the Warrant by the
Company as described in Sections 2.1 above, the Holder shall be deemed to be
the holder of record of the Shares issuable upon such exercise,
notwithstanding that the transfer books of the Company may then be closed or
that certificates representing such Shares may not have been prepared or
actually delivered to the Holder.
2.5 VESTING PROVISIONS. Notwithstanding anything else to the contrary
herein, this Earnout Warrant is subject to the following vesting provisions:
a. This Earnout Warrant shall vest at the rate of twenty five (25)
Shares per Customer Subscription (as defined in the Exclusive
Marketing Agreement) obtained from a Property in an Exclusive
Territory marketed by Holder and provided to the Company.
b. This Earnout Warrant is subject to the following minimum vesting
schedule:
<TABLE>
<CAPTION>
Minimum Required
Vesting Date Vesting Shares for Period
---------------- ---------------------------
<S> <C> <C>
December 31,1999 100,000
December 31, 2000 150,000 additional
December 31, 2001 200,000 additional
December 31, 2002 300,000 additional
December 31, 2003 500,000 additional
May 22, 2004 750,000 additional
</TABLE>
Any portion of the minimum required vested Shares for each year that
is not vested by the Vesting Date for that year is lost and may
never be exercised. Except as provided in the following paragraph,
Shares must be exercised within five (5) years of vesting or they
will expire.
Notwithstanding the foregoing, the maximum number of shares that can
be exercised is the lesser of twenty percent (20%) of the Company's
outstanding Shares as of the Vesting Date or 2,000,000 Shares
(subject to adjustment as provided herein) less any previously
vested shares. Any shares which may not be exercised by reason of
the foregoing limitation shall remain exercisable until such time
as, by reason of additional issuances, the shares may be exercised.
c. In the event that, at any time during the term of the Exclusive
Marketing Agreement, there is (i) a merger of the Company or its
parent or (ii) an event resulting in a change of the ownership of at
least fifty percent (50%) of the outstanding voting securities of
the Company or its parent or (iii) the individuals who constitute
the board of directors as of the date hereof cease, for any reason,
to constitute a majority of the board and, following any of the
foregoing, the Exclusive Marketing Agreement is terminated, then WEB
shall be entitled to elect, at its sole discretion, to cause the
vesting of certain Shares as set forth in Section 1.6 of the
Exclusive Marketing Agreement.
d. TERMS. All terms used in this Section 2.5 are as defined herein in
the Exclusive Marketing Agreement between the Company and Holder.
Section 3. Non-Transferability and Form of Warrant.
---------------------------------------
3.1 LIMITATION ON TRANSFER. This Warrant is non-transferable.
3.2 MUTILATED, LOST, STOLEN OR DESTROYED WARRANT. In case the Warrant
shall be mutilated, lost, stolen or destroyed, the Company shall, at the
request of the Warrantholder, issue and deliver in exchange and substitution
for and upon cancellation of the mutilated Warrant or Warrants, or in lieu of
and substitution for the Warrant or Warrants lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence satisfactory to the Company of such loss, theft
or destruction of such Warrant and a bond of indemnity, if requested, also
satisfactory in form and amount, at the applicant's cost. Applicants for such
substitute Warrant shall also comply with such other reasonable regulations
and pay such other reasonable charges as the Company may prescribe.
3.3 FORM OF ELECTION. The form of election to purchase Shares shall be
substantially as set forth in Exhibit A attached hereto. The Warrants shall
be executed on behalf of the Company by its President or by a Vice President
and attested to by its Secretary or an Assistant Secretary. A Warrant bearing
the signature of an individual who was at any time the proper officer of the
Company shall bind the Company, notwithstanding that such individual shall
have ceased to hold such officer prior to the delivery of such Warrant or did
not hold such office on the date of this Agreement.
The Warrants shall be dated as of the date of signature thereof by the
Company either upon initial issuance or upon division, exchange, substitution
or transfer.
Section 4. Adjustment of Number of Shares.
------------------------------
The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
4.1 ADJUSTMENTS. The number of Shares purchasable upon the exercise of
the Warrants shall be subject to adjustments as follows:
(a) In case the Company shall:
(i) pay a dividend in Common Stock or make a distribution to
its stockholders in Common Stock,
(ii) subdivide its outstanding Common Stock,
(iii) combine its outstanding Common Stock into a smaller
number of shares of Common Stock, or
(iv) issue by classification of its Common Stock other
securities of the Company, the number of Shares
purchasable upon exercise of the Warrants immediately'
prior thereto shall be adjusted so that the
Warrantholder shall be entitled to receive the kind and
number of Shares or other securities of the Company
which it would have owned or would have been entitled to
receive immediately after the happening of any of the
events described above, had the Warrants been exercised
immediately prior to the happening of such event or any
record date with respect thereto. Any adjustment made
pursuant to this subsection (4.1. (a)) shall become
effective immediately after the effective date of such
event retroactive to the record date, if any, for such
event.
(b) Whenever the number of Shares purchasable upon the exercise of
the Warrant is adjusted, as herein provided, the Exercise Price
payable upon exercise of the Warrant shall be adjusted by
multiplying such Exercise Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the
number of Warrant Shares purchasable upon the exercise prior to
such adjustment, and of which the denominator shall be
purchasable immediately thereafter.
(c) Whenever the number of Shares purchasable upon exercise of the
Warrants is adjusted as herein provided, the Company shall
cause to be promptly mailed to the Warrantholder by first class
mail, postage prepaid, notice of such adjustment and a
certificate of the chief financial officer of the Company
setting forth the number of Shares purchasable upon the
exercise of the Warrants after such adjustment, a brief
statement of the facts requiring such adjustment and the
computation by which such adjustment was made.
(d) For the purpose of this Section (4.1), the term "Common Stock"
shall mean (i) the class of stock designated as the Common
Stock of the Company at the date of this Agreement, or (ii) any
other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of
changes in par value, or from par value to no par value, or
from no par value to par value.
4.2 NO ADJUSTMENT FOR CERTAIN CASES. No adjustments shall be made
pursuant to Section (4) hereof in connection with the issuance of the Common
Stock upon exercise of the Warrants. No adjustments shall be made pursuant to
Section (4) hereof in connection with grant or exercise of presently
authorized or outstanding options to purchase, or the issuance of shares of
Common Stock under the Company's director or employee benefit plan.
4.3 INDEPENDENT PUBLIC ACCOUNTANTS. The Company may retain a firm of
independent public accountants of recognized national standing (which may be
any such firm regularly employed by the Company) to make any computation
required under this Section (4), and a certificate signed by such firm shall
be conclusive evidence of the correctness of any computation made under this
Section (4).
4.4 STATEMENT ON WARRANTS. Irrespective of any adjustments in the
number of securities issuable upon exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same number of
securities as are stated in the similar Warrants initially issuable pursuant
to this Agreement. However, the Company may, at any time in its sole
discretion (which shall be conclusive), make any change in the form of Warrant
that it may deem appropriate and that does not affect the substance thereof;
and any Warrant thereafter issued, whether upon registration of transfer of,
or in exchange or substitution for, an outstanding Warrant, may be in the form
so changed.
Section 5. Notice to Holders.
-----------------
If, prior to the expiration of this Warrant, either by its terms or by
its exercise in full, any of the following shall occur:
(a) the Company shall declare a dividend of Common Stock or authorize
any other distribution on its Common Stock; or
(c) any reclassification, reorganization or similar change of the Common
Stock, or any consolidation or merger to which the Company is a
party; or
(d) the voluntary or involuntary dissolution, liquidation or winding up
of the Company; or
(e) any purchase, retirement or redemption by the Company of its Common
Stock; then, and in any such case, the Company shall deliver to the
Holder or Holders written notice thereof at least 30 days prior to
the earliest applicable date specified below with respect to which
notice is to be given, which notice shall state the following:
(i) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights, or, if a record is not
to be taken, the date as of which the shareholders of Common
Stock of record to be entitled to such dividend, distribution
or rights are to be determined;
(ii) the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution,
liquidation, winding up or purchase, retirement or redemption
is expected to become effective, and the date, if any, as of
which the Company's shareholders of Common Stock of record
shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger,
sale, transfer, dissolution, liquidation, winding up,
purchase, retirement or redemption; and
(iii) if any matters referred to in the foregoing clauses (i) and
(ii) are to be voted upon by shareholders of Common Stock,
the date as of which those shareholders to be entitled to
vote are to be determined.
Section 6. Reservation of Warrant Securities.
---------------------------------
There has been reserved, and the Company shall at all times keep reserved
so long as the Warrants remain outstanding, out of its authorized and unissued
Common Stock, such number of shares of Common Stock as shall be subject to
purchase under the Warrants. Every transfer agent for the Common Stock and
other securities of the Company issuable upon the exercise of the Warrants
will be irrevocably authorized and directed at all times to reserve such
number of authorized shares and other securities as shall be requisite for
such purpose. The Company will keep a copy of this Agreement on file with
every transfer agent for the Common Stock and other securities of the Company
issuable upon the exercise of the Warrants. The Company will supply every
such transfer agent with duly executed stock and other certificates, as
appropriate for such purpose and will provide or otherwise make available any
cash which may be payable as provided in Section 9 hereof.
Section 7. Payment of Taxes.
----------------
The Company will pay all documentary stamp taxes, if any, attributable to
the initial issuance of the Warrants or the securities comprising the Shares;
provided, however, the Company shall not be required to pay any tax which may
be payable in respect of any transfer of the Warrants or the securities
comprising the Shares.
Section 8. Transfer to Comply With the Securities Act of 1933.
--------------------------------------------------
This Warrant, the Warrant Securities, and all other securities issued or
issuable upon exercise of this Warrant, may not be offered, sold or
transferred, in whole or in part, except in compliance with the Act, and
except in compliance with all applicable state securities laws. The Company
may cause substantially the following legends, or their equivalents, to be set
forth on each certificate representing the Warrant Securities, or any other
security issued or issuable upon exercise of this Warrant:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SECURITIES HAVE
BEEN ACQUIRED WITHOUT A VIEW TO DISTRIBUTION AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
EFFECTIVE REGISTRATION STATEMENTS FOR THE SECURITIES UNDER
APPLICABLE FEDERAL AND STATE LAWS, A "NO-ACTION" LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION AND ANY APPLICABLE STATE
SECURITIES ADMINISTRATOR AS TO SUCH SALE OR OFFER, OR AN OPINION OF
COUNSEL TO THE CORPORATION THAT NEITHER STATE NOR FEDERAL
REGISTRATION IS REQUIRED AS TO SUCH SALE OR OFFER. THE
CORPORATION'S TRANSFER AGENT HAS BEEN ORDERED TO EFFECTUATE TRANSFER
OF THIS CERTIFICATE ONLY IN ACCORDANCE WITH THE ABOVE INSTRUCTIONS."
(b) Any legend required by applicable state securities laws.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legends (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act of 1933, as amended (the "Act"), or the securities
represented thereby) shall also bear the above legends unless, in the opinion
of the Company's counsel, the securities represented thereby need no longer be
subject to such restrictions.
Section 9. Fractional Shares.
-----------------
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of all or any part of this Warrant. With respect to
any fraction of a share of any security called for upon any exercise of this
Warrant, the Company shall pay to the Holder an amount in money equal to that
fraction multiplied by the Current Market Price of that share.
Section 10. No Rights as Stockholder.
------------------------
Nothing contained in this Agreement or in the Warrants shall be construed
as conferring upon the Warrantholder or its transferees any rights as a
stockholder of the Company, including the right to vote, receive dividends,
consent or receive notices as a stockholder in respect to any meeting of
stockholders for the election of directors of the Company or any other matter.
Section 11. Warrant Securities to be Fully Paid.
-----------------------------------
The Company covenants that all Warrant Securities that may be issued and
delivered to a Holder of this Warrant upon the exercise of this Warrant and
payment of the Exercise Price will be, upon such delivery, validly and duly
issued, fully paid and nonassessable.
Section 12. Notices.
-------
Any notice pursuant to this Agreement by the Company or by a
Warrantholder or a holder of Shares shall be in writing and shall be deemed to
have been duly given if delivered or mailed by certified mail, return receipt
requested:
(i) If to a Warrantholder or a holder of Shares, addressed to the
address set forth above.
(ii) If to the Company addressed to it at FirstLink
Communications, Inc., 190 SW Harrison Street, Portland,
Oregon, 97201.
Each party may from time to time change the address to which notices to
it are to be delivered or mailed hereunder by notice in accordance herewith to
the other party.
Section 13. Applicable Law.
--------------
This Warrant shall be governed by and construed in accordance with the
laws of the State of Oregon.
Section 14. Arbitration.
-----------
The terms of Section 3.5 of the Exclusive Marketing Agreement are hereby
incorporated by reference.
Section 15. Acceptance of Terms; Successors.
-------------------------------
By its acceptance of this Warrant, the Holder accepts and agrees to
comply with all of the terms and provisions hereof. All the covenants and
provisions of this Warrant by or for the benefit of the Company or the Holder
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 16. Miscellaneous Provisions.
------------------------
(a) Subject to the terms and conditions contained herein, this Warrant
shall be binding on the Company and its successors and shall inure
to the benefit of the original Holder, its successors and assigns
and all holders of Warrant Securities and the exercise of this
Warrant in full shall not terminate the provisions of this Warrant
as it relates to holders of Warrant Securities.
(b) This Warrant cannot be changed or terminated or any performance or
condition waived in whole or in part except by an agreement in
writing signed by the party against whom enforcement of the change,
termination or waiver is sought; provided, however, that any
provisions hereof may be amended, waived, discharged or terminated
only upon the written consent of the Company and all of the holders
of Warrants.
(c) If any provision of this Warrant shall be held to be invalid,
illegal or unenforceable, such provision shall be severed, enforced
to the extent possible, or modified in such a way as to make it
enforceable, and the invalidity, illegality or unenforceability
shall not affect the remainder of this Warrant.
(d) Paragraph headings used in this Warrant are for convenience only and
shall not be taken or construed to define or limit any of the terms
or provisions of this Warrant. Unless otherwise provided, or unless
the context shall otherwise require, the use of the singular shall
include the plural and the use of any gender shall include all
genders.
Dated: August 26, 1998 FIRSTLINK COMMUNICATIONS, INC.
By:
---------------------------------------
A. Roger Pease, Chief Executive Officer
<PAGE>
<PAGE>
PURCHASE FORM
--------------
Dated
-------------
The undersigned hereby irrevocably elects to exercise this Warrant to the
extent of purchasing _________________ Shares of ____________________ and
hereby tenders payment of the exercise price thereof.
Name
-------------------------------------------
(please type or print in block letters)
Address
-------------------------------------------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
