<PAGE> 1
REGISTRATION NO. 333-
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 24, 1998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PARK 'N VIEW, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 4899 65-0612435
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
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11711 N.W. 39TH STREET
CORAL SPRINGS, FLORIDA 33065
(954) 745-7800
(Address, including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
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STEPHEN L. CONKLING
VICE PRESIDENT - FINANCE AND CHIEF OPERATING OFFICER
PARK 'N VIEW, INC., 11711 N.W. 39TH STREET, CORAL SPRINGS, FLORIDA 33065
(954) 745-7800
(Name, Address, including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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COPIES TO:
ELIZABETH G. WREN, ESQ.
JAMES M. O'CONNELL, ESQ.
KILPATRICK STOCKTON LLP
3500 ONE FIRST UNION CENTER, CHARLOTTE, NORTH CAROLINA 28202
(704) 338-5123
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AGGREGATE PRINCIPAL MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Series B 13% Senior Notes due 2008... $75,000,000 100% $75,000,000 $22,125
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(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1993, as amended.
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.
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<PAGE> 2
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.
SUBJECT TO COMPLETION, DATED JULY 24, 1998
PROSPECTUS
PARK 'N VIEW, INC.
OFFER TO EXCHANGE
SERIES B 13% SENIOR NOTES DUE 2008,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING
SERIES A 13% SENIOR NOTES DUE 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1998, UNLESS EXTENDED.
Park 'N View, Inc., a Delaware corporation (the "Company"), hereby offers,
upon the terms and subject to the conditions set forth in this Prospectus and
the accompanying letter of transmittal (the "Letter of Transmittal" and such
offer, the "Exchange Offer"), to exchange Series B 13% Senior Notes due 2008 of
the Company (the "New Notes"), which have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), pursuant to a Registration
Statement of which this Prospectus forms a part, for an equal principal amount
of outstanding Series A 13% Senior Notes due 2008 of the Company (the "Old
Notes"), of which $75,000,000 aggregate principal amount is outstanding as of
the date hereof. The New Notes and the Old Notes are collectively referred to
herein as the "Notes."
Any and all Old Notes that are validly tendered and not withdrawn on or
prior to 5:00 P.M., New York City time, on the date the Exchange Offer expires,
which will be , 1998 (30 calendar days following the commencement of
the Exchange Offer) unless the Exchange Offer is extended (such date, including
as extended, the "Expiration Date"), will be accepted for exchange. Tenders of
Old Notes may be withdrawn at any time prior to 5:00 P.M., New York City time on
the Expiration Date. The Exchange Offer is not conditioned upon any minimum
principal amount of Old Notes being tendered for exchange. However, the Exchange
Offer is subject to certain customary conditions, which may be waived by the
Company, and to the terms of the Registration Rights Agreement, dated as of May
27, 1997, by and among the Company and the Initial Purchaser (as defined herein)
(the "Registration Rights Agreement"). Old Notes may only be tendered in
integral multiples of $1,000. See "The Exchange Offer."
The New Notes will be entitled to the benefits of the Indenture (as defined
herein) that governs the Old Notes and that will govern the New Notes. The form
and terms of the New Notes are the same in all material respects as the form and
terms of the Old Notes, except that the New Notes have been registered under the
Securities Act and therefore will not bear legends restricting the transfer
thereof. See "The Exchange Offer" and "Description of the New Notes."
The New Notes will be represented by permanent global notes (the "Global
Notes") in fully registered form and will be deposited with, or on behalf of,
The Depository Trust Company ("DTC") and registered in the name of a nominee of
DTC. Beneficial interests in the Global Notes will be shown on, and transfers
thereof will be effected through, records maintained by DTC and its
participants.
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission"), as set forth in no-action letters issued to third
parties, including Exxon Capital Holdings Corporation, SEC No-Action Letter
(available May 13, 1988), Morgan Stanley & Co. Incorporated, SEC No-Action
Letter (available June 5, 1991) and Shearman & Sterling, SEC No-Action Letter
(available July 2, 1993) (collectively, the "Exchange Offer No-Action Letters"),
the Company believes that the New Notes issued pursuant to the Exchange Offer
may be offered for resale, resold or otherwise transferred by each holder (other
than a broker-dealer who acquires such New Notes directly from the Company for
resale pursuant to Rule 144A under the Securities Act or any other available
exemption under the Securities Act and other than any holder that is an
"affiliate" (as defined in Rule 405 under the Securities Act) of the Company)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such New Notes are acquired in the ordinary
course of such holder's business and such holder is not engaged in, and does
(continued on next page)
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FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PARTICIPANTS IN THE EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 11 OF
THIS PROSPECTUS.
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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 PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 3
(cover page continued)
not intend to engage in, a distribution of such New Notes and has no arrangement
with any person to participate in a distribution of such New Notes. By tendering
Old Notes in exchange for New Notes, each holder, other than a broker-dealer,
will represent to the Company that: (i) it is not an affiliate (as defined in
Rule 405 under the Securities Act) of the Company; (ii) it is not a
broker-dealer tendering Old Notes acquired for its own account directly from the
Company; (iii) any New Notes to be received by it will be acquired in the
ordinary course of its business; and (iv) it is not engaged in, and does not
intend to engage in, a distribution of such New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. If a holder of Old
Notes is engaged in or intends to engage in a distribution of New Notes or has
any arrangement or understanding with respect to the distribution of New Notes
to be acquired pursuant to the Exchange Offer, such holder may not rely on the
applicable interpretations of the staff of the Commission and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction.
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer (a "Participating Broker-Dealer") must acknowledge that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities. Pursuant to the
Registration Rights Agreement, the Company has agreed that it will make this
Prospectus available to any Participating Broker-Dealer for a period of time not
to exceed one year after the date on which the Exchange Offer is consummated for
use in connection with any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from this offering. The Company
has agreed to pay the expenses of the Exchange Offer. No underwriter is being
utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES AND BLUE SKY LAWS OF SUCH JURISDICTION.
The Old Notes have been designated as eligible for trading in the Private
Offerings, Resale and Trading through Automated Linkages ("PORTAL") market.
Prior to the Exchange Offer, there has been no public market for the New Notes.
If such a market were to develop, the New Notes could trade at prices that may
be higher or lower than their principal amount. The Company does not intend to
apply for listing of the New Notes on any securities exchange or for quotation
of the New Notes on The Nasdaq Stock Market's National Market or otherwise. The
Initial Purchaser has previously made a market in the Old Notes, and the Company
has been advised that the Initial Purchaser currently intends to make a market
in the New Notes, as permitted by applicable laws and regulations, after
consummation of the Exchange Offer. The Initial Purchaser is not obligated,
however, to make a market in the Old Notes or the New Notes and any such market
making activity may be discontinued at any time without notice at the sole
discretion of the Initial Purchaser. There can be no assurance as to the
liquidity of the public market for the New Notes or that any active public
market for the New Notes will develop or continue. If an active public market
does not develop or continue, the market price and liquidity of the New Notes
may be adversely affected. See "Risk Factors -- Lack of Public Market for the
New Notes."
ii
<PAGE> 4
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement") under the Securities Act with respect to the
Securities being offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits thereto, to
which reference is hereby made. The Registration Statement and the exhibits
thereto may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and will also be available for inspection and
copying at the regional offices of the Commission located at 7 World Trade
Center, New York, New York 10048 and at Northwestern Atrium Center, 500 West
Madison Street (Suite 1400), Chicago, Illinois 60661. Copies of such material
may also be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
also maintains a web site that contains reports, proxy statements and other
information regarding registrants, including the Company, that file such
information electronically with the Commission. The address of the Commission's
web site is http://www.sec.gov.
As a result of the filing of the Registration Statement with the
Commission, the Company will become subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith will be required to file periodic reports and other
information with the Commission. Pursuant to the Indenture, the Company has
agreed to file with the Commission, to the extent permitted, and provide to the
holders of the Notes, reports, information and documents which are required to
be delivered pursuant to Sections 13 and 15(d) of the Exchange Act so long as
the Notes are outstanding, whether or not the Company is subject to the
informational requirements of the Exchange Act.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements under the
captions "Prospectus Summary," "Risk Factors," "Use of Proceeds," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business" and elsewhere, including statements regarding, among other items, the
Company's anticipated strategies, installation of the PNV Network (as defined
herein) at a significant number of additional sites, expansion of the
functionality and capacity of the PNV Network, additional telecommunications and
other services to be offered through the PNV Network, cost savings, expenditures
and cash requirements. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause the actual
results, performance or achievements of the Company to differ materially from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and other factors include,
among others: general economic and business conditions and industry trends;
uncertainties inherent in proposed business strategies and development plans;
future financial performance, including availability, terms and deployment of
capital; inability to increase subscription sales or realize expected cost
savings; market demand for the Company's current and planned telecommunications
and entertainment services and products; technological developments; competitive
developments in the telecommunications, cable and long-haul trucking industry;
the ability of vendors to deliver required equipment; availability of qualified
personnel; changes in, or the failure or inability to comply with, government
regulation, including, without limitation, regulations of the Federal
Communications Commission, and adverse outcomes from regulatory proceedings;
changes in the nature of key contractual relationships with truckstops and/or
fleet trucking companies; market acceptance of the pricing of the Company's
services and products; and other factors referenced in this Prospectus. See
"Risk Factors." These forward-looking statements speak only as of the date of
this Prospectus. The Company expressly disclaims any obligation or undertaking
to disseminate any updates or revisions to any forward-looking statement
contained herein to reflect any change in the Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.
---------------------
Certain market data used throughout this Prospectus were obtained from
industry and government sources. The Company has not independently verified this
market data and makes no representations as to its accuracy.
iii
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Capitalized terms used and not otherwise defined
in this summary have the meanings given to them elsewhere in this Prospectus. As
used in this Prospectus unless otherwise indicated, references to the Company's
fiscal year means the fiscal year ended June 30.
THE COMPANY
The Company originated and operates the only integrated telecommunications
and entertainment network (the "PNV Network" or "Network") currently capable of
providing voice, data and cable television services to long-haul truck drivers
in the convenience and privacy of their trucks while parked at truckstops. The
Company markets and sells subscriptions to its Network to fleet trucking
companies and individual long-haul truck drivers. Based on independent market
research commissioned by the Company and industry data, the Company believes
that there are between 800,000 and 1,000,000 long-haul truck drivers in the
United States. During March 1998, the Company had over 19,000 active
subscribers, an increase of over 120% from the approximately 8,400 subscribers
it had in April 1997. The Company was formed in September 1995 and, as of March
31, 1998, had installed the PNV Network in 102 truckstops located in 35 states
across the United States.
The Company believes that both long-haul drivers and fleet trucking
companies have a need for a more comprehensive, cost-effective and easily
accessible voice and data communications and entertainment solution than
currently available alternatives. The Company believes that this market need
combined with the absence of an effective current solution provides the Company
with the opportunity to become the leading provider of integrated
telecommunications and entertainment services to the long-haul trucking
industry. The Company plans to realize this opportunity by (i) increasing the
number of locations served by its Network to a "critical mass" of truckstops
(which the Company believes to be between 200 and 250 strategically located
truckstops), and then to continue the build-out of the Network to approximately
650 sites in total, and (ii) significantly enhancing the functionality and
capacity of its Network to create a broadband, cost competitive private
telecommunications network for the long-haul trucking industry.
The PNV Network provides a full range of high quality, cost-effective
telecommunications and cable television services over land-based lines. Users
connect to the Network by attaching standard telephone and coaxial television
cables (which the Company provides to each new subscriber) to outlets, called
"Bollards," installed in the ground at each parking stall at a truckstop. The
telecommunications services currently provided include: (i) local and long
distance calling, in-coming calls, voice mail services and driver location; (ii)
data connectivity; (iii) access to the Internet; and (iv) other
telecommunications services, including wake up calls and the ability to offer
call waiting and call conferencing. The cable television service offers 18 cable
viewing channels, including premium and local programming, a Pay-Per-View
channel and a dedicated advertising channel.
The long-haul trucking industry's operational characteristics require
significant reliance on telecommunications. Based on industry data, Company
research and data from the Company's switch, the Company believes that long-haul
fleet trucking companies and drivers spend over $2.4 billion annually on long
distance services (not including data, Internet and messaging). The Company
believes that the level of telephone usage at truckstops is second only to that
of airports. According to data generated from the Company's switch and Company
research, the average long-haul truck driver that logs on to the Network uses
approximately 1,200 minutes of long distance a month, spending approximately
$250 per month. The Company believes that this level of usage is a result of:
(i) the long periods most drivers spend on the road each month, 21 days or more;
(ii) the operational need for drivers to be in regular contact with their
dispatchers and customers concerning load pick-up, deliveries and routes; and
(iii) the drivers' personal communication needs. Drivers and fleet trucking
companies must also regularly exchange data pertaining to proof of delivery,
employee pay information, load availability and permits. The Company believes
that the Internet will increasingly become the preferred method for transmitting
and receiving this type of data.
1
<PAGE> 6
While on the road, drivers use full service truckstops for fueling, eating,
showering, parking for rest periods (which are required by federal law),
overnight stays and for layovers between hauls. These truckstops are the primary
location at which drivers conduct their business while on the road. Currently,
voice, data communication, Internet connectivity and entertainment options for
the individual long-haul truck drivers and for the fleet trucking companies
trying to communicate with their drivers at these truckstops are limited,
relatively expensive and inaccessible.
There are over 2,100 truckstops in the United States located on the
interstate highway system, of which the Company believes approximately 1,100 are
full service truckstops that provide more services than just fuel. The Company
has entered into long-term contracts pursuant to which eight of the ten largest
full service truckstop chains and associations in the United States, including
TA Operating Corporation, Petro Stopping Centers, Inc., Pilot Corporation, and
Professional Transportation Partners, LLC, have granted the Company the
exclusive right to provide telecommunications and entertainment services to
drivers in their cabs at their truckstops. Of the approximately 730 full-service
truckstops under contract, approximately 390 are covered by contracts directly
with the truckstop owner and approximately 340 are covered by contracts with
associations which require the Company to enter into a contract directly with
the truckstop owner to install the PNV Network. The Company also believes that
these approximately 730 full-service truckstops are among the most heavily
trafficked and are located along the busiest truck routes in the United States.
The Company believes that the truckstop owners are highly incentivized to
support the success of the Company as: (i) the contracts contain provisions for
revenue and profit sharing with the Company; (ii) the PNV Network is a means for
competitive differentiation; and (iii) the PNV Network is an amenity that many
long-haul truck drivers have been requesting.
The Company believes that its most significant competitive advantages over
competing telecommunications and entertainment providers include:
- Only provider and first to market. The Company is currently the only
provider with the capability to deliver integrated telecommunications,
access to the Internet and cable entertainment services in the privacy
and convenience of the truck cab.
- Significant barriers to entry. As of March 31, 1998, the Company had
entered into long-term contracts to provide telecommunications and
entertainment services to long-haul drivers at approximately 730 of the
approximately 1,100 full service truckstops across the country. These
contracts are generally for terms of ten years and the Company believes
that they pose a significant barrier to entry to other current or
potential competitive telecommunications and entertainment providers.
- Compelling value to drivers, fleets and truckstops. The Company believes
that the PNV Network represents a compelling value to long-haul drivers,
long-haul fleet trucking companies and truckstops. For drivers, the PNV
Network currently provides cost-effective telephone and cable television
access in the privacy and convenience of their cab. For fleets, the PNV
Network currently provides high levels of accessibility to their drivers
with cost efficiency and, once enhanced, will offer a cost competitive
high capacity voice and data network designed to address their unique
geographic and access needs. For truckstops, the PNV Network provides a
means for competitive differentiation and generating additional revenue.
- Broadband and cost competitive network. The Company has developed the
PNV Network so that it is flexible and upgradable. This foundation will
allow the Company to expand the functionality and capacity of the PNV
Network to provide a broadband, cost competitive voice, data, Internet
and cable television platform. This will allow the Company to become, in
effect, a private full-service telecommunications network for the
long-haul trucking industry.
The Company provides its telecommunication and entertainment services on a
subscriber basis. Subscribers first purchase a membership card and starter kit
for $10. They can then sign up for an on-going subscription deducted
automatically from their credit card or checking account for $30 per month, or
purchase a monthly or daily usage card for $30 or $5, respectively, from vending
machines located at each truckstop. Each subscription plan has various benefits
associated with it. See "Business -- Products and Services."
2
<PAGE> 7
The Company markets to fleet trucking companies through a direct sales
force and plans to focus a significant portion of its marketing efforts on large
and medium size fleet trucking companies. The Company strives to negotiate
contracts with fleet trucking companies that contain minimum term and number of
subscriber commitments. Fleet trucking companies are billed for their entire
subscriber group on a monthly basis. The Company recently signed contracts with
five fleet trucking companies that have purchased monthly subscriptions for an
aggregate of approximately 2,300 drivers for periods ranging from one to three
years, subject to certain earlier termination rights. The Company also plans to
pursue co-marketing arrangements with certain strategic partners to market the
PNV Network to fleet trucking companies. These partners may include truckstop
chains, other communications services providers, or other providers of services
to the long-haul trucking industry which can help facilitate the marketing and
sales process. The Company markets subscriptions to the PNV Network to
individual truck drivers through field sales representatives working principally
at the larger truckstops and signage, brochures, vending machines and other
merchandising materials posted and distributed at each truckstop. The Company is
developing incentives to encourage sales to truck drivers by truckstop employees
and is also considering additional marketing strategies, promotional products
and contests.
The architecture of the current PNV Network uses existing proven technology
which includes a personal computer (PC) based communications server installed at
each truckstop location (the "Site Server") which is connected by a wide area
network (WAN) to a central host server (the "Host Server"). The Company plans to
enhance the current capacity and functionality of the PNV Network by replacing
Plain Old Telephone Service ("POTS" or "local") lines currently used with T-1
lines which, with certain additional equipment, will allow for dedicated long
distance and a frame relay network. This will reduce the Company's cost of
providing long distance, provide greater bandwidth for voice and data
transmission and result in a design that continues to be flexible and
upgradable. The Company also plans to become an Internet Service Provider
("ISP") and develop voice over Internet Protocol (IP) capability. The Company
will be able to offer highly competitive long distance rates to large fleet
trucking companies by installing T-1 lines between truckstops and fleet
operation centers. To allow greater access to the PNV Network, the Company plans
to install member-only telephones, which may include both wired and 900 MHz
wireless, inside selected truckstops.
Since its formation in September 1995, the Company has received
approximately $37.4 million in financing through the issuance of three classes
of preferred stock, common stock and certain debt, in addition to the net
proceeds of the Unit Offering (as defined herein). The Company believes, based
on its current estimates, that the net proceeds of the Unit Offering, together
with existing cash and cash generated by operations, will be sufficient to
finance the continued installation of the PNV Network and the expansion of
services offered through the PNV Network through the first half of 2000. The
actual amount and timing of the Company's future capital requirements may differ
materially from the Company's estimates as a result of, among other things, the
demand for the Company's telecommunications and cable television services and
regulatory, technological and competitive developments in the
telecommunications, cable and long-haul trucking industries. The Company also
expects that it will require additional financing (or require financing sooner
than anticipated) if the Company's development plans or projections change or
prove to be inaccurate or the Company accelerates or delays the expansion of
either the installation of the PNV Network or the services offered through the
PNV Network. Sources of additional financing may include commercial bank
borrowings, equipment leasing or private or public sale of equity or debt
securities. There can be no assurance that such financing will be available on
terms acceptable to the Company or at all. See "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
The Company was incorporated in Delaware in September 1995. The Company's
principal executive offices are located at 11711 NW 39th Street, Coral Springs,
Florida 33065 and its telephone number is (954) 745-7800.
3
<PAGE> 8
THE OLD NOTES OFFERING
Old Notes.................. The Old Notes were sold by the Company on May 27,
1998 to Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchaser") pursuant to a
Purchase Agreement dated May 20, 1998 (the
"Purchase Agreement") together with certain
warrants (the "Warrants") to purchase shares of the
Company's Common Stock ("Common Stock") in the form
of units (the "Units") (such sale, the "Unit
Offering"). The Initial Purchaser subsequently
resold the Units to qualified institutional buyers
pursuant to Rule 144A under the Securities Act.
Registration Rights
Agreement................ Pursuant to the Purchase Agreement, the Company and
the Initial Purchaser entered into a Registration
Rights Agreement dated May 27, 1998 (the
"Registration Rights Agreement"), providing for,
among other things, the Exchange Offer.
SUMMARY OF THE EXCHANGE OFFER
The Exchange Offer......... The New Notes are being offered in exchange for an
equal principal amount of Old Notes. As of the date
hereof, $75,000,000 aggregate principal amount of
Old Notes is outstanding. Old Notes may be tendered
only in integral multiples of $1,000.
Resale of New Notes........ Based on interpretations by the staff of the
Commission, as set forth in no-action letters
issued to third parties, including the Exchange
Offer No-Action Letters, the Company believes that
the New Notes issued pursuant to the Exchange Offer
may be offered for resale, resold or otherwise
transferred by each holder thereof (other than a
broker-dealer who acquires such New Notes directly
from the Company for resale pursuant to Rule 144A
under the Securities Act or any other available
exemption under the Securities Act and other than
any holder that is an "affiliate" (as defined under
Rule 405 of the Securities Act) of the Company)
without compliance with the registration and
prospectus delivery provisions of the Securities
Act, provided that such New Notes are acquired in
the ordinary course of such holder's business and
such holder is not engaged in, and does not intend
to engage in, a distribution of such New Notes and
has no arrangement with any person to participate
in a distribution of such New Notes. By tendering
the Old Notes in exchange for New Notes, each
holder, other than a broker-dealer, will represent
to the Company that: (i) it is not an affiliate (as
defined in Rule 405 under the Securities Act) of
the Company; (ii) it is not a broker-dealer
tendering Old Notes acquired for its own account
directly from the Company; (iii) any New Notes to
be received by it were acquired in the ordinary
course of its business; and (iv) it is not engaged
in, and does not intend to engage in, a
distribution of such New Notes and has no
arrangement or understanding to participate in a
distribution of the New Notes. If a holder of Old
Notes is engaged in or intends to engage in a
distribution of the New Notes or has any
arrangement or understanding with respect to the
distribution of the New Notes to be acquired
pursuant to the Exchange Offer, such holder may not
rely on the applicable interpretations of the staff
of the Commission and must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any
secondary resale
4
<PAGE> 9
transaction. Each Participating Broker-Dealer that
receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will
deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of
such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not
be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New
Notes received in exchange for Old Notes where such
Old Notes were acquired by such Participating
Broker-Dealer as a result of market-making
activities or other trading activities. The Company
has agreed that it will make this Prospectus
available to any Participating Broker-Dealer for a
period of time not to exceed one year after the
date on which the Exchange Offer is consummated for
use in connection with any such resale. See "Plan
of Distribution." To comply with the securities
laws of certain jurisdictions, it may be necessary
to qualify for sale or register the New Notes prior
to offering or selling such New Notes. The Company
has agreed, pursuant to the Registration Rights
Agreement and subject to certain specified
limitations therein, to register or qualify the New
Notes for offer or sale under the securities or
"blue sky" laws of such jurisdictions as may be
necessary to permit consummation of the Exchange
Offer.
Consequences of Failure to
Exchange Old Notes....... Upon consummation of the Exchange Offer, subject to
certain exceptions, holders of Old Notes who do not
exchange their Old Notes for New Notes in the
Exchange Offer will no longer be entitled to
registration rights and will not be able to offer
or sell their Old Notes unless such Old Notes are
subsequently registered under the Securities Act
(which, subject to certain limited exceptions, the
Company will have no obligation to do), except
pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable
state securities laws. See "Risk
Factors -- Consequences of Failure to Exchange" and
"The Exchange Offer -- Terms of the Exchange
Offer."
Expiration Date............ 5:00 p.m., New York City time, on ,
1998 (30 calendar days following the commencement
of the Exchange Offer), unless the Exchange Offer
is extended, in which case the term "Expiration
Date" means the latest date and time to which the
Exchange Offer is extended.
Conditions to the Exchange
Offer.................... The Exchange Offer is not conditioned upon any
minimum principal amount of Old Notes being
tendered for exchange. However, the Exchange Offer
is subject to certain customary conditions, which
may, under certain circumstances, be waived by the
Company. See "The Exchange Offer -- Conditions."
Except for the requirements of applicable federal
and state securities laws, there are no federal or
state regulatory requirements to be complied with
or obtained by the Company connection in with the
Exchange Offer.
Procedures for Tendering
Old Notes................ Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, in accordance with the
instructions contained herein and therein, and mail
or otherwise deliver
5
<PAGE> 10
such Letter of Transmittal, together with the Old
Notes to be exchanged and any other required
documentation to the Exchange Agent at the address
set forth herein or effect a tender of Old Notes
pursuant to the procedures for book-entry transfer
as provided for herein. See "The Exchange
Offer -- Procedures for Tendering" and
" -- Book-Entry Transfer."
Guaranteed Delivery........ Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes and
a properly completed Letter of Transmittal or any
other documents required by the Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date may tender their Old Notes
according to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights.......... Tenders of Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the
Expiration Date. To withdraw a tender of Old Notes,
a written notice of withdrawal must be received by
the Exchange Agent at its address set forth herein
under "The Exchange Offer -- Exchange Agent" prior
to 5:00 p.m., New York City time, on the Expiration
Date.
Acceptance of Old Notes and
Delivery of New Notes.... Subject to certain conditions, any and all Old
Notes that are properly tendered in the Exchange
Offer prior to 5:00 p.m., New York City time, on
the Expiration Date will be accepted for exchange.
The New Notes issued pursuant to the Exchange Offer
will be delivered promptly following the Expiration
Date. See "The Exchange Offer -- Terms of the
Exchange Offer."
Certain Tax
Considerations........... A holder of Old Notes should not recognize any
taxable gain or loss on the exchange of Old Notes
for New Notes pursuant to the Exchange Offer. See
"Certain Federal Income Tax Considerations."
Exchange Agent............. State Street Bank and Trust Company is serving as
exchange agent (the "Exchange Agent") in connection
with the Exchange Offer.
Fees and Expenses.......... All expenses incident to consummation of the
Exchange Offer and compliance with the Registration
Rights Agreement will be borne by the Company. See
"The Exchange Offer -- Fees and Expenses."
Use of Proceeds............ There will be no cash proceeds payable to the
Company from the issuance of the New Notes pursuant
to the Exchange Offer. See "Use of Proceeds."
SUMMARY OF TERMS OF THE NEW NOTES
The form and terms of the New Notes are identical in all material respects
to the Old Notes, except for certain transfer restrictions and registration
rights relating to the Old Notes. The Old Notes will evidence the same debt as
the New Notes and both series of Notes will be entitled to the benefits of the
Indenture and treated as a single class of debt securities thereunder. See
"Description of the New Notes."
Securities Offered......... $75,000,000 principal amount of Series B 13% Senior
Notes due 2008.
Maturity Date.............. May 15, 2008.
Interest................... Interest on the New Notes will accrue at the rate
of 13% per annum and will be payable semi-annually
in arrears on May 15 and November 15 of
6
<PAGE> 11
each year, commencing on November 15, 1998. The
Company placed $19.2 million of the net proceeds of
the Unit Offering into an escrow account (the
"Escrow Account") that was used to purchase a
portfolio of Pledged Securities (as defined). The
Escrow Account and the Pledged Securities have been
pledged as security for payment of the first four
scheduled interest payments on the Notes and, under
certain circumstances, as security for repayment of
principal of the Note. See "Description of the New
Notes -- Disbursement of Funds; Escrow Account."
Mandatory Redemption....... The Company will not be required to make mandatory
redemption or sinking fund payments with respect to
the New Notes.
Optional Redemption........ The New Notes will not be redeemable prior to May
15, 2003. Thereafter, the New Notes will be
redeemable at the option of the Company, in whole
or in part, at the redemption prices set forth
herein, plus accrued and unpaid interest and
Liquidated Damages (as defined), if any, thereon to
the applicable redemption date. See "Description of
the New Notes -- Optional Redemption."
Notwithstanding the foregoing, prior to May 15,
2001, the Company at its option may redeem up to
35% of the then outstanding New Notes with the net
proceeds from an Initial Public Equity Offering (as
defined herein) of the Company at a redemption
price equal to 113% of the principal amount
thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the
redemption date; provided that at least 65% in
aggregate principal amount of New Notes originally
issued remain outstanding immediately after the
occurrence of such redemption.
Original Issue Discount.... A holder of Old Notes should not recognize any
taxable gain or loss on the exchange of Old Notes
for New Notes pursuant to the Exchange Offer, as
previously mentioned, and such holder's tax basis
and holding period in the New Notes should be the
same as in the Old Notes. A New Note will be issued
with original issue discount for federal income tax
purposes equal to the difference, if any, between
the stated redemption price at maturity on the New
Note (i.e., all payments thereon, other than
payments of qualified stated interest) and the fair
market value of the Old Note exchanged therefor, as
determined on the first date that a substantial
amount of New Notes are issued in exchange for Old
Notes. Original issue discount on the New Notes
will be included in gross income by a holder under
a constant yield accrual method regardless of the
holder's regular method of tax accounting, and thus
this income generally will be included in a
holder's gross income in advance of the receipt of
cash payments to which the income relates. See
"Certain Federal Income Tax Considerations."
Change of Control.......... Upon the occurrence of a Change of Control (as
defined herein), holders of the New Notes will have
the right to require the Company to repurchase all
or any part of such holder's Notes at an offer
price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to
the date of purchase.
Ranking.................... The New Notes will be general senior obligations of
the Company, will rank pari passu in right of
payment with all existing and future senior
7
<PAGE> 12
indebtedness of the Company and will rank senior in
right of payment to all existing and future
subordinated indebtedness of the Company.
Covenants.................. The indenture governing the Notes by and between
the Company and State Street Bank and Trust Company
(as trustee), dated as of May 27, 1998 (the
"Indenture"), contains covenants that, among other
things: (i) limit the incurrence by the Company and
its Subsidiaries of additional indebtedness; (ii)
limit the issuance by the Company of Disqualified
Stock (as defined); (iii) restrict the ability of
the Company and its Subsidiaries to make dividends
and other restricted payments or investments; (iv)
limit the ability of the Company and its
Subsidiaries to enter into sale-leaseback
transactions; (v) limit transactions by the Company
and its Subsidiaries with affiliates; (vi) limit
the ability of the Company and its Subsidiaries to
make asset sales; (vii) limit the ability of the
Company and its Subsidiaries to incur certain
liens; and (viii) limit the ability of the Company
to consolidate or merge with or into, or to
transfer all or substantially all of its assets to,
another person.
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered in evaluating an investment in the Notes.
8
<PAGE> 13
SUMMARY FINANCIAL DATA
The summary financial data for the Predecessor for the year ended December
31, 1994 and the period from January 1, 1995 to November 2, 1995, and for the
Successor for the period from September 18, 1995 (Successor's date of
incorporation) to June 30, 1996 and the year ended June 30, 1997 set forth below
are derived from the audited financial statements of the Predecessor and the
Successor for such periods included elsewhere in this Prospectus. The summary
financial data for the nine months ended March 31, 1997 and 1998 are derived
from unaudited financial statements included elsewhere in this Prospectus,
which, in the opinion of management reflect all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the Company's
financial position and results of operations. The summary balance sheet data set
forth below for the Predecessor as of December 31, 1994 and November 2, 1995 are
derived from audited financial information. These historical results are not
necessarily indicative of the results that may be expected in the future. The
summary financial data are qualified by reference to and should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the financial statements and notes thereto and other
financial data included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR(1) SUCCESSOR(1)
--------------------------- ---------------------------------------------------------
PERIOD FROM
PERIOD FROM SEPTEMBER 18,
JANUARY 1, 1995 (DATE OF NINE MONTHS ENDED
YEAR ENDED 1995 TO INCORPORATION YEAR ENDED MARCH 31,
DECEMBER 31, NOVEMBER 2, TO JUNE 30, JUNE 30, ---------------------------
1994 1995 1996 1997 1997 1998
------------ ------------ ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................... $ 149,755 $ 888,397 $ 462,676 $ 2,106,455
Cost of revenues(2).............. 436,829 2,077,689 1,243,994 4,128,735
Selling, general and
administrative expenses........ $ 287,782 $ 475,891 1,576,209 5,026,580 3,400,159 6,471,565
--------- --------- ----------- ----------- ------------ ------------
Loss from operations............. (287,782) (475,891) (1,863,283) (6,215,872) (4,181,477) (8,493,845)
Interest (expense) income and
other, net..................... (97,954) 170,852 59,452 373,493
--------- --------- ----------- ----------- ------------ ------------
Net loss......................... $(287,782) $(475,891) $(1,961,237) $(6,045,020) $ (4,122,025) $ (8,120,352)
========= ========= =========== =========== ============ ============
OTHER OPERATING DATA:
EBITDA (3)....................... $(287,782) $(475,891) $(1,778,942) $(5,572,556) $ (3,747,633) $ (7,281,996)
Capital expenditures............. 109,587 909 1,650,177 6,443,899 3,614,764 9,822,272
Net cash flows used in operating
activities..................... (254,311) (398,809) (1,452,706) (3,448,848) (2,044,219) (7,566,197)
Net cash flows used in investing
activities..................... (109,587) (909) (1,650,177) (6,443,899) (3,614,764) (9,822,272)
Net cash flows provided by
financing activities........... 369,449 380,070 3,468,614 14,244,410 14,345,524 17,447,526
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR(1) SUCCESSOR(1)
--------------------------- ---------------------------------------------------------
MARCH 31, 1998
DECEMBER 31, NOVEMBER 2, JUNE 30, ---------------------------
------------ ------------ --------------------------- AS ADJUSTED
1994 1995 1996 1997 ACTUAL (4)(5)(6)
------------ ------------ ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........ $ 19,856 -- $ 365,731 $4,717,394 $ 4,776,451 $ 76,251,451
Working capital.................. 6,521 -- (81,610) 2,516,806 3,143,811 74,618,811
Total assets..................... 174,711 -- 2,898,125 12,938,783 22,410,888 97,410,888
Total long-term debt............. 216,667 -- 3,387,934 128,692 187,940 70,537,940
Partnership deficiency/common
stockholders' deficit.......... (55,292) -- (1,969,525) (8,931,927) (18,515,370) (13,865,370)
</TABLE>
- ---------------
(1) Park 'N View, Ltd. transferred certain of its assets, contractual rights and
liabilities to Park 'N View, Inc. in exchange for 2,318,182 shares of common
stock issued to the former partners of Park 'N View, Ltd. The net
liabilities transferred were recorded by Park 'N View, Inc. at Park 'N View,
Ltd.'s historical carrying amount of $84,446. The financial information
identified herein as for the Predecessor is for Park 'N View, Ltd. as of
December 31, 1994 and November 2, 1995 and for the year ended December 31,
9
<PAGE> 14
1994 and the period from January 1, 1995 to November 2, 1995, the date of
the net liabilities transferred to Park 'N View, Inc. The financial
information identified herein as for the Successor is for Park 'N View, Inc.
as of June 30, 1996 and 1997 and March 31, 1998 and for the period from
September 18, 1995 (date of incorporation) to June 30, 1996, for the year
ended June 30, 1997 and the nine months ended March 31, 1997 and 1998.
(2) Includes service depreciation of $84,000 and $643,000 for the period from
September 18, 1995 (date of incorporation) to June 30, 1996 and the year
ended June 30, 1997, respectively, and $434,000 and $1,212,000 for the nine
months ended March 31, 1997 and 1998, respectively. Service depreciation
consists of amortization of capitalized costs of the PNV Network.
(3) EBITDA is earnings (loss) from operations before interest, taxes, and
service depreciation. EBITDA is a measure of a company's performance
commonly used in the telecommunications industry, but should not be
construed as an alternative to net income (loss) determined in accordance
with generally accepted accounting principles ("GAAP") as an indicator of
operating performance or as an alternative to cash from operating activities
determined in accordance with GAAP as a measure of liquidity.
(4) Adjusted to give effect to the Unit Offering and the application of the net
proceeds therefrom as if the Unit Offering had occurred March 31, 1998.
(5) Includes the aggregate principal amount of the Pledged Securities, estimated
at approximately $19.2 million.
(6) The Company received gross proceeds from the Unit Offering of $75.0 million.
The estimated value of the Warrants ($4.65 million) has been reflected as a
debt discount and an element of paid-in capital. However, the actual
aggregate principal amount of the Notes is $75.0 million. The resulting debt
discount will be amortized over the term of the Notes.
10
<PAGE> 15
RISK FACTORS
Prospective investors should carefully consider the following factors in
evaluating the Company and its business in addition to other information
contained in this Prospectus prior to tendering their Old Notes in the Exchange
Offer.
LIMITED HISTORY OF OPERATIONS; HISTORY OF LOSSES, NEGATIVE CASH FLOW AND
NEGATIVE GROSS MARGIN
The Company was incorporated in September 1995. Accordingly, prospective
investors have limited financial information about the Company upon which to
base an evaluation of the Company's performance and an investment in the Units.
Given the Company's limited operating history, there is no assurance that it
will be able to generate sufficient cash flow to service its debt obligations
(including the Notes) or to achieve its objectives.
The Company has experienced a net loss and negative cash flow from
operations in each quarter since it was incorporated. As of March 31, 1998, the
Company had a common stockholders' deficit of $19.1 million. The Company expects
to incur a significant net loss and negative cash flow from operations in the
fiscal year ending June 30, 1998 and for the next several years. There can be no
assurance that the Company will ever be profitable. From September 1995 to date,
the Company's cost of revenues has been substantially higher than its revenues,
leading to a negative gross margin. There can be no assurance that the Company
will generate significant revenue in the future, and even if it does so, that
the Company's revenues will ever exceed its cost of revenues. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
FUTURE CAPITAL REQUIREMENTS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company expects that it will have significant capital requirements in
the future to fund the continued expansion of its business and for working
capital purposes, and there can be no assurance that such capital requirements
will be available on terms satisfactory to the Company, if at all. The Company's
capital requirements will depend on numerous factors, including the growth of
the Company's revenues, if any, and the rate of such growth. The Company expects
that the net proceeds of the Offering, together with existing cash and
anticipated cash generated from operations, will be sufficient to fund its
planned expansion and operations at least through the first half of 2000.
Thereafter, if the Company's cash flow from operations is not sufficient to
provide funds for working capital and capital expenditures and if equity or debt
or other financing is not available, the Company expects that it may experience
insufficient liquidity which could have a material adverse effect on the
Company's financial condition and results of operations. There can be no
assurance that additional financing will be available when needed, if at all,
or, if available, on terms acceptable to the Company. If adequate funds are not
available on acceptable terms, the Company will be required to delay or limit
any further expansion of its business. Any inability to fund its future capital
requirements would have a material adverse effect on the Company's business,
financial condition and operating results. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
ABILITY TO SUSTAIN AND INCREASE SUBSCRIPTION SALES; RETENTION
The future success of the Company depends upon its ability to significantly
increase its revenues which, in turn, depends materially upon its ability to
increase the number of subscribers to the PNV Network. During March 1998, the
Company had approximately 19,000 active subscribers of whom approximately 11,600
had subscribed on a monthly basis (including subscription sales at the Company's
vending machines at truckstops, pursuant to the Power Plan Program (as defined
herein) and pursuant to the Company's contracts with fleet trucking companies)
and 7,400 were daily subscribers. To date, the Company's average revenue per
subscriber has been lower than expected which the Company believes is due
primarily to a larger number of daily subscribers as compared to monthly
subscribers. Market research and the Company's experience indicate that, in
order to provide a benefit to truck drivers sufficient to justify the monthly
subscription fee, the PNV Network must be available nationally at a minimum
threshold number of sites so that truck drivers can rely on access to the PNV
Network as they travel their routes. The Company believes that this number of
sites ranges
11
<PAGE> 16
between 200 and 250, depending on site location, size and other factors. As of
March 31, 1998, the PNV Network was installed and operating at 102 truckstops.
Even if truck drivers initially subscribe to the PNV Network, there can be
no assurance that they will renew their subscriptions. Of those subscribers who
purchased a subscription in November or December 1997, Company data indicates
that approximately 69% renewed their subscriptions at least once between such
subscription and March 1998. In October 1997, the Company implemented a monthly
subscription program designed to increase monthly subscription renewals referred
to as the "Power Plan Program." See "Business -- Marketing." Pursuant to this
program, a subscriber's monthly subscription is automatically renewed and the
monthly fee is automatically drafted from or charged to the subscriber's
checking account or credit card until the subscriber cancels the subscription.
As of March 31, 1998, the Company had 5,400 monthly subscribers pursuant to the
Power Plan Program, however, there can be no assurance that the number of such
subscribers will continue to grow. There are many factors that could cause a
subscriber not to renew a subscription, including dissatisfaction with the PNV
Network and the services offered or with the number and location of the
truckstops at which the PNV Network is available.
The Company's ability to increase subscriptions to the PNV Network depends
significantly upon its ability to increase sales to fleets. See
"Business -- Marketing." The Company has entered into contracts with five fleet
trucking companies for a minimum of 2,300 subscriptions for terms ranging from
one to three years, subject to certain earlier termination rights by the fleet
trucking companies. There can be no assurance, however, that the fleets having
earlier termination rights will not terminate their contracts prior to the
expiration of their stated terms, existing contracts will be renewed or the
Company will be able to increase its subscription sales to fleets.
The ability of the Company to attract and retain subscribers will also
depend in part on the ability of such subscribers to access a stall at a
truckstop served by the PNV Network and, with regard to the use of the Company's
telephone services, to access one of the local telephone lines maintained by the
Company in connection with the telephone service offered. Subscribers may on
occasion be unable to utilize the PNV Network due to a lack of open stalls at
some of the busier truckstops. In addition, users of the PNV Network's telephone
service at a particular truckstop cannot exceed the number of local lines
available. The Company presently maintains an average of 12 local telephone
lines at each truckstop served by the PNV Network. In connection with the
proposed enhancements to the PNV Network to increase its capacity and
functionality to allow the Company to offer additional telecommunications
services, the Company intends, among other things, to install and maintain a T-1
line, and to reduce the number of local lines, at each truckstop. See
"Business -- Network and Technology." Although this installation will increase
the number of users that may access the PNV Network's telecommunications
services simultaneously, this number will still be limited. In addition, truck
drivers may find that the truckstops served by the PNV Network are not
conveniently located. If truck drivers find that the truckstops served by the
PNV Network are not conveniently located, it is unlikely that they will purchase
or renew subscriptions. The Company's inability to attract and retain
subscribers and to significantly increase revenues from sales of subscriptions,
including subscription sales to fleets, for any reason, would have a material
adverse effect on the Company's business, financial condition and results of
operations, including its ability to make payments on the Notes.
SUBSTANTIAL LEVERAGE; POSSIBLE INABILITY TO SERVICE INDEBTEDNESS
As a result of the Unit Offering, the Company is highly leveraged. After
giving pro forma effect to the Unit Offering and the estimated application of
the proceeds thereof, at March 31, 1998, the Company would have had total
long-term debt of $70.5 million and a common stockholders' deficit of $13.9
million. The Company's earnings were insufficient to cover its fixed charges and
preferred stock dividend requirements by approximately $7.0 and $10.1 million
for fiscal 1997 and for the nine months ended March 31, 1998, respectively. The
Company will be permitted to incur additional indebtedness in the future under
the Indenture. See "Capitalization," "Selected Financial Data" and "Description
of the New Notes."
The Company's ability to make scheduled payments of principal of, or to pay
interest or Liquidated Damages, if any, on its indebtedness (including the
Notes) will depend on the Company's future performance
12
<PAGE> 17
which, to a certain extent is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond its
control. Based upon the current level of operations and anticipated revenue
growth, management believes that the net proceeds of the Offering, together with
existing cash and anticipated cash generated by operations, will be adequate to
meet the Company's future liquidity needs at least through the first half of
2000. There can be no assurance that the Company's business will generate
sufficient cash flow from operations and that anticipated revenue growth will be
realized in an amount sufficient to enable the Company to service its
indebtedness, including the Notes, or to continue the installation of the PNV
Network and the payment of the costs associated with the provision of
telecommunications and entertainment services and its operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
The degree to which the Company is leveraged could have important
consequences to the holders of the Notes and the Company's future prospects,
including the following: (i) limiting the ability of the Company to obtain any
necessary financing in the future for working capital, capital expenditures,
debt service requirements or other purposes; (ii) the Company's vulnerability to
the effects of general economic downturns or to delays or increases in the costs
of installing the PNV Network or planned subsequent improvements thereto or
providing planned telecommunications services in addition to those currently
provided may be increased; (iii) limiting the flexibility of the Company in
planning for, or reacting to, changes in its business; (iv) leveraging the
Company more highly than some of its potential competitors, which may place it
at a competitive disadvantage; (v) increasing its vulnerability in the event of
a downturn in its business or the economy generally; and (vi) requiring that a
substantial portion of the Company's cash flow from operations be dedicated to
the payment of principal and interest on the Notes and not be available for
other purposes.
There can be no assurance that the Company will be able to meet its
obligations under the Notes. The Company expects to generate significant
negative cash flow over the next several years. If the Company does not
ultimately generate sufficient cash flow to meet its debt service and capital
requirements, the Company may need to examine alternative strategies that may
include actions such as reducing or delaying capital expenditures, restructuring
or refinancing its indebtedness, the sale of assets or seeking additional
equity, debt or other financing. There can be no assurance that any of these
strategies could be effected on satisfactory terms, if at all. In addition,
there can be no assurance that the Company will be able to effect any such
refinancing on commercially reasonable terms or at all.
EXPANSION OF PNV NETWORK INSTALLATION AND SERVICES; FUTURE REVENUE STREAMS;
MINIMUM REQUIREMENTS CONTRACTS; COST-SAVINGS
The Company's ability to achieve its objectives will depend in large part
on the timely and cost-effective installation of the PNV Network at a
significant number of additional truckstops and the addition of T-1 lines and
certain additional equipment at all the truckstops at which the PNV Network is
available. The success of the Company in installing the PNV Network will depend
on, among other things, timely performance by the third parties of their
contractual obligations. The Company intends to increase its truckstop
installation rate to approximately 15 to 20 per month by the first quarter of
1999. The Company is presently installing the PNV Network at approximately seven
truckstops per month. There can be no assurance that the Company will be able to
achieve its build-out rate after the consummation of the Offering as planned and
any failure to do so could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company is presently utilizing the services of four contractors, three
of which the Company believes operate on a national basis and one of which the
Company believes operates on a regional basis. To date, the installation of the
PNV Network at truckstops by outside contractors has been completed
substantially on the Company's schedule and within its budget, and the
installation services performed by such contractors have been satisfactory to
the Company. Although management believes that there are a number of contractors
that could perform the required installation services or that the Company could
employ sufficient persons to perform such services, there can be no assurance
that it will be able to obtain the services of outside contractors that can
install the PNV Network on a timely basis and at a cost acceptable to the
Company.
13
<PAGE> 18
In connection with planned enhancements to the PNV Network, the Company
intends to install T-1 lines, in addition to local telephone lines, at each
truckstop served by the PNV Network. The Company has recently entered into a
contract with AT&T for the lease of T-1 lines. See "Business -- Products and
Services -- Future Products and Services." Any delay in the installation of the
T-1 lines or adverse weather or other complications could significantly delay
the Company's planned increase in the number of truckstops served by the PNV
Network. Such delay or an increase in the cost associated with the installation
of the PNV Network could adversely affect the Company's planned build-out of the
PNV Network which in turn could adversely affect the Company's ability to create
substantial demand for its services and increase subscription sales and, as a
result, the Company's business, financial condition and results of operations,
including its ability to make payments on the Notes.
The Company has also recently entered into a contract with AT&T for the
purchase of long distance and other telephone services. This contract, as well
as the Company's contract relating to its lease of T-1 lines, require the
Company to pay a specified minimum dollar amount of lease payments and to
purchase a specified minimum dollar amount of long distance telephone services,
each of which amounts is subject to certain discounts based on the T-1 lines
leased and the telephone services purchased. See "Business -- Products and
Services -- Future Products and Services." The Company's ability to achieve its
objectives depends in significant part on its ability to obtain these discounts.
Any failure to obtain the available discounts with regard to its T-1 line lease
payments and its long distance telephone service rates could have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company's ability to achieve its objectives also depends significantly
on its ability to generate revenues from planned future services and recognize
cost-savings from planned enhancements to the PNV Network. The PNV Network as
currently designed does not have the capacity to provide certain of these
planned future services and the capacity of the proposed PNV Network
architecture to provide such services is untested and the market for such
services is undetermined. Any inability of the Company to generate revenue from
such planned future services or realize anticipated cost-savings could have a
material adverse effect on the Company's business, financial condition and
results of operations, including its ability to make payments on the Notes.
POTENTIAL UNAVAILABILITY OF EQUIPMENT
The Company purchases its satellite equipment, head-end equipment,
telephone and cable switching equipment, computer hardware and cable programming
from outside suppliers. The Company has no purchase agreements with any such
supplier other than its cable programming supplier, Echostar Communications
Corporation ("Echostar"). The Company presently purchases its satellite
equipment and computer hardware from a sole supplier and management believes
that limited alternative sources for such items exist. The Company believes that
its relationships with the suppliers of these items are good. However, if the
Company were required to purchase telephone switching alternative equipment from
another source, it would require reprogramming of certain of the Company's
software or if the Company were required to purchase any alternative equipment
from another source, it would require that the Company modify and redesign the
PNV Network in certain respects which, in each case, could result in service
delays and expense to the Company. In addition, the Company purchases the cable
programming offered through the PNV Network from Echostar. Although management
believes that limited alternative sources for cable programming exist, utilizing
an alternative source could require retrofitting certain equipment at each
truckstop site and could result in an interruption in the Company's ability to
offer cable television services through the PNV Network for a limited period of
time. Any failure of the Company to obtain any of the foregoing equipment,
particularly its cable and telephone switching equipment, or cable programming,
could have a material adverse effect on the Company's ability to expand its
business in a timely fashion and, as a result, on its results of operations and
financial condition.
DEPENDENCE ON CONTRACTUAL RELATIONSHIPS WITH TRUCKSTOPS
All of the Company's current revenues are generated from its operation of
the PNV Network at truckstops. The Company expects that the provision of
telecommunications and entertainment services,
14
<PAGE> 19
including planned future services, through the PNV Network will continue to be
the sole source of the Company's revenues for the foreseeable future. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview" and "Business -- Network Buildout; Truckstop
Relationships and Contracts" for a discussion of the Company's contractual
relationships with truckstop owners and associations. The Company is dependent
on its ability to continue to install the PNV Network for its future expansion.
The Company has contracted with truckstop chains and independent truckstop
owners located throughout the United States. See "Business -- Network Buildout;
Truckstop Relationships and Contracts." While most independent truckstop owners
who own a single truckstop execute a standard contract, the contracts executed
by truckstop chains that operate multiple truckstops vary significantly. The
contracts generally provide that the truckstop chains and independent truckstop
owners may terminate the contract, and the Company's exclusive rights under the
contract, if the Company fails in any material respect to perform any of its
obligations under the contract and fails to remedy the breach within 30 days
after the Company receives notice of the breach. For example, if the Company
fails to install the PNV Network in accordance with the build-out schedule in
certain of its contracts, truckstop owners owning over one-third of the
Company's proposed truckstop locations may terminate the exclusivity provisions
contained in such contracts. Any failure by the Company to meet its contractual
obligations that results in the termination of contracts, including the loss of
the Company's exclusive rights under such contracts, would have a material
adverse effect on the Company's financial condition and results of operations.
In addition, as of March 31, 1998, the Company had contracts to install the
PNV Network at approximately 340 truckstops through trucking associations whose
members consist of smaller truckstop chains generally having fewer than 10
truckstops. These associations act as purchasing agents for their members. The
Company entered into contracts with these associations as an efficient manner in
which to gain access to and establish a relationship with numerous small to
medium size truckstops. These associations do not have authority to legally bind
their members. Therefore, while each association has granted the Company the
exclusive right to provide cable television and telephone services to its
members, this contractual right is not binding on each member. Prior to
installation of the PNV Network at an association member's truckstop, the
Company enters into a contract with the association member granting the Company
the exclusive right to install the PNV Network at the member's truckstops.
Accordingly, there can be no assurance that the Company's contracts with
truckstop associations will result in the Company installing the PNV Network at
additional truckstop locations. See "Business -- Network Buildout; Truckstop
Relationships and Contracts."
MANAGEMENT OF GROWTH
The Company has expanded its operations significantly over the past 12
months, placing significant demands on its financial, marketing and sales,
administrative and operational personnel and systems. The Company has also
experienced rapid growth in its management and staff, including the addition of
two executive officers during the last 12 months. As of March 31, 1998, the
number of the Company's full-time employees had increased to 132 from 35 as of
April 1, 1997. In addition, the Company expects to add approximately 100 persons
to its sales force over the next 12 months. The growth in the size and scope of
the Company's business activities have placed, and are expected to continue to
place, a strain on the Company's management and operations. In connection with
its planned expansion of the PNV Network locations and services, management has
been and in the future will be required to recruit, organize, train and manage
additional personnel to perform, among other things (i) the planning and
engineering activity associated with the installation of the PNV Network at each
truckstop, (ii) the assembly at the Company's headquarters of the electronics
and other equipment comprising the PNV Network and the loading of such equipment
for delivery to each site, (iii) the inspection of each site upon completion of
the installation, (iv) the training of the truckstop employees and (v) the
marketing and promotion of the PNV Network at each site. The Company's success
in managing the expansion of its business will depend to a large extent on the
Company's ability to hire, train and supervise such additional personnel. There
can be no assurance that the Company will be able to attract, train, supervise
and retain an adequate number of such personnel. The failure of the Company to
effectively manage the growth in its business and to develop the additional
personnel, systems,
15
<PAGE> 20
resources, procedures and controls necessary to support that growth in a timely
manner would have a material adverse effect on the Company's business, financial
condition and results of operations.
COMPETITION
In the voice and data communication and entertainment arenas, the Company
competes with various elements of other providers' offerings based on ease of
access, functionality and cost. These industries are highly competitive, and the
Company expects to face strong competition from existing and potential
competitors. The Company's competitors comprise a broad range of companies
engaged in telecommunications and entertainment, including but not limited to,
public pay telephone operators, cellular telephone companies, long distance
telephone companies, cable operators, direct broadcast satellite companies, as
well as companies developing new technologies. Certain of these competitors and
potential competitors are well established companies and have significantly
greater financial, marketing and programming resources than the Company.
The Company's telecommunication services compete with cellular telephones,
pay telephones and providers of long distance cards and prepaid cards. Cellular
service is widely available and, although it is currently more expensive than
the PNV Network, it is becoming more affordable. The Company believes that
drivers currently use pay telephones located at truckstops for a significant
number of the calls they make and there can be no assurance that the Company
will successfully attract customers who predominately use these pay telephones.
The Company understands that one company, HighwayMaster, resells cellular
telephone service to provide both voice and data communication to the truck cab.
The Company's long distance services compete with providers of long distance
cards and pre-paid cards such as AT&T and MCI and with providers of toll free
(800 and 888) numbers that fleets or even individuals use to call fleet
headquarters or home. Qualcomm's OmniTRACS service, another competitor, is used
primarily for mobile vehicle location and two-way text messaging and it
addresses the trucking fleets' need for real-time mobile text communication.
Based on publicly available data, the OmniTRACS service has an installed base of
approximately 210,000 units in 32 countries worldwide, of which the Company
believes that over 150,000 units are installed in the United States which would
compete with certain of the Company's services. In addition, the Company
believes that there is a company that has begun installing Internet/e-mail
kiosks in truckstops. There can be no assurance that the Company will be able to
effectively compete against these or future telecommunications competitors, many
of which have large customer bases and significantly more resources than the
Company.
With respect to entertainment, the Company's competition currently consists
of entertainment alternatives located outside the truck cab and primarily in the
truckstop. Community television and game rooms inside the truckstop are the most
readily available entertainment alternatives for long-haul truck drivers. The
Company believes that a small number of professional truck drivers have
purchased direct broadcast satellite dishes to receive television programming in
their cab. Cable providers to such users as residential apartment buildings
could seek to compete by offering programming to truckstops. There can be no
assurance that the Company will be able to compete successfully against the
providers of cable and digital satellite programming services, most of which
will have access to greater resources and provide more programming than the PNV
Network. See "Business -- Competition."
SUBSTANTIAL RELIANCE ON KEY PERSONNEL
The success of the Company is dependent to a significant extent on the
personal efforts and abilities of its senior management. The Company has no
employment agreement with any members of its senior management. The Company
believes that the loss of services of any member of its senior management could
have a material adverse effect on the Company. The Company maintains key man
term life insurance on the life of Mr. Williams, the Chief Executive Officer, in
the amount of $1.0 million, payable to the Company. There can be no assurance
that the Company will be able to retain its senior management or that it will be
able to attract or retain other skilled personnel in the future.
16
<PAGE> 21
REGULATORY MATTERS
The FCC and relevant state regulatory authorities ("PSC's") have the
authority to regulate interstate and intrastate telephone rates, respectively,
ownership of transmission facilities and the terms and conditions under which
certain of the Company's telephone service offerings are provided. Federal and
state regulations and regulatory trends have had, and in the future are likely
to have, both positive and negative effects on the Company and its ability to
compete. There can be no assurance that changes in current or future Federal or
State regulations or future judicial changes would not have a material adverse
effect on the Company's business, financial condition or results of operations.
Interstate telecommunications carriers are subject to a number of other
federal regulatory obligations and reporting requirements, including obligations
to contribute to universal service and other subsidy funds, to permit resale of
their services by other carriers, and to take certain steps to protect
consumers. While the Company does not believe the burdens imposed by federal
regulations will be onerous, failure to comply with applicable regulations could
result in fines or other penalties, including loss of authority to provide
interstate service.
The intrastate operations of the Company may be subject to various state
laws and regulations. Most states require the Company to apply for certification
to provide long distance telecommunications services, operator services, pay
phones or competitive local exchange services, or to register or be found exempt
from regulation, before commencing intrastate services. Most states also require
the Company to file and maintain detailed tariffs listing their rates for
intrastate service. Many states also impose various reporting requirements
and/or require prior approval for transfers of control of certified carriers,
assignment of carrier assets, including customer bases, carrier stock offerings,
incurrence by carriers of significant debt obligations and acquisitions of
telecommunications operations. Other regulatory requirements may mandate that
the Company permit resale of its services by other companies, make payments to
intrastate universal service and similar funds, and take certain steps to
protect consumers. Certificates of authority can generally be conditioned,
modified, canceled, terminated and revoked by state regulatory authorities for
failure to comply with state law and/or rules, regulations and policies of the
state regulatory authorities. Fines and other penalties also may be imposed for
such violations. Any delay by the Company in complying with these state laws and
regulations would limit the Company's ability to provide telecommunications
services to the long-haul trucking industry. In addition, if the Company were
not to be in compliance with relevant state laws and regulations, the
appropriate state regulatory body may force the Company to suspend offering its
telecommunications services in such state. Such an event could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Although the Company has not determined whether its current and anticipated
telephone service offerings are subject to regulation by all state and federal
regulatory authorities, the Company is currently in the process of obtaining
authority, pursuant to regulation, certification, tariffs, notifications, or on
an unregulated basis, to provide intrastate interexchange service in the 48
contiguous states and Hawaii. The interpretation and enforcement of such laws
and regulations in relation to the Company's current and future service offering
may vary, and there can be no assurance that the Company will be in compliance
with all such laws and regulations at any one point in time.
Various state and federal regulatory factors may have an impact on the
Company's ability to service customers. Many of the rights and obligations
created by statute and regulation are subject to ongoing regulatory
implementation proceedings and review by the courts, and are subject to change.
Changes to some regulations could benefit the Company, while other changes could
make it more difficult for the Company to compete.
Cable television companies are subject to extensive governmental
regulation. The Company does not believe that it is subject to such regulations.
However, in the event the Company is required to comply with such regulations,
the expense, potential delay and management distraction potentially resulting
from the compliance process could have a material adverse effect on the
Company's results of operations and financial condition. See
"Business -- Regulatory Matters."
17
<PAGE> 22
TRUCKING INDUSTRY; TARGET MARKET
The Company's business is dependent upon the trucking industry in general
and upon long-haul trucking activity in particular. In turn, the trucking
industry is dependent on economic factors, such as the level of domestic
economic activity and interest rates, as well as operating factors such as fuel
prices and fuel taxes over which the Company has no control and which could
contribute to a decline in truck travel. The long-haul trucking business is also
a mature industry that has grown slowly in recent years and has, in the past,
been susceptible to recessionary downturns.
The current target market for the PNV Network is comprised primarily of the
long-haul truck drivers in the United States (including Canadian drivers
crossing the U.S.-Canadian border to deliver and/or pick up loads) that spend
material amounts of time in truckstops. There is no consensus as to the number
of long-haul truck drivers that comprise the Company's target market, and there
can be no assurance that the Company's estimate of the size of its target market
is accurate. Although a number of sources, including government agencies, trade
associations, industry publications and the Company's own independently retained
market research consulting firm have published estimates based on one or more of
the following: freight taxes, diesel fuel usage, number of trucks, number of
truck drivers, commercial drivers licenses or other data relating to the
trucking industry, these estimates vary widely. Accordingly, there can be no
assurance that the Company's estimate of its target market is not materially
inaccurate, which could increase the penetration level that the Company must
achieve in order to successfully implement its business plan.
RAPID TECHNOLOGICAL CHANGES
The telecommunications and cable industries are subject to rapid and
significant changes in technology. While the Company believes that for the
foreseeable future these changes will neither materially affect the continued
use of the Company's technology or the current or planned design, functionality
or capacity of the PNV Network or the telecommunications and cable services
offered nor materially hinder the Company's ability to acquire necessary
technologies, the effect of technological changes on the business of the Company
cannot be predicted. Thus, there can be no assurance that technological
developments will not have a material adverse effect on the Company.
PROPRIETARY RIGHTS
The Company believes that recognition of its products and services is an
important competitive factor in its industry. Accordingly, it promotes (or
intends to promote) the following in connection with its marketing activities
and holds or has filed an application for a United States trademark registration
for the following: "PARK 'N VIEW," "INCAB PNV," "PNV USA," "YOUR CAB. YOUR
CABLE. YOUR CALL.," "PARK 'N VIEW" (with design), "DEN" (with design), and
"WHERE SMART DRIVERS STAY CONNECTED."
The Company also regards the PNV Software (as defined herein) as
proprietary and attempts to protect it as a trade secret. The Company holds no
patents or copyrights on its software technology. If the Company decides to seek
either a copyright or a patent for the PNV Software, there can be no assurance
that the Company will be able to obtain such a copyright or a patent. The
intellectual property protections employed by the Company, however, may not
afford complete protection and there can be no assurance that third parties will
not independently develop such know-how or obtain access to its know-how, ideas,
concepts and documentation.
IMPACT OF YEAR 2000 ISSUE
A potential problem exists for all companies that rely on computers as the
year 2000 approaches. The "Year 2000" problem is the result of the past practice
in the computer industry of using two digits rather than four to identify the
applicable year. This practice will result in incorrect results when computers
perform arithmetic operations, comparisons or data field sorting involving years
later than 1999. The Company is in the process of conducting a review of its
computer systems to identify the systems that could be affected by the "Year
2000" issue and is developing a plan to address the issue. The Company will
utilize both internal and, if
18
<PAGE> 23
needed, external resources to reprogram or replace and test all of its software
for Year 2000 compliance and the Company expects to complete the project during
the second half of 1999. The Company believes that costs incurred in connection
with any such testing and required reprogramming and replacement will not have a
material adverse effect on the Company's financial condition or results of
operations. Based on its preliminary internal review, the Company believes that
the PNV Software is Year 2000 compliant. In addition, the Company relies on
third party vendors which must also become Year 2000 compliant. However, if any
necessary modifications to the PNV Software are not completed in a timely manner
or if the Company's vendors are not Year 2000 compliant, the Year 2000 problem
could have a material adverse impact on the operations of the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Year 2000."
RISK OF INABILITY TO REPURCHASE NOTES UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control (as defined), each holder of
Notes will have the right to require the Company to repurchase all or any
portion of such holder's Notes. If a Change of Control were to occur, there can
be no assurance that the Company would have sufficient financial resources, or
would be able to arrange financing, to pay the repurchase price for all Notes
tendered by holders thereof. Further, the provisions of the Indenture may not
afford holders of Notes protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving the Company that may adversely affect holders of Notes, if such
transaction does not result in a Change of Control. Any future credit agreements
or other agreements relating to other indebtedness to which the Company becomes
a party may contain similar restrictions and provisions. In the event a Change
of Control occurs at a time when the Company is prohibited from repurchasing
Notes, the Company could seek the consent of its lenders to repurchase Notes or
could attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such consent or repay such borrowing, the Company would
remain prohibited from repurchasing Notes. In such case, the Company's failure
to repurchase tendered Notes would constitute an Event of Default under the
Indenture, which would, in turn, constitute a further default under certain of
the Company's existing debt agreements and may constitute a default under the
terms of other indebtedness that the Company may enter into from time to time.
See "Description of the Notes -- Repurchase at the Option of Holders -- Change
of Control."
RESTRICTIVE COVENANTS
The Indenture contains a number of covenants that limit the discretion of
the Company's management with respect to certain business matters. These
covenants, among other things, restrict the ability of the Company to incur
additional indebtedness, pay dividends and make other distributions, prepay
subordinated indebtedness, make investments and other distributions, enter into
sale and leaseback transactions, create liens, sell assets, and engage in
certain transactions with affiliates. A failure to comply with the covenants and
restrictions contained in the Indenture, or other agreements relating to any
subsequent financing, could result in an event of default under such agreements
which could permit acceleration of the related debt and acceleration of debt
under other debt agreements that may contain cross-acceleration or cross-default
provisions. See "Description of the Notes."
LACK OF PUBLIC MARKET FOR THE NEW NOTES
The Old Notes have been designated as eligible for trading in the PORTAL
market. Prior to this Exchange Offer, there has been no public market for the
New Notes. If such a market were to develop, the New Notes could trade at prices
that may be higher or lower than their principal amount. The Company does not
intend to apply for listing of the New Notes on any securities exchange or for
quotation of the New Notes on The Nasdaq Stock Market's National Market or
otherwise. The Initial Purchaser has previously made a market in the Old Notes,
and the Company has been advised that the Initial Purchaser currently intends to
make a market in the New Notes, as permitted by applicable laws and regulations,
after consummation of the Exchange Offer. The Initial Purchaser is not
obligated, however, to make a market in the Old Notes or the New Notes and any
such market making activity may be discontinued at any time without notice at
the sole
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<PAGE> 24
discretion of the Initial Purchaser. There can be no assurance as to the
liquidity of the public market for the New Notes or that any active public
market for the New Notes will develop or continue. If an active public market
does not develop or continue, the market price and liquidity of the New Notes
may be adversely affected.
ORIGINAL ISSUE DISCOUNT
The New Notes will be issued with original issue discount equal to the
difference, if any, between their stated redemption price at maturity and their
issue price. Original issue discount will be included in gross income by a
holder under an economic accrual method generally in advance of the receipt of
cash attributable to this income. See "Certain Federal Income Tax
Considerations" for a more detailed discussion of the U.S. federal income tax
considerations relevant to holders of New Notes.
CONTROL BY EXISTING STOCKHOLDERS AND MANAGEMENT
As of June 15, 1998, (i) the beneficial owners of 5% or more of the
outstanding shares of Common Stock beneficially owned an aggregate of
approximately 74.9% of the outstanding shares of Common Stock and (ii) the
Company's directors and officers (including members of the Board of Directors
designated by the holders of the Series A Preferred Stock, the Series B
Preferred Stock and the Series C Preferred Stock) beneficially owned an
aggregate of approximately 50.7% of the outstanding shares of Common Stock. See
"Principal Stockholders." Accordingly, all such stockholders acting together
effectively could control the Company and certain of such stockholders acting
together could exert substantial influence with regard to matters requiring
stockholder approval. In addition, the Company and substantially all of the
stockholders of the Company are parties to an agreement that provides for the
designation of all the Company's directors and restricts the Company's ability
to increase the number of directors. See "Description of Capital Stock
- -- Certain Appointments to the Board of Directors." The Company's Certificates
of Designations creating the Series A Preferred Stock, the Series B Preferred
Stock and the Series C Preferred Stock also include certain provisions that
restrict the Company's ability to enter into certain transactions or take
certain actions without the approval of the holders of two-thirds of the
outstanding shares of each of the Series A Preferred Stock, the Series B
Preferred Stock and the Series C Preferred Stock. See "Description of Capital
Stock." This concentration of ownership and the terms of such agreements and
Certificates of Designations may have the effect of delaying or preventing a
change in control of the Company.
ANTI-TAKEOVER PROVISIONS
The Company's Bylaws and the Delaware General Corporation Law (the "DGCL")
contain certain provisions that may have the effect of discouraging, delaying or
making more difficult a change in control of the Company or preventing the
removal of incumbent directors. In addition, the Series A Preferred Stock, the
Series B Preferred Stock and the Series C Preferred Stock are redeemable upon
certain changes in control. The existence of these provisions may have a
negative impact on the price of the Common Stock and may discourage third-party
bidders from making a bid for the Company or may reduce any premiums paid to
stockholders for their Common Stock. Furthermore, the Company is subject to
Section 203 of the DGCL, which could have the effect of delaying or preventing a
change in control of the Company. See "Description of Capital Stock -- Certain
Provisions of the Certificate of Designations, Bylaws and Delaware Law."
BANKRUPTCY RISKS RELATED TO ESCROW ACCOUNT
The right of the Trustee under the Indenture and the Escrow Agreement (as
defined) to foreclose upon and sell Pledged Securities upon the occurrence of an
Event of Default (as defined) on the Notes is likely to be significantly
impaired by applicable bankruptcy law if a bankruptcy or reorganization case
were to be commenced by or against the Company or one or more of its
subsidiaries. Under applicable bankruptcy law, secured creditors such as the
holders of the Notes are prohibited from foreclosing upon or disposing of a
debtor's property without prior bankruptcy court approval. See "Description of
the Notes -- Disbursement of Funds; Escrow Account."
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<PAGE> 25
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register the Old Notes under the Securities Act. To the extent that Old
Notes are tendered and accepted in the Exchange Offer, the trading market for
untendered and tendered but unaccepted Old Notes could be adversely affected.
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<PAGE> 26
USE OF PROCEEDS
There will be no cash proceeds payable to the Company from the issuance of
the New Notes pursuant to the Exchange Offer. The net proceeds to the Company
from the Unit Offering were approximately $71.5 million. The Company placed
$19.2 million of such net proceeds in the Escrow Account that was used to
purchase a portfolio of U.S. Government Obligations (the "Pledged Securities").
The Escrow Account and the Pledged Securities were pledged as security for
payment of the first four scheduled interest payments on the Notes through May
15, 2000 and, under certain circumstances, as security for repayment of
principal of the Notes. See "Description of the New Notes -- Disbursement of
Funds; Escrow Account." The Company intends to use the remainder of the net
proceeds from the Unit Offering of approximately $52.3 million principally in
connection with the installation of the PNV Network at additional truckstops,
the addition of certain equipment to the PNV Network, marketing and sales
efforts, working capital and other general corporate purposes, including
possible acquisitions of companies engaged in similar or complementary
businesses. The Company has no present agreements, arrangements or commitments
and has not engaged in any negotiations or evaluations with respect to any such
transaction. Pending application of the net proceeds as described above, the
Company intends to invest the net proceeds in short-term, investment grade,
interest-bearing securities.
CAPITALIZATION
The following table sets forth the cash and cash equivalents and
capitalization of the Company as of March 31, 1998, and as adjusted to reflect
the issuance of the Units and the application of estimated net proceeds to the
Company therefrom. The following table should be read in conjunction with the
financial statements and notes thereto of the Company included elsewhere herein.
<TABLE>
<CAPTION>
MARCH 31, 1998
---------------------------
ACTUAL AS ADJUSTED
------------ ------------
<S> <C> <C>
Cash and cash equivalents(1)................................ $ 4,776,451 $ 76,251,451
============ ============
Long-term debt:
13% Senior Notes due 2008(2).............................. $ -- $ 70,350,000
Other long-term debt, less current portion................ 187,940 187,940
------------ ------------
Total long-term debt, excluding current portion... 187,940 70,537,940
------------ ------------
Series A Redeemable Preferred Stock (including accrued
dividends of $417,103), par value $.01 per share; 627,630
shares authorized; 388,075 shares issued and
outstanding............................................... 4,155,003 4,155,003
Series B Redeemable 7% Cumulative Convertible Preferred
Stock (including accrued dividends of $1,449,550), par
value $.01 per share; 1,372,370 shares authorized, issued
and outstanding........................................... 16,041,560 16,041,560
Series C Redeemable 7% Cumulative Convertible Preferred
Stock (including accrued dividends of $789,617), par value
$.01 per share; 3,750,000 shares authorized; 2,328,543
shares issued and outstanding............................. 18,146,910 18,146,910
Common Stockholders' Deficit:
Common stock, par value $.001 per share; 12,000,000 shares
authorized; 4,318,182 shares issued and outstanding.... 4,318 4,318
Additional paid-in capital(2)............................. 547,763 5,197,763
Accumulated deficit....................................... (19,067,451) (19,067,451)
------------ ------------
Total common stockholders' deficit.......................... (18,515,370) (13,865,370)
------------ ------------
Total capitalization.............................. $ 20,016,043 $ 95,016,043
============ ============
</TABLE>
- ---------------
(1) Includes the aggregate principal amount of the Pledged Securities, estimated
at approximately $19.2 million. See "Description of the Notes."
(2) The Company received gross proceeds from the Unit Offering of $75.0 million.
The estimated value of the Warrants ($4.65 million) has been reflected as
both a debt discount and an element of additional paid-in capital. However,
the actual aggregate principal amount of the Notes is $75.0 million. The
resulting debt discount will be amortized over the term of the Notes.
22
<PAGE> 27
SELECTED FINANCIAL DATA
The selected financial data for the Predecessor for the year ended December
31, 1994 and the period from January 1, 1995 to November 2, 1995, and for the
Successor for the period from September 18, 1995 (Successor's date of
incorporation) to June 30, 1996 and the year ended June 30, 1997 set forth below
are derived from the audited financial statements of the Predecessor and the
Successor for such periods included elsewhere in this Prospectus. The selected
financial data as of and for the nine months ended March 31, 1997 and 1998 are
derived from unaudited financial statements included elsewhere in this
Prospectus, which, in the opinion of management reflect all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the Company's financial position and results of operations. The
selected financial data for the Predecessor as of December 31, 1993 and 1994 and
November 2, 1995 and for the period from November 19, 1993 (date of inception)
to December 31, 1993 are derived from audited financial information. These
historical results are not necessarily indicative of the results that may be
expected in the future. The selected financial data are qualified by reference
to and should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations," the financial statements and
notes thereto and other financial data included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR(1) SUCCESSOR(1)
------------------------------------------- --------------------------------------------------------
PERIOD FROM PERIOD PERIOD FROM
NOVEMBER 19, FROM SEPTEMBER 18,
1993(DATE OF JANUARY 1, 1995(DATE OF NINE MONTHS ENDED
INCEPTION) TO YEAR ENDED 1995 TO INCORPORATION) YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, NOVEMBER 2, TO JUNE 30, JUNE 30, -------------------------
1993 1994 1995 1996 1997 1997 1998
------------- ------------ ------------ -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $ 149,755 $ 888,397 $ 462,676 $ 2,106,455
Cost of revenues(2)..... 436,829 2,077,689 1,243,994 4,128,735
----------- ----------- ----------- -----------
Gross margin............ (287,074) (1,189,292) (781,318) (2,022,280)
Selling, general and
administrative
expenses.............. $ 7,792 $ 287,782 $ 475,891 1,576,209 4,431,889 2,796,456 6,471,565
Lease cancellation
expense............... 594,691 603,703
-------- --------- --------- ----------- ----------- ----------- -----------
Loss from operations.... (7,792) (287,782) (475,891) (1,863,283) (6,215,872) (4,181,477) (8,493,845)
Interest expense........ 103,079 157,416 144,617 23,949
Interest income and
other................. (5,125) (328,268) (204,069) (397,442)
-------- --------- --------- ----------- ----------- ----------- -----------
Net loss................ $ (7,792) $(287,782) $(475,891) $(1,961,237) $(6,045,020) $(4,122,025) $(8,120,352)
======== ========= ========= =========== =========== =========== ===========
OTHER OPERATING DATA:
EBITDA(3)............... $ (7,792) $(287,782) $(475,891) $(1,778,942) $(5,572,556) $(3,747,633) $(7,281,996)
Capital expenditures.... 65,404 109,587 909 1,650,177 6,443,899 3,614,764 9,822,272
Ratio of earnings to
fixed charges and
preferred stock
dividend
requirements(4)....... -- -- -- --
Net cash flows used in
operating
activities............ (7,792) (254,311) (389,809) (1,452,706) (3,448,848) (2,044,219) (7,566,197)
Net cash flows used in
investing
activities............ (65,404) (109,587) (909) (1,650,177) (6,443,899) (3,614,764) (9,822,272)
Net cash flows provided
by financing
activities............ 87,500 369,449 380,070 3,468,614 14,244,410 14,345,524 17,447,526
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR(1) SUCCESSOR(1)
------------------------------------------ -------------------------------------------------
AS OF DECEMBER 31, AS OF JUNE 30,
---------------------- AS OF NOVEMBER 2, ----------------------------- AS OF MARCH 31,
1993 1994 1995 1996 1997 1998
------- ------------ ----------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents......... $14,304 $ 19,856 -- $ 365,731 $ 4,717,394 $ 4,776,451
Working capital....... 14,304 6,521 -- (81,610) 2,516,806 3,143,811
Total assets.......... 79,708 174,711 -- 2,898,125 12,938,783 22,410,888
Total long-term
debt................ 87,500 216,667 -- 3,387,934 128,692 187,940
Total redeemable
preferred stock..... -- -- -- 721,370 19,131,466 38,343,473
Partnership
deficiency/ common
stockholders'
deficit............. (7,792) (55,292) -- (1,969,525) (8,931,927) (18,515,370)
</TABLE>
23
<PAGE> 28
- ---------------
(1) Park 'N View, Ltd. transferred certain of its assets, contractual rights and
liabilities to Park 'N View, Inc. in exchange for 2,318,182 shares of common
stock issued to the former partners of Park 'N View, Ltd. The net
liabilities transferred were recorded by Park 'N View, Inc. at Park 'N View,
Ltd.'s historical carrying amount of $84,446. The financial information
identified herein as for the Predecessor is for Park 'N View, Ltd. as of
December 31, 1993 and 1994 and November 2, 1995 and for period from November
19, 1993 (date of inception) to December 31, 1993, the year ended December
31, 1994 and the period from January 1, 1995 to November 2, 1995, the date
of the net liabilities transferred to Park 'N View, Inc. The financial
information identified herein as for the Successor is for Park 'N View, Inc.
as of June 30, 1996, and 1997 and March 31, 1998 and for the period from
September 18, 1995 (date of incorporation) to June 30, 1996, for the year
ended June 30, 1997 and the nine months ended March 31, 1997 and 1998.
(2) Includes service depreciation of $84,000 and $643,000 for the period from
September 18, 1995 (date of incorporation) to June 30, 1996 and the year
ended June 30, 1997, respectively, and $434,000 and $1,212,000 for the nine
months ended March 31, 1997 and 1998, respectively. Service depreciation
consists of amortization of capitalized costs of the PNV Network.
(3) EBITDA is earnings (loss) from operations before interest, taxes, and
service depreciation. EBITDA is a measure of a company's performance
commonly used in the telecommunications industry, but should not be
construed as an alternative to net income (loss) determined in accordance
with GAAP as an indicator of operating performance or as an alternative to
cash from operating activities determined in accordance with GAAP as a
measure of liquidity.
(4) In calculating the ratio of earnings to fixed charges and preferred stock
dividend requirements, "earnings" consist of net loss and fixed charges.
Fixed charges consist of interest expense, including such portion of rental
expense that is attributed to interest. Earnings were insufficient to cover
fixed charges and preferred stock dividend requirements for the periods
ended June 30, 1996 and 1997 by $1,983,000 and $6,962,000, respectively, and
for the nine months ended March 31, 1997 and 1998 by $4,686,000 and
$10,100,000, respectively.
24
<PAGE> 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations should be read in conjunction with the financial statements and other
financial information included elsewhere in this Prospectus. The following
discussion includes certain forward-looking statements. For a discussion of
important factors, including, but not limited to the fact that there can be no
assurance that the Company's results of operations will not be adversely
affected by one or more of these factors, that the Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, and other factors
that could cause actual results to differ materially from the forward-looking
statements, see "Risk Factors."
OVERVIEW
Background. From November 1993 to November 1995, Park 'N View, Ltd.
developed the PNV Network and installed and operated the PNV Network at one
truckstop as a field test. There were no revenues generated by Park 'N View,
Ltd. during this period. Following the formation of the Company in September
1995, and the transfer to the Company of the business and net liabilities of
Park 'N View, Ltd., the Company began the build-out of the PNV Network utilizing
principally proceeds from sales of its securities. See "Certain Transactions."
As of March 31, 1998, the PNV Network was available at 102 full-service
truckstops. During March 1998, the Company had over 19,000 subscribers
(including approximately 2,300 drivers sponsored by five fleets under contracts
with the Company), an increase of over 120% from the 8,400 subscribers the
Company had in April 1997. The telecommunications and entertainment services
currently offered by the Company through the PNV Network consist principally of
local and long-distance telephone access, incoming calls, voice messaging and
driver location, data, Internet connectivity, cable television and a
Pay-Per-View channel. See "Business -- Products and Services."
Components of Revenues
To date, the Company's revenues have been generated principally from sales
of monthly and daily subscriptions to the PNV Network, as well as daily access
subscriptions to a Pay-Per-View channel, and, to a lesser extent, sales of long
distance telephone time and starter kits to long-haul truck drivers. The Company
markets the PNV Network to both long-haul fleet trucking companies who sponsor
their drivers and to the individual long-haul truck drivers. Subscribers first
purchase a membership card and starter kit for $10 (which fee is waived for
fleet and Power Plan subscribers). Subscribers then sign-up for $30 per month or
purchase a monthly or daily card for $30 or $5, respectively, from vending
machines at the truckstop. Fleets purchase a guaranteed minimum number of $30
monthly subscriptions for a period of one year or more. Monthly subscribers
currently receive 60 minutes of free long distance. The Company's sales to truck
drivers at the Company's vending machines are cash transactions completed at the
point of sale. Under the Power Plan Program, a subscriber's monthly subscription
is automatically renewed and the monthly fee is automatically drafted from or
charged to the subscriber's checking account or credit card. In connection with
initially subscribing under the Power Plan Program, a subscriber receives a
two-month subscription for $30, paid in advance. See "Business -- Marketing."
Power Plan subscribers may cancel their subscriptions at any time. The Company
currently has one Pay-Per-View channel, The Playboy Channel (which as of March
31, 1998 was available at approximately 40% of the truckstops as permitted by
the truckstop owner) for which it charges $5 for daily access. As of March 31,
1998, the Company has experienced a 19% penetration rate for this service.
In January 1998, the Company ran a promotional test of the resale of long
distance minutes to a select group of subscribers that was very successful. The
Company now offers all Power Plan subscribers the ability to purchase additional
long distance minutes from the convenience of their truck cab. The Company plans
to roll-out the opportunity for all subscribers to purchase long distance
minutes by the end of 1998.
25
<PAGE> 30
By December 1998, the Company plans to deploy a $20 value card at selected
truckstops. This card, which will be available for purchase in vending machines
located at such truckstops will serve as an additional method of payment for
both long distance minutes and Pay-Per-View programming.
In the future, the Company anticipates that sales of subscriptions to the
PNV Network, resale of long distance minutes, and Pay-Per-View purchases will
generate the majority of the Company's revenues. To a lesser extent, the Company
anticipates that providing Internet Service Provider (ISP) services and selling
advertising on its dedicated cable advertising channel will become sources of
revenue for the Company.
The Company plans to offer the following products and services, among
others:
ISP Service -- Expansion of the PNV Network to include the T-1 lines and
frame relay network will enable the Company to become an
ISP. The Company intends to charge subscribers to the ISP
service a competitive monthly access fee.
Advertising -- The current PNV Network allows the Company the ability to
carry dedicated advertising and programming channels. The
Company already has one long-haul fleet trucking company
advertising for recruitment of drivers on the channel.
The Company generally recognizes service revenue in the period earned.
Prepaid service revenues are recorded as deferred revenue until earned.
Recognition of one-half of the revenue relating to an initial Power Plan Program
subscription sale is deferred until the beginning of the second month of the two
month period. Fees received in advance of recognizing the related revenue are
recorded as deferred revenue.
Cost of Revenues
Current Network. The Company's fixed operating expenses currently consist
principally of amortization of capitalized costs of the PNV Network (service
depreciation), cable programming (which is purchased by the Company on a per
parking stall basis) and leased POTS lines at truckstops (the Company presently
maintains an average of 12 POTS lines at each truckstop).
The Company's variable operating expenses consist principally of long
distance telephone service, revenue and profit sharing commissions paid to
certain truckstop owners which have entered into long-term contracts with the
Company and the starter kit equipment. Variable telephone service costs, until
the Company recently began to resell long distance minutes, were comprised of
the cost of providing 60 free minutes of long distance together with a monthly
subscription.
Pursuant to the terms of the contracts with the truckstop owners'
commission expenses are comprised of commissions payable in an amount equal to
(a) 35% of revenues from sales from on-site vending machines for the first five
years and 40% for the second five years, and (b) with regard to a Power Plan
subscription, 35% of revenue for the first month of service and 10% of revenues
thereafter. The contracts further provide that the Company will pay an
additional commission to truckstop owners equal to 10% of its revenues from
subscription sales to fleets pro rata based on the number of their stalls.
Future Network. The Company has recently entered into contracts with AT&T
for the lease of T-1 lines and the purchase of long distance and other telephone
services. Under these contracts, for the periods specified therein, the Company
is required to pay a specified minimum dollar amount of lease payments and to
purchase a specified minimum dollar amount of long distance telephone services,
each of which amounts is subject to certain discounts based on the T-1 lines
leased and the telephone services purchased. See "Business -- Products and
Services -- Future Products and Services" and "Risk Factors -- Expansion of the
PNV Network Installation and Services; Future Revenue Streams; Minimum
Requirements Contracts; Cost-Savings." The Company believes that the addition of
the T-1 lines to the PNV Network will reduce the Company's telephone backbone
cost and reduce its per minute long distance costs. The Company believes that
fixed costs related to these Network enhancements will increase but variable
costs will decrease.
26
<PAGE> 31
Selling Expenses
The Company markets to fleet trucking companies through a direct sales
force and intends to increase this sales force. Selling expenses have therefore
consisted principally of salaries, benefits and travel expenses. In addition,
the Company sells subscriptions at truckstops through its vending machines and
has marketed subscriptions through point-of-sale merchandising materials and in
addition, at larger sites, through field sales representatives. The Company
expects to add approximately 100 persons to its sales force over the next 12
months.
General and Administrative Expenses
The Company has significantly increased the size of its management team and
the number of its full-time employees has increased to 132 as of March 31, 1998
from 35 as of April 1, 1997, all of which resulted in a significant increase in
general and administrative expenses. The Company expects that general and
administrative expenses will increase substantially subsequent to the completion
of the Unit Offering, as the Company applies a portion of the net proceeds of
the Unit Offering to expand marketing programs, operations and administrative
staff to accommodate the growth in new sites and memberships. Such expenses will
be incurred in advance of anticipated related revenues.
RESULTS OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1998 COMPARED TO NINE MONTHS ENDED MARCH 31, 1997
Revenues. The Company's revenues increased 355% to $2,106,000 for the nine
months ended March 31, 1998 from $463,000 for the nine months ended March 31,
1997 primarily due to an increase in subscription sales and an increase in
subscription fees initiated in the month of May 1997.
Cost of Revenues. Cost of revenues, excluding service depreciation,
increased 260% to $2,917,000 for the nine months ended March 31, 1998 from
$810,000 for the nine months ended March 31, 1997 principally due to increased
sales volume. Cost of revenues includes commissions payable to truckstops, cable
programming, leased telephone lines, equipment and freight. As the Company
increases the number of truckstops at which it installs the PNV Network per
month, and the aggregate number of truckstop stalls, the Company believes that
cost of revenues will increase significantly.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 131% to $6,472,000 for the nine months ended
March 31, 1998 from $2,796,000 for the nine months ended March 31, 1997,
reflecting principally increased expenses related to Company marketing programs,
additional selling, management and administrative personnel, additional
administrative offices and warehouse space.
Service Depreciation. Service depreciation increased 179% to $1,212,000
for the nine months ended March 31, 1998 from $434,000 for the nine months ended
March 31, 1997 resulting primarily from the Company's increased build-out of the
Network.
Interest Income (Expense) and Other-Net. Interest income (expense) and
other-net increased $314,000 to $373,000 for the nine months ended March 31,
1998 from $59,000 for the nine months ended March 31, 1997, reflecting an
increase in interest and other income of $193,000 from investment of cash in
short-term investments and a decrease in interest expense of $121,000. The
principal amount of the related debt securities, together with interest accrued
thereon, was converted by the holders thereof into shares of Series A Preferred
Stock. See "Certain Transactions" and Note 6 of Notes to Financial Statements.
Net Loss. The Company's net loss increased 97% to $8,120,000 for the nine
months ended March 31, 1998 from $4,122,000 for the nine months ended March 31,
1997 primarily as a result of the foregoing factors.
27
<PAGE> 32
YEAR ENDED JUNE 30, 1997 COMPARED TO PERIOD FROM SEPTEMBER 18, 1995 (DATE OF
INCORPORATION) TO JUNE 30, 1996
Revenues. The Company's revenues increased $738,000 to $888,000 for the
year ended June 30, 1997 from $150,000 for the period from September 18, 1995 to
June 30, 1996 (the "fiscal 1996 period"), reflecting additional subscription
sales volume to the PNV Network in the year ending June 30, 1997.
Cost of Revenues. Cost of revenues, excluding service depreciation,
increased $1,082,000 to $1,434,000 for the year ended June 30, 1997 from
$352,000 for the fiscal 1996 period principally due to increased subscription
sales volume.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $2,856,000 to $4,432,000 for the year ended
June 30, 1997 from $1,576,000 for the fiscal 1996 period reflecting the
Company's increased administrative personnel and increased expenses for
administrative offices and warehouse space.
Service Depreciation. Service depreciation increased $559,000 to $643,000
for the year ended June 30, 1997 from $84,000 for the fiscal 1996 period
resulting primarily from the Company's increased build-out of the Network.
Interest Income (Expense) and Other-Net. Interest income (expense) and
other-net increased $269,000 to $171,000 for the year ended June 30, 1997 from
($98,000) for the fiscal 1996 period reflecting an increase in interest income
of $297,000 from investment of cash in short-term investments and a gain on a
sale of fixed assets of $26,000, which was partially offset by an increase in
interest expense of $54,000. The principal amount of the related debt
securities, together with interest accrued thereon, was converted by the holders
thereof into shares of Series A Preferred Stock. See "Certain Transactions" and
Note 6 of Notes to Financial Statements.
Net Loss. The Company's net loss increased $4,084,000 to $6,045,000 for
the year ended June 30, 1997 from $1,961,000 for the fiscal 1996 period
primarily as a result of the foregoing factors.
LIQUIDITY AND CAPITAL RESOURCES
Since the Company's incorporation in September 1995, the Company has
satisfied its cash requirements through the proceeds of issuances of three
classes of preferred stock, Common Stock and certain debt securities (an
aggregate of $37.4 million) and cash generated from operations.
From November 1995 to November 1996, in connection with the capitalization
of the Company, the Patricof Managed Funds (as defined herein) invested $3.8
million in the Company, purchasing shares of the Company's Series A Preferred
Stock, par value $.01 per share ("Series A Preferred Stock") and the Company's
common stock, par value $.001 per share (the "Common Stock") as well as debt
securities of the Company. In November 1996, a group of investors comprised of
the Patricof Managed Funds and certain partners in such funds made an additional
$15.0 million investment in the Company, purchasing shares of the Company's
Series B 7% Cumulative Convertible Preferred Stock, par value $.01 per share
(the "Series B Preferred Stock"). In August 1997, a group of investors,
including the Patricof Managed Funds, invested $18.6 million in the Company,
purchasing shares of the Company's Series C 7% Cumulative Convertible Preferred
Stock, par value $.01 per share (the "Series C Preferred Stock"). See Notes 1
and 6 of Notes to Financial Statements.
On May 27, 1998, the Company sold 75,000 Units, consisting of an aggregate
$75,000,000 of its 13% Senior Notes due 2008 and 75,000 Warrants, for net
proceeds before offering expenses of $72,375,000. See "Use of Proceeds."
Net cash used in operating activities was $7,566,000 and $2,044,000 for the
nine months ended March 31, 1998 and 1997, respectively, and $3,449,000 and
$1,453,000 for the year ended June 30, 1997 and the fiscal 1996 period,
respectively. The $5,522,000 increase in net cash used in operating activities
for the nine months ended March 31, 1998 as compared to the nine months ended
March 31, 1997 resulted primarily from increased marketing and additional staff
to support the larger number of sites and subscribers. The $1,996,000
28
<PAGE> 33
increase in net cash used in operating activities for the year ended June 30,
1997 as compared to the fiscal 1996 period resulted principally from additional
administrative needs to support the Company's build-out schedule.
Net cash used in investing activities was $9,822,000 and $3,615,000 and for
the nine months ended March 31, 1998 and 1997, respectively, and $6,444,000 and
$1,650,000 for the year ended June 30, 1997 and the fiscal 1996 period,
respectively. The $6,207,000 increase in net cash used in investing activities
for the nine months ended March 31, 1998 as compared to the nine months ended
March 31, 1997 resulted primarily from the additional buildout of the PNV
Network. The $4,794,000 increase in net cash used in investing activities for
the year ended June 30, 1997 as compared to the fiscal 1996 period resulted
principally from the additional build-out of the PNV Network.
Net cash provided by financing activities was $17,448,000 and $14,346,000
for the nine months ended March 31, 1998 and 1997, respectively, and $14,244,000
and $3,469,000 for the year ended June 30, 1997 and the fiscal 1996 period,
respectively. The $3,102,000 increase in net cash provided by financing
activities for the nine months ended March 31, 1998 as compared to the nine
months ended March 31, 1997 resulted primarily from the issuance of the Series C
Preferred Stock. The $10,775,000 increase in net cash provided by financing
activities for the year ended June 30, 1997 as compared to the fiscal 1996
period resulted principally from the issuance of the Series B Preferred Stock.
See "Certain Transactions" and Note 6 of Notes to Financial Statements.
The Company's capital commitments consist primarily of capital leases and
noncancellable operating leases for office space, furnishings, equipment and T-1
lines. In addition, the Company recently entered into a contract for the
purchase of long distance and other telephone services that contains minimum
purchase requirements for a two-year period. See "Business -- Product and
Services -- Future Products and Services" and "Risk Factors -- Expansion of PNV
Network Installation and Services; Future Revenue Streams; Minimum Requirements
Contracts; Cost-Savings." At June 30, 1997, the Company's minimum commitments
under capital leases and noncancellable operating leases with terms in excess of
one year totaled $223,000, $172,000, $128,000, $106,000 and $36,000 for the five
years ending June 30, 1998 through 2002, respectively. See Note 4 of Notes to
Financial Statements.
The Company expects that it will have significant capital requirements in
the future to fund the continued expansion of its business and for working
capital purposes, and there can be no assurance that such capital requirements
will be available on terms satisfactory to the Company, if at all. The Company's
capital requirements will depend on numerous factors, including the growth of
the Company's revenues, if any, and the rate of such growth. The Company expects
that the net proceeds of the Unit Offering, together with existing cash and
anticipated cash generated by operations, will be sufficient to fund its planned
expansion and operations to at least the first half of 2000. Thereafter, if the
Company's cash flow from operations is not sufficient to provide funds for
working capital and capital expenditures and if equity, debt or other financing
is not available, the Company expects that it may experience insufficient
liquidity which could have a material adverse effect on the Company's financial
condition and results of operations. There can be no assurance that additional
financing will be available when needed, if at all, or, if available, on terms
acceptable to the Company. If adequate funds are not available on acceptable
terms, the Company will be required to delay or limit any further expansion of
its business. Any inability to fund its future capital requirements could have a
material adverse effect on the Company's business, financial condition and
operating results. See "Risk Factors -- Future Capital Requirements; Uncertainty
of Additional Funding."
YEAR 2000
A potential problem exists for all companies that rely on computers as the
year 2000 approaches. The "Year 2000" problem is the result of the past practice
in the computer industry of using two digits rather than four to identify the
applicable year. This practice could result in incorrect results when computers
perform arithmetic operations, comparisons or data field sorting involving years
later than 1999. The Company is in the process of conducting a review of its
computer systems to identify the systems that could be affected by the "Year
2000" issue and is developing a plan to address the issue. The Company will
utilize both internal and, if
29
<PAGE> 34
needed, external resources to reprogram or replace and test all of its software
for Year 2000 compliance, and the Company expects to complete the project during
the second half of 1999. The Company estimates that costs incurred in connection
with any such testing and required reprogramming and replacement will not have a
material adverse effect on the Company's financial condition or results of
operations. Based on its preliminary internal review, the Company believes that
the Company-developed software is Year 2000 compliant. In addition, the Company
relies on third party vendors which must also become Year 2000 compliant.
However, if any necessary modifications to the PNV Software are not completed in
a timely manner or if the Company's vendors are not Year 2000 compliant, the
Year 2000 problem may have a material adverse impact on the operations of the
Company.
30
<PAGE> 35
BUSINESS
OVERVIEW
The Company originated and operates the only currently integrated
telecommunications and entertainment network (the "PNV Network" or "Network")
currently capable of providing voice, data and cable television services to
long-haul truck drivers in the convenience and privacy of their trucks while
parked at truckstops. The Company markets and sells subscriptions to its Network
to fleet trucking companies and individual long-haul truck drivers. Based on
independent market research commissioned by the Company and industry data, the
Company believes that there are between 800,000 and 1,000,000 long-haul truck
drivers in the United States. During March 1998, the Company had over 19,000
active subscribers, an increase of over 120% from the approximately 8,400
subscribers it had in April 1997. The Company was formed in September 1995 and,
as of March 31, 1998, had installed the PNV Network in 102 truckstops located in
35 states across the United States.
The Company believes that both long-haul drivers and fleet trucking
companies have a need for a more comprehensive, cost-effective and easily
accessible voice and data communications and entertainment solution than
currently available alternatives. The Company believes that this market need
combined with the absence of an effective current solution provides the Company
with the opportunity to become the leading provider of integrated
telecommunications and entertainment services to the long-haul trucking
industry. The Company plans to realize this opportunity by (i) increasing the
number of locations served by its Network to a "critical mass" of truckstops
(which the Company believes to be between 200 and 250 strategically located
truckstops), and then to continue the build-out of the Network to approximately
650 sites in total, and (ii) significantly enhancing the functionality and
capacity of its Network to create a broadband, cost competitive private
telecommunications network for the long-haul trucking industry.
The PNV Network provides a full range of high quality, cost-effective
telecommunications and cable television services over land-based lines. Users
connect to the Network by attaching standard telephone and coaxial television
cables (which the Company provides to each new subscriber) to outlets, called
"Bollards," installed in the ground at each parking stall at a truckstop. The
telecommunications services currently provided include: (i) local and long
distance calling, in-coming calls, voice mail services and driver location; (ii)
data connectivity; (iii) access to the Internet; and (iv) other
telecommunications services, including wake up calls and the ability to offer
call waiting and call conferencing. The cable television service offers 18 cable
viewing channels, including premium and local programming, a Pay-Per-View
channel and a dedicated advertising channel.
The long-haul trucking industry's operational characteristics require
significant reliance on telecommunications. Based on industry data, Company
research and data from the Company's switch, the Company believes that long-haul
fleet trucking companies and drivers spend over $2.4 billion annually on long
distance services (not including data, Internet and messaging). The Company
believes that the level of telephone usage at truckstops is second only to that
of airports. According to data generated from the Company's switch and Company
research, the average long-haul truck driver that logs on to the Network uses
approximately 1,200 minutes of long distance a month, spending approximately
$250 per month. The Company believes that this level of usage is a result of:
(i) the long periods most drivers spend on the road each month, 21 days or more;
(ii) the operational need for drivers to be in regular contact with their
dispatchers and customers concerning load pick-up, deliveries and routes; and
(iii) the drivers' personal communication needs. Drivers and fleet trucking
companies must also regularly exchange data pertaining to proof of delivery,
employee pay information, load availability and permits. The Company believes
that the Internet will increasingly become the preferred method for transmitting
and receiving this type of data.
While on the road, drivers use full service truckstops for fueling, eating,
showering, parking for rest periods (which are required by federal law),
overnight stays and for layovers between hauls. These truckstops are the primary
location at which drivers conduct their business while on the road. Currently,
voice, data communication, Internet connectivity and entertainment options for
the individual long-haul truck drivers and
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<PAGE> 36
for the fleet trucking companies trying to communicate with their drivers at
these truckstops are limited, relatively expensive and inaccessible.
There are over 2,100 truckstops in the United States located on the
interstate highway system, of which the Company believes approximately 1,100 are
full service truckstops that provide more services than just fuel. The Company
has entered into long-term contracts pursuant to which eight of the ten largest
full service truckstop chains and associations in the United States, including
TA Operating Corporation, Petro Stopping Centers, Inc., Pilot Corporation, and
Professional Transportation Partners, LLC, have granted the Company the
exclusive right to provide telecommunications and entertainment services to
drivers in their cabs at their truckstops. Of the approximately 730 full-service
truckstops under contract as of March 31, 1998, approximately 390 are covered by
contracts directly with the truckstop owner and approximately 340 are covered by
contracts with associations which require the Company to enter into a contract
directly with the truckstop owner to install the PNV Network. The Company also
believes that these approximately 730 full-service truckstops are among the most
heavily trafficked and are located along the busiest truck routes in the United
States. The Company believes that the truckstop owners are highly incentivized
to support the success of the Company as: (i) the contracts contain provisions
for revenue and profit sharing with the Company; (ii) the PNV Network is a means
for competitive differentiation; and (iii) the PNV Network is an amenity that
many long-haul truck drivers have been requesting.
The Company believes that its most significant competitive advantages over
competing telecommunications and entertainment providers include:
- Only provider and first to market. The Company is currently the only
provider with the capability to deliver integrated telecommunications,
access to the Internet and cable entertainment services in the privacy
and convenience of the truck cab.
- Significant barriers to entry. As of March 31, 1998, the Company has
entered into long-term contracts to provide telecommunications and
entertainment services to long-haul drivers at approximately 730 of the
approximately 1,100 full service truckstops across the country. These
contracts are generally for terms of ten years and the Company believes
that they pose a significant barrier to entry to other current or
potential competitive telecommunications and entertainment providers.
- Compelling value to drivers, fleets and truckstops. The Company believes
that the PNV Network represents a compelling value to long-haul drivers,
long-haul fleet trucking companies and truckstops. For drivers, the PNV
Network currently provides cost-effective telephone and cable television
access in the privacy and convenience of their cab. For fleets, the PNV
Network currently provides high levels of accessibility to their drivers
with cost efficiency and, once enhanced, will offer a cost competitive
high capacity voice and data network designed to address their unique
geographic and access needs. For truckstops, the PNV Network provides a
means for competitive differentiation and generating additional revenue.
- Broadband and cost competitive network. The Company has developed the
PNV Network so that it is flexible and upgradable. This foundation will
allow the Company to expand the functionality and capacity of the PNV
Network to provide a broadband, cost competitive voice, data, Internet
and cable television platform. This network will allow the Company to
become, in effect, a private full-service telecommunications network for
the long-haul trucking industry.
The Company provides its telecommunication and entertainment services on a
subscriber basis. Subscribers first purchase a membership card and starter kit
for $10. They can then sign up for an on-going subscription deducted
automatically from their credit card or checking account for $30 per month, or
purchase a monthly or daily usage card for $30 or $5, respectively, from vending
machines located at each truckstop. Each subscription plan has various benefits
associated with it. See "Business -- Products and Services."
The Company markets to fleet trucking companies through a direct sales
force and plans to focus a significant portion of its marketing efforts on large
and medium size fleet trucking companies. The Company strives to negotiate
contracts with fleet trucking companies that contain minimum term and number of
subscriber commitments. Fleet trucking companies are billed for their entire
subscriber group on a monthly
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<PAGE> 37
basis. The Company recently signed contracts with five fleet trucking companies
that have purchased monthly subscriptions for an aggregate of approximately
2,300 drivers for periods ranging from one to three years, subject to certain
earlier termination rights. The Company also plans to pursue co-marketing
arrangements with certain strategic partners to market the PNV Network to fleet
trucking companies. These partners may include truckstop chains, other
communications services providers, or other providers of services to the long-
haul trucking industry which can help facilitate the marketing and sales
process. The Company markets subscriptions to the PNV Network to individual
truck drivers through field sales representatives working principally at the
larger truckstops and signage, brochures, vending machines and other
merchandising materials posted and distributed at each truckstop. The Company is
developing incentives to encourage sales to truck drivers by truckstop employees
and is also considering additional marketing strategies, promotional products
and contests.
The architecture of the current PNV Network uses existing proven technology
which includes a PC-based communications server installed at each truckstop
location which is connected by a WAN to the Host Server. The Company plans to
enhance the current capabilities and functionality of the PNV Network by
replacing the POTS lines currently used with T-1 lines which, with certain
additional equipment, will allow for dedicated long distance and a frame relay
network. This will reduce the Company's cost of providing long distance, provide
greater bandwidth for voice and data transmission and result in a design that
continues to be flexible and upgradable. The Company also plans to become an ISP
and develop voice over IP capability. The Company believes that it will be able
to offer highly competitive long distance rates available to large fleet
trucking companies by installing T-1 lines between truckstops and fleet
operation centers. To allow greater access to the PNV Network, the Company plans
to install member-only telephones, which may include both wired and 900 MHz
wireless, inside selected truckstops.
INDUSTRY OVERVIEW
Based on independent market research commissioned by the Company and
industry data, the Company believes that there are between 800,000 and 1,000,000
long-haul truck drivers in the United States. The Company believes that there
are over 19,000 trucking fleets in the United States that operate a total of
approximately 630,000 long-haul trucks. There are approximately 50 fleets that
operate over 1,000 trucks, more than 850 fleets that operate between 100 to
1,000 trucks, and approximately 18,400 fleets that operate fewer than 100
trucks. In addition, there are approximately 140,000 independent long-haul truck
drivers that are not affiliated with any fleet. The Company believes that there
are an additional 30,000 trucks associated with private fleets and 40,000
Canadian-based long-haul drivers who primarily service the United States which
fall within its target market. The trucking industry has been stable over the
last several years and has experienced an increase in intercity ton-miles every
year from 1985 through 1995 and a compounded annual average growth rate of
approximately 4% over this 10-year period.
There are over 2,100 truckstops in the United States along the interstate
highway system, of which the Company believes that approximately 1,100 are
full-service truckstops that provide more than just fuel. A large number of
truckstops are affiliated with or owned by chains that maintain centralized
control over operations. Full service truckstops, generally located on major
interstate highways, offer a full range of services for drivers and fleets
including fueling facilities, certified scales, repair facilities, restaurants,
community television and game rooms, public telephones and showers. These
truckstops are the primary location at which long-haul truck drivers stop to
fuel, eat, shower, park for their rest periods, overnight stays and for layovers
between hauls. This is due to the range of services that these truckstops offer,
their location and the obvious limitations that a large truck has in stopping at
other venues such as regular gas stations, fast food restaurants, malls and
motels. As such, truckstops are the primary location at which drivers conduct
business with fleets and customers, communicate with family and friends, and
seek entertainment.
Industry data, Company research and data collected from the Company's
telephone switch indicates that the long-haul trucking industry is
telecommunications intensive. The Company believes that long-haul drivers and
fleet trucking companies spend over $2.4 billion on long distance services (not
including data, Internet and messaging) annually. According to data generated
from the Company's switch and Company research, long-
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<PAGE> 38
haul drivers that log on to the Network on average use approximately 1,200
minutes of long distance a month and have monthly expenditures of approximately
$250 for long distance telephone usage.
The high degree of telecommunications usage by long-haul trucking fleets
and drivers is a result of several operational characteristics of the industry.
The nature of the routes and operations of long-haul trucking require that
drivers be on the road for long periods of time. Company research and industry
data indicates that most long-haul truck drivers spend at least 21 days a month
on the road and earn an average of approximately $35,000 per year. Long-haul
trucking requires frequent communication between drivers, fleets and customers.
Long-haul drivers must stay in regular contact with customers and fleet
dispatchers to coordinate load pickup, delivery, and routes. At the same time,
drivers and fleets must exchange administrative paperwork, such as proof of
delivery, permits and employee payroll information (for which they currently use
regular or express mail services). Truck drivers also use telephones for
personal communications purposes to stay in touch with family and friends.
A significant issue facing the long-haul trucking industry is employee
turnover. The Company believes that many fleet trucking companies attempt to
reduce high driver turnover costs (approximately $3,000 per driver) and to
mitigate the high levels of driver turnover which are prevalent in the industry
by seeking ways to improve the quality of life for long-haul truck drivers on
the road.
Voice communication options available to fleets and drivers are either
cellular telephones or pay telephones inside the truckstop. Cellular telephones
are currently particularly costly since these drivers are away from home and
typically incur roaming charges. Pay telephones inside the truckstop are
inconvenient, lack privacy and are not capable of handling data transmission or
Internet connectivity services. Also, drivers generally cannot receive incoming
calls at these pay telephones, making it very difficult to make contact with
their dispatchers or customers. The options available to fleets for data
communications and Internet access also are limited. While other companies
provide mobile text-messaging using satellite and cellular telephone networks,
these services are limited in capability, costly and do not allow the
transmission of large amounts of data such as bills of lading, proof of
delivery, and pay check stubs. Drivers currently send these documents back to
their fleets by regular or express mail services. Express mail services are
expensive and regular mail services are slow. Facsimile services at truckstops
are not universally available and are costly. The ability to fax or
electronically transmit bills of lading and delivery information directly to and
from the truck allows fleets to reduce their billing cycle. At the same time,
the Company's research indicates that fleets have great difficulty providing
drivers with timely payroll information which frequently results in numerous
telephone communications between drivers and fleets. The Company believes that
this can be avoided if the detailed pay information is provided directly to the
driver in his cab through the Internet or other data network. As a result of
these and other factors, the Company believes that, increasingly, the Internet
will develop into a major data communications pipeline for fleets and their
drivers.
Drivers' options for entertainment while on the road are generally limited
to community television and video game rooms at truckstops. These facilities are
typically crowded, afford drivers little programming choice or privacy, and are
uncomfortable. Drivers can purchase satellite television systems for their cabs,
however, such systems have relatively high up front costs and monthly
subscription fees.
BUSINESS STRATEGY
The Company's objective is to become the leading provider of telephony,
data, Internet and entertainment services to the long-haul trucking industry.
The Company believes that the current lack of accessible and cost effective
telecommunications and entertainment options for fleets and drivers is a
significant opportunity and that the Company is well positioned to take
advantage of this opportunity.
The Company plans to achieve its objective by:
- Continuing the build-out of the PNV Network from 102 sites as of March
31, 1998 to a total of approximately 650 truckstop sites (see "-- Network
Build-Out; Truckstop Relationships and Contracts");
- Expanding its current products and services offering (see "-- Products
and Services");
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<PAGE> 39
- Enhancing the PNV Network by increasing its capacity and functionality
(see "-- Network and Technology); and
- Continuing to develop its marketing and sales program to further
penetrate the fleet and individual driver segments (see "-- Marketing").
PRODUCTS AND SERVICES
Current Products and Services
The Company is currently providing drivers and fleet trucking companies
with the following services over the PNV Network:
<TABLE>
<CAPTION>
TELEPHONE ACCESS INTERNET ACCESS AND DATA CABLE TELEVISION
<S> <C> <C>
- - Full landline quality and - Full landline quality and - Full access and cable
capability from inside the capability from inside the quality reception from inside
truck cab. truck cab. the truck cab.
- - Full local and long distance - Ability to use the telephone - 18 channels of programming.
calling. system to connect to the - Pay-Per-View channel
- - Ability to purchase Internet and to available for an incremental
incremental long distance transmit/receive data $5.00 per day at certain
minutes. through a regular modem. locations.
- - Ability to receive calls. - Availability of dedicated
- - Location service to find advertising channels.
members logged on to the - The Driver entertainment
Network. Network.
- - Voicemail.
- - Wake-up calls.
</TABLE>
35
<PAGE> 40
The following table sets forth certain information regarding prices and
services currently associated with each type of subscription offered by the
Company:
<TABLE>
<CAPTION>
"POWER PLAN"
SUBSCRIPTION
(PAID FOR BY THE
FLEET SPONSORED SUBSCRIPTION INDIVIDUAL DRIVER) MONTHLY USAGE CARD DAILY USAGE CARD
<S> <C> <C> <C>
- On-going subscription at - On-going - 30 days of usage - 24 hours of usage
$30 per month. subscription at $30 from time of first from time of first
per month. activation at $30 activation at $5
- $10 initial membership fee per month. per day.
waived. - $10 initial
membership fee - $10 initial - $10 initial
- Local and long distance waived. membership fee. membership fee.
access.
- Local and long - Local and long - Local and long
- 60 minutes of long distance access. distance access. distance access.
distance included per
month with subscription. - 60 minutes of long - 60 minutes of long - Purchased with cash
distance included distance included at a vending
- One to three year per month with per month with machine at the
contracts with minimum subscription. subscription. truckstop.
commitments.
- Second month of - Purchased with cash - Unlimited monthly
- Billed to the fleet each service is free. at a vending access to cable
month. machine at the television
- Charged every month truckstop. services.
- Unlimited monthly access to a credit card or
to cable television checking account - Unlimited daily
services. provided by the access to cable
subscriber. television
services.
- Unlimited monthly
access to cable
television
services.
</TABLE>
As part of a subscription, the user obtains a membership card and kit that
includes a telephone, 25 foot coaxial and telephone cable and an owner's manual
for a $10 fee (the fee is waived for fleet and Power Plan members). A subscriber
accesses the PNV Network by plugging the coaxial and telephone cable into the
Bollard at the parking stall at a truckstop. The subscriber then dials * and
logs on to the PNV Network. A computerized voice response prompts the subscriber
to enter the subscriber's membership number. If the subscriber is a daily or
monthly user, the computer prompts the user to enter the subscriber's daily or
monthly card number. If the subscriber is in good standing, service is
activated.
The Company's services currently consist of the following local and
long-distance telephone, voice messaging and cable television services:
Telephone services. Telephone service includes long distance, incoming
calls and free outside access (0+, 800 and local calls), as well as amenities
such as computerized wake-up calls. In January 1998, the Company successfully
started reselling incremental long distance minutes, beyond the free 60 minutes
per month included in the monthly subscription, to a select group of
subscribers. The promotional tests were successful. As of February 1998, Power
Plan members could purchase long distance telephone time by charging directly to
their existing accounts. By September 1998, the Company expects that all
subscribers will be able to charge the purchase of long distance time to credit
cards. By the end of 1998, the Company plans to deploy a $20 "value card" to
serve as an additional method of payment for both long distance and other
Network services, such as the Pay-Per-View channel. The value card will be
available at the vending machine located at each truckstop. The Company is also
pursuing a payment plan that will allow fleet drivers to purchase long distance
minutes for personal use through payroll deductions.
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<PAGE> 41
Voice Messaging and Location Services. Voice messaging and location
determination services are provided on a no-fee basis to subscribers. These
services are keyed to the subscriber's membership number utilizing the driver
location service. If a subscriber is logged on to the PNV Network anywhere in
the country, a third party can telephone the subscriber directly. The driver
location service also is useful to fleet trucking companies in tracking their
drivers. If a subscriber is not logged onto the PNV Network or is unavailable,
the third party can leave a voice message. Drivers can access the voice mail
system and retrieve their messages from any telephone by calling into the PNV
Network.
Data Communications and Internet Access. Basic data communications and
access to the Internet are available through the use of modems. For access to
the Internet, subscribers must have an existing ISP. Subscribers can access the
ISP by calling either a local number (if their ISP has a local number available
at the location where the subscriber is) or by calling a long distance number.
Cable Television. The basic cable television service features 18 channels,
including HBO1, HBO2, HBO3, ESPN, ESPN2, The Weather Channel, Discovery, A&E,
TNN, TNT, CNN Headline News, ABC, CBS, NBC and Fox. The Company also offers The
Playboy Channel (which as of March 31, 1998 was available at approximately 40%
of the truckstops as permitted by the truckstop owners) as a premium Pay-
Per-View service for an additional charge of $5.00 per day. As of March 31,
1998, the Company had experienced a 19% penetration rate for this service.
The Driver's Entertainment Network (DEN). The PNV Network has excess
capacity over which dedicated channels can be created so that advertisers and
others can broadcast information. In December 1997, the Company launched the
Driver's Entertainment Network (DEN), its music-based channel. The current
programming format consists of a two hour video loop. The Company plans to
gradually expand programming content to include informational programming and
other programming targeted at professional drivers. The Company intends to
market the DEN to advertisers such as automotive products manufacturers and
fleet trucking companies wishing to use the medium for driver recruitment or
education, and other companies doing business in the trucking industry. One
fleet trucking company has recently begun advertising on the DEN for driver
recruitment. The Company believes that the DEN offers advertisers a highly
efficient medium for penetrating an otherwise difficult to reach market segment.
Future Products and Services
The Company plans to expand its voice and data communication services by
increasing the network functionality and capacity through the installation of
T-1 lines and intelligent switches throughout the PNV Network and to major fleet
trucking companies. Expansion of the functionality of the PNV Network will allow
the Company to offer drivers and fleet trucking companies voice and data
communications and Internet access at competitive rates. See "Risk
Factors -- Expansion of PNV Network Installation and Services; Future Revenue
Streams; Minimum Requirements Contracts; Cost-Savings."
Creation of High Capacity, Low Cost Voice and Data Network. The Company
plans to create a high capacity, low cost voice and data network which will be
established in two steps. First, the Company plans to install T-1 lines at each
truckstop which will provide for more voice and data transmission capacity
compared to the current POTS and allow for dedicated long distance and frame
relay services. Use of T-1 lines will allow the Company to (i) bypass the local
exchange carrier ("LEC") and associated LEC access charges and (ii) obtain
favorable pricing from long distance carriers, essentially creating a private
network. Secondly, the Company plans to offer this private network to major
fleet trucking companies. The Company anticipates that it will be able to
connect truckstop and certain fleet terminal locations through a frame relay
link that will allow the Company to transmit voice over IP. This will allow the
Company to offer major fleet trucking companies highly effective and competitive
pricing for voice and data communications with their drivers.
Internet Access as Internet Service Provider. Expansion of the PNV Network
to include T-1 lines and frame relay will allow the Company to become an ISP.
With the increased use of the Internet for all types of commerce, the Company
believes that Internet access will become a major data communication pipeline
for fleet trucking companies and drivers and, as a result, plans to become an
ISP. As such, providing reliable low
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<PAGE> 42
cost access from inside the truck will be a valuable service to the fleet
trucking companies and drivers. The Company plans to make this service available
for a monthly fee.
T-1 Line Leases, Long Distance Services and Internet Access Contracts. The
Company recently entered into contracts with AT&T to lease T-1 lines and related
frame relay services and to purchase long distance, local and related voice
telephone services. The Company also recently entered into a contract with AT&T
pursuant to which it may purchase Internet access services in the future.
Pursuant to the contract for the lease of T-1 lines, the Company is
required to lease approximately (i) 200 T-1 lines having minimum payments,
before available discounts, of $5.1 million during the first year following the
start-up period and (ii) 300 T-1 lines having minimum payments, before available
discounts, of $7.7 million during the second and third years following the
start-up period. The start-up period ends in February 1999 or such earlier date
as to which the Company gives AT&T notice. Lease payments by the Company for T-1
lines during the start-up period will not be counted in determining satisfaction
of the required minimum dollar amounts. Discounts are available to the Company
if it satisfies the foregoing undiscounted minimum requirements. Discounts are
also available for lease payments during the start-up period. If the Company is
not able to satisfy its minimum requirements under the contract due to lower
than expected use of T-1 lines or otherwise, then the Company is obligated to
pay AT&T the difference between the minimum requirement for the applicable
period and the lease payments related to the T-1 lines actually leased by the
Company for the applicable period, both before available discounts. AT&T has
waived the installation fee for each T-1 line, but, upon disconnection of a T-1
line, the Company must pay such fee for any T-1 line not in service for a period
of at least 18 months. See "Risk Factors -- Expansion of PNV Network
Installation and Services; Future Revenue Streams; Minimum Requirements
Contracts; Cost-Savings."
The Company may terminate the contract for the lease of T-1 lines at any
time. Upon any such termination prior to the third anniversary of the completion
of the start-up period, the Company must pay to AT&T 35% of the remaining
aggregate undiscounted required minimum lease payments. However, in the event of
a business downturn beyond the Company's control, a restructuring of the PNV
Network that results in the use of other AT&T services, or certain limited
circumstances that significantly reduce the volume of telecommunications
services required by the Company and that will make the Company unable to meet
its commitment under the contract, AT&T has agreed to cooperate with the Company
to develop a mutually agreeable alternative that will satisfy the needs of the
Company and AT&T and will comply with all applicable legal and regulatory
requirements.
Pursuant to the contract for long distance and other telephone services,
the Company will purchase long distance, local (in those states where available)
and voice telephone services, including incoming toll-free 800 lines, to the
Company for a two year term. While the total amount payable pursuant to the
contract will vary with usage, the contract requires the Company to purchase
each month, at minimum, services having an undiscounted price of $40,000 based
upon standard AT&T rates. The Company has negotiated discounts off the standard
AT&T rates based upon certain usage levels. While the Company may terminate this
contract for any reason, the Company is obligated to pay to AT&T upon
termination the remaining aggregate undiscounted required minimum amount. See
"Risk Factors -- Expansion of PNV Network Installation and Services; Future
Revenue Streams; Minimum Requirements Contracts; Cost-Savings."
Pursuant to the Internet access services contract, for a period of three
years the Company may purchase certain standard AT&T Internet access services.
No services will be provided, and the Company will have no obligation to make
payments to AT&T, unless and until the Company submits a purchase order, agreed
to by AT&T, for particular services.
NETWORK BUILD-OUT; TRUCKSTOP RELATIONSHIPS AND CONTRACTS
The Company intends to continue to install the PNV Network from 102 sites
as of March 31, 1998 to a total of approximately 650 full-service truckstop
sites. Approximately half of these locations will have an average of 100 to 150
parking stalls per truckstop and approximately half will have fewer than 100
parking stalls. In order to achieve contractual milestones, the Company will
initially focus its build program on the
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<PAGE> 43
larger truckstops. The Company believes that its ability to significantly
increase subscription sales to drivers and fleet trucking companies is dependent
on the availability of the PNV Network at a critical mass of truckstops so that
drivers can access the PNV Network at least seven or more times during a month.
The Company currently believes that it will achieve "critical mass," once it has
installed the PNV Network at approximately 100 to 150 additional truckstops
(making the PNV Network available at between approximately 200 and 250 sites).
At such time, the Company believes that the number of subscribers that will
purchase monthly subscriptions, renewal rates and sales to fleet trucking
companies will increase substantially. The Company believes that installations
at the next 100 to 150 additional sites will be complete by June 1999. See "Risk
Factors -- Expansion of PNV Network Installation and Services; Future Revenue
Streams; Minimum Requirements Contracts; Cost-Savings."
There are over 2,100 truckstops in the United States located on the
interstate highway system of which the Company believes there are approximately
1,100 full service truckstops (providing more services than just fuel). The
Company currently has long-term contracts to install the PNV Network at
approximately 730 of such truckstops. The Company has entered into these
long-term contracts pursuant to which eight of the 10 largest full-service
truckstop chains and associations in the United States, including TA Operating
Corporation, Petro Stopping Centers, Inc., Pilot Corporation, and Professional
Transportation Partners, LLC, as well as with several other associations
representing independent truckstops have agreed to permit the Company to offer
its services to their members on an exclusive basis. The Company's contracts to
install the PNV Network at approximately 340 truckstops are with associations
whose members consist of smaller truckstop chains generally having fewer than 10
truckstops. These associations act as purchasing agents for their members. The
Company entered into contracts with these associations as an efficient manner in
which to gain access to and establish a relationship with numerous small to
medium size truckstops. These associations do not have authority to legally bind
their members. Therefore, while each association has granted the Company the
exclusive right to provide cable television and telephone services to its
members, this contractual right is not binding on each member. Prior to
installation of the PNV Network at an association member's truckstop, the
Company enters into a contract with the association member granting the Company
the exclusive right to install the PNV Network at the member's truckstops.
The Company has contracted with truckstop chains, independent truckstop
owners and associations of truckstop owners. While most independent truckstop
owners who own a single truckstop execute a standard contract, the contracts
executed by truckstop chains that operate multiple truckstops vary
significantly. The Company offers a standard contract to the truckstop owners
and associations generally consisting of a term ranging from five to ten years
with an automatic five year renewal. Pursuant to the terms of the standard
contract, the Company is granted the exclusive right to provide
telecommunications and entertainment services to all of the owners' truckstops
for a mutually agreed period of time which, if the Company achieves its
contractual build-out milestones, generally extend for 10 years. Two owners of a
total of less than 15 truckstops did not grant the Company the exclusive right
to install the PNV Network at all of their truckstops. The Company pays
commissions to truckstop owners/operators based upon a percentage of its
revenues less specified costs on a negotiated basis. See "Risk
Factors -- Dependence on Contractual Relationships with Truckstops" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."
A significant portion of the 21 or more days per month a driver spends on
the road is spent at truckstops as (i) there frequently are restrictions on the
roads and streets on which a long-haul truck can travel; (ii) many truckstops
have fueling agreements with fleet trucking companies that require refueling at
certain specified truckstops; and (iii) many full service truckstops provide a
variety of services to long-haul truck drivers, including showers, pay
telephones, television rooms and stalls for parking trucks. The Company believes
that the average truckstop represents a substantial capital investment. Despite
the amount of capital invested in the parking lot, the typical truckstop does
not generate any revenue from that asset (other than a limited number of
truckstops which charge for parking). At the same time, margins on fuel have
been under pressure, forcing truckstop operators to differentiate their
truckstops from their competitors and find other sources of revenue. The Company
believes that the PNV Network offers truckstops: (i) an amenity for long-
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<PAGE> 44
haul truck driver customers; (ii) a means for competitive differentiation; and
(iii) the ability to generate incremental revenue through the revenue and
profit-sharing provisions of the contracts.
The table below summarizes the Company's current contracts with truckstop
owners and operators, and truckstop associations as of March 31, 1998.
<TABLE>
<CAPTION>
TOTAL NO. OF LOCATIONS
NO. OF LOCATIONS INSTALLED
---------------- ----------------
<S> <C> <C>
TRUCKSTOP CHAINS AND OWNERS
TA Operating Corporation.................................... 123 14
Pilot Corporation........................................... 119 30
Petro Stopping Centers, Inc................................. 39 4
Travelports of America, Inc................................. 16 8
All American Travel Plaza's, Inc............................ 10 6
MAPCO Marketing, Inc........................................ 3 1
Sapp Brothers Truckstops, Inc............................... 7 6
Bosselman's Travel Plazas................................... 3 3
Hamburg Enterprises, Inc.................................... 5 2
Bruce's Truckstops, Inc..................................... 4 0
Highway Service Ventures, Inc............................... 4 4
Welsh Oil, Inc.............................................. 4 4
Tewel Corporation........................................... 4 1
Smithton Interstate Corporation............................. 3 0
Stony Ridge Travel Plazas................................... 2 0
Baggett's Travel Plaza...................................... 2 1
Additional Owners of a Single Truckstop..................... 38 18
--- ---
Subtotal.......................................... 386 102
TRUCKSTOP ASSOCIATIONS
Professional Transportation Partners, LLC................... 128 28(1)
North American Truckstop Network, Inc....................... 109 26(1)
Ambest, Inc................................................. 107 8(1)
---
Subtotal.......................................... 344 -0-
Total............................................. 730
===
</TABLE>
- ---------------
(1) Pursuant to the Company's contract with the association, the Company has
contracted directly with the specified number of truckstop owners to install
the PNV Network. Accordingly, these truckstop association locations are also
included under the appropriate truckstop chain referenced in the section of
this table entitled "Truckstop Chains and Owners."
As of March 31, 1998, the Company is in negotiations to enter into
additional exclusive contracts with several truckstop chains and independent
owners that collectively own more than 70 truckstops.
MARKETING
The Company believes that providing a cost effective, accessible
telecommunications and entertainment network that is deployed at a large number
of truckstops throughout the country will be a valuable service to long-haul
drivers and long-haul fleet trucking companies. The Company's marketing efforts
seek to communicate appropriate elements of this value proposition to each
segment of the target market and the Company's distribution strategy is designed
to reach each segment of the market efficiently. As the functionality and size
of the PNV Network grows, the Company plans to adjust its marketing and
distribution methods to emphasize its strengths. While the Company believes that
its primary target market consists of 800,000 to 1,000,000 long-haul drivers,
the Company has divided this target market into two broad segments, individual
drivers and fleet trucking companies. The fleet segment is further divided into
three segments based on fleet size. The Companies marketing strategies to each
segment of the target market are as follows.
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<PAGE> 45
Marketing to Fleets. The Company believes that as the functionality and
size of the PNV Network expands, selling to medium and large fleet trucking
companies will increasingly become the most efficient means to add new
subscribers and to increase revenues from new services as they come on line. In
selling to fleet trucking companies, the Company plans to negotiate for
contracts of at least one year in length containing minimum subscription
commitments. The Company has successfully used this model and recently entered
into contracts with five fleet trucking companies that have committed to a
minimum of 2,300 drivers for terms ranging from one to three years, subject to
certain earlier termination rights. See "Risk Factors -- Ability to Sustain and
Increase Subscription Sales; Retention."
LARGE FLEETS (OVER 1,000 TRUCKS). Company research indicates that there
are approximately 50 fleet trucking companies in this segment that operate, in
the aggregate, 140,000 trucks. The marketing message to this segment is based on
long-term partnerships and the fact that the Company is developing a
telecommunications network designed to meet the needs of the fleet.
Specifically, improvement in driver retention by enhancing drivers' on-road
lifestyle with in-cab voice, data and cable entertainment, as well as telephone
access inside the truck cab to reach the driver efficiently and effectively, are
identified as immediate benefits to the fleet. Equal weight is given to the
future expansion and capability of the enhanced PNV Network. The potential for
building high capacity, low cost voice and data links between fleet centers and
a large number of truckstops is highlighted, as well as the fact that this
network is also a viable gateway onto the Internet from inside the truck. The
distribution method for reaching this segment involves multi-level selling and
relationship building at various organizational levels of the fleet trucking
company account. A senior-level major account representative coordinates sales
efforts. The Company currently has one such person on staff. The Company's
senior management, including the President and COO, are also actively involved
in contacting their counterparts at the target account. One of the Company's
five fleet contracts is with a large fleet.
MEDIUM SIZE FLEETS (100 TO 1,000 TRUCKS). Company research indicates that
there are approximately 892 fleet trucking companies in this segment who
operate, in the aggregate, over 212,000 trucks. The marketing message to this
segment is the same as to large fleet trucking companies and is aimed at senior
management and/or owners. Commercial sales representatives are the primary
channel for reaching this segment. The Company currently has three such
representatives on staff. The Company also may contract with independent sales
agents to sell to this segment. Company representatives are compensated with a
base salary plus commissions based on sales performance. Independent
representatives will be compensated on a commission basis. Four of the Company's
five fleet contracts are with medium size fleets.
SMALL FLEETS (UNDER 100 TRUCKS). Company research indicates that there are
over 18,000 fleet trucking companies in this segment who operate, in the
aggregate, over 280,000 trucks. This segment represents a very large but highly
fragmented sector of the target market. The marketing message to this segment is
aimed at the owner of the business. The primary distribution channel for
reaching this segment will be telemarketing and direct mail. The Company
believes that this segment is too fragmented and each individual company is too
small to warrant sales representatives salaries and travel costs. Telemarketing
leads will be generated through contact lists of targets in this segment,
working with independent telemarketers who have had prior experience selling
communication and technology services into the trucking and trade advertising
markets.
Marketing to Individual Drivers. The key marketing message to this segment
of the market is the benefits of telecommunications and cable television service
in the privacy and comfort of the truck cab at a very low cost. For
approximately $1 per day, typically significantly cheaper than the cost at home
for cable and telephone, a driver can obtain telecommunications and cable
television service while parked at a truckstop. The distribution channels for
reaching this segment are: (i) vending machines at the truckstops which dispense
daily and monthly memberships; (ii) field sales representatives at the larger
stops who sell Power Plan subscriptions; and (iii) telemarketing representatives
who sell Power Plan memberships to potential subscribers who call in to the
numbers provided on brochures and other advertising materials. The field sales
organization has three objectives: (i) generate Power Plan and machine sales;
(ii) maintain strong relationships with local truckstop personnel; and (iii)
ensure the PNV Network is fully operational at each truckstop.
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<PAGE> 46
As a result of its marketing programs to date, the Company believes that
the best method of advertising to truck drivers is at the truckstop through
point of sale merchandising, signage, brochures and similar materials. The
Company has developed extensive materials to support this program and has
successfully deployed it in the field. Call volume into the telemarketing center
has increased and was over 1,800 calls during the first quarter of 1998. The
Company is also working with truckstop operators, particularly the large
national chains, to institute standardized merchandising programs including
incentives for truckstop employees to sell Power Plan subscriptions or to direct
potential customers to telemarketing.
Field Sales Force. The field sales organization consists of Regional
Managers (RM) that oversee the Eastern and Western areas, Area Sales Managers
(ASM) and site representatives that report to the ASM at select truckstops. As
of March 31, 1998, the Company has two RMs, 12 ASMs and approximately 60 sales
representatives. Each RM has overall sales and maintenance responsibility for
approximately 50 locations. The ASM's operate as area general managers, leading
site representatives who are responsible for generating sales and helping to
maintain strong truckstop relationships, and a technical support person that
makes sure that the PNV Network is fully operational. Sales representatives are
deployed at large high traffic truckstops to directly sell Power Plan
subscriptions. They strategically set up a podium at the truckstop with
prominent Company signage and market and sell to drivers as they pass from the
lot into the truckstop. The sales representatives report to an ASM who generally
has control over eight to ten locations. The ASM has overall responsibility for
ensuring that all sites under their control are properly manned and have proper
sales and marketing material. Each ASM also has responsibility for ensuring
technical maintenance of the PNV Network at their sites. A maintenance person is
assigned to each ASM and travels with them to each site to perform routine
inspections and repairs. Sales representatives and ASMs are compensated with a
base salary plus commissions for sales. The Company plans to hire additional
RMs, ASMs and sales representatives as the size of the PNV Network grows.
Telemarketing. The Company currently uses telemarketing to sell on-going
Power Plan subscriptions. Leads for telemarketing are generated through
advertising in trade magazines, sales materials distributed at the truckstops
and through an upselling program aimed at current monthly/daily users. As part
of the upselling program, monthly/daily users are diverted to a telemarketing
representative when they log on to the network. The representative welcomes them
to the PNV Network and attempts to upsell them to Power Plan. The Company plans
to expand its telemarketing effort to small fleet trucking companies. Leads will
be generated through direct mail campaigns and trade advertising. As part of its
efforts, the Company may utilize independent agents who have had prior
experience selling communications and technology services into the trucking and
trade advertising markets.
Voice Response Unit. The Company believes that the voice response unit,
which all users interact with when they log on to the PNV Network, is a highly
effective marketing tool. When a user logs on the PNV Network, an audio message
is played that informs the user of options to purchase long distance services.
Users will hear a message every time they activate service. The Company has
complete flexibility in targeting specific messages to selected groups of users.
For example, a subset of all subscribers can be targeted for a campaign to
market a high usage long distance package and a special message can be played
only for that group. This model has already been successfully used to sell long
distance minutes to Power Plan subscribers.
Driver Referral Programs. The Company believes that word of mouth is a
major element in increasing product awareness among drivers. The Company
recently launched a driver referral program that awards 60 minutes of long
distance to existing subscribers who refer a friend or colleague who signs up
for the Power Plan. The Company plans to run various programs and contests that
reward referrals by drivers.
NETWORK AND TECHNOLOGY
Current PNV Network Design. The current architecture of the PNV Network
consists of a Site Server at each truckstop connected to the Host Server. The
Site Server controls and manages all interaction with the
42
<PAGE> 47
subscriber, telephone communications, cable television activation and
communications with the Host Server. The following diagram depicts the current
architecture of the PNV Network:
CURRENT SYSTEM ARCHITECTURE
[THERE APPEARS HERE A DIAGRAM DEPICTING THE CURRENT ARCHITECTURE OF THE PNV
NETWORK]
The current architecture of the various components of the PNV Network and
related services are described below.
PC Based Communications Server. The Site Server located at each truckstop
is both the controlling computer and intelligent private branch exchange (PBX).
Using off-the-shelf telephony boards, each telephone extension and outside
telephone line is connected and controlled by the Site Server. Although the
hardware architecture utilizes off the shelf components, the real power of the
system comes from the proprietary software developed by the Company (the "PNV
Software"), which controls all aspects of user interaction. Unlike a standard
PBX, once a user picks up their telephone, all interaction with the user is
controlled by the PNV Software which is more fully described below.
Host Server. The Host Server located in Coral Springs, Florida maintains
control of all membership information and determines individual membership
privileges. The Site Server communicates by dial-up modem to the Host Server
each time a member attempts to log on to or log off of the PNV Network. The
membership number is checked in the database and specific information about the
user such as their membership expiration date, number of long distance minutes
available and voice mail messages is downloaded to the Site Server for
subsequent interaction with and access by the user.
Proprietary Software. The PNV Software was developed in-house by the
Company and performs numerous functions including: (i) subscriber log on entry;
(ii) subscriber log on host server validation; (iii) membership information
maintenance, including membership cards and renewal card tracking; (iv) log on
information communicated to subscribers such as expiration date, stall number,
and call back number; (v) wake-up call notification; (vi) cable television
system control including activation of standard cable and activation of premium
channels; (vii) outbound call control and tracking; (viii) least cost call
routing; (ix) prepaid long distance call control and tracking including account
balance maintenance; (x) extension to extension call control and tracking; (xi)
call detail record storage and reporting; (xii) inbound call control and
tracking; (xiii) subscriber location tracking and voice mail services; (xiv)
subscriber voice messaging with broadcast capability; and (xv) stall maintenance
tracking. Unlike a standard PBX system with computer interfaces, all aspects of
the PNV Network are programmable, allowing for full upgradability and
flexibility as new capabilities are needed or made available in the future.
Telephone Wiring. The telephone jack in each Bollard connects by twisted
pair wiring to a pedestal box ("PED Box") that in turn is connected to the
telephone switch and Site Server inside the truckstop. The Site Server is
connected via trunk interface cards to the Public Switched Telephone Network
(PSTN) through POTS lines. These POTS lines are used to connect all local and
long distance calls. Although there is no limit on the number of extension to
extension calls within the truckstop, the number of outside calls is limited to
the number of POTS lines available at each site which currently averages 12 per
truckstop. Additional POTS lines can be added to meet telephone usage demand at
a particular truckstop.
Billable Long Distance Call Management. Unlike prepaid long distance card
companies, the Company has the advantage of having an intelligent switch
controlling each call at the place of origination and can thereby reduce their
cost per call. Prepaid calling card vendors require the user to dial an 800
number, enter their card and access numbers and then dial the number they wish
to dial. Thus, they are actually making two calls each time. An inbound call to
the calling switch and then an outbound call from the calling switch to the
applicable number. All completed calls have double costs associated with them.
If all calls are busy or not answered, the calling card company must absorb the
costs of the inbound call.
The Company believes that its long distance service uses a unique approach
by having the equivalent of a prepaid calling card switch at each site. All call
management functions including adding new minutes,
43
<PAGE> 48
deducting minutes for each call and terminating a call when all minutes have
been used are performed by the Site Server. Since call management is performed
locally at each site, the user can simply make long distance calls by dialing
9,1 + number. The call is originated from the truckstop directly to the
applicable number as a single call. Therefore, if there is no answer or the line
is busy, the user is not billed and the Company does not incur the cost of an
incoming call. This feature greatly reduces the cost per call for the Company as
compared to other prepaid calling card vendors.
Cable Television Wiring. The television plug-in terminal in each Bollard
is connected through a single coaxial cable to the PED Box. The PED Box is
connected through a single coaxial cable to the cable head end system inside the
truckstop.
Cable Television Head End and Wiring. The cable head end system is
comprised of a satellite dish connected to an individual receiver. Other
conventional methods of Off-Air antennas and C-Band technologies are also used
in supplying channels to the user. An encrypted control unit is used to control
which users have access to Pay-Per-View services.
Proposed Enhanced PNV Network Design. Following the completion of the
Offering, the Company plans to significantly enhance the functionality and
capacity of the PNV Network to expand the scope of services offered and reduce
operational costs. See "Risk Factors -- Expansion of PNV Network Installation
and Services; Future Revenue Streams; Minimum Requirements Contracts;
Cost-Savings." In connection with these enhancements, although the basic
architecture currently in place will remain the same, certain additional
components will be added. The following diagram depicts the proposed enhanced
PNV Network:
PROPOSED SYSTEM ARCHITECTURE
[THERE APPEARS HERE A DIAGRAM DEPICTING THE PROPOSED ENHANCED PNV NETWORK]
The planned architecture of the additional components of the enhanced PNV
Network and related services are described below.
Dedicated T-1 Access at Truckstop. The planned addition of a T-1 line at
each truckstop affords additional telecommunications capacity and reduced
operational costs. Each T-1 line offers 24 channels of long distance voice or
data capability at a fixed cost. All 24 channels can be designated as voice
channels for a flat monthly fee. Any number of the 24 channels can be designated
for data at an additional cost. The ability to designate between voice or data
channels allows flexibility as requirements change.
Dedicated Long Distance Access at Truckstops. Dedicated long-distance
service offers distinct advantages over existing switched services. First, the
cost of long distance minutes will be reduced from current rates because a
dedicated T-1 bypasses the LEC and the associated LEC access charges. In
addition, the Company believes that it will be able to obtain more favorable
pricing available from long distance carriers. This more favorable pricing is
only available when either the originating or terminating numbers have dedicated
T-1 access from the carrier. Finally, transmission of long distance calls over
the T-1 reduces the need for POTS lines and therefore reduces costs per site.
Frame Relay Network. The Company plans to connect each truckstop via frame
relay in a hub and spoke configuration and to increase the bandwidth to each
truckstop as traffic warrants. Although frame relay will be the transport
method, the Company currently expects that the network protocol will be Transmit
Control Protocol/Internet Protocol. The Company plans to replace the current
dial-up access to the Host Server with real-time transactions over the PNV
Network. This will speed up user access to the system and greatly increase
system flexibility. Additionally, the Company plans to perform site system
monitoring and remote access over the frame network, greatly enhancing site
manageability.
Dedicated Long Distance and Data Transmission to Fleets. The Company plans
to offer installation of network nodes at select large fleet locations. These
network nodes will consist of a frame relay connection to a communication server
developed by the Company. The communication server will in turn connect to the
fleet's PBX. When a driver calls their fleet from any telephone connected to the
PNV Network, the driver will simply enter a four-digit extension. The system
will route the call to the fleet PBX and it will be like any other incoming
call. Additionally, if the fleet wishes to contact a driver, the fleet can
simply call an extension that
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<PAGE> 49
connects to the Site Server and enter the drivers membership number. If the
driver is currently logged on to the PNV Network, the call will be routed over
the frame network to the drivers personal telephone in their cab. If they are
not connected to the PNV Network at that time, the fleet can leave a voice mail
message.
Internet Access. As part of the Company's plan to become an ISP, the
Company intends to equip each truckstop with a modem bank for locally
terminating Internet access calls. This will give the Company the ability to
offer local Internet access at all truckstops. Once a user connects to a local
modem, the data will travel over the frame relay network and then to the
Internet. The Company expects that this feature will generate additional
revenues through monthly fees and reduce operational costs if the Company
succeeds in its plan to become an ISP. Since connections between the member and
the on site modems are via the local wiring, no POTS lines will be used. The
user only ties up bandwidth on the frame network when active. Idle users have no
effect on the frame network bandwidth.
Voice Over IP. The Company intends to equip each site additionally with a
voice compression/de-compression capability allowing the transfer of point to
point voice calls over the frame relay network. The Company intends to use
industry standard voice compression allowing near toll quality voice to travel
over the network. The Company plans to initially use this system for calls
between truckstops and the Company's offices, as well as for log-on and voice
response units. Subscriber service calls will transfer over the data network and
calls to drivers from the voice mail/driver locator system will be routed
directly to the drivers telephone rather than the user having to hang up and
dial the callback number. The advantage of this type of call is that the cost of
usage is flat. The existing data network carries the call as additional traffic
on the network. If network bandwidth is unavailable at the time, such as during
peak hours, the call can be routed as a voice call over the T-1. This allows the
Company the ability to build network capacity based on normal usage patterns
instead of over-engineering capacity to handle peak times.
Access Telephones Inside Truckstop. To offer greater access to the PNV
Network, the Company intends to install telephones inside the truckstop at
certain locations that are connected to the PNV Network. Most drivers stop
several times a day, but may only be off the road an hour each time. This hour
is spent inside the truckstop at the restaurant or other areas. Therefore, to
allow members to use the PNV Network as often as possible, the Company plans to
install member-only telephones, both wired and 900 MHz wireless, throughout the
inside of the truckstop. The member would simply log on to the PNV Network via
these telephones just like the telephone in the cab. All calling features will
be available, including local calls, 800 calls, billable fleet calls, billable
personal long distance calls and inbound calls.
COMPETITION
General
The Company believes competitive entry in its target market is already
difficult and will become even more difficult as the Company: (i) enters into
additional exclusive long-term contracts with truckstop owners and operators;
(ii) builds out additional sites; and (iii) increases its market penetration and
signs additional fleets to contracts. The Company believes that deploying an
integrated voice, data, Internet and cable network designed to address the needs
of the long-haul trucking industry will be difficult to duplicate and will place
the Company in a position to become the leading provider of voice, data,
Internet and entertainment access to the long-haul trucking industry.
Telecommunications
In the voice and data communication arena, the Company competes with
various elements of other providers' offerings based on ease of access,
functionality and cost. The Company's competitive advantage with respect to each
provider varies and is outlined below.
Public pay telephones. The Company believes that drivers currently use pay
telephones located at truckstops for a significant number of the calls they
make. The Company believes that the ability to offer telephone access at a
comparable cost to pay telephones in the privacy and convenience of the truck
cab is a significant competitive advantage when compared to public pay telephone
access which is generally in an
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<PAGE> 50
environment that lacks privacy, consistent availability, Internet and data
connectivity or a means to receive calls.
Cellular telephones. The Company believes that it can successfully compete
with cellular telephones. Cellular service is not always available in more
remote truckstop locations. Even when cellular service is available at a
truckstop, the Company's in-cab access provides comparable convenience and more
robust functionality at a much lower cost and higher sound quality. Cellular
telephones are expensive to use for drivers, particularly due to the roaming
charges that drivers usually incur when they are away from home and with higher
cost per minute charges than either pay telephones or the Company's service.
Also, cellular telephones have limited data transmission capability and are not
cost efficient for transmission of large volumes of data. The Company
understands that one company, HighwayMaster, resells cellular telephone service
to provide both voice and data communication to the cab. According to
HighwayMaster's Annual Report on Form 10-K for the year ended December 31, 1997,
approximately 33,000 units were installed and each unit requires an initial
payment of approximately $1,995 and costs $41 per month plus $0.53 per minute
for voice and $0.48 per minute for data to operate. The Company believes that
one of the fleets with which it has a contract utilizes the HighwayMaster
service as well as the PNV Network.
Long distance service cards, pre-paid cards, and toll free numbers. The
Company's long distance services compete with providers of long distance cards
and pre-paid cards such as AT&T and MCI. The Company believes that it currently
sells long distance telephone time to individual drivers at competitive rates.
The Company also competes with providers of toll free (800 and 888) numbers that
fleets or even individuals use to call fleet headquarters or home. The Company
believes that it can successfully compete with these providers since its
dedicated long distance T-1 network will allow very competitive rates to both
fleets and drivers. The Company believes that by: (i) providing competitive
rates; (ii) allowing purchases through the voice response unit in the truck; and
(iii) providing multiple payment options, the Company can increase the amount of
long distance services sold. The Company has already successfully sold long
distance minutes to a select group of Power Plan members.
Qualcomm OmniTRACS. Qualcomm's OmniTRACS service, a satellite based
system, is used primarily for mobile vehicle location and two-way text
messaging. Based on publicly available data, the OmniTRACS service has an
installed base of approximately 210,000 units in 32 countries worldwide, of
which the Company believes that over 150,000 units are installed in the United
States. This service addresses the trucking fleets' need for real-time mobile
text communication. The Company believes that the PNV Network and OmniTRACS
service are complementary to each other. The Company believes that Qualcomm's
subscribers may find it cost efficient to also subscribe to the PNV Network to:
(i) transmit certain large amounts of data over the PNV Network rather than
transmitting all data by satellite over the Qualcomm service, (ii) have Internet
access, and (iii) have personal communication capabilities. The Company believes
that one of the fleets with which it has a contract utilizes the OmniTRACS
service as well as the PNV Network.
Internet/e-mail kiosks inside the truckstop. The Company believes that
there is a company that has begun installing Internet/e-mail kiosks in
truckstops. The Company believes that these kiosks do not pose a significant
competitive threat since they will operate in the same fashion as pay telephones
with limitations in privacy, availability, and convenience. The Company believes
that this company is in the early start-up phase of its business. The Company
believes that it can compete effectively with this service based on its
capability to provide Internet access in the privacy of the truck cab at
competitive rates. The Company believes that currently there are no other viable
options available that provide Internet connectivity from the truck cab.
Entertainment
With respect to entertainment, the Company's competition currently consists
of entertainment alternatives located outside the truck cab and primarily in the
truckstop. The Company's competitive position with respect to existing and
potential entertainment alternatives is outlined below.
Televisions and game rooms inside the truckstop. Community television and
game rooms inside the truckstop are the most readily available entertainment
alternatives for long-haul truck drivers. These rooms
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<PAGE> 51
offer no privacy and limited choice in programming and are typically crowded and
smoke-filled. The Company believes that it can successfully compete against this
alternative by offering full cable television programming in the privacy and
comfort of the cab.
Satellite dishes. A small number of professional truck drivers have
purchased direct broadcast satellite dishes to receive television programming in
their cab. Satellite dishes have high up-front costs (approximately $200 --
$700) and monthly usage fees of approximately $30 per month. They are awkward to
use in the long-haul trucking environment since the driver must remount and
realign the dish every time the driver parks. The Company believes that the
sensitive electronics within the equipment also may not survive long in the
high-vibration environment of a moving truck and the truck's engine is usually
running even in the parking lot, so the dish may vibrate which could inhibit
high-quality reception. The Company believes that it can successfully compete
with satellite dishes since its bundled services include telecommunications
service in addition to cable television programming for a comparable price and
since the Company's service is easier to use and more reliable.
Local cable television operators. The Company does not view local cable
television operators as a likely source of competition due to: (i) federal and
local regulations on uniform programming and pricing within franchise areas; and
(ii) programming agreements that commonly prohibit resale. Cable providers to
such users as residential apartment buildings could seek to compete by offering
these services to truckstops; however, the Company believes these operators are
unlikely to have the capital or experience to compete nationwide or offer the
range of services provided by the Company.
REGULATORY MATTERS
The FCC and relevant state regulatory authorities ("PSC's") have the
authority to regulate interstate and intrastate telephone rates, respectively,
ownership of transmission facilities and the terms and conditions under which
certain of the Company's telephone service offerings are provided. Federal and
state regulations and regulatory trends have had, and in the future are likely
to have, both positive and negative effects on the Company and its ability to
compete. In general, neither the FCC nor the relevant state PSC's currently
regulate the Company's domestic long distance rates or profit levels, although
either or both may do so in the future. There can be no assurance that changes
in current or future Federal or State regulations or future judicial changes
would not have a material adverse effect on the Company's business, financial
condition or results of operations.
Federal laws and FCC regulations apply to interstate telecommunications
(including international telecommunications that originate or terminate in the
United States), while particular state regulatory authorities have jurisdiction
over telecommunications originating and terminating within the state.
The FCC may regulate the Company's current telephone service offerings as a
non-dominant carrier with respect to both its international and domestic
interstate long distance services, unless the Company is deemed to be an agent
or private network operator, and not a common carrier. In the domestic, as
distinguished from the international sector, the FCC abstains from closely
regulating the services and charges of non-dominant carriers. Nevertheless, the
FCC acts upon complaints against such carriers for failure to comply with
statutory obligations or with the FCC's rules, regulations and policies. The FCC
also has the power to impose more stringent regulatory requirements on the
Company and to change its regulatory classification. In the current regulatory
atmosphere, the Company believes that the FCC is unlikely to do so with respect
to the Company's international or domestic interstate service offerings.
The Company, as a non-dominant carrier, has "blanket" authority to enter
the domestic long-distance market without prior FCC approval, but must obtain
specific authority to enter the international market. In addition, the Company
is required to file with the FCC domestic and international tariffs containing
charges and related practices, regulations and classifications. The FCC presumes
the tariffs of non-dominant carriers to be lawful. The FCC could, however,
investigate the Company's tariffs, upon its own motion or upon complaint by a
member of the public. As a result of any such investigation, the FCC could order
the company to revise its tariffs, or the FCC could prescribe revised tariffs.
With respect to domestic long-distance services
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provided by the FCC has ordered non-dominant carriers to withdraw their tariffs,
but that order has been stayed pending review by a court of appeals.
Interstate telecommunications carriers are subject to a number of other
federal regulatory obligations and reporting requirements, including obligations
to contribute to universal service and other subsidy funds, to permit resale of
their services by other carriers, and to take certain steps to protect
consumers. While the Company does not believe the burdens imposed by federal
regulations will be onerous, failure to comply with applicable regulations could
result in fines or other penalties, including loss of authority to provide
interstate service.
The intrastate operations of the Company may be subject to various state
laws and regulations. Most states require the Company to apply for certification
to provide intrastate telecommunications services, operator services, payphones
or competitive local exchange services or to register or be found exempt from
regulation, before commencing intrastate services. Most states also require the
Company to file and maintain detailed tariffs listing their rates for intrastate
service. Many states also impose various reporting requirements and/or require
prior approval for transfers of control of certified carriers, assignment of
carrier assets, including customer bases, carrier stock offerings, incurrence by
carriers of significant debt obligations and acquisitions of telecommunications
operations. Other regulatory requirements may mandate that the Company permit
resale of its services by other companies, make payments to intrastate universal
service and similar funds, and take certain steps to protect consumers.
Certificates of authority can generally be conditioned, modified, canceled,
terminated and revoked by state regulatory authorities for failure to comply
with state law and/or rules, regulations and policies of the state regulatory
authorities. Fines and other penalties also may be imposed for such violations.
Although the Company has not determined whether its current and anticipated
telephone service offerings are subject to regulation by all state and federal
regulatory authorities, the Company is currently in the process of obtaining
authority, pursuant to regulation, certification, tariffs, notifications, or on
an unregulated basis, to provide intrastate interexchange service in the 48
contiguous states and Hawaii. The interpretation and enforcement of such laws
and regulations in relation to the Company's current and future service offering
may vary, and there can be no assurance that the Company will be in compliance
with all such laws and regulations at any one point in time. However, the
Company intends to meet any filing requirements to which it may be subject.
In the future, when the enhanced PNV Network is fully deployed, the Company
may decide that it would be advantageous to have the status of a competitive
local exchange carrier (CLEC) in some or all of the states in which it operates,
or some states may require the Company to register or seek certification as a
CLEC. Current regulation provides CLECs with certain benefits, such as the right
to interconnect with incumbent LECs (ILECs) on just, reasonable and
non-discriminatory terms, access to the unbundled network elements of ILECs at
cost-based rates, and the ability to purchase (for resale) the ILECs' retail
telecommunications services at a significant wholesale discount (determined by
the state PSCs). CLECs are also subject to certain regulatory obligations, which
differ by state, but which include the obligations to interconnect with and
permit resale of their services by other telecommunications carriers, to provide
access to their poles, ducts, conduits and rights-of-way to competing service
providers, and to provide number portability so customers may switch their LEC
without changing their telephone number.
Various state and federal regulatory factors may have an impact on the
Company's ability to attract customers. Many of the rights and obligations
created by statute and regulation are subject to ongoing regulatory
implementation proceedings and review by the courts, and are subject to change.
Changes to some regulations could benefit the Company, while other changes could
make it more difficult for the Company to compete.
Cable television companies are subject to extensive governmental
regulation. The Company does not believe that it is subject to such regulations.
However, in the event the Company is required to comply with such regulations,
the expense, potential delay and management distraction potentially resulting
from the compliance process could have a material adverse effect on the
Company's results of operations and financial condition.
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<PAGE> 53
PROPRIETARY RIGHTS
The Company believes that recognition of its products and services is an
important competitive factor in its industry. Accordingly, it promotes (or
intends to promote) the following in connection with its marketing activities
and holds or has filed an application for a United States trademark registration
for the following: "PARK 'N VIEW," "INCAB PNV," "PNV USA," "YOUR CAB. YOUR
CABLE. YOUR CALL," "PARK 'N VIEW" (with design), "DEN" (with design), and "WHERE
SMART DRIVERS STAY CONNECTED."
The Company regards the PNV Software as proprietary and attempts to protect
it as a trade secret. The Company holds no patents or copyrights on its software
technology.
EMPLOYEES
As of March 31, 1998, the Company had 151 employees, including 19 part-time
employees, none of whom are represented by a collective bargaining agreement.
The Company considers its employee relations to be good.
PROPERTIES
The Company is headquartered in Coral Springs, Florida, where it leases an
approximately 21,000 square foot facility in which its administrative offices
and warehouse facility are located. The Company currently leases an
approximately 11,650 square foot facility in Ft. Lauderdale which previously
served as its headquarters and warehouse facilities prior to moving to Coral
Springs. The Company has sublet the Ft. Lauderdale facility.
LEGAL MATTERS
The Company is not currently a party to any legal proceedings. From time to
time, the Company may be involved in legal proceedings relating to claims
arising in the ordinary course of business. Pursuant to the standard contract
between the Company and the truckstop owners and operators, both the Company and
the truckstop owners and operators are required to maintain at least $1,000,000
of comprehensive public liability coverage on each truckstop which offers the
PNV Network. To date, the Company has been notified of six claims for
reimbursement of medical expenses relating to slip and fall incidents. One
claimant has filed suit for unspecified damages. The Company has remitted these
claims to its insurance carrier for processing. The Company does not believe
that the outcome of these claims will have a material adverse effect on the
Company or its business.
The Company has recently received a letter alleging that the Company's use
of its "Park 'N View" logo infringes certain federal trademark rights. While the
Company does not believe its logo infringes any rights as alleged, it is
changing certain aspects of its logo to eliminate any concerns regarding
infringement. As a result, the Company believes that the outcome of this matter
will not have a material adverse effect on the Company or its business.
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<PAGE> 54
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the executive
officers and directors of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
- ---- --- --------------------------
<S> <C> <C>
Ian Williams.............................. 48 President and Chief Executive Officer and Director
Stephen L. Conkling....................... 53 Vice President-Finance and Chief Operating Officer
Anthony W. Allen.......................... 37 Vice President-Operations and Secretary
Richard K. Brenner........................ 44 Vice President-Sales
Bill J. Buzbee............................ 53 Vice President-Business Development
A. Alexander Ezazi........................ 37 Vice President-Marketing
James D. Green............................ 39 Vice President-Product Development
Ralph A. Head............................. 51 Vice President-Fleet Sales
Yves Roland Maynard....................... 37 Vice President-Engineering
Robert M. Chefitz......................... 38 Director
Thomas P. Hirschfeld...................... 35 Director
Richard M. Johnston....................... 63 Director
Daniel K. O'Connell....................... 69 Director
David C. Turner........................... 48 Director
</TABLE>
IAN WILLIAMS, a founder of the Company, has served as President, Chief
Executive Officer and a director of the Company since the Company's
incorporation in September 1995. From 1993 to 1995, Mr. Williams served as
President of Park 'N View, Ltd., the predecessor of the Company. The Company
intends to hire a Chief Financial Officer as soon as practicable, at which time
Mr. Conkling will assume the office of President of the Company and Mr. Williams
will thereafter serve as Chairman of the Board and Chief Executive Officer of
the Company. Prior to joining Park 'N View, Ltd., from 1991 to March 1993, Mr.
Williams served as President of Arden Technologies, Inc., a manufacturer and
distributor of wireless cable transmitters. Mr. Williams' experience at Arden as
well as other previous employment includes the design of numerous satellite
master antenna television systems, multi-channel low-power television systems,
FM rebroadcast and distribution systems and wireless television broadcast
systems and the installation of low-power television and cable systems
throughout Canada and the Arctic, as well as over thirty other countries
throughout the world. Mr. Williams is a graduate of West Gloucestershire College
of Education in the United Kingdom.
STEPHEN L. CONKLING has served as Chief Operating Officer since December
1997 and as Vice President-Finance of the Company since April 1996. The Company
intends to hire a Chief Financial Officer as soon as practicable, at which time
Mr. Conkling will serve as President and Chief Operating Officer of the Company
and will cease to serve as Vice President-Finance. Prior to joining the Company,
from January 1995 to March 1996, Mr. Conkling served as Chief Financial Officer
of Advanced Promotion Technologies, a publicly held database marketing company
that filed for Chapter 11 bankruptcy protection within two years after Mr.
Conkling left the company. From November 1993 to January 1995, Mr. Conkling was
a consultant providing strategic and financial strategy services. From 1991 to
November 1993, Mr. Conkling served as Chief Executive Officer of Imagery, a
document imaging software company. Mr. Conkling served as Chief Financial
Officer of Interactive Systems, a systems software company, from 1984 to January
1991. Prior to 1984, he was employed for 16 years by Xerox Corporation in
various finance and marketing positions. He is a graduate of Purdue University,
where he earned a Bachelor degree in industrial management, and the University
of Southern California, where he earned a Masters of Business Administration.
ANTHONY W. ALLEN has served as Vice President-Operations of the Company
since March 1997 and Secretary since the Company's incorporation in September
1995. From 1993 to August 1997, Mr. Allen served as Director of Marketing for
Arden Technologies, Inc., a manufacturer and distributor of wireless cable
transmitters, which from September 1995 to March 1997 contracted with the
Company to provide Mr. Allen's
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<PAGE> 55
services to the Company. From 1990 to 1993 he served as Director & General
Manager of IMDS International Microwave Distribution Systems, Ltd. in Barbados
in which position he was responsible for the international distribution and
installation of wireless cable products. From 1988 to 1990 he served as Regional
Sales Manager for Southfields Coachworks Ltd. (located in the United Kingdom), a
manufacturer of semi-trailers and heavy truck bodywork. He is a graduate of
Harper Adams in the United Kingdom, where he earned a diploma in mechanical
engineering.
RICHARD K. BRENNER has served as Vice President-Sales of the Company since
November 1997. Prior to joining the Company, Mr. Brenner was the founder and
President of Brenner Consulting Group, a consulting firm that provided marketing
consulting services to the Company, from February 1996 to October 1997. See
"Certain Transactions." From June 1995 to February 1996, Mr. Brenner served as
Vice President-World-wide Business Planning for Scott Paper Company, in which
position he was responsible for directing business planning for all Scott
brands. From January 1994 to June 1995, Mr. Brenner served as Vice President-
Marketing of Advanced Promotion Technologies, a publicly held database marketing
company that filed for Chapter 11 bankruptcy protection within two years after
Mr. Brenner left the company. Mr. Brenner was employed by Procter and Gamble
from 1986 to January 1994 in various marketing and product management positions.
Prior to joining Procter and Gamble, Mr. Brenner was employed by Leo Burnett
USA, an advertising agency, as an account supervisor. Mr. Brenner is a graduate
of the University of Maryland, where he earned a Bachelor degree in business
administration, and Northwestern University, where he earned a Masters of
Management.
BILL J. BUZBEE has served as Vice President-Business Development of the
Company since October 1997 and Vice-President-Marketing and Sales from April
1995 to October 1997. Prior to joining the Company, he served as Manager of
Fuel/Ancillary Sales for National Auto/Truckstops Corp., a truckstop operator,
from October 1993 to April 1995. From 1989 to 1993 and from 1972 to 1984, Mr.
Buzbee was employed by Truckstops of America and served in various capacities
including as general manager of truckstop facilities located in Nashville,
Tennessee; West Memphis, Arkansas; Gary, Indiana and Grovertown, Indiana. Mr.
Buzbee was employed by a Petro Stopping Center franchisee from 1984 to 1986. Mr.
Buzbee attended State Community College in Columbia, Tennessee, and David
Lipscomb University in Nashville, Tennessee.
A. ALEXANDER EZAZI has served as Vice President-Marketing of the Company
since September 1997. Prior to joining the Company, from September 1995 to April
1997, Mr. Ezazi was Director of Marketing and Sales for PrimeCo, a joint venture
formed by AirTouch Communications and Bell Atlantic, to provide personal
communications services throughout the United States. From February 1993 to
September 1995, Mr. Ezazi worked for AirTouch Cellular, a division of AirTouch
Communications, as Director of Distribution Strategy for the Corporate Marketing
Group, where he was responsible for directing various distribution initiatives.
From 1992 to February 1993, Mr. Ezazi worked as Manager of Business Development
for the Los Angeles Marketing and Sales Department of AirTouch Cellular, where
he managed the evaluation and implementation of new products and services in the
Los Angeles cellular market. Mr. Ezazi worked as a consultant for Andersen
Consulting from 1988 to 1991. Mr. Ezazi is a graduate of the University of
Pennsylvania and Columbia University, where he earned a Masters of Business
Administration.
JAMES D. GREEN has served as Vice President-Product Development of the
Company since November 1996. Prior to joining the Company, Mr. Green was
President of GreenLight Technologies, Inc., which was formed in 1994 as a
software development company specializing in frequency marketing and transaction
processing services for the truckstops and trucking companies and which
performed certain software programming consulting services for the Company. See
"Certain Transactions." From 1984 to 1994, Mr. Green worked for Comdata
Corporation as Senior Product Manager responsible for all transportation card
based products. Mr. Green worked as Product Manager for Financial Institutional
Services Inc. from 1982 to 1984 and as consultant for Computer Sciences
Corporation from 1980 to 1982. Mr. Green is a graduate of The Evergreen State
College in Olympia, Washington, where he earned a Bachelor degree in business
administration and computer science.
RALPH A. HEAD has served as Vice President-Fleet Sales of the Company since
January 1996. Mr. Head was President of Ralph Head & Associates, a
transportation consulting firm, from December 1994 to January
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<PAGE> 56
1996. Mr. Head served as Vice President of Fleet Sales for National
Auto/Truckstops from May 1993 to December 1994 and as President of Direct Bill
Management, a financial services company serving fleet trucking companies and
truckstops, from January 1991 to May 1993. Mr. Head is a graduate of Auburn
University, where he earned a Bachelor degree in business administration.
YVES ROLAND MAYNARD has served as Vice President-Engineering of the Company
since September 1995 but has been employed by the Company since June 1993. Mr.
Maynard was employed by Glocom Engineering from August 1990 to June 1993, and by
Glocom Engineering Ltd./Canada from 1987 to May 1990, as Director of
Engineering, and as such was responsible for the engineering and installation of
microwave distribution systems. His experience at Glocom includes the
engineering and installation of microwave distribution systems for companies in
Canada, the United States and the Caribbean, and the design of equipment and
construction methods necessary to deliver cable television and telephone
services. From 1986 to 1987, Mr. Maynard was employed by Island Engineering BWI
as Director of Engineering. Mr. Maynard is a graduate of Red River Community
College in Winnipeg, Manitoba, where he earned a diploma in industrial
electronics.
ROBERT M. CHEFITZ has served as a director of the Company since November
1995. Mr. Chefitz has served as a Managing Director of Patricof & Co. Ventures,
Inc., a venture capital firm ("Patricof"), since 1991. Mr. Chefitz joined
Patricof in 1987 and served as Vice-President until 1991. From 1981 to 1987, Mr.
Chefitz served in various management positions with Golder, Thoma & Cressey Co.
of Chicago, Illinois. Mr. Chefitz' experience includes consulting with
management teams to consolidate fragmented industries, including communications,
security and specialty retailing. Mr. Chefitz serves as a director of Protection
One and several privately held companies in which the limited partnerships
managed by Patricof are investors. Mr. Chefitz is a graduate of Northwestern
University and Columbia University, where he earned a Bachelor degree and a
Masters of Business Administration, respectively.
THOMAS P. HIRSCHFELD has served as a director of the Company since November
1995. Mr. Hirschfeld has served as a Principal of Patricof since January 1995.
From January 1994 to January 1995, he served as Assistant to the Mayor of New
York City. From August 1986 to December 1993, Mr. Hirschfeld was employed by
Salomon Brothers as an investment banker. Mr. Hirschfeld serves as a director of
a number of privately held companies in which the limited partnerships managed
by Patricof are investors. He is a graduate of Harvard College and Balliol
College, Oxford.
RICHARD M. JOHNSTON has served as a director of the Company since August
1997. Mr. Johnston has served as Vice President-Investments and a director of
The Hillman Company, an investment holding company with diversified operations
("Hillman"), since 1970. Mr. Johnston served as Assistant to the President of
Hillman from 1965 to 1970 and Assistant to the Vice President-Investments of
Hillman from 1961 to 1965. Mr. Johnston serves as a director of Metrocall, Inc.,
a leading provider of paging and other wireless messaging services, Novoste
Corporation and several privately held companies in each of which Hillman is an
investor. Mr. Johnston is a graduate of Washington & Lee University and the
Wharton School of Finance of the University of Pennsylvania, where he earned a
Masters of Business Administration.
DANIEL K. O'CONNELL has served as a director of the Company since November
1995. Mr. O'Connell has been a private investor since April 1991. Mr. O'Connell
was employed by Ryder System, Inc., an international transportation services
company, from 1964 to April 1991 and served in various capacities including
Executive Vice President from 1974 to 1991, Financial Vice President from 1970
to 1974, General Counsel from 1968 to 1970 and attorney from 1964 to 1968. He is
a director of American Retirement Corporation in Nashville, Tennessee, which
develops, owns and manages assisted living, continuing care and congregate
living retirement communities throughout the United States, and of Fortress-FAE
Corporation in Boston, Massachusetts, which transports and stores art objects
and other high-value personal property. He also serves as a director of
Fiduciary Trust International of the South located in Miami, Florida, a
subsidiary of Fiduciary Trust Company International, headquartered in New York.
Mr. O'Connell is a graduate of Southern Illinois University of Carbondale,
Illinois, and Georgetown University Law Center. Mr. O'Connell's son is a partner
in the law firm of Kilpatrick Stockton LLP, which provides legal services to the
Company.
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<PAGE> 57
DAVID C. TURNER has served as a director of the Company since November
1996. Mr. Turner has worked as Senior Investment Analyst with the Michigan
Retirement System since 1985 and in this capacity shares in the management of a
$3.0 billion alternative investment portfolio. From 1978 to 1985, Mr. Turner
held several policy advisory and management positions in the Michigan Department
of Commerce with responsibilities for developing business and financial
legislation, implementing large-scale industrial development projects, serving
as a small business loan officer and overseeing the State of Michigan's
Technology Transfer Program between university research departments and the
private sector. Mr. Turner is a graduate of the State University of New York.
COMPOSITION OF THE BOARD OF DIRECTORS; EXECUTIVE OFFICERS
The Company's Bylaws provide that the number of members of the Company's
Board of Directors shall consist of between one and seven and that the Board has
the power to determine the number of directors (when not determined by the
stockholders) and to fill vacancies on the Board. The number of directors is
presently fixed at seven. The Company presently has six directors and one
vacancy on the Board of Directors. The Board of Directors, the holders of the
Series B Preferred Stock and the holders of the Series C Preferred Stock intend
to fill the existing vacancy with a person who is not an employee of the Company
as soon as practicable. All directors are elected annually to serve until the
next annual stockholders' meeting following their election and until their
successors are elected and qualified.
The Board of Directors has established a Compensation Committee and an
Audit Committee. The members of the Compensation Committee are Robert M.
Chefitz, David C. Turner and Ian Williams and the members of the Audit Committee
are Daniel K. O'Connell, Thomas P. Hirschfeld and Richard M. Johnston. The
Compensation Committee is responsible for reviewing the performance of all
executive officers and determining all compensation for such officers. The Audit
Committee is responsible for recommending to the Board of Directors the
appointment of independent auditors, reviewing with the auditors the plans and
results of the audit engagement, approving professional services provided by the
auditors, reviewing the independence of the independent public accountants,
considering the range of audit and non-audit fees and reviewing the adequacy of
the Company's internal accounting controls. The Board of Directors may from time
to time establish such other committees as circumstances warrant. Such
committees will have such authority and responsibility as is delegated by the
Board of Directors.
Pursuant to an Amended and Restated Securityholders' Agreement and Exchange
Agreement, dated as of November 13, 1996 (as amended pursuant to an amendment,
dated as of August 22, 1997, the "Securityholders' Agreement"), (i) the
Company's Board of Directors shall consist of not more than seven members, (ii)
as long as the Series A Preferred Stock has not been redeemed and paid in full,
the holders of the Series A Preferred Stock have the right to designate two
directors, (iii) the holders of the Series B Preferred Stock have the right to
designate one director, (iv) the holders of the Series C Preferred Stock have
the right to designate one director, (v) certain holders of the Common Stock
have the right to designate two directors, and (vi) the Board of Directors, the
holders of the Series B Preferred Stock and the holders of the Series C
Preferred Stock will mutually agree upon the remaining director.
Of the Company's current directors, Mr. Chefitz and Mr. Hirschfeld are the
designees of the holders of the Series A Preferred Stock, Mr. Turner is the
designee of the holders of the Series B Preferred Stock, Mr. Johnston is the
designee of the holders of the Series C Preferred Stock, and Mr. Williams and
Mr. O'Connell are the designees of the holders of the Common Stock.
Pursuant to the respective Certificates of Designations for the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock,
the holders of the Series A Preferred Stock, voting as a separate class, are
entitled to elect two directors and, prior to the consummation of a registered
common stock offering that is a Qualifying Offering (as defined in the
applicable Certificate of Designations), the holders of the Series B Preferred
Stock and Series C Preferred Stock, each voting as a separate class are each
entitled to elect one director of the Company. Subsequent to the consummation of
a Qualifying Offering, but only for so long as at least 66 2/3% of the Common
Stock issuable upon conversion of the Series B Preferred Stock or the Series C
Preferred Stock, as the case may be, is held of record by the original
purchasers of such stock, the
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holders of a majority of the Common Stock issuable upon conversion of the Series
B Preferred Stock and the Series C Preferred Stock shall each be entitled to
nominate one person for election as a director of the Company, which nominees
the Company will include in management's slate of nominees for election as
directors of the Company. Whenever (i) dividends declared on the Series B
Preferred Stock or the Series C Preferred Stock are in arrears in an amount
equivalent to the aggregate dividends required to be paid on such stock for any
two quarterly periods, (ii) the Company fails to satisfy its redemption
obligations, (iii) the Company otherwise fails to perform certain obligations
under the Certificates of Designations authorizing such stock or (iv) certain
other events of default occur, the holders of the Series C Preferred Stock,
together with the holders of the Series B Preferred Stock, have the exclusive
right to elect a majority of the Board of Directors.
The Company currently pays no compensation to directors for serving in such
capacity.
The Company's executive officers are elected annually by the Board of
Directors to serve until their successors are elected and qualify. The Company
is not a party to an employment agreement with any of its executive officers.
There are no family relationships among any of the directors and executive
officers of the Company, except that Mr. Allen, Vice President-Operations of the
Company, is the brother-in-law of Mr. Williams, President and Chief Executive
Officer of the Company.
LIMITATIONS OF LIABILITY AND INDEMNIFICATION
The Delaware General Corporation Law (the "DGCL") permits a corporation to
include in its certificate of incorporation a provision eliminating or limiting
a director's personal liability to the corporation or its stockholders for
monetary damages for breaches of fiduciary duty. However, the DGCL expressly
provides that the liability of a director may not be eliminated or limited for
(i) breaches of his or her duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) the unlawful
purchase or redemption of stock or unlawful payment of dividends, or (iv) any
transaction from which the director derived an improper personal benefit. The
DGCL further provides that no such provision shall eliminate or limit the
liability of a director for any act or omission occurring prior to the date when
such provision becomes effective. The Company's Certificate of Incorporation
contains a provision eliminating director liability to the extent permitted by
the DGCL.
Generally, the DGCL permits a corporation to indemnify certain persons made
a party to any action, suit or proceeding by reason of the fact that such person
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 or enterprise provided that such person acted in
good faith and in a manner that person reasonably believed to be in or not
opposed to the best interests of the corporation. To the extent that person has
been successful in any such matter, that person shall be indemnified against
expenses actually and reasonably incurred by that person. In the case of an
action by or in the right of the corporation, no indemnification may be made in
respect of any matter as to which that person was adjudged liable to the
corporation unless and only to the extent that the Delaware Court of Chancery or
the court to which the action was brought determines that despite the
adjudication of liability that person is fairly and reasonably entitled to
indemnity for proper expenses. The Company's Bylaws provide that each director
and officer shall be indemnified by the Company to the fullest extent allowed by
Delaware law.
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EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth certain information regarding the annual
compensation for the fiscal year ended June 30, 1998, with respect to the
Company's Chief Executive Officer and the Company's four other highest paid
executive officers (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------
NAME AND PRINCIPAL POSITION SALARY($) BONUS($)(1)
- --------------------------- --------- -----------
<S> <C> <C>
Ian Williams................................................ 157,500 --
President, Chief Executive Officer and Director
Stephen L. Conkling......................................... 132,501 --
Vice President-Finance and Chief Operating Officer
Jody Green.................................................. 127,500 --
Vice President-Product Development
A. Alexander Ezazi(2)....................................... 87,083 27,500
Vice President-Marketing
Richard Brenner(2).......................................... 73,333 27,500
Vice President-Sales
</TABLE>
- ---------------
(1) Represents guaranteed cash bonuses paid for fiscal 1997.
(2) Mr. Ezazi's employment by the Company commenced in September 1997 and Mr.
Brenner's employment by the Company commenced in November 1997.
Stock Options
The following table summarizes the number and value of unexercised options
held by Named Executive Officers as of June 30, 1998. No Named Executive
Officers exercised any options during the year ended June 30, 1998.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AS OF JUNE 30, 1998(#) AS OF JUNE 30, 1998($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Stephen L. Conkling.............................. 27,151 40,727 222,640 333,960
12,000 18,000 74,400 111,600
Jody Green....................................... 15,151 22,727 120,452 180,678
</TABLE>
- ---------------
(1) There was no public trading market for the Common Stock as of June 30, 1998.
These values have been calculated based on a fair market value of $9.20 per
share on June 30, 1998, as determined by the Board of Directors, less the
per share exercise price.
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<PAGE> 60
EMPLOYMENT ARRANGEMENTS
The Company does not have employment agreements with any of its executive
officers. In connection with its acquisition in November 1996 of certain
software from a software development company of which Mr. Green, an executive
officer of the Company, owned 50%, the Company agreed to pay Mr. Green an annual
salary of $100,000 as long as he is employed by the Company. See "Certain
Transactions." The Company's executive officers are not entitled to any payments
in connection with a termination of employment or a change in control of the
Company. Pursuant to the Company's Stock Option Plan, the exercisability of
options granted under such plan is accelerated in the event of certain changes
in control of the Company.
BONUS PLAN
In February 1998, the Board of Directors adopted the Company's Compensation
Plan (the "Compensation Plan") to provide cash and/or stock awards to certain
key employees of the Company, including all of the Company's executive officers.
Pursuant to the Compensation Plan, such employees are each eligible for bonuses
based on a percentage of their annual base salary, which percentage may be up to
61% depending upon the employee's position with the Company (the "Potential
Bonus"). The Potential Bonus for any employee is then subdivided into two
components consisting of: (i) 40% for participants other than executive
officers, and 60% for executive officers, of the Potential Bonus for the
Company's achievement of certain goals for the Company's earnings before
interest, taxes, depreciation and amortization ("EBITDA") during the applicable
period (the "Company Component"), and (ii) 40% for executive officers, and 60%
for participants other than executive officers, of the Potential Bonus for the
employee's achievement of certain functional and personal goals for the
applicable period (the "Personal Component"). The Company's Board of Directors
establishes the Company's goals for EBITDA, as well as each employee's
functional and personal goals, prior to the commencement of the applicable
period.
The percentage of the Company Component and the Personal Component that the
employee actually may receive is determined based upon the percentage of the
Company's goal for EBITDA that the Company achieves during the applicable period
and the percentage of the employee's achievement of his or her functional and
personal goals for the applicable period as determined by the Board of
Directors. The allocation of the bonus between cash and/or stock awards shall be
determined by the Board of Directors.
STOCK OPTION PLAN
Under the Park 'N View, Inc. Stock Option Plan (the "Stock Option Plan"),
options to purchase up to 800,000 shares of Common Stock may be granted to
employees, directors, consultants and independent contractors of the Company.
The Stock Option Plan is presently administered by the Board of Directors. Each
option granted under the Stock Option Plan must be exercised within a period
fixed by the Board of Directors which, subject to certain limitations, may not
exceed ten years from the date of grant of the option. The Company may grant
incentive stock options (intended to qualify under Section 422 of the Internal
Revenue Code of 1986) or nonqualified stock options. The exercise price of
incentive stock options under the Stock Option Plan may not be less than 100% of
the fair market value of the Common Stock on the date of grant. Options granted
under the Stock Option Plan become exercisable at such time or times as the
Board of Directors shall determine. Of the options outstanding under the Stock
Option Plan as of March 31, 1998, options to purchase an aggregate of 219,390
shares of Common Stock were granted in August 1996 having an exercise price of
$1.00, options to purchase an aggregate of 32,500 shares of Common Stock were
granted in November 1996 having an exercise price of $1.00 per share, options to
purchase an aggregate of 75,756 shares of Common Stock were granted in December
1996 having an exercise price of $1.25 per share, options to purchase an
aggregate of 7,200 shares of Common Stock were granted in March 1997 having an
exercise price of $1.50 per share, and options to purchase an aggregate of
75,000 shares of Common Stock were granted in June 1997 having an exercise price
of $3.00 per share. All of such outstanding options become exercisable in five
annual increments of 20% each commencing on the date of grant so long as
employment with the Company continues. The exercise price of outstanding options
to date has been the deemed fair market value of the Common Stock on the date of
grant. No options have been granted to any director of the Company.
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<PAGE> 61
The Company plans to grant options to purchase an aggregate of 259,000
shares of Common Stock to certain of its executive officers. The Company
currently expects that such options to purchase 152,000 shares of Common Stock
will have an exercise price equal to the fair market value of the Common Stock
on the date of grant as determined by the Board of Directors and that such
options to purchase 107,000 shares of Common Stock will have an exercise price
substantially below such value.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Decisions concerning the compensation of the Company's executive officers
for the year ended June 30, 1998 were made by the Company's Compensation
Committee of which Mr. Williams, President and Chief Executive Officer of the
Company, is a member.
CERTAIN TRANSACTIONS
In November 1995, the Company, which was organized by Patricof, Ian
Williams and the then-partners of Park 'N View, Ltd. (Sam Hashman, Monte
Nathanson and Nelgo Investments, of which Daniel O'Connell is a general
partner), acquired the business and assets, and assumed the liabilities, of Park
'N View, Ltd. In connection with such purchase, the Company issued approximately
2.3 million shares of Common Stock to Park 'N View, Ltd. Park 'N View, Ltd.
subsequently distributed such shares to its partners. The amount of the net
liabilities assumed by the Company was $84,446, including a promissory note of
Park 'N View, Ltd., to Sam Hashman in the principal amount of $150,000, which
was subsequently paid in full by the Company. In addition, over a 12-month
period commencing in November 1995, certain investment limited partnerships
managed by Patricof & Co. Ventures, Inc. (the "Patricof Managed Funds") invested
$3.8 million in the Company in exchange for which the Company issued to the
Patricof Managed Funds an aggregate of 2.0 million shares of Common Stock,
70,010 shares of Series A Preferred Stock and $3.0 million aggregate principal
amount of the Company's 8% Subordinated Notes. During the fall of 1996, the
Company issued to the Patricof Managed Funds an additional $1.5 million
aggregate principal amount of the Company's 8% Subordinated Notes and warrants
to purchase 239,250 shares of Common Stock. In connection with the sale of the
Series A Preferred Stock, the Company entered into certain agreements with
certain holders of the capital stock of the Company. Pursuant to these
agreements, certain holders of Common Stock and Series A Preferred Stock
obtained rights of first refusal with respect to proposed sales of stock by the
Company or by certain holders of shares of Common Stock of the Company. The
holders of the Company's outstanding shares of Common Stock and Series A
Preferred Stock also have certain co-sale rights. See "Description of Capital
Stock."
Park 'N View, Ltd., issued to Sam Hashman, its promissory note in the
principal amount of approximately $150,000. This note was issued in connection
with development of the PNV Network. This note was assumed by the Company in
November 1995 and paid (in three installments during 1995 and 1996) from the net
proceeds of the sale of the Series A Preferred Stock to the Patricof Managed
Funds.
In November 1996, in connection with the sale of the Series B Preferred
Stock, (i) the Patricof Managed Funds (a) converted $3.0 million aggregate
principal amount of the Company's 8% Subordinated Notes plus $180,000 in
interest accrued thereon into 318,065 shares of the Series A Preferred Stock,
(b) converted $1.5 million aggregate principal amount of such notes, and
warrants to purchase 239,250 shares of Common Stock, into 137,237 shares of the
Series B Preferred Stock and (c) purchased 45,746 shares of Series B Preferred
Stock for $500,000, (ii) the State of Michigan Retirement System purchased
731,930 shares of the Series B Preferred Stock for $8.0 million and (iii)
Benefit Capital Management Corporation purchased 274,474 shares of the Series B
Preferred Stock for $3.0 million. In connection with the sale of the Series B
Preferred Stock, the Company entered into certain agreements with certain
holders of the capital stock of the Company. Pursuant to these agreements, the
Company granted certain registration rights to certain holders of shares of
Common Stock and to holders of the shares of Common Stock issuable upon the
conversion of the Series B Preferred Stock and any additional shares of Common
Stock acquired as a result of a stock dividend, stock split, or other
distribution in respect of the Series B Preferred Stock. See "Description of
Capital Stock -- Registration Rights." Certain holders of Common Stock and
Series B Preferred Stock also obtained rights of
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<PAGE> 62
first refusal with respect to proposed sales of stock by the Company or by
certain holders of shares of Common Stock pursuant to these agreements. The
holders of the Company's outstanding shares of Common Stock, and Series B
Preferred Stock also have certain co-sale rights pursuant to these agreements.
See "Description of Capital Stock."
From November 1995 to November 1996, GreenLight Technologies, Inc.
("Greenlight"), of which James Green owned 50%, provided certain software
programming consulting services to the Company relating to the PNV Software
pursuant to a software development agreement. Pursuant to the provisions of this
agreement, during this period, the Company paid Greenlight an aggregate of
approximately $49,800 in fees. In November 1996, pursuant to a technology
transfer agreement, Greenlight, Mr. Green and the owner of the remaining 50% of
Greenlight, transferred and assigned to the Company certain software relating to
the PNV Software developed by them, including rights in software developed
pursuant to the software development agreement, in consideration of the
Company's payment to each individual of a $100,000 annual salary as long as he
is employed by the Company and the grant to each of them of an option to
purchase 37,878 shares of Common Stock having an exercise price of $1.25 per
share and becoming exercisable in five annual cumulative increments of 20% each
commencing on the date of grant as long as employment continues.
In August 1997, the Company issued an aggregate of 2,328,543 shares of
Series C Preferred Stock for $18.6 million, of which (i) Henry L. Hillman, Elsie
Hilliard Hillman and C.G. Grefenstette, Trustees, purchased 812,500 shares of
Series C Preferred Stock for $6.5 million, (ii) the Patricof Managed Funds
purchased 125,000 shares of Series C Preferred Stock for $1.0 million, (iii)
Benefit Capital Management Corporation purchased 125,000 shares of Series C
Preferred Stock for $1.0 million and (iv) the State of Michigan Retirement
System purchased 125,000 shares of Series C Preferred Stock for $1.0 million. In
connection with the sale of the Series C Preferred Stock, the Company entered
into certain amendments to the agreements with certain holders of the capital
stock of the Company that the Company had entered into in connection with the
sale of the Series A Preferred Stock and the Series B Preferred Stock. Pursuant
to these amendments, the Company granted certain registration rights to holders
of the shares of Common Stock issuable upon the conversion of the Series C
Preferred Stock and any additional shares of Common Stock acquired as a result
of a stock dividend, stock split, or other distribution in respect of the Series
C Preferred Stock. See "Description of Capital Stock -- Registration Rights."
These amendments also provided holders of Series C Preferred Stock rights of
first refusal with respect to proposed sales of stock by the Company or by
certain holders of shares of Common Stock. The holders of the Series C Preferred
Stock also have certain co-sale rights pursuant to these amendments. See
"Description of Capital Stock."
Prior to his employment by the Company, Richard Brenner provided certain
marketing consulting services to the Company, from December 1996 to October
1997. During this period, the Company paid Mr. Brenner an aggregate of
approximately $52,000 in fees.
Since December 1995, Mr. Williams has personally guaranteed the Company's
obligations of $480,000 under lease agreements for construction equipment and
telephone switches to which the Company is a party. In May 1997, the Company
loaned $59,000 to Mr. Buzbee in connection with his relocation from the
Company's Nashville, Tennessee office to its headquarters in Ft. Lauderdale,
Florida. This loan was evidenced by Mr. Buzbee's promissory note payable to the
Company, bearing interest at the prime rate (as defined therein). This note was
satisfied in August 1997.
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PRINCIPAL STOCKHOLDERS
The following table sets forth, as of June 15, 1998, certain information
regarding the beneficial ownership of the Common Stock by (i) each person that
is a member of the Board of Directors of the Company, (ii) each person or entity
known by the Company to be the beneficial owner of 5% or more of the outstanding
Common Stock of the Company and (iii) all executive officers and directors of
the Company as a group. The persons and entities named in the table have sole
voting and investment power with respect to all shares shown as beneficially
owned by them, except as indicated in the footnotes below.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OF SHARES
NAME OWNED OUTSTANDING
- ---- ------------ -----------------
<S> <C> <C>
Ian Williams(1)............................................. 441,953 5.19%
Daniel K. O'Connell(2)...................................... 270,810 3.18
Robert M. Chefitz(3)........................................ 2,372,919 27.85
Thomas P. Hirschfeld(4)..................................... 2,372,919 27.85
David C. Turner(5).......................................... 1,140,918 13.39
Richard M. Johnston(6)...................................... 12,500 *
Sam Hashman(7).............................................. 1,011,560 11.87
Patricof & Co. Ventures, Inc., as Manager(8)................ 2,372,919 27.85
MPN Partners, Ltd.(9)....................................... 540,856 6.35
State of Michigan Retirement System(10)..................... 1,140,918 13.39
Benefit Capital Management Corporation(11).................. 500,000 5.87
Henry L. Hillman, Elsie Hilliard Hillman and C.G.
Grefenstette, Trustees(12)................................ 812,500 9.53
All directors and officers as group (14 persons)(13)........ 4,411,866 50.74
</TABLE>
- ---------------
* Less than 1%
(1) Includes 22,950 shares of Common Stock beneficially owned by PNV General
Partner, Inc., of which Mr. Williams, Mr. Hashman and Monte Nathanson, the
general partner of MPN Partners, Ltd., each owns one-third of such shares.
(2) Represents an aggregate of 270,810 shares of Common Stock beneficially
owned by Nelgo Investments, a partnership of which Mr. O'Connell is a
general partner. Mr. O'Connell owns 15% of Nelgo Investments.
(3) Represents an aggregate of 2,372,919 shares of Common Stock presently
issuable upon conversion of outstanding shares of Series B Preferred Stock
and Series C Preferred Stock beneficially owned by the Patricof Managed
Funds. Mr. Chefitz, a director of the Company, is a Managing Director of
Patricof, and a general partner in the limited partnerships which Patricof
& Co. Ventures, Inc. manages. Mr. Chefitz does not exercise sole or shared
voting or investment power with respect to such shares and disclaims
beneficial ownership of such shares.
(4) Represents an aggregate of 2,372,919 shares of Common Stock presently
issuable upon conversion of outstanding shares of Series B Preferred Stock
and Series C Preferred Stock beneficially owned by the Patricof Managed
Funds. Mr. Hirschfeld, a director of the Company, is a Principal of
Patricof. Mr. Hirschfeld does not exercise sole or shared voting or
investment power with respect to such shares and disclaims beneficial
ownership of such shares.
(5) Represents an aggregate of 1,140,918 shares presently issuable upon
conversion of outstanding shares of Series B Preferred Stock and Series C
Preferred Stock beneficially owned by the State of Michigan Retirement
System. Mr. Turner, a director of the Company, is a Senior Investment
Analyst with the State of Michigan Retirement System. Mr. Turner does not
exercise sole or shared voting or investment power with respect to such
shares and disclaims beneficial ownership of such shares.
(6) Represents shares of Common Stock presently issuable upon conversion of
outstanding shares of Series C Preferred Stock beneficially owned by
Richard M. Johnston Trust #2, for which Mr. Johnston is the sole trustee
and beneficiary. Does not include 1,250,000 shares beneficially owned by
affiliates and related parties of The Hillman Company. Mr. Johnston is Vice
President-Investments and a director of
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<PAGE> 64
The Hillman Company. Mr. Johnston does not exercise sole or shared voting
or investment power with respect to such shares and disclaims beneficial
ownership of such shares.
(7) Includes 22,950 shares of Common Stock beneficially owned by PNV General
Partner, Inc., of which Mr. Williams, Mr. Hashman and Monte Nathanson, the
general partner of MPN Partners, Ltd., each owns one-third of such shares.
(8) Consists of shares of Common Stock and shares of Common Stock presently
issuable upon conversion of outstanding shares of Series B Preferred Stock
and Series C Preferred Stock owned of record as follows: (i) an aggregate
of 1,755,193 shares held by APA Excelsior IV, L.P., (ii) an aggregate of
309,513 shares held by APA Excelsior IV/Offshore, L.P. and (iii) an
aggregate of 308,213 shares held by The P/A Fund, L.P. Patricof & Co.
Ventures, Inc., directly or indirectly, controls, and has sole voting or
investment power with regard to shares held by, such limited partnerships.
(9) MPN Partners, Ltd. is a limited partnership of which Monte Nathanson, a
founder of the Company, is the general partner. Includes 22,950 shares of
Common Stock beneficially owned by PNV General Partner, Inc., of which Mr.
Williams, Mr. Hashman and Mr. Nathanson each own one-third.
(10) Consists of shares of Common Stock presently issuable upon conversion of
outstanding shares of Series B Preferred Stock and Series C Preferred
Stock. Does not include shares held by APA Excelsior IV, L.P., a limited
partnership of which the State of Michigan Retirement System is a limited
partner.
(11) Consists of shares of Common Stock presently issuable upon conversion of
outstanding shares of Series B Preferred Stock and Series C Preferred Stock
owned of record by Benefit Capital Management Corporation as Investment
Manager for The Prudential Insurance Company of America Separate Account
No. VCA-GA-5298 ("Benefit"). Benefit has voting power as to the shares of
Common Stock issuable upon conversion of the Series B Preferred Stock and
Series C Preferred Stock held by Benefit. Benefit is a wholly owned
subsidiary of Union Carbide Corporation, a New York Corporation ("UCC").
Benefit manages the assets of UCC's retirement program plan for employees
of UCC and its participating subsidiaries (the "Plan"). In connection with
the purchase of certain annuities by the Plan, Prudential has established a
separate insurance account with respect to the Plan. Prudential disclaims
beneficial ownership of the shares.
(12) Consists of shares of Common Stock presently issuable upon conversion of
outstanding shares of Series C Preferred Stock owned of record as follows:
(i) 187,500 shares held by a trust for the benefit of Henry L. Hillman (the
"HLH Trust"), and (ii) 625,000 shares owned by Juliet Challenger, Inc., an
indirect, wholly-owned subsidiary of The Hillman Company ("THC"). THC is
controlled by the HLH Trust. The Trustees of the HLH Trust are Henry L.
Hillman, Elsie Hilliard Hillman and C. G. Grefenstette (the "HLH
Trustees"). The HLH Trustees share voting and investment power with respect
to the shares held of record by the HLH Trust and the assets of THC. Does
not include an aggregate of 250,000 shares held by four trusts for the
benefit of members of the Hillman family, as to which shares the HLH
Trustees (other than Mr. Grefenstette, who is one of the trustees of such
family trusts) disclaim beneficial ownership. Also does not include 187,500
shared held by Venhill Limited Partnership, as to which shares the HLH
Trustees disclaim beneficial ownership. Howard B. Hillman, the general
partner of Venhill Limited Partnership, is a step-brother of Henry L.
Hillman.
(13) Includes an aggregate of 172,786 shares of Common Stock subject to options
that are presently exercisable or become exercisable by November 30, 1998.
The addresses of the persons named in the foregoing table who beneficially
own 5% or more of the outstanding Common Stock (including shares of Common Stock
currently issuable upon the conversion of the outstanding Series B Preferred
Stock and the Series C Preferred Stock) are as follows: (i) Ian Williams and Sam
Hashman, c/o Park 'N View, Inc., 11711 NW 39th Street, Coral Springs, Florida
33065, (ii) Robert M. Chefitz, Thomas P. Hirschfeld and the Patricof Managed
Funds, c/o Patricof & Co. Ventures, Inc., 445 Park Avenue, New York, New York
10022, (iii) MPN Partners, Ltd., 17058 White Haven Drive, Boca Raton, Florida
33496, (iv) David C. Turner and State of Michigan Retirement System, 430 West
Allegan Street, Lansing, Michigan 48922, (v) Benefit Capital Management
Corporation, 39 Old Ridgebury Road, Danbury, Connecticut 06817, and (vi) Henry
L. Hillman, Elsie Hilliard Hillman and C.G. Grefenstette, Trustees, 2000 Grant
Building, Pittsburgh, Pennsylvania 15219.
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<PAGE> 65
DESCRIPTION OF CAPITAL STOCK
The following summary of the terms and provisions of the Company's capital
stock does not purport to be complete and is qualified in its entirety by
reference to the actual terms and conditions of the capital stock contained in
the Company's Certificate of Incorporation, as amended, and the respective
Certificates of Designation, each as amended, of the Series A Preferred Stock,
the Series B Preferred Stock and the Series C Preferred Stock. The following
summary reflects the Company's Certificate of Incorporation, as amended, the
respective Certificates of Designation, each as amended, of the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock,
and certain agreements entered into in connection with the Company's sale of the
Series A Preferred Stock, the Series B Preferred Stock and the Series C
Preferred Stock.
The Company's Certificate of Incorporation authorizes 12,000,000 shares of
common stock, par value $.001 per share, and 5,750,000 shares of preferred
stock, par value $.01 per share. The Company has designated 627,630 shares of
the Preferred Stock as Series A Preferred Stock, 1,372,370 shares of the
Preferred Stock as Series B 7% Cumulative Convertible Preferred Stock, and
3,750,000 shares of the Preferred Stock as Series C 7% Cumulative Convertible
Preferred Stock.
As of June 15, 1998, there were issued and outstanding 4,318,182 shares of
Common Stock, 388,065 shares of Series A Preferred Stock, 1,372,370 shares of
Series B Preferred Stock, and 2,328,543 shares of Series C Preferred Stock. The
Company has not issued any other shares of the Company's capital stock.
Immediately prior to the consummation of this Offering, options to acquire
409,846 shares of the Company's Common Stock will be outstanding. In addition,
the Company has reserved (i) 390,154 shares of Common Stock for issuance upon
the exercise of stock options available for future grants under the Stock Option
Plan; (ii) 1,372,300 shares of Common Stock for issuance upon conversion of the
issued and outstanding Series B Preferred Stock; (iii) 2,328,543 shares of the
Common Stock for issuance upon conversion of the issued and outstanding Series C
Preferred Stock; and (iv) an aggregate of 785,774 shares of Common Stock subject
to outstanding warrants consisting of: (A) 280,399 having an exercise price of
$8.00 per share, including presently exercisable warrants to purchase 100,399
shares of Common Stock granted to BT Alex. Brown Incorporated in connection with
the offer and sale of the Series C Preferred Stock, and (B) 505,375 having an
exercise price of $0.01 per share granted to the Initial Purchaser in connection
with the Unit Offering (and subsequently resold by the Initial Purchaser in the
form of the Units to qualified institutional buyers pursuant to Rule 144A under
the Securities Act).
COMMON STOCK
All shares of Common Stock now outstanding are fully paid and
non-assessable. The holders of Common Stock: (i) subject to preferences that may
be applicable to the Preferred Stock, have equal and ratable rights to dividends
from funds legally available for distribution, when, as and if declared by the
Board of Directors of the Company; (ii) are entitled to share ratably in all of
the assets of the Company available for distribution to holders of Common Stock
upon liquidation, dissolution or winding up of the affairs of the Company; (iii)
do not have subscription or conversion rights (there are no redemption or
sinking fund provisions applicable to the Common Stock); and (iv) are entitled
to one vote for each share of Common Stock held on all matters as to which
holders of Common Stock shall be entitled to vote. In any election of directors,
no holder of shares of Common Stock will be entitled to cumulate his or her
votes by giving one candidate more than one vote per share. The rights and
preferences of holders of Common Stock are subject to the rights of the
Preferred Stock currently issued and outstanding or issued and outstanding in
the future. In addition, each outstanding series of the Company's Preferred
Stock contains certain dividend rights, liquidation preferences, redemption and
voting rights.
PREFERRED STOCK
All shares of Preferred Stock now outstanding are fully paid and
non-assessable.
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<PAGE> 66
Series A Preferred Stock
The Series A Preferred Stock has the following rights and preferences:
Dividends. Commencing on November 2, 1996, the holders of shares of
Series A Preferred Stock are entitled to receive, when and as declared by
the Board of Directors of the Company out of funds legally available
therefor, cumulative dividends payable quarterly in cash or in kind at the
Company's option at a rate of 7% per annum, computed on the basis of $10.00
per share (the "Series A Stock Value"), before any dividends are set apart
for or paid on the Common Stock. Such dividends will accrue until paid,
whether or not declared by the Board of Directors and whether or not there
are funds legally available. Dividends paid in cash on the shares of Series
A Preferred Stock (or Series B Preferred Stock or Series C Preferred Stock,
which shall rank pari passu with the Series A Preferred Stock) in an amount
less than the total amount of such dividends shall be allocated pro rata so
that the total value of dividends paid on the Preferred Stock shall in all
cases bear to each other the same ratio that the total value of accrued and
unpaid dividends on the Series A Preferred Stock, the Series B Preferred
Stock and the Series C Preferred Stock bear to each other.
Without the written consent of the holders of two-thirds of the
outstanding shares of Series A Preferred Stock, the Company shall not
declare or make any cash distribution with respect to any shares of capital
stock of the Company unless all dividends on the shares of Series A
Preferred Stock shall have been paid or declared and set aside for payment.
Liquidation Preference. In the event of any liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary, the holders
of shares of Series A Preferred Stock are entitled, before any amount is
payable to the holders of the Common Stock, to receive the Series A Stock
Value plus an amount equal to all unpaid dividends accrued to the date of
payment. In the event of such a liquidation, dissolution or winding up of
the Company, the Series A Preferred Stock will rank pari passu with the
Series B Preferred Stock and the Series C Preferred Stock. If, upon any
such liquidation, dissolution or winding up of the Company, the assets of
the Company, or proceeds thereof, distributed among the holders of Series A
Preferred Stock shall be insufficient to pay in full the aggregate
preferential amounts on all of the then outstanding shares of Series A
Preferred Stock, then such assets or proceeds will be distributed among
such holders of the Series A Preferred Stock equally and ratably in
proportion to the full liquidation preference to which each such holder is
entitled.
Redemption Rights. On the date six months after the payment of the
Notes in full in cash (the "Mandatory Redemption Date") the Company shall
redeem all of the shares of Series A Preferred Stock outstanding for $10.00
per share plus an amount equal to all accrued and unpaid dividends to the
date of redemption (the "Series A Redemption Price"), payable in cash.
Except as described below, upon the consummation of a Series A Qualifying
Offering (as defined below), the Company shall redeem each share of Series
A Preferred Stock, payable in cash, at the Series A Redemption Price.
Moreover, except as described below, upon a Change of Control (as defined
below), each holder of shares of Series A Preferred Stock may elect to
require the Company to redeem all of such holder's shares of Series A
Preferred Stock, payable in cash, at the Series A Redemption Price. If, on
a respective redemption date, the funds of the Company legally available
for redemption of the Series A Preferred Stock (or Series B Preferred Stock
or Series C Preferred Stock, which shall rank pari passu with the Series A
Preferred Stock) are insufficient to redeem the total number of shares of
Preferred Stock to be redeemed on such date, the Company will use the funds
legally available therefor to redeem the maximum number of shares of
Preferred Stock ratably among the holders of such shares to be redeemed
based upon their holdings of Preferred Stock. In addition, the Company has
the option to redeem shares of Series A Preferred Stock at any time for an
amount equal to the Series A Stock Value plus all accrued dividends due
thereon as of the date of redemption. The Company may not redeem, under any
circumstances, any shares of Series A Preferred Stock until the Company
pays the Notes in full in cash; if the Company has not paid the Notes in
full in cash on any redemption date, the Company will redeem the shares of
Series A Preferred Stock only after payment of the Notes in full in cash.
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A "Change of Control" means: (i) the merger or consolidation of the
Company with or into another person or any person shall consolidate with or
merge into the Company; (ii) the transfer of all or substantially all of
the Company's assets; (iii) a reorganization, share exchange or
reclassification; or (iv) an acquisition or purchase such that any person
beneficially owns more than 50% of the Company's Common Stock or more than
50% of the Company's voting stock as a result of the acquisition or
purchase. A "Series A Qualifying Offering" means: (i) the Company shall
have consummated a firm commitment underwritten public offering of its
Common Stock by a nationally recognized investment banking firm pursuant to
an effective registration statement under the Securities Act of 1933, as
amended, resulting in gross proceeds to the Company of at least
$20,000,000; (ii) the Company's Common Stock is quoted or listed by The
Nasdaq National Market, the New York Stock Exchange or the American Stock
Exchange; and (iii) the price of the Company's Common Stock in the offering
is at least equal to 200% of the Series A Redemption Price or would
represent a compound annual rate of return of 35% based upon the initial
issuance price of the Series A Preferred Stock.
Voting. Unless otherwise provided by law or except as indicated
below, holders of the Series A Preferred Stock have no voting rights with
respect to the election of directors of the Company or otherwise. Upon the
failure of the Company to redeem the Series A Preferred Stock on the
Mandatory Redemption Date, the holders of the Series A Preferred Stock
shall be entitled to one vote for each share of Series A Preferred Stock
and shall be entitled to vote as a separate class only in respect of any
merger, consolidation, sale of assets or creation of any class or series
(other than the Series B Preferred Stock or Series C Preferred Stock) equal
to or superior to the Series A Preferred Stock. The holders of at least
two-thirds of the Series A Preferred Stock as a class have the right to
elect two directors of the Company.
Without the authorizing vote or consent of the holders of two-thirds
of the outstanding shares of Series A Preferred Stock, voting as a class,
the Company shall not: (i) amend, waive or repeal any provisions of (or add
any provision to) the Certificate of Designations authorizing the Series A
Preferred Stock, the Company's Certificate of Incorporation or any
certificates of designations with respect to the Company's preferred stock;
(ii) amend, waive or repeal any provisions of (or add any provision to) the
Company's Bylaws; (iii) authorize, create, issue or sell any stock having
preferential rights in the distribution of earnings or assets of the
Company prior to or on a parity with those of the outstanding Series A
Preferred Stock other than the Series B Preferred Stock or Series C
Preferred Stock; (iv) except under certain circumstances, issue any shares
of Series A Preferred Stock; (v) enter into any agreements that restrict
the Company's obligation to pay dividends on or redeem the shares of Series
A Preferred Stock; or (vi) dissolve the Company.
Other than the rights described above, the holders of the Series A
Preferred Stock have no preemptive, subscription, sinking fund or
conversion rights.
Series B Preferred Stock
The Series B Preferred Stock has the following rights and preferences:
Dividends. Commencing on January 31, 1997, the holders of shares of
Series B Preferred Stock are entitled to receive, when and as declared by
the Board of Directors of the Company out of funds legally available
therefor, cumulative dividends payable in cash or to accrue quarterly at a
rate of $0.7651 (7%) per share per annum ($0.9837 (9%) per share per annum
upon an Event of Default (as defined below)), before any dividends are set
apart for or paid on the Common Stock. Dividends paid in cash on the shares
of Series B Preferred Stock (or Series A Preferred Stock or Series C
Preferred Stock, which shall rank pari passu with the Series B Preferred
Stock) in an amount less than the total amount of such dividends shall be
allocated pro rata so that the total value of dividends paid on the
Preferred Stock shall in all cases bear to each other the same ratio that
the total value of accrued and unpaid dividends on the Series A Preferred
Stock, the Series B Preferred Stock and the Series C Preferred Stock bear
to each other.
Without the written consent of the holders of two-thirds of the
outstanding shares of Series B Preferred Stock, the Company shall not
declare or make any cash distribution with respect to any other
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shares of capital stock of the Company unless all dividends on the shares
of Series B Preferred Stock shall have been paid or declared and set aside
for payment.
An "Event of Default" shall mean: (i) any failure by the Company to
pay a cash dividend on the payment date, such failure lasting for two (2)
consecutive quarterly periods; (ii) failure by the Company to satisfy its
redemption obligations, such failure lasting five (5) days beyond the
redemption date; (iii) failure by the Company to comply with its
obligations upon liquidation, dissolution or winding up of the Company and
conversion of shares of Series B Preferred Stock; and regarding
anti-dilution adjustments, certain notice provisions and voting and
preemptive rights; (iv) a representation or warranty is untrue in the
Securities Purchase Agreement; (v) failure to comply with covenants in the
Securities Purchase Agreement; (vi) default by the Company in the
performance or observance of any obligation or condition with respect to
the indebtedness of the Company; or (vii) if the Company shall become
insolvent or bankrupt.
Liquidation Preference. In the event of any liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary, the holders
of Series B Preferred Stock are entitled, before any amount is payable to
the holders of the Common Stock or any other class or series of stock
ranking junior to the Series B Preferred Stock, to receive $10.93 per share
plus an amount equal to all accrued and unpaid dividends to the date of
payment. In the event of such a liquidation, dissolution or winding up of
the Company, the Series B Preferred Stock will shall rank pari passu with
the Series A Preferred Stock and the Series C Preferred Stock. If, upon any
such liquidation, dissolution or winding up of the Company, the assets of
the Company, or proceeds thereof, distributed among the holders of Series B
Preferred Stock shall be insufficient to pay in full the aggregate
preferential amounts on all of the then outstanding shares of Series B
Preferred Stock, then such assets or proceeds will be distributed among
such holders of Preferred Stock equally and ratably in proportion to the
full respective liquidation preference to which each such holder is
entitled.
Conversion. Each holder of Series B Preferred Stock has the right to
convert such holder's shares of Series B Preferred Stock into shares of
Common Stock at any time. Each share of Series B Preferred Stock is
initially convertible into one share of Common Stock. The number of shares
of Common Stock into which a share of Series B Preferred Stock is
convertible will be equal to the ratio of the original purchase price of
$10.93, divided by the conversion price, which initially will be $8.00.
Under the antidilution provisions, the conversion price of the Series B
Preferred Stock will be subject to adjustment in the event of (i) any
subdivision or combination of the Company's outstanding Common Stock; (ii)
a dividend to holders of Common Stock payable in Common Stock; or (iii) the
issuance of additional shares of Common Stock or warrants or rights to
purchase Common Stock or securities convertible into Common Stock in
certain circumstances. The conversion price of Series B Preferred Stock
also will be adjusted on a "weighted average" basis upon the Company's
issuance of additional shares of Common Stock or warrants or rights to
purchase Common Stock or securities convertible into Common Stock for a
consideration per share which is less than the greater of the Fair Market
Price (as defined below) in effect immediately prior to such issue or the
conversion price in effect immediately prior to such issue. The "Fair
Market Price" means the average closing bid price of the Common Stock as
reported by The Nasdaq National Market (or the last sale price if traded on
an exchange) for a period of thirty (30) consecutive trading days ending on
the third day prior to the date of determination or (if the Common Stock is
not quoted on The Nasdaq National Market or listed on an exchange) the fair
market value determined by two-thirds of the Corporation's Board of
Directors, or (if the Board of Directors cannot reach agreement), as
determined by a qualified independent investment banking firm of national
reputation appointed by the vote of two-thirds of the Board of Directors.
The conversion price of the Series B Preferred Stock will not be adjusted
for issuances of Common Stock upon the conversion of the Series B Preferred
Stock, up to 800,000 shares of Common Stock issuable upon the exercise of
options issued to officers, directors and employees of the Company, up to
186,750 shares of Common Stock issuable upon exercise of the warrant
granted to BT Alex. Brown Incorporated in connection with the offer and
sale of the Series C Preferred Stock, or up to 505,375 shares of Common
Stock issuable upon
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exercise of warrants granted to certain lenders and guarantors or
purchasers of loans to the Company under certain circumstances.
In the event of (i) any consolidation, merger or similar business
combination of the Company, (ii) a capital reorganization of the Company or
(iii) a reclassification of the Common Stock, and the holders of the Series
B Preferred Stock have elected not to require redemption of their shares,
the Series B Preferred Stock then outstanding will thereafter be
convertible, at the option of the holder, into the kind and number of
shares of Common Stock or other securities or property (including cash) to
which the holders thereof would have been entitled if such holders had
converted such shares of Series B Preferred Stock into Common Stock
immediately prior to the effective date of such merger, consolidation,
disposition, reorganization or reclassification.
Each share of Series B Preferred Stock automatically will convert into
fully paid and nonassessable shares of Common Stock at the conversion rate,
upon the occurrence of a Series B Qualifying Offering. A "Series B
Qualifying Offering" means (i) the Corporation shall have consummated a
firm commitment underwritten public offering of its Common Stock by a
nationally recognized investment banking firm pursuant to an effective
registration under the Securities Act covering the offering and sale of
both primary and secondary shares of Common Stock which results in gross
proceeds of at least $20,000,000, (ii) the Common Stock is quoted or listed
on either The Nasdaq National Market, the New York Stock Exchange or the
American Stock Exchange, (iii) the price at which the Common Stock is sold
in such offering is at least equal to an amount which (a) is 200% of the
then effective conversion price of the Series B Preferred Stock or (b)
would represent, on an as converted basis, a compound annual rate of return
of 35% based upon the original issuance price of the Series B Preferred
Stock.
Redemption Rights. On the date six months after the payment of the
Notes in full in cash, the Company shall redeem all of the shares of Series
B Preferred Stock outstanding for $10.93 per share plus an amount equal to
all accrued and unpaid dividends to the date of redemption (the "Series B
Redemption Price"), payable in cash. Except as described below, upon a
Change of Control (as defined above), the Company shall redeem each share
of Series B Preferred Stock, payable in cash, at the Series B Redemption
Price. If on a respective redemption date, the funds of the Company legally
available for redemption of the Series B Preferred Stock (or Series A
Preferred Stock or Series C Preferred Stock, which shall rank pari passu
with the Series B Preferred Stock) are insufficient to redeem the total
number of shares of Preferred Stock to be redeemed on such date, the
Company will use the funds legally available therefor to redeem the maximum
number of shares of Preferred Stock ratably among the holders of such
shares to be redeemed based upon their holdings of Preferred Stock. The
Company may not redeem, under any circumstances, any shares of Series B
Preferred Stock until the Company pays the Notes in full in cash; if the
Company has not paid the Notes in full in cash on any redemption date, the
Company will redeem the shares of Series B Preferred Stock only after
payment of the Notes in full in cash.
Voting. Holders of shares of Series B Preferred Stock shall be
entitled to the number of votes equal to the number of full shares of
Common Stock into which such shares of Series B Preferred Stock is then
convertible. Unless otherwise required by law or except as described below,
the Series B Preferred Stock and the Common Stock shall vote together on
each matter submitted to stockholders, and not by class or series.
Prior to the consummation of a Series B Qualifying Offering, the
holders of the Series B Preferred Stock, voting together as a class, shall
be entitled to elect one director of the Company. Subsequent to a Series B
Qualifying Offering and only so long as at least 66 2/3% of the Common
Stock issuable upon the conversion of the Series B Preferred Stock is held
of record by the original purchasers of such stock, the holders of a
majority of the shares of Common Stock issuable upon conversion of the
Series B Preferred Stock shall be entitled to nominate one person for
election as a director of the Company and the Company will include such
person in management's slate of nominees for election as directors. Upon
the occurrence of an Event of Default, the holders of the Series B
Preferred Stock, together with the holders of the Series C Preferred Stock,
have the exclusive right to elect a majority of the Board of Directors.
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Without the authorizing vote or consent of the holders of two-thirds
of the outstanding shares of Series B Preferred Stock, voting as a class,
the Company shall not: (i) amend, waive or repeal any provisions of (or add
any provision to) the Certificate of Designations authorizing the Series B
Preferred Stock, the Company's Certificate of Incorporation or any
certificates of designations with respect to the Company's preferred stock;
(ii) amend, waive or repeal any provisions of (or add any provision to) the
Company's Bylaws; (iii) authorize, create, issue or sell any stock having
preferential rights in the distribution of earnings or assets of the
Company prior to or on a parity with those of the outstanding Series B
Preferred Stock other than shares of Series A Preferred Stock or Series C
Preferred Stock; (iv) except under certain circumstances, issue any shares
of Series B Preferred Stock; (v) enter into any agreements that restrict
the Company's obligation to pay dividends on or redeem the Series B
Preferred Stock; or (vi) dissolve the Company.
Without the authorizing vote of the holders of ninety percent (90%) of
the outstanding Series B Preferred Stock, voting as a class, the Company
shall not amend the Company's Certificate of Incorporation or the
Certificate of Designations creating the Series B Preferred Stock to change
(i) the dividend rate, (ii) redemption provisions, (iii) anti-dilution
provisions, (iv) the place or currency of payments with respect to the
Series B Preferred Stock, (v) the right to institute suit for payment, (vi)
conversion rights, or (vii) voting rights to adversely affect the
foregoing.
Preemptive Rights. Except pursuant to a Series B Qualifying Offering,
a stock option plan approved by the Company's Board of Directors, as a form
of consideration in a merger or acquisition in which the Company is the
surviving entity, or where the aggregate gross proceeds are less than
$500,000 in any single transaction in which the sale price per share is not
less than the then-applicable conversion price of the Series B Preferred
Stock, or $1,500,000 in all of such transactions, the Company shall not
issue or sell any shares of Common Stock, Preferred Stock or other
securities convertible into or exchangeable for shares of Common Stock,
unless prior to such issuance or sale, in the same proportion as the number
of shares of Common Stock issuable upon conversion of the Series B
Preferred Stock bears to the total number of fully-diluted shares of Common
Stock outstanding, the holders of the Series B Preferred Stock shall have
been given the opportunity to purchase such securities on the same terms as
such securities are proposed to be sold. The holders of two-thirds of the
Series B Preferred Stock may waive the preemptive rights afforded to the
holders of Series B Preferred Stock.
Series C Preferred Stock
The Series C Preferred Stock has the following rights and preferences:
Dividends. Commencing on August 31, 1997, the holders of Series C
Preferred Stock will be entitled to receive, when and as declared by the
Board of Directors of the Company out of funds legally available therefor,
cumulative dividends payable in cash or to accrue quarterly at a rate of
$0.56 (7%) per share per annum ($0.72 (9%) upon an Event of Default) before
any dividends are set apart for or paid on the Common Stock or on any prior
series of Preferred Stock. Dividends paid in cash on the shares of Series C
Preferred Stock (or Series A Preferred Stock or Series B Preferred Stock,
which shall rank pari passu with the Series C Preferred Stock) in an amount
less than the total amount of such dividends shall be allocated pro rata so
that the total value of dividends paid on the Preferred Stock shall in all
cases bear to each other the same ratio that the total value of accrued and
unpaid dividends on the Series A Preferred Stock, the Series B Preferred
Stock and the Series C Preferred Stock bear to each other.
Without the written consent of the holders of two-thirds of the
outstanding shares of Series C Preferred Stock, the Company shall not
declare or make any cash distribution with respect to any other shares of
capital stock of the Company unless all dividends on the shares of Series C
Preferred Stock shall have been paid or declared and set aside for payment.
Liquidation Preference. In the event of any liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary, the holders
of Series C Preferred Stock are entitled, before any amount is payable to
the holders of the Common Stock or any other class or series of stock
ranking junior to the Series C Preferred Stock, to receive $8.00 per share
plus an amount equal to all accrued and unpaid
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dividends to the date of payment. In the event of such a liquidation,
dissolution or winding up of the Company, the Series C Preferred Stock will
shall rank pari passu with the Series A Preferred Stock and the Series B
Preferred Stock. If, upon any such liquidation, dissolution or winding up
of the Company, the assets of the Company, or proceeds thereof, distributed
among the holders of Series C Preferred Stock shall be insufficient to pay
in full the aggregate preferential amounts on all of the then outstanding
shares of Series C Preferred Stock, then such assets or proceeds will be
distributed among such holders of Preferred Stock equally and ratably in
proportion to the full respective liquidation preference to which each such
holder is entitled.
Conversion. Each holder of Series C Preferred Stock has the right to
convert such holder's shares of Series C Preferred Stock into shares of
Common Stock at any time. Each share of Series C Preferred Stock is
initially convertible into one share of Common Stock. The number of shares
of Common Stock into which a share of Series C Preferred Stock is
convertible will be equal to the ratio of the original purchase price of
$8.00, divided by the conversion price, which initially will be $8.00.
Under the antidilution provisions, the conversion price of the Series C
Preferred Stock will be subject to adjustment in the event of (i) any
subdivision or combination of the Company's outstanding Common Stock; (ii)
a dividend to holders of Common Stock payable in Common Stock; or (iii) the
issuance of additional shares of Common Stock or warrants or rights to
purchase Common Stock or securities convertible into Common Stock in
certain circumstances. The conversion price of Series C Preferred Stock
also will be adjusted on a "weighted average" basis upon the Company's
issuance of additional shares of Common Stock or warrants or rights to
purchase Common Stock or securities convertible into Common Stock for a
consideration per share which is less than the greater of the Fair Market
Price in effect immediately prior to such issue or the conversion price in
effect immediately prior to such issue. The "Fair Market Price" means (i)
prior to the first anniversary of the initial issuance of the Series C
Preferred Stock, $8.00; and (ii) after the first anniversary of the initial
issuance of the Series C Preferred Stock, the average closing bid price of
the Common Stock as reported by The Nasdaq National Market (or the last
sale price if traded on an exchange) for a period of thirty (30)
consecutive trading days ending on the third day prior to the date of
determination or (if the Common Stock is not quoted on The Nasdaq National
Market or listed on an exchange) the fair market value determined by
two-thirds of the Corporation's Board of Directors, or (if the Board of
Directors cannot reach agreement), as determined by a qualified independent
investment banking firm of national reputation appointed by the vote of
two-thirds of the Board of Directors. The conversion price of the Series C
Preferred Stock will not be adjusted for issuances of Common Stock upon the
conversion of the Series C Preferred Stock, up to 800,000 shares of Common
Stock issuable upon the exercise of options issued to officers, directors
and employees of the Company, up to 186,750 shares of Common Stock issuable
upon exercise of the warrant granted to BT Alex. Brown in connection with
the offer and sale of the Series C Preferred Stock, or up to 505,375 shares
of Common Stock issuable upon exercise of warrants granted to certain
lenders and guarantors or purchasers of loans to the Company under certain
circumstances.
The conversion price of the Series C Preferred Stock also will be
adjusted if the Company reports earnings before interest, taxes,
depreciation, and amortization, as determined in accordance with generally
accepted accounting principles ("EBITDA") for the fiscal year ending June
30, 2000 (the "Period"), of less than $27,614,500. If the Company reports
EBITDA for the Period of less than or equal to $16,568,700, then the
conversion price of the Series C Preferred Stock will be reduced to equal
$5.00. If the Company reports EBITDA for the Period of less than
$27,614,500, but more than $16,568,700, then the conversion price of the
Series C Preferred Stock will be reduced to equal: (i) the then-current
conversion price, less (ii) the product of (A) a fraction, the numerator of
which will be $27,614,500, minus the EBITDA reported by the Company for the
Period, and the denominator of which will be $27,614,500, minus
$16,568,700, multiplied by (B) the then-current conversion price minus
$5.00. However, the adjustments of the conversion price of the Series C
Preferred Stock based on the EBITDA for the Period will not result in a
reduction of the conversion price to less than $5.00.
In addition to the foregoing, if, on or before December 31, 2000, the
Company sells all or substantially all of its assets, merges or
consolidates with any other business entity where the Company is
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not the surviving Company, or completes a public offering of the Company's
Common Stock pursuant to an effective registration under the Securities Act
of 1933, as amended, then (i) the adjustments based on the EBITDA reported
for the Period, as described in the preceding paragraph, will terminate
immediately and be of no effect, and (ii) if necessary to cause the holders
of the Series C Preferred Stock to obtain an internal rate of return of
35%, calculated as if each such holder purchased such shares of Series C
Preferred Stock at the purchase price per paid by such holder on the date
such holder purchased such shares, the then-current conversion price will
be reduced concurrently with any such transaction to an amount that results
in the holders of the Series C Preferred Stock obtaining such an internal
rate of return.
In the event of (i) any consolidation, merger or similar business
combination of the Company, (ii) a capital reorganization of the Company or
(iii) a reclassification of the Common Stock, and the holders of the Series
C Preferred Stock have elected not to require redemption of their shares,
the Series C Preferred Stock then outstanding will thereafter be
convertible, at the option of the holder, into the kind and number of
shares of Common Stock or other securities or property (including cash) to
which the holders thereof would have been entitled if such holders had
converted such shares of Series C Preferred Stock into Common Stock
immediately prior to the effective date of such merger, consolidation,
disposition, reorganization or reclassification.
Each share of Series C Preferred Stock will automatically convert into
fully paid and nonassessable shares of Common Stock at the conversion rate,
upon the occurrence of a Series C Qualifying Offering. A "Series C
Qualifying Offering" means (i) the Corporation shall have consummated a
firm commitment underwritten public offering of its Common Stock by a
nationally recognized investment banking firm pursuant to an effective
registration under the Securities Act covering the offering and sale of
both primary and secondary shares of Common Stock which results in gross
proceeds of at least $20,000,000, (ii) the Common Stock is quoted or listed
on either The Nasdaq National Market, the New York Stock Exchange or the
American Stock Exchange, (iii) the price at which the Common Stock is sold
in such offering is at least equal to an amount which (a) is 200% of the
then effective conversion price of the Series C Preferred Stock or (b)
would represent, on an as converted basis, a compound annual rate of return
of 35% based upon the original issuance price of the Series C Preferred
Stock.
Redemption Rights. On the date six months after the payment of the
Notes in full in cash, the Company shall redeem all of the Shares of Series
C Preferred Stock outstanding for $8.00 per share plus an amount equal to
all unpaid dividends accrued to the date of redemption (the "Series C
Redemption Price"), payable in cash. Except as described below, upon a
Change of Control (as defined above), the Company shall redeem each share
of Series C Preferred Stock, payable in cash, at the Series C Redemption
Price. If on a respective redemption date, the funds of the Company legally
available for redemption of the Series C Preferred Stock (or Series A
Preferred Stock or Series B Preferred Stock, which shall rank pari passu
with the Series C Preferred Stock) are insufficient to redeem the total
number of shares of Preferred Stock to be redeemed on such date, the
Company will use the funds legally available therefor to redeem the maximum
number of shares of Preferred Stock ratably among the holders of such
shares to be redeemed based upon their holdings of Preferred Stock. The
Company may not redeem, under any circumstances, any shares of Series C
Preferred Stock until the Company pays the Notes in full in cash; if the
Company has not paid the Notes in full in cash on any redemption date, the
Company will redeem the shares of Series C Preferred Stock only after
payment of the Notes in full in cash.
Voting. Holders of shares of Series C Preferred Stock shall be
entitled to the number of votes equal to the number of full shares of
Common Stock into which such share of Series C Preferred Stock is then
convertible. Unless otherwise required by law or except as described below,
the Series C Preferred Stock and the Common Stock shall vote together on
each matter submitted to stockholders, and not by class or series.
Prior to the consummation of a Series C Qualifying Offering, the
holders of the Series C Preferred Stock, voting together as a class, shall
be entitled to elect one director of the Company. Subsequent to a
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Series C Qualifying Offering and only so long as at least 66 2/3% of the
Common Stock issuable upon the conversion of the Series C Preferred Stock
is held of record by the original purchasers of such stock, the holders of
a majority of the Common Stock issuable upon conversion of the Series C
Preferred Stock shall be entitled to nominate one person for election as a
director of the Company and the Company will include such person in
management's slate of nominees for election as directors. Upon the
occurrence of an Event of Default, the holders of the Series C Preferred
Stock, together with the holders of the Series B Preferred Stock, have the
exclusive right to elect a majority of the Board of Directors.
Without the authorizing vote or consent of the holders of two-thirds
of the outstanding shares of Series C Preferred Stock, voting as a class,
the Company shall not: (i) amend, waive or repeal any provisions of (or add
any provision to) the Certificate of Designations authorizing the Series C
Preferred Stock, the Company's Certificate of Incorporation or any
certificates of designations with respect to the Company's preferred stock;
(ii) amend, waive or repeal any provisions of (or add any provision to) the
Company's Bylaws; (iii) authorize, create, issue or sell any stock having
preferential rights in the distribution of earnings or assets of the
Company prior to or on a parity with those of the outstanding Series C
Preferred Stock; (iv) except under certain circumstances, issue any
additional shares of Series C Preferred Stock; (v) enter into any
agreements that restrict the Company's obligation to pay dividends on or
redeem the shares of Series C Preferred Stock; or (vi) dissolve the
Company.
Without the authorizing vote of the holders of ninety percent (90%) of
the outstanding Series C Preferred Stock, voting as a class, the Company
shall not amend the Company's Certificate of Incorporation or the
Certificate of Designations creating the Series C Preferred Stock to change
(i) the dividend rate, (ii) redemption provisions, (iii) anti-dilution
provisions, (iv) the place or currency of payments with respect to the
Series C Preferred Stock, (v) the right to institute suit for payment, (vi)
conversion rights, or (vii) voting rights to adversely affect the
foregoing.
Preemptive Rights. Except pursuant to a Series C Qualifying Offering,
a stock option plan approved by the Company's Board of Directors, as a form
of consideration in a merger or acquisition in which the Company is the
surviving entity, or where the aggregate gross proceeds are less than
$500,000 in any single transaction in which the sale price per share is not
less than the then-applicable conversion price of the Series C Preferred
Stock, or $1,500,000 in all of such transactions, the Company shall not
issue or sell any shares of Common Stock, Preferred Stock or other
securities convertible into or exchangeable for shares of Common Stock,
unless prior to such issuance or sale, in the same proportion as the number
of shares of Common Stock issuable upon conversion of the Series C
Preferred Stock bears to the total number of fully-diluted shares of Common
Stock outstanding, the holders of the Series C Preferred Stock shall have
been given the opportunity to purchase such securities on the same terms as
such securities are proposed to be sold. The holders of two-thirds of the
Series C Preferred Stock may waive the preemptive rights afforded to the
holders of Series C Preferred Stock.
RIGHTS OF FIRST REFUSAL AND CO-SALE
Rights of First Refusal. Certain holders of Preferred Stock and Common
Stock have rights of first refusal with respect to proposed sales of stock by
the Company or by certain holders of shares of the Common Stock.
Pursuant to rights of first refusal, if the Company proposes to sell any
shares of Common Stock, Preferred Stock or other securities convertible into or
exchangeable for shares of Common Stock, other than any issuance or sale (i)
pursuant to a Series B Qualifying Offering or Series C Qualifying Offering, (ii)
pursuant to a stock option plan approved by the Board of Directors, (iii) as a
form of consideration in connection with a merger or acquisition where the
Company is the surviving entity or (iv) where the aggregate gross proceeds are
less than $500,000 in any single transaction (provided that the sale price per
share is not less than the then-applicable conversion price of the Series B
Preferred Stock or Series C Preferred Stock, and provided further that the
aggregate gross proceeds of all such transactions shall not exceed $1,500,000
(the "Subject Shares"), then the Company must first offer to sell the Subject
Shares to the holders of Common Stock and Series B Preferred Stock and Series C
Preferred Stock upon the same terms and conditions as the proposed
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sale. If such holders do not purchase all of such Subject Shares to which they
are entitled, then the other holders of Common Stock, Series B Preferred Stock
and Series C Preferred Stock shall have the right to purchase their pro rata
portion of the subject shares which such holders did not elect to purchase. If
such holders of Common Stock, Series B Preferred Stock and Series C Preferred
Stock do not collectively elect to purchase all of the Subject Shares, the
Company may proceed to sell or assign the Subject Shares not purchased by such
holders to the proposed transferee on the same terms offered the holders within
three months after the 30 day period in which the holders of Common Stock,
Series B Preferred Stock and Series C Preferred Stock could have elected to
purchase the Subject Shares.
Pursuant to rights of first refusal, if certain holders of Common Stock
propose to sell any or all of such holder's Common Stock, other than any sale in
the event of a public offering, merger, consolidation or exchange of securities
of the Company approved by the stockholders of the Company, then the holder of
Common Stock must first offer to sell such shares of Common Stock to the other
holders of the Company's Common Stock and the holders of the Series A Preferred
Stock upon the same terms and conditions as the proposed sale. If such holders
of Common Stock and Series A Preferred Stock do not individually or collectively
elect to purchase all of such shares of Common Stock, then the selling holder of
Common Stock must notify the other holders of the Company's Common Stock and the
holders of the Series A Preferred Stock of the number of shares of Common Stock
that remain to be sold to the prospective purchaser. Each holder of the
Company's Common Stock then will have, for a period of twenty days after the
date of such notice, the pro rata right (in proportion to their respective
ownership percentages of Common Stock) to purchase the remaining shares. The
holders of Series B Preferred Stock and Series C Preferred Stock do not have
rights equivalent to the rights of first refusal described in this paragraph.
Rights of Co-Sale. The current holders of the Company's outstanding shares
of Common Stock have certain co-sale rights. As noted above, pursuant to rights
of first refusal, if a holder of Common Stock proposes to sell any or all of
such holder's Common Stock, other than any sale in the event of a public
offering, merger, consolidation or exchange of securities of the Company
approved by the stockholders of the Company, then the holder of Common Stock
must first offer to sell such shares of Common Stock to the other holders of the
Company's Common Stock and the holders of the Series A Preferred Stock upon the
same terms and conditions as the proposed sale. If such holders of Common Stock
and Series A Preferred Stock do not individually or collectively elect to
purchase all of such shares of Common Stock, then the selling holder of Common
Stock must notify the other holders of the Company's Common Stock and the
holders of the Series A Preferred Stock of the number of shares of Common Stock
that remain to be sold to the prospective purchaser. Each holder of the
Company's Common Stock then will have, for a period of twenty days after the
date of such notice, the pro rata right (in proportion to their respective
ownership percentages of Common Stock) to sell, instead of the holder of Common
Stock, shares of Common Stock to the proposed purchaser on the same terms and
conditions as the proposed seller of Common Stock. The holders of Series B
Preferred Stock and Series C Preferred Stock do not have rights equivalent to
the rights of co-sale described in this paragraph.
The holders of the Company's outstanding shares of Series B Preferred and
Series C Preferred Stock have certain co-sale rights. If a current holder of
shares of the Company's outstanding Common Stock proposes to sell shares of
Common Stock (other than shares of Common Stock issuable upon the conversion of
Series B Preferred Stock or Series C Preferred Stock), the holders of Series B
Preferred Stock and Series C Preferred Stock will have the pro rata right (in
proportion to their respective ownership percentages of the Company's total
outstanding shares on an as-converted to Common Stock basis) to sell, instead of
the holder of Common Stock, shares of Common Stock (issuable upon conversion of
their Series B Preferred Stock or Series C Preferred Stock) to the proposed
purchaser on the same terms and conditions as the Common Stock holder's proposed
sale. The co-sale rights terminate upon a Series B Qualifying Offering or a
Series C Qualifying Offering, the consolidation, merger or capital
reorganization of the Company, the sale, lease or transfer by the Company of all
or substantially all of its assets, or a reclassification of the Company's
outstanding shares of Common Stock, the date on which those who purchased the
Series B Preferred Stock pursuant to the Stock Purchase Agreement dated as of
November 13, 1996, or their affiliates, cease to own of record 50% or more of
the Series B Preferred Stock (or shares of Common Stock into which such Series B
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Preferred Stock may have been converted) purchased pursuant to such agreement,
or the date on which those who purchased the Series C Preferred Stock pursuant
to the Stock Purchase Agreement dated as of August 22, 1997, or their
affiliates, cease to own of record 50% or more of the Series C Preferred Stock
(or shares of Common Stock into which such Series C Preferred Stock may have
been converted) purchased pursuant to such agreement.
WARRANTS
In addition to the Warrants, the Company has granted warrants to purchase
an aggregate of 785,774 shares of Common Stock, as follows: (i) 280,399 having
an exercise price of $8.00 per share, including presently exercisable warrants
to purchase 100,399 shares of Common Stock granted to BT Alex. Brown
Incorporated in connection with the offer and sale of the Series C Preferred
Stock, and (ii) 505,375 having an exercise price of $0.01 per share granted to
the Initial Purchaser in connection with the Unit Offering (and subsequently
resold by the Initial Purchaser in the form of the Units to qualified
institutional buyers pursuant to Rule 144A under the Securities Act). The
exercise price and the number of shares of the Common Stock for which the
warrants may be exercised are subject to adjustment in the event of any
subdivision or combination of the Company's outstanding Common Stock, a dividend
to holders of Common Stock payable in Common Stock or the issuance of additional
shares of Common Stock in certain circumstances.
CERTAIN PROVISIONS OF THE CERTIFICATES OF DESIGNATIONS, BYLAWS AND DELAWARE LAW
The Company's Bylaws contain certain provisions that may have the effect of
rendering more difficult certain possible takeover proposals to acquire control
of the Company and of making removal of management of the Company more
difficult. Pursuant to the Company's Bylaws, only a director may call a special
meeting of the stockholders of the Company. In addition, the Certificates of
Designations creating the Series A Preferred Stock, the Series B Preferred
Stock, and the Series C Preferred Stock each provide for the immediate
redemption of the Series A Preferred Stock, the Series B Preferred Stock and the
Series C Preferred Stock upon a Change of Control (as discussed above). However,
in the event of such a Change of Control prior to the payment in full in cash of
the Notes, the Company may not redeem any shares of Series A Preferred Stock,
Services B Preferred Stock or Series C Preferred Stock until the Notes are paid
in full in cash. In such event, the Company must redeem the shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
immediately after payment of the Notes in full in cash.
REGISTRATION RIGHTS
The Company has granted certain registration rights to the holders of
shares of Common Stock held by the Patricof Managed Funds and to holders of the
shares of Common Stock issuable upon conversion of the Series B Preferred Stock,
the Series C Preferred Stock and the exercise of the warrants granted to BT
Alex. Brown Incorporated, and any additional shares of Common Stock acquired as
a result of a stock dividend, stock split or other distribution in respect of
the Series B Preferred Stock or the Series C Preferred Stock (all such shares,
together, the "Registrable Securities").
At any time and from time to time after January 1, 1999, holders of
Registrable Securities will be entitled to demand that the Company on three
occasions register the resale of Registrable Securities under the Securities Act
(a "Demand Registration"). Such demand must be made by the holders of the lesser
of at least 25% of the Registrable Securities or of Registrable Securities
having a minimum aggregate offering price of $7,500,000 (the "Minimum Offering
Price"). An offering pursuant to any Demand Registration may be in the form of
an underwritten offering. In addition to the foregoing demand rights, if the
resale of the Registrable Securities may be registered on Form S-3, the holders
of Registrable Securities are entitled to require the Company to so register the
Registrable Securities once per year without regard to the Minimum Offering
Price or the aggregate number of such registrations.
In addition, the Company is required to give notice to holders of the
Registrable Securities of its filing of a registration statement (other than on
Form S-4 or Form S-8) for its own account or the account of another stockholder
of the Company and to offer such holders the opportunity to include Registrable
Securities on
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such registration statement subject to the compliance by any such holder with
certain notice conditions (a "Piggyback Registration"). In the event the
offering pursuant to such registration statement is an underwritten one, the
Company will use its reasonable best efforts to cause the managing underwriter
to permit the Registrable Securities to be included.
The Company shall be responsible for all expenses in connection with all of
the foregoing registrations, other than underwriting discounts and commissions,
except under certain limited circumstances.
If, in an underwritten offering pursuant to a Demand Registration, the
managing underwriter requires cutbacks of the number of shares of Common Stock
to be included in the offering, the number of shares to be offered for the
account of the Company or any other person (other than the holders of
Registrable Securities) participating in such offering will be reduced or
limited pro rata in proportion to the respective number of shares requested to
be registered. If, in an underwritten offering pursuant to a Piggyback
Registration, the managing underwriter requires cutbacks of the number of shares
of Common Stock to be included in the offering, cutbacks shall be made in the
following order (i) shares of Common Stock to be offered by holders of Common
Stock other than the holders of Registrable Securities, to the extent necessary
to reduce the total number of shares as recommended by the managing underwriter
and (ii) if further reduction is necessary, shares held by the holders of
Registrable Securities shall be reduced on a pro rata basis in proportion to the
relative number of Registrable Securities of the holders of Registrable
Securities participating in such offering. If an offering pursuant to a Demand
Registration is not an underwritten offering, neither the Company nor any
stockholder of the Company (other than the holders of Registrable Securities)
shall be permitted to include securities in such offering without the consent of
the holders of Registrable Securities being offered pursuant to such Demand
Registration.
All holders of Registrable Securities agree not to make any sale of
Registrable Shares within a period of up to 180 days prior to or following the
effective date of a registration statement of the Company filed under the
Securities Act, except for Common Stock included in the registration and unless
otherwise permitted by the Company or such underwriter.
In addition to the registration rights granted to the holders of
Registrable Securities, the Company also has granted certain registration rights
to the holder of a warrant to purchase up to 180,000 shares of the Company's
Common Stock. The Company is required to give notice to the holder of the
warrant of the Company's filing of a registration statement (other than on Form
S-4 or Form S-8) for its own account or the account of another stockholder of
the Company and to offer to the holder of the warrant the opportunity to include
on such registration statement shares of the Company's Common Stock issuable
upon exercise of the warrant, subject to the compliance by the holder of the
warrant with certain conditions, including the exercise of the warrant by the
holder of the warrant for at least the number of shares of the Company's Common
Stock being registered. In the event the offering pursuant to such registration
statement is an underwritten one and the managing underwriter requires cutbacks
of the number of shares of Common Stock to be included in the offering, then the
number of shares of Common Stock to be included in the offering by the holder of
the warrant will be reduced pro rata based on the number of shares of Common
Stock which each selling stockholder (other than the holders of the Registrable
Securities) has requested to include in the registration statement. The
registration rights granted to the holder of the warrant are subordinate to the
registration rights granted to the holders of the Registrable Securities.
CERTAIN APPOINTMENTS TO THE BOARD OF DIRECTORS
Pursuant to an Amended and Restated Securityholders' Agreement and Exchange
Agreement, dated as of November 13, 1996 (as amended pursuant to an amendment,
dated as of August 22, 1997, the "Amended Securityholders' Agreement") (i) the
Company's Board of Directors shall consist of not more than seven members, (ii)
as long as the Series A Preferred Stock has not been redeemed and paid in full,
the holders of the Series A Preferred Stock have the right to designate two
directors, (iv) the holders of the Series B Preferred Stock have the right to
designate one director, (iii) the holders of the Series C Preferred Stock have
the right to designate one director, (v) certain holders of the Common Stock
have the right to designate two directors, and (vi) the Board of Directors and
the holders of the Series B Preferred Stock and Series C Preferred Stock will
mutually agree upon the remaining director.
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THE EXCHANGE OFFER
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and reference is made to the
provisions of the Registration Rights Agreement, a copy of which is available as
set forth under "Description of the New Notes -- Additional Information."
TERMS OF THE EXCHANGE OFFER
In connection with the issuance of the Old Notes pursuant to the Purchase
Agreement, the Company and the Initial Purchaser entered into the Registration
Rights Agreement. Under the Registration Rights Agreement, the Company is
required to file within 60 days after May 27, 1998 (the date the Registration
Rights Agreement was entered into (the "Closing Date")) a registration statement
(the "Exchange Offer Registration Statement") for a registered exchange offer
with respect to an issue of new notes identical in all material respects to the
Old Notes except that the new notes shall contain no restrictive legend thereon.
Under the Registration Rights Agreement, the Company is required to (i) cause
the Exchange Offer Registration Statement to be filed with the Commission no
later than 60 days after the Closing Date, (ii) use its best efforts to cause
such Exchange Offer Registration Statement to become effective within 120 days
after the Closing Date, (iii) use its best efforts to keep the Exchange Offer
open for at least 20 business days (or longer if required by applicable law),
(iv) use its best efforts to consummate the Exchange Offer on or prior to the
30th business day following the date on which the Exchange Offer Registration
Statement is declared effective by the Commission and (v) cause the Exchange
Offer to comply with all applicable federal and state securities laws. The
Exchange Offer being made hereby, if commenced and consummated within the time
periods described in this paragraph, will satisfy those requirements under the
Registration Rights Agreement.
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, all Old Notes validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date will be
accepted for exchange. New Notes will be issued in exchange for an equal
principal amount of outstanding Old Notes accepted in the Exchange Offer. Old
Notes may be tendered only in integral multiples of $1,000 of principal amount.
This Prospectus, together with the Letter of Transmittal, is being sent to all
registered holders as of , 1998. There will be no fixed record date
for determining registered holders of Old Notes entitled to participate in the
Exchange Offer. The Exchange Offer is not conditioned upon any minimum principal
amount of Old Notes being tendered in exchange. However, the obligation to
accept Old Notes for exchange pursuant to the Exchange Offer is subject to
certain conditions as set forth herein under "-- Conditions."
Old Notes shall be deemed to have been accepted as validly tendered when,
as and if the Company has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders of Old
Notes for the purposes of receiving the New Notes and delivering New Notes to
such holders.
Based on interpretations by the staff of the Commission, as set forth in
no-action letters issued to third parties, including the Exchange Offer
No-Action Letters, the Company believes that the New Notes issued pursuant to
the Exchange Offer may be offered for resale, resold or otherwise transferred by
each holder thereof (other than a broker-dealer who acquires such New Notes
directly from the Company for resale pursuant to Rule 144A under the Securities
Act or any other available exemption under the Securities Act and other than any
holder that is an "affiliate" (as defined in Rule 405 under the Securities Act)
of the Company) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holder's business and such holder is not engaged in,
and does not intend to engage in, a distribution of such New Notes and has no
arrangement with any person to participate in a distribution of such New Notes.
By tendering the Old Notes in exchange for New Notes, each holder, other than a
broker-dealer, will represent to the Company that, among other things (i) it is
not an affiliate (as defined in Rule 405 under the Securities Act) of the
Company; (ii) it is not a broker-dealer tendering Old Notes acquired for its own
account directly from the Company; (iii) any New Notes to be received by it will
be acquired in the ordinary course of its business; and (iv) it is not engaged
in,
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and does not intend to engage in, a distribution of such New Notes and has no
arrangement or understanding to participate in a distribution of the New Notes.
If a holder of Old Notes is engaged in or intends to engage in a distribution of
the New Notes or has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such holder may not rely on the applicable interpretations of the staff of the
Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction. Each Participating Broker-Dealer that receives New Notes for its
own account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such Participating Broker-Dealer
as a result of market-making activities or other trading activities. The Company
has agreed that it will make this Prospectus available to any Participating
Broker-Dealer for a period of time not to exceed one year after the date on
which the Exchange Offer is consummated for use in connection with any such
resale. See "Plan of Distribution."
In the event that (i) any changes in law or the applicable interpretations
of the staff of the Commission do not permit the Company to effect the Exchange
Offer, or (ii) if any holder of Old Notes shall notify the Company within 10
business days following the consummation of the Exchange Offer that (A) such
holder was prohibited by law or Commission policy from participating in the
Exchange Offer or (B) such holder may not resell the New Notes acquired by it in
the Exchange Offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such holder or (C) such holder is a
broker-dealer and holds Old Notes acquired directly from the Company or one of
its affiliates, then the Company shall (x) cause to be filed a shelf
registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement") on or prior to 30 days after the date on which the
Company determines that it is not required to file the Exchange Offer
Registration Statement pursuant to clause (i) above or 90 days after the date on
which the Company receives the notice specified in clause (ii) above and shall
(y) use its best efforts to cause such Shelf Registration Statement to become
effective within 90 days after the date on which the Company becomes obligated
to file such Shelf Registration Statement. If, after the Company has filed an
Exchange Offer Registration Statement, the Company is required to file and make
effective a Shelf Registration Statement solely because the Exchange Offer shall
not be permitted under applicable federal law, then the filing of the Exchange
Offer Registration Statement shall be deemed to satisfy the requirements of
clause (x) above. Such an event shall have no effect on the requirements of
clause (y) above. The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended, subject
to the exceptions provided for in the Registration Rights Agreement, to the
extent necessary to ensure that it is available for sales of Transfer Restricted
Securities (as defined below) by the holders thereof for a period of at least
two years following the date on which such Shelf Registration Statement first
becomes effective under the Securities Act. The term "Transfer Restricted
Securities" means each Note, until the earliest to occur of (a) the date on
which such Note is exchanged in the Exchange Offer and entitled to be resold to
the public by the holder thereof without complying with the prospectus delivery
requirements of the Act, (b) the date on which such Note has been disposed of in
accordance with a Shelf Registration Statement, (c) the date on which such Note
is disposed of by a broker-dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including delivery of
the prospectus contained therein) or (d) the date on which such Note is
distributed to the public pursuant to Rule 144 under the Act, or is eligible for
sale under Rule 144(k).
If (i) the Exchange Offer Registration Statement or the Shelf Registration
Statement is not filed with the Commission on or prior to the date specified in
the Registration Rights Agreement, (ii) any such Registration Statement has not
been declared effective by the Commission on or prior to the date specified for
such effectiveness in the Registration Rights Agreement, (iii) the Exchange
Offer has not been consummated on or prior to the date specified in the
Registration Rights Agreement or (iv) any Registration Statement required by the
Registration Rights Agreement is filed and declared effective but shall
thereafter cease to be effective or fail to be usable for its intended purpose
without being succeeded immediately by a post-effective
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amendment to such Registration Statement that cures such failure and that is
itself declared effective immediately, other than as provided in the
Registration Rights Agreement (each such event referred to in clauses (i)
through (iv), a "Registration Default"), then the Company has agreed to pay
Liquidated Damages to each holder of Transfer Restricted Securities. With
respect to the first 90-day period immediately following the occurrence of such
Registration Default the Liquidated Damages shall equal $.05 per week per $1,000
principal amount of Transfer Restricted Securities held by such holder for each
week or portion thereof that the Registration Default continues. The amount of
the Liquidated Damages shall increase by an additional $.05 per week per $1,000
in principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.25 per week per $1,000 principal
amount of Transfer Restricted Securities. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon consummation of the Exchange Offer, in the case of (iii)
above, or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made usable in the case of (iv) above, the
Liquidated Damages payable with respect to the Transfer Restricted Securities a
result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued Liquidated Damages shall be paid to the holder of the global
note representing the Old Notes by wire transfer of immediately available funds
or by federal funds check and to holders of certificated securities by mailing
checks to their registered addresses on each May 15 and November 15. All
obligations of the Company set forth in the preceding paragraph that are
outstanding with respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security shall have been
satisfied in full.
Upon consummation of the Exchange Offer, subject to certain exceptions,
holders of Old Notes who do not exchange their Old Notes for New Notes in the
Exchange Offer will no longer be entitled to registration rights and will not be
able to offer or sell their Old Notes, unless such Old Notes are subsequently
registered under the Securities Act (which, subject to certain limited
exceptions, the Company will have no obligation to do), except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. See "Risk Factors -- Consequences of Failure
to Exchange."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The term "Expiration Date" shall mean , 1998 (30 calendar days
following the commencement of the Exchange Offer), unless the Exchange Offer is
extended, if and as required by applicable law, in which case the term
"Expiration Date" shall mean the latest date to which the Exchange Offer is
extended.
In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will notify the
holders of the Old Notes by means of a press release or other public
announcement prior to 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date.
The Company reserves the right (i) to delay acceptance of any Old Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and not permit
acceptance of Old Notes not previously accepted if any of the conditions set
forth herein under " -- Conditions" shall have occurred and shall not have been
waived by the Company, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent, or (ii) to amend the terms of the Exchange
Offer in any manner deemed by it to be advantageous to the holders of the Old
Notes. Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
Exchange Agent. If the Exchange Offer is amended in a manner determined by the
Company to constitute a material change, the Company will promptly disclose such
amendment in a manner reasonably calculated to inform the holders of the Old
Notes of such amendment.
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PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, have the signatures thereon guaranteed if required by the
Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal,
together with any other required documents, to the Exchange Agent prior to 5:00
p.m., New York City time, on or prior to the Expiration Date. In addition,
either (i) certificates for such Old Notes must be received by the Exchange
Agent along with the Letter of Transmittal, (ii) a timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if such
procedure is available, into the Exchange Agent's account at DTC (the
"Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date or (iii) the holder must comply with the guaranteed delivery
procedures described below.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS OF THE NOTES. IF
SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD
NOTES SHOULD BE SENT TO THE COMPANY. Delivery of all documents must be made to
the Exchange Agent at its address set forth below. Holders of Notes may also
request their respective brokers, dealers, commercial banks, trust companies or
nominees to effect such tender for such holders.
The tender by a holder of Old Notes will constitute an agreement between
such holder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
The term "holder" with respect to the Exchange Offer means any person in whose
name Old Notes are registered on the books of the Company or any other person
who has obtained a properly completed bond power from the registered holder.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial owner wishes to
tender on his own behalf, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering his Old Notes, either make
appropriate arrangements to register ownership of the Old Notes in such owner's
name or obtain a properly completed bond power from the registered holder. The
transfer of registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by any member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Exchange Act (each an "Eligible Institution") unless the Old
Notes tendered pursuant thereto are tendered (i) by a registered holder who has
not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by bond powers and a proxy which authorizes such person
to tender the Old Notes on behalf of the registered holder, in each case as the
name of the registered holder or holders appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
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All questions as to the validity, form, eligibility (including time of
receipt) and withdrawal of the tendered Old Notes will be determined by the
Company in its sole discretion, which determination will be final and binding.
The Company reserves the absolute right to reject any and all Old Notes not
properly tendered or any Old Notes which, if accepted, would, in the opinion of
counsel for the Company, be unlawful. The Company also reserves the absolute
right to waive any irregularities or conditions of tender as to particular Old
Notes. The Company's interpretation of the terms and conditions of the Exchange
Offer (including the instructions in the Letter of Transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of defects or irregularities
with respect to tenders of Old Notes, nor shall any of them incur any liability
for failure to give such notification. Tenders of Old Notes will not be deemed
to have been made until such irregularities have been cured or waived. Any Old
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned without cost to such holder by the Exchange Agent to the tendering
holders of Old Notes, unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion, subject
to the provisions of the Indenture, to (i) purchase or make offers for any Old
Notes that remain outstanding subsequent to the Expiration Date or, as set forth
under " -- Conditions", (ii) to terminate the Exchange Offer in accordance with
the terms of the Registration Rights Agreement and (iii) to the extent permitted
by applicable law, purchase Old Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offer.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
all Old Notes properly tendered will be accepted, promptly after the Expiration
Date, and the New Notes will be issued promptly after acceptance of the Old
Notes. See "-- Conditions" below. For purposes of the Exchange Offer, Old Notes
shall be deemed to have been accepted as validly tendered for exchange when, as
and if the Company has given oral or written notice thereof to the Exchange
Agent.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or nonexchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in the case of Old
Notes tendered by book-entry transfer procedures described below, such
nonexchanged Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal with any required
signature guarantees and any other required documents must, in any case, be
transmitted to and received by the Exchange Agent at one of the addresses set
forth below under "-- Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
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GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes,
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedures for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent receives from such Eligible Institution a properly completed and duly
executed Letter of Transmittal and Notice of Guaranteed Delivery, substantially
in the form provided by the Company (by mail or hand delivery), setting forth
the name and address of the holder of Old Notes and the amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the Letter
of Transmittal will be deposited by the Eligible Institution with the Exchange
Agent and (iii) the certificates for all physically tendered Old Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be, and
all other documents required by the Letter of Transmittal are received by the
Exchange Agent within three NYSE trading days after the date of execution of the
Notice of Guaranteed Delivery.
WITHDRAWAL OF TENDERS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time on the Expiration Date. For a withdrawal to be effective, a
written notice of withdrawal must be received by the Exchange Agent prior to
5:00 p.m., New York City time on the Expiration Date at one of the addresses set
forth below under "-- Exchange Agent." Any such notice of withdrawal must
specify the name of the person having tendered the Old Notes to be withdrawn,
identify the Old Notes to be withdrawn (including the principal amount of such
Old Notes) and (where certificates for Old Notes have been transmitted) specify
the name in which such Old Notes are registered, if different from that of the
withdrawing holder. If certificates for Old Notes have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Old Notes have been tendered pursuant to the procedure
for book-entry transfer described above, any notice of withdrawal must specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder (or, in the case of Old Notes
tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Old Notes will be credited to an account maintained with
such Book-Entry Transfer Facility for the Old Notes) as soon as practicable
after withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "-- Procedures for Tendering" and "-- Book-Entry
Transfer" above at any time on or prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Old Notes will not be
required to be accepted for exchange, nor will New Notes be issued in exchange
for any Old Notes, and the Company may terminate or amend the Exchange Offer as
provided herein before the acceptance of such Old Notes, if because of any
change in law, or applicable interpretations thereof by the Commission, the
Company determines that they are not permitted to effect the Exchange Offer. The
Company has no obligation to, and will not knowingly, permit acceptance of
tenders of Old Notes from affiliates (within the meaning of Rule 405 under the
Securities Act) of the Company or from any other holder or holders who are not
eligible to participate in the Exchange Offer
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under applicable law or interpretations thereof by the Commission, or if the New
Notes to be received by such holder or holders of Old Notes in the Exchange
Offer, upon receipt, will not be tradable by such holder without restriction
under the Securities Act and the Exchange Act and without material restrictions
under the "blue sky' or securities laws of substantially all of the states of
the United States.
EXCHANGE AGENT
State Street Bank & Trust Company has been appointed as Exchange Agent for
the Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight or Hand Delivery:
Corporate Trust Department Corporate Trust Department
P.O. Box 778 Two International Place, 4th Floor
Boston, Massachusetts 02102-0078 Boston, Massachusetts 02110
Attention: Kellie Mullen Attention: Kellie Mullen
</TABLE>
By Facsimile:
Corporate Trust Department
(617) 664-5290
Attention: Kellie Mullen
For information call:
(617) 664-5587
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone, telecopy or in person by officers and regular
employees of the Company.
The Company will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. The Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of the Prospectus and related documents to the beneficial
owners of the Old Notes, and in handling or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company, including fees and expenses of the Exchange Agent and
Trustee and accounting, legal, printing and related fees and expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered holder of the Old Notes
tendered, or if tendered Old Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.
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DESCRIPTION OF THE NEW NOTES
The Old Notes were issued, and the New Notes will be, issued pursuant to
the Indenture which is dated as of May 27, 1998 and is between the Company and
State Street Bank and Trust Company, as trustee (the "Trustee"). The terms of
the New Notes will include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (the "Trust
Indenture Act"). The New Notes will be subject to all such terms, and
prospective holders of New Notes are referred to the Indenture and the Trust
Indenture Act for a statement thereof. The following summary of the material
provisions of the Indenture does not purport to be complete and is qualified in
its entirety by reference to the Indenture, including the definitions therein of
certain terms used below. Copies of the proposed form of Indenture, Registration
Rights Agreement and the Escrow Agreement are available as set forth below under
"-- Additional Information." The definitions of certain terms used in the
following summary are set forth below under "-- Certain Definitions." For
purposes of this summary, the term "Company" refers only to Park 'N View, Inc.
GENERAL
The New Notes will be general senior obligations of the Company and will
rank pari passu in right of payment with all current and future unsecured senior
indebtedness of the Company. In addition, a portion of the net proceeds from the
Offering were used to purchase the Pledged Securities in an amount sufficient to
provide for payment in full when due of the first four scheduled interest
payments on the Notes. The Pledged Securities were pledged as security for
repayment of principal and interest on the Notes under the Escrow Agreement. See
"-- Disbursement of Funds; Escrow Account." As of March 31, 1998, on a pro forma
basis after giving effect to the Unit Offering and the application of the net
proceeds therefrom, the Company would have had approximately $70.5 million of
long-term debt outstanding.
As of the date of the Indenture, the Company had no Subsidiaries. The
Indenture requires that if the Company or any of its Subsidiaries shall acquire
or create another Subsidiary after the date of the Indenture, then such newly
acquired or created Subsidiary shall become a Guarantor and execute a
supplemental indenture in accordance with the terms of the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The New Notes will be limited in aggregate principal amount of $75.0
million and will mature on May 15, 2008. Interest on the New Notes will accrue
at the rate of 13% per annum, and will be payable semi-annually on May 15 and
November 15 of each year commencing November 15, 1998, to holders of record on
the immediately preceding May 1 and November 1, respectively. Interest on the
Notes will accrue from the most recent date of which interest has been paid, or
if no interest has been paid, from the date of original issuance. Interest will
be computed on the basis of a 360-day year comprised of 30-day months.
Principal, premium, if any, and interest and Liquidated Damages, if any, on the
New Notes will be payable at the office or agency of the Company maintained for
such purpose within the City and State of New York or, at the option of the
Company, payment of interest and Liquidated Damages, if any, may be made by
check mailed to the holders of the Notes at their respective addresses set forth
in the register of holders of the Notes; provided that all payments of
principal, premium, interest and Liquidated Damages, if any, with respect to New
Notes the holders of which have given wire transfer instructions to the Company
will be required to be made by wire transfer of immediately available funds to
the accounts specified by the holders thereof. Until otherwise designated by the
Company, the Company's office or agency in New York will be the office of the
Trustee maintained for such purpose. The New Notes will be issued in
denominations of $1,000 and integral multiples thereof.
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OPTIONAL REDEMPTION
The New Notes will not be redeemable at the Company's option prior to May
15, 2003. Thereafter, the New Notes will be subject to redemption at any time at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on May 15 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003........................................................ 106.500%
2004........................................................ 104.333%
2005........................................................ 102.167%
2006 and thereafter......................................... 100.000%
</TABLE>
Notwithstanding the foregoing, any time after the issue date of the Old
Notes and prior to May 15, 2001, the Company, at its option, may redeem up to
35% of the then outstanding New Notes with the net proceeds of an Initial Public
Equity Offering of the Company at a redemption price of 113.0% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the date of redemption; provided that at least 65% in aggregate
principal amount of Notes originally issued remain outstanding immediately after
the occurrence of such redemption (excluding Notes held by the Company, its
subsidiaries and its Affiliates); and provided, further, that such redemption
shall occur within 60 days of the date of the closing of such Initial Public
Equity Offering.
MANDATORY REDEMPTION
Except as set forth under "-- Repurchase at the Option of Holders -- Change
of Control," and "-- Asset Sales," the Company is not required to make mandatory
redemption payments or sinking fund payments with respect to the New Notes.
SELECTION AND NOTICE
If less than all of the New Notes are to be redeemed at any time, selection
of New Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
New Notes are listed, or, if the New Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no New Notes of $1,000 or less shall be redeemed in part. Notices
of redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each Holder of New Notes to be redeemed at
its registered address. Notices of redemption may not be conditional. If any New
Note is to be redeemed in part only, the notice of redemption that relates to
such New Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in principal amount equal to the unredeemed portion thereof
will be issued in the name of the Holder thereof upon cancellation of the
original New Note. New Notes called for redemption become due on the date fixed
for redemption. On and after the redemption date, interest ceases to accrue on
New Notes or portions of them called for redemption.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each Holder of New Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
New Notes on the date specified in such
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notice, which date shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed (the "Change of Control Payment Date"),
pursuant to the procedures required by the Indenture and described in such
notice. Any New Note not tendered will continue to accrue interest. The Company
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the New Notes as
a result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all New Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the New Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of New Notes or portions thereof being purchased
by the Company. The Paying Agent will promptly mail to each Holder of New Notes
so tendered the Change of Control Payment for such New Notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a New Note equal in principal amount to any unpurchased portion
of the New Notes surrendered, if any; provided that each such New Note will be
in a principal amount of $1,000 or an integral multiple thereof. The Company
will publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the New Notes to require that the Company
repurchase or redeem the New Notes in the event of a takeover, recapitalization
or similar transaction. Finally, the Company's ability to pay cash to the
Holders of New Notes upon a repurchase may be limited by the Company's then
existing financial resources. See "Risk Factors -- Risk of Inability to
Repurchase Notes Upon a Change of Control."
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all New Notes validly tendered and not withdrawn under such Change of
Control Offer.
"Change of Control" means the occurrence of any of the following: (i) the
sale, transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act); (ii) the adoption of a plan relating to the liquidation or dissolution of
the Company; (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person," such "person" shall be deemed to have
beneficial ownership of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
40% of the Voting Stock of the Company (measured by voting power rather than
number of shares); or (iv) the first day on which a majority of the members of
the Board of Directors of the Company are not Continuing Directors.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder of New Notes to require the Company to
repurchase such Notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of the Company and its
Subsidiaries taken as a whole to another Person or group may be uncertain.
"Continuing Director" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was
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nominated for election or elected to such Board of Directors with the approval
of a majority of the Continuing Directors who were members of such Board at the
time of such nomination or election.
"Principals" means Patricof & Co. Ventures, Inc. and its affiliated
entities, State of Michigan Retirement System, Henry L. Hillman, Elsie Hilliard
Hillman and C. G. Grefenstette and their affiliated entities, Sam Hashman, MPN
Holdings, Inc. and Ian Williams.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 70% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding a 70% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
ASSET SALES
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Subsidiary, as the case may be) receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value (as determined in accordance with
the third paragraph of this covenant) of the assets or Equity Interests issued
or sold or otherwise disposed of and (ii) at least 85% of the consideration
therefor received by the Company or such Subsidiary is in the form of cash;
provided that the amount of (x) any liabilities (as shown on the Company's or
such Subsidiary's most recent balance sheet), of the Company or any Subsidiary
(other than contingent liabilities and liabilities that are by their terms
subordinated to the New Notes or any guarantee thereof) that are assumed by the
transferee of any such assets pursuant to a customary novation agreement that
releases the Company or such Subsidiary from further liability and (y) any
securities, notes or other obligations received by the Company or any such
Subsidiary from such transferee that are contemporaneously (subject to ordinary
settlement periods) converted by the Company or such Subsidiary into cash (to
the extent of the cash received), shall be deemed to be cash for purposes of
this provision.
Within 180 days after the receipt of any Net Proceeds (as defined) from an
Asset Sale, the Company may apply such Net Proceeds to (a) to repay Indebtedness
under a Credit Facility, (b) acquire all or substantially all of (1) the assets
of, or a majority of the Voting Stock of, a Person engaged in a
Telecommunications or Entertainment Business or (2) the assets of a line of
business of a Person engaged in the Telecommunications or Entertainment
Business; provided that such assets relate to the Telecommunications or
Entertainment Business; or (c) to make a capital expenditure or otherwise
acquire other long-term assets that are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds
from Asset Sales that are not applied or invested as provided in the first
sentence of this paragraph will be deemed to constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will
be required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase, in accordance with the procedures set
forth in the Indenture. To the extent that any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by the Indenture. If the aggregate
principal amount of New Notes tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the New Notes to be purchased on a pro rata basis. Upon completion of such offer
to purchase, the amount of Excess Proceeds shall be reset at zero.
The determination of the Fair Market Value of any Asset Sale shall be based
upon: (i) an Officer's Certificate delivered to the Trustee if such Fair Market
Value is less than or equal to $500,000; (ii) the resolution of a majority of
the disinterested members of the Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee, if such Fair Market Value is
greater than $500,000 but less than $5.0 million; and (iii) an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
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<PAGE> 88
national standing, if such Fair Market Value is equal to or exceeds $5.0
million. Not later than the date of making any Asset Sale, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Asset Sale is
permitted and setting forth the basis upon which the calculations required by
this covenant were computed, together with any other documents required by the
Indenture.
DISBURSEMENT OF FUNDS; ESCROW ACCOUNT
The New Notes are collateralized pursuant to the Escrow Agreement, dated as
of May 27, 1998, among the Company, the Trustee and State Street Bank and Trust
Company, as Escrow Agent (the "Escrow Agreement"), by a pledge of the Escrow
Account (as defined in the Escrow Agreement), which initially contained $19.2
million of the net proceeds from the Unit Offering (the "Escrow Collateral"),
representing funds that, together with the proceeds from the investment thereof,
will be sufficient to pay interest on the New Notes for the first four scheduled
interest payments on the New Notes (but will not be in an amount sufficient to
pay any Liquidated Damages that may arise under the Registration Rights
Agreement).
The Company entered into the Escrow Agreement providing for the grant by
the Company to the Trustee, for the benefit of the Holders, of a security
interest in the Escrow Collateral. All such security interests collateralize the
payment and performance when due of all obligations of the Company under the
Indenture and Notes, as provided in the Escrow Agreement. The Liens created by
the Escrow Agreement are the first priority security interests in the Escrow
Collateral. The ability of Holders to realize upon any such funds or securities
may be subject to certain bankruptcy law limitations in the event of the
bankruptcy of the Company.
Pursuant to the Escrow Agreement, funds may be disbursed from the Escrow
Account only to pay interest on the Notes (or, if a portion of the Notes has
been retired by the Company, funds representing the lesser of (i) the excess of
the amount sufficient to pay interest through and including May 15, 2000, on the
Notes not so retired and (ii) the interest payments which have not previously
been made on such retired Notes for each Interest Payment Date through and
including the Interest Payment Date). The ability of holders to realize upon any
such funds or securities may be subject to certain bankruptcy limitations in the
event of a bankruptcy of the Company.
Pending such disbursements, all funds contained in the Escrow Account will
be invested in U.S. Government Obligations (the "Pledged Securities"). Interest
earned on the Pledged Securities will be placed in the Escrow Account. Upon the
acceleration of the maturity of the Notes, the Escrow Agreement will provide for
foreclosure by the Trustee upon the net proceeds of the Escrow Account. Under
the terms of the Indenture, the proceeds of the Escrow Account shall be applied,
first, to amounts owing to the Trustee in respect of fees and expenses of the
Trustee and second, to all obligations under the New Notes and the Indenture.
Under the Escrow Agreement, assuming that the Company makes the first four
scheduled interest payments on the Notes in a timely manner with funds or
Pledged Securities held in the Escrow Account, the balance of the Pledged
Securities in the Escrow Account will be released to the Company on no later
than May 15, 2001.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend
or make any other payment or distribution on account of the Company's or any of
its Subsidiaries' Equity Interests (including, without limitation, any payment
in connection with any merger or consolidation involving the Company or any of
its Subsidiaries) or to the direct or indirect holders of the Company's or any
of its Subsidiaries' Equity Interests in their capacity as such (other than
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of the Company or to the Company or a Subsidiary of the Company); (ii)
purchase, redeem or otherwise acquire or retire for value (including, without
limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company or any direct or indirect parent of
the Company or other Affiliate of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned
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Subsidiary of the Company); (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the New Notes (other than Notes), except a
payment of interest or principal at Stated Maturity and reasonable fees and
expenses incurred in connection therewith; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the two most recent fiscal quarters ending
immediately prior to the date of such Restricted Payment for which
financial statements are available, have been permitted to incur at least
$1.00 of additional Indebtedness (other than Permitted Debt) pursuant to
the Debt to Cash Flow Ratio test set forth in the first paragraph of the
covenant described below under the caption " -- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Disqualified
Stock;" and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Subsidiaries after
the date of the Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii) and (iv) of the next succeeding paragraph), is less
than the sum, without duplication, of (i) 50% of the Consolidated Net
Income of the Company for the period (taken as one accounting period) from
the beginning of the first fiscal quarter commencing after the date of the
Indenture to the end of the Company's most recently ended fiscal quarter
for which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net
cash proceeds received by the Company since the date of the Indenture as a
contribution to its common equity capital or from the issue or sale of
Equity Interests of the Company (other than Disqualified Stock) or from the
issue or sale of Disqualified Stock or debt securities of the Company that
have been converted into such Equity Interests (other than Equity Interests
(or Disqualified Stock or convertible debt securities) sold to a Subsidiary
of the Company), plus (iii) to the extent that any Restricted Investment
that was made after the date of the Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital
with respect to such Restricted Investment (less the cost of disposition,
if any) and (B) the initial amount of such Restricted Investment.
So long as no Default has occurred and is continuing or would be caused
thereby, the foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity Interests
of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c) (ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of pari passu or
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a
Subsidiary of the Company to the holders of its common Equity Interests on a pro
rata basis; (v) Investments by the Company or any of its Subsidiaries in any
Permitted Joint Venture; provided that the aggregate Fair Market Value of all
such Investments does not exceed $5.0 million at any one time outstanding (with
the Fair Market Value of each Investment being measured at the time made and
without giving effect to subsequent changes in value); (vi) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Company or any Subsidiary of the Company held by any employee or any
member of the Company's (or any of its Subsidiaries') management pursuant to any
management or employee equity subscription or purchase agreement or stock option
agreement in effect as of the date of the Indenture; provided that the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests shall not exceed $500,000
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in any twelve-month period; and (vii) additional Investments having an aggregate
Fair Market Value, taken together with all other Investments made pursuant to
this clause (vii) that are at the time outstanding, not exceeding $2.0 million
(with the Fair Market Value of each Investment being measured at the time made
and without giving effect to subsequent changes in value).
Except to the extent specifically provided to the contrary herein, the
amount of all Restricted Payments (other than cash) shall be the Fair Market
Value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. The Fair Market Value of any
assets or securities that are required to be valued by this covenant shall be
based upon: (i) an Officer's Certificate delivered to the Trustee if such Fair
Market Value is less than or equal to $500,000; (ii) the resolution of a
majority of the disinterested members of the Board of Directors whose resolution
with respect thereto shall be delivered to the Trustee, if such Fair Market
Value is greater than $500,000 but less than $5.0 million; and (iii) an opinion
or appraisal issued by an accounting, appraisal or investment banking firm of
national standing, if such Fair Market Value is equal to or exceeds $5.0
million. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted Payments" were computed,
together with any other documents required by the Indenture.
Incurrence of Indebtedness and Issuance of Disqualified Stock
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly, or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock if the Company's Debt to Cash Flow
Ratio at the time of incurrence of such Indebtedness or the issuance of such
Disqualified Stock, after giving pro forma effect to such incurrence or issuance
as of such date and to the use of proceeds therefrom as if the same had occurred
at the beginning of the most recently ended two full fiscal quarter period of
the Company for which internal financial statements are available, would have
been no greater than 5 to 1.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt") so long as no Default shall have occurred and be continuing or
would be caused thereby:
(i) the incurrence by the Company of no more than $10.0 million in
connection with a Credit Facility at any one time outstanding; provided
that the amount of Indebtedness permitted to be incurred pursuant to this
clause (i) shall be reduced by the amount of all Net Proceeds of Asset
Sales applied to repay Indebtedness under a Credit Facility pursuant to the
covenant described above under the caption "-- Asset Sales";
(ii) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by the
Notes and the Exchange Notes;
(iv) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money or similar obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
Permitted Business of the Company or such Subsidiary, in an aggregate
principal amount not to exceed $10.0 million at any time outstanding;
(v) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new
Subsidiary; provided that such Indebtedness was incurred by the prior owner
of such assets or such Subsidiary prior to such acquisition by the Company
or one of its Subsidiaries and was not incurred in connection with, or in
contemplation of, such acquisition by the
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Company or one of its Subsidiaries; and provided further that the principal
amount (or accreted value, as applicable) of such Indebtedness, together
with any other outstanding Indebtedness incurred pursuant to this clause
(v) and any Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause (v),
does not exceed $5.0 million;
(vi) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by the Indenture to be
incurred under the first paragraph hereof or clauses (i), (ii), (v) or (x)
of this paragraph;
(vii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Wholly Owned Subsidiaries; provided, however, that (i) if the Company is
the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes and (ii)(A) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Subsidiary thereof and (B) any sale or
other transfer of any such Indebtedness to a Person that is not either the
Company or a Wholly Owned Subsidiary thereof shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or such
Subsidiary, as the case may be, that was not permitted by this clause
(vii);
(viii) the incurrence by the Company or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be outstanding;
(ix) the guarantee by the Company or any of its Subsidiary of
Indebtedness of the Company or a Subsidiary of the Company that was
permitted to be incurred by another provision of this covenant; and
(x) the incurrence by the Company or any of its Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (x), not to exceed $5.0
million.
The Indenture also provides that the Company will not incur any
Indebtedness (including Permitted Debt) that is contractually subordinated in
right of payment to any other Indebtedness of the Company unless such
Indebtedness is also contractually subordinated in right of payment to the Notes
on substantially identical terms; provided, however, that no Indebtedness of the
Company shall be deemed to be contractually subordinated in right of payment to
any other Indebtedness of the Company solely by virtue of being unsecured.
For purposes of determining compliance with this covenant, in the event
that an item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (x) above as of
the date of incurrence thereof, or is entitled to be incurred pursuant to the
first paragraph of this covenant as of the date of incurrence thereof, the
Company shall, in its sole discretion, classify such item of Indebtedness on the
date of its incurrence in any manner that complies with this covenant and may
treat revolving credit Indebtedness incurred in accordance with the first
paragraph of this covenant, as being incurred in its entire committed (whether
or not at the time drawn) amount at the date on which the initial borrowing
thereunder is made. Accrual of interest, accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock for purposes of this covenant.
Liens
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer
to exist any Lien of any kind on any asset now owned or hereafter acquired,
except Permitted Liens.
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Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (1) on its Capital Stock
or (2) with respect to any other interest or participation in, or measured by,
its profits, or (b) pay any indebtedness owed to the Company or any of its
Subsidiaries, (ii) make loans or advances to the Company or any of its
Subsidiaries or (iii) transfer any of its properties or assets to the Company or
any of its Subsidiaries. However, the foregoing restrictions will not apply to
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the date of the Indenture, (b) the Indenture and
the New Notes, (c) applicable law, (d) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company or any of its Subsidiaries as
in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture to
be incurred, (e) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices, (f) purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired, (g) any agreement for the sale or other disposition of a
Subsidiary that restricts distributions by that Subsidiary pending its sale or
other disposition, (h) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those contained in
the agreements governing the Indebtedness being refinanced, (i) Liens securing
Indebtedness otherwise permitted to be incurred pursuant to the provisions of
the covenant described above under the caption "-- Liens" that limit the right
of the Company or any of its Subsidiaries to dispose of the assets subject to
such Lien, (j) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business and (k) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business.
Merger, Consolidation, or Sale of Assets
The Indenture provides that the Company may not, directly or indirectly,
consolidate or merge with or into (whether or not the Company is the surviving
corporation), or sell, assign, transfer, convey or otherwise dispose of all or
substantially all of its properties or assets, in one or more related
transactions, to another Person unless (i) the Company is the surviving
corporation or the Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made is a corporation organized
or existing under the laws of the United States, any state thereof or the
District of Columbia; (ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Person to which such
sale, assignment, transfer, conveyance or other disposition shall have been made
assumes all the obligations of the Company under the Registration Rights
Agreement, the Notes and the Indenture pursuant to a supplemental indenture in a
form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of the Company with or into a Wholly Owned Subsidiary of the
Company, the Company or the Person formed by or surviving any such consolidation
or merger (if other than the Company), or to which such sale, assignment,
transfer, conveyance or other disposition shall have been made (A) will have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction and (B) will, immediately after such transaction after giving pro
forma effect thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable two-quarter period on an annualized
basis, be permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Debt to Cash Flow test set forth in the first paragraph of the covenant
described above under the caption "-- Incurrence of Indebtedness and Issuance of
Disqualified Stock." The Indenture will also provide that the Company may not,
directly or indirectly, lease all or substantially all of its properties or
assets, in one or more related transactions, to any other Person. The
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provisions of this covenant will not be applicable to a sale, assignment,
transfer, conveyance or other disposition of assets between or among the Company
and its Wholly Owned Subsidiaries.
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Subsidiary with an unrelated
Person and (ii) the Company delivers to the Trustee (a) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $1.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5.0
million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing. Notwithstanding the foregoing, the
following items shall not be deemed to be Affiliate Transactions: (i) any
employment agreement entered into by the Company or any of its Subsidiaries in
the ordinary course of business and consistent with the past practice of the
Company or such Subsidiary, (ii) transactions between or among the Company
and/or its Subsidiaries, (iii) payment of reasonable directors fees to Persons
who are not otherwise Affiliates of the Company, (iv) any sale or other issuance
of Equity Interests (other than Disqualified Stock) of the Company, and (v)
Restricted Payments that are permitted by the provisions of the Indenture
described above under the caption "-- Restricted Payments."
Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, enter into any Sale and Leaseback Transaction; provided
that the Company or any of its Subsidiaries may enter into a Sale and Leaseback
Transaction if (i) the Company or such Subsidiary, as applicable, could have (a)
incurred Indebtedness in an amount equal to the Attributable Debt relating to
such sale and leaseback transaction pursuant to either (1) the Debt to Cash Flow
test set forth in the first paragraph of the covenant described above under the
caption "-- Incurrence of Indebtedness and Issuance of Disqualified Stock" or
(2) clause (iv) of the second paragraph of the covenant described above under
the caption "-- Incurrence of Indebtedness and Issuance of Disqualified Stock"
and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant
described above under the caption "-- Liens," (ii) the gross cash proceeds of
such sale and leaseback transaction are at least equal to the Fair Market Value
of the property that is the subject of such sale and leaseback transaction and
(iii) the transfer of assets in such sale and leaseback transaction is permitted
by, and the Company applies the proceeds of such transaction in compliance with,
the covenant described above under the caption "-- Asset Sales."
Limitation on Issuances and Sales of Equity Interests in Wholly Owned
Subsidiaries
The Indenture provides that the Company (i) will not, and will not permit
any Subsidiary of the Company to, transfer, convey, sell, lease or otherwise
dispose of any Equity Interests in any Wholly Owned Subsidiary of the Company to
any Person (other than the Company or a Wholly Owned Subsidiary of the Company),
unless (a) such transfer, conveyance, sale, lease or other disposition is of all
the Equity Interests in such Wholly Owned Subsidiary and (b) the cash Net
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with the covenant described above under the caption
" -- Asset Sales," and (ii) will not permit any Wholly Owned Subsidiary of the
Company to issue any of its Equity Interests (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or a Wholly Owned Subsidiary of the Company; provided
that the
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provisions of this covenant shall not apply to Investments by the Company in
Subsidiaries that are made in accordance with clause (iv) of the covenant
entitled " -- Restricted Payments."
Limitations on Issuances of Guarantees of Indebtedness by Subsidiaries
The Indenture provides that the Company will not permit any Subsidiary,
directly or indirectly, to Guarantee or pledge any assets to secure the payment
of any other Indebtedness of the Company ("Guaranteed Debt") unless each such
Subsidiary simultaneously executes and delivers a supplemental indenture to the
Indenture providing for the Guarantee of the payment of the New Notes by such
Subsidiary, which Guarantee shall be (i) if the New Notes or the Guarantee of
such Subsidiary is subordinated in right of payment to the Guaranteed Debt, the
Guarantee under the supplemental indenture shall be subordinated to such
Subsidiary's guarantee with respect to the Guaranteed Debt substantially to the
same extent as the New Notes or the Guarantee are subordinated to the Guaranteed
Debt under the Indenture; or (ii) if the Guaranteed Debt is by its express terms
subordinated in right of payment to the New Notes or the Guarantee of such
Subsidiary, any such guarantee of such Subsidiary with respect to the Guaranteed
Debt shall be subordinated in right of payment to such Subsidiary's Guarantee
with respect to the New Notes substantially to the same extent as the Guaranteed
Debt is subordinated to the Notes or the Guarantee of such Subsidiary.
Notwithstanding the foregoing, any such Guarantee by a Subsidiary of the Notes
shall provide by its terms that it shall be automatically and unconditionally
released and discharged upon any sale, exchange or transfer, to any Person not
an Affiliate of the Company, of all of the Company's stock in, or all or
substantially all the assets of, such Subsidiary, which sale, exchange or
transfer is made in compliance with the applicable provisions of the Indenture.
The form of such Guarantee will be attached as an exhibit to the Indenture.
Business Activities
The Company will not, and will not permit any Subsidiary to, engage in any
business other than Permitted Businesses, except to such extent as would not be
material to the Company and its Subsidiaries taken as a whole.
Payments for Consent
The Indenture provides that neither the Company nor any of its Subsidiaries
will, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any Holder of any New Notes for or as
an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the New Notes unless such consideration is
offered to be paid or agreed to be paid to all Holders of the New Notes that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
Limitation on Status as Investment Company
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, conduct its business in a fashion that would cause the
Company to be required to register as an "investment company" (as that term is
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act")), or otherwise become subject to regulation under the Investment
Company Act. For purposes of establishing the Company's compliance with this
provision, any exemption which is or would become available under Section 3 (c)
(1) or Section 3 (c) (7) of the Investment Company Act will be disregarded.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any New Notes are outstanding, the
Company will furnish to the Holders of New Notes (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and
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(ii) all current reports that would be required to be filed with the Commission
on Form 8-K if the Company were required to file such reports, in each case
within the time periods specified in the Commission's rules and regulations. In
addition, following the consummation of the exchange offer contemplated by the
Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. In addition, the
Company has agreed that, for so long as any New Notes remain outstanding, it
will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
Events of Default and Remedies
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the New Notes, other than as provided in
clause (ii); (ii) default in payment pursuant to the Escrow Agreement or a
default in payment when due of the principal of or premium, if any, on the New
Notes; (iii) failure by the Company or any of its Subsidiaries to comply with
the provisions described under the captions "-- Change of Control," "-- Asset
Sales," "-- Restricted Payments" or "-- Incurrence of Indebtedness and Issuance
of Disqualified Stock"; (iv) failure by the Company or any of its Subsidiaries
for 60 days after notice to comply with any of its other agreements in the
Indenture or the New Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of the Indenture, which default (a) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the date of such
default (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $3.0 million or more; (vi) failure
by the Company or any of its Subsidiaries to pay final judgments aggregating in
excess of $3.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days; and (viii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding New Notes
may declare all the New Notes to be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding New Notes will become due and payable
without further action or notice. Holders of the New Notes may not enforce the
Indenture or the New Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding New Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the New Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the New Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the New Notes. If an Event of Default occurs prior to
May 15, 2003 by reason of any willful action (or inaction) taken (or not taken)
by or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the New Notes prior
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to May 15, 2003, then the premium specified in the Indenture shall also become
immediately due and payable to the extent permitted by law upon the acceleration
of the Notes.
The Holders of a majority in aggregate principal amount of the New Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the New Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the New Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
New Notes, the Indenture or the Escrow Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
New Notes by accepting a New Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the New Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding New Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding New Notes to
receive payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages on such New Notes when such payments are due from the
trust referred to below, (ii) the Company's obligations with respect to the New
Notes concerning issuing temporary New Notes, registration of New Notes,
mutilated, destroyed, lost or stolen New Notes and the maintenance of an office
or agency for payment and money for security payments held in trust, (iii) the
rights, powers, trusts, duties and immunities of the Trustee, and the Company's
obligations in connection therewith and (iv) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the New Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the New
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the New Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages on
the outstanding New Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether the New Notes are
being defeased to maturity or to a particular redemption date; (ii) in the case
of Legal Defeasance, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of the Indenture, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm that,
the Holders of the outstanding New Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that
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the Holders of the outstanding New Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Covenant Defeasance and will
be subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Covenant Defeasance had not
occurred; (iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit) or insofar
as Events of Default from bankruptcy or insolvency events are concerned, at any
time in the period ending on the 91st day after the date of deposit; (v) such
Legal Defeasance or Covenant Defeasance will not result in a breach or violation
of, or constitute a default under any material agreement or instrument (other
than the Indenture) to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries is bound; (vi) the Company
must have delivered to the Trustee an opinion of counsel to the effect that
after the 91st day following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally; (vii) the Company must deliver to
the Trustee an Officers' Certificate stating that the deposit was not made by
the Company with the intent of preferring the Holders of New Notes over the
other creditors of the Company with the intent of defeating, hindering, delaying
or defrauding creditors of the Company or others; and (viii) the Company must
deliver to the Trustee an Officers' Certificate and an opinion of counsel, each
stating that all conditions precedent provided for relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the New Notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the New Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, New Notes), and any existing default
or compliance with any provision of the Indenture or the New Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding New Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, New
Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any New Notes held by a non-consenting Holder): (i) reduce the
principal amount of New Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any New Note or alter the provisions with respect to the redemption of the
New Notes (other than provisions relating to the covenants described above under
the caption "-- Repurchase at the Option of Holders"), (iii) reduce the rate of
or change the time for payment of interest on any New Note, (iv) waive a Default
or Event of Default in the payment of principal of or premium, if any, or
interest on the New Notes (except a rescission of acceleration of the New Notes
by the Holders of at least a majority in aggregate principal amount of the New
Notes and a waiver of the payment default that resulted from such acceleration),
(v) make any New Note payable in money other than that stated in the New Notes,
(vi) make any change in the provisions of the Indenture relating to waivers of
past Defaults or the rights of Holders of New Notes to receive payments of
principal of or premium, if any, or interest on the New Notes, (vii) waive a
redemption payment with respect to any New Note (other than a payment required
by one of the covenants described above under the caption " -- Repurchase at the
Option of Holders") or (viii) make any change in the foregoing amendment and
waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of New
Notes, the Company and the Trustee may amend or supplement the Indenture or the
New Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated New Notes in addition to or in place of certificated New Notes,
to provide for the assumption of the Company's obligations to Holders of New
Notes in the case of a merger or consolidation or sale of all or substantially
all of the Company's assets, to make any change that would provide any
additional rights or benefits to the Holders of New Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
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CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding New
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of New Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture,
Registration Rights Agreement and the Escrow Agreement without charge by writing
to Park 'N View, Inc., 11711 NW 39th Street, Coral Springs, Florida 33065,
Attention: Steve Conkling.
TRANSFER AND EXCHANGE
A holder may transfer or exchange New Notes in accordance with the
Indenture. The Company, the Registrar and the Trustee may require a holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a holder to pay any taxes and fees required by law
or permitted by the Indenture.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any capitalized terms used herein for which no definition
is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 5% or more of the Voting Stock of a Person shall be
deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory or services in the ordinary course of
business consistent with past practices (provided that the sale, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole will be governed by the provisions of the
Indenture described above under the caption " -- Change of Control" and/or the
provisions described above under the caption " -- Merger, Consolidation or Sale
of Assets" and not by the provisions of the Asset Sale covenant), and (ii) the
issue or sale by the Company or any of its Subsidiaries of Equity
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Interests of any of the Company's Subsidiaries, in the case of either clause (i)
or (ii), whether in a single transaction or a series of related transactions (a)
that have a Fair Market Value in excess of $1.0 million or (b) for net proceeds
in excess of $1.0 million. Notwithstanding the foregoing, the following items
shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company
to a Wholly Owned Subsidiary or by a Wholly Owned Subsidiary to the Company or
to another Wholly Owned Subsidiary, (ii) an issuance of Equity Interests by a
Wholly Owned Subsidiary to the Company or to another Wholly Owned Subsidiary,
(iii) Permitted Revenue Sharing Agreements and (iv) a Restricted Payment that is
permitted by the covenant described above under the caption " -- Restricted
Payments."
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and demand deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500 million and a Thompson Bank Watch Rating
of "B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation
and in each case maturing within six months after the date of acquisition and
(vi) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (i) -- (v) of this definition.
"Common Stock" means, with respect to any Person, any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of such Person's common shares.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income, plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was deducted in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, plus (iv) depreciation, amortization
(including amortization of goodwill and other
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intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, minus (v) non-cash items
increasing such Consolidated Net Income for such period (other than items that
were accrued in the ordinary course of business), in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash expenses of, a Subsidiary of
the Company shall be added to Consolidated Net Income to compute Consolidated
Cash Flow of the Company only to the extent that a corresponding amount would be
permitted at the date of determination to be dividended to the Company by such
Subsidiary without prior governmental approval (that has not been obtained), and
without direct or indirect restriction pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided
that (i) the Net Income (but not loss) of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Indebtedness" means, with respect to any Person as of any
date of determination, the aggregate amount of Indebtedness and the liquidation
preference of the Disqualified Stock of such Person and its Subsidiaries
outstanding as of such date of determination, determined on a consolidated basis
in accordance with GAAP.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Credit Facility" means one or more credit agreements, loan agreements or
similar agreements providing for working capital advances, term loans, letter of
credit facilities or similar advances, loans or facilities to the Company, which
may, pursuant to the terms of the Indenture, be guaranteed by the Subsidiaries,
with a bank or syndicate of banks or other financial institutions, as such may
be amended, renewed, extended, supplemented, refinanced and replaced or refunded
from time to time.
"Debt to Cash Flow Ratio" means, as of any date of determination, the ratio
of (a) the Consolidated Indebtedness of the Company as of such date to (b) two
times the Consolidated Cash Flow of the Company
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for the two most recent full fiscal quarters ending immediately prior to such
date for which internal financial statements are available, determined on a pro
forma basis after giving effect to all acquisitions or dispositions of assets
made by the Company and its Subsidiaries from the beginning of such two-quarter
period on an annualized basis through and including such date of determination
(including any related financing transactions) as if such acquisitions and
dispositions had occurred at the beginning of such two-quarter period. In
addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the two-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the two-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature; provided, however, that any Capital Stock that
would constitute Disqualified Stock solely because the holders thereof have the
right to require the Company to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with the covenant described above
under the caption " -- Certain Covenants -- Restricted Payments."
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means up to $400,000 in aggregate principal amount
of Indebtedness of the Company and its Subsidiaries in existence on the date of
the Indenture, until such amounts are repaid.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's length transaction between an informed
and willing seller under no compulsion to sell and informed and willing buyer
under no compulsion to buy; provided that in each case in which the Fair Market
Value of an item is determined to be greater than $500,000, such determination
shall be evidenced by a resolution of a majority of the disinterested members of
the Board of Directors; and provided, further, that in each case in which the
Fair Market Value of an item is determined to be greater than $5.0 million, such
determination shall be evidenced by the written opinion of nationally recognized
appraisal, accounting or investment banking firm.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Guarantor" means a Subsidiary that executes and delivers a Guarantee of
the Notes.
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"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, notes or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness.
"Initial Public Equity Offering" means an underwritten public offering of
Common Stock of the Company pursuant to an effective registration statement
filed under the Securities Act that results in $25.0 million or more of gross
proceeds to the Company.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding (i) commission, travel and similar
advances to officers and employees (ii) accounts receivable arising in respect
of services rendered to unaffiliated third parties, in each case, made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Company or any Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the Fair Market Value of the Equity Interests of such Subsidiary not
sold or disposed of in an amount determined as provided in the final paragraph
of the covenant described above under the caption "-- Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary gain (but not loss), together with any related provision
for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale (including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
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account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness under a Credit Facility) secured by a Lien on the asset
or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Business" means the provision of: (a) the following services or
products (i) voice, enhance data, data, internet, video, wire or wireless and
other telecommunications related services, (ii) local, dedicated access, closed
circuit, or satellite delivered network, cable or wired or wireless television
or similar or related television services or (iii) other services including, but
not limited to, (A) load matching, home shopping and games; (B) payment
processing, transmissions and card processing transmissions, (C) facsimile
transmissions and load matching, (D) advertising to: (b) the following customer
base: fleet trucking companies, truckstops, individual truck drivers, others in
or related to the long-haul trucking industry, and others interested in
purchasing the products and services described in this Prospectus, and all
products and services ancillary, similar or related thereto.
"Permitted Investments" means (a) any Investment in the Company or in a
Wholly Owned Subsidiary of the Company; (b) any Investment in Cash Equivalents;
(c) any Investment by the Company or any Subsidiary of the Company in a Person,
if as a result of such Investment (i) such Person becomes a Wholly Owned
Subsidiary of the Company or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Subsidiary of
the Company; (d) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with the covenant described above under the caption "-- Repurchase at the Option
of Holders -- Asset Sales"; and (e) any acquisition of assets solely in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of the
Company.
"Permitted Joint Venture" means any Person engaged in a Telecommunications
or Entertainment Business.
"Permitted Liens" means (i) Liens securing Indebtedness and other
Obligations under a Credit Facility that were permitted by the terms of the
Indenture to be incurred; (ii) Liens in favor of the Company or any of its
Subsidiaries; (iii) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company or any Subsidiary
of the Company; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Company;
(iv) Liens on property existing at the time of acquisition thereof by the
Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of the second paragraph of the covenant
entitled "Incurrence of Indebtedness and Issuance of Disqualified Stock"
provided that such Liens cover the assets permitted to be acquired with
Indebtedness; (vii) Liens to secure Permitted Refinancing Indebtedness, provided
that such Liens only cover the same assets that were covered under the
Indebtedness being refinanced; (viii) Liens existing on the date of the
Indenture; (ix) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; and (x) Liens incurred in
the ordinary course of business of the Company or any Subsidiary of the Company
with respect to obligations that do not exceed $5.0 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Subsidiary.
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"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries (other than intercompany
Indebtedness); provided that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus accrued interest
on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Permitted Revenue Sharing Agreements" means (i) all agreements that the
Company has entered into as of the date of the Indenture with truckstop
locations and/or truckstop chains to provide the PNV Network and (ii) any
agreements or arrangements that the Company enters into after the date of the
Indenture to provide services through the PNV Network which are entered into in
the ordinary course of business consistent with past practice or are approved by
the Board of Directors; provided that if such agreements or arrangements provide
for more than 50% of the gross income or net revenues, gross profits, operating
cash flow, operating income, earnings before interest, taxes, depreciation and
amortization ("EBITDA") or similar measure of financial performance to be paid
to any entity other than the Company or its Subsidiaries, the Board of Directors
shall be required to approve such contract.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Sale and Leaseback Transaction" means, with respect to any Person, any
direct or indirect arrangement pursuant to which Property is sold or transferred
by such Person or a Subsidiary of such Person and is thereafter leased back from
the purchaser or transferee thereof by such Person or one of its Subsidiaries.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Telecommunications or Entertainment Business" means the provision of: (i)
voice, enhanced data, data, internet, wireless and other telecommunications
related services, (ii) local, dedicated access, closed circuit or satellite
delivered network, cable or wireless television or similar or related television
services or (iii) other services including but not limited to (A) local
matching, home shopping and games for the drivers,
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(B) payment processing transmissions and card processing transmissions and load
matching for fleets or (C) advertising for fleets, local and/or regional
businesses.
"U.S. Government Obligations" means (x) securities that are (i) direct
obligations of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (ii) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which in either case, are not callable or redeemable at the
option of the Company thereof, and (y) depository receipts issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any U.S. Government Obligation which is specified in clause (x) above and held
by such bank for the account of the holder of such depository receipt, or with
respect to any specific payment of principal or interest on any U.S. Government
Obligation which is so specified and held, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal or interest of the U.S. Government Obligation evidenced by such
depository receipt.
"Voting Stock" means, with respect to any Person, securities of any class
or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or at the times that such class of Capital Stock has
voting power by reason of the happening of any contingency) to vote in the
election of members of the Board of Directors or comparable body of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
---------------------
The Indenture provides that, for purposes of the definition of "Change of
Control," the definition of "Asset Sales" and for purposes of the provisions
under the covenant entitled "Merger, Consolidation, or Sale of Assets," any
grant of a security interest by the Company that is otherwise permitted by the
Indenture (as opposed to any transfer as a result of the exercise of remedies
under any instrument or document creating such interest) will not be deemed to
be a sale, lease, transfer or other disposition of an asset.
BOOK-ENTRY; DELIVERY AND FORM
The Old Notes were offered and sold to qualified institutional buyers in
reliance on Rule 144A. The New Notes will be issued in registered, global form
in minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof. The Global Notes will be deposited upon issuance with the Trustee as
custodian for DTC in New York, New York, and registered in the name of DTC or
its nominee, in each case for credit to an account of a direct or indirect
participant in DTC as described below.
Except as set forth below, Global Notes may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in Global Notes may not be exchanged for Notes in
certificated form except in the circumstances described below. See " -- Exchange
of Book-Entry Securities for Certificated Notes."
Initially, the Trustee will act as Paying Agent and Registrar with respect
to the New Notes. The New Notes may be presented for registration of transfer
and exchange at the offices of the Registrar.
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Depository Procedures
The following description of the operations and procedures of DTC are
provided solely as a matter of convenience. These operations and procedures are
solely within the control of DTC and are subject to changes by them from time to
time. The Company takes no responsibility for these operations and procedures
and urges investors to contact the system or their participants directly to
discuss these matters.
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial Purchaser), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interests in, and transfers of ownership interests
in, each security held by or on behalf of DTC are recorded on the records of the
Participants and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established
by it, (i) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the principal
amount of Global Notes and (ii) ownership of such interests in the Global Notes
will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by DTC (with respect to Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Notes).
Investors in the Global Notes may hold their interests therein directly
through DTC, if they are Participants in such system, or indirectly through
organizations which are Participants in such system. All interests in a Global
Note may be subject to the procedures and requirements of DTC. The laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Note to such persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in turn act on behalf
of Indirect Participants and certain banks, the ability of a person having
beneficial interests in a Global Note to pledge such interests to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such interests, may be affected by the lack of a physical certificate
evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, and premium, if any, Liquidated
Damages, if any, and interest on the New Notes registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the registered Holder
under the Indenture and the Warrant Agreement. Under the terms of the Indenture,
the Company and the Trustee or Warrant Agent, as the case may be, will treat the
persons in whose names the New Notes are registered as the owners thereof for
the purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither the Company, the Trustee nor any agent of the
Company, or the Trustee has or will have any responsibility or liability for (i)
any aspect of DTC's records or any Participant's or Indirect Participant's
records relating to or payments made on account of beneficial ownership
interests in the Global Notes, or for maintaining, supervising or reviewing any
of DTC's records or any Participant's or Indirect Participant's records relating
to the beneficial ownership interests in the Global Notes or (ii) any other
matter relating to the actions and practices of DTC or any of its Participants
or Indirect Participants. DTC has advised the Company that its current practice,
upon receipt of any payment in respect of securities such as the New Notes
(including principal and interest), is to credit the accounts of the relevant
Participants with the payment on the payment date, in amounts proportionate to
their respective holdings in the principal amount of beneficial interests in the
relevant security as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
Participants
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and the Indirect Participants to the beneficial owners of Securities will be
governed by standing instructions and customary practices and will be the
responsibility of the Participants or the Indirect Participants and will not be
the responsibility of DTC, the Trustee or the Company. Neither the Company nor
the Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the Securities, and the Company and the
Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
Interests in the Global Notes are expected to be eligible to trade in DTC's
Same-Day Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its Participants. See "-- Same Day
Settlement and Payment."
Subject to the transfer restrictions set forth under "Notice to Investors,"
transfers between Participants in DTC will be effected in accordance with DTC's
procedures, and will be settled in same day funds.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of New Notes only at the direction of one or more Participants
to whose account DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the Securities as
to which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the New Notes, DTC reserves the
right to exchange the Global Notes for legended Notes in certificated form, and
to distribute such Notes to its Participants.
Neither the Company nor the Trustee nor any of their respective agents will
have any responsibility for the performance by DTC or their respective
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
Exchange of Book-Entry Notes for Certificated Notes
A Global Note is exchangeable for definitive Notes in registered
certificated form ("Certificated Securities") if (i) DTC (x) notifies the
Company that it is unwilling or unable to continue as depositary for the Global
Securities and the Company thereupon fails to appoint a successor depositary or
(y) has ceased to be a clearing agency registered under the Exchange Act, (ii)
the Company, at its option, notifies the Trustee in writing that it elects to
cause the issuance of the certificated Notes, (iii) there shall have occurred
and be continuing a Default or Event of Default with respect to the New Notes or
(iv) otherwise as provided in the Indenture. In addition, beneficial interests
in a Global Note may be exchanged for certificated Notes upon request but only
upon prior written notice given to the Trustee by or on behalf of DTC in
accordance with the Indenture. In all cases, certificated Notes delivered in
exchange for any Global Notes or beneficial interests therein will be registered
in the names, and issued in any approved denominations, requested by or on
behalf of the depositary (in accordance with its customary procedures) and will
bear the applicable restrictive legend referred to in "Notice to Investors,"
unless the Company determines otherwise in compliance with applicable law.
Exchange of Certificated Notes for Book-Entry Notes
Notes issued in certificated form may not be exchanged for beneficial
interests in any Global Notes unless the transferor first delivers to the
Trustee a written certificate (in the form provided in the Indenture) to the
effect that such transfer will comply with the appropriate transfer restrictions
applicable to such Notes.
Same Day Settlement and Payment
The Indenture will require that payments in respect of the Notes
represented by the Global Notes (including principal, premium, if any, interest
and Liquidated Damages, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Global Note Holder. With
respect to Notes in certificated form, the Company will make all payments of
principal, premium, if any, interest and Liquidated Damages, if any, by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof, or, if no such account is specified, by mailing a check to each such
Holder's registered address. The
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New Notes represented by the Global Notes are expected to trade in the
Depositary's Same-Day Funds Settlement System, and any permitted secondary
market trading activity in such Notes will, therefore, be required by the
Depositary to be settled in immediately available funds. The Company expects
that secondary trading in any Certificated Notes will also be settled in
immediately available funds.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discusses the material U.S. federal income tax considerations
relating to the exchange of Old Notes for New Notes, and the ownership and
disposition of New Notes, by holders who exchange Old Notes for New Notes
pursuant to the Exchange Offer. The discussion deals only with Notes that are
held as capital assets within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code"), and does not address all of the
tax consequences that may be relevant to a holder of Notes in light of the
holder's particular circumstances. In addition, the discussion does not address
the federal income tax consequences to holders subject to special treatment
under the U.S. federal income tax laws, such as holders who are not U.S. Holders
(as defined below), brokers or dealers in securities or currencies, certain
securities traders, tax-exempt entities, banks, thrifts, insurance companies,
persons that hold the Notes as a position in a "straddle' or as part of a
"synthetic security," a "hedging" or "conversion" transaction or other
integrated instrument, persons that have a "functional currency" other than the
U.S. dollar, and certain U.S. expatriates. Further, the discussion does not
address any U.S. federal alternative minimum tax consequences, or any state,
local or foreign tax consequences relating to the exchange of Old Notes for New
Notes, or the ownership or disposition of New Notes.
This discussion is based upon the Code, existing and proposed regulations
thereunder, and current administrative rulings and court decisions. All of the
foregoing are subject to change, possibly on a retroactive basis, and any such
change could alter the tax considerations discussed herein.
Holders considering the exchange of Old Notes for New Notes should consult
their tax advisors concerning the application of U.S. federal income tax laws,
as well as the laws of any state, local, or foreign taxing jurisdiction, to
their particular situations.
The following discussion applies only to holders of New Notes who are "U.S.
Holders." For purposes of this discussion, "U.S. Holder" generally means (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is includible in its
gross income for U.S. federal income tax purposes without regard to its source
or (iv) a trust if a court within the United States is able to exercise primary
supervision over its administration and one or more U.S. persons have the
authority to control all substantial decisions of the trust.
EXCHANGE OF NOTES
A holder of Old Notes should not recognize any taxable gain or loss on the
exchange of Old Notes for New Notes pursuant to the Exchange Offer, and such
holder's tax basis and holding period in the New Notes should be the same as in
the Old Notes.
THE NEW NOTES
Payments of Interest
Stated interest paid or accrued on the New Notes will constitute qualified
stated interest and will be taxable to a U.S. Holder as ordinary income in
accordance with the holder's method of accounting for U.S. federal income tax
purposes. Alternatively, a U.S. Holder may elect to include stated interest on
the New Notes (as well as original issue discount ("OID") and, if any, market
discount, de minimis market discount and unstated interest on the Notes, as
adjusted by any amortizable bond premium or acquisition premium) in gross income
on a constant yield basis. The mechanics and implications of such an election
are complex and, as a result, U.S. Holders should consult their tax advisors
regarding the advisability of making such an election.
Original Issue Discount
A New Note will have OID for U.S. federal income tax purposes equal to the
difference, if any, between the stated redemption price at maturity on the New
Note and its issue price, as discussed in more detail below. U.S. Holders of New
Notes issued with OID will be subject to special rules relating to the accrual
of income
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for tax purposes. U.S. Holders of New Notes generally must include OID in gross
income for U.S. federal income tax purposes on an annual basis under a constant
yield accrual method regardless of their regular method of tax accounting. As a
result, U.S. Holders generally will include OID in income in advance of the
receipt of cash attributable to such income. However, U.S. Holders of New Notes
generally will not be required to include separately in income cash payments
received on such Notes, even if denominated as interest, to the extent such
payments constitute payments of previously accrued OID.
The New Notes will be treated as issued with OID equal to the excess of a
New Note's "stated redemption price at maturity" over its "issue price." The
stated redemption price at maturity of a New Note is the total of all payments
on the Note that are not payments of "qualified stated interest." A qualified
stated interest payment is a payment of stated interest unconditionally payable,
in cash or property (other than debt instruments of the Company), at least
annually at a single fixed rate during the entire term of the New Note that
appropriately takes into account the length of intervals between payments.
Stated interest on the New Notes will be treated as qualified stated interest.
The issue price of a New Note will be the fair market value of the Old Note
exchanged therefor, as determined on the first date that a substantial amount of
New Notes are issued in exchange for Old Notes.
The amount of OID includible in income by a U.S. Holder of a New Note is
the sum of the "daily portions" of OID with respect to the New Note for each day
during the taxable year or portion thereof in which such U.S. Holder holds such
Note ("accrued OID"). A daily portion is determined by allocating to each day in
any "accrual period" a pro-rata portion of the OID that accrued in such period.
The "accrual period" of a New Note may be of any length and may vary in length
over the term of the New Note, provided that each accrual period is no longer
than one year and each scheduled payment of principal or interest occurs either
on the first or last day of an accrual period. The amount of OID that accrues
with respect to any accrual period is the excess of (i) the product of the New
Note's adjusted issue price at the beginning of such accrual period and its
yield to maturity, determined on the basis of compounding at the close of each
accrual period and properly adjusted for the length of such period, over (ii)
the amount of qualified stated interest allocable to such accrual period. The
"adjusted issue price" of a New Note at the start of any accrual period is equal
to its issue price, increased by the accrued OID for each prior accrual period
and reduced by any prior payments made on such Note (other than payments of
qualified stated interest).
If the Company is required to pay Liquidated Damages with respect to Old
Notes or New Notes exchanged for Old Notes, as described under "Exchange
Offer -- Terms of the Exchange Offer," such payment would result in ordinary
income to a U.S. Holder. Although not free from doubt, the Company believes the
likelihood that Liquidated Damages will be paid is "remote" for purposes of
applicable Treasury Regulations, and intends to treat any such payments as
additional interest payable on the New Notes, which should be taxable to a U.S.
Holder at the time such interest accrues or is received in accordance with the
U.S. Holder's regular method of accounting. If such treatment is not respected,
in the event of a payment of Liquidated Damages the New Notes may be treated as
reissued for OID purposes, which may affect the calculation of OID and the
timing of income inclusion for a U.S. Holder.
Impact of Applicable High Yield Discount Obligation Rules
If the "yield to maturity" on the New Notes equals or exceeds the sum of 5%
and the appropriate "applicable federal rate" in effect for the month in which
the New Notes are issued and the Notes have "significant" OID, the New Notes
will be considered "applicable high yield discount obligations" ("AHYDOS"). A
debt instrument has "significant" OID if the aggregate amount of unpaid interest
(including OID) as of the close of any accrual period ending after the date five
years after the date of issue exceeds the product of the issue price of such
instrument and its yield to maturity.
If the New Notes are AHYDOS, the Company will not be permitted to deduct
for U.S. federal income tax purposes OID accrued on the New Notes until such
time as the Company actually pays such OID in cash or in property other than
stock or debt of the Company (or persons related to the Company). Moreover, to
the extent that the yield to maturity of the New Notes exceeds the sum of 6% and
the appropriate applicable federal rate, such excess (the "Dividend-Equivalent
Interest") will not be deductible at any time by the
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Company for U.S. federal income tax purposes (regardless of whether the Company
actually pays such Dividend-Equivalent Interest in cash or in other property).
Such Dividend-Equivalent Interest would be treated as a dividend to the extent
it is deemed to have been paid out of the Company's current or accumulated
earnings and profits. Accordingly, a U.S. Holder that is domestic corporation
may be entitled to a dividends received deduction with respect to any
Dividend-Equivalent Interest received by such corporate U.S. Holder with respect
to the New Note.
Sale or Redemption
Upon the disposition of a New Note by sale, exchange or redemption, a U.S.
Holder generally will recognize gain or loss equal to the difference between (i)
the amount realized on the disposition (other than amounts attributable to
accrued and unpaid interest, which will be taxed as ordinary interest income)
and (ii) the U.S. Holder's tax basis in the Note. A U.S. Holder's tax basis in a
New Note generally will equal the tax basis in its Old Note exchanged therefor,
increased by OID previously included (or currently includible) in such holder's
gross income to the date of disposition of the New Note, and reduced by any
payments other than payments of qualified stated interest made on such New Note.
When a New Note is sold, disposed of or redeemed between interest payment dates,
the portion of the amount realized on the disposition that is attributable to
interest accrued to the date of sale must be reported as interest income by a
cash method U.S. Holder, and an accrual method U.S. Holder that has not included
the interest in income as it accrued.
Assuming a New Note is held as a capital asset, gain or loss on the sale,
exchange or other disposition on the Note generally will constitute capital gain
or loss and will be long-term capital gain or loss if the U.S. Holder has held
the New Note for longer than one year. U.S. Holders should contact their tax
advisors for more information regarding the particular capital gain tax rates
applicable to their sale or disposition of New Notes at any given time.
Under the market discount rules of the Code, an exchanging U.S. Holder
(other than a U.S. Holder who has made the election described below) that
purchased an Old Note at a "market discount" (in general, defined as the amount
by which the revised issue price of the Old Note on the U.S. Holder's date of
purchase exceeded the holder's purchase price therefor) will be required to
treat any gain recognized on the sale, exchange or redemption of the New Note as
ordinary income to the extent of the market discount that accrued during the
holding period of the New Note. Alternatively, a U.S. Holder who has elected to
include market discount in gross income as ordinary income as such discount
accrues on its market discount obligations will not be subject to this gain
recognition rule. U.S. Holders should consult their tax advisors as to the
effect, if any, of the market discount rules to their particular situations.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to "reportable
payments" that are made to certain noncorporate U.S. Holders, including payments
of principal and interest on a New Note, and payment of the proceeds of sale
with respect to a New Note. Backup withholding at a rate of 31% may apply to
such payments if the holder (i) fails to furnish or certify its correct taxpayer
identification number to the payor in the manner required, (ii) is notified by
the IRS that it has failed to report payments of interest and dividends properly
or (iii) under certain circumstances, fails to certify under penalty of perjury
that it has furnished a correct taxpayer identification number and that it has
not been notified by the IRS that it is subject to backup withholding for
failure to report interest and dividend payments. Certain holders (including,
among others, all corporations) are not subject to the backup withholding and
information reporting requirements. U.S. Holders should consult their tax
advisors regarding their potential qualification for exemption from backup
withholding and the procedure for obtaining such an exemption, if applicable.
The amount of any backup withholding from a payment to a U.S. Holder will be
allowed as a credit against such U.S. Holder's U.S. federal income tax
liability, and may entitle such U.S. Holder to a refund, provided that the
required information is furnished to the IRS.
The Company will report to U.S. Holders of New Notes and to the IRS the
amount of any "reportable payments" for each calendar year and the amount of tax
withheld, if any, with respect to such payments.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Notes. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of New Notes received
in exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that they will make this Prospectus available to any Participating Broker-Dealer
for a period of time not to exceed one year after the date on which the Exchange
Offer is consummated for use in connection with any such resale. In addition,
until such date, all broker-dealers effecting transactions in the New Notes may
be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
Starting on the Expiration Date, the Company will promptly send additional
copies of this Prospectus and any amendment or supplement to this Prospectus to
any broker-dealer that requests such documents in the Letter of Transmittal. The
Company has agreed to pay all expenses incident to the Exchange Offer (including
the expenses of one counsel for the holders of the Old Notes) other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the Old Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the New Notes offered
hereby will be passed upon for the Company by Kilpatrick Stockton LLP, Raleigh,
North Carolina. As of April 30, 1998, James M. O'Connell, a partner in the law
firm of Kilpatrick Stockton LLP is a general partner of Nelgo Investments, a
general partnership that owns 270,810 shares of the Common Stock. Mr. O'Connell
owns 17.0% of Nelgo Investments. Mr. O'Connell is the son of Daniel K.
O'Connell, a director of the Company.
EXPERTS
The financial statements of the Company as of June 30, 1996 and 1997 and
for the period from September 18, 1995 (date of incorporation) to June 30, 1996
and the year ended June 30, 1997; and of Park 'N View, Ltd. for the year ended
December 31, 1994 and the period from January 1, 1995 to November 2, 1995,
included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
108
<PAGE> 113
PARK 'N VIEW, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ANNUAL FINANCIAL STATEMENTS
Independent Auditors' Report................................ F-2
Balance Sheets as of June 30, 1996 and 1997................. F-3
Statements of Operations for the Predecessor for the year
ended December 31, 1994 and for the period from January 1,
1995 to November 2, 1995 and for the Successor for the
period from September 18, 1995 (Date of Incorporation) to
June 30, 1996 and for the year ended June 30, 1997........ F-4
Statements of Changes in Partnership Capital for the
Predecessor for the year ended December 31, 1994 and for
the period from January 1, 1995 to November 2, 1995 and
Statements of Changes in Common Stockholders' Deficit for
the Successor for the period from September 18, 1995 (Date
of Incorporation) to June 30, 1996 and for the year ended
June 30, 1997............................................. F-5
Statements of Cash Flows for the Predecessor for the year
ended December 31, 1994 and for the period from January 1,
1995 to November 2, 1995 and for the Successor for the
period from September 18, 1995 (Date of Incorporation) to
June 30, 1996 and the year ended June 30, 1997............ F-6
Notes to Financial Statements............................... F-7
INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Balance Sheets as of June 30, 1997 and March 31, 1998
(unaudited)............................................... F-14
Statements of Operations for the nine months ended March 31,
1997 and 1998 (unaudited)................................. F-15
Statements of Cash Flows for the nine months ended March 31,
1997 and 1998 (unaudited)................................. F-16
Notes to Condensed Financial Statements (unaudited)......... F-17
</TABLE>
F-1
<PAGE> 114
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Park 'N View, Inc.:
We have audited the accompanying balance sheets of Park 'N View, Inc. (the
"Company") as of June 30, 1996 and 1997, and the related statements of
operations, changes in partnership capital and common stockholders' deficit, and
cash flows of Park 'N View, Ltd. (the "Predecessor") for the year ended December
31, 1994 and for the period from January 1, 1995 to November 2, 1995, and of the
Company for the period from September 18, 1995 (date of incorporation) to June
30, 1996 and the year ended June 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of June 30, 1996 and 1997,
and the results of operations and cash flows of the Predecessor for the year
ended December 31, 1994 and for the period from January 1, 1995 to November 2,
1995, and of the Company for the period from September 18, 1995 (date of
incorporation) to June 30, 1996 and for the year ended June 30, 1997, in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Certified Public Accountants
Fort Lauderdale, Florida
September 5, 1997
F-2
<PAGE> 115
PARK 'N VIEW, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
--------------------------
1996 1997
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 365,731 $ 4,717,394
Accounts receivable, net of allowance for doubtful
accounts of $5,411 at June 30, 1996 and 1997........... 52,390 11,526
Inventory................................................. 141,698 259,825
Prepaid expenses and other................................ 116,917 138,613
----------- -----------
Total current assets.............................. 676,736 5,127,358
Property And Equipment, Net (Note 3)........................ 2,012,928 7,650,753
Deferred Financing Costs.................................... 195,434 143,869
Other Assets................................................ 13,027 16,803
----------- -----------
Total............................................. $ 2,898,125 $12,938,783
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable.......................................... $ 399,090 $ 1,116,464
Accrued expenses.......................................... 122,137 866,759
Deferred revenue.......................................... 48,557 31,929
Current portion of capital lease obligations (Note 4)..... 172,514 71,533
Current portion of long-term debt......................... 16,048 33,630
Lease cancellation payable (Note 3)....................... 490,237
----------- -----------
Total current liabilities......................... 758,346 2,610,552
----------- -----------
Obligations Under Capital Leases (Note 4)................... 299,515 69,828
----------- -----------
Long-Term Debt And Accrued Interest (Note 5)................ 3,088,419 58,864
----------- -----------
Commitments and Contingencies
Series A Redeemable Preferred Stock And Accrued
Dividends -- Par value $.01 per share; 140,010 and 627,630
shares authorized at June 30, 1996 and 1997, respectively;
70,010 and 388,075 shares issued and outstanding at June
30, 1996 and 1997, respectively ($10.00 per share
liquidation preference, including accrued dividends of
$21,370 and $212,252 as of June 30, 1996 and 1997,
respectively). (Note 6)................................... 721,370 3,931,320
----------- -----------
Series B Redeemable Convertible Preferred Stock And Accrued
Dividends -- Par value $.01 per share; 1,372,370 shares
authorized, issued and outstanding ($10.93 per share
liquidation preference, including accrued dividends of
$662,068 as of June 30, 1997). (Note 6)................... 15,200,146
----------- -----------
Common Stockholders' Deficit:
Common stock -- par value $.001 per share; 5,000,000 and
7,000,000 shares authorized at June 30, 1996 and 1997,
respectively; 4,318,182 shares issued and
outstanding............................................ 4,318 4,318
Additional paid-in capital................................ 8,764 8,764
Accumulated deficit....................................... (1,982,607) (8,945,009)
----------- -----------
Total common stockholders' deficit................ (1,969,525) (8,931,927)
----------- -----------
Total............................................. $ 2,898,125 $12,938,783
=========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 116
PARK 'N VIEW, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
-------------------------------------- ----------------------------------
PERIOD FROM
SEPTEMBER 18, 1995
PERIOD FROM (DATE OF
YEAR ENDED JANUARY 1, 1995 TO INCORPORATION) TO YEAR ENDED
DECEMBER 31, 1994 NOVEMBER 2, 1995 JUNE 30, 1996 JUNE 30, 1997
----------------- ------------------ ------------------ -------------
<S> <C> <C> <C> <C>
Revenues:
Service revenue................. $ 68,451 $ 755,057
Equipment sales................. 76,953 51,909
Advertising..................... 4,050 22,500
Other........................... 301 58,931
----------- -----------
Total revenues.......... 149,755 888,397
----------- -----------
Cost of Revenues
Service cost.................... 287,792 996,260
Service depreciation............ 84,341 643,316
Equipment cost.................. 62,821 422,557
Advertising..................... 1,875 15,556
----------- -----------
Total cost of
revenues.............. 436,829 2,077,689
----------- -----------
Gross margin...................... (287,074) (1,189,292)
Selling, general and
administrative expenses......... $ 287,782 $ 475,891 1,576,209 4,431,889
Lease cancellation expense and
related costs................... 594,691
--------- --------- ----------- -----------
Loss from operations.............. (287,782) (475,891) (1,863,283) (6,215,872)
Interest expense.................. 103,079 157,416
Interest income and other......... (5,125) (328,268)
--------- --------- ----------- -----------
Net loss................ $(287,782) $(475,891) $(1,961,237) $(6,045,020)
========= ========= =========== ===========
Net loss per share...... $ (0.45) $ (1.61)
=========== ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 117
PARK 'N VIEW, INC.
STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL AND
COMMON STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
PARTNERSHIP
PREDECESSOR CAPITAL
- ----------- -----------
<S> <C> <C>
Balance, December 31, 1993........................ $ (7,792)
Contributions from partners....................... 800,100
Distributions to partners......................... (559,818)
Net loss.......................................... (287,782)
---------
Balance, December 31, 1994........................ (55,292)
Contributions from partners....................... 446,737
Net loss.......................................... (475,891)
---------
Balance, November 2, 1995......................... $ (84,446)
=========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------ PAID-IN ACCUMULATED
SUCCESSOR SHARES AMOUNT CAPITAL DEFICIT TOTAL
- --------- --------- ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net liabilities transferred from Park 'N
View, Ltd. in exchange for shares in
Park 'N View, Inc...................... 2,318,182 $2,318 $(86,764) $ (84,446)
Shares issued at initial closing......... 2,000,000 2,000 98,000 100,000
Financing Costs.......................... (2,472) (2,472)
Dividends accrued for Series A preferred
stock.................................. $ (21,370) (21,370)
Net loss................................. (1,961,237) (1,961,237)
--------- ------ -------- ----------- -----------
Balance, June 30, 1996................... 4,318,182 4,318 8,764 (1,982,607) (1,969,525)
Dividends accrued for Series A preferred
stock.................................. (190,882) (190,882)
Dividends accrued for Series B preferred
stock.................................. (662,068) (662,068)
Amortization of preferred stock issuance
cost................................... (64,432) (64,432)
Net loss................................. (6,045,020) (6,045,020)
--------- ------ -------- ----------- -----------
Balance, June 30, 1997................... 4,318,182 $4,318 $ 8,764 $(8,945,009) $(8,931,927)
========= ====== ======== =========== ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 118
PARK 'N VIEW, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------ ----------------------------------
PERIOD FROM
PERIOD FROM SEPTEMBER 18, 1995
YEAR ENDED JANUARY 1, 1995 (DATE OF
DECEMBER 31, TO NOVEMBER 2, INCORPORATION) TO YEAR ENDED
1994 1995 JUNE 30, 1996 JUNE 30, 1997
------------ --------------- ------------------ -------------
<S> <C> <C> <C> <C>
Operating Activities:
Net loss....................................... $(287,782) $(475,891) $(1,961,237) $(6,045,020)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................ 20,136 27,966 174,360 705,418
Provision for lease cancellation and related
costs...................................... 594,691
Provision for losses on accounts
receivable................................. 5,411
Loss on disposal of property and equipment... 2,150
Changes in assets and liabilities:
Accounts receivable........................ (57,801) 40,864
Inventories................................ (141,698) (118,127)
Prepaid expenses and other................. (5,000) (116,917) (21,696)
Other assets............................... (13,027) (3,776)
Accounts payable........................... 13,335 54,116 399,090 717,374
Accrued expenses........................... 122,137 744,622
Deferred revenue........................... 48,557 (16,628)
Lease cancellation payable................. (48,720)
Accrued interest........................... 88,419
--------- --------- ----------- -----------
Net cash used in operating activities... (254,311) (398,809) (1,452,706) (3,448,848)
--------- --------- ----------- -----------
Investing Activities:
Purchases of property and equipment.......... (109,587) (909) (1,650,177) (6,443,899)
--------- --------- ----------- -----------
Net cash used in investing activities... (109,587) (909) (1,650,177) (6,443,899)
--------- --------- ----------- -----------
Financing Activities:
Proceeds from long-term debt................... 3,000,000 1,500,000
Proceeds from issuance of common and preferred
stock........................................ 800,000 13,500,000
Contributions from partners.................... 800,100 70,070
Distributions to partners...................... (559,818)
Loans from partners............................ 369,349 310,000
Payment of loan from partner................... (240,182)
Payment of stock and debt issuance costs and
other........................................ (152,000) (509,560)
Payment of obligation under capital lease...... (178,607)
Deferred financing costs....................... (195,434) (143,869)
Notes payable.................................. 16,048 76,446
--------- --------- ----------- -----------
Net cash provided by financing
activities............................ 369,449 380,070 3,468,614 14,244,410
--------- --------- ----------- -----------
Net Increase (Decrease)In Cash And Cash
Equivalents.................................... 5,551 (19,648) 365,731 4,351,663
Cash And Cash Equivalents, Beginning Of Period... 14,305 19,856 365,731
--------- --------- ----------- -----------
Cash And Cash Equivalents, End Of Period......... $ 19,856 $ 208 $ 365,731 $ 4,717,394
========= ========= =========== ===========
Supplemental Cash Flow Information:
Interest paid.................................. $ 14,660 $ 48,987
=========== ===========
Non-Cash Financing And Investing Activities:
Conversion of partnership loans into
partnership capital.......................... $ 376,667
=========
Historical carrying value of net liabilities
assumed at formation in exchange for Common
Stock........................................ $ (84,446)
===========
Capital lease obligations relating to
acquisition of property and equipment........ $ 472,029 $ 357,932
=========== ===========
Exchange of promissory notes and accrued
interest for Series B Preferred Stock........ $ 1,533,000
===========
Exchange of promissory notes and accrued
interest for Series A Preferred Stock........ $ 3,180,646
===========
</TABLE>
See notes to financial statements.
F-6
<PAGE> 119
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS
1. FORMATION OF THE COMPANY AND NATURE OF BUSINESS
Park 'N View, Inc. (the "Company") was incorporated on September 18, 1995
and provides cable television and telephone service to long-haul truck drivers
at truckstops ("sites") throughout the country. As of June 30, 1997, the Company
has 41 sites in operation and 6 in the planning or construction phase. The
Company has contracts to provide their service to approximately 625 sites. The
final determination on the number of sites to be provided with the service will
be made by the Company on a site by site basis.
The Company commenced commercial operations as a result of the Securities
Purchase Agreement (the "Agreement") dated November 2, 1995 between the former
partners of Park 'N View, Ltd., the Company's predecessor entity, and an
investor group led by Patricof & Company ("Patricof").
Pursuant to the Agreement, Park 'N View, Ltd. transferred certain of its
assets, intangible assets, contractual rights, and certain liabilities to the
Company in exchange for 2,318,182 shares of common stock issued to the former
partners of Park 'N View, Ltd. These net assets were recorded by the Company at
the transferor's historical carrying amounts. Patricof was issued 2,000,000
shares of Common Stock for $100,000.
Park 'N View, Ltd. was incorporated for the purpose of developing cable
television and telephone service technology for use by long-haul truck drivers
at truckstops. The accompanying financial statements identified as for the
Predecessor are for Park 'N View, Ltd. for the year ended December 31, 1994 and
the period from January 1, 1995 to November 2, 1995. The accompanying financial
statements identified as for the Successor are for Park 'N View, Inc. as of June
30, 1996 and 1997 and for the period from September 18, 1995 (date of
incorporation) to June 30, 1996 and for the year ended June 30, 1997.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements follows:
Accounting Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and Cash Equivalents -- The Company considers all highly liquid
investments purchased with an original maturity of three months or less to
be cash equivalents.
Inventory -- Consists principally of telephones and components and is
stated at lower of cost (first-in, first-out method) or market.
Property and Equipment -- Property and equipment is stated at cost,
less accumulated depreciation. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets,
generally three to ten years.
Deferred Financing Costs -- Costs incurred in connection with
obtaining financing are being amortized based on the interest method over
the term of the related obligations. Amortization of deferred financing
costs relating to debt are amortized to interest expense and amortization
of deferred financing costs relating to preferred stock are amortized to
accumulated deficit.
Revenue Recognition/Deferred Revenue -- Service revenues are
recognized as revenue in the period earned. Prepaid service revenues are
recorded as deferred revenue until earned.
Income Taxes -- In conformity with the Internal Revenue Code and
applicable state and local tax statutes, taxable income or loss of the
Predecessor is required to be reported in the tax returns of the
F-7
<PAGE> 120
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
partners. Accordingly, no provision has been made in the accompanying
Predecessor Financial Statements for any federal or state income taxes.
The provision for income taxes for the Company represents the amount
payable or refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities. The Company provides for
deferred taxes under the liability method. Under such method, deferred
taxes are adjusted for tax rate changes as they occur. Deferred income tax
assets and liabilities are computed annually for differences between the
financial reporting and tax bases of assets and liabilities that will
result in taxable or deductible amounts in the future based on enacted tax
laws and rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are recorded when
necessary to reduce deferred tax assets to the amount that management
believes is more likely than not to be realized.
Long-Lived Assets -- The Company has adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of. SFAS No. 121
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles and goodwill related to those assets to be
held and used and for long-lived assets and certain identifiable
intangibles to be disposed of. SFAS No. 121 requires that long-lived assets
and certain identifiable intangibles and goodwill be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. SFAS No. 121 also
requires that long-lived assets and certain identifiable intangibles to be
disposed of be reported at the lower of carrying amount or fair value less
cost to sell. The adoption of this standard did not have a significant
effect on the Company's results of operations or financial position.
Stock-Based Compensation -- The Company currently accounts for its
stock-based compensation plans using the provisions of Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
("APB 25").
SFAS No. 123, Accounting for Stock-Based Compensation, provides that
companies may elect to account for stock-based compensation plans using a
fair value based method or continue measuring compensation expense for
those plans using the intrinsic value method prescribed in APB 25. SFAS No.
123 requires that companies electing to continue using the intrinsic value
method must make pro forma disclosures of net income as if the fair value
based method of accounting has been applied.
Net Loss Per Share -- Net loss per share is computed by dividing the
net loss attributable to common stockholders by the number of weighted
average common shares outstanding. The effect of common stock equivalents
would have been antidilutive and therefore was not included. The weighted
average common shares outstanding was 4,318,182 for the period from
September 18, 1995 to June 30, 1996 and the year ended June 30, 1997.
Preferred stock dividends and related amortization of preferred stock
issuance costs was $21,370 and $917,382 for the period form September 18,
1995 to June 30, 1996 and the year ended June 30, 1997, respectively.
In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, Earnings Per Share. This statement supercedes Accounting
Principles Board Opinion No. 15 and replaces primary and fully diluted
earnings per share with a dual presentation of basic and diluted earnings
per share. Basic earnings per share equals net loss attributable to common
stockholders divided by the number of weighted average common shares
outstanding. Diluted earnings per share includes potentially dilutive
securities such as stock options. Application of this standard would have
had no impact on the Company's reported net loss per share.
F-8
<PAGE> 121
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Site equipment and improvements............................. $1,567,452 $5,404,620
Component inventory......................................... 247,239 2,218,590
Construction equipment...................................... 117,972 127,912
Computer equipment.......................................... 110,024 231,907
Vehicles.................................................... 41,740 255,467
Furniture, fixtures and other equipment..................... 34,968 28,739
---------- ----------
Total............................................. 2,119,395 8,267,235
Less accumulated depreciation............................... 106,467 616,482
---------- ----------
Property and equipment, net................................. $2,012,928 $7,650,753
========== ==========
</TABLE>
During the year ended June 30, 1997, the Company decided to terminate
certain capital leases relating to telephone switches that will be replaced with
updated technology. The Company has accrued for a related lease cancellation fee
of $538,957 and has written down to estimated fair value certain equipment
previously used with the telephone switches by $55,734.
4. LEASE COMMITMENTS
The Company leases an office site and equipment maintained at various
facilities under operating leases. Capital leases primarily consist of
construction equipment. Future minimum lease payments under capital leases and
noncancellable operating leases are as follows:
<TABLE>
<CAPTION>
YEAR ENDING JUNE 30: OPERATING CAPITAL
- -------------------- --------- --------
<S> <C> <C>
1998........................................................ $140,515 $ 82,736
1999........................................................ 122,568 49,266
2000........................................................ 101,418 26,878
2001........................................................ 106,488
2002........................................................ 36,069
-------- --------
Total............................................. $507,058 158,880
========
Imputed interest on capital leases.......................... (17,519)
--------
Present value of capital leases............................. 141,361
Current portion............................................. 71,533
--------
Long-term portion........................................... $ 69,828
========
</TABLE>
Rent expense was $77,569 and $149,401 for the period ended June 30, 1996
and the year ended June 30, 1997, respectively.
In August 1997, the Company entered into a five-year operating lease for
approximately 21,000 square feet of office space to be used as its new corporate
and operational headquarters. Total future minimum lease payments under this
lease approximate $835,000. The Company anticipates subleasing its existing
corporate and operational headquarters until that lease expires in 2002.
5. NOTES PAYABLE
At June 30, 1997, the Company had outstanding $92,494 of notes payable
relating to the purchase of vehicles. These notes have an average interest rate
of 10% and mature on various dates through March 2000.
F-9
<PAGE> 122
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
At June 30, 1996, the Company had outstanding $3,000,000 of 8% Subordinated
Promissory Notes ("Notes") due November 1, 2000, with interest payable
semiannually on June 30 and December 31. The Notes were held by Patricof.
Accrued interest at June 30, 1996 was $88,419.
On August 5, 1996, Patricof provided the Company with an additional
$1,500,000 in exchange for 8% Subordinated Promissory Notes due November 2, 2000
and 239,250 common stock warrants.
On November 13, 1996, the Company completed a private placement (the "1996
Offering") with certain investors of 1,372,370 shares of Series B 7% Cumulative
Convertible Preferred Stock (the "Series B Preferred") due November 7, 2003 for
a purchase price of $10.93 per share and a total offering amount of $15,000,000.
As payment for 137,237 shares of the Series B Preferred, Patricof exchanged the
$1,500,000 8% Subordinated Promissory Notes and the 239,250 common stock
warrants. In addition, the $3,000,000 in Notes and related accrued interest of
$180,646 were exchanged by Patricof for 318,065 shares of Series A Redeemable
Preferred Stock (the "Series A Preferred").
6. REDEEMABLE PREFERRED STOCK
Series A Redeemable Preferred Stock -- On November 13, 1996, in connection
with the 1996 Offering, $3,000,000 in Notes and related accrued interest of
$180,646 were exchanged for 318,065 shares of Series A Preferred. In November
1995, in accordance with the Agreement, 32,210 shares of Series A Preferred were
issued at $10 per share to Patricof. In April 1996, Patricof purchased an
additional 37,800 shares of Series A Preferred at $10 per share. The Series A
Preferred provides for an annual dividend of 7%, payable in arrears quarterly in
cash or in kind. Cumulative unpaid dividends in arrears were $21,370 and
$212,252 at June 30, 1996 and 1997, respectively.
The Company is required to redeem for $10 per share all of the issued and
outstanding shares of Series A Preferred as follows: (a) mandatory redemption of
50% of the number of shares outstanding on November 13, 2002 and the remaining
shares on November 13, 2003, (b) upon the receipt of proceeds of an initial
public offering of not less than $20 million, net of underwriting expenses, (c)
in the event the Company consolidates or merges with or into another entity, or
(d) upon sale of the Company's assets.
Upon the failure of the Company to redeem the Series A Preferred as
required, the shareholders of the Series A Preferred shall be entitled to vote
as a separate class only in respect to any merger, consolidation, sale of assets
or creation of any class or series, other than Series B Preferred, equal to or
superior to its Series A Preferred. The shareholders of at least 66.6% of the
outstanding Series A Preferred voting as a separate class shall be entitled to
elect two members of the Board of Directors.
Series B 7% Cumulative Convertible Preferred Stock -- In connection with
the 1996 Offering, the Company authorized and issued 1,372,370 shares of Series
B Preferred, par value of $.01 for $10.93 per share and a total offering amount
of $15,000,000.
Commencing on January 31, 1997, the shareholders of the Series B Preferred
are entitled to receive dividends payable in cash at 7% per annum and 9% per
annum upon an event of default. An event of default includes any of the
following: (a) failure by the Company to declare and pay a dividend on the
payment due dates, (b) failure by the Company to satisfy its redemption
obligations, (c) default by the Company in the performance or observance of any
obligation or condition with respect to the indebtedness of the Company, or (d)
insolvency. Cumulative unpaid dividends accrued were $662,068 at June 30, 1997.
The Company is required to redeem for $10.93 per share all of the issued
and outstanding shares of Series B Preferred as follows: (a) mandatory
redemption of 50% of the shares outstanding on November 13, 2002 and the
remaining shares on November 13, 2003, (b) upon the receipt of proceeds of an
initial public offering of not less than $20 million, net of underwriting
expenses, (c) in the event the Company consolidates or merges with or into
another entity, or (d) upon sale of the Company's assets.
F-10
<PAGE> 123
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The shareholders of Series B Preferred can convert their shares at any time
at the option of the holder into common stock at an initial conversion rate of
one Series B Preferred Share for one share of common stock. Under antidilution
provisions, the conversion price of Series B Preferred will be adjusted upon the
Company's issuance of additional shares of common stock, warrants or rights to
purchase common stock.
Series B Preferred shareholders are entitled to the number of votes equal
to the number of full shares of common stock into which such shares of Series B
Preferred is then convertible. Shareholders of Series B Preferred and common
stock shall vote together on each matter submitted to stockholders and not by
class or series. Prior to the consummation of an initial public offering of not
less than $20 million, net of underwriting expenses ("Qualifying Offer"), the
shareholders of the Series B Preferred, voting together as a class, shall be
entitled to elect one director. Subsequent to a Qualifying Offer and only so
long as at least 50% of the shares of Series B Preferred originally issued
remain outstanding, the holders of a majority of the shares of common stock
issuable upon conversion of the Series B Preferred shall be entitled to nominate
one director. Upon the occurrence of an event of default, the shareholders of
the Series B Preferred as a class have the exclusive right to elect a majority
of the Board of Directors.
7. RELATED PARTY TRANSACTIONS
Prepaid expenses and other at June 30, 1997 includes $64,000 in cash
advances to a Company executive. A promissory note was executed for $59,000 of
the advances. The total advances were satisfied in August 1997.
8. STOCK OPTIONS
The Company has incentive and non-qualified stock option plans for
directors and key employees and has 525,000 shares of common stock reserved for
issuance under the plans. The incentive and non-qualified options become
exercisable as determined by the Board of Directors and have a term of ten
years.
Option activity for the year ended June 30, 1997 is as follows:
<TABLE>
<CAPTION>
AVERAGE
NUMBER EXERCISE PRICE RANGE OF
OF SHARES PER SHARE EXERCISE PRICE
--------- -------------- --------------
<S> <C> <C> <C>
Granted during the year ended June 30, 1997 and
outstanding at June 30, 1997...................... 409,846 $1.42 $1.00-$3.00
Exercisable at June 30, 1997........................ 81,969 $1.42 $1.00-$3.00
</TABLE>
The weighted average remaining contractual life of options outstanding is
9.5 years.
The Company accounts for stock options in accordance with APB 25. The
Company's stock options are issued with exercise prices which equal the fair
value of the Company's common stock on the date of grant and, consequently, no
compensation expense is recognized.
SFAS No. 123 requires entities that account for awards for stock-based
compensations in accordance with APB 25 to present pro forma disclosure as if
compensation cost was measured at the date of grant based on the fair value of
the award. The fair value for these options was estimated at the date of grant
using the minimum value method with the following weighted-average assumptions:
a risk free interest rate of 6.8%, no dividend yield and an expected life of six
years. The weighted average grant date fair value per option is approximately
$.46.
The minimum value option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input
F-11
<PAGE> 124
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
For purposes of pro forma disclosure, the estimated fair value of the
options is amortized to expense over the options vesting period. The Company's
net loss determined in accordance with SFAS No. 123 on a pro forma basis for the
year ended June 30, 1997 would have been as follows:
<TABLE>
<S> <C>
Net loss:
As reported............................................... $(6,045,020)
Pro forma................................................. (6,082,726)
</TABLE>
The pro forma amount may not be representative of the future effects on
reported net income that will result from the future granting of stock options,
since the pro forma compensation expense is allocated over the periods in which
options become exercisable and new option awards are granted each year.
9. INCOME TAXES
No current income taxes have been provided for any periods presented as the
Company has had net operating losses since inception. The Company had
approximately $7.4 million in net operating loss carryforwards at June 30, 1997
for income tax purposes, with approximately $2 million expiring in 2011 and $5.4
million in 2012 which are available to offset future taxes payable.
Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and (b)
operating loss and tax credit carryforwards. The Company has not recognized any
benefit for its net deferred tax asset and has offset the net deferred tax asset
by a valuation allowance, as it is more likely than not that this asset will not
be realized prior to its expiration. The tax effects of significant items
comprising the Company's net deferred tax asset as of June 30, 1996 and 1997 are
as follows:
<TABLE>
<CAPTION>
1996 1997
--------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward........................... $ 662,135 $ 1,723,073
Nondeductible lease cancellation accrual.................. 237,876
Bad debt reserve.......................................... 2,164 2,164
Vacation accrual.......................................... 14,536
--------- -----------
664,299 1,977,649
--------- -----------
Deferred tax liabilities:
Differences between book and tax basis of property........ 198 409
Amortization.............................................. 1,943 14,095
--------- -----------
2,141 14,504
--------- -----------
Valuation allowance......................................... (662,158) (1,963,145)
--------- -----------
Net deferred tax asset............................ $ -- $ --
========= ===========
</TABLE>
10. SUBSEQUENT EVENT
In August 1997, the Company entered into a private placement offering (the
"1997 Offering") with certain investors to raise additional working capital
through the sale of 2,328,543 shares of Series C 7% Cumulative Convertible
Preferred Stock (the "Series C Preferred") for a purchase price of $8.00 per
share and a total offering amount of $18,628,344. The Series C Preferred will
vote in conjunction with the Series B Preferred on an as-if-converted basis. The
Series C Preferred is convertible into 2,328,543 shares of common
F-12
<PAGE> 125
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
stock at a price of $8.00 per share. Also, as part of the 1997 Offering, the
Company issued a warrant to the underwriting agent for the purchase of 100,399
shares of common stock exercisable at $8.00 per share at any time within five
years from the date of the 1997 Offering.
The Company is required to redeem for $8.00 per share all of the issued and
outstanding shares of Series C Preferred as follows: (a) mandatory redemption of
50% of the shares outstanding on November 13, 2002 and the remaining shares on
November 13, 2003, (b) upon the receipt of proceeds of an initial public
offering of not less than $20 million, net of underwriting expenses, (c) in the
event the Company consolidates or merges with or into another entity, or (d)
upon sale of the Company's assets.
F-13
<PAGE> 126
PARK 'N VIEW, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1997 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 4,717,394 $ 4,776,451
Accounts receivable, net of allowance for doubtful
accounts of $5,411 at June 30, 1997 and March 31,
1998.................................................... 11,526 160,129
Inventory................................................. 259,825 480,193
Prepaid expenses and other................................ 138,613 121,883
----------- ------------
Total current assets............................... 5,127,358 5,538,656
Property And Equipment, Net................................. 7,650,753 16,395,669
Deferred Financing Costs.................................... 143,869 --
Other Assets................................................ 16,803 476,563
----------- ------------
Total.............................................. $12,938,783 $ 22,410,888
=========== ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable.......................................... $ 1,116,464 $ 1,219,472
Accrued expenses.......................................... 866,759 521,968
Deferred revenue.......................................... 31,929 190,881
Current portion of capital lease obligations.............. 71,533 117,914
Current portion of long-term debt......................... 33,630 37,536
Lease cancellation payable................................ 490,237 307,074
----------- ------------
Total current liabilities.......................... 2,610,552 2,394,845
Obligations Under Capital Leases............................ 69,828 153,784
----------- ------------
Long-Term Debt.............................................. 58,864 34,156
----------- ------------
Commitments and Contingencies
Series A Redeemable Preferred Stock And Accrued
Dividends -- Par value $.01 per share; 627,630 shares
authorized; 388,075 shares issued and outstanding ($10.00
per share liquidation preference, including accrued
dividends of $212,252 and $417,103 as of June 30, 1997 and
March 31, 1998, respectively)............................. 3,931,320 4,155,003
----------- ------------
Series B Redeemable Convertible Preferred Stock And Accrued
Dividends -- Par value $.01 per share; 1,372,370 shares
authorized issued and outstanding ($8.00 per share
liquidation preference, including accrued dividends of
$662,068 and $1,449,550 as of June 30, 1997 and March 31,
1998, respectively)....................................... 15,200,146 16,041,560
----------- ------------
Series C Redeemable Convertible Preferred Stock And Accrued
Dividends -- Par value $.01 per share; 3,750,000 shares
authorized; 2,328,543 shares issued and outstanding ($8.00
per share liquidation preference, including accrued
dividends of $789,617).................................... 18,146,910
----------- ------------
Common Stockholders' Deficit:
Common stock -- par value $.001 per share; 7,000,000 and
12,000,000 shares authorized at June 30, 1997 and March
31, 1998, respectively; 4,318,182 shares issued and
outstanding............................................... 4,318 4,318
Additional paid-in capital.................................. 8,764 547,763
Accumulated deficit......................................... (8,945,009) (19,067,451)
----------- ------------
Total common stockholders' deficit................. (8,931,927) (18,515,370)
----------- ------------
Total.............................................. $12,938,783 $ 22,410,888
=========== ============
</TABLE>
See notes to condensed financial statements.
F-14
<PAGE> 127
PARK 'N VIEW, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
-------------------------
1997 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
Revenues:
Service revenue........................................... $ 392,377 $ 1,973,687
Equipment sales........................................... 42,380 71,158
Advertising............................................... 22,500 --
Other..................................................... 5,419 61,610
----------- -----------
Total revenues.................................... 462,676 2,106,455
----------- -----------
Cost of Revenues:
Service cost.............................................. 597,957 2,113,783
Service depreciation...................................... 433,844 1,211,849
Equipment cost............................................ 200,511 771,606
Advertising............................................... 11,682 31,497
----------- -----------
Total cost of revenues............................ 1,243,994 4,128,735
----------- -----------
Gross margin................................................ (781,318) (2,022,280)
Selling, general and administrative expenses................ 2,796,456 6,471,565
Lease cancellation expenses and related costs............... 603,703 --
----------- -----------
Loss from operations........................................ (4,181,477) (8,493,845)
Interest expense............................................ 144,617 23,949
Interest income and other................................... (204,069) (397,442)
----------- -----------
Net loss.......................................... $(4,122,025) $(8,120,352)
=========== ===========
Net loss per share................................ $ (1.09) $ (2.34)
=========== ===========
</TABLE>
See notes to condensed financial statements.
F-15
<PAGE> 128
PARK 'N VIEW, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
-------------------------
1997 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
Operating Activities:
Net loss.................................................. $(4,122,025) $(8,120,352)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization.......................... 492,811 1,286,143
Provision for lease cancellation and related costs..... 603,703 (50,000)
Changes in assets and liabilities:
Accounts receivable.................................. 42,952 (148,603)
Inventories.......................................... (14,506) (220,368)
Prepaid expenses and other........................... 15,650 16,730
Other assets......................................... (113,753)
Accounts payable..................................... 645,743 103,008
Accrued expenses..................................... 283,669 (344,791)
Deferred revenue..................................... 7,784 158,952
Lease cancellation payable........................... (133,163)
----------- -----------
Net cash used in operating activities............. (2,044,219) (7,566,197)
----------- -----------
Investing Activities:
Purchases of property and equipment.................... (3,614,764) (9,822,272)
----------- -----------
Net cash used in investing activities............. (3,614,764) (9,822,272)
----------- -----------
Financing Activities:
Proceeds from long-term debt........................... 1,500,000 --
Proceeds from issuance of common and preferred stock... 13,500,000 18,628,344
Payment of stock and debt issuance costs and other..... (509,560) (1,081,835)
Payment of obligation under capital lease.............. (163,096) (78,181)
Notes payable.......................................... 18,180 (20,802)
----------- -----------
Net cash provided by financing activities......... 14,345,524 17,447,526
----------- -----------
Net Increase In Cash And Cash Equivalents................... 8,686,541 59,057
Cash And Cash Equivalents, Beginning Of Period.............. 365,731 4,717,394
----------- -----------
Cash And Cash Equivalents, End Of Period.................... $ 9,052,272 $ 4,776,451
=========== ===========
Supplemental Cash Flow Information:
Interest paid............................................... $ 39,656 $ 29,460
=========== ===========
Non-Cash Financing And Investing Activities:
Capital lease obligations relating to acquisition of
property and equipment................................. $ 271,647 $ 208,518
=========== ===========
Exchange of promissory notes and accrued interest for
Series B
Preferred Stock........................................... $ 1,533,000
===========
Exchange of promissory notes and accrued interest for
Series A
Preferred Stock........................................... $ 3,180,646
===========
Warrants issued in connection with securities offering and
contract commitments................................... $ 538,999
===========
</TABLE>
See notes to condensed financial statements.
F-16
<PAGE> 129
PARK 'N VIEW, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The interim financial statements of the Company as of March 31, 1998 and
for the nine months ended March 31, 1997 and 1998 are unaudited. In the opinion
of management, these interim financial statements include all adjustments
necessary to present fairly the financial position, results of operations and
cash flows as of March 31, 1998 and for the interim periods presented. All
adjustments made were of a normal recurring nature. Certain information and
footnote disclosure normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. The Company believes that the disclosures included are adequate and
provide a fair presentation of interim period results. Interim financial
statements are not necessarily indicative of financial position or operating
results to be expected for an entire year. These interim financial statements
should be read in conjunction with the audited financial statements of the
Company and the notes thereto for the year ended June 30, 1997.
2. LIQUIDITY AND CAPITAL RESOURCES
In August 1997, the Company entered into a private placement offering (the
"1997 Offering") with certain investors to raise additional working capital
through the sale of 2,328,543 shares of Series C 7% Cumulative Convertible
Preferred Stock (the "Series C Preferred") for a purchase price of $8.00 per
share and a total offering amount of $18,628,344. The Series C Preferred will
vote in conjunction with the Series B Preferred on an as-if converted basis. The
Series C Preferred is convertible into 2,328,543 shares of common stock at a
price of $8.00 per share. Also, as part of the 1997 Offering, the Company issued
a warrant to the underwriting agent for the purchase of 100,399 shares of common
stock exercisable at $8.00 per share at any time within five years from the date
of this offering.
The Company is required to redeem for $8.00 per share all of the issued and
outstanding shares of Series C Preferred as follows: (a) mandatory redemption of
50% of the shares outstanding on November 13, 2002 and the remaining shares on
November 13, 2003, (b) upon the receipt of proceeds of an initial public
offering of not less that $20 million, net of underwriting expenses, (c) in the
event the Company consolidates or merges with, or into another entity, or (d)
upon sale of the Company's assets.
The Company's Series B 7% Cumulative Convertible Preferred Stock are
subject to certain antidilution provisions. In August 1997, the Company adjusted
the conversion price on the Series B 7% Cumulative Convertible Preferred Stock
from $10.93 per share to $8.00 per share as allowed by the antidilution
provisions.
The Company has experienced net operating losses since its inception and as
of March 31, 1998 had an accumulated deficit of $19.1 million. Management
believes that the Company must significantly increase the sales of Park 'N View
service subscriptions in order to achieve profitability. Management further
believes that a significant increase in sales of subscriptions is dependent on
truck drivers' perception that the Park 'N View system is installed and
operating at a sufficient number and location of truckstops that potential uses
of the Park 'N View system justify the subscription fee. The Company's future
success will depend on achieving market acceptance in sufficient numbers and at
commercially viable subscription rates, the timely and cost-effective
installation of the Park 'N View system at a significant number of additional
truckstops, and obtaining the financing necessary to install its system in a
sufficient number of locations.
F-17
<PAGE> 130
PARK 'N VIEW, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
In May 1998, the Company issued $75,000,000 of 13% Senior Notes (the
"Notes"). The Notes are general senior obligations of the Company and will rank
pari passu with all current and future unsecured senior indebtedness of the
Company. The Notes have a maturity date of May 15, 2008. Interest on the Notes
will accrue commencing on the closing date and will be paid semiannually on May
15 and November 15. In addition, a portion of the net proceeds ($19.2 million)
from the Notes was used to purchase securities in an amount sufficient to
provide payment in full when due on the first four scheduled interest payments.
The Notes are redeemable at the Company's option after May 15, 2003, at
which time the Company will pay a decreasing premium for this redemption until
maturity at May 15, 2008. The Notes are mandatorily redeemable only at the
option of the holders due to change of control or an asset sale.
F-18
<PAGE> 131
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AT
ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF.
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF THE DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. iii
Disclosure Regarding Forward-Looking
Statements.......................... iii
Prospectus Summary.................... 1
Risk Factors.......................... 11
Use Of Proceeds....................... 22
Capitalization........................ 23
Selected Financial Data............... 24
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 26
Business.............................. 32
Management............................ 51
Certain Transactions.................. 58
Principal Stockholders................ 60
Description of Capital Stock.......... 62
The Exchange Offer.................... 74
Description of New Notes.............. 81
Certain Federal Income Tax
Considerations...................... 106
Plan of Distribution.................. 109
Legal Matters......................... 109
Experts............................... 109
Index to Financial Statements......... F-1
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
PARK 'N VIEW, INC.
OFFER TO EXCHANGE
SERIES B 13% SENIOR NOTES
DUE 2008
FOR
SERIES A 13% SENIOR NOTES
DUE 2008
---------------------
PROSPECTUS
---------------------
JULY , 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 132
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Paragraph Eleventh of the Registrant's Certificate of
Incorporation, which provides as follows:
No director shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director; provided, however, that to the extent required by the provisions
of Section 102(b)(7) of the General Corporation Law of the State of
Delaware or any successor statute, or any other laws of the State of
Delaware, this provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware or (iv) for any transaction from which the director derived an
improper personal benefit. If the General Corporation Law of the State of
Delaware hereafter is amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director
of the Corporation, in addition to the limitation on personal liability
provided herein, shall be limited to the fullest extent permitted by the
amended General Corporation Law of the State of Delaware. Any repeal or
modification of this paragraph ELEVENTH by the stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation
existing at the time of such repeal or modification.
Reference is made to Section 8.1 of the Registrant's Amended and
Restated Bylaws, which provides as follows:
To the extent permitted by law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment) the Corporation shall indemnify any person against any and all
judgments, fines, and amounts paid in settling or otherwise disposing of
actions or threatened actions, and expenses in connection therewith,
incurred by reason of the fact that he, his testator or intestate is or was
a director or officer of the Corporation or of any other corporation of any
type or kind, domestic or foreign, which he served in any capacity at the
request of the Corporation. To the extent permitted by law, expenses so
incurred by any such person in defending a civil or criminal action or
proceeding shall at his request be paid by the Corporation in advance of
the final disposition of such action or proceeding.
Reference also is made to Section 145 of Title 8 of the Delaware General
Corporation Law, which provides as follows:
145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE.
(a) A corporation shall have power to 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 the person 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 the person in connection with such action, suit or
proceeding if the person acted in good faith and in a manner the person
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 the person's 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,
II-1
<PAGE> 133
of itself, create a presumption that the person did not act in good
faith and in a manner which the person 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 the person's conduct was unlawful.
(b) A corporation shall have power to 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 the person 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 the
person in connection with the defense or settlement of such action or
suit if the person acted in good faith and in a manner the person
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 present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (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 present or former director, officer, employee or
agent is proper in the circumstances because the person has met the
applicable standard of conduct set forth in subsections (a) and (b) of
this section. Such determination shall be made, with respect to a person
who is a director or officer at the time of such determination, (1) by a
majority vote of the directors who are not parties to such action, suit
or proceeding, even though less than a quorum, or (2) by a committee of
such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written
opinion, or (4) 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
such person is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees)
incurred by former directors and officers or other employees and agents
may be so paid upon such terms and conditions, if any, as the
corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section 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 such person's official capacity and as
to action in another capacity while holding such office.
(g) A corporation shall have 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 such person
II-2
<PAGE> 134
in any such capacity or arising out of such person's status as such
whether or not the corporation would have the power to indemnify such
person against such liability under this section.
(h) For purposes of this section, references to "the corporation'
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position
under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any
employee benefit plan; and references to "serving at the request of the
corporation" shall include any service as a director, officer, employee
or agent of the corporation which imposes duties on, or involves
services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably
believed to be in the interest of the participants and beneficiaries of
an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section 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.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of
expenses or indemnification brought under this section or under any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise. The Court of Chancery may summarily determine a corporation's
obligation to advance expenses (including attorneys' fees).
The Registrant currently intends to obtain liability insurance covering its
executive officers and directors against claims arising from certain acts or
decisions by them in their capacities as directors and executive officers of the
Registrant, subject to certain exclusions and deductible and maximum amounts,
which may extend to, among other things, liabilities arising under the
Securities Act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. A list of exhibits included as part of this Registration
Statement is set forth in the Exhibit Index which immediately precedes such
exhibits and is hereby incorporated by reference herein.
(b) Financial Statement Schedules. Financial statement schedules have been
omitted since the required information is not present, or not present in amounts
sufficient to require submission of the schedule, or because the information is
included in the financial statements or notes thereto.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plans annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement 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.
II-3
<PAGE> 135
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 Securities Act
of 1933 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 any 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 of whether or not
such indemnification is against public policy as expressed in the Securities Act
of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(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.
II-4
<PAGE> 136
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Coral Springs, State of
Florida, on July 24, 1998.
PARK 'N VIEW, INC.
By: /s/ IAN WILLIAMS
------------------------------------
Ian Williams
President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Ian Williams and Stephen L. Conkling and either of them his true and lawful
attorneys-in-fact with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
as well as any new registration statement filed to register additional
securities pursuant to Rule 462(b) under the Securities Act of 1933, as amended,
and to cause the same to be filed, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby
granting to said attorneys-in-fact and agent, full power and authority to do and
perform each and every act and thing whatsoever requisite or desirable to be
done in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
acts and things that said attorneys-in-fact and agents, or their substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on the 24th day
of July, 1998, in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE POSITION
--------- --------
<C> <S>
/s/ IAN WILLIAMS President, Chief Executive Officer and
- ----------------------------------------------------- Director (Principal Executive Officer)
Ian Williams
/s/ STEPHEN L. CONKLING Vice President-Finance and Chief Operating
- ----------------------------------------------------- Officer (Principal Financial and Accounting
Stephen L. Conkling Officer)
/s/ ROBERT M. CHEFITZ Director
- -----------------------------------------------------
Robert M. Chefitz
/s/ THOMAS P. HIRSCHFELD Director
- -----------------------------------------------------
Thomas P. Hirschfeld
/s/ RICHARD M. JOHNSTON Director
- -----------------------------------------------------
Richard M. Johnston
/s/ DANIEL K. O'CONNELL Director
- -----------------------------------------------------
Daniel K. O'Connell
/s/ DAVID C. TURNER Director
- -----------------------------------------------------
David C. Turner
</TABLE>
II-5
<PAGE> 137
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S> <C>
3.1 -- Amended and Restated Certificate of Incorporation, dated
October 30, 1995, of Park 'N View, Inc. (the "Company").
3.2 -- Certificate of Amendment of the Certificate of
Incorporation, dated November 12, 1996, of the Company.
3.3 -- Certificate of Amendment of the Certificate of
Incorporation, dated August 22, 1997, of the Company.
3.4 -- Certificate of Amendment Relating to the Series A Preferred
Stock, dated May 7, 1998, of the Company.
3.5 -- Certificate of Amendment to Certificate of Designations,
Preferences and Rights of Series B 7% Cumulative Convertible
Preferred Stock, dated May 7, 1998, of the Company.
3.6 -- Certificate of Amendment to Certificate of Designations,
Preferences and Rights of Series C 7% Cumulative Convertible
Preferred Stock, dated May 7, 1998, of the Company.
3.7 -- Amended and Restated By-laws, of the Company.
4.1 -- Indenture, dated as of May 27, 1998, by and between the
Company and State Street Bank and Trust Company, as trustee.
4.2 -- A/B Exchange Registration Rights Agreement, dated as of May
27, 1998, by and between the Company and Donaldson, Lufkin &
Jenrette Securities Corporation.
4.3 -- Form of Series B 13% Senior Note due 2008 of the Company
(included as Exhibit A to the Indenture filed as Exhibit
4.1).
5.1* -- Opinion of Kilpatrick Stockton LLP.
10.1 -- Fleet Service Agreement, dated as of January 28, 1997, by
and between the Company and Trucks For You.
10.2 -- Fleet Service Agreement, dated as of February 1, 1998, by
and between the Company and Carroll Fulmer & Co., Inc.
10.3 -- Fleet Service Agreement, dated as of March 1, 1998, by and
between the Company and Contract Freighters, Inc.
10.4 -- Fleet Service Agreement, dated as of March 11, 1998, by and
between the Company and Lake City Express.
10.5 -- Fleet Service Agreement, dated as of April 1, 1998, by and
between the Company and Top Gun Transport, Inc.
10.6 -- Cable Television and Telephone Service Agreement, dated as
of August 14, 1995, by and between the Company and AMBEST.
10.7 -- Cable Television and Telephone Service Agreement, dated as
of July 11, 1996, by and between the Company and
Professional Transportation Partners, LLC.
10.8 -- Cable Television and Telephone Service Agreement, dated as
of March 18, 1997, by and between the Company and North
America Truck Stop Network.
10.9 -- Cable Television and Telephone Service Agreement, dated as
of October 28, 1995, by and between the Company and Travel
Ports of America, Inc.
10.10 -- Cable Television and Telephone Service Agreement, dated as
of February 15, 1996, by and between the Company and Pilot
Corporation.
10.11 -- Cable Television and Telephone Service Agreement, dated as
of February 7, 1997, by and between the Company and All
American Plazas, Inc.
10.12 -- Cable Television and Telephone Service Agreement, dated as
of September 12, 1997, by and between the Company and Petro
Stopping Centers, L.P.
</TABLE>
<PAGE> 138
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S> <C>
10.13+ -- Cable Television and Telephone Service Agreement, dated
March 12, 1998 by and between the Company and TA Operating
Corporation d/b/a Travel Centers of America.
10.14 -- Lease, dated August 11, 1997, between Unipower Corporation
and the Company.
10.15 -- Software Development Agreement, dated November 22, 1995,
between the Company and GreenLight Technologies, Inc.
10.16 -- Technology Transfer and Development Agreement, dated as of
November 4, 1996, by and among GreenLight, Inc., Jody Green,
Lewis Tatham and the Company.
10.17 -- Customer Agreement, dated December 17, 1997, by and between
the Company and Echostar Satellite Corporation.
10.18 -- Compensation Plan of the Company.
10.19 -- Stock Option Plan of the Company.
10.20 -- Securities Purchase Agreement Subordinated Notes, Series A
Preferred Stock and Common Stock, dated as of November 2,
1995, by and among the Company and the Purchasers named
therein.
10.21 -- Letter Agreement, dated as of May 18, 1998, by and among the
Company and certain holders of the Company's Series A
Preferred Stock.
10.22 -- Securities Restriction Agreement, dated as of November 2,
1995, by and among the Company and the Investors named
therein.
10.23 -- Stock Purchase Agreement Series B 7% Cumulative Convertible
Preferred Stock, dated as of November 13, 1996, by and among
the Company and the Purchasers named therein.
10.24 -- Securities Restriction Agreement, dated as of November 13,
1996, by and among the Company and the Investors named
therein.
10.25 -- Amended and Restated Securityholders' Agreement and Exchange
Agreement, dated as of November 13, 1996, by and among the
Company and the Investors named therein.
10.26 -- Registration Rights Agreement, dated as of November 13,
1996, by and among the Company and the Investors named
therein.
10.27 -- Stock Purchase Agreement Series C 7% Cumulative Convertible
Preferred Stock, dated as of August 22, 1997, by and among
the Company and the Purchasers named therein.
10.28 -- Amendment to Securities Restriction Agreement, dated as of
August 22, 1997, by and among the Company and the Investors
named therein.
10.29 -- Amendment to Amended and Restated Securityholders' Agreement
and Exchange Agreement, dated as of August 22, 1997, by and
among the Company and the Investors named therein.
10.30 -- Amendment to Registration Rights Agreement, dated as of
August 22, 1997, by and among the Company and the Investors
named therein.
10.31 -- Letter Agreement, dated as of May 20, 1998, by and among the
Company and certain parties to the Registration Rights
Agreement, dated as of November 13, 1996, as amended.
10.32 -- Pledge, Escrow and Disbursement Agreement, dated as of May
27, 1998, by and between the Company and State Street Bank
and Trust Company, as trustee and escrow agent.
10.33 -- Warrant, dated as of August 22, 1997, granted to Alex. Brown
& Sons Incorporated.
10.34 -- Warrant, dated as of August 22, 1997, granted to Alex. Brown
& Sons Incorporated.
10.35+ -- Warrant, dated March 12, 1998.
10.36+ -- Letter Agreement, dated as of May 18, 1998, by and between
the Company and a holder of warrants to purchase shares of
the Company's Common Stock.
10.37+ -- AT&T Custom Offer Order Form, by and between the Company and
AT&T.
10.38 -- Form of AT&T Contract Tariff Order Form, by and between the
Company and AT&T.
12.1 -- Statement Regarding Computation of Ratios.
</TABLE>
<PAGE> 139
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S> <C>
23.1* -- Consent of Kilpatrick Stockton LLP (included in Exhibit 5.1)
23.2 -- Consent of Deloitte & Touche LLP.
25.1 -- Statement on Form T-1 of Eligibility of Trustee.
27.1 -- Financial Data Schedule.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Letter to Registered Holders and DTC Participants.
99.4 -- Form of Letter to Client.
</TABLE>
- ---------------
* To be filed by amendment.
+ Portions of this Exhibit are omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment.
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PARK `N VIEW, INC.
The undersigned, being the duly elected and acting President of Park `N
View, Inc., a corporation duly organized under the laws of the State of Delaware
on September 18, 1995, does hereby certify that this Amended and Restated
Certificate of Incorporation was duly adopted by the Board of Directors of Park
`N View, Inc. in accordance with Section 245 and Section 241 of the General
Corporation Law of the State of Delaware:
FIRST: The name of the Corporation is: PARK `N VIEW, INC.
SECOND: The registered office of the Corporation is to be located at
1013 Centre Road, in the City of Wilmington, County of New Castle, State of
Delaware, 19805. The name of its registered agent at that address is Corporation
Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful actor
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
FOURTH: The aggregate number of shares of stock which the Corporation
shall have authority to issue is 5,000,000 shares of common stock, par value
$.001 per share, all of which shall be designated "Common Stock" and 140,010
shares of preferred stock, par value $.01 per share, all of which are designated
"Series A Preferred Stock."
FIFTH: The name and mailing address of the Incorporator is James M.
O'Connell, 4101 Lake Boone Trail, Suite 400, Raleigh, North Carolina 27606.
SIXTH: The number of Directors of the Corporation may be specified by
the By-Laws. The number of Directors constituting the instant Board of Directors
shall be two (2), and the names and mailing addresses of the persons who are to
serve as Directors until the first annual meeting of the shareholders or until
the successors are elected and qualify are:
<TABLE>
<CAPTION>
Name Address
- ---- -------
<S> <C>
Ian Williams 3403 NW 55th Street
Building 10
Fort Lauderdale, FL 33309
Daniel O'Connell 5133 NW 93 Doral Way
Miami, FL 33178
</TABLE>
<PAGE> 2
SEVENTH: In furtherance and not in limitation of the powers conferred
by statute but subject to any limitations contained in any Certificate of
Designation, the board of directors is expressly authorized:
(a) to adopt, amend or repeal the By-Laws of the Corporation in such
manner and subject to such limitations, if any, as shall be set forth in the
By-Laws;
(b) to allot and authorized the issuance of the authorized but unissued
shares of the Corporation, including the declaration of dividends payable in
shares of any class to stockholders of any class;
(c) (i) with respect to the authorized shares of Preferred Stock, the
board of directors is expressly authorized, from time to time, (1) to fix the
number of shares of one or more series thereof; (2) to determine the designation
of any such series; (3) to determine or alter, without limitation or
restriction, the right, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series including, without limitation, dividend
rights, conversion rights, redemption privileges, and liquidation preferences,
as shall be stated in such resolution or resolutions, all to the fullest extent
permitted by the Delaware Statute; and (4) within the limits or restrictions
stated in any resolution or resolutions of the board of directors originally
fixing the number of shares constituting any series, to increase or decrease
(but not below the number of shares then outstanding) the number of shares of
any such series of such class subsequent to the issue of shares of that series,
(5) to determine and fix such voting powers, full or limited, or no voting
powers, and such other powers, designations, preferences and relative,
participating, optional and other rights, and the qualifications, limitations
and restrictions thereof. Without limiting the generality of the foregoing, the
resolution or resolutions providing for the establishment of any series of
Preferred Stock may, to the extent permitted by law, provide that such series
shall be superior to, rank equally with or be junior to any other series of
Preferred Stock.
The amendment of the terms of any certificate of designation of any
series of the Corporation's Preferred Stock of which shares are outstanding
shall require only (i) that the Corporation's board of directors adopt a
resolution setting forth the amendment proposed, declaring its advisability, and
either calling a special meeting of the holders of such series of Preferred
Stock for consideration of such amendment or directing that the amendment
proposed be considered at the next annual meeting of stockholders by the holders
of such series of Preferred Stock (in either event, subject to the ability of
such holders to act by written consent in lieu of voting at a meeting), and (ii)
that the holders of sixty-six and two thirds percent (66 2/3%) (or such greater
number as may be required by the certificate of designations of such series) of
the outstanding shares of such series of Preferred Stock have voted in favor of
the amendment. Except for holders of a series of Preferred Stock the terms of
which are being amended, no holder of Common Stock and no holder of any series
of Preferred Stock shall be entitled to vote upon such amendment unless the
rights of such holders would be adversely affected by such amendment or such
vote shall otherwise be required by law or by any certificate of designation of
any series of Preferred Stock.
2
<PAGE> 3
(ii) with respect to Common Stock, (1) Voting. Each holder of shares of
Common Stock shall be entitled to one vote for each share of Common Stock held
on all matters as to which holders of Common Stock shall be entitled to vote. In
any election of directors, no holder of shares of Common Stock shall be entitled
to cumulate his or her votes by giving one candidate more than one vote per
share.
(2) Other Rights. Each share of Common Stock issued and outstanding
shall be identical in all respects one with the other. In the event any dividend
is paid on all shares of Common Stock, the same dividend shall be paid on all
shares of Common Stock outstanding at the time of such payment. Except for and
subject to those rights expressly granted to the holders of the Preferred Stock,
or except as may be provided by the laws of the State of Delaware, the holders
of Common Stock shall have exclusively all other rights of stockholders.
(d) to exercise all of the powers of the Corporation, insofar as the
same may lawfully be vested by this certificate in the board of directors.
EIGHTH: That thereafter by a written consent of the requisite
stockholders of the Corporation any amendment was approved and adopted by the
stockholders of the Corporation.
NINTH: That any said amendment was duly adopted in accordance with the
provision of Section 242 of the General Corporation Law of the State of
Delaware.
TENTH: If the Corporation has outstanding Preferred Stock which is then
in default on its obligations to pay dividends thereon or to redeem such
Preferred Stock, the primary duty of the directors of the Corporation shall be
to cause the Corporation to take such actions as may be necessary in order to
pay such dividends and make such redemption.
ELEVENTH: No director shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; provided, however, that to the extent required by the provisions of
Section 102(b)(7) of the General Corporation Law of the State of Delaware or any
successor statute, or any other laws of the State of Delaware, this provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware or (iv) for any transaction from which the director
derived an improper personal benefit. If the General Corporation Law of the
State of Delaware hereafter is amended to authorized the further elimination or
limitation of the liability of directors, then the liability of a director of
the Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended General
Corporation Law of the State of Delaware. Any repeal or modification of this
paragraph ELEVENTH by the stockholders of the Corporation shall be prospective
only, and shall not adversely affect
3
<PAGE> 4
any limitation on the personal liability of a director of the Corporation
existing at the time of such repeal or modification.
The Board of Directors of the Corporation has, by unanimous written
consent, authorized the filing of this Amended and Restated Certificate of
Incorporation in compliance with Section 245 & 241(b) of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of
October, 1995.
/s/ Ian Williams
--------------------------
Ian Williams, President
4
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
PARK `N VIEW, INC.
(Pursuant to Section 242 of the General Corporation Law of the State of
Delaware) It is hereby certified that:
1. The name of the corporation is Park `N View, Inc. (the
"Corporation") The Certificate of Incorporation of the Corporation was
originally filed with the Secretary of State of the State of Delaware on
September 8, 1995.
2. The Board of Directors of the Corporation duly adopted a resolution
proposing and declaring it advisable that Section 1 of Article FOURTH of the
Certificate of Incorporation of the Corporation be amended in its entirety to
read as follows:
"Section 1. Authorized Capitalization. The aggregate number of
shares of stock which the Corporation shall have authority to issue is
nine million (9,000,000), of which seven million (7,000,000) shares
shall be common stock par value $.001 per share ("Common Stock"), and
two million (2,000,000) shares shall be preferred stock, par value $.01
per share ("Preferred Stock")."
3. This amendment to the Certificate of Incorporation was duly adopted
in accordance with the applicable provisions of Section 242 of the General
Corporation Law of Delaware.
4. This amendment to the Certificate of Incorporation shall be
effective on and as of the date of filing of this Certificate of Amendment with
the office of the Secretary of State of the State of Delaware.
<PAGE> 2
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed in its name by its President and attested to by its Secretary this 12th
day of November, 1996 and the statements contained herein are affirmed as true
under penalties of perjury.
PARK `N VIEW, INC.
By /s/ Ian Williams
-----------------------
Ian Williams, President
ATTEST:
By: /s/ Anthony Allen
------------------------
Anthony Allen, Secretary
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
PARK `N VIEW, INC.
(Pursuant to Section 242 of the General Corporation Law of the State of
Delaware)
It is hereby certified that:
1. The name of the corporation is Park `N View, Inc. (the
"Corporation"). The Certificate of Incorporation of the Corporation was
originally filed with the Secretary of State of the State of Delaware on
September 18, 1995.
2. The Board of Directors of the Corporation duly adopted a
resolution proposing and declaring it advisable that Section 1 of Article FOURTH
of the Certificate of Incorporation of the Corporation be amended in its
entirety to read as follows:
"Section 1. Authorized Capitalization. The aggregate number of
shares of stock which the Corporation shall have authority to issue is
seventeen million seven hundred fifty thousand (17,750,000), of which
twelve million (12,000,000) shares shall be common stock, par value
$.001 per share ("Common Stock"), and five million seven hundred and
fifty thousand (5,750,000) shares shall be preferred stock, par value
$.01 per share ("Preferred Stock")."
3. This amendment to the Certificate of Incorporation was duly
adopted in accordance with the applicable provisions of Section 242 of the
General Corporation Law of Delaware.
<PAGE> 2
4. This amendment to the Certificate of Incorporation shall be
effective on and as of the date of filing of this Certificate of Amendment with
the office of the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed in its name by its President and attested to by its Secretary this 22nd
day of August, 1997 and the statements contained herein are affirmed as true
under penalties of perjury.
PARK `N VIEW, INC.
By /s/ Ian Williams
------------------------
Ian Williams, President
ATTEST:
By: /s/ Anthony Allen
---------------------------
Anthony Allen, Secretary
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EXHIBIT 3.4
PARK `N VIEW, INC.
CERTIFICATE OF AMENDMENT
RELATING TO THE SERIES A PREFERRED STOCK
WITH A PAR VALUE OF $.01 PER SHARE
OF PARK `N VIEW, INC.
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Park `N View, Inc., a Delaware corporation (the "Corporation"), hereby
certifies that pursuant to the authority contained in Article Fourth of the
Corporation's Certificate of Incorporation, and in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware (the "DGCL"), the following resolution was duly adopted by the Board of
Directors of the Corporation, amending a series of its Preferred Stock
designated as Series A Preferred Stock:
WHEREAS, the amendment of the designations herein certified has been
duly adopted by the Corporation's Board of Directors and Holders of the Series A
Preferred Stock in accordance with Section 242 of the DGCL;
RESOLVED, that there is hereby created and the Corporation be, and it
hereby is, authorized to issue 627,630 shares of a series of its Preferred Stock
designated Series A Preferred Stock (the "Series A Stock") to have the powers,
preferences and rights and the qualifications, limitations or restrictions
thereof hereinafter set forth in this resolution:
1. Preference. The preferences of each share of Series A Stock
with respect to distributions of the Corporation's assets upon voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation shall be
equal to the preferences of every other share of: (i) Series A Stock; (ii)
Series B 7% Cumulative Convertible Preferred Stock of the Corporation (the
"Series B Stock"); and (iii) Series C 7% Cumulative Convertible Preferred Stock
of the Corporation (the "Series C Stock") from time to time outstanding in every
respect and prior in right to such preferences of all other equity Securities of
the Corporation, whether now or hereafter authorized.
2. Voting Rights. Upon the failure of the Corporation to
redeem the Series A Stock in accordance with Section 5(a) hereof, except as
otherwise expressly provided herein, in the Certificate of Incorporation or the
By-laws of the Corporation or by law, the Holders of Series A Stock, by virtue
of their ownership thereof, shall be entitled to one vote for each share of
Series A Stock and shall be entitled to vote as a separate class only
<PAGE> 2
in respect of any merger, consolidation, sale of assets or creation of any class
or series, other than Series B Stock or Series C Stock, equal to or superior to
the Series A Stock. The Holders of at least 66.6% of the shares of the then
outstanding Series A Stock voting as a separate class shall be entitled to elect
two members of the Board of Directors.
3. Liquidation Rights. If the Corporation shall be voluntarily
or involuntarily liquidated, dissolved or wound up, at any time when any Series
A Stock shall be outstanding, each then outstanding share of Series A Stock
shall entitle the Holder thereof to a preference against the Assets of the
corporation available for distribution to the Holders of the Corporation's
equity securities equal to the Series A Stock Value plus an amount equal to all
unpaid dividends (including, without limitation, all accrued and unpaid interest
thereon and the Deferred Dividends, calculated in accordance with Section 4(B)
hereof) accrued on such share to the date of payment. If, upon any such
liquidation, dissolution or winding-up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributed among the Holders of Series A
Stock shall be insufficient to pay in full the aggregate preferential amounts on
all of the then outstanding shares of the Series A Stock, then such assets, or
the proceeds thereof, shall be distributed among such Holders equally and
ratably in proportion to the full liquidation preferences to which each such
Holder is entitled. After such payment shall have been made in full to the
Holders of the outstanding Series A Stock, or funds necessary for such payment
shall have been set aside in trust for the account of the Holders of Series A
Stock so as to be, and continue to be, available therefor, the Holders of Series
A Stock shall be entitled to no further participation in such distribution of
assets of the Corporation.
All of the preferential amounts to be paid to the Holders of
Series A Stock as provided in this Section 3 shall be paid or set apart for
payment before the payment or setting apart for payment of any amount for, or
the distribution of any Assets of the Corporation to, the Holders of any other
equity securities of the Corporation (other than the Series B Stock and Series C
Stock which shall rank pari passu with the Series A Stock), whether now or
hereafter authorized, in connection with such liquidation, dissolution or
winding up.
4. Dividends.
(a) Accrual of Dividends. Commencing with the first
anniversary of the Initial Closing pursuant to and as defined in the Purchase
Agreements, the Holders of Series A Stock shall be entitled to receive, when and
as declared by the Board of Directors out of funds legally available therefor,
cumulative dividends payable quarterly on March 15, June 15, September 15 and
December 15 of each year (each of such date being a "Dividend Payment Date") in
cash or in kind at a rate of 7% per annum, computed on the basis of the Series A
Stock Value. Such dividends shall be Series A Stock with respect to each share
of Series A Stock, from the later of the first anniversary of the Initial
Closing pursuant to and as defined in the Purchase Agreements and the date of
issuance of such share, and shall accrue until paid, whether or not earned,
whether or not declared by the Board and whether or not there are funds legally
available therefor on
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<PAGE> 3
the date such dividends are payable. Dividends not declared and paid in cash on
any Dividend Payment Date has paid in kind shall accrue dividends thereon at the
rate of 7% per annum until such dividends are declared and paid in full in cash.
(b) Payment of Dividends. Dividends shall be payable at
the Corporation's option in cash or in kind to each Holder of Series A Stock in
quarterly installments on March 31, June 30, September 30, and December 31, in
each year commencing on March 31, 1996 (each a "Regular Dividend Payment Date"),
as declared by the Board out of funds legally available therefor. Dividends paid
in cash on the shares of Series A Stock (or Series B Stock or Series C Stock
which shall rank pari passu with the Series A Stock) in an amount less than the
total amount of such dividends shall be allocated pro rata so that the total
value of dividends paid on the Series A Stock, Series B Stock and Series C Stock
shall in all cases bear to each other the same ratio that the total value of
accrued and unpaid dividends on the Series A Stock, Series B Stock and Series C
Stock bear to each other. The Board may fix a record date for the determination
of a dividend or distribution declared thereon, which record date shall not be
more than 30 days prior to the date fixed for the payment thereof.
(c) Limitation on Certain Distributions. Without the
written consent of the Holders of at least 66.6% of the then outstanding Series
A Stock, the Corporation shall not declare or pay any cash dividend on, or
redeem or repurchase or make any other cash distribution in respect of any other
equity Securities of the Corporation, unless at the time of such declaration,
payment or distribution the Corporation shall have paid all dividends on the
Series A Stock accrued through the most recent Regular Dividend Payment Date
preceding the date of such payment or distribution.
5. Redemption.
(a) Mandatory Redemption. On the date six (6)
months immediately after the payment in full and satisfaction of all of the
obligations of the Corporation to the lenders who provide financing to the
Corporation in the aggregate principal amount of Seventy-five Million Dollars
($75,000,000.00) (referred to herein as the "Mandatory Redemption Date"), the
Corporation shall redeem all the shares of Series A Stock originally issued
hereunder (or such lesser amount as shall then be outstanding) at the
"Redemption Price" per share defined in paragraph (e) below, payable in each
case in cash on the Mandatory Redemption Date.
(b) Redemption Upon an Initial Public Offering.
Upon the consummation of a Qualifying Offering (as defined below) (the date of
such consummation being referred to herein as a "Qualifying Offering Redemption
Date"), upon not less than ten (10) days prior written notice by the Corporation
of the anticipated consummation of such offering, each share of Series A Stock
shall be redeemed for cash at the Redemption Price. A "Qualifying Offering"
means (i) the Corporation shall have consummated a firm commitment underwritten
public offering of its Common Stock by a nationally recognized investment
banking firm pursuant to an effective registration under
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<PAGE> 4
the Securities Act covering the offering and sale of both primary and secondary
shares of Common Stock which results in gross proceeds of at least $20,000,000,
(ii) the Common Stock is listed on either the Nasdaq Stock Market (National
Market) ("Nasdaq"), the New York Stock Exchange or the American Stock Exchange,
and (iii) the price at which the Common Stock is sold in such offering is at
least equal to an amount which (x) is 200% of the Redemption Price or (y) would
represent a compound annual rate of return of 35% based upon the original
issuance price of the Series A Stock.
(c) Redemption on Change of Control. Upon a
"Change of Control" of the Corporation, each holder of the then outstanding
shares of Series A Stock may elect to have the Corporation redeem all (but not
less than all) outstanding shares of Series A Stock owned by such holder at the
Redemption Price per share, payable in cash on any date within 100 days of the
effective date of the Change of Control (such date being herein referred to as
the "Change of Control Redemption Date"). The election shall be made by
delivering written notice to the Corporation at least thirty (30) but no more
than sixty (60) days prior to the Change of Control Redemption Date. The
Corporation will then be required to redeem all the shares of Series A Stock
owned by such holder on the Change of Control Redemption Date. For purposes of
this Section, "Change of Control" means any one or more of the following events:
(i) The Corporation shall consolidate with or
merge into any another person or any person shall consolidate
with or merge into the Corporation (other than a consolidation
or merger of the Corporation and a wholly-owned subsidiary of
the Corporation in which all shares of the Corporation's
Common Stock outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the
same consideration), in either event pursuant to a transaction
in which any of the Corporation's common stock outstanding
immediately prior to the effectiveness thereof is changed into
or exchanged for cash, securities or other property; or
(ii) the Corporation shall directly or
indirectly convey, transfer or lease, in one transaction or
a series of transactions, all or substantially all of its
assets to any person or "group" (within the meaning of
Section 13(d) and 14(d)(2) of the Securities Exchange Act of
1934 (the "1934 Act") (other than to a wholly-owned
subsidiary of the Corporation); or
(iii) there shall be a reorganization, share
exchange, or reclassification, other than a change in par
value, or from par value to no par value, or from no par value
to par value; or
(iv) any person (other than the Corporation, any
subsidiary of the Corporation or an Existing Investor,
including a "group" (within the meaning of Section 13(d) and
14(D)(2) of the 1934 Act) that includes such person), shall
purchase or otherwise acquire, directly or indirectly,
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<PAGE> 5
beneficial ownership of securities of the Corporation and, as
a result of such purchase or acquisition, such person
(together with its associates and affiliates) shall directly
or indirectly beneficially own in the aggregate (1) more than
50% of the Common Stock, or (2) securities representing more
than 50% of the combined voting power of the Corporation's
voting securities, in each case under subclause (1) or (2),
outstanding on the date immediately prior to the date of such
purchase or acquisition (or, if there be more than one, the
last such purchase or acquisition).
(d) Optional Redemption.
(i) Intentionally omitted.
(ii) Subject to the rights of the holders of the
Series B Stock and the Series C Stock, the Corporation shall have the
option of redeeming shares of Series A Stock at any time after the date
of issuance of such Series A Stock at a redemption price per share
equal to the Series A Stock Value plus an amount equal to all unpaid
dividends (and interest thereon) accrued thereon to the date of
redemption.
(e) Redemption Price. The Redemption Price per share of
Series A Stock shall equal $10.00 plus all accrued and unpaid dividends (and
interest thereon) on such share of Series A Stock to the Mandatory Redemption
Date, Qualifying Offering Redemption Date or Change of Control Redemption Date,
as the case may be.
(f) Procedure. The term "Redemption Date" as used in this
paragraph (f) shall refer to whichever of the Mandatory Redemption Date,
Qualifying Offering Redemption Date or Change of Control Redemption Date is
applicable in a particular circumstance. On or prior to the Redemption Date, the
Corporation shall deposit the Redemption Price of all outstanding shares of
Series A Stock to be redeemed with a bank or trust corporation having aggregate
capital and surplus in excess of $100,000,000 as a trust fund for the benefit of
the holders of the shares of Series A Stock, with irrevocable instructions and
authority to the bank or trust corporation to pay the Redemption Price for such
shares to their respective holders on or after the Redemption Date upon receipt
of the certificate or certificates of the shares of Series A Stock to be
redeemed. From and after the Redemption Date, unless there shall have been a
default in payment of the Redemption Price, all rights of the holders of shares
of Series A Stock as holders of Series A Stock (except the right to receive the
Redemption Price upon surrender of their certificate or certificates) shall
cease as to those shares of Series A Stock redeemed, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever. If on the Redemption Date the funds of
the Corporation legally available for redemption of shares
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<PAGE> 6
of Series A Stock (or Series B Stock or Series C Stock which shall rank pari
passu with the Series A Stock) are insufficient to redeem the total number of
shares of Series A Stock, Series B Stock and Series C Stock to be redeemed on
such date, the Corporation will use those funds which are legally available
therefor to redeem the maximum possible number of shares of Series A Stock,
Series B Stock and Series C stock ratably among the holders of such shares to be
redeemed based upon their holdings of Series A Stock, Series B Stock and Series
C Stock. Payments shall first be applied against accrued and unpaid dividends
and thereafter against the remainder of the Redemption Price. The shares of
Series A Stock not redeemed shall remain outstanding and entitled to all the
rights and preferences provided herein. At any time thereafter when additional
funds of the Corporation are legally available for the redemption of shares of
Series A Stock such funds will immediately be used to redeem the balance of the
shares of Series A Stock to be redeemed. No dividends or other distributions
shall be declared or paid on, nor shall the Corporation redeem, purchase or
acquire any shares of, the Common Stock or any other class or series of stock of
the Corporation (other than the Series B Stock and Series C Stock which shall
rank pari passu with the Series A Stock) unless the Redemption Price of all
shares elected to be redeemed shall have been paid in full. Until the Redemption
Price for a share of Series A Stock elected to be redeemed shall have been paid
in full, such shares of Series A Stock shall remain outstanding for all purposes
and entitle the holder thereof to all the rights and privileges provided herein,
including, without limitation, that dividends (and interest thereon) shall
continue to accrue and, if unpaid prior to the date such shares are redeemed,
shall be included as part of the Redemption Price as provided in paragraph (e)
above.
(g) Prohibition on Redemption. Notwithstanding any other
term of this Certificate of Designation, the Corporation shall not redeem (or
have any obligation to redeem) any shares of Series A Stock under any
circumstances, whether upon a Qualifying Offering, Change of Control or
otherwise, prior to the payment in full and satisfaction of all of the
obligations of the Corporation to the lenders who provide financing to the
Corporation in the aggregate principal amount of up to $75,000,000.00. If the
Corporation shall not have paid in full or satisfied all of its obligations to
such lenders on or before any Redemption Date, upon such payment and
satisfaction the Corporation will immediately use any funds legally available
therefor to redeem the shares of Series A Stock to be redeemed.
6. Protective Provisions. So long as any shares of Series A Stock
shall be outstanding, the Corporation shall not, without the approval by the
vote or written consent of the Holders of at least 66.6% (or more if required by
law) of the then outstanding shares of Series A Stock:
(a) Amend, waive or repeal any provisions of, or add any
provision to, (i) this Certificate of Designation or (ii) any provision of the
Corporation's Certificate of Incorporation or any other certificate of
designation filed with the Secretary of State of Delaware by the Corporation
with respect to its preferred stock;
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<PAGE> 7
(b) Amend, waive or repeal any provisions of, or add any
provision to, the Corporations By-Laws;
(c) Authorize, create, issue or sell any shares of
Equivalent Stock or Superior Stock (other than Series B Stock and Series C
Stock); except as authorized in this Certificate of Designation;
(d) Issue any shares of Series A Stock other than
pursuant to the Purchase Agreements or upon transfers of outstanding shares of
Series A Stock;
(e) Enter into any agreement, indenture or other
instrument which contains any provisions restricting the Corporation's
obligation to pay dividends on or make redemptions of the Series A Stock in
accordance with Sections 4 and 5 hereof;
(f) Dissolve the Corporation.
7. Definitions. As used in this Certificate of Designation, the
following terms have the following meanings:
"Affiliate" shall mean any entity controlling, controlled by or under
common control with another entity. For the purposes of this definition,
"control" shall have the meaning presently specified for that word in Rule 405
promulgated by the Securities and Exchange Commission under the Securities Act.
"Assets" shall mean an interest in any kind of property or assets,
whether real, personal or mixed, or tangible or intangible.
"Board" shall mean the Board of Directors of the Corporation.
"Common Stock" shall mean the Corporation's Common Stock, par value
$.001 per share, and any stock into which such stock may hereafter be changed.
"Equivalent Stock" shall mean any shares of any class or series of
Stock of the Corporation having any preference or priority as to dividends or
Assets on a parity with any such preference or priority of the Series A Stock
and no preference or priority as to dividends or Assets superior to any such
preference or priority of the Series A Stock and any instrument or Security
convertible into or exchangeable for Equivalent Stock. Without limiting the
generality of the foregoing, a dividend rate, mandatory or optional sinking fund
payment amounts or schedules or optional redemption provisions, the existence of
a conversion right or the existence of a liquidation preference of up to 100% of
the original issue price plus unpaid accrued dividends plus a premium of up to
the dividend rate or up to the percentage of the equity of the Corporation
represented by such Stock, with respect to any class or series of Stock,
differing from that of the Series A Stock, shall not prevent such class of Stock
from being Equivalent Stock.
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<PAGE> 8
"Existing Investors" shall mean Ian Williams, Nelgo Investments, Samuel
Hashman, MPN Partners, Ltd., Park `N View General Partner, Inc. and the
Investors (as defined in the Purchase Agreements).
"Holders" shall mean the Persons who shall, from time to time, own of
record, or beneficially, any Security. The term "Holder" shall mean one of the
Holders.
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government organization or an agency
or political subdivision thereof.
"Purchase Agreements" shall mean those certain purchase agreements,
dated as of October 31, 1995, between the Corporation and each of the Investors,
as defined therein, providing for the purchase and sale of Subordinated Notes,
Series A Stock and Common Stock.
"Securities" shall mean any debt or equity securities of the
Corporation, whether now or hereafter authorized, and any instrument convertible
into or exchangeable for Securities or a Security. The term "Security" shall
mean one of the Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended
prior to or after the date hereof, or any federal statutes or statutes which
shall be enacted to take the place of such Act together with all rules and
regulations promulgated thereunder.
"Securities and Exchange Commission" shall mean the United States
Securities and Exchange Commission or any successor to the functions of such
agency.
"Series A Stock Value" shall mean $10.00 per share of Series A Stock.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participants in, corporate stock.
"Subordinated Notes" shall mean the $1,000 subordinated promissory with
an 8% coupon purchasable pursuer to the Purchase Agreements.
"Superior Stock" shall mean any shares of any class or series of Stock
of the Corporation having any preference or priority as to dividends or Asset
superior to any such preference or priority of the Series A Stock and any
instrument or security convertible into or exchangeable for Superior Stock.
(The remainder of this page is intentionally left blank.)
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IN WITNESS WHEREOF, Park `N View, Inc. has caused this Amended
Certificate to be duly executed this 7th day of May, 1998.
PARK `N VIEW, INC.
By /s/ Ian Williams
----------------------------------
Ian Williams, President
ATTEST:
By: /s/ Anthony Allen
------------------------------
Anthony Allen, Secretary
9
<PAGE> 1
EXHIBIT 3.5
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES B 7% CUMULATIVE CONVERTIBLE
PREFERRED STOCK OF PARK 'N VIEW, INC.
Park 'N View, Inc., a Delaware corporation (the "Corporation"), hereby
certifies that pursuant to the authority contained in Article Seventh of the
Corporation's Certificate of Incorporation, and in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware (the "DGCL"), the following resolution was duly adopted by the Board of
Directors of the Corporation, amending a series of its Preferred Stock
designated as Series B Preferred Stock:
WHEREAS, the amendment of the designations herein certified has been
duly adopted by the Corporation's Board of Directors and Holders of the Series A
Preferred Stock and the Holders of the Series B Preferred Stock in accordance
with Section 242 of the DGCL;
WHEREAS, the Certificate of Incorporation of the Corporation provides
for two classes of shares known as common stock, $.001 par value per share (the
"Common Stock"), and preferred stock, $.01 par value per share ("Preferred
Stock");
WHEREAS, the Corporation has created: (i) a series of Preferred Stock
designated as Series A Preferred Stock ("Series A Stock"); and (ii) a series of
Preferred Stock designated as Series C 7% Cumulative Convertible Preferred Stock
("Series C Stock"); and
WHEREAS, the Board of Directors of the Corporation is authorized by the
Certificate of Incorporation to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in such series and to fix the designations,
preferences and rights of the shares of each such series and the qualifications,
limitations and restrictions thereof.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors deems it
advisable to, and hereby does, designate a Series B 7% Cumulative Convertible
Preferred Stock and fixes and determines the rights, preferences,
qualifications,
<PAGE> 2
limitations and restrictions relating to the Series B 7% Cumulative Convertible
Preferred Stock as follows:
1. Designation. The shares of such series of Preferred Stock shall be
designated "Series B 7% Cumulative Convertible Preferred Stock" (referred to
herein as the "Series B Stock").
2. Authorized Number. The number of shares constituting the Series B
Stock shall be 1,372,370.
3. Dividends. The holders of shares of Series B Stock shall be entitled
to receive, when and as declared by the Board of Directors of the Corporation,
out of assets legally available for such purpose, dividends at the rate of
$0.7651 (i.e., 7%) per share per annum, which shall be payable when and if
declared by the Board of Directors or shall accrue quarterly on the last day of
January, April, July and October in each year, commencing on January 31, 1997;
provided, however, that upon an Event of Default (as hereinafter defined) and so
long as it shall continue, such dividend rate shall be $0.9837 (i.e., 9%) per
share per annum. Dividends on the Series B Stock shall be cumulative so that if,
for any dividend accrual period, cash dividends at the rate hereinabove
specified are not declared and paid or set aside for payment, the amount of
accrued but unpaid dividends shall accumulate and shall be added to the
dividends payable for subsequent dividend accrual periods and upon any
redemption or conversion of shares of Series B Stock. If any shares of Series B
Stock are issued on a date which does not coincide with a dividend payment date,
then the initial dividend accrual period applicable to such shares shall be the
period from the date of issuance thereof through whichever of January 31, April
30, July 31, or October 31 next occurs after the date of issuance. If the date
fixed for payment of a final liquidating distribution on any shares of Series B
Stock, or the date on which any shares of Series B Stock are redeemed or
converted into Common Stock does not coincide with a dividend payment date, then
subject to the provisions hereof relating to such payment, redemption or
conversion, the final dividend accrual period applicable to such shares shall be
the period from whichever of February 1, May 1, August 1 or November 1 most
recently precedes the date of such payment, conversion or redemption through the
effective date of such payment, conversion or redemption. Dividends paid in cash
on the shares of Series B Stock (or Series A Stock or Series C Stock which shall
rank pari passu with the Series B Stock) in an amount less than the total amount
of such dividends shall be allocated pro rata so that the total value of
dividends paid on the Preferred Stock shall in all cases bear to each other the
same ratio that the total value of accrued and unpaid dividends on the Series A
Stock, Series B Stock and Series C Stock bear to each other. Without the written
consent of the holders of at least 66 2/3% of the then outstanding Series B
Stock, the Corporation shall not declare or pay any cash dividend on, or redeem
or repurchase or make any other cash distribution in respect of any other equity
Securities (as defined herein) of the Corporation unless at the time of such
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declaration, payment or distribution all dividends on the Series B Stock accrued
for all past dividend accrual periods shall have been paid and the full
dividends thereon for the current dividend period shall be paid or declared and
set aside for payment.
4. Liquidation.
(a) Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the
shares of Series B Stock shall be entitled, before any distribution or
payment is made upon any Common Stock or any other class or series of
stock ranking junior to the Series B Stock as to distribution of assets
upon liquidation (other than the Series A Stock and the Series C Stock
of the Corporation which shall rank pari passu with the Series B
Stock), to be paid an amount equal to $10.93 per share (as adjusted for
Recapitalization Events (as hereinafter defined)) plus all accrued and
unpaid dividends to such date (collectively, the "Liquidation
Payments"). If upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the assets to be
distributed among the holders of Series B Stock shall be insufficient
to permit payment in full to the holders of Series B Stock of the
Liquidation Payments, then the entire assets of the Corporation shall
be distributed ratably among such holders and the holders of any class
of preferred stock ranking on a parity with the Series B Stock in
proportion to the full respective distributive amounts to which they
are entitled.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after the holders of Series B Stock shall have been paid
in full the Liquidation Payments, the remaining assets of the
Corporation may be distributed ratably per share in order of preference
to the holders of Common Stock and any other class or series of stock
ranking junior to the Series B Stock as to distribution of assets upon
liquidation.
(c) Written notice of a liquidation, dissolution or winding
up, stating a payment date, the amount of the Liquidation Payments and
the place where said Liquidation Payments shall be payable, shall be
given by mail, postage prepaid, not less than 30 days prior to the
payment date stated therein, to each holder of record of Series B Stock
at its post office address as shown by the records of the Corporation.
5. Conversion.
The holders of the Series B Stock shall have the following
conversion rights:
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(a) Optional Conversion. Each share of Series B Stock shall be
convertible at any time, at the option of the holder of record thereof,
into fully paid and nonassessable shares of Common Stock at the
"conversion rate" (as defined in paragraph (c) below) then in effect
upon surrender to the Corporation or its transfer agent of the
certificate or certificates representing the Series B Stock to be
converted, as provided below, or if the holder notifies the Corporation
or its transfer agent that such certificate or certificates have been
lost, stolen or destroyed, upon the execution and delivery of an
agreement satisfactory to the Corporation to indemnify the Corporation
from any losses incurred by it in connection therewith.
(b) Conversion on Qualifying Offering. Upon the consummation
of a Qualifying Offering (as defined below), upon not less than ten
(10) days prior written notice by the Corporation of the anticipated
consummation of such offering, each share of Series B Stock shall be
converted into fully paid and nonassessable shares of Common Stock at
the conversion rate. A "Qualifying Offering" means (i) the Corporation
shall have consummated a firm commitment underwritten public offering
of its Common Stock by a nationally recognized investment banking firm
pursuant to an effective registration under the Securities Act of 1933,
as amended, covering the offering and sale of both primary and
secondary shares of Common Stock which results in gross proceeds of at
least $20,000,000, (ii) the Common Stock is quoted or listed by either
The Nasdaq Stock Market (National Market) ("Nasdaq"), the New York
Stock Exchange or the American Stock Exchange, and (iii) the price at
which the Common Stock is sold in such offering is at least equal to an
amount which (x) is 200% of the then effective conversion price or (y)
would represent, on an as converted basis, a compound annual rate of
return of 35% based upon the original issuance price of the Series B
Stock. Upon the achievement of (i), (ii) and (iii) above and the giving
of the mandatory conversion notice by the Corporation, the outstanding
shares of Series B Stock to be converted shall be converted
automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent.
(c) Basis For Conversion; Converted Shares. The basis for any
conversion under this Section 5 shall be the "conversion rate" in
effect at the time of conversion, which for the purposes hereof shall
mean the number of shares of Common Stock issuable for each share of
Series B Stock surrendered for conversion under this Section 5.
Initially, the conversion rate shall be 1.0, i.e., 1.0 share of Common
Stock for each share of Series B Stock being converted. Such conversion
rate shall be subject to adjustment as provided in Section 7 below. As
used herein, the term "conversion price" shall be an amount computed by
dividing $8.00 by the conversion rate then in effect. Initially, the
conversion
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price shall be $8.00 per share of Common Stock. If any fractional
interest in a share of Common Stock would be deliverable upon
conversion of Series B Stock, the Corporation shall pay in lieu of such
fractional share an amount in cash equal to the conversion price of
such fractional share (computed to the nearest one hundredth of a
share) in effect at the close of business on the date of conversion.
Any shares of Series B Stock which have been converted shall be
canceled and all dividends on converted shares shall cease to accrue
and the certificates representing shares of Series B Stock so converted
shall represent the right to receive (i) such number of shares of
Common Stock into which such shares of Series B Stock are convertible,
plus (ii) cash payable for any fractional share plus (iii) all accrued
but unpaid dividends relating to such shares through the immediately
preceding dividend payment date. Upon the conversion of shares of
Series B Stock as provided in this Section 5, the Corporation shall
promptly pay all then accrued but unpaid dividends to the holder of the
Series B Stock being converted. The Board of Directors of the
Corporation shall at all times reserve a sufficient number of
authorized but unissued shares of Common Stock to be issued in
satisfaction of the conversion rights and privileges aforesaid.
(d) Mechanics of Conversion. In the case of an optional
conversion, before any holder of Series B Stock shall be entitled to
convert the same into shares of Common Stock, it shall surrender the
certificate or certificates therefor, duly endorsed, at the office of
the Corporation or its transfer agent for the Series B Stock, and shall
give written notice to the Corporation of the election to convert the
same and shall state therein the name or names in which the certificate
of certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver
at such office to such holder of Series B Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as
aforesaid. A certificate or certificates will be issued for the
remaining shares of Series B Stock in any case in which fewer than all
of the shares of Series B Stock represented by a certificate are
converted.
(e) Issue Taxes. The Corporation shall pay all issue taxes, if
any, incurred in respect of the issue of shares of Common Stock on
conversion. If a holder of shares surrendered for conversion specifies
that the shares of Common Stock to be issued on conversion are to be
issued in a name or names other than the name or names in which such
surrendered shares stand, the Corporation shall not be required to pay
any transfer or other taxes incurred by reason of the issuance of such
shares of Common Stock to the name of another, and if the appropriate
transfer taxes shall not have been paid to the Corporation or the
transfer agent for the Series B Stock at the time of surrender of the
shares involved, the shares of Common Stock issued upon conversion
thereof may be
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<PAGE> 6
registered in the name or names in which the surrendered shares were
registered, despite the instructions to the contrary.
6. Adjustment of Conversion Price and Conversion Rate.
The number and kind of securities issuable upon the conversion of the Series B
Stock, the conversion price and the conversion rate shall be subject to
adjustment from time to time in accordance with the following provisions:
(a) Certain Definitions. For purposes of this
Certificate:
(i) The term "Additional Shares of Common
Stock" shall mean all shares of Common Stock issued, or
deemed to be issued by the Corporation pursuant to paragraph
(g) of this Section 6, after the Original Issue Date except:
(A) shares of Common Stock issuable upon
conversion of, or distributions with respect to, the
Series B Stock or the Series C Stock now or hereafter
issued by the Corporation;
(B) up to 800,000 shares of Common Stock
issuable upon the exercise of options issued to
officers, directors and employees of the Corporation
under stock option plans maintained from time to time
by the Corporation and approved by the Board of
Directors, subject to adjustment for all subdivisions
and combinations:
(C) up to 186,750 shares of Common Stock
issuable upon the exercise of the Warrant held by
Alex. Brown & Sons Incorporated; and
(D) up to 505,375 shares of Common Stock
issuable upon the exercise of warrants to be granted
to lenders in connection with loans to the
Corporation or to guarantors or purchasers of such
loans; and
(E) shares of Common Stock issued with
respect to adjustments of the conversion price
hereunder.
(ii) The term "Common Stock" shall be deemed
to mean (i) the Common Stock, $.001 par value, and (ii) the
stock of the Corporation of any class, or series within a
class, whether now or hereafter authorized, which has the
right to participate in the distribution of either earnings or
assets of the Corporation without limit as to the amount or
percentage.
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(iii) The term "Convertible Securities" shall mean
any evidence of indebtedness, shares (other than Series B
Stock and Series C Stock) or other securities convertible into
or exchangeable for Common Stock.
(iv) The term "Options" shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire
Common Stock or Convertible Securities.
(v) The term "Original Issue Date" shall mean the
date of the initial issuance of the Series B Stock.
(vi) The term "Fair Market Price" shall mean with
respect to a share of Common Stock (i) prior to the first
anniversary of the Original Issue Date, $10.93, and (ii)
subsequent to the first anniversary of the Original Issue
Date, the average closing bid price of the Common Stock as
reported by Nasdaq (or the last sale price if the Common Stock
is traded on an exchange) for a period of thirty (30)
consecutive trading days ending on the third day prior to the
date of determination, or, if the Common Stock is not listed
on Nasdaq or an exchange, the fair market value as determined
by the vote of 66 2/3% of the Corporation's Board of Directors
or if the Board of Directors cannot reach such agreement, as
determined by a qualified independent investment banker
appointed by the vote of 66 2/3% of the Corporation's Board of
Directors.
(b) Reorganization, Reclassification. In the event of a
reorganization, share exchange, or reclassification, other than a
change in par value, or from par value to no par value, or from no par
value to par value or a transaction described in subsection (c) or (d)
below, each share of Series B Stock shall, after such reorganization,
share exchange or reclassification (a "Reclassification Event"), be
convertible at the option of the holder into the kind and number of
shares of stock or other securities or other property of the
Corporation which the holder of Series B Stock would have been entitled
to receive if the holder had held the Common Stock issuable upon
conversion of his Series B Stock immediately prior to such
reorganization, share exchange, or reclassification.
(c) Consolidation, Merger. In the event of a merger or
consolidation to which the Corporation is a party each share of Series
B Stock shall, after such merger or consolidation, be convertible at
the option of the holder into the kind and number of shares of stock
and/or other securities, cash or other property which the holder of
such share of Series B Stock would have been entitled to receive if the
holder had held the Common Stock issuable upon conversion of such share
of Series B Stock immediately prior to such consolidation or merger.
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<PAGE> 8
(d) Subdivision or Combination of Shares. In case outstanding
shares of Common Stock shall be subdivided, the conversion price shall
be proportionately reduced as of the effective date of such
subdivision, or as of the date a record is taken of the holders of
Common Stock for the purpose of so subdividing, whichever is earlier.
In case outstanding shares of Common Stock shall be combined, the
conversion price shall be proportionately increased as of the effective
date of such combination, or as of the date a record is taken of the
holders of Common Stock for the purpose of so combining, whichever is
earlier.
(e) Stock Dividends. In case shares of Common Stock are issued
as a dividend or other distribution on the Common Stock (or such
dividend is declared), then the conversion price shall be adjusted, as
of the date a record is taken of the holders of Common Stock for the
purpose of receiving such dividend or other distribution (or if no such
record is taken, as at the earliest of the date of such declaration,
payment or other distribution), to that price determined by multiplying
the conversion price in effect immediately prior to such declaration,
payment or other distribution by a fraction (i) the numerator of which
shall be the number of shares of Common Stock outstanding immediately
prior to the declaration or payment of such dividend or other
distribution, and (ii) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after the
declaration or payment of such dividend or other distribution. In the
event that the Corporation shall declare or pay any dividend on the
Common Stock payable in any right to acquire Common Stock for no
consideration, then the Corporation shall be deemed to have made a
dividend payable in Common Stock in an amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to
acquire Common Stock.
(f) Issuance of Additional Shares of Common Stock. If the
Corporation shall issue any Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued
pursuant to paragraph (g) below) after the Original Issue Date (other
than as provided in the foregoing subsections (b) through (e)), for no
consideration or for a consideration per share less than the greater of
(i) the Fair Market Price in effect on the date of and immediately
prior to such issue or (ii) the conversion price in effect on the date
of and immediately prior to such issue, then in such event, the
conversion price shall be reduced as follows:
(i) For issuances of Additional Shares of Common Stock on or
before 12 months after the Original Issue Date, the conversion price
shall be reduced concurrently with any such issuance as follows: the
conversion price will equal the issuance or sales price of the
Additional Shares of Common Stock.
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<PAGE> 9
(ii) For issuances of Additional Shares of Common
Stock at any time after 12 months after the Original Issue Date, the
conversion price shall be reduced concurrently with any such issuance
to a price equal to the quotient obtained by dividing:
(A) an amount equal to (x) the total number of shares
of Common Stock outstanding immediately prior to such issuance
or sale multiplied by the conversion price in effect
immediately prior to such issuance or sale, plus (y) the
aggregate consideration received or deemed to be received by
the Corporation upon such issuance or sale, by
(B) the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
For purposes of the formulas expressed in paragraph 6(e) and
6(f), all shares of Common Stock issuable upon the exercise of outstanding
Options or issuable upon the conversion of the Series B Stock and the Series C
Stock or outstanding Convertible Securities (including Convertible Securities
issued upon the exercise of outstanding Options), shall be deemed outstanding
shares of Common Stock both immediately before and after such issuance or sale.
(g) Deemed Issue of Additional Shares of Common
Stock. In the event the Corporation at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities or shall
fix a record date for the determination of holders of any class of securities
then entitled to receive any such Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein designed to protect against
dilution) of Common Stock issuable upon the exercise of such Options, or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue of Options or Convertible
Securities or, in case such a record date shall have been fixed, as of the close
of business on such record date, provided that in any such case in which
Additional Shares of Common Stock are deemed to be issued:
(i) no further adjustments in the conversion price
shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such
Options or the issue of Common Stock upon the conversion or
exchange of such Convertible Securities;
(ii) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise,
for any increase or decrease in the consideration payable to
the Corporation, or increase or
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<PAGE> 10
decrease in the number of shares of Common Stock issuable,
upon the exercise, conversion or exchange thereof, the
conversion price computed upon the original issuance of such
Options or Convertible Securities (or upon the occurrence of a
record date with respect thereto), and any subsequent
adjustments based thereon, upon any such increase or decrease
becoming effective, shall be recomputed to reflect such
increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible
Securities (provided, however, that no such adjustment of the
conversion price shall affect Common Stock previously issued
upon conversion of the Series B Stock);
(iii) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the conversion
price computed upon the original issue of such Options or
Convertible Securities (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments
based thereon, shall, upon such expiration, be recomputed as
if:
(A) in the case of Options or Convertible
Securities, the only Additional Shares of Common
Stock issued were the shares of Common Stock, if any,
actually issued upon the exercise of such Options or
the conversion or exchange of such Convertible
Securities and the consideration received therefor
was the consideration actually received by the
Corporation (x) for the issue of all such Options,
whether or not exercised, plus the consideration
actually received by the Corporation upon exercise of
the Options or (y) for the issue of all such
Convertible Securities which were actually converted
or exchanged plus the additional consideration, if
any, actually received by the Corporation upon the
conversion or exchange of the Convertible Securities;
and
(B) in the case of Options for Convertible
Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued
at the time of issue of such Options, and the
consideration received by the Corporation for the
Additional Shares of Common Stock deemed to have been
then issued was the consideration actually received
by the Corporation for the issue of all such Options,
whether or not exercised, plus the consideration
deemed to have been received by the Corporation upon
the issue of the Convertible Securities with respect
to which such Options were actually exercised.
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(iv) No readjustment pursuant to clause (ii) or (iii)
above shall have the effect of increasing the conversion price
to an amount which exceeds the lower of (x) the conversion
price on the original adjustment date or (y) the conversion
price that would have resulted from any issuance of Additional
Shares of Common Stock between the original adjustment date
and such readjustment date.
(v) In the case of any Options which expire by their
terms not more than 30 days after the date of issue thereof,
no adjustment of the conversion price shall be made until the
expiration or exercise of all such Options, whereupon such
adjustment shall be made in the same manner provided in clause
(iii) above.
(h) Determination of Consideration. For purposes of
this Section 6, the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as
follows:
(i) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be the aggregate
amount of cash received by the Corporation; and
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of the
issue, as determined by the vote of 66 2/3% of the
Corporation's Board of Directors or if the Board of Directors
cannot reach such agreement, by a qualified independent public
accounting firm, other than the accounting firm then engaged
as the Corporation's independent auditors, agreed upon by the
Corporation on the one hand and the holders of 66 2/3% of the
outstanding shares of Series B Stock on the other hand.
(ii) Options and Convertible Securities. The consideration
per share received by the Corporation for Additional Shares of Common
Stock deemed to have been issued pursuant to paragraph (g) above,
relating to Options and Convertible Securities shall be determined by
dividing:
(A) the total amount, if any, received or receivable
by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein designed to protect against dilution)
payable to the Corporation upon the exercise of such Options
or the conversion or exchange of such Convertible Securities,
or in the case of
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<PAGE> 12
Options for Convertible Securities, the exercise of such
Options for Convertible Securities and the conversion or
exchange of such Convertible Securities by
(B) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard
to any provision contained therein designed to protect against
dilution) issuable upon the exercise of such Options or
conversion or exchange of such Convertible Securities.
(i) Adjustment of Conversion Rate. Upon each adjustment
of the conversion price under the provisions of this Section 6, the
conversion rate shall be adjusted to an amount determined by dividing
(x) the conversion price in effect immediately prior to the event
causing such adjustment by (y) such adjusted conversion price.
(j) Other Provisions Applicable to Adjustment Under this
Section. The following provisions will be applicable to the adjustments
in conversion price and conversion rate as provided in this Section 6:
(i) Treasury Shares. The number of shares of
Common Stock at any time outstanding shall not include any
shares thereof then directly or indirectly owned or held by or
for the account of the Corporation.
(ii) Other Action Affecting Common Stock. In case
the Corporation shall take any action affecting the
outstanding number of shares of Common Stock other than an
action described in any of the foregoing subsections 6(b) to
6(g) hereof, inclusive, which would have an inequitable effect
on the holders of Series B Stock, the conversion price shall
be adjusted in such manner and at such time as the Board of
Directors of the Corporation on the advice of the
Corporation's independent public accountants may in good faith
determine to be equitable in the circumstances.
(iii) Minimum Adjustment. No adjustment of the
conversion price shall be made if the amount of any such
adjustment would be an amount less than one percent (1%) of
the conversion price then in effect, but any such amount shall
be carried forward and an adjustment with respect thereof
shall be made at the time of and together with any subsequent
adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate an
increase or decrease of one percent (1%) or more.
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(iv) Certain Adjustments. The conversion price shall
not be adjusted upward except in the event of a combination of
the outstanding shares of Common Stock into a smaller number
of shares of Common Stock or in the event of a readjustment of
the conversion price pursuant to Section 6(g)(ii) or (iii).
(k) Notices of Adjustments. Whenever the conversion
rate and conversion price is adjusted as herein provided, an officer of
the Corporation shall compute the adjusted conversion rate and
conversion price in accordance with the foregoing provisions and shall
prepare a written certificate setting forth such adjusted conversion
rate and conversion price and showing in detail the facts upon which
such adjustment is based, and such written instrument shall promptly be
delivered to the recordholders of the Series B Stock.
7. Redemption.
(a) Mandatory Redemption. On the date six (6) months
immediately after the payment in full and satisfaction of all of the
obligations of the Corporation to the lenders who provide financing to
the Corporation in the aggregate principal amount of Seventy-five
Million Dollars ($75,000,000.00) (referred to herein as the "Mandatory
Redemption Date") the Corporation shall redeem all the shares of Series
B Stock originally issued hereunder (or such lesser amount as shall
then be outstanding) at the "Redemption Price" per share defined in
paragraph (c) below, payable in each case in cash on the Mandatory
Redemption Date.
(b) Redemption on Change of Control. Upon a "Change of
Control" of the Corporation, each holder of the then outstanding shares
of Series B Stock may elect to have the Corporation redeem all (but not
less than all) outstanding shares of Series B Stock owned by such
holder at the "Redemption Price" per share defined in paragraph (c)
below, payable in cash on any date within 100 days of the effective
date of the Change of Control (such date being herein referred to as
the "Change of Control Redemption Date"). The election shall be made by
delivering written notice to the Corporation at least thirty (30) but
no more than sixty (60) days prior to the Change of Control Redemption
Date. The Corporation will then be required to redeem all the shares of
Series B Stock owned by such holder on the Change of Control Redemption
Date. For purposes of this Section 7, "Change of Control" means any one
or more of the following events:
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(i) The Corporation shall consolidate with or merge
into any another person or any person shall consolidate with
or merge into the Corporation (other than a consolidation or
merger of the Corporation and a wholly-owned subsidiary of the
Corporation in which all shares of the Corporation's Common
Stock outstanding immediately prior to the effectiveness
thereof are changed into or exchanged for the same
consideration), in either event pursuant to a transaction in
which any of the Corporation's common stock outstanding
immediately prior to the effectiveness thereof is changed into
or exchanged for cash, securities or other property; or
(ii) the Corporation shall directly or indirectly
convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all of its assets to any
person or "group" (within the meaning of Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the "1934
Act") (other than to a wholly-owned subsidiary of the
Corporation); or
(iii) there shall be a reorganization, share
exchange, or reclassification, other than a change in par
value, or from par value to no par value, or from no par value
to par value; or
(iv) any person (other than the Corporation, any
subsidiary of the Corporation or an Existing Investor (as
defined in the Purchase Agreement (as hereinafter defined))),
including a "group" (within the meaning of Section 13(d) and
14(D)(2) of the 1934 Act) that includes such person, shall
purchase or otherwise acquire, directly or indirectly,
beneficial ownership of securities of the Corporation and, as
a result of such purchase or acquisition, such person
(together with its associates and affiliates) shall directly
or indirectly beneficially own in the aggregate (1) more than
50% of the Common Stock, or (2) securities representing more
than 50% of the combined voting power of the Corporation's
voting securities, in each case under subclause (1) or (2),
outstanding on the date immediately prior to the date of such
purchase or acquisition (or, if there be more than one, the
last such purchase or acquisition).
(c) The Redemption Price per share of Series B Stock
shall equal the sum of (x) $10.93 (as adjusted for Recapitalization
Events) plus (y) all accrued and unpaid dividends on such share of
Series B Stock to the Mandatory Redemption Date or Change of Control
Redemption Date, as the case may be.
(d) The term "Redemption Date" as used in this
paragraph (d) shall refer to whichever of the Mandatory Redemption Date
or the Change of Control Redemption Date is applicable in a particular
circumstance. On or prior to the
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Redemption Date, the Corporation shall deposit the Redemption Price of
all outstanding shares of Series B Stock to be redeemed with a bank or
trust corporation having aggregate capital and surplus in excess of
$100,000,000 as a trust fund for the benefit of the holders of the
shares of Series B Stock, with irrevocable instructions and authority
to the bank or trust corporation to pay the Redemption Price for such
shares to their respective holders on or after the Redemption Date upon
receipt of the certificate or certificates of the shares of Series B
Stock to be redeemed. From and after the Redemption Date, unless there
shall have been a default in payment of the Redemption Price, all
rights of the holders of shares of Series B Stock as holders of Series
B Stock (except the right to receive the Redemption Price upon
surrender of their certificate or certificates) shall cease as to those
shares of Series B Stock redeemed, and such shares shall not thereafter
be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever. If on the Redemption Date the
funds of the Corporation legally available for redemption of shares of
Series B Stock (or Series A Stock and Series C Stock which shall rank
pari passu with the Series B Stock) are insufficient to redeem the
total number of shares of Preferred Stock to be redeemed on such date,
the Corporation will use those funds which are legally available
therefor to redeem the maximum possible number of shares of Preferred
Stock ratably among the holders of such shares to be redeemed based
upon their holdings of Series A Stock, Series B Stock and Series C
Stock. Payments shall first be applied against accrued and unpaid
dividends and thereafter against the remainder of the Redemption Price.
The shares of Series B Stock not redeemed shall remain outstanding and
entitled to all the rights and preferences provided herein. At any time
thereafter when additional funds of the Corporation are legally
available for the redemption of shares of Series B Stock such funds
will immediately be used to redeem the balance of the shares of Series
B Stock to be redeemed. No dividends or other distributions shall be
declared or paid on, nor shall the Corporation redeem, purchase or
acquire any shares of, the Common Stock or any other class or series of
stock of the Corporation unless the Redemption Price of all shares
elected to be redeemed shall have been paid in full. Until the
Redemption Price for a share of Series B Stock elected to be redeemed
shall have been paid in full, such share of Series B Stock shall remain
outstanding for all purposes and entitle the holder thereof to all the
rights and privileges provided herein, including, without limitation,
that dividends and interest thereon shall continue to accrue and, if
unpaid prior to the date such shares are redeemed, shall be included as
part of the Redemption Price as provided in paragraph (c) above.
Notwithstanding anything in this Section 7 to the contrary, even if a
notice of redemption was delivered under paragraph (a) or (b) of this
Section 7, all shares of Series B Stock shall be convertible pursuant
to Section 5 at all times prior to the Redemption Date.
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(e) Notwithstanding any other term of this Certificate of
Designation, the Corporation shall not redeem (or have any obligation
to redeem) any shares of Series B Stock under any circumstances,
whether upon a Change of Control or otherwise, prior to the payment in
full and satisfaction of all of the obligations of the Corporation to
the lenders who provide financing to the Corporation in the aggregate
principal amount of up to $75,000,000.00. If the Corporation shall not
have paid in full or satisfied all of its obligations to such lenders
on or before any Redemption Date, upon such payment and satisfaction
the Corporation will immediately use any funds legally available
therefor to redeem the shares of Series B Stock to be redeemed.
8. Notices of Record Dates and Effective Dates. In case:
(a) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock payable otherwise than in shares of
Common Stock; or (b) the Corporation shall authorize the granting to
the holders of Common Stock of rights to subscribe for or purchase any
shares of capital stock of any class or any other rights; or (c) of any
reorganization, share exchange or reclassification of the capital stock
of the Corporation (other than a subdivision or combination of
outstanding shares of Common Stock), or of any consolidation or merger
to which the Corporation is party or of the sale, lease or exchange of
all or substantially all of the property of the Corporation; or (d) of
the voluntary or involuntary dissolution, liquidation or winding up of
the Corporation; or (e) of a Change of Control, then the Corporation
shall cause to be mailed to the recordholders of the Series B Stock at
least 20 days prior to the applicable record date or effective date
hereinafter specified, a notice stating (i) the date on which a record
is to be taken for the purpose of such dividend, distribution or
rights, or, if a record is not to be taken, the date as of which the
holders of record of Common Stock to be entitled to such dividend,
distribution or rights are to be determined or (ii) the date on which
such reclassification, reorganization, share exchange, consolidation,
merger, sale, lease, exchange, dissolution, liquidation, winding up or
Change of Control is expected to become effective, and the date as of
which it is expected that holders of record of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reclassification, reorganization
share exchange, consolidation, liquidation, merger, sale, lease,
exchange, dissolution, liquidation, winding up or Change of Control.
9. Voting Rights.
(a) Holders of Series B Stock shall be entitled to notice of
any stockholder's meeting. Except as otherwise required by law or
provided herein, at any annual or special meeting of the Corporation's
stockholders, or in connection with any written consent in lieu of any
such meeting, each outstanding share of Series B Stock shall be
entitled to the number of votes equal to the number of full shares of
Common Stock into which such share of Series B
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Stock is then convertible. Except as otherwise required by law or
provided herein, the Series B Stock and the Common Stock shall vote
together on each matter submitted to stockholders, and not by class or
series.
(b) Prior to the consummation of a Qualifying Offering by the
Corporation of its Common Stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended, the holders of
the Series B Stock, voting together as a class, shall be entitled to
elect one (1) director to the Corporation's Board of Directors.
Subsequent to such Qualifying Offering, the holders of a majority of
the Common Stock issuable upon conversion of the Series B Stock shall
be entitled to nominate one (1) director for election to the
Corporation's Board of Directors which the Corporation shall nominate
to management's slate for election; provided, however, that the right
provided for in this last sentence of subsection 9(b) shall be
effective only for so long as at least 66 2/3% of the shares of Common
Stock issuable upon conversion of the Series B Stock are held of record
by the original Purchasers (as defined in the Purchase Agreement) of
the Series B Stock.
Notwithstanding the foregoing, upon an Event of Default and so
long as it shall continue, the holders of the Series B Stock and the
Series C Stock, voting together as a class, shall be entitled at any
annual meeting of the stockholders or special meeting held in place
thereof, or at a special meeting of the holders of the Series B Stock
and the Series C Stock called as hereinafter provided, to elect a
majority of the Board of Directors and such right to elect a majority
of the Board of Directors shall be in lieu of the right of the holders
of Series B Stock and the Series C Stock to each elect one director.
Such right of the holders of the Series B Stock and the Series C Stock
to elect a majority of the Board of Directors may be exercised until an
Event of Default shall be cured, if curable, or waived, and when so
cured or waived, the right of the holders of the Series B Stock and the
Series C Stock to elect a majority of the Board of Directors shall
cease and the right of the holders of the Series B Stock and the
holders of the Series C Stock to each elect one director shall resume,
but subject always to the same provisions for the vesting of such
special voting rights in the case of any such future Event of Default.
At any time when such special voting rights shall have so vested in the
holders of the Series B Stock and the Series C Stock, the Secretary of
the Corporation may, and upon the written request of the holders of 10%
or more of the number of shares of the Series B Stock and the Series C
Stock then outstanding addressed to him at the principal office of the
Corporation, shall, call a special meeting of the holders of the Series
B Stock and the Series C Stock for the election of a majority of the
Board of Directors to be elected by them as provided herein, to be held
in the case of such written request as soon as practicable after
delivery of such request, and in either case to be held at the place
and upon the notice provided by law and in the by-laws for the holding
of
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<PAGE> 18
meetings of stockholders. If at any such annual or special meeting or
adjournment thereof the holders of at least a majority of the Series B
Stock and the Series C Stock then outstanding shall be present or
represented at such meeting, the then authorized number of directors of
the Corporation shall be increased to the extent necessary to provide a
majority of new directors to be elected and the holders of the Series B
Stock and the Series C Stock shall be entitled to elect the additional
directors so provided for. The directors so elected shall serve until
the next annual meeting or until their successors shall be elected and
qualified, provided, however, that whenever the holders of the
Preferred Stock shall be divested of the special rights to elect a
majority of the Board of Directors as above provided, the term of
office of the persons so elected as directors by the holders of the
Series B Stock and the Series C Stock as a class, or elected to fill
any vacancies resulting from the death, resignation or removal of the
directors so elected by the holders of the Series B Stock and the
Series C Stock, shall forthwith terminate and the authorized number of
directors shall be reduced accordingly.
If during any interval between any special meeting of the
holders of the Series B Stock and the Series C Stock for the election
of directors to be elected by them as provided above and the next
ensuing annual meeting of stockholders, or between annual meetings of
stockholders for the election of directors, and while the holders of
the Series B Stock and the Series C Stock shall be entitled to elect a
majority of the Board of Directors, any of the directors who have been
elected by the holders of the Series B Stock and the Series C Stock
shall, by reason of resignation, death or removal, have departed from
the Board, the Secretary of the Corporation shall call a special
meeting of the holders of the Series B Stock and the Series C Stock and
such vacancy or vacancies shall be filled at such special meeting.
No director elected by the holders of Series B Stock as a
class, or elected by other directors to fill a vacancy resulting from
the death, resignation or removal of a director elected by such class
vote, may be removed from office by the vote or written consent of
stockholders unless such vote or written consent includes that of the
holders of a majority of the outstanding shares of Series B Stock.
(c) In addition to any other vote or consent of
stockholders provided by law or by the Corporation's Certificate of
Incorporation, the Corporation shall not, without the approval by vote
or written consent of the holders of not less than 66 2/3% of the then
outstanding shares of Series B Stock:
(i) amend, waive or repeal any provisions of, or add
any provision to, (i) this Certificate of Designation or (ii)
any provision of the Corporation's Certificate of
Incorporation or any other certificate of
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<PAGE> 19
designation filed with the Secretary of State of Delaware by
the Corporation with respect to its preferred stock;
(ii) amend, waive or repeal any provisions of, or
add any provision to, the Corporation's By-Laws;
(iii) authorize, create, issue or sell any shares of
Equivalent Stock or Superior Stock (other than Series A Stock
and Series C Stock); except as authorized in this Certificate
of Designation;
(iv) issue any shares of Series B Stock other than
pursuant to the Purchase Agreement or upon transfers of
outstanding shares of Series B Stock;
(v) enter into any agreement, indenture or other
instrument which contains any provisions restricting the
Corporation's obligation to pay dividends on or make
redemptions of the Series B Stock in accordance herewith; or
(vi) dissolve the Corporation.
"Assets" shall mean an interest in any kind of property or
assets, whether real, personal or mixed, or tangible or intangible.
"Equivalent Stock" shall mean any shares of any class or
series of Stock of the Corporation having any preference or priority as to
dividends or Assets on a parity with any such preference or priority of the
Series B Stock and no preference or priority as to dividends or Assets superior
to any such preference or priority of the Series B Stock and any instrument or
Security convertible into or exchangeable for Equivalent Stock. Without limiting
the generality of the foregoing, a dividend rate, mandatory or optional sinking
fund payment amounts or schedules or optional redemption provisions, the
existence of a conversion right or the existence of a liquidation preference of
up to 100% of the original issue price plus unpaid accrued dividends plus a
premium of up to the dividend rate or up to the percentage of the equity of the
Corporation represented by such Stock, with respect to any class or series of
Stock, differing from that of the Series B Stock, shall not prevent such class
of Stock from being Equivalent Stock.
"Securities" shall mean any debt or equity securities of the
Corporation, whether now or hereafter authorized, and any instrument convertible
into or exchangeable for Securities or Security. The term "Security" shall mean
one of the Securities.
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<PAGE> 20
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, corporate stock.
"Superior Stock" shall mean any shares of any class or series
of Stock of the Corporation having any preference or priority as to dividends or
Assets superior to any such preference or priority of the Series B Stock and any
instrument or security convertible into or exchangeable for Superior Stock.
(d) Notwithstanding anything else contained herein, the
affirmative vote or written consent of the holders of not less than 90%
of the then outstanding shares of Series B Stock shall be necessary to
amend, alter or repeal any of the provisions of the Corporation's
Certificate of Incorporation or the Certificate of Designation creating
this Series B Stock which would alter or change (i) the dividend rate,
(ii) redemption provisions, (iii) anti-dilution provisions, (iv) the
place or currency of payments hereunder, (v) the right to institute
suit for the enforcement of any payment hereunder, (vi) the conversion
provisions, or (vii) provisions of this Section 9, so as to affect any
of the foregoing adversely.
10. Preemptive Rights.
(a) The Corporation shall not issue or sell any shares of
Common Stock, Preferred Stock or other securities convertible into or
exchangeable for shares of Common Stock, other than any such issuance
or sale (i) pursuant to a Qualifying Offering, (ii) pursuant to a stock
option plan approved by the Board of Directors, (iii) as a form of
consideration in connection with mergers or acquisitions where the
Corporation is the surviving entity or (iv) where the aggregate gross
proceeds are less than $500,000 in any single transaction, provided
that the sale price per share is not less than the then applicable
conversion price and, provided further, that the aggregate gross
proceeds of all such transactions shall not exceed $1,500,000 (the
securities issued in such transactions being referred to as the "Newly
Issued Securities"), unless prior to the issuance or sale of such Newly
Issued Securities each holder of Series B Stock shall have been given
the opportunity (such opportunity being herein referred to as the
"Preemptive Right") to purchase (on the same terms as such Newly Issued
Securities are proposed to be sold) the same proportion of such Newly
Issued Securities being issued or offered for sale by the Corporation
as (x) the number of shares of Common Stock (calculated solely on
account of outstanding shares of Series B Stock on an as converted
basis) held by such holder on the day preceding the date of the
Preemptive Notice (as defined herein), as the case may
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<PAGE> 21
be, bears to (y) the total number of shares of Common Stock (calculated
on a fully diluted basis) outstanding on that day.
(b) Prior to the issuance or sale by the Corporation of any
Newly Issued Securities, the Corporation shall give written notice
thereof (the "Preemptive Notice") to each holder of Series B Stock. The
Preemptive Notice shall specify (i) the name and address of the bona
fide investor to whom the Corporation proposes to issue or sell Newly
Issued Securities, (ii) the total amount of capital to be raised by the
Corporation pursuant to the issuance or sale of Newly Issued
Securities, (iii) the number of Securities of such Newly Issued
Securities proposed to be issued or sold, (iv) the price and other
terms of their proposed issuance or sale, (v) the number of such Newly
Issued Securities which such holder is entitled to purchase (determined
as provided in subsection (a) above), and (vi) the period during which
such holder may elect to purchase such Newly Issued Securities, which
period shall extend for at least thirty (30) days following the receipt
by such holder of the Preemptive Notice (the "Preemptive Acceptance
Period"). Each holder of Series B Stock who desires to purchase Newly
Issued Securities shall notify the Corporation within the Preemptive
Acceptance Period of the number of Newly Issued Securities he wishes to
purchase, as well as the number, if any, of additional Newly Issued
Securities he would be willing to purchase in the event that all of the
Newly Issued Securities subject to the Preemptive Right are not
subscribed for by the other holders of Series B Stock.
(c) In the event a holder of Series B Stock declines to
subscribe for all or any part of its pro rata portion of any Newly
Issued Securities which are subject to the Preemptive Right (the
"Declining Preemptive Purchaser") during the Preemptive Acceptance
Period, then the other holders of Series B Stock shall have the right
to subscribe for all (or any declined part) of the Declining Preemptive
Purchaser's pro rata portion of such Newly Issued Securities (to be
divided among the other holders of Series B Stock desiring to exercise
such right on a ratable basis).
(d) Any such Newly Issued Securities which none of the holders
elect to purchase in accordance with the provisions of this Section 10,
may be sold by the Corporation, within a period of three (3) months
after the expiration of the Preemptive Acceptance Period, to any other
person or persons at not less than the price and upon other terms and
conditions not less favorable to the Corporation than those set forth
in the Preemptive Notice.
(e) The preemptive rights afforded by this Section 10, and any
obligation for the Corporation to offer such shares of Common Stock,
Preferred Stock or other securities convertible into or exchangeable
for shares of Common
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<PAGE> 22
Stock may be waived by a written instrument signed by the holders of
sixty-six and two-thirds percent (66 2/3 %) of the Series B Stock.
11. Events of Default. An Event of Default shall mean any of the
following:
(i) Any failure by the Corporation to pay in cash
any dividend, if and when declared by the Board of Directors,
on the payment due dates and in the amounts provided pursuant
to Section 3 hereof, if such failure shall continue for any
two quarterly periods;
(ii) Any failure by the Corporation to satisfy its
redemption obligations pursuant to Section 7 hereof if any
such failure shall continue for a period of five days from the
appropriate redemption date;
(iii) Any failure by the Corporation to comply with
the provisions of Sections 4, 5, 6, 8, 9 or 10 hereof;
(iv) If any representation or warranty made by the
Corporation in the Stock Purchase Agreement dated as of
November 13, 1996 or the exhibits or schedules thereto (the
"Purchase Agreements") is or shall be untrue in any material
respect at the time it was made, if such representation or
warranty remains untrue after 10 days' written notice, with
such notice delivered by hand or by first-class, certified or
overnight mail, postage prepaid, or by telecopier, from any
holder of Series B Stock, unless waived in writing by holders
of not less than 66 2/3% of the outstanding shares of Series B
Stock;
(v) Any failure by the Corporation to comply with,
or any breach by the Corporation of, any of the covenants,
agreements or obligations of the Corporation contained in the
Purchase Agreements which continues for a period of 10 days
after written notice, with such notice delivered by hand or by
first-class, certified or overnight mail, postage prepaid, or
by telecopier, from any holder of Series B Stock, unless
waived in writing by holders of not less than 66 2/3% of the
outstanding shares of Series B Stock;
(vi) Default by the Corporation in the performance
or observance of any obligation or condition with respect to
any Indebtedness of the Corporation that is not cured or
waived within 90 days or if the effect of such default is to
accelerate the maturity of such Indebtedness or cause such
Indebtedness to be prepaid, purchased or redeemed or to permit
the holder or holders thereof, or any trustee or agent for
such holders, to cause such Indebtedness to become due and
22
<PAGE> 23
payable prior to its expressed maturity or to cause such
Indebtedness to be prepaid, purchased or redeemed or to
realize upon any collateral or security for such Indebtedness,
unless such default shall have been waived by the appropriate
person. Indebtedness of any corporation shall mean the
principal of (and premium, if any) and unpaid interest on (i)
indebtedness which is for money borrowed from others; (ii)
indebtedness guaranteed, directly or indirectly, in any manner
by such corporation, or in effect guaranteed, directly or
indirectly, by such corporation through an agreement,
contingent or otherwise, to supply funds to or in any manner
invest in the debtor or to purchase indebtedness, or to
purchase assets or services primarily for the purpose of
enabling the debtor to make payment of the indebtedness or of
assuring the owner of the indebtedness against loss; (iii) all
indebtedness secured by any mortgage, lien, pledge, charge or
other encumbrance upon assets owned by such corporation, even
if such corporation has not in any manner become liable for
the payment of such indebtedness; (iv) all indebtedness of
such corporation created or arising under any conditional
sale, lease or other title retention agreement with respect to
assets acquired by such corporation even though the rights and
remedies of the seller, lessor or lender under such agreement
or lease in the event of default are limited to repossession
or sale of such assets and provided that obligations for the
payment of rent under a lease of premises from which the
business of such corporation will be conducted shall not
constitute indebtedness; and (v) renewals, extensions and
refunding of any such indebtedness;
(vii) If the Corporation shall:
(a) become insolvent or generally fail to
pay, or admit in writing its inability to pay, its debts as they become
due;
(b) apply for, consent to, or acquiesce
in, the appointment of a trustee, receiver, sequestrator or other
custodian for the Corporation or any property thereof, or make a
general assignment for the benefit of creditors (any of which shall
be referred to herein as a "Receiver");
(c) in the absence of such application,
consent or acquiescence, permit or suffer to exist the appointment of a
Receiver, and such Receiver shall not be discharged within 60 calendar
days;
(d) commit any act of bankruptcy, permit
or suffer to exist the commencement of any bankruptcy reorganization,
debt arrangement or other case or proceeding under any bankruptcy or
insolvency law, or any dissolution, winding up or liquidation
proceeding in respect of the Corporation,
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<PAGE> 24
and, if any such case or proceeding is not commenced by the
Corporation, such case or proceeding shall be consented to or
acquiesced in by the Corporation, or shall result in the entry of an
order for relief and shall remain for 30 calendar days undismissed; or
(e) take any corporate or other action authorizing,
or in furtherance of, any of the foregoing.
B. The recitals and resolutions contained herein have not been
modified, altered or amended and are presently in full force and effect.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
7th day of May, 1998.
PARK `N VIEW, INC.
By /s/ Ian Williams
-------------------------------
Ian Williams, President
ATTEST:
By: /s/ Anthony Allen
----------------------------
Anthony Allen, Secretary
24
<PAGE> 1
EXHIBIT 3.6
042398
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES C 7% CUMULATIVE CONVERTIBLE
PREFERRED STOCK OF PARK 'N VIEW, INC.
Park `N View, Inc., a Delaware corporation (the "Corporation"), hereby
certifies that pursuant to the authority contained in Article Seventh of the
Corporation's Certificate of Incorporation, and in accordance with Section 242
of the General Corporation Law of the State of Delaware (the "DGCL"), the
following resolution was duly adopted by the Board of Directors of the
Corporation, amending a series of its Preferred Stock designated as Series C 7%
Cumulative Convertible Preferred Stock:
WHEREAS, the amendment of the designations herein certified has been
duly adopted by the Corporation's Board of Directors and Holders of the Series A
Preferred Stock (the "Series A Stock"), the Holders of the Series B 7%
Cumulative Convertible Preferred Stock (the "Series B Stock"), and the Holders
of the Series C 7% Cumulative Convertible Preferred Stock (the "Series C
Stock"); and
WHEREAS, the Certificate of Incorporation of the Corporation provides
for two classes of shares known as common stock, $.001 par value per share (the
"Common Stock"), and preferred stock, $.01 par value per share ("Preferred
Stock"); and
WHEREAS, the Corporation has created: (i) a series of Preferred Stock
designated as Series A Preferred Stock; (ii) a series of Preferred Stock
designated as Series B 7% Cumulative Convertible Preferred Stock; and (iii) a
series of Preferred Stock designated as Series C 7% Cumulative Convertible
Preferred Stock; and
WHEREAS, the Board of Directors of the Corporation is authorized by the
Certificate of Incorporation to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in such series and to fix the designations,
preferences and rights of the shares of each such series and the qualifications,
limitations and restrictions thereof.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors deems it
advisable to, and hereby does, designate a Series C 7% Cumulative Convertible
Preferred Stock and fixes and determines the rights, preferences,
qualifications,
<PAGE> 2
limitations and restrictions relating to the Series C 7% Cumulative Convertible
Preferred Stock as follows:
1. Designation. The shares of such series of Preferred Stock shall be
designated "Series C 7% Cumulative Convertible Preferred Stock" (referred to
herein as the "Series C Stock").
2. Authorized Number. The number of shares constituting the Series C
Stock shall be 3,750,000.
3. Dividends. The holders of shares of Series C Stock shall be entitled
to receive, when and as declared by the Board of Directors of the Corporation,
out of assets legally available for such purpose, dividends at the rate of $0.56
(i.e., 7%) per share per annum, which shall be payable when and if declared by
the Board of Directors or shall accrue quarterly on the last day of January,
April, July and October in each year, commencing on August 31, 1997; provided,
however, that upon an Event of Default (as hereinafter defined) and so long as
it shall continue, such dividend rate shall be $.72 (i.e., 9%) per share per
annum. Dividends on the Series C Stock shall be cumulative so that if, for any
dividend accrual period, cash dividends at the rate hereinabove specified are
not declared and paid or set aside for payment, the amount of accrued but unpaid
dividends shall accumulate and shall be added to the dividends payable for
subsequent dividend accrual periods and upon any redemption or conversion of
shares of Series C Stock. If any shares of Series C Stock are issued on a date
which does not coincide with a dividend payment date, then the initial dividend
accrual period applicable to such shares shall be the period from the date of
issuance thereof through whichever of January 31, April 30, July 31, or October
31 next occurs after the date of issuance. If the date fixed for payment of a
final liquidating distribution on any shares of Series C Stock, or the date on
which any shares of Series C Stock are redeemed or converted into Common Stock
does not coincide with a dividend payment date, then subject to the provisions
hereof relating to such payment, redemption or conversion, the final dividend
accrual period applicable to such shares shall be the period from whichever of
February 1, May 1, August 1 or November 1 most recently precedes the date of
such payment, conversion or redemption through the effective date of such
payment, conversion or redemption. Dividends paid in cash on the shares of
Series C Stock (or Series A Stock or Series B Stock, which shall rank pari passu
with the Series C Stock) in an amount less than the total amount of such
dividends shall be allocated pro rata so that the total value of dividends paid
on the Preferred Stock shall in all cases bear to each other the same ratio that
the total value of accrued and unpaid dividends on the Series A Stock, the
Series B Stock and Series C Stock bear to each other. Without the written
consent of the holders of at least 66 2/3% of the then outstanding Series C
Stock, the Corporation shall not declare or pay any cash dividend on, or redeem
or repurchase or make any other cash distribution in respect of any other equity
Securities (as defined herein) of the Corporation unless at the time of such
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<PAGE> 3
declaration, payment or distribution all dividends on the Series C Stock accrued
for all past dividend accrual periods shall have been paid and the full
dividends thereon for the current dividend period shall be paid or declared and
set aside for payment.
4. Liquidation.
(a) Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the
shares of Series C Stock shall be entitled, before any distribution or
payment is made upon any Common Stock or any other class or series of
stock ranking junior to the Series C Stock as to distribution of assets
upon liquidation (other than the Series A Preferred Stock and the
Series B Preferred Stock of the Corporation which shall rank pari passu
with the Series C Stock), to be paid an amount equal to $8.00 per share
(as adjusted for Recapitalization Events (as hereinafter defined)) plus
all accrued and unpaid dividends to such date (collectively, the
"Liquidation Payments"). If upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the
assets to be distributed among the holders of Series C Stock shall be
insufficient to permit payment in full to the holders of Series C Stock
of the Liquidation Payments, then the entire assets of the Corporation
shall be distributed ratably among such holders and the holders of any
class of preferred stock ranking on a parity with the Series C Stock in
proportion to the full respective distributive amounts to which they
are entitled.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after the holders of Series C Stock shall have been paid
in full the Liquidation Payments, the remaining assets of the
Corporation may be distributed ratably per share in order of preference
to the holders of Common Stock and any other class or series of stock
ranking junior to the Series C Stock as to distribution of assets upon
liquidation.
(c) Written notice of a liquidation, dissolution or winding
up, stating a payment date, the amount of the Liquidation Payments and
the place where said Liquidation Payments shall be payable, shall be
given by mail, postage prepaid, not less than 30 days prior to the
payment date stated therein, to each holder of record of Series C Stock
at its post office address as shown by the records of the Corporation.
5. Conversion.
The holders of the Series C Stock shall have the following
conversion rights:
3
<PAGE> 4
(a) Optional Conversion. Each share of Series C Stock shall be
convertible at any time, at the option of the holder of record thereof,
into fully paid and nonassessable shares of Common Stock at the
"conversion rate" (as defined in paragraph (c) below) then in effect
upon surrender to the Corporation or its transfer agent of the
certificate or certificates representing the Series C Stock to be
converted, as provided below, or if the holder notifies the Corporation
or its transfer agent that such certificate or certificates have been
lost, stolen or destroyed, upon the execution and delivery of an
agreement satisfactory to the Corporation to indemnify the Corporation
from any losses incurred by it in connection therewith.
(b) Conversion on Qualifying Offering. Upon the consummation
of a Qualifying Offering (as defined below), upon not less than ten
(10) days prior written notice by the Corporation of the anticipated
consummation of such offering, each share of Series C Stock shall be
converted into fully paid and nonassessable shares of Common Stock at
the conversion rate. A "Qualifying Offering" means (i) the Corporation
shall have consummated a firm commitment underwritten public offering
of its Common Stock by a nationally recognized investment banking firm
pursuant to an effective registration under the Securities Act of 1933,
as amended, covering the offering and sale of both primary and
secondary shares of Common Stock which results in gross proceeds of at
least $20,000,000, (ii) the Common Stock is quoted or listed by either
The Nasdaq Stock Market (National Market) ("Nasdaq"), the New York
Stock Exchange or the American Stock Exchange, and (iii) the price at
which the Common Stock is sold in such offering is at least equal to an
amount which (x) is 200% of the then effective conversion price or (y)
would represent, on an as converted basis, a compound annual rate of
return of 35% based upon the original issuance price of the Series C
Stock, and (iv) all outstanding shares of the Series B Preferred Stock
shall have been converted into shares of common stock of the Company in
accordance with the Certificate of Designation relating to the Series B
Preferred Stock and all outstanding shares of the Series A Preferred
Stock shall have been redeemed in accordance with the Certificate of
Designation relating to the Series A Preferred Stock. Upon the
achievement of (i), (ii), (iii) and (iv) above and the giving of the
mandatory conversion notice by the Corporation, the outstanding shares
of Series C Stock to be converted shall be converted automatically
without any further action by the holders of such shares and whether or
not the certificates representing such shares are surrendered to the
Corporation or its transfer agent.
(c) Basis For Conversion; Converted Shares. The basis for any
conversion under this Section 5 shall be the "conversion rate" in
effect at the time of conversion, which for the purposes hereof shall
mean the number of shares of Common Stock issuable for each share of
Series C Stock surrendered for
4
<PAGE> 5
conversion under this Section 5. Initially, the conversion rate shall
be 1.0, i.e., 1.0 share of Common Stock for each share of Series C
Stock being converted. Such conversion rate shall be subject to
adjustment as provided in Section 7 below. As used herein, the term
"conversion price" shall be an amount computed by dividing $8.00 by the
conversion rate then in effect. Initially, the conversion price shall
be $8.00 per share of Common Stock. If any fractional interest in a
share of Common Stock would be deliverable upon conversion of Series C
Stock, the Corporation shall pay in lieu of such fractional share an
amount in cash equal to the conversion price of such fractional share
(computed to the nearest one hundredth of a share) in effect at the
close of business on the date of conversion. Any shares of Series C
Stock which have been converted shall be canceled and all dividends on
converted shares shall cease to accrue and the certificates
representing shares of Series C Stock so converted shall represent the
right to receive (i) such number of shares of Common Stock into which
such shares of Series C Stock are convertible, plus (ii) cash payable
for any fractional share plus (iii) all accrued but unpaid dividends
relating to such shares through the immediately preceding dividend
payment date. Upon the conversion of shares of Series C Stock as
provided in this Section 5, the Corporation shall promptly pay all then
accrued but unpaid dividends to the holder of the Series C Stock being
converted. The Board of Directors of the Corporation shall at all times
reserve a sufficient number of authorized but unissued shares of Common
Stock to be issued in satisfaction of the conversion rights and
privileges aforesaid.
(d) Mechanics of Conversion. In the case of an optional
conversion, before any holder of Series C Stock shall be entitled to
convert the same into shares of Common Stock, it shall surrender the
certificate or certificates therefor, duly endorsed, at the office of
the Corporation or its transfer agent for the Series C Stock, and shall
give written notice to the Corporation of the election to convert the
same and shall state therein the name or names in which the certificate
of certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver
at such office to such holder of Series C Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as
aforesaid. A certificate or certificates will be issued for the
remaining shares of Series C Stock in any case in which fewer than all
of the shares of Series C Stock represented by a certificate are
converted.
(e) Issue Taxes. The Corporation shall pay all issue taxes, if
any, incurred in respect of the issue of shares of Common Stock on
conversion. If a holder of shares surrendered for conversion specifies
that the shares of Common Stock to be issued on conversion are to be
issued in a name or names other than the name or names in which such
surrendered shares stand, the Corporation shall not be required to pay
any transfer or other taxes incurred by reason of the
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<PAGE> 6
issuance of such shares of Common Stock to the name of another, and if
the appropriate transfer taxes shall not have been paid to the
Corporation or the transfer agent for the Series C Stock at the time of
surrender of the shares involved, the shares of Common Stock issued
upon conversion thereof may be registered in the name or names in which
the surrendered shares were registered, despite the instructions to the
contrary.
6. Adjustment of Conversion Price and Conversion Rate. The number and
kind of securities issuable upon the conversion of the Series C Stock, the
conversion price and the conversion rate shall be subject to adjustment from
time to time in accordance with the following provisions:
(a) Certain Definitions. For purposes of this Certificate:
(i) The term "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued, or deemed to be
issued by the Corporation pursuant to paragraph (g) of this
Section 6, after the Original Issue Date except:
(A) shares of Common Stock issuable upon
conversion of, or distributions with respect to, the
Series B Stock or the Series C Stock now or hereafter
issued by the Corporation;
(B) up to 800,000 shares of Common Stock
issuable upon the exercise of options issued to
officers, directors and employees of the Corporation
under stock option plans maintained from time to time
by the Corporation and approved by the Board of
Directors, subject to adjustment for all subdivisions
and combinations;
(C) up to 186,750 shares of Common Stock
issuable upon the exercise of the Warrant held by
Alex. Brown & Sons Incorporated;
(D) up to 505,375 shares of Common Stock
issuable upon the exercise of warrants to be granted
to lenders in connection with loans to the
Corporation or to guarantors or purchasers of such
loans; and
(E) shares of Common Stock issued with
respect to adjustments of the conversion price
hereunder.
(ii) The term "Common Stock" shall be deemed to mean
(i) the Common Stock, $.001 par value, and (ii) the stock of
the Corporation of any class, or series within a class,
whether now or hereafter authorized,
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<PAGE> 7
which has the right to participate in the distribution of
either earnings or assets of the Corporation without limit as
to the amount or percentage.
(iii) The term "Convertible Securities" shall mean
any evidence of indebtedness, shares (other than Series B
Stock and Series C Stock) or other securities convertible into
or exchangeable for Common Stock.
(iv) The term "Options" shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire
Common Stock or Convertible Securities.
(v) The term "Original Issue Date" shall mean the
date of the initial issuance of the Series C Stock.
(vi) The term "Fair Market Price" shall mean with
respect to a share of Common Stock (i) prior to the first
anniversary of the Original Issue Date, the conversion price
in effect on the Original Issue Date, and (ii) subsequent to
the first anniversary of the Original Issue Date, the average
closing bid price of the Common Stock as reported by Nasdaq
(or the last sale price if the Common Stock is traded on an
exchange) for a period of thirty (30) consecutive trading days
ending on the third day prior to the date of determination,
or, if the Common Stock is not listed on Nasdaq or an
exchange, the fair market value as determined by the vote of
66 2/3% of the Corporation's Board of Directors or if the
Board of Directors cannot reach such agreement, as determined
by a qualified independent investment banker appointed by the
vote of 66 2/3% of the Corporation's Board of Directors.
(b) Reorganization, Reclassification. In the event of a
reorganization, share exchange, or reclassification, other than a
change in par value, or from par value to no par value, or from no par
value to par value or a transaction described in subsection (c) or (d)
below, each share of Series C Stock shall, after such reorganization,
share exchange or reclassification (a "Reclassification Event"), be
convertible at the option of the holder into the kind and number of
shares of stock or other securities or other property of the
Corporation which the holder of Series C Stock would have been entitled
to receive if the holder had held the Common Stock issuable upon
conversion of his Series C Stock immediately prior to such
reorganization, share exchange, or reclassification.
(c) Consolidation, Merger. In the event of a merger or
consolidation to which the Corporation is a party each share of Series
C Stock shall, after such merger or consolidation, be convertible at
the option of the holder into the kind and number of shares of stock
and/or other securities, cash or other property
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<PAGE> 8
which the holder of such share of Series C Stock would have been
entitled to receive if the holder had held the Common Stock issuable
upon conversion of such share of Series C Stock immediately prior to
such consolidation or merger.
(d) Subdivision or Combination of Shares. In case outstanding
shares of Common Stock shall be subdivided, the conversion price shall
be proportionately reduced as of the effective date of such
subdivision, or as of the date a record is taken of the holders of
Common Stock for the purpose of so subdividing, whichever is earlier.
In case outstanding shares of Common Stock shall be combined, the
conversion price shall be proportionately increased as of the effective
date of such combination, or as of the date a record is taken of the
holders of Common Stock for the purpose of so combining, whichever is
earlier.
(e) Stock Dividends. In case shares of Common Stock are issued
as a dividend or other distribution on the Common Stock (or such
dividend is declared), then the conversion price shall be adjusted, as
of the date a record is taken of the holders of Common Stock for the
purpose of receiving such dividend or other distribution (or if no such
record is taken, as at the earliest of the date of such declaration,
payment or other distribution), to that price determined by multiplying
the conversion price in effect immediately prior to such declaration,
payment or other distribution by a fraction (i) the numerator of which
shall be the number of shares of Common Stock outstanding immediately
prior to the declaration or payment of such dividend or other
distribution, and (ii) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after the
declaration or payment of such dividend or other distribution. In the
event that the Corporation shall declare or pay any dividend on the
Common Stock payable in any right to acquire Common Stock for no
consideration, then the Corporation shall be deemed to have made a
dividend payable in Common Stock in an amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to
acquire Common Stock.
(f) Issuance of Additional Shares of Common Stock. If the
Corporation shall issue any Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued
pursuant to paragraph (g) below) after the Original Issue Date (other
than as provided in the foregoing subsections (b) through (e)), for no
consideration or for a consideration per share less than the greater of
(i) the Fair Market Price in effect on the date of and immediately
prior to such issue or (ii) the conversion price in effect on the date
of and immediately prior to such issue, then in such event, the
conversion price shall be reduced as follows:
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<PAGE> 9
(i) For issuances of Additional Shares of Common
Stock on or before 9 months after the Original Issue Date, if
the issuance or sales price of the Additional Shares of Common
Stock is below $8.00, the conversion price shall be reduced so
as to equal such issuance or sales price.
(ii) For issuances of Additional Shares of Common
Stock at any time after 9 months after the Original Issue
Date, the conversion price shall be reduced concurrently with
any such issuance to a price equal to the quotient obtained by
dividing:
(A) an amount equal to (x) the total number of shares
of Common Stock outstanding immediately prior to such issuance
or sale multiplied by the conversion price in effect
immediately prior to such issuance or sale, plus (y) the
aggregate consideration received or deemed to be received by
the Corporation upon such issuance or sale, by
(B) the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
For purposes of the formulas expressed in paragraph 6(e) and
6(f), all shares of Common Stock issuable upon the exercise of
outstanding Options or issuable upon the conversion of the
Series B Stock and the Series C Stock or outstanding
Convertible Securities (including Convertible Securities
issued upon the exercise of outstanding Options), shall be
deemed outstanding shares of Common Stock both immediately
before and after such issuance or sale.
(g) Deemed Issue of Additional Shares of Common Stock. In the
event the Corporation at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities
or shall fix a record date for the determination of holders of any
class of securities then entitled to receive any such Options or
Convertible Securities, then the maximum number of shares (as set forth
in the instrument relating thereto without regard to any provisions
contained therein designed to protect against dilution) of Common Stock
issuable upon the exercise of such Options, or, in the case of
Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares
of Common Stock issued as of the time of such issue of Options or
Convertible Securities or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided that
in any such case in which Additional Shares of Common Stock are deemed
to be issued:
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<PAGE> 10
(i) no further adjustments in the conversion price
shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such
Options or the issue of Common Stock upon the conversion or
exchange of such Convertible Securities;
(ii) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise,
for any increase or decrease in the consideration payable to
the Corporation, or increase or decrease in the number of
shares of Common Stock issuable, upon the exercise, conversion
or exchange thereof, the conversion price computed upon the
original issuance of such Options or Convertible Securities
(or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, upon
any such increase or decrease becoming effective, shall be
recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange
under such Convertible Securities (provided, however, that no
such adjustment of the conversion price shall affect Common
Stock previously issued upon conversion of the Series C
Stock);
(iii) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the conversion
price computed upon the original issue of such Options or
Convertible Securities (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments
based thereon, shall, upon such expiration, be recomputed as
if:
(A) in the case of Options or Convertible Securities,
the only Additional Shares of Common Stock issued were the
shares of Common Stock, if any, actually issued upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities and the consideration received therefor
was the consideration actually received by the Corporation (x)
for the issue of all such Options, whether or not exercised,
plus the consideration actually received by the Corporation
upon exercise of the Options or (y) for the issue of all such
Convertible Securities which were actually converted or
exchanged plus the additional consideration, if any, actually
received by the Corporation upon the conversion or exchange of
the Convertible Securities; and
(B) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued upon the exercise thereof were issued at the time of
issue of such Options, and the consideration received
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<PAGE> 11
by the Corporation for the Additional Shares of Common Stock
deemed to have been then issued was the consideration actually
received by the Corporation for the issue of all such Options,
whether or not exercised, plus the consideration deemed to
have been received by the Corporation upon the issue of the
Convertible Securities with respect to which such Options were
actually exercised.
(iv) No readjustment pursuant to clause (ii) or (iii)
above shall have the effect of increasing the conversion price
to an amount which exceeds the lower of (x) the conversion
price on the original adjustment date or (y) the conversion
price that would have resulted from any issuance of Additional
Shares of Common Stock between the original adjustment date
and such readjustment date.
(v) In the case of any Options which expire by their
terms not more than 30 days after the date of issue thereof,
no adjustment of the conversion price shall be made until the
expiration or exercise of all such Options, whereupon such
adjustment shall be made in the same manner provided in clause
(iii) above.
(h) Determination of Consideration. For purposes of this
Section 6, the consideration received by the Corporation for the issue
of any Additional Shares of Common Stock shall be computed as follows:
(i) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be the
aggregate amount of cash received by the Corporation; and
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of the
issue, as determined by the vote of 66 2/3% of the
Corporation's Board of Directors or if the Board of Directors
cannot reach such agreement, by a qualified independent public
accounting firm, other than the accounting firm then engaged
as the Corporation's independent auditors, agreed upon by the
Corporation on the one hand and the holders of 66 2/3% of the
outstanding shares of Series C Stock on the other hand.
(ii) Options and Convertible Securities. The
consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued
pursuant to paragraph (g) above, relating to Options and
Convertible Securities shall be determined by dividing:
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<PAGE> 12
(A) the total amount, if any, received or receivable
by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein designed to protect against dilution)
payable to the Corporation upon the exercise of such Options
or the conversion or exchange of such Convertible Securities,
or in the case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities by
(B) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard
to any provision contained therein designed to protect against
dilution) issuable upon the exercise of such Options or
conversion or exchange of such Convertible Securities.
(i) Adjustments Based Upon EBITDA for Fiscal Year Ending
June 30, 2000.
(i) If the Corporation reports earnings before
interest, taxes, depreciation, and amortization, as determined
in accordance with generally accepted accounting principles
("EBITDA") for the fiscal year ending June 30, 2000 (the
"Period"), of greater than or equal to Twenty-seven Million
Six Hundred Fourteen Thousand and Five Hundred Dollars
($27,614,500), then the conversion price of the Series C Stock
will not be adjusted (except as otherwise provided in this
Certificate of Designations).
(ii) If the Corporation reports EBITDA for the
Period of less than or equal to Sixteen Million Five Hundred
Sixty Eight Thousand and Seven Hundred Dollars ($16,568,700),
then the conversion price of the Series C Stock will be
reduced to equal Five Dollars ($5.00); provided, however, that
if, prior to the end of the Period, the conversion price of
the Series C Stock has been reduced as otherwise provided in
this Certificate of Designations to less than Five Dollars
($5.00), the conversion price of the Series C Stock will not
be adjusted pursuant to this Section 6(i)(ii).
(iii) If the Corporation reports EBITDA for the
Period of less than Twenty Seven Million Six Hundred Fourteen
Thousand and Five Hundred Dollars ($27,614,500), but more than
Sixteen Million Five Hundred Sixty Eight Thousand and Seven
Hundred Dollars ($16,568,700), then the conversion price of
the Series C Stock will be reduced to equal: (i) the
then-current conversion price, less (ii) the product of (A) a
fraction, the numerator of which will be Twenty Seven Million
Six Hundred Fourteen
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Thousand and Five Hundred Dollars ($27,614,500), minus the
EBITDA reported by the Corporation for the Period, and the
denominator of which will be Twenty Seven Million Six Hundred
Fourteen Thousand and Five Hundred Dollars ($27,614,500),
minus Sixteen Million Five Hundred Sixty Eight Thousand and
Seven Hundred Dollars ($16,568,700), multiplied by (B) the
then-current conversion price minus Five Dollars ($5.00);
provided, however, that if, prior to the end of the Period,
the conversion price of the Series C Stock has been reduced as
otherwise provided in this Certificate of Designations to less
than Five Dollars ($5.00), the conversion price of the Series
C Stock will not be adjusted pursuant to this Section
6(i)(iii).
(iv) Notwithstanding the foregoing provisions of this
Section 6(i), if, on or before December 31, 2000, the
Corporation sells all or substantially all of its assets,
merges or consolidates with any other business entity where
the Corporation is not the surviving corporation, or completes
a public offering of the Corporation's Common Stock pursuant
to an effective registration under the Securities Act of 1933,
as amended, then: (A) the provisions described in subsections
(i), (ii) and (iii) of this Section 6(i) (and the adjustments
described therein) will terminate immediately and the
conversion price of the Series C Stock will be immediately
adjusted as if subsections (i), (ii) and (iii) of this Section
6(i) (and the adjustments described therein) were of no force
or effect, and (B) if necessary to cause the holders of the
Series C Stock to obtain an internal rate of return ("IRR")
(as defined below) equal to thirty-five one hundredths
(35/100), calculated as if each such holder purchased such
shares of Series C Stock at the purchase price per share paid
by such holder on the date such holder purchased such shares,
the then-current conversion price will be reduced concurrently
with any such transaction to an amount that results in the
holders of the Series C Stock obtaining such an IRR in
connection with the purchase of the Series C Stock. For the
purposes of this Section 6(i)(iv), "IRR" will equal the number
that satisfies the following expression:
0 = C(0) + (C(1)/1+IRR) + (C(2)/(1+IRR)(2))
+...+ (C(T)/(1+IRR)(T))
where:
C = cash flows, including the purchase of shares of
Series C Stock and all dividends and other distributions paid
by the Corporation; provided, however, that for the purposes
of calculating IRR pursuant to the foregoing expression, the
fair market value of any consideration held or received by the
holders of the Series C Stock, including, without limitation,
shares of Series
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C Stock, in connection with or at the time of any
transaction(s) that results in adjustment pursuant to this
Section 6(i)(iv), shall be deemed to constitute a cash flow
and shall be treated as if paid on the date of such
transaction; and
T = the number of years (which may be expressed as a
fraction to the nearest one-twelfth based upon completed
calendar months) since the purchase of shares of Series C
Stock.
(v) The Corporation shall prepare (or shall cause its
accountants to prepare) its financial statement and calculate
EBITDA for the Period on or before September 30, 2000.
(vi) The provisions of this Section 6(i) shall be
adjusted to reflect any prior or concurrent adjustment of the
conversion price and the conversion rate pursuant to any other
provision of Section 6.
(j) Adjustment of Conversion Rate. Upon each adjustment of the
conversion price under the provisions of this Section 6, the conversion
rate shall be adjusted to an amount determined by dividing (x) the
conversion price in effect immediately prior to the event causing such
adjustment by (y) such adjusted conversion price.
(k) Other Provisions Applicable to Adjustment Under this
Section. The following provisions will be applicable to the adjustments
in conversion price and conversion rate as provided in this Section 6:
(i) Treasury Shares. The number of shares of Common
Stock at any time outstanding shall not include any shares
thereof then directly or indirectly owned or held by or for
the account of the Corporation.
(ii) Other Action Affecting Common Stock. In case
the Corporation shall take any action affecting the
outstanding number of shares of Common Stock other than an
action described in any of the foregoing subsections 6(b) to
6(g) hereof, inclusive, which would have an inequitable effect
on the holders of Series C Stock, the conversion price shall
be adjusted in such manner and at such time as the Board of
Directors of the Corporation on the advice of the
Corporation's independent public accountants may in good faith
determine to be equitable in the circumstances.
(iii) Minimum Adjustment. No adjustment of the
conversion price shall be made if the amount of any such
adjustment would be an
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amount less than one percent (1%) of the conversion price then
in effect, but any such amount shall be carried forward and an
adjustment with respect thereof shall be made at the time of
and together with any subsequent adjustment which, together
with such amount and any other amount or amounts so carried
forward, shall aggregate an increase or decrease of one
percent (1%) or more.
(iv) Certain Adjustments. The conversion price shall
not be adjusted upward except in the event of a combination of
the outstanding shares of Common Stock into a smaller number
of shares of Common Stock or in the event of a readjustment of
the conversion price pursuant to Section 6(g)(ii) or (iii).
(l) Notices of Adjustments. Whenever the conversion rate and
conversion price is adjusted as herein provided, an officer of the
Corporation shall compute the adjusted conversion rate and conversion
price in accordance with the foregoing provisions and shall prepare a
written certificate setting forth such adjusted conversion rate and
conversion price and showing in detail the facts upon which such
adjustment is based, and such written instrument shall promptly be
delivered to the recordholders of the Series C Stock.
7. Redemption.
(a) Mandatory Redemption. On the date six (6) months
immediately after the payment in full and satisfaction of all of the
obligations of the Corporation to the lenders who provide financing to
the Corporation in the aggregate principal amount of Seventy-five
Million Dollars ($75,000,000.00) (referred to herein as the "Mandatory
Redemption Date") the Corporation shall redeem all the shares of Series
C Stock originally issued hereunder (or such lesser amount as shall
then be outstanding) at the "Redemption Price" per share defined in
paragraph (c) below, payable in each case in cash on the Mandatory
Redemption Date.
(b) Redemption on Change of Control. Upon a "Change of
Control" of the Corporation, each holder of the then outstanding shares
of Series C Stock may elect to have the Corporation redeem all (but not
less than all) outstanding shares of Series C Stock owned by such
holder at the "Redemption Price" per share defined in paragraph (c)
below, payable in cash on any date within 100 days of the effective
date of the Change of Control (such date being herein referred to as
the "Change of Control Redemption Date"). The election shall be made by
delivering written notice to the Corporation at least thirty (30) but
no more than sixty (60) days prior to the Change of Control Redemption
Date. The Corporation will then be required to redeem all the shares of
Series C Stock owned by such holder on the Change of Control Redemption
Date. For purposes
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of this Section 7, "Change of Control" means any one or more of the
following events:
(i) The Corporation shall consolidate with or merge
into any another person or any person shall consolidate with
or merge into the Corporation (other than a consolidation or
merger of the Corporation and a wholly-owned subsidiary of the
Corporation in which all shares of the Corporation's Common
Stock outstanding immediately prior to the effectiveness
thereof are changed into or exchanged for the same
consideration), in either event pursuant to a transaction in
which any of the Corporation's common stock outstanding
immediately prior to the effectiveness thereof is changed into
or exchanged for cash, securities or other property; or
(ii) the Corporation shall directly or indirectly
convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all of its assets to any
person or "group" (within the meaning of Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the "1934
Act") (other than to a wholly-owned subsidiary of the
Corporation); or
(iii) there shall be a reorganization, share
exchange, or reclassification, other than a change in par
value, or from par value to no par value, or from no par value
to par value; or
(iv) any person (other than the Corporation, any
subsidiary of the Corporation or an Existing Investor (as
defined in the Purchase Agreement (as hereinafter defined))),
including a "group" (within the meaning of Section 13(d) and
14(D)(2) of the 1934 Act) that includes such person, shall
purchase or otherwise acquire, directly or indirectly,
beneficial ownership of securities of the Corporation and, as
a result of such purchase or acquisition, such person
(together with its associates and affiliates) shall directly
or indirectly beneficially own in the aggregate (1) more than
50% of the Common Stock, or (2) securities representing more
than 50% of the combined voting power of the Corporation's
voting securities, in each case under subclause (1) or (2),
outstanding on the date immediately prior to the date of such
purchase or acquisition (or, if there be more than one, the
last such purchase or acquisition).
(c) The Redemption Price per share of Series C Stock shall
equal the sum of (x) $8.00 (as adjusted for Recapitalization Events)
plus (y) all accrued and unpaid dividends on such share of Series C
Stock to the Mandatory Redemption Date or Change of Control Redemption
Date, as the case may be.
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(d) The term "Redemption Date" as used in this paragraph (d)
shall refer to whichever of the Mandatory Redemption Date or the Change
of Control Redemption Date is applicable in a particular circumstance.
On or prior to the Redemption Date, the Corporation shall deposit the
Redemption Price of all outstanding shares of Series C Stock to be
redeemed with a bank or trust corporation having aggregate capital and
surplus in excess of $100,000,000 as a trust fund for the benefit of
the holders of the shares of Series C Stock, with irrevocable
instructions and authority to the bank or trust corporation to pay the
Redemption Price for such shares to their respective holders on or
after the Redemption Date upon receipt of the certificate or
certificates of the shares of Series C Stock to be redeemed. From and
after the Redemption Date, unless there shall have been a default in
payment of the Redemption Price, all rights of the holders of shares of
Series C Stock as holders of Series C Stock (except the right to
receive the Redemption Price upon surrender of their certificate or
certificates) shall cease as to those shares of Series C Stock
redeemed, and such shares shall not thereafter be transferred on the
books of the Corporation or be deemed to be outstanding for any purpose
whatsoever. If on the Redemption Date the funds of the Corporation
legally available for redemption of shares of Series C Stock (or Series
A Stock and Series B Stock which shall rank pari passu with the Series
C Stock) are insufficient to redeem the total number of shares of
Preferred Stock to be redeemed on such date, the Corporation will use
those funds which are legally available therefor to redeem the maximum
possible number of shares of Preferred Stock ratably among the holders
of such shares to be redeemed based upon their holdings of Series C
Stock, Series B Stock and Series A Stock. Payments shall first be
applied against accrued and unpaid dividends and thereafter against the
remainder of the Redemption Price. The shares of Series C Stock not
redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein. At any time thereafter when additional
funds of the Corporation are legally available for the redemption of
shares of Series C Stock such funds will immediately be used to redeem
the balance of the shares of Series C Stock to be redeemed. No
dividends or other distributions shall be declared or paid on, nor
shall the Corporation redeem, purchase or acquire any shares of, the
Common Stock or any other class or series of stock of the Corporation
unless the Redemption Price of all shares elected to be redeemed shall
have been paid in full. Until the Redemption Price for a share of
Series C Stock elected to be redeemed shall have been paid in full,
such share of Series C Stock shall remain outstanding for all purposes
and entitle the holder thereof to all the rights and privileges
provided herein, including, without limitation, that dividends and
interest thereon shall continue to accrue and, if unpaid prior to the
date such shares are redeemed, shall be included as part of the
Redemption Price as provided in paragraph (c) above. Notwithstanding
anything in this Section 7 to the contrary, even if a notice of
redemption was delivered under paragraph (a) or (b) of this Section 7,
all shares of Series C Stock
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<PAGE> 18
shall be convertible pursuant to Section 5 at all times prior to the
Redemption Date.
(e) Notwithstanding any other term of this Certificate of
Designation, the Corporation shall not redeem (or have any obligation
to redeem) any shares of Series C Stock under any circumstances,
whether upon a Change of Control or otherwise, prior to the payment in
full and satisfaction of all of the obligations of the Corporation to
the lenders who provide financing to the Corporation in the aggregate
principal amount of $75,000,000.00. If the Corporation shall not have
paid in full or satisfied all of its obligations to such lenders on or
before any Redemption Date, upon such payment and satisfaction the
Corporation will immediately use any funds legally available therefor
to redeem the shares of Series C Stock to be redeemed.
8. Notices of Record Dates and Effective Dates. In case: (a) the
Corporation shall declare a dividend (or any other distribution) on the Common
Stock payable otherwise than in shares of Common Stock; or (b) the Corporation
shall authorize the granting to the holders of Common Stock of rights to
subscribe for or purchase any shares of capital stock of any class or any other
rights; or (c) of any reorganization, share exchange or reclassification of the
capital stock of the Corporation (other than a subdivision or combination of
outstanding shares of Common Stock), or of any consolidation or merger to which
the Corporation is party or of the sale, lease or exchange of all or
substantially all of the property of the Corporation; or (d) of the voluntary or
involuntary dissolution, liquidation or winding up of the Corporation; or (e) of
a Change of Control, then the Corporation shall cause to be mailed to the
recordholders of the Series C Stock at least 20 days prior to the applicable
record date or effective date hereinafter specified, a notice stating (i) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights, or, if a record is not to be taken, the date as of which
the holders of record of Common Stock to be entitled to such dividend,
distribution or rights are to be determined or (ii) the date on which such
reclassification, reorganization, share exchange, consolidation, merger, sale,
lease, exchange, dissolution, liquidation, winding up or Change of Control is
expected to become effective, and the date as of which it is expected that
holders of record of Common Stock shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, reorganization share exchange, consolidation, liquidation,
merger, sale, lease, exchange, dissolution, liquidation, winding up or Change of
Control.
9. Voting Rights.
(a) Holders of Series C Stock shall be entitled to notice of
any stockholder's meeting. Except as otherwise required by law or
provided herein, at any annual or special meeting of the Corporation's
stockholders, or in
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connection with any written consent in lieu of any such meeting, each
outstanding share of Series C Stock shall be entitled to the number of
votes equal to the number of full shares of Common Stock into which
such share of Series C Stock is then convertible. Except as otherwise
required by law or provided herein, the Series C Stock and the Common
Stock shall vote together on each matter submitted to stockholders, and
not by class or series.
(b) Prior to the consummation of a Qualifying Offering by the
Corporation of its Common Stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended, the holders of
the Series C Stock, voting together as a class, shall be entitled to
elect one (1) director to the Corporation's Board of Directors.
Subsequent to such Qualifying Offering, the holders of a majority of
the Common Stock issuable upon conversion of the Series C Stock shall
be entitled to nominate one (1) director for election to the
Corporation's Board of Directors which the Corporation shall nominate
to management's slate for election; provided, however, that the right
provided for in this last sentence of subsection 9(b) shall be
effective only for so long as at least 66 2/3% of the shares of Common
Stock issuable upon conversion of the Series C Stock are held of record
by the original Purchasers (as defined in the Purchase Agreement) of
the Series C Stock.
Notwithstanding the foregoing, upon an Event of Default and so
long as it shall continue, the holders of the Series B Stock and the
Series C Stock, voting together as a class, shall be entitled at any
annual meeting of the stockholders or special meeting held in place
thereof, or at a special meeting of the holders of the Series B Stock
and the Series C Stock called as hereinafter provided, to elect a
majority of the Board of Directors and such right to elect a majority
of the Board of Directors shall be in lieu of the right of the holders
of Series B Stock and the Series C Stock to each elect one director.
Such right of the holders of the Series B Stock and the Series C Stock
to elect a majority of the Board of Directors may be exercised until an
Event of Default shall be cured, if curable, or waived, and when so
cured or waived, the right of the holders of the Series B and the
Series C Stock to elect a majority of the Board of Directors shall
cease and the right of the holders of the Series B Stock and the
holders of the Series C Stock to each elect one director shall resume,
but subject always to the same provisions for the vesting of such
special voting rights in the case of any such future Event of Default.
At any time when such special voting rights shall have so vested in the
holders of the Series B and the Series C Stock, the Secretary of the
Corporation may, and upon the written request of the holders of 10% or
more of the number of shares of the Series B Stock and the Series C
Stock then outstanding addressed to him at the principal office of the
Corporation, shall, call a special meeting of the holders of the Series
B Stock and the Series C Stock for the election of a majority of the
Board of Directors to be elected by them as provided herein, to be
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held in the case of such written request as soon as practicable after
delivery of such request, and in either case to be held at the place
and upon the notice provided by law and in the by-laws for the holding
of meetings of stockholders. If at any such annual or special meeting
or adjournment thereof the holders of at least a majority of the Series
B Stock and the Series C Stock then outstanding shall be present or
represented at such meeting, the then authorized number of directors of
the Corporation shall be increased to the extent necessary to provide a
majority of new directors to be elected and the holders of the Series B
Stock and the Series C Stock shall be entitled to elect the additional
directors so provided for. The directors so elected shall serve until
the next annual meeting or until their successors shall be elected and
qualified, provided, however, that whenever the holders of the
Preferred Stock shall be divested of the special rights to elect a
majority of the Board of Directors as above provided, the term of
office of the persons so elected as directors by the holders of the
Series B Stock and the Series C Stock as a class, or elected to fill
any vacancies resulting from the death, resignation or removal of the
directors so elected by the holders of the Series B Stock and the
Series C Stock, shall forthwith terminate and the authorized number of
directors shall be reduced accordingly.
If during any interval between any special meeting of the
holders of the Series B Stock and the Series C Stock for the election
of directors to be elected by them as provided above and the next
ensuing annual meeting of stockholders, or between annual meetings of
stockholders for the election of directors, and while the holders of
the Series B Stock and the Series C Stock shall be entitled to elect a
majority of the Board of Directors, any of the directors who have been
elected by the holders of the Series B Stock and the Series C Stock
shall, by reason of resignation, death or removal, have departed from
the Board, the Secretary of the Corporation shall call a special
meeting of the holders of the Series B Stock and the Series C Stock and
such vacancy or vacancies shall be filled at such special meeting.
No director elected by the holders of Series C Stock as a
class, or elected by other directors to fill a vacancy resulting from
the death, resignation or removal of a director elected by such class
vote, may be removed from office by the vote or written consent of
stockholders unless such vote or written consent includes that of the
holders of a majority of the outstanding shares of Series C Stock.
(c) In addition to any other vote or consent of stockholders
provided by law or by the Corporation's Certificate of Incorporation,
the Corporation shall not, without the approval by vote or written
consent of the holders of not less than 66 2/3% of the then outstanding
shares of Series C Stock:
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<PAGE> 21
(i) amend, waive or repeal any provisions of, or
add any provision to, (i) this Certificate of Designation
or (ii) any provision of the Corporation's Certificate of
Incorporation or any other certificate of designation filed
with the Secretary of State of Delaware by the Corporation
with respect to its preferred stock;
(ii) amend, waive or repeal any provisions of, or
add any provision to, the Corporation's By-Laws;
(iii) authorize, create, issue or sell any shares of
Equivalent Stock or Superior Stock (other than Series A Stock
and Series B Stock); except as authorized in this Certificate
of Designation;
(iv) issue any shares of Series C Stock other than
pursuant to the Purchase Agreement or upon transfers of
outstanding shares of Series C Stock;
(v) enter into any agreement, indenture or other
instrument which contains any provisions restricting the
Corporation's obligation to pay dividends on or make
redemptions of the Series C Stock in accordance herewith;
(vi) dissolve the Corporation;
(vii) enter into any agreement(s) that would
restrict the Corporation's ability to perform its obligations
pursuant to the Purchase Agreements (as defined in Section 11
below);
(viii) sell, lease or otherwise dispose of 20% or
more of the assets of the Corporation, other than in the
ordinary course of business, unless the proceeds of such sale,
lease or other disposition are reinvested in assets of the
general type used in the business of the Corporation;
(ix) issue equity securities to employees, officers
or directors of the Corporation, except (a) securities
issuable upon the exercise of outstanding options and warrants
and pursuant to existing contractual commitments and (b)
options to purchase up to 390,514 shares of Common Stock,
together with the Common Stock issuable upon exercise thereof;
(x) issue any securities for a price less than
fair market value, other than as may be required by existing
contractual commitments or as permitted by clause (ix) hereof;
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(xi) enter into any transactions (or series of
transactions), including loans, with any officer or director
of the Corporation or to or with their affiliates and family
members involving $100,000.00 or more per year individually or
$500,000.00 or more per year in the aggregate except (a) as
may be contemplated by existing contractual commitments, (b)
reasonable compensation payable to officers and directors, and
(c) for options and warrants issued in compliance with clause
(ix) hereof; or
(xii) engage in any transaction (or series of
transactions) that would impair or reduce the rights and
preferences of the holders of the Series C Stock as a class
relative to the rights and preferences of the holders of any
other class of the Corporation's capital stock.
"Assets" shall mean an interest in any kind of property or
assets, whether real, personal or mixed, or tangible or intangible.
"Equivalent Stock" shall mean any shares of any class or
series of Stock of the Corporation having any preference or priority as to
dividends or Assets on a parity with any such preference or priority of the
Series C Stock and no preference or priority as to dividends or Assets superior
to any such preference or priority of the Series C Stock and any instrument or
Security convertible into or exchangeable for Equivalent Stock. Without limiting
the generality of the foregoing, a dividend rate, mandatory or optional sinking
fund payment amounts or schedules or optional redemption provisions, the
existence of a conversion right or the existence of a liquidation preference of
up to 100% of the original issue price plus unpaid accrued dividends plus a
premium of up to the dividend rate or up to the percentage of the equity of the
Corporation represented by such Stock, with respect to any class or series of
Stock, differing from that of the Series C Stock, shall not prevent such class
of Stock from being Equivalent Stock.
"Securities" shall mean any debt or equity securities of the
Corporation, whether now or hereafter authorized, and any instrument convertible
into or exchangeable for Securities or Security. The term "Security" shall mean
one of the Securities.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, corporate stock.
"Superior Stock" shall mean any shares of any class or series
of Stock of the Corporation having any preference or priority as to dividends or
Assets superior to any such preference or priority of the Series C Stock and any
instrument or security convertible into or exchangeable for Superior Stock.
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<PAGE> 23
(d) Notwithstanding anything else contained herein, the
affirmative vote or written consent of the holders of not less than 90%
of the then outstanding shares of Series C Stock shall be necessary to
amend, alter or repeal any of the provisions of the Corporation's
Certificate of Incorporation or the Certificate of Designation creating
this Series C Stock which would alter or change (i) the dividend rate,
(ii) redemption provisions, (iii) anti-dilution provisions, (iv) the
place or currency of payments hereunder, (v) the right to institute
suit for the enforcement of any payment hereunder, (vi) the conversion
provisions, or (vii) provisions of this Section 9, so as to affect any
of the foregoing adversely.
10. Preemptive Rights.
(a) The Corporation shall not issue or sell any shares of
Common Stock, Preferred Stock or other securities convertible into or
exchangeable for shares of Common Stock, other than any such issuance
or sale (i) pursuant to a Qualifying Offering, (ii) pursuant to a stock
option plan approved by the Board of Directors, (iii) as a form of
consideration in connection with mergers or acquisitions where the
Corporation is the surviving entity or (iv) where the aggregate gross
proceeds are less than $500,000 in any single transaction, provided
that the sale price per share is not less than the then applicable
conversion price and, provided further, that the aggregate gross
proceeds of all such transactions shall not exceed $1,500,000 (the
securities issued in such transactions being referred to as the "Newly
Issued Securities"), unless prior to the issuance or sale of such Newly
Issued Securities each holder of Series C Stock shall have been given
the opportunity (such opportunity being herein referred to as the
"Preemptive Right") to purchase (on the same terms as such Newly Issued
Securities are proposed to be sold) the same proportion of such Newly
Issued Securities being issued or offered for sale by the Corporation
as (x) the number of shares of Common Stock (calculated solely on
account of outstanding shares of Series C Stock on an as converted
basis) held by such holder on the day preceding the date of the
Preemptive Notice (as defined herein), as the case may be, bears to (y)
the total number of shares of Common Stock (calculated on a fully
diluted basis) outstanding on that day.
(b) Prior to the issuance or sale by the Corporation of any
Newly Issued Securities, the Corporation shall give written notice
thereof (the "Preemptive Notice") to each holder of Series C Stock. The
Preemptive Notice shall specify (i) the name and address of the bona
fide investor to whom the Corporation proposes to issue or sell Newly
Issued Securities, (ii) the total amount of capital to be raised by the
Corporation pursuant to the issuance or sale of Newly Issued
Securities, (iii) the number of Securities of such Newly
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<PAGE> 24
Issued Securities proposed to be issued or sold, (iv) the price and
other terms of their proposed issuance or sale, (v) the number of such
Newly Issued Securities which such holder is entitled to purchase
(determined as provided in subsection (a) above), and (vi) the period
during which such holder may elect to purchase such Newly Issued
Securities, which period shall extend for at least thirty (30) days
following the receipt by such holder of the Preemptive Notice (the
"Preemptive Acceptance Period"). Each holder of Series C Stock who
desires to purchase Newly Issued Securities shall notify the
Corporation within the Preemptive Acceptance Period of the number of
Newly Issued Securities he wishes to purchase, as well as the number,
if any, of additional Newly Issued Securities he would be willing to
purchase in the event that all of the Newly Issued Securities subject
to the Preemptive Right are not subscribed for by the other holders of
Series C Stock.
(c) In the event a holder of Series C Stock declines to
subscribe for all or any part of its pro rata portion of any Newly
Issued Securities which are subject to the Preemptive Right (the
"Declining Preemptive Purchaser") during the Preemptive Acceptance
Period, then the other holders of Series C Stock shall have the right
to subscribe for all (or any declined part) of the Declining Preemptive
Purchaser's pro rata portion of such Newly Issued Securities (to be
divided among the other holders of Series C Stock desiring to exercise
such right on a ratable basis).
(d) Any such Newly Issued Securities which none of the holders
elect to purchase in accordance with the provisions of this Section 10,
may be sold by the Corporation, within a period of three (3) months
after the expiration of the Preemptive Acceptance Period, to any other
person or persons at not less than the price and upon other terms and
conditions not less favorable to the Corporation than those set forth
in the Preemptive Notice.
(e) The preemptive rights afforded by this Section 10, and any
obligation for the Corporation to offer such shares of Common Stock,
Preferred Stock or other securities convertible into or exchangeable
for shares of Common Stock may be waived by a written instrument signed
by the holders of sixty-six and two-thirds percent (66 2/3 %) of the
Series C Stock.
11. Events of Default. An Event of Default shall mean any of the
following:
(i) Any failure by the Corporation to pay in cash any
dividend, if and when declared by the Board of Directors, on
the payment due dates and in the amounts provided pursuant to
Section 3 hereof, if such failure shall continue for any two
quarterly periods;
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(ii) Any failure by the Corporation to satisfy its
redemption obligations pursuant to Section 7 hereof if any
such failure shall continue for a period of five days from the
appropriate redemption date;
(iii) Any failure by the Corporation to comply with
the provisions of Sections 4, 5, 6, 8, 9 or 10 hereof;
(iv) If any representation or warranty made by the
Corporation in the Stock Purchase Agreement dated as of August
22, 1997 or the exhibits or schedules thereto (the "Purchase
Agreements") is or shall be untrue in any material respect at
the time it was made, if such representation or warranty
remains untrue after 10 days' written notice, with such notice
delivered by hand or by first-class, certified or overnight
mail, postage prepaid, or by telecopier, from any holder of
Series C Stock, unless waived in writing by holders of not
less than 66 2/3% of the outstanding shares of Series C Stock;
(v) Any failure by the Corporation to comply with,
or any breach by the Corporation of, any of the covenants,
agreements or obligations of the Corporation contained in the
Purchase Agreements which continues for a period of 10 days
after written notice, with such notice delivered by hand or by
first-class, certified or overnight mail, postage prepaid, or
by telecopier, from any holder of Series C Stock, unless
waived in writing by holders of not less than 66 2/3% of the
outstanding shares of Series C Stock;
(vi) Default by the Corporation in the performance
or observance of any obligation or condition with respect to
any Indebtedness of the Corporation that is not cured or
waived within 90 days or if the effect of such default is to
accelerate the maturity of such Indebtedness or cause such
Indebtedness to be prepaid, purchased or redeemed or to permit
the holder or holders thereof, or any trustee or agent for
such holders, to cause such Indebtedness to become due and
payable prior to its expressed maturity or to cause such
Indebtedness to be prepaid, purchased or redeemed or to
realize upon any collateral or security for such Indebtedness,
unless such default shall have been waived by the appropriate
person. Indebtedness of any corporation shall mean the
principal of (and premium, if any) and unpaid interest on (i)
indebtedness which is for money borrowed from others; (ii)
indebtedness guaranteed, directly or indirectly, in any manner
by such corporation, or in effect guaranteed, directly or
indirectly, by such corporation through an agreement,
contingent or otherwise, to supply funds to or in any manner
invest in the debtor or to purchase indebtedness, or to
purchase assets or
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services primarily for the purpose of enabling the debtor to
make payment of the indebtedness or of assuring the owner of
the indebtedness against loss; (iii) all indebtedness secured
by any mortgage, lien, pledge, charge or other encumbrance
upon assets owned by such corporation, even if such
corporation has not in any manner become liable for the
payment of such indebtedness; (iv) all indebtedness of such
corporation created or arising under any conditional sale,
lease or other title retention agreement with respect to
assets acquired by such corporation even though the rights and
remedies of the seller, lessor or lender under such agreement
or lease in the event of default are limited to repossession
or sale of such assets and provided that obligations for the
payment of rent under a lease of premises from which the
business of such corporation will be conducted shall not
constitute indebtedness; and (v) renewals, extensions and
refunding of any such indebtedness;
(vii) If the Corporation shall:
(a) become insolvent or generally fail to
pay, or admit in writing its inability to pay, its debts as they become
due;
(b) apply for, consent to, or acquiesce
in, the appointment of a trustee, receiver, sequestrator or other
custodian for the Corporation or any property thereof, or make a
general assignment for the benefit of creditors (any of which shall be
referred to herein as a "Receiver");
(c) in the absence of such application,
consent or acquiescence, permit or suffer to exist the appointment of a
Receiver, and such Receiver shall not be discharged within 60 calendar
days;
(d) commit any act of bankruptcy,
permit or suffer to exist the commencement of any bankruptcy
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding in respect of the Corporation, and, if any such
case or proceeding is not commenced by the Corporation, such case or
proceeding shall be consented to or acquiesced in by the Corporation,
or shall result in the entry of an order for relief and shall remain
for 30 calendar days undismissed; or
(e) take any corporate or other action
authorizing, or in furtherance of, any of the foregoing.
B. The recitals and resolutions contained herein have not been
modified, altered or amended and are presently in full force and effect.
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IN WITNESS WHEREOF, the undersigned has executed this
Certificate this 7th day of May, 1998.
PARK 'N VIEW, INC.
By: /s/ Ian Williams
-----------------------------
Name: Ian Williams
Title: President
Attest:
/s/ Anthony Allen
- -------------------------
Anthony Allen, Secretary
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EXHIBIT 3.7
AMENDED AND RESTATED BY-LAWS OF
PARK `N VIEW, INC.
ARTICLE I
OFFICES
Section 1.1. Registered Office. The registered office of the
Corporation within the State of Delaware shall be located at the principal place
of business in said State of such corporation or individual acting as the
Corporation's registered agent in Delaware.
Section 1.2. Other Offices. The Corporation may also have offices and
places of business at such other places both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. Place of Meetings. All meetings of stockholders shall be
held at the principal office of the Corporation, or at such other place within
or without the State of Delaware as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
<PAGE> 2
Section 2.2. Annual Meetings. The annual meeting of stockholders for
the election of directors shall be held at such time on such day, other than a
legal holiday, as the Board of Directors in each such year determines. At the
annual meeting, the stockholders entitled to vote for the election of directors
shall elect a Board of Directors and transact such other business as may
properly come before the meeting.
Section 2.3. Special Meetings. Special meetings of stockholders, for
any purpose or purposes, may be called by a member of the Board of Directors.
Any such request shall state the purpose or purposes of the proposed meeting. At
any special meeting of stockholders, only such business may be transacted as is
related to the purpose or purposes set forth in the notice of such meeting.
Section 2.4. Notice of Meetings. Written notice of every meeting of
stockholders, stating the place, date and hour thereof and, in the case of a
special meeting of stockholders, the purpose or purposes thereof and the person
or persons by whom or at whose direction such meeting has been called and such
notice is being issued, shall be given not less than ten (10) nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
or at the direction of the Chairman of the Board, Secretary, or the persons
calling the meeting, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it
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appears on the stock transfer books of the Corporation. Nothing herein contained
shall preclude the stockholders from waiving notice as provided in Section 4.1
hereof.
Section 2.5. Quorum. The holders of a majority of the issued and
outstanding shares of stock of the Corporation entitled to vote, represented in
person or by proxy, shall be necessary to and shall constitute a quorum for the
transaction of business at any meeting of stockholders. If, however, such quorum
shall not be present or represented at any meeting of stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At any such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. Notwithstanding the foregoing, if after any
such adjournment the Board of Directors shall fix a new record date for the
adjourned meeting, or if the adjournment is for more than thirty (30) days, a
notice of such adjourned meeting shall be given as provided in Section 2.4 of
these By-Laws, but such notice may be waived as provided in Section 4.1 hereof.
Section 2.6. Voting. At each meeting of stockholders, each holder of
record of shares of stock entitled to vote shall be entitled to vote in person
or by proxy, and each such holder shall be entitled to one vote for every share
standing in his name on the books of the Corporation as of the record date fixed
by the Board of Directors or prescribed by
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<PAGE> 4
law and, if a quorum is present, a majority of the shares of such stock present
or represented at any meeting of stockholders shall be the vote of the
stockholders with respect to any item of business, unless otherwise provided by
any applicable provision of law, by these By-Laws or by the Certificate of
Incorporation.
Section 2.7. Proxies. Every stockholder entitled to vote at a meeting
or by consent without a meeting may authorize another person or persons to act
for him by proxy. Each proxy shall be in writing executed by the stockholder
giving the proxy or by his duly authorized attorney. No proxy shall be valid
after the expiration of three (3) years from its date, unless a longer period is
provided for in the proxy. Unless and until voted, every proxy shall be
revocable at the pleasure of the person who executed it, or his legal
representatives or assigns except in those cases where an irrevocable proxy
permitted by statute has been given.
Section 2.8. Consents. Any action which is required or permitted to be
taken at a meeting of the stockholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed and dated
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 thereof were present and voted. Such signed
and dated action must be filed with the Secretary of the Corporation to be kept
in the corporate minute book.
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<PAGE> 5
Section 2.9. Stock Records. The Secretary or agent having charge of the
stock transfer books shall make, at least ten (10) days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order and showing
the address of and the number and class and series, if any, of shares held by
each. Such list, for a period of ten (10) days prior to such meeting, shall be
kept at the principal place of business of the Corporation or at the office of
the transfer agent or registrar of the Corporation and such other places as
required by statute and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder at any time during the meeting.
ARTICLE III
DIRECTORS
Section 3.1. Number. The number of directors of the Corporation which
shall constitute the entire Board of Directors shall initially be fixed by the
Incorporator and thereafter from time to time by a vote of a majority of the
entire Board and shall be not less than one (1) nor more than seven (7). If a
certificate of designation of a series of preferred stock provides that the
number of directors shall be increased upon the occurrence of certain events,
then the provisions of such certificate of designation shall supersede the
provisions of these By-laws.
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<PAGE> 6
Section 3.2. Resignation and Removal. Any director may resign at any
time upon notice of resignation to the Corporation. Any director may be removed
at any time by vote of the stockholders then entitled to vote for the election
of directors at a special meeting called for that purpose, either with or
without cause, except that directors elected by a class vote of holders of
preferred stock may only be removed by vote of the holders a majority of such
preferred stock.
Section 3.3. Newly Created Directorship and Vacancies. Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason whatsoever shall be
filled by vote of the Board. If the number of directors then in office is less
than a quorum, such newly created directorships and vacancies may be filled by a
vote of a majority of the directors then in office. Any director elected to fill
a vacancy shall be elected until the next meeting of stockholders at which the
election of directors is in the regular course of business, and until his
successor has been elected and qualified.
Section 3.4. Powers and Duties. Subject to the applicable provisions of
law, these By-Laws or the Certificate of Incorporation, but in furtherance and
not in limitation of any rights therein conferred, the Board of Directors shall
have the control and management of the business and affairs of the Corporation
and shall exercise all such powers of the Corporation and do all such lawful
acts and things as may be exercised by the Corporation.
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<PAGE> 7
Section 3.5. Place of Meetings. All meetings of the Board of Directors
may be held either within or without the State of Delaware.
Section 3.6. Annual Meetings. An annual meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting to the newly elected directors shall
be necessary in order to legally constitute the meeting, provided a quorum shall
be present, or the newly elected directors may meet at such time and place as
shall be fixed by the written consent of all of such directors.
Section 3.7. Regular Meetings. Regular meetings of the Board of
Directors may be held upon such notice or without notice, and at such time and
at such place as shall from time to time be determined by the Board.
Section 3.8. Special Meetings. Special meetings of the Board of
Directors may be called by a member of the Board of Directors. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
Section 3.9. Notice of Meetings. Notice of each special meeting of the
Board (and of each regular meeting for which notice shall be required) shall be
given by the
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<PAGE> 8
Secretary or an Assistant Secretary and shall state the place, date and time of
the meeting. Notice of each such meeting shall be given orally or shall be
mailed to each director at his residence or usual place of business. If notice
of less than three (3) days is given, it shall be oral, whether by telephone or
in person, or sent by special delivery mail or telegraph. If mailed, the notice
shall be given when deposited in the United States mail, postage prepaid. Notice
of any adjourned meeting, including the place, date and time of the new meeting,
shall be given to all directors not present at the time of the adjournment, as
well as to the other directors unless the place, date and time of the new
meeting is announced at the adjourned meeting. Nothing herein contained shall
preclude the directors from waiving notice as provided in Section 4.1 hereof.
Section 3.10. Quorum and Voting. At all meetings of the Board of
Directors a majority of the entire Board shall be necessary to and shall
constitute a quorum for the transaction of business at any meeting of directors,
unless otherwise provided by any applicable provision of law, by these By-Laws,
or by the Certificate of Incorporation. The act of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the Board of Directors, unless otherwise provided by an applicable
provision of law, by these By-Laws or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, until a
quorum shall be present.
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<PAGE> 9
Section 3.11. Compensation. The Board of Directors, by the affirmative
vote of a majority of the directors then in office, and irrespective of any
personal interest of any of its members, shall have authority to establish
reasonable compensation of all directors for services to the Corporation as
directors, officers or otherwise.
Section 3.12. Books and Records. The directors may keep the books of
the Corporation, except such as are required by law to be kept within the state,
outside of the State of Delaware, at such place or places as they may from time
to time determine.
Section 3.13. Action without a Meeting. Any action required or
permitted to be taken by the Board, or by a committee of the Board, may be taken
without a meeting if all members of the Board or the committee, as the case may
be, consent in writing to the adoption of a resolution authorizing the action.
Any such resolution and the written consents thereto by the members of the Board
or committee shall be filed with the minutes of the proceedings of the Board or
committee.
Section 3.14. Telephone Participation. Any one or more members of the
Board, or any committee of the Board, may participate in a meeting of the Board
or committee by means of a conference telephone call or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
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<PAGE> 10
Section 3.15. Committees of the Board. The Board, by resolution adopted
by a majority of the entire Board, may designate one or more committees, each
consisting of one or more directors. The Board may designate one or more
directors as alternate members of any such committee. Such alternate members may
replace any absent member or members at any meeting of such committee. Each
committee (including the members thereof) shall serve at the pleasure of the
Board and shall keep minutes of its meetings and report the same to the Board.
Except as otherwise provided by law, each such committee, to the extent provided
in the resolution establishing it, shall have and may exercise all the authority
of the Board with respect to all matters. However, no such committee shall have
power or authority to:
(a) amend the Certificate of Incorporation;
(b) adopt an agreement of merger or consolidation;
(c) recommend to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets;
(d) recommend to the stockholders a dissolution of the
Corporation or a revocation of a dissolution;
(e) amend these By-Laws; and unless expressly so provided by
resolution of the Board, no such committee shall have power or authority to:
(1) declare a dividend; or
(2) authorize the issuance of shares of the Corporation
of any class.
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<PAGE> 11
ARTICLE IV
WAIVER
Section 4.1. Waiver. Whenever a notice is required to be given by any
provision of law, by these By-Laws, or by the Certificate of Incorporation, a
waiver thereof in writing, whether before or after the time stated therein,
shall be deemed equivalent to such notice. In addition, any stockholder
attending a meeting of stockholders in person or by proxy without protesting
prior to the conclusion of the meeting the lack of notice thereof to him, and
any director attending a meeting of the Board of Directors without protesting
prior to the meeting or at its commencement such lack or notice, shall be
conclusively deemed to have waived notice of such meeting.
ARTICLE V
OFFICERS
Section 5.1. Executive Officers. The officers of the Corporation shall
be a President or Chief Executive Officer, a Treasurer and a Secretary. Any
person may hold two or more of such offices. The officers of the Corporation
shall be elected annually (and from time to time by the Board of Directors, as
vacancies occur), at the annual meeting of the Board of Directors following the
meeting of stockholders at which the Board of Directors was elected.
Section 5.2. Other Officers. The Board of Directors may appoint such
other officers and agents, including a Chief Financial Officer, Vice President,
Assistant Vice
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<PAGE> 12
Presidents, Secretaries, Assistant Secretaries and Assistant Treasurers, as it
shall at any time or from time to time deem necessary or advisable.
Section 5.3. Authorities and Duties. All officers, as between
themselves and the Corporation, shall have such authority and perform such
duties in the management of business and affairs of the Corporation as may be
provided in these By-Laws, or, to the extent not so provided, as may be
prescribed by the Board of Directors.
Section 5.4. Tenure and Removal. The officers of the Corporation shall
be elected or appointed to hold office until their respective successors are
elected or appointed. All officers shall hold office at the pleasure of the
Board of Directors, and any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors for cause or
without cause at any regular or special meeting.
Section 5.5. Vacancies. Any vacancy occurring in any office of the
Corporation, whether because of death, resignation or removal, with or without
cause, or any other reason, shall be filled by the Board of Directors.
Section 5.6. Compensation. The salaries and other compensation of all
officers and agents of the Corporation shall be fixed by or in the manner
prescribed by the Board of Directors.
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<PAGE> 13
Section 5.7. President. The President shall have general charge of the
business and affairs of the Corporation and in the absence of the Chairman of
the Board, the President shall preside at all meetings of the stockholders and
the directors. The President shall perform such other duties as are properly
required of him by the Board of Directors.
Section 5.8. Vice President. Each Vice President, if any, shall perform
such duties as may from time to time be assigned to him by the Board of
Directors.
Section 5.9. Secretary. The Secretary shall attend all meetings of the
stockholders and all meetings of the Board of Directors and shall record all
proceedings taken at such meetings in a book to be kept for that purpose; he
shall see that all notices of meetings of stockholders and meetings of the Board
of Directors are duly given in accordance with the provisions of these By-Laws
or as required by law; he shall be the custodian of the records and of the
corporate seal or seals of the Corporation; he shall have authority to affix the
corporate seal or seals to all documents, the execution of which, on behalf of
the Corporation, under its seal, is duly authorized, and when so affixed it may
be attested by his signature; and in general, he shall perform all duties
incident to the office of the Secretary of a corporation, and such other duties
as the Board of Directors may from time to time prescribe.
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<PAGE> 14
Section 5.10. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit, or cause to be deposited, in the name and to the
credit of the Corporation, all moneys and valuable effects in such banks, trust
companies, or other depositories as shall from time to time be selected by the
Board of Directors. He shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation; he shall render to the
President and to each member of the Board of Directors, whenever requested, an
account of all of his transactions as Treasurer and of the financial condition
of the Corporation; and in general, he shall perform all of the duties incident
to the office of the Treasurer of a corporation, and such other duties as the
Board of Directors may from time to time prescribe.
Section 5.11. Other Officers. The Board of Directors may also elect or
may delegate to the President the power to appoint such other officers as it may
at any time or from time to time deem advisable, and any officers so elected or
appointed shall have such authority and perform such duties as the Board of
Directors or the President, if he shall have appointed them, may from time to
time prescribe.
ARTICLE VI
PROVISIONS RELATING TO STOCK CERTIFICATES AND STOCKHOLDERS
Section 6.1. Form and Signature. The shares of the Corporation shall be
represented by a certificate signed by the President or any Vice President and
by the Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer, and shall
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<PAGE> 15
bear the seal of the Corporation or a facsimile thereof. Each certificate
representing shares shall state upon its face (a) that the Corporation is formed
under the laws of the State of Delaware, (b) the name of the person or persons
to whom it is issued, (c) the number of shares which such certificate represents
and (d) the par value, if any, of each share represented by such certificate.
Section 6.2. Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares of stock to receive dividends or other distributions, and to
vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of stock, and shall not be bound to
recognize any equitable or legal claim to or interest in such shares on the part
of any other person.
Section 6.3. Transfer of Stock. Upon surrender to the Corporation or
the appropriate transfer agent, if any, of the Corporation, of a certificate
representing shares of stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, and, in the event that the
certificate refers to any agreement restricting transfer of the shares which it
represents, proper evidence of compliance with such agreement, a new certificate
shall be issued to the person entitled thereto, and the old certificate canceled
and the transaction recorded upon the books of the Corporation.
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<PAGE> 16
Section 6.4. Lost Certificates, etc. The Corporation may issue a new
certificate for shares in place of any certificate theretofore issued by it,
alleged to have been lost, mutilated, stolen or destroyed, and the Board may
require the owner of such lost, mutilated, stolen or destroyed certificate, or
his legal representatives, to make an affidavit of the fact and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation on account of the alleged loss,
mutilation, theft or destruction of any such certificate or the issuance of any
such new certificate.
Section 6.5. Record Date. For the purpose of determining the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express written consent to any corporate
action without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board may fix, in advance, a record date. Such date shall not be more than
sixty (60) nor less than ten (10) days before the date of any such meeting, nor
more than sixty (60) days prior to any other action.
Section 6.6. Regulations. Except as otherwise provided by law, the
Board may make such additional rules and regulations, not inconsistent with
these By-Laws, as it may deem expedient, concerning the issue, transfer and
registration of certificates for the
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<PAGE> 17
securities of the Corporation. The Board may appoint, or authorize any officer
or officers to appoint, one or more transfer agents and one or more registrars
and may require all certificates for shares of capital stock to bear the
signature or signatures of any of them.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Dividends and Distributions. Dividends and other
distributions upon or with respect to outstanding shares of stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, bonds, property, or in stock of the
Corporation. The Board shall have full power and discretion, subject to the
provisions of the Certificate of Incorporation or the terms of any other
corporate document or instrument to determine what, if any, dividends or
distributions shall be declared and paid or made.
Section 7.2. Checks, etc. All checks or demands for money and notes or
other instruments evidencing indebtedness or obligations of the Corporation
shall be signed by such officer or officers or other person or persons as may
from time to time be designated by the Board of Directors.
Section 7.3. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal Delaware". The
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<PAGE> 18
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or otherwise reproduced.
Section 7.4. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 7.5. General and Special Bank Accounts. The Board may authorize
from time to time the opening and keeping of general and special bank accounts
with such banks, trust companies or other depositories as the Board may
designate or as may be designated by any officer or officers of the Corporation
to whom such power of designation may be delegated by the Board from time to
time. The Board may make such special rules and regulations with respect to such
bank accounts, not inconsistent with the provisions of these By-Laws, as it may
deem expedient.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS
Section 8.1. Indemnification by Corporation. To the extent permitted by
law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment) the Corporation shall indemnify
any person against any and all judgments, fines, and amounts paid in settling or
otherwise disposing of actions or threatened actions, and expenses in connection
therewith, incurred by reason of the fact that he, his testator
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<PAGE> 19
or intestate is or was a director or officer of the Corporation or of any other
corporation of any type or kind, domestic or foreign, which he served in any
capacity at the request of the Corporation. To the extent permitted by law,
expenses so incurred by any such person in defending a civil or criminal action
or proceeding shall at his request be paid by the Corporation in advance of the
final disposition of such action or proceeding.
ARTICLE VIII
ADOPTION AND AMENDMENT
Section 9.1. Power to Amend. Subject to any limitation contained in any
certificate of designation, these By-Laws may be amended or repealed and any new
By-Laws may be adopted by the Board of Directors; provided that these By-Laws
and any other By-Laws amended or adopted by the Board of Directors may be
amended, may be reinstated, and new By-Laws may be adopted, by the stockholders
of the Corporation entitled to vote at the time for the election of directors.
THIS IS TO CERTIFY that the above Bylaws were duly adopted and include
all amendments adopted by the Board of Directors of the Corporation by action
taken at a meeting held on April 23, 1998, and subsequently approved by the
holders of the Series A Preferred Stock, the Series B 7% Cumulative Convertible
Preferred Stock, and the Series C 7% Cumulative Convertible Preferred Stock by
written consent.
/s/ Anthony Allen
-------------------------
Anthony Allen, Secretary
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<PAGE> 1
EXHIBIT 4.1
- -------------------------------------------------------------------------------
PARK `N VIEW, INC.
SERIES A AND SERIES B
13% SENIOR NOTES DUE 2008
INDENTURE
--------------------------------------------
Dated as of May 27, 1998
--------------------------------------------
State Street Bank and Trust Company
Trustee
--------------------------------------------
<PAGE> 2
CROSS-REFERENCE TABLE*
(a) Trust Indenture
<TABLE>
<CAPTION>
Act Section Indenture Section
<S> <C>
310 (a)(1)................................................................................................ 7.10
(a)(2) ................................................................................................... 7.10
(a)(3).................................................................................................... N.A.
(a)(4).................................................................................................... N.A.
(a)(5).................................................................................................... 7.10
(i)(b).................................................................................................... 7.10
(ii)(c)................................................................................................... N.A.
311(a).................................................................................................... 7.11
(b)....................................................................................................... 7.11
(iii)(c).................................................................................................. N.A.
312 (a)................................................................................................... 2.05
(b)...................................................................................................... 11.03
(iv)(c)...................................................................................................11.03
313(a).................................................................................................... 7.06
(b)(1)....................................................................................................10.03
(b)(2).................................................................................................... 7.07
(v)(c).................................................................................................... 7.06
(vi)(d)................................................................................................... 7.06
314(a).................................................................................................... 4.03
11.02
(A)(b)....................................................................................................10.02
(c)(1)....................................................................................................11.04
(c)(2)....................................................................................................11.04
(c)(3)....................................................................................................N.A.
(d)..................................................................................................... .10.03
10.04, 10.05
(vii)(e)..................................................................................................11.05
(f)....................................................................................................... NA
315 (a)....................................................................................................7.01
(b)....................................................................................................... 7.05
11.02
(A)(c).................................................................................................... 7.01
(e)....................................................................................................... 6.11
316 (a)(last sentence).................................................................................... 2.09
(a)(1)(A)................................................................................................. 6.05
(a)(1)(B)................................................................................................. 6.04
(a)(2).................................................................................................... N.A.
(b)....................................................................................................... 6.07
(B)(c).................................................................................................... 2.12
317 (a)(1)................................................................................................ 6.08
(a)(2).................................................................................................... 6.09
(b)....................................................................................................... 2.04
318 (a)...................................................................................................11.01
(b)....................................................................................................... N.A.
(c).......................................................................................................11.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
SECTION 1.01. DEFINITIONS......................................................................................1
SECTION 1.02. OTHER DEFINITIONS...............................................................................14
SECTION 1.03..................................................................................................15
SECTION 1.04. RULES OF CONSTRUCTION...........................................................................15
ARTICLE 2. THE NOTES.............................................................................................16
SECTION 2.01. FORM AND DATING................................................................................16
SECTION 2.02. EXECUTION AND AUTHENTICATION....................................................................17
SECTION 2.03. REGISTRAR AND PAYING AGENT......................................................................17
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.............................................................17
SECTION 2.05. HOLDER LISTS....................................................................................18
SECTION 2.06. TRANSFER AND EXCHANGE...........................................................................18
SECTION 2.07. REPLACEMENT NOTES...............................................................................29
SECTION 2.08. OUTSTANDING NOTES...............................................................................30
SECTION 2.09. TREASURY NOTES..................................................................................30
SECTION 2.10. TEMPORARY NOTES.................................................................................30
SECTION 2.11. CANCELLATION....................................................................................31
SECTION 2.12. DEFAULTED INTEREST..............................................................................31
ARTICLE 3. REDEMPTION AND PREPAYMENT.............................................................................31
SECTION 3.01. NOTICES TO TRUSTEE..............................................................................31
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED...............................................................31
SECTION 3.03. NOTICE OF REDEMPTION............................................................................32
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION..................................................................32
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.....................................................................33
SECTION 3.06. NOTES REDEEMED IN PART..........................................................................33
SECTION 3.07. OPTIONAL REDEMPTION.............................................................................33
SECTION 3.08. MANDATORY REDEMPTION............................................................................34
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.............................................34
ARTICLE 4. COVENANTS.............................................................................................36
SECTION 4.01. PAYMENT OF NOTES................................................................................36
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.................................................................36
SECTION 4.03. REPORTS.........................................................................................36
SECTION 4.04. COMPLIANCE CERTIFICATE..........................................................................37
SECTION 4.05. TAXES...........................................................................................38
SECTION 4.06. STAY, EXTENSION AND USURY LAWS..................................................................38
SECTION 4.07. RESTRICTED PAYMENTS.............................................................................38
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES..................................40
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK...................................40
SECTION 4.10. ASSET SALES.....................................................................................42
SECTION 4.11. TRANSACTIONS WITH AFFILIATES....................................................................43
SECTION 4.12. LIENS...........................................................................................44
SECTION 4.13. LINE OF BUSINESS................................................................................44
SECTION 4.14. CORPORATE EXISTENCE.............................................................................44
</TABLE>
i
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<TABLE>
<S> <C> <C>
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL......................................................44
SECTION 4.16. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS...................................................46
SECTION 4.17. LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS IN WHOLLY OWNED SUBSIDIARIES..............46
SECTION 4.18. LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY SUBSIDIARIES...........................46
SECTION 4.19. LIMITATION ON STATUS AS INVESTMENT COMPANY......................................................47
SECTION 4.20. PAYMENTS FOR CONSENT............................................................................47
SECTION 4.21. SUBSIDIARY GUARANTEES..........................................................................47
SECTION 4.22. ESCROW AGREEMENT DEPOSIT........................................................................47
ARTICLE 5. SUCCESSORS............................................................................................47
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS........................................................47
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED...............................................................48
ARTICLE 6. DEFAULTS AND REMEDIES.................................................................................48
SECTION 6.01. EVENTS OF DEFAULT...............................................................................48
SECTION 6.02. ACCELERATION....................................................................................50
SECTION 6.03. OTHER REMEDIES..................................................................................51
SECTION 6.04. WAIVER OF PAST DEFAULTS.........................................................................51
SECTION 6.05. CONTROL BY MAJORITY.............................................................................51
SECTION 6.06. LIMITATION ON SUITS.............................................................................51
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT...................................................52
SECTION 6.08. COLLECTION SUIT BY TRUSTEE......................................................................52
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM................................................................52
SECTION 6.10. PRIORITIES......................................................................................53
SECTION 6.11. UNDERTAKING FOR COSTS...........................................................................53
ARTICLE 7. TRUSTEE...............................................................................................53
SECTION 7.01. DUTIES OF TRUSTEE...............................................................................53
SECTION 7.02. RIGHTS OF TRUSTEE...............................................................................54
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE....................................................................55
SECTION 7.04. TRUSTEE'S DISCLAIMER............................................................................55
SECTION 7.05. NOTICE OF DEFAULTS..............................................................................55
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES......................................................55
SECTION 7.07. COMPENSATION AND INDEMNITY......................................................................56
SECTION 7.08. REPLACEMENT OF TRUSTEE..........................................................................57
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC................................................................58
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION...................................................................58
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY...............................................58
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE..............................................................58
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE........................................58
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE..................................................................58
SECTION 8.03. COVENANT DEFEASANCE.............................................................................59
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE......................................................59
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS..................................................................60
SECTION 8.06. REPAYMENT TO COMPANY............................................................................61
SECTION 8.07. REINSTATEMENT...................................................................................61
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER......................................................................62
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.............................................................62
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES................................................................62
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.............................................................64
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS...............................................................64
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES................................................................64
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.................................................................64
ARTICLE 10. COLLATERAL AND SECURITY..............................................................................65
SECTION 10.01. ESCROW AGREEMENT...............................................................................65
SECTION 10.02. RECORDING AND OPINIONS.........................................................................65
SECTION 10.03. RELEASE OF COLLATERAL..........................................................................66
SECTION 10.04. CERTIFICATES OF THE COMPANY....................................................................66
SECTION 10.05. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE ESCROW AGENT UNDER THE ESCROW AGREEMENT............67
SECTION 10.06. AUTHORIZATION OF RECEIPT OF FUNDS BY THE ESCROW AGENT UNDER THE ESCROW AGREEMENT...............67
SECTION 10.07. TERMINATION OF SECURITY INTEREST...............................................................67
ARTICLE 11. MISCELLANEOUS........................................................................................67
SECTION 11.01. TRUST INDENTURE ACT CONTROLS...................................................................67
SECTION 11.02. NOTICES........................................................................................67
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES..................................69
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.............................................69
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION..................................................69
SECTION 11.06. RULES BY TRUSTEE AND AGENTS....................................................................69
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS.......................70
SECTION 11.08. GOVERNING LAW..................................................................................70
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS..................................................70
SECTION 11.10. SUCCESSORS.....................................................................................70
SECTION 11.11. SEVERABILITY...................................................................................70
SECTION 11.12. INTERPRETATION OF SECURITY INTERESTS...........................................................70
SECTION 11.13. COUNTERPART ORIGINALS..........................................................................70
SECTION 11.14. TABLE OF CONTENTS, HEADINGS, ETC...............................................................71
</TABLE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF NOTATION OF SUBSIDIARY GUARANTEE ON NOTE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
Exhibit G FORM OF ESCROW AGREEMENT
iii
<PAGE> 6
INDENTURE dated as of May 27, 1998 between Park `N View, Inc.,
a Delaware corporation (the "Company"), and State Street Bank and Trust Company,
as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the 13%
Series A Senior Notes due 2008 (the "Series A Notes") and the 13% Series B
Senior Notes due 2008 (the "Series B Notes" and, together with the Series A
Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global note in the form of Exhibit
A hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 5% or more of the Voting Stock of a Person
shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary that apply to such transfer or exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory or services in the ordinary
course of business consistent with past practices (provided that the sale,
conveyance or other disposition of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole shall be governed by Section 4.15
and/or Section 5.01 and not by Section 4.10 hereof), and (ii) the issue or sale
by the Company or any of its Subsidiaries of Equity Interests of
<PAGE> 7
any of the Company's Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a Fair Market Value in excess of $1.0 million or (b) for net proceeds in
excess of $1.0 million. Notwithstanding the foregoing, the following items shall
not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a
Wholly Owned Subsidiary or by a Wholly Owned Subsidiary to the Company or to
another Wholly Owned Subsidiary, (ii) an issuance of Equity Interests by a
Wholly Owned Subsidiary to the Company or to another Wholly Owned Subsidiary,
(iii) Permitted Revenue Sharing Agreements and (iv) a Restricted Payment that is
permitted by Section 4.07 hereof.
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the
Company, or any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and demand deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500 million
and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing within
six months after the date of acquisition and (vi) money market funds at least
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<PAGE> 8
95% of the assets of which constitute Cash Equivalents of the kinds described in
clauses (i) - (v) of this definition.
"Change of Control" means the occurrence of any of the
following: (i) the sale, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the assets of the Company and its Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act); (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company; (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), other than the Principals and their
Related Parties, becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person," such "person" shall be deemed
to have beneficial ownership of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
40% of the Voting Stock of the Company (measured by voting power rather than
number of shares); or (iv) the first day on which a majority of the members of
the Board of Directors of the Company are not Continuing Directors.
"Closing Date" means the closing date for the sale and
original issuance of the Notes under this Indenture.
"Common Stock" means, with respect to any Person, any and all
shares, interests or other participations in, and other equivalents (however
designated and whether voting or non-voting) of such Person's common shares.
"Company" means Park `N View, Inc., a Delaware corporation,
and any and all successors thereto.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period plus (i)
an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale, to the extent such losses were deducted in
computing such Consolidated Net Income, plus (ii) provision for taxes based on
income or profits of such Person and its Subsidiaries for such period, to the
extent that such provision for taxes was deducted in computing such Consolidated
Net Income, plus (iii) consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (v) non-cash items
3
<PAGE> 9
increasing such Consolidated Net Income for such period (other than items that
were accrued in the ordinary course of business), in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash expenses of, a Subsidiary of
the Company shall be added to Consolidated Net Income to compute Consolidated
Cash Flow of the Company only to the extent that a corresponding amount would be
permitted at the date of determination to be dividended to the Company by such
Subsidiary without prior governmental approval (that has not been obtained), and
without direct or indirect restriction pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Indebtedness" means, with respect to any Person
as of any date of determination, the aggregate amount of Indebtedness and the
liquidation preference of the Disqualified Stock of such Person and its
Subsidiaries outstanding as of such date of determination, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or a Wholly Owned Subsidiary thereof, (ii)
the Net Income of any Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that Net Income is not at the date of determination permitted without any
prior governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded and (iv) the cumulative effect of
a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as
of any date, the sum of (i) the consolidated equity of the common stockholders
of such Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this
4
<PAGE> 10
Indenture or (ii) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 11.02 hereof or such other address
as to which the Trustee may give notice to the Company.
"Credit Facility" means one or more credit agreements, loan
agreements or similar agreements providing for working capital advances, term
loans, letter of credit facilities or similar advances, loans or facilities to
the Company, which may, pursuant to the terms of this Indenture, be guaranteed
by the Subsidiaries, with a bank or syndicate of banks or other financial
institutions, as such may be amended, renewed, extended, supplemented,
refinanced and replaced or refunded from time to time.
"Custodian" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.
"Debt to Cash Flow Ratio" means, as of any date of
determination, the ratio of (a) the Consolidated Indebtedness of the Company as
of such date to (b) two times the Consolidated Cash Flow of the Company for the
two most recent full fiscal quarters ending immediately prior to such date for
which internal financial statements are available, determined on a pro forma
basis after giving effect to all acquisitions or dispositions of assets made by
the Company and its Subsidiaries from the beginning of such two-quarter period
on an annualized basis through and including such date of determination
(including any related financing transactions) as if such acquisitions and
dispositions had occurred at the beginning of such two-quarter period. In
addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the two-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the two-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded.
"Default" means any event that is, or with the passage of time
or the giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.06 hereof, in
the form of Exhibit A hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
5
<PAGE> 11
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible, or for
which it is exchangeable, in each case at the option of the holder thereof), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
Holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the Notes mature; provided, however, that any Capital
Stock that would constitute Disqualified Stock solely because the holders
thereof have the right to require the Company to repurchase such Capital Stock
upon the occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.07 hereof.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Escrow Agent" means State Street Bank and Trust Company and
any successor thereto in accordance with the terms of the Escrow Agreement.
"Escrow Agreement" means the Pledge, Escrow and Disbursement
Agreement dated as of the date of this Indenture and substantially in the form
attached as Exhibit G hereto, as such agreement may be amended, modified or
supplemented from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set
forth in the Registration Rights Agreement.
"Exercise Date" means at any time on or after the Separation
Date and prior to May 15, 2008.
"Existing Indebtedness" means up to $400,000 in aggregate
principal amount of Indebtedness of the Company and its Subsidiaries in
existence on the date of this Indenture, until such amounts are repaid.
"Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's length transaction
between an informed and willing seller under no compulsion to sell and informed
and willing buyer under no compulsion to buy; provided that in each case in
which the Fair Market Value of an item is determined to be greater than
$500,000, such determination shall be evidenced by a resolution of a majority of
the disinterested members of the Board of Directors; and provided, further, that
in each case in which the Fair Market Value of an item is determined to be
greater than $5.0 million, such determination shall be evidenced by the written
opinion of nationally recognized appraisal, accounting or investment banking
firm.
6
<PAGE> 12
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"Global Notes" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Guarantor" means a Subsidiary that executes and delivers a
Guarantee of the Notes.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all Indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
Indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness issued with original
issue discount, and (ii) the principal amount thereof, together with any
interest thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
7
<PAGE> 13
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Initial Purchaser" means Donaldson, Lufkin & Jenrette
Securities Corporation and any successor thereto.
"Initial Public Equity Offering" means an underwritten public
offering of Common Stock of the Company pursuant to an effective registration
statement filed under the Securities Act that results in $25.0 million or more
of gross cash proceeds to the Company.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding (i) commission,
travel and similar advances to officers and employees (ii) accounts receivable
arising in respect of services rendered to unaffiliated third parties, in each
case, made in the ordinary course of business), purchases or other acquisitions
for consideration of Indebtedness, Equity Interests or other securities,
together with all items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP. If the Company or any Subsidiary
of the Company sells or otherwise disposes of any Equity Interests of any direct
or indirect Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a Subsidiary of the Company, the
Company shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the Fair Market Value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of Section 4.07 hereof.
"Issue Date" means the closing date for the sale and original
issuance of the Notes under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or in the city in which the
principal corporate trust office of the Trustee is located or at a place of
payment are authorized by law, regulation or executive order to remain closed.
If a payment date is a Legal Holiday at a place of payment, payment may be made
at that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
8
<PAGE> 14
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Subsidiaries
or the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (ii) any extraordinary gain (but not loss), together with any
related provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness under a Credit Facility) secured by a Lien on the asset
or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Offering Memorandum" means that certain final Offering
Memorandum, dated May 20, 1998 with respect to the Company's offering of the
Notes.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Sections 11.04 and 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Sections
11.04 and 11.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company or the Trustee.
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<PAGE> 15
"Participant" means a Person who has an account with the
Depositary.
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Permitted Business" means the provision of: (a) the following
services or products (i) voice, enhanced data, data, internet, video, wire or
wireless and other telecommunications related services, (ii) local, dedicated
access, closed circuit, or satellite delivered network, cable or wired or
wireless television or similar or related television services or (iii) other
services including, but not limited to, (A) load matching, home shopping and
games; (B) payment processing, transmissions and card processing transmissions,
(C) facsimile transmissions and load matching, (D) advertising to: (b) the
following customer base: fleet trucking companies, truckstops, individual truck
drivers, others in or related to the long-haul trucking industry, and others
interested in purchasing the products and services described in the Offering
Memorandum, and all products and services ancillary, similar or related thereto.
"Permitted Investments" means (a) any Investment in the
Company or in a Wholly Owned Subsidiary of the Company; (b) any Investment in
Cash Equivalents; (c) any Investment by the Company or any Subsidiary of the
Company in a Person, if as a result of such Investment (i) such Person becomes a
Wholly Owned Subsidiary of the Company or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Wholly Owned
Subsidiary of the Company; (d) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof; and (e) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock) of
the Company.
"Permitted Joint Venture" means any Person engaged in a
Telecommunications or Entertainment Business.
"Permitted Liens" means (i) Liens securing Indebtedness and
other Obligations under a Credit Facility that were permitted by the terms of
this Indenture to be incurred; (ii) Liens in favor of the Company or any of its
Subsidiaries; (iii) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company or any Subsidiary
of the Company; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Company;
(iv) Liens on property existing at the time of acquisition thereof by the
Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of the second paragraph of Section 4.09
provided that such Liens only cover the assets permitted to be acquired by such
Indebtedness; (vii) Liens to secure Permitted Refinancing Indebtedness, provided
that such Liens only cover the same assets that were covered under the
Indebtedness being refinanced; (viii) Liens existing on the date of this
Indenture; (ix) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; and (x) Liens incurred in
the ordinary
10
<PAGE> 16
course of business of the Company or any Subsidiary of the Company with respect
to obligations that do not exceed $5.0 million at any one time outstanding and
that (a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary course
of business) and (b) do not in the aggregate materially detract from the value
of the property or materially impair the use thereof in the operation of
business by the Company or such Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Subsidiaries (other than
intercompany Indebtedness); provided that: (i) the principal amount (or accreted
value, if applicable) of such Permitted Refinancing Indebtedness does not exceed
the principal amount of (or accreted value, if applicable), plus accrued
interest on, the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Permitted Revenue Sharing Agreements" means (i) all
agreements that the Company has entered into as of the date of this Indenture
with truckstop locations and/or truckstop chains to provide the PNV Network and
(ii) any agreements or arrangements that the Company enters into after the date
of this Indenture to provide services through the PNV Network which are entered
into in the ordinary course of business consistent with past practice or are
approved by the Board of Directors; provided that if such agreements or
arrangements provide for more than 50% of the gross income or net revenues,
gross profits, operating cash flow, operating income, earnings before interest,
taxes, depreciation and amortization ("EBITDA") or similar measure of financial
performance to be paid to any entity other than the Company or its Subsidiaries,
the Board of Directors shall be required to approve such contract.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Pledged Collateral" means any assets of the Company defined
as Collateral in the Escrow Agreement.
"PNV Network" means the Company's integrated
telecommunications and entertainment network currently capable of providing
voice, data and cable television services to long-haul truck drivers in the
convenience and privacy of their trucks while parked at truckstops.
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<PAGE> 17
"Principals" means Patricof & Co. Ventures, Inc. and its
affiliated entities, State of Michigan Retirement System, Henry L. Hillman,
Elsie Hilliard Hillman and C. G. Grefenstette and their affiliated entities, Sam
Hashman, MPN Holdings, Inc. and Ian Williams.
"Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of May 27, 1998, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Related Party" with respect to any Principal means (A) any
controlling stockholder, 70% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding a 70% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
"Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing
the Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the
Private Placement Legend.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Rule 144" means Rule 144 promulgated under the Securities
Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"Sale and Leaseback Transaction" means, with respect to any
Person, any direct or indirect arrangement pursuant to which Property is sold or
transferred by such Person or a Subsidiary of such Person and is thereafter
leased back from the purchaser or transferee thereof by such Person or one of
its Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Separation Date" means the earliest of (i) 180 days following
the Closing Date, (ii) the date on which the Exchange Offer Registration
Statement is declared effective under the Securities Act,
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<PAGE> 18
(iii) the date on which the Shelf Registration Statement is declared effective
under the Securities Act, (iv) such date as the Initial Purchaser shall
determine and (v) in the event a Change of Control occurs, the date the Company
mails the required notice thereof to the Note holders.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" shall mean the joint and several
Guarantee by the Subsidiaries of the Company's obligations under the Notes, in
substantially the form of such Subsidiary Guarantee attached as Exhibit E to
this Indenture.
"Telecommunications or Entertainment Business" means the
provision of: (i) voice, enhanced data, data, internet, wireless and other
telecommunications related services, (ii) local, dedicated access, closed
circuit or satellite delivered network, cable or wireless television or similar
or related television services or (iii) other services including but not limited
to (A) load matching, home shopping and games for the drivers, (B) payment
processing transmissions and card processing transmissions and load matching for
fleets or (C) advertising for fleets, local and/or regional businesses.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note in
the form of Exhibit A attached hereto that bears the Global Note Legend and that
has the "Schedule of Exchanges of Interests
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<PAGE> 19
in the Global Note" attached thereto, and that is deposited with or on behalf of
and registered in the name of the Depositary, representing a series of Notes
that do not bear the Private Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive
Notes that do not bear and are not required to bear the Private Placement
Legend.
"U.S. Government Obligations" means (x) securities that are
(i) direct obligations of the United States of America for the payment of which
the full faith and credit of the United States of America is pledged or (ii)
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which in either case, are not callable or redeemable at the
option of the issuer thereof, and (y) depository receipts issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any U.S. Government Obligation which is specified in clause (x) above and held
by such bank for the account of the holder of such depository receipt, or with
respect to any specific payment of principal or interest on any U.S. Government
Obligation which is so specified and held, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal or interest of the U.S. Government Obligation evidenced by such
depository receipt.
"Voting Stock" means, with respect to any Person, securities
of any class or classes of Capital Stock in such Person entitling the holders
thereof (whether at all times or at the times that such class of Capital Stock
has voting power by reason of the happening of any contingency) to vote in the
election of members of the Board of Directors or comparable body of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
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<PAGE> 20
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction"................................................... 4.11
"Asset Sale Offer"........................................................ 3.09
"Authentication Order".................................................... 2.02
"Change of Control Offer"................................................. 4.15
"Change of Control Payment"............................................... 4.15
"Change of Control Payment Date" ......................................... 4.15
"Covenant Defeasance"..................................................... 8.03
"DTC"..................................................................... 2.03
"Event of Default"........................................................ 6.01
"Excess Proceeds"......................................................... 4.10
"Guaranteed Debt"......................................................... 4.18
"incur"................................................................... 4.09
"Investment Company Act".................................................. 4.19
"Legal Defeasance" ....................................................... 8.02
"Offer Amount"............................................................ 3.09
"Offer Period"............................................................ 3.09
"Paying Agent"............................................................ 2.03
"Payment Default"......................................................... 6.01
"Permitted Debt".......................................................... 4.09
"Purchase Date"........................................................... 3.09
"Registrar"............................................................... 2.03
"Restricted Payments"..................................................... 4.07
"Unit Legend"............................................................. 2.06
</TABLE>
SECTION 1.03.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Notes and the Subsidiary Guarantees, if any,
means the Company and the Guarantors, if any, respectively, and any successor
obligor upon the Notes and the Subsidiary Guarantees, if any, respectively.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
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<PAGE> 21
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act or the TIA shall be deemed to include substitute,
replacement of successor sections or rules adopted by the SEC from time
to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes. Notes issued in global form shall be substantially
in the form of Exhibit A attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
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<PAGE> 22
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by two Officers (an "Authentication Order"), authenticate Notes for original
issue up to the aggregate principal amount stated in paragraph 4 of the Notes.
The aggregate principal amount of Notes outstanding at any time may not exceed
such amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the
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<PAGE> 23
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be exchanged by the
Company for Definitive Notes if (i) the Company delivers to the Trustee notice
from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set
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<PAGE> 24
forth in the Private Placement Legend. Beneficial interests in any
Unrestricted Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note. No written orders or instructions shall be required to be delivered
to the Registrar to effect the transfers described in this Section
2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above. Upon consummation of an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in
the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Indenture and the Notes or otherwise applicable
under the Securities Act, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives from the transferor a certificate in the form of Exhibit
B hereto, including the certifications in item (1) thereof, if the
transferee will take delivery in the form of a beneficial interest in the
144A Global Note.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the
Company;
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<PAGE> 25
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a beneficial interest in an Unrestricted Global Note, a certificate
from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to
a Person who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note, a certificate from such holder
in the form of Exhibit B hereto, including the certifications in item
(3) thereof;
and, in each such case set forth in this subparagraph (D), if the
Company or the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
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<PAGE> 26
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(D) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than
those listed in subparagraphs (B) or (C) above, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by
item (2) thereof, if applicable;
(E) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(F) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (2)(c) thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount; provided, that,
the Company or the Registrar shall be entitled to request an Opinion of
Counsel with respect to transfers pursuant to any of the preceding
paragraphs (A) through (F). Any Definitive Note issued in exchange for
a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note pursuant
to this Section 2.06(c)(i) shall bear the Private Placement Legend and
shall be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the case
of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not
(1) a broker-dealer, (2) a
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Person participating in the distribution of the Exchange Notes or
(3) a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Definitive Note that does not bear the Private Placement Legend,
a certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to
a Person who shall take delivery thereof in the form of a Definitive
Note that does not bear the Private Placement Legend, a certificate
from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar or the Company so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Definitive Note, then, upon satisfaction of the
conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall
execute and the Trustee shall authenticate and deliver to the Person
designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall be registered in such
name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the Persons
in whose names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.06(c)(iii)
shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests in Global Notes.
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(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or
to transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes
to exchange such Note for a beneficial interest in a Restricted
Global Note, a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to
a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(D) if such Restricted Definitive Note is being transferred to
an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) or (C) above, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable;
(E) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (3)(b) thereof; or
(F) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, in the case
of clause (B) above, the 144A Global Note; provided, that, the Company
or the Registrar shall be entitled to request an Opinion of Counsel
with respect to transfers pursuant to any of the preceding paragraphs
(A) through (F).
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an
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<PAGE> 29
exchange, or the transferee, in the case of a transfer, certifies
in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as defined
in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Company or the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Unrestricted Definitive Note and
increase or cause to be increased the aggregate principal amount of one of
the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
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(e) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in
item (1) thereof; and
(B) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (2) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or
(3) a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (1)(d) thereof; or
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<PAGE> 31
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
Holder of Unrestricted Definitive Notes may transfer such Notes to a Person
who takes delivery thereof in the form of an Unrestricted Definitive Note.
Upon receipt of a request to register such a transfer, the Registrar shall
register the Unrestricted Definitive Notes pursuant to the instructions
from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE
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<PAGE> 32
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144 UNDER THE SECURITIES ACT OR (c) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR
TO SUCH TRANSFER, FURNISHES THE TRUSTEE OR THE WARRANT AGENT, AS
APPLICABLE, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE OR THE
WARRANT AGENT, AS APPLICABLE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION
OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH SECURITIES ACT OR (d)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND, IN THE CASE OF CLAUSE (b), (c) or (d) BASED
UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this
Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF
THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT
IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL
NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
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(iii) Unit Legend. Each Note issued prior to the Separation Date shall
bear the following legend (the "Unit Legend") on the face thereof:
"THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART
OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSIST OF $1,000 PRINCIPAL
AMOUNT OF THE NOTES AND ONE (1) WARRANT (THE "WARRANTS") INITIALLY
ENTITLING THE HOLDER THEREOF TO PURCHASE 6.73833 SHARES, PAR VALUE
$.001 PER SHARE, OF THE COMPANY. PRIOR TO THE CLOSE OF BUSINESS UPON
THE EARLIEST TO OCCUR OF (I) 180 DAYS FOLLOWING THE CLOSING DATE, (II)
THE DATE ON WHICH THE EXCHANGE OFFER REGISTRATION STATEMENT IS DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (III) THE DATE ON WHICH THE SHELF
REGISTRATION STATEMENT IS DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(IV) SUCH DATE AS THE INITIAL PURCHASER SHALL DETERMINE AND (V) IN THE
EVENT A CHANGE OF CONTROL OCCURS, THE DATE THE COMPANY MAILS THE
REQUIRED NOTICE THEREOF TO THE NOTE HOLDERS, THE NOTES EVIDENCED BY
THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM,
BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE WARRANTS."
(iv) Original Issue Discount Legend. Each Note shall bear a legend in
substantially the following form:
"FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER,
THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH
$1,000 PRINCIPAL AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS $938;
(2) THE AMOUNT OF THE ORIGINAL ISSUE DISCOUNT IS $62; (3) THE ISSUE
DATE IS MAY 27, 1998; AND (4) THE YIELD TO MATURITY (COMPOUNDED
SEMI-ANNUALLY) IS 14.1778%."
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
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<PAGE> 34
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (c) to register the transfer
of or to exchange a Note between a record date and the next succeeding
Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the Trustee's requirements are met. If required by the Trustee or the
Company, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Company to protect the
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<PAGE> 35
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section
2.09 hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive or certificated Notes but may have
variations that the Company considers appropriate for temporary Notes and as
shall be reasonably acceptable to the Trustee. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
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SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed or purchased
in an offer to purchase at any time, the Trustee shall select the Notes to be
redeemed or purchased among the Holders of the Notes in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or in accordance with any other method the Trustee considers fair and
appropriate, provided that no Notes of $1,000 or less shall be redeemed in part.
In the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to
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<PAGE> 37
be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000
or whole multiples of $1,000; except that if all of the Notes of a Holder are to
be redeemed, the entire outstanding amount of Notes held by such Holder, even if
not a multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
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<PAGE> 38
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the Notes
will not be redeemable at the Company's option prior to May 15, 2003.
Thereafter, the Notes will be subject to redemption at any time at the option of
the Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on May 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003................................................................. 106.500%
2004................................................................. 104.333%
2005................................................................. 102.167%
2006 and thereafter.................................................. 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section
3.07, any time after the Issue Date and prior to May 15, 2001, the Company, at
its option, may redeem up to 35% of the then outstanding Notes with the net
proceeds of an Initial Public Equity Offering of the Company at a redemption
price of 113.0% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon, to the date of redemption;
provided that at least 65% in aggregate principal amount of Notes originally
issued remain outstanding immediately after the occurrence of such redemption
(excluding Notes held by the Company, its subsidiaries and its Affiliates); and
provided,
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<PAGE> 39
further, that such redemption shall occur within 60 days of the date of the
closing of such Initial Public Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08 MANDATORY REDEMPTION.
Except as set forth in Sections 4.10 and 4.15 hereof, the
Company shall not be required to make mandatory redemption payments or sinking
fund payments with respect to the Notes.
SECTION 3.09 OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an offer to all Holders to purchase Notes
(an "Asset Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Purchase Date;
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<PAGE> 40
(e) that Holders electing to have a Note purchased pursuant to
an Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if
the Company, the depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered
by Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
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<PAGE> 41
ARTICLE 4.
COVENANTS
SECTION 4.01 PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.
SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the corporate trust office
located at 61 Broadway, 15th Floor, New York New York 10006 of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.
SECTION 4.03 REPORTS.
(a) Whether or not required by the rules and regulations of the
SEC, so long as any Notes are outstanding, the Company shall furnish to the
Holders of Notes (i) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company were required to file such Forms, including a "Management's
Discussion and Analysis
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<PAGE> 42
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports, in each
case within the time periods specified in the SEC's rules and regulations. In
addition, following the consummation of the Exchange Offer, whether or not
required by the rules and regulations of the SEC, the Company shall file a copy
of all such information and reports with the SEC for public availability within
the time periods specified in the SEC's rules and regulations (unless the SEC
will not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. The Company shall at all times
comply with TIA ss. 314(a).
(b) For so long as any Notes remain outstanding, the Company and
the Guarantors, if any, shall furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.04 COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and the Escrow Agreement, and further stating,
as to each such Officer signing such certificate, that to the best of his or her
knowledge the Company has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and the Escrow Agreement and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture or the Escrow Agreement (or, if a Default or Event
of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
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<PAGE> 43
SECTION 4.05 TAXES.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
SECTION 4.06 STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.07 RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Subsidiaries' Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Company or any of its
Subsidiaries) or to the direct or indirect holders of the Company's or any of
its Subsidiaries' Equity Interests in their capacity as such (other than
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of the Company or to the Company or a Subsidiary of the Company); (ii)
purchase, redeem or otherwise acquire or retire for value (including, without
limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company or any direct or indirect parent of
the Company or other Affiliate of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned Subsidiary of the Company);
(iii) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated to
the Notes (other than Notes), except a payment of interest or principal at
Stated Maturity and reasonable fees and expenses incurred in connection
therewith; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the two most recent fiscal quarters ending immediately
prior to the date of such Restricted Payment for which financial statements are
available, have been permitted to incur at least $1.00 of additional
Indebtedness (other than Permitted Debt) pursuant to the Debt to Cash Flow Ratio
test set forth in the first paragraph of Section 4.09; and
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<PAGE> 44
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Subsidiaries after the
date of this Indenture (excluding Restricted Payments permitted by clauses (ii),
(iii) and (iv) of the next succeeding paragraph), is less than the sum, without
duplication, of (i) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the first fiscal
quarter commencing after the date of this Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus (ii) 100%
of the aggregate net cash proceeds received by the Company since the date of
this Indenture as a contribution to its common equity capital or from the issue
or sale of Equity Interests of the Company (other than Disqualified Stock) or
from the issue or sale of Disqualified Stock or debt securities of the Company
that have been converted into such Equity Interests (other than Equity Interests
(or Disqualified Stock or convertible debt securities) sold to a Subsidiary of
the Company), plus (iii) to the extent that any Restricted Investment that was
made after the date of this Indenture is sold for cash or otherwise liquidated
or repaid for cash, the lesser of (A) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment.
So long as no Default has occurred and is continuing or would
be caused thereby, the foregoing provisions shall not prohibit (i) the payment
of any dividend within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity Interests
of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c) (ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of pari passu or
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a
Subsidiary of the Company to the holders of its common Equity Interests on a pro
rata basis; (v) Investments by the Company or any of its Subsidiaries in any
Permitted Joint Venture; provided that the aggregate Fair Market Value of all
such Investments does not exceed $5.0 million at any one time outstanding (with
the Fair Market Value of each Investment being measured at the time made and
without giving effect to subsequent changes in value); (vi) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Company or any Subsidiary of the Company held by any employee or any
member of the Company's (or any of its Subsidiaries') management pursuant to any
management or employee equity subscription or purchase agreement or stock option
agreement in effect as of the date of this Indenture; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $500,000 in any twelve-month period; and (vii)
additional Investments having an aggregate Fair Market Value, taken together
with all other Investments made pursuant to this clause (vii) that are at the
time outstanding, not exceeding $2.0 million (with the Fair Market Value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value).
Except to the extent specifically provided to the contrary
herein, the amount of all Restricted Payments (other than cash) shall be the
Fair Market Value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair
Market Value of any assets
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<PAGE> 45
or securities that are required to be valued by this Section 4.07 shall be based
upon: (i) an Officer's Certificate delivered to the Trustee if such Fair Market
Value is less than or equal to $500,000; (ii) the resolution of a majority of
the disinterested members of the Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee, if such Fair Market Value is
greater than $500,000 but less than $5.0 million; and (iii) an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing, if such Fair Market Value is equal to or exceeds $5.0
million. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, together with any
other documents required by this Indenture.
SECTION 4.08 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary to (i)(a) pay dividends or make any other distributions to the
Company or any of its Subsidiaries (1) on its Capital Stock or (2) with respect
to any other interest or participation in, or measured by, its profits, or (b)
pay any indebtedness owed to the Company or any of its Subsidiaries, (ii) make
loans or advances to the Company or any of its Subsidiaries or (iii) transfer
any of its properties or assets to the Company or any of its Subsidiaries.
However, the foregoing restrictions shall not apply to encumbrances or
restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of this Indenture, (b) this Indenture and the Notes, (c)
applicable law, (d) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Subsidiaries as in effect at the
time of such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (e) customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices, (f) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in clause (iii) above on the property so acquired, (g) any
agreement for the sale or other disposition of a Subsidiary that restricts
distributions by that Subsidiary pending its sale or other disposition, (h)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced, (i) Liens securing Indebtedness otherwise
permitted to be incurred pursuant to Section 4.12 that limit the right of the
Company or any of its Subsidiaries to dispose of the assets subject to such
Lien, (j) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements and other similar agreements entered
into in the ordinary course of business and (k) restrictions on cash or other
deposits or net worth imposed by customers under contracts entered into in the
ordinary course of business.
SECTION 4.09 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Company shall not issue any Disqualified Stock and shall not
permit any of its
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<PAGE> 46
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock if the Company's Debt to Cash Flow Ratio at the time of
incurrence of such Indebtedness or the issuance of such Disqualified Stock,
after giving pro forma effect to such incurrence or issuance as of such date and
to the use of proceeds therefrom as if the same had occurred at the beginning of
the most recently ended two full fiscal quarter period of the Company for which
internal financial statements are available, would have been no greater than 5
to 1.
The provisions of the first paragraph of this Section 4.09 will
not apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt") so long as no Default shall have occurred and
be continuing or would be caused thereby:
(i) the incurrence by the Company of no more than $10.0 million in
connection with a Credit Facility at any one time outstanding; provided
that the amount of Indebtedness permitted to be incurred pursuant to this
clause (i) shall be reduced by the amount of all Net Proceeds of Asset
Sales applied to repay Indebtedness under a Credit Facility pursuant to
Section 4.10;
(ii) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by the
Notes and the Exchange Notes;
(iv) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money or similar obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
Permitted Business, in an aggregate principal amount not to exceed $10.0
million at any time outstanding;
(v) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new
Subsidiary; provided that such Indebtedness was incurred by the prior
owner of such assets or such Subsidiary prior to such acquisition by the
Company or one of its Subsidiaries and was not incurred in connection
with, or in contemplation of, such acquisition by the Company or one of
its Subsidiaries; and provided further that the principal amount (or
accreted value, as applicable) of such Indebtedness, together with any
other outstanding Indebtedness incurred pursuant to this clause (v) and
any Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any Indebtedness incurred pursuant to this clause (v), does not
exceed $5.0 million;
(vi) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by this Indenture to be
incurred under the first paragraph hereof or clauses (i), (ii), (v) or (x)
of this paragraph;
(vii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Wholly Owned Subsidiaries; provided, however, that (i) if the Company is
the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes and (ii)(A) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being held
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by a Person other than the Company or a Subsidiary thereof and (B) any
sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Wholly Owned Subsidiary thereof shall be deemed,
in each case, to constitute an incurrence of such Indebtedness by the
Company or such Subsidiary, as the case may be, that was not permitted by
this clause (vii);
(viii) the incurrence by the Company or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be outstanding;
(ix) the guarantee by the Company or any of its Subsidiaries of
Indebtedness of the Company or a Subsidiary of the Company that was
permitted to be incurred by another provision of this Section 4.09; and
(x) the incurrence by the Company or any of its Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (x), not to exceed $5.0
million.
The Company shall not incur any Indebtedness (including Permitted
Debt) that is contractually subordinated in right of payment to any other
Indebtedness of the Company unless such Indebtedness is also contractually
subordinated in right of payment to the Notes on substantially identical terms;
provided, however, that no Indebtedness of the Company shall be deemed to be
contractually subordinated in right of payment to any other Indebtedness of the
Company solely by virtue of being unsecured.
For purposes of determining compliance with this Section 4.09, in
the event that an item of proposed Indebtedness meets the criteria of more than
one of the categories of Permitted Debt described in clauses (i) through (x)
above as of the date of incurrence thereof, or is entitled to be incurred
pursuant to the first paragraph of this Section 4.09 as of the date of
incurrence thereof, the Company shall, in its sole discretion, classify such
item of Indebtedness on the date of its incurrence in any manner that complies
with this Section 4.09 and may treat revolving credit Indebtedness incurred in
accordance with the first paragraph of this Section 4.09, as being incurred in
its entire committed (whether or not at the time drawn) amount at the date on
which the initial borrowing thereunder is made. Accrual of interest, accretion
or amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Stock in the form of additional shares of
the same class of Disqualified Stock shall not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this Section
4.09.
SECTION 4.10 ASSET SALES.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Subsidiary, as the case may be) receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value (as determined in accordance with
Section 4.10(c) hereof) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 85% of the consideration therefor
received by the Company or such Subsidiary is in the form of cash; provided that
the amount of (x) any liabilities (as shown on the Company's or such
Subsidiary's
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most recent balance sheet), of the Company or any Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any guarantee thereof) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Company
or such Subsidiary from further liability and (y) any securities, notes or other
obligations received by the Company or any such Subsidiary from such transferee
that are contemporaneously (subject to ordinary settlement periods) converted by
the Company or such Subsidiary into cash (to the extent of the cash received),
shall be deemed to be cash for purposes of this provision.
(b) Within 180 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply such Net Proceeds to (a) to repay Indebtedness
under a Credit Facility, (b) acquire all or substantially all of (1) the assets
of, or a majority of the Voting Stock of, a Person engaged in a
Telecommunications or Entertainment Business or (2) the assets of a line of
business of a Person engaged in the Telecommunications or Entertainment
Business; provided that such assets relate to the Telecommunications or
Entertainment Business; or (c) to make a capital expenditure or otherwise
acquire other long-term assets that are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company
shall be required to make an Asset Sale Offer to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, in accordance with the procedures set forth in Section 3.09 hereof.
To the extent that any Excess Proceeds remain after consummation of an Asset
Sale Offer, the Company may use such Excess Proceeds for any purpose not
otherwise prohibited by this Indenture. If the aggregate principal amount of
Notes tendered into such Asset Sale Offer surrendered by Holders thereof exceeds
the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Upon completion of such Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.
(c) The determination of the Fair Market Value of any Asset Sale
shall be based upon: (i) an Officer's Certificate delivered to the Trustee if
such Fair Market Value is less than or equal to $500,000; (ii) the resolution of
a majority of the disinterested members of the Board of Directors whose
resolution with respect thereto shall be delivered to the Trustee, if such Fair
Market Value is greater than $500,000 but less than $5.0 million; and (iii) an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing, if such Fair Market Value is equal to or exceeds $5.0
million. Not later than the date of making any Asset Sale, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Asset Sale is
permitted and setting forth the basis upon which the calculations required by
this Section 4.10 were computed, together with any other documents required by
this Indenture.
SECTION 4.11 TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Subsidiaries to make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing,
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an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant Subsidiary than those
that would have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement entered into by the
Company or any of its Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Subsidiary, (ii)
transactions between or among the Company and/or its Subsidiaries, (iii) payment
of reasonable directors fees to Persons who are not otherwise Affiliates of the
Company, (iv) any sale or other issuance of Equity Interests (other than
Disqualified Stock) of the Company, and (v) Restricted Payments that are
permitted by Section 4.07.
SECTION 4.12 LIENS.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind on any asset now owned or hereafter acquired, except
Permitted Liens.
SECTION 4.13 LINE OF BUSINESS.
The Company shall not, and shall not permit any Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Subsidiaries taken as a whole.
SECTION 4.14 CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.15 OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer (a "Change of Control Offer") to each Holder to repurchase all or
any part (equal to $1,000 or an integral
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multiple thereof) of each Holder's Notes at an offer price in cash equal to 101%
of the aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (the "Change of
Control Payment"). Within ten days following any Change of Control, the Company
shall mail a notice to each Holder describing the transaction or transactions
that constitute the Change of Control and stating: (1) that the Change of
Control Offer is being made pursuant to this Section 4.15 and that all Notes
tendered will be accepted for payment; (2) the purchase price and the purchase
date, which shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"); (3) that any
Note not tendered will continue to accrue interest; (4) that, unless the Company
defaults in the payment of the Change of Control Payment, all Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date; (5) that Holders electing to have any
Notes purchased pursuant to a Change of Control Offer will be required to
surrender the Notes, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third Business Day
preceding the Change of Control Payment Date; (6) that Holders will be entitled
to withdraw their election if the Paying Agent receives, not later than the
close of business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Notes delivered for purchase,
and a statement that such Holder is withdrawing his election to have the Notes
purchased; and (7) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to
the extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(c) The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
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SECTION 4.16 LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any Sale and Leaseback Transaction; provided that
the Company or any of its Subsidiaries may enter into a Sale and Leaseback
Transaction if (i) the Company or such Subsidiary, as applicable, could have (a)
incurred Indebtedness in an amount equal to the Attributable Debt relating to
such sale and leaseback transaction pursuant to either (1) the Debt to Cash Flow
test set forth in the first paragraph of Section 4.09 hereof or (2) clause (iv)
of the second paragraph of Section 4.09 hereof and (b) incurred a Lien to secure
such Indebtedness pursuant to Section 4.12 hereof, (ii) the gross cash proceeds
of such sale and leaseback transaction are at least equal to the Fair Market
Value of the property that is the subject of such sale and leaseback transaction
and (iii) the transfer of assets in such sale and leaseback transaction is
permitted by, and the Company applies the proceeds of such transaction in
compliance with, Section 4.10 hereof.
SECTION 4.17 LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS IN WHOLLY
OWNED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Subsidiary of
the Company to, transfer, convey, sell, lease or otherwise dispose of any Equity
Interests in any Wholly Owned Subsidiary of the Company to any Person (other
than the Company or a Wholly Owned Subsidiary of the Company), unless (a) such
transfer, conveyance, sale, lease or other disposition is of all the Equity
Interests in such Wholly Owned Subsidiary and (b) the cash Net Proceeds from
such transfer, conveyance, sale, lease or other disposition are applied in
accordance with Section 4.10 hereof and (ii) will not permit any Wholly Owned
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Subsidiary of
the Company; provided that the provisions of this Section 4.17 shall not apply
to Investments by the Company in Subsidiaries that are made in accordance with
clause (iv) of the Section 4.07 hereof.
SECTION 4.18 LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY
SUBSIDIARIES.
The Company shall not permit any Subsidiary, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any other
Indebtedness of the Company ("Guaranteed Debt") unless each such Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for the Guarantee of the payment of the Notes by such Subsidiary,
which Guarantee shall be (i) if the Notes or the Guarantee of such Subsidiary is
subordinated in right of payment to the Guaranteed Debt, the Guarantee under the
supplemental indenture shall be subordinated to such Subsidiary's guarantee with
respect to the Guaranteed Debt substantially to the same extent as the Notes or
the Guarantee are subordinated to the Guaranteed Debt under this Indenture; or
(ii) if the Guaranteed Debt is by its express terms subordinated in right of
payment to the Notes or the Guarantee of such Subsidiary, any such guarantee of
such Subsidiary with respect to the Guaranteed Debt shall be subordinated in
right of payment to such Subsidiary's Guarantee with respect to the Notes
substantially to the same extent as the Guaranteed Debt is subordinated to the
Notes or the Guarantee of such Subsidiary. Notwithstanding the foregoing, any
such Guarantee by a Subsidiary of the Notes shall provide by its terms that it
shall be automatically and unconditionally released and discharged upon any
sale, exchange or transfer, to any Person not an Affiliate of the Company, of
all of the Company's stock in, or all or substantially all the assets of, such
Subsidiary, which sale, exchange or transfer is made in compliance
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with the applicable provisions of this Indenture. The form of such Guarantee is
attached as Exhibit E hereto.
SECTION 4.19 LIMITATION ON STATUS AS INVESTMENT COMPANY.
The Company shall not, and shall not permit any of its
Subsidiaries to, conduct its business in a fashion that would cause the Company
to be required to register as an "investment company" (as that term is defined
in the Investment Company Act of 1940, as amended (the "Investment Company
Act")), or otherwise become subject to regulation under the Investment Company
Act. For purposes of establishing the Company's compliance with this provision,
any exemption which is or would become available under Section 3 (c) (1) or
Section 3 (c) (7) of the Investment Company Act will be disregarded.
SECTION 4.20 PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.21 SUBSIDIARY GUARANTEES.
If the Company or any of its Subsidiaries shall acquire or create
another Subsidiary after the date of this Indenture, then such newly acquired or
created Subsidiary shall become a Guarantor by executing a Supplemental
Indenture in the form attached hereto as Exhibit F and deliver an Opinion of
Counsel to the Trustee to the effect that such Supplemental Indenture has been
duly authorized, executed and delivered by such Subsidiary and constitutes a
valid and binding obligation of such Subsidiary, enforceable against such
Subsidiary in accordance with its terms (subject to customary exceptions).
SECTION 4.22 ESCROW AGREEMENT DEPOSIT.
Upon consummation of the initial sale of the Notes offered hereby
on the date hereof, the Company will deposit $19,175,000 of the net proceeds
from the sale of the Notes, in the Escrow Account with the Trustee. The Escrow
Account shall be governed by the terms of the Escrow Agreement attached as
Exhibit G hereto.
ARTICLE 5.
SUCCESSORS
SECTION 5.01 MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether
or not the Company is the surviving corporation), or sell, assign, transfer,
convey or otherwise dispose of all or substantially all of its properties or
assets, in one or more related transactions, to another Person unless (i) the
Company is the surviving corporation or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, conveyance or other
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disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the Person formed by or surviving any such consolidation or merger (if
other than the Company) or the Person to which such sale, assignment, transfer,
conveyance or other disposition shall have been made assumes all the obligations
of the Company under the Registration Rights Agreement, the Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) except in the case of a merger of the Company with or
into a Wholly Owned Subsidiary of the Company, the Company or the Person formed
by or surviving any such consolidation or merger (if other than the Company), or
to which such sale, assignment, transfer, conveyance or other disposition shall
have been made (A) shall have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) shall, immediately after such
transaction after giving pro forma effect thereto and any related financing
transactions as if the same had occurred at the beginning of the applicable
two-quarter period on an annualized basis, be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Debt to Cash Flow test set forth in
the first paragraph of Section 4.09 hereof. This Indenture shall also provide
that the Company may not, directly or indirectly, lease all or substantially all
of its properties or assets, in one or more related transactions, to any other
Person. The provisions of this Section 5.01 shall not be applicable to a sale,
assignment, transfer, conveyance or other disposition of assets between or among
the Company and its Wholly Owned Subsidiaries.
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, conveyance or other disposition of all or substantially all of the
assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of
interest on, or Liquidated Damages with respect to, the Notes and such default
continues for a period of 30 days, other than as provided in clause (b);
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(b) the Company defaults in payment pursuant to the Escrow Agreement
or defaults in payment when due of principal of or premium, if any, on the Notes
when the same becomes due and payable at maturity, upon redemption (including in
connection with an offer to purchase) or otherwise;
(c) the Company fails to comply with any of the provisions of Section
4.07, 4.09, 4.10 or 4.15 hereof;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture, or the Notes for
60 days after notice to the Company by the Trustee or the Holders of at least
25% in aggregate principal amount of the Notes then outstanding voting as a
single class;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries),
whether such Indebtedness or guarantee now exists, or is created after the date
of this Indenture, which default (i) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (ii) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $3.0 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Subsidiaries and such judgment or judgments are not paid, discharged
or stayed for a period (during which execution shall not be effectively stayed)
of 60 days, provided that the aggregate of all such unpaid, undischarged or
unstayed judgments exceeds $3.0 million;
(g) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against
it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
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(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days.
SECTION 6.02 ACCELERATION.
If any Event of Default (other than an Event of Default specified
in clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary) occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately. Upon any such
declaration, the Notes shall become due and payable immediately. Notwithstanding
the foregoing, if an Event of Default specified in clause (g) or (h) of Section
6.01 hereof occurs with respect to the Company, any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, all outstanding Notes shall be due and
payable immediately without further action or notice. The Holders of a majority
in aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.
If an Event of Default occurs on or after May 15, 2003 by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to May 15, 2003 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding the prohibition on redemption of
the Notes prior to such date, then, upon acceleration of the Notes, an
additional premium shall also become and be immediately due and payable in an
amount, for each of the years beginning on May 15 of the years set forth below,
as set forth below (expressed as a percentage of the amount that would otherwise
be due but for the provisions of this paragraph, plus accrued interest, if any,
to the date of payment):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1998............................................13.000%
1999............................................11.375%
2000............................................ 9.750%
</TABLE>
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<PAGE> 56
<TABLE>
<S> <C>
2001.............................................8.125%
2002.............................................6.500%
</TABLE>
SECTION 6.03 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04 WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount
of the then outstanding Notes by notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05 CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06 LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
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<PAGE> 57
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right
of any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or
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<PAGE> 58
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10 PRIORITIES.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium and Liquidated Damages, if
any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
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<PAGE> 59
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture, but need not independently verify the contents of such
certificates and opinions.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject
to this Section and Section 7.02.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02 RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
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(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04 TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05 NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice
of the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be
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transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee
shall also transmit by mail all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA ss. 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07 COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the
Company (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent any such loss, liability or expense
may be attributable to its negligence or bad faith. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need
not pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2)
to the extent applicable.
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SECTION 7.08 REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
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SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIAss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss.
310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article Eight.
SECTION 8.02 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding Notes
on the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest and Liquidated Damages on such
Notes when such payments are due, (b) the Company's obligations with respect to
such Notes under Article 2 and
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Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder and the Company's obligations in connection therewith and
(d) this Article Eight. Subject to compliance with this Article Eight, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
SECTION 8.03 COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21 and 4.22 hereof
with respect to the outstanding Notes on and after the date the conditions set
forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and
the Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of Default.
SECTION 8.04 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages on the outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the
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Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(c) in the case of an election under Section 8.03 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the Holders
of the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit) or
insofar as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the
period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an
Opinion of Counsel (which may be subject to customary exceptions) to the effect
that after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders of Notes over the other creditors of the
Company or with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
60
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.06 REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 8.07 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any
United States dollars or non-callable Government Securities in accordance
with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that,
if the Company makes any payment of principal of, premium, if any, or interest
on any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
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ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01 WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company,
the Guarantors, if any, and the Trustee may amend or supplement this Indenture,
the Subsidiary Guarantees, if any, or the Notes without the consent of any
Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's or a
Guarantor's, if any, obligations to the Holders of the Notes by a successor to
the Company or a Guarantor, if any, pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights
or benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to allow any Subsidiary to execute a supplemental indenture
and/or a Subsidiary Guarantee with respect to the Notes.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company and
the Guarantors, if any, in the execution of any amended or supplemental
Indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into such amended or
supplemental Indenture that affects its own rights, duties or immunities under
this Indenture or otherwise.
SECTION 9.02 WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture (including Section 3.09, 4.10
and 4.15 hereof), the Subsidiary Guarantees, if any, and the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding voting as a single class
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default (other than a Default
or Event of Default in the payment of the principal of, premium, if any, or
interest on the Notes, except a payment default resulting from an acceleration
that has been rescinded) or compliance with any provision of this Indenture, the
Subsidiary Guarantees, if any, or the Notes may be waived with
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the consent of the Holders of a majority in principal amount of the then
outstanding Notes voting as a single class (including consents obtained in
connection with a purchase of, or tender offer or exchange offer for Notes).
Section 2.08 hereof shall determine which Notes are considered to be
"outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 7.02
hereof, the Trustee shall join with the Company in the execution of such amended
or supplemental Indenture unless such amended or supplemental Indenture directly
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding voting as a single class may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Note or alter the provisions with respect to the redemption of the Notes except
as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a rescission
of acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
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(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other
than a payment required by Sections 3.09, 4.10 and 4.15 hereof);
(h) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions; or
(i) release a Guarantor, if any, from any of its obligations under
its Subsidiary Guarantee or this Indenture, except in accordance with the terms
of this Indenture.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in a amended or supplemental Indenture that complies with the
TIA as then in effect.
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall, upon receipt
of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
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ARTICLE 10.
COLLATERAL AND SECURITY
SECTION 10.01. ESCROW AGREEMENT.
The due and punctual payment of the principal of and interest
and Liquidated Damages, if any, on the Notes when and as the same shall be due
and payable, whether on an interest payment date, at maturity, by acceleration,
repurchase, redemption or otherwise, and interest on the overdue principal of
and interest and Liquidated Damages (to the extent permitted by law), if any, on
the Notes and performance of or payment of all other obligations of the Company
to the Holders of Notes or to the Trustee under this Indenture and the Notes,
according to the terms hereunder or thereunder, shall be secured as provided in
the Escrow Agreement which the Company has entered into simultaneously with the
execution of this Indenture and which is attached as Exhibit G hereto. Each
Holder of Notes, by its acceptance thereof, consents and agrees to the terms of
the Escrow Agreement (including, without limitation, the provisions providing
for foreclosure and release of Escrow Proceeds) as the same may be in effect or
may be amended from time to time in accordance with its terms and authorizes and
directs the Escrow Agent to enter into the Escrow Agreement and to perform its
obligations and exercise its rights thereunder in accordance therewith. The
Company shall deliver to the Escrow Agent copies of all documents pursuant to
the Escrow Agreement, and shall do or cause to be done all such acts and things
as may be necessary or proper, or as may be required by the provisions of the
Escrow Agreement, to assure and confirm to the Escrow Agent the security
interest in the Escrow Proceeds contemplated hereby, by the Escrow Agreement or
any part thereof, as from time to time constituted, so as to render the same
available for the security and benefit of this Indenture and of the Notes
secured hereby, according to the intent and purposes herein expressed. The
Company shall take, or shall cause its Subsidiaries to take, upon request of the
Escrow Agent, any and all actions reasonably required to cause the Escrow
Agreement to create and maintain, as security for the Obligations of the Company
hereunder, a valid and enforceable perfected first priority Lien in and on all
the Pledged Collateral, in favor of the Escrow Agent for the benefit of the
Holders of Notes and the Trustee, superior to and prior to the rights of all
third Persons and subject to no other Liens than Permitted Liens. Each Holder of
Notes, by its acceptance thereof, acknowledges and agrees that the Trustee may
also act as Escrow Agent pursuant to the terms of the Escrow Agreement.
SECTION 10.02. RECORDING AND OPINIONS.
(a) The Company shall furnish to the Escrow Agent and the
Trustee simultaneously with the execution and delivery of this Indenture an
Opinion of Counsel either (i) stating that in the opinion of such counsel all
action has been taken with respect to the recording, registering and filing of
this Indenture, financing statements or other instruments necessary to make
effective the Lien intended to be created by the Escrow Agreement, and reciting
with respect to the security interests in the Pledged Collateral, the details of
such action, or (ii) stating that, in the opinion of such counsel, no such
action is necessary to make such Lien effective.
(b) The Company shall furnish to the Escrow Agent and the
Trustee on May 27 in each year beginning with May 27, 1999, an Opinion of
Counsel, dated as of such date, either (i) (A) stating that, in the opinion of
such counsel, action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and refiling of all supplemental
indentures, financing statements, continuation statements or other instruments
of further assurance as is necessary to maintain
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the Lien of the Escrow Agreement and reciting with respect to the security
interests in the Pledged Collateral the details of such action or referring to
prior Opinions of Counsel in which such details are given, (B) stating that,
based on relevant laws as in effect on the date of such Opinion of Counsel, all
financing statements and continuation statements have been executed and filed
that are necessary as of such date and during the succeeding 12 months fully to
preserve and protect, to the extent such protection and preservation are
possible by filing, the rights of the Holders of Notes and the Escrow Agent
hereunder and under the Escrow Agreement with respect to the security interests
in the Pledged Collateral, or (ii) stating that, in the opinion of such counsel,
no such action is necessary to maintain such Lien and assignment.
(c) The Company shall otherwise comply with the provisions of
TIA ss.314(b).
SECTION 10.03. RELEASE OF COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section
10.03, Pledged Collateral may be released from the Lien and security interest
created by the Escrow Agreement at any time or from time to time in accordance
with the provisions of the Escrow Agreement or as provided hereby.
(b) No Pledged Collateral shall be released from the Lien and
security interest created by the Escrow Agreement pursuant to the provisions of
the Escrow Agreement unless there shall have been delivered to the Escrow Agent
and the Trustee the certificate required by this Section 10.03.
(c) At any time when a Default or Event of Default shall have
occurred and be continuing and the maturity of the Notes shall have been
accelerated (whether by declaration or otherwise) and the Escrow Agent has
knowledge of such Default or Event of Default, no release of Pledged Collateral
pursuant to the provisions of the Escrow Agreement shall be effective as against
the Holders of Notes.
(d) The release of any Pledged Collateral from the terms of
this Indenture and the Escrow Agreement shall not be deemed to impair the
security under this Indenture in contravention of the provisions hereof if and
to the extent the Pledged Collateral is released pursuant to the terms of the
Escrow Agreement. To the extent applicable, the Company shall cause TIA ss.
313(b), relating to reports, and TIA ss. 314(d), relating to the release of
property or securities from the Lien and security interest of the Escrow
Agreement and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Escrow
Agreement, to be complied with. Any certificate or opinion required by TIA ss.
314(d) may be made by an Officer of the Company except in cases where TIA ss.
314(d) requires that such certificate or opinion be made by an independent
Person, which Person shall be an independent engineer, appraiser or other expert
selected or approved by the Escrow Agent in the exercise of reasonable care.
SECTION 10.04. CERTIFICATES OF THE COMPANY.
(a) The Company shall furnish to the Trustee and the Escrow
Agent, prior to each proposed release of Pledged Collateral pursuant to the
Escrow Agreement, (i) all documents required by TIA ss. 314(d) and (ii) an
Opinion of Counsel, which may be rendered by internal counsel to the Company, to
the effect that such accompanying documents constitute all documents required by
TIA ss. 314(d). The Trustee and the Escrow Agent may, to the extent permitted by
Sections 7.01 and 7.02
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hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such documents and such
Opinion of Counsel.
SECTION 10.05. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE ESCROW AGENT UNDER
THE ESCROW AGREEMENT.
Subject to the provisions of Section 7.01 and 7.02 hereof, the
Escrow Agent may, in its sole discretion and without the consent of the Holders
of Notes, take, on behalf of the Holders of Notes, all actions it deems
necessary or appropriate in order to (a) enforce any of the terms of the Escrow
Agreement and (b) collect and receive any and all amounts payable in respect of
the Obligations of the Company hereunder. The Escrow Agent shall have power to
institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Pledged Collateral by any acts that may be
unlawful or in violation of the Escrow Agreement or this Indenture, and such
suits and proceedings as the Escrow Agent may deem expedient to preserve or
protect its interests and the interests of the Holders of Notes in the Pledged
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Holders of Notes or of the Escrow Agent).
SECTION 10.06. AUTHORIZATION OF RECEIPT OF FUNDS BY THE ESCROW AGENT UNDER
THE ESCROW AGREEMENT.
The Escrow Agent is authorized to receive any funds for the
benefit of the Holders of Notes distributed under the Escrow Agreement, and to
make further distributions of such funds to the Holders of Notes according to
the provisions of this Indenture.
SECTION 10.07. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Company
under this Indenture and the Notes, or upon Legal Defeasance or Covenant
Defeasance, the Escrow Agent shall release the Liens pursuant to this Indenture
and the Escrow Agreement.
ARTICLE 11.
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall
control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company, any Guarantor or
the Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address
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If to the Company and/or Guarantor:
Park `N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
Telephone No.: (954) 754-7800
Telecopier No.: (954) 745-7899
Attention: Steve Conkling
With a copy to:
Kilpatrick Stockton LLP
4100 Lake Boone Trail, Suite 400
Raleigh, NC 27607
Telephone No.: (919) 420-1700
Telecopier No. (919) 420-1800
Attention: James M. O'Connell, Esq.
If to the Trustee:
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, CT 06103
Telephone No.: (860) 244-1817
Telecopier No.: (860) 244-1889
Attention: Elizabeth Hammer
The Company, any Guarantor or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA ss. 313(c), to the extent required by the
TIA. Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
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If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
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SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee,
incorporator or stockholder of the Company as such, shall have any liability for
any obligations of the Company under the Notes, this Indenture or the Escrow
Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES, IF
ANY, WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 11.12. INTERPRETATION OF SECURITY INTERESTS.
For purposes of the Sections 4.10, 4.15 and Section 5.01 any
grant of a security interest by the Company that is otherwise permitted by this
Indenture (as opposed to any transfer as a result of the exercise of remedies
under any instrument or document creating such interest) will not be deemed to
be a sale, lease, transfer or other disposition of an asset.
SECTION 11.13. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
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SECTION 11.14. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of May 27, 1998
PARK`N VIEW, INC.
BY: /s/ Stephen L. Conkling
----------------------------
Name: Stephen L. Conkling
Title: CFO, COO
STATE STREET BANK AND TRUST
COMPANY
By: /s/ Steven Cimalore
----------------------------
Name: Steven Cimalore
Title: Vice President
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EXHIBIT A
(Face of Note)
===============================================================================
(a) CUSIP __________
13% [Series A] [Series B] Senior Notes due 2008
$
----------
PARK `N VIEW, INC.
promises to pay to Cede & Co. or registered assigns, the principal sum of
Dollars on May 15, 2008
----------------------------------------
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
DATED: __________, 1998
PARK `N VIEW, INC.
BY:
-------------------------------------
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
------------------------------------
===============================================================================
A-1
<PAGE> 78
(Back of Note)
13% [Series A] [Series B] Senior Notes due 2008
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF
THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT
IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL
NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.](1)
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT OR (c) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE OR THE
WARRANT AGENT, AS APPLICABLE, A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM
THE TRUSTEE OR THE WARRANT AGENT, AS APPLICABLE) AND, IF SUCH TRANSFER
IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN
$250,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE
WITH SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN THE CASE
OF CLAUSE (b), (c) or (d) BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE
- -----------------------
(1) This paragraph should be included only if Note is issued in global
form.
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<PAGE> 79
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF
AN ISSUANCE OF UNITS, EACH OF WHICH CONSIST OF $1,000 PRINCIPAL AMOUNT
OF THE NOTES AND ONE (1) WARRANT (THE "WARRANTS") INITIALLY ENTITLING
THE HOLDER THEREOF TO PURCHASE 6.73833 SHARES, PAR VALUE $.001 PER
SHARE, OF THE COMPANY. PRIOR TO THE CLOSE OF BUSINESS UPON THE EARLIEST
TO OCCUR OF (I) 180 DAYS FOLLOWING THE CLOSING DATE, (II) THE DATE ON
WHICH THE EXCHANGE OFFER REGISTRATION STATEMENT IS DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (III) THE DATE ON WHICH THE SHELF
REGISTRATION STATEMENT IS DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(IV) SUCH DATE AS THE INITIAL PURCHASER SHALL DETERMINE AND (V) IN THE
EVENT A CHANGE OF CONTROL OCCURS, THE DATE THE COMPANY MAILS THE
REQUIRED NOTICE TO THE NOTE HOLDERS, THE NOTES EVIDENCED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT
MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE WARRANTS.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER,
THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH
$1,000 PRINCIPAL AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS
$938.007; (2) THE AMOUNT OF THE ORIGINAL ISSUE DISCOUNT IS $61.993; (3)
THE ISSUE DATE IS MAY 27, 1998; AND (4) THE YIELD TO MATURITY
(COMPOUNDED SEMI-ANNUALLY) IS 14.17766%.
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Park `N View, Inc., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at 13% per annum from the Closing Date until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on May 15 and November 15 of each year, or if any such day
is not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"). Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be November 15, 1998 The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in
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effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on
the Notes (except defaulted interest) and Liquidated Damages to the Persons who
are registered Holders of Notes at the close of business on the May 1 or
November 1 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street
Bank and Trust Company, the Trustee under the Indenture, will act as Paying
Agent and Registrar. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company or any of its Subsidiaries may act in
any such capacity.
4. INDENTURE AND ESCROW AGREEMENT. The Company issued
the Notes under an Indenture dated as of May 27, 1998 ("Indenture") between the
Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Notes are secured obligations of
the Company limited to $75.0 million in aggregate principal amount. The Notes
are secured by a pledge of U.S. Government Obligations pursuant to the Escrow
Agreement referred to in the Indenture.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this
Paragraph 5, the Notes will not be redeemable at the Company's option prior to
May 15, 2003. Thereafter, the Notes will be subject to redemption at any time at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on May 15 of the years
indicated below:
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<PAGE> 81
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2003...................................................................106.500%
2004...................................................................104.333%
2005...................................................................102.167%
2006 and thereafter 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of
this Paragraph 5, any time after the Issue Date and prior to May 15, 2001, the
Company, at its option, may redeem up to 35% of the then outstanding Notes with
the net proceeds of an Initial Public Equity Offering of the Company at a
redemption price of 113.0% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the date of
redemption; provided that at least 65% in aggregate principal amount of Notes
originally issued remain outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Company, its subsidiaries and its
Affiliates); and provided, further, that such redemption shall occur within 60
days of the date of the closing of such Initial Public Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDERS.
(a) If there is a Change of Control, the Company shall be
required to make an offer (a "Change of Control Offer") to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at
an offer price in cash equal 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase. Within ten days following any Change of Control, the Company shall
mail a notice to each Holder setting forth the procedures governing the Change
of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset
Sales, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $5 million, the Company shall commence an offer to all Holders
of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase, in accordance with the procedures set
forth in the Indenture. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company (or such Subsidiary) may use such deficiency for any purpose not
otherwise prohibited by the Indenture. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Holders of
Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have
such Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in
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<PAGE> 82
whole multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange or register the transfer of any Notes
for a period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a
Note may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Subsidiary Guarantees, if any, or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes, voting as a single
class, and any existing default or compliance with any provision of the
Indenture, the Subsidiary Guarantees, if any, or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes, voting as a single class. Without the consent of any Holder
of a Note, the Indenture, the Subsidiary Guarantees, if any, or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or Guarantor's, if any,
obligations to Holders of the Notes in case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act, or to allow any Subsidiary to execute a
supplemental indenture to the Indenture and/or a Subsidiary Guarantee with
respect to the Notes.
12. DEFAULTS AND REMEDIES. Events of Default include:
(i) default for 30 days in the payment when due of interest or Liquidated
Damages on the Notes, other than as provided in clause (ii); (ii) default in
payment pursuant to the Escrow Agreement or a default in payment when due of
principal of or premium, if any, on the Notes; (iii) failure by the Company to
comply with Section 4.07, 4.09, 4.10 or 4.15 of the Indenture; (iv) failure by
the Company or any of its Subsidiaries for 60 days after notice to the Company
by the Trustee or the Holders of at least 25% in principal amount of the Notes
then outstanding voting as a single class to comply with certain other
covenants, representations, warranties or other agreements in the Indenture or
the Notes; (v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries),
whether such Indebtedness or guarantee now exists, or is created after the date
of this Indenture, which default (A) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (B) results in
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<PAGE> 83
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $3.0
million or more; (vi) certain final judgments for the payment of money that
remain undischarged for a period of 60 days, provided that the aggregate of all
such undischarged judgments exceeds $3.0 million; and (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable. Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer,
employee, incorporator or stockholder, of the Company, as such, shall not have
any liability for any obligations of the Company under the Notes, the Indenture
or the Escrow Agreement for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL
NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to
Holders of Notes under the Indenture, Holders of Restricted Global Notes and
Restricted Definitive Notes shall have all the rights set forth in the A/B
Exchange Registration Rights Agreement dated as of May 27, 1998, between the
Company and the parties named on the signature pages thereof (the "Registration
Rights Agreement").
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<PAGE> 84
18. CUSIP NUMBERS. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
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<PAGE> 85
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Park `N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
Attention: Steve Conkling
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<PAGE> 86
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:
--------------
Your Signature:__________________________
(Sign exactly as your name appears on the
face of this Note)
SIGNATURE GUARANTEE.
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<PAGE> 87
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date: __________
Your Signature:
-------------------------------
(Sign exactly as your name appears on the Note)
Tax Identification No:
------------------------
SIGNATURE GUARANTEE.
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<PAGE> 88
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of increase of
decrease in in Principal this Global Note Signature of
Principal Amount Amount following such authorized officer
of of decrease (or of Trustee or
Date of Exchange this Global Note this Global Note increase) Note Custodian
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
A-12
<PAGE> 89
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Park `N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, Connecticut 06103
Re: 13% Senior Notes due 2008 of Park `N View, Inc.
Reference is hereby made to the Indenture, dated as of May 27,
1998 (the "Indenture"), between Park `N View, Inc., as issuer (the "Company"),
and State Street Bank and Trust Company, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to
transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in
the principal amount of $___________ in such Note[s] or interests (the
"Transfer"), to __________ (the "Transferee"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE
SECURITIES ACT OTHER THAN RULE 144A. The Transfer is being effected in
compliance with the transfer restrictions applicable to beneficial interests in
Restricted Global Notes and Restricted Definitive Notes and pursuant to and in
accordance with the
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<PAGE> 90
Securities Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies that
(check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial interests in a
Restricted Global Note or Restricted Definitive Notes and the requirements of
the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Indenture and (2) if
such Transfer is in respect of a principal amount of Notes at the time of
transfer of less than $250,000, an Opinion of Counsel provided by the Transferor
or the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Definitive Notes and in the Indenture and the
Securities Act.
3. [ ] Check if Transferee will take delivery of a beneficial interest in
an Unrestricted Global Note or of an Unrestricted Definitive Note.
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<PAGE> 91
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION.
(i) The Transfer is being effected pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act other than
Rule 144 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-----------------------------------------
[Insert Name of Transferor]
By:
--------------------------------------
Name:
Title:
Dated: ___________, _____
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<PAGE> 92
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] Unrestricted Global Note (CUSIP ); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE> 93
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Park `N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, Connecticut 06103
Re: 13% Senior Notes due 2008 of Park `N View, Inc.
(CUSIP____________)
Reference is hereby made to the Indenture, dated as of May 27, 1998
(the "Indenture"), between Park `N View, Inc., as issuer (the "Company"), and
State Street Bank and Trust Company, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s]
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
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the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE
TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE
TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE
TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the 144A Global Note with an equal principal amount, the Owner hereby certifies
(i) the beneficial interest is being acquired for the Owner's own account
without transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
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This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
-----------------------------------
[Insert Name of Owner]
By:
--------------------------------
Name:
Title:
Dated: ________________, ____
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<PAGE> 96
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Park `N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, Connecticut 06103
Re: 13% Senior Notes due 2008 of Park `N View, Inc.
Reference is hereby made to the Indenture, dated as of May 27, 1998
(the "Indenture"), between Park `N View, Inc., as issuer (the "Company"), and
State Street Bank and Trust Company, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the
Notes or any interest therein is subject to certain restrictions and conditions
set forth in the Indenture and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes
have not been registered under the Securities Act, and that the Notes and any
interest therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (c) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and, if such
transfer is in respect of a principal amount of Notes, at the time of transfer
of less than $250,000, an Opinion of Counsel in form reasonably acceptable to
the Company to
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<PAGE> 97
the effect that such transfer is in compliance with the Securities Act, (D)
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (D) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the
Notes or beneficial interest therein, we will be required to furnish to you and
the Company such certifications, legal opinions and other information as you and
the Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Notes purchased
by us will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the Notes,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Notes or beneficial interest
therein purchased by us for our own account or for one or more accounts (each of
which is an institutional "accredited investor") as to each of which we exercise
sole investment discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
------------------------------------------
[Insert Name of Accredited Investor]
By:
---------------------------------------
Name:
Title:
Dated: __________________, ____
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<PAGE> 98
EXHIBIT E
FORM OF NOTATION OF SUBSIDIARY GUARANTEE ON NOTE
Each Guarantor (as defined in the Indenture) has jointly and severally
unconditionally guaranteed (a) the due and punctual payment of the principal of,
premium, if any, and interest on the Notes, whether at maturity or an Interest
Payment Date, by acceleration, call for redemption or otherwise, (b) the due and
punctual payment of interest on the overdue principal and premium of, and
interest, to the extent lawful, on the Notes and (c) that in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, the same will be promptly paid in full when due in accordance with
the terms of the extension of renewal, whether at stated maturity, by
acceleration or otherwise.
Notwithstanding the foregoing, in the event that the Subsidiary
Guarantee would constitute or result in a violation of any applicable fraudulent
conveyance or similar law of any relevant jurisdiction, the liability of the
Guarantor under its Subsidiary Guarantee shall be limited to such amount as will
not, after giving effect thereto, and to all other liabilities of the Guarantor,
result in such amount constituting a fraudulent transfer or conveyance.
The Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which the
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual or facsimile signature of one of its authorized
officers.
Dated:_____________, _____ [GUARANTOR]
By:
--------------------------------------
Name:
Title:
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<PAGE> 99
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guarantor"), a subsidiary of
Park `N View, Inc. (or its permitted successor), a Delaware corporation (the
"Company"), the Company, the other Guarantors (as defined in the Indenture
referred to herein) and State Street Bank and Trust Company, as trustee under
the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of May 27, 1998 providing for
the issuance of an aggregate principal amount of up to $75.0 million of 13%
Senior Notes due 2008 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Subsidiary Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings as signed to them in the Indenture.
2. INDENTURE PROVISION PURSUANT TO WHICH GUARANTEE IS GIVEN. This
Supplemental Indenture is being executed and delivered pursuant to Section 4.21
of the Indenture.
3. AGREEMENTS TO GUARANTEE. The Guarantor hereby agrees as
follows:
(a) The Guarantor, jointly and severally with all other
Guarantors, if any, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, regardless of the validity and enforceability of the Indenture, the
Notes and the obligations of the Company under the Indenture and the Notes,
that:
(i) the principal of, premium, if any, and
interest on the Notes shall be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of, premium, if any, and interest on the Notes, to the extent lawful,
and all other obligations of the Company to the Holders or the Trustee
thereunder shall be promptly paid in full, all in accordance with the terms
thereof; and
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<PAGE> 100
(ii) in case of any extension of time for payment
or renewal of any Notes or any of such other obligations, that the same shall be
promptly paid in full when due in accordance with the terms of the extension or
renewal, whether at Stated Maturity, by acceleration or otherwise.
Notwithstanding the foregoing, in the event that this Subsidiary
Guarantee would constitute or result in a violation of any applicable fraudulent
conveyance or similar law of any relevant jurisdiction, the liability of the
Guarantor under this Supplemental Indenture and its Subsidiary Guarantee shall
be limited to such amount as will not, after giving effect thereto, and to all
other liabilities of the Guarantor, result in such amount constituting a
fraudulent transfer or conveyance.
4. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES
(a) To evidence its Subsidiary Guarantee set forth in
this Supplemental Indenture, the Guarantor hereby agrees that a notation of such
Subsidiary Guarantee substantially in the form of Annex A hereto shall be
endorsed by an officer of such Guarantor on each Note authenticated and
delivered by the Trustee after the date hereof.
(b) Notwithstanding the foregoing, the Guarantor hereby
agrees that its Subsidiary Guarantee set forth herein shall remain in full force
and effect notwithstanding any failure to endorse on each Note a notation of
such Subsidiary Guarantee.
(c) If an officer whose signature is on this Supplemental
Indenture or on the Subsidiary Guarantee no longer holds that office at the time
the Trustee authenticates the Note on which a Subsidiary Guarantee is endorsed,
the Subsidiary Guarantee shall be valid nevertheless.
(d) The delivery of the Note by the Trustee, after the
authentication thereof under the Indenture, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Supplemental Indenture on behalf of the
Guarantor.
(e) The Guarantor hereby agrees that its obligations
hereunder shall be unconditional, regardless of the validity, regularity or
enforceability of the Notes or the Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
(f) The Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that its
Subsidiary Guarantee made pursuant to this Supplemental Indenture will not be
discharged except by complete performance of the obligations contained in the
Notes and the Indenture or pursuant to Section 5(b) of this Supplemental
Indenture.
(g) If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Supplemental Indenture and
such proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then, and in every such
case,
F-2
<PAGE> 101
subject to any determination in such proceeding, the Guarantor, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Guarantor, the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
(h) The Guarantor hereby waives and will not in any
manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Guarantor as a result of any payment by such Guarantor under its
Subsidiary Guarantee. The Guarantor further agrees that, as between the
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand:
(i) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six of the Indenture for the
purposes of the Subsidiary Guarantee made pursuant to this Supplemental
Indenture, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby; and
(ii) in the event of any declaration of
acceleration of such obligations as provided in Article Six, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantor for the purpose of the Subsidiary Guarantee made pursuant to this
Supplemental Indenture.
(i) The Guarantor shall have the right to seek contribution from
any other non-paying Guarantor, if any, so long as the exercise of such right
does not impair the rights of the Holders under the Subsidiary Guarantee made
pursuant to this Supplemental Indenture.
(j) The Guarantor covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of the Indenture or this Subsidiary
Guarantee; and the Guarantor (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
5. SUBSIDIARY GUARANTOR MAY CONSOLIDATE, ETC. ON CERTAIN TERMS
(a) Except as set forth in Articles Four and Five of the
Indenture, nothing contained in the Indenture, this Supplemental Indenture or in
the Notes shall prevent any consolidation or merger of the Guarantor with or
into the Company or any other Guarantor or shall prevent any transfer, sale or
conveyance of the property of the Guarantor as an entirety or substantially as
an entirety, to the Company or any other Guarantor.
(b) Except as set forth in Article Five of the Indenture,
upon the sale or disposition of all of the Capital Stock of the Guarantor by the
Company or the Subsidiary of the Company, or upon the consolidation or merger of
the Guarantor with or into any Person, or the sale of all or substantially all
of the assets of the Guarantor (in each case, other than to an Affiliate of the
Company), such Guarantor shall be deemed automatically and unconditionally
released and discharged from all obligations under this
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<PAGE> 102
Subsidiary Guarantee without any further action required on the part of the
Trustee or any Holder if no Default shall have occurred and be continuing;
provided, that in the event of an Asset Sale, the Net Cash Proceeds therefrom
are treated in accordance with Section 4.10 of the Indenture. Except with
respect to transactions set forth in the preceding sentence, the Company and the
Guarantor covenant and agree that upon any such consolidation, merger or
transfer of assets, the performance of all covenants and conditions of this
Supplemental Indenture to be performed by such Guarantor shall be expressly
assumed by supplemental indenture satisfactory in form to the Trustee, by the
corporation formed by such consolidation, or into which the Guarantor shall have
merged, or by the corporation which shall have acquired such property. Upon
receipt of an Officer's Certificate of the Company or the Guarantor, as the case
may be, to the effect that the Company or such Guarantor has complied with the
first sentence of this Section 5(b), the Trustee shall execute any documents
reasonably requested by the Company or the Guarantor, at the cost of the Company
or such Guarantor, as the case may be, in order to evidence the release of such
Guarantor from its obligations under its Guarantee endorsed on the Notes and
under the Indenture and this Supplemental Indenture.
6. NEW YORK LAW TO GOVERN. The internal law of the State of New
York shall govern and be used to construe this Supplemental Indenture.
7. COUNTERPARTS. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not effect the construction hereof.
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<PAGE> 103
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _______________, ____
[GUARANTOR]
By:
----------------------------------------
Name:
Title:
PARK `N VIEW, INC.
By:
----------------------------------------
Name:
Title:
[EXISTING GUARANTORS]
By:
----------------------------------------
Name:
Title
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
----------------------------------------
Name:
Title:
<PAGE> 104
EXHIBIT G
FORM OF ESCROW AGREEMENT
===============================================================================
PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
by and among
PARK `N VIEW, INC.
STATE STREET BANK AND TRUST COMPANY
as Trustee
and
STATE STREET BANK AND TRUST COMPANY
as Escrow Agent
May 27, 1998
===============================================================================
<PAGE> 105
PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
THIS PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT (this "Agreement"), dated as of
May 27, 1998, is by and among PARK `N VIEW, INC. (the "Company"), STATE STREET
BANK AND TRUST COMPANY, as trustee under the Indenture referred to below (the
"Trustee"), AND STATE STREET BANK AND TRUST COMPANY, in its capacity as
collateral agent for the Trustee and the Holders of the Notes hereinafter
described (the "Escrow Agent").
RECITALS
A. The Notes. Pursuant to that certain Indenture (the "Indenture") dated
as of May 27, 1998, by and between the Company and the Trustee, the Company will
issue $75,000,000 in aggregate principal amount of 13% Senior Notes due 2008
(collectively, the "Notes"). Immediately after receipt of payment for the Notes
(the "Deposit Time"), the Company will deposit $19,175,000 of the net proceeds
from the sale of the Notes (the "Escrow Proceeds") into a segregated cash
collateral trust account with the Escrow Agent at its office at 61 Broadway, New
York, New York 10006 in the name of State Street Bank and Trust Company, as
Escrow Agent, "Collateral Account for Park `N View, Inc." (the "Escrow
Account"). The Escrow Account and all balances and investments from time to time
therein shall be under the sole dominion and control of the Escrow Agent for the
benefit of the Holders of the Notes. Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Indenture.
B. Purpose. The parties hereto desire to set forth their agreement with
regard to the administration of the Escrow Account, the creation of a security
interest in the Collateral (as defined herein) and the conditions upon which
funds will be released from the Escrow Account and the conditions upon which the
security interest and Lien described herein will be released.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. SECURITY INTEREST.
1.1. PLEDGE AND ASSIGNMENT. THE COMPANY HEREBY IRREVOCABLY PLEDGES, ASSIGNS
AND SETS OVER TO THE TRUSTEE, AND GRANTS TO THE TRUSTEE, FOR THE BENEFIT OF THE
HOLDERS OF THE NOTES, A FIRST PRIORITY CONTINUING SECURITY INTEREST IN ALL OF
THE COMPANY'S RIGHT, TITLE AND INTEREST TO ALL OF THE FOLLOWING, WHETHER NOW
OWNED OR EXISTING OR HEREAFTER ACQUIRED OR CREATED (COLLECTIVELY, THE
"COLLATERAL"):
1.1.1. the Escrow Account;
1.1.2. all funds from time to time held in the Escrow Account,
including, without limitation, the Escrow Proceeds and all certificates and
instruments, if any, from time to time, representing or evidencing the Escrow
Account or the Escrow Proceeds;
1.1.3. all Pledged Securities (as defined herein), whether the same
shall constitute certificated securities, uncertificated securities, investment
property, instruments, general intangibles or otherwise held by or registered in
the name of the Escrow Agent or the Trustee and all certificates and
instruments, if any, from time to time representing or evidencing the Pledged
Securities;
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<PAGE> 106
1.1.4. all notes, certificates of deposit, deposit accounts, checks
and other instruments from time to time hereafter delivered to or otherwise
possessed by the Trustee or the Escrow Agent for or on behalf of the Company in
substitution for or in addition to any or all of the then existing Collateral;
1.1.5. all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the then existing Collateral; and
1.1.6. all proceeds of the foregoing including, without limitation,
cash proceeds.
The Company and the Trustee hereby appoint the Escrow Agent to act as the
Trustee's agent, on behalf of the Holders of the Notes, for purposes of
perfecting the foregoing pledge, assignment and security interest in the
Collateral, and the Escrow Agent hereby accepts such appointment. The Escrow
Agent hereby acknowledges the security interest in the Collateral granted by the
Company in favor of the Trustee hereunder. The Escrow Agent further acknowledges
that it is holding the Collateral for the benefit of the Holders of the Notes
subject to the pledge and security interest granted to the Trustee hereunder.
Without prejudice to the Trustee's rights under Section 7.07 of the Indenture,
for so long as the foregoing pledge, assignment and security interest remains in
effect, the Escrow Agent hereby waives any right of setoff or banker's lien that
it, in its individual capacity, may have with respect to any or all of the
Collateral.
1.2. SECURED OBLIGATIONS. THIS AGREEMENT SECURES THE DUE AND PUNCTUAL
PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS AND INDEBTEDNESS OF THE COMPANY,
WHETHER NOW OR HEREAFTER EXISTING, UNDER THE NOTES AND THE INDENTURE INCLUDING,
WITHOUT LIMITATION, INTEREST ACCRUED THEREON AFTER THE COMMENCEMENT OF A
BANKRUPTCY, REORGANIZATION OR SIMILAR PROCEEDING INVOLVING THE COMPANY TO THE
EXTENT PERMITTED BY APPLICABLE LAW (COLLECTIVELY, THE "SECURED OBLIGATIONS").
1.3. DELIVERY OF COLLATERAL. ALL CERTIFICATES OR INSTRUMENTS, IF ANY,
REPRESENTING OR EVIDENCING THE COLLATERAL SHALL BE HELD BY OR ON BEHALF OF THE
ESCROW AGENT PURSUANT HERETO AND SHALL BE IN SUITABLE FORM FOR TRANSFER BY
DELIVERY, OR SHALL BE ACCOMPANIED BY DULY EXECUTED INSTRUMENTS OF TRANSFER OR
ASSIGNMENTS IN BLANK, ALL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
TRUSTEE AND THE ESCROW AGENT. ALL SECURITIES IN UNCERTIFICATED OR BOOK-ENTRY
FORM, IF ANY, REPRESENTING OR EVIDENCING THE COLLATERAL SHALL BE REGISTERED IN
THE NAME OF THE TRUSTEE OR ANY OF ITS NOMINEES BY BOOK-ENTRY OR AS OTHERWISE
APPROPRIATE SO AS TO PROPERLY IDENTIFY THE INTEREST OF THE TRUSTEE THEREIN. IN
ADDITION, THE TRUSTEE SHALL HAVE THE RIGHT, AT ANY TIME FOLLOWING THE OCCURRENCE
OF AN EVENT OF DEFAULT, AND ONLY FOR SO LONG AS SUCH EVENT OF DEFAULT IS
CONTINUING, TO INSTRUCT THE ESCROW AGENT TO RELEASE THE COLLATERAL AND TO
TRANSFER TO OR TO REGISTER IN THE NAME OF THE TRUSTEE OR ANY OF ITS NOMINEES ANY
OR ALL OTHER COLLATERAL. EXCEPT AS OTHERWISE PROVIDED HEREIN, ALL COLLATERAL
SHALL BE DEPOSITED AND HELD IN THE ESCROW ACCOUNT. THE TRUSTEE SHALL HAVE THE
RIGHT AT ANY TIME TO EXCHANGE CERTIFICATES OR INSTRUMENTS REPRESENTING OR
EVIDENCING ALL OR ANY PORTION OF THE COLLATERAL FOR CERTIFICATES OR INSTRUMENTS
OF SMALLER OR LARGER DENOMINATIONS IN THE SAME AGGREGATE AMOUNT.
1.4. FURTHER ASSURANCES. PRIOR TO, CONTEMPORANEOUSLY HEREWITH, AND AT ANY
TIME AND FROM TIME TO TIME HEREAFTER, THE COMPANY SHALL, AT THE COMPANY'S
EXPENSE, EXECUTE AND DELIVER TO THE TRUSTEE OR THE ESCROW AGENT SUCH OTHER
INSTRUMENTS AND DOCUMENTS,
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<PAGE> 107
AND SHALL TAKE ALL FURTHER ACTION AS IT DEEMS REASONABLY NECESSARY OR ADVISABLE
OR AS THE TRUSTEE OR THE ESCROW AGENT MAY REASONABLY REQUEST, INCLUDING, WITHOUT
LIMITATION, AN OPINION OF COUNSEL, UPON WHICH THE TRUSTEE OR THE ESCROW AGENT,
AS THE CASE MAY BE, MAY CONCLUSIVELY RELY, TO CONFIRM OR PERFECT THE SECURITY
INTEREST OF THE TRUSTEE GRANTED OR PURPORTED TO BE GRANTED HEREBY OR TO ENABLE
THE TRUSTEE TO EXERCISE AND ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER WITH
RESPECT TO ANY COLLATERAL, AND THE COMPANY SHALL TAKE ALL NECESSARY ACTION TO
PRESERVE AND PROTECT THE SECURITY INTEREST CREATED HEREBY AS A FIRST PRIORITY,
PERFECTED LIEN AND ENCUMBRANCE UPON THE COLLATERAL. THE COMPANY SHALL PAY ALL
COSTS INCURRED IN CONNECTION WITH ANY OF THE FOREGOING.
1.5. MAINTAINING THE ESCROW ACCOUNT. SO LONG AS THIS AGREEMENT IS IN FULL
FORCE AND EFFECT:
1.5.1. the Company shall establish and maintain the Escrow Account
with the Escrow Agent in New York, New York, and the Escrow Account and the
Collateral shall at all times remain under the exclusive dominion and control of
the Escrow Agent for the benefit of the Holders of the Notes; and
1.5.2. it shall be a term and condition of the Escrow Account,
notwithstanding any term or condition to the contrary in any other agreement
relating to the Escrow Account and except as otherwise provided by the
provisions of Article 3 of this Agreement, that no amount (including, without
limitation, interest on or other proceeds of the Escrow Account or on any
Pledged Securities held therein) shall be paid or released to or for the account
of, or withdrawn by or for the account of, the Company or any other person or
entity other than the Trustee from the Escrow Account.
1.5.3. the Escrow Agent shall have full and exclusive control over
the Collateral and no act or consent by the Company shall be required for the
Trustee to effect its duties hereunder. In the event that inconsistent
provisions are taken by the Trustee and the Company, the Trustee's instructions
shall govern.
1.6. TRANSFERS AND OTHER LIENS. UNTIL TERMINATION OF THIS AGREEMENT PURSUANT
TO SECTION 8, THE COMPANY AGREES THAT IT SHALL NOT (I) SELL, ASSIGN (BY
OPERATION OF LAW OR OTHERWISE) OR OTHERWISE DISPOSE OF, OR GRANT ANY OPTION WITH
RESPECT TO, ANY OF THE COLLATERAL OR (II) CREATE OR PERMIT TO EXIST ANY LIEN
UPON OR WITH RESPECT TO ANY OF THE COLLATERAL, EXCEPT FOR THE SECURITY INTEREST
UNDER THIS AGREEMENT.
1.7. ATTORNEYS-IN-FACT. IN ADDITION TO ALL OF THE POWERS GRANTED TO THE
TRUSTEE PURSUANT TO ARTICLE 6 OF THE INDENTURE, THE COMPANY HEREBY IRREVOCABLY
APPOINTS EACH OF THE TRUSTEE AND THE ESCROW AGENT AS THE COMPANY'S
ATTORNEY-IN-FACT, COUPLED WITH AN INTEREST, WITH FULL AUTHORITY IN THE PLACE AND
STEAD OF THE COMPANY AND IN THE NAME OF THE COMPANY OR OTHERWISE, FROM TIME TO
TIME IN THE TRUSTEE'S OR THE ESCROW AGENT'S DISCRETION TO, SO LONG AS ANY EVENT
OF DEFAULT HAS OCCURRED AND IS CONTINUING, TAKE ANY ACTION AND TO EXECUTE ANY
INSTRUMENT WHICH THE TRUSTEE OR THE ESCROW AGENT MAY DEEM REASONABLY NECESSARY
OR ADVISABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, TO RECEIVE, ENDORSE AND COLLECT ALL INSTRUMENTS MADE PAYABLE TO THE
COMPANY REPRESENTING ANY INTEREST PAYMENT, DIVIDEND OR OTHER DISTRIBUTION IN
RESPECT OF THE COLLATERAL OR ANY PART THEREOF AND TO GIVE FULL DISCHARGE FOR THE
SAME, AND THE EXPENSES OF THE TRUSTEE (INCLUDING REASONABLE FEES OF
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ITS AGENTS AND COUNSEL) INCURRED IN CONNECTION THEREWITH SHALL BE PAYABLE BY THE
COMPANY.
1.8. TRUSTEE OR ESCROW AGENT MAY PERFORM. WITHOUT LIMITING THE AUTHORITY
GRANTED UNDER SECTION 1.7 AND EXCEPT WITH RESPECT TO THE FAILURE OF THE COMPANY
TO DELIVER INVESTMENT INSTRUCTIONS, WHICH SHALL BE GOVERNED BY THE SECOND
PARAGRAPH OF SECTION 2.1 HEREOF, IF THE COMPANY FAILS TO PERFORM ANY AGREEMENT
CONTAINED HEREIN, THE TRUSTEE OR THE ESCROW AGENT MAY, BUT SHALL NOT BE
OBLIGATED TO, ITSELF PERFORM, OR CAUSE PERFORMANCE OF, SUCH AGREEMENT, AND THE
EXPENSES OF THE TRUSTEE OR THE ESCROW AGENT INCURRED IN CONNECTION THEREWITH
SHALL BE PAYABLE BY THE COMPANY. IN THE EVENT THAT THE TRUSTEE OR THE ESCROW
AGENT PERFORM PURSUANT TO THIS SECTION 1.8, THE COMPANY SHALL COMPENSATE,
REIMBURSE AND INDEMNIFY THE TRUSTEE OR THE ESCROW AGENT, AS THE CASE MAY BE, IN
THE MANNER PROVIDED IN SECTION 7.07 OF THE INDENTURE.
1.9. ESCROW ACCOUNT STATEMENT. EACH MONTH, THE ESCROW
AGENT SHALL DELIVER TO THE COMPANY AND THE TRUSTEE A STATEMENT IN A FORM
SATISFACTORY TO THE COMPANY AND THE TRUSTEE SETTING FORTH WITH REASONABLE
PARTICULARITY THE BALANCE OF FUNDS THEN IN THE ESCROW ACCOUNT AND THE MANNER IN
WHICH SUCH FUNDS ARE INVESTED. THE PARTIES HERETO IRREVOCABLY INSTRUCT THE
ESCROW AGENT THAT ON THE FIRST DATE UPON WHICH THE BALANCE IN THE ESCROW ACCOUNT
IS REDUCED TO ZERO, THE ESCROW AGENT SHALL DELIVER TO THE COMPANY AND TO THE
TRUSTEE A NOTICE THAT THE BALANCE IN THE ESCROW ACCOUNT HAS BEEN REDUCED TO
ZERO.
2. INVESTMENT AND LIQUIDATION OF FUNDS IN ESCROW ACCOUNT. FUNDS DEPOSITED
IN THE ESCROW ACCOUNT SHALL BE INVESTED AND REINVESTED BY THE ESCROW AGENT ON
THE FOLLOWING TERMS AND CONDITIONS:
2.1. PLEDGED SECURITIES. SUBJECT TO THE PROVISIONS OF ARTICLES 2 AND 3,
FUNDS HELD BY THE ESCROW AGENT IN THE ESCROW ACCOUNT MAY, AT THE WRITTEN
DIRECTION OF THE COMPANY, BE INVESTED AND REINVESTED SOLELY IN THE FOLLOWING
("PLEDGED SECURITIES"): (X) SECURITIES THAT ARE (I) DIRECT OBLIGATIONS OF THE
UNITED STATES OF AMERICA FOR THE PAYMENT OF WHICH THE FULL FAITH AND CREDIT OF
THE UNITED STATES OF AMERICA IS PLEDGED OR (II) OBLIGATIONS OF A PERSON
CONTROLLED OR SUPERVISED BY AND ACTING AS AN AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES OF AMERICA THE PAYMENT OF WHICH IS UNCONDITIONALLY GUARANTEED AS A
FULL FAITH AND CREDIT OBLIGATION BY THE UNITED STATES OF AMERICA, WHICH IN
EITHER CASE, ARE NOT CALLABLE OR REDEEMABLE AT THE OPTION OF THE ISSUER THEREOF,
AND (Y) DEPOSITORY RECEIPTS ISSUED BY A BANK (AS DEFINED IN SECTION 3(A)(2) OF
THE SECURITIES ACT) AS CUSTODIAN WITH RESPECT TO ANY U.S. GOVERNMENT OBLIGATION
WHICH IS SPECIFIED IN CLAUSE (X) ABOVE AND HELD BY SUCH BANK FOR THE ACCOUNT OF
THE HOLDER OF SUCH DEPOSITORY RECEIPT, OR WITH RESPECT TO ANY SPECIFIC PAYMENT
OF PRINCIPAL OR INTEREST ON ANY U.S. GOVERNMENT OBLIGATION WHICH IS SO SPECIFIED
AND HELD, PROVIDED THAT (EXCEPT AS REQUIRED BY LAW) SUCH CUSTODIAN IS NOT
AUTHORIZED TO MAKE ANY DEDUCTION FROM THE AMOUNT PAYABLE TO THE HOLDER OF SUCH
DEPOSITORY RECEIPT FROM ANY AMOUNT RECEIVED BY THE CUSTODIAN IN RESPECT OF THE
U.S. GOVERNMENT OBLIGATION OR THE SPECIFIC PAYMENT OF PRINCIPAL OR INTEREST OF
THE U.S. GOVERNMENT OBLIGATION EVIDENCED BY SUCH DEPOSITORY RECEIPT ("U.S.
GOVERNMENT OBLIGATIONS"), IN EACH CASE, HAVING A MATURITY DATE ON OR BEFORE THE
DATE ON WHICH THE PAYMENTS OF INTEREST ON THE NOTES TO WHICH SUCH U.S.
GOVERNMENT OBLIGATIONS ARE PLEDGED TO SECURE OCCUR.
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If the Company fails to give written investment instructions
to the Escrow Agent by 10:00 a.m. (New York time) on any Business Day (other
than the Closing Date) on which there is uninvested cash and/or maturing Pledged
Securities in the Escrow Account, the Trustee is hereby authorized and directed
to direct the Escrow Agent to, and the Escrow Agent shall, invest any such cash
or the proceeds of any maturing Pledged Securities in Pledged Securities
maturing on the next Business Day. On the Closing Date, the Company may direct
the Trustee, who shall direct the Escrow Agent, to invest the proceeds in the
Escrow Account in Pledged Securities until 2:00 p.m., which instructions shall
be executed no later than 12:00 noon on the Business Day immediately following
the Closing Date. The Company's failure to give such investment instructions
shall not constitute a default or an event of default hereunder.
2.2. INTEREST. ALL INTEREST EARNED ON FUNDS INVESTED IN PLEDGED SECURITIES
SHALL BE HELD IN THE ESCROW ACCOUNT AND REINVESTED IN ACCORDANCE WITH THE TERMS
HEREOF AND SHALL BE SUBJECT TO THE SECURITY INTEREST GRANTED HEREUNDER TO THE
TRUSTEE.
2.3. LIMITATION OF TRUSTEE'S AND ESCROW AGENT'S LIABILITY. SUBJECT TO
SECTION 9.12, IN NO EVENT SHALL THE TRUSTEE OR THE ESCROW AGENT HAVE ANY
LIABILITY TO THE COMPANY OR ANY OTHER PERSON FOR INVESTING THE FUNDS FROM TIME
TO TIME IN THE ESCROW ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF THIS ARTICLE
2, REGARDLESS OF WHETHER GREATER INCOME OR A HIGHER YIELD COULD HAVE BEEN
OBTAINED HAD THE ESCROW AGENT INVESTED SUCH FUNDS IN DIFFERENT PLEDGED
SECURITIES, OR FOR ANY LOSS (INCLUDING BREAKAGE COSTS OR LOSS OF PRINCIPAL)
ASSOCIATED WITH THE SALE OR LIQUIDATION OF PLEDGED SECURITIES IN ACCORDANCE WITH
THE TERMS OF THIS AGREEMENT.
2.4. LIQUIDATION OF FUNDS. IN LIQUIDATING ANY PLEDGED SECURITIES IN
ACCORDANCE WITH ARTICLE 3 OF THIS AGREEMENT, THE COMPANY SHALL DIRECT THE
TRUSTEE OR THE ESCROW AGENT AS TO WHICH PLEDGED SECURITIES SHALL BE LIQUIDATED.
3. INTEREST PAYMENTS.
3.1. NOT LATER THAN FIVE (5) BUSINESS DAYS PRIOR TO THE DATE OF EACH OF THE
FIRST FOUR SCHEDULED INTEREST PAYMENTS DUE ON THE NOTES, THE COMPANY SHALL, IN
WRITING, DIRECT THE ESCROW AGENT TO TRANSFER FROM THE ESCROW ACCOUNT TO THE
PAYING AGENT FUNDS NECESSARY TO PROVIDE FOR PAYMENT IN FULL OR ANY PORTION OF
THE NEXT SCHEDULED INTEREST PAYMENT ON THE NOTES (OR, IF A PORTION OF THE NOTES
HAS BEEN RETIRED BY THE COMPANY, FUNDS REPRESENTING THE LESSER OF (I) THE AMOUNT
SUFFICIENT TO PAY INTEREST THROUGH AND INCLUDING MAY 15, 2000, ON THE NOTES NOT
SO RETIRED AND (II) THE INTEREST PAYMENTS WHICH HAVE NOT PREVIOUSLY BEEN MADE ON
SUCH RETIRED NOTES FOR EACH SCHEDULED INTEREST PAYMENT DATE THROUGH AND
INCLUDING THE SCHEDULED INTEREST PAYMENT DATE) OR, IF THE COMPANY DOES NOT
INTEND TO UTILIZE THE FUNDS IN THE ESCROW ACCOUNT FOR SUCH PAYMENT OF INTEREST,
THEN THE COMPANY SHALL COMPLY WITH SECTION 3.2 BELOW. UPON RECEIPT OF SUCH
WRITTEN REQUEST, THE ESCROW AGENT SHALL TAKE ANY ACTION NECESSARY TO PROVIDE FOR
THE PAYMENT OF SUCH INTEREST PAYMENT ON THE NOTES DIRECTLY TO THE HOLDERS OF
NOTES FROM PROCEEDS OF THE COLLATERAL IN THE ESCROW ACCOUNT. CONCURRENTLY WITH
ANY RELEASE OF FUNDS TO THE PAYING AGENT PURSUANT TO THIS SECTION 3.1, THE
COMPANY SHALL DELIVER TO THE TRUSTEE A CERTIFICATE SUBSTANTIALLY IN THE FORM OF
EXHIBIT A HERETO.
3.2. IF THE COMPANY MAKES ANY INTEREST PAYMENT OR PORTION OF AN INTEREST
PAYMENT FROM A SOURCE OF FUNDS OTHER THAN THE ESCROW ACCOUNT ("COMPANY FUNDS"),
THE
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COMPANY MAY, AFTER PAYMENT IN FULL OF SUCH INTEREST PAYMENT, DIRECT THE TRUSTEE
IN WRITING TO DIRECT THE ESCROW AGENT TO RELEASE TO THE COMPANY OR AT THE
DIRECTION OF THE COMPANY AN AMOUNT OF FUNDS FROM THE ESCROW ACCOUNT EQUAL TO THE
LESSER OF (I) THE AMOUNT OF COMPANY FUNDS SO EXPENDED AND (II) THE AMOUNT OF
FUNDS IN THE ESCROW ACCOUNT WHICH EXCEEDS THE AMOUNT SUFFICIENT, IN THE
REASONABLE OPINION OF THE TRUSTEE, TO PROVIDE FOR PAYMENT IN FULL OF THE FIRST
FOUR SCHEDULED INTEREST PAYMENTS ON THE NOTES. UPON RECEIPT OF THE CERTIFICATE
DESCRIBED IN THE FOLLOWING SENTENCE, THE TRUSTEE SHALL DIRECT THE ESCROW AGENT
TO PAY OVER TO THE COMPANY THE REQUESTED AMOUNT. CONCURRENTLY WITH ANY RELEASE
OF FUNDS TO THE COMPANY PURSUANT TO THIS SECTION 3.2, THE COMPANY SHALL DELIVER
TO THE TRUSTEE A CERTIFICATE SUBSTANTIALLY IN THE FORM OF EXHIBIT A HERETO.
3.3. UPON PAYMENT IN FULL OF THE FIRST FOUR SCHEDULED INTEREST PAYMENTS ON
THE NOTES, THE SECURITY INTEREST IN THE COLLATERAL EVIDENCED BY THIS AGREEMENT
SHALL TERMINATE AND BE OF NO FURTHER FORCE AND EFFECT. FURTHERMORE, UPON THE
RELEASE OF ANY COLLATERAL FROM THE ESCROW ACCOUNT IN ACCORDANCE WITH THE TERMS
OF THIS AGREEMENT, WHETHER UPON RELEASE OF COLLATERAL TO HOLDERS AS PAYMENT OF
INTEREST, TO THE COMPANY OR OTHERWISE, THE SECURITY INTEREST EVIDENCED BY THIS
AGREEMENT IN THE COLLATERAL SO RELEASED SHALL TERMINATE AND BE OF NO FURTHER
FORCE AND EFFECT.
4. REPRESENTATIONS AND WARRANTIES. THE COMPANY HEREBY REPRESENTS AND
WARRANTS THAT:
4.1. THE EXECUTION, DELIVERY AND PERFORMANCE BY THE COMPANY OF THIS
AGREEMENT ARE WITHIN THE COMPANY'S CORPORATE POWERS, HAVE BEEN DULY AUTHORIZED
BY ALL NECESSARY CORPORATE ACTION, AND DO NOT CONTRAVENE, OR CONSTITUTE A
DEFAULT UNDER, ANY PROVISION OF APPLICABLE LAW OR REGULATION OR OF THE
CERTIFICATE OF INCORPORATION OF THE COMPANY OR OF ANY AGREEMENT, JUDGMENT,
INJUNCTION, ORDER, DECREE OR OTHER INSTRUMENT BINDING UPON THE COMPANY OR RESULT
IN THE CREATION OR IMPOSITION OF ANY LIEN ON ANY ASSETS OF THE COMPANY, EXCEPT
FOR THE SECURITY INTERESTS GRANTED UNDER THIS AGREEMENT.
4.2. THE COMPANY IS THE RECORD AND BENEFICIAL OWNER OF THE COLLATERAL, FREE
AND CLEAR OF ANY AND ALL LIENS OR CLAIMS OF ANY PERSON OR ENTITY (EXCEPT FOR THE
SECURITY INTERESTS GRANTED UNDER THIS AGREEMENT). NO FINANCING STATEMENT
COVERING THE COLLATERAL IS ON FILE IN ANY PUBLIC OFFICE OTHER THAN THE FINANCING
STATEMENTS FILED PURSUANT TO THIS AGREEMENT.
4.3. THIS AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED BY THE COMPANY AND
CONSTITUTES A LEGAL, VALID AND BINDING OBLIGATION OF THE COMPANY, ENFORCEABLE
AGAINST THE COMPANY IN ACCORDANCE WITH ITS TERMS, EXCEPT AS SUCH ENFORCEABILITY
MAY BE LIMITED BY THE EFFECT OF ANY APPLICABLE BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM OR OTHER SIMILAR LAWS AFFECTING CREDITORS' RIGHTS
GENERALLY OR GENERAL PRINCIPLES OF EQUITY AND COMMERCIAL REASONABLENESS.
4.4. UPON THE FILING OF FINANCING STATEMENTS REQUIRED BY THE UNIFORM
COMMERCIAL CODE (THE "UCC"), THE PLEDGE OF THE COLLATERAL PURSUANT TO THIS
AGREEMENT CREATES A VALID AND PERFECTED FIRST PRIORITY SECURITY INTEREST IN AND
TO THE COLLATERAL, SECURING THE PAYMENT OF THE SECURED OBLIGATIONS FOR THE
BENEFIT OF THE TRUSTEE AND THE RATABLE BENEFIT OF THE HOLDERS OF NOTES,
ENFORCEABLE AS SUCH AGAINST ALL CREDITORS OF THE
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COMPANY AND ANY PERSONS PURPORTING TO PURCHASE ANY OF THE COLLATERAL FROM THE
COMPANY OTHER THAN AS PERMITTED BY THE INDENTURE.
4.5. NO CONSENT OF ANY OTHER PERSON AND NO CONSENT, AUTHORIZATION, APPROVAL,
OR OTHER ACTION BY, AND NO NOTICE TO OR FILING WITH, ANY GOVERNMENTAL AUTHORITY
OR REGULATORY BODY IS REQUIRED EITHER (1) FOR THE PLEDGE BY THE COMPANY OF THE
COLLATERAL PURSUANT TO THIS AGREEMENT OR FOR THE EXECUTION, DELIVERY OR
PERFORMANCE OF THIS AGREEMENT BY THE COMPANY (EXCEPT FOR ANY FILINGS NECESSARY
TO PERFECT LIENS ON THE COLLATERAL) OR (2) FOR THE EXERCISE BY THE TRUSTEE OF
THE RIGHTS PROVIDED FOR IN THIS AGREEMENT OR THE REMEDIES IN RESPECT OF THE
COLLATERAL PURSUANT TO THIS AGREEMENT.
4.6. NO LITIGATION, INVESTIGATION OR PROCEEDING OF OR BEFORE ANY ARBITRATOR
OR GOVERNMENTAL AUTHORITY IS PENDING OR, TO THE KNOWLEDGE OF THE COMPANY,
THREATENED BY OR AGAINST THE COMPANY WITH RESPECT TO THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY.
4.7. THE PLEDGE OF THE COLLATERAL PURSUANT TO THIS AGREEMENT IS NOT
PROHIBITED BY ANY APPLICABLE LAW OR GOVERNMENTAL REGULATION, RELEASE,
INTERPRETATION OR OPINION OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM OR OTHER REGULATORY AGENCY (INCLUDING, WITHOUT LIMITATION, REGULATIONS G,
T, U AND X OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM).
4.8. THE MATURITY DATES OF THE U.S. GOVERNMENT OBLIGATIONS IN WHICH THE
ESCROW ACCOUNT ARE INVESTED AND REINVESTED SO AS TO ENSURE THAT SUFFICIENT FUNDS
(OR, IF A PORTION OF THE NOTES HAS BEEN RETIRED BY THE COMPANY, FUNDS
REPRESENTING THE LESSER OF (I) THE AMOUNT SUFFICIENT TO PAY INTEREST THROUGH AND
INCLUDING MAY 15, 2000, ON THE NOTES NOT SO RETIRED AND (II) THE INTEREST
PAYMENTS WHICH HAVE NOT PREVIOUSLY BEEN MADE ON SUCH RETIRED NOTES FOR EACH
SCHEDULED INTEREST PAYMENT DATE THROUGH AND INCLUDING THE SCHEDULED INTEREST
PAYMENT DATE) ARE AVAILABLE TO MAKE THE FULL PAYMENTS OF THE FIRST FOUR
SCHEDULED INTEREST PAYMENTS ON THE NOTES.
5. COVENANTS
The Company covenants and agrees with the Escrow Agent, the Trustee and
the Holders of Notes from and after the date of this Agreement until the earlier
of payment in full in cash of (A) each of the first four scheduled interest
payments due on the Notes under the terms of the Indenture or (B) all
obligations (including, but not limited to all Obligations) due and owing under
the Indenture and the Notes in the event such obligations (including, but not
limited to all Obligations) become due and payable prior to the payment of the
first four scheduled interest payments on the Notes:
(i) The Company agrees that it shall not (a) sell or otherwise dispose of,
or grant any option or warrant with respect to, any of the Collateral or (b)
create or permit to exist any Lien upon or with respect to any of the Collateral
(except for the lien created pursuant to this Agreement) and, except as
otherwise provided in this Agreement, at all times shall be the sole beneficial
owner of the Collateral.
(ii) The Company agrees that it shall not (a) enter into any agreement or
understanding that purports to or may restrict or inhibit the Escrow Agent's or
the Trustee's rights or remedies hereunder, including, without limitation, the
Trustee's right to sell or otherwise dispose of the
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Collateral in accordance with the terms of this Agreement or (b) fail to pay or
discharge any tax, assessment or levy of any nature not later than five days
prior to the date of any proposed sale under any judgment, writ or warrant of
attachment with regard to the Collateral.
6. REMEDIES UPON DEFAULT. IF ANY EVENT OF DEFAULT SHALL HAVE OCCURRED
AND BE CONTINUING:
(i) The Trustee may, without notice to the Company except as required by
law and at any time or from time to time, direct the Escrow Agent to liquidate
all Pledged Securities and transfer all funds in the Escrow Account to the
Trustee or the Paying Agent to apply such funds in accordance with the
provisions of the Indenture.
(ii) The Escrow Agent and/or the Trustee may also exercise in respect of the
Collateral, in addition to the other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code in effect at that time in the State of
New York (the "Code") (whether or not the Code applies to the affected
Collateral), and may also, without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Trustee's or the Escrow Agent's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Trustee may deem
commercially reasonable. The Company agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to the Company of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Trustee and the Escrow Agent
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Trustee or the Escrow Agent may adjourn any public
or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(iii) Any cash held by the Escrow Agent as Collateral and all net cash
proceeds received by the Trustee or the Escrow Agent in respect of any sale or
liquidation of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of the Trustee, be held by the Trustee or
the Escrow Agent as collateral for, and/or then or at any time thereafter be
applied (after payment of any costs and expenses incurred in connection with any
sale, liquidation or disposition of or realization upon the Collateral and the
payment of any amounts payable to the Trustee or the Escrow Agent) in whole or
in part by the Trustee or the Escrow Agent for the ratable benefit of the
Holders of the Notes against, all or any part of the Secured Obligations in such
order as the Trustee shall elect. Any surplus of such cash or cash proceeds held
by the Trustee or the Escrow Agent and remaining after payment in full of all
the Secured Obligations and the costs and expenses incurred by and amounts
payable to the Trustee or the Escrow Agent hereunder or under the Indenture
shall be paid over to the Company or to whomsoever shall be lawfully entitled to
receive such surplus.
7. INDEMNITY AND AUTHORITY OF THE ESCROW AGENT.
7.1. THE ESCROW AGENT SHALL HAVE AND BE ENTITLED TO EXERCISE ALL POWERS
HEREUNDER THAT ARE SPECIFICALLY GRANTED TO THE ESCROW AGENT BY THE TERMS HEREOF,
TOGETHER WITH SUCH POWERS AS ARE REASONABLY INCIDENT THERETO. THE ESCROW AGENT
MAY PERFORM ANY OF ITS DUTIES HEREUNDER OR IN CONNECTION WITH THE ESCROW ACCOUNT
BY OR THROUGH AGENTS OR EMPLOYEES AND SHALL BE ENTITLED TO RETAIN COUNSEL OF ITS
CHOICE AND TO ACT IN RELIANCE UPON THE ADVICE OF SUCH COUNSEL CONCERNING ALL
SUCH MATTERS. NEITHER THE
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ESCROW AGENT, THE TRUSTEE NOR ANY DIRECTOR, OFFICER, EMPLOYEE, ATTORNEY OR AGENT
OF THE ESCROW AGENT OR THE TRUSTEE (EACH, AN "INDEMNIFIED PERSON") SHALL BE
RESPONSIBLE FOR THE VALIDITY, EFFECTIVENESS OR SUFFICIENCY HEREOF OR OF ANY
DOCUMENT OR SECURITY FURNISHED PURSUANT HERETO. THE ESCROW AGENT AND THE TRUSTEE
AND THEIR DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS AND AGENTS SHALL BE ENTITLED
TO RELY ON ANY COMMUNICATION, INSTRUMENT OR DOCUMENT REASONABLY BELIEVED BY IT
OR THEM TO BE GENUINE AND CORRECT AND TO HAVE BEEN SIGNED OR SENT BY THE PROPER
PERSON OR PERSONS. THE COMPANY AGREES TO INDEMNIFY AND HOLD HARMLESS THE ESCROW
AGENT AND THE TRUSTEE AND EACH INDEMNIFIED PERSON FROM AND AGAINST ANY AND ALL
COSTS, EXPENSES (INCLUDING THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL
(INCLUDING THE REASONABLY ALLOCATED COSTS OF INSIDE COUNSEL)), CLAIMS AND
LIABILITIES INCURRED BY THE ESCROW AGENT OR SUCH INDEMNIFIED PERSON HEREUNDER
ARISING OUT OF OR INCURRED IN CONNECTION WITH SUCH PERSONS OR IN CONNECTION WITH
THE PERFORMANCE OF ITS DUTIES OR OBLIGATIONS HEREUNDER OR IN THE INDENTURE OR
EXERCISING ANY RIGHTS PROVIDED FOR HEREUNDER OR IN THE INDENTURE OR EXERCISING
ANY RIGHTS PROVIDED FOR HEREUNDER OR IN THE INDENTURE, UNLESS SUCH CLAIM OR
LIABILITY SHALL BE ATTRIBUTABLE TO BAD FAITH, GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT ON THE PART OF THE ESCROW AGENT OR THE TRUSTEE OR SUCH INDEMNIFIED
PERSON.
7.2. THE COMPANY ACKNOWLEDGES THAT THE RIGHTS AND RESPONSIBILITIES OF THE
ESCROW AGENT UNDER THIS AGREEMENT WITH RESPECT TO ANY ACTION TAKEN BY THE ESCROW
AGENT OR THE EXERCISE OR NON-EXERCISE BY THE ESCROW AGENT OF ANY OPTION, RIGHT,
REQUEST, JUDGMENT OR OTHER RIGHT OR REMEDY PROVIDED FOR HEREIN OR RESULTING OR
ARISING OUT OF THIS AGREEMENT SHALL BE GOVERNED BY THE INDENTURE AND, AS BETWEEN
THE ESCROW AGENT AND THE COMPANY, THE ESCROW AGENT SHALL BE CONCLUSIVELY
PRESUMED TO BE ACTING AS AGENT FOR THE TRUSTEE WITH FULL AND VALID AUTHORITY SO
TO ACT OR REFRAIN FROM ACTING, AND THE COMPANY SHALL NOT BE OBLIGATED OR
ENTITLED TO MAKE ANY INQUIRY RESPECTING SUCH AUTHORITY.
7.3. NO PROVISION OF THIS AGREEMENT SHALL REQUIRE THE ESCROW AGENT OR THE
TRUSTEE TO EXPEND OR RISK ITS OWN FUNDS OR INCUR ANY LIABILITY. THE TRUSTEE
SHALL BE UNDER NO OBLIGATION TO EXERCISE ANY OF ITS RIGHTS AND POWERS UNDER THIS
AGREEMENT AT THE REQUEST OF ANY HOLDERS, UNLESS SUCH HOLDER SHALL HAVE OFFERED
TO THE TRUSTEE SECURITY AND INDEMNITY SATISFACTORY TO IT AGAINST ANY LOSS,
LIABILITY OR EXPENSE.
7.4. THE OBLIGATIONS OF THE COMPANY UNDER THIS SECTION 7 SHALL SURVIVE THE
SATISFACTION AND DISCHARGE OF THIS AGREEMENT.
To secure the Company's payment obligations in this Section 7,
the Trustee or Escrow Agent shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee or the Escrow Agent, except that held
in trust to pay principal and interest on particular Notes. Such Lien shall
survive the satisfaction and discharge of this Agreement.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) of the Indenture occurs,
the expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
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8. TERMINATION.
8.1. THIS AGREEMENT SHALL CREATE A CONTINUING SECURITY INTEREST IN AND TO
THE COLLATERAL AND SUCH SECURITY INTEREST SHALL, UNLESS OTHERWISE PROVIDED IN
THE INDENTURE OR IN THIS AGREEMENT, REMAIN IN FULL FORCE AND EFFECT UNTIL THE
EARLIER OF PAYMENT IN FULL IN CASH OF (A) EACH OF THE FIRST FOUR SCHEDULED
INTEREST PAYMENTS DUE ON THE NOTES UNDER THE TERMS OF THE INDENTURE OR (B) ALL
OBLIGATIONS (INCLUDING, BUT NOT LIMITED TO, ALL OBLIGATIONS) DUE AND OWING UNDER
THE INDENTURE AND THE NOTES IN THE EVENT SUCH OBLIGATIONS BECOME PAYABLE PRIOR
TO THE PAYMENT OF THE FIRST FOUR SCHEDULED INTEREST PAYMENTS ON THE NOTES. THIS
AGREEMENT SHALL BE BINDING UPON THE COMPANY, ITS SUCCESSORS AND ASSIGNS, AND
SHALL INURE, TOGETHER WITH THE RIGHTS AND REMEDIES OF THE TRUSTEE HEREUNDER, TO
THE BENEFIT OF THE TRUSTEE, THE ESCROW AGENT, THE HOLDERS OF NOTES AND THEIR
RESPECTIVE SUCCESSORS, TRANSFEREES AND ASSIGNS.
8.2. SUBJECT TO THE PROVISIONS OF SECTION 9.3 HEREOF, THIS AGREEMENT SHALL
TERMINATE UPON THE EARLIER OF PAYMENT IN FULL IN CASH OF (A) EACH OF THE FIRST
FOUR SCHEDULED INTEREST PAYMENTS DUE ON THE NOTES UNDER THE TERMS OF THE
INDENTURE OR (B) ALL OBLIGATIONS (INCLUDING, BUT NOT LIMITED TO, ALL
OBLIGATIONS) DUE AND OWING UNDER THE INDENTURE AND THE NOTES IN THE EVENT SUCH
OBLIGATIONS (INCLUDING, BUT NOT LIMITED TO ALL OBLIGATIONS) BECOME PAYABLE PRIOR
TO THE PAYMENT OF THE FIRST FOUR SCHEDULED INTEREST PAYMENTS ON THE NOTES. AT
SUCH TIME, THE TRUSTEE SHALL, AT THE WRITTEN REQUEST OF THE COMPANY, REASSIGN
AND REDELIVER TO THE COMPANY ALL OF THE COLLATERAL HEREUNDER THAT HAS NOT BEEN
SOLD, DISPOSED OF, RETAINED OR APPLIED BY THE TRUSTEE IN ACCORDANCE WITH THE
TERMS OF THIS AGREEMENT AND THE INDENTURE. SUCH REASSIGNMENT AND REDELIVERY
SHALL BE WITHOUT WARRANTY (EITHER EXPRESS OR IMPLIED) BY OR RECOURSE TO THE
TRUSTEE, EXCEPT AS TO THE ABSENCE OF ANY PRIOR ASSIGNMENTS BY OR ENCUMBRANCES
CREATED BY THE TRUSTEE ON ITS INTEREST IN THE COLLATERAL, AND SHALL BE AT THE
EXPENSE OF THE COMPANY.
9. MISCELLANEOUS.
9.1. WAIVER. EITHER PARTY HERETO MAY SPECIFICALLY WAIVE ANY BREACH OF THIS
AGREEMENT BY ANY OTHER PARTY, BUT NO SUCH WAIVER SHALL BE DEEMED TO HAVE BEEN
GIVEN UNLESS SUCH WAIVER IS IN WRITING, SIGNED BY THE WAIVING PARTY, AND
SPECIFICALLY DESIGNATES THE BREACH WAIVED, NOR SHALL ANY SUCH WAIVER CONSTITUTE
A CONTINUING WAIVER OF SIMILAR OR OTHER BREACHES.
9.2. INVALIDITY. IF, FOR ANY REASON WHATSOEVER, ANY ONE OR MORE OF THE
PROVISIONS OF THIS AGREEMENT SHALL BE HELD OR DEEMED TO BE INOPERATIVE,
UNENFORCEABLE OR INVALID IN A PARTICULAR CASE OR IN ALL CASES, SUCH
CIRCUMSTANCES SHALL NOT HAVE THE EFFECT OF RENDERING ANY OF THE OTHER PROVISIONS
OF THIS AGREEMENT INOPERATIVE, UNENFORCEABLE OR INVALID, AND THE INOPERATIVE,
UNENFORCEABLE OR INVALID PROVISION SHALL BE CONSTRUED AS IF IT WERE WRITTEN SO
AS TO EFFECTUATE, TO THE MAXIMUM EXTENT POSSIBLE, THE PARTIES' INTENT.
9.3. SURVIVAL OF PROVISIONS. ALL REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE COMPANY CONTAINED HEREIN SHALL SURVIVE THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, AND SHALL TERMINATE ONLY UPON THE TERMINATION OF THIS AGREEMENT;
PROVIDED, HOWEVER, THAT THE COMPANY'S OBLIGATIONS PURSUANT TO SECTION 7 HEREOF
SHALL SURVIVE THE
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TERMINATION OF THIS AGREEMENT (INCLUDING ANY TERMINATION UNDER APPLICABLE
BANKRUPTCY LAWS) OR THE RESIGNATION OR REMOVAL OF THE TRUSTEE OR THE ESCROW
AGENT.
9.4. ASSIGNMENT. THIS AGREEMENT SHALL INURE TO AND BE BINDING UPON THE
PARTIES AND THEIR RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNS; PROVIDED,
HOWEVER, THAT THE COMPANY MAY NOT ASSIGN ITS RIGHTS OR OBLIGATIONS HEREUNDER
WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF THE TRUSTEE, ACTING AT THE
DIRECTION OF THE HOLDERS AS PROVIDED IN THE INDENTURE.
9.5. ENTIRE AGREEMENT AMENDMENTS. THIS AGREEMENT AND THE INDENTURE CONTAIN
THE ENTIRE AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY AND ALL PRIOR AGREEMENTS, UNDERSTANDINGS AND COMMITMENTS WITH
RESPECT THERETO, WHETHER ORAL OR WRITTEN; PROVIDED, HOWEVER, THAT THIS AGREEMENT
IS EXECUTED AND ACCEPTED BY THE TRUSTEE AND THE ESCROW AGENT SUBJECT TO ALL
TERMS AND CONDITIONS OF ITS ACCEPTANCE OF THE TRUST UNDER THE INDENTURE, AS
FULLY AS IF SAID TERMS AND CONDITIONS WERE SET FORTH AT LENGTH HEREIN. THIS
AGREEMENT MAY BE AMENDED ONLY BY A WRITING SIGNED BY DULY AUTHORIZED
REPRESENTATIVES OF ALL PARTIES. THE TRUSTEE AND THE ESCROW AGENT MAY EXECUTE AN
AMENDMENT TO THIS AGREEMENT ONLY IF THE REQUISITE CONSENT OF THE HOLDERS OF THE
NOTES REQUIRED BY SECTION 9.02 OF THE INDENTURE HAS BEEN OBTAINED, UNLESS NO
SUCH CONSENT IS REQUIRED BY SUCH SECTION 9.02 OF THE INDENTURE.
9.6. NOTICES. ALL NOTICES AND OTHER COMMUNICATIONS REQUIRED OR PERMITTED TO
BE GIVEN OR MADE UNDER THIS AGREEMENT TO ANY PARTY HERETO SHALL BE DELIVERED IN
WRITING BY HAND DELIVERY OR OVERNIGHT DELIVERY, OR SHALL BE DELIVERED BY
FACSIMILE OR TELEPHONICALLY WITH CONFIRMATION IN WRITING NOT MORE THAN
TWENTY-FOUR HOURS FOLLOWING SUCH TELEPHONIC NOTICE. A NOTICE GIVEN IN ACCORDANCE
WITH THE PRECEDING SENTENCE SHALL BE DEEMED TO HAVE BEEN DULY GIVEN UPON THE
SENDING THEREOF, EXCEPT FOR NOTICE TO THE TRUSTEE OR THE ESCROW AGENT, WHICH
SHALL BE DEEMED GIVEN ONLY WHEN RECEIVED. NOTICES SHOULD BE ADDRESSED AS
FOLLOWS:
To the Company:
Park `N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
Attention: Steve Conkling
Facsimile number:(954) 745-7899
Telephone number:(954) 745-7800
With copies to:
Kilpatrick Stockton, LLP
Suite 400
4101 Lake Boone Trial
Raleigh, North Carolina 27607
Attention: James M. O'Connell, Esq.
Facsimile number.: (919) 420-1800
Telephone number: (919) 420-1700
11
<PAGE> 116
To the Trustee:
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, CT 06103
Attention: Elizabeth Hammer
Facsimile number: (860) 244-1889
Telephone number: (860) 244-1817
To the Escrow Agent:
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, CT 06103
Attention: Elizabeth Hammer
Facsimile number: (860) 244-1889
Telephone number: (860) 244-1817
or at such other address, facsimile number or phone number as the specified
entity most recently may have designated in writing in accordance with this
paragraph to the other parties.
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<PAGE> 117
9.7. EXPENSES. THE COMPANY SHALL FROM TIME TO TIME PAY TO THE TRUSTEE AND
THE ESCROW AGENT THEIR REASONABLE FEES AND EXPENSES AND ANY REASONABLE FEES AND
EXPENSES OF THEIR COUNSEL, THAT THE TRUSTEE AND ESCROW AGENT MAY INCUR IN
CONNECTION WITH (A) THE ADMINISTRATION OF THIS AGREEMENT; (B) THE CUSTODY OR
PRESERVATION OF, OR THE SALE OF, COLLECTION FROM, OR OTHER REALIZATION UPON, ANY
OF THE COLLATERAL; (C) THE EXERCISE OR ENFORCEMENT OF ANY OF THE RIGHTS OF THE
TRUSTEE AND ESCROW AGENT AND THE HOLDERS OF NOTES HEREUNDER; OR (D) THE FAILURE
BY THE COMPANY TO PERFORM OR OBSERVE ANY OF THE PROVISIONS HEREOF, IN EACH CASE
OTHER THAN ANY SUCH EXPENSES THAT ARISE FROM THE BAD FAITH, GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE TRUSTEE OR ESCROW AGENT.
9.8. SECURITY INTEREST ABSOLUTE. ALL RIGHTS OF THE TRUSTEE AND THE HOLDERS
OF NOTES AND SECURITY INTERESTS HEREUNDER, AND ALL OBLIGATIONS OF THE COMPANY
HEREUNDER, SHALL BE ABSOLUTE AND UNCONDITIONAL IRRESPECTIVE OF (A) ANY LACK OF
VALIDITY OR ENFORCEABILITY OF THE INDENTURE OR ANY OTHER AGREEMENT OR INSTRUMENT
RELATING THERETO; (B) ANY CHANGE IN THE TIME, MANNER OR PLACE OF PAYMENT OF, OR
IN ANY OTHER TERM OF, ALL OR ANY OF THE SECURED OBLIGATIONS, OR ANY OTHER
AMENDMENT OR WAIVER OF OR ANY CONSENT TO ANY DEPARTURE FROM THE INDENTURE; (C)
ANY EXCHANGE, SURRENDER, RELEASE OR NON-PERFECTION OF ANY LIENS ON ANY OTHER
COLLATERAL FOR ALL OR ANY OF THE SECURED OBLIGATIONS; OR (D) TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY OTHER CIRCUMSTANCE WHICH MIGHT OTHERWISE
CONSTITUTE A DEFENSE AVAILABLE TO, OR A DISCHARGE OF, THE COMPANY IN RESPECT OF
THE SECURED OBLIGATIONS OR OF THIS AGREEMENT.
9.9. 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. DELIVERY OF AN EXECUTED
COUNTERPART OF A SIGNATURE PAGE TO THIS AGREEMENT BY FACSIMILE SHALL BE
EFFECTIVE AS DELIVERY OF A MANUALLY EXECUTED COUNTERPART OF THIS AGREEMENT.
9.10. LIMITATION BY LAW. ALL RIGHTS, REMEDIES AND POWERS PROVIDED HEREIN MAY
BE EXERCISED ONLY TO THE EXTENT THAT THEY SHALL NOT RENDER THIS AGREEMENT NOT
ENTITLED TO BE RECORDED, REGISTERED OR FILED UNDER PROVISIONS OF ANY APPLICABLE
LAW.
9.11. RIGHTS OF HOLDERS OF NOTES. NO HOLDER OF NOTES SHALL HAVE ANY
INDEPENDENT RIGHTS HEREUNDER OTHER THAN THOSE RIGHTS GRANTED TO INDIVIDUAL
HOLDERS OF NOTES PURSUANT TO SECTION 6.06 OF THE INDENTURE; PROVIDED THAT
NOTHING IN THIS SUBSECTION SHALL LIMIT ANY RIGHTS GRANTED TO THE TRUSTEE UNDER
THE INDENTURE.
9.12. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF
THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH. RELATED
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE COMPANY, THE
TRUSTEE, THE ESCROW AGENT AND THE HOLDERS OF NOTES IN CONNECTION WITH THIS
AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF
LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
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(ii) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH AND IN PARAGRAPH (vi) BELOW,
THE COMPANY, THE TRUSTEE, THE ESCROW AGENT AND THE HOLDERS OF NOTES AGREE THAT
ALL DISPUTES BETWEEN OR AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE,
SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK,
BUT THE COMPANY, THE TRUSTEE, THE ESCROW AGENT AND THE HOLDERS OF NOTES
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF NEW YORK, NEW YORK. THE COMPANY WAIVES IN ALL DISPUTES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.
(iii) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY AS TRUSTEE
OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF NOTES, HAVE THE RIGHT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE COMPANY OR ITS
PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND
HAVING PERSONAL OR IN REM JURISDICTION OVER THE COMPANY OR ITS PROPERTY, AS THE
CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE COMPANY
AGREES THAT IT SHALL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSS CLAIMS IN
ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE COMPANY WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE TRUSTEE HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS.
(iv) THE COMPANY, THE TRUSTEE AND THE ESCROW AGENT EACH WAIVE ANY AND ALL
RIGHTS TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, IN CONNECTION WITH, OR RELATING OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM PURSUANT TO, UNDER OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ALL DISPUTES RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(v) THE COMPANY HEREBY IRREVOCABLY DESIGNATES CT CORPORATION AS THE
DESIGNEE, APPOINTEE AND AGENT OF THE COMPANY TO RECEIVE, FOR AND ON BEHALF OF
THE COMPANY, SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT. IT IS UNDERSTOOD THAT NOTICE AND A COPY OF SUCH PROCESS
SERVED ON SUCH AGENT WILL BE FORWARDED PROMPTLY TO THE COMPANY, BUT THE FAILURE
OF THE COMPANY
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<PAGE> 119
TO RECEIVE SUCH NOTICE AND COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH
PROCESS. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
COMPANY AT ITS ADDRESS SET FORTH IN SECTION 11.02 OF THE INDENTURE, SUCH SERVICE
TO BECOME EFFECTIVE FIVE (5) BUSINESS DAYS AFTER SUCH MAILING.
(vi) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ESCROW AGENT, THE TRUSTEE
OR ANY HOLDER OF NOTES TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
(vii) THE COMPANY AGREES THAT NEITHER THE TRUSTEE, THE ESCROW AGENT NOR ANY
HOLDER OF NOTES SHALL HAVE ANY LIABILITY TO THE COMPANY (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE COMPANY IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATING OR INCIDENTAL TO, THE TRANSACTIONS
CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY
A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE,
THE ESCROW AGENT OR SUCH HOLDER OF NOTES, AS THE CASE MAY BE, THAT SUCH LOSSES
WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE TRUSTEE, THE ESCROW
AGENT OR SUCH HOLDER OF NOTES, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(viii) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS OTHERWISE
PROVIDED IN THIS AGREEMENT, THE COMPANY WAIVES ALL RIGHTS OF NOTICE AND HEARING
OF ANY KIND PRIOR TO THE EXERCISE BY THE TRUSTEE, THE ESCROW AGENT OR ANY HOLDER
OF NOTES OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO
REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY
UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE COMPANY WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF THE TRUSTEE, THE ESCROW AGENT OR ANY HOLDER OF NOTES IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY. ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE TRUSTEE, THE ESCROW AGENT OR ANY HOLDER OF NOTES, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION,
THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE COMPANY ON THE ONE
HAND AND THE TRUSTEE, THE ESCROW AGENT AND/OR THE HOLDERS OF NOTES ON THE OTHER
HAND.
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<PAGE> 120
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Pledge, Escrow and Disbursement Agreement as of the day first written above.
COMPANY: PARK `N VIEW, INC.
By
---------------------------------------
Name:
Title:
TRUSTEE: STATE STREET BANK AND TRUST COMPANY
By
---------------------------------------
Name:
Title:
ESCROW AGENT: STATE STREET BANK AND TRUST COMPANY
By
---------------------------------------
Name:
Title:
16
<PAGE> 121
EXHIBIT A
[Form of Certificate for Release of Funds to [Company] [Paying Agent]]
PARK `N VIEW, INC.
Date:
-------
The undersigned officer of Park `N View, Inc., a Delaware corporation (the
"Company"), hereby certifies, pursuant to Section [3.l][3.2] of the Pledge,
Escrow and Disbursement Agreement dated as of May 27, 1998 (the "Escrow and
Disbursement Agreement") by and among the Company, State Street Bank and Trust
Company, as trustee (the "Trustee"), and State Street Bank and Trust Company as
escrow agent (the "Escrow Agent"), under the Indenture dated as of May 27, 1998
(the "Indenture"), between the Company and the Trustee, that:
The release of funds has been duly authorized by all necessary
corporation action and does not contravene, or constitute a default
under, any provision of applicable law or regulation or the certificate
of incorporation of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company
or result in the creation or imposition of any Lien on any assets of
the Company.
The Company hereby requests the Trustee to direct the Escrow
Agent to liquidate $_________ worth of Pledged Securities in the Escrow Account
by not later than 12:00 noon (New York time) on _________ , 199 and to transfer
$________ in immediately available funds to [the Company] [the Paying Agent].
Capitalized terms used herein without definition shall have
the meanings set forth in the Escrow and Disbursement Agreement.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
<PAGE> 1
EXHIBIT 4.2
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
DATED AS OF MAY 27, 1998
BY AND BETWEEN
PARK `N VIEW, INC.
AND
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE> 2
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of May 27, 1998 by and between Park `N View, Inc., a Delaware
corporation (the "COMPANY"), and Donaldson, Lufkin & Jenrette Securities
Corporation (the "INITIAL PURCHASER" ), who has agreed to purchase the Company's
13% Series A Senior Notes due 2008 (the "SERIES A NOTES") pursuant to the
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated May
20, 1998 (the "PURCHASE AGREEMENT"), by and between the Company and the Initial
Purchaser. In order to induce the Initial Purchaser to purchase the Series A
Notes, the Company has agreed to provide the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the obligations of the Initial Purchaser set forth in the Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the meaning
assigned to them the Indenture, dated May 27, 1998, between the Company and
State Street Bank and Trust Company, as Trustee, relating to the Series A Notes
and the Series B Notes (the "INDENTURE").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall
have the following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.
CERTIFICATED SECURITIES: Definitive Notes, as defined in the
Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
maintenance of such Exchange Offer Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes tendered by
Holders thereof pursuant to the Exchange Offer.
<PAGE> 3
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Company of a
principal amount of Series B Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal amount
of Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchaser
proposes to sell the Series A Notes to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) that is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
RULE 144: Rule 144 promulgated under the Act.
SERIES B NOTES: The Company's 13% Series B Senior Notes due 2008
to be issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) as
contemplated by Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
2
<PAGE> 4
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Series A Note, until the
earliest to occur of (a) the date on which such Series A Note is exchanged in
the Exchange Offer for a Series B Note which is entitled to be resold to the
public by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (b) the date on which such Series A Note has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Series B Notes), or (c) the date on which
such Series A Note is distributed to the public pursuant to Rule 144 or are
eligible for sale under Rule 144(k) under the Act and each Series B Note held by
a Broker-Dealer until the date on which such Series B Note is disposed of by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including the delivery of the Prospectus
contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company shall (i) cause the Exchange Offer Registration
Statement to be filed with the Commission as soon as practicable after the
Closing Date, but in no event later than 60 days after the Closing Date (such
60th day being the "FILING DEADLINE"), (ii) use its best efforts to cause such
Exchange Offer Registration Statement to become effective at the earliest
possible time, but in no event later than 120 days after the Closing Date (such
120th day being the "EFFECTIVENESS DEADLINE"), (iii) in connection with the
foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause it to become
effective, (B) file, if applicable, a post-effective amendment to such Exchange
Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings, if any, in connection with the registration and
qualification of the Series B Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting (i) registration of the Series B Notes to be offered
in exchange for the Series A Notes that are Transfer Restricted Securities and
(ii) resales of Series B Notes by Broker-Dealers that tendered into the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Series A Notes acquired directly from the Company or any of its Affiliates) as
contemplated by Section 3(c) below.
3
<PAGE> 5
(b) The Company shall use its best efforts to cause the Exchange
Offer Registration Statement to be effective continuously, and shall keep the
Exchange Offer open for a period of not less than the minimum period required
under applicable federal and state securities laws to Consummate the Exchange
Offer; provided, however, that in no event shall such period be less than 20
Business Days. The Company shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No securities other than the
Series B Notes shall be included in the Exchange Offer Registration Statement.
The Company shall use its best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
Business Days thereafter (such 30th day being the "CONSUMMATION DEADLINE").
(c) The Company shall include a "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Broker-Dealer who holds Transfer Restricted Securities
that were acquired for the account of such Broker-Dealer as a result of
market-making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any Affiliate of the Company), may
exchange such Transfer Restricted Securities pursuant to the Exchange Offer.
Such "Plan of Distribution" section shall also contain all other information
with respect to such sales by such Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Transfer Restricted Securities held by any such Broker-Dealer, except to the
extent required by the Commission as a result of a change in policy, rules or
regulations after the date of this Agreement. See the Shearman & Sterling
no-action letter (available July 2, 1993).
Because such Broker-Dealer may be deemed to be an "underwriter"
within the meaning of the Act and must, therefore, deliver a prospectus meeting
the requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company shall
permit the use of the Prospectus contained in the Exchange Offer Registration
Statement by such Broker-Dealer to satisfy such prospectus delivery requirement.
To the extent necessary to ensure that the prospectus contained in the Exchange
Offer Registration Statement is available for sales of Series B Notes by
Broker-Dealers, the Company agrees to use its best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented, amended and
current as required by and subject to the provisions of Section 6(a) and (c)
hereof and in conformity with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, for a period of one year from the Consummation Deadline or such shorter
period as will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold pursuant thereto. The Company shall
provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealers, promptly upon request, and in no event later than one day after
such request, at any time during such period.
4
<PAGE> 6
Upon consummation of the Exchange Offer and compliance with Section
3(c) above, the Company shall no longer have any obligations to register
Transfer Restricted Securities pursuant to this Section 3.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted
by applicable law (after the Company has complied with the procedures set forth
in Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted
Securities shall notify the Company within 10 Business Days following the
Consummation Deadline that (A) such Holder was prohibited by law or Commission
policy from participating in the Exchange Offer or (B) such Holder may not
resell the Series B Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the Prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales by
such Holder or (C) such Holder is a Broker-Dealer and holds Series A Notes
acquired directly from the Company or any of its Affiliates, then the Company
shall:
(x) cause to be filed, on or prior to 30 days after the earlier of
(i) the date on which the Company determines that the Exchange Offer
Registration Statement cannot be filed as a result of clause (a)(i) above and
(ii) the date on which the Company receives the notice specified in clause
(a)(ii) above, (such earlier date, the "FILING DEADLINE"), a shelf registration
statement pursuant to Rule 415 under the Act (which may be an amendment to the
Exchange Offer Registration Statement (the "SHELF REGISTRATION STATEMENT")),
relating to all Transfer Restricted Securities, and
(y) use its best efforts to cause such Shelf Registration
Statement to become effective on or prior to 90 days after the Filing Deadline
for the Shelf Registration Statement (such 90th day the "EFFECTIVENESS
DEADLINE").
If, after the Company has filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law (i.e.,
clause (a)(i) above), then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above;
provided that, in such event, the Company shall remain obligated to meet the
Effectiveness Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration
Statement is available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 4(a), the Company shall
use its best efforts to keep any Shelf Registration Statement required by this
Section 4(a) continuously effective, supplemented, amended and current as
required by and subject to the provisions of Sections 6(b) and (c) hereof and in
conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (as extended pursuant to Section 6(c)(i)) following
the Closing Date, or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold pursuant thereto; provided that, to the extent that any Holder is required
by the Act to comply with the registration and prospectus
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<PAGE> 7
delivery requirements of the Act in connection with such Holder's use of the
Shelf Registration Statement in connection with a secondary resale transaction,
such Holder, by its acquisition of a Transfer Restricted Security, agrees to
comply with such requirements.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation Deadline
or (iv) any Registration Statement required by this Agreement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective immediately (each such event referred to
in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the Company hereby
agrees to pay to each Holder of Transfer Restricted Securities affected thereby
liquidated damages in an amount equal to $.05 per week per $1,000 in principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues for the first 90-day
period immediately following the occurrence of such Registration Default. The
amount of the liquidated damages shall increase by an additional $.05 per week
per $1,000 in principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum amount of liquidated damages of $.50 per week per $1,000 in
principal amount of Transfer Restricted Securities; provided that the Company
shall in no event be required to pay liquidated damages for more than one
Registration Default at any given time. Notwithstanding anything to the contrary
set forth herein, (1) upon filing of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of (i)
above, (2) upon the effectiveness of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of (ii)
above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above,
or (4) upon the filing of a post-effective amendment
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<PAGE> 8
to the Registration Statement or an additional Registration Statement that
causes the Exchange Offer Registration Statement (and/or, if applicable, the
Shelf Registration Statement) to again be declared effective or made usable in
the case of (iv) above, the liquidated damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease. Notwithstanding the foregoing, the Company
will not be obligated to pay any liquidated damages as provided in clause (iv)
above during the period that dispositions of Transfer Restricted Securities are
permitted to be suspended in accordance with Section 6(d); provided, that the
Company is otherwise in compliance with its obligations hereunder.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Company to pay liquidated damages with respect to securities shall survive until
such time as such obligations with respect to such securities shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall (x) comply with all applicable provisions of
Section 6(c) below, (y) use its best efforts to effect such exchange and to
permit the resale of Series B Notes by Broker-Dealers that tendered in the
Exchange Offer Series A Notes that such Broker-Dealer acquired for its own
account as a result of its market making activities or other trading activities
(other than Series A Notes acquired directly from the Company or any of its
Affiliates) being sold in accordance with the intended method or methods of
distribution thereof, and (z) comply with all of the following provisions:
(i) If, following the date hereof there has been
announced a change in Commission policy with respect to exchange
offers such as the Exchange Offer, that in the reasonable opinion of
counsel to the Company raises a substantial question as to whether
the Exchange Offer is permitted by applicable federal law, the
Company hereby agrees to seek a no-action letter or other favorable
decision from the Commission allowing the Company to Consummate an
Exchange Offer for such Transfer Restricted Securities. The Company
hereby agrees to pursue the issuance of such a decision to the
Commission staff level. In connection with the foregoing, the
Company hereby agrees to take all such other actions as may be
requested by the Commission or otherwise required in connection with
the issuance of such decision, including without limitation (A)
participating in telephonic conferences with the Commission, (B)
delivering to the Commission staff an analysis prepared by counsel
to the Company setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution (which need not
be favorable) by the Commission staff.
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<PAGE> 9
(ii) As a condition to its participation in the Exchange
Offer, each Holder of Transfer Restricted Securities (including,
without limitation, any Holder who is a Broker Dealer) shall furnish,
upon the request of the Company, prior to the Consummation of the
Exchange Offer, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange
Offer Registration Statement) to the effect that (A) it is not an
Affiliate of the Company, (B) it is not engaged in, and does not
intend to engage in, and has no arrangement or understanding with any
person to participate in, a distribution of the Series B Notes to be
issued in the Exchange Offer and (C) it is acquiring the Series B
Notes in its ordinary course of business. As a condition to its
participation in the Exchange Offer each Holder using the Exchange
Offer to participate in a distribution of the Series B Notes shall
acknowledge and agree that, if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired
directly from the Company or an Affiliate thereof, it (1) could not,
under Commission policy as in effect on the date of this Agreement,
rely on the position of the Commission enunciated in Morgan Stanley
and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters (including, if applicable, any no-action
letter obtained pursuant to clause (i) above), and (2) must comply
with the registration and prospectus delivery requirements of the Act
in connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange
Offer in reliance on the position of the Commission enunciated in
Exxon Capital Holdings Corporation (available May 13, 1988), Morgan
Stanley and Co., Inc. (available June 5, 1991) as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and, if
applicable, any no-action letter obtained pursuant to clause (i)
above, (B) including a representation that the Company has not entered
into any arrangement or understanding with any Person to distribute
the Series B Notes to be received in the Exchange Offer and that, to
the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B Notes in
its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of
the Series B Notes received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as set forth
in any no-action letter obtained pursuant to clause (i) above, if
applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall (i) comply with all the provisions of
Section 6(c) below and use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
8
<PAGE> 10
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof; and
(ii) issue, upon the request of any Holder or purchaser of
Series A Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Company
shall:
(i) use its best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that
would cause any such Registration Statement or the Prospectus
contained therein (A) to contain an untrue statement of material
fact or omit to state any material fact necessary to make the
statements therein not misleading or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the
period required by this Agreement, the Company shall file promptly
an appropriate amendment to such Registration Statement curing such
defect, and, if Commission review is required, use its best efforts
to cause such amendment to be declared effective as soon as
practicable.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement
as may be necessary to keep such Registration Statement effective
for the applicable period set forth in Section 3 or 4 hereof, as the
case may be; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Act, and to comply fully with Rules 424, 430A
and 462, as applicable, under the Act in a timely manner; and
comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method
or methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise (A) each selling Holder of Transfer Restricted
Securities named in any Shelf Registration Statement or
Prospectus and (B) to the extent that the Company is required to
maintain an effective Exchange Offer Registration Statement for any
Broker Dealer pursuant to Section 3 hereof, any such Broker Dealer
named in such Exchange Offer Registration Statement, promptly and,
if requested by such Holder or Broker-Dealer, confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
applicable Registration
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<PAGE> 11
Statement or any post-effective amendment thereto, when the same has
become effective, (B) of any request by the Commission for amendments
to the Registration Statement or amendments or supplements to the
Prospectus or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or
that requires the making of any additions to or changes in the
Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes
in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under state securities or Blue Sky
laws, the Company shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to (A) each selling Holder of Transfer Restricted
Securities named in any Shelf Registration Statement or Prospectus and
(B) to the extent that the Company is required to maintain an
effective Exchange Offer Registration Statement for any Broker Dealer
pursuant to Section 3 hereof, any such Broker Dealer named in such
Exchange Offer Registration Statement, in connection with such
exchange or sale, if any, before filing with the Commission, copies of
any Registration Statement (excluding exhibits) or any Prospectus
included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review
and comment of such Holders in connection with such sale, if any, for
a period of at least five days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or supplement to
any such Registration Statement or Prospectus (including all such
documents incorporated by reference) to which such Holders shall
reasonably object within five days after the receipt thereof. A
selling Holder or Broker Dealer, as applicable,
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<PAGE> 12
shall be deemed to have reasonably objected to such filing if such
Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading or fails to comply with the
applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to (A) each selling Holder of Transfer
Restricted Securities named in any Shelf Registration Statement or
Prospectus and (B) to the extent that the Company is required to
maintain an effective Exchange Offer Registration Statement for any
Broker Dealer pursuant to Section 3 hereof, any such Broker Dealer
named in such Exchange Offer Registration Statement, in connection
with such exchange or sale, if any, make the Company's representatives
available for discussion of such document and other customary due
diligence matters, and include such information in such document prior
to the filing thereof as such Holders or such Broker Dealers may
reasonably request;
(vii) make available, at reasonable times, for inspection by
each Holder and any attorney or accountant retained by such Holders,
all financial and other records, pertinent corporate documents of the
Company and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Holder,
attorney or accountant in connection with such Registration Statement
or any post-effective amendment thereto subsequent to the filing
thereof and prior to its effectiveness;
(viii) if requested (A) by any selling Holder of Transfer
Restricted Securities named in any Shelf Registration Statement or
Prospectus and (B) to the extent that the Company is required to
maintain an effective Exchange Offer Registration Statement for any
Broker Dealer pursuant to Section 3 hereof, by any such Broker Dealer
named in such Exchange Offer Registration Statement, in connection
with such sale, promptly include in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such Holders or such Broker Dealers may
reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(ix) furnish to (A) each selling Holder of Transfer Restricted
Securities named in any Shelf Registration Statement or Prospectus and
(B) to the extent that the Company is required to maintain an
effective Exchange Offer Registration Statement for any Broker Dealer
pursuant to Section 3 hereof, each such Broker Dealer named in such
Exchange Offer Registration Statement, in connection with such
exchange or sale, without charge, at least one copy of the
Registration Statement (excluding exhibits, unless requested by any
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<PAGE> 13
such selling Holder or such Broker Dealer), as first filed with the
Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(x) deliver to (A) each selling Holder of Transfer Restricted
Securities named in any Shelf Registration Statement or Prospectus and
(B) to the extent that the Company is required to maintain an
effective Exchange Offer Registration Statement for any Broker Dealer
pursuant to Section 3 hereof, each such Broker Dealer named in such
Exchange Offer Registration Statement, without charge, as many copies
of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons reasonably may
request; the Company hereby consent to the use (in accordance with
law) of the Prospectus and any amendment or supplement thereto by each
selling Holder or each such Broker Dealer in connection with the
offering and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement thereto;
(xi) upon the request of (A) any selling Holder of Transfer
Restricted Securities named in any Shelf Registration Statement or
Prospectus and (B) to the extent that the Company is required to
maintain an effective Exchange Offer Registration Statement for any
Broker Dealer pursuant to Section 3 hereof, any such Broker Dealer
named in such Exchange Offer Registration Statement, enter into such
agreements (including underwriting agreements) and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to any
applicable Registration Statement contemplated by this Agreement as
may be reasonably requested by any selling Holder or any such Broker
Dealer in connection with any sale or resale pursuant to any
applicable Registration Statement. In such connection, the Company
shall:
(A) upon request of any selling Holder or any such Broker Dealer,
furnish (or in the case of paragraphs (2) and (3), use its best
efforts to cause to be furnished) to each selling Holder, upon the
effectiveness of the Shelf Registration Statement or such Broker
Dealer upon closing of any sale pursuant to an effective Exchange
Offer Registration Statement:
(1) a certificate, dated such date, signed on behalf of the
Company by (x) the President and (y) the Chief Financial or
Operating Officer of the Company, confirming, as of the date
thereof, the matters set forth in Sections 6(ee), 9(a) and 9(b)
of the Purchase Agreement and such other similar matters as such
Holders or such Broker Dealer may reasonably request;
(2) an opinion of counsel for the Company covering
matters similar to those set forth in paragraph (e) of Section 9
of the Purchase Agreement and such other matter as such Holder or
such Broker Dealer may reasonably
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<PAGE> 14
request, and in any event including a statement to the effect
that such counsel has participated in conferences with officers
and other representatives of the Company, representatives of the
independent public accountants for the Company and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the basis
of the foregoing (relying as to materiality to the extent such
counsel deemed appropriate upon the statements of officers and
other representatives of the Company and without independent
check or verification), no facts came to such counsel's attention
that caused such counsel to believe that the applicable
Registration Statement, at the time such Registration Statement
or any post-effective amendment thereto became effective,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the
Prospectus contained in such Registration Statement as of its
date, contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. Without limiting the foregoing,
such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter from the Company's independent
accountants, in the customary form and covering matters of the
type customarily covered in comfort letters to underwriters in
connection with underwritten offerings, and affirming the matters
set forth in the comfort letters delivered pursuant to Section
9(h) of the Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders or such Broker Dealers to
evidence compliance with the matters covered in clause (A) above and with
any customary conditions contained in the any agreement entered into by the
Company pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the (A) each selling Holder of Transfer
Restricted Securities named in any Shelf Registration Statement or
Prospectus and their counsel and (B) to the extent that the Company is
required to maintain an effective Exchange Offer Registration Statement for
any Broker Dealer pursuant to Section 3 hereof, any such Broker Dealer
named in such Exchange Offer Registration Statement and their counsel, in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or
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<PAGE> 15
Blue Sky laws of such jurisdictions as such selling Holders or such Broker
Dealers may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that neither the Company shall be required to register
or qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such denominations and such
names as the Holders may request at least two Business Days prior to such
sale of Transfer Restricted Securities;
(xiv) use its best efforts to cause the disposition of
the Transfer Restricted Securities covered by the Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject
to the proviso contained in clause (xii) above;
(xv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration Statement
covering such Transfer Restricted Securities and provide the Trustee under
the Indenture with printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with the Depository
Trust Company;
(xvi) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xvii) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement required
by this Agreement and, in connection therewith, cooperate with the Trustee
and the Holders to effect such changes to the Indenture as may be required
for such Indenture to be so qualified in accordance with the terms of the
TIA; and execute and use its best efforts to cause the Trustee to execute,
all documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner; and
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<PAGE> 16
(xviii) provide promptly to each Holder, upon request, each
document filed with the Commission pursuant to the requirements of
Section 13 or Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees (i) by acquisition
of a Transfer Restricted Security that, upon receipt of the notice referred to
in Section 6(c)(iii)(C) or any notice from the Company of the existence of any
fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT
DATE"). The Company will be deemed not to have used its best efforts to cause a
Registration Statement to remain effective during the requisite period if the
Company has voluntarily taken any action that resulted in the delivery of a
notice described in Section 6(c)(iii)(C) hereof unless (A) such action was
required by applicable law or (B) such action was taken by the Company in good
faith and for valid business reasons (but not including avoidance of the
Company's obligations hereunder), including a material corporate transaction;
provided that, in any event, the aggregate number of days in any consecutive
twelve-month period for a which a Registration Statement is not effective or
usable does not exceed 45 days. Each Holder receiving a Suspension Notice hereby
agrees that it will either (i) destroy any Prospectuses, other than permanent
file copies, then in such Holder's possession which have been replaced by the
Company with more recently dated Prospectuses or (ii) deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such Holder's possession of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of the Suspension Notice. The
time period regarding the effectiveness of such Registration Statement set forth
in Section 3 or 4 hereof, as applicable, shall be extended by a number of days
equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the date of delivery of the Recommencement
Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses; (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing certificates for the Series B Notes
to be issued in the Exchange Offer and printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Company and the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing the Series B Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company
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<PAGE> 17
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities who are
tendering Series A Notes into in the Exchange Offer and/or selling or reselling
Series A Notes or Series B Notes pursuant to the "Plan of Distribution"
contained in the Exchange Offer Registration Statement or the Shelf Registration
Statement, as applicable, for the reasonable fees and disbursements of not more
than one counsel, who shall be Latham & Watkins, unless another firm shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder,
its directors, officers and each Person, if any, who controls such Holder
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act),
from and against any and all losses, claims, damages, liabilities, judgments,
(including without limitation, any legal or other expenses reasonably incurred
in connection with investigating or defending any matter, including any action
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, preliminary prospectus or
Prospectus (or any amendment or supplement thereto) provided by the Company to
any Holder or any prospective purchaser of Series B Notes or registered Series A
Notes, or caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission or alleged untrue
statement or omission that is (i) based upon information relating to any of the
Holders furnished in writing to the Company by or on behalf of any of the
Holders or (ii) made in any preliminary prospectus if a copy of the Prospectus
(as amended or supplemented, if the Company shall furnish such amendment or
supplement thereto) was not sent or given by or on behalf of such Holder to the
person asserting any such loss, claim, damage, liability or expense, if required
to law so to have been delivered, at or prior to the written confirmation of the
sale of the Notes as required by the Act and the Prospectus (as so amended or
supplemented) would have corrected in all material respects such untrue
statement or omission.
(b) Each Holder of Transfer Restricted agrees, severally and not
jointly, to indemnify and hold harmless the Company, and its directors and
officers, and each person, if any, who controls
16
<PAGE> 18
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company, to the same extent as the foregoing indemnity from the Company set
forth in section (a) above, but only with reference to information relating to
such Holder furnished in writing to the Company by or on behalf of such Holder
expressly for use in any Registration Statement. In no event shall any Holder,
its directors, officers or any Person who controls such Holder be liable or
responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages that such Holder, its directors, officers or any Person who controls
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING person") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 8(a), and by
the Company, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received a
request from the
17
<PAGE> 19
indemnified party for reimbursement for the fees and expenses of counsel (in any
case where such fees and expenses are at the expense of the indemnifying party)
and, prior to the date of such settlement, the indemnifying party shall have
failed to comply with such reimbursement request. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent that the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company, on
the one hand, and the Holders, on the other hand, from their sale of Transfer
Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 8(d)(i) above but also the
relative fault of the Company, on the one hand, and of the Holder, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company, on the one hand,
and of the Holder, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by the Holder, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and judgments referred to above shall be deemed to include, subject
to the limitations set forth in the second paragraph of Section 8(a), any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments.
18
<PAGE> 20
Notwithstanding the provisions of this Section 8, no Holder, its directors, its
officers or any Person, if any, who controls such Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(c) are several in proportion to the respective
principal amount of Transfer Restricted Securities held by each Holder hereunder
and not joint.
SECTION 9. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any failure
by the Company to comply with its obligations under Sections 3 and 4 hereof may
result in material irreparable injury to the Initial Purchaser or the Holders
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchaser or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Sections 3 and
4 hereof. The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The Company has not
previously entered into any agreement granting any registration rights with
respect to its securities to any Person. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's securities under any agreement in
effect on the date hereof.
19
<PAGE> 21
(c) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchaser, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
(ii) if to the Company:
Park N' View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
Telecopier No.: (954) 745-7899
Attention: Steve Conkling
With a copy to:
Kilpatrick Stockton, LLP
Suite 400
4101 Lake Boone Trial
Raleigh, North Carolina 27607
Telecopier No.: (919) 420-1800
Attention: James M. O'Connell, Esq.
20
<PAGE> 22
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when receipt acknowledged, if telecopied; and on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders; provided, that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Transfer Restricted
Securities in violation of the terms hereof or of the Purchase Agreement or the
Indenture. If any transferee of any Holder shall acquire Transfer Restricted
Securities in any manner, whether by operation of law or otherwise, such
Transfer Restricted Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Transfer Restricted Securities such
Person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the Purchase Agreement,
and such Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
21
<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
PARK `N VIEW, INC.
By: /s/ Stephen L. Conkling
-------------------------------
Name: Stephen L. Conkling
Title: CFO, COO
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Marc Cummins
-------------------------
Name: Marc Cummins
Title: M.E.
22
<PAGE> 1
Exhibit 10.1
FLEET SERVICE AGREEMENT
THIS FLEET SERVICE AGREEMENT (this "Agreement") is entered into as of
January 28, 1997 (the "Effective Date") by and between Park 'N View, Inc., a
Delaware corporation ("PNV"), with its headquarters at 11711 NW 39th Street,
Coral Springs, Florida 33065 and Trucks For You, an Oklahoma corporation
("Fleet"), with its headquarters at 3303 N. 32nd Street, Muskogee, OK 74402.
WHEREAS, Fleet currently employs or has contracted for the services of
professional truck drivers to operate its fleet of trucks; and
WHEREAS, PNV has designed and developed the concept and equipment to:
(a) enable truck drivers to receive and/or have access to cable television
services and telecommunications services; and (b) make available to such truck
drivers programming consisting of video and audio services, and telephone, voice
mail, fax or other data transmission services while remaining in their vehicles
parked at truckstops; (collectively, the "Services"); and
WHEREAS, PNV provides the Services to truck drivers through a
membership program pursuant to which each member is entitled to use the Services
at each truckstop at which they are provided in return for a monthly membership
fee; and
WHEREAS, Fleet desires to purchase and PNV desires to provide
membership to certain of Fleet's drivers.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Fleet and PNV (hereinafter collectively being referred to as
the "Parties"), intending to be legally bound, hereby mutually agree as follows:
1. Purpose. The Parties hereby agree that PNV shall provide and Fleet
shall purchase memberships for certain of Fleet's drivers pursuant to the terms
of this Agreement.
2. Number of Memberships-Drivers. Fleet desires to purchase from PNV
450 memberships for use by certain of its professional truck drivers. Upon
execution of this Agreement, Fleet shall provide PNV with the name and CDL
number of each such driver to enable PNV to activate each driver's membership.
Fleet shall provide to PNV, on or before the twenty-fifth (25th) day of each
month, the name and CDL number of any driver to be added to or deleted from the
list of drivers for whom Fleet shall purchase a membership. If Fleet does not
provide PNV with an updated list on a timely basis, PNV shall issue memberships
for the following month based upon the most recent list provided by Fleet.
Notwithstanding anything contained herein to the contrary, the minimum number of
memberships to be purchased by Fleet each month during the Term (as defined in
Section 4(a)) shall be 450.
<PAGE> 2
3. Fees.
(a) Fleet agrees to pay to PNV a fee of (see Schedule I) per
month (plus applicable taxes) for each membership purchased by Fleet
(collectively the "Monthly Fee"). PNV shall invoice Fleet for the Monthly Fee on
the first day of each month for the purchase of memberships for its drivers for
that month. Fleet shall pay the Monthly Fee to PNV on or before the tenth (10th)
day of the month. Monthly Fees not paid on or before the tenth (10th) day of the
month shall accrue interest at the rate of 1.5% per month until paid in full and
PNV may terminate the membership of Fleet's drivers if the Monthly Fee is not
received by the last day of the month. If Fleet desires to terminate the
membership of any driver, PNV shall reissue such membership to a substitute
driver upon receipt of (i) the terminated drivers name and CDL member and (ii)
the substitute drivers name and CDL number. If Fleet desires to purchase
memberships for additional drivers effective during the month (as opposed to the
first day of the month), PNV shall, upon receipt of the additional drivers name
and CDL number, activate such membership at no cost to Fleet for the remainder
of that month but shall not provide the driver with any free long distance
service for that month. On the first day of the following month, PNV shall
commence charging Fleet the Monthly Fee and provide the driver with full
membership privileges, including any applicable free long distance phone
service.
(b) Notwithstanding the terms of Section 4(a), Fleet may
terminate this Agreement at any time within ninety (90) days of the Effective
Date by delivery to PNV of written notice of termination within such ninety (90)
day period. If Fleet terminates this Agreement in compliance with this Section
3(b), Fleet shall be entitled to a refund of all monies paid to PNV as of the
date of termination.
4. Term.
(a) Subject to Sections 3(b) and 5, the term of this Agreement
shall be for a period of one (1) year commencing on the Effective Date (the
"Term"). The Term shall be automatically extended for additional one year
renewal periods provided that either Party may prevent such automatic renewal by
delivery of written notice to the other Party at least thirty (30) days prior to
the end of the then current Term.
(b) Except as provided in Section 3(b), upon termination of
the Agreement for any reason, PNV shall be entitled to retain without offset or
repayment all amounts paid to PNV by Fleet as of the date of termination.
5. Breach. In the event that either Party shall fail in any material
respect to perform any obligation under this Agreement, the other Party may in
writing notify the non-performing Party that such failure constitutes a breach.
If the breach is not remedied or cured within ten (10) days following receipt of
the notice of breach, without limiting any other remedy which may be available,
the non-breaching Party may terminate this Agreement by notice to the breaching
Party.
2
<PAGE> 3
6. Arbitration. Any controversy, dispute or question arising out of, or
in connection with, or in relation to this Agreement or the interpretation,
performance or non-performance or any breach thereof shall be determined by
arbitration conducted in Ft. Lauderdale, Florida in accordance with the then
existing rules of the American Arbitration Association. PNV and Fleet shall each
select one arbitrator, and the two arbitrators shall select a third with the
same qualifications. Any decision rendered shall be binding upon the Parties,
however, the arbitrators shall have no authority to grant any relief that is
inconsistent with this Agreement. The expense of arbitration shall be borne by
the non-prevailing Party.
7. General Provisions.
(a) Notices. All notices required or permitted hereunder shall be
in writing and, may either be delivered by overnight courier, transmitted by
facsimile, or delivered by the United States Mail, postage prepaid, addressed as
follows:
To PNV: Park 'N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
Attn: Fleet Sales Department
Fax Number: (954) 745 7899
To Fleet: Trucks For You, Inc.
3303 N. 32nd Street
Muskogee, OK 74402
Attn: Mr. Smokey Irwin
Fax: (918) 667-9963
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this Section 7(a).
(b) Miscellaneous. The section headings in this
Agreement are for convenience of reference only and shall not be deemed to alter
or affect any provision hereof. This Agreement shall be governed by the laws of
the State of Florida. This Agreement shall not be modified or amended except by
an instrument in writing executed by the parties to this Agreement. Except as
required by law, the Parties agree to keep the terms and provisions of this
Agreement and all information received by either Party pursuant to this
Agreement strictly confidential. This Agreement shall apply to, and be binding
upon, the parties and their respective successors and permitted assigns. If any
part or sub-part of this Agreement is found or held to be invalid, that
invalidity shall not affect the enforceability and binding nature of any other
part of this Agreement. This Agreement may be executed in one or more
counterparts,
3
<PAGE> 4
each of which when so executed shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Fleet and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
PARK 'N VIEW, INC., a
Delaware corporation
By: /s/ Ian Williams
--------------------------
Ian Williams, President
TRUCKS FOR YOU, INC.
By: /s/ Dewey Grigsby
--------------------------
Title:
Date: January 29, 1998
4
<PAGE> 5
SCHEDULE I
Company: Trucks For You
A. Fees shall be as following:
<TABLE>
<CAPTION>
Monthly Fee per Driver Period
- ---------------------- ------
<S> <C>
$ 0.00 Feb.-no long distance provided in Feb.
$10.00 March and April, 1998
$20.00 May, June and July, 1998
$30.00 August 1st, 1998 through remainder
of Agreement term
</TABLE>
B. Fleet shall be entitled, for no additional charge, to place an advertisement
in one 30 second spot every two hours on PNV's Driver Entertainment Network. The
advertisement must be mutually acceptable to PNV and Trucks For You. This
service shall be available for the initial one (1) year term.
C. Fleet and PNV agree to allow the distribution of mutually accepted press
releases, advertisements, and other marketing materials that benefit both
parties.
5
<PAGE> 1
Exhibit 10.2
FLEET SERVICE AGREEMENT
THIS FLEET SERVICE AGREEMENT (this "Agreement") is entered into as of
February 1, 1998 (the "Effective Date") by and between Park 'N View, Inc., a
Delaware corporation ("PNV"), with its headquarters at 11711 NW 39th Street,
Coral Springs, Florida 33065 and Carroll Fulmer & Co., Inc., a Florida
corporation ("Fleet"), with its headquarters at Groveland, Florida 34736.
WHEREAS, Fleet currently employs or has contracted for the services of
professional truck drivers to operate its fleet of trucks; and
WHEREAS, PNV has designed and developed the concept and equipment to:
(a) enable truck drivers to receive and/or have access to cable television
services and telecommunications services; and (b) make available to such truck
drivers programming consisting of video and audio services, and telephone, voice
mail, fax or other data transmission services while remaining in their vehicles
parked at truckstops; (collectively, the "Services"); and
WHEREAS, PNV provides the Services to truck drivers through a
membership program pursuant to which each member is entitled to use the Services
at each truckstop at which they are provided in return for a monthly membership
fee; and
WHEREAS, Fleet desires to purchase and PNV desires to provide
membership to certain of Fleet's drivers.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Fleet and PNV (hereinafter collectively being referred to as
the "Parties"), intending to be legally bound, hereby mutually agree as follows:
1. Purpose. The Parties hereby agree that PNV shall provide
and Fleet shall purchase memberships for certain of Fleet's drivers pursuant to
the terms of this Agreement.
2. Number of Memberships-Drivers. Fleet desires to purchase from PNV
200 memberships for use by certain of its professional truck drivers. Upon
execution of this Agreement, Fleet shall provide PNV with the name and CDL
number of each such driver to enable PNV to activate each driver's membership.
Fleet shall provide to PNV, on or before the twenty-fifth (25th) day of each
month, the name and CDL number of any driver to be added to or deleted from the
list of drivers for whom Fleet shall purchase a membership. If Fleet does not
provide PNV with an updated list on a timely basis, PNV shall issue memberships
for the following month based upon the most recent list provided by Fleet.
Notwithstanding anything contained herein to the contrary, the minimum number of
memberships to be purchased by Fleet each month during the Term (as defined in
Section 4(a)) shall be 200.
<PAGE> 2
3. Fees.
(a) Fleet agrees to pay to PNV a fee of (see Schedule I) per
month (plus applicable taxes) for each membership purchased by Fleet
(collectively the "Monthly Fee"). PNV shall invoice Fleet for the Monthly Fee on
the first day of each month for the purchase of memberships for its drivers for
that month. Fleet shall pay the Monthly Fee to PNV on or before the tenth (10th)
day of the month. Monthly Fees not paid on or before the tenth (10th) day of the
month shall accrue interest at the rate of 1.5% per month until paid in full and
PNV may terminate the membership of Fleet's drivers if the Monthly Fee is not
received by the last day of the month. If Fleet desires to terminate the
membership of any driver, PNV shall reissue such membership to a substitute
driver upon receipt of (i) the terminated drivers name and CDL member and (ii)
the substitute drivers name and CDL number. If Fleet desires to purchase
memberships for additional drivers effective during the month (as opposed to the
first day of the month), PNV shall, upon receipt of the additional drivers name
and CDL number, activate such membership at no cost to Fleet for the remainder
of that month but shall not provide the driver with any free long distance
service for that month. On the first day of the following month, PNV shall
commence charging Fleet the Monthly Fee and provide the driver with full
membership privileges, including any applicable free long distance phone
service.
(b) Notwithstanding the terms of Section 4(a), Fleet may
terminate this Agreement at any time within ninety (90) days of the Effective
Date by delivery to PNV of written notice of termination within such ninety (90)
day period. If Fleet terminates this Agreement in compliance with this Section
3(b), Fleet shall be entitled to a refund of all monies paid to PNV as of the
date of termination.
4. Term.
(a) Subject to Sections 3(b) and 5, the term of this Agreement
shall be for a period of one (1) year commencing on the Effective Date (the
"Term"). The Term shall be automatically extended for additional one year
renewal periods provided that either Party may prevent such automatic renewal by
delivery of written notice to the other Party at least thirty (30) days prior to
the end of the then current Term.
(b) Except as provided in Section 3(b), upon termination of
the Agreement for any reason, PNV shall be entitled to retain without offset or
repayment all amounts paid to PNV by Fleet as of the date of termination.
5. Breach. In the event that either Party shall fail in any material
respect to perform any obligation under this Agreement, the other Party may in
writing notify the non-performing Party that such failure constitutes a breach.
If the breach is not remedied or cured within ten (10) days following receipt of
the notice of breach, without limiting any other remedy which may be available,
the non-breaching Party may terminate this Agreement by notice to the breaching
Party.
2
<PAGE> 3
6. Arbitration. Any controversy, dispute or question arising out of, or in
connection with, or in relation to this Agreement or the interpretation,
performance or non-performance or any breach thereof shall be determined by
arbitration conducted in Ft. Lauderdale, Florida in accordance with the then
existing rules of the American Arbitration Association. PNV and Fleet shall each
select one arbitrator, and the two arbitrators shall select a third with the
same qualifications. Any decision rendered shall be binding upon the Parties,
however, the arbitrators shall have no authority to grant any relief that is
inconsistent with this Agreement. The expense of arbitration shall be borne by
the non-prevailing Party.
7. General Provisions.
(a) Notices. All notices required or permitted hereunder shall be
in writing and, may either be delivered by overnight courier, transmitted by
facsimile, or delivered by the United States Mail, postage prepaid, addressed as
follows:
To PNV: Park 'N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
Attn: Fleet Sales Department
Fax Number: (954) 745 7899
To Fleet: Carroll Fulmer & Co., Inc.
P.O. Box 5000
Groveland, FL 34736-5000
Attn: Phillip Fulmer, President
Fax: (352) 427-0350
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this Section 7(a).
(b) Miscellaneous. The section headings in this
Agreement are for convenience of reference only and shall not be deemed to alter
or affect any provision hereof. This Agreement shall not be modified or amended
except by an instrument in writing executed by the parties to this Agreement.
Except as required by law, the Parties agree to keep the terms and provisions of
this Agreement and all information received by either Party pursuant to this
Agreement strictly confidential. This Agreement shall apply to, and be binding
upon, the parties and their respective successors and permitted assigns. If any
part or sub-part of this Agreement is found or held to be invalid, that
invalidity shall not affect the enforceability and binding nature of any other
part of this Agreement. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
and all of which together shall constitute one and the same instrument.
3
<PAGE> 4
IN WITNESS WHEREOF, Fleet and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
PARK 'N VIEW, INC., a
Delaware corporation
By: /s/ Ian Williams
----------------------------
Ian Williams, President
TRUCKS FOR YOU, INC.
By: /s/ Phillip Fulmer
-----------------------------
Title: President
4
<PAGE> 5
SCHEDULE I
Company: Carroll Fulmer & Company, Inc.
Fees shall be as following:
Monthly Fee per Driver Number of PNV Locations
$10.00 0-100
$20.00 101-125
$30.00 126 +
<PAGE> 1
EXHIBIT 10.3
FLEET SERVICE AGREEMENT
THIS FLEET SERVICE AGREEMENT (this "Agreement") is entered into as of
March 1, 1998, by and between Park 'N View, Inc., a Delaware corporation
("PNV"), with its headquarters at 11711 NW 39th Street, Coral Springs, Florida
33065 and Contract Freighters, Inc., a Missouri corporation ("CFI"), with its
headquarters at 4701 East 32nd Street, P.O. Box 2547, Joplin, Missouri 64803.
WHEREAS, CFI currently employs or has contracted for the services of
professional truck drivers to operate its fleet of trucks; and
WHEREAS, CFI operates truck terminals including, without limitation,
those located in (i) Laredo, Texas, (ii) Joplin, Missouri, and (iii) Lancaster,
Texas (which three (3) terminals are hereinafter collectively referred to as
the "Fleet Terminals"); and
WHEREAS, PNV has designed and developed the concept and equipment (the
"System") to: (a) enable truck drivers to receive and/or have access to cable
television services and telecommunications services; and (b) provide such truck
drivers programming consisting of video and audio services, and telephone,
voice mail, fax or other data services while remaining in their vehicles parked
at truckstops and the Fleet Terminals; (collectively, the "Services"); and
WHEREAS, PNV provides the Services to truck drivers through a
membership program pursuant to which each member is entitled to use the
Services at each truckstop and Fleet Terminal at which they are provided in
return for a monthly membership fee; and
WHEREAS, CFI desires to have PNV install the System and provide the
Services at the Fleet Terminals; and
WHEREAS, CFI desires to purchase and PNV desires to provide
memberships to CFI's drivers.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, CFI and PNV (hereinafter collectively being referred to as
the "Parties"), intending to be legally bound, hereby mutually agree as
follows:
1. Purpose. The Parties hereby agree that pursuant to the terms of
this Agreement: (i) PNV shall provide and CFI shall purchase memberships to be
used by certain of CFI's drivers; and (ii) PNV shall install the System and
provide the Services at the Fleet Terminals.
<PAGE> 2
2. Purchase of Memberships. Commencing on the date that the System
has been installed and is in full operation at each Fleet Terminal (the
"Effective Date"), CFI will purchase from PNV each month during the Term (as
defined in Section 5) the greater of: (i) 1,500 monthly memberships; or (ii)
monthly memberships for each CFI truck being used by a professional truck
driver or driving team employed or retained by CFI during that month. Prior to
the Effective Date, CFI shall provide PNV with a date file of the necessary
driver names and CDL numbers of to enable PNV to activate each driver's/team's
membership. On or before the twenty-fifth (25th) day of each month. PNV shall
acquire from CFI an updated data file of driver names and CDL numbers, and PNV
shall determine the drivers/teams to be added to or deleted from the list for
the following month. Notwithstanding anything contained herein to the contrary,
the minimum number of memberships to be purchased by CFI each month during the
Term shall be 1,500.
3. Installation of the System at the Fleet Terminals
(a) PNV shall, at its sole cost and expense, and in the
manner herein provided, install (and increase) at each Fleet Terminal all
equipment necessary for the provision of the Services and outlet ports to
sufficient parking spaces to provide users full adequate access to the
Services. The location and initial number of the truck parking spaces at which
the Services shall be provided ("Serviced Spaces") shall be mutually determined
by the Parties, and PNV shall complete installation of the System at each of
the Fleet Terminals on or before May 31, 1998. Thereafter, PNV shall increase
the number of Serviced Spaces at each Fleet Terminal as mutually agreed by the
Parties to adequately accommodate use access and demand. The Parties shall
mutually determine the precise number and location of the truck parking spaces
at which the Services shall be provided, taking into account such factors as
the cost of construction and implementation, the layout of the parking
facilities, the usage of particular parking rows to drop trailers and such
other factors as the Parties may deem relevant. All of the equipment as
currently used by PNV is described on Schedule 1 hereto and is hereinafter,
together with any additions or deletions to said equipment, collectively
referred to as the "PNV Equipment." PNV may make additions to and deletions
from the PNV Equipment at each Fleet Terminal with CFI's prior consent, which
consent shall not be unreasonably withheld.
(b) CFI shall make available to PNV a sufficient area in
which to install the PNV Equipment including: (i) such area as is required for
the installation of satellite dish(es); (ii) a secured air-conditioned (normal
air-conditioned room temperature) interior area of approximately 50 square feet
for the installation of the headend equipment and the telephone and related
monitoring equipment; and (iii) an area at the dispatcher desk or other
interior location for installation of the equipment required for activation of
the Services (hereinafter collectively referred to as the "Equipment Area").
Upon reasonable prior notice to CFI, PNV shall be entitled to have continued
access to the Equipment Area and all parking areas for purposes of installing
and monitoring the PNV Equipment, the System and the Services.
2
<PAGE> 3
(c) Prior to commencement of construction at any Fleet
Terminal, PNV shall obtain CFI's written approval of the methods and materials
to be used by PNV with respect to the installation of the System. PNV will
repair any damage to the Fleet Terminal that is caused by PNV. However, PNV
shall not be responsible for any existing defects or deficiencies or the normal
wear and tear to the parking lot or the Fleet Terminal.
(d) PNV shall on a timely basis secure, and continuously
maintain in full force and effect, all licenses, permits and approvals required
by governmental authorities with respect to the installation, operation and
maintenance of the System and providing the Services. CFI shall assist PNV (at
PNV's expense) in obtaining any such licenses, permits, or approvals upon PNV's
reasonable request. PNV shall at all times comply with all applicable laws,
rules, regulations, etc. in connection with the installation, operation and
maintenance of the System, or otherwise related to the performance of PNV's
obligations hereunder.
4. Fees.
(a) Commencing on the Effective Date, CFI shall pay to PNV
a fee of Thirty Dollars ($30.00) per month for each membership purchased by CFI
(collectively the "Monthly Fee"). PNV shall invoice CFI for the Monthly Fee on
the first day of each month for the purchase of memberships for its
drivers/teams for that month, and CFI shall pay the Monthly Fee to PNV by the
15th day of that month. Uncontested Monthly Fees that are not timely paid shall
accrue interest at the rate of nine (9%) per annum until paid in full and PNV
may terminate the membership of CFI's drivers if any uncontested delinquent
Monthly Fee is not paid by CFI within five (5) business days after CFI receives
written notice of said delinquency. If CFI desires to transfer the membership
of any driver, PNV shall reissue such membership to a substitute driver upon
receipt of (i) the terminated drivers name and CDL member and (ii) the
substitute drivers name and CDL number. If CFI desires to purchase memberships
for additional drivers (i.e. memberships in excess of 1,500) effective during
the month (as opposed to the first day of the month), PNV shall, upon receipt
of the additional drivers name and CDL number, activate such membership at no
cost to CFI for the remainder of that month but shall not provide the driver
with any free long distance service for that month. On the first day of the
following month, PNV shall commence charging CFI the Monthly Fee and provide
the driver with full membership privileges, including any applicable free long
distance phone service.
(b) PNV agrees that: (i) PNV shall provide CFI with its
most favorable pricing; and (ii) the Monthly Fee shall be adjusted to match the
more favorable pricing provided to any other fleet or group; and (iii) PNV will
promptly notify CFI in writing if a more favorable pricing is given to any
other fleet or group. The foregoing shall not apply to any trial of the
Services by a fleet or group provided that the trial does not exceed 180 days
and that it applies to less than 10% of the fleet's or group's drivers.
3
<PAGE> 4
5. Term. The term of this Agreement (the "Term") shall be for an
initial period of three (3) years commencing on the Effective Date, and shall
automatically renew from year to year thereafter, unless CFI gives PNV written
notice of nonrenewal at least ninety (90) days before the end of the initial or
any renewal period. For value received, PNV guarantees that CFI's Monthly Fee
for PNV's "Basic Package" (as defined in Section 7) shall not exceed Thirty
Dollars ($30.00) during the initial three year period, nor exceed Thirty-Three
Dollars ($33.00) per month for the first five (5) annual renewal periods
thereafter.
6. Rights and Duties of The Parties With Respect To The PNV
Equipment. Notwithstanding the fact that certain parts of the PNV Equipment may
be affixed to each Fleet Terminal, the PNV Equipment shall not become a fixture
thereto and shall remain the property of PNV. Upon the termination of this
Agreement for any reason, PNV shall have the right to: (i) remove, at its sole
cost and expense, any or all of the PNV Equipment from each Fleet Terminal; or
(ii) if agreeable to CFI, sell or lease it to the CFI or its successors,
nominees or assignees. If PNV removes the PNV Equipment, PNV shall restore the
Fleet Terminal as near as reasonably possible to the condition of such premises
prior to the installation of the System, existing defects and normal wear and
tear excepted, but shall not be obligated or permitted without the prior
consent of CFI to remove any underground cables.
7. Programming and Telecommunications Services to Be Provided.
(a) PNV shall make the Services available on the System as
follows:
(i) PNV shall source and deliver its "Basic
"Package" which at all times (i) shall
consist of at least eighteen (18) channels
of entertainment programming, and (ii) be
at least the substantial equivalent in
quality of PNV's current programming
schedule shown on Schedule 2; and (iii)
include at least the other programming and
telecommunications services hereinafter
listed in this Section 7. PNV shall pay the
cost of all such programming. PNV may add
to or make changes to its programming
schedule from time to time, and any
additional channels or other services which
PNV makes generally available in the future
to PNV's other subscribers without
additional charge or as part of their basic
services also be included in CFI's Basic
Package without additional charge.
(ii) In addition to at least eighteen (18)
channel entertainment channels, there shall
be other channels, which shall be used to
provide a programming schedule and
advertising.
(iii) PNV may provide pay-per-view or other
non-traditional cable channels or services
as part of the Services, and shall provide
4
<PAGE> 5
CFI a dedicated VCR driven channel at each
Fleet Terminal to be available for CFI
specific programming that CFI will develop
and deliver on 1/2 inch video tape.
(iv) As part of CFI's Basic Package, PNV shall
also provide telephone service at each
parking slot at which the Services are
provided. The current telephone services
offered by PNV are set forth on Schedule 3.
PNV shall have the right to determine and
make changes to the specific types of
telecommunication services provided from
time to time, but CFI always shall receive
without further charge such
telecommunications upgrades and additions
as PNV generally makes available to its
other subscribers without additional charge
or as part of their basic services.
8. Promotion, Use, Operation and Maintenance of the PNV Equipment,
the System and the Services.
(a) Prior to the Effective Date, PNV shall, at its cost,
provide CFI and its drivers with all equipment (including a free phone kit and
cable wires) and materials necessary for CFI and its drivers to commence use of
the System and the Services on the Effective Date. PNV shall program its
automated log-on system to provide CFI's drivers with a personal message from
CFI upon their initial log-on to the System.
(b) Upon installation of the System at a Fleet Terminal,
PNV shall train CFI and its designated employees at no additional expense to
CFI with respect to the maintenance and operation of the System. This initial
training will be designed so that CFI will be able to maintain the System and
train new personnel with respect to operation of the System and maintenance of
the PNV Equipment as needed. PNV shall provide follow up training for CFI's
personnel at no additional expense to CFI during normal business hours with
respect to the operation of the System and the maintenance of the PNV Equipment
as may be reasonably requested by CFI from time to time.
(c) PNV shall maintain a good quality signal and reception
through the System comparable to the signal and reception supplied for regular
television programming and telecommunications services to home consumers.
(d) The day to day maintenance of the System shall be
handled as follows:
(i) CFI's trained staff members shall: (i)
maintain the cable and phone boxes in the
outside hookups in proper operating order,
including cleaning and removal of debris
(i.e. oil, dirt, ice, snow, etc.; (ii)
replace failed connecting drop cables and
accessories with replacement equipment to
be furnished by PNV at PNV's
5
<PAGE> 6
cost; and (iii) replace failed cable and
phone connection outlets in the outside
hookups with equipment furnished by PNV at
PNV's cost. PNV shall keep CFI provided
with an adequate inventory of such
replacement equipment, materials and parts
at PNV's cost.
(ii) If a mechanical problem arises other than
through a failed connecting cable or
accessory, CFI shall contact PNV by
telephone at PNV's office. Unless
extenuating circumstances exist, PNV shall
make (or have made) the necessary repairs
to the System at PNV's sole cost and
expense within forty-eight (48) hours.
9. Representations and Warranties of PNV.
(a) PNV is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power
and authority: (i) to enter into this Agreement; and (ii) to carry out the
other transactions and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement by PNV has been duly authorized by all necessary action of PNV. This
Agreement and each of the other documents to be executed and delivered by PNV
pursuant to this Agreement have been duly executed and delivered by PNV and are
the valid and binding obligations of PNV enforceable in accordance with their
respective terms, subject only as to enforceability affected by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally and by
general equitable principles. The execution, delivery and performance of this
Agreement and the other documents to be executed, delivered and performed by
PNV pursuant to this Agreement will not: (i) conflict with or violate any
provision of PNV's organizational documents, or any law, ordinance or
regulation or any decree or order of any court or administrative or other
governmental body which is either applicable to, binding upon or enforceable
against PNV; or (ii) result in any breach of or default under or cause the
acceleration of performance of any mortgage, contract, agreement, indenture or
other instrument which is either binding upon or enforceable against PNV.
(c) PNV is not required to obtain the approval, consent or
waiver of any other person or entity for the execution, delivery or performance
of this Agreement.
(d) PNV warrants that the Services shall be provided in
accordance with Section 8(c) hereof and the highest industry standards, and
that all equipment, materials and parts furnished by PNV in connection with the
System and the Services shall be of merchantable quality and fit for the
purposes stated herein.
6
<PAGE> 7
10. Representations and Warranties of CFI.
(a) CFI is a corporation duly organized, validly existing
and in good standing under the laws of Missouri and has full power and
authority: (i) to enter into this Agreement; and (ii) to carry out the other
transactions and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement by CFI has been duly authorized by all necessary action of CFI. This
Agreement and each of the other documents to be executed and delivered by CFI
pursuant to this Agreement have been duly executed and delivered by CFI and are
the valid and binding obligations of CFI enforceable in accordance with their
respective terms, subject only as to enforceability affected by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally and by
general equitable principles. The execution, delivery and performance of this
Agreement and the other documents to be executed, delivered and performed by
CFI pursuant to this Agreement will not: (i) conflict with or violate any
provision of CFI's organizational documents, or any law, ordinance or
regulation or any decree or order of any court or administrative or other
governmental body which is either applicable to, binding upon or enforceable
against CFI; or (ii) result in any breach of or default under or cause the
acceleration of performance of any mortgage, contract, agreement, indenture or
other instrument which is either binding upon or enforceable against CFI.
(c) CFI is not required to obtain the approval, consent or
waiver of any other person or entity for the execution, delivery or performance
of this Agreement.
11. Ownership and Confidentiality. PNV agrees to maintain and cause
its employees and agents to maintain and keep strictly confidential all
proprietary information received from CFI relating to its drivers, Fleet
Terminals, operations and customers. CFI recognizes and agrees that PNV shall,
during the term of this Agreement and thereafter, retain sole ownership of the
System and the PNV Equipment. CFI recognizes the proprietary nature of the
concept and the design of the System, the PNV Equipment and the Services.
Accordingly, CFI and PNV agree to maintain and cause each of its employees and
agents to maintain and keep strictly confidential all of the confidential
information that it obtains or receives in conjunction with the operation of
the System, the PNV Equipment or the Services. CFI further agrees that the
"Park N' View" name and logo shall be and remain the property of PNV and all
references by CFI to the System or the Services shall incorporate and/or refer
to PNV by its full name (Park N' View), whether in literature, electronic or
print displays, articles, advertising, billboards, banners or otherwise. The
name, Park 'N View, is, or will be, a registered service mark of PNV and to the
extent required by PNV, CFI shall execute a no cost limited license agreement
for the use of such service mark.
7
<PAGE> 8
12. Termination.
(a) This Agreement shall be deemed immediately terminated upon
either party's bankruptcy or insolvency.
(b) In the event that either Party shall fail in any material
respect to perform any obligation under this Agreement, the other Party may in
writing notify the non-performing Party that such failure constitutes a breach.
If the breach is not remedied or cured within ten (10) days following receipt
of such written notice of breach, without limiting any other remedy which may
be available, the non-breaching Party may terminate this Agreement by written
notice to the breaching Party.
(c) CFI also may also terminate the Agreement without cause in CFI's
sole discretion any time after February 28, 1999 upon written notice and
payment to PNV, as liquidated damages, of the following sums:
(i) Two Hundred Thousand Dollars ($200,000) for such
"without cause" termination effective between March 1, 1999 and February 29,
2000;
(ii) One Hundred Thousand Dollars ($100,000) for such
"without cause" termination effective between March 1,
2000 and February 28, 2001;
(iii) One Dollar ($1) for such "without cause" termination
effective after March 1, 2001.
13. Indemnity and Insurance.
(a) PNV shall defend, indemnify and hold harmless CFI and its
employees, agents, successors and assigns from and against all loss, damage,
expense (including legal fees and expenses), actions and claims of every type
and nature whatsoever arising out of or relating to PNV's installation,
maintenance, repair or removal of the System of PNV's performance hereof,
including but not limited to personal injury, death or property damage, unless
such loss, damage, expense actions or claims were directly attributable to
CFI's own sole fault. This obligation shall survive any termination or
expiration of this Agreement.
(b) PNV agrees to furnish and keep in full force and effect the
following minimum insurance and coverage throughout the Term of this Agreement
and so long thereafter as PNV is obligated to indemnify CFI::
(i) Workers Compensation Insurance covering all persons
employed or provided by PNV in the performance of
services required by the Agreement; and
8
<PAGE> 9
(ii) Both (1) Comprehensive General Liability and (2)
Comprehensive Automobile Liability Insurance covering
liabilities for property damage and bodily injury,
including death, at the minimum amount of One Million
and No/100 Dollars ($1,000,000.00) per occurrence.
Said insurance policies shall be endorsed so they cannot be terminated without
at least thirty (30) days prior written notice to CFI. PNV will furnish CFI
satisfactory evidence of said insurance before beginning to install the System
or providing any services hereunder.
14. Forum Selection. Any controversy, dispute or question arising
out of, or in connection with, or in relation to this Agreement or the
interpretation, performance or non-performance or any breach thereof shall be
determined at CFI's request exclusively in the Circuit Court of Jasper County,
Missouri, and the Parties irrevocably waive all objections to said court's
jurisdiction and venue (including forum non conveniens) and any removal or
transfer rights therefrom. The prevailing Party shall be entitled in any such
action to recover its reasonable attorney's fees and legal expenses from the
other Party.
15. General Provisions.
(a) Notices. All notices required or permitted hereunder
shall be in writing and, may either be delivered by overnight courier,
transmitted by facsimile, or delivered by the United States Mail, postage
prepaid, addressed as follows:
To PNV: Park 'N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
Attn: Fleet Sales Department
Fax Number: (954) 745-7899
To CFI: Contract Freighters, Inc.
4701 East 32nd Street
P.O. Box 2547
Joplin, Missouri 64803
Attn: Angelo Ianello
Fax: (417) 782-9675
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this section.
9
<PAGE> 10
(b) Assignment. Except in connection with a bona fide
nonbankruptcy sale of substantially all of a Party's assets or business
(including by merger or similar transaction), neither Party may assign this
Agreement or subcontract its obligations hereunder without the other Party's
prior written consent. In the event of a permitted assignment, the Agreement
shall be binding upon and inure to the benefit of CFI's successors and assigns.
(c) Miscellaneous. The section headings in this Agreement
are for convenience of reference only and shall not be deemed to alter or
affect any provision hereof. This Agreement shall not be modified or amended
except by an instrument in writing executed by the parties to this Agreement.
If any part or sub-part of this Agreement is found or held to be invalid that
invalidity shall not affect the enforceability and binding nature of any other
part of this Agreement. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, CFI and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
PARK 'N VIEW, INC.
By: /s/ Stephen Conkling
------------------------------
Stephen Conkling
Chief Operating Officer
CONTRACT FREIGHTERS, INC.
By: /s/ Angelo J. Ianello
------------------------------
Angelo J. Ianello
Senior Vice President-Finance
10
<PAGE> 11
SCHEDULE 1
LIST OF CURRENT PNV EQUIPMENT
Current PNV Equipment:
Satellite Dish & Off-air receive antenna
Processing [head-end] equipment
Telephone PBX switch and CFI console
Distribution cables
Parking lot plug-in boxes
Cable TV "billing" computer and software
Membership card dispenser
Telephone & Cable TV accessories for resale
Voice-mail service
11
<PAGE> 12
SCHEDULE 2
LIST OF CURRENT PROGRAMMING SCHEDULE
Current Programming Schedule:
<TABLE>
<CAPTION>
===============================================================================
Channel # Program
- -------------------------------------------------------------------------------
<S> <C>
04 HBO
- -------------------------------------------------------------------------------
05 HBO2
- -------------------------------------------------------------------------------
06 HBO3
- -------------------------------------------------------------------------------
07 DISCOVERY
- -------------------------------------------------------------------------------
08 ESPN 2
- -------------------------------------------------------------------------------
09 FOX
- -------------------------------------------------------------------------------
10 DEN
- -------------------------------------------------------------------------------
11 CNN HN
- -------------------------------------------------------------------------------
12 WEATHER
- -------------------------------------------------------------------------------
13 ESPN
- -------------------------------------------------------------------------------
14 NBC
- -------------------------------------------------------------------------------
15 ABC
- -------------------------------------------------------------------------------
16 A&E
- -------------------------------------------------------------------------------
17 CBS
- -------------------------------------------------------------------------------
18 TNN
- -------------------------------------------------------------------------------
19 TNT
- -------------------------------------------------------------------------------
20 WGN
- -------------------------------------------------------------------------------
21 PNV
===============================================================================
</TABLE>
12
<PAGE> 13
SCHEDULE 3
LIST OF CURRENT TELEPHONE SERVICES
Current Telephone Services:
1+ calls
1-800 calls
Local calls
CFI services
Direct call back to stall # (automated)
Message waiting
Wake-up calls (automated)
13
<PAGE> 1
EXHIBIT 10.4
FLEET SERVICE AGREEMENT
THIS FLEET SERVICE AGREEMENT (this "Agreement") is entered into as of
March 11, 1998 (the "Effective Date") by and between Park 'N View, Inc., a
Delaware corporation ("PNV"), with its headquarters at 11711 NW 39th Street,
Coral Springs, Florida 33065 and Lake City Express, an Arkansas corporation
("Fleet"), with its headquarters at 25100 U.S. Highway 59 North, Grove, OK
74344;
WHEREAS, Fleet currently employs or has contracted for the services of
professional truck drivers to operate its fleet of trucks; and
WHEREAS, PNV has designed and developed the concept and equipment to:
(a) enable truck drivers to receive and/or have access to cable television
services and telecommunications services; and (b) make available to such truck
drivers programming consisting of video and audio services, and telephone, voice
mail, fax or other data transmission services while remaining in their vehicles
parked at truckstops; (collectively, the "Services"); and
WHEREAS, PNV provides the Services to truck drivers through a
membership program pursuant to which each member is entitled to use the Services
at each truckstop at which they are provided in return for a monthly membership
fee; and
WHEREAS, Fleet desires to purchase and PNV desires to provide
membership to certain of Fleet's drivers.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Fleet and PNV (hereinafter collectively being referred to as
the "Parties"), intending to be legally bound, hereby mutually agree as follows:
1. Purpose. The Parties hereby agree that PNV shall provide and
Fleet shall purchase memberships for certain of Fleet's drivers pursuant to the
terms of this Agreement.
2. Number of Memberships-Drivers. Fleet desires to purchase from
PNV 154 memberships for use by certain of its professional truck drivers. Upon
execution of this Agreement, Fleet shall provide PNV with the name and CDL
number of each such driver to enable PNV to activate each driver's membership.
Fleet shall provide to PNV, on or before the twenty-fifth (25th) day of each
month, the name and CDL number of any driver to be added to or deleted from the
list of drivers for whom Fleet shall purchase a membership. If Fleet does not
provide PNV with an updated list on a timely basis, PNV shall issue memberships
for the following month based upon the most recent list provided by Fleet.
Notwithstanding anything contained herein to the contrary, the minimum number of
memberships to be purchased by Fleet each month during the Term (as defined in
Section 4(a)) shall be 154.
<PAGE> 2
3. Fees.
(a) Fleet agrees to pay to PNV a fee of (see Schedule I)
per month (plus applicable taxes) for each membership purchased by Fleet
(collectively the "Monthly Fee"). PNV shall invoice Fleet for the Monthly Fee on
the first day of each month for the purchase of memberships for its drivers for
that month. Fleet shall pay the Monthly Fee to PNV on or before the tenth (10th)
day of the month. Monthly Fees not paid on or before the tenth (10th) day of the
month shall accrue interest at the rate of 1.5% per month until paid in full and
PNV may terminate the membership of Fleet's drivers if the Monthly Fee is not
received by the last day of the month. If Fleet desires to terminate the
membership of any driver, PNV shall reissue such membership to a substitute
driver upon receipt of (i) the terminated drivers name and CDL member and (ii)
the substitute drivers name and CDL number. If Fleet desires to purchase
memberships for additional drivers effective during the month (as opposed to the
first day of the month), PNV shall, upon receipt of the additional drivers name
and CDL number, activate such membership at no cost to Fleet for the remainder
of that month but shall not provide the driver with any free long distance
service for that month. On the first day of the following month, PNV shall
commence charging Fleet the Monthly Fee and provide the driver with full
membership privileges, including any applicable free long distance phone
service.
(b) Notwithstanding the terms of Section 4(a), Fleet may
terminate this Agreement at any time within ninety (90) days of the Effective
Date by delivery to PNV of written notice of termination within such ninety (90)
day period. If Fleet terminates this Agreement in compliance with this Section
3(b), Fleet shall be entitled to a refund of all monies paid to PNV as of the
date of termination.
4. Term.
(a) Subject to Sections 3(b) and 5, the term of this
Agreement shall be for a period of three (3) years commencing on the Effective
Date (the "Term"). The Term shall be automatically extended for additional one
year renewal periods provided that either Party may prevent such automatic
renewal by delivery of written notice to the other Party at least thirty (30)
days prior to the end of the then current Term.
(b) Except as provided in Section 3(b), upon termination
of the Agreement for any reason, PNV shall be entitled to retain without offset
or repayment all amounts paid to PNV by Fleet as of the date of termination.
5. Breach. In the event that either Party shall fail in any
material respect to perform any obligation under this Agreement, the other Party
may in writing notify the non-performing Party that such failure constitutes a
breach. If the breach is not remedied or cured within ten (10) days following
receipt of the notice of breach, without limiting any other remedy which may be
available, the non-breaching Party may terminate this Agreement by notice to the
breaching Party.
2
<PAGE> 3
6. Arbitration. Any controversy, dispute or question arising out
of, or in connection with, or in relation to this Agreement or the
interpretation, performance or non-performance or any breach thereof shall be
determined by arbitration conducted in Ft. Lauderdale, Florida in accordance
with the then existing rules of the American Arbitration Association. PNV and
Fleet shall each select one arbitrator, and the two arbitrators shall select a
third with the same qualifications. Any decision rendered shall be binding upon
the Parties, however, the arbitrators shall have no authority to grant any
relief that is inconsistent with this Agreement. The expense of arbitration
shall be borne by the non-prevailing Party.
7. General Provisions.
(a) Notices. All notices required or permitted hereunder
shall be in writing and, may either be delivered by overnight courier,
transmitted by facsimile, or delivered by the United States Mail, postage
prepaid, addressed as follows:
To PNV: Park 'N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
Attn: Fleet Sales Department
Fax Number: (954) 745 7899
To Fleet: Lake City Express
25100 U.S. Highway 59 North
Grove, OK 74344
Attn: Susan Atherton
Fax: (918) 787-4401
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this Section 7(a).
(b) Miscellaneous. The section headings in this Agreement
are for convenience of reference only and shall not be deemed to alter or affect
any provision hereof. This Agreement shall be governed by the laws of the State
of Florida. This Agreement shall not be modified or amended except by an
instrument in writing executed by the parties to this Agreement. Except as
required by law, the Parties agree to keep the terms and provisions of this
Agreement and all information received by either Party pursuant to this
Agreement strictly confidential. This Agreement shall apply to, and be binding
upon, the parties and their respective successors and permitted assigns. If any
part or sub-part of this Agreement is found or held to be invalid, that
invalidity shall not affect the enforceability and binding nature of any other
part of this Agreement. This Agreement may be executed in one or more
counterparts,
3
<PAGE> 4
each of which when so executed shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Fleet and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
PARK 'N VIEW, INC., a
Delaware corporation
By: /s/ Stephen L. Conkling
-------------------------------------
Stephen L. Conkling, COO
[INSERT NAME OF FLEET BELOW]
By: /s/ Susan Atherton
-------------------------------------
Susan Atherton, President
4
<PAGE> 5
SCHEDULE I
A. Pricing - the price per month per membership is as follows:
<TABLE>
<CAPTION>
Month Price
- ----- -----
<S> <C>
April $ 0.00 - no long distance included
May through $30.00
contract term
</TABLE>
B. During the term of this agreement, if another fleet should sign a contract
with Park `N View at a lower base month rate, Park `N View will adjust the
Fleet's monthly price to the equivalent rate. Additionally, Park `N View will
provide a retroactive reimbursement for the difference in the monthly fees,
limited to a maximum of one year's paid billings, or the tenure of the
agreement, whichever is less.
C. At the conclusion of either the initial (90) day period of the contract term,
or the waiver of the termination clause, whichever occurs first, the fleet has
the option of adding a fax machine to each actively dispatched truck. An
additional charge of $8 per month will be added to each membership price. Park
`N View will purchase and provide for installation, Sharp thermal fax machines,
or comparable units, and inverter power sources for use by the fleet. If the fax
option is exercised, the fleet shall be given and Introductory Rebate equal to
$3 per truck per month for the remaining term of the contract. The fleet shall
be responsible for the installation of the units. Maintenance and replacement of
any damaged, destroyed, altered, pilfered, or malfunctioning equipment will be
the responsibility of the fleet. At the termination of the contract, the fleet
has the option to either return the equipment to Park `N View in good working
order (normal wear and tear excepted), or purchase the equipment from Park `N
View at a mutually accepted market value.
5
<PAGE> 1
EXHIBIT 10.5
FLEET SERVICE AGREEMENT
THIS FLEET SERVICE AGREEMENT (this "Agreement") is entered into as of
April 1, 1998 (the "Effective Date") by and between Park 'N View, Inc., a
Delaware corporation ("PNV"), with its headquarters at 11711 NW 39th Street,
Coral Springs, Florida 33065 and Top Gun Transport Inc., an Indiana corporation
("Fleet"), with its headquarters at Clarksville, Indiana.
WHEREAS, Fleet currently employs or has contracted for the services of
professional truck drivers to operate its fleet of trucks; and
WHEREAS, PNV has designed and developed the concept and equipment to:
(a) enable truck drivers to receive and/or have access to cable television
services and telecommunications services; and (b) make available to such truck
drivers programming consisting of video and audio services, and telephone, voice
mail, fax or other data transmission services while remaining in their vehicles
parked at truckstops; (collectively, the "Services"); and
WHEREAS, PNV provides the Services to truck drivers through a
membership program pursuant to which each member is entitled to use the Services
at each truckstop at which they are provided in return for a monthly membership
fee; and
WHEREAS, Fleet desires to purchase and PNV desires to provide
membership to certain of Fleet's drivers.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Fleet and PNV (hereinafter collectively being referred to as
the "Parties"), intending to be legally bound, hereby mutually agree as follows:
1. Purpose. The Parties hereby agree that PNV shall provide and
Fleet shall purchase memberships for certain of Fleet's drivers pursuant to the
terms of this Agreement.
2. Number of Memberships-Drivers. Fleet desires to purchase from
PNV 25 memberships for use by certain of its professional truck drivers. Upon
execution of this Agreement, Fleet shall provide PNV with the name and CDL
number of each such driver to enable PNV to activate each driver's membership.
Fleet shall provide to PNV, on or before the twenty-fifth (25th) day of each
month, the name and CDL number of any driver to be added to or deleted from the
list of drivers for whom Fleet shall purchase a membership. If Fleet does not
provide PNV with an updated list on a timely basis, PNV shall issue memberships
for the following month based upon the most recent list provided by Fleet.
Notwithstanding anything contained herein to the contrary, the minimum number of
memberships to be purchased by Fleet each month during the Term (as defined in
Section 4(a)) shall be 25.
<PAGE> 2
3. Fees.
(a) Fleet agrees to pay to PNV a fee of (see Schedule I)
per month (plus applicable taxes) for each membership purchased by Fleet
(collectively the "Monthly Fee"). PNV shall invoice Fleet for the Monthly Fee on
the first day of each month for the purchase of memberships for its drivers for
that month. Fleet shall pay the Monthly Fee to PNV on or before the tenth (10th)
day of the month. Monthly Fees not paid on or before the tenth (10th) day of the
month shall accrue interest at the rate of 1.5% per month until paid in full and
PNV may terminate the membership of Fleet's drivers if the Monthly Fee is not
received by the last day of the month. If Fleet desires to terminate the
membership of any driver, PNV shall reissue such membership to a substitute
driver upon receipt of (i) the terminated drivers name and CDL member and (ii)
the substitute drivers name and CDL number. If Fleet desires to purchase
memberships for additional drivers effective during the month (as opposed to the
first day of the month), PNV shall, upon receipt of the additional drivers name
and CDL number, activate such membership at no cost to Fleet for the remainder
of that month but shall not provide the driver with any free long distance
service for that month. On the first day of the following month, PNV shall
commence charging Fleet the Monthly Fee and provide the driver with full
membership privileges, including any applicable free long distance phone
service.
(b) Notwithstanding the terms of Section 4(a), Fleet may
terminate this Agreement at any time within ninety (90) days of the Effective
Date by delivery to PNV of written notice of termination within such ninety (90)
day period. If Fleet terminates this Agreement in compliance with this Section
3(b), Fleet shall be entitled to a refund of all monies paid to PNV as of the
date of termination.
4. Term.
(a) Subject to Sections 3(b) and 5, the term of this
Agreement shall be for a period of one (1) year commencing on the Effective Date
(the "Term"). The Term shall be automatically extended for additional one year
renewal periods provided that either Party may prevent such automatic renewal by
delivery of written notice to the other Party at least thirty (30) days prior to
the end of the then current agreement.
(b) Except as provided in Section 3(b), upon termination
of the Agreement for any reason, PNV shall be entitled to retain without offset
or repayment all amounts paid to PNV by Fleet as of the date of termination.
5. Breach. In the event that either Party shall fail in any
material respect to perform any obligation under this Agreement, the other Party
may in writing notify the non-performing Party that such failure constitutes a
breach. If the breach is not remedied or cured within ten (10) days following
receipt of the notice of breach, without limiting any other remedy which may be
available, the non-breaching Party may terminate this Agreement by notice to the
breaching Party.
2
<PAGE> 3
6. Arbitration. Any controversy, dispute or question arising out
of, or in connection with, or in relation to this Agreement or the
interpretation, performance or non-performance or any breach thereof shall be
determined by arbitration conducted in Ft. Lauderdale, Florida in accordance
with the then existing rules of the American Arbitration Association. PNV and
Fleet shall each select one arbitrator, and the two arbitrators shall select a
third with the same qualifications. Any decision rendered shall be binding upon
the Parties, however, the arbitrators shall have no authority to grant any
relief that is inconsistent with this Agreement. The expense of arbitration
shall be borne by the non-prevailing Party.
7. General Provisions.
(a) Notices. All notices required or permitted hereunder
shall be in writing and, may either be delivered by overnight courier,
transmitted by facsimile, or delivered by the United States Mail, postage
prepaid, addressed as follows:
To PNV: Park 'N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
Attn: Fleet Sales Department
Fax Number: (954) 745 7899
To Fleet: Top Gun Transport Inc.
5921 Highway 31
Clarksville, IN 47129
Attn: Leo O'Daniel
Fax: (812) 228-5972
Mailing Address:
P.O. Box 167
Sellersburg, IN 47172
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this Section 7(a).
(b) Miscellaneous. The section headings in this Agreement
are for convenience of reference only and shall not be deemed to alter or affect
any provision hereof. This Agreement shall not be modified or amended except by
an instrument in writing executed by the parties to this Agreement. Except as
required by law, the Parties agree to keep the terms and provisions of this
Agreement and all information received by either Party pursuant to this
Agreement strictly confidential. This Agreement shall apply to, and be binding
upon, the parties and their respective successors and permitted assigns. If any
part or sub-part of this Agreement is found or held to be invalid, that
invalidity shall not affect the enforceability and
3
<PAGE> 4
binding nature of any other part of this Agreement. This Agreement may be
executed in one or more counterparts, each of which when so executed shall be
deemed to be an original and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, Fleet and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
PARK 'N VIEW, INC., a
Delaware corporation
By: /s/ Ian Williams
--------------------------------
Ian Williams, President
Fleet: TOP GUN TRANSPORT
5921 Highway 31
Clarksville, IN 47129
By: /s/ Leo O'Daniel
--------------------------------
Title: Owner
4
<PAGE> 5
SCHEDULE I
Company: Top Gun Transport Inc.
$10.00 per driver per month up to 100 PNV locations
$20.00 per driver per month up to 125 PNV locations
$30.00 per driver per month over 126 PNV locations
5
<PAGE> 1
EXHIBIT 10.6
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT (this
"Agreement") is entered into this 14th day of August, 1995, by and between Park
'N View, Ltd., a Florida limited partnership ("PNV"), with its headquarters at
3403 N.W. 55th Street, Building #10, Ft. Lauderdale, Florida, AMBEST, a
Tennessee corporation ("AMBEST"), with its headquarters at Harpeth on the Green
One, 101 West Park Drive, Suite 230, Brentwood, Tennessee 37027, and
________________________, a ___________________ corporation (the "Operator")
with its headquarters at
_______________________________________________________.
WHEREAS, AMBEST is an association, the members of which are the owners
or operators of 150 full-service travel plaza truckstops;
WHEREAS, Operator is a member of AMBEST and the owner or operator of
____________ (___) full-service travel plaza truckstops which are located at the
addresses listed on Schedule 1 hereto, all of the aforesaid hereinafter
individually being referred to as a "Truckstop" and collectively being referred
to as the "Truckstops"; and
WHEREAS, PNV has designed and developed the concept and equipment ("the
System") to (i) enable truck drivers to: (a) receive and/or have access to cable
television services and telecommunications services; and (b) provide such truck
drivers programming consisting of video and audio services, and telephone, fax
or other data services while remaining in or near their vehicles parked at the
Truckstop; and (ii) sell advertising to be broadcast over the System
(collectively, the "Services"); and
WHEREAS, AMBEST and Operator desire to engage PNV to install the System
and provide the Services at the Truckstops.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, PNV, AMBEST and Operator intending to be legally bound, hereby
mutually agree as follows:
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<PAGE> 2
1. Purpose. PNV, AMBEST and Operator hereby agree that PNV shall
install the System at certain of the Truckstops and that PNV, AMBEST and
Operator shall operate the System at such Truckstops pursuant to the terms of
this Agreement. PNV shall initially install the System at one or more of the
Operator's Truckstop(s) to be mutually agreed upon by PNV and Operator within
thirty (30) days of the date of this Agreement. If the gross revenue derived
from the sale of the Services at the initial Truckstop(s) exceeds an average of
$45 per wired stall per month for the period commencing 90 days after the
On-Line Service Date (defined in Section 2(g)) and terminating 180 days after
the On-Line Service Date (the "Financial Milestone"), then PNV shall have the
right to proceed with the installation of the System at the Operator's remaining
Truckstops. If the Financial Milestones are not met, then the Operator shall not
be obligated to permit and PNV shall not be obligated to proceed with the
installation of the System at the Operator's other Truckstops.
2. Installation of Equipment.
(a) PNV shall, at its sole cost and expense, and in the
manner herein provided, install at each Truckstop equipment consisting of the
following:
(i) equipment for the provision and
distribution of the Services.
(ii) outlet ports to parking spaces to
provide users with access to the Services.
(iii) equipment designed to (a) monitor
the use of the Services and (b) account for
all receipts for billing and revenue sharing
purposes either independently and/or in
conjunction with the Truckstop's existing
cash register system.
(iv) such other equipment or services as
may be agreed upon by PNV and Operator
including, without limitation, the provision
of AC power to parking spaces at certain of
the Truckstops, the installation of
phone-debit card dispensers or the sale of
phone-debit cards at the fuel desk. Prior to
installing such additional equipment or
providing such additional services, PNV and
Operator shall mutually agree to a
reasonable adjustment to the profit
allocations set forth in Section 8 in order
to reflect PNV's differing profit margins
and increased capital costs with respect to
the installation of such additional
equipment and the provision of such
additional services at the Truckstops.
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<PAGE> 3
All of the foregoing equipment as currently used by PNV is described on Schedule
2 hereto and is hereinafter together with any additions or deletions to said
equipment collectively referred to as the "PNV Equipment". PNV reserves the
right to make additions to and deletions from the PNV Equipment to be installed
at each Truckstop. PNV shall attempt, on average, to provide the Services to at
least 75% of the truck parking spaces located at each Truckstop at which it
installs the System. However, PNV shall determine at which Truckstops it shall
install the System and the precise number and location of the truck parking
spaces at which the Services shall be provided at such Truckstops taking into
account such factors as the cost of construction and implementation, the layout
of the parking facilities, the usage of particular parking rows to drop trailers
and such other factors as PNV may deem relevant.
(b) Operator shall make available to PNV a sufficient
area in which to install the PNV Equipment including: (i) such area as is
required for the installation of satellite dish(es); (ii) a secured
air-conditioned interior area of approximately 50 square feet for the
installation of the headend equipment and the telephone and related monitoring
equipment; and (iii) an area at the fuel desk and/or the travel store for
installation of the equipment required for activation and sale of the Services
(hereinafter collectively referred to as the "Equipment Area").
(c) PNV shall have the right to install, at its sole cost
and expense, underground and above ground but not overhead, transmission and
distribution cables and equipment through all parking areas at each Truckstop
(and any Operator owned or managed hotels and motels, located at or adjacent to
a Truckstop, as may be mutually agreed) as is necessary and appropriate to
install the System and to provide the Services. All construction shall be with
aerial or buried cable as deemed appropriate by PNV and at all times subject to
Operator's reasonable prior approval. PNV shall have the right to run additional
transmission lines under and through each Truckstop, at reasonable times and
locations, to serve adjacent properties (including hotels or motels), if in the
future any such Truckstop expands its operations to include such properties.
(d) PNV shall be entitled to have continued access to the
Equipment Area and all parking areas for purposes of installing, repairing and
monitoring the System and the Services. PNV shall take all reasonable care and
make every reasonable effort to minimize damage and disruption to the premises
during the installation and operation of the System at each Truckstop. Prior to
commencement of any construction, Operator will approve the methods and
materials to be used by PNV with respect to the installation of the System. PNV
will repair any material damage to the Truckstop which is caused by PNV.
However, PNV shall not be responsible for any existing defects or deficiencies
or the normal wear and tear to the parking lot or the Truckstop.
(e) PNV shall on a timely basis secure, and continuously
maintain in full force and effect, all licenses, permits and approvals required
by governmental authorities with
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<PAGE> 4
respect to the installation of the System and the providing of the Services.
Operator shall assist PNV in obtaining any such licenses, permits, or approvals
upon PNV's request.
(f) PNV shall install the PNV Equipment in a workmanlike
and efficient manner, without unreasonable interference with the operation of
each Truckstop. PNV shall use its best efforts to complete the installation of
the System at each Truckstop within ninety (90) days of commencement of the
installation at each Truckstop. However, failure to install the System at one or
more of the Truckstops within said ninety (90) day period, because of either
PNV's or Operator's actions or inactions shall not constitute a breach of this
Agreement.
(g) After completion of the installation of the System at
a Truckstop, PNV shall provide Operator with written notice of the date on which
the sale of the Services shall commence at each such Truckstop (hereinafter
referred to as the "Truckstop Service Date").
3. Rights and Duties of The Parties With Respect To The PNV
Equipment.
(a) Notwithstanding the fact that certain parts of the
PNV Equipment may be affixed to each Truckstop, the PNV Equipment shall not
become a fixture thereto and shall remain the property of PNV. AMBEST and
Operator acknowledge that the System, the Services and the PNV Equipment and the
manner of its operation and installation are proprietary to PNV. Accordingly,
AMBEST and Operator shall use their best efforts to insure that all information
and data concerning the System, the Services and the PNV Equipment shall not be
divulged, and (except in the case of emergency) that access to the System and
the PNV Equipment shall not be given to any person or persons other than
personnel authorized by PNV.
(b) Upon the termination of this Agreement for any
reason, PNV shall have the right, at its sole cost and expense, to remove any or
all of the PNV Equipment from each Truckstop, or at its option to: (a) sell or
lease it to the Operator or its successors, nominees or assignees; or (b)
abandon it, without any further liability whatsoever. PNV shall, if it elects to
remove the System, restore each Truckstop as near as reasonably possible to the
condition of such premises prior to the installation of the System, normal wear
and tear excepted, but shall not be obligated to remove any underground cables.
4. Programming and Telecommunications Services to Be Provided.
(a) PNV shall make the Services available on the System
as follows:
(i) PNV shall source and deliver a
programming package consisting of a minimum
of eleven (11) channels of entertainment
programming. PNV shall pay the cost of all
such programming. The current programming
schedule to be broadcast by PNV is as
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<PAGE> 5
set forth on Schedule 3. PNV shall have the
right to determine and make changes to the
programming schedule from time to time.
(ii) In addition to the eleven (11)
channel entertainment lineup, there shall be
other channels which shall be used to
provide a programming schedule and
advertising. Net profits (after payment of
all directly related expenses) generated by
advertising on such channels at each
Truckstop shall be divided as follows: 50%
to PNV and 50% to Operator. All advertising
revenue and other revenues and commissions
generated by these channels shall not be
considered "Gross Receipts" (as defined in
Section 8(a)) for purposes of the Agreement.
(iii) PNV may provide pay-per-view or
other non-traditional cable channels or
services as part of the Services. The net
profits (after payment of all directly
related expenses) from such additional
channels or services shall be divided as
follows: 50% to PNV and 50% to Operator. All
revenues and commissions generated by these
channels shall not be considered Gross
Receipts for purposes of the Agreement.
(iv) PNV may also provide telephone
service to certain parking slots at each
Truckstop. The current telephone and related
services which may be offered by PNV are set
forth on Schedule 4. PNV shall have the
right to determine and make changes to the
specific types of telecommunication services
which may be provided to a particular
Truckstop from time to time.
5. Operation of the System and Sale and Promotion of the
Services.
(a) PNV shall, from time to time, at its sole cost and
expense, train the Operator and its fuel desk employees with respect to the
operation of the point of sale equipment and the sale and promotion of the
Services. The Operator and its fuel desk employees shall be responsible for the
operation of the point of sale equipment and the sale and promotion of the
Services. The Operator shall be responsible for training its future employees
with respect to the operation of the point of sale equipment and the sale and
promotion of the Services.
(b) AMBEST and Operator may also supply PNV, at no cost
to PNV, certain advertising and promotional materials relating to the System and
the Services which may be developed by AMBEST or Operator, with the approval of
PNV. PNV may also
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<PAGE> 6
develop and supply to Operator and AMBEST, at no cost to Operator or AMBEST,
certain advertising and promotional materials relating to the System and the
Services. Operator and AMBEST shall utilize and display all such materials at
each Truckstop with respect to the sale and promotion of the Services.
(c) Operator shall use their best efforts to assure that
the management, fuel desk employees and other personnel promote the use of the
Services by the truck drivers frequenting the Truckstop. AMBEST, Operator and
PNV may mutually agree from time to time to implement sales incentive programs
for the fuel desk employees and other personnel to promote the sale of the
Services. AMBEST, Operator and PNV shall share the cost of implementing and
funding any such mutually agreed upon incentive programs.
(d) Operator shall provide proper follow up training for
its personnel during their working hours with respect to the sale and promotion
of the Services, the operation of the System, and the maintenance of the PNV
Equipment as may be reasonably requested by PNV from time to time. PNV shall
also be entitled to have its own employees or agents engage in the sale and the
promotion of the Services at any Truckstop, provided that PNV's employees and
agents do not interfere with the operation of said Truckstop.
6. Maintenance of the PNV Equipment and the System.
(a) PNV agrees to maintain a good quality signal and
reception through the System comparable to the signal and reception supplied for
regular television programming and telecommunications services to home
consumers.
(b) Operator shall assign responsibility for the day to
day maintenance of the System to the Operator's trained staff members.
(i) Such trained staff members shall:
(i) replace failed connecting drop cables
and accessories with equipment to be
furnished by PNV at its cost; (ii) maintain
the cable and phone boxes in the outside
hookups in proper operating order, including
frequent cleaning and removal of debris
(i.e. oil, dirt, ice, snow, etc.); and (iii)
replace cable and phone connection outlets
in the outside hookups with equipment
furnished by PNV at its cost.
(ii) If a mechanical problem arises
other than through a failed connecting cable
or accessory, Operator shall contact PNV by
telephone at PNV's office. If necessary, PNV
shall, within a reasonable response period,
either authorize Operator to contact a
designated repair technician or dispatch a
designated repair technician to make the
necessary repairs to the System.
-6-
<PAGE> 7
7. Term.
(a) The term of this Agreement as it applies to each
Truckstop shall be for a period of five (5) years commencing on the Truckstop
Service Date and terminating on the fifth anniversary of the Truckstop Service
Date (the "Term"). Subject to Section 7(b) and Section 17, the Term shall
automatically be extended for a five (5) year renewal period (the "Automatic
Renewal Term") provided that, as a condition to the commencement of the
Automatic Renewal Term, Operator shall be entitled to receipt of the increased
percentage of Gross Receipts set forth in Section 8(a). Upon the expiration of
the Automatic Renewal Term, PNV and Operator may mutually agree to an additional
five (5) year renewal term (the "Optional Renewal Term"), provided that, as a
condition to the commencement of the Optional Renewal Term, Operator shall be
entitled to receipt of the increased percentage of Gross Receipts set forth in
Section 8(a).
(b) Either PNV or Operator may terminate this Agreement
at the end of the Automatic Renewal Term by giving written notice to the other
party on or before the 90th day prior to the end of the Automatic Renewal Term.
Unless either Operator or PNV exercises its right of termination in a timely
basis, the Term shall be automatically extended for five (5) years.
8. Fees.
(a) Subject to PNV's right to the Priority Payment (as
defined in Section 8(b)), the monthly Gross Receipts derived at each Truckstop
shall be allocated between PNV and Operator as follows: (i) during the Term,
sixty-five percent (65%) to PNV and thirty-five percent (35%) to Operator; (ii)
during the Automatic Renewal Term, sixty percent (60%) to PNV and forty percent
(40%) to Operator; and (iii) during the Optional Renewal Term, fifty-five
percent (55%) to PNV and forty-five percent (45%) to Operator.
For these purposes, "Gross Receipts" for any period shall mean the aggregate
gross amount collected by the Operator, during any calendar month, from the sale
of the Services during such period less the amount of taxes, if any, which are
required to be charged by Operator to the user of the Services and less any
refunds for faulty service or equipment. Notwithstanding the foregoing, for
purposes of this Agreement, "Gross Receipts" shall not include any revenue
received by PNV or the Operator for: (i) for advertising displayed by PNV
pursuant to Section 4(a)(ii) or; (ii) pay-per-view or other additional channels
or services provided as part of the Services pursuant to Section 4(a)(iii).
(b) Operator hereby agrees that, for a term of five (5)
years commencing on the Truckstop Service Date, if the Gross Receipts derived at
any Truckstop are less than Forty-Six Dollars ($46.00) per wired stall during
any calendar month, then PNV shall be entitled to
-7-
<PAGE> 8
retain the first Thirty Dollars ($30.00) per wired stall derived at such
Truckstop (the "Priority Payment") and Operator shall be entitled to any Gross
Receipts in excess of said Thirty Dollars ($30.00). If the revenue derived from
the Truckstop is less than the Priority Payment due to PNV for any particular
month, the Operator shall not be obligated to fund any such deficiency. If the
Gross Receipts derived at any Truckstop during a calendar month are equal to or
greater than Forty-Six Dollars ($46.00) per wired stall, then PNV shall not be
entitled to any Priority Payment and all Gross Receipts shall be allocated
between PNV and Operator pursuant to Section 8(a). Estimated revenue projections
indicating the calculation of the Priority Payment under various assumptions are
set forth on Schedule 5 attached hereto.
(c) Operator shall collect all applicable fees and taxes
from the users of the Services and shall secure and account for all funds
collected. Billing is to be made on a unit basis in accordance with the rates
and procedures to be specified by PNV from time to time. PNV may, with
Operator's consent, which shall not be unreasonably withheld, adjust the charge
per use for any particular Service and shall notify Operator in writing of such
change and the effective date of the change. All monies collected by Operator
shall be held in trust by Operator for PNV and shall remain the property of PNV.
Any taxes due on the Services provided are to be collected by Operator from the
user over and above the charge established by PNV for the particular Services
and said taxes shall be remitted by Operator to the proper governmental agency.
(d) All Gross Receipts and other revenues received by
Operator with respect to the sale of the Services shall be deposited by Operator
into PNV's local bank account on a weekly basis. All amounts due to Operator
from PNV for each calendar month shall be paid to Operator by PNV within ten
(10) days of the close of each calendar month.
(e) At weekly intervals during each calendar month,
Operator shall inform PNV of: (i) the amount of the use of the Services; (ii)
the amount of the Gross Receipts and other revenue received with respect to the
sale of the Services, Park 'N View cable drops, adapters and connectors,
telephones and television rentals; (iii) the amount of the taxes required to be
collected and paid by the Operator; and (iv) other such operating data of each
Truckstop as PNV may reasonably request which will assist PNV in evaluating the
use and marketing of the Services.
(f) The books and records of the Operator and PNV
pertinent to the Gross Receipts and other revenue and taxes received with
respect to the sale of the Services for any calendar month shall be open for
inspection and audit by an authorized representative of either Operator or PNV
upon five (5) business days notice to said party.
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<PAGE> 9
9. Exclusivity.
(a) If the Financial Milestone is met, PNV shall, during
the term of this Agreement (and any renewal term), have the exclusive right to
install the System and provide the Services to each Truckstop and any additional
truckstops in which Operator acquires an interest (whether owned, leased or
operated under a contract or some similar agreement). Operator shall advise PNV
of its acquisition of a truckstop or any interest in a truckstop (whether owned,
leased or operated under a contract or some similar arrangement) within 60 days
of the closing of the acquisition of said interest. If the Financial Milestone
is not met and the Operator does not proceed with the build-out of the remaining
Truckstops, the Operator shall not, for a period of thirty (30) months from the
date of this Agreement, contract with a party other than PNV for the
installation, operation or ownership of a system which provides for the
distribution of video or audio services, telephone, fax or other data services
to the truck parking spaces. If the Financial Milestone is not met and PNV does
not proceed with the build-out of the remaining Truckstops, the Operator shall
be permitted to contract with a party other than PNV for the installation,
operation or ownership of a system which provides for the distribution of video
or audio services, telephone, fax or other data services to the truck parking
spaces.
(b) PNV shall have: (i) the exclusive right to sell to
Operator coaxial and phone cables for use with the Services at competitive
prices; and (ii) the nonexclusive right to sell to Operator television,
telephone and cable accessories and adapters for use with the Services. After
purchasing the foregoing items from PNV, Operator shall be entitled to resell
such items to its customers and retain all profits from such resales. PNV shall
have the exclusive right to provide televisions for rent (but not for sale) to
the users of the Services at each Truckstop. All fees charged for television
rentals shall be considered Gross Receipts and shall be allocated between
Operator and PNV pursuant to the provisions of Section 8(a).
10. Rights Granted to PNV. Operator hereby grants and conveys to
PNV, for the Term of this Agreement (and any renewal term), a non-exclusive
easement, license and covenant in, over, under and across the premises of each
Truckstop. The purpose of said easement and license shall be for installing,
maintaining, repairing, replacing and operating the System and providing the
Services. PNV shall be entitled to record this Agreement or a memorandum
memorializing the terms of the easement, license and covenant granted herein for
purposes of perfecting its interest as a matter of public record. Operator
agrees that if it sells, assigns, transfers or otherwise disposes of its
interest in one or more of the Truckstops (through a change of control or
otherwise) the acquireror of such interest or assets shall assume the Operator's
rights and obligations hereunder.
11. Representations and Warranties of PNV.
(a) PNV is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Florida and has
full power and authority: (i) to enter
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<PAGE> 10
into this Agreement; and (ii) to carry out the other transactions and agreements
contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement by PNV has been duly authorized by all necessary action of PNV. This
Agreement and each of the other documents to be executed and delivered by PNV
pursuant to this Agreement have been duly executed and delivered by PNV and are
the valid and binding obligations of PNV enforceable in accordance with their
respective terms, subject only as to enforceability affected by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally and by
general equitable principles. The execution, delivery and performance of this
Agreement and the other documents to be executed, delivered and performed by PNV
pursuant to this Agreement will not: (i) conflict with or violate any provision
of PNV's organizational documents, or any law, ordinance or regulation or any
decree or order of any court or administrative or other governmental body which
is either applicable to, binding upon or enforceable against PNV; or (ii) result
in any breach of or default under or cause the acceleration of performance of
any mortgage, contract, agreement, indenture or other instrument which is either
binding upon or enforceable against PNV.
(c) PNV is not required to obtain the approval, consent
or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of PNV set forth in this Agreement or in any of
the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
12. Representations and Warranties of Operator.
(a) Operator is a corporation duly organized, validly
existing and in good standing under the laws of the State of __________________
and has full corporate power and authority: (i) to enter into this Agreement;
and (ii) to carry out the other transactions and agreements contemplated by this
Agreement.
(b) The execution, delivery and performance of this
Agreement by Operator has been duly authorized by all necessary corporate action
of Operator. This Agreement and each of the other documents to be executed and
delivered by Operator pursuant to this Agreement have been duly executed and
delivered by Operator and are the valid and binding obligations of Operator
enforceable in accordance with their respective terms, subject only as to
enforceability affected by bankruptcy, insolvency or similar laws affecting the
rights of creditors generally and by general equitable principles. The
execution, delivery and performance of this Agreement and the other documents to
be executed, delivered and performed by Operator pursuant to this Agreement will
not: (i) conflict with or violate any
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<PAGE> 11
provision of Operator's Articles of Incorporation, By-laws, or any law,
ordinance or regulation or any decree or order of any court or administrative or
other governmental body which is either applicable to, binding upon or
enforceable against Operator; or (ii) result in any breach of or default under
or cause the acceleration of performance of any mortgage, contract, agreement,
indenture or other instrument which is either binding upon or enforceable
against Operator.
(c) Operator is not required to obtain the approval,
consent or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of Operator set forth in this Agreement or in any
of the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
13. Representations and Warranties of AMBEST.
(a) AMBEST is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee and has
full corporate power and authority: (i) to enter into this Agreement; and (ii)
to carry out the other transactions and agreements contemplated by this
Agreement.
(b) The execution, delivery and performance of this
Agreement by AMBEST has been duly authorized by all necessary corporate action
of AMBEST. This Agreement and each of the other documents to be executed and
delivered by AMBEST pursuant to this Agreement have been duly executed and
delivered by AMBEST and are the valid and binding obligations of AMBEST
enforceable in accordance with their respective terms, subject only as to
enforceability affected by bankruptcy, insolvency or similar laws affecting the
rights of creditors generally and by general equitable principles. The
execution, delivery and performance of this Agreement and the other documents to
be executed, delivered and performed by AMBEST pursuant to this Agreement will
not: (i) conflict with or violate any provision of AMBEST's Articles of
Incorporation, By-laws, or any law, ordinance or regulation or any decree or
order of any court or administrative or other governmental body which is either
applicable to, binding upon or enforceable against AMBEST; or (ii) result in any
breach of or default under or cause the acceleration of performance of any
mortgage, contract, agreement, indenture or other instrument which is either
binding upon or enforceable against AMBEST.
(c) AMBEST is not required to obtain the approval,
consent or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
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<PAGE> 12
(d) All of the information contained in the
representations and warranties of AMBEST set forth in this Agreement or in any
of the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
14. Risk of Loss and Insurance; Indemnification.
(a) PNV shall bear the risk of loss for: (i) damage to or
destruction of the PNV Equipment and the System installed at each Truckstop
which is caused by the negligence or willful misconduct of PNV, its employees,
contractors, agents and customers; and (ii) injury to persons or damage to
property arising from the installation or repair of the PNV Equipment and the
System (except to the extent such damage is occasioned by any act, omission or
negligence of Operator, its employees, contractors or agents). After the PNV
Equipment has been installed and the System is operational, PNV shall have no
liability for damages or injury resulting from the operation or use of the
System.
(b) Operator shall be responsible for the repair,
replacement and maintenance resulting from damage or destruction of the PNV
Equipment and the System and all component parts thereof and damage to persons
or property to the extent such damage or destruction is caused by the negligence
or willful misconduct of the Operator, its employees, contractors or agents.
(c) Operator shall maintain during the Term of this
Agreement (or any renewal term), at its sole cost and expense, comprehensive
public liability insurance in the minimum amount of $1,000,000 providing
coverage at each Truckstop against any claims relating to the operation or use
of the System or the sale or provision of the Services and shall ensure that PNV
is named as an additional loss payee in respect of such insurance or is
otherwise covered as its interest may appear.
15. Force Majeure. Neither party shall have any liability for the
failure to perform or a delay in performing any of its obligations if such
failure or delay is the result of any legal restriction, labor dispute, strike,
boycott, flood, fire, public emergency, revolution, insurrection, riot, war,
unavoidable mechanical failure, interruption in the supply of electrical power
or any other cause beyond the control of any party acting in a reasonable
business-like manner, whether similar or dissimilar to the causes enumerated
above.
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<PAGE> 13
16. Assignment.
(a) AMBEST and Operator may, with the consent of PNV,
assign their interests in this Agreement to a party gaining or acquiring
ownership or operating control of either AMBEST, Operator or any Truckstop, and
any such assignee shall be bound by the terms of this Agreement and no such
assignment will release AMBEST or Operator from its obligations hereunder unless
specifically consented to by PNV.
(b) PNV may convert from a limited partnership to a
corporation, in which case PNV shall be entitled to assign this Agreement to
said corporation. PNV may, without the consent of AMBEST or Operator, but upon
notice to AMBEST and Operator, assign its interest in this Agreement to any
party, including without limitation, to any bank, recognized lending or leasing
institution or investor.
17. Breach. In the event that any party shall fail in any material
respect to perform any obligation under this Agreement, one or more of the other
parties may in writing notify the non-performing party that such failure
constitutes a breach. If the breach is not remedied or cured within thirty (30)
days following receipt of the notice of breach, one or more of the non-breaching
parties may terminate this Agreement by notice to the breaching party.
18. Financial Information. PNV shall not be required to commence
installation of the PNV Equipment or provide the Services to any Truckstop until
such time as Operator has provided PNV with a copy of its financial statement
for its most recently completed fiscal year, and its financial statement for the
most recently completed quarter, and until PNV has determined that, based on
such statements, PNV agrees to proceed with the installation of the System at
the Truckstops. PNV covenants and agrees to notify Operator of its decision in
this regard within 30 days of receipt of the financial statements.
19. Ownership and Confidentiality. AMBEST and Operator recognize
and agree that PNV shall, during the term of this Agreement and thereafter,
retain sole ownership of the System and the PNV Equipment. AMBEST and Operator
recognize the proprietary nature of the concept and the design of the System,
the PNV Equipment and the Services and further recognizes the fact that serious
financial loss, or loss of potential business may be incurred by PNV through the
divulgence of any information with respect to any of the foregoing. Accordingly,
AMBEST and Operator agree to maintain and cause each of its employees and agents
to maintain and keep strictly confidential all information that it obtains or
receives in conjunction with the System, the PNV Equipment and the Services. In
the event of any breach of this provision, AMBEST and Operator agree to
reimburse, indemnify and hold PNV harmless with respect to any and all damages,
costs and expenses that it may incur in connection with such breach. AMBEST and
Operator further agree that the "Park N' View" name and logo shall be and remain
the property of PNV and all references by AMBEST or Operator to the System or
the Services shall incorporate and/or refer to PNV by its full name
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<PAGE> 14
(Park N' View), whether in literature, electronic or print displays, articles,
advertising, billboards, banners or otherwise. The name, Park 'N View, is, or
will be, a registered service mark of PNV and to the extent required by PNV,
AMBEST and Operator shall execute a no cost limited license agreement for the
use of such service mark.
20. General Provisions.
(a) Notices. All notices required or permitted hereunder
shall be in writing and, may either be delivered by overnight courier,
transmitted by facsimile, or delivered by the United States Mail, postage
prepaid, addressed as follows:
To PNV: Ian Williams, President
Park 'N View, Inc.
3403 N.W. 55th Street
Building #10
Ft. Lauderdale, Florida 33309
Fax Number: (305) 730-2298
With a copy to: James M. O'Connell, Esq.
Petree Stockton, L.L.P.
4101 Lake Boone Trail
Suite 400
Raleigh, North Carolina 27607
Fax Number: (919) 420-1800
To Operator:
---------------------------
---------------------------
---------------------------
---------------------------
---------------------------
---------------------------
To AMBEST: Burt Newman, CEO & President
Harpeth on the Green One
101 West Park Drive, Suite 230
Brentwood, Tennessee 37027
Fax Number: (615) 371-5186
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this Section 20(a).
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<PAGE> 15
(b) Expenses. Each party agrees to pay, without right of
reimbursement from any other party, its costs relating to the preparation of
this Agreement and the performance of its obligations hereunder, including
without limitation, fees and disbursements of counsel, accountants and
consultants employed by such party in connection herewith.
(c) Actions; Further Assurances. Subject to the terms and
conditions of this Agreement, each party agrees to use its best efforts in good
faith to: (i) take or cause to be taken as promptly as practicable all actions
and obligations arising herein; and (ii) do or cause to be done all things that
are within its power to fulfill and comply with its obligations or the
obligations of the other parties to consummate the transactions contemplated
herein.
(d) Press Releases. PNV, AMBEST and Operator shall
consult with each other as to the form and content of all press releases and
other public disclosures of matters relating to this Agreement, the System and
the Services. Nothing in this section shall prohibit PNV, AMBEST or Operator
from making any disclosure which its legal counsel deems necessary or advisable
to fulfill such party's disclosure obligations under applicable law. All
disclosure shall be transmitted by telecopier to the other party or its counsel
prior to publication or dissemination.
(e) Section Headings. The section headings in this
Agreement are for convenience of reference only and shall not be deemed to alter
or affect any provision hereof.
(f) Applicable Law. This agreement shall be governed in
all respects by the laws of the State of Florida.
(g) Litigation; Prevailing Party. If litigation is
brought with regard to this Agreement, the prevailing party shall be entitled to
receive from the non-prevailing party, and the non-prevailing party shall
immediately pay upon demand, all reasonable fees and expenses of counsel of the
prevailing party.
(h) Schedules. The Schedules attached to this Agreement
are integral parts of this Agreement and all references to this Agreement shall
include the Schedules.
(i) Modification. This Agreement shall not be modified or
amended except by an instrument in writing executed by the parties to this
Agreement.
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<PAGE> 16
(j) Successors And Assigns. This Agreement shall apply
to, and be binding upon, the parties and their respective successors and
permitted assigns.
(k) Severability. If any part or sub-part of this
Agreement is found or held to be invalid, that invalidity shall not affect the
enforceability and binding nature of any other part of this Agreement.
(l) Counterparts. This Agreement may be executed in one
or more counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Operator, AMBEST and PNV have caused this
Agreement to be executed pursuant to appropriate legal authority duly given, as
of the day and year first above written.
PARK 'N VIEW, LTD., a
Florida limited partnership
By: Park 'N View General Partner, Inc., a
Florida corporation
By: /s/ Ian Williams
---------------------------
Ian Williams, President
AMBEST, a Tennessee corporation
By: /s/ Bert Newman
---------------------------
Bert Newman
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<PAGE> 17
SCHEDULE 1
LIST OF TRUCKSTOPS OWNED OR OPERATED
BY OPERATOR
AMBEST, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AB-01 Fifth Wheel\Milton Exit 320, MM320 Milton 905-878-8441
AB-07 Road King Truck Stop Peigan Trail Exit, Hwy 2 Peigan Trail Ext. Calgary 403-273-4849
AL-01 Perils Truck Stop of AL Exit 70 Cusseta 334-756-3161
AR-01 Truckomat-No. Little Rock Exit 161, MM161 Galloway North Little Rock 501-945-2899
AR-03 Memphis Gateway Travel Exit 278 Hwy. 77 West Memphis 870-735-7078
Center
AR-04 Van Buren Travel Center Exit 5 Hwy. 59 Van Buren 501-474-8081
AZ-01 Rip Griffin Travel Centers Exit 103, MM103 Tonopah 602-386-5443
AZ-03 Rip Griffin Travel Centers Exit 340, MM340 Fort Grand Road Willcox 520-384-5311
CA-01 Rip Griffin Travel Centers at Lenwood Road Barstow 760-253-2922
CA-02 Bruce's Bakersfield Truck Exit 184 Bakersfield 805-366-5314
Stop
CA-03 Vanco Truck & Auto Plaza 1033 W. Charter Way Hwy. 4 Stockton 208-468-0833
CA-04 Southwest Express Travel Plaza I-10 & Mesa Drive Mesa Drive Blythe 760-922-5109
CA-07 San Luis Truck Stop Santa Nella @ Exit 33 Gustine 209-827-8020
CA-08 Bruce's Buttonwillow Ambest Hwy. 58 Buttonwillow 805-764-5107
CA-09 Salinas Auto/Truck Plaza Monterey Penisula at Salinas 408-424-0875
Sanborn Rd.
CO-01 Rip Griffin Travel Centers Exit 359, MM359 U.S. 24 Limon 719-775-2811
CO-03 Johnson's Corner Truckstop Exit 254, MM254 Loveland 970-667-2059
FL-04 New Cigar City Truck Stop Exit 8 Tampa 813-623-2255
FL-05 Capital City Truck/Travel Exit 32, MM217 Hwy. 59 Lloyd 850-997-3538
Center
GA-01 Choo Choo Truck Wash Plaza Exit 139, MM Ringgold 706-935-5107
GA-02 Cisco Travel Plaza, Inc. Exit 2A, MM5 Kingsland 912-729-6550
</TABLE>
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<PAGE> 18
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GA-03 Leathers Truck Stop Exit 6, MM26 Villa Rica 770-459-6615
GA-05 Georgia Travel Center Exit 31, MM97 Cordale 912-273-5710
IA-02 Bosseiman Travel Center Exit 142, MM142A U.S. 65 Altonna 515-967-7878
IA-03 Iowa 80 Truck Stop Exit 284, MM284 Walcott 319-284-8961
IA-05 Truckomat of Council Bluffs Exit 3, MM3 Council Bluffs 712-366-1766
IA-06 I-35 Truck Stop Exit 144, MM144 Hwy. 20 Williams 515-854-2238
ID-02 Traveler's Oasis Exit 182, MM182 Eden 208-825-4147
ID-03 Ranch Hand Truck Stop, Inc. 23200 N. Hwy. 30 @ Montpeller 208-847-1180
IL-01 Dixie Truckers Home Exit 145, MM145 U.S. Route 136 McLean 309-874-2323
IL-02 Dixie Truckers Home Exit 212, MM212 Tuscola 217-253-4721
IL-04 Romines Standard Plaza Exit 112-B, MM112 Rt. 47 Morris 815-942-5690
IL-05 Woodhull Plaza Exit 32, MM32 Woodhull 309-334-2191
IL-06 Getaway Midstate Truck Exit 4, MM4 East St. Louis 618-875-5800
Plaza
IL-07 Arrowhead Shell Oasis Truck Exit 36, MM36 1/2 U.S. Hwy 20 Hampshire 847-683-2061
Stop
IL-08 Truckomat-So.Holland Exit 73B, MM73 I-80, Hwy 8 South Holland 708-339-6338
IN-01 Brazil 70 Ambest Exit 23, MM23 St. Rd 59 & I-70 Brazil 812-446-2296
IN-03 Haubstadt 41 Travel Plaza I-84, MM20 11/2Miles N. I-64 Haubstadt 812-768-6158
IN-04 231 Ambest Plaza Exit 57, MM57 U.S. 231 Dale 812-937-4408
IN-06 Grovertown Truckstop, Inc. State Hwy 23 Grovertown 219-887-2810
IN-08 Daleville 76 ATP Exit 34, MM34 Daleville 765-378-0246
IN-10 Gas America #43 Exit 115, MM115 Hwy. 109 Knightstown 765-735-6820
IN-11 Steel City Truck Stop Exit 9A, MM88 I-85 Gary 219-884-1133
IN-12 Steel City Express Exit 22-B, MM22-B Porter 219-926-4871
KS-01 Bosselman Travel Center- Exit 252, MM252 Salina 785-825-6787
Salina
KS-02 Newell Truck Plaza Exit 31, MM31 U.S. 50 Newton 316-283-4000
KS-03 Star Fuel Centers, Inc. Exit 215 Hwy. 169 & K7 Olatha 913-780-2009
KY-03 Henderson Auto/Truck Plaza 2214 U.S. Hwy. 41 North Henderson 501-827-3881
</TABLE>
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<PAGE> 19
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
KY-06 Madisonville Auto/Truck Plaza Exit 37, MM37 Hwy. 183 Mortons Gap 502-258-5213
Plaza
KY-09 Olive Hill Happy Mart Exit 161, MM161 Olive Hill 506-286-5252
KY-11 Southern Pride Truck Stop Exit 16, MM16 Paducah 502-898-8753
KY-12 Expressway Shell Exit 38, MM38 I-75 & 192 London 606-864-2183
KY-13 Sonors Auto-Truck Plaza Exit 81, MM81 Sonora 502-369-7300
KY-14 Waddy `76 Travel Plaza Exit 43, MM43 KY 395 Waddy 502-829-5223
KY-15 Curry Petrol Auto Truck Exit 41, MM41 London 606-864-2174
Center
LA-01 Kelly's Truck Terminal Exit 5 Hwy. 80 Greenwood 318-938-5411
MA-01 Pride Travel Center Exit 6, MM6 I-291 Chicopee 413-592-8190
ME-01 Howell's Travel Shop Exit 2, Rt. 1 & I-236 I-236 Kittery 207-439-2466
MI-01 TE-KHI Truck Auto Plaza Exit 104, MM104 Battle Creek
MI-02 Windmill Truck Stop Exit 98A, MM98A I-98 & I-69 Lansing 517-848-0717
MN-02 Petrol Pumper #0073 MM146 Hwy. 109 Alden 507-874-3767
MN-03 Petrol Pumper #0079 MM300 S. Minneapolis 612-438-3397
MN-04 Petrol Pumper #0065 Exit 42, MM42 Hwy. 14 West Owatonna 507-455-0050
MN-05 Petrol Pumper #0081 MM218 Hwy. 52 Rochester 507-289-0540
MN-06 Petrol Pumper #0066 Exit 183, MM183 Hasty 612-878-1655
MO-01 B & D Truck Port Exit 127, MM127 Lebanon 417-588-2281
MO-03 Oak Grove 301 SW 1st I-26 Oak Grove 816-690-4455
MO-04 J & N Truck Stop Exit 143, MM143 County Rd M, N, & J Ste. Genevieve 573-543-2287
MO-05 Kearney Truck Plaza Exit 26, MM26 Hwy. 92 Kearney 816-628-5101
MS-02 35-55 Truck Stop Exit 174, MM174 I-55 Valden 601-484-5357
MT-01 Muralt's Truck Plaza Exit 96, MM96 U.S. 93 Missoula 405-728-4700
NC-01 Kings Mountain Truck Plaza Exit 5, MM5 Kings Mountain 704-739-8415
NC-02 Horn's Unocal ATP Exit 170, MM170 Highway 601 Mocksville 338-751-3815
ND-01 Big Sioux Travel Plaza Exit 138 32nd Ave. S. Grand Forks 701-748-8145
</TABLE>
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<PAGE> 20
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NE-01 Bosselman Travel Center-BS Exit 107, MM107 I-76 Big Springs 308-889-3886
NE-02 Bosselman Travel Center-G1 Exit 312, MM312 U.S. 281 Grand Island 308-382-2288
NE-03 Bosselman's Fuel Stop-Wood Exit 300, MM300 Hwy. 11 Wood River 308-583-2493
River
NE-04 Bosselman Travel Center-EC Exit 257, MM312 U.S. 183 Elm Creek 308-858-4330
NM-01 Rip Griffin Travel Centers Exit 194, MM194 St. Hwy. 41 Moriarty 505-832-4421
NM-02 Price's Truck Stop US Hwys. 285 & 70 Roswell 505-823-1450
NY-01 Sugar Creek Travel Plaza Route 19 & 33, MM3 Bergen 716-494-2120
#09
NY-02 Sugar Creek Travel Plaza Exit 42, Rt. 14, MM340 Route 14 Geneva 315-781-1484
#107
NY-03 Sugar Creek Travel Plaza I-390, Exit 12, MM12 Henrietta 716-334-7510
#88 (Rochester)
NY-04 Sugar Creek Travel Plaza #67 Exit 37, MM37 Ranona 607-776-7834
#67
NY-05 Sugar Creek Travel Plaza Exit 48 Rt. 37 & 342 Pamelia 315-785-9232
#90
NY-07 Lounsberry Truck Stop Exit 63 (Watertown) 607-687-3957
Nichols
NY-08 Sugar Creek Stores #66 Exit 16 Route 17 Randolph 716-358-3939
NY-10 Canaan Truck Stop Exit B22 NY State Thruway Canaan 518-781-4144
OH-01 Stony Ridge Truck Plaza Exit 1B, MM72 Toledo 419-837-6409
OH-02 Stony Ridge Truck Plaza - Exit 29, MM29 I-75 & S. R. 63 Monroe 513-539-9247
South
OH-03 Truckomat - Hebron Exit 126, MM126 Hebron 740-467-2818
OK-01 Simon's Truck Oasis #1 Exit 26, MM26 Sayre 405-928-5571
OK-02 Bruce's Tulsa Truck Plaza 161st St. Exit, MM238 Tulsa 918-234-3800
OK-03 Bruce's Oklahoma City I-40 Exit 166, MM166 Chociaw Rd. Oklahoma City 405-386-2021
OK-04 Bruce's Oklahoma City I-35 Exit 134, Wilshire Blvd. Wilshire Blvd. Oklahoma City 405-478-0473
OR-01 Jubliz Truck Stop Exit 307 on Marine Dr. Portland 503-283-1111
OR-02 Arrowhead Travel Plaza Exit 216, MM216 Pendleton 541-276-8484
PA-02 All American Auto/Truck Plaza Exit 17, MM52 PA Turnpike, Exit Carlisle 717-249-1921
Plaza 16
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PA-04 Green Shingle Service Exit 5, MM18.5 Rt. 832 Erie 814-838-1947
PA-05 Clark's Ferry All American U.S. 22-322 Duncannon 717-834-3174
Plaza
PA-06 Frystown All American Plaza Exit 2, MM10 Bethel 717-834-3174
PA-07 Pine Grove All American Plaza Exit 31, MM100 Hwy. 443 Pine Grove 717-345-8110
PA-08 Howe's 84 Auto/Truck Plaza Exit 5, MM17 Rt. 191 Lake Ariel 717-698-5821
PA-09 Carlisle Texaco Truck Plaza Exit 17 off I-81 Exit 16 off PA Carlisle 717-765-5144
Turnpike
PA-13 Pocono Mountain Travel Plaza Exit 468-30S, MM46 U.S. 33 Bartonsville 717-421-1770
PA-14 Keystone Shortway Travel Exit 11, MM70 U.S. 322 Strattanville 814-379-3276
Center
SC-01 Anderson Truck Plaza Exit 27, MM27 Hwy. 81 Anderson 884-224-6454
TN-01 417 Travel Center Exit 417, MM417 TN 92 Dandridge 423-397-3547
TN-02 The Tennessean Truck Stop Exit 22, MM417 US Hwy 31A Cornersville 931-283-4171
TX-02 Hitchin' Post T/T-Gainsville Exit 500, MM500 Gainesville 940-665-9521
TX-03 Hitchin' Post T/T-Huntsville Exit 118, MM118 Texas Hwy. 75 Huntsville 409-295-2488
TX-04 Rip Griffin Travel Centers Exit 177, MM177 Hwy. 87 Big Spring 915-264-4444
TX-05 Rip Griffin Travel Centers 50th Street/Ave. "A" I-27 to Ave. A Lubbock 806-747-2505
TX-06 Rip Griffin Travel Centers Exit 503, MM503 Terrell 972-553-6939
TX-07 Texaco Auto/Truck Plaza Exit 77 Amarillo 806-335-1911
TX-09 Rip Griffin Travel Centers U.S. 84 180 & U.S. 84 Snyder 915-573-5213
TX-10 Rip Griffin Travel Centers Exit 74, MM74 Hwy. 86 Tulia 806-995-4567
TX-13 Rip Griffin Travel Centers Exit 193 Conrads Road New Braunfels 830-608-9395
TX-14 El Paso Travel Plaza Exit 37 Hortzon Blvd. El Paso 915-852-4141
TX-15 Houston West Travel Center MM732 F.M. 359 Brookshire 281-934-8576
TX-16 Circle Bar Auto Truck Plaza Exit 372 Ozona-San Angelo 915-392-2837
UT-02 West Winds Truck Stop Exit 162, MM162 Hwy. #6 & #191 Green River 435-564-3495
UT-04 Super-Mart Utah Exit 21 South & 3rd W. 201 Salt Lake City 801-481-7535
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
VA-02 The Virginian Truck Stop Exit 291, MM291 Tom's Brook 540-438-3141
VA-03 Doswell All American Plaza Exit 96, MM96 Route 30 Doswell 804-876-3712
WI-01 Bar-B Travel Plaza Exit 116, MM116 Hwy. 54 Black River 715-284-4341
Falls
WI-03 Edgerton Shell Oasis Truck Exit 160 Hwy. 51 & Hwy. 73 Edgerton 608-884-9451
Stop
WI-04 Highlands Mobil Travel Plaza Exit 333, MM333 Hwy. 20 Racine 414-884-7500
WV-01 Dallas Pike Travel Express Exit 11, MM11 Dallas Pike Wheeling 304-547-0570
WY-01 Rip Griffin Travel Centers Exit 214, MM214 Rawlins 307-328-2103
</TABLE>
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<PAGE> 23
SCHEDULE 2
LIST OF CURRENT PNV EQUIPMENT
Current PNV Equipment:
Satellite Dish & Off-air receive antenna
Processing [head-end] equipment
Telephone PBX switch and operator console
Distribution cables
Parking lot plug-in boxes
Rental coaxial cables
Rental telephones and cables
Rental Televisions
Cable TV "billing" computer and software
Prepaid [debit] phonecard dispenser
Telephone & Cable TV accessories for resale
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<PAGE> 24
SCHEDULE 3
LIST OF CURRENT PROGRAMMING SCHEDULE
Current Programming Schedule:
<TABLE>
<CAPTION>
==============================================================================================
Channel # Program
- ----------------------------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------------------------
2* Playboy
- ----------------------------------------------------------------------------------------------
3 CBS
- ----------------------------------------------------------------------------------------------
4 ESPN
- ----------------------------------------------------------------------------------------------
5 Fox
- ----------------------------------------------------------------------------------------------
6 HBO (East)
- ----------------------------------------------------------------------------------------------
7 WGN Chicago
- ----------------------------------------------------------------------------------------------
8 USA
- ----------------------------------------------------------------------------------------------
9 WTBS Atlanta
- ----------------------------------------------------------------------------------------------
10 PNV Program Guide and Advertising
- ----------------------------------------------------------------------------------------------
11 TNN
- ----------------------------------------------------------------------------------------------
12 Headline News
- ----------------------------------------------------------------------------------------------
13 ABC
==============================================================================================
</TABLE>
* This program forms part of a premium tier of service.
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<PAGE> 25
SCHEDULE 4
LIST OF CURRENT TELEPHONE SERVICES
Current Telephone Services:
1-800 calls
Local calls
Operator services
Direct call back to stall # (automated)
Message waiting
Wake-up calls (automated)
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<PAGE> 1
EXHIBIT 10.7
[FORM OF CONTRACT FOR MULTIPLE TRUCKSTOPS]
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT (this
"Agreement") is entered into this 11th day of July, 1996, by and between Park
'N View, Inc., a Delaware corporation ("PNV"), with its headquarters at 3403
N.W. 55th Street, Building #10, Ft. Lauderdale, Florida and Professional
Transportation Partners, LLC ("Operator"), with its headquarters at 5121
Maryland Way, Ste. 200, Brentwood, TN 37027.
WHEREAS, Operator: (i) currently owns or operates ______________
(_____) full-service travel plaza truckstops which are located at the addresses
listed on Schedule 1 hereto; and (ii) may acquire or contract to operate other
full-service travel plaza truckstops, all of the aforesaid hereinafter
individually being referred to as a "Truckstop" and collectively being referred
to as the "Truckstops"; and
WHEREAS, PNV has designed and developed the concept and equipment
("the System") to (i) enable truck drivers to: (a) receive and/or have access
to cable television services and telecommunications services; and (b) provide
such truck drivers programming consisting of video and audio services, and
telephone, fax or other data services while remaining in their vehicles parked
at the Truckstop; and (ii) sell advertising to be broadcast over the System
(collectively, the "Services"); and
WHEREAS, Operator desires to engage PNV to install the System and
provide the Services at certain of the Truckstops.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Operator and PNV (hereinafter collectively being referred to
as the "Parties"), intending to be legally bound, hereby mutually agree as
follows:
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<PAGE> 2
1. Purpose. The Parties hereby agree that PNV shall install the
System at certain of the Truckstops and that the Parties shall operate the
System at such Truckstops pursuant to the terms of this Agreement. PNV shall
initially install the System at Operator's Truckstop located at
___________________________________. PNV shall install the System at such other
Truckstops as may be mutually agreed upon by the Parties.
2. Installation of Equipment.
(a) PNV shall, at its sole cost and expense, and in the
manner herein provided, install and continually maintain at each Truckstop at
which the Services are to be provided equipment consisting of the following:
(i) equipment necessary for the
provision and distribution of the Services.
(ii) outlet ports to parking spaces to
provide users with access to the Services.
(iii) equipment designed to (a) monitor
the use of the Services and (b) account for
all receipts for billing and revenue
sharing purposes either independently
and/or in conjunction with the Truckstop's
existing cash register system.
All of the foregoing equipment as currently used by PNV is described on
Schedule 2 hereto and is hereinafter, together with any additions or deletions
to said equipment, collectively referred to as the "PNV Equipment". PNV
reserves the right to make additions to and deletions from the PNV Equipment to
be installed at each Truckstop. PNV shall provide the Services to at least 75%
of the truck parking spaces located at each Truckstop at which it installs the
System. The Parties shall mutually determine the precise number and location of
the truck parking spaces at which the Services shall be provided, taking into
account such factors as the cost of construction and implementation, the layout
of the parking facilities, the usage of particular parking rows to drop
trailers and such other factors as the Parties may deem relevant.
(b) PNV shall, subject to Operator's prior approval,
install, at PNV's sole cost and expense, underground and above ground but not
overhead, transmission and distribution cables and equipment through the truck
parking areas at each Truckstop (and any Operator owned or managed hotels and
motels, located at or adjacent to a Truckstop, as may be mutually agreed) as is
necessary and appropriate to install the System and to provide the Services.
PNV shall, with Operator's prior consent, have the right to run additional
transmission lines under and through each Truckstop, at reasonable times and
locations, to serve adjacent properties (including hotels or motels), if in the
future any such Truckstop expands its operations to include such properties.
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<PAGE> 3
(c) Operator shall make available to PNV a sufficient area
in which to install the PNV Equipment including: (i) such area as is required
for the installation of satellite dish(es); (ii) a secured air-conditioned
interior area of approximately 50 square feet for the installation of the
headend equipment and the telephone and related monitoring equipment; and (iii)
an area at the fuel desk and/or the travel store for installation of the
equipment required for activation and sale of the Services (hereinafter
collectively referred to as the "Equipment Area").
(d) PNV shall be entitled to have continued access to the
Equipment Area and all parking areas for purposes of installing, repairing and
monitoring the PNV Equipment, the System and the Services. PNV shall take care
and make every reasonable effort to minimize damage and disruption to the
premises and Operator's business operations during the installation and
operation of the System at each Truckstop. Prior to commencement of any
construction, PNV shall obtain Operator's approval of the methods and materials
to be used by PNV with respect to the installation of the System. PNV will
repair any material damage to the Truckstop which is caused by PNV. However,
PNV shall not be responsible for any existing defects or deficiencies or the
normal wear and tear to the parking lot or the Truckstop.
(e) PNV shall install the PNV Equipment in a workmanlike
and efficient manner, without unreasonable interference with the operation of
each Truckstop. PNV shall use its best efforts to: (i) minimize the disruption
to traffic flow and parking space availability; and (ii) complete the
installation of the System at each Truckstop within forty-five (45) days of
commencement of the installation at each Truckstop.
(f) PNV shall on a timely basis secure, and continuously
maintain in full force and effect, all licenses, permits and approvals required
by governmental authorities with respect to the installation, operation and
maintenance of the System and providing the Services. Operator shall assist PNV
in obtaining any such licenses, permits, or approvals upon PNV's reasonable
request.
(g) After completion of the installation of the System at
a Truckstop, PNV shall provide Operator with written notice of the date on
which the sale of the Services shall commence at each such Truckstop
(hereinafter referred to as the "Truckstop Service Date").
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<PAGE> 4
3. Rights and Duties of The Parties With Respect To The PNV
Equipment.
(a) Notwithstanding the fact that certain parts of the PNV
Equipment may be affixed to each Truckstop, the PNV Equipment shall not become
a fixture thereto and shall remain the property of PNV. Operator acknowledges
that the System, the Services and the PNV Equipment and the manner of its
operation and installation are proprietary to PNV. Accordingly, Operator shall
use its best efforts to insure that all information and data concerning the
System, the Services and the PNV Equipment shall not be divulged, and (except
in the case of emergency) that access to the System and the PNV Equipment shall
not be given to any person or persons other than personnel authorized by PNV.
(b) Upon the termination of this Agreement for any reason,
PNV shall have the right to: (i) remove, at its sole cost and expense, any or
all of the PNV Equipment from each Truckstop; or (ii) sell or lease it to the
Operator or its successors, nominees or assignees. PNV shall, if it elects to
remove the System, restore each Truckstop as near as reasonably possible to the
condition of such premises prior to the installation of the System, normal wear
and tear excepted, but shall not be obligated to remove any underground cables.
4. Programming and Telecommunications Services to Be Provided.
(a) PNV shall make the Services available on the System as
follows:
(i) PNV shall source and deliver a
programming package consisting of a minimum
of eleven (11) channels of entertainment
programming. PNV shall pay the cost of all
such programming. The current programming
schedule to be broadcast by PNV is as set
forth on Schedule 3. PNV may, with the
prior consent of Operator, make changes to
the programming schedule from time to time.
(ii) In addition to the eleven (11)
channel entertainment lineup, there shall
be other channels which shall be used to
provide a programming schedule and
advertising. Net profits (after payment of
all "Directly Related Expenses" as defined
in Section 8(b) below) generated by
advertising on such channels at each
Truckstop shall be divided as follows: 50%
to PNV and 50% to Operator. All advertising
revenue and other revenues and commissions
generated by these channels shall not be
considered "Gross Receipts" (as defined in
Section 8(a)) for purposes of the
Agreement.
(iii) PNV may, with the consent of
Operator, provide pay-per-view or other
non-traditional cable channels or services
as part of the Services. The net profits
(after payment of all Directly
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<PAGE> 5
Related Expenses) from such additional
channels or services shall be divided as
follows: 50% to PNV and 50% to Operator.
All revenues and commissions generated by
these channels shall not be considered
Gross Receipts for purposes of the
Agreement.
(iv) PNV shall also provide telephone
service to certain parking slots at each
Truckstop. The current telephone services
offered by PNV are set forth on Schedule 4.
The fee schedules established for the
Services include a charge relating to phone
usage and such fees shall be considered
Gross Receipts for purposes of this
Agreement. PNV shall, with Operator's prior
consent, have the right to determine and
make changes to the specific types of
telecommunication services provided to a
particular Truckstop from time to time. If
the Parties mutually agree to permit PNV to
provide phone service to areas of the
Truckstops, other than the parking lot, the
Parties shall mutually agree as to the
profit allocations with respect to such
services.
5. Operation of the System and Sale and Promotion of the
Services.
(a) PNV shall, from time to time, at its sole cost
and expense, train the Operator and its fuel desk employees with respect to the
operation of the point of sale equipment and the sale and promotion of the
Services. The Operator and its fuel desk employees shall be responsible for the
operation of the point of sale equipment and the sale and promotion of the
Services. PNV shall provide follow up training for Operator's personnel during
working hours with respect to the sale and promotion of the Services, the
operation of the System, and the maintenance of the PNV Equipment as may be
reasonably requested by Operator from time to time. PNV shall, with the prior
consent of Operator, be entitled to have its own employees or agents engage in
the sale and the promotion of the Services at any Truckstop, provided that
PNV's employees and agents shall not interfere with the operation of said
Truckstop.
(b) Operator shall use its best efforts to assure
that the management, fuel desk employees and other personnel promote the use of
the Services by the truck drivers frequenting the Truckstop. The Parties may
mutually agree from time to time to implement sales incentive programs for the
fuel desk employees and other personnel to promote the sale of the Services.
The Parties shall share the cost of implementing and funding any such mutually
agreed upon incentive programs.
(c) Operator may develop and supply to PNV, at no
cost to PNV, certain advertising and promotional materials relating to the
System and the Services. PNV may also
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<PAGE> 6
develop and supply to Operator, at no cost to Operator, certain advertising and
promotional materials relating to the System and the sale of the Services.
Subject to each Party's approval and consent, Operator and PNV shall make
reasonable efforts to utilize and display such materials at each Truckstop in
order to promote the sale and promotion of the Services.
6. Maintenance of the PNV Equipment and the System.
(a) PNV shall maintain a good quality signal and reception
through the System comparable to the signal and reception supplied for regular
television programming and telecommunications services to home consumers.
(b) The day to day maintenance of the System shall be
handled as follows:
(i) Operator's trained staff members
shall: (i) replace failed connecting drop
cables and accessories with equipment to be
furnished by PNV at its cost; (ii) maintain
the cable and phone boxes in the outside
hookups in proper operating order,
including cleaning and removal of debris
(i.e. oil, dirt, ice, snow, etc.); and
(iii) replace cable and phone connection
outlets in the outside hookups with
equipment furnished by PNV at its cost.
(ii) If a mechanical problem arises
other than through a failed connecting
cable or accessory, Operator shall contact
PNV by telephone at PNV's office. Unless
extenuating circumstances exist, PNV shall,
within forty-eight (48) hours, either
authorize Operator to contact a designated
repair technician or dispatch a designated
repair technician to make the necessary
repairs to the System. Charges for repairs
will be billed directly to PNV.
7. Term.
(a) Subject to Sections 7(b) and 16, the term of this
Agreement, as it applies to each Truckstop at which the System is installed,
shall be for a period of ten (10) years commencing on the Truckstop Service
Date and terminating on the tenth anniversary of the Truckstop Service Date
(the "Term"). Subject to Section 7(b) and Section 16, the Term shall
automatically be extended for a five (5) year renewal period (the "Automatic
Renewal Term") provided that, as a condition to the commencement of the
Automatic Renewal Term, Operator shall be entitled to receipt of the increased
percentage of Gross Receipts set forth in Section 8(a).
(b) Operator and PNV hereby acknowledge and agree that
either party shall have the right to terminate this Agreement as it applies to
one or more Truckstops if such Truckstop does not have average gross revenue of
$35 per wired stall per month during any six
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<PAGE> 7
(6) month period, the Parties have jointly implemented a plan to increase
revenue at such Truckstop and the average gross revenue does not exceed $35 per
wired stall per month at such Truckstop during the three (3) month period
following implementation of such plan.
8. Fees.
(a) The monthly Gross Receipts derived at each Truckstop
shall be allocated between PNV and Operator as follows: (i) during the Term,
sixty-five percent (65%) to PNV and five-percent (5%) to Operator and thirty
percent (30%) to truckstop operator; and (ii) during the Automatic Renewal
Term, sixty percent (60%) to PNV and ten percent (10%) to Operator and thirty
percent (30%) to truckstop operator.
For these purposes, "Gross Receipts" for any period shall mean the aggregate
gross amount collected by the Operator, during any calendar month, from the
sale of the Services during such period less the amount of taxes, if any, which
are required to be charged by Operator to the user of the Services and less any
refunds for faulty service or equipment. Notwithstanding the foregoing, for
purposes of this Agreement, "Gross Receipts" shall not include any revenue
received by PNV or the Operator for: (i) advertising displayed by PNV pursuant
to Section 4(a)(ii) or; (ii) pay-per-view or other additional channels or
services provided as part of the Services pursuant to Section 4(a)(iii).
(b) Net profits (after payment of all Directly Related
Expenses) generated by the services provided pursuant to Sections 4(a)(ii) and
4(a)(iii) shall be divided as follows: 50% to PNV and 50% to Operator. For
these purposes, "Directly Related Expenses" shall mean all direct costs and
expenses incurred by PNV with respect to the: (i) acquisition and installation
of the equipment necessary to transmit advertising over the System, including,
without limitation, loop tape players and loop tapes; (ii) sale, promotion and
production of advertising programs; (iii) salaries and commissions paid to and
expenses incurred by individuals or entities which sell advertising; and (iv)
fees paid to pay-per-view programmers. Directly Related Expenses shall not
include: (i) allocations of corporate overhead (other than the advertising
department); (ii) depreciation of the PNV Equipment, other than the equipment
necessary to transmit advertising over the System; or (iii) other costs and
expenses which are not directly related to the sale and promotion of
advertising over the System.
(c) Operator shall collect all applicable fees and taxes
from the users who purchase the Services directly from Operator. Operator shall
not be responsible for collection of fees and taxes from those users who
purchase the Services through PNV's automated phone activation program. Billing
is to be made on a unit basis in accordance with the rates and procedures
specified by PNV from time to time. Any taxes due on the Services purchased
directly through Operator are to be collected by Operator from the user over
and above the charge established by PNV for the particular Services and said
taxes shall be remitted by Operator to the proper governmental agency. PNV
shall be responsible for the payment of all
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<PAGE> 8
taxes due with respect to amounts collected by PNV from users who purchase the
Services through PNV's automated phone activation program.
(d) All Gross Receipts and other revenues collected by
Operator with respect to the sale of the Services shall be remitted to PNV on a
monthly basis. All amounts due to Operator from PNV for each calendar month
shall be paid to Operator by PNV within ten (10) days of the close of each
calendar month.
(e) Upon request by PNV, but not more than once a week,
Operator shall inform PNV of: (i) the amount of the use of the Services; (ii)
the amount of the Gross Receipts and other revenue received with respect to the
sale of the Services, cable drops, adapters, connectors and telephones; (iii)
the amount of the taxes collected by the Operator; and (iv) other operating
data relating to the System as PNV may reasonably request.
(f) The books and records of the Operator and PNV
pertinent to the Gross Receipts, Directly Related Expenses, and other revenue
and taxes received with respect to the sale of the Services for any calendar
month shall be open for inspection and audit by an authorized representative of
either Operator or PNV upon five (5) business days notice to said party.
9. Exclusivity.
(a) PNV shall, for the Term of this Agreement (and any
renewal term), have the exclusive right to install the System and provide the
Services to each Truckstop and any additional truckstops in which Operator
acquires an interest (whether owned, leased or operated under a contract or
some similar agreement).
(b) PNV shall during the Term of this Agreement (and any
renewal term) have: (i) the exclusive right to sell to Operator at competitive
prices coaxial and phone cables for use with the Services provided by PNV; and
(ii) the nonexclusive right to sell to Operator television, telephone and cable
accessories and adapters for use with the Services. After purchasing the
foregoing items from PNV, Operator shall be entitled to resell such items to
its customers and retain all profits from such resales.
10. Rights Granted to PNV. Operator hereby grants and conveys to
PNV, for the Term of this Agreement (and any renewal term), access to the
premises of each Truckstop at which the System is installed for purposes of
maintaining, repairing, replacing and operating the System and providing the
Services.
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<PAGE> 9
11. Representations and Warranties of PNV.
(a) PNV is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power
and authority: (i) to enter into this Agreement; and (ii) to carry out the
other transactions and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement by PNV has been duly authorized by all necessary action of PNV. This
Agreement and each of the other documents to be executed and delivered by PNV
pursuant to this Agreement have been duly executed and delivered by PNV and are
the valid and binding obligations of PNV enforceable in accordance with their
respective terms, subject only as to enforceability affected by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally and by
general equitable principles. The execution, delivery and performance of this
Agreement and the other documents to be executed, delivered and performed by
PNV pursuant to this Agreement will not: (i) conflict with or violate any
provision of PNV's organizational documents, or any law, ordinance or
regulation or any decree or order of any court or administrative or other
governmental body which is either applicable to, binding upon or enforceable
against PNV; or (ii) result in any breach of or default under or cause the
acceleration of performance of any mortgage, contract, agreement, indenture or
other instrument which is either binding upon or enforceable against PNV.
(c) PNV is not required to obtain the approval, consent or
waiver of any other person or entity for the execution, delivery or performance
of this Agreement.
(d) All of the information contained in the
representations and warranties of PNV set forth in this Agreement or in any of
the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
12. Representations and Warranties of Operator.
(a) Operator is a limited liability corporation duly
organized, validly existing and in good standing under the laws of Tennessee
and has full corporate power and authority: (i) to enter into this Agreement;
and (ii) to carry out the other transactions and agreements contemplated by
this Agreement.
(b) The execution, delivery and performance of this
Agreement by Operator has been duly authorized by all necessary corporate
action of Operator. This Agreement and each of the other documents to be
executed and delivered by Operator pursuant to this Agreement have been duly
executed and delivered by Operator and are the valid and binding obligations of
Operator enforceable in accordance with their respective terms, subject only as
to enforceability affected by bankruptcy, insolvency or similar laws affecting
the rights of creditors generally and by general equitable principles. The
execution, delivery and performance of this Agreement and the other documents
to be executed, delivered and
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<PAGE> 10
performed by Operator pursuant to this Agreement will not: (i) conflict with or
violate any provision of Operator's Articles of Incorporation, By-laws, or any
law, ordinance or regulation or any decree or order of any court or
administrative or other governmental body which is either applicable to,
binding upon or enforceable against Operator; or (ii) result in any breach of
or default under or cause the acceleration of performance of any mortgage,
contract, agreement, indenture or other instrument which is either binding upon
or enforceable against Operator.
(c) Operator is not required to obtain the approval,
consent or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of Operator set forth in this Agreement or in
any of the documents delivered or to be delivered herewith or after the
execution hereof as set forth in any provision of this Agreement is true,
accurate and complete.
13. Risk of Loss and Insurance; Indemnification.
(a) PNV shall bear the risk of loss and hereby indemnifies
Operator for: (i) damage to or destruction of the PNV Equipment and the System
installed at each Truckstop which is caused by the negligence or willful
misconduct of PNV, its employees, contractors, agents and customers; and (ii)
injury to persons or damage to property arising from the installation,
operation or repair of the PNV Equipment and the System (except to the extent
such damage is occasioned by any act, omission or negligence of Operator, its
employees, contractors or agents).
(b) Operator shall be responsible for the repair or
replacement of the PNV Equipment resulting from damage or destruction caused by
the negligence or willful misconduct of the Operator, its employees,
contractors or agents.
(c) Both Operator and PNV shall maintain during the Term
of this Agreement (or any renewal term), at their sole cost and expense,
comprehensive public liability insurance in the minimum amount of $1,000,000
providing coverage at each Truckstop at which the Services are provided against
any claims relating to the operation or use of the System or the sale or
provision of the Services and shall ensure that each Party is named as an
additional insured in respect of such insurance or is otherwise covered as its
interest may appear.
14. Force Majeure. Neither party shall have any liability for the
failure to perform or a delay in performing any of its obligations if such
failure or delay is the result of any legal restriction, labor dispute, strike,
boycott, flood, fire, public emergency, revolution, insurrection, riot, war,
unavoidable mechanical failure, interruption in the supply of electrical
-10-
<PAGE> 11
power or any other cause beyond the control of any party acting in a reasonable
business-like manner, whether similar or dissimilar to the causes enumerated
above.
15. Assignment.
(a) Operator may sell, assign, transfer or otherwise
dispose of its interest in one or more of the Truckstops (through a change of
control or otherwise) provided that the acquiror of such interest or assets
shall assume the Operator's rights and obligations hereunder and shall be bound
by the terms of this Agreement, in which case, PNV shall recognize the acquiror
of such Truckstop as its Operator for purposes of this Agreement.
(b) PNV may pledge its interest in this Agreement to any
party, including without limitation, to any bank, recognized lending or leasing
institution or investor as collateral. PNV may sell, assign, transfer or
otherwise dispose of its interest in this Agreement provided that said acquiror
shall assume all of PNV's rights and obligations hereunder and shall be bound
by the terms of this Agreement.
16. Breach. In the event that either party shall fail in any
material respect to perform any obligation under this Agreement, the other
party may in writing notify the non-performing party that such failure
constitutes a breach. If the breach is not remedied or cured within thirty (30)
days following receipt of the notice of breach, without limiting any other
remedy which may be available, the non-breaching party may terminate this
Agreement by notice to the breaching party.
17. Ownership and Confidentiality. Operator recognizes and agrees
that PNV shall, during the term of this Agreement and thereafter, retain sole
ownership of the System and the PNV Equipment. Operator recognizes the
proprietary nature of the concept and the design of the System, the PNV
Equipment and the Services. Accordingly, Operator agrees to maintain and cause
each of its employees and agents to maintain and keep strictly confidential all
information that it obtains or receives in conjunction with the System, the PNV
Equipment and the Services. Operator further agrees that the "Park N' View"
name and logo shall be and remain the property of PNV and all references by
Operator to the System or the Services shall incorporate and/or refer to PNV by
its full name (Park N' View), whether in literature, electronic or print
displays, articles, advertising, billboards, banners or otherwise. The name,
Park 'N View, is, or will be, a registered service mark of PNV and to the
extent required by PNV, Operator shall execute a no cost limited license
agreement for the use of such service mark.
-11-
<PAGE> 12
18. General Provisions.
(a) Notices. All notices required or permitted
hereunder shall be in writing and, may either be delivered by overnight
courier, transmitted by facsimile, or delivered by the United States Mail,
postage prepaid, addressed as follows:
To PNV: Ian Williams
President
Park 'N View, Inc.
3403 N.W. 55th Street
Building #10
Ft. Lauderdale, Florida 33309
Fax Number: (305) 730-2298
With a copy to: James M. O'Connell, Esq.
Petree Stockton, L.L.P.
4101 Lake Boone Trail
Suite 400
Raleigh, North Carolina 27607
Fax Number: (919) 420-1800
To Operator: Burton C. Newman, Pres.
Professional Transportation Partners LLC
5121 Maryland Way, Ste. 200
Brentwood, TN 37027
Fax Number: (615) 377-7965
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this Section 18(a).
(b) Expenses. Each party agrees to pay, without right of
reimbursement from any other party, its costs relating to the preparation of
this Agreement and the performance of its obligations hereunder, including
without limitation, fees and disbursements of counsel, accountants and
consultants employed by such party in connection herewith.
(c) Actions; Further Assurances. Subject to the terms and
conditions of this Agreement, each party agrees to use its best efforts in good
faith to: (i) take or cause to be taken as promptly as practicable all actions
and obligations arising herein; and (ii) do or cause
-12-
<PAGE> 13
to be done all things that are within its power to fulfill and comply with its
obligations or the obligations of the other parties to consummate the
transactions contemplated herein.
(d) Press Releases. To the extent practical, PNV and
Operator shall consult with each other as to the form and content of all press
releases and other public disclosures of matters relating to this Agreement,
the System and the Services. Nothing in this section shall prohibit PNV or
Operator from making any disclosure which its legal counsel deems necessary or
advisable to fulfill such party's disclosure obligations under applicable law.
To the extent practical, all public disclosures shall be transmitted by
telecopier to the other party or its counsel prior to publication or
dissemination.
(e) Section Headings. The section headings in this
Agreement are for convenience of reference only and shall not be deemed to
alter or affect any provision hereof.
(f) Applicable Law. This agreement shall be governed in
all respects by the laws of the State of Florida.
(g) Litigation; Prevailing Party. If litigation is
brought with regard to this Agreement, the prevailing party shall be entitled
to receive from the non-prevailing party, and the non-prevailing party shall
immediately pay upon demand, all reasonable fees and expenses of counsel of the
prevailing party.
(h) Schedules. The Schedules attached to this Agreement
are integral parts of this Agreement and all references to this Agreement shall
include the Schedules.
(i) Modification. This Agreement shall not be modified or
amended except by an instrument in writing executed by the parties to this
Agreement.
(j) Successors And Assigns. This Agreement shall apply
to, and be binding upon, the parties and their respective successors and
permitted assigns.
(k) Severability. If any part or sub-part of this
Agreement is found or held to be invalid, that invalidity shall not affect the
enforceability and binding nature of any other part of this Agreement.
-13-
<PAGE> 14
(l) Arbitration. Any controversy, dispute or question
arising out of, or in connection with, or in relation to this Agreement or the
interpretation, performance or non-performance or any breach thereof shall be
determined by arbitration conducted in Ft. Lauderdale, Florida in accordance
with the then existing rules of the American Arbitration Association. PNV and
Operator shall each select one arbitrator, and the two arbitrators shall select
a third with the same qualifications. Any decision rendered shall be binding
upon the Parties, however, the arbitrators shall have no authority to grant any
relief that is inconsistent with this Agreement. The expense of arbitration
shall be borne equally by the Parties.
(m) Counterparts. This Agreement may be executed in one
or more counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same
instrument.
SIGNATURE PAGE TO FOLLOW
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<PAGE> 15
IN WITNESS WHEREOF, Operator and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
WITNESSES:
PARK 'N VIEW, INC., a
Delaware corporation
- ------------------------------
By: /s/ Ian Williams
---------------------------------
Ian Williams, President
- ------------------------------
[OPERATOR]
- ------------------------------
By: /s/ Burton C. Newman
- ------------------------------ ---------------------------------
-15-
<PAGE> 16
SCHEDULE 1
LIST OF TRUCKSTOPS OWNED OR OPERATED
BY OPERATOR
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PHONE
STATE CITY INTERSTATE LOCATION CONTACT NUMBER
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alabama Cusseta I-85, Exit 70 Perlis Travel Plaza Mr. DuWayne Bridges 334-756-3161
AL001
Alabama Tuscaloosa I-59 & I-20 @ Exit 76 Baggett's 76 Truck Stop Mr. Jerry Baggett 205-553-9710
AL002 Minor Highway
Arkansas Wheatley I-40 & US Highway 78 Shell Super Stop #400 Gary F. Henard 501-457-3311
AR001
Arkansas Wheatley I-40, US 78 Phillips 66 #401 Todd White 501-457-4681
AR002
Arkansas Little Rock 13400, I-30, County County Line Truckstop #38 Toby White 501-455-4224
AR003 Line Exit
Arizona San Simon I-10, Exit 378 4-K Truck Stop Mr. Kurt Roark 520-845-2251
AZ001
Arizona Holbrook I-40 & Highway 77 Holbrook Truck Plaza Mr. Mark Phillips 602-248-7814
AZ002
Arizona Kingman I-40 & Exit 66 Snobird Truckstop Mr. Scott Cook 520-757-1152
AZ003
California Bakersfield US Highway 99, Exit Bear Mountain Travel Stop Mr. Pat Marchbanks 805-834-5733
CA001 223
California Santa Nella Hwy 152 & 33 San Luis Truck Stop Ms. Desiree Summit 209-827-8025
CA002
Colorado Brighton I-76, Exit 17 Tomahawk Truck Stop - Mr. Kyle Johansen 303-659-0810
CO001 Brighton
Colorado Fountain I-25, Exit 128 Tomahawk Truck Stop - Mr. Kyle Johansen 719-382-5473
CO002 Fountain
Colorado Watkins I-70, Exit 295 Tomahawk Truck Stop - Mr. Kyle Johansen 303-292-0500
CO003 Watkins
Connecticut Branford I-95, Exit 56 at Leetes New Haven 95 East Truck Mr. John Bernet 203-481-0301
CT002 Island Stop
Florida Tampa I-4, Exit 301 North Tampa 301 Auto/Truck Mr. Cary Parrish 813-623-1548
FL001 Plaza, Inc.
Florida Lake City I-75 & US 441, Exit L & G Auto and Truck Plaza Michel Moukhtara 904-755-4960
FL002 80
</TABLE>
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<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C> <C>
Florida Mossy Head I-10, & Highway 285 Lucky 13 Truck and Auto Mr. Roger H. Wright 904-678-4471
FL003 Plaza
Georgia Villa Rice I-20 & Liberty Road, Leather's Truck Stop Ms. Vickie Willis 770-459-6615
GA001 Exit 6
Georgia Madison I-20 & U.S. Highway Madison "20" Travel Center Mr. Mike Adkins 706-342-4176
GA002 441
Georgia Cordele I-75, Exit 31 Georgia Travel Center Mr. Ed Hampson 912-273-4220
GA003
Georgia Ringgold I-75, Exit 139 Choo Choo Truck Plaza Mr. Wayne Hixon 706-935-5107
GA004
Georgia Kingsland I-95, Exit 2A Cisco Travel Plaza Inc. Mr. Fairley Cisco 912-729-6550
GA005
Idaho Downey I-15, Exit 31 Flags West Truck Stop Mr. Dan Willie 208-897-5238
ID001
Illinois McLean I-55 & US 136, Exit Dixie Truckers Home - Mr. Mark Beeler 309-874-2516
IL001 145 McLean
Illinois Tuscola I-57 & US 36 Dixie Truckers Home - Mr. Mark Beeler 217-253-4721
IL002 Tuscola
Illinois Peru I-80 & Rt. 251, Exit La Salle-Peru Jack Hamilton 815-223-2858
IL003 75 Auto/Truckstop
Illinois South Holland I-94 & 159th Street Calumet Auto Truck Plaza Mr. Michael LaVieri 708-339-4101
IL004
Illinois Hampshire I-90 & US Hwy 20 Elgin West Truckstop Mr. Jerry Lindley 847-683-4550
IL005
Illinois Troy I-55 and I-70, Exit 18 Coutry Style Plaza - Troy David Allen 618-667-2501
IL006
Indiana Lake Station I-80 & I-94 Travel Ports of America - Mr. Michael Holahan 219-962-6552
IN001 Lake Station
Indiana Porter 1600 West US Hwy 20 Travel Ports of America - Mr. Michael Holahan 219-926-8566
IN002 Porter
Indiana Grovertown US 30, 1 mile East of Grovertown Truckstop Inc. Mr. Mark Kesmodel 219-867-2810
IN003 Hwy 2223
Indiana Cloverdale I-70 & Highway 231, Cloverdale Travel Plaza Mr. George Hedrick 317-795-3223
IN004 Exit 41
Indiana Haubstadt Jct. US 41 & Highway Haubstadt 41 Travel Plaza Mr. Tim Martin 812-768-6168
IN005 68
Indiana Memphis I-65, Exit 16 Country Style Plaza - David Allen 812-294-4554
IN006 Memphis
</TABLE>
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<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C> <C>
Indiana Leavenworth I-64, Exit 92 Country Style Plaza - David Allen 812-739-4510
IN007 Leavenworth
Kansas Wakeeney I-70 & Highway 283 Wakeeney Travel Plaza Mr. Mark Augustine 913-743-2157
KS001
Kentucky Waddy I-64 & KY 395, Exit 43 Waddy Travel Plaza Mr. Harry Seeger, III 502-829-5223
KY001
Kentucky Paducah I-24, Exit 16 Southern Pride Truck Stop Mr. Mike Vaughn 502-898-6753
KY002
Kentucky Corbin I-75, Exit 29 Corbin Travel Plaza Mr. Curt Rose 606-528-7676
KY003
Kentucky Richmond I-75, Exit 97 Clays Ferry Travel Center Mr. Curt Rose 606-623-7676
KY004
Kentucky Glendale I-65, Exit 86 Country Style Plaza - David Allen 502-369-8202
KY005 Glendale
Louisiana New Orleans I-510, Old Gentilly New Orleans Truck & Mr. Mark W. Smith 504-241-0409
LA001 Road Travel Center
Louisiana Tallulah I-20, US Hwy. 65, Louisiana I-20 East Mr. Kyle Dorbeck 318-574-5900
LA002 Exit 171 Travel Center
Maryland Baltimore I-95 & O'Donnell, Travel Ports of America - Mr. Michael Holahan 410-633-9500
MD001 Exit 57 Baltimore
Michigan Holland I-196, Exit 49 Tulip City Truck Stop Ms. Joyce Yancy 616-396-2538
MI001
Michigan Bridgeport I-75, Bridgeport Alpine Auto Truck Plaza, Mr. Larry Long` 517-777-7650
MI002 Exit, MM 144 Inc.
Michigan Battle Creek I-94, Exit 104 @ TE-Khi Truck Auto Plaza Mr. Pat Belt 616-965-7721
MI003 Eleven Mile Road Inc.
Missouri Mound City I-29, Exit Highway Squaw Creek Truck Plaza, Mr. Larry Smith 816-442-5492
MO001 159, MM 79 Inc.
Missouri Columbia I-70, Highway 40, Midway Travel Plaza Mr. Bob Bechtold 573-445-9466
MO002 Exit 21
Mississippi Vaiden I-55 & US Hwy 35, 35/55 Truck Plaza Mr. Sonny Tucker 601-464-5357
MS001 Exit 174
Mississippi McComb I-55, Exit 13, Fernwood Truck Stop Mr. Larry Seago 601-684-3000
MS002 Fernwood Road
Montana Bonner I-90, Exit Town Pump Travel Plaza of Mr. Cy Cohn 406-782-9121
MT001 Bonner
North Carolina Kings Mountain I-85, Exit 5 & Dixon Kings Mountain Truck Plaza Mr. Jim Testa 704-739-6415
NC001 School Road
</TABLE>
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<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C> <C>
North Carolina Candler I-40, Exit 37 Travel Ports of America - Mr. Michael Holahan 704-665-1156
NC002 Candler
Nebraska Hershey I-80, Exit 164 Tomahawk Truck Stops - Mr. Kyle Johansen 308-368-7369
NE001 Hershey
Nebraska Lincoln I-80 & US 6, Exit 395 Shoemakers Trucker Station Dave Shoemaker 402-474-1771
NE002
New Hampshire Greenland I-95 & US 101, Exit 3 Travel Ports of America - Mr. Michael Holahan 603-436-3636
NH001 N & 3 AS Greenland
New Jersey Mahwah I-87, Exit 15; I-287, Travel Ports of America - Mr. Michael Holahan 201-529-2704
NJ001 Rt. 17S Mahwah
New Jersey Paulsboro I-295, Exit Mt. Royal Travel Ports of America - Mr. Michael Holahan 716-272-1810
NJ002 Paulsboro
New Jersey Clinton I-78, Exit 12, 3 Johnny's Truck Stop Mr. John Poggi 908-735-4545
NJ003 Miles West
New Mexico Gallup I-40, Exit 16 & St. Baggett's Gallup 76 Auto Mr. Randy Stokes 505-722-4301
NM001 Highway 66 Truck Plaza
New Mexico Roswell US Highway 285 & 70 Price's Truck Stop Mr. Gene Price 505-623-1450
NM002
New Mexico Tucumcari I-40, Exit 329 Tuccumcari Truck Terminal Mr. Ed Shipley 505-461-1730
NM003
Nevada Sparks I-80 East, Exit 20, Alamo Travel Center Mr. Rob Cashell 702-355-8888
NV001 Sparks Road
Nevada Wells I-80 & Highway 93 4-Way Truck Stop Mr. Scott Cook 702-752-3336
NV002
Nevada Las Vegas I-15, Tropicana, Exit King 8 Truck Plaza Mr. Earl Haubert 702-736-2298
NV003 37
New York Belmont Routes 17 & 19 Travel Ports of America - Mr. Michael Holahan 716-268-5656
NY001 Belmont
New York Dansville I-390, Exit 5 Travel Ports of America - Mr. Michael Holahan 716-335-6023
NY002 Dansville
New York Fultonville I-90, Exit 28, NY Travel Ports of America - Mr. Michael Holahan 518-853-3411
NY003 Thruway Fultonville
New York Maybrook I-84, Exit 5, MM 29 Travel Ports of America - Mr. Michael Holahan 914-457-3163
NY004 Maybrook
New York Binghampton I-81, Exit 2W, NY 17 Travel Ports of America - Mr. Michael Holahan 607-775-3500
NY005 Binghampton
</TABLE>
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<PAGE> 20
<TABLE>
<S> <C> <C> <C> <C> <C>
Ohio Beaverdam 1-75, US Highway 30, Perry Oil/Beaverdam Mr. Larry W. Perry 419-643-2231
OH001 30, MM 135 Truck Plaza
Ohio Hubbard I-80, Exit 234 Truck World, Inc. Mr. Bob Israel 216-448-2210
OH002
Ohio London 940 US Route 42 NE Columbus I-70 West Auto Mr. Chris Tobin 614-852-3810
OH003 Truck Stop
Canada Cornwall, Jct. 401 & McConnell Fuel Saver Corporation - Mr. Bruce Rankin 613-933-8363
ON001 Ontario Avenue Cornwall
Canada Dorchester, Jct. 401 & Dorchester Fuel Saver Corporation - Mr. Bruce Rankin 519-268-7319
ON002 Ontario Road, Exit 199 Dorchester
Canada Grimsby, QEW and Fuel Saver Corporation - Mr. Bruce Rankin 905-878-8446
ON003 Ontario Casablanca Grimsby
Boulevard, Exit 74
Canada Bowmanville, Highway 401 & Fuel Saver Corporation - Mr. Bruce Rankin 905-623-3604
ON004 Ontario Waverly Road, Exit Bowmanville
431
Canada Milton, Highways 401 & 25, Fuel Saver/Fifth Wheel - Mr. Bruce Rankin 905-878-8441
ON005 Ontario Exit 320 Milton
Oregon Pendleton I-84, Exit 202 Floyd's Truck Ranch Mr. Floyd D. Lamberson 503-276-6709
OR001
Oregon Halsey 33180 Highway 220 Pioneer Villa Truck Plaza Greg Moore 503-369-2801
OR002
Pennsylvania Bloomsburg I-80, Exit 34 Travel Ports of America Mr. Michael Holahan 717-784-9400
PA001 - Bloomsburg
Pennsylvania Greencastle I-81, Exit 3 & Travel Ports of America Mr. Michael Holahan 717-597-7762
PA002 Buchanan TR. - Greencastle
Pennsylvania Milesburg I-80, Exit 23 Travel Ports of America Mr. Michael Holahan 814-355-7561
PA003 - Milesburg
Pennsylvania Harbor Creek I-90, Exit 10 Travel Ports of America Mr. Michael Holahan 716-272-1810
PA004 - Harbor Creek
South Carolina Columbia I-20, Exit 71, US Hwy Columbia "20" Travel Mr. Mike Balthazor 803-786-7680
SC001 21 Center
South Carolina Manning I-95 & SC US Hwy. Jerry's Travel Center Ms. Blanche Brow 803-473-2568
SC002 261
Tennessee Cookeville I-40 & Hwy 111, Exit Mid-Tenn Auto Truck Plaza Mr. Ronald J. Craig 615-526-3314
TN001 288
</TABLE>
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<PAGE> 21
<TABLE>
<S> <C> <C> <C> <C> <C>
Tennessee White Pine I-81, Exit 4 Pioneer Travel Center Mr. Dan Tuttle 423-674-2506
TN002
Tennessee Cornersville I-65 & 31 A, Exit 22 The Tennessean Truck Stop Mr. J. A. Van Westrop 615-293-4171
TN003
Tennessee Stanton I-40 & St. 179, Exit Exit 47 Plaza Mr. Nat Newman 901-548-6537
TN004 47
Tennessee Antioch I-24, Exit 62 Baggett's Music City Ms. Audrey Butler 615-641-6731
TN005 Auto Truckstop
Texas Huntsville I-45, Exit 118 & US Hitchin' Post Truck Mr. Stan Saucler 409-295-2488
TX001 75 North Terminal - Huntsville
Texas Forney I-20 & FM 460, MM Knox Fuel Stop Mr. Bob Knox 214-564-4357
TX002 488
Texas Gainesville I-35, Exit 500 Hitchin' Post Truck Mr. Andrew Olmstead 817-665-9521
TX003 Terminal - Gainesville
Texas Gordon I-20, Exit 370 Bar-B Travel Plaza of Mr. Doug Martin 817-693-5215
TX004 Texas
Texas Vidor I-10, Exit 858 B Spindletop Truck Stop Mr. Brad Haeggquist 409-769-5458
TX005
Virginia Raphine I-81, I-64, Exit 205 White's Truck Stop, Inc. Mr. Gary Pilgreen 540-377-2111
VA001
Virginia Fredericksburg I-95 & US Highway Servicetown Travel Plaza Mr. Jeffrey Scott 703-371-1166
VA002 17 North
Washington Marysville I-5, Exit 202 Donna's Travel Plaza's, Mr. William Couch 360-653-3000
WA001 Inc.
Washington Union Gap I-82, Exit 36 Gearjammer Truck Plaza Mr. Chuck Hinckley 509-248-9640
WA002
Wisconsin Hudson I-94, Exit 4 & US Twin City East Auto Mr. Thomas Fulton 715-386-5835
WI001 Highway 12 Truck Plaza
Wisconsin Deforest I-90/94 & Highway Windsor Marathon Truck Mr. Richard A. Edwards 608-249-9294
WI002 51, Exit 132 Stop
Wisconsin Richfield US 41 and 45, State Richfield Truck Stop Mr. Michael McLea 414-628-1133
WI003 Highway 167 West
Wisconsin Oak Creek I-94, Exit 322 Milwaukee Travel Center Mr. David Huscher 414-761-2250
WI004
Wyoming Cokeville US 30 North & Cokeville Truck Plaza Mr. Scott Banks 307-279-3275
WY001 Wyoming 89
Wyoming Rock Springs I-80, Exit 104 Outlaw Truckstop Mr. Scott Cook 307-362-6205
WY002
</TABLE>
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<PAGE> 22
SCHEDULE 2
LIST OF CURRENT PNV EQUIPMENT
Current PNV Equipment:
Satellite Dish & Off-air receive antenna
Processing [head-end] equipment
Telephone PBX switch and operator console
Distribution cables
Parking lot plug-in boxes
Rental coaxial cables
Cable TV "billing" computer and software
Prepaid [debit] phonecard dispenser
Telephone & Cable TV accessories for resale
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<PAGE> 23
PARK `N VIEW
CHANNEL LINE-UP
Current Programming Schedule:
<TABLE>
<CAPTION>
================================================================================
Channel # Station SAT Channel
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
2 A&E G5 23H
- --------------------------------------------------------------------------------
3 Discovery G5 12V
- --------------------------------------------------------------------------------
4 ESPN II G5 14V
- --------------------------------------------------------------------------------
5 WGN G5 7H
- --------------------------------------------------------------------------------
6 HBO West G5 8V/East G5 15H
- --------------------------------------------------------------------------------
7 AMC F4 1V
- --------------------------------------------------------------------------------
8 Off Air NBC
- --------------------------------------------------------------------------------
9 ESPN 1 G5 9H
- --------------------------------------------------------------------------------
10 Prevue F4 8H
- --------------------------------------------------------------------------------
11 TNN G5 18H
- --------------------------------------------------------------------------------
12 CNN G5 5H
- --------------------------------------------------------------------------------
13 Off Air ABC
- --------------------------------------------------------------------------------
14 Blank Future Service
- --------------------------------------------------------------------------------
15 USA G5 19H
- --------------------------------------------------------------------------------
16 Off Air Fox
- --------------------------------------------------------------------------------
17 Off Air CBS
- --------------------------------------------------------------------------------
18 WTBS G5 6V
- --------------------------------------------------------------------------------
19 US XPRESS Power Channel
- --------------------------------------------------------------------------------
20 VCR II
- --------------------------------------------------------------------------------
21 VCR III
- --------------------------------------------------------------------------------
22 VCR IV
- --------------------------------------------------------------------------------
</TABLE>
-23-
<PAGE> 24
SCHEDULE 4
LIST OF CURRENT TELEPHONE SERVICES
Current Telephone Services:
1-800 calls
Local calls
Operator services
Direct call back to stall # (automated)
Message waiting
Wake-up calls (automated)
-24-
<PAGE> 1
Exhibit 10.8
[FORM OF CONTRACT FOR MULTIPLE TRUCKSTOPS]
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT (this
"Agreement") is entered into this 18th day of March, 1997, by and between Park
'N View, Inc., a Delaware corporation ("PNV"), with its headquarters at 3403
N.W. 55th Street, Building #10, Ft. Lauderdale, Florida and NATSN ("Operator"),
with its headquarters at 106 Maple, Sullivan, MO 63080.
WHEREAS, Operator: (i) currently owns or operates One Hundred Thirty
Six (136) full-service travel plaza truckstops which are located at the
addresses listed on Schedule 1 hereto; and (ii) may acquire or contract to
operate other full-service travel plaza truckstops, all of the aforesaid
hereinafter individually being referred to as a "Truckstop" and collectively
being referred to as the "Truckstops"; and
WHEREAS, PNV has designed and developed the concept and equipment ("the
System") to (i) enable truck drivers to: (a) receive and/or have access to cable
television services and telecommunications services; and (b) provide such truck
drivers programming consisting of video and audio services, and telephone, fax
or other data services while remaining in their vehicles parked at the
Truckstop; and (ii) sell advertising to be broadcast over the System
(collectively, the "Services"); and
WHEREAS, Operator desires to engage PNV to install the System and
provide the Services at certain of the Truckstops.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Operator and PNV (hereinafter collectively being referred to
as the "Parties"), intending to be legally bound, hereby mutually agree as
follows:
1. Purpose. The Parties hereby agree that PNV shall install the
System at certain of the Truckstops and that the Parties shall operate the
System at such Truckstops pursuant to the terms of this Agreement. PNV shall
initially install the System at Operator's Truckstop located at
________________________________________. PNV shall install the System at such
other Truckstops as may be mutually agreed upon by the Parties.
2. Installation of Equipment.
(a) PNV shall, at its sole cost and expense, and in the
manner herein provided, install and continually maintain at each Truckstop at
which the Services are to be provided equipment consisting of the following:
-1-
<PAGE> 2
(i) equipment necessary for the
provision and distribution of the Services.
(ii) outlet ports to parking spaces to
provide users with access to the Services.
(iii) equipment designed to (a) monitor
the use of the Services and (b) account for
all receipts for billing and revenue sharing
purposes either independently and/or in
conjunction with the Truckstop's existing
cash register system.
All of the foregoing equipment as currently used by PNV is described on Schedule
2 hereto and is hereinafter, together with any additions or deletions to said
equipment, collectively referred to as the "PNV Equipment". PNV reserves the
right to make additions to and deletions from the PNV Equipment to be installed
at each Truckstop. PNV shall provide the Services to at least 75% of the truck
parking spaces located at each Truckstop at which it installs the System. The
Parties shall mutually determine the precise number and location of the truck
parking spaces at which the Services shall be provided, taking into account such
factors as the cost of construction and implementation, the layout of the
parking facilities, the usage of particular parking rows to drop trailers and
such other factors as the Parties may deem relevant.
(b) PNV shall, subject to Operator's prior approval,
install, at PNV's sole cost and expense, underground and above ground but not
overhead, transmission and distribution cables and equipment through the truck
parking areas at each Truckstop (and any Operator owned or managed hotels and
motels, located at or adjacent to a Truckstop, as may be mutually agreed) as is
necessary and appropriate to install the System and to provide the Services. PNV
shall, with Operator's prior consent, have the right to run additional
transmission lines under and through each Truckstop, at reasonable times and
locations, to serve adjacent properties (including hotels or motels), if in the
future any such Truckstop expands its operations to include such properties.
(c) Operator shall make available to PNV a sufficient
area in which to install the PNV Equipment including: (i) such area as is
required for the installation of satellite dish(es); (ii) a secured
air-conditioned interior area of approximately 50 square feet for the
installation of the headend equipment and the telephone and related monitoring
equipment; and (iii) an area at the fuel desk and/or the travel store for
installation of the equipment required for activation and sale of the Services
(hereinafter collectively referred to as the "Equipment Area").
-2-
<PAGE> 3
(d) PNV shall be entitled to have continued access to the
Equipment Area and all parking areas for purposes of installing, repairing and
monitoring the PNV Equipment, the System and the Services. PNV shall take care
and make every reasonable effort to minimize damage and disruption to the
premises and Operator's business operations during the installation and
operation of the System at each Truckstop. Prior to commencement of any
construction, PNV shall obtain Operator's approval of the methods and materials
to be used by PNV with respect to the installation of the System. PNV will
repair any material damage to the Truckstop which is caused by PNV. However, PNV
shall not be responsible for any existing defects or deficiencies or the normal
wear and tear to the parking lot or the Truckstop.
(e) PNV shall install the PNV Equipment in a workmanlike
and efficient manner, without unreasonable interference with the operation of
each Truckstop. PNV shall use its best efforts to: (i) minimize the disruption
to traffic flow and parking space availability; and (ii) complete the
installation of the System at each Truckstop within forty-five (45) days of
commencement of the installation at each Truckstop.
(f) PNV shall on a timely basis secure, and continuously
maintain in full force and effect, all licenses, permits and approvals required
by governmental authorities with respect to the installation, operation and
maintenance of the System and providing the Services. Operator shall assist PNV
in obtaining any such licenses, permits, or approvals upon PNV's reasonable
request.
(g) After completion of the installation of the System at
a Truckstop, PNV shall provide Operator with written notice of the date on which
the sale of the Services shall commence at each such Truckstop (hereinafter
referred to as the "Truckstop Service Date").
3. Rights and Duties of The Parties With Respect To The PNV
Equipment.
(a) Notwithstanding the fact that certain parts of the
PNV Equipment may be affixed to each Truckstop, the PNV Equipment shall not
become a fixture thereto and shall remain the property of PNV. Operator
acknowledges that the System, the Services and the PNV Equipment and the manner
of its operation and installation are proprietary to PNV. Accordingly, Operator
shall use its best efforts to insure that all information and data concerning
the System, the Services and the PNV Equipment shall not be divulged, and
(except in the case of emergency) that access to the System and the PNV
Equipment shall not be given to any person or persons other than personnel
authorized by PNV.
(b) Upon the termination of this Agreement for any
reason, PNV shall have the right to: (i) remove, at its sole cost and expense,
any or all of the PNV Equipment from each Truckstop; or (ii) sell or lease it to
the Operator or its successors, nominees or assignees. PNV shall, if it elects
to remove the System, restore each Truckstop as near as reasonably possible to
the condition of such premises prior to the installation of the System, normal
wear and tear excepted, but shall not be obligated to remove any underground
cables.
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<PAGE> 4
4. Programming and Telecommunications Services to Be Provided.
(a) PNV shall make the Services available on the System
as follows:
(i) PNV shall source and deliver a
programming package consisting of a minimum
of eleven (11) channels of entertainment
programming. PNV shall pay the cost of all
such programming. The current programming
schedule to be broadcast by PNV is as set
forth on Schedule 3. PNV may, with the prior
consent of Operator, make changes to the
programming schedule from time to time.
(ii) In addition to the eleven (11)
channel entertainment lineup, there shall be
other channels which shall be used to
provide a programming schedule and
advertising. Net profits (after payment of
all "Directly Related Expenses" as defined
in Section 8(b) below) generated by
advertising on such channels at each
Truckstop shall be divided as follows: 50%
to PNV and 50% to Operator. All advertising
revenue and other revenues and commissions
generated by these channels shall not be
considered "Gross Receipts" (as defined in
Section 8(a)) for purposes of the Agreement.
(iii) PNV may, with the consent of
Operator, provide pay-per-view or other
non-traditional cable channels or services
as part of the Services. The net profits
(after payment of all Directly Related
Expenses) from such additional channels or
services shall be divided as follows: 50% to
PNV and 50% to Operator. All revenues and
commissions generated by these channels
shall not be considered Gross Receipts for
purposes of the Agreement.
(iv) PNV shall also provide telephone
service to certain parking slots at each
Truckstop. The current telephone services
offered by PNV are set forth on Schedule 4.
The fee schedules established for the
Services include a charge relating to phone
usage and such fees shall be considered
Gross Receipts for purposes of this
Agreement. PNV shall, with Operator's prior
consent, have the right to determine and
make changes to the specific types of
telecommunication services provided to a
particular Truckstop from time to time. If
the Parties mutually agree to permit PNV to
provide phone service to areas of the
Truckstops, other than the parking lot, the
Parties shall mutually agree as to the
profit allocations with respect to such
services.
-4-
<PAGE> 5
5. Operation of the System and Sale and Promotion of the
Services.
(a) PNV shall, from time to time, at its sole cost and
expense, train the Operator and its fuel desk employees with respect to the
operation of the point of sale equipment and the sale and promotion of the
Services. The Operator and its fuel desk employees shall be responsible for the
operation of the point of sale equipment and the sale and promotion of the
Services. PNV shall provide follow up training for Operator's personnel during
working hours with respect to the sale and promotion of the Services, the
operation of the System, and the maintenance of the PNV Equipment as may be
reasonably requested by Operator from time to time. PNV shall, with the prior
consent of Operator, be entitled to have its own employees or agents engage in
the sale and the promotion of the Services at any Truckstop, provided that PNV's
employees and agents shall not interfere with the operation of said Truckstop.
(b) Operator shall use its best efforts to assure that
the management, fuel desk employees and other personnel promote the use of the
Services by the truck drivers frequenting the Truckstop. The Parties may
mutually agree from time to time to implement sales incentive programs for the
fuel desk employees and other personnel to promote the sale of the Services. The
Parties shall share the cost of implementing and funding any such mutually
agreed upon incentive programs.
(c) Operator may develop and supply to PNV, at no cost to
PNV, certain advertising and promotional materials relating to the System and
the Services. PNV may also develop and supply to Operator, at no cost to
Operator, certain advertising and promotional materials relating to the System
and the sale of the Services. Subject to each Party's approval and consent,
Operator and PNV shall make reasonable efforts to utilize and display such
materials at each Truckstop in order to promote the sale and promotion of the
Services.
6. Maintenance of the PNV Equipment and the System.
(a) PNV shall maintain a good quality signal and
reception through the System comparable to the signal and reception supplied for
regular television programming and telecommunications services to home
consumers.
(b) The day to day maintenance of the System shall be
handled as follows:
(i) Operator's trained staff members
shall: (i) replace failed connecting drop
cables and accessories with equipment to be
furnished by PNV at its cost; (ii) maintain
the cable and phone boxes in the outside
hookups in proper operating order, including
cleaning and removal of debris (i.e. oil,
dirt, ice, snow, etc.); and (iii) replace
cable and phone connection outlets in the
outside hookups with equipment furnished by
PNV at its cost.
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<PAGE> 6
(ii) If a mechanical problem arises
other than through a failed connecting cable
or accessory, Operator shall contact PNV by
telephone at PNV's office. Unless
extenuating circumstances exist, PNV shall,
within forty-eight (48) hours, either
authorize Operator to contact a designated
repair technician or dispatch a designated
repair technician to make the necessary
repairs to the System. Charges for repairs
will be billed directly to PNV.
7. Term.
(a) Subject to Sections 7(b) and 16, the term of this
Agreement, as it applies to each Truckstop at which the System is installed,
shall be for a period of ten (10) years commencing on the Truckstop Service Date
and terminating on the tenth anniversary of the Truckstop Service Date (the
"Term"). Subject to Section 7(b) and Section 16, the Term shall automatically be
extended for a five (5) year renewal period (the "Automatic Renewal Term")
provided that, as a condition to the commencement of the Automatic Renewal Term,
Operator shall be entitled to receipt of the increased percentage of Gross
Receipts set forth in Section 8(a).
(b) Operator and PNV hereby acknowledge and agree that
either party shall have the right to terminate this Agreement as it applies to
one or more Truckstops if such Truckstop does not have average gross revenue of
$35 per wired stall per month during any six (6) month period, the Parties have
jointly implemented a plan to increase revenue at such Truckstop and the average
gross revenue does not exceed $35 per wired stall per month at such Truckstop
during the three (3) month period following implementation of such plan.
8. Fees.
(a) The monthly Gross Receipts derived at each Truckstop
shall be allocated between PNV and Operator as follows: (i) during the Term,
sixty-five percent (65%) to PNV and thirty-five percent (35%) to Operator; and
(ii) during the Automatic Renewal Term, sixty percent (60%) to PNV and forty
percent (40%) to Operator.
For these purposes, "Gross Receipts" for any period shall mean the aggregate
gross amount collected by the Operator, during any calendar month, from the sale
of the Services during such period less the amount of taxes, if any, which are
required to be charged by Operator to the user of the Services and less any
refunds for faulty service or equipment. Notwithstanding the foregoing, for
purposes of this Agreement, "Gross Receipts" shall not include any revenue
received by PNV or the Operator for: (i) advertising displayed by PNV pursuant
to Section 4(a)(ii) or; (ii) pay-per-view or other additional channels or
services provided as part of the Services pursuant to Section 4(a)(iii).
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<PAGE> 7
(b) Net profits (after payment of all Directly Related
Expenses) generated by the services provided pursuant to Sections 4(a)(ii) and
4(a)(iii) shall be divided as follows: 50% to PNV and 50% to Operator. For these
purposes, "Directly Related Expenses" shall mean all direct costs and expenses
incurred by PNV with respect to the: (i) acquisition and installation of the
equipment necessary to transmit advertising over the System, including, without
limitation, loop tape players and loop tapes; (ii) sale, promotion and
production of advertising programs; (iii) salaries and commissions paid to and
expenses incurred by individuals or entities which sell advertising; and (iv)
fees paid to pay-per-view programmers. Directly Related Expenses shall not
include: (i) allocations of corporate overhead (other than the advertising
department); (ii) depreciation of the PNV Equipment, other than the equipment
necessary to transmit advertising over the System; or (iii) other costs and
expenses which are not directly related to the sale and promotion of advertising
over the System.
(c) Operator shall collect all applicable fees and taxes
from the users who purchase the Services directly from Operator. Operator shall
not be responsible for collection of fees and taxes from those users who
purchase the Services through PNV's automated phone activation program. Billing
is to be made on a unit basis in accordance with the rates and procedures
specified by PNV from time to time. Any taxes due on the Services purchased
directly through Operator are to be collected by Operator from the user over and
above the charge established by PNV for the particular Services and said taxes
shall be remitted by Operator to the proper governmental agency. PNV shall be
responsible for the payment of all taxes due with respect to amounts collected
by PNV from users who purchase the Services through PNV's automated phone
activation program.
(d) All Gross Receipts and other revenues collected by
Operator with respect to the sale of the Services shall be remitted to PNV on a
monthly basis. All amounts due to Operator from PNV for each calendar month
shall be paid to Operator by PNV within ten (10) days of the close of each
calendar month.
(e) Upon request by PNV, but not more than once a week,
Operator shall inform PNV of: (i) the amount of the use of the Services; (ii)
the amount of the Gross Receipts and other revenue received with respect to the
sale of the Services, cable drops, adapters, connectors and telephones; (iii)
the amount of the taxes collected by the Operator; and (iv) other operating data
relating to the System as PNV may reasonably request.
(f) The books and records of the Operator and PNV
pertinent to the Gross Receipts, Directly Related Expenses, and other revenue
and taxes received with respect to the sale of the Services for any calendar
month shall be open for inspection and audit by an authorized representative of
either Operator or PNV upon five (5) business days notice to said party.
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<PAGE> 8
9. Exclusivity.
(a) PNV shall, for the Term of this Agreement (and any
renewal term), have the exclusive right to install the System and provide the
Services to each Truckstop and any additional truckstops in which Operator
acquires an interest (whether owned, leased or operated under a contract or some
similar agreement).
(b) PNV shall during the Term of this Agreement (and any
renewal term) have: (i) the exclusive right to sell to Operator at competitive
prices coaxial and phone cables for use with the Services provided by PNV; and
(ii) the nonexclusive right to sell to Operator television, telephone and cable
accessories and adapters for use with the Services. After purchasing the
foregoing items from PNV, Operator shall be entitled to resell such items to its
customers and retain all profits from such resales.
10. Rights Granted to PNV. Operator hereby grants and conveys to
PNV, for the Term of this Agreement (and any renewal term), access to the
premises of each Truckstop at which the System is installed for purposes of
maintaining, repairing, replacing and operating the System and providing the
Services.
11. Representations and Warranties of PNV.
(a) PNV is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power
and authority: (i) to enter into this Agreement; and (ii) to carry out the other
transactions and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement by PNV has been duly authorized by all necessary action of PNV. This
Agreement and each of the other documents to be executed and delivered by PNV
pursuant to this Agreement have been duly executed and delivered by PNV and are
the valid and binding obligations of PNV enforceable in accordance with their
respective terms, subject only as to enforceability affected by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally and by
general equitable principles. The execution, delivery and performance of this
Agreement and the other documents to be executed, delivered and performed by PNV
pursuant to this Agreement will not: (i) conflict with or violate any provision
of PNV's organizational documents, or any law, ordinance or regulation or any
decree or order of any court or administrative or other governmental body which
is either applicable to, binding upon or enforceable against PNV; or (ii) result
in any breach of or default under or cause the acceleration of performance of
any mortgage, contract, agreement, indenture or other instrument which is either
binding upon or enforceable against PNV.
-8-
<PAGE> 9
(c) PNV is not required to obtain the approval, consent
or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of PNV set forth in this Agreement or in any of
the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
12. Representations and Warranties of Operator.
(a) Operator is a corporation duly organized, validly
existing and in good standing under the laws of Washington State and has full
corporate power and authority: (i) to enter into this Agreement; and (ii) to
carry out the other transactions and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement by Operator has been duly authorized by all necessary corporate action
of Operator. This Agreement and each of the other documents to be executed and
delivered by Operator pursuant to this Agreement have been duly executed and
delivered by Operator and are the valid and binding obligations of Operator
enforceable in accordance with their respective terms, subject only as to
enforceability affected by bankruptcy, insolvency or similar laws affecting the
rights of creditors generally and by general equitable principles. The
execution, delivery and performance of this Agreement and the other documents to
be executed, delivered and performed by Operator pursuant to this Agreement will
not: (i) conflict with or violate any provision of Operator's Articles of
Incorporation, By-laws, or any law, ordinance or regulation or any decree or
order of any court or administrative or other governmental body which is either
applicable to, binding upon or enforceable against Operator; or (ii) result in
any breach of or default under or cause the acceleration of performance of any
mortgage, contract, agreement, indenture or other instrument which is either
binding upon or enforceable against Operator.
(c) Operator is not required to obtain the approval,
consent or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of Operator set forth in this Agreement or in any
of the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
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<PAGE> 10
13. Risk of Loss and Insurance; Indemnification.
(a) PNV shall bear the risk of loss and hereby
indemnifies Operator for: (i) damage to or destruction of the PNV Equipment and
the System installed at each Truckstop which is caused by the negligence or
willful misconduct of PNV, its employees, contractors, agents and customers; and
(ii) injury to persons or damage to property arising from the installation,
operation or repair of the PNV Equipment and the System (except to the extent
such damage is occasioned by any act, omission or negligence of Operator, its
employees, contractors or agents).
(b) Operator shall be responsible for the repair or
replacement of the PNV Equipment resulting from damage or destruction caused by
the negligence or willful misconduct of the Operator, its employees, contractors
or agents.
(c) Both Operator and PNV shall maintain during the Term
of this Agreement (or any renewal term), at their sole cost and expense,
comprehensive public liability insurance in the minimum amount of $1,000,000
providing coverage at each Truckstop at which the Services are provided against
any claims relating to the operation or use of the System or the sale or
provision of the Services and shall ensure that each Party is named as an
additional insured in respect of such insurance or is otherwise covered as its
interest may appear.
14. Force Majeure. Neither party shall have any liability for the
failure to perform or a delay in performing any of its obligations if such
failure or delay is the result of any legal restriction, labor dispute, strike,
boycott, flood, fire, public emergency, revolution, insurrection, riot, war,
unavoidable mechanical failure, interruption in the supply of electrical power
or any other cause beyond the control of any party acting in a reasonable
business-like manner, whether similar or dissimilar to the causes enumerated
above.
15. Assignment.
(a) Operator may sell, assign, transfer or otherwise
dispose of its interest in one or more of the Truckstops (through a change of
control or otherwise) provided that the acquiror of such interest or assets
shall assume the Operator's rights and obligations hereunder and shall be bound
by the terms of this Agreement, in which case, PNV shall recognize the acquiror
of such Truckstop as its Operator for purposes of this Agreement.
(b) PNV may pledge its interest in this Agreement to any
party, including without limitation, to any bank, recognized lending or leasing
institution or investor as collateral. PNV may sell, assign, transfer or
otherwise dispose of its interest in this Agreement provided that said acquiror
shall assume all of PNV's rights and obligations hereunder and shall be bound by
the terms of this Agreement.
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<PAGE> 11
16. Breach. In the event that either party shall fail in any
material respect to perform any obligation under this Agreement, the other party
may in writing notify the non-performing party that such failure constitutes a
breach. If the breach is not remedied or cured within thirty (30) days following
receipt of the notice of breach, without limiting any other remedy which may be
available, the non-breaching party may terminate this Agreement by notice to the
breaching party.
17. Ownership and Confidentiality. Operator recognizes and agrees
that PNV shall, during the term of this Agreement and thereafter, retain sole
ownership of the System and the PNV Equipment. Operator recognizes the
proprietary nature of the concept and the design of the System, the PNV
Equipment and the Services. Accordingly, Operator agrees to maintain and cause
each of its employees and agents to maintain and keep strictly confidential all
information that it obtains or receives in conjunction with the System, the PNV
Equipment and the Services. Operator further agrees that the "Park N' View" name
and logo shall be and remain the property of PNV and all references by Operator
to the System or the Services shall incorporate and/or refer to PNV by its full
name (Park N' View), whether in literature, electronic or print displays,
articles, advertising, billboards, banners or otherwise. The name, Park 'N View,
is, or will be, a registered service mark of PNV and to the extent required by
PNV, Operator shall execute a no cost limited license agreement for the use of
such service mark.
18. General Provisions.
(a) Notices. All notices required or permitted hereunder
shall be in writing and, may either be delivered by overnight courier,
transmitted by facsimile, or delivered by the United States Mail, postage
prepaid, addressed as follows:
To PNV: Ian Williams
President
Park 'N View, Inc.
3403 N.W. 55th Street
Building #10
Ft. Lauderdale, Florida 33309
Fax Number: (305) 730-2298
With a copy to: James M. O'Connell, Esq.
Petree Stockton, L.L.P.
4101 Lake Boone Trail
Suite 400
Raleigh, North Carolina 27607
Fax Number: (919) 420-1800
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<PAGE> 12
To Operator: Douglas L. Lozier, CEO
North American Truck Stop Network
P.O. Box 337
Sullivan, MO 63080
Fax Number: (573) 468-5885
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this Section 18(a).
(b) Expenses. Each party agrees to pay, without right of
reimbursement from any other party, its costs relating to the preparation of
this Agreement and the performance of its obligations hereunder, including
without limitation, fees and disbursements of counsel, accountants and
consultants employed by such party in connection herewith.
(c) Actions; Further Assurances. Subject to the terms and
conditions of this Agreement, each party agrees to use its best efforts in good
faith to: (i) take or cause to be taken as promptly as practicable all actions
and obligations arising herein; and (ii) do or cause to be done all things that
are within its power to fulfill and comply with its obligations or the
obligations of the other parties to consummate the transactions contemplated
herein.
(d) Press Releases. To the extent practical, PNV and
Operator shall consult with each other as to the form and content of all press
releases and other public disclosures of matters relating to this Agreement, the
System and the Services. Nothing in this section shall prohibit PNV or Operator
from making any disclosure which its legal counsel deems necessary or advisable
to fulfill such party's disclosure obligations under applicable law. To the
extent practical, all public disclosures shall be transmitted by telecopier to
the other party or its counsel prior to publication or dissemination.
(e) Section Headings. The section headings in this
Agreement are for convenience of reference only and shall not be deemed to alter
or affect any provision hereof.
(f) Applicable Law. This agreement shall be governed in
all respects by the laws of the State of Florida.
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<PAGE> 13
(g) Litigation; Prevailing Party. If litigation is
brought with regard to this Agreement, the prevailing party shall be entitled to
receive from the non-prevailing party, and the non-prevailing party shall
immediately pay upon demand, all reasonable fees and expenses of counsel of the
prevailing party.
(h) Schedules. The Schedules attached to this Agreement
are integral parts of this Agreement and all references to this Agreement shall
include the Schedules.
(i) Modification. This Agreement shall not be modified or
amended except by an instrument in writing executed by the parties to this
Agreement.
(j) Successors And Assigns. This Agreement shall apply
to, and be binding upon, the parties and their respective successors and
permitted assigns.
(k) Severability. If any part or sub-part of this
Agreement is found or held to be invalid, that invalidity shall not affect the
enforceability and binding nature of any other part of this Agreement.
(l) Arbitration. Any controversy, dispute or question
arising out of, or in connection with, or in relation to this Agreement or the
interpretation, performance or non-performance or any breach thereof shall be
determined by arbitration conducted in Ft. Lauderdale, Florida in accordance
with the then existing rules of the American Arbitration Association. PNV and
Operator shall each select one arbitrator, and the two arbitrators shall select
a third with the same qualifications. Any decision rendered shall be binding
upon the Parties, however, the arbitrators shall have no authority to grant any
relief that is inconsistent with this Agreement. The expense of arbitration
shall be borne equally by the Parties.
(m) Counterparts. This Agreement may be executed in one
or more counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same instrument.
SIGNATURE PAGE TO FOLLOW
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<PAGE> 14
IN WITNESS WHEREOF, Operator and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
WITNESSES:
PARK 'N VIEW, INC., a
Delaware corporation
- -------------------------------
By: /s/ Ian Williams
- -------------------------------- ----------------------------
Ian Williams, President
[OPERATOR]
- --------------------------------
By: /s/ Douglas Lozier
- -------------------------------- ----------------------------
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<PAGE> 15
SCHEDULE 1
LIST OF TRUCKSTOPS OWNED OR OPERATED
BY OPERATOR
SCHEDULE 1
LIST OF TRUCKSTOPS OWNED OR OPERATED
BY OPERATOR
<TABLE>
<CAPTION>
<S> <C> <C>
London Husky Kingston Husky Windsor Husky
Hwy 401 & 74 London Kingston, Ontario K7M-8S5 Windsor Ontario
Belmont, Ontario NOL-1B0 Old Castle Ontario
Regina Husky St. Catharines Husky So. Star Fuel Center
Regina SK S4V-OR5 St. Catharines Ontario I-65/Exit 262
Birmingham, AL
J-Mart #2 J-Mart #16 J-Mart #1
I-30 & Hwy 7, Exit 78 I-40 Exit 260 I-30 & Hwy 270, Exit 98A
Arkadelphia, AR Heth, AR Malvern, AR
J-Mart #3 4-K Truck Stop Barney's Truck Plaza
I-40 Exit 280 @ Clubb Rd. I-10 Exit 378 I-8, Exit 12
W. Memphis, AR San Simon, AZ Yuma, AZ
Dunnigan Truck Service Truck Town Truck Stop Jimco Truck Plaza
I-5 & Country Rd 8 I-10 @ Cherry Ave. Hwy 99 & Jack Towne Rd.
Dunnigan, CA Fontana, CA Ripon, CA
Sapp Bros Truck Stop Gay Johnsons Cameo T/Stop Pinon Truck Stop
I-70 & 270 Exit 278 I-70 Exit 47 I-25 Exit 110
Commerce City, CO Grand Junction, CO Pueblo, CO
Trinidad Fuel Stop Jimmic's Truck Stop Choo Choo Truck Wash
I-25 Exit 11 I-10 Exit 37 I-75 S. Exit 139
Trinidad, CO Madison, FL Ringgold, GA
All State Truck Stop Sapp Bros. Oasis Bobber Truck Plaza
I-75 & US 41 S. Exit 39 I-29 Exit 1-B I-57 & 70, IL 32/33 Exit 160
Unadilla, GA Council Bluffs, IA Effingham, IL
Shell Oasis Truck Stop Marion Truck Plaza Gromann's I-39 Truck Plaza
I-90 & Hwy 20 Exit 36 1/2 I-57 & IL Rt 13 Exit 54B I-39 Exit 72
Hampshire, IL Marion, IL Mendota, IL
</TABLE>
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<PAGE> 16
<TABLE>
<S> <C> <C>
Sapp Bros. Illini I-69 Truck Plaza Ross Point Truck Plaza
I-80 Exit 73 I-69 Exit 45 I-74 Exit 143
Peru, IL Gaston,, IN Greensburg, IN
New Lisbon Travel Plaza Remington Truck Plaza Mitten Truck Stop
I-70 Exit 130 I-65 Exit 201 I-70 Exit 76
New Lisbon, IN Remington, IN Oakley, KS
Salina West Travel Plaza Topeka Truck Plaza Driver's Treatment #400
I-135 Exit 92 I-470 & 70 I-65 / Hwy 218 / Exit 58
Salina, KS Topeka, KS Horse Cave, KY
Manuel's I-10 Truck Stop Flynn's Shell Truck Stop New Transit Truck Stop
I-10 & Hwy 91 Exit 76 I-90 Exit 11 I-97 Exit 10/10A
Egan, LA Shrewsbury, MA Millersville, MD
Trucker's International Windmill Truck Stop Oasis Truck Plaza
I-95 Exit 35 Rt. 139 I-69 Exit 70/I-96 Exit 98A US 23 Exit 67 - M59 Rd
Fairfield, ME Dimondale, MI Hartland, MI
Clearwater Travel Plaza Metro Truck Plaza Bobber Truck Plaza
I-94 & Hwy 24 Exit 178 I-494 Exit 64A I-70 & Hwy "B"
Clearwater, MN S. St. Paul, MN Boonville, MO
New Trail Truck Center #102 Double Nickel Truck Stop I-55 Motor Plaza
I-70 Exit 24 I-55 Exit 19 I-55 Exit 180
Grain Valley, MO Hayti, MO Pevely, MO
Trails End Truck Stop Bobber Travel Center MOC 1 Travel Plaze
I-29 & US 136 Exit 110 I-44 Exit 225 I-70 & Hwy D Exit 161
Rock Port, MO Sullivan, MO Williamsburg, MO
Christy's Travel Center High Country Travel Plaza Pelican Truck Stop
78 Highway West I-15 Exit 192 I-90 Exit 437
Hickory Flat, MS Helena, MT Laurel, MT
Crossroads Truck Center Chex Truck World Big Boy's Truck Stop
I-90 & Hwy 93 Exit 96 I-85, Milemarker 220 I-95 Exit 105
Missoula, MT Henderson, NC Kenly, NC
Brintle Enterprises, Inc. Homer's Truck Stop Tiger Discount Truck Stop
I-77 Exit 100 I-40 Exit 146 I-94 Exit 64
Mt. Airy, NC Statesville, NC Dickinson, ND
</TABLE>
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<PAGE> 17
<TABLE>
<S> <C> <C>
Stamart Convenience #14 Stamart Travel Plaza #13 Stamart Truck Plaza #12
2903 Main I-29 Exit 65 I-29 & Hwy 2 Exit 141 I-29/13th Ave. S. Exit 64
Fargo, ND Grand Forks, ND W. Fargo, ND
Sapp Bros. Landmark Sapp Bros. Ogallala Sapp Bros. Truck Plaza
I-80 Exit 263 I-80 Exit 126 I-80 & Hwy 50 Exit 440
Odessa, NE Ogallala, NE Omaha, NE
Sapp Bros. Sidney Sapp Bros. York Johnny's Truck Stop
I-80 Exit 59 I-80 Exit 353 I-78 Exit 12
Sidney, NE York, NE Clinton, NJ
Cook's Truck Center Giant Travel Center Drivers Travelmart #408
Hwy 60-70-84 I-40 Exit 39 I-40 & Hwy 469 Exit 356
Clovis, NM Jamestown, NM San Jon, NM
Truck Inn Magic Wand Truck Stop 77 Gullivers Travel Plaza
J-80 Exit 48 I-15 Exit 46 I-77 Exit 101
Fernley, NV N. Las Vegas, NV Canton, OH
Shenandoah Fuel Sales New Trail Truck Center #103 Drivers Travelmart #411
I-70 @ State Rt. 285 US Hwy 54 8402 NE Expressway Exit 134
Old Washington, OH Guymon, OK Oklahoma City, OK
Biggs Junction Travel Plaza Fat Harvey's Truck Stop Diamond J's Truck Stop
I-84 & US 97, Exit 104 I-5 Exit 99 I-80 Exit 15
Biggs Junction, OH Canyonville, OR Brookville, PA
Carlisle Texaco Truck Plaza BFS Truck Plaza BP Stateline Travel Center
I-81 Exit 17/PA Turnpike Exit 16 I-79 Exit I I-90 & Rt. 6N, Exit 1W
Carlisle, PA Mt. Morris, PA W. Springfield, PA
Town Hill Truck Plaza Cherokee Run Truck Stop I-90 Truck Haven
I-70 Exit 31 I-85 Exit 4 I-90 & SD 37, Exit 332
Warfordsburg, PA Fairplay, SC Mitchell, SD
Windmill Truck Stop TR Truck Plaza Shady Lawn Truck Stop
I-90 Exit 55 I-40 Exit 412 I-65 Exit 6
Rapid City, SD Dandridge, TN Elkton, TN
</TABLE>
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<PAGE> 18
<TABLE>
<S> <C> <C>
Jiffy #19 Truck Plaza Jiffy #8 Truck Plaza Drivers Travelmart #401
I-24 Exit 114 I-65 North Exit 117 Hwy 75 & 455 Exit 48
Manchester, TN Portland, TN Anna, TX
Knox Fuel Center Knox Fuel Center Drivers Travelmart #410
2221 Irving Blvd. MM#440 Hwy 80 FM460 19765 Hwy 287 E.
Dallas, TX Forney, TX Harrold, TX
Knox Fuel Center Drivers Travelmart #409 Drivers Travelmart #405
I-35 FM310 Exit 364A 4010 South St. Hwy 59 5935 W. I-20 Exit 112
Hillsboro, TX Nacogdoches, TX Odessa, TX
Knox Fuel Center Knox Fuel Center Knox Fuel Center
I-45 # Parkerhill Rd. I-35 @ Red Oak Rd. Exit 410 I-30 FM35 MM#77B
Palmer, TX Red Oak, TX Royse City, TX
Knox Fuel Stop Drivers Travelmart #402 Gas-N-Go #13
I-10 @ FM 1458 MM#273 3910 I-20 Exit 415 I-70 Exit 158
Sealy, TX Weatherford, TX Green River, UT
Sapp Bros. Truck Stop Doswell All American Lee Hi Travel Plaza
I-215 Exit 21 I-95 Exit 98 I-84 & 64 Exit 195
Salt Lake City, UT Doswell, VA Lexington, VA
P & H Truck Stop Seattle East Auto/Truck Plaza Horse Heaven Hills
I-91 Rt. 302 Exit 17 I-90 Exit 34 I-82 Exit 80
Wells River, VT North Bend, WA Prosser, WA
Edgerton Shell Golden Rule Truck Plaza Citgo Truck Plaza
I-90 & 51 Exit 160 I-94 & SR 10 Exit 88 I-94 Hwy 20 Exit 333
Edgerton, WI Ossco, WI Sturtevant, WI
Sapp Bros. Big C Gas-N-Go #15 Wings America Travel Centre
I-80 Exit 370 I-8 Exit 41 I-80 @ Exit 40
Cheyenne, WY Lyman, WY Avoca, IA
</TABLE>
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<PAGE> 19
SCHEDULE 2
LIST OF CURRENT PNV EQUIPMENT
Current PNV Equipment:
Satellite Dish & Off-air receive antenna
Processing [head-end] equipment
Telephone PBX switch and operator console
Distribution cables
Parking lot plug-in boxes
Rental coaxial cables
Cable TV "billing" computer and software
Prepaid [debit] phonecard dispenser
Telephone & Cable TV accessories for resale
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<PAGE> 20
SCHEDULE 3
LIST OF CURRENT PROGRAMMING SCHEDULE
Current Programming Schedule:
<TABLE>
<CAPTION>
==============================================================================================
Channel # Program
- ----------------------------------------------------------------------------------------------
<S> <C>
2 NBC
- ----------------------------------------------------------------------------------------------
3 Playboy
- ----------------------------------------------------------------------------------------------
4 ESPN
- ----------------------------------------------------------------------------------------------
5 Fox
- ----------------------------------------------------------------------------------------------
6 HBO (East)
- ----------------------------------------------------------------------------------------------
7 WGN Chicago
- ----------------------------------------------------------------------------------------------
8 USA
- ----------------------------------------------------------------------------------------------
9 WTBS Atlanta
- ----------------------------------------------------------------------------------------------
10 PNV Program Guide and Advertising
- ----------------------------------------------------------------------------------------------
11 TNN
- ----------------------------------------------------------------------------------------------
12 Headline News
- ----------------------------------------------------------------------------------------------
13 ABC
==============================================================================================
</TABLE>
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<PAGE> 21
SCHEDULE 4
LIST OF CURRENT TELEPHONE SERVICES
Current Telephone Services:
1-800 calls
Local calls
Operator services
Direct call back to stall # (automated)
Message waiting
Wake-up calls (automated)
-21
<PAGE> 1
EXHIBIT 10.9
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT (this
"Agreement") is entered into this 28th day of October, 1995, by and between Park
'N View, Inc., a Delaware corporation ("PNV"), with its headquarters at 3403
N.W. 55th Street, Building #10, Ft. Lauderdale, Florida and Travel Ports of
America, Inc., a New York corporation ("Operator"), with its headquarters at
3495 Winton Place, Building C, Rochester, New York.
WHEREAS, Operator: (i) currently owns or operates thirteen (13)
full-service travel plaza truckstops which are located at the addresses listed
on Schedule 1 hereto; and (ii) may acquire or contract to operate other
full-service travel plaza truckstops, all of the aforesaid hereinafter
individually being referred to as a "Truckstop" and collectively being referred
to as the "Truckstops"; and
WHEREAS, PNV has designed and developed the concept and equipment ("the
System") to (i) enable truck drivers to: (a) receive and/or have access to cable
television services and telecommunications services; and (b) provide such truck
drivers programming consisting of video and audio services, and telephone, fax
or other data services while remaining in or near their vehicles parked at the
Truckstop; and (ii) sell advertising to be broadcast over the System
(collectively, the "Services"); and
WHEREAS, Operator desires to engage PNV to install the System and
provide the Services at the Truckstops.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Operator and PNV (hereinafter collectively being referred to
as the "Parties"), intending to be legally bound, hereby mutually agree as
follows:
1. Purpose. Operator and PNV hereby agree that PNV shall
install the System at certain of the Truckstops and that Operator and PNV shall
operate the System at such Truckstops pursuant to the terms of this Agreement.
PNV shall initially install the System at one or more of Operator's Truckstop(s)
to be mutually agreed upon by PNV and Operator within thirty (30) days of the
date of this Agreement. If the gross revenue derived from the sale of the
Services at such initial Truckstop(s) exceeds an average of $55 per wired stall
per month for the period commencing 90 days after the Truckstop Service Date
(defined in Section 2(g)) and terminating 180 days after the Truckstop Service
Date (the "Financial Milestone"), then PNV shall, subject to mutual agreement,
have the right to proceed with the installation of the System at certain of the
Operator's remaining Truckstops. If the Financial Milestones are
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<PAGE> 2
not met, then: (i) the Operator shall not be obligated to permit and PNV shall
not be obligated to proceed with the installation of the System at the
Operator's other Truckstops; and (ii) the System will remain in place at the
initial Truckstops subject to the parties' rights to cause removal of the System
pursuant to Section 3(b).
2. Installation of Equipment.
(a) PNV shall, at its sole cost and expense, and in the
manner herein provided, install at each Truckstop equipment consisting of the
following:
(i) all equipment necessary for the provision
and distribution of the Services.
(ii) outlet ports to parking spaces to provide
users with access to the Services.
(iii) equipment designed to (a) monitor the use of
the Services and (b) account for all
receipts for billing and revenue sharing
purposes either independently and/or in
conjunction with the Truckstop's existing
cash register system including the right to
develop and install debit card dispensers
and readers to be used for the automatic
sale of the Services.
(iv) such other equipment or services as may be
agreed upon by PNV and Operator including,
without limitation, the provision of AC
power to parking spaces at certain of the
Truckstops. Prior to installing such
additional equipment or providing such
additional services, PNV and Operator shall
mutually agree to a reasonable adjustment to
the profit allocations set forth in Section
8 in order to reflect PNV's differing profit
margins and increased capital costs with
respect to the installation of such
additional equipment and the provision of
such additional services at the Truckstops.
All of the foregoing equipment as currently used by PNV is described on Schedule
2 hereto and is hereinafter together with any additions or deletions to said
equipment collectively referred to as the "PNV Equipment". PNV shall, with
Operator's consent, which shall not be unreasonably withheld, have the right to
make additions to and deletions from the PNV Equipment to be installed at each
Truckstop. PNV shall attempt, on average, to provide the Services to at least
75% of the truck parking spaces located at each Truckstop at which it installs
the System. However, PNV shall determine at which Truckstops it shall, with
Operator's consent, install the System and the precise number and location of
the truck parking
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<PAGE> 3
spaces at which the Services shall be provided at such Truckstops taking into
account such factors as the cost of construction and implementation, the layout
of the parking facilities, the usage of particular parking rows to drop trailers
and such other factors as PNV and Operator may deem relevant.
(b) Operator shall make available to PNV a sufficient
area in which to install the PNV Equipment including: (i) such area as is
required for the installation of satellite dish(es); (ii) a secured
air-conditioned interior area of approximately 50 square feet for the
installation of the headend equipment and the telephone and related monitoring
equipment; and (iii) an area at the fuel desk and/or the travel store for
installation of the equipment required for activation and sale of the Services
(hereinafter collectively referred to as the "Equipment Area").
(c) PNV shall install, at its sole cost and expense, and
with the approval of Operator, underground and above ground but not overhead,
transmission and distribution cables and equipment through all parking areas at
each Truckstop (and any Operator owned or managed hotels and motels, located at
or adjacent to a Truckstop, as may be mutually agreed) as is necessary and
appropriate to install the System and to provide the Services. The
implementation and construction of the System at each Truckstop shall at all
times be subject to Operator's reasonable prior approval. PNV shall, with
Operator's consent, have the right to run additional transmission lines under
and through each Truckstop, at reasonable times and locations, to serve adjacent
properties (including hotels or motels), if in the future any such Truckstop
expands its operations to include such properties.
(d) PNV shall be entitled to have continued access to the
Equipment Area and all parking areas for purposes of installing, repairing and
monitoring the System and the Services. PNV shall take care and make every
reasonable effort to minimize damage and disruption to the premises during the
installation and operation of the System at each Truckstop. Prior to
commencement of any construction, Operator will approve the methods and
materials to be used by PNV with respect to the installation of the System. PNV
will repair any material damage to the Truckstop which is caused by PNV.
However, PNV shall not be responsible for any existing defects or deficiencies
or the normal wear and tear to the parking lot or the Truckstop.
(e) PNV shall on a timely basis secure, and continuously
maintain in full force and effect, all licenses, permits and approvals required
by governmental authorities with respect to the installation of the System and
the providing of the Services. Operator shall assist PNV in obtaining any such
licenses, permits, or approvals upon PNV's request.
(f) PNV shall install the PNV Equipment in a workmanlike
and efficient manner, without unreasonable interference with the operation of
each Truckstop. PNV shall use its best efforts to: (i) minimize the disruption
to traffic flow and parking space availability;
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<PAGE> 4
and (ii) complete the installation of the System at each Truckstop within
forty-five (45) days of commencement of the installation at each Truckstop.
(g) After completion of the installation of the System at
a Truckstop, PNV shall provide Operator with written notice of the date on which
the sale of the Services shall commence at each such Truckstop (hereinafter
referred to as the "Truckstop Service Date").
3. Rights and Duties of The Parties With Respect To The PNV
Equipment.
(a) Notwithstanding the fact that certain parts of the PNV
Equipment may be affixed to each Truckstop, the PNV Equipment shall not become a
fixture thereto and shall remain the property of PNV. Operator acknowledges that
the System, the Services and the PNV Equipment and the manner of its operation
and installation are proprietary to PNV. Accordingly, Operator shall use its
best efforts to insure that all information and data concerning the System, the
Services and the PNV Equipment shall not be divulged, and (except in the case of
emergency) that access to the System and the PNV Equipment shall not be given to
any person or persons other than personnel authorized by PNV.
(b) Upon the termination of this Agreement for any reason,
PNV shall: (i) remove, at its sole cost and expense, any or all of the PNV
Equipment (except underground wiring and cable) from each Truckstop; or (ii)
sell or lease it to the Operator or its successors, nominees or assignees. PNV
shall, if it elects to remove the System, restore each Truckstop as near as
reasonably possible to the condition of such premises prior to the installation
of the System, normal wear and tear excepted, but shall not be obligated to
remove any underground cables. Operator and PNV hereby acknowledge and agree
that either party shall have the right to cause PNV to remove the System and
terminate the Services at any Truckstop that does not have average gross revenue
of $35 per wired stall per month during any twelve (12) month period and that
said termination shall not constitute a breach of this Agreement as it relates
to other Truckstops.
4. Programming and Telecommunications Services to Be Provided.
(a) PNV shall make the Services available on the System as
follows:
(i) PNV shall source and deliver a
programming package consisting of a minimum
of eleven (11) channels of entertainment
programming. PNV shall pay the cost of all
such programming. The current programming
schedule to be broadcast by PNV is as set
forth on Schedule 3. PNV shall, with the
consent of Operator, have the right to
determine and make changes to the
programming schedule from time to time.
-4-
<PAGE> 5
(ii) In addition to the eleven (11) channel
entertainment lineup, there shall be other
channels which shall be used to provide a
programming schedule and advertising. Net
profits (determined after payment of all
directly related expenses only) generated by
advertising on such channels at each
Truckstop shall be divided as follows: 50%
to PNV and 50% to Operator. All advertising
revenue and other revenues and commissions
generated by these channels shall not be
considered "Gross Receipts" (as defined in
Section 8(a)) for purposes of the Agreement.
(iii) PNV may, with the consent of Operator,
provide pay-per-view or other
non-traditional cable channels or services
as part of the Services. The net profits
(determined after payment of all directly
related expenses only) from such additional
channels or services shall be divided as
follows: 50% to PNV and 50% to Operator. All
revenues and commissions generated by these
channels shall not be considered Gross
Receipts for purposes of the Agreement.
(iv) PNV may also provide telephone service
to certain parking slots at each Truckstop.
The current telephone and related services
which may be offered by PNV are set forth on
Schedule 4. The fee schedules established
for the Services include a charge relating
to phone usage and such fees shall be
considered Gross Receipts for purposes of
this Agreement. PNV shall have the right to
determine and make changes to the specific
types of telecommunication services which
may be provided to a particular Truckstop
from time to time. If PNV and Operator
mutually agree to permit PNV to provide
phone service to areas of the Truckstops,
other than the parking lot, PNV and Operator
shall mutually agree as to the profit
allocations with respect to such services.
5. Operation of the System and Sale and Promotion of the Services.
(a) PNV shall, from time to time, at its sole cost and
expense, train the Operator and its fuel desk employees with respect to the
operation of the point of sale equipment and the sale and promotion of the
Services. The Operator and its fuel desk employees shall be responsible for the
operation of the point of sale equipment and the sale and promotion of the
Services. The Operator shall be responsible for training its future employees
-5-
<PAGE> 6
with respect to the operation of the point of sale equipment and the sale and
promotion of the Services.
(b) Operator may also supply PNV, at no cost to PNV,
certain advertising and promotional materials relating to the System and the
Services which may be developed by Operator, with the approval of PNV. PNV may
also develop and supply to Operator, at no cost to Operator, certain advertising
and promotional materials relating to the System and the Services. Operator
shall utilize and display all such materials at each Truckstop with respect to
the sale and promotion of the Services.
(c) Operator shall use its best efforts to assure that the
management, fuel desk employees and other personnel promote the use of the
Services by the truck drivers frequenting the Truckstop. Operator and PNV may
mutually agree from time to time to implement sales incentive programs for the
fuel desk employees and other personnel to promote the sale of the Services.
Operator and PNV shall share the cost of implementing and funding any such
mutually agreed upon incentive programs.
(d) PNV shall provide proper follow up training for
Operator's personnel during their working hours with respect to the sale and
promotion of the Services, the operation of the System, and the maintenance of
the PNV Equipment as may be reasonably requested by PNV from time to time. PNV
shall, with the consent of Operator, be entitled to have its own employees or
agents engage in the sale and the promotion of the Services at any Truckstop,
provided that PNV's employees and agents do not interfere with the operation of
said Truckstop.
6. Maintenance of the PNV Equipment and the System.
(a) PNV agrees to maintain a good quality signal and
reception through the System comparable to the signal and reception supplied for
regular television programming and telecommunications services to home
consumers.
(b) Operator shall assign responsibility for the day to
day maintenance of the System (as described in Sections 6(b)(i) and (ii) below)
to the Operator's trained staff members.
(i) Such trained staff members shall: (i)
replace failed connecting drop cables and
accessories with equipment to be furnished
by PNV at its cost; (ii) maintain the cable
and phone boxes in the outside hookups in
proper operating order, including frequent
cleaning and removal of debris (i.e. oil,
dirt, ice, snow, etc.); and (iii) replace
cable and phone connection outlets in the
outside hookups with equipment furnished by
PNV at its cost.
-6-
<PAGE> 7
(ii) PNV shall make all repairs other than
those required to be made by Operator
pursuant to the preceding subparagraph (i).
If a mechanical problem arises other than
through a failed connecting cable or
accessory, or if any other problem arises
for which PNV is responsible, Operator shall
contact PNV by telephone at PNV's office.
Unless extenuating circumstances exist, PNV
shall, within forty-eight (48) hours, either
authorize Operator to contact a designated
repair technician or dispatch a designated
repair technician to make the necessary
repairs to the System. Charges for repair
will be billed directly to PNV.
7. Term.
(a) The term of this Agreement as it applies to each
Truckstop at which the System is installed shall be for a period of five (5)
years commencing on the Truckstop Service Date and terminating on the fifth
anniversary of the Truckstop Service Date (the "Term"). Subject to Section 16,
the Term shall automatically be extended for a five (5) year renewal period (the
"Automatic Renewal Term") provided that, as a condition to the commencement of
the Automatic Renewal Term, Operator shall be entitled to receipt of the
increased percentage of Gross Receipts set forth in Section 8(a). Upon the
expiration of the Automatic Renewal Term, PNV and Operator may mutually agree to
an additional five (5) year renewal term (the "Optional Renewal Term"), provided
that, as a condition to the commencement of the Optional Renewal Term, Operator
shall be entitled to receipt of the increased percentage of Gross Receipts set
forth in Section 8(a).
8. Fees.
(a) The monthly Gross Receipts derived at each Truckstop
shall be allocated between PNV and Operator as follows: (i) during the Term,
sixty-five percent (65%) to PNV and thirty-five percent (35%) to Operator; (ii)
during the Automatic Renewal Term, sixty percent (60%) to PNV and forty percent
(40%) to Operator; and (iii) during the Optional Renewal Term, fifty-five
percent (55%) to PNV and forty-five percent (45%) to Operator.
For these purposes, "Gross Receipts" for any period shall mean the aggregate
gross amount collected by the Operator, during any calendar month, from the sale
of the Services during such period less the amount of taxes, if any, which are
required to be charged by Operator to the user of the Services and less any
refunds for faulty service or equipment. Notwithstanding the foregoing, for
purposes of this Agreement, "Gross Receipts" shall not include any revenue
received by PNV or the Operator for: (i) for advertising displayed by PNV
pursuant to Section 4(a)(ii) or; (ii) pay-per-view or other additional channels
or services provided as part of the Services pursuant to Section 4(a)(iii).
-7-
<PAGE> 8
(b) Operator shall collect all applicable fees and taxes
from the users of the Services and shall secure and account for all funds
collected. Billing is to be made on a unit basis in accordance with the rates
and procedures to be specified by PNV from time to time. The current charges for
the Services provided are as set forth on Schedule 5 hereto. PNV may, with
Operator's consent, which shall not be unreasonably withheld, adjust the charge
per use for any particular Service and shall notify Operator in writing of such
change and the effective date of the change. If PNV adjusts the charges for the
Services at any truckstop within 100 miles of a Truckstop owned by Operator (the
"Effected Truckstop"), PNV shall provide Operator with notice and shall
correspondingly adjust the charges for the Services at the Effected Truckstop,
if so requested by Operator. All monies collected by Operator shall be held in
trust by Operator for PNV and shall remain the property of PNV. Any taxes due on
the Services provided are to be collected by Operator from the user over and
above the charge established by PNV for the particular Services and said taxes
shall be remitted by Operator to the proper governmental agency.
(c) All Gross Receipts and other revenues received by
Operator with respect to the sale of the Services shall be deposited by Operator
into PNV's local bank account on a weekly basis. All amounts due to Operator
from PNV for each calendar month shall be paid to Operator by PNV within ten
(10) days of the close of each calendar month.
(d) At weekly intervals during each calendar month,
Operator shall inform PNV of: (i) the amount of the use of the Services; (ii)
the amount of the Gross Receipts and other revenue received with respect to the
sale of the Services, Park 'N View cable drops, adapters and connectors,
telephones and television rentals; (iii) the amount of the taxes required to be
collected and paid by the Operator; and (iv) other such operating data of each
Truckstop as PNV may reasonably request which will assist PNV in evaluating the
use and marketing of the Services.
(e) The books and records of the Operator and PNV
pertinent to the Gross Receipts and other revenue and taxes received with
respect to the sale of the Services for any calendar month shall be open for
inspection and audit by an authorized representative of either Operator or PNV
upon five (5) business days notice to said party. PNV shall provide Operator
with detailed summaries of all direct expenses incurred with respect to the sale
of programming and advertising pursuant to Sections 4(a)(ii) and (iii).
9. Exclusivity.
(a) For the Term and the Automatic Renewal Term, PNV
shall, as to each Truckstop at which the Services are provided, have: (i) the
exclusive right to sell to Operator coaxial and phone cables for use with the
Services at competitive prices; and (ii) the nonexclusive right to sell to
Operator television, telephone and cable accessories and adapters
-8-
<PAGE> 9
for use with the Services. After purchasing the foregoing items from PNV,
Operator shall be entitled to resell such items to its customers and retain all
profits from such resales. PNV shall have the exclusive right to provide at no
cost to Operator televisions for rent (but not for sale) to the users of the
Services at each Truckstop. All fees charged for television rentals shall be
considered Gross Receipts and shall be allocated between Operator and PNV
pursuant to the provisions of Section 8(a).
10. Rights Granted to PNV. Operator hereby grants and conveys to
PNV, for the Term of this Agreement (and any renewal term), a non-exclusive
easement, license and covenant in, over, under and across the premises of each
Truckstop at which the System is installed. The purpose of said easement and
license shall be for installing, maintaining, repairing, replacing and operating
the System and providing the Services. PNV shall be entitled to record this
Agreement or a memorandum memorializing the terms of the easement, license and
covenant granted herein for purposes of perfecting its interest as a matter of
public record. Notwithstanding the foregoing, if this Agreement is terminated
with respect to one or more Truckstops, the rights granted to PNV pursuant to
this Section 10 shall become null and void with respect to such Truckstop.
-9-
<PAGE> 10
11. Representations and Warranties of PNV.
(a) PNV is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power
and authority: (i) to enter into this Agreement; and (ii) to carry out the other
transactions and agreements contemplated by this Agreement. PNV shall qualify to
do business in each jurisdiction in which it installs the System and provides
the Services.
(b) The execution, delivery and performance of this
Agreement by PNV has been duly authorized by all necessary action of PNV. This
Agreement and each of the other documents to be executed and delivered by PNV
pursuant to this Agreement have been duly executed and delivered by PNV and are
the valid and binding obligations of PNV enforceable in accordance with their
respective terms, subject only as to enforceability affected by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally and by
general equitable principles. The execution, delivery and performance of this
Agreement and the other documents to be executed, delivered and performed by PNV
pursuant to this Agreement will not: (i) conflict with or violate any provision
of PNV's organizational documents, or any law, ordinance or regulation or any
decree or order of any court or administrative or other governmental body which
is either applicable to, binding upon or enforceable against PNV; or (ii) result
in any breach of or default under or cause the acceleration of performance of
any mortgage, contract, agreement, indenture or other instrument which is either
binding upon or enforceable against PNV.
(c) PNV is not required to obtain the approval, consent
or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of PNV set forth in this Agreement or in any of
the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
12. Representations and Warranties of Operator.
(a) Operator is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
full corporate power and authority: (i) to enter into this Agreement; and (ii)
to carry out the other transactions and agreements contemplated by this
Agreement. Operator is qualified to do business in each jurisdiction in which it
owns or operates a Truckstop.
(b) The execution, delivery and performance of this
Agreement by Operator has been duly authorized by all necessary corporate action
of Operator. This Agreement and each of the other documents to be executed and
delivered by Operator pursuant to this Agreement have been duly executed and
delivered by Operator and are the valid and binding
-10-
<PAGE> 11
obligations of Operator enforceable in accordance with their respective terms,
subject only as to enforceability affected by bankruptcy, insolvency or similar
laws affecting the rights of creditors generally and by general equitable
principles. The execution, delivery and performance of this Agreement and the
other documents to be executed, delivered and performed by Operator pursuant to
this Agreement will not: (i) conflict with or violate any provision of
Operator's Articles of Incorporation, By-laws, or any law, ordinance or
regulation or any decree or order of any court or administrative or other
governmental body which is either applicable to, binding upon or enforceable
against Operator; or (ii) result in any breach of or default under or cause the
acceleration of performance of any mortgage, contract, agreement, indenture or
other instrument which is either binding upon or enforceable against Operator.
(c) Operator is not required to obtain the approval,
consent or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of Operator set forth in this Agreement or in any
of the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
13. Risk of Loss and Insurance; Indemnification.
(a) PNV shall bear the risk of loss for: (i) damage to or
destruction of the PNV Equipment and the System installed at each Truckstop
which is caused by the negligence or willful misconduct of PNV, its employees,
contractors, agents and customers; and (ii) injury to persons or damage to
property arising from the installation or repair of the PNV Equipment and the
System (except to the extent such damage is occasioned by any act, omission or
negligence of Operator, its employees, contractors or agents).
(b) Operator shall be responsible for the repair or
replacement of the PNV Equipment resulting from damage or destruction caused by
the negligence or willful misconduct of the Operator, its employees, contractors
or agents.
(c) Both Operator and PNV shall maintain during the Term
of this Agreement (or any renewal term), at their sole cost and expense,
comprehensive public liability insurance in the minimum amount of $1,000,000
providing coverage at each Truckstop against any claims relating to the
operation or use of the System or the sale or provision of the Services and
shall ensure that each party is named as an additional loss payee in respect of
such insurance or is otherwise covered as its interest may appear.
14. Force Majeure. Neither party shall have any liability for the
failure to perform or a delay in performing any of its obligations if such
failure or delay is the result of any legal restriction, labor dispute, strike,
boycott, flood, fire, public emergency, revolution,
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<PAGE> 12
insurrection, riot, war, unavoidable mechanical failure, interruption in the
supply of electrical power or any other cause beyond the control of any party
acting in a reasonable business-like manner, whether similar or dissimilar to
the causes enumerated above.
15. Assignment.
(a) Operator may sell, assign, transfer or otherwise
dispose of its interest in one or more of the Truckstops to an unaffiliated
third party (through a change of control or otherwise) and the acquiror may, but
shall not be required, to assume Operator's obligations hereunder and Operator
shall have no further obligation to PNV hereunder.
(b) PNV may assign its interest in this Agreement to any
party, including without limitation, to any bank, recognized lending or leasing
institution or investor as collateral. PNV may sell, assign, transfer or
otherwise dispose of its interest in this Agreement, provided that the acquiror
of such interest shall assume all of PNV's rights and obligations hereunder and
shall be bound by the terms of this Agreement.
16. Breach. In the event that either party shall fail in any
material respect to perform any obligation under this Agreement, the other party
may in writing notify the non-performing party that such failure constitutes a
breach. If the breach is not remedied or cured within thirty (30) days following
receipt of the notice of breach, the non-breaching party may terminate this
Agreement by notice to the breaching party.
17. Ownership and Confidentiality. Operator recognizes and agrees
that PNV shall, during the term of this Agreement and thereafter, retain sole
ownership of the System and the PNV Equipment. Operator recognizes the
proprietary nature of the concept and the design of the System, the PNV
Equipment and the Services and further recognizes the fact that serious
financial loss, or loss of potential business may be incurred by PNV through the
divulgence of any information with respect to any of the foregoing. Accordingly,
Operator agrees to maintain and cause each of its employees and agents to
maintain and keep strictly confidential all information that it obtains or
receives in conjunction with the System, the PNV Equipment and the Services,
provided that, information which is: (i) already in the public domain; (ii)
developed by Operator independently; or (iii) obtained by Operator from third
parties with no obligation of confidentiality, shall not be subject hereto. In
the event of any breach of this provision, Operator agrees to reimburse,
indemnify and hold PNV harmless with respect to any and all damages, costs and
expenses that it may incur in connection with such breach. Operator further
agrees that the "Park N' View" name and logo shall be and remain the property of
PNV and all references by Operator to the System or the Services shall
incorporate and/or refer to PNV by its full name (Park N' View), whether in
literature, electronic or print displays, articles, advertising, billboards,
banners or otherwise. The name, Park 'N View, is, or will be, a registered
service mark of PNV and to the extent required by PNV, Operator shall execute a
no cost limited license agreement for the use of such service mark.
-12-
<PAGE> 13
18. General Provisions.
(a) Notices. All notices required or permitted hereunder
shall be in writing and, may either be delivered by overnight courier,
transmitted by facsimile, or delivered by the United States Mail, postage
prepaid, addressed as follows:
To PNV: Ian Williams, President
Park 'N View, Inc.
3403 N.W. 55th Street
Building #10
Ft. Lauderdale, Florida 33309
Fax Number: (305) 730-2298
With a copy to: James M. O'Connell, Esq.
Petree Stockton, L.L.P.
4101 Lake Boone Trail
Suite 400
Raleigh, North Carolina 27607
Fax Number: (919) 420-1800
To Operator: Ralph Jacklin
Vice President of Development
Travel Ports of America, Inc.
3495 Winton Place, Building C
Rochester, New York 14623
Fax Number: (716) 272-9952
With a copy to: Robert Sant, Esq.
760 Brookes Avenue
Rochester, New York 14619
Fax Number: (716) 328-0787
All notices shall be deemed delivered only upon actual receipt provided,
however, that delivery shall be deemed to be made if delivery is offered to the
recipient and acceptance of delivery is refused. Any party may change its
address for purposes of this Agreement by giving notice of such change to the
other parties pursuant to the terms of this Section 19(a).
(b) Expenses. Each party agrees to pay, without right of
reimbursement from any other party, its costs relating to the preparation of
this Agreement and the
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<PAGE> 14
performance of its obligations hereunder, including without limitation, fees and
disbursements of counsel, accountants and consultants employed by such party in
connection herewith.
(c) Actions; Further Assurances. Subject to the terms and
conditions of this Agreement, each party agrees to use its best efforts in good
faith to: (i) take or cause to be taken as promptly as practicable all actions
and obligations arising herein; and (ii) do or cause to be done all things that
are within its power to fulfill and comply with its obligations or the
obligations of the other parties to consummate the transactions contemplated
herein.
(d) Press Releases. To the extent practical, PNV and
Operator shall consult with each other as to the form and content of all press
releases and other public disclosures of matters relating to this Agreement, the
System and the Services. Nothing in this section shall prohibit PNV or Operator
from making any disclosure which its legal counsel deems necessary or advisable
to fulfill such party's disclosure obligations under applicable law. To the
extent practical, all public disclosures shall be transmitted by telecopier to
the other party or its counsel prior to publication or dissemination.
(e) Section Headings. The section headings in this
Agreement are for convenience of reference only and shall not be deemed to alter
or affect any provision hereof.
(f) Applicable Law. This Agreement as it applies to each
Truckstop shall be governed in all respects by the laws of the jurisdiction in
which such Truckstop is located.
(g) Litigation; Prevailing Party. If litigation is
brought with regard to this Agreement, the prevailing party shall be entitled to
receive from the non-prevailing party, and the non-prevailing party shall
immediately pay upon demand, all reasonable fees and expenses of counsel of the
prevailing party.
(h) Schedules. The Schedules attached to this Agreement
are integral parts of this Agreement and all references to this Agreement shall
include the Schedules.
(i) Modification. This Agreement shall not be modified or
amended except by an instrument in writing executed by the parties to this
Agreement.
(j) Successors And Assigns. This Agreement shall apply
to, and be binding upon, the parties and their respective successors and
permitted assigns.
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<PAGE> 15
(k) Severability. If any part or sub-part of this
Agreement is found or held to be invalid, that invalidity shall not affect the
enforceability and binding nature of any other part of this Agreement.
(l) Favored Nations. PNV agrees that the profit or
revenue allocations set forth in Sections 4(a)(ii), 4(a)(iii) and 8(a) of this
Agreement shall be amended to reflect any increased profit or revenue
allocations provided to either: (i) TA Operating Corp.; (ii) Highway Service
Ventures, Inc.; (iii) Pilot Corporation; or (iv) Petro Stopping Centers, L.P.
pursuant to contracts to be entered into with such entities or their franchising
entities, successors, assigns, and affiliates, provided that, if the term of the
contract with any of these entities exceeds the Term and Automatic Renewal Term
of this Agreement as set forth herein Section 7(a), Operator shall agree to a
comparable extension of the Term and Automatic Renewal Term of this Agreement as
a condition to its right to receive the increased profit or revenue allocations.
(m) Counterparts. This Agreement may be executed in one
or more counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Operator and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
WITNESSES:
PARK 'N VIEW, INC., a
Delaware corporation
- -------------------------------
By: /s/ Ian Williams
- ------------------------------- ------------------------------
Ian Williams, President
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<PAGE> 16
Travel Ports of America, Inc.,
a New York corporation
- -----------------------------
By: /s/ John Holahan
- ----------------------------- ------------------------------
John Holahan
-16-
<PAGE> 17
SCHEDULE 1
LIST OF TRUCKSTOPS OWNED OR OPERATED
BY OPERATOR
<TABLE>
<CAPTION>
==========================================================================================
Truckstop State Travel Port's Ref #
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Lake Station Indiana 161
- ------------------------------------------------------------------------------------------
2 Porter Indiana 151
- ------------------------------------------------------------------------------------------
3 Greenland New Hampshire 601
- ------------------------------------------------------------------------------------------
4 Paulsboro New Jersey 131
- ------------------------------------------------------------------------------------------
5 Binghamton New York 301
- ------------------------------------------------------------------------------------------
6 Dansville New York 101
- ------------------------------------------------------------------------------------------
7 Fultonville New York 401
- ------------------------------------------------------------------------------------------
8 Maybrook New York 501
- ------------------------------------------------------------------------------------------
9 Candler North Carolina 211
- ------------------------------------------------------------------------------------------
10 Bloomsburg Pennsylvania 121
- ------------------------------------------------------------------------------------------
11 Greencastle Pennsylvania 141
- ------------------------------------------------------------------------------------------
12 Milesburg Pennsylvania 321
- ------------------------------------------------------------------------------------------
13 Harbour Creek Pennsylvania 631
==========================================================================================
</TABLE>
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<PAGE> 18
SCHEDULE 2
LIST OF CURRENT PNV EQUIPMENT
Current PNV Equipment:
Satellite Dish & Off-air receive antenna
Processing [head-end] equipment
Telephone PBX switch and operator console
Distribution cables
Parking lot plug-in boxes
Rental coaxial cables
Rental telephones and cables
Rental Televisions
Cable TV "billing" computer and software
Prepaid debit card dispenser
Telephone & Cable TV accessories for resale
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<PAGE> 19
SCHEDULE 3
LIST OF CURRENT PROGRAMMING SCHEDULE
Current Programming Schedule:
<TABLE>
<CAPTION>
=============================================================================================
Channel # Program
<S> <C>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
2* Playboy
- ---------------------------------------------------------------------------------------------
3 CBS
- ---------------------------------------------------------------------------------------------
4 ESPN
- ---------------------------------------------------------------------------------------------
5 Fox
- ---------------------------------------------------------------------------------------------
6 HBO (East)
- ---------------------------------------------------------------------------------------------
7 WGN Chicago
- ---------------------------------------------------------------------------------------------
8 USA
- ---------------------------------------------------------------------------------------------
9 WTBS Atlanta
- ---------------------------------------------------------------------------------------------
10 PNV Program Guide and Advertising
- ---------------------------------------------------------------------------------------------
11 TNN
- ---------------------------------------------------------------------------------------------
12 Headline News
- ---------------------------------------------------------------------------------------------
13 ABC
=============================================================================================
</TABLE>
* This program forms part of a premium tier of service.
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<PAGE> 20
SCHEDULE 4
LIST OF CURRENT TELEPHONE SERVICES
Current Telephone Services:
1-800 calls
Local calls
Operator access
Direct call back to stall # (automated)
Message waiting
Wake-up calls (automated)
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<PAGE> 21
SCHEDULE 5
LIST OF CURRENT PRICES OF SERVICES
<TABLE>
<CAPTION>
============================================================================================
Rates 6 Hour 24 Hour
- ----- ------ -------
<S> <C> <C>
- --------------------------------------------------------------------------------------------
Premium $ 4.98 $ 9.36
- --------------------------------------------------------------------------------------------
Premium Plus Playboy $ 7.98 $12.96
- --------------------------------------------------------------------------------------------
Premium & TV Rental $12.42 $21.12
- --------------------------------------------------------------------------------------------
Premium Plus Playboy & TV Rental $14.46 $23.04
- --------------------------------------------------------------------------------------------
Phone Only $ 3.00 $ 6.00
============================================================================================
</TABLE>
Premium service includes unlimited phone service listed on Schedule 4. Coaxial
Cable Rental is $2.00 plus a $20.00 refundable deposit. Cable and adapters are
available for sale in the store. Tax not included.
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<PAGE> 22
AMENDMENT TO
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS AMENDMENT TO THAT CERTAIN CABLE TELEVISION AND TELEPHONE SERVICE
AGREEMENT (this "Amendment") is entered into effective as of the 19th day of
January, 1998, by and between Park 'N View, Inc. ("PNV") and Travel Ports of
America, Inc. ("Operator").
WHEREAS, PNV and Operator have entered into that certain Cable
Television and Telephone Services Agreement dated October 28, 1995 (the
"Original Agreement"). Unless otherwise defined in this Amendment, defined terms
contained herein have the meaning ascribed to them in the Original Agreement;
WHEREAS, PNV now offers additional services to truckdrivers
(hereinafter referred to as the "New PNV Services" which together with the
Services as defined in the Original Agreement are collectively referred to as
the PNV Services) and PNV has developed additional sales programs (the "Power
Plan") to sell the PNV Services to truckdrivers;
WHEREAS, the Original Agreement did not address the allocation, between
PNV and the Operator, of the revenues or profits derived from the New PNV
Services or the Power Plan;
WHEREAS, PNV and Operator (collectively the "Parties") desire to
formally amend the Original Agreement to implement the following changes.
1. All revenues and profits derived from the sale of the PNV
Services shall, during the Term of the Original Agreement (and any renewed
term), be allocated between Operator and PNV as set forth on Schedule A attached
hereto.
2. All other terms and provisions of the Original Agreement shall
remain in full force and effect. The Parties acknowledge and agree that if PNV
provides additional services in the future, the revenue and profit allocations
for such services shall be agreed to by the Parties in the form of a letter
agreement which shall constitute an amendment to the Original Agreement.
IN WITNESS WHEREOF, Operator and PNV have caused this Amendment to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
TRAVEL PORTS OF AMERICA, INC. PARK 'N VIEW, Inc.,
a Delaware Corporation
By: /s/ Dan McHenry By: /s/ Ian Williams
------------------------------- -------------------------------
Dan McHenry Ian Williams, President
-22-
<PAGE> 23
SCHEDULE A
AMENDMENT TO CABLE TELEVISION
AND TELEPHONE SERVICE AGREEMENT
<TABLE>
<CAPTION>
DESCRIPTION OF SERVICE OR SALE OPERATOR'S PORTION
<S> <C> <C>
A. Gross Receipts Based Programs
1. Gross Receipts* from the sale of monthly 35% for first five (5) years of the Term;
and daily memberships and other services 40% for second five (5) years of the Term
from the vending machine at each of
Operator's Truckstop.
2. Gross Receipts* from the sale of Power 35% for first month of service and 10% for each
Plans at each of Operator's Truckstop. additional month of service under Power Plan
3. Gross Receipts* from the sale of 10% of each months receipts will be placed in a
memberships by telemarketing staff. pool and allocated among all Truckstops based
upon the number of wired stalls at each Truckstop.
4. Gross Receipts** from sales to Fleets. 10% of each months receipts will be placed in a
pool and allocated among all Truckstops based
upon the number of wired stalls at each Truckstop.
B. Net Profit Based Programs
1. Net Profits*** derived from Advertising. 50%
2. Net Profits*** derived from Pay Per View. 50%
3. Net Profits*** derived from sale of long 35%
distance phone time.
</TABLE>
* Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the Services less
the cost of 60 free minutes of phone time and applicable taxes. Gross
Receipts shall not include any revenue received by PNV or the Operator for
services listed under Net Profit Based Programs above.
** Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the Services less
the cost of 60 free minutes of phone time, direct sales commissions and
applicable taxes. Gross Receipts shall not include any revenue received by
PNV or the Operator for services listed under Net Profit Based Programs
above.
*** Net Profits shall mean the aggregate gross revenue collected by PNV or
Operator less Directly Related Expenses. Directly Related Expenses shall
mean all direct costs and expenses incurred by PNV with respect to the: (i)
acquisition and installation of the equipment necessary to provide
advertising, Pay-Per-View or long distance phone time over the System; (ii)
sale, promotion and production of advertising, Pay-Per-View or long
distance phone time; (iii) salaries and commissions paid to and expenses
incurred by individuals or entities which sell advertising, Pay-Per-View or
long distance phone time; (iv) fees paid to pay-per-view programmers; and
(v) fees paid or costs incurred to provide long distance phone time.
Directly Related Expenses shall not include: (i) allocations of corporate
overhead (other than the advertising department); (ii) depreciation of the
PNV Equipment, other than the equipment necessary to provide advertising,
Pay-Per-View or long distance phone time over the System; or (iii) other
costs and expenses which are not directly related to the sale and promotion
of advertising, Pay-Per-View or long distance phone time over the System.
-23-
<PAGE> 1
EXHIBIT 10.10
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT (this
"Agreement") is entered into this 15th day of February, 1996, by and between
Park 'N View, Inc., a Delaware corporation ("PNV"), with its headquarters at
3403 N.W. 55th Street, Building #10, Ft. Lauderdale, Florida and Pilot
Corporation, a Tennessee corporation ("Operator"), with its headquarters at
5508 Lonas Road, Knoxville, Tennessee, 37909.
WHEREAS, Operator: (i) currently owns or operates eighty-seven (87)
full-service travel plaza truckstops which are located at the addresses listed
on Schedule 1 hereto; and (ii) may acquire or contract to operate other
full-service travel plaza truckstops, all of the aforesaid hereinafter
individually being referred to as a "Truckstop" and collectively being referred
to as the "Truckstops"; and
WHEREAS, PNV has designed and developed the concept and equipment
("the System") to (i) enable truck drivers to: (a) receive and/or have access
to cable television services and telecommunications services; and (b) provide
such truck drivers programming consisting of video and audio services, and
telephone, fax or other data services while remaining in their vehicles parked
at the Truckstop; and (ii) sell advertising to be broadcast over the System
(collectively, the "Services"); and
WHEREAS, Operator desires to engage PNV to install the System and
provide the Services at certain of the Truckstops.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Operator and PNV (hereinafter collectively being referred to
as the "Parties"), intending to be legally bound, hereby mutually agree as
follows:
1. Purpose. The Parties hereby agree that PNV shall install
the System at certain of the Truckstops and that the Parties shall operate the
System at such Truckstops pursuant to the terms of this Agreement. PNV shall
initially install the System at Operator's Truckstop located at Madera,
California. PNV shall install the System at such other Truckstops as may be
mutually agreed upon by the Parties.
2. Installation of Equipment.
(a) PNV shall, at its sole cost and expense, and in the
manner herein provided, install and continually maintain at each Truckstop at
which the Services are to be provided equipment consisting of the following:
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<PAGE> 2
(i) equipment necessary for the provision
and distribution of the Services.
(ii) outlet ports to parking spaces to
provide users with access to the Services.
(iii) equipment designed to (a) monitor the
use of the Services and (b) account for all
receipts for billing and revenue sharing
purposes either independently and/or in
conjunction with the Truckstop's existing
cash register system.
All of the foregoing equipment as currently used by PNV is described on
Schedule 2 hereto and is hereinafter, together with any additions or deletions
to said equipment, collectively referred to as the "PNV Equipment". PNV
reserves the right to make additions to and deletions from the PNV Equipment to
be installed at each Truckstop. PNV shall provide the Services to at least 75%
of the truck parking spaces located at each Truckstop at which it installs the
System. The Parties shall mutually determine the precise number and location of
the truck parking spaces at which the Services shall be provided taking into
account such factors as the cost of construction and implementation, the layout
of the parking facilities, the usage of particular parking rows to drop
trailers and such other factors as the Parties may deem relevant.
(b) PNV shall, subject to Operator's prior approval,
install, at PNV's sole cost and expense, underground and above ground but not
overhead, transmission and distribution cables and equipment through the truck
parking areas at each Truckstop (and any Operator owned or managed hotels and
motels, located at or adjacent to a Truckstop, as may be mutually agreed) as is
necessary and appropriate to install the System and to provide the Services.
PNV shall, with Operator's prior consent, have the right to run additional
transmission lines under and through each Truckstop, at reasonable times and
locations, to serve adjacent properties (including hotels or motels), if in the
future any such Truckstop expands its operations to include such properties.
(c) Operator shall make available to PNV a sufficient area
in which to install the PNV Equipment including: (i) such area as is required
for the installation of satellite dish(es); (ii) a secured air-conditioned
interior area of approximately 50 square feet for the installation of the
headend equipment and the telephone and related monitoring equipment; and (iii)
an area at the fuel desk and/or the travel store for installation of the
equipment required for activation and sale of the Services (hereinafter
collectively referred to as the "Equipment Area").
-2-
<PAGE> 3
(d) PNV shall be entitled to have continued access to the
Equipment Area and all parking areas for purposes of installing, repairing and
monitoring the PNV Equipment, the System and the Services. PNV shall take care
and make every reasonable effort to minimize damage and disruption to the
premises and Operator's business operations during the installation and
operation of the System at each Truckstop. Prior to commencement of any
construction, PNV shall obtain Operator's approval of the methods and materials
to be used by PNV with respect to the installation of the System. PNV will
repair any material damage to the Truckstop which is caused by PNV. However,
PNV shall not be responsible for any existing defects or deficiencies or the
normal wear and tear to the parking lot or the Truckstop.
(e) PNV shall install the PNV Equipment in a workmanlike
and efficient manner, without unreasonable interference with the operation of
each Truckstop. PNV shall use its best efforts to: (i) minimize the disruption
to traffic flow and parking space availability; and (ii) complete the
installation of the System at each Truckstop within forty-five (45) days of
commencement of the installation at each Truckstop.
(f) PNV shall on a timely basis secure, and continuously
maintain in full force and effect, all licenses, permits and approvals required
by governmental authorities with respect to the installation, operation and
maintenance of the System and providing the Services. Operator shall assist PNV
in obtaining any such licenses, permits, or approvals upon PNV's reasonable
request.
(g) After completion of the installation of the System at
a Truckstop, PNV shall provide Operator with written notice of the date on
which the sale of the Services shall commence at each such Truckstop
(hereinafter referred to as the "Truckstop Service Date").
3. Rights and Duties of The Parties With Respect To The PNV
Equipment.
(a) Notwithstanding the fact that certain parts of the PNV
Equipment may be affixed to each Truckstop, the PNV Equipment shall not become
a fixture thereto and shall remain the property of PNV. Operator acknowledges
that the System, the Services and the PNV Equipment and the manner of its
operation and installation are proprietary to PNV. Accordingly, Operator shall
use its best efforts to insure that all information and data concerning the
System, the Services and the PNV Equipment shall not be divulged, and (except
in the case of emergency) that access to the System and the PNV Equipment shall
not be given to any person or persons other than personnel authorized by PNV.
(b) Upon the termination of this Agreement for any reason,
PNV shall have the right to: (i) remove, at its sole cost and expense, any or
all of the PNV Equipment from each Truckstop; or (ii) sell or lease it to the
Operator or its successors, nominees or assignees. PNV shall, if it elects to
remove the System, restore each Truckstop as near as reasonably
-3-
<PAGE> 4
possible to the condition of such premises prior to the installation of the
System, normal wear and tear excepted, but shall not be obligated to remove any
underground cables.
4. Programming and Telecommunications Services to Be Provided.
(a) PNV shall make the Services available on the System as
follows:
(i) PNV shall source and deliver a
programming package consisting of a minimum
of eleven (11) channels of entertainment
programming. PNV shall pay the cost of all
such programming. The current programming
schedule to be broadcast by PNV is as set
forth on Schedule 3. PNV may, with the
prior consent of Operator, make changes to
the programming schedule from time to time.
If requested by Operator, PNV shall delete
one or more channels from the programming
schedule and substitute the same with
programming mutually agreed to by PNV and
Operator.
(ii) In addition to the eleven (11)
channel entertainment lineup, there shall
be other channels which shall be used to
provide a programming schedule and
advertising. PNV shall not permit any
individual or entity which owns or operates
a truckstop or truckstops to advertise over
the System at any of Operator's Truckstops.
Net profits (after payment of all "Directly
Related Expenses" as defined in Section
8(b) below) generated by advertising on
such channels at each Truckstop shall be
divided as follows: 50% to PNV and 50% to
Operator. All advertising revenue and other
revenues and commissions generated by these
channels shall not be considered "Gross
Receipts" (as defined in Section 8(a)) for
purposes of the Agreement.
(iii) PNV may, with the consent of
Operator, provide pay-per-view or other
non-traditional cable channels or services
as part of the Services. The net profits
(after payment of all Directly Related
Expenses) from such additional channels or
services shall be divided as follows: 50%
to PNV and 50% to Operator. All revenues
and commissions generated by these channels
shall not be considered Gross Receipts for
purposes of the Agreement.
(iv) PNV shall also provide telephone
service to certain parking slots at each
Truckstop. PNV's right to provide telephone
services to each Truckstop shall be subject
to: (a) Operator's legal right to permit
PNV to provide such services;
-4-
<PAGE> 5
and (b) any contractual restriction imposed
on Operator which may prohibit PNV from
providing such services. The current
telephone services offered by PNV are set
forth on Schedule 4. The fee schedules
established for the Services include a
charge relating to phone usage and such
fees shall be considered Gross Receipts for
purposes of this Agreement. PNV shall, with
Operator's prior consent, have the right to
determine and make changes to the specific
types of telecommunication services
provided to a particular Truckstop from
time to time. If the Parties mutually agree
to permit PNV to provide phone service to
areas of the Truckstops, other than the
parking lot, the Parties shall mutually
agree as to the profit allocations with
respect to such services.
5. Operation of the System and Sale and Promotion of the Services.
(a) PNV shall, from time to time, at its sole cost and
expense, train the Operator and its fuel desk employees with respect to the
operation of the point of sale equipment and the sale and promotion of the
Services. The Operator and its fuel desk employees shall be responsible for the
operation of the point of sale equipment and the sale and promotion of the
Services. PNV shall provide follow up training for Operator's personnel during
working hours with respect to the sale and promotion of the Services, the
operation of the System, and the maintenance of the PNV Equipment as may be
reasonably requested by Operator from time to time. PNV shall, with the prior
consent of Operator, be entitled to have its own employees or agents engage in
the sale and the promotion of the Services at any Truckstop, provided that
PNV's employees and agents shall not interfere with the operation of said
Truckstop and shall be subject to any restrictions or requirements imposed by
Operator.
(b) Operator shall use its best efforts to assure that the
management, fuel desk employees and other personnel promote the use of the
Services by the truck drivers frequenting the Truckstop. The Parties may
mutually agree from time to time to implement sales incentive programs for the
fuel desk employees and other personnel to promote the sale of the Services.
The Parties shall share the cost of implementing and funding any such mutually
agreed upon incentive programs.
(c) Operator may develop and supply to PNV, at no cost to
PNV, certain advertising and promotional materials relating to the System and
the Services. PNV may also develop and supply to Operator, at no cost to
Operator, certain advertising and promotional materials relating to the System
and the sale of the Services. Subject to each Party's approval
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<PAGE> 6
and consent, Operator and PNV shall make reasonable efforts to utilize and
display such materials at each Truckstop in order to promote the sale and
promotion of the Services.
6. Maintenance of the PNV Equipment and the System.
(a) PNV shall maintain a good quality signal and reception
through the System comparable to the signal and reception supplied for regular
television programming and telecommunications services to home consumers.
(b) The day to day maintenance of the System shall be
handled as follows:
(i) Operator's trained staff members
shall: (i) replace failed connecting drop
cables and accessories with equipment to be
furnished by PNV at its cost; (ii) maintain
the cable and phone boxes in the outside
hookups in proper operating order,
including cleaning and removal of debris
(i.e. oil, dirt, ice, snow, etc.); and
(iii) replace cable and phone connection
outlets in the outside hookups with
equipment furnished by PNV at its cost.
(ii) If a mechanical problem arises
other than through a failed connecting
cable or accessory, Operator shall contact
PNV by telephone at PNV's office. Unless
extenuating circumstances exist, PNV shall,
within forty-eight (48) hours, either
authorize Operator to contact a designated
repair technician or dispatch a designated
repair technician to make the necessary
repairs to the System. Charges for repairs
will be billed directly to PNV.
7. Term.
(a) Subject to Sections 7(b) and 16, the term of this
Agreement, as it applies to each Truckstop at which the System is installed,
shall be for a period of five (5) years commencing on the Truckstop Service
Date and terminating on the fifth anniversary of the Truckstop Service Date
(the "Term"). Subject to Section 7(b) and Section 16, the Term shall
automatically be extended for a five (5) year renewal period (the "Automatic
Renewal Term") provided that, as a condition to the commencement of the
Automatic Renewal Term, Operator shall be entitled to receipt of the increased
percentage of Gross Receipts set forth in Section 8(a). Notwithstanding the
foregoing, the Term and Automatic Renewal Term of this Agreement as it applies
to each Truckstop at which PNV has installed the System shall be subject to and
limited by the term of Operator's lease, if any, of the premises at which said
Truckstop is located.
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<PAGE> 7
(b) Operator and PNV hereby acknowledge and agree that
either party shall have the right to terminate this Agreement as it applies to
one or more Truckstops if: (i) such Truckstop does not have average gross
revenue of $35 per wired stall per month during any six (6) month period, the
Parties have jointly implemented a plan to increase revenue at such Truckstop
and the average gross revenue does not exceed $35 per wired stall per month at
such Truckstop during the three (3) month period following implementation of
such plan; or (ii) Operator reasonably believes that the PNV Equipment and the
System is obsolete, Operator reasonably requests that PNV install new equipment
and PNV fails to do so within one hundred fifty (150) days of Operator's
request.
8. Fees.
(a) The monthly Gross Receipts derived at each Truckstop
shall be allocated between PNV and Operator as follows: (i) during the Term,
sixty-five percent (65%) to PNV and thirty-five percent (35%) to Operator; and
(ii) during the Automatic Renewal Term, sixty percent (60%) to PNV and forty
percent (40%) to Operator.
For these purposes, "Gross Receipts" for any period shall mean the aggregate
gross amount collected by the Operator, during any calendar month, from the
sale of the Services during such period less the amount of taxes, if any, which
are required to be charged by Operator to the user of the Services and less any
refunds for faulty service or equipment. Notwithstanding the foregoing, for
purposes of this Agreement, "Gross Receipts" shall not include any revenue
received by PNV or the Operator for: (i) advertising displayed by PNV pursuant
to Section 4(a)(ii) or; (ii) pay-per-view or other additional channels or
services provided as part of the Services pursuant to Section 4(a)(iii).
(b) Net profits (after payment of all Directly Related
Expenses) generated by the services provided pursuant to Sections 4(a)(ii) and
4(a)(iii) shall be divided as follows: 50% to PNV and 50% to Operator. For
these purposes, "Directly Related Expenses" shall mean all direct costs and
expenses incurred by PNV with respect to the: (i) acquisition and installation
of the equipment necessary to transmit advertising over the System, including,
without limitation, loop tape players and loop tapes; (ii) sale, promotion and
production of advertising programs; (iii) salaries and commissions paid to and
expenses incurred by individuals or entities which sell advertising; and (iv)
fees paid to pay-per-view programmers. Directly Related Expenses shall not
include: (i) allocations of corporate overhead (other than the advertising
department); (ii) depreciation of the PNV Equipment, other than the equipment
necessary to transmit advertising over the System; or (iii) other costs and
expenses which are not directly related to the sale and promotion of
advertising over the System.
(c) Operator shall collect all applicable fees and taxes
from customers who purchase the Services at the Truckstop and shall secure and
account for all funds so collected. Billing is to be made on a unit basis in
accordance with the rates and procedures to be
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<PAGE> 8
established by PNV from time to time. Operator shall not be responsible for
collecting or accounting for fees and taxes obtained from customers who use
PNV's automated telephone activation service. PNV may, with Operator's prior
consent, which shall not be unreasonably withheld, adjust the charge per use
for any particular Service and shall notify Operator in writing of such change
and the effective date of the change.
(d) Operator shall collect all applicable fees and taxes
from the users who purchase the Services directly from Operator. Operator shall
not be responsible for collection of fees and taxes from those users who
purchase the Services through PNV's automated phone activation program. Billing
is to be made on a unit basis in accordance with the rates and procedures
specified by PNV from time to time. Any taxes due on the Services purchased
directly through Operator are to be collected by Operator from the user over
and above the charge established by PNV for the particular Services and said
taxes shall be remitted by Operator to the proper governmental agency. PNV
shall be responsible for the payment of all taxes due with respect to amounts
collected by PNV from users who purchase the Services through PNV's automated
phone activation program.
(e) All Gross Receipts and other revenues collected by
Operator with respect to the sale of the Services shall be remitted to PNV on a
monthly basis. All amounts due to or from Operator and PNV for each calendar
month shall be paid to Operator by PNV within ten (10) days of the close of
each calendar month.
(f) Upon request by PNV, but not more than once a week,
Operator shall inform PNV of: (i) the amount of the use of the Services; (ii)
the amount of the Gross Receipts and other revenue received with respect to the
sale of the Services, cable drops, adapters, connectors and telephones; (iii)
the amount of the taxes collected by the Operator; and (iv) other operating
data relating to the System as PNV may reasonably request.
(g) The books and records of the Operator and PNV
pertinent to the Gross Receipts and other revenue and taxes received with
respect to the sale of the Services for any calendar month shall be open for
inspection and audit by an authorized representative of either Operator or PNV
upon five (5) business days notice to said party. Upon request, PNV shall
provide Operator with detailed summaries of all Directly Related Expenses
incurred with respect to the sale of programming and advertising pursuant to
Sections 4(a)(ii) and (iii). Operator shall have the right to review and
discuss with PNV the appropriateness of items included in the calculation of
Directly Related Expenses.
9. Exclusivity.
(a) Subject to the provisions of Section 1 hereof, PNV
shall, for a period of thirty-six (36) months from the date of this Agreement,
have the exclusive right to install the System and provide the Services to each
Truckstop and any additional truckstops in which
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<PAGE> 9
Operator acquires an interest (whether owned, leased or operated under a
contract or some similar agreement), provided that, such additional truckstop
is not prohibited from entering into a contract with PNV pursuant to an
existing contractual obligation.
(b) PNV shall during the Term of this Agreement (and any
renewal term) have: (i) the exclusive right to sell to Operator at competitive
prices coaxial and phone cables for use with the Services provided by PNV; and
(ii) the nonexclusive right to sell to Operator television, telephone and cable
accessories and adapters for use with the Services. After purchasing the
foregoing items from PNV, Operator shall be entitled to resell such items to
its customers and retain all profits from such resales.
(c) For a period of six (6) months from the date of this
Agreement, PNV shall not install the System or provide the Services to any
truckstop owned or operated by Flying J or any of its affiliates. Upon the
expiration of said six (6) month period, the Parties shall discuss the
continuation of the foregoing provision or some modified version of the same.
10. Rights Granted to PNV. Operator hereby grants and conveys to
PNV, for the Term of this Agreement (and any renewal term), access to the
premises of each Truckstop at which the System is installed for purposes of
maintaining, repairing, replacing and operating the System and providing the
Services.
11. Representations and Warranties of PNV.
(a) PNV is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power
and authority: (i) to enter into this Agreement; and (ii) to carry out the other
transactions and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement by PNV has been duly authorized by all necessary action of PNV. This
Agreement and each of the other documents to be executed and delivered by PNV
pursuant to this Agreement have been duly executed and delivered by PNV and are
the valid and binding obligations of PNV enforceable in accordance with their
respective terms, subject only as to enforceability affected by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally and by
general equitable principles. The execution, delivery and performance of this
Agreement and the other documents to be executed, delivered and performed by PNV
pursuant to this Agreement will not: (i) conflict with or violate any provision
of PNV's organizational documents, or any law, ordinance or regulation or any
decree or order of any court or administrative or other governmental body which
is either applicable to, binding upon or enforceable against PNV; or (ii) result
in any breach of or default under or cause the acceleration of performance of
any mortgage, contract, agreement, indenture or other instrument which is either
binding upon or enforceable against PNV.
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<PAGE> 10
(c) PNV is not required to obtain the approval, consent or
waiver of any other person or entity for the execution, delivery or performance
of this Agreement.
(d) All of the information contained in the
representations and warranties of PNV set forth in this Agreement or in any of
the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
12. Representations and Warranties of Operator.
(a) Operator is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee and has
full corporate power and authority: (i) to enter into this Agreement; and (ii)
to carry out the other transactions and agreements contemplated by this
Agreement.
(b) The execution, delivery and performance of this
Agreement by Operator has been duly authorized by all necessary corporate
action of Operator. This Agreement and each of the other documents to be
executed and delivered by Operator pursuant to this Agreement have been duly
executed and delivered by Operator and are the valid and binding obligations of
Operator enforceable in accordance with their respective terms, subject only as
to enforceability affected by bankruptcy, insolvency or similar laws affecting
the rights of creditors generally and by general equitable principles. The
execution, delivery and performance of this Agreement and the other documents
to be executed, delivered and performed by Operator pursuant to this Agreement
will not: (i) conflict with or violate any provision of Operator's Articles of
Incorporation, By-laws, or any law, ordinance or regulation or any decree or
order of any court or administrative or other governmental body which is either
applicable to, binding upon or enforceable against Operator; or (ii) result in
any breach of or default under or cause the acceleration of performance of any
mortgage, contract, agreement, indenture or other instrument which is either
binding upon or enforceable against Operator.
(c) Operator is not required to obtain the approval,
consent or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of Operator set forth in this Agreement or in
any of the documents delivered or to be delivered herewith or after the
execution hereof as set forth in any provision of this Agreement is true,
accurate and complete.
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<PAGE> 11
13. Risk of Loss and Insurance; Indemnification.
(a) PNV shall bear the risk of loss and hereby indemnifies
Operator for: (i) damage to or destruction of the PNV Equipment and the System
installed at each Truckstop which is caused by the negligence or willful
misconduct of PNV, its employees, contractors, agents and customers; and (ii)
injury to persons or damage to property arising from the installation,
operation or repair of the PNV Equipment and the System (except to the extent
such damage is occasioned by any act, omission or negligence of Operator, its
employees, contractors or agents).
(b) Operator shall be responsible for the repair or
replacement of the PNV Equipment resulting from damage or destruction caused by
the negligence or willful misconduct of the Operator, its employees,
contractors or agents.
(c) Both Operator and PNV shall maintain during the Term
of this Agreement (or any renewal term), at their sole cost and expense,
comprehensive public liability insurance in the minimum amount of $1,000,000
providing coverage at each Truckstop at which the Services are provided against
any claims relating to the operation or use of the System or the sale or
provision of the Services and shall ensure that each Party is named as an
additional insured in respect of such insurance or is otherwise covered as its
interest may appear. PNV shall provide Operator with a certificate of insurance
evidencing insurance coverage in compliance with this Section 13(c). PNV and
Operator shall review the amount and terms of PNV's insurance coverage on an
annual basis and make such adjustments as may be reasonably necessary based
upon the prior years' claims experience.
14. Force Majeure. Neither party shall have any liability for the
failure to perform or a delay in performing any of its obligations if such
failure or delay is the result of any legal restriction, labor dispute, strike,
boycott, flood, fire, public emergency, revolution, insurrection, riot, war,
unavoidable mechanical failure, interruption in the supply of electrical power
or any other cause beyond the control of any party acting in a reasonable
business-like manner, whether similar or dissimilar to the causes enumerated
above.
15. Assignment.
(a) Operator may sell, assign, transfer or otherwise
dispose of its interest in one or more of the Truckstops (through a change of
control or otherwise) provided that the acquiror of such interest or assets
shall assume the Operator's rights and obligations hereunder and shall be bound
by the terms of this Agreement, in which case, PNV shall recognize the acquiror
of such Truckstop as its Operator for purposes of this Agreement.
(b) PNV may pledge its interest in this Agreement to any
party, including without limitation, to any bank, recognized lending or leasing
institution or investor as collateral. PNV may sell, assign, transfer or
otherwise dispose of its interest in this Agreement, provided that the acquiror
of such interest is not the owner or operator of one or
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<PAGE> 12
more truckstops and provided further that said acquiror shall assume all of
PNV's rights and obligations hereunder and shall be bound by the terms of this
Agreement.
16. Breach. In the event that either party shall fail in any
material respect to perform any obligation under this Agreement, the other
party may in writing notify the non-performing party that such failure
constitutes a breach. If the breach is not remedied or cured within thirty (30)
days following receipt of the notice of breach, without limiting any other
remedy which may be available, the non-breaching party may terminate this
Agreement by notice to the breaching party.
17. Ownership and Confidentiality. Operator recognizes and agrees
that PNV shall, during the term of this Agreement and thereafter, retain sole
ownership of the System and the PNV Equipment. Operator recognizes the
proprietary nature of the concept and the design of the System, the PNV
Equipment and the Services. Accordingly, Operator agrees to maintain and cause
each of its employees and agents to maintain and keep strictly confidential all
information that it obtains or receives in conjunction with the System, the PNV
Equipment and the Services. Operator further agrees that the "Park N' View"
name and logo shall be and remain the property of PNV and all references by
Operator to the System or the Services shall incorporate and/or refer to PNV by
its full name (Park N' View), whether in literature, electronic or print
displays, articles, advertising, billboards, banners or otherwise. The name,
Park 'N View, is, or will be, a registered service mark of PNV and to the
extent required by PNV, Operator shall execute a no cost limited license
agreement for the use of such service mark.
18. General Provisions.
(a) Notices. All notices required or permitted hereunder
shall be in writing and, may either be delivered by overnight courier,
transmitted by facsimile, or delivered by the United States Mail, postage
prepaid, addressed as follows:
To PNV: Ian Williams
President
Park 'N View, Inc.
3403 N.W. 55th Street
Building #10
Ft. Lauderdale, Florida 33309
Fax Number: (305) 730-2298
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<PAGE> 13
With a copy to: James M. O'Connell, Esq.
Petree Stockton, L.L.P.
4101 Lake Boone Trail
Suite 400
Raleigh, North Carolina 27607
Fax Number: (919) 420-1800
To Operator: Jeffrey Cornish
Pilot Corporation
5508 Lonas Road
Knoxville, Tennessee 37909
Fax Number: (423) 450-2850
With a copy to: Thomas Dickinson, Esq.
Hodges, Doughty & Carson
617 Main Street
Knoxville, Tennessee 37902
Fax Number: (423) 544-2014
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this Section 18(a).
(b) Expenses. Each party agrees to pay, without right of
reimbursement from any other party, its costs relating to the preparation of
this Agreement and the performance of its obligations hereunder, including
without limitation, fees and disbursements of counsel, accountants and
consultants employed by such party in connection herewith.
(c) Actions; Further Assurances. Subject to the terms and
conditions of this Agreement, each party agrees to use its best efforts in good
faith to: (i) take or cause to be taken as promptly as practicable all actions
and obligations arising herein; and (ii) do or cause to be done all things that
are within its power to fulfill and comply with its obligations or the
obligations of the other parties to consummate the transactions contemplated
herein.
(d) Press Releases. To the extent practical, PNV and
Operator shall consult with each other as to the form and content of all press
releases and other public disclosures of matters relating to this Agreement,
the System and the Services. Nothing in this section shall
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<PAGE> 14
prohibit PNV or Operator from making any disclosure which its legal counsel
deems necessary or advisable to fulfill such party's disclosure obligations
under applicable law. To the extent practical, all public disclosures shall be
transmitted by telecopier to the other party or its counsel prior to
publication or dissemination.
(e) Section Headings. The section headings in this
Agreement are for convenience of reference only and shall not be deemed to
alter or affect any provision hereof.
(f) Applicable Law. This agreement shall be governed in
all respects by the laws of the State of Florida.
(g) Litigation; Prevailing Party. If litigation is
brought with regard to this Agreement, the prevailing party shall be entitled
to receive from the non-prevailing party, and the non-prevailing party shall
immediately pay upon demand, all reasonable fees and expenses of counsel of the
prevailing party.
(h) Schedules. The Schedules attached to this Agreement
are integral parts of this Agreement and all references to this Agreement shall
include the Schedules.
(i) Modification. This Agreement shall not be modified or
amended except by an instrument in writing executed by the parties to this
Agreement.
(j) Successors And Assigns. This Agreement shall apply
to, and be binding upon, the parties and their respective successors and
permitted assigns.
(k) Severability. If any part or sub-part of this
Agreement is found or held to be invalid, that invalidity shall not affect the
enforceability and binding nature of any other part of this Agreement.
(l) Arbitration. Any controversy, dispute or question
arising out of, or in connection with, or in relation to this Agreement or the
interpretation, performance or non-performance or any breach thereof shall be
determined by arbitration conducted in Knoxville, Tennessee in accordance with
the then existing rules of the American Arbitration Association. PNV and
Operator shall each select one arbitrator, and the two arbitrators shall select
a third with the same qualifications. Any decision rendered shall be binding
upon the Parties, however, the arbitrators shall have no authority to grant any
relief that is inconsistent with this Agreement. The expense of arbitration
shall be borne equally by the Parties.
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<PAGE> 15
(m) Favored Nations. PNV agrees that the profit or
revenue allocations set forth in Sections 8(a) and 8(b) of this Agreement shall
be amended to reflect any increased profit or revenue allocations provided to
any other owner or operator of a truckstop, provided that, if the term of the
contract with any of such other owner or operator exceeds the Term and
Automatic Renewal Term of this Agreement as set forth in Section 7(a), Operator
must agree to a comparable extension of the Term and Automatic Renewal Term of
this Agreement as a condition to its right to receive the increased profit or
revenue allocations.
(n) Counterparts. This Agreement may be executed in one
or more counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, Operator and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
WITNESSES:
PARK 'N VIEW, INC., a
Delaware corporation
/s/ Tony Allen
- --------------------------------------
Tony Allen
By: /s/ Ian Williams
-----------------------------
Ian Williams, President
Pilot Corporation,
a Tennessee corporation
- --------------------------------------
By: /s/ Jeffrey Cornish
- -------------------------------------- -----------------------------
Jeffrey Cornish
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<PAGE> 16
SCHEDULE 1
LIST OF TRUCKSTOPS OWNED OR OPERATED
BY OPERATOR
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
STORE Reg. Manager Address Phone/Fax
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
219 tc 2 Paul LaRue 7200 Straw Pines Pike (423) 523-0348
I-40 (Exit 398) Fax: 522-8640
Knoxville TN 37914 Subway 523-0348
231 tc 11 Al Kupchik Route 11, Box 257 (606) 528-0631
I-75 at U.S. 25E (Exit 29) Fax: 528-1003
Corbin KY 40701 Subway 528-0631
239 tc 1 Joe Lawry 105 South Carter Road (804) 798-3006
I-95 at Hwy. 54 (Exit 92) Fax: 798-2056
Ashland VA 23005
245 tc 10 Phil Giurintano 7961 Linglestown Road (717) 545-5507
I-81 & SR 39 (Exit 27) Fax: 545-6768
Harrisburg PA 17112
250 tc 8 Jeff Cutts 953 West Beale Street (520) 753-1818
I-40 & SR 93 (Exit 48) Fax: 753-2045
Kingman AZ 86401 Subway 753-3660
253 tc 10 Mike Motto 6010 Pennsville-Auburn Road (609) 299-5700
Exit 2B I-295 at Jersey Tnpk. Fax: 299-8563
Carney's Point NJ 08069 Subway 299-5700
258 tc 1 David Clark 2191 Lee Highway South (703) 992-2805
P.O. Box 480 Fax: 992-1534
I-81 (Exit 150 A or B) Subway 992-2805
Troutville VA 24175
262 tc 8 David Brock 5240 South Sunland Gin Road (520) 836-9681
(Exit 200) Fax: 836-3255
Casa Grande AZ 85222 Subway 836-9681
263 tc 9 Rick Kallsen P.O. Box BA, 723 Main Street (816) 443-2027
I-70 (Exit 24) Fax: 443-2522
Grain Valley MO 64029 Subway 443-2027
</TABLE>
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<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C>
265 tc 2 Jim Easley Route 9, 1111 South Jefferson (615) 528-7100
I-40 (Exit 287) Fax: 528-3893
Cookeville TN 38501
266 tc 8 Kym VanDyke 2681 West Amador (505) 523-2700
I-10 & SR 292 (Exit 139) Fax: 525-8222
Las Cruces NM 88005 Subway 523-2700
268 tc 9 Jerry Reynolds 2975 North Plainview Road (319) 284-5074
I-80 & Co. Rd. Y-40 (Exit 284) Fax: 284-5076
Walcott IA 52773 Subway 284-5152
270 tc 3 Lou Sakacsi 400 Lovell Road (423) 966-0445
I-40 (Exit 374) Fax: 966-2918
Knoxville TN 37923 Wendy's 966-0447
271 tc 9 John Bolland 2501 Burr Street (219) 844-2661
Gary IN 46406 Fax: 844-7957
Subway 844-4161
272 tc 17 Tommy Bradshaw 800 Club Road (501) 732-1272
I-40/55 (Exit 280) Fax: 732-1280
West Memphis AZ 72301 Subway 732-1272
273 tc 18 Jim Williams 113011-40 East (806) 335-363
Amarillo TX 79111 Fax: 335-2394
Arby's 335-2003
275 tc 15 Brian Cooper 3807 Statesville Avenue (704) 358-1006
I-85/77 (Exit 39) Fax: 358-1506
Charlotte NC 28206 Subway 358-1006
276 tc 2 Jim Young I-40 at Highway 13 (615) 296-4805
Route 1, Box 76D (Exit 143) Fax: 296-5024
Hurricane Mills TN 37078 Subway 296-4805
278 tc 12 Dave Howard 118 Richwood Road (606) 485-6100
I-75 (Exit 175) Fax: 485-6113
Walton KY 41094 Travelers' Cafe
280 tc 10 John Brown I-78 & SR 173 (908) 479-6443
Exit 7 Fax: 479-6394
Bloomsbury NJ 08804 Subway 479-6443
</TABLE>
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<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C>
281 tc 13 Gary Mooney 2786 Salt Springs Road (216) 530-8500
I-80/Salt Springs Rd. (Exit 226) Fax: 530-8318
Girard OH 44420 Arby's 530-5100
282 tc 8 Chuck Smith 2591 Commerce Parkway (619) 253-2861
I-15 & Lenwood Road Fax: 253-2863
Barstow CA 92311 DQ 253-2861
283 tc 9 Jeff Symon U.S. 36/I-57 (Exit 212) (217) 253-5474
RR #1, Box 189-A Fax: 253-4115
Tuscola IL 61953
284 tc 13 Steve Schultz 1200 Nadeau Road (313) 457-3500
I-75 @ Nadeau Road (Exit 18) Fax: 457-9126
Monroe MI 48161 Arby's 457-3507
285 tc 13 Bob Burns 10258 Lancaster Road SW (614) 928-5588
I-70 & Highway 37 (Exit 125) Fax: 928-6032
Hebron OH 43025 DQ 928-6128
286 tc 12 Mike Stockdale 6141 US 127 North (513) 456-6303
I-70 & SR 127 (Exit 10) Fax: 456-6497
Eaton OH 45320 DQ 456-6303
289 tc 9 Dave Darlington 3001 Milwaukee (608) 364-3644
I-43/90 (Exit 185-A) Fax: 364-3643
Beloit WI 53511 DQ 364-3648
290 tc 10 Pete Chrystal 31 Heather Lane (410) 642-2883
I-95 & SR 222 (Exit 93) Fax: 378-4941
Perryville MD 21903 DQ/Subway 642-2694
291 tc 10 John Bowden I-95 & SR 207 (Exit 104) (804) 448-0102
P.O. Box 430 Fax: 448-1222
Ruther Glen VA 22546 DQ/Subway 448-0102
292 tc 2 Ross Adkison 120 West Trinity Lane (615) 226-6393
I-65 & Trinity Lane (Exit 87A) Fax: 226-6392
Nashville TN 37207 Arby's 226-3750
</TABLE>
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<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C>
293 tc 14 Larry Ross 2020 SW 135th Street (904) 347-8555
I-75 & SR 484 (Exit 67) Fax: 347-3082
Ocala FL 34476 Arby's/DQT 347-8499
294 tc 16 Massoud Shafizadeh 1670 West 12th Street (801) 731-2900
I-15 (Exit 347) Fax: 731-2380
Ogden UT 84404 Taco Bell/DQT/Subway
731-2088
296 tc 13 Tom Hay 195 Baker Road (313) 426-0065
I-94 & Baker Road Fax: 426-0339
Dexter MI 48130 Arby's 426-0814
297 tc 12 Mike Schmitt 5555 E. Margaret Avenue (812) 877-9977
I-70 & SR 46 (Exit 11) Fax: 877-9978
Terre Haute IN 47803 Arby's 877-1879
298 tc 10 Walt Szczubelek Route 2, Box 301 (717) 788-3262
I-80 & SR 93 (Exit 38) Fax: 788-2163
Drums PA 18222 Subway 788-8765
299 tc 9 Steve Hopkins 1522 West Market Street (309) 827-7867
I-55 (Exit 160-A) Fax: 827-2355
Bloomington IL 61701 Wendy's 829-3826
300 tc 14 Chet Chotkowski 2111 SW Railroad Avenue (504) 345-5476
I-12 & Hwy. 51 (Exit 40) Fax: 345-5028
Hammond LA 70403 Arby's 345-3419
301 tc 17 Mike Sarvay I-55 & St. Jude Road (314) 643-2320
Exit 40 Fax: 643-2252
Marston MO 63866 Arby's 643-2200
302 tc 14 Steve Skipper 6955 Theodore Dawes Road (334) 653-8834
I-10 (Exit 13) Fax: 653-9556
Theodore AL 36582 Wendy's 653-8830
306 tc 18 Eugene Palla 5619 IH-10 East (210) 661-5353
I-10/Ackermann Rd. (Exit 582) Fax: 661-4660
San Antonio TX 78219 Arby's 661-5500
</TABLE>
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<PAGE> 20
<TABLE>
<S> <C> <C> <C> <C>
307 tc 8 Bill Harmeyer 19997 Indian Avenue (I-10) (619) 329-5562
P.O. Box 1236 Fax: 329-0083
N. Palm Springs CA 92258 Wendy's/DQT
329-7493
308 tc 16 John Christensen 1564 McCue Street (307) 742-6443
I-80 (Exit 310) Fax: 742-2576
Laramie WY 82070 Wendy's 742-2878
310 tc 15 Skip Detweiler 1405 East Main Street (803) 433-1221
I-85 & SR 290 (Exit 63) Fax: 433-1210
Duncan SC 29344 Wendy's 433-1301
311 tc 13 John Bailey 8035 Perry Highway (814) 864-8536
I-90 & SR 97 (Exit 7) Fax: 864-0332
Erie PA 16509 Subway/DQT 864-8897
316 tc 8 Dan Wilkinson 4640 Steele Street (303) 292-6303
I-70 & Steele Street Fax: 292-3647
Denver CO 80216 Wendy's/DQT 292-6927
317 tc 18 Eric Cote Route 5, Box 700 (417) 781-0255
Highway 43 South Fax: 781-0179
Joplin MO 64804 Wendy's/DQT 781-0255
318 tc 12 Ken Garber 4607 South Harding Street (317) 783-1033
I-465 & SR 37 (Exit 4) Fax: 783-1186
Indianapolis IN 46217 Wendy's/DQT 783-1994
319 tc 11 Rick Neeley 244 Connector 3 SW (706) 277-7934
I-75/Connector 3 (Exit 135) Fax: 277-3337
Dalton GA 30720 Arby's/TCBY 277-3002
320 tc 18 Mark Romig 8181 S. Lancaster Rd. (Exit 470) (214) 228-9290
I-20 & IH-635 (LBJ Highway) Fax: 228-6764
Dallas TX 75241 Wendy's/DQT 224-9732
321 tc 12 Miles Boyd 11229 Frontage Road (606) 485-1327
Walton KY 41094 Fax: 485-8519
Subway 485-1327
</TABLE>
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<PAGE> 21
<TABLE>
<S> <C> <C> <C> <C>
323 tc 15 Murry Leith 415 Highway 49 South (601) 939-7672
I-20/US 49 (Exit 47) Fax: 939-7686
Richland MS 39218 Subway/Krystal
932-7571
324 tc 9 Patty Jo Hess 13712 Northwestern Avenue (414) 835-2292
I-94 & Highway K (Exit 329) Fax: 835-2564
Franksville WI 53126 Arby's 835-2417
328 tc 6 Brent Bullough P.O. Box 4090 (520) 927-7777
B-10 Exit 17 Fax: 927-7000
Quartzsite AZ 85359 Subway/DQT 927-7778
329 tc 18 Kevin Koebel 2647 South 24th Street (712) 322-0088
I-80, I-29 & 24th St. (Exit 1B) Fax: 322-0236
Council Bluffs IA 51501 Arby's
331 tc 15 Dave Carter 2605 Bouldercrest (404) 212-8733
I-285 (Exit 37) Fax: 212-8568
Atlanta GA 30316 Wendy's/DQT 212-9264
332 tc 18 Darrin Spence 3300 Highway 391 North (501) 945-2226
North Little Rock AR 72117 Fax: 945-2282
Subway/DQT 945-9263
335 tc 14 Ben Oseni 103 Grimshaw Street (318) 728-4100
I-20 & SR 137 (Exit 138) Fax: 728-4236
Rayville LA 71269 Wendy's/DQT 728-9592
337 tc 15 David Frankenfield 2015 West Lucas Street (803) 662-2646
I-95 & US Highway 52 Fax: 662-2893
Florence SC 29501 Subway/DQT/Krystal
662-2673
338 tc 15 Dave Carson 3008 Highway 321 (803) 739-2921
I-26 & US 321 Fax: 739-4521
Cayce SC 29033 Wendy's/DQT 739-5848
340 tc 16 Todd Gray 465 Highway 95A (702) 575-5115
US Alt. 95 & I-80 (Exit 46) Fax: 575-4619
Fernley NV 89408 Wendy's/DQT 575-6298
</TABLE>
-21-
<PAGE> 22
<TABLE>
<S> <C> <C> <C> <C>
341 tc 8 Mike Hill 3812 East Craig Road (702) 644-1600
Craig Rd. & Mitchell St. (I-15) Fax: 644-8432
North Las Vegas NV 89030 Pizza Hut/KFC/DQT
644-8495
344 tc 15 Noah Strong 4600 South Atlanta Road (770) 434-9949
I-285 (Exit 11) Fax: 434-8341
Smyrna GA 30080 Subway/KFC
346 tc 15 Mike Delemartre I-20, Highway 601 South (Exit 92) (803) 438-5175
Lugoff SC 29078 Fax: 438-3947
Subway/DQT 438-5175
348 tc 13 Monte Job 205 Wilson Road Opening March 96
Bentleyville PA 15314 Subway
349 tc 9 Michael Bennett 5301 North Cliff Avenue (605) 332-7611
I-90 (Exit 399) Fax: 335-1567
Sioux Falls SD 57104 Subway/DQT 332-7611
350 tc 16 Warren Post 1050 Highway 20 (208) 587-4465
I-84 (Exit 95) Fax: 587-1567
Mountain Home ID 83647 Subway/DQT 587-4944
352 tc 14 Mike Frye 6050 Plaza Drive (941) 693-6868
I-75 (Exit 24) Fax: 693-8831
Fort Myers FL 33905 Subway/DQT 693-7799
353 tc 12 Tom Richeal 110 Triport Road (502) 863-2708
I-75 (Exit 129) Fax: 863-5012
Georgetown KY 40324 Subway 863-2708
354 tc 17 Rod Walker 819 Buck Creek Road (502) 722-5636
I-64 (Exit 28) Fax: 722-5630
Simpsonville KY 40067 Subway 722-5636
355 tc 17 Virgil Pounds P.O. Box 97 (502) 743-5931
Highway 153, I-71 (Exit 28) Fax: 743-5610
Pendleton KY 40055 Subway 743-5931
356 tc 17 Kevin Stevens 2050 East Blue Lick Road (502) 955-5049
I-65 (Exit 121) Fax: 955-9717
Shepherdsville KY 40165 Subway/TB 955-5049
</TABLE>
-22-
<PAGE> 23
<TABLE>
<S> <C> <C> <C> <C>
357 tc 17 Jim Walker 12745 Fort Campbell Blvd. (502) 439-9490
I-24 & US 41A (Exit 86) Fax: 439-1109
Oak Grove KY 42262 Subway/DQT 439-9490
358 tc 17 Johnny Johnson 5353 Cairo Road (502) 443-2044
I-24 (Exit 3) Fax: 443-8538
Paducah KY 42001 Subway 443-2044
359 tc 17 Danny Tumbleson P.O. Box 159 (314) 683-6056
I-57 (Exit 10) Fax: 683-6016
Charleston MO 63834 Subway 683-6056
360 tc 13 Doug Diebert 11471 SR 613W (419) 299-3381
I-75 (Exit 164) Fax: 299-3096
Findlay OH 45840 Subway/TB 299-3577
361 tc 12 Mark Campbell 5935 West 225 North (317) 894-0462
I-70 (Exit 96) Fax: 894-0732
Greenfield IN 46140 Subway 894-0462
362 tc 12 Gene Holstein 7455 South State Road 13 (317) 485-6211
I-69 (Exit 14) Fax: 485-4527
Pendleton IN 46064 Subway/TB 485-6211
364 tc 13 Monte Job 750 N. Carol Malone Blvd. (606) 474-6009
I-64 Fax: 474-0436
Grayson KY 41143 Wendy's 474-8890
365 tc 16 Mike Hamstra 22717 Avenue 18 1/2 (209) 673-3878
Highway 99 Fax: 673-7679
Madera CA 93637 Subway/DQT 673-2638
366 tc 18 Brian Elliott 6110 Interstate 10E (Exit 793) (713) 421-2283
North Main Street Fax: 421-7879
Baytown TX 77521 Subway/KFC 421-2024
369 tc Steve Ensminger 901 Bankhead Highway Opening 3/12/96
I-59 (Exit 123) Wendy's
Birmingham AL 35204
371 tc 8 Brett Davenport 2201 North Park Drive (520) 289-9531
Winslow AZ 86047 Fax: 289-9558
</TABLE>
-23-
<PAGE> 24
<TABLE>
<S> <C> <C> <C> <C>
373 tc 18 Larry Traywick 11957 Douglas Avenue (515) 276-1500
P.O. Box 3975 Fax: 276-8599
Des Moines IA 50322 Subway
374 tc 15 Chris Hannaford 2209 Highway 71 (904) 482-2148
I-10 (Exit 21) Fax: 482-2136
Marianna FL 32448 Arby's 482-4689
377 tc 18 Craig Renshaw 1101 Uniroyal Drive (210) 717-5006
I-35 (Exit 13) Fax: 717-5012
Laredo TX 78045 Subway/KFC
380 tc 10 Warren Spaulding 107 Seventh North Street (315) 424-0124
Syracuse NY 13088 Subway/KFC
387 tc 16 Dan Grangroth 791 Tenth Street (702) 754-6384
I-80 (Exit 280) Fax: 754-6025
Carlin NV 89822 Subway
</TABLE>
-24-
<PAGE> 25
SCHEDULE 2
LIST OF CURRENT PNV EQUIPMENT
Current PNV Equipment:
Satellite Dish & Off-air receive antenna
Processing [head-end] equipment
Telephone PBX switch and operator console
Distribution cables
Parking lot plug-in boxes
Rental coaxial cables
Cable TV "billing" computer and software
Prepaid [debit] phonecard dispenser
Telephone & Cable TV accessories for resale
-25-
<PAGE> 26
SCHEDULE 3
LIST OF CURRENT PROGRAMMING SCHEDULE
Current Programming Schedule:
<TABLE>
<CAPTION>
===============================================================================
Channel # Program
- -------------------------------------------------------------------------------
<S> <C>
- -------------------------------------------------------------------------------
2 NBC
- -------------------------------------------------------------------------------
3 Playboy
- -------------------------------------------------------------------------------
4 ESPN
- -------------------------------------------------------------------------------
5 Fox
- -------------------------------------------------------------------------------
6 HBO (East)
- -------------------------------------------------------------------------------
7 WGN Chicago
- -------------------------------------------------------------------------------
8 USA
- -------------------------------------------------------------------------------
9 WTBS Atlanta
- -------------------------------------------------------------------------------
10 PNV Program Guide and Advertising
- -------------------------------------------------------------------------------
11 TNN
- -------------------------------------------------------------------------------
12 Headline News
- -------------------------------------------------------------------------------
13 ABC
===============================================================================
</TABLE>
-26-
<PAGE> 27
SCHEDULE 4
LIST OF CURRENT TELEPHONE SERVICES
Current Telephone Services:
1-800 calls
Local calls
Operator services
Direct call back to stall # (automated)
Message waiting
Wake-up calls (automated)
-27-
<PAGE> 28
AMENDMENT TO
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS AMENDMENT TO THAT CERTAIN CABLE TELEVISION AND TELEPHONE SERVICE
AGREEMENT (this "Amendment") is entered into effective as of the 11th day of
March, 1998, by and between Park 'N View, Inc. ("PNV") and Pilot Corporation
("Operator").
WHEREAS, PNV and Operator have entered into that certain Cable
Television and Telephone Services Agreement dated February 15, 1996 (the
"Original Agreement"). Unless otherwise defined in this Amendment, defined
terms contained herein have the meaning ascribed to them in the Original
Agreement;
WHEREAS, PNV now offers additional services to truckdrivers
(hereinafter referred to as the "New PNV Services" which together with the
Services as defined in the Original Agreement are collectively referred to as
the PNV Services) and PNV has developed additional sales programs (the "Power
Plan") to sell the PNV Services to truckdrivers;
WHEREAS, the Original Agreement did not address the allocation,
between PNV and the Operator, of the revenues or profits derived from the New
PNV Services or the Power Plan;
WHEREAS, PNV and Operator (collectively the "Parties") desire to
formally amend the Original Agreement to implement the following changes.
1. All revenues and profits derived from the sale of the PNV
Services shall, during the Term of the Original Agreement (and any renewed
term), be allocated between Operator and PNV as set forth on Schedule A
attached hereto.
2. All other terms and provisions of the Original Agreement shall
remain in full force and effect. The Parties acknowledge and agree that if PNV
provides additional services in the future, the revenue and profit allocations
for such services shall be agreed to by the Parties in the form of a letter
agreement which shall constitute an amendment to the Original Agreement.
IN WITNESS WHEREOF, Operator and PNV have caused this Amendment to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
PILOT CORPORATION PARK 'N VIEW, Inc.,
a Delaware Corporation
By: /s/ J. Brad Butcher By: /s/ Ian Williams
--------------------------- ---------------------------------
Real Estate Manager Ian Williams, President
-28-
<PAGE> 29
- -------------------------------------------------------------------------------
SCHEDULE A
- -------------------------------------------------------------------------------
AMENDMENT TO CABLE TELEVISION
AND TELEPHONE SERVICE AGREEMENT
<TABLE>
<CAPTION>
DESCRIPTION OF SERVICE OR SALE OPERATOR'S PORTION
------------------------------ ------------------
<S> <C> <C>
A. Gross Receipts Based Programs
1. Gross Receipts* from the sale of monthly and 35% for first five (5) years of the Term;
daily memberships and other services from the 40% for second five (5) years of the Term
vending machine at each of Operator's
Truckstop.
2. Gross Receipts* from the sale of Power 35% for first month of service and 10% for each
Plans at each of Operator's Truckstop. additional month of service under Power Plan
3. Gross Receipts* from the sale of 10% of each months receipts will be placed in a
memberships by telemarketing staff. pool and allocated among all Truckstops based
upon the number of wired stalls at each Truckstop
4. Gross Receipts** from sales to Fleets. 10% of each months receipts will be placed in a
pool and allocated among all Truckstops based
upon the number of wired stalls at each Truckstop.
B. Net Profit Based Programs
1. Net Profits*** derived from Advertising. 50%
2. Net Profits*** derived from Pay Per View. 50%
3. Net Profits*** derived from sale of long 35%
distance phone time.
</TABLE>
* Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the Services
less the cost of 60 free minutes of phone time and applicable taxes. Gross
Receipts shall not include any revenue received by PNV or the Operator for
services listed under Net Profit Based Programs above.
** Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the Services
less the cost of 60 free minutes of phone time, direct sales commissions
and applicable taxes. Gross Receipts shall not include any revenue
received by PNV or the Operator for services listed under Net Profit Based
Programs above.
*** Net Profits shall mean the aggregate gross revenue collected by PNV or
Operator less Directly Related Expenses. Directly Related Expenses shall
mean all direct costs and expenses incurred by PNV with respect to the:
(i) acquisition and installation of the equipment necessary to provide
advertising, Pay-Per-View or long distance phone time over the System;
(ii) sale, promotion and production of advertising, Pay-Per-View or long
distance phone time; (iii) salaries and commissions paid to and expenses
incurred by individuals or entities which sell advertising, Pay-Per-View
or long distance phone time; (iv) fees paid to pay-per-view programmers;
and (v) fees paid or costs incurred to provide long distance phone time.
Directly Related Expenses shall not include: (i) allocations of corporate
overhead (other than the advertising department); (ii) depreciation of the
PNV Equipment, other than the equipment necessary to provide advertising,
Pay-Per-View or long distance phone time over the System; or (iii) other
costs and expenses which are not directly related to the sale and
promotion of advertising, Pay-Per-View or long distance phone time over
the System.
-29-
<PAGE> 1
EXHIBIT 10.11
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT (this
"Agreement") is entered into this 7th day of February, 1997, by and between Park
'N View, Inc., a Delaware corporation ("PNV"), with its headquarters at 3403
N.W. 55th Street, Building #10, Ft. Lauderdale, Florida and All American Plazas,
Inc., a Pennsylvania corporation ("Operator"), with its headquarters at 7029
Carlisle Pike, Carlisle, Pennsylvania.
WHEREAS, Operator: (i) currently owns or operates eight (8)
full-service travel plaza truckstops which are located at the addresses listed
on Schedule 1 hereto; and (ii) may acquire or contract to operate other
full-service travel plaza truckstops, all of the aforesaid hereinafter
individually being referred to as a "Truckstop" and collectively being referred
to as the "Truckstops"; and
WHEREAS, PNV has designed and developed the concept and equipment ("the
System") to (i) enable truck drivers to: (a) receive and/or have access to cable
television services and telecommunications services; and (b) provide such truck
drivers programming consisting of video and audio services, and telephone, fax
or other data services while remaining in their vehicles parked at the
Truckstop; and (ii) sell advertising to be broadcast over the System
(collectively, the "Services"); and
WHEREAS, Operator desires to engage PNV to install the System and
provide the Services at certain of the Truckstops.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Operator and PNV (hereinafter collectively being referred to
as the "Parties"), intending to be legally bound, hereby mutually agree as
follows:
1. Purpose. The Parties hereby agree that PNV shall install the
System and the parties shall operate the System at Operator's Truckstop located
at 1201 Harrisburg Pike, Carlisle, Pennsylvania, 17013. PNV shall install the
System at such other Truckstops as may be mutually agreed upon by the Parties.
2. Installation of Equipment.
(a) Subject to the mutual agreement of Operator and PNV
as to the type and amount of equipment, PNV shall, at its sole cost and expense,
and in the manner herein provided, install and continually maintain at each
Truckstop at which the Services are to be provided all equipment necessary to
provide the Services including the following:
-1-
<PAGE> 2
(i) equipment necessary for the provision and
distribution of the Services.
(ii) outlet ports to parking spaces to provide
users with access to the Services.
(iii) such other equipment or services as may
be agreed upon by PNV and Operator,
including, without limitation, the provision
of AC power to parking spaces at certain of
the Truckstops. Prior to installing such
additional equipment or providing such
additional services, PNV and Operator shall
mutually agree to a reasonable adjustment to
the profit allocations set forth in Section
8 in order to reflect PNV's differing profit
margins and increased capital costs with
respect to the installation of such
additional equipment and the provision of
such additional services at the Truckstops.
All of the foregoing equipment as currently used by PNV is described on Schedule
2 hereto and is hereinafter, together with any additions or deletions to said
equipment, collectively referred to as the "PNV Equipment". With the consent of
Operator, which shall not be unreasonably withheld, PNV may make additions to
and deletions from the PNV Equipment to be installed at each Truckstop. PNV
shall provide the Services to at least 75% of the truck parking spaces located
at each Truckstop at which it installs the System. The Parties shall mutually
determine the precise number and location of the truck parking spaces at which
the Services shall be provided, taking into account such factors as the cost of
construction and implementation, the layout of the parking facilities, the usage
of particular parking rows to drop trailers and such other factors as the
Parties may deem relevant.
(b) PNV and Operator shall mutually agree upon sufficient
areas in which to install the PNV Equipment at each Truckstop, including: (i)
such area as is required for the installation of satellite dish(es); (ii) a
secured air-conditioned interior area of approximately 50 square feet for the
installation of the headend equipment and the telephone and related monitoring
equipment; and (iii) an area at the fuel desk and/or the travel store for
installation of the equipment required for activation of the Services
(hereinafter collectively referred to as the "Equipment Area"). PNV shall be
entitled to have continued access to the Equipment Area and all parking areas
for purposes of installing, repairing and monitoring the PNV Equipment, the
System and the Services, provided that, PNV shall use PNV's best efforts to
minimize the disruption to traffic flow and parking space availability.
(c) Prior to commencement of construction at any
Truckstop, PNV shall obtain Operator's approval of the methods and materials to
be used by PNV with respect to the installation of the System. PNV will repair
any damage to the Truckstop which is caused by
-2-
<PAGE> 3
PNV. However, PNV shall not be responsible for any existing defects or
deficiencies or the normal wear and tear to the parking lot or the Truckstop.
(d) PNV shall install the PNV Equipment in a workmanlike
and efficient manner, without unreasonable interference with the operation of
each Truckstop. PNV shall use its best efforts to minimize the disruption to
traffic flow and parking space availability. PNV shall fully complete the
installation of the System at each Truckstop within 180 days of commencement of
the installation at said Truckstop.
(e) PNV shall on a timely basis secure, and continuously
maintain in full force and effect, all licenses, permits and approvals required
by governmental authorities with respect to the installation, operation and
maintenance of the System and providing the Services. Operator shall assist PNV
(at PNV's expense) in obtaining any such licenses, permits, or approvals upon
PNV's reasonable request.
(f) Within thirty (30) days of completion of the
installation of the System at a Truckstop, PNV shall provide Operator with
written notice of the date on which the sale of the Services shall commence at
each such Truckstop (hereinafter referred to as the "Truckstop Service Date").
3. Rights and Duties of The Parties With Respect To The PNV
Equipment.
(a) Notwithstanding the fact that certain parts of the
PNV Equipment may be affixed to each Truckstop, the PNV Equipment shall not
become a fixture thereto and shall remain the property of PNV. Operator
acknowledges that the System, the Services and the PNV Equipment and the manner
of its operation and installation are proprietary to PNV. Accordingly, Operator
shall use its best efforts to insure that all material confidential information
and data concerning the System, the Services and the PNV Equipment shall not be
divulged, and (except in the case of emergency) that access to the System and
the PNV Equipment shall not be given to any person or persons other than
personnel authorized by PNV.
(b) Upon the termination of this Agreement for any
reason, PNV may, but shall not be obligated to, offer to sell or lease any or
all of the PNV Equipment to Operator; provided, however, that Operator shall not
be required to purchase or lease any portion or all of the PNV Equipment. Any
purchase and sale or lease pursuant to the preceding sentence of this section
shall be on such terms as are mutually agreeable to PNV and Operator. In the
event that (i) PNV elects not to offer to sell or lease to Operator some portion
or all of the PNV Equipment, or (ii) Operator declines to purchase or lease some
portion of all of PNV Equipment offered for sale or lease by PNV, or (iii) the
parties are unable to reach mutual agreement as to the terms of such sale and
purchase or lease, then PNV, at PNV's sole cost and expense, shall remove all of
the PNV Equipment not sold or leased to Operator and restore
-3-
<PAGE> 4
each Truckstopas near as reasonably possible to the condition of such premises
prior to the installation of the System, normal wear and tear excepted. PNV
shall not be obligated to remove any underground cables so long as PNV provides
Operator with such documentation as is reasonable to enable Operator to identify
the location of said underground cables.
4. Programming and Telecommunications Services to Be Provided.
(a) PNV shall make the Services available on the System
as follows:
(i) PNV shall source and deliver a
programming package consisting of a minimum
of eleven (11) channels of entertainment
programming. PNV shall pay the cost of all
such programming. The current programming
schedule to be broadcast by PNV is as set
forth on Schedule 3. PNV may, with the prior
consent of Operator, make changes to the
programming schedule from time to time.
(ii) In addition to the eleven (11) channel
entertainment lineup, there shall be other
channels which shall be used to provide a
programming schedule and advertising.
Operator and PNV shall mutually agree on the
nature, scope and content of the advertising
to be broadcast over the System at each
Truckstop. Net profits (after payment of all
"Directly Related Expenses" as defined in
Section 8(b) below) generated by advertising
on such channels at each Truckstop shall be
divided as follows: 50% to PNV and 50% to
Operator. All advertising revenue and other
revenues and commissions generated by these
channels shall not be considered "Gross
Receipts" (as defined in Section 8(a)) for
purposes of the Agreement.
(iii) PNV may, with the consent of Operator,
provide pay-per-view or other
non-traditional cable channels or services
as part of the Services. The net profits
(after payment of all Directly Related
Expenses) from such additional channels or
services shall be divided as follows: 50% to
PNV and 50% to Operator. All revenues and
commissions generated by these channels
shall not be considered Gross Receipts for
purposes of the Agreement.
(iv) PNV shall also provide telephone service
to certain parking slots at each Truckstop.
The current telephone services offered by
PNV are set forth on Schedule 4. The fee
schedules established for the Services
include a charge relating to phone
-4-
<PAGE> 5
usage and such fees shall be considered
Gross Receipts for purposes of this
Agreement. PNV shall, with Operator's prior
consent, have the right to determine and
make changes to the specific types of
telecommunication services provided to a
particular Truckstop from time to time. If
the Parties mutually agree to permit PNV to
provide phone service to areas of the
Truckstops, other than the parking lot, the
Parties shall mutually agree as to the
profit allocations with respect to such
services. The nominated long distance
carrier will be AT&T unless the parties
mutually agreed to change such carrier
and/or the other services.
-5-
<PAGE> 6
5. Operation of the System and Sale and Promotion of the
Services.
(a) Initially, upon installation of the System at any
Truckstop, PNV shall train the Operator and its fuel desk employees with respect
to the maintenance and operation of the System and the promotion of the
Services. PNV shall provide follow up training for Operator's personnel during
working hours with respect to the promotion of the Services, the operation of
the System, and the maintenance of the PNV Equipment as may be reasonably
requested by Operator from time to time. PNV shall, with the prior consent of
Operator, be entitled to have its own employees or agents engage in the
promotion of the Services at any Truckstop, provided that PNV's employees and
agents shall not interfere with the operation of said Truckstop.
(b) Operator shall use its best efforts to assure that
the management, fuel desk employees and other personnel promote the use of the
Services by the truck drivers frequenting the Truckstop. The Parties may
mutually agree from time to time to implement sales incentive programs for the
fuel desk employees and other personnel to promote the sale of the Services. The
Parties shall share the cost of implementing and funding any such mutually
agreed upon incentive programs.
(c) Operator may develop and supply to PNV, at no cost to
PNV, certain advertising and promotional materials relating to the Truckstops to
be run on a single dedicated channel to be made available to Operator.
Additional channels may be provided for Operator's use at mutually agreed upon
charges. PNV may also develop and supply to Operator, at no cost to Operator,
certain advertising and promotional materials relating to the System and the
sale of the Services. Subject to each Party's approval and consent, Operator and
PNV shall make reasonable efforts to utilize and display such materials at each
Truckstop in order to promote the sale and promotion of the Services.
6. Maintenance of, and Repairs to, the PNV Equipment and the
System.
(a) PNV shall maintain a good quality signal and
reception through the System comparable to the signal and reception supplied for
regular cable television programming and telecommunications services to home
consumers.
(b) Maintenance of and Repairs to, the System shall be
handled as follows:
(i) Operator's trained staff members shall:
(a) replace failed connecting drop cables
and accessories with equipment to be
furnished by PNV at PNV's cost; (b) clean
and remove debris such as oil, dirt, ice,
and snow from the cable and phone boxes in
the outside hookups; and (c) replace cable
and phone connection outlets in the outside
hookups with equipment furnished by PNV
-6-
<PAGE> 7
at PNV's cost. Subject to the provisions of
Section (13)(b) herein, all other
maintenance and repairs shall be at PNV's
expense and shall be performed pursuant to
the provisions of Section 6(b)(ii) below.
(ii) If a mechanical problem arises other than
those routine maintenance matters which
Operator is required to perform pursuant to
the provisions of Section 6(b)(i) above, or
if a repair is needed to the System,
Operator shall contact PNV by telephone at
PNV's office. PNV shall, within forty-eight
(48) hours of said call, either authorize
Operator to contact a designated repair
technician or dispatch a designated repair
technician to make the necessary repairs to
the System. All charges for repairs for
which PNV is responsible pursuant to the
provisions of Sections 6(b)(i) and (ii)
above shall be billed directly to, and be
the responsibility of, PNV.
7. Term.
(a) Subject to Section 16, the term of this Agreement, as
it applies to each Truckstop at which the System is installed, shall be for a
period of five (5) years commencing on the Truckstop Service Date and
terminating on the fifth anniversary of the Truckstop Service Date (the "Term").
Subject to Section 16, the Term shall automatically be extended for a five (5)
year renewal period (the "Automatic Renewal Term") provided that, as a condition
to the commencement of the Automatic Renewal Term, Operator shall be entitled to
receipt of the increased percentage of Gross Receipts set forth in Section 8(a).
Upon the expiration of the Automatic Renewal Period, PNV and Operator may
mutually agree to an additional five-year renewal term.
8. Fees.
(a) The monthly Gross Receipts derived from sales at each
card dispensing machine located at each Truckstop shall be allocated between PNV
and Operator as follows: (i) during the Term, sixty-five percent (65%) to PNV
and thirty-five percent (35%) to Operator; and (ii) during the Automatic Renewal
Term, sixty percent (60%) to PNV and forty percent (40%) to Operator. In
addition, Operator shall be entitled to receive a portion of the gross revenues
received by PNV from sales to fleets ("Fleet Revenues"). The Operator's portion
of the Fleet Revenues shall be determined by multiplying thirty-five percent 35%
of the Fleet Revenues by a fraction, the numerator of which is the total number
of wired stalls at the Operator's Truckstops and the denominator of which is the
total number of wired stalls in the PNV network.
-7-
<PAGE> 8
For these purposes, "Gross Receipts" for any period shall mean the
aggregate gross amount collected by the Operator, during any calendar month,
from the sale of the Services at the card dispensing machine located at each
truckstop during such period less the amount of taxes, if any, which are
required to be charged to the user of the Services and less any refunds for
faulty service or equipment. Notwithstanding the foregoing, for purposes of this
Agreement, "Gross Receipts" shall not include any revenue received by PNV or the
Operator for: (i) advertising displayed by PNV pursuant to Section 4(a)(ii) or;
(ii) pay-per-view or other additional channels or services provided as part of
the Services pursuant to Section 4(a)(iii).
(b) Net profits (after payment of all Directly Related
Expenses) generated by the services provided pursuant to Sections 4(a)(ii) and
4(a)(iii) shall be divided as follows: 50% to PNV and 50% to Operator. For these
purposes, "Directly Related Expenses" shall mean all direct costs and expenses
incurred by PNV with respect to the: (i) acquisition and installation of the
equipment necessary to transmit advertising over the System, including, without
limitation, loop tape players and loop tapes; (ii) sale, promotion and
production of advertising programs; (iii) salaries and commissions paid to and
expenses incurred by individuals or entities which sell advertising; and (iv)
fees paid to pay-per-view programmers. Directly Related Expenses shall not
include: (i) allocations of corporate overhead (other than the advertising
department); (ii) depreciation of the PNV Equipment, other than the equipment
necessary to transmit advertising over the System; or (iii) other costs and
expenses which are not directly related to the sale and promotion of advertising
over the System.
(c) Unless otherwise agreed to by the Parties, PNV shall
have sole responsibility for collection of all revenues generated by the System
and the Services at each Truckstop and PNV shall cause its representative to
collect all revenues derived from the debit card dispensers located at each
Truckstop at least once during each calendar month. On or before the twentieth
(20th) day of each calendar month, PNV shall: (i) remit payment to Operator of
all amounts due to Operator which were received by PNV during the prior calendar
month; and (ii) provide Operator with a report indicating: (a) the usage of the
System and the Services at each Truckstop; and (b) the calculation of the amount
remitted to Operator. The books and records of the Operator and PNV pertinent to
the Gross Receipts, Directly Related Expenses, and other revenue and taxes
received with respect to the sale of the Services for any calendar month shall
be open for inspection and audit by an authorized representative of either
Operator or PNV upon five (5) business days notice to said party.
9. Exclusivity.
(a) PNV shall, for a period of ten (10) years from the
date of this Agreement, have the exclusive right to install the System and
provide the Services to each Truckstop and any additional truckstops in which
Operator acquires an interest (whether owned, leased or operated under a
contract or some similar agreement), provided that, PNV shall not install the
System at any Truckstop until PNV has obtained Operator's consent as
-8-
<PAGE> 9
required by Sections 1 and 2(c). Notwithstanding the foregoing, within ninety
(90) days of receipt from Operator of a written request for installation of the
System at a particular Truckstop, PNV shall provide Operator with written notice
of PNV's intention to install the System at such Truckstop pursuant to PNV's
normal build schedule. In the event that PNV declines to install the System at a
particular Truckstop or fails to provide the Operator with the required written
notice within said ninety (90) day period, PNV's exclusive right to provide the
Services and the System to that particular Truckstop shall terminate and
Operator shall be entitled to obtain services at that particular Truckstop which
compete with the Services and the System provided by PNV.
(b) PNV shall during the Term of this Agreement (and any
renewal term) have the nonexclusive right to sell to Operator, and Operator
shall have no obligation to purchase: (i) coaxial and phone cables for use with
the Services; and (ii) television, telephone and cable accessories and adapters
for use with the Services. After purchasing the foregoing items from PNV,
Operator shall be entitled to resell such items to its customers and retain all
profits from such resales.
10. Rights Granted to PNV. Operator hereby grants and conveys to
PNV, for the Term of this Agreement (and any renewal term), access to the
premises of each Truckstop at which the System is installed for purposes of
maintaining, repairing, replacing and operating the System and providing the
Services.
11. Representations and Warranties of PNV.
(a) PNV is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power
and authority: (i) to enter into this Agreement; and (ii) to carry out the other
transactions and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement by PNV has been duly authorized by all necessary action of PNV. This
Agreement and each of the other documents to be executed and delivered by PNV
pursuant to this Agreement have been duly executed and delivered by PNV and are
the valid and binding obligations of PNV enforceable in accordance with their
respective terms, subject only as to enforceability affected by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally and by
general equitable principles. The execution, delivery and performance of this
Agreement and the other documents to be executed, delivered and performed by PNV
pursuant to this Agreement will not: (i) conflict with or violate any provision
of PNV's organizational documents, or any law, ordinance or regulation or any
decree or order of any court or administrative or other governmental body which
is either applicable to, binding upon or enforceable against PNV; or (ii) result
in any breach of or default under or cause the
-9-
<PAGE> 10
acceleration of performance of any mortgage, contract, agreement, indenture or
other instrument which is either binding upon or enforceable against PNV.
(c) PNV is not required to obtain the approval, consent
or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of PNV set forth in this Agreement or in any of
the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
12. Representations and Warranties of Operator.
(a) Operator is a corporation duly organized, validly
existing and in good standing under the laws of Pennsylvania and has full power
and authority: (i) to enter into this Agreement; and (ii) to carry out the other
transactions and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement by Operator has been duly authorized by all necessary action of
Operator. This Agreement and each of the other documents to be executed and
delivered by Operator pursuant to this Agreement have been duly executed and
delivered by Operator and are the valid and binding obligations of Operator
enforceable in accordance with their respective terms, subject only as to
enforceability affected by bankruptcy, insolvency or similar laws affecting the
rights of creditors generally and by general equitable principles. The
execution, delivery and performance of this Agreement and the other documents to
be executed, delivered and performed by Operator pursuant to this Agreement will
not: (i) conflict with or violate any provision of Operator's organizational
documents, or any law, ordinance or regulation or any decree or order of any
court or administrative or other governmental body which is either applicable
to, binding upon or enforceable against Operator; or (ii) result in any breach
of or default under or cause the acceleration of performance of any mortgage,
contract, agreement, indenture or other instrument which is either binding upon
or enforceable against Operator.
(c) Operator is not required to obtain the approval,
consent or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of Operator set forth in this Agreement or in any
of the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
-10-
<PAGE> 11
13. Risk of Loss and Insurance; Indemnification.
(a) PNV shall bear the risk of loss and hereby
indemnifies and holds harmless Operator for and agrees to defend Operator from:
(i) damage to or destruction of the PNV Equipment and the System installed at
each Truckstop, except as provided in Section 13(b); and (ii) injury to persons
or damage to property arising from the installation, operation or repair of the
PNV Equipment and the System (except to the extent such damage is occasioned by
the gross negligence or willful misconduct of Operator, its employees,
contractors or agents, but not its customers).
(b) Operator shall be responsible for the maintenance,
repair or replacement of the PNV Equipment resulting from damage or destruction
caused by the gross negligence or willful misconduct of the Operator, its
employees, contractors or agents, but not its customers. Operator shall use its
best efforts to orient its employees or contractors providing snow removal
services to the Truckstops to the location of the PNV Equipment. Notwithstanding
the foregoing, PNV specifically acknowledges and agrees that damage may occur
during snow removal operations and further agrees that PNV shall remain fully
responsible for any repair or replacement of the PNV Equipment required because
of damage or destruction caused during snow removal operations. Operator shall
have no responsibility for damage to, or destruction of, the PNV Equipment
during or incident to snow removal operations, whether or not resulting from the
negligence of Operator or Operator's contractors or agents.
(c) Both Operator and PNV shall maintain during the Term
of this Agreement (or any renewal term), at their sole cost and expense,
comprehensive public liability insurance in the minimum amount of $1,000,000
providing coverage at each Truckstop at which the Services are provided against
any claims relating to the operation or use of the System or the sale or
provision of the Services and shall ensure that each Party is named as an
additional insured in respect of such insurance or is otherwise covered as its
interest may appear.
14. Force Majeure. Neither party shall have any liability for the
failure to perform or a delay in performing any of its obligations if such
failure or delay is the result of any legal restriction, labor dispute, strike,
boycott, flood, fire, public emergency, revolution, insurrection, riot, war,
unavoidable mechanical failure, interruption in the supply of electrical power
or any other cause beyond the control of any party acting in a reasonable
business-like manner, whether similar or dissimilar to the causes enumerated
above. In the event performance becomes impossible and this Agreement is
terminated at any or all of the Truckstops pursuant to the provisions of this
paragraph, PNV shall remove the Equipment at each Truckstop so affected pursuant
to the provisions of Section 3(b) of this Agreement.
-11-
<PAGE> 12
15. Assignment.
(a) Operator may sell, assign, transfer or otherwise
dispose of its interest in one or more of the Truckstops (through a change of
control or otherwise) provided that the acquiror of such interest or assets
shall assume the Operator's rights and obligations hereunder and shall be bound
by the terms of this Agreement, in which case, PNV shall recognize the acquiror
of such Truckstop as its Operator for purposes of this Agreement.
(b) PNV may pledge its interest in this Agreement to any
party, including without limitation, to any bank, recognized lending or leasing
institution or investor as collateral. PNV may sell, assign, transfer or
otherwise dispose of its interest in this Agreement provided that said acquiror
shall assume all of PNV's rights and obligations hereunder and shall be bound by
the terms of this Agreement.
16. Breach. In the event that either party shall fail in any
material respect to perform any obligation under this Agreement, the other party
may in writing notify the non-performing party that such failure constitutes a
breach. If the breach is not remedied or cured within thirty (30) days following
receipt of the notice of breach, without limiting any other remedy which may be
available, the non-breaching party may terminate this Agreement by notice to the
breaching party.
17. Ownership and Confidentiality. Operator recognizes and agrees
that PNV shall, during the term of this Agreement and thereafter, retain sole
ownership of the System and the PNV Equipment. Operator recognizes the
proprietary nature of the concept and the design of the System, the PNV
Equipment and the Services. Accordingly, Operator agrees to maintain and cause
each of its employees and agents to maintain and keep strictly confidential all
confidential information that it obtains or receives in conjunction with the
System, the PNV Equipment and the Services. Operator further agrees that the
"Park N' View" name and logo shall be and remain the property of PNV and all
references by Operator to the System or the Services shall incorporate and/or
refer to PNV by its full name (Park N' View), whether in literature, electronic
or print displays, articles, advertising, billboards, banners or otherwise. The
name, Park 'N View, is, or will be, a registered service mark of PNV and to the
extent required by PNV, Operator shall execute a no cost limited license
agreement for the use of such service mark.
-12-
<PAGE> 13
18. General Provisions.
(a) Notices. All notices required or permitted hereunder
shall be in writing and, may either be delivered by overnight courier,
transmitted by facsimile, or delivered by the United States Mail, postage
prepaid, addressed as follows:
To PNV: Ian Williams
President
Park 'N View, Inc.
3403 N.W. 55th Street
Building #10
Ft. Lauderdale, Florida 33309
Fax Number: (305) 730-2298
With a copy to: James M. O'Connell, Esq.
Kilpatrick Stockton, L.L.P.
4101 Lake Boone Trail, Suite 400
Raleigh, North Carolina 27607
Fax Number: (919) 420-1800
To Operator: Paul Rogers
Executive Vice President
Carlisle Texaco Travel Plaza
7029 Carlisle Pike
Carlisle, PA 17013
Fax Number: (717) 691-7705
With a copy to: Richard L. Grubb, Esquire
Barley, Snyder, Senft & Cohen
126 East King Street
Lancaster, PA 17602-2863
Fax Number: (717) 291-4660
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this Section 18(a).
-13-
<PAGE> 14
(b) Expenses. Each party agrees to pay, without right of
reimbursement from any other party, its costs relating to the preparation of
this Agreement and the performance of its obligations hereunder, including
without limitation, fees and disbursements of counsel, accountants and
consultants employed by such party in connection herewith.
(c) Actions; Further Assurances. Subject to the terms and
conditions of this Agreement, each party agrees to use its best efforts in good
faith to: (i) take or cause to be taken as promptly as practicable all actions
and obligations arising herein; and (ii) do or cause to be done all things that
are within its power to fulfill and comply with its obligations or the
obligations of the other parties to consummate the transactions contemplated
herein.
(d) Press Releases. To the extent practical, PNV and
Operator shall consult with each other as to the form and content of all press
releases and other public disclosures of matters relating to this Agreement, the
System and the Services. Nothing in this section shall prohibit PNV or Operator
from making any disclosure which its legal counsel deems necessary or advisable
to fulfill such party's disclosure obligations under applicable law. To the
extent practical, all public disclosures shall be transmitted by telecopier to
the other party or its counsel prior to publication or dissemination.
(e) Section Headings. The section headings in this
Agreement are for convenience of reference only and shall not be deemed to alter
or affect any provision hereof.
(f) Applicable Law. This Agreement shall be governed by
Florida law except to the extent that a matter relates solely to a Truckstop
outside the state of Florida, in which case it shall be governed by the laws of
the State in which such Truckstop is located.
(g) Litigation; Prevailing Party. If litigation is
brought with regard to this Agreement, the prevailing party shall be entitled to
receive from the non-prevailing party, and the non-prevailing party shall
immediately pay upon demand, all reasonable fees and expenses of counsel of the
prevailing party.
(h) Schedules. The Schedules attached to this Agreement
are integral parts of this Agreement and all references to this Agreement shall
include the Schedules.
(i) Modification. This Agreement shall not be modified or
amended except by an instrument in writing executed by the parties to this
Agreement.
-14-
<PAGE> 15
(j) Successors And Assigns. This Agreement shall apply
to, and be binding upon, the parties and their respective successors and
permitted assigns (as determined under Section 15).
(k) Severability. If any part or sub-part of this
Agreement is found or held to be invalid, that invalidity shall not affect the
enforceability and binding nature of any other part of this Agreement.
(l) Arbitration. Any controversy, dispute or question
arising out of, or in connection with, or in relation to this Agreement or the
interpretation, performance or non-performance or any breach thereof shall be
determined by arbitration conducted in Ft. Lauderdale, Florida in accordance
with the then existing rules of the American Arbitration Association. PNV and
Operator shall each select one arbitrator, and the two arbitrators shall select
a third with the same qualifications. Any decision rendered shall be binding
upon the Parties, however, the arbitrators shall have no authority to grant any
relief that is inconsistent with this Agreement. The expense of arbitration
shall be borne equally by the Parties.
(m) Counterparts. This Agreement may be executed in one
or more counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same instrument.
SIGNATURE PAGE TO FOLLOW
-15-
<PAGE> 16
IN WITNESS WHEREOF, Operator and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
PARK 'N VIEW, INC., a
Delaware corporation
[CORPORATE SEAL]
Attest: By: /s/ Ian Williams
--------------------------------
Ian Williams, President
- ---------------------------------
, Secretary
-----------
ALL AMERICAN PLAZAS, INC.,
a Pennsylvania company
[CORPORATE SEAL]
Attest: By: /s/ Glenn E. Mitstifer
--------------------------------
Glenn E. Mitstifer
- ---------------------------------
, Secretary
-----------
-16-
<PAGE> 17
SCHEDULE 1
LIST OF TRUCKSTOPS OWNED OR OPERATED
BY OPERATOR
Breezewood All American
I-70 & PA Pike Exit 12
P.O. Box 241
Breezewood, PA 15533
Carlisle Texaco Truck Plaza
I-81 Exit 17 & PA Pike Exit 16
7029 Carlisle Pike
Carlisle, PA 17013
Clarks Ferry All American
US 22 & 322
P.O. Box 57
Duncannon, PA 17020
Frystown All American
I-78 Exit 2 & PA Route 645
P.O. Box 302
Bethel, PA 19507-0302
-17-
<PAGE> 18
Milton All American
I-80 Exit 32
P.O. Box 359
Milton, PA 17847
Carlisle All American
1201 Harrisburg Pike
P.O. Box 657
Carlisle, PA 17013
Doswell All American
I-95 Exit 98
P.O. Box 2001
Doswell, VA 23047
Pine Grove All American / Subway
I-81 Exit 31 & Route 443
P.O. Box 326
Pine Grove, PA 17963
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<PAGE> 19
SCHEDULE 2
LIST OF CURRENT PNV EQUIPMENT
Current PNV Equipment:
Satellite Dish & Off-air receive antenna
Processing [head-end] equipment
Telephone PBX switch and operator console
Distribution cables
Parking lot plug-in boxes
Cable TV "billing" computer and software
Prepaid [debit] card dispenser
Voice-mail service
-19-
<PAGE> 20
SCHEDULE 3
LIST OF CURRENT PROGRAMMING SCHEDULE
Current Programming Schedule:
<TABLE>
<CAPTION>
================================================================================
Channel # Program
- --------------------------------------------------------------------------------
<S> <C>
2 ARTS & ENTERTAINMENT
- --------------------------------------------------------------------------------
3 DISCOVERY
- --------------------------------------------------------------------------------
4 ESPN II
- --------------------------------------------------------------------------------
5 WGN
- --------------------------------------------------------------------------------
6 HBO
- --------------------------------------------------------------------------------
7 AMC
- --------------------------------------------------------------------------------
8 NBC
- --------------------------------------------------------------------------------
9 ESPN
- --------------------------------------------------------------------------------
10 PREVUE
- --------------------------------------------------------------------------------
11 TNN
- --------------------------------------------------------------------------------
12 CNN
- --------------------------------------------------------------------------------
13 ABC
- --------------------------------------------------------------------------------
14 FUTURE SERVICE
- --------------------------------------------------------------------------------
15 USA
- --------------------------------------------------------------------------------
16 FOX
- --------------------------------------------------------------------------------
17 CBS
- --------------------------------------------------------------------------------
18 WTBS
- --------------------------------------------------------------------------------
19 US XPRESS Power Channel
- --------------------------------------------------------------------------------
20 VCR II
- --------------------------------------------------------------------------------
21 VCR III
- --------------------------------------------------------------------------------
22 VCR IV
================================================================================
</TABLE>
-20-
<PAGE> 21
SCHEDULE 4
LIST OF CURRENT TELEPHONE SERVICES
Current Telephone Services:
1-800 calls
Local calls
Operator services
Direct call back to stall # (automated)
Message waiting
Wake-up calls (automated)
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<PAGE> 22
AMENDMENT TO
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS AMENDMENT TO THAT CERTAIN CABLE TELEVISION AND TELEPHONE SERVICE
AGREEMENT (this "Amendment") is entered into effective as of the 27th day of
January, 1998, by and between Park 'N View, Inc. ("PNV") and All American
Plazas, Inc. ("Operator").
WHEREAS, PNV and Operator have entered into that certain Cable
Television and Telephone Services Agreement dated February 7, 1997 (the
"Original Agreement"). Unless otherwise defined in this Amendment, defined terms
contained herein have the meaning ascribed to them in the Original Agreement;
WHEREAS, PNV now offers additional services to truckdrivers
(hereinafter referred to as the "New PNV Services" which together with the
Services as defined in the Original Agreement are collectively referred to as
the PNV Services) and PNV has developed additional sales programs (the "Power
Plan") to sell the PNV Services to truckdrivers;
WHEREAS, the Original Agreement did not address the allocation, between
PNV and the Operator, of the revenues or profits derived from the New PNV
Services or the Power Plan;
WHEREAS, PNV and Operator (collectively the "Parties") desire to
formally amend the Original Agreement to implement the following changes.
1. All revenues and profits derived from the sale of the PNV
Services shall, during the Term of the Original Agreement (and any renewed
term), be allocated between Operator and PNV as set forth on Schedule A attached
hereto.
2. All other terms and provisions of the Original Agreement shall
remain in full force and effect. The Parties acknowledge and agree that if PNV
provides additional services in the future, the revenue and profit allocations
for such services shall be agreed to by the Parties in the form of a letter
agreement which shall constitute an amendment to the Original Agreement.
-22-
<PAGE> 23
IN WITNESS WHEREOF, Operator and PNV have caused this Amendment to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
ALL AMERICAN PLAZAS, INC. PARK 'N VIEW, Inc.,
a Delaware Corporation
By: /s/ Glenn E. Mitstifer By: /s/ Ian Williams
------------------------------- --------------------------------
Glenn E. Mitstifer Ian Williams, President
-23-
<PAGE> 24
SCHEDULE A
AMENDMENT TO CABLE TELEVISION
AND TELEPHONE SERVICE AGREEMENT
<TABLE>
<CAPTION>
DESCRIPTION OF SERVICE OR SALE OPERATOR'S PORTION
------------------------------ ------------------
<S> <C>
A. Gross Receipts Based Programs
-----------------------------
1. Gross Receipts* from the sale of monthly and 35% for first five (5) years of the Term;
daily memberships and other services from the 40% for second five (5) years of the Term
vending machine at each of Operator's Truckstop.
2. Gross Receipts* from the sale of Power 35% for first month of service and 10% for each
Plans at each of Operator's Truckstop. additional month of service under Power Plan
3. Gross Receipts* from the sale of 10% of each months receipts will be placed in a
memberships by telemarketing staff. pool and allocated among all Truckstops based
upon the number of wired stalls at each Truckstop.
4. Gross Receipts** from sales to Fleets. 10% of each months receipts will be placed in a
pool and allocated among all Truckstops based
upon the number of wired stalls at each Truckstop.
B. Net Profit Based Programs
-------------------------
1. Net Profits*** derived from Advertising. 50%
2. Net Profits*** derived from Pay Per View. 50%
3. Net Profits*** derived from sale of long 35%
distance phone time.
</TABLE>
* Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the Services less
the cost of 60 free minutes of phone time and applicable taxes. Gross
Receipts shall not include any revenue received by PNV or the Operator for
services listed under Net Profit Based Programs above.
** Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the Services less
the cost of 60 free minutes of phone time, direct sales commissions and
applicable taxes. Gross Receipts shall not include any revenue received by
PNV or the Operator for services listed under Net Profit Based Programs
above.
*** Net Profits shall mean the aggregate gross revenue collected by PNV or
Operator less Directly Related Expenses. Directly Related Expenses shall
mean all direct costs and expenses incurred by PNV with respect to the: (i)
acquisition and installation of the equipment necessary to provide
advertising, Pay-Per-View or long distance phone time over the System; (ii)
sale, promotion and production of advertising, Pay-Per-View or long distance
phone time; (iii) salaries and commissions paid to and expenses incurred by
individuals or entities which sell advertising, Pay-Per-View or long
distance phone time; (iv) fees paid to pay-per-view programmers; and (v)
fees paid or costs incurred to provide long distance phone time. Directly
Related Expenses shall not include: (i) allocations of corporate overhead
(other than the advertising department); (ii) depreciation of the PNV
Equipment, other than the equipment necessary to provide advertising,
Pay-Per-View or long distance phone time over the System; or (iii) other
costs and expenses which are not directly related to the sale and promotion
of advertising, Pay-Per-View or long distance phone time over the System.
-24-
<PAGE> 1
EXHIBIT 10.12
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT (this
"Agreement") is entered into this 12th day of September, 1997, by and between
Park 'N View, Inc., a Delaware corporation ("PNV"), with its headquarters at
3403 N.W. 55th Street, Building #10, Ft. Lauderdale, Florida and Petro Stopping
Centers, L.P., a Delaware limited partnership ("Operator"), with its
headquarters at 6080 Surety Drive, El Paso, TX 79905.
WHEREAS, Operator currently owns or operates (or has entered into
franchise agreements with certain entities entitling them to operate)
full-service travel plaza truckstops which are located at the addresses listed
on Schedules 1A and 1B hereto; all of the aforesaid hereinafter individually
being referred to as a "Truckstop" and collectively being referred to as either
the "Truckstops" or the "Petro Network"; and
WHEREAS, PNV has designed and developed the concept and equipment ("the
System") to (i) enable truck drivers to: (a) receive and/or have access to cable
television services and telecommunications services; and (b) provide such truck
drivers programming consisting of video and audio services, and telephone, fax
or other data services while remaining in their vehicles parked at the
Truckstop; and (ii) sell advertising to be broadcast over the System (the
specific services set forth in (i) and (ii) above are hereinafter collectively
referred to as the "Services"); and
WHEREAS, Operator desires to engage PNV to install the System and
provide the Services at (i) the Initial Sites (as defined in Section 1(a)); and
(ii) perhaps at all of the additional Truckstops in the Petro Network,
contingent upon Petro electing to have PNV install the System and provide the
Services at such Truckstops pursuant to Section 1 (b).
NOW THEREFORE, in consideration of the mutual promises and covenants
and subject to the terms and conditions contained herein, Operator and PNV
(hereinafter collectively being referred to as the "Parties"), intending to be
legally bound, hereby mutually agree as follows:
1. Purpose.
(a) Installation at Initial Sites. The Parties hereby
agree that PNV shall, within sixty (60) days of the date of this Agreement,
commence installation of the System at Operator's Truckstops located at (i) 3181
Bank Head Highway, I-285 West, Exit 8, Atlanta, Georgia and I-10; (ii) 1295
Horizon Boulevard, El Paso, Texas; and (iii) 26416 West Service Road,
Perrysburg, Ohio (collectively the "Initial Sites"). PNV shall complete
installation of the System and commence provision of the Services at the Initial
Sites within 60 days of
<PAGE> 2
commencement of installation subject to Operator's observance and performance of
its duties and obligations under this Agreement and Operator's reasonable
cooperation with PNV to facilitate the installation. PNV shall in all instances
install the PNV Equipment in a workmanlike and efficient manner, with the least
interference with the operation of the Truckstop as is possible in the best
efforts of PNV. Without limiting the foregoing, PNV agrees that during the
course of installation of the System at the Initial Sites, PNV shall: (i) not
cause significant disruption to the traffic flow or the availability of parking
spaces in the parking lots of the Initial Sites; and (ii) install the
underground wire in the parking lots in stages in order to minimize the number
of parking spaces which will be inaccessible at any one time. In no event shall
any single row of parking spaces remain completely inaccessible for more than
two (2) days. Notwithstanding the foregoing, the Parties agree that while PNV
shall use its best efforts to complete the installation of the System at the
Initial Sites within the foregoing time frame, PNV's obligations to install the
System at a particular Truckstop shall be subject to: (i) completion of
satisfactory engineering and environmental surveys at such Truckstop; (ii)
confirmation that no part of the System crosses a public right of way adjacent
to such Truckstop; (iii) receipt from Operator of all requested maps, blue
prints and other relevant information relating to such Truckstop on a timely
basis; and (iv) PNV being unable to complete any such installation within said
time because of any of the following: floods; civil unrest; acts of God; war;
governmental interference or embargoes; labor strikes; failure to supply fuel,
power, materials or supplies; transportation delays by third parties; or any
other cause (whether or not similar to those described in this Section 1) beyond
the control of PNV; so long as in any case PNV uses its best efforts to
recommence its performance of the installation whenever and to whatever extent
possible without delay and such nonperformance does not otherwise constitute a
breach of this Agreement or grounds for termination of this Agreement. In the
event PNV fails to complete any installation within a reasonable period of time
after the expiration of the aforesaid time frame, Operator may elect to
terminate this Agreement, in whole or as to the particular Truckstop or
Truckstops in question. Operator may elect to extend the term of this Agreement
as to the affected Truckstop for a period equal to the delay in completion of
the installation.
(b) Installation at Additional Truckstops. Within ninety
(90) days of the completion of the installation of the System and commencement
of the Services at all of the Initial Sites, Petro shall provide PNV with
written notice (the "Written Notice") as to whether Petro elects to have PNV
install the System and provide the Services at all of the additional Truckstops
listed on Schedules 1A and 1B. If Petro elects not to have PNV install the
System and provide the Services at the additional Truckstops listed on Schedules
1A and 1B, the Parties will continue to operate the Initial Sites pursuant to
the terms of this Agreement. If Petro elects to have PNV install the System and
provide the Services at all of the additional Truckstops listed on Schedules 1A
and 1B, PNV shall, subject to Operator's observance and performance of its
duties and obligations under this Agreement and Operator's reasonable
cooperation with PNV to facilitate the installation: (i) complete the
installation of the System and commence provision of the Services at the
Truckstops listed on Schedule 1A within
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<PAGE> 3
eighteen (18) months of the date of receipt of the Written Notice from Petro;
and (ii) complete the installation of the System and commence provision of the
Services at the Truckstops listed on Schedule 1B subject to the terms of this
Agreement, including Section 1(c). PNV shall, in all instances, install the PNV
Equipment in a workmanlike and efficient manner, with the least interference
possible with the operation of each such Truckstop in the best efforts of PNV.
Without limiting the foregoing, during the course of installation of the System
at each Truckstop, PNV shall not cause significant disruption to the traffic
flow or the availability of parking spaces in the parking lots at each
Truckstop. PNV shall install the underground wire in the parking lots in stages
in order to minimize the number of parking spaces which will be inaccessible at
any one time. In no event shall any single row of parking spaces remain
completely inaccessible for more than two (2) days. Notwithstanding the
foregoing, the Parties agree that while PNV shall use its best efforts to
complete the installation of the System at all of the Truckstops constituting
the Petro Network within the foregoing time frame, PNV's obligations to install
the System at a particular Truckstop shall be subject to: (i) completion of
satisfactory engineering and environmental surveys at such Truckstop; (ii)
confirmation that no part of the System crosses a public right of way adjacent
to such Truckstop; (iii) receipt from Operator of all requested maps, blue
prints and other relevant information relating to such Truckstop on a timely
basis; and (iv) PNV being unable to complete any such installation within said
time because of any of the following: floods; civil unrest; acts of God; war;
governmental interference or embargoes; labor strikes; failure to supply fuel,
power, materials or supplies; transportation delays by third parties; or any
other cause (whether or not similar to those described in this Section 1) beyond
the control of PNV; so long as in any case PNV uses its best efforts to
recommence its performance of the installation whenever and to whatever extent
possible without delay and such nonperformance does not otherwise constitute a
breach of this Agreement or grounds for termination of this Agreement. In the
event PNV fails to complete any installation within a reasonable period of time
after the expiration of the aforesaid time frame, Operator may elect to
terminate this Agreement, in whole or as to the particular Truckstop or
Truckstops in question. Operator may elect to extend the term of this Agreement
as to the affected Truckstop for a period equal to the delay in completion of
the installation.
(c) Installation at Franchisee Sites. PNV acknowledges
and agrees that, upon receipt of Written Notice from Operator to extend the
System and the Services to the Truckstops listed on Schedule 1B, which are
operated by a franchisee of Operator (the "Franchisee"), other than Highway
Services Ventures, Inc. or Welsh, Inc. (both of which have already entered into
agreements with PNV), PNV shall, subject to the Franchisee entering into an
agreement with PNV substantially identical to this Agreement (and as to which
Operator shall have consented to writing), install the System and provide the
Services to the Truckstops owned or operated by the Franchisee (which are listed
on Schedule 1B) within twelve (12) months of entering into an agreement with the
Franchisee. Notwithstanding the foregoing, the agreement with any Franchisee may
be for a term of not to exceed 10 years and need not contain the financial
milestones set forth in Section 16(b).
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<PAGE> 4
2. Installation of Equipment.
(a) PNV shall, at its sole cost and expense, and in the
manner herein provided, install and continually maintain at each Truckstop at
which the Services are to be provided all equipment necessary to provide the
Services including the following:
(i) equipment necessary for the provision and
distribution of the Services.
(ii) outlet ports to parking spaces to provide
users with access to the Services.
(iii) such other equipment or services as may be
agreed upon by PNV and Operator, including, without limitation, the
provision of AC power to parking spaces at certain of the Truckstops.
Prior to installing such additional equipment or providing such
additional services, PNV and Operator shall mutually agree to a
reasonable adjustment to the profit allocations set forth in Section 8
in order to reflect PNV's differing profit margins and increased
capital costs with respect to the installation of such additional
equipment and the provision of such additional services at the
Truckstops.
All of the foregoing equipment as currently used by PNV is described on Schedule
2 hereto and is hereinafter, together with any additions or deletions to said
equipment, collectively referred to as the "PNV Equipment". PNV may make
additions to and deletions from the PNV Equipment to be installed at each
Truckstop for the purposes of upgrading and repairing the System. PNV shall
provide the Services to at least 75% of the truck parking spaces located at each
Truckstop at which it installs the System. The Parties shall mutually determine
the precise number and location of the truck parking spaces at which the
Services shall be provided, taking into account such factors as the cost of
construction and implementation, the layout of the parking facilities, the usage
of particular parking rows to drop trailers and such other factors as the
Parties may deem relevant. After installation of the System at a Truckstop, PNV
may not expand the System to provide the Services to additional truck parking
spaces located at or added to such Truckstop without the prior written consent
of Operator.
(b) Operator shall make available to PNV a sufficient
area in which to install the PNV Equipment including: (i) such area as is
required for the installation of satellite dish(es); (ii) a secured
air-conditioned interior area of approximately 50 square feet for the
installation of the headend equipment and the telephone and related monitoring
equipment; and (iii) an area at the fuel desk and/or the travel store for
installation of the equipment required for activation of the Services
(hereinafter collectively referred to as the "Equipment Area"). PNV shall be
entitled to have continued access to the Equipment Area and all parking areas
for purposes of installing, repairing and monitoring the PNV Equipment, the
System and the
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<PAGE> 5
Services. PNV may install and maintain in each Truckstop: (i) a bank of six (6)
television sets to be located in the hallway of the main building for purposes
of broadcasting, programming and advertising to solicit truckdrivers as
customers; (ii) a permanent message board below such bank of television sets;
(iii) three additional television sets for purposes of broadcasting, programming
and advertising, two of which shall be located in the diesel fuel island store
and one in the mall area near the telephones. Without the prior written consent
of Operator, PNV shall not be entitled to display any other banners or signs at
the Truckstops, other than newsletters, pamphlets, flyers and other printed
materials (the placement of which shall be agreed to by the Parties). If any
such television sets are in need of maintenance or repair, unless extenuating
circumstances exist, PNV shall within forty-eight (48) hours, dispatch a
designated repair technician to make the necessary repairs at PNV's cost.
(c) Prior to commencement of construction at any
Truckstop, PNV shall obtain Operator's approval of the methods and materials to
be used by PNV with respect to the installation of the System. PNV will repair
any damage to the Truckstop which is caused by PNV. However, PNV shall not be
responsible for any existing defects or deficiencies or the normal wear and tear
to the parking lot or the Truckstop. PNV shall not permit any contractors or
subcontractors, retained by or providing services on behalf of PNV, to place any
liens on any Truckstop for work performed pursuant to the installation,
operation or maintenance of the System.
(d) PNV shall install the PNV Equipment in a workmanlike
and efficient manner, without unreasonable interference with the operation of
each Truckstop. PNV shall on a timely basis secure, and continuously maintain in
full force and effect, all licenses, permits and approvals required by
governmental authorities with respect to the installation, operation and
maintenance of the System and providing the Services. Upon request by PNV,
Operator shall provide PNV with reasonable assistance (at PNV's expense) in
obtaining any such licenses, permits, or approvals.
(e) Within thirty (30) days of completion of the
installation of the System at a Truckstop, PNV shall provide Operator with
written notice of the date on which the sale of the Services shall commence at
each such Truckstop (hereinafter referred to as the "Truckstop Service Date").
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<PAGE> 6
3. Rights and Duties of The Parties With Respect To The PNV
Equipment.
(a) Notwithstanding the fact that certain parts of the
PNV Equipment may be affixed to each Truckstop, the PNV Equipment shall not
become a fixture thereto and shall remain the property of PNV. Operator
acknowledges that the System, the Services and the PNV Equipment and the manner
of its operation and installation are proprietary to PNV. Accordingly, Operator
shall use its reasonable best efforts to insure that all material confidential
information and data concerning the System, the Services and the PNV Equipment
shall not be divulged, and (except in the case of emergency) that access to the
System and the PNV Equipment shall not be given to any person or persons other
than personnel authorized by PNV.
(b) If Operator re-asphalts or changes the layout of the
parking lot of a Truckstop, PNV shall be responsible for removal and
reconnection of the PNV Equipment to the extent necessary to facilitate such
work. Operator shall provide PNV with at least 90 days prior written notice
before commencement of such work. Operator shall make reasonable efforts not to
cause PNV to remove any underground cable pursuant to such work. PNV and
Operator shall share in the cost of the removal and reconnection of the PNV
Equipment as follows: (i) prior to the first anniversary of the Truckstop
Service Date, Operator shall incur 80% of such costs (up to a maximum of
$50,000, with PNV being responsible for the balance of such cost); (ii) prior to
the second anniversary of the Truckstop Service Date, Operator shall incur 75%
of such costs (up to a maximum of $45,000, with PNV being responsible for the
balance of such cost); (iii) prior to the third anniversary of the Truckstop
Service Date, Operator shall incur 70% of such costs (up to a maximum of
$40,000, with PNV being responsible for the balance of such cost); (iv) prior to
the fourth anniversary of the Truckstop Service Date, Operator shall incur 65%
of such costs (up to a maximum of $35,000, with PNV being responsible for the
balance of such cost); (v) prior to the fifth anniversary of the Truckstop
Service Date, Operator shall incur 60% of such costs (up to a maximum of
$30,000, with PNV being responsible for the balance of such cost); (vi) after
the fifth anniversary of the Truckstop Service Date, Operator shall incur 50% of
such costs (up to a maximum of $25,000, with PNV being responsible for the
balance of such cost).
(c) If Operator closes down a Truckstop at which the
System has been installed, this Agreement shall terminate with respect to that
Truckstop but shall remain in full force and effect with respect to all other
Truckstops in the Petro Network then subject to this Agreement.
(d) Upon the termination of this Agreement, in whole or
as to any individual Truckstop, for any reason, PNV shall either: (i) remove, at
its sole cost and expense, any or all of the PNV Equipment from each affected
Truckstop; or (ii) sell or lease it to the Operator or its successors, nominees
or assignees if, in response to PNV's offer to sell, such parties are agreeable
to the purchase. If the System is to be removed, PNV shall restore each affected
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<PAGE> 7
Truckstop as near as reasonably possible to the condition of such premises prior
to the installation of the System, normal wear and tear excepted, provided
however, PNV shall not remove any underground cables.
4. Programming and Telecommunications Services to Be Provided.
(a) PNV shall make the Services available on the System
as follows:
(i) PNV shall source and deliver a programming
package consisting of a minimum of eleven (11) channels of
entertainment programming. PNV shall pay the cost of all such
programming. The current programming schedule to be broadcast by PNV is
as set forth on Schedule 3. PNV may make changes to the programming
schedule from time to time, provided that, such changes are limited to
the substitution or addition of quality programming comparable to that
currently provided by PNV. Any other changes to the programming
schedule will require Operator's prior written consent.
(ii) In addition to the eleven (11) channel
entertainment lineup, there shall be other channels which shall be used
to provide a programming schedule and advertising. Net profits (after
payment of all "Directly Related Expenses" as defined in Section 8(b)
below) generated by advertising on such channels at each Truckstop
shall be divided as follows: 50% to PNV and 50% to Operator pursuant to
Section 8(c). All advertising revenue and other revenues and
commissions generated by these channels shall not be considered "Gross
Receipts" (as defined in Section 8(a)) for purposes of the Agreement.
(iii) PNV may, with the consent of Operator,
provide pay-per-view or other non-traditional cable channels or
services as part of the Services. The net profits (after payment of all
Directly Related Expenses) from such additional channels or services
shall be divided as follows: 50% to PNV and 50% to Operator. All
revenues and commissions generated by these channels shall not be
considered Gross Receipts for purposes of the Agreement.
(iv) PNV shall also provide telephone service to
certain parking slots at each Truckstop. The current telephone services
offered by PNV are set forth on Schedule 4. The fee schedules
established for the Services include a charge relating to phone usage
and such fees shall be considered Gross Receipts for purposes of this
Agreement. PNV shall, with Operator's prior written consent, have the
right to determine and make changes to the specific types of
telecommunication services provided to a particular Truckstop from time
to time, provided that, Operator shall have the right to offer drivers
any other telephone or telecommunication services in the parking lot
that is not transmitted by hard wire. If the Parties mutually agree to
permit
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<PAGE> 8
PNV to provide phone service to areas of the Truckstops, other than the
parking lot, the Parties shall mutually agree as to the profit
allocations with respect to such Services. The nominated long distance
carrier will be AT&T unless the parties mutually agreed to change such
carrier and/or the other services.
5. Operation of the System and Sale and Promotion of the
Services.
(a) Initially, upon installation of the System at any
Truckstop, PNV shall train the Operator and its designated employees with
respect to the maintenance and operation of the System and the promotion of the
Services. PNV shall provide follow up training for Operator's personnel during
working hours with respect to the promotion of the Services, the operation of
the System, and the maintenance of the PNV Equipment as may be reasonably
requested by Operator from time to time. PNV shall, with the prior written
consent of Operator, be entitled to have its own employees or agents engage in
the promotion of the Services at any Truckstop, provided that PNV's employees
and agents shall not interfere with the operation of said Truckstop.
(b) Operator shall use its reasonable best efforts to
insure that the management, fuel desk employees and other personnel promote the
use of the Services by the truck drivers frequenting the Truckstop as mutually
agreed to prior to installation of the System. The Parties may mutually agree
from time to time to implement sales incentive programs for the fuel desk
employees and other personnel to promote the sale of the Services. The Parties
may share the cost of implementing and funding any such mutually agreed upon
incentive programs.
(c) Operator may develop and supply to PNV, at no cost to
PNV, certain advertising and promotional materials relating to the Petro
truckstop system to be run on a single dedicated channel to be made available to
Operator at no charge. Additional channels may be provided for Operator's use at
mutually agreed upon charges. PNV may also develop and supply to Operator, at no
cost to Operator, certain advertising and promotional materials relating to the
System and the sale of the Services. Subject to the terms of Section 2(b) and
each Party's approval and consent, Operator and PNV shall make reasonable
efforts to utilize and display such materials at each Truckstop in order to
promote the sale and promotion of the Services.
6. Maintenance of the PNV Equipment and the System.
(a) PNV shall maintain a good quality signal and
reception through the System comparable to the signal and reception supplied for
regular television programming and telecommunications services to home
consumers.
(b) The day to day maintenance of the System shall be
handled as follows:
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<PAGE> 9
(i) Operator's trained staff members shall: (i) replace
failed connecting drop cables and accessories with equipment to be
furnished by PNV at its cost; (ii) maintain the cable and phone boxes
in the outside hookups in proper operating order, including cleaning
and removal of debris (i.e. oil, dirt, ice, snow, etc.); and (iii)
replace cable and phone connection outlets in the outside hookups with
equipment furnished by PNV at its cost.
(ii) If a mechanical problem arises other than through a
failed connecting cable, accessory or television set, Operator shall
contact PNV by telephone at PNV's office. Unless extenuating
circumstances exist, PNV shall, within forty-eight (48) hours, either
authorize Operator to contact a designated repair technician or
dispatch a designated repair technician to make the necessary repairs
to the System. Charges for repairs will be billed directly to PNV.
7. Term.
(a) Subject to Section 16, the term of this Agreement
shall be for a period of nine (9) years commencing on the date of this Agreement
and terminating on the ninth anniversary of the date of this Agreement (the
"Term"). Upon the expiration of the Term, PNV and Operator may mutually agree to
an additional term.
8. Fees.
(a) The monthly Gross Receipts derived from sales at each
card dispensing machine located at each Truckstop shall be allocated between PNV
and Operator as follows: (i) during the first five years of the Term, sixty-five
percent (65%) to PNV and thirty-five percent (35%) to Operator; and (ii) during
the last four years of the Term, sixty percent (60%) to PNV and forty percent
(40%) to Operator.
For these purposes, "Gross Receipts" for any period shall mean the
aggregate gross amount collected by the Operator, during any calendar month,
from the sale of the Services at the card dispensing machine located at each
truckstop during such period less the amount of taxes, if any, which are
required to be charged to the user of the Services and less any refunds for
faulty service or equipment. Notwithstanding the foregoing, for purposes of this
Agreement, "Gross Receipts" shall not include any revenue received by PNV or the
Operator for: (i) advertising displayed by PNV pursuant to Section 4(a)(ii) or;
(ii) pay-per-view or other additional channels or services provided as part of
the Services pursuant to Section 4(a)(iii).
(b) Operator shall also be entitled to receive a portion
of the gross revenues received by Park 'N View from sales to fleets ("Fleet
Revenues"). The Operator's portion of the Fleet Revenues shall be determined by
multiplying thirty-five percent 35% of the Fleet
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<PAGE> 10
Revenues by a fraction, the numerator of which is the total number of wired
stalls at the Operator's Truckstops and the denominator of which is the total
number of wired stalls in the PNV network.
(c) Net profits (after payment of all Directly Related
Expenses) generated by the services provided pursuant to Sections 4(a)(ii) and
4(a)(iii) shall be divided as follows: 50% to PNV and 50% to Operator. For these
purposes, "Directly Related Expenses" shall mean all direct costs and expenses
incurred by PNV with respect to the: (i) acquisition and installation of the
equipment necessary to transmit advertising over the System, including, without
limitation, loop tape players and loop tapes; (ii) sale, promotion and
production of advertising programs; (iii) salaries and commissions paid to and
expenses incurred by individuals or entities which sell advertising; and (iv)
fees paid to pay-per-view programmers. Directly Related Expenses shall not
include: (i) allocations of corporate overhead (other than the advertising
department); (ii) depreciation of the PNV Equipment, other than the equipment
necessary to transmit advertising over the System; or (iii) other costs and
expenses which are not directly related to the sale and promotion of advertising
over the System.
(d) PNV will provide Operator, free of charge, use of one
(1) channel at each Truckstop at which the System is installed. Operator shall
be responsible for providing the content and material to be broadcast over such
channel, provided that, Operator shall not broadcast or advertise over such
channel any services which compete with the Services provided by PNV (including,
but not limited to, satellite dish television or wireless telephone services).
(e) All amounts due to Operator hereunder shall be paid
by PNV to Operator by check on or before the twentieth (20th) day of the month
following the month in which PNV receives such revenues. The books and records
of the Operator and PNV pertinent to the Fleet Revenues, Gross Receipts,
Directly Related Expenses, and other revenue and taxes received with respect to
the sale of the Services shall be open for inspection and audit by an authorized
representative of either Operator or PNV upon five (5) business days notice to
said party. If any such audit shows an error of 5% or more with respect to the
amount to be paid to Operator, PNV shall bear the cost of such audit.
9. Exclusivity.
(a) PNV shall, subject to PNV's performance and observance of its
obligations under this Agreement and Operator's rights of termination provided
for in Sections 1 and 16, for a period of nine (9) years from the date of this
Agreement, have the exclusive right to install the System and provide the
Services to the Initial Truckstops. Furthermore, if, pursuant to Section 1 (b),
Petro elects to have PNV install the System at the additional Truckstops in the
Petro Network, PNV shall, subject to PNV's performance and observance of its
obligations under this Agreement and Operator's rights of termination provided
for in
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<PAGE> 11
Sections 1 and 16, for a period of nine (9) years from the date of this
Agreement, have the right to install the System at all Truckstops listed on
Schedule 1A. Notwithstanding the foregoing, the right of exclusivity granted
hereunder to PNV with respect to telecommunication services is limited solely to
telecommunication services provided by means of a system and equipment of the
same kind as the PNV System (i.e. the delivery of phone service by hard wire to
parking stalls), it being agreed that Operator may install or agree to have
installed competing telecommunication services to the Truckstops which are
different in their technology, systems or equipment from the PNV System.
(b) PNV shall during the Term of this Agreement have: (i)
the non-exclusive right to offer to Operator at competitive prices coaxial and
phone cables for use with the Services provided by PNV; and (ii) the
nonexclusive right to offer to Operator television, telephone and cable
accessories and adapters for use with the Services. After purchasing the
foregoing items from PNV, Operator shall be entitled to resell such items to its
customers and retain all profits from such resales.
10. Rights Granted to PNV. Operator hereby grants and conveys to
PNV, during the Term of this Agreement, reasonable access to the premises of
each Truckstop at which the System is installed for purposes of installing,
maintaining, repairing, replacing and operating the System and providing the
Services. If PNV is denied access to any portions of the promises necessary for
making repairs, the 48 hour period in which such repairs are to be made shall
commence at such time as PNV is granted access to the necessary premises.
11. Representations and Warranties of PNV.
(a) PNV is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power
and authority: (i) to enter into this Agreement; and (ii) to carry out the other
transactions and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement by PNV has been duly authorized by all necessary action of PNV. This
Agreement and each of the other documents to be executed and delivered by PNV
pursuant to this Agreement have been duly executed and delivered by PNV and are
the valid and binding obligations of PNV enforceable in accordance with their
respective terms, subject only as to enforceability affected by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally and by
general equitable principles. The execution, delivery and performance of this
Agreement and the other documents to be executed, delivered and performed by PNV
pursuant to this Agreement will not: (i) conflict with or violate any provision
of PNV's organizational documents, or any law, ordinance or regulation or any
decree or order of any court or administrative or other governmental body which
is either applicable to, binding upon or enforceable against PNV; or (ii) result
in any breach of or default under or cause the
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<PAGE> 12
acceleration of performance of any mortgage, contract, agreement, indenture or
other instrument which is either binding upon or enforceable against PNV.
(c) PNV is not required to obtain the approval, consent
or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of PNV set forth in this Agreement or in any of
the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
12. Representations and Warranties of Operator.
(a) Operator is a limited partnership duly organized,
validly existing and in good standing under the laws of Delaware and has full
power and authority: (i) to enter into this Agreement; and (ii) to carry out the
other transactions and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement by Operator has been duly authorized by all necessary partnership
action of Operator. This Agreement and each of the other documents to be
executed and delivered by Operator pursuant to this Agreement have been duly
executed and delivered by Operator and are the valid and binding obligations of
Operator enforceable in accordance with their respective terms, subject only as
to enforceability affected by bankruptcy, insolvency or similar laws affecting
the rights of creditors generally and by general equitable principles. The
execution, delivery and performance of this Agreement and the other documents to
be executed, delivered and performed by Operator pursuant to this Agreement will
not: (i) conflict with or violate any provision of Operator's Partnership
Agreement, or any law, ordinance or regulation or any decree or order of any
court or administrative or other governmental body which is either applicable
to, binding upon or enforceable against Operator; or (ii) result in any breach
of or default under or cause the acceleration of performance of any mortgage,
contract, agreement, indenture or other instrument which is either binding upon
or enforceable against Operator.
(c) Operator is not required to obtain the approval,
consent or waiver of any other person or entity for the execution, delivery or
performance of this Agreement.
(d) All of the information contained in the
representations and warranties of Operator set forth in this Agreement or in any
of the documents delivered or to be delivered herewith or after the execution
hereof as set forth in any provision of this Agreement is true, accurate and
complete.
-12-
<PAGE> 13
13. Safety, Liability for Loss and Damage; Indemnification;
Insurance.
(a) PNV shall be responsible for initiating, maintaining
and supervising all necessary and appropriate safety precautions, policies and
programs in connection with the installation, operation and maintenance of the
System and provision of the Services at and to each Truckstop and shall be fully
responsible for the safety of and take all steps necessary to prevent damage,
loss and injury to any person or property in connection with such installation,
maintenance and operation of the System. PNV shall be liable for any and all
loss, damage and injury to person or property that in any way relates to,
results from, is based upon or arises in connection with this Agreement or the
subject matter hereof or the installation, operation and maintenance of the
System and provision of the Services to a Truckstop or events occurring in
connection therewith, except where such loss, damage or injury is caused by the
intentional misconduct or wrongdoing of Operator, its employees, contractors or
agents. Operator shall not be liable to PNV or any other party for any act or
omission to act, including acts or omissions to act constituting negligence of
Operator, in connection with this Agreement or the transactions contemplated
hereby or events occurring in connection herewith or therewith, except where
Operator shall be guilty of gross negligence, fraud or intentional wrongdoing or
misconduct. In no event shall Operator, its partners, officers, directors,
employees, agents or affiliates be liable for any special, indirect,
consequential or punitive damages in respect of any theory of liability arising
out of or related to any act or omission to act in connection with this
Agreement or the transactions contemplated hereby or events occurring in
connection therewith.
(b) PNV hereby agrees to indemnify and save and keep
harmless Operator and its partners, officers, directors, employees, agents and
affiliates, from and against any and all liabilities, obligations, losses,
damages, penalties, fines, punitive damages, amounts in settlement, claims,
actions, proceedings, suits, judgments, costs, interest, expenses and
disbursements of any kind and nature whatsoever, including attorneys' fees and
costs (a "Claim") that may be imposed on, incurred by or asserted against any
such indemnified party in any way relating to, resulting from, based upon or
arising out of this Agreement or the transactions contemplated hereby or the
subject matter hereof, including, without limitation, any Claim arising from any
liability in tort (strict or otherwise) or from the active or passive negligence
of any of the foregoing indemnified parties or any breach or violation of any
provision, representation, warranty or covenant of this Agreement by PNV;
provided, however, that PNV shall not be required to indemnify any such party
for any claim against any such party resulting solely from the intentional
misconduct or wrongdoing or gross negligence of such party (unless imputed to
such party by reason of any act or omission of PNV, whether as agent for such
party or otherwise). Without limiting the foregoing, it is agreed that in any
and all claims against Operator by any employee or subcontractor of PNV or any
other party, the indemnification available under this paragraph shall not be
limited in any way by any limitation on the amount or type of damages or
compensation or benefits payable by or on
-13-
<PAGE> 14
behalf of PNV or any subcontractor under any workers' compensation act,
disability act or other employee benefit act.
(c) PNV shall maintain during the Term of this Agreement
(or any renewal term), at its sole cost and expense, comprehensive public
liability insurance in the minimum amount of $1,000,000 providing coverage at
each Truckstop at which the Services are provided against any claims relating to
the operation or use of the System or the sale or provision of the Services and
shall ensure that Petro is named as an additional insured in respect of such
insurance or is otherwise covered as its interest may appear.
14. Force Majeure. Neither party shall have any liability for the
failure to perform or a delay in performing any of its obligations if such
failure or delay is the result of such party being unable to perform because of
civil unrest; acts of God; war; governmental interferences or embargoes; labor
strikes; failure to provide fuel, power, materials or supplies; transportation
delays by third parties; or any other cause (whether or not similar to those
described in this Section 14) beyond the control of the responsible party so
long as in any case PNV uses its best efforts to recommence its performance of
the obligation whenever and to whatever extent possible without delay and such
nonperformance does not otherwise constitute a breach of this Agreement or
grounds for termination of this Agreement.
15. Assignment.
(a) Operator may sell, assign, transfer or otherwise
dispose of its interest in one or more of the Truckstops (through a change of
control or otherwise) provided that either (i) the acquiror of such interest or
assets shall assume the Operator's rights and obligations hereunder and shall be
bound by the terms of this Agreement in which case, PNV shall recognize the
acquiror of such Truckstop as its Operator for purposes of this Agreement and
Operator shall have no further liability, responsibility or duty hereunder; or
(ii) Operator shall provide PNV with payment for PNV's earnings for the
remainder of the Term based on sales prior to such event.
(b) PNV may pledge its interest in this Agreement to any
party, including without limitation, to any bank, recognized lending or leasing
institution or investor as collateral. PNV may sell, assign, transfer or
otherwise dispose of its interest in this Agreement provided that said acquiror
shall assume all of PNV's rights and obligations hereunder and shall be bound by
the terms of this Agreement, provided that, said acquiror shall be deemed to be
in breach of this Agreement, and Operator may terminate this Agreement, subject
to Section 16, if said acquiror does not provide the level of services and
maintenance comparable to that provided by PNV.
-14-
<PAGE> 15
16. Breach; Termination.
(a) In the event that either party shall fail or refuse in any
material respect to perform any obligation under this Agreement, the other party
may in writing notify the non-performing party that such failure or refusal
constitutes a breach of this Agreement. If the breach is not remedied or cured
within thirty (30) days following receipt of the notice of breach, without
limiting any other remedy which may be available, the non-breaching party may
terminate this Agreement by notice to the breaching party. Termination of this
Agreement by a party for breach by the other party is not exclusive of any other
right or remedy the terminating party may have at law or in equity as a result
of such breach. All rights or remedies available to a party, under this
Agreement at law or in equity, may be exercised or pursued cumulatively. If PNV
has knowledge of or discovers that it is in breach of this Agreement, it shall
immediately notify Operator of said breach. In addition, this Agreement shall
terminate automatically if any of the following occur:
(i) the Party shall admit in writing its
inability to pay its debts as they mature, or shall make an assignment
for the benefit of its or any of its creditors;
(ii) proceedings in bankruptcy, or for
reorganization of the Party, or for the readjustment of any of its
debts, under the Bankruptcy Code, as amended, or under any other laws,
whether state or federal, for the relief of insolvent debtors, now or
hereafter existing, shall be commenced by the Party, or shall be
commenced against the Party and shall not be discharged within sixty
(60) days of their commencement; or
(iii) a receiver, custodian or trustee shall be
appointed for the Party or for any substantial part of its assets, or
any proceedings shall be instituted for the dissolution or the full or
partial liquidation of the Party, and such receiver, custodian or
trustee shall not be discharged within sixty (60) days of his
appointment, or such proceedings shall not be discharged within sixty
(60) days of their commencement, or the Party shall discontinue
business or materially change the nature of its business.
(b) If after the third anniversary of the Truckstop
Service Date of any Truckstop at which the System has been installed, the
Operator's portion of the Gross Receipts, Fleets Revenues and Net profits
allocable to such Truckstop pursuant to Sections 8 (a), (b) and (c) do not, in
the aggregate, average at least $1,500 per month during any six month period,
the Operator may terminate this Agreement as it applies to that Truckstop,
provided that, Operator is not in breach of this Agreement and there have been
no material changes in the average total monthly revenues of that Truckstop
during the applicable period and, provided further, that this Agreement will
remain in full force and effect with respect to all other Truckstops then
subject to this Agreement.
17. Ownership and Confidentiality. Operator recognizes and agrees
that PNV shall, during the term of this Agreement and thereafter, retain sole
ownership of the System and the PNV Equipment. Operator recognizes the
proprietary nature of the concept and the design of
-15-
<PAGE> 16
the System, the PNV Equipment and the Services. Accordingly, Operator agrees to
maintain and cause each of its employees and agents to maintain and keep
strictly confidential all confidential information that it obtains or receives
in conjunction with the System, the PNV Equipment and the Services. Operator
further agrees that the "Park N' View" name and logo shall be and remain the
property of PNV and all references by Operator to the System or the Services
shall incorporate and/or refer to PNV by its full name (Park N' View), whether
in literature, electronic or print displays, articles, advertising, billboards,
banners or otherwise. The name, Park 'N View, is, or will be, a registered
service mark of PNV and to the extent required by PNV, Operator shall execute a
no cost limited license agreement for the use of such service mark on terms and
conditions mutually satisfactory to the Parties. The Parties agree to use their
commercially reasonable best efforts to keep in strictest confidence and not to
disclose to any third party the fact that the Term of this Agreement is nine
years as provided in Section 7. Notwithstanding the foregoing, either party may
disclose this Agreement, and any of the terms and conditions hereof, including,
without limitation, its Term, (i) to the party's respective directors, officers,
partners, employees, agents, representatives, affiliates, counsel, accountants
and professional advisers; (ii) as compelled pursuant to subpoena or judicial or
administrative order or ruling; and (iii) as the party may deem necessary or
appropriate (a) in connection with filings and disclosures and the provision of
information pursuant to laws and regulations applicable to the party, including,
without limitation, federal and state securities laws and regulations, (b) to
franchisees and potential franchisees and bank lenders and other insiders of
such party, and (c) to any party to the extent the information disclosed has
become otherwise publicly available pursuant to the provisions of this Agreement
or by any other means not involving a breach of this Agreement by the party.
-16-
<PAGE> 17
18. General Provisions.
(a) Notices. All notices required or permitted hereunder
shall be in writing and, may either be delivered by overnight courier,
transmitted by facsimile, or delivered by the United States Mail, postage
prepaid, addressed as follows:
To PNV: Ian Williams, President
Park 'N View, Inc.
3403 N.W. 55th Street, Bldg. 10
Ft. Lauderdale, Florida 33309
Fax Number: (954) 730-2298
With a copy to: James M. O'Connell, Esq.
Kilpatrick Stockton LLP
4101 Lake Boone Trail
Suite 400
Raleigh, North Carolina 27607
Fax Number: (919) 420-1800
To Operator: Attn: Legal Department
Petro Stopping Centers, L.P.
6080 Surety Drive
El Paso, TX 79905
Fax Number: (915) 774-7373
With a copy to: Kemp, Smith, Duncan & Hammond, P.C.
Attn: Dane George
2000 Norwest Plaza
El Paso, TX 79901
Fax Number: (915) 546-5360
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this Section 18(a).
(b) Expenses. Each party agrees to pay, without right of
reimbursement from any other party, its costs relating to the preparation of
this Agreement and the performance of its obligations hereunder, including
without limitation, fees and disbursements of counsel, accountants and
consultants employed by such party in connection herewith.
-17-
<PAGE> 18
(c) Actions; Further Assurances. Subject to the terms and
conditions of this Agreement, each party agrees to use its best efforts in good
faith to: (i) take or cause to be taken as promptly as practicable all actions
and obligations arising herein; and (ii) do or cause to be done all things that
are within its power to fulfill and comply with its obligations or the
obligations of the other parties to consummate the transactions contemplated
herein.
(d) Press Releases. To the extent practical, PNV and
Operator shall consult with each other as to the form and content of all press
releases and other public disclosures of matters relating to this Agreement, the
System and the Services. Nothing in this section shall prohibit PNV or Operator
from making any disclosure which its legal counsel deems necessary or advisable
to fulfill such party's disclosure obligations under applicable law. To the
extent practical, all public disclosures shall be transmitted by telecopier to
the other party or its counsel prior to publication or dissemination.
(e) Section Headings. The section headings in this
Agreement are for convenience of reference only and shall not be deemed to alter
or affect any provision hereof.
(f) Applicable Law. This Agreement shall be governed by
Florida law except to the extent that a matter relates solely to a Truckstop
outside the state of Florida, in which case it shall be governed by the laws of
the State in which such Truckstop is located.
(g) Litigation; Prevailing Party. If litigation is
brought with regard to this Agreement, the prevailing party shall be entitled to
receive from the non-prevailing party, and the non-prevailing party shall
immediately pay upon demand, all reasonable fees and expenses of counsel of the
prevailing party.
(h) Schedules. The Schedules attached to this Agreement
are integral parts of this Agreement and all references to this Agreement shall
include the Schedules.
(i) Modification. This Agreement shall not be modified or
amended except by an instrument in writing executed by the parties to this
Agreement.
(j) Successors And Assigns. This Agreement shall apply
to, and be binding upon, the parties and their respective successors and
permitted assigns (as determined under Section 15).
-18-
<PAGE> 19
(k) Severability. If any part or sub-part of this
Agreement is found or held to be invalid, that invalidity shall not affect the
enforceability and binding nature of any other part of this Agreement.
(l) Arbitration. Any controversy, dispute or question
arising out of, or in connection with, or in relation to this Agreement or the
interpretation, performance or non-performance or any breach thereof shall be
determined by arbitration conducted in Dallas, Texas in accordance with the then
existing commercial arbitration rules of the American Arbitration Association
and its supplementary procedures for larger, complex commercial disputes. PNV
and Operator shall each select one arbitrator, and the two arbitrators shall
select a third. Any decision rendered shall be binding upon the Parties,
however, the arbitrators shall have no authority to grant any relief that is
inconsistent with this Agreement. The expense of arbitration shall be borne
equally by the Parties or in such other proportion as shall be determined by the
arbitrators.
(m) Favored Nations. PNV agrees that the profit or
revenue allocations set forth in Sections 4(a)(ii), 4(a)(iii), 8(a), 8(b) and
8(c) of this Agreement shall, at the election of the Operator, be amended to
reflect any greater profit or revenue allocations provided to either: (i) TA
Operating Corp.; (ii) Travel Ports of America, Inc.; (iii) Pilot Corporation; or
(iv) any Franchisee of Petro Stopping Centers, L.P. pursuant to existing or
future contracts with such entities or their franchising entities, successors,
assigns, and affiliates, provided that, if the term of the contract with any of
these entities exceeds the Term of this Agreement as set forth in Section 7(a),
Operator shall agree to a comparable extension of the Term of this Agreement as
a condition to its right to receive the greater profit or revenue allocations.
(n) Counterparts. This Agreement may be executed in one
or more counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same instrument.
-19-
<PAGE> 20
IN WITNESS WHEREOF, Operator and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
WITNESSES:
PARK 'N VIEW, INC., a
Delaware corporation
- -----------------------------
By: /s/ Ian Willaims
- ----------------------------- -------------------------------
Ian Williams, President
PETRO STOPPING CENTERS, L.P.,
a Delaware limited partnership
- -----------------------------
By: /s/ Evan Brudhal
- ----------------------------- -------------------------------
<PAGE> 21
SCHEDULE 1A
LIST OF TRUCKSTOPS OWNED OR OPERATED
BY OPERATOR
1. PETRO STOPPING CENTERS - ATLANTA, GA (Initial Site)
2. PETRO STOPPING CENTERS - OKLAHOMA CITY, OK
3. PETRO STOPPING CENTERS - EL PASO, TX (Initial Site)
4. PETRO STOPPING CENTERS - SAN ANTONIO, TX
5. PETRO STOPPING CENTERS - AMARILLO, TX
6. PETRO STOPPING CENTERS - WEST MEMPHIS, OK
7. PETRO STOPPING CENTERS - NORTH BALTIMORE, OH
8. PETRO STOPPING CENTERS - PERRYSBURG, OH (Initial Site)
9. PETRO STOPPING CENTERS - YOUNGSTOWN, OH
10. PETRO STOPPING CENTERS - OCALA, FL
11. PETRO STOPPING CENTERS - EFFINGHAM IL
12. PETRO STOPPING CENTERS - HAMMOND, LA
13. PETRO STOPPING CENTERS - SHREVEPORT, LA
14. PETRO STOPPING CENTERS - KINGMAN, AZ
15. PETRO STOPPING CENTERS - BUCKSVILLE, AL
16. PETRO STOPPING CENTERS - KNOXVILLE, TN
17. PETRO STOPPING CENTERS - CORNING, CA
18. PETRO STOPPING CENTERS - KINGDOM CITY, MO
19. PETRO STOPPING CENTERS - LARAMIE, WY
20. PETRO STOPPING CENTERS - WEATHERFORD, TX
21. PETRO STOPPING CENTERS - MILAN, NM
22. PETRO STOPPING CENTERS - MEDFORD, OR
23. PETRO STOPPING CENTERS - BEAUMONT, TX
24. PETRO STOPPING CENTERS - CASA GRANDE, AZ
<PAGE> 22
SCHEDULE 1B
LIST OF TRUCKSTOPS OWNED OR OPERATED BY FRANCHISEES
1. Portage, Wisconsin
2. Joplin, Missouri
3. New Paris, Ohio
4. Salina, Kansas (Petro:2)
5. Twin Falls, Idaho (Petro:2)
6. Rochelle, Illinois
7. Fargo, North Dakota
8. Bordentown, New Jersey
9. York, Nebraska
10. Dupont, Pennsylvania
<PAGE> 23
SCHEDULE 2
LIST OF CURRENT PNV EQUIPMENT
Current PNV Equipment:
Satellite Dish & Off-air receive antenna
Processing [head-end] equipment
Telephone PBX switch and operator console
Distribution cables
Parking lot plug-in boxes
Rental coaxial cables
Cable TV "billing" computer and software
PNV sales vending machine
Telephone & Cable TV accessories for resale
Voice-mail service
<PAGE> 24
SCHEDULE 3
LIST OF CURRENT PROGRAMMING SCHEDULE
Current Programming Schedule:
<TABLE>
<CAPTION>
================================================================================
<S> <C>
CHANNEL # PROGRAM
- --------------------------------------------------------------------------------
02 Playboy
- --------------------------------------------------------------------------------
04 HBO1
- --------------------------------------------------------------------------------
05 HBO2
- --------------------------------------------------------------------------------
06 HBO3
- --------------------------------------------------------------------------------
07 Discovery
- --------------------------------------------------------------------------------
08 ESPN2
- --------------------------------------------------------------------------------
09 FOX
- --------------------------------------------------------------------------------
10 TBS
- --------------------------------------------------------------------------------
11 CNN HN
- --------------------------------------------------------------------------------
12 Weather
- --------------------------------------------------------------------------------
13 ESPN
- --------------------------------------------------------------------------------
14 NBC
- --------------------------------------------------------------------------------
15 ABC
- --------------------------------------------------------------------------------
16 A&E
- --------------------------------------------------------------------------------
17 CBS
- --------------------------------------------------------------------------------
18 TNN
- --------------------------------------------------------------------------------
19 TNT
- --------------------------------------------------------------------------------
20 US EXPRESS
- --------------------------------------------------------------------------------
21 PNV
================================================================================
</TABLE>
<PAGE> 25
SCHEDULE 4
LIST OF CURRENT TELEPHONE SERVICES
Current Telephone Services:
1+ calls
1-800 calls
Local calls
Operator services
Direct call back to stall # (automated)
Message waiting
Wake-up calls (automated)
<PAGE> 26
AMENDMENT TO
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS AMENDMENT TO THAT CERTAIN CABLE TELEVISION AND TELEPHONE SERVICE
AGREEMENT (this "Amendment") is entered into effective as of the 16th day of
March, 1998, by and between Park 'N View, Inc. ("PNV") and Petro Stopping
Centers, L.P. ("Operator").
WHEREAS, PNV and Operator have entered into that certain Cable
Television and Telephone Services Agreement dated September 12, 1997 (the
"Original Agreement"). Unless otherwise defined in this Amendment, defined terms
contained herein have the meaning ascribed to them in the Original Agreement;
WHEREAS, PNV now offers additional services to truckdrivers
(hereinafter referred to as the "New PNV Services" which together with the
Services as defined in the Original Agreement are collectively referred to as
the PNV Services) and PNV has developed additional sales programs (the "Power
Plan") to sell the PNV Services to truckdrivers;
WHEREAS, the Original Agreement did not address the allocation, between
PNV and the Operator, of the revenues or profits derived from the New PNV
Services or the Power Plan;
WHEREAS, PNV and Operator (collectively the "Parties") desire to
formally amend the Original Agreement to implement the following changes.
1. All revenues and profits derived from the sale of the PNV Services
shall, during the Term of the Original Agreement (and any renewed term), be
allocated between Operator and PNV as set forth on Schedule A attached hereto.
2. All other terms and provisions of the Original Agreement shall
remain in full force and effect. The Parties acknowledge and agree that if PNV
provides additional services in the future, the revenue and profit allocations
for such services shall be agreed to by the Parties in the form of a letter
agreement which shall constitute an amendment to the Original Agreement.
IN WITNESS WHEREOF, Operator and PNV have caused this Amendment to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
PETRO STOPPING CENTERS, L.P. PARK 'N VIEW, Inc.,
a Delaware Corporation
By: /s/ Jack Cardwell By: /s/ Ian Williams
------------------------------ -----------------------------
Ian Williams, President
<PAGE> 27
- --------------------------------------------------------------------------------
SCHEDULE A
- --------------------------------------------------------------------------------
AMENDMENT TO CABLE TELEVISION
AND TELEPHONE SERVICE AGREEMENT
<TABLE>
<CAPTION>
DESCRIPTION OF SERVICE OR SALE OPERATOR'S PORTION
------------------------------ ------------------
<S> <C>
A. Gross Receipts Based Programs
1. Gross Receipts* from the sale of monthly and 35% for first five (5) years of the Term;
daily memberships and other services from the 40% for second five (5) years of the Term
vending machine at each of Operator's
Truckstop.
2. Gross Receipts* from the sale of Power Plans 35% for first month of service and 10% for each
at each of Operator's Truckstop. additional month of service under Power Plan
3. Gross Receipts* from the sale of memberships 10% of each months receipts will be placed in a pool
by telemarketing staff. and allocated among all Truckstops based upon the
number of wired stalls at each Truckstop.
4. Gross Receipts** from sales to Fleets. 10% of each months receipts will be placed in a pool
and allocated among all Truckstops based upon the
number of wired stalls at each Truckstop.
B. Net Profit Based Programs
1. Net Profits*** derived from Advertising. 50%
2. Net Profits*** derived from Pay Per View. 50%
3. Net Profits*** derived from sale of long 35%
distance phone time.
</TABLE>
* Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the Services less
the cost of 60 free minutes of phone time and applicable taxes. Gross
Receipts shall not include any revenue received by PNV or the Operator for
services listed under Net Profit Based Programs above.
** Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the Services less
the cost of 60 free minutes of phone time, direct sales commissions and
applicable taxes. Gross Receipts shall not include any revenue received by
PNV or the Operator for services listed under Net Profit Based Programs
above.
*** Net Profits shall mean the aggregate gross revenue collected by PNV or
Operator less Directly Related Expenses. Directly Related Expenses shall mean
all direct costs and expenses incurred by PNV with respect to the: (i)
acquisition and installation of the equipment necessary to provide advertising,
Pay-Per-View or long distance phone time over the System; (ii) sale, promotion
and production of advertising, Pay-Per-View or long distance phone time; (iii)
salaries and commissions paid to and expenses incurred by individuals or
entities which sell advertising, Pay-Per-View or long distance phone time; (iv)
fees paid to pay-per-view programmers; and (v) fees paid or costs incurred to
provide long distance phone time. Directly Related Expenses shall not include:
(i) allocations of corporate overhead (other than the advertising department);
(ii) depreciation of the PNV Equipment, other than the equipment necessary to
provide advertising, Pay-Per-View or long distance phone time over the System;
or (iii) other costs and expenses which are not directly related to the sale and
promotion of advertising, Pay-Per-View or long distance phone time over the
System.
<PAGE> 28
SECOND AMENDMENT TO
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS SECOND AMENDMENT TO THAT CERTAIN CABLE TELEVISION AND TELEPHONE
SERVICE AGREEMENT (this "Second Amendment") is entered into effective as of the
7th day of May, 1998, by and between Park 'N View, Inc. ("PNV") and Petro
Stopping Centers, L.P. ("Operator").
WHEREAS, PNV and Operator have entered into that certain Cable
Television and Telephone Services Agreement dated September 12, 1997, as amended
by that certain Amendment to Cable Television and Telephone Service Agreement
dated March, 16, 1998 (collectively, the "Original Agreement"). Unless otherwise
defined in this Second Amendment, defined terms contained herein have the
meaning ascribed to them in the Original Agreement;
WHEREAS, PNV now offers additional services to truckdrivers
(hereinafter referred to as the "New PNV Services" which together with the
Services as defined in the Original Agreement are collectively referred to as
the PNV Services) and PNV has developed additional sales programs (the "Power
Plan") to sell the PNV Services to truckdrivers;
WHEREAS, the Original Agreement did not address the allocation, between
PNV and the Operator, of the revenues or profits derived from the New PNV
Services or the Power Plan;
WHEREAS, PNV and Operator desire to formally amend the Original
Agreement to implement the following changes.
1. All revenues and profits derived from the sale of the PNV Services
shall be allocated between Operator and PNV as set forth on Schedule A attached
hereto.
2. All other terms and provisions of the Original Agreement shall
remain in full force and effect. The Parties acknowledge and agree that if PNV
provides additional services in the future, the revenue and profit allocations
for such services shall be agreed to by the Parties in the form of a letter
agreement which shall constitute an amendment to the Original Agreement.
<PAGE> 29
IN WITNESS WHEREOF, Operator and PNV have caused this Second Amendment
to be executed pursuant to appropriate legal authority duly given, as of the day
and year first above written.
PETRO STOPPING CENTERS, L.P. PARK 'N VIEW, Inc.,
a Delaware Corporation
By: /s/ Evan Brudhal By: /s/ Ian Williams
------------------------------- --------------------------------
Ian Williams, President
<PAGE> 30
- --------------------------------------------------------------------------------
SCHEDULE A
- --------------------------------------------------------------------------------
AMENDMENT TO CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
<TABLE>
<CAPTION>
DESCRIPTION OF SERVICE OR SALE OPERATOR'S PORTION
------------------------------ ------------------
<S> <C>
A. Gross Receipts Based Programs
1. Gross Receipts* from the sale of monthly and 35% for first five (5) years of the Term;
daily memberships from the vending machine at 40% for second four (4) years of the Term
each of Operator's Truckstops.
2. Gross Receipts* from the sale of Power Plans 35% for first month of service and 10% for each
at each of Operator's Truckstops. additional month of service under Power Plan
3. Gross Receipts* from the sale of memberships 10% of each months receipts will be placed in a pool
by telemarketing staff. and allocated among all
Truckstops based upon the number of wired stalls at
each Truckstop
4. Gross Receipts** from sales to Fleets. 10% of each months receipts will be placed in a pool
and allocated among all Truckstops based upon the
number of wired stalls at each Truckstop
B. Net Profit Based Programs
1. Net Profits*** derived from Advertising. 50%
2. Net Profits*** derived from Pay Per View or other non-traditional 50%
cable channels or services (collectively, Pay-Per-View).
3. Net Profits*** derived from sale of long distance phone time. 35%
</TABLE>
* Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the PNV Services
less the cost of 60 free minutes of phone time and applicable taxes. Gross
Receipts shall not include any revenue received by PNV or the Operator for
services listed under Net Profit Based Programs above.
** Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the PNV Services
less the cost of 60 free minutes of phone time, direct sales commissions
and applicable taxes. Gross Receipts shall not include any revenue received
by PNV or the Operator for services listed under Net Profit Based Programs
above.
*** Net Profits shall mean the aggregate gross revenue collected by PNV or
Operator less Directly Related Expenses. Directly Related Expenses shall
mean all direct costs and expenses incurred by PNV with respect to the: (i)
acquisition and installation of the equipment necessary to provide
advertising, Pay-Per-View or long distance phone time over the System; (ii)
sale, promotion and production of advertising, Pay-Per-View or long
distance phone time; (iii) salaries and commissions paid to and expenses
incurred by individuals or entities which sell advertising, Pay-Per-View or
long distance phone time; (iv) fees paid to pay-per-view programmers; and
(v) fees paid or costs incurred to provide long distance phone time.
Directly Related Expenses shall not include: (i) allocations of corporate
overhead (other than the advertising department); (ii) depreciation of the
PNV Equipment, other than the equipment necessary to provide advertising,
Pay-Per-View or long distance phone time over the System; or (3) other
costs and expenses which are not directly related to the sale and promotion
of advertising, Pay-Per-View or long distance phone time over the System.
Directly Related Expenses shall be determined on a program specific basis,
and shall not be cumulative of expenses for each program, so that in
determining Net Profits of a program, only Directly Related Expenses for
that program shall be taken into account.
<PAGE> 1
EXHIBIT 10.13
[*] - Confidential treatment requested pursuant to Rule 406.
CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT
THIS CABLE TELEVISION AND TELEPHONE SERVICE AGREEMENT (this
"Agreement") is entered into this 12th day of March, 1998, by and between Park
'N View, Inc., a Delaware corporation ("PNV"), with its headquarters at 11711 NW
39th Street, Coral Springs, Florida 33065 and TA Operating Corporation, a
Delaware Corporation, d/b/a Travel Centers of America ("Operator"), with its
headquarters at 24601 Center Ridge Road, Suite 200, Westlake, Ohio 44145.
WHEREAS, Operator, itself or through its affiliates: (i) currently owns
or operates (or has entered into franchise agreements with certain entities
entitling them to operate) approximately 120 full-service travel plaza
truckstops which are located at the addresses listed on Schedules 1A, 1B and 1C
hereto; and (ii) may acquire or contract to operate other full-service travel
plaza truckstops, all of the aforesaid hereinafter individually being referred
to as a "Truckstop" and collectively being referred to as either the
"Truckstops" or the "Operator's Network"; and
WHEREAS, PNV has designed and developed the concept and equipment ("the
System") to (i) enable truck drivers to: (a) receive and/or have access to cable
television services and telecommunications services; and (b) provide such truck
drivers programming consisting of video and audio services, and telephone, fax
or other data services while remaining in their vehicles parked at the
Truckstop; and (ii) sell advertising to be broadcast over the System
(collectively, the "Services"); and
WHEREAS, Operator desires to engage PNV to install the System and
provide the Services at certain of the Truckstops.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Operator and PNV (hereinafter collectively being referred to
as the "Parties"), intending to be legally bound, hereby mutually agree as
follows:
1. Purpose. The Parties hereby agree that PNV shall install the System
and the Parties shall operate the System at Operator's Truckstops pursuant to
the terms of this Agreement.
(a) Installation at Truckstops. The Parties acknowledge and agree
that Operator, itself or through its affiliates, currently owns, operates or has
entered into franchise agreements with respect to (i) Truckstops which are
listed on Schedule 1A (constituting all of the Truckstops which are owned and
operated by Operator or its affiliates); (ii) Truckstops which are listed on
Schedule 1B (constituting all of the Truckstops which are owned by Operator or
its affiliates and operated pursuant to franchise agreements); and (iii)
Truckstops
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which are listed on Schedule 1C (constituting all of the Truckstops which are
not owned by Operator and which are operated pursuant to franchise agreements).
Subject to the terms and conditions of this Agreement, PNV shall have the right
to (i) install the System and provide the Services at each of the Truckstops
listed on Schedules 1A and 1B; and (ii) subject to the approval of the
Franchisee (as defined in Section 1(b)) to enter into an agreement with the
owner of each Truckstop listed on Schedule 1C. PNV shall, subject to Operator's
(i) observance and performance of its duties and obligations under this
Agreement; and (ii) reasonable cooperation with PNV to facilitate PNV's
obligations hereunder, complete the installation of the System and commence
provision of the Services within eighteen (18) months of the date of this
Agreement to at least 90 of the Truckstops listed on Schedules 1A and 1B
(including those Truckstops at which the Services are currently provided).
During said eighteen month period, PNV shall complete installation of the System
at four (4) of such Truckstops by April 30, 1998, five (5) additional Truckstops
by May 30, 1998, six (6) additional Truckstops by June 30, 1998, and seven (7)
additional Truckstops each month thereafter. After said eighteen month period,
PNV shall complete installation of the System at all of Operators remaining
Truckstops listed on Schedules 1A and B at the rate of seven (7) per month. PNV
and Operator shall mutually agree on the order of such installations. PNV shall,
in all instances, install the PNV Equipment in a high quality, workmanlike and
efficient manner, with the least interference possible with the operation of
each such Truckstop. Without limiting the foregoing, during the course of
installation of the System at each Truckstop, PNV shall not cause significant
disruption to the traffic flow or the availability of parking spaces in the
parking lots at each Truckstop. Notwithstanding the foregoing, the Parties agree
that while PNV shall use its best efforts to complete the installation of the
System at the foregoing number of Truckstops within the foregoing time frames,
PNV's obligations to install the System at a particular Truckstop or Truckstops
shall be subject to: (i) Operator having ownership or control over such
Truckstop at the time PNV commences installation of the System; (ii) with
respect to the Truckstops listed on Schedule 1B, the Franchisee entering into an
agreement with PNV pursuant to Section 1(b); (iii) Operator's authorizing PNV to
install the System at seven (7) or more Truckstops per month; (iv) completion of
satisfactory engineering and environmental surveys at such Truckstop(s); (v)
confirmation that no part of the System crosses a public right of way adjacent
to such Truckstop(s); (vi) receipt from Operator of all requested maps, blue
prints and other relevant information relating to such Truckstop(s) on a timely
basis; and (vii) PNV not being able to complete any such installation within
said time frame because of any of the following: floods, civil unrest, acts of
God; war; governmental interference or embargoes; labor strikes; failure to
supply fuel, power, materials or supplies; transportation delays by third
parties; or any other cause (whether or not similar to those described in this
Section 1) beyond the control of PNV.
(b) Installation at Franchisee Sites. The Parties acknowledge and agree
that, prior to installation of the System at any of the Truckstops listed on
Schedule 1B or Schedule 1C, which are operated by a franchisee of Operator (the
"Franchisee"), other than those Truckstops listed on Schedule 1D (each of which
have already entered into agreements with PNV), PNV shall, enter into an
agreement with Franchisee upon terms acceptable to PNV and Franchisee (and as to
which Operator shall have consented to in writing) (the "Franchisee
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Agreement"). Pursuant to the Franchisee Agreement: (i) Gross Receipts (as
defined in Item A.1. on Schedule 5) shall be allocated 30% to Franchisee and
5% to Operator; and (ii) the first month of Gross Receipts (as defined in Item
A.2 on Schedule 5) shall be allocated during the Term 30% to Franchisee and
5% to Operator and during the Automatic Renewal Term as may be agreed to by
Operator and Franchisee. Operator shall not be entitled to payment of any
portion of ; (i) the 5% residual to be paid to Franchisee after the first
month pursuant to Items A.2 on Schedule 5; or (ii) any other amounts payable to
Franchisee pursuant to Schedule 5.
2. Installation of Equipment.
(a) PNV shall, at its sole cost and expense, and in the manner
herein provided, install and continually maintain at each Truckstop at which the
Services are to be provided all equipment necessary to provide the Services
including the following:
(i) equipment necessary for the provision and distribution
of the Services.
(ii) outlet ports to parking spaces to provide users with
access to the Services.
(iii) such other equipment or services as may be agreed upon
in writing by PNV and Operator, including, without
limitation, the provision of AC power to parking spaces
at certain of the Truckstops. Prior to installing such
additional equipment or providing such additional
services, PNV and Operator shall mutually agree to a
reasonable adjustment to the profit allocations set
forth in Section 8 in order to reflect PNV's differing
profit margins and increased capital costs with respect
to the installation of such additional equipment and the
provision of such additional services at the Truckstops.
All of the foregoing equipment as currently used by PNV is described on Schedule
2 hereto and is hereinafter, together with any additions or deletions to said
equipment, collectively referred to as the "PNV Equipment". PNV reserves the
right with the prior written consent of Operator to make additions to and
deletions from the PNV Equipment to be installed at each Truckstop. PNV shall
use its best efforts to provide the Services to at least 75% of the truck
parking spaces located at each Truckstop at which it installs the System. The
Parties shall mutually determine the precise number and location of the truck
parking spaces at which the Services shall be provided, taking into account such
factors as the cost of construction and implementation, the layout of the
parking facilities, the usage of particular parking rows to drop trailers and
such other factors as the Parties may deem relevant.
(b) Operator shall make available to PNV a sufficient area in a
mutually agreed location in which to install the PNV Equipment including: (i)
such area as is required
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for the installation of satellite dish(es); (ii) a secured air-conditioned
interior area of approximately 40 square feet for the installation of the
headend equipment and the telephone and related monitoring equipment; and (iii)
an area at the fuel desk or the travel store for installation of the equipment
required for activation of the Services (hereinafter collectively referred to as
the "Equipment Area"). Upon reasonable prior notice to Operator, PNV shall be
entitled to have continued access to the Equipment Area and all parking areas
for purposes of installing, repairing and monitoring the PNV Equipment, the
System and the Services.
(c) Prior to commencement of construction at any Truckstop, PNV
shall obtain Operator's written approval of the methods and materials to be used
by PNV with respect to the installation of the System. PNV shall, in
consultation with Operator, use reasonable efforts to utilize the boring method
of installation at all sites where local conditions permit use of the boring
method (recognizing that PNV's experience is that only 50% of sites are
appropriate for the boring method). PNV will repair any damage to the Truckstop
which is caused by PNV. However, PNV shall not be responsible for any existing
defects or deficiencies or the normal wear and tear to the parking lot or the
Truckstop. PNV shall provide Operator written notice of any defects or
deficiencies discovered by PNV during installation. At sites designated by
Operator, PNV will use its best efforts to cause its contractor to dig a trench
for purposes of laying conduit between the main building and the shop building.
Operator shall reimburse PNV for the incremental cost incurred for such work
with estimates provided in advance.
(d) PNV shall on a timely basis secure, and continuously maintain in
full force and effect, all licenses, permits and approvals required by
governmental authorities with respect to the installation, operation and
maintenance of the System and providing the Services. Operator shall assist PNV
(at PNV's expense) in obtaining any such licenses, permits, or approvals upon
PNV's reasonable request. PNV shall at all times comply with all applicable
laws, rules, regulations, etc. in connection with the installation, operation
and maintenance of the System, or otherwise related to the performance of PNV's
obligations hereunder.
(e) Within thirty (30) days of completion of the installation of the
System at a Truckstop, PNV shall provide Operator with written notice of the
date on which the sale of the Services shall commence at each such Truckstop
(hereinafter referred to as the "Truckstop Service Date").
3. Rights and Duties of The Parties With Respect To The PNV Equipment.
(a) Notwithstanding the fact that certain parts of the PNV Equipment
may be affixed to each Truckstop, the PNV Equipment shall not become a fixture
thereto and shall remain the property of PNV. PNV shall pay all taxes or other
fees related to ownership of the PNV Equipment. Operator acknowledges that the
System, the Services and the PNV Equipment and the manner of its operation and
installation are proprietary to PNV. Accordingly, Operator shall use its best
efforts to insure that all material confidential information and data concerning
the System, the Services and the PNV Equipment shall not be
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divulged, and (except in the case of emergency) that access to the System and
the PNV Equipment shall not be given to any person or persons other than
personnel authorized by PNV.
(b) Upon the termination of this Agreement for any reason, PNV shall
have the obligation to: (i) remove, at its sole cost and expense, any or all of
the PNV Equipment from each Truckstop; or (ii) if agreeable to Operator, sell or
lease it to the Operator or its successors, nominees or assignees. If PNV
removes the PNV Equipment, PNV shall restore the Truckstop as near as reasonably
possible to the condition of such premises prior to the installation of the
System, normal wear and tear excepted, but shall not be obligated or permitted
without the prior consent of Operator to remove any underground cables. If PNV
does not comply with the terms of this Section 3(b) within 90 days after
termination of this Agreement, Operator may treat the PNV Equipment as abandoned
or have the PNV Equipment removed at the expense of PNV.
(c) If Operator disposes of its interest in one or more Truckstops
at which the System has been installed (through a sale of assets, change of
control or otherwise), Operator shall, as a condition to such sale, either; (i)
cause the acquiror of said Truckstop to assume Operator's obligations under this
Agreement (in the case of the sale of all of its Truckstops at which the System
is installed); or enter into a separate agreement with PNV on substantially
similar terms (in the case of the sale of less than all of the Truckstops at
which the System is installed); or (ii) pay PNV an amount equal to PNV's actual
cost incurred with respect to the installation of the System and the PNV
Equipment at each such Truckstop as reduced by (a) depreciation calculated on a
straight line basis over a seven (7) year period; and (b) the depreciated cost
of any PNV Equipment which is removable by PNV; provided that, Operator may
dispose of up to ten (10) Truckstops at which the Services are provided without
compliance with this Section 3(c) and Operator may only elect to make payments
to PNV under (ii) above with respect to up to an additional ten (10) Truckstops.
4. Programming and Telecommunications Services to Be Provided.
(a) PNV shall make the Services available on the System as follows:
(i) PNV shall source and deliver a programming package
consisting of a minimum of fifteen (15) channels of
entertainment programming. PNV shall pay the cost of all
such programming. The current programming schedule to be
broadcast by PNV is as set forth on Schedule 3. PNV may,
with prior notice to Operator, make changes to the
programming schedule from time to time.
(ii) In addition to the fifteen (15) channel entertainment
lineup, there shall be other channels which shall be
used to provide a programming schedule and advertising.
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(iii) PNV may, with prior notice to Operator, provide
pay-per-view or other non-traditional cable channels or
services as part of the Services.
(iv) PNV shall also provide telephone service at each parking
slot at each Truckstop at which the Services are
provided. The current telephone services offered by PNV
are set forth on Schedule 4. PNV shall, with notice to
Operator, have the right with the prior written consent
of Operator, to determine and make changes to the
specific types of telecommunication services provided to
a particular Truckstop from time to time. Operator and
PNV may mutually agree to permit PNV to provide data
communication, telephone and internet access services to
areas of the Truckstops, other than the parking lot, and
the Parties agree that the profits derived from such
services shall be allocated between PNV and Operator
pursuant to Section B.3. of Schedule 5 hereto.
(v) PNV will provide Operator, free of charge, use of one
(1) channel at each Truckstop at which the System is
installed. Operator shall be responsible for providing
the content and material to be broadcast over such
channel, provided that, Operator shall not broadcast or
advertise over such channel any services which compete
with the in cab Services provided by PNV (including, but
not limited to, satellite dish television or wireless
telephone services). Additional channels may be provided
for Operator's use at mutually agreed upon rates.
5. Operation of the System and Sale and Promotion of the Services.
(a) Upon installation of the System at a Truckstop, and prior to the
Truckstop Service Date, PNV shall train the Operator and its designated
employees with respect to the maintenance and operation of the System and the
promotion of the Services. PNV shall provide follow up training for Operator's
personnel during working hours with respect to the promotion of the Services,
the operation of the System, and the maintenance of the PNV Equipment as may be
reasonably requested by Operator from time to time. All training shall be at
PNV's cost and expense. PNV shall, with the prior consent of Operator, be
entitled to have its own employees or agents engage in the promotion of the
Services at any Truckstop, provided that PNV's employees and agents shall not
interfere with the operation of said Truckstop.
(b) Operator shall use reasonable efforts to encourage the
management, fuel desk employees and other personnel at each Truckstop to promote
the use of the Services by and the sale of the Services to the truck drivers
frequenting the Truckstops. The Parties may
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mutually agree from time to time to implement sales incentive programs for the
Operator's employees and other personnel to promote the use and sale of the
Services. The Parties shall share the cost of implementing and funding any such
mutually agreed upon incentive programs.
(c) For so long as this Agreement remains in effect and Operator
continues to be associated with the publication of "Road King," Operator shall
provide to PNV free of charge a full page color advertisement in each edition of
"Road King." PNV shall, at its cost, provide the ad to Operator in camera ready
format 7 days prior to the publishing deadline established by Operator. Operator
shall permit PNV to display its icon and snipes at PNV's cost on one or more of
Operator's billboard located at or near each Truckstop in Operator's Network.
Recognizing that: (i) the layout of each Truckstop is different; and (ii) PNV's
promotional equipment and materials shall conform to the interior design of each
Truckstop, PNV may, with Operator's consent, install and maintain at each
Truckstop: (i) a bank of up to twelve (12) television sets to be located above
the fuel desk, or at such other location mutually agreed to by PNV and Operator
in the main building of the Truckstop, to broadcast programming and advertising
to solicit truckdrivers as customers; (ii) a permanent message board or banner
below such bank of television sets; (iii) up to five (5) additional television
sets to be placed at other locations mutually agreed to by PNV and Operator in
the main building of the Truckstop (including the restaurant, the store and near
the phone banks) to broadcast programming and advertising to solicit truck
drivers as customers. PNV shall also be entitled to display newsletters,
pamphlets, flyers and other printed materials at mutually agreed upon locations
in each Truckstop in order to promote the sale and promotion of the Services.
(d) Within six (6) months of the date of this Agreement, PNV and
Operator shall jointly devise and implement a marketing program (collectively,
the "PNV-TA Fleet Sales Program") which shall be used by PNV and Operator to
jointly sell the Services to fleet owners and their professional truck drivers.
Pursuant to PNV-TA Fleet Sales Program: (i) Operator shall provide PNV with: (a)
access to Operator's fleet customers through headquarter meetings, regional
meetings and conferences; and (b) meaningful assistance through Operator's fleet
sales organization to effectuate the closing of the sale of the Services to
Operator's fleet customers; and (ii) Operator and PNV shall mutually agree to
share jointly in the cost of promoting the PNV-TA Fleet Sales Program (including
through the bundling of incentives to fleets). Operator and PNV shall share the
Gross Receipts (as defined in Section 8(b)) derived from the PNV-TA Fleet Sales
Program pursuant to the terms of Section 8(b).
6. Maintenance of the PNV Equipment and the System.
(a) PNV shall maintain a good quality signal and reception through
the System comparable to the signal and reception supplied for regular
television programming and telecommunications services to home consumers.
(b) The day to day maintenance of the System shall be handled as
follows:
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(i) Operator's trained staff members shall: (i) in
connection with normal site maintenance, make visual
inspection of cable and phone boxes in the outside
hookups and remove debris from such outside hookups
(i.e. oil, dirt, ice, snow, etc.); and (ii) replace
cable and phone connection outlets in the outside
hookups with equipment furnished by PNV at PNV's cost.
(ii) If a mechanical problem arises other than through a
failed connecting cable or accessory, Operator shall
contact PNV by telephone at PNV's office. Unless
extenuating circumstances exist, PNV shall, within
forty-eight (48) hours, either authorize Operator to
contact a designated repair technician or dispatch a
designated repair technician to make the necessary
repairs to the System. Charges for repairs will be
billed directly to PNV and paid by PNV.
7. Term. Subject to Section 16, the term of this Agreement, as it
applies to each Truckstop at which the System is installed, shall be for a
period of five (5) years commencing on the Truckstop Service Date and
terminating on the fifth anniversary of the Truckstop Service Date (the "Term").
Subject to Section 16, the Term shall automatically be extended for a five (5)
year renewal period (the "Automatic Renewal Term") provided that, as a condition
to the commencement of the Automatic Renewal Term, Operator shall be entitled to
receipt of the increased percentage of Gross Receipts (as defined on Schedule 5)
set forth in Section A.1 of Schedule 5. Upon the expiration of the Automatic
Renewal Period, PNV and Operator may mutually agree to additional renewal terms.
8. Fees.
(a) All revenues and profits derived from the sale or provision of
the Services at each Truckstop, other than any revenues and profits derived from
sales to fleets under the PNV-TA Fleet Sales Program (to be implemented pursuant
to Section 5(d)), shall, during the Term (and any renewal terms), be allocated
between PNV and Operator as set forth on Schedule 5 attached hereto.
(b) All Gross Receipts (as defined with respect to item A.3 on
Schedule 5) derived from sales to fleets under the PNV-TA Fleet Sales Program,
shall be allocated to Operator as follows:
(i) Operator shall be entitled to 10% of each month's Gross
Receipts derived from the first 10,000 power plan or other monthly memberships
sold to fleets or fleet drivers through the PNV-TA Fleet Sales Program.
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(ii) Operator shall be entitled to 12.50% of each month's
Gross Receipts derived from the next 20,000 power plan or other monthly
memberships sold to fleets or fleet drivers through the PNV-TA Fleet Sales
Program.
(iii) Operator shall be entitled to 15% of each month's Gross
Receipts derived from the sale of more than 30,000 power plan or other monthly
memberships to fleets or fleet drivers through the PNV-TA Fleet Sales Program.
(c) PNV shall also pay Operator a one-time fee of $15.00 for each
monthly membership sold to a fleet or fleet driver through the PNV-TA Fleet
Sales Program. Said fee shall be paid to Operator within ten (10) days of
receipt of the first monthly payment to PNV from the fleet or fleet driver.
(d) The books and records of the Operator and PNV pertinent to the
Gross Receipts (as defined on Schedule 5), Net Profits (as defined on Schedule
5), Directly Related Expenses (as defined on Schedule 5), and other revenue and
taxes received with respect to the sale of the Services for any calendar month
shall be open for inspection and audit by an authorized representative of either
Operator or PNV upon five (5) business days notice to said party. The Parties
acknowledge and agree that if, in the future, PNV provides additional services
through the System to the Truckstops, the revenue and profit allocations for
such additional services may be agreed to by the Parties in the form of a letter
agreement which shall constitute an amendment to this Agreement.
9. Exclusivity.
(a) For a period of six (6) months following the commencement of the
installation of the System at a particular Truckstop, PNV shall not install the
System at any other truckstop which (i) is not owned or operated by Operator;
and (ii) is located at the same intersection or interchange as that particular
Truckstop, provided that, the provisions of this Section 9(a) shall not apply to
or otherwise restrict PNV's ability or right to install the System at any
truckstop which is subject to an agreement listed on Schedule 6. Notwithstanding
the foregoing, Operator's right of exclusivity set forth in this Section 9(a)
shall terminate on August 11, 1999 with respect to any Truckstop at which PNV
has not commenced installation of the Services as of such date, provided that,
PNV has complied with the installation schedule set forth in Section 1(a).
(b) PNV shall, for the Term of this Agreement (and any renewal
term), have: (i) the exclusive right to install the System and provide the
Services to each Truckstop listed on Schedules 1A and 1B; and (ii) a right of
first refusal to install the System and provide the Services (on the terms
contained herein) at the first fifteen (15) additional truckstops in which
Operator acquires an ownership interest (whether operated by Operator or a
franchisee) after the date of this Agreement. PNV's right of first refusal shall
expire if PNV has not completed installation of the System at such Truckstop
within seven (7) months after Operator provides notice to PNV of Operator's
acquisition of an interest in said truckstop.
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(c) PNV shall during the Term of this Agreement (and any renewal
term) have: (i) the nonexclusive right to sell to Operator at competitive prices
coaxial and phone cables for use with the Services provided by PNV; and (ii) the
nonexclusive right to sell to Operator at competitive prices television,
telephone and cable accessories and adapters for use with the Services. After
purchasing the foregoing items from PNV, Operator shall be entitled to resell
such items to its customers and retain all profits from such resales.
10. Rights Granted to PNV. Operator hereby grants and conveys to PNV,
for the Term of this Agreement (and any renewal term), access, upon reasonable
prior notice, to the premises of each Truckstop at which the System is installed
for purposes of maintaining, repairing, replacing and operating the System and
providing the Services.
11. Representations and Warranties of PNV.
(a) PNV is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full power and
authority: (i) to enter into this Agreement; and (ii) to carry out the other
transactions and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement by PNV
has been duly authorized by all necessary action of PNV. This Agreement and each
of the other documents to be executed and delivered by PNV pursuant to this
Agreement have been duly executed and delivered by PNV and are the valid and
binding obligations of PNV enforceable in accordance with their respective
terms, subject only as to enforceability affected by bankruptcy, insolvency or
similar laws affecting the rights of creditors generally and by general
equitable principles. The execution, delivery and performance of this Agreement
and the other documents to be executed, delivered and performed by PNV pursuant
to this Agreement will not: (i) conflict with or violate any provision of PNV's
organizational documents, or any law, ordinance or regulation or any decree or
order of any court or administrative or other governmental body which is either
applicable to, binding upon or enforceable against PNV; or (ii) result in any
breach of or default under or cause the acceleration of performance of any
mortgage, contract, agreement, indenture or other instrument which is either
binding upon or enforceable against PNV.
(c) PNV will obtain the approval, consent or waiver of any other
person or entity required for the execution, delivery or performance of this
Agreement.
(d) In the event Operator's or PNV's right to use the System, the
Services or the PNV Equipment is challenged, PNV will defend and indemnify
Operator, its officers, directors, shareholders, employees and agents from any
and all expenses (including reasonable attorneys' fees) and damages (of whatever
kind or nature) relating to the challenge of such use. Further, in the event
Operator is not able to use the System or the Services during the term of this
Agreement due to any such challenge, Operator may, subject to the terms of
Section 16,
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terminate this Agreement and receive any amounts due to Operator as of the date
of termination.
(e) All of the information contained in the representations and
warranties of PNV set forth in this Agreement or in any of the documents
delivered or to be delivered herewith or after the execution hereof as set forth
in any provision of this Agreement is true, accurate and complete.
12. Representations and Warranties of Operator.
(a) Operator is a corporation duly organized, validly existing and
in good standing under the laws of Delaware and has full power and authority:
(i) to enter into this Agreement; and (ii) to carry out the other transactions
and agreements contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement by
Operator has been duly authorized by all necessary action of Operator. This
Agreement and each of the other documents to be executed and delivered by
Operator pursuant to this Agreement have been duly executed and delivered by
Operator and are the valid and binding obligations of Operator enforceable in
accordance with their respective terms, subject only as to enforceability
affected by bankruptcy, insolvency or similar laws affecting the rights of
creditors generally and by general equitable principles. The execution, delivery
and performance of this Agreement and the other documents to be executed,
delivered and performed by Operator pursuant to this Agreement will not: (i)
conflict with or violate any provision of Operator's organizational documents,
or any law, ordinance or regulation or any decree or order of any court or
administrative or other governmental body which is either applicable to, binding
upon or enforceable against Operator; or (ii) result in any breach of or default
under or cause the acceleration of performance of any mortgage, contract,
agreement, indenture or other instrument which is either binding upon or
enforceable against Operator.
(c) Operator will obtain the approval, consent or waiver of any
other person or entity required for the execution, delivery or performance of
this Agreement.
(d) All of the information contained in the representations and
warranties of Operator set forth in this Agreement or in any of the documents
delivered or to be delivered herewith or after the execution hereof as set forth
in any provision of this Agreement is true, accurate and complete.
13. Risk of Loss and Insurance; Indemnification.
(a) PNV shall bear the risk of loss and hereby indemnifies and holds
harmless Operator for: (i) damage to or destruction of the PNV Equipment and the
System installed at each Truckstop, except as provided in Section 13(b); and
(ii) injury to persons or damage to property arising from the existence,
installation, operation or repair of, or otherwise
-11-
<PAGE> 12
in any way related to, the PNV Equipment and the System (except to the extent
such damage is occasioned by the gross negligence or willful misconduct of
Operator, its employees, contractors or agents).
(b) Operator shall be responsible for the maintenance, repair or
replacement of the PNV Equipment resulting from damage or destruction caused by
the gross negligence or willful misconduct of the Operator, its employees,
contractors or agents.
(c) Both Operator and PNV shall maintain during the Term of this
Agreement (or any renewal term), at their sole cost and expense, comprehensive
public liability insurance in the minimum amount of $1,000,000 providing
coverage at each Truckstop at which the Services are provided against any claims
covered under Sections 13 (a) or (b) and shall ensure that each Party is named
as an additional insured in respect of such insurance or is otherwise covered as
its interest may appear. PNV shall provide Operator with evidence of insurance
and thirty (30) days prior written notice of cancellation or amendment to PNV's
insurance policies.
14. Force Majeure. Neither party shall have any liability for the
failure to perform or a delay in performing any of its obligations if such
failure or delay is the result of any legal restriction, labor dispute, strike,
boycott, flood, fire, public emergency, revolution, insurrection, riot, war,
unavoidable mechanical failure, interruption in the supply of electrical power
or any other cause beyond the control of any party acting in a reasonable
business-like manner, whether similar or dissimilar to the causes enumerated
above.
15. Assignment.
(a) Operator may sell, assign, transfer or otherwise dispose of its
interest in one or more of the Truckstops (through a change of control, sale of
assets or otherwise) subject to the terms of Section 3(c).
(b) PNV may pledge its interest in this Agreement to any party,
including without limitation, to any bank, recognized lending or leasing
institution or investor as collateral. PNV may sell, assign, transfer or
otherwise dispose of its interest in this Agreement provided that said acquiror
shall: (i) not be the owner or operator of competing truckstops; (ii) assume all
of PNV's rights and obligations hereunder; and (iii) shall be bound by the terms
of this Agreement.
16. Breach. In the event that either party shall fail in any material
respect to perform any obligation under this Agreement, the other party may in
writing notify the non-performing party that such failure constitutes a breach.
If the breach is not remedied or cured within thirty (30) days following receipt
of the notice of breach, without limiting any other remedy which may be
available, the non-breaching party may terminate this Agreement by notice to the
breaching party.
-12-
<PAGE> 13
17. Ownership and Confidentiality. Operator recognizes and agrees that
PNV shall, during the term of this Agreement and thereafter, retain sole
ownership of the System and the PNV Equipment. Operator recognizes the
proprietary nature of the concept and the design of the System, the PNV
Equipment and the Services. Accordingly, Operator and PNV agree to maintain and
cause each of its employees and agents to maintain and keep strictly
confidential the terms and provisions of this Agreement, [******] and all of the
confidential information that it obtains or receives in its status as a
[********************* **************************] or in conjunction with the
operations of the System, the PNV Equipment or the Services. Operator further
agrees that the "Park N' View" name and logo shall be and remain the property of
PNV and all references by Operator to the System or the Services shall
incorporate and/or refer to PNV by its full name (Park N' View), whether in
literature, electronic or print displays, articles, advertising, billboards,
banners or otherwise. The name, Park 'N View, is, or will be, a registered
service mark of PNV and to the extent required by PNV, Operator shall execute a
no cost limited license agreement for the use of such service mark. PNV agrees
to maintain and cause its employees and agents to maintain and keep strictly
confidential all proprietary information received from Operator relating to its
Truckstops, operations and customers.
18. General Provisions.
(a) Notices. All notices required or permitted hereunder shall be
in writing and, may either be delivered by overnight courier, transmitted by
facsimile, or delivered by the United States Mail, postage prepaid, addressed as
follows:
<TABLE>
<S> <C>
To PNV: Ian Williams
President
Park 'N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
Fax Number: (954) 745-7899
With a copy to: James M. O'Connell, Esq.
Kilpatrick Stockton LLP
4101 Lake Boone Trail,
Suite 400
Raleigh, North Carolina 27607
Fax Number: (919) 420-1800
To Operator: President
Travel Centers of America
24601 Center Ridge Road, Suite 200
Westlake, Ohio 44145
Fax Number: (440) 808-3301
</TABLE>
-13-
<PAGE> 14
<TABLE>
<S> <C>
With a copy to: General Counsel
Travel Centers of America
24601 Center Ridge Road, Suite 200
Westlake, Ohio 44145
Fax Number: (440) 808-4310
</TABLE>
All notices shall be deemed delivered only upon actual receipt. Any party may
change its address for purposes of this Agreement by giving notice of such
change to the other parties pursuant to the terms of this Section 18(a).
(b) Expenses. Each party agrees to pay, without right of
reimbursement from any other party, its costs relating to the preparation of
this Agreement and the performance of its obligations hereunder, including
without limitation, fees and disbursements of counsel, accountants and
consultants employed by such party in connection herewith.
(c) Actions; Further Assurances. Subject to the terms and
conditions of this Agreement, each party agrees to: (i) take or cause to be
taken as promptly as practicable all actions and obligations arising herein; and
(ii) do or cause to be done all things to fulfill and comply with its
obligations or the obligations of the other parties to consummate the
transactions contemplated herein.
(d) Press Releases. PNV and Operator shall consult with each other
as to the form and content of all press releases and other public disclosures of
matters relating to this Agreement, the System and the Services. Nothing in this
section shall prohibit PNV or Operator from making any disclosure which its
legal counsel deems necessary or advisable to fulfill such party's disclosure
obligations under applicable law. All public disclosures shall be transmitted by
telecopier to the other party or its counsel for approval prior to publication
or dissemination.
(e) Section Headings. The section headings in this Agreement are
for convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
(f) Applicable Law. This Agreement shall be governed by the laws of
the State of Florida.
(g) Litigation; Prevailing Party. If litigation is brought with
regard to this Agreement, the prevailing party shall be entitled to receive from
the non-prevailing party, and the non-prevailing party shall immediately pay
upon demand, all reasonable fees and expenses of counsel of the prevailing
party.
-14-
<PAGE> 15
(h) Schedules. The Schedules attached to this Agreement are
integral parts of this Agreement and all references to this Agreement shall
include the Schedules.
(i) Modification. This Agreement shall not be modified or amended
except by an instrument in writing executed by the Parties to this Agreement.
(j) Successors And Assigns. This Agreement shall apply to, and be
binding upon, the parties and their respective successors and permitted assigns
(as determined under Section 16).
(k) Severability. If any part or sub-part of this Agreement is
found or held to be invalid, that invalidity shall not affect the enforceability
and binding nature of any other part of this Agreement.
(l) Arbitration. Any controversy, dispute or question arising out
of, or in connection with, or in relation to this Agreement or the
interpretation, performance or non-performance or any breach thereof shall be
determined by arbitration conducted in New York, NY or the home office of the
party not bringing the claim in accordance with the then existing rules of the
American Arbitration Association. PNV and Operator shall each select one
arbitrator, and the two arbitrators shall select a third with the same
qualifications. Any decision rendered shall be binding upon the Parties,
however, the arbitrators shall have no authority to grant any relief that is
inconsistent with this Agreement. The expense of arbitration shall be borne by
the non-prevailing Party.
(m) Integration; Entire Agreement. This Agreement (including
Exhibits, Schedules, documents and instruments referenced herein) constitutes
the entire agreement among the Parties and supercedes all prior agreements and
understandings, both written and oral, among the Parties with respect to the
subject matters hereof. The Parties acknowledge and agree that the Amended Cable
Television and Telephone Services Agreement, dated March 27, 1995, by and
between National Auto/Truckstops Inc. and Park `N View, Inc., as amended, is
hereby terminated and that the Parties hereto shall have no further rights or
obligations thereunder.
(n) Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
and all of which together shall constitute one and the same instrument.
-15-
<PAGE> 16
IN WITNESS WHEREOF, Operator and PNV have caused this Agreement to
be executed pursuant to appropriate legal authority duly given, as of the day
and year first above written.
WITNESSES:
<TABLE>
<S> <C>
PARK 'N VIEW, INC., a
Delaware corporation
/s/ Bill Buzbee
- -------------------------------
/s/ Alex Ezazi By: /s/ Ian Williams
- -------------------------------- ----------------------------------
Ian Williams, President
TA Operating Corporation, a Delaware
Corporation, d/b/a TRAVEL CENTERS
OF AMERICA
/s/
- -----------------------------
/s/ By: /s/
- ------------------------------ ---------------------------------
</TABLE>
-16-
<PAGE> 17
SCHEDULE 1A
LIST OF TRUCKSTOPS OWNED AND OPERATED
BY OPERATOR
<TABLE>
<S> <C> <C>
ASHLAND, VA GREENSBORO, NC BROOKVILLE, PA
BRUNSWICK, GA AMARILLO, TX** COLUMBIA, NJ
ELOY, AZ GALLUP, NM CARNEY'S POINT, NJ
GARY, IN DAYTON, OH HARRISBURG, PA
TUSCALOOSA, AL KNOXVILLE, TN LODI, OH**
BAYTOWN, TX LAS CRUCES, NM** CONCORDIA, MO
ELKTON, MD ROANOKE, VA WILLINGTON, CT
SANTA ROSA, NM LONDON, OH SPARTANURG, SC
STONY RIDGE, OH** CINCINNATI S., OH KINGSVILLE, OH
CHICAGO DALLAS, TX WHEELING, WV
N., IL ATLANTA, GA EFFINGHAM, IL
WEST MEMPHIS, AR MOUNT VERNON, IL WHEELER RIDGE, CA
OKLAHOMA CITY, OK TALLULAH, LA ELGIN, IL
HEBRON, OH ROCKWELL, TX** MERIDIAN, MS
MADISON, GA OAK GROVE, MO MADISON, WI
BLOOMBURY, NJ AMARILLO, TX** WILDWOOD, FL*
MATTHERWS, MO YOUNGSTOWN, OH PROTLAND, OR
MOBILE, AL JEFFERSONVILLE, OH OKLAHOMA CITY, OK (NATL)
REDDING, CA SEVILLE, OH** ALTOONA, IA**
SALT LAKE CITY, UT BARKEYVILLE, PA SEYMOUR, IN
ASHLAND, OH ALBUQUERQUE, NM* LAMAR, PA
COUNCIL BLUFF, IA NEW LISBON, WI** MARTINSBURG, WV**
MONROE, MI** OGALLALA, NE** TOLEDO, OH**
LEBANON, TN** KINGMAN, AZ BLOOMINGTON, IL
ANN ARBOR, MI SAWYER, MI ATLANTA SOUTH, GA
FLORENCE, KY JEFFERSONVILLE, OH ANTIOCH, TN (NATL)*
LAS VEGAS, NV ASHLAND SOUTH, VA*
NORTH EAST, PA**
WYTHEVILLE, VA
</TABLE>
*PNV already installed or
installation commenced 3/1/98
**Installation on hold until
further notice from operator
-17-
<PAGE> 18
SCHEDULE 1B
LIST OF TRUCKSTOPS WHICH ARE OWNED BY OPERATOR
AND WHICH ARE OPERATED BY FRANCHISEES
<TABLE>
<S> <C> <C>
MONTGOMERY, AL JACKSONVILLE, FL MARIANNA, FL*
ST. AUGUSTINE, FL VERO BEACH, FL* COMMERCE, GA
JACKSON, GA* LAKE PARK, GA SAVANNAH, GA*
SLIDELL, LA* MANNING, SC DENMARK, TN
FRANKLIN, TN KNOXVILLE, TN* BUTTONWILLOW, CA*
DENVER, CO FORISTELL, MO GRAND ISLAND, NE
SPARKS, NV DENTON, TX SWEETWATER, TX*
BRANFORD, CT MILLDALE, CT CLAYTON, IN
WHITESTONE, IN SAGINAW, MI ROGERS, MI
CORFU, NY HUDSON, WI LAFAYETTE, LA
SACRAMENTO, CA ONTARIO, CA* SANTA NELLA, CA
HURRICANE, WV NEW LEMONT, IL
</TABLE>
* PNV already installed 3/1/98
-18-
<PAGE> 19
SCHEDULE 1C
LIST OF TRUCKSTOPS WHICH ARE NOT OWNED BY OPERATOR
AND WHICH ARE OPERATED BY FRANCHISEES
<TABLE>
<S> <C> <C>
KENLY, NC* WALCOTT, IA BETO JUNCTION, KS
MT. VERNON, MO STRAFFORD, MO EUGENE, OR
BALTIMORE, MD ALBERT LEA, MN BREEZEWOOD, PA
JANESVILLE, WI
</TABLE>
*PNV already installed 3/1/98
-19-
<PAGE> 20
SCHEDULE 1D
LIST OF FRANCHISEES WHICH HAVE
ENTERED INTO CONTRACTS WITH PNV
1. STALLINGS OIL COMPANY
-20-
<PAGE> 21
SCHEDULE 2
LIST OF CURRENT PNV EQUIPMENT
Current PNV Equipment:
Satellite Dish & Off-air receive antenna
Processing [head-end] equipment
Telephone PBX switch and operator console
Distribution cables
Parking lot plug-in boxes
Cable TV "billing" computer and software
Membership card dispenser
Telephone & Cable TV accessories for resale
Voice-mail service
-21-
<PAGE> 22
SCHEDULE 3
LIST OF CURRENT PROGRAMMING SCHEDULE
Current Programming Schedule:
<TABLE>
<CAPTION>
Channel # Program
------------------ -------------------------
<S> <C>
02 PLAYBOY
04 HBO
05 HBO2
06 HBO3
07 DISCOVERY
08 ESPN 2
09 FOX
10 DEN
11 CNN HN
12 WEATHER
13 ESPN
14 NBC
15 ABC
16 A&E
17 CBS
18 TNN
19 TNT
20 WGN
21 PNV
</TABLE>
-22-
<PAGE> 23
SCHEDULE 4
LIST OF CURRENT TELEPHONE SERVICES
Current Telephone Services:
1+ calls
1-800 calls
Local calls
Operator services
Direct call back to stall # (automated)
Message waiting
Wake-up calls (automated)
-23-
<PAGE> 24
SCHEDULE 5
REVENUE AND PROFIT ALLOCATION
<TABLE>
<CAPTION>
DESCRIPTION OF SERVICE OR SALE OPERATOR'S PORTION
------------------------------ ------------------
A. Gross Receipts Based Programs
<S> <C>
1. Gross Receipts* from the sale of monthly and 35% for five (5) year Term;
daily memberships and other services from the 40% for five (5) year Automatic Renewal Term
vending machine at each of Operator's
Truckstop.
2. Gross Receipts* from the sale of Power Plans 35% for first month of service and 10% for each additional month
at each of Operator's Truckstop. of service under Power Plan
3. Gross Receipts* from the sale of memberships by 10% of each months receipts will be placed in a pool and
telemarketing staff. allocated among all Truckstops based upon the number of wired
stalls at each Truckstop.
4. Gross Receipts** from sales to Fleets. 10% of each months receipts from all fleets and fleet drivers,
other than those who purchase memberships under the PNV-TA Fleet
Sales Program which shall be allocated pursuant to Section 8(b),
will be placed in a pool and allocated among all Truckstops based
upon the number of wired stalls at each Truckstop.
</TABLE>
<TABLE>
B. Net Profit Based Programs
-------------------------
<S> <C>
1. Net Profits*** derived from Advertising. 50%
2. Net Profits*** derived from Pay Per View. 50%
3. Net Profits *** derived from sale of long 35%
distance phone time.
</TABLE>
* Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the Services
less the actual cost to PNV of 60 free minutes of phone time or such
lesser amount as actually given to customers and applicable taxes. Gross
Receipts shall not include any revenue received by PNV or the Operator
for services listed under Net Profit Based Programs above.
** Gross Receipts shall mean the aggregate gross revenue collected by PNV or
the Operator, during any calendar month, from the sale of the Services
less the actual cost to PNV of 60 free minutes of phone time or such
lesser amount as actually given to customer, direct sales commissions and
applicable taxes. Gross Receipts shall not include any revenue received
by PNV or the Operator for services listed under Net Profit Based
Programs above.
*** Net Profits shall mean the aggregate gross revenue collected by PNV or
Operator less Directly Related Expenses. Directly Related Expenses shall
mean all direct costs and expenses incurred by PNV with respect to the:
(i) acquisition and installation of the equipment necessary to provide
advertising, Pay-Per-View or long distance phone time over the System;
(ii) sale, promotion and production of advertising, Pay-Per-View or long
distance phone time; (iii) salaries and commissions paid to and expenses
incurred by individuals or entities which sell advertising, Pay-Per-View
or long distance phone time; (iv) fees paid to pay-per-view programmers;
and (v) fees paid or costs incurred to provide long distance phone time.
Directly Related Expenses shall not include: (i) allocations of corporate
overhead (other than the advertising department); (ii) depreciation of
the PNV Equipment listed on Schedule 2, other than the equipment
necessary to provide advertising, Pay-Per-View or long distance phone
time over the System; (iii) costs and expenses incurred by PNV in the
promotion of the Services which are shared jointly by PNV and Operator;
and (iv) other costs and expenses which are not directly related to the
sale and promotion of advertising, Pay-Per-View or long distance phone
time over the System.
-24-
<PAGE> 25
SCHEDULE 6
LIST OF TRUCKSTOPS TO WHICH EXCLUSIVITY PROVISIONS
OF SECTION 9(A) DO NOT APPLY
SIGNED CONTRACTS - CONFIDENTIAL
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AL Birmingham Pilot Pilot Travel Center I-20/59, Exit 123 |_| |_| |_|
AL Birmingham South Star Fuel Center I-65 Exit 262 B (Finley Blvd.) |_| |X| |_|
AL Brewton Wallace Interstate Texaco I-65, Exit 69 |_| |_| |X|
AL Bucksville Petro Petro Stopping Center #19 I-20/59 Exit 100 |_| |_| |_|
AL Cusseta Perlis Truck Stop of AL I-85 Exit 79 |X| |_| |X|
AL Livingston Noble Truckstop |_| |X| |_|
AL Mobile Pilot Pilot Travel Center I-10, Ex 13 |_| |_| |_|
AL Robertsdale Oasis Truck Plaza I-10 Exit 53 (LA-Wilcox Rd.) |_| |X| |_|
AL Shorter Petro Petro:2 #48 I-85 Exit 22 (Depot Rd) |_| |_| |_|
AL Tuscaloosa Baggett's Travel Center I-59 & US 11 By-Pass, Mile Marker #76 |X| |_| |_|
AL Alma Ozark Truck Plaza I-40 Exit 13 (US 71) |_| |X| |_|
AR Arkadelphia J-Mart #2 Food & Fuel 1-30 & Hwy 7, Exit 78 |_| |X| |_|
AR Brinkley Shell Super Stop #400 I-40 & US Hwy 78 Wheatley |_| |_| |X|
AR Heth J-Mart #16 |_| |X| |_|
AR Little Rock County Line Truckstop #38 13400, I-30, County Line Exit |_| |_| |X|
AR Malvern J-Mart #1 Food & Fuel I-30 & Hwy 270, Exit 98-A |_| |X| |_|
</TABLE>
-25-
<PAGE> 26
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AR North Little Rock Petro Petro Stopping Center #26 I-40 Exit 161(E Galloway) |_| |_| |_|
AR North Little Rock Pilot Pilot Travel Center I-40 Exit 161, Galloway Rd. |_| |_| |_|
AR North Little Rock Truckomat I-40 @ Exit 161 |X| |_| |_|
AR Russellville Mapco Mapco Express |_| |_| |_|
AR W. Memphis Pilot Pilot Travel Center I-40/55, ?Exit 280 |_| |_| |_|
AR West Memphis J-mart #3 |_| |X| |_|
AR West Memphis Petro Petro Stopping Center #11 I-40 Exit 280 (Club Rd.) I-55 Exit 4 |_| |_| |_|
AR West Memphis Mapco Mapco Express I-40, Martin Luther King exit |_| |_| |_|
AR West Memphis Natl Memphis Gateway Travel Plaza I-40 & I-55 Exit 278 (7th Street) |_| |_| |X|
AR Wheatley Phillips 66#401 I-40, US 78 |_| |_| |X|
AZ Ash Fork Ted's Truck Center I-40, Exit 146 |_| |X| |_|
AZ Casa Grande Pilot Pilot Travel Center Exit 200 |_| |_| |_|
AZ Eloy Petro Petro Stopping Center #6 I-10(Exit 200) |_| |_| |_|
AZ Holbrook Holbrook Truck Plaza I-40 Exit 292, AZ 77 N. |X| |_| |_|
AZ Kingman Snobird Truckstop I-40 & Exit 66 |_| |_| |X|
AZ Kingman Pilot Pilot Travel Center I-40 & SR93, Exit 48 |_| |_| |_|
AZ Kingman Petro Petro Stopping Center #15 I-40 Exit 66 (Blake Ranch Rd) |_| |_| |_|
AZ Phoenix Pilot Pilot Travel Center |_| |_| |_|
AZ Quartzsite Pilot Pilot Travel Center I-10, Exit 17 |X| |_| |_|
AZ Quartzsite Ted's Truck Center I-10, Exit 17 |_| |X| |_|
AZ Salome Tomahawk Auto/Truck Plz Salome I-10 Exit 45 |_| |_| |X|
</TABLE>
-26-
<PAGE> 27
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AZ San Simon 4-K Truck Stop I-10 Exit 378 |_| |X| |X|
AZ Tonopah Rip Rip Griffin Travel Center I-10 Exit 103 (339th Ave) |X| |_| |_|
AZ Wilcox Rip Griffin's Truck/Travel Exit 340 |X| |_| |_|
AZ Winslow Pilot Pilot Travel Center I-40 Exit 253, Northpark Dr. |_| |_| |_|
AZ Yuma Barney's Auto/Truck Plaza I-8 Exit 12 (Fortuna Rd) |_| |X| |_|
CA Bakersfield Holden Truck Plaza US99& Pierce Road |_| |_| |X|
CA Bakersfield Bruce's Bakersfield Truckstop CA 58 & CA 184, Weedpatch Hwy |X| |_| |_|
CA Bakersfield Bear Mountain Travel Stop US Hwy 99, Exit 223 |_| |_| |X|
CA Barstow Pilot Pilot Travel Center I-15 & Lenwood Road |_| |_| |_|
CA Barstow Rip Rip Griffin Travel Center I-15 Exit69 (Lenwood Rd) |X| |_| |_|
CA Blythe Southwest Express Travel Center I-10 & Mesa Drive |X| |_| |_|
CA Buttonwillow TCA-76 Bruce's Buttonwillow Truckstop I-5 & Highway 58 |X| |_| |_|
CA Corning Petro Petro Stopping Center #9 I-5 & South Ave |_| |_| |_|
CA El Centro Imperial 8 Travel Center I-8 at 4th Street |X| |_| |_|
CA Fontana Truck Town Truck Stop I-10 & Cherry St (NW Corner) |_| |X| |_|
CA Gustine San Luis Truck Stop Hwy 152 West |X| |_| |_|
CA Los Banos San Luis Travel Plaza CA 152 & CA 33 |X| |_| |_|
CA Madera Pilot Pilot Travel Center I-99 at Ave. 18.5 |_| |_| |_|
CA North Palm Springs Pilot Pilot Travel Center I-10,Garnet & Indian Ave. |_| |_| |_|
CA Ontario Natnl Ontario 76 Truck Plaza I-10 & Milliken Avenue Exit |_| |X| |_|
CA Rialto 10-10 Truck Stop I-10 & Riverside Exit |_| |X| |_|
</TABLE>
-27-
<PAGE> 28
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CA Ripon Jimco Truck Plaza CA 99 & Jacktone Rd |_| |X| |_|
CA Salinas Gieg's Truck Stop 101 Hwy at Monterey Exit |X| |_| |_|
CA San Francisco Olmpian Auto & Truck Center |_| |X| |_|
CA Santa Nella San Luis Truck Stop Hwy 152 & 33 |_| |_| |X|
CA Stockton Vanco Truck & Auto Plaza I-5 at Hwy 4/Charter Way |X| |_| |_|
CA Westley Westley Triangle Truck Stop I-5 & Westley Exit |_| |X| |_|
CO Brighton Tomahawk Truck Stop I-76 Exit 17 (CO 51) |_| |_| |X|
CO Denver Pilot Pilot Fuel Center #315 I-70 & Steele Street |_| |_| |_|
CO Denver/Commerce SAP Sapp Brothers - Denver I-70 Exit 278 (E 49th) |_| |X| |_|
CO Denver/Wheatridge Natnl Denver West Travel Center I-70 & Ward Road, Exit 266 |X| |_| |_|
CO Fountain Tomahawk Truck Stop I-25 Exit 128 |_| |_| |X|
CO Limon Rip Rip Griffin's Truck/Travel I-70 Exit 359 (US 24) |X| |_| |_|
CO Loveland Johnson's Corner Truck Stop I-25 Exit 254 |X| |_| |_|
CO Pueblo Pinon Truck Stop I-25, Exit 110 |_| |X| |_|
CO Trinidad Trinidad Fuel Stop I-25, Exit 110 |_| |X| |_|
CO Watkins Tomahawk Truck Stop I-70 Exit 295 (12 Mi E of Denver) |_| |_| |X|
CT Branford New Haven 95 East Truck Stop I-95 Exit 58 at Leetes Island |X| |_| |X|
CT Milldale American Eagle Auto/Truck Exit 28, Hwy 322 |X| |_| |_|
CT New Haven Natnl New Haven 95 East Truckstop CT Exit 56 on I-95, Leekes Island Rd., M.M. #5 |X| |_| |_|
CT Southington Natnl American Eagle 76 Auto/Truck Plaza I-84 and Route 322, Exit 28 |X| |_| |_|
DE New Castle Delaware Truck Plaza US 13-40 NB (at split) |_| |X| |_|
</TABLE>
-28-
<PAGE> 29
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FL Fort Pierce Pilot Pilot Travel Center I-95, Exit 65 |_| |_| |_|
FL Ft. Myers Fort Meyers Travel Plaza I-75, Exit 24 |_| |_| |_|
FL Jacksonville Gate Petroleum Co. #1193 I-295 Loop Exit 9A |_| |_| |X|
FL Jacksonville Gate Petroleum Co. #1143 I-95 & Dunn Avenue |_| |_| |X|
FL Lake City L&G Auto & Truck Plaza I-75 Exit 80 (US 41-441) |X| |_| |X|
FL Lloyd Capital City Truck & Travel Plaza I-10 Exit 32 (FL 59) |X| |_| |_|
FL Marianna Natnl Marianna 76 Auto/Truckstop I-10 Exit 21 (S.R. 71) MM#141 |_| |_| |_|
FL Marianna Pilot Pilot Travel Center I-10 Exit 21 |_| |_| |_|
FL Mossy Head Lucky 13 Truck and Auto Plaza I-10 Exit 13 |_| |_| |X|
FL Ocala Pilot Pilot Travel Center I-75 @SR 484,Ex 67 |_| |_| |_|
FL Ocala Speedway Speedway I75 Exit 71 |_| |_| |_|
FL Ocala Petro Petro Stopping Center #23 I-75 Exit 72 (@ Hwy. 318) |_| |_| |_|
FL Tampa Tampa 301 Truckstop I-4 Exit 301 |_| |_| |X|
FL Tampa New Cigar City T/S I-4 Exit 6 (US 92 W) |X| |_| |_|
FL Vero Beach Natnl Courtesy House Auto/Truck Plaza I-95 Exit 68 (Hwy 60) |_| |_| |_|
FL Wildwood Natnl Wildwood Travel Center I-75 & Route 44, Exit 66 |_| |_| |X|
GA Atlanta Petro Petro Stopping Center #22 I-285 Exit 8 (Bankhead Hwy) |_| |_| |_|
GA Atlanta (East) Pilot Pilot Travel Center I-285 Exit 37 |_| |_| |_|
GA Atlanta (West) Pilot Pilot Travel Center I-285, Exit 11 |_| |_| |_|
GA Brunswick Pilot Pilot Travel Center I-95, Exit 6 |_| |_| |_|
GA Carnesville Petro-HSV Petro Stopping Center I-85 Exit 55 |_| |_| |_|
</TABLE>
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<PAGE> 30
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GA Cordele Georgia Travel Center I-75 Exit 31 (Wenona) |X| |_| |X|
GA Cordele Mapco Mapco Express I75 Exit 33 |_| |_| |_|
GA Dalton Pilot Pilot Travel Center I-75,Connector 3,Exit 135 |_| |_| |_|
GA Hogansville Noble truckstop |_| |X| |_|
GA Jackson TCA-76 Atlanta South 76 Auto/Truck Plaza I-75 Exit 66(Rt. 36) |_| |_| |_|
GA Kingsland Cisco Travel Plaza I-95 Exit 2A |X| |_| |X|
GA Madison TCA-76 Madison 20 Truck Plaza I-20 & U.S. 441, Exit #51, M.M. #115 |_| |_| |_|
GA Port Wentworth Speedway Speedway I-95 Exit 19 |_| |_| |_|
GA Priceville Mapco Mapco Express |_| |_| |_|
GA Ringgold ChooChoo Truck Wash Plaza I-75 at Exit 139 |X| |X| |X|
GA Rising Fawn Mapco Mapco Express I-59 Exit 1 |_| |_| |_|
GA Savannah Natnl Savannah 76 Truck Plaza I-95 Exit 14 (U.S. 17 So) |_| |_| |_|
GA Tallapoosa Pilot Pilot Travel Center I20, Exit 1 |_| |_| |_|
GA Tallapoosa Noble Auto/Truck Plaza I-20 Exit 1 (GA 100) |_| |X| |_|
GA Thomson Samuel's Ambest Truck Stop I-20 Exit 60 (GA 150) |X| |_| |_|
GA Villa Rica Leathers Truck Stop I-20 Exit 6 (Liberty Rd) |X| |_| |_|
IA Clear Lake Petrol Pumper #0069 I-35 W Exit #194 |X| |_| |_|
IA Coralville Hawk I Feed & Relay Station I-80 Exit 242 |_| |_| |X|
IA Council Bluffs Truckomat of Council Bluffs I-80 & I-29 @ Exit 3 |X| |_| |_|
IA Council Bluffs Council Bluff/Travel Centers of America I-80 & I-29, Exit 3, 192 Lake Manawa |X| |_| |_|
IA Council Bluffs Pilot Pilot Travel Center I-80, I-29 & 24th St., Exit 1B |_| |_| |_|
</TABLE>
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<PAGE> 31
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IA Council Bluffs SAP Sapp Brothers Oasis I-29-80 Exit 1 B (24th St) |_| |X| |_|
IA Des Moines Pilot Pilot Travel Center I-35/80 Exit 126 (Douglas Ave) |_| |_| |_|
IA Des Moines/Altoona Boss Bosselman Travel Center I-80 Exit 142 (US 65-69) |X| |_| |_|
IA Walcott Pilot Pilot Travel Center I-80 & Co. R. Y40, Exit 284 |_| |_| |X|
IA Walcott Iowa 80 Truck Stop Exit 284 |X| |_| |_|
IA Williams I-35 Truck Stop Exit 144 |X| |_| |_|
ID Downey Flags West Truck Stop I-15, Exit 31 |_| |_| |X|
ID Eden Travelers Oasis T/P I-84 Exit 182 |X| |_| |X|
ID Montpelier Ranch Hand Truck Stop, Inc. Hwy 30 at Montpelier |X| |_| |_|
ID Mountain Home Pilot Pilot Travel Center I-84,Exit 95 (Hwy. 20) |_| |_| |_|
ID Twin Falls Petro-French Petro:2 #82 I-84 Exit 173 (US 93) |_| |_| |_|
IL Bloomington Pilot Pilot Travel Center I-55, Exit 160A |_| |_| |_|
IL East Saint Louis Gateway Midstate Truck Plaza I-55-70 Exit 4 (IL 203 N) |X| |_| |_|
IL Effingham Bobber Auto/Truck Plaza I-57-70 Exit 160 (IL 32-33) |_| |_| |_|
IL Effingham T/A Truckstops of America I-57-70, Exit 160, SR 32 & 33 |_| |X| |_|
IL Effingham Petro Petro Stopping Center #21 I-57-70 Exit 159 |_| |_| |_|
IL Hampshire Arrowhead Shell Oasis I-90 Exit 36-1/2 (US 20) |X| |X| |_|
IL Marion Marion Truck Plaza I-57 Exit 54 B (IL 13) |_| |X| |_|
IL McLean Dixie Truckers Home I-55 Exit 145 (US 136) |X| |_| |X|
IL Mendota Gromann's I-39 Auto/Truck Plaza I-39 & IL Rt. 34, Exit 72 West |_| |X| |_|
IL Monee Windy City South Auto/Truck Plaza I-57 & Monee Road M.M. #335 |_| |_| |_|
</TABLE>
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<PAGE> 32
<TABLE>
<CAPTION>
STATE TRUCKSTO GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IL Morris Romines Standard Truck/Car Plaza I-80 Exit 112 B (IL 47) |X| |_| |_|
IL Peru SAP Sapp Brothers - Illinois I-80 Exit 73 (Plank St) |_| |X| |_|
IL Peru/Lasalle Jack's La Salle/Peru Auto/Truckstop I-80, Exit 75 (US51) |_| |_| |X|
IL Rochelle Petro-French Petro Stopping Center #59 I-39 Exit 99 (38) |_| |_| |_|
IL South Holland Truckomat I-94 159th St. @ Exit 73B |X| |_| |_|
IL Troy Pilot Pilot Travel Center I-55 & I70, Exit 18 |_| |_| |_|
IL Troy St. Louis East Truck Plaza I-55 & I-70 Exit 18 (St. Rt. 162) |_| |_| |_|
IL Tuscola Dixie Truckers Home I-57 Exit 212 (US 36) |X| |_| |X|
IL Tuscola Pilot Pilot Travel Center US36 & 1-57, Exit 212 |_| |_| |_|
IL Woodhull Woodhull Plaza I-74 & SR 17 @ Exit 32 |X| |_| |_|
IN Angola Natnl-French Angola 76 Traveler's Mall I-69 & Baker Rd. 1/2 Mi N of IN Toll Rd, M.M. |_| |_| |_|
#144 on i-80, M.M. #157-I-69
IN Brazil Brazil 70 Ambest T/S I-70 Exit 23 (IN 59) |X| |_| |_|
IN Cambridge City Stop One Truck Plaza I-70 Exit 137 (IN 1 SW |_| |_| |X|
IN Cloverdale Cloverdale Travel Plaza I-70 & hwy 231, Exit 41 |_| |_| |X|
IN Dale 231 Ambest Plaza I-64 Exit 57 (US 231) |X| |_| |_|
IN Daleville Daleville '76 ATP I-69 Exit 34 (IN 67 W) |X| |_| |_|
IN Dyer Speedway Speedway Hwy 30, Hwy 41 |_| |_| |_|
IN Evansville Pilot Pilot Travel Center I64, Exit 25B |_| |_| |_|
IN Fort Wayne Fort Wayne Truck Plaza I-69 Exit 109-A (US 30-33-24) |_| |_| |_|
IN Fortville Pilot Pilot Travel Center I-69, Ex. 14 |_| |_| |_|
IN Fremont Angola 76 Travelers Mall Exit 144 off I-80 North on I-69 |_| |_| |X|
</TABLE>
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<PAGE> 33
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IN Fremont Speedway Speedway I-69 Exit 157 |_| |_| |_|
IN Gary Pilot Pilot Travel Center I-80/94 & Burr St., Exit 6 |_| |_| |_|
IN Gary Steel City Truck Plaza I-80-94 Exit 9 A (Grant St S) |X| |_| |_|
IN Gaston I-69 Truck Plaza I-69 Exit 45 (IN 28) |_| |X| |_|
IN Greenfield Pilot Pilot Travel Center I-70 Exit 96 |_| |_| |_|
IN Grovertown Grovertown Truckstop US 30 MM 56 (1/2 mi E of IN 23) |X| |_| |X|
IN Haubstadt Haubstadt 41 Travel Plaza Jct. US 41 & Hwy 68 |X| |_| |X|
IN Haubstadt Lakeview Truck Plaza I-64 Exit 25 B (1 mi N on US 41) |X| |_| |_|
IN Indianapolis Pilot Pilot Fuel Center #318 I-465 & SR 37, Ex 4 |_| |_| |_|
IN Knightstown Gas America #43 I-70 @ Exit 115, Hwy 109 |X| |_| |_|
IN Lake Station Petro-Welsh Petro Stopping Center #55 I-80-94 Exit 15 B (In 51 - Ripley N) |_| |_| |_|
IN Lake Station TPort Travelport I-80-94 Exit 15 B |_| |_| |X|
IN Leavenworth Country Style Plaza-Leavenworth I-64, Exit 92 |_| |_| |X|
IN Leavenworth Kiel Bros. Stop 92 I-64 & S.R. 66, Exit 92 |_| |_| |_|
IN Lowell Petro-Wel Crossroads Plaza I-65 Exit 240 (Rte. 2) |_| |_| |_|
IN Memphis Country Style Travel Plaza I-65 Exit 16 |_| |_| |X|
IN Memphis Davis Davis Brothers Travel Plaza I-65 Exit 16 |X| |_| |_|
IN New Lisbon-KFC Natnl New Lisbon Auto/Truck Plaza I-70 & Wilbur Wright Road, Exit 131 |_| |X| |_|
IN New Paris (IN/OH) Petro-B Beacon Petro Stopping Center #57 I-70 Exit 156 B (US 40) |_| |_| |_|
IN Porter Steel City Express I-94 @ Exit 22-B |X| |_| |_|
IN Porter TPort Travelport Truck Plaza I-94 Exit 22 B (US 20 E) |_| |_| |X|
</TABLE>
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<PAGE> 34
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IN Remington Natnl Hoosier Heartland/Travel Center I-65 & U.S. 24, M.M. #201 |_| |X| |_|
IN Rensselaer Grandma's Travel Center I-65 & State Route 114, Exit 215 |_| |_| |X|
IN Rileysburg Pilot Pilot Travel Center I-74, Exit 4 SR 63 |_| |_| |_|
IN Ross Point Natnl Hoosier Heartland/Ross Point Travel I-74 New Point Interchange, M.M. #143 |_| |X| |_|
IN Sellersburg Davis Hamburg Service Center I-65 Exit 7 (IN 60) |_| |_| |_|
IN Terre Haute Pilot Pilot Travel Center I-70 & SR46, Exit 11 |_| |_| |_|
IN Whiteland Kiel Kiel Brothers Oil Stop #95 I-65 Exit 95 |_| |_| |_|
IN Whiteland Pilot Pilot Travel Center I-65 & Whiteland Rd., Exit 95 |_| |_| |_|
IN Whiteland Speedway Speedway I65,Exit 95 |_| |_| |_|
IN Whitestown Natnl Indy 500 Truck Plaza I-65 & S.R. 334 (Whitestown-Zionsville Exit) |_| |X| |_|
KS Newton Newell Truck Plaza I-135 Exit 31 (US 50 & KS 15) |X| |_| |_|
KS Oakley Mitten Truck Stop I-70 Exit 76 (US 40) |_| |X| |_|
KS Salina Petro-B Beacon Petro: 2 #81 I-70 Exit 252 |_| |_| |_|
KS Salina Salina West Truck Center I-135 Exit 92 (Crawford St) |_| |X| |_|
KS Salina Boss Bosselman Travel Center I-70 Exit 252 (9th St) |X| |_| |_|
KS Topeka Topeka Travel Plaza I-79 Exit 356/I-470 Exit 1 |_| |X| |_|
KS Wakeeney Wakeeney Travel Plaza I-70 & Hwy 283 |_| |_| |X|
KY Brooks Pilot Pilot Travel Center I-65, Ex 121 |_| |_| |_|
KY Corbin Pilot Pilot Travel Center I-75 @ US 25 E, Exit 29 |_| |_| |_|
KY Elizabethtown Petro Big "T"Truck Stop I-65 - 31 W., Exit 91 |_| |_| |_|
KY Franklin Mapco Mapco Express |_| |_| |_|
</TABLE>
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<PAGE> 35
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
KY Georgetown Pilot Pilot Travel Center I-75 Exit 129 |_| |_| |_|
KY Georgetown Speedway Speedway I-75 Exit 129 |_| |_| |_|
KY Glendale Country Style Plaza-Glendale I-65, Exit 86 |_| |_| |X|
KY Grayson Pilot Pilot Travel Center I-64 & KY7, Exit 172 |_| |_| |_|
KY Henderson Henderson Auto/Truck Plaza 2214 Hwy 41 N. |X| |_| |_|
KY Horse cave Drivers Travelmart #400 |_| |X| |_|
KY Lebanon Junction Davis Davis Brothers Travel Plaza I-65 Exit 105 (KY 61) |_| |_| |_|
KY London Curry Petrol Auto Truck Center I-75 @ Exit 41 |X| |_| |_|
KY London Expressway Shell I-75 @ Exit 38, Hwy 192 |X| |_| |_|
KY Mortons Gap Madisonville Auto/Truck Plaza Pennyrile Pky @ Exit 37 |X| |_| |_|
KY Oak Grove Pilot Pilot Travel Center I-24 & US 41-A, Ex 86 |_| |_| |_|
KY Olive Hill Olive Hill Happy Mart I-64 Exit 161 (US 60 E) |X| |_| |_|
KY Paducah Southern Pride Auto/Truck Plaza I-24 Exit 16 (Hwy 68) |X| |_| |X|
KY Paduucah Pilot Pilot Travel Center I-24, Exit 3 |_| |_| |_|
KY Pendleton Pilot Pilot Travel Center I-71 Hwy 153, Exit 28 |_| |_| |_|
KY Pendleton Davis Pendleton 76 Auto/Truck Stop I-71 Exit 28 (KY 153) |X| |_| |_|
KY Richwood 1/Walton Pilot Pilot Travel Center I-75, Exit 175 |_| |_| |_|
KY Richwood 2 Pilot Pilot Travel Center I-75, & KY338, Exit 175 |_| |_| |_|
KY Simpsonville Pilot Pilot Travel Center I-64, Exit 28 |_| |_| |_|
KY Sonora Davis Sonora Davis Brothers Truckstop I-65 Exit 81 (KY 84) |X| |_| |_|
KY Waddy Waddy 76 Truck Plaza I-64 Exit 43 (KY 395) |X| |_| |X|
</TABLE>
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<PAGE> 36
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
KY Williamsburg Mapco Mapco Express |_| |_| |_|
LA Egan Manuel's I-10 Truck Stop I-10 & LA 9, Exit 76 |_| |X| |_|
LA Greenwood Kelly's Truck Terminal Inc. I-20 West, 79 & 80 Exit |X| |_| |X|
LA Hammond Petro Petro Stopping Centre #10 I-12 Exit 40 @ Hwy. 51 |_| |_| |_|
LA Hammond Pilot Pilot Fuel Center #300 I-12 Hwy 51, Exit 40 |_| |_| |_|
LA New Orleans New Orleans Truck & Travel Center I-510, Old Gantilly Road |_| |_| |X|
LA Rayville Pilot Pilot Travel Center I-20 & SR 137, Exit 138 |_| |_| |_|
LA Shreveport Natnl-Franch Kelly's Truck Terminal I-20 & Rt 79 Exit 5 |_| |_| |_|
LA Shreveport Petro Petro Stopping Center I-20 Exit 8 (Industrial Loop) |_| |_| |_|
LA Slidell Natnl Slidell Travel Center Natl. 76 I-10 Exit 266 (US 190E,Gause Blvd.) |_| |_| |_|
MA Chicopee Pride Traavel center I-90/Mass Pike at Exit 6, I-291 |X| |_| |_|
MA Shrewsbury Flynn's Truck Stop US 20 & MA 140 |_| |X| |_|
MD Baltimore Travelport Truck Plaza I-95 Exit 57 |X| |_| |X|
MD Elkton Petro-HSV Petro Stopping Center I-95 Exit 109 A |_| |_| |_|
MD Frederick Frederick I-70 Truck City I-70 Exit 54 (MD 85 & 355) |_| |_| |X|
MD Millersville New transit truckstop I-97 Exit 10 |_| |X| |_|
MD Perryville Pilot Pilot Travel Center I-95 @ SR 222, Ex 93 |_| |_| |_|
MD Queenstown Diesel truckstop |_| |X| |_|
ME Fairfield Truckers International I-95 Exit 35 (ME 139 |_| |X| |_|
ME Kittery Howell's Auto Truck Stop I-95 Exit 2 US-1 |X| |_| |_|
MI Battle Creek Te-Khi Truck/Auto Plaza I-94 Exit 104 (11 Mile Rd) |X| |_| |X|
</TABLE>
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<PAGE> 37
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MI Benton Harbor Petro-Welsh Petro Stopping Center I-94 Exit 30 |_| |_| |_|
MI Bridgeport Smithton Alpine Auto Truck Plaza, Inc. I-75, Brudgeport Exit, MM144 |_| |_| |_|
MI Dexter Pilot Pilot Travel Center I-94 & Baker Road |_| |_| |_|
MI Hartland Oasis Truck Stop US 23 Exit 67 (MI 59) |_| |X| |_|
MI Lansing/Diamon. Windmill Truckstop U.S. 27, I-69 & I-96 6 Mi S/W Lansing 98A |X| |_| |_|
MI Monroe Pilot Pilot Travel Center I-75 @ Nadeau Rd, Ex 18 |_| |_| |_|
MI Tekonsha Tekon Travel Plaza I-69, MI 60 & Old US 27 |_| |_| |X|
MN Albert Lea Trails Truck & Travel Plaza I-35 Exit 11 NB/12 SB (65 E & 16) |_| |X| |_|
MN Alden Petrol Pumper #0073 I-90 MM 146 |X| |_| |_|
MN Clearwater Clearwater Travel Plaza I-94 Exit 178 (CR 24) |_| |X| |_|
MN Dakota Trucker's Inn Dakota I-90 & Country Rd 12., Exit 266 |_| |_| |X|
MN Ellendale Trucker's Inn Ellendale I-35 & Hwy 30, Exit 26 |_| |_| |X|
MN Fairbault Trucker's Inn Fairbault I-35 & Hwy 21, Exit 59 |_| |_| |X|
MN Glyndon Trucker's Inn Glyndon I-94 & Country Rd 11, Exit 6 |_| |_| |X|
MN Hasty Petrol Pumper #0066 Jctn 194 @ Exit #183 |X| |_| |_|
MN Owatonna Petrol Pumper #0065 I-35 @ Exit 42, Hwy 14W |X| |_| |_|
MN Rochester Petrol Pumper #0061 4100 Hwy 63 S. @ Hwy 52 |X| |_| |_|
MN Rogers Natnl Twin City West Auto/Truck Plaza I-94 & Hwy 101, M.M. #207 |X| |_| |_|
MN S. Minneapolis Petrol Pumper #0079 US Hwy 52 |X| |_| |_|
MN Saint Paul Metro Truck Plaza I-494 Exit 64A (Hwy 56 N) |_| |X| |_|
MN Sauk Centre Trucker's Inn I-94 Exit 127 (US 71) |_| |_| |X|
</TABLE>
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<PAGE> 38
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MN Stewartville Trucker's Inn Stewartville I-90 & US 63, Exit 209 |_| |_| |X|
MO Boonville Bobber Auto Truck Plaza I-70 & Hwy B, Exit 103 |_| |X| |_|
MO Charleston Pilot Pilot Travel Center I-57, Ex 10 |_| |_| |_|
MO Columbia Midway Auto/Truck Plaza I-70 Exit 121 (US 40) |_| |_| |X|
MO Cuba Voss Truck Port I-44 Exit 208 (MO 19) |_| |_| |X|
MO Grain Valley Pilot Pilot Travel Center I-70, Exit 24 |_| |_| |_|
MO Hayti Double Nickel Fuel center I-55 Exit 19 |_| |X| |_|
MO Joplin Petro-Franch Petro Stopping Center #54 I-44 & Highway 43 (Exit 4) |_| |_| |_|
MO Joplin Pilot Pilot Travel Center I-44 & MO 435, Exit 4 |_| |_| |_|
MO Kearney Kearney Truck Plaza I-35 & I-27 @ Hwy 92 |X| |_| |_|
MO Kingdom City Petro Petro Stopping Center # 18 I-70 Exit 148 (US 54) |_| |_| |_|
MO Lebanon B&D Auto/Truck Plaza I-44 Exit 127 (US 66 W) |X| |_| |_|
MO Marston Pilot Pilot Travel Center I-55 & St. Jude Road, Exit 40 |_| |_| |_|
MO Oak Grove Natnl Travel Centers of America/Oak Grove I-70 & Rte H., Exit 28 |_| |_| |_|
MO Oak Grove Oak Grove Ambest T/S I-70 Exit 28 |X| |_| |_|
MO Pevely I-55 motor Plaza I-55 Exit 180 |_| |X| |_|
MO Rock Port Rock Port Truck Plaza I-29 Exit 110 (US 136 W) |_| |X| |_|
MO Saint Genevieve J&N Truck Stop I-55 Exit 143 (CR M&N) |X| |_| |_|
MO Strafford Natnl Travel Centers of America/Stafford I-44 & Rt. 125, Strafford Exit 88, M.M. #89 |X| |_| |_|
MO Sullivan Bobber Travel Center I-44 Exit 225 (MO 185 N) |X| |_| |_|
MO Williamsburg MOCI Travel Plaza |_| |X| |_|
</TABLE>
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<PAGE> 39
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MO Escalawpa JJ's 63 Truck Stop I-10 Exit 69 (MS 63) |_| |X| |_|
MS Hickory Flat Christy's Travel Plaza |_| |X| |_|
MS Jackson Pilot Pilot Travel Center I-20 & US 49, Ex 47 |_| |_| |_|
MS McComb Fernwood Truck Stop I-55 @ Exit 13 |X| |_| |X|
MS Vaiden 35-55 Truck Plaza I-55 Exit 174 (MS 35) |X| |_| |X|
MT Belgrade Blair's Truck Stop I-90, Exit 298 (MT 85) |_| |X| |_|
MT Hardin Blair's Truck Stop I-90 & MT Exit 495 |_| |X| |_|
MT Helena High Country Travel Plaza |_| |X| |_|
MT Laurel Pelican Truck Plaza I-90, Exit 437 |_| |X| |_|
MT Missoula Muralt's Truck Plaza I-90 Exit 96 (US 93) |X| |_| |_|
MT Missoula Crossroads Truck Center I-90 Exit 96 (US 93) |_| |X| |_|
NC Candler TPort Travelport I-40 Exit 37 |_| |_| |X|
NC Charlotte Pilot Pilot Travel Center I-85/77, Ex 39 |_| |_| |_|
NC Dunn Robin Hood Truck Plaza Ltd. I-95 at Exit 77, Hodges Chapel Rd. |X| |_| |_|
NC Halifax Travel Centers of America/Lakewood I-95 & Cnty Rd 903, Halifax |_| |_| |X|
Interchange, Ex 168
NC Henderson Chex Truck Stop I-85 Exit 220 (Fleming Rd) |_| |X| |_|
NC Kenly T/A Truckstops of America I-95 Exit 106 |_| |_| |_|
NC Kenly Big Boys Truck Stop I-95 Exit 105 (Bagley Rd) |_| |X| |_|
NC Kings Mountain Kings Mountain Truck Plaza I-85 Exit 5 (Dixon School Rd) |X| |_| |X|
NC Mebane Speedway Speedway I-40/85 exit 152 |_| |_| |_|
NC Mocksville Natnl-Franch Horn's 76 Auto/Truckstop I-40 & U.S. 601, Mocksville, Exit #170, |X| |_| |_|
M.M. 170
</TABLE>
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<PAGE> 40
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NC Mount Airy Brintle Enterprises I-77 Exit 100 (NC 89) |_| |X| |_|
NC Statesville Homers Truck Plaza I-40 Exit 146 (Stamey Farm Rd) |_| |X| |_|
NC Waynesville Pilot Pilot Travel Center I-40, Exit 24, Hwy 209 |_| |_| |_|
ND Dickinson Tiger Discount T/S I-94 Exit 64 (US 10 E) |_| |X| |_|
ND Fargo Petro-Franch Petro Stopping Center I-94 (Exit 348) |_| |_| |_|
ND Fargo Stamart Truck Center #14 2903 Main Ave. I-29, Exit 65 |_| |X| |_|
ND Fargo Stamart Travel Center I-29 & 13 Ave. So., Exit 64 |_| |X| |_|
ND Grand Forks Bix Sioux Truck Stop I-29 Exit 141 (US 2 W) |_| |X| |_|
ND North Canton 77 Gullivers Travel Plaza |_| |X| |_|
NE Big Springs Boss Bosselman Travel Center I-80 Exit 107 (Big Springs Rd) |X| |_| |_|
NE Columbus SAP Sapp Bros Columbus Hwy 30 |_| |_| |_|
NE Elm Creek Boss Bosselman F/S I-80 Exit 257 (US 183) |X| |_| |_|
NE Fremont SAP Sapp Bros Truckstop Hwy 77 |_| |_| |_|
NE Grand Island Boss Bosselman Travel Center I-80 at Exit 312, US 281 |X| |_| |_|
NE Hershey Tomahawk Truck Stops-Hershey I-80, Exit 164 |_| |_| |_|
NE Lincoln Shoemaker's Truck Station I-80 & Hwy. 283 |_| |_| |_|
NE Odessa SAP Sapp Bros Landmark I-80 Exit 263 (Odessa Rd) |_| |X| |_|
NE Ogallala SAP Travel Centers of America/Ogallala I-80 & US Hwy 26, Exit 26 |_| |_| |_|
NE Ogallala TCA-76 Ogallala Unocal 76 A/T Plaza I-80 & Rt. 61, M.M. #126 |_| |X| |_|
NE Omaha SAP Sapp Bros Plaza I-80 Exit 440 (NE 50) |_| |X| |_|
NE Sidney SAP Sapp Bros Sidney I-80 |_| |X| |_|
</TABLE>
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<PAGE> 41
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NE Wood River Boss Bosselman's Fuel Stop I-80 at Exit 300, Hwy 11 |X| |_| |_|
NE York Petro-B Beacon Petro Stopping Center I-80, Exit 353 |_| |_| |_|
NE York SAP Sapp Bros. York I-80 & Hwy 81 |_| |X| |_|
NH Greenland Exit 3 Truck Services I-95 Exit 3 NB/3A SB (NH 101) |_| |_| |X|
NH Greenland TPort Travelport I-95 Exit 3 |_| |_| |_|
NJ Bloomsbury TCA-76 Travel Centers of America/Bloomsbury I-78 & S.T. 173, Exit 7, M.M. #7 |X| |_| |_|
NJ Bloomsbury Pilot Pilot Travel Center I-78 @ SR 173, Ex 7 |_| |_| |_|
NJ Bordentown Petro-Bordent. Bordentown Junction Truck Stop I-295 Exit 56 (NJTP Exit 7) |_| |_| |_|
NJ Bordentown Pilot Pilot Travel Centers #382 I-195 Exit 56/57A |_| |_| |_|
NJ Carney's Point Fogg's Truck Plaza I-295 @ Exit 2C, NJ Tpke |X| |_| |_|
NJ Carney's Point Pilot Pilot Travel Center I-295, Exit 2B |_| |_| |_|
NJ Clinton Johnny's Truck Stop I-78 Exit 12 |_| |X| |X|
NJ Mahwah TPort Travelport I-87 Exit 15, I287, rt 17S |_| |_| |X|
NJ Paulsboro TPort Travelport Truck Plaza I-295 Exit 18A |_| |_| |_|
NJ Paulsboro I-295 Travelers Plaza I-295 & Mt. Royal Exit, M.M. #18 |_| |_| |X|
NM Albuquerque Natnl Albuquerque Travel Centers of America I-40 & I-25 Exit 227A |_| |_| |_|
NM Clovis Cook's Truck Center US 60-70-84 E |_| |X| |_|
NM Gallup Baggett's Gallup 76 I-40 Exit #16, Hwy 66 |_| |_| |X|
NM Gallup Giant Travel Plaza I-40 Exit 39 |_| |_| |_|
NM Las Cruces Pilot Pilot Travel Center I-10 @ SR 292, Exit 139 |_| |_| |_|
NM Milan Petro Petro Stopping Center I-40 Exit 79 (Horizon Blvd) |_| |_| |_|
</TABLE>
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<PAGE> 42
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NM Moriarty Ted's Truck Center I-40 Exit 197 (Loop P) |_| |X| |_|
NM Moriarty Rip Rip Griffin Truck/Travel Center I-40 Exit 194 (Central Ave) |X| |_| |_|
NM Roswell Price's Ambest Truck Stop 5500 US 70-285 N |X| |_| |X|
NM San Jon Drivers Travelmart #408 I-40 Exit 356 (NM 469) |_| |X| |_|
NM Tucumcari Tucumcari Truck Terminal I-40 Exit 329 |_| |_| |X|
NM Vado Natnl National Truck Stop I-10 Exit 155 |_| |_| |_|
NV Battle Mountain Colt Service Center Ambest I-80 Exit 229/233 |X| |_| |_|
NV Carlin Pilot Pilot Travel Center I-95, Exit 6 |_| |_| |_|
NV Fernley Truck Inn I-80, Exit 48 |_| |X| |_|
NV Fernley Pilot Pilot Travel Center I-80 Exit 46, US95 |_| |_| |_|
NV Las Vegas King 8 Truck Plaza I-15 Exit 37 (W Tropicana Ave) |_| |_| |X|
NV Las Vegas Pilot Pilot Travel Center Craig Rd & Mitchell St. I-15 |_| |_| |_|
NV N. Las Vegas Magic Wand Truck Stop I-15, Exit 46, 1/4 mi. NW |_| |X| |_|
NV Sparks Alamo Travel Center I-80 Exit 20/21 East Greg St |X| |_| |X|
NV Wells 4-Way Truck Stop I-80 Exit 352 (US 93) |_| |_| |X|
NY Belmont TPort Travelport |_| |_| |X|
NY Bergen Sugar Creen Travel Plaza #09 I-490 at Route 19 & 33 |X| |_| |_|
NY Binghamton TPort Travelport I-81 Exit 2 N/B/Exit 3 S/B (US 11) |_| |_| |X|
NY Buffalo Natnl Buffalo I-90 East I-90 Exit 48A & rout 77, M.M. #401 |X| |_| |_|
NY Canaan Canaan Truck Stop I-90 (NYTP) Exit B-3 (NY 22) |X| |_| |_|
NY Dansville TPort Travelport I-390 Exit 5 (Airport) |_| |_| |X|
</TABLE>
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<PAGE> 43
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NY Fultonville TPort Travelport I-80 (NYTP Exit 28 (L on Riverside) |_| |_| |X|
NY Geneva Sugar Creek Travel Plaza #107 I-90 at Exit 42, Rt. 14 |X| |_| |_|
NY Henrietta Sugar Creek Travel Plaza #88 I-90 Exit 46/I-390 Exit 12 (NY 15) |X| |_| |_|
NY Kanona Sugar Creek #67 I-390 Exit 37 (NY 17) |X| |_| |_|
NY Maybrook TPort Travelport I-84 Exit 5 (Neelytown Rd) |_| |_| |X|
NY Nichols Lounsberry Truck Stop Route 17 at Exit 63 |X| |_| |_|
NY Pamelia(Watertown) Sugar Creek Travel Plaza #90 I-81 Exit 48 |X| |_| |_|
NY Randolph Sugar Creek Travel Plaza #066 NY 17 Exit 16 (Main St) |X| |_| |_|
NY Syracuse Pilot Pilot Travel Center I-81/90, Exit 25 |_| |_| |_|
OH Beaverdam Beaverdam Truck Plaza I-75 Exit 135 (US 30 N) |_| |_| |X|
OH Columbus/Hebron Natnl Ohio 70-37 Truckstop I-70 & SR 37, 26 Mi E. of Columbus OH, mm 126 |_| |_| |_|
OH Eaton Pilot Pilot Travel Center I-70 @ SR 127, Ex 10 |_| |_| |_|
OH Findlay Pilot Pilot Travel Center I-75, Ex. 164 |_| |_| |_|
OH Girard/Youngstown Petro Petro Stopping Center #20 I-80 Exit 226 (Salt Spring Rd) |_| |_| |_|
OH Hebron Pilot Pilot Travel Center I-70 Exit 125 (Hwy 37) |_| |_| |_|
OH Hebron Travel Centers of America/Hebron I-70 at Exit 126 (SR37) |X| |_| |_|
OH Hubbard Truck World I-80 Exit 234 (OH 7 & US 62) |_| |_| |X|
OH Millbury/Toledo Stony Ridge Travel Center I-280 Exit 1B |X| |_| |_|
OH Monroe Stony Ridge Travel Center I-70 Exit 29 (OH 63 E) |X| |_| |_|
OH North Baltimore Petro Petro Stopping Center #25 I-75 & S.R. 18, Exit 167 |_| |_| |_|
OH Old Washington Shenandoah Fuel Sales I-79 Exit 186 (OH 285) |_| |X| |_|
</TABLE>
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<PAGE> 44
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OH Perrysburg Petro Petro Stopping Center #17 I-280 Exit 1B/Exit 5 Ohio Turnpike |_| |_| |_|
OH Seville Speedway Speedway I-71, Exit 209 |_| |_| |_|
OH Seville Natnl Akron All American 76 I-71, I-76 & US 224, Exit 209 on I-71 |X| |_| |_|
OH Stony Ridge Stony Ridge Inn Ltd I-280 Exit 1B |X| |_| |_|
OH Sunbury Speedway Speedway I-71 exit 131 |_| |_| |_|
OH Youngstown Pilot Pilot Travel Center I-80 & Salt Spring Rd., Exit 226 |_| |_| |_|
OK Big Cabin Big Cabin Truck Plaza I-44 Exit 282 (US 69) |_| |X| |X|
OK Caloosa/Tulsa Bruce's Tulsa Truck Stop I-44 Exit 238 (161st E Ave) |X| |_| |_|
OK Choctaw/Okla City Texaco A/T Plaza Pro-Am IV I-40 Exit 166 (Choctaw Rd E) |X| |_| |_|
OK Guyman New Trail Travel Center #103 |_| |X| |_|
OK Oklahoma City Texaco Auto/Truck Plaza IV Exit 166, Choctaw |X| |_| |_|
OK Oklahoma City Drivers Travelmart #411 8402 NE Expressway, Exit 134 |_| |X| |_|
OK Oklahoma City Pilot Pilot Travel Center I-40 & I-35 Exit 127 |_| |_| |_|
OK Oklahoma City Texaco A/T Plaza Pro-Am 1 I-35-44 Exit 134 (Willshire NE) |X| |_| |_|
OK Oklahoma City Petro Petro Stopping Center # 16 I-40 & Martin Luther King Blvd. |_| |_| |_|
OK Sayre Simon's Truck Oasis #1 I-40 Exit 26 (Cemetery Rd) |X| |_| |_|
OK Tulsa Bruce's Tulsa Truck Stop I-44 Exit 238 |X| |_| |_|
ONT Bowmanville Fuel Saver Corporation-Bowmanville Hwy 401 & Waverly Rd. Ext 431 |X| |_| |_|
ONT Cornwall Fuel Saver Corporation-Cornwall Jct 401 & McConnell Avenue |X| |_| |_|
ONT Dorchester Fuel Saver Corporation-Dorchester Jct 401 & Dorchester Rd. Ext 199 |X| |_| |_|
ONT Grimsby Fuel Saver Corporation-Grimsby QEW & Casablanca Blvd.,Ext 74 |X| |_| |_|
</TABLE>
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<PAGE> 45
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ONT Milton Fuel Saver/Fifth Wheel-Milton Hwy 401 & 25, Exit 320 |X| |_| |X|
ONT North Bay Fifth Wheel/North Bay Hwy 11S at pinewood Park Drv. |X| |_| |_|
OR Biggs Junction Biggs Auto/TruckStop I-84 & US 97, Exit 104 |_| |X| |_|
OR Medford Petro Petro Stopping Center I-5 Exit 24 |_| |_| |_|
OR Pendleton Arrohead Truck Plaza I-84 Exit 216 (Mission) |X| |_| |_|
OR Portland Jubitz Truck Stop I-5 Exit 307 E |X| |_| |_|
OR Rice Hill Pilot Pilot Travel Center I5, Exit 148 |_| |_| |_|
OR Stanfield Pilot Pilot Travel Center I-84 & I-82, Exit 188 |_| |_| |_|
OR Yoncalala Rice Hill Truck Plaza I-5, Exit 148 |_| |X| |_|
PA Altonna/East Freedom Junction A/T Plaza US 220 & PA 36 |X| |_| |_|
PA Bartonsville Natnl Travel Centers of America/Pocono I-80 & U.S. 611 - Exit 46 N. M.M. #302 |X| |_| |_|
PA Beach Haven TPort Travelport |_| |_| |_|
PA Bentlyville Pilot Pilot Travel Center I-70, Exit 12-A |_| |_| |_|
PA Bentlyville American Truck Stop I-70 Exit 12-B (PA 917) |X| |_| |_|
PA Bethel Frystown All American Exit 2 |X| |_| |_|
PA Bloomsburg TPort Travelport Travel Plaza I-80 Exit 34 |_| |_| |X|
PA Breezewood Natnl All American 76 Truck Plaza I-70 Exit 12 (U.S. 30) |X| |_| |_|
PA Carlisle All Am. Carlisle Texaco Truck Plaza I-81 Exit 17 E (1 Mi N on US 11) |X| |_| |_|
PA Carlisle Pilot Pilot Travel Center I81, PA Turnpike |_| |_| |_|
PA Carlisle All Am. Soco Truck Plaza I-76 Exit 16 N/I-81 Exit 17 W |X| |_| |_|
PA Carlisle All Am. All American A/T Plaza I-76 Exit 16 N/I-81 Exit 17 W |X| |X| |_|
</TABLE>
-45-
<PAGE> 46
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PA Carlisle Texaco Truck Plaza |X| |_| |_|
PA Clearfield SAP Sapp Bros Clearfield I-80 Exit 19 |_| |_| |_|
PA DuBois Pilot Pilot Travel Center I-80 Exit 16, Hwy. 219 |_| |_| |_|
PA Duncannon All Am Clarks Ferry All American US 22-322 (1/l4 mi E of US 11-15) |X| |_| |_|
PA Erie Pilot Pilot Travel Center I-90 & SR 97, Ex 7 |_| |_| |_|
PA Fairview/Erie Green Shingle Svc & Restaurant I-90 Exit 5 (PA 832 S) |X| |_| |_|
PA Frystown All Am. Gables Of Frystown |_| |_| |_|
PA Frystown All Am. Frystown All American I-78 Exit 2 (PA 645) |X| |_| |_|
PA Greencastle TPort Travelport I-81 Exit 3 |_| |_| |X|
PA Harbour Creek TPort Travelport I-90 Exit 19 |_| |_| |X|
PA Harrisburg Pilot Pilot Travel Center I-81 & SR 39, Exit 27 |_| |_| |_|
PA Hazelton Pilot Pilot Travel Center I-80/ & SR 93, Exit 38 |_| |_| |_|
PA Lake Ariel TCA Howe's 84 Auto-Truck Plaza |X| |_| |_|
PA Milesburg TPort Travelport I-80 Exit 23 |_| |_| |X|
PA Milton All Am. Milton All American A/T Plaza I-80 Exit 32 (PA 254 N) |X| |_| |_|
PA Mount Morris BFS Truck/Auto Plaza I-79 Exit 1 |_| |X| |_|
PA Phildelphia Walt Whitman Truck Stop, Inc. I-95 Exit 15 |_| |_| |X|
PA Pine Grove All Am. Pine Grove All American I-81 Exit 31 (PA 443) |X| |_| |_|
PA Reynoldsville Diamond J's Truck & Auto Stop I-80 Exit 15 (1/4 mi W on PA 830) |_| |X| |_|
PA Sterling/Lake Ariel Howe's 84 A/T Plaza I-84 Exit 5 (PA 191) |X| |_| |_|
PA Strattanville Natnl Travel Centers of America I-80 & Rt. 322, Exit 11, M.M. #70 |_| |_| |_|
</TABLE>
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<PAGE> 47
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PA Warfordsburg Town Hill Auto Truck Plaza I-70 Exit 31 |_| |X| |_|
PA West Springfield Bartone's State Line Svc Ctr I-90 Exit 1 (US 6 N) |_| |X| |_|
SC Anderson Anderson Auto Truck Plaza I-85 Exit 27 (SC 81) |X| |_| |_|
SC Bowman Speedway Speedway I-26 Exit 159 |_| |_| |_|
SC Bowman Petro Bowman Texaco Truckstop I-26 Exit 165 (SC 210) |_| |_| |_|
SC Camden Pilot Pilot Travel Center I-20, 601 S., Ex 92 |_| |_| |_|
SC Columbia Columbia 20 Unocal A/T Center I-20 Exit 71 (U.S. 21) |_| |_| |X|
SC Columbia(Cayce) Pilot Pilot Travel Center I-26 & US 321 |_| |_| |_|
SC Duncan Pilot Pilot Travel Center I-85 & SR 290, Ex 63 |_| |_| |_|
SC Fairplay Cherokee Run Auto Truck Stop I-85, Exit 4, Routh 23 |_| |X| |X|
SC Florence Pilot Pilot Travel Center I-95 & US Hwy 52 |_| |_| |_|
SC Florence Petro-HSV Petro Stopping Center #58 I-95 Exit 169 |_| |_| |_|
SC Manning Natnl Jerry's Travel Center I-95 & SC 261, Exit #119, M.M. #119 |X| |_| |X|
SC Piedmont Speedway Speedway I-85 Exit 35 |_| |_| |_|
SC Waterloo Circle c |_| |X| |_|
SD Mitchell I-90 Truck Haven I-90 & SD 37, Exit 332 |_| |X| |_|
SD Rapid City Windmill Truck Stop I-90 Exit 55 (Deadwood Ave) |_| |X| |_|
SD Sioux Falls Frontier Village Truck Stop I-90 Exit 399 (Hwy 77) |X| |_| |X|
SD Sioux Falls Pilot Pilot Travel Center I-90 Exit 399 |_| |_| |_|
TN Concord/Knoxville Petro Petro Stopping Center #12 I-40-75 Exit 369 (Watt Rd) |_| |_| |_|
TN Cookeville Pilot Pilot Travel Center I-40, Exit 287 |_| |_| |_|
</TABLE>
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<PAGE> 48
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TN Cookeville Middle Tennessee A/T Plaza I-40, Exit 288 (TN 111 S) |_| |_| |X|
TN Cornersville The Tennessean Ambest T/S I-65 Exit 22 (US 31 Alt) |X| |_| |X|
TN Dandridge TR Auto/Truck Plaza I-40 Exit 412 (Deep Springs Rd) |_| |X| |_|
TN Danridge 417 Travel Center I-40 at Exit 417 (TN92) |X| |_| |_|
TN Dickson Mapco Mapco Express |_| |_| |_|
TN Elkton Shady lawn truckstop |_| |X| |_|
TN Hurricane Mills Pilot Pilot Travel Center I-40 at Hwy 13, Exit 143 |_| |_| |_|
TN Kingston Springs Petro Petro:2 #49 I-40 Exit 188 (Luyben Hills Rd) |_| |_| |_|
TN Knoxville Natnl Knoxville Travel Center I-40 & I-75, Exit 369 |_| |_| |_|
TN Knoxville Pilot Pilot Travel Center I-40, Exit 398 |_| |_| |_|
TN Knoxville Pilot Pilot Travel Center I-40, Exit 374 |_| |_| |_|
TN Lebanon Mapco Mapco Express |_| |_| |_|
TN Manchester Jiffy T/A Plaza # 19 I-24 Exit 114 (US 41 S) |_| |X| |_|
TN Nashville Natnl Travel Center of America I-24 Exit 62 (Old Hickory Blvd) |X| |_| |X|
TN Nashville Pilot Pilot Travel Center I-65 & E. Trinity Ln., Ex 87 A |_| |_| |_|
TN Portland Jiffy Truck/Auto Plaza # 08 I-65 Exit 117 (TN 52 N) |_| |X| |_|
TN Stanton Exit 47 Plaza I-40 & St. 179, Exit 47 |_| |X| |X|
TN White Pine Pioneer Travel Center I-81 Exit 4 (White Pine Rd) |_| |_| |X|
TX Amarillo Texaco A/T Plaza - Pro-Am III I-40 Exit 77 (US 287) |X| |_| |_|
TX Amarillo Pilot Pilot Travel Center I-40 Exit 77, Pullman Rd. |_| |_| |_|
TX Amarillo Petro Petro Stopping Center #7 I-40 Exit 75 (Lakeside Dr) |_| |_| |_|
</TABLE>
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<PAGE> 49
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TX Anna Drivers Travelmart #401 Hwy 75 & 455 Exit 48 |_| |X| |_|
TX Baytown Pilot Pilot Travel Center I-10E, Exit 793 |_| |_| |_|
TX Beaumont Petro Petro Stopping Center # 4 I-10 Exit 848 (Walden Rd) |_| |_| |_|
TX Big Spring Rip Rip Griffin Travel Center I-20 Exit 177 (US 87) |X| |_| |_|
TX Brookshire Natnl Houston West Travel Center I-10 & FM 359, Exit 732 |_| |_| |_|
TX Dallas Pilot Pilot Travel Center I-20 & IH-635, Exit 470 |_| |_| |_|
TX Dallas Knox Fuel Stop Dallas 2221 Irving Boulevard |_| |_| |X|
TX Dallas Knox Fuel Center 2221 Irving Blvd. |_| |X| |_|
TX Edinburg Edinburg Auto/Truckstop U.S. 281, S.W. & F.M. 2812 |_| |_| |_|
TX El Paso Petro Petro Stopping Center #1 I-10 Exit 37 (Horizon Bld) |_| |_| |_|
TX Forney Knox Fuel Stop I-20 & FM 460, MM 488 |_| |X| |X|
TX Gainsville Hitchin' Post Truck Terminal I-35 at Exit 500 |X| |_| |X|
TX Gordon Bar-B Ambest Plaza I-20 Exit 370 (FM 919) |X| |_| |X|
TX Harrold Drivers Travelmart #410 19765 Hwy 287 East |_| |X| |_|
TX Hillsboro Knox Fuel Center Hillsboro I-35 @ FM310 MM#364A |_| |_| |X|
TX Hillsboro Knox Fuel Center I-35 @ FM310 MM#364A |_| |X| |_|
TX Houston Pilot Pilot Travel Center I-45 Exit 50 & 50B |_| |_| |_|
TX Huntsville Pilot Pilot Travel Center I45, Exit 118 |_| |_| |_|
TX Huntsville Hitchin' Post Truck Terminal I-45 Exit 118 (US 75 N) |X| |_| |X|
TX Laredo Pilot Pilot Travel Center I-35 Exit 13 |_| |_| |_|
TX Lubbock Rip Rip Griffin's Truck/Travel Center I-27 at 50th St/Ave. "A" |X| |_| |_|
</TABLE>
-49-
<PAGE> 50
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TX Marshall Pony Express Travel Center I-20 Exit 6617 & US Hwy 59 |_| |_| |X|
TX Nacogdoches NuWay Food 'N Fuel 4010 South Street Hwy 59 |_| |X| |_|
TX New Braunfels Rip Griffin Travel Center |X| |_| |_|
TX Odessa Drivers Travelmart #405 5934 West I-20 Exit 112 |_| |X| |_|
TX Palmer Knox Fuel Center I-45 @ Parkerhill Rd. MM#258 |_| |X| |X|
TX Red Oak Knox Fuel Stop Red Oak I-3, Red Oak Road, MM410 |_| |_| |X|
TX Red Oak Knox Fuel Center I-35 @ Red Oak Road |_| |X| |_|
TX Royse City Knox Fuel Center I-30 @ FM35 MM#77B |_| |X| |_|
TX Royse Cityocala Knox Fuel Stop Royse City I-30 & FM 35 |_| |_| |X|
TX San Antonio Petro Petro Stopping Center # 5 I-10 Exit 582 (Ackerman Rd) |_| |_| |_|
TX San Antonio Pilot Pilot Travel Center I-10 & Ackeman Rd, Exit 582 |_| |_| |_|
TX Sealy Knox Fuel Stop I-10 @ FM 1458 MM#723 |_| |X| |_|
TX Sealy Knox Fuel Stop Sealy I-10 & FM 1458 |_| |_| |X|
TX Snyder Rip Rip Griffin's Fastop Hwy 180 at US 84 |X| |_| |_|
TX Sweetwater Natnl Travel Centers of America/Sweetwater I-20 Exit 242, Hopkins Road |_| |_| |_|
TX Terrell Rip Rip Griffin Travel Center I-20 Exit 503 (Wilson Rd) |X| |_| |_|
TX Tulia Rip Rip Griffin Fastop I-27 & TX 86 |X| |_| |_|
TX Tye Petro WES-T-Go Truck Stop I-20 Exit 278 |_| |_| |_|
TX Vidor Spindistop Truck Stop I-10, Exit 858 B |_| |_| |X|
TX Vinton Petro Petro:2 #50 I-10 at exit 2 |_| |_| |_|
TX Weatherford Drivers Travelmart #402 3910 I-20 Exit 415 |_| |X| |_|
</TABLE>
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<PAGE> 51
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TX Weatherford Petro Petro Stopping Center # 2 I-20 Exit 409 (Clear Lake Rd) |_| |_| |_|
TX Wichita Falls Love's Country Store #269 US Hwy 82 at Central Parkway |X| |_| |_|
UT Green River West Winds T/S I-70 Exit 162 (US 6-50 E) |X| |_| |_|
Green River Gas-n-Go #13 I-70 Exit 158 |_| |X| |_|
UT Ogden Pilot Pilot Travel Center I-15, Exit 347 |_| |_| |_|
UT Salt Lake City SAP Sapp Bros Salt Lake City I-215 Exit 21 |_| |X| |_|
UT Salt Lake City Petro Mark Truck Plaza I-15/I-80 at 21st St. E. |X| |_| |_|
VA Ashland Natnl Speed & Briscoe Auto Truckstop I-95 Exit 89 (Lewiston Road) |_| |_| |_|
VA Ashland Pilot Pilot Travel Center I-95 at Hwy 54, Exit 92 |_| |_| |_|
VA Doswell All Am. Doswell All American Plaza I-95 Exit 98 (VA 30 E) |X| |X| |_|
VA Fort Chiswell Petro-Welsh Petro Stopping Center # 52 I-77& I-81 Exit 80 (US 52) |_| |_| |_|
VA Fredericksburg Servicetown Travel Plaza I-95 & US Hwy 17 North |_| |_| |X|
VA Galax Eagle Fuel Center, Inc. |_| |_| |X|
VA Lexington Lee Hi Truck Stop I-64-81 Exit 195 (US 11 N) |_| |X| |_|
VA Raphine White's Truckstop I-81& I-64 Exit 205 |_| |_| |X|
VA Ruther Glen Petro-HSV Petro Stopping Center I-95 Exit 104 (VA 207) |_| |_| |_|
VA Ruther Glen Pilot Pilot Travel Center I-95 @ SR 207, Ex 104 |_| |_| |_|
VA Toms Brook The Virginian T/C I-81 Exit 291 (VA 651) |X| |_| |_|
VA Troutville Pilot Pilot Travel Center I-81, Exit 150 A or B |_| |_| |_|
VT Wells River P&H Truck Stop I-91 Exit 17 (VT 302) |_| |X| |_|
WA Ellensburg Pilot Pilot Travel Center I90, Exit 106 |_| |_| |_|
</TABLE>
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<PAGE> 52
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
WA Ellensburg Steve's A/T Stop I-90, Exit 106 (US 97) |X| |_| |_|
WA Ferndale Border Travel Plaza |X| |X| |_|
WA Greenacres Allen's GTX Truckstop, Inc. I-90 Exit 293 |_| |X| |_|
WA Marysville Donna's Travel Plaza's Inc. I-5, Exit 202 |_| |_| |X|
WA North Bend Seattle East 76 Auto/Truck Plaza I-90 Exit 34 |_| |X| |_|
WA Prosser Horse Heaven Hills Truck Stop I-82 Exit 80 |_| |X| |_|
WA Yakima Gear Jammer Truck Plaza I-82 Exit 36 |_| |_| |X|
WI Beloit Pilot Pilot Travel Center I-43/90, Exit 185A |_| |_| |_|
WI Black River Falls Bar-B Travel Plaza I-94 Exit 116 (WI 54) |X| |_| |_|
WI Edgerton Edgerton Shell Oasis Truck Stop I-90 at Exit 160 (Hwy 51) |X| |X| |_|
WI Green Bay Country Express I-43 Exit 180 (1/2 mi W) |_| |X| |_|
WI Hudson Natnl Twin City East Auto/Truck Plaza I-94 & U.S. 12, M.M. #4 |_| |_| |X|
WI Milwaukee TCA-76 Milwaukee Truckstop I-94 Exit 322 (Ryan Road) |X| |_| |_|
WI Oak Creek Milwaukkee Travel Center I-94, Exit 322 |_| |_| |X|
WI Oak Creek Speedway Speedway I-94 Exit 339 |_| |_| |_|
WI Osseo Golden Rule Travel Plaza I-94 Exit 88, & US 10 |_| |X| |_|
Wi Portage Petro-Franch Petro Stopping Center #53 I-90-94 Exit 108 (WI 78 S) |_| |_| |_|
WI Racine Pilot Pilot Travel Center I-94 & Hwy, K, Exit 329 |_| |_| |_|
WI Racine Highlands Mobil Travel Plaza |X| |_| |_|
WI Richfield Richfield Truck Stop US 41-45 & WI 167 W |_| |_| |X|
WV Wheeling Dallas Pike Travel Express I-70 Exit 11, Rt 40 |X| |_| |_|
</TABLE>
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<PAGE> 53
<TABLE>
<CAPTION>
STATE TRUCKSTOP GROUP COMPANY NAME DIRECTIONS AMBEST NATSN PTP
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
WY Cheyenne SAP Sapp Brothers Big C I-80 Exit 370 |_| |X| |_|
WY Cokeville Cokeville Texaco Truck Stop I-80 & I-86 at US Hwy 30 |X| |_| |X|
WY Laramie Petro Petro Stopping Center #3/Iron Skillet I-80 Exit 310 |_| |_| |_|
WY Laramie Pilot Pilot Fuel Center # 308 I-80 Exit 310 |_| |_| |_|
WY Lyman Gas-N-go #15 I-80 Exit 41 |_| |X| |_|
WY Rawlins Rip Rip Griffin Travel Center I-80 Exit 214 (Higley Blvd) |X| |_| |_|
</TABLE>
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<PAGE> 1
EXHIBIT 10.14
LEASE
UNIPOWER CORPORATION
LANDLORD
PARK N' VIEW
TENANT
1
<PAGE> 2
STANDARD COMMERCIAL LEASE
ARTICLE 1.00 BASIC LEASE TERMS
1.01 PARTIES. This lease agreement ("Lease") is entered into by and
between the following Landlord and Tenant: UNIPOWER Corporation, a Delaware
corporation ("Landlord"); Park N' View, a Delaware corporation ("Tenant").
1.02 LEASED PREMISES. In consideration of the rents, terms, provisions
and covenants of this Lease, Landlord hereby leases, lets and demises to Tenant
the following described premises ("Premises"):
Approximately 21,000 square feet of renewable area, more
particularly described on EXHIBIT "A" attached hereto, which Premises consist of
the southwest portion of that certain building ("Building") located at 11711 NW
39th St., Coral Springs, Florida.
So long as no other tenant is occupying the 3200 square foot expansion
space, Tenant shall have the exclusive use of thirty parking spaces for its
employees, visitors and guests. These spaces shall be comprised of the twenty
spaces immediately to the west of the Premises and ten spaces located at the
southwest corner of the Premises. Landlord shall take all reasonable steps to
insure Tenant's use of these exclusive spaces. Further, Landlord shall cooperate
in creating, to the extent permitted by applicable law, at Tenant's expense, an
overflow lot on Landlord's property immediately to the west of the Premises, to
accommodate Tenant's future parking needs. So long as another tenant is
occupying the expansion space (new tenant), The new tenant shall only have
exclusive use of five spaces for its employees, visitors, and guests and Tenant
shall have the exclusive use of twenty five spaces plus any additional spaces
arising from the future resealing of the parking lot on the Premises.
1.03 TERM. Subject to and upon the conditions set forth herein, the
term of this Lease shall commence on September 1, 1997 and shall terminate on
the Expiration Date which shall be August 31, 2002. Tenant shall have an option
to extend the term of the Lease for an additional period of two (2) years. In
order to exercise the option, Tenant must give written notice to Landlord not
less than one hundred eighty (180) days prior to the then existing expiration
date of the Lease that it wishes to extend the term of this Lease; provided,
however, that Tenant shall not be entitled to exercise either option unless each
of the following conditions shall be fully satisfied at the time of its
exercise: (i) the Lease shall be in full force and effect, (ii) the original
Tenant named in this Lease shall be in possession of the Leased Premises; and
(iii) Tenant shall not then be in default under any of the terms, provisions,
covenants or conditions of the Lease. If Tenant exercises the Option as
provided, the termination date of the Lease shall be extended for a period of
two (2) years and Base Rent shall be adjusted as set forth in Paragraph 1.04
below. If Tenant shall fail to give written notice to Landlord of Tenant's
exercise of the Option as provided, Tenant shall be deemed to have waived its
right to exercise the Option and to occupy the Premises beyond the then existing
term of the Lease. Notwithstanding anything to the contrary in this Lease, the
term "Lease Term" whenever used in this Lease shall be defined to include the
original term and all renewals and extensions thereof. Tenant acknowledges
Landlord's obligation to execute this agreement upon the termination of the
existing lease agreement between Landlord and current occupant of the premises.
On or before the Commencement date, Landlord agrees to deliver the
Premises to Tenant, clear and free of Occupants and in broom clean condition. In
the event, that Landlord has not delivered the Premises as of September 7,1997,
Landlord agrees to abate rent until actual delivery of the Premises.
<PAGE> 3
These Moines will be credited against the first month's rent as free rent.
Further, a late penalty of $250.00 per day will be charged to Landlord until
actual delivery of the Premises. This Penalty, if due shall be paid by Landlord
upon occupancy by Tenant.
In the event that Landlord has not delivered the Premises or Tenant
does not occupy the Premises as of October 7, 1997, the party not responsible
for the delay may terminate the agreement upon delivery of such notice and
neither party shall have further obligations to the other, hereunder. If Tenant
terminates the agreement in the event that Landlord has not delivered the
Premises as of October 7,1997, Tenant is hereby entitled to a refund of its
security deposit.
1.04 SECURITY DEPOSIT AND BASE RENT. Security deposit is $26,750
payable by Tenant in the amount of $13,375.00 on July 30,1997 (received) and
$13,375.00 at the execution of this lease agreement. As used herein, a Lease
Year is a period of 12 months commencing on the Commencement Date or anniversary
thereof. Base Rent shall be as follows (notwithstanding the foregoing, the first
payment of Base Rent due hereunder shall be paid by Tenant on the Commencement
date:)
A. For Lease Year 1, $7.50 per square foot of leasable area or
$160,500.00 per annum payable monthly in advance, without deduction or offset,
on the first day of each calendar month in equal installments of $13,375.00
together with applicable sales tax and applicable local taxes.
B. For Lease Year 2, $7.65 per square foot of leasable area or $
163,710.00 per annum payable monthly in advance, without deduction or offset, on
the first day of each calendar month in equal installments of $13,642.50
together with applicable sales tax and applicable local taxes.
C. For Lease Year 3, $7.80 per square foot of leasable area or
$166,920.00 per annum payable monthly in advance, without deduction or offset,
on the first day of each calendar month in equal installments of $13,910.00
together with applicable sales tax and applicable local taxes.
D. For Lease Year 4, $7.96 per square foot of leasable area or
$170,344.00 per annum payable monthly in advance, without deduction or offset,
on the first day of each calendar month in equal installments of $14,195.33
together with applicable sales tax and applicable local taxes.
E. For Lease Year 5, $8.12 per square foot of leasable area or
$173,768.00 per annum payable monthly in advance, without deduction or offset,
on the first day of each calendar month in equal installments of $14,480.66
together with applicable sales tax and applicable local taxes.
Renewal Term
F. For Lease Year 6, $8.28 per square foot of leasable area or
$177,192.00 per annum payable monthly in advance, without deduction or offset,
on the first day of each calendar month in equal installments of $14,766.00
together with applicable sales tax and applicable local taxes.
G. For Lease Year 7, $8.45 per square foot of leasable area or
$180,830.00 per annum payable monthly in advance, without deduction or offset,
on the first day of each calendar month in equal installments of $15,069.17
together with applicable sales tax and applicable local taxes.
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<PAGE> 4
1.05 ADDRESSES.
Tenant's Address for Notices:
Park N' View 11711 NW 39th St.
Coral Springs, Florida 33065
Attention: Tony Allen, Vice President of Operations
Landlord's Address for Notices:
Unipower Corporation
3900 Coral Ridge Drive
Coral Springs, Florida 33065
Attention: Bianca M. Gallo, Chief Financial Officer
1.06 PERMITTED USE. Corporate headquarters, development, assembly
and warehouse of cable access stations and all company related products
1.07 LANDLORD'S BROKER. Cushman & Wakefield.
1.08 COOPERATIVE BROKER. None.
1.09 RIGHT OF FIRST OFFER. The first time Landlord intends to
commence what Landlord reasonably believes to be serious negotiations with a
third party for the leasing of the space shown in EXHIBIT "A" and designated as
the Expansion Space ("Expansion Space") then Landlord shall give Tenant notice
("Landlord's Notice") of the terms and conditions of such proposed leasing. If
Tenant fails to notify Landlord within three (3) business days from the date of
Landlord's Notice that Tenant wishes to lease the Expansion Space on such terms
and conditions, Tenant shall have waived any and all rights it may have under
this paragraph with respect to the Expansion Space. If Tenant notifies Landlord
within three (3) business days from the date of Landlord's Notice that Tenant
accepts such terms and conditions, then Tenant shall be deemed to have leased
the Expansion Space on such terms and conditions, except that the Base Rent,
Operating Expenses, and Additional Rent to be paid for the Expansion Space shall
never be less than those amounts paid under this Lease, per square foot.
Landlord shall be entitled to use its then standard lease form for the Building,
or amend this Lease in such manner as is consistent with such terms and
conditions. Tenant shall not be deemed to have effectively exercised its right
to lease the Expansion Space unless Tenant .(i) is in possession of the Premises
and in good standing under this Lease and (ii) has not have defaulted under this
Lease prior to such exercise. The expansion space shall be co-terminus with the
remainder of the lease term. This right of first offer can only be exercised
once each time the Expansion space becomes available for lease.
ARTICLE 2.00 RENT
2.01 BASE RENT. Tenant agrees to pay monthly as Base Rent during
the term of this Lease the sum of money set forth in Section 1.04 of this Lease,
which amount shall be payable to Landlord at the address shown above. One
monthly installment of Rent shall be due and payable on the Commencement date by
Tenant for the first month's Rent and a like monthly installment shall be due
and payable on or before the first day of each calendar month succeeding the
Commencement Date the term of this Lease; provided, if the Commencement Date
should be a date other than the first of a calendar
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month, the Base Rent set forth above shall be prorated to the end of that
calendar month, and all succeeding installments of Rent shall be payable on or
before the first day of each succeeding calendar month during the term of this
Lease. Each year commencing on the Commencement Date (or commencing on the first
day of the first month following the Commencement Date if the Commencement Date
is other than the first day of the month, in which event the First Lease Year
shall include the period between the Commencement Date and the first month
thereafter) or anniversary thereof is hereafter referred to as a "Lease Year."
2.02 OPERATING EXPENSES. Tenant shall also pay as Additional Rent the
Operating Expenses defined in Section 2.03 below. Landlord represents that its
best-guess estimate of the Operating Expenses for the Premises are, for the year
1997, $2,600 per month. Landlord shall provide Tenant upon request copies of
bills and invoices to permit Tenant to verify Operating Expense Charges.
Landlord may invoice Tenant monthly for the estimated Operating Expenses for
each calendar year, which amount shall be adjusted each year based upon
anticipated operating expenses. Within three (3) months following the dose of
each Lease Year, Landlord shall provide Tenant an accounting showing in
reasonable detail all computations of Additional Rent due under this section. In
the event the accounting shows that the total of the monthly payments made by
Tenant exceeds the amount of Additional Rent due by Tenant under this section,
Tenant shall be entitled to a refund to be paid within ten (10) days of such
accounting. In the event the accounting shows that the total of the monthly
payments made by Tenant is less than the amount of Additional Rent due by Tenant
under this section, the accounting shall be accompanied by an invoice for the
Additional Rent. Notwithstanding any other provisions in this Lease, during the
year in which this Lease terminates, Landlord, prior to the termination date,
shall have the option to invoice Tenant for Tenant's pro rata share of the
operating expenses based upon the previous year's operating expenses. If this
Lease shall terminate on a day other than the last day of a calendar year, the
amount of any Additional Rent payable by Tenant applicable to the year in which
the termination shall occur shall be prorated on the ratio that the number of
days from the commencement of the calendar year to and including such
termination date bears to 365. Tenant agrees to pay any Additional Rent due
under this section within ten days following receipt of the invoice or
accounting showing Additional Rent due. For a period of thirty (30) days after
receipt of Landlord's accounting, Tenant shall have the right, upon advance
notice, to visit Landlord's office during business hours to inspect its books
and records concerning the operating expenses. Tenant hereby agrees that the
Additional Rent for operating expenses from time to time computed by Landlord
shall be final and binding for all purposes of this Lease unless, within thirty
(30) days after Landlord provides Tenant with written notice of the amount
thereof, Tenant provides Landlord with written notice (i) disputing the accuracy
of such amount (the "Disputed Amount"), (ii) designating an attorney or
accountant, reasonably acceptable to Landlord, and appointed by Tenant, at its
sole cost and expense, to review the accuracy of the Disputed Amount with
Landlord and/or its designated representatives and (iii) confirming that the
Disputed Amount shall not be subject to adjustment, and agreeing to pay all of
Landlord's costs and expenses in connection with such review, including
attorneys' fees and accountants' fees, unless as a result thereof the Disputed
Amount is demonstrated to reflect an error in excess of three percent (3%) of
the amount actually due from Tenant. Landlord hereby agrees, in the event it
receives such notice from Tenant, to cooperate in promptly completing such
review and promptly refunding any portion of the Disputed Amount which exceeds
the amount actually due from Tenant including any reasonable costs and expenses
incurred in identifying, calculating or verifying the overstatement.
2.03 DEFINITION of OPERATING EXPENSES. The term Operating Expenses
means twenty-six and one-quarter percent (26.25%) of the following: Landlord's
insurance on the Building and appurtenant lands, the costs of property
management and maintenance of the Building and appurtenant lands, real property
taxes and any other reasonable Operating Expenses related to the facility.
Excluded from
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<PAGE> 6
Operating Expenses shall be capital improvements made by Landlord at the
Building, unless such improvements are incurred to replace existing equipment
that is not maintainable or repairable. As used herein, "real property taxes"
includes ad valorem taxes and assessments, general and special, taxes on real
estate rental receipts, taxes on Landlord's gross receipts, or any other tax
imposed upon or levied against real estate, or upon owners of real estate as
such rather than persons generally, extraordinary as well as ordinary,
foreseeable and unforeseeable, together with the reasonable cost (including fees
of attorneys, consultants and appraisers) of any negotiation, contest or appeal
pursued by Landlord in an effort to reduce any such tax, assessment or charge,
and all of Landlord's reasonable administrative costs in relation to the
foregoing.
2.04 MISCELLANEOUS. In the event any installment of Rent is not paid
within five (5) business days of when due, then Tenant covenants and agrees to
pay a late charge in the amount equal to five percent (5%) of the amount of the
unpaid Rent not received by Landlord. Tenant shall pay Landlord any such late
charge(s) within five (5) days after Landlord notifies Tenant of same. The term
"Rent" shall refer collectively to Base Rent and Additional Rent. The term
"Additional Rent" is sometimes used herein to refer to any and all other sums
payable by Tenant hereunder including, but not limited to, Operating Expenses
and sums payable on account of default by Tenant. All Rent shall be paid by
Tenant without offset, demand or other credit, and shall be payable only in
lawful money of the United States of America which shall be legal tender in
payment of all debts and dues, public and private, at the time of payment. All
sums payable by Tenant hereunder by check shall be obtained against a financial
institution located in the United States of America. The Rent shall be paid by
Tenant at such location as designated by Landlord in writing to Tenant. Any Rent
payable for a portion of a month shall be prorated based upon the number of days
in the applicable calendar month.
2.05 INCREASE in INSURANCE PREMIUMS. If any increase in any insurance
premiums paid by Landlord for the Building is caused by Tenant's use of the
Premises in a manner other than as set forth in section 1.06, or if Tenant
vacates the Premises and causes an increase in such premiums, then Tenant shall
pay as Additional Rent the amount of such increase to Landlord, however, before
Landlord could exercise its rights under this Section, it must consult with no
fewer than three other insurance carriers to inquire about the availability of
insurance at a rate lower than the rate as raised by the original carrier.
2.06 SECURITY DEPOSIT. The security deposit set forth above shall be
held by Landlord for the performance of Tenant's covenants and obligations under
this Lease, it being expressly understood that the deposit shall not be
considered an advance payment of Rent or a measure of Landlord's damage in case
of default by Tenant. Upon the occurrence of any event of default by Tenant of
breach by Tenant of Tenant's covenants under this Lease, Landlord may, from time
to time, without prejudice to any other remedy, use the security deposit to the
extent necessary to make good any arrears of Rent, or to repair any damage or
injury, or pay any expense or liability incurred by Landlord as a result of the
event- of default or breach of covenant, and any remaining balance of the
security deposit shall be returned by Landlord to Tenant upon termination of
this Lease. If any portion of the security deposit is so used or applied, Tenant
shall upon ten (10) days' written notice from Landlord, deposit with Landlord by
cash or cashier's check an amount sufficient to restore the security deposit to
its original amount.
2.07 HOLDING OVER.
A. Tenant agrees to surrender the Premises to Landlord on the
Expiration Date (or sooner termination of the Lease Term pursuant to other
applicable provisions hereof) in as good condition as they were at the
commencement of Tenant's occupancy, ordinary wear and tear, and damage by fire
and windstorm excepted or other casualty not caused by Tenant.
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B. In all events, Tenant will promptly restore all damage caused
in connection with any removal of Tenant's personal property and Tenant shall be
responsible for all losses incurred for physical damage caused by the Tenant in
removing its personal property.
C. If Tenant shall be in possession of the Premises after the
expiration of the Term, the tenancy under this Lease shall become one from month
to month, terminable by either party on thirty (30) days' prior notice, and
shall be subject to all of the terms and conditions of this Lease as though the
Term had been extended from month to month, except that (i) the Base Rent
payable hereunder for each month during said holdover period shall be equal to
one hundred and 50 per cent (150%) of the monthly installment of Base Rent
payable during the last month of the Term and (ii) all Additional Rent payable
hereunder for Operating Expenses shall be prorated for each month during such
holdover period.
D. During a holdover, no offer of surrender of the Premises, by
delivery to Landlord or its agent of keys to the Premises or otherwise, will be
binding on Landlord unless accepted by Landlord, in writing, specifying the
effective surrender of the Premises. A, the expiration or termination of the
Lease Term, Tenant shall deliver to Landlord all keys to the Premises and make
known to Landlord the location and combinations of all locks, safes and similar
items.
ARTICLE 3.00 OCCUPANCY AND USE
3.01 USE. Tenant warrants and represents to Landlord that the Premises
shall be used and occupied only for the purpose as set forth in section 1.06. In
regard to the use and occupancy of the Premises and facilities, Tenant will not
place or maintain any merchandise, signage (except as permitted herein), trash,
refuse or other articles in any vestibule or entry of the Premises, on the
footwalks or corridors adjacent thereto or elsewhere on the exterior of the
Premises, nor obstruct any driveway, corridor, footwalk, or parking area; use or
permit the use of any objectionable advertising medium such as, without
limitation, loudspeakers, phonographs, public address systems, sound amplifiers,
reception of radio or television broadcasts which is in any manner audible or
visible outside of the Premises; permit undue accumulations of or bum garbage,
trash, rubbish or other refuse within or without the Premises; cause or permit
objectionable odors (in Landlord's opinion) to emanate or to be dispelled from
the Premises; conduct or permit to be conducted any auction, fictitious fire
sale, going out of business sale, bankruptcy sale (unless directed by court
order), or other similar type sale in or connected with the Premises; use or
permit the use of any portion of the Premises in a manner which will be in
violation of law, or for any activity of a type which is not, in Landlord's
reasonable opinion, conducted in accordance with good and generally accepted
standards of operation; or use the Premises for any unlawful or illegal
business, use or purpose, or for any business, use or purpose which is immoral
or disreputable (including without limitation "adult entertainment
establishments" and "adult bookstores"), or which is hazardous, or in such
manner as to constitute a nuisance of any kind (public or private), or for any
purpose or in any way in violation of the certificates of occupancy (or other
similar approvals of applicable governmental authorities). Tenant shall neither
permit any waste on the Project nor allow the Project to be used in any way
which would, in the opinion of Landlord, be extra hazardous on account of fire
or which would any way increase or render void the fire insurance on the
Building. if at any time during the term of this Lease the State Board of
Insurance or other insurance authority disallows any of Landlord's sprinkler
credits or imposes an additional penalty or surcharge in Landlord's insurance
premiums because of Tenant's original or subsequent placement or use of storage
racks or bins, method of storage or nature of Tenant's inventory or any other
act of Tenant, Tenant agrees to pay as Additional Rent the increase (between
fire walls) in Landlord's insurance premiums. Notwithstanding anything to the
contrary,
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Tenant shall be permitted to store its corporate vehicles at the Premises if and
only if an entrance has been retrofitted per local ordinances or codes that
would allow the entry of vehicles. Any improvements to the entrances of the
Premises to provide this access must first be approved by Landlord not to
unreasonably withheld. Further, Tenant shall be entitled to temporarily park
trailers or company vehicles oven-Light along the service road located at the
North end of the Building adjacent to the loading dock area as well as company
cars parked overnight in assigned parking spaces.
3.02 SIGNS. No sign of any type or description shall be erected, placed
or painted in or about the Premises or project except those signs submitted to
Landlord in writing. Landlord agrees to permit Tenant to install a sign, subject
to the terms herein, over the southwest entrance facing 39th Street. The size
and placement of the signage can not be larger than 2' 6" in height and must be
subject to Landlord's approval not to be unreasonably withheld and City code
requirements. Landlord will permit Tenant to place signage on a planned monument
sign facing Coral Ridge Drive. Additionally, Landlord will provide a monument
sign on 39th St. per the Tenant improvement requirements identified in Section
6.03. The design, size, form, content and location of the signs shall be subject
to Landlord's prior written approval and must comply with all applicable laws,
codes and ordinances.
3.03 COMPLIANCE WITH LAWS, RULES AND REGULATIONS. Tenant, at Tenant's
sole cost and expense, shall comply with all laws, ordinances, orders, rules and
regulations of state, federal, municipal or other agencies or bodies having
jurisdiction over use, condition and occupancy of the Premises. Tenant will
comply with the Association's declaration attached hereto as EXHIBIT "B" and
rules and regulations of the Building adopted by Landlord. The current rules and
regulations are attached hereto as EXHIBIT "C". Landlord shall have the right at
all times to change and amend the rules and regulations in any reasonable manner
as may be deemed advisable for the safety, care, cleanliness, preservation of
good order and operation or use of the Building or the Premises. All changes and
amendments to the rules and regulations of the Building will be sent by Landlord
to Tenant in writing and shall thereafter be carried out and observed by Tenant.
3.04 WARRANTY OF POSSESSION. Landlord warrants that it has the right
and authority to execute this Lease, and Tenant, upon payment of the required
Rents and subject to the terms, conditions, covenants and agreements contained
in this Lease, shall have possession of the Premises during the full term of
this Lease as well as any extension or renewal thereof so long as Landlord takes
all reasonable actions to prevent or end such interference from other tenants or
third parties. Landlord shall not be responsible for the acts or omissions of
any other Tenant or third party that may interfere with Tenant's use and
enjoyment of the Premises.
3.05 INSPECTION. Landlord or its authorized agents shall at any and au
reasonable times upon notice to Tenant, have the right to enter the Premises to
inspect the same, to supply janitorial service or any other service to be
provided by Landlord, to show the Premises to prospective purchasers or lessees,
and to alter, improve or repair the Premises or any other portion of the
Building. Tenant hereby waives any claim for damages for injury or inconvenience
or to interference with Tenant's business, any loss of occupancy or use of the
Premises, and any other loss occasioned thereby so long as Landlord makes all
reasonable efforts to minimize any such inconvenience or interference. Landlord
shall at all times have and retain a key with which to unlock all of the doors
in, upon and about the Premises. Tenant shall not change Landlord's lock system
or in any other manner prohibit Landlord from entering the Premises. Landlord
shall have the right to use any and all means which Landlord may deem proper to
open any door in an emergency without liability therefore.
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ARTICLE 4.00 UTILITIES AND SERVICE
4.01 BUILDING SERVICES. Landlord shall provide the normal utility
service connections to the Building. Tenant shall pay, as Additional Rent, in
addition to and simultaneously with its payment of Base Rent, a monthly charge
determined by Landlord, to cover the cost of all utility services, including,
but not limited to, initial connection charges, all charges for electricity,
water, sanitary and storm sewer service, and for all electric lights (the
"Utility Rent"). The amount of Utility Rent for Lease Year 1 shall be
$42,000.00, payable $3,500.00 per month, and shall be adjusted by Landlord,
semi-annually, based on usage by Tenant and rate adjustments. At Tenant's
request, Landlord shall provide information to verify said adjustment. Tenant
shall pay all costs caused by Tenant introducing excessive pollutants or solids
other than ordinary human waste into the sanitary system, including permits,
fees, and charges levied by any governmental subdivision for any such pollutants
or solids. Tenant shall pay all surcharges levied due to Tenant's use of
sanitary sewer or waste removal service insofar as such surcharges affect
Landlord or other lessees in the Building.
Landlord agrees to monitor air-conditioning capability and take
necessary action to ensure that the system is capable of achieving and
maintaining a temperature of 70 degrees or less in all work areas based on an
assumption of approximately 40 employees and an occupancy of one person (plus
normal business equipment) in each designated work area.
ARTICLE 5.00 REPAIRS AND MAINTENANCE
5.01 LANDLORD REPAIRS. Landlord shall not be required to make any
improvements, replacements or repairs of any, kind or character to the Premises
during the term of this Lease except for repairs and replacements necessitated
due to Landlord's negligence and as are set forth in this section. Landlord
shall maintain only the structural integrity of the roof, foundation, and
exterior walls. Except as stated herein, Landlord shall not be liable to Tenant
for any damage or inconvenience, and Tenant shall not be entitled to any
abatement or reduction of Rent by reason of any repairs, alterations or
additions made by Landlord under this Lease. Notwithstanding the foregoing,
Tenant shall be entitled to a prorata abatement or reduction of Rent only in the
event (a) Landlord makes repairs required herein due to Landlord's negligence
and (b) at Landlord's option, such repairs are performed during Tenant's
business hours. If Landlord fails to promptly repair or maintain the Premises as
required under Section 5.01, Tenant shall have the right to make such repairs on
behalf of Landlord at Landlord's expense.
5.02 TENANT REPAIRS. Tenant shall, at its sole cost and expense,
maintain, repair and replace all other parts of the Premises in good repair and
condition, including, pest control and extermination, trash pick up and removal,
and including heating, HVAC, ventilating, electrical, plumbing, , fire sprinkler
systems and the loading dock equipment or any other internal equipment specific
to the Tenant's Premises. Any HVAC equipment located on the roof that is shared
by Landlord and Tenant, will be maintained and repaired by Landlord. Tenant
shall repair and pay for any damage caused by any act or omission of Tenant or
Tenant's agents, employees, invitees, licensee or visitors.
5.03 REQUEST FOR REPAIRS. All requests for repairs or maintenance that
are the responsibility of Landlord pursuant to any provision of this Lease must
be made in writing to Landlord at the address in section 1.05.
5.04 TENANT DAMAGES. Tenant will repair promptly at its expense any
damage to the Premises and, upon demand, shall reimburse Landlord (as Additional
Rent) for the cost of the repair of
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any damage elsewhere in the Building, caused by or arising from: the
installation or removal of property in or from the Premises, regardless of fault
or by whom such damage shall be caused (unless caused by Landlord, its agents,
employees or contractors); or any act or omission of Tenant or any of its
employees, agents or invitees. If Tenant shall fail to commence such repairs
within five (5) days after notice to do so from Landlord, Landlord may make or
cause the same to be made and Tenant agrees to pay to Landlord promptly upon
Landlord's demand, as Additional Rent, the cost thereof with interest thereon at
the highest rate permitted by law until paid. The cost and expense of any
repairs to restore the condition of the Premises shall be borne by Tenant.
ARTICLE 6.00 ALTERATIONS AND IMPROVEMENTS
6.01 "AS-IS" CONDITION. Except as provided in this Article 6.00, Tenant
accepts the Premises in its "as-is" condition and acknowledges that Landlord has
no obligation to improve or refurbish the Premises or contribute to the cost of
same. Landlord agrees that all HVAC, plumbing and other Building systems will be
in good working order as of the Commencement Date and adequate to serve Tenant's
use of the Premises. All existing cables including data, phone, and video at the
time of execution of this Lease which serve the Premises shall be available and
marked as of the Lease Commencement date.
6.02 TENANT IMPROVEMENTS BY TENANT. Tenant shall not make or allow to
be made any alterations or physical additions in or to the Premises without
first obtaining the written consent of Landlord, which consent shall not be
unreasonably withheld. Any alterations, physical additions or improvements to
the Premises made by Tenant shall at once become the property of Landlord and
shall be surrendered to Landlord upon the termination of this Lease; provided,
however, Landlord, at its option, may require Tenant to remove any physical
additions and/or repair any alterations in order to restore the Premises to the
condition existing at the time Tenant took possession, all costs of removal
and/or alterations to be borne by Tenant. In order for Landlord to exercise its
option, Landlord must have provided Tenant notice at the time Tenant notified
Landlord of its intention to make alterations that it will require the removal
of such alterations or additions. This clause shall not apply to moveable
equipment or furniture owned by Tenant, which may be removed by Tenant at the
end of the term of this Lease if Tenant is not then in default and if such
equipment and furniture are not then subject to any other rights, liens and
interest of Landlord.
6.03 TENANT IMPROVEMENTS BY LANDLORD. Landlord shall cause the
construction of certain tenant improvements within the Premises ("Tenant
Improvements") described in EXHIBIT "D" subsequent to the occupancy date
however, no later than sixty days (60) from such occupancy date.
6.04 SATELLITE DISHES. Landlord shall permit the Tenant to erect up to
three (3) satellite dishes or offair antennas (the "Equipment") on the parapet
wall/roof of the Building located on the southwest portion of the Building,
subject to the terms and conditions herein. Tenant shall submit to Landlord
plans for the Equipment prepared by qualified engineers showing all aesthetic,
structural, mechanical, and electrical details thereof and of the necessary
structural and other changes to the Building required to accommodate the same,
all in accordance with all applicable Federal, state, and local laws, statutes,
codes, and ordinances, and properly licensed by all applicable governmental
authorities. Tenant its agents, customers and business invitees shall only use
the Equipment for its own use, and in no event shall Tenant be permitted to
allow the Equipment to be used by or for the direct or indirect benefit of
anyone other than Tenant. The Equipment shall not be permitted to interfere with
any other equipment presently located on the roof, and shall not be visible from
ground level, if such
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equipment would be visible from ground level, then Tenant must erect the
satellite dishes on the ground with an appropriate structural cover to avoid
visibility subject to Landlords approval not to be unreasonably withheld and in
accordance with all applicable Federal, state, and local laws, statutes, codes
and ordinances. Any and all structural, electrical or other mechanical changes
to the Building and any and all roof or wall penetrations must be specifically
approved in writing by the Landlord and shall be performed by a contractor and
contractors approved in writing by the Landlord. Upon termination of the Lease,
Tenant shall remove the Equipment and restore affected parts of the Building to
their former condition. Tenant shall be responsible for the cost of repairing
any damage caused by the Equipment and/or installation thereof, and Tenant shall
indemnify and hold harmless Landlord from any liability resulting in connection
with electromagnetic transmissions from the Equipment.
ARTICLE 7.00 CASUALTY AND INSURANCE
7.01 LANDLORD'S OBLIGATION TO REPAIR AND RECONSTRUCT. Except as
otherwise provided in this Article 7.00, if the Premises shall be damaged by
fire, the elements, accident or other casualty (any of such causes being
referred to herein as a "Casualty"), Landlord shall promptly cause such damage
to be repaired and there shall be no abatement of Rent unless such damage
results in untenantable space All such repairs shall be made at the expense of
Landlord; provided, however, that Landlord shall not be liable for interruption
to Tenant's business or for damage to or replacement or repair of Tenant's
personal property (including, without limitation inventory, trade fixtures,
floor coverings, furniture and other property removable by Tenant under the
provisions of this Lease) or to any leasehold improvements installed in the
Premises by or on behalf of Tenant, all of which damage, replacement or repair
shall be undertaken and completed by Tenant promptly.
7.02 LANDLORD'S OPTION TO TERMINATE LEASE. If the Premises are (a)
rendered wholly untenantable, or (b) damaged as a result of any cause which is
not covered by Landlord's insurance or (c) damaged or destroyed in whole or in
part during the last three (3) years of the Term, or if the Building is damaged
to the extent of fifty percent (50%) or more of the rentable area within, then,
in any of such events, Landlord or Tenant may elect to terminate this Lease by
giving to Tenant notice of such election within ninety (90) days after the
occurrence of such event. If such notice is given, the rights and obligations of
the parties shall cease as of the date of such notice, and Rent (other than any
Additional Rent due Landlord by reason of Tenant's failure to perform any of its
obligations hereunder) shall be adjusted as of the date of such occurrence which
renders the Premises wholly untenantable, damaged or destroyed.
7.03 DEMOLITION OF LANDLORD'S BUILDING. If the Building shall be so
substantially damaged that it is reasonably necessary, in Landlord's sole
judgment, to demolish same for the purpose of reconstruction, Landlord may
demolish the same, in which event Rent shall be abated to the same extent as if
the Premises were rendered untenantable by a Casualty.
7.04 INSURANCE PROCEEDS. If Landlord does not elect to terminate this
Lease, Landlord shall, subject to the prior rights of any Mortgagee, disburse
and apply any insurance proceeds received by Landlord to the restoration and
rebuilding of Landlord's Building in accordance with this Article 7.00. All
insurance proceeds payable with respect to the Premises shall belong to and
shall be payable to Landlord.
7.05 PROPERTY INSURANCE. Landlord shall at all times during the term of
this Lease maintain a policy or policies of insurance with the premiums paid in
advance, issued by and binding upon some
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solvent insurance company, insuring the Building against all risk of direct
physical loss in an amount equal to at least ninety percent of the full
replacement cost of the Building structure and its improvements as of the date
of the loss; provided, Landlord shall not be obligated in any way or manner to
insure any personal property (including, but not limited to, any furniture,
machinery, goods or supplies) of Tenant Premises, or any improvements which
Tenant may construct on the Premises. Tenant shall have no right in or claim to
the proceeds of any policy of insurance maintained by Landlord even if the cost
of such insurance is borne by Tenant as set forth in article 2.00.
7.06 WAIVER OF RIGHT OF RECOVERY. Except as provided in Section 13.13,
neither Landlord nor Tenant shall be liable to the other for any damage to any
building, structure or other tangible property, or any resulting loss of income,
or losses under worker's compensation laws and benefits, unless such damage is
due to the negligence of the Landlord or Tenant, even though such loss or damage
might have been occasioned by the negligence of such party, its agents or
employees. The provisions of this Section shall not limit the indemnification
for liability to third parties pursuant to Section 7.07. As used in this
paragraph, "damage" refers to any loss, destruction or other damage. Tenant
acknowledges that Landlord will not carry insurance on improvements, furniture,
furnishings, trade fixtures, equipment installed in or made to the Premises by
or for Tenant, and Tenant agrees that Tenant, and not Landlord, will be
obligated to promptly repair any damage thereto or replace the same, unless such
damage is due to the negligence of Landlord.
7.07 HOLD HARMLESS. All personal property placed or moved into the
Building will be at the sole risk of Tenant or other owner. Landlord will not be
liable to Tenant or others for any damage to person or property arising from
Hazardous Substances, as hereafter defined, theft, vandalism, HVAC malfunction,
the bursting or leaking of water pipes, any act or omission of any cotenant or
occupant of the Building or of any other person, or otherwise, unless such
damage is due to the negligence of Landlord.
Landlord and Tenant agree to indemnify, defend and hold harmless each
other and its agents from and against all claims, causes of actions,
liabilities, judgments, damages, losses, costs and expenses, including
reasonable attorneys' fees and costs through all appeals, incurred or suffered
by Landlord or Tenant and arising from or in any way connected with the Premises
or the use thereof or any acts, omissions, neglect or fault of Landlord or
Tenant or any of Landlord or Tenant's Agents, including, but not limited to, any
breach of this Lease or any death, personal injury or property damage occurring
in or about the Premises or the Building.
7.08 TENANT'S INSURANCE. Tenant agrees that, at all times during the
Lease Term (as well as prior and subsequent thereto if Tenant or any of Tenant's
Agents should then use or occupy any portion of the Premises), it will keep in
force, with an insurance company licensed to do business in the State of
Florida, and acceptable to Landlord, (a) without deductible, comprehensive
general liability insurance, including coverage for bodily injury and death,
property damage and personal injury and contractual liability as referred to
below, in the amount of not less than One Million Dollars ($1,000,000.00),
combined single limit per occurrence for injury (or death) and damages to
property, (b) with deductible of not more than Five Thousand Dollars
($5,000.00), insurance on an "All Risk or Physical Loss" basis, including
sprinkler leakage, vandalism, malicious mischief, fire and extended coverage,
covering all improvements to the Premises, fixtures, furnishings, removable
floor coverings, equipment, signs and all other decoration or stock in trade, in
the amounts of not less than the full replacement value thereof, (c) workmen's
compensation and employer's liability insurance, if required by statute, and.
Such policies will: (i) include Landlord, Landlord's mortgagees and such other
parties as Landlord may reasonably designate as additional insureds, (ii) be
considered primary insurance, (iii) include within the terms of the
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policy or by contractual liability endorsement coverage insuring Tenant
indemnity obligations set forth in this Lease, and (v) provide that it may not
be canceled or changed without at least thirty (30) days prior written notice
from the company providing such insurance to each party insured thereunder.
Tenant will also maintain throughout the Lease Term worker's compensation
insurance with not less than the maximum statutory limits of coverage. The
insurance coverages to be provided by Tenant will be for a period of not less
than one year. At least fifteen (15) days prior to the Commencement Date, Tenant
will deliver to Landlord original certificates of all such paid-up insurance;
thereafter, at least fifteen (15) days prior to the expiration of any policy
Tenant will deliver to Landlord such original certificates as will evidence a
paid-up renewal or new policy to take the place of the one expiring.
ARTICLE 8.00 CONDEMNATION
8.01 SUBSTANTIAL TAKING. If all or a substantial part of the Premises
are taken for any public or quasi-public use under any governmental law,
ordinance or regulation, or by right of eminent domain or by purchase in lieu
thereof, and the taking would prevent or materially interfere with the use of
the Premises for the purpose for which it is then being used, this Lease shall
terminate and the Rent shall be abated during the unexpired portion of this
Lease effective on the date physical possession is taken by the condemning
authority. Tenant shall have no claim to the condemnation award or proceeds in
lieu thereof. Tenant shall have no claim to the condemnation award with respect
to the leasehold estate but, in a subsequent, separate proceeding, may make a
separate claim for trade fixtures installed in the Premises by and at the
expense of Tenant and Tenant's moving expense. In no event will Tenant have any
claim for the value of the unexpired Lease Term.
8.02 PARTIAL TAKING. If a portion of the Premises shall be taken for
any public or quasi-public use under any governmental law, ordinance or
regulations, or by right of eminent domain or by purchase in lieu thereof, and
this Lease is not terminated as provided in section 8.01 above, Landlord shall
at Landlord's sole risk and expense, restore and reconstruct the Building and
other improvements on the Premises to the extent necessary to make it reasonably
tenantable. The Rent payable under this Lease during the unexpired portion of
the term shall be adjusted to such an extent as may be fair and reasonable under
the circumstances. Tenant shall have no claim to the condemnation award or
proceeds in lieu thereof.
ARTICLE 9.00 ASSIGNMENT OR SUBLEASE; MORTGAGEE RIGHTS
9.01 LANDLORD'S CONSENT REQUIRED.
A. Except as provided below with respect to assignment of this
Lease following Tenant's bankruptcy, Tenant will not assign this Lease, in whole
or in part, nor sublet all or any part of the Premises, nor license concessions
or lease departments therein, nor pledge or encumber by mortgage or other
instruments its interest in this Lease (each individually and collectively
referred to in this Section as a "transfer") without first obtaining the consent
of Landlord, which consent may not be unreasonably withheld conditioned, or
delayed and which reasonable consent may be based on the conditions provided
below. This prohibition includes, without limitation, any subletting or
assignment which would otherwise occur by operation of law, merger,
consolidation, reorganization, transfer or other change of Tenant's corporate,
partnership or propriety structure. Any transfer to or by a receiver or trustee
in any federal or state bankruptcy, insolvency, or similar proceeding shall be
subject to, and in accordance with, the provisions described below. Consent by
Landlord to any transfer shall not
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constitute a waiver of the requirement for such consent to any subsequent
transfer. In lieu of approving any transfer, Landlord may elect to terminate
this Lease as to the portion of the Premises covered by the proposed transfer by
giving Tenant notice of such election, in which event, unless Tenant cancels the
transfer and notifies Landlord of such cancellation within three (3) days after
such notice from Landlord, this Lease and the rights and obligations of the
parties hereunder shall cease as of a date set forth in such notice which date
shall not be less than sixty (60) days after the date of such notice.
B. In determining whether to give its reasonable consent to the
assignment or subletting of the Premises, Landlord may consider the following:
(i) In Landlord's reasonable judgment, the proposed assignee
or subtenant or occupant is engaged in a business or activity, which (a) is
limited to the use of the Premises set forth in Section 1.06 above, and (b) will
not violate any negative covenant as to use contained in any other lease in the
Building, There shall be only one proposed assignee or subtenant;
(ii) The proposed assignee or subtenant or occupant is a
reputable person of good character and with sufficient financial worth
considering the responsibility involved, and Landlord has been furnished with
reasonable proof thereof;
(iii) The form of the proposed sublease or instrument of
assignment or occupancy shall be reasonably satisfactory to Landlord, and shall
comply with the applicable provisions of this Paragraph; and
(iv) The proposed subtenant or assignee or occupant shall not
be entitled, directly or indirectly, to diplomatic or sovereign immunity and
shall be subject to the service of process in, and the jurisdiction of the
courts of the State of Florida;
(v) Such transferee shall assume in writing, in a form
acceptable to Landlord, all of Tenant's obligations hereunder and Tenant shall
provide Landlord with a copy of such assumption/ transfer document,
(vi) Tenant shall pay to Landlord a transfer fee of One
Thousand Five Hundred Dollars ($1,500.00) prior to the effective date of the
transfer in order to reimburse Landlord for any internal costs and expenses
incurred with reviewing the legal documents and the execution of the required
transfer documentation;
(vii) As of the effective date of the transfer and continuing
throughout the remainder of the Term, the Base Rent shall not be less than the
Base Rent set forth in this Lease;
(viii) Tenant to which the Premises were initially leased shall
continue to remain liable under this Lease for the performance of all terms,
including but not limited to, payment of Rent due under this Lease;
(ix) Tenant's guarantor, if any, shall continue to remain
liable under the terms of the Guaranty of this Lease and, if Landlord deems it
necessary, such guarantor shall execute such documents necessary to insure the
continuation of its guaranty;
(x) Tenant shall give notice of a requested transfer to
Landlord, which notice shall be accompanied by (a) a conformed or photostatic
copy of the proposed assignment or
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sublease, the effective or commencement date of which shall be at least 30 days
after the giving of such notice, (b) a statement setting forth in reasonable
detail the identity of the proposed assignee or subtenant, the nature of its
business and its proposed use of the Premises, (c) current financial information
with respect to the proposed assignee or subtenant, including, without
limitation, its most recent financial report and (d) such other information as
Landlord may reasonably request.
9.02 TRANSFER OF CORPORATE SHARES. If Tenant is a corporation other
than a corporation the outstanding voting stock of which is listed on a
"national securities exchange," (as defined in the Securities Exchange Act of
1934) and if at any time after execution of this Lease a majority of the
corporate shares shall be transferred by sale, assignment, bequest, inheritance,
operation of law or other disposition (including, but not limited to, such a
transfer to or by a receiver or trustee in federal or state bankruptcy,
insolvency, or other proceedings) so as to result in a change in the present
control of said corporation by the person(s) now owning a majority of said
corporate shares, Tenant shall give Landlord notice of such event within fifteen
(15) days of the date of such transfer.
9.03 ACCEPTANCE OF RENT FROM TRANSFEREE. The acceptance by Landlord of
the payment of Rent following any assignment or other transfer prohibited by
this Article shall not be deemed to be a consent by Landlord to any such
assignment or other transfer nor shall the same be deemed to be a waiver of any
right or remedy of Landlord hereunder.
9.04 RIGHTS OF MORTGAGEE. Landlord has the unrestricted right to
convey, mortgage and refinance the Building, or any part thereof. Tenant agrees,
within seven (7) days after notice, to execute and deliver to Landlord or its
mortgagee or designee such instruments as Landlord or its mortgagee may require,
certifying the amount of the Security Deposit and whether this Lease is in full
force and effect, and listing any modifications. This estoppel certificate is
intended to be for the benefit of Landlord, any purchaser or mortgagee of
Landlord, or, any purchaser or assignee of Landlord's mortgage. The estoppel
certificate will also contain such other information as Landlord or its designee
may request. This Lease is and at all times will be subject and subordinate to
all present and future mortgages or ground leases which may affect the Building
and to all recastings, renewals, modifications, consolidations, replacements,
and extensions of any such mortgage(s), and to all increases and voluntary and
involuntary advances made thereunder. The foregoing will be self-operative and
no further instrument of subordination will be required. In the event that the
holder ("Lender") of any encumbrance ("Mortgage") on the Building or any other
person acquires title to the Building pursuant to the exercise of any remedy
provided for in the Mortgage or by reason of the acceptance of a deed in lieu of
foreclosure (the Lender, any other such person and their participants,
successors and assigns being referred to herein as the "Purchaser"), Tenant
covenants and agrees to attorn to and recognize and be bound to Purchaser as its
new Landlord, and except as provided below, this Lease shall continue in full
force and effect as a direct Lease between Tenant and Purchaser, except that,
notwithstanding anything to the contrary herein or in the Lease, the provisions
of the Mortgage will govern with respect to the disposition of proceeds of
insurance policies or condemnation or eminent domain awards. So long as the
Lease is in full force and effect and Tenant is not in default under any
provision of this Lease, and no event has occurred that has continued to exist
for a period of time (after notice, if any, required by this Lease) as would
entitle Landlord to terminate this Lease or would cause without further action
by Landlord, the termination of this Lease or would entitle Landlord to
dispossess the Tenant thereunder:
A. The right of possession of Tenant to the Premises shall not be
terminated or disturbed by any steps or proceedings taken by Lender in the
exercise of any of its rights under the Mortgage or the indebtedness secured
thereby;
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B. This Lease shall not be terminated or affected by said exercise
of any remedy provided for in the Mortgage, and any sale by Lender of the
Building pursuant to the exercise of any rights and remedies under the Mortgage
or otherwise, shall be made subject to this Lease and the rights of Tenant
hereunder;
C. In no event shall Lender or any other Purchaser be:
(i) liable for any act or omission of Landlord or any prior
landlord;
(ii) subject to any offsets or defenses that the Tenant might
have against Landlord or any prior landlord; unless such offset or defense is
due to a deficiency or default which is continuing following the transfer of
Property.
(iii) bound by any amendment or modifications of the Lease made
without Lender's or such other Purchaser's prior written consent.
D. Provided that Landlord has previously notified Tenant of
Lender's address for notice, Tenant agrees to give prompt written notice to
Lender of any default by Landlord that would entitle Tenant to cancel this
Lease, and agrees that notwithstanding any provision of this Lease, no notice of
cancellation thereof given on behalf of Tenant shall be effective unless Lender
has received said notice and has failed within 30 days of the date of receipt
thereof to cure Landlord's default, or if the default cannot be cured within 30
days, has failed to commence and to diligently pursue the cure of Landlord's
default which gave rise to such right of cancellation. Tenant further agrees to
give such notices to any successor of Lender, provided that such successor shall
have given written notice of Tenant of its acquisition of Lender's interest in
the Mortgage and designated the address to which such notices are to be sent.
E. Tenant acknowledges that Landlord may execute and deliver to
Lender an Assignment of Leases and Rents conveying the Rents under this Lease as
additional security for the loan secured by the Mortgage, and Tenant hereby
expressly consents to such Assignment.
F. Tenant agrees that it will not, without the prior written
consent of Lender, do any of the following, and any such purported action
without such consent shall be void as against Lender:
(i) terminate this Lease except as provided by its terms; or
(ii) Tenant agrees to certify in writing to Lender, upon
request, whether or not any default known on the part of Landlord exists and the
nature of any such default.
(iii) The foregoing provisions shall be self-operative and
effective without the execution of any further instruments on the part of Lender
or Tenant. However, Tenant agrees to execute and deliver to Lender or to any
person to whom Tenant herein agrees to attorn such other instruments as either
shall request in order to effectuate said provisions.
ARTICLE 10.00 LIENS
10.01 LIENS. TENANT HAS NO AUTHORITY OR POWER TO CAUSE OR PERMIT ANY
LIEN OR ENCUMBRANCE OF ANY KIND WHATSOEVER, WHETHER CREATED BY
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ACT OF TENANT, OPERATION OF LAW OR OTHERWISE, TO ATTACH TO OR BE PLACED UPON
LANDLORD'S TITLE OR INTEREST IN THE PREMISES, AND ANY AND ALL LIENS AND
ENCUMBRANCES CREATED BY TENANT SHALL ATTACH TO TENANT'S INTEREST ONLY. Tenant
shall not permit any lien or claim for lien of any mechanic, laborer or supplier
or any other lien to be filed against the Premises or the Building, or any part
of such property arising out of work performed, or alleged to have been
performed by, or at the direction of, or on behalf of Tenant. If any such lien
or claim for lien is filed, Tenant shall within five (5) days after such filing
either have such lien of claim for lien released of record or shall deliver to
Landlord a bond or other security in form, content, amount, and issued by a
company satisfactory to Landlord indemnifying Landlord, Manager and others
designated by Landlord against all costs and liabilities resulting from such
lien or claim for lien and the foreclosure or attempted foreclosure thereof. If
Tenant fails to have such lien or claim for lien so released or to deliver such
bond to Landlord, Landlord, without investigating the validity of such lien, may
pay or discharge the same and Tenant shall reimburse Landlord upon demand for
the amount so paid by Landlord, including Landlord's expenses and attorneys'
fees.
ARTICLE 11.00 DEFAULT AND REMEDIES
11.01 EVENTS OF DEFAULT. If (1) Tenant fails to fulfill any of the
terms or conditions of this Lease or any other Lease heretofore made by Tenant
for space in the Building or (2) the appointment of a trustee or a receiver to
take possession of all or substantially all of Tenant's assets occurs, or if the
attachment, execution or other judicial seizure of all or substantially all of
Tenant's assets located at the Premises, or of Tenant's interest in this Lease,
occurs, or (3) Tenant or any of its successors or assigns or any guarantor of
this Lease ("Guarantor") should file any voluntary petition in bankruptcy,
reorganization or arrangement, or an assignment for the benefit of creditors or
for similar relief under any present or future statute, law or regulation
relating to relief of debtors, or (4) Tenant or any of its successors or assigns
or any Guarantor should be adjudicated bankrupt or have an involuntary petition
in bankruptcy filed against it, or (5) Tenant shall permit, allow or suffer to
exist any lien, judgment, writ, assessment, charge, attachment or execution upon
Landlord's or Tenant's interest in this Lease or to the Premises, and/or the
fixtures, improvements and furnishings located thereon; then, Tenant shall be in
default hereunder.
11.02 TENANT'S GRACE PERIODS. Tenant shall not be in default under the
terms of this Lease, notwithstanding the provisions of Section 11.01, unless (1)
Tenant fails to pay Rent or Additional Rent on the date due or (2) Tenant fails
to cure any other default within thirty days after notice from Landlord
specifying the nature of such default (unless such default is of a nature that
it cannot be completely cured within said ten (10) day period and steps have
been diligently commenced to cure or remedy it within such ten (10) day period
and are thereafter pursued with reasonable diligence and in good faith), then
Landlord shall have such remedies as are provided under this Lease and/or under
the laws of the State of Florida.
11.03 REPEATED LATE PAYMENT. Regardless of the number of times of
Landlord's prior acceptance of late payments and/or late charges, (i) if
Landlord notifies Tenant more than twice in any 6-month period that Base Rent or
any Additional Rent has not been paid when due, then any other late payment
within such 6-month period shall automatically constitute a default hereunder
and (ii) the mere acceptance by Landlord of late payments in the past shall not,
regardless of any applicable laws to the contrary, thereafter be deemed to waive
Landlord's right to strictly enforce this Lease, including Tenant's obligation
to make payment of Rent on the exact day same is due, against Tenant.
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11.04 LANDLORD'S REMEDIES FOR TENANT'S DEFAULT.
A. Landlord's Options. If Tenant is in default of this Lease,
Landlord may, at its option, in addition to such other remedies as may be
available under Florida law:
(1) terminate this Lease and Tenant's right of possession; or
(2) terminate Tenant's right to possession but not the Lease
and/or proceed in accordance with any and all provisions of paragraph B below.
B. Landlord's Remedies.
(1) Landlord may without further notice reenter the Premises
either by force and dispossess Tenant by summary proceedings, as well as the
legal representatives) of Tenant and/or other occupants) of the Premises, and
remove their effects and hold the Premises as if this Lease had not been made.
(2) All Rent and all Additional Rent for the balance of the
Term will, at the election of Landlord, be accelerated and the present worth of
same for the balance of the Lease Term, net of amounts actually collected by
Landlord, shall become immediately due thereupon and be paid, together with all
expenses of every nature which Landlord may incur such as (by way of
illustration and not limitation) those for attorneys' fees, brokerage,
advertising, and refurbishing the Premises in good order or preparing them for
re-rental; and/or at Landlord's option. Landlord agrees that it will make all
reasonable efforts to mitigate its damages.
(3) Landlord may re-let the Premises or any part thereof,
either in the name of Landlord or otherwise, for a term or terms which may at
Landlord's option be less than or exceed the period which would otherwise have
constituted the balance of the Lease Term, and may grant concessions or free
rent or charge a higher rental than that reserved in this Lease; and/or at
Landlord's option,
(4) Tenant or its legal representative(s) will also pay to
Landlord as liquidated damages any deficiency between the Rent and all
Additional Rent hereby reserved and/or agreed to be paid and the net amount, if
any, of the rents collected on account of the lease or leases of the Premises
for each month of the period which would otherwise have constituted the balance
of the Lease Term.
C. Landlord's Remedies in Bankruptcy.
(1) Anything contained herein to the contrary notwithstanding,
if termination of this Lease shall be stayed by order of any court having
jurisdiction over any proceeding described in subparagraph A. of this Paragraph,
or by federal or state statute, then, following the expiration of any such stay,
or if Tenant or Tenant as debtor-in possession or the trustee appointed in any
such proceeding (being collectively referred to as "Tenant" only for the
purposes of this Paragraph) shall fail to assume Tenant's obligations under this
Lease within the period prescribed therefor by law or within fifteen (15) days
after entry of the order for relief or as may be allowed by the Court, or if
Tenant shall fail to provide adequate protection of Landlord's right, title and
interest in and to the Premises or adequate assurance of the complete and
continuous future performance of Tenant's obligations under this Lease,
Landlord, to the extent permitted by law or by leave of the court having
jurisdiction over such
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proceeding, shall have the right, at its election, to terminate this Lease on
fifteen (15) days' notice to Tenant and upon the expiration of said fifteen (15)
day period this Lease shall cease and expire as aforesaid and Tenant shall
immediately quit and surrender the Premises as aforesaid. Upon the termination
of this Lease as provided above, Landlord, without notice, may re-enter and
repossess the Premises using such force for that purpose as may be necessary
without being liable to indictment, prosecution or damages therefor and may
dispossess Tenant by summary proceedings or otherwise.
(2) For the purposes of the preceding paragraph (1), adequate
protection of Landlord's right, title and interest in and to the Premises, and
adequate assurance of the complete and continuous future performance of Tenant's
obligations under this Lease, shall include, without limitation, the following
requirements:
(i) that Tenant comply with all of its obligations under
this Lease;
(ii) that Tenant pay to Landlord, on the first day of
each month occurring subsequent to the entry of such order, or the effective
date of such stay, a sum equal to the amount by which the Premises diminished in
value during the immediately preceding monthly period, but in no event, an
amount which is less than the aggregate Rent payable for such monthly period;
(iii) that Tenant continue to use the Premises in the
manner originally required by this Lease;
(iv) that Landlord be permitted to supervise the
performance of Tenant's obligations under this Lease;
(v) that Tenant pay to Landlord within fifteen (15) days
after entry of such order or the effective date of such stay, as partial
adequate protection against future diminution in value of the Premises and
adequate assurance of the complete and continuous future performance of Tenant's
obligations under this Lease, an additional security deposit in an amount
acceptable to Landlord;
(vi) that Tenant has and will continue to have
unencumbered assets after the payment of all secured obligations and
administrative expenses to assure landlord that sufficient funds will be
available to fulfill the obligations of Tenant under this Lease;
(vii) that if Tenant assumes this Lease and proposes to
assign the same (pursuant to Title 11 U.S.C. ss 365, or as the same may be
amended) to any person who shall have made a bona fide offer to accept an
assignment of this Lease on terms acceptable to such court having competent
jurisdiction over Tenant's estate, then notice of such proposed assignment,
setting forth (x) the name and address of such person, (y) all of the terms and
conditions of such offer, and (z) the adequate assurance to be provided Landlord
to assure such person's future performance under this Lease, including, without
limitation, the assurance referred to in Title 11 U.S.C. ss 365(b) (3), as it
may be amended, shall be given to Landlord by Tenant no later than fifteen (15)
days after receipt by Tenant of such offer, but in any event no later than
thirty (30) days prior to the date that Tenant shall make application to such
court for authority and approval to enter into such assignment and assumption,
and Landlord shall thereupon have the prior right and option, to be exercised by
notice to Tenant given at any time prior to the effective date of such proposed
assignment, to accept, or to cause Landlord's designee to accept, an assignment
of this Lease upon the same terms and conditions and for the same consideration,
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if any, as the bona fide offer made by such person less any brokerage commission
which may be payable out of the consideration to be paid by such person for the
assignment of this Lease; and
(viii) that if Tenant assumes this Lease and proposes to
assign the same, and Landlord does not exercise its option pursuant to Paragraph
(vii) of this Paragraph, Tenant hereby agrees that:
(A) such assignee shall have a net worth not less
than the net worth of Tenant as of the Commencement Date, or such Tenant's
obligations under this Lease shall be unconditionally guaranteed by a person
having a net worth equal to Tenant's net worth as of the Commencement Date;
(B) such assignee shall not use the Premises except
subject to all the restrictions contained in this Lease;
(C) such assignee shall assume in writing all of the
terms, covenants and conditions of this Lease including, without limitation, all
of such terms, covenants and conditions respecting the Permitted Use and payment
of Rent;
(D) such assignee shall indemnify Landlord against,
and pay to Landlord the amount of, any payments which Landlord may be obligated
to make to any Mortgagee by virtue of such assignment;
(E) such assignee shall pay to Landlord an amount
equal to the unamortized portion of any construction allowance made to Tenant;
and
(F) if such assignee makes any payment to Tenant, or
for Tenant's account, for the right to assume this Lease (including, without
limitation, any lump sum payment, installment payment or payment in the nature
of rent over and above the Rent payable under this Lease), Tenant shall pay over
to Landlord one-half of any such payment, less any amount paid to landlord
pursuant to clause (E) above on account of any construction allowance.
11.05 LANDLORD'S RIGHT TO PERFORM FOR TENANT'S ACCOUNT. If Tenant fails
to observe or perform any term or condition of this Lease within the grace
period, if any, applicable thereto, then Landlord may immediately or at any time
thereafter perform the same for the account of Tenant. if Landlord makes any
expenditure or incurs any obligation for the payment of money in connection with
such performance for Tenant's account (including reasonable attorneys' fees and
costs in instituting, prosecuting and/or defending any action or proceeding
through appeal), the sums paid or obligations incurred, with interest at
eighteen percent (18%) per annum, will be paid by Tenant to Landlord within ten
(10) days after rendition of a bill or statement to Tenant. In the event Tenant
in the performance or non-performance of any term or condition of this Lease
should cause an emergency situation to occur or arise within the Premises or in
the Building, Landlord will have all rights set forth in this paragraph
immediately without the necessity of providing Tenant any advance notice.
11.06 TENANT'S RIGHT TO TERMINATE. If at the beginning of the fourth or
fifth year of the Lease term, Tenant wishes to terminate this lease agreement,
then Tenant must provide one hundred and eighty (180) days written notice to
Landlord on the anniversary date and must pay three months of lease payments
plus all unamortized commission and tenant improvements for the remainder of the
lease term,
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which shall be eighteen (18) months for the fourth year election and six (6)
months for the fifth year election.
ARTICLE 12.00 DEFINITIONS
12.01 ABANDON. "Abandon" means the vacating of all or a substantial
portion of the Premises by Tenant, whether or not Tenant is in default of the
Rent payment due under this Lease.
12.02 ACT OF GOD OR FORCE MAJEURE. An "act of God" or "Force Majeure"
is defined for purposes of this Lease as strikes, lockouts, sitdowns, material
or labor restrictions by any governmental authority, unusual transportation
delays, riots, floods, washouts, explosions, earthquakes, fire, storms, weather
(including wet grounds or inclement weather which prevents construction), acts
of the public enemy, wars, insurrections and any other cause not reasonably
within the control of Landlord and which by the exercise of due diligence
Landlord is unable, wholly or in part, to prevent or overcome.
ARTICLE 13.00 MISCELLANEOUS
13.01 WAIVER. Failure of Landlord to declare an event of default
immediately upon its occurrence, or delay in taking any action in connection
with an event of default, shall not constitute a waiver of the default, but
Landlord shall have the right to declare the default at any time prior to
Tenant's cure and take such action as is lawful or authorized under this Lease.
Pursuit of any one or more of the remedies set forth in article 11.00 above
shall not preclude pursuit of any one or more of the other remedies provided
elsewhere in this Lease or provided by law, nor shall pursuit of any remedy
constitute forfeiture or waiver of any Rent or damages accruing to Landlord by
reason of the violation of any of the terms, provisions or covenants of this
Lease. Failure by Landlord to enforce one or more of the remedies provided upon
an event of default shall not be deemed or construed to constitute a waiver of
the default or of any other violation or breach of any of the terms, provisions
and covenants contained in this Lease.
13.02 ACT OF GOD. Landlord shall not be required to perform any
covenant or obligation in this Lease, or be liable in damages to Tenant, so long
as the performance or non-performance of the covenant or obligation is delayed,
caused or prevented by an act of God, Force Majeure or by Tenant.
13.03 JURY TRIAL; ATTORNEY'S FEES. To the extent permitted by law, in
any action or proceeding by Landlord for eviction where Landlord has also filed
a separate action for damages, Tenant waives the right to interpose any
counterclaim in such eviction action. Moreover, Tenant agrees that it shall not
interpose or maintain any counterclaim in such damages action unless it pays and
continues to pay all Rent, as and when due, into the registry of the court in
which the damages action is filed. In the event of any dispute hereunder, or any
default in the performance of any term or condition of this Lease, the
prevailing party in litigation shall be entitled to recover all costs and
expenses associated therewith, including reasonable attorneys' fees.
13.04 SUCCESSORS. This Lease shall be binding upon and inure to the
benefit of Landlord and Tenant and their respective heirs, personal
representatives, successors and assigns. It is hereby covenanted and agreed that
should Landlord's interest in the Premises cease to exist for any reason during
the term of this Lease, then notwithstanding the happening of such event this
Lease nevertheless shall remain unimpaired and in full force and effect, and
Tenant hereunder agrees to attorn to the then owner of the Premises.
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13.05 RENT TAX. If applicable in the jurisdiction where the Premises
are situated, Tenant shall pay and be liable for all rental, sales and use taxes
or other similar taxes, if any, levied or imposed by any city, state, county or
other governmental body having authority, such payment is to be in addition to
all other payments required to be paid to Landlord by Tenant under the terms of
this Lease. Any such payment shall be paid concurrently with the payment of the
Rent, Additional Rent, Operating Expenses or other charge upon which the tax is
based as set forth above.
13.06 CAPTIONS. The captions appearing in this Lease are inserted only
as a matter of convenience and in no way define, limit, construe or describe the
scope or intent of any section.
13.07 NOTICE. All Rent and other payments required to be made by Tenant
shall be payable to Landlord at the address set forth in section 1.05. All
payments required to be made by Landlord to Tenant shall be payable to Tenant at
the address set forth in section 1.05, or at any other address within the United
States as Tenant may specify from time to time by written notice. Any notice or
document required or permitted to be delivered by the terms of this Lease shall
be deemed to be delivered (whether or not actually received) when deposited in
the United States Mail, postage prepaid, certified mail, return receipt
requested, addressed to the parties at the respective addresses set forth in
section 1.05.
13.08 SUBMISSION OF LEASE. Submission of this Lease to Tenant for
signature does not constitute a reservation of space or an option to lease. This
Lease is not effective until execution by and delivery to both Landlord and
Tenant.
13.09 CORPORATE AUTHORITY. If Landlord or Tenant executes this Lease as
a corporation, each of the persons executing the Lease on behalf of Landlord or
Tenant does hereby personally represent and warrant that Landlord or Tenant is a
duly authorized and existing corporation, that Landlord or Tenant is qualified
to do business in the state in which the Premises are located, that the
corporation has full right and authority to enter into this Lease, and that each
person signing on behalf of the corporation is authorized to do so. In the event
any representation or warranty is false, all persons who execute this Lease
shall be liable, individually, as Landlord or Tenant.
13.10 SEVERABILITY. If any provision of this Lease or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Lease and the application of such provisions to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
13.11 LANDLORD'S LIABILITY. If Landlord shall be in default under this
Lease and, if as a consequence of such default, Tenant shall recover a money
judgment against Landlord, such judgment shall be satisfied only out of the
right, title and interest of Landlord in the Building or any other real property
as the same may then be encumbered and neither Landlord nor any person or entity
comprising Landlord shall be liable for any deficiency.
13.12 RADON GAS. The following statement has been included in this
lease as required by Florida Statutes 404.056 (6): "Radon Gas: Radon is a
naturally occurring radioactive gas that, when it has accumulated in a building
in sufficient quantities, may present health risks to persons who are exposed to
it over time. Levels of Radon that exceed Federal and State guidelines have been
found in buildings in Florida. Additional information regarding Radon and radon
testing may be obtained from your county public health unit".
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13.13 HAZARDOUS SUBSTANCES.
A. Prohibition of Storage. As used herein, "Hazardous Materials
Laws" means all federal, state and local laws, statutes, ordinances and
regulations, rules, rulings, policies, orders and administrative actions and
orders relating to industrial hygiene, environmental protection or the use,
analysis, generation, manufacture, storage, disposal or transportation of any
oil, flammable explosives, asbestos, urea formaldehyde, radioactive materials or
waste, infectious waste, or other hazardous, toxic, contaminated or polluting
materials, substances or wastes, including, without limitation, any "hazardous
substances," "hazardous wastes," "hazardous materials" or "toxic substances"
under any such laws, ordinances or regulations (collectively, "Hazardous
Materials"). Tenant shall, at its own expense, at all times and in all respects:
(i) comply with all Hazardous Materials Laws regarding Hazardous Materials
introduced in or about the Building by or at the direction of Tenant or in
connection with Tenant's use of the Premises ("Tenant's Hazardous Materials");
and (ii) procure, maintain in effect and comply with all conditions of any and
all permits, licenses and other governmental and regulatory approvals relating
to Tenant's Hazardous Materials within, on, under or about the Building in
conformity with all applicable Hazardous Materials Laws and prudent industry
practices regarding management of such Hazardous Materials. Landlord recognizes
and agrees that Tenant may use Tenant's Hazardous Materials in normal quantities
that are applicable to general office use and that such use by Tenant shall not
be deemed a violation of this Section, so long as the levels are not in
violation of any Hazardous Materials Laws. Upon termination or expiration of the
Lease, Tenant shall, at its own expense, cause all of Tenant s Hazardous
Materials to be removed from the Premises and Building Common Area and
transported for use, storage or disposal in accordance and compliance with all
applicable Hazardous Materials Laws. Landlord acknowledges that it is not the
intent of this Article to prohibit Tenant from operating its business as
described in this Lease. Tenant may operate its business according to the custom
of the industry so long as the use or presence of Tenant's Hazardous Materials
is strictly and properly monitored according to all applicable governmental
requirements. Notwithstanding anything herein to the contrary, Tenant shall not
be entitled to install any tanks under, on or about the Premises for the storage
of Hazardous Materials without the express written consent of Landlord which
Landlord shall be entitled to withhold in its sole and arbitrary discretion.
Tenant shall indemnify, protect, defend (by counsel reasonably acceptable to
Landlord), and hold Landlord free and harmless from and against any and all
claims, liabilities, penalties, forfeitures, losses and expenses (including
attorneys' fees) or death of or injury to any person or damage to any property
whatsoever, including, without limitation, the Building common area, arising
from or caused in whole or in part, directly or indirectly, by the presence in
or about the Building of any of Tenant's Hazardous Materials or by Tenant's
failure to comply with any Hazardous Materials Law regarding Tenant's Hazardous
Materials or in connection with any removal, remediation, clean up, restoration
and materials required hereunder to return the Premises and any other property
of whatever nature to their condition existing prior to the appearance of
Tenant's Hazardous Materials. The foregoing indemnity shall also include any
consultant, laboratory and expert fees incurred by Landlord and diminution in
the value of the Premises (or the Building in which same is located), damages
for the loss or restriction on use of rentable or usable space or of any amenity
of the Premises and damages arising from any adverse impact on marketing of
space.
B. Disclosure Warning and Notice Obligations. Tenant shall comply
with all laws, ordinances and regulations in the State where the Premises is
located regarding the disclosure of the presence or danger of Tenant's Hazardous
Materials. Tenant acknowledges and agrees that all reporting and warning
obligations required under the Hazardous Materials Laws with respect to Tenant's
Hazardous Materials are the sole responsibility of Tenant, whether or not such
Hazardous Materials Laws permit or require Landlord to provide such reporting or
warnings, and Tenant shall be solely responsible for complying with such
Hazardous Materials Laws regarding the disclosure of, the presence
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or danger of Tenant's Hazardous Materials. Tenant shall immediately notify
Landlord, in writing, of any complaints, notices, warnings, reports or asserted
violations of which Tenant becomes aware relating to Hazardous Materials on or
about the Premises. Tenant shall also immediately notify Landlord if Tenant
knows or has reason to believe Tenant's Hazardous Materials have or will be
released in or about the Building.
C. Environmental Tests and Audits. Tenant may from time to time
perform or cause to be performed, any Hazardous Materials surveys, studies,
reports or inspection, relating to the Premises without obtaining Landlord's
advance written consent, which consent may be withheld in Landlord's sole
discretion. At any time prior to the expiration of the Lease Term, Landlord
shall have the right to enter upon the Premises in order to conduct appropriate
tests and to deliver to Tenant the results of such tests to demonstrate that
levels of any Hazardous Materials in excess of permissible levels has occurred
as a result of Tenant's use of the Premises. Upon Landlord's request, Tenant
shall provide Landlord with lists of au Hazardous Materials used, stored or
located in or on the Premises.
D. Survival/Tenant's Obligations. The respective rights and
obligations of Landlord and Tenant under this Article shall survive the
expiration or termination of this Lease.
E. Landlord represents that as of the Commencement date, the
Premises shall be free of all Hazardous materials. Further Landlord represents
that no Hazardous materials have been stored or generated at the Premises other
than in compliance with all Hazardous materials laws.
13.14 DELIVERY OF GUARANTY. At or prior to the parties execution of
this Lease Landlord has delivered to Tenant a form of guaranty (the "Guaranty")
to be signed by the Guarantors, if any, identified above. Tenant's failure to
deliver the Guaranty fully executed by the Guarantors within 5 days from the
earliest date on which this Lease has been signed by the parties shall
constitute an Event of Default.
ARTICLE 14.00 REAL ESTATE COMMISSION
14.01 BROKERS. Landlord warrants that it has had no dealings with any
real estate broker or agent in connection with the negotiation of this Lease
except the broker and cooperating broker named above, and that it knows of no
other real estate broker or agent who is or might be entitled to a commission in
connection with this Lease. Landlord agrees to pay all real estate commissions
due in connection with this Lease to the broker named above, and Landlord agrees
to indemnify and hold harmless Tenant from and against any liability or claim,
whether meritorious or not, arising with respect to any broker not so named
above, which claim arises by, through or on behalf of Landlord. Tenant warrants
and represents that it has had no dealings with any real estate broker or agent
in connection with the negotiations of this Lease except the broker and
cooperating broker named above, and that it knows of no other real estate broker
or agent who is or might be entitled to a commission in connection with this
Lease, and Tenant agrees to indemnify and hold harmless Landlord from and
against any liability or claim, whether meritorious or not, arising with respect
to any broker no so named below, which claim arose by, through or on behalf of
Tenant.
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ARTICLE 15.00 AMENDMENT AND LIMITATION OF WARRANTIES
15.01 ENTIRE AGREEMENT. IT IS EXPRESSLY AGREED BY TENANT, AS A MATERIAL
CONSIDERATION FOR THE EXECUTION OF THIS LEASE, THAT THIS LEASE, WITH THE
SPECIFIC REFERENCES TO WRITTEN EXTRINSIC DOCUMENTS, IS THE ENTIRE AGREEMENT OF
THE PARTIES; THAT THERE ARE, AND WERE NO VERBAL REPRESENTATIONS, WARRANTIES,
UNDERSTANDINGS, STIPULATIONS, AGREEMENTS OR PROMISES PERTAINING TO THIS LEASE OR
TO THE EXPRESSLY MENTIONED WRITTEN EXTRINSIC DOCUMENTS NOT INCORPORATED IN
WRITING IN THIS LEASE. EXCEPT AS PROVIDED ELSEWHERE, HEREIN. Notwithstanding the
above, Landlord is not aware of any material defects of the Premises.
5.02 AMENDMENT. THIS LEASE MAY NOT BE ALTERED, WAIVED, AMENDED OR
EXTENDED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY LANDLORD AND TENANT.
5.03 LIMITATION OF WARRANTIES. LANDLORD AND TENANT EXPRESSLY AGREE
THAT LANDLORD HAS NOT MADE AND DOES HEREBY EXPRESSLY DISCLAIM ANY AND ALL
IMPLIED WARRANTIES OR MERCHANTABILITY, HABITABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS LEASE, AND THERE ARE NO
WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN THIS LEASE.
ARTICLE 16.00 FINANCIAL REPORTING
6.01 FINANCIAL STATEMENTS. Throughout the term of this Lease, Tenant
shall furnish Landlord with true and correct copies of Tenant's audited
financial statements within ninety (90) days after the close of Tenant's fiscal
year. Prior to or simultaneously with the execution of this Lease, Tenant shall
furnish Landlord true and correct copies of Tenant's most recent financial
statements, which must be in form and content acceptable to Landlord. Such
Financial information is confidential, and may only be shared with Landlord's
accountants and lenders.
ARTICLE 17.00 SIGNATURES
SIGNED AT __________________________________________ this _______ day of
_____________, 1998/
WITNESSES: LANDLORD
UNIPOWER Corporation, a Delaware
corporate
_________________________________ By:/s/ Bianca M. Gallo
-------------------
Name:
Title:
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WITNESSES TENANT
Park N' View, a Delaware corporation
By:/s/ Tony Allen
-----------------------
________________________________ Name:
Title:
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EXHIBIT "A"
DESCRIPTION OF SITE
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EXHIBIT "B"
DECLARATION
This instrument prepared and
recorded by and to be returned to:
Barry E. Somerstein, Esq.
Howard D. Cohen, Esq.
RUDEN, MCCLOSKY, SMITH,
SCHUSTER & RUSSELL, P.A.
200 E. Broward Blvd.
Fort Lauderdale, FL 33031
DECLARATION OF COVENANTS AND RESTRICTIONS
FOR
GREATER CORAL SPRINGS RESEARCH AND
DEVELOPMENT PARK ADDITION V
THIS DECLARATION OF COVENANTS AND RESTRICTIONS is made this 18 day of December,
1996, by BANKATLANTIC, F.S.B., a Federal Savings Bank, its successors and
assigns ("Declarant").
W I T N E S S E T H:
WHEREAS, Declarant is the owner of the real property located in Broward
County, Florida ("Property") the legal description of which is attached hereto
as Exhibit A and made a part hereof, and the Declarant desires to create thereon
a planned business park; and
WHEREAS, Declarant desires to provide for the preservation and
enhancement of the property values, amenities and opportunities in said business
park and for the maintenance of the properties and improvements thereon, and to
this end desires to subject the Property, to the covenants, restrictions,
easements, charges and liens hereinafter set forth, each and all of which is and
are for the benefit of said property and each owner thereof; and
WHEREAS, Declarant has deemed it desirable, for the efficient
preservation of the values and amenities in said business park, to create the
Research Park Association, Inc. ("Association") to which should be delegated and
assigned the powers of owning, maintaining and administering the
[PAGE TWO MISSING FROM ORIGINAL]
its successors and assigns. Declarant's assigns shall be deemed to include only
such party or parties whom (or which) Declarant designates. Any designation may
be made with respect to all or any portion of Declarant's rights and functions
hereunder or of the Property. An Owner shall not solely by the purchase of a
Site be deemed a successor or assign of Declarant, unless
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such Owner is specifically so designated as a successor or assign of such rights
as a Declarant in the instrument of conveyance or any other instrument executed
by Declarant.
9. "Improvement" shall mean and include, but shall not be limited to,
(a) the construction, installation, erection, or expansion of any buildings,
structures, or other Improvements (such as parking areas, loading areas,
railroad tracks, fences, walls, hedges, mass planting, poles, driveways, berms,
ponds, lakes, signs, changes in any exterior color or shape, glazing or
reglazing of exterior windows with mirrored or reflective glass, and other
exterior construction or improvement, whether initially constructed or any
subsequent change thereto), (b) the demolition or destruction, by voluntary
action of any building, structure or other Improvements, (c) the grading,
excavation, filling or similar disturbance to the surface of the land including,
without limitation, change of grade, change of ground level, change of drainage
pattern or change of stream bed, (d) landscaping, planting, clearing or removing
of trees, shrubs, grass or plants, and (e) any change or alteration of any
previously approved Improvement to the Property including, without limitation,
any change of exterior appearance.
10. "Institutional Mortgagee" shall mean any lending institution
holding a construction mortgage lien on any portion of the Property or having a
first lien on a Site, including any of the following institutions: an insurance
company or subsidiary thereof, a federal or state savings and loan association,
a federal or state savings bank, a federal or state building and loan
association, the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, a national or state banking association, the respective
County Housing Authority or similar entity, a real estate investment trust, any
mortgage banking company authorized to do business in the State of Florida, any
issuer of mortgage backed securities, any Real Estate Investment Mortgage
Conduit (as defined in Section 860 of the Internal Revenue Code), any entity
providing credit enhancement or direct financing in any "synthetic" or
"bondable" leasing transaction, any other form of entity issuing commercial
mortgage backed securities secured in whole or in part by a mortgage, lease, or
other security instrument relating to a Site, or any purchase money mortgage
taken back by the Declarant.
11. "Member" shall mean and refer to a Person entitled to membership in
the Association, as provided herein.
12. "Occupant" shall mean the occupant of a Site who shall be the
Owner, the lessee, subtenant and/or their respective guest and invitee.
13. "Owner" or "Site Owner" shall mean the fee simple title holder of
any Site, whether one or more persons or entities, but excluding in all cases
any party holding an interest merely as security for the performance of an
obligation.
14. "Person" shall mean a natural person, a corporation, a partnership,
a trust or a trustee, an association, or any other legal entity.
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15. "Plat" shall mean the Greater Coral Springs Research and
Development Park Addition V, according to the Plat thereof recorded in Plat Book
161, at Page 28, of the Public Records of Broward County, Florida, as may be
amended from time to time by the Declarant or, after the Transfer Date, by the
Association.
16. "Property" shall mean all of the property subject to this
Declaration. The real property is described in Exhibit A, which is attached to
this Declaration now or may be attached to this Declaration at some date in the
future, and made a part hereof.
17. "Site" shall mean a contiguous area of land within the Property
which is owned of record by the same Owner, which land may consist of more than
one parcel of real property or combination of parcels or portions of parcels.
18. "Subsequent Amendment" or "Supplemental Declaration" shall mean an
amendment to this Declaration which adds additional real property to that
covered by this Declaration, or which withdraws real property from that covered
by this Declaration. Such Subsequent Amendment may, but is not required to,
impose, expressly or by reference, additional restrictions and obligations on
the land submitted by that Subsequent Amendment to the provisions of this
Declaration.
19. "Transfer Date" shall mean the date that the Declarant relinquishes
the right to appoint a majority of the directors to the Board of Directors of
the Association. The Transfer Date shall occur not later than one hundred twenty
(120) days after the date of the closing of the last Site to be sold by the
Declarant in the Property.
20. The use of gender is deemed to include all genders; the use of the
singular includes the plural and the use of the plural includes the use of the
singular.
ARTICLE 11
EASEMENTS AND PROPERTY RIGHTS
1. There is hereby created as an appurtenant easement for the benefit
of each Site an ingress and egress easement for vehicular and pedestrian traffic
over all those portions of the Property (including portions of each Site) which
are paved parking and drive surfaces existing from time to time which easement
may be utilized by each Occupant and their guests and invitees for ingress and
egress (but not parking) to and from each Site over the paved parking and drive
surfaces of the Complex. Notwithstanding the foregoing, Site Owners shall have
the right to develop and redevelop their respective Sites from time to time,
subject to obtaining approval as herein provided, and that such easement for
ingress and egress shall only be over the paved surfaces that exist from time to
time on each Site. The Association shall have the authority to establish and
enforce reasonable speed limits on said roadways and drives.
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2. There presently exists a certain paved driveway running East to West
(the "Common Drive") straddling, approximately on its centerline, the northern
boundary of that certain Site, more particularly described in Exhibit D attached
hereto and made a part hereof (the "Site A") and the southern boundary of that
certain Site more particularly described on Exhibit E attached hereto and made a
part hereof ("Site B"). The Common Drive may be used, on a non-exclusive basis,
by the Owners and the Occupants of all Sites for vehicular and pedestrian access
to and from the Sites within the Complex. No Person shall construct or permit to
exist on the Common Drive any obstructions to the passage thereover of vehicles
or pedestrians. The Common Drive shall be maintained and repaired by the Owner
of Site A, in a clean and good condition, free from trash accumulation and free
from potholes. The Owner of Site A shall cause the cost of maintenance and
repairs of the Common Drive to be charged separate and apart from any other
maintenance or repair costs incurred by the Owner of Site A, and the cost of all
maintenance and repairs to the Common Drive shall be paid one-half by the Owner
of Site A and the remaining one-half by the Owner of Site B. The owner of Site B
shall reimburse the Owner of Site A for one-half (1/2) of the bona fide costs
and expenses incurred in connection with maintaining the common drive, which
reimbursement shall be made within thirty (30) days after written demand
therefore, together with reasonable evidence of the costs incurred in connection
with maintaining the common drive. In the event the Owner of Site A shall fail
to maintain the Common Drive, then the Owner of Site B and/or the Association
shall have the right to perform the maintenance of the Common Drive upon
providing the Owner of Site A with written notice and a thirty (30) day
opportunity to cure its beach in failing to maintain the Common Drive. In the
event that the Owner of Site A shall fail to maintain the Common Drive within
such thirty (30) day period, then either the Owner of Site B and/or the
Association shall have the right to perform the maintenance for the Common Drive
and in the event the Owner of Site B shall perform such maintenance, the Owner
of Site A shall reimburse the Owner of Site B for one-half (1/2) of the costs
and expenses incurred in connection with performing the maintenance of the
Common Drive within thirty (30) days of written demand together with reasonable
documentation evidencing the costs incurred in connection with such maintenance,
and in the event that the Association shall perform such maintenance, then the
Owner of Site A and the Owner of Site B shall each be responsible to reimburse
the Association for one-half (1/2) of any costs and expenses incurred by the
Association in connection with maintaining the Common Drive, which reimbursement
shall be made within thirty (30) days after written demand together with
reasonable documentation evidencing such costs incurred by the Association. In
the event any party shall fail to reimburse the party entitled to such
reimbursement as set forth above, then the party entitled to such reimbursement
shall be entitled to any and all remedies available at law or in equity,
including, but not limited to, being reimbursed for reasonable attorneys' fees
and court costs through all trial and appellate levels together with interest on
any sums owed to such party at the rate of eighteen percent (1 8%) per annum
from the date such reimbursement was due until paid.
3. Declarant reserves the right to amend this Declaration unilaterally
at any time, without prior notice and without the consent of any Person, for the
sole purpose of adding
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certain portions of the Property then owned by Declarant (or its affiliates) to
the provisions of this Declaration. To effectuate such addition, Declarant shall
record amongst the Official Records a Supplemental Declaration, which shall
extend the scheme of the restrictions, easements, and limitations . of this
Declaration to such additional land. Each Supplemental Declaration shall contain
a legal description of the land added or annexed.
4. There is hereby created as an appurtenant easement for the benefit
of each Site an easement through and under the Property for (i) installation,
use, service, repair and maintenance of the underground power, electric
transmission, television cable, telecommunications, lighting, telephone, gas,
water, sewer and irrigation systems, (ii) underground drainage, and (iii)
security services, governmental and quasi-governmental services, including, but
not limited to, police and fire protection together with rights of ingress,
egress and access for persons and equipment necessary for the aforementioned
purposes for the benefit of Declarant (or its affiliates), the Association, the
Owners, and all appropriate utility companies, agencies, franchises or
governmental or quasi-governmental agencies. Notwithstanding the foregoing, no
such easement shall be permitted or deemed to exist which may cause any
building, permanent structure or other Improvement within the Property which
have been constructed or are contemplated to be constructed and prior to the use
of such easement to be materially altered or detrimentally affected thereby nor
shall any such easements be granted or deemed to exist under any such structures
or buildings so built prior to the actual use of such easement. Additionally,
notwithstanding the foregoing, any easement not in existence as of the date of
the recording of this Declaration shall only be permitted or deemed to exist
over another Site, provided that the Owner requesting such easement over another
Owner's Site shall submit a request to the Owner of such Site showing the
location of such utility easement on the Site, and provided that the Owner of
such Site consents to such easement and its location, which consent shall not be
unreasonably withhold. The foregoing shall not preclude such easements under
then-existing Improvements other than buildings or structures (such as, but not
limited to, a fence, driveway, parking or landscaping area); provided, that (i)
the use and enjoyment of the easement and the installation of the facilities in
connection therewith would not result in other than minor, temporary alterations
to such Improvements other than a building or structure (such as, but not
limited to, temporary alterations or removal of a fence or temporary excavation
within a driveway, or parking access area); and (ii) the same is repaired and/or
restored, as the case may be, at the expense of one making use of such easement
within a reasonable period of time thereafter.
5. Declarant reserves the right to amend this Declaration unilaterally
at any time, without prior notice and without the consent of any Person, for the
sole purpose of removing certain portions of the Property then owned by
Declarant (or its affiliates) from the provisions of this Declaration to this
extent included originally in error or as a result of any changes whatsoever in
the plans for the Complex desired to be effected by Declarant; provided,
however, such withdrawal shall not be unequivocally contrary to the overall,
uniform scheme of development for the Complex, as determined by Declarant in the
exercise
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of its reasonable judgment. To effectuate such withdrawal, Declarant shall
record amongst the Official Records a Subsequent Amendment, which amendment
shall contain a statement including such intent and determination to withdraw
that portion. of real property legally described therein from the designation as
Property being subject to this Declaration. Upon recording of a Subsequent
Amendment, the property described therein shall no longer be part of the
Property and may be developed and/or used for any purposes allowed by law.
6. In the event any Owner shall cause damage to the property of any
other Owner in connection with its utilization of the easement rights created
pursuant to this Declaration, then the Owner causing damage to the other Owner
shall be responsible to reimburse such Owner for the compensatory damages caused
to the other property Owner.
7. Nothing contained in this Declaration is intended to or shall be
construed to limit any Owner from reasonably restricting access over any paved
areas on such Owner's property as reasonably necessary from time to time (not to
exceed one [1] day per year) to prevent a public dedication of such surfaces.
ARTICLE III
MEMBERSHIP AND VOTING RIGHTS
1. Declarant has heretofore caused the Association to be incorporated.
Every Owner of a Site shall automatically be and become a Member of the
Association during, and only during, all periods of such Owner's ownership of
such Site. The Association shall be governed in accordance with its Articles and
its By-Laws. The purposes of the Association shall be to enforce the covenants,
restrictions, easements, conditions, and other limitations set forth in this
Declaration, to appoint the members of the Board from and after the date
Declarant ceases to make such appointments, to assume such other obligations
with respect to the Property as the Association deems appropriate, and to
fulfill such other purposes as Declarant may deem necessary or appropriate to
enable the Association to carry out the purpose and intent of this Declaration.
2. The directors first appointed may be appointed by Declarant for
staggered terms of one, two or three years, at Declarant's election. Succeeding
directors shall each serve a term of one year. Any director not appointed by
Declarant shall be elected by the Owners at the times and in the manner
prescribed in the By-Laws. Declarant shall, notwithstanding anything herein to
the contrary, retain the right to appoint a majority of the directors to the
Board of the Association until the Transfer Date.
3. Every Owner shall be deemed to have a membership in the Association-
No Owner, whether one or more Persons, shall have more than one membership per
Site owned. In the event the Owner of a Site is more than one Person, votes and
rights of use and enjoyment shall be as provided for herein. The rights and
privileges of membership may be exercised by the Owner or, in the case of a
corporate owner or partnership, by the individual
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person designated by such corporate owner or partnership in writing delivered to
the Association. No Occupant or other third party may exercise any right or
privilege of a Member except pursuant to a written proxy issued by the Owner of
the Site, which proxy must be on file with the Secretary of the Association.
4. The Association shall have two classes of membership, Class "A" and
Class "B," as follows:
A. Class "A". "Class "A" Members" shall be all Owners with the
exception of the Class "B" Member, if any. Class "A" Members shall be entitled
on all issues to the number of votes determined in accordance with the formula
set out in Exhibit F attached hereto. Unless otherwise specified in this
Declaration or the By-Laws, the votes for each Site shall be exercised by the
Site Owner. In any situation where a Member is entitled personally to exercise
the votes for his Site and when more than one Person holds the interest in any
Site required for membership, the votes for such Site shall be exercised as
those Persons themselves determine and advise the Secretary of the Association
prior to any meetings. In the absence of such advice, the Site's vote shall be
suspended in the event more than one Person seeks to exercise it. Any Owner of a
Site which is leased may, in the lease or other written instrument, assign the
voting right appurtenant to that Site to the lessee, provided that a copy of
such instrument is furnished to the Secretary of the Association prior to any
meeting.
B. Class "B". The "Class B" Member shall be Declarant, and its
successors and assigns, or a representative thereof designated by it in a
written notice to the Association, who shall have and cast one (1) weighted vote
(based on the formula set forth in Exhibit F) in all Association matters, plus
three (3) votes for each vote which may be cast by the "Class A" Members. The
"Class B" Member may be removed and replaced by Declarant in its sole
discretion. The "Class B" membership shall cease and terminate (and convert to a
"Class A" membership) at such time as Declarant elects, but in no event later
than the Transfer Date. From and after the conversion to Class "A" membership,
the Class "B" Member shall be deemed to be a Class "A" Member entitled to the
votes for each Site in which it holds an interest as determined pursuant to the
formula set out in Exhibit F.
ARTICLE IV
GENERAL CHARACTER, PURPOSE AND USE OF PROPERTY
1. It is the intent of this Declaration to ensure that the Property
will be maintained as an attractive, park-like setting for business and industry
with attractive high-quality structures, proper and desirable uses and
appropriate development of all of the Property. This Article shall be used by
the Declarant and the Association as a general standard in interpreting the
provisions of this Declaration and judging performance hereunder, in approving
or disapproving the development of Sites, and in carrying out the overall
development of the Property.
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2. Without the written consent of Declarant (or the Association after
the Declarant no longer owns any Site), the Sites shall be used solely as
commercial business and/or industrial use. Nothing herein shall be deemed to
prevent an Owner from leasing a building to a commercial business or industrial
use as may be permitted under applicable zoning laws, subject to all of the
terms, conditions and covenants contained in this Declaration.
3. Notwithstanding anything to the contrary contained herein, there is
hereby reserved two hundred twenty five thousand (225,000) square feet of
industrial use as set forth on the plat of GREATER CORAL SPRINGS RESEARCH AND
DEVELOPMENT PARK ADDITION V, recorded in Plat Book 161, Page 28, of the Public
Records of Broward County, Florida ("Plat") for Parcels 3 and 4 of the Plat.
4. Without the written consent of Declarant (or the Association after
the Declarant no longer owns any Site), all Site Owners and future Owners are
prohibited from entering into gas, oil, minerals, metals, or other petroleum
products leases on the Property. This covenant and provision shall run with the
land and restrict its use for this purpose until the end of time. The Site Owner
shall not permit any nuisance to exist upon his Site so as to be detrimental to
any other Site or to its Owners.
5. Without the written consent of Declarant (or the Association after
the Declarant no longer owns any Site) which shall not be unreasonably withheld,
a Site shall not be further subdivided or separated by any Owner; and no portion
less than all of any such Site, nor any easement or other interest granted
herein, shall be conveyed or transferred by an Owner; provided, however, that
this shall not prevent corrective deeds, deeds to resolve boundary disputes, and
other similar corrective instruments. Nothing contained herein is intended to
restrict the Owner from granting additional easements upon its Property,
provided such easements do not interfere with the easements provided in this
Declaration.
6. The Site may be used in any trade, business, profession, or for any
other commercial use permitted by the Governmental Ordinances having
jurisdiction over same, subject to the covenants and restrictions set forth in
this Declaration (or as otherwise permitted in writing by Declarant (or the
Association after the Declarant no longer owns any Site). The Owner may lease
the Site for any purpose permitted by any governmental ordinances or laws having
jurisdiction over same, subject to all of the terms and provisions contained in
this Declaration. Notwithstanding the foregoing, unless authorized in writing by
the Declarant (or the Association after the Declarant no longer owns any Site),
no Site may be used as: (i) "adult" book or video stores, nude photography
studios or any nude or otherwise suggestive entertainment; (ii) any store
selling inventory not available for sale or rental to children under eighteen (I
8) years old because such inventory explicitly deals with or depicts human
sexuality; (iii) a flea market; (iv) an auditorium, meeting hall or other place
or public assembly; (v) any type of karate facility, gymnasium, health club,
physical fitness facility (other than for the exclusive use of the employees of
any occupant of the Site) or any exercise or dance studio; (vi) an off-track
betting business; (vii) a billiard or pool hall; (viii)
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for bingo or other similar game of chance; (ix) a massage parlor; (x) a game or
video arcade; and (xi) a nightclub.
7. Nothing contained herein shall prohibit the Declarant from carrying
on any and all types of activity necessary to accomplish develop and operate the
Sites owned by Declarant which are conveyed to third parties.
8. No automatic teller machine or similar equipment ("ATM") shall be
installed from and after the date hereof on the Property without the prior
written consent of Declarant.
9. The Site Owners shall abide by each and every reasonable rule and
regulation promulgated from time to time by the Board. The Board shall give an
Owner in violation of the rules and regulations, written notice of the violation
by U.S. Certified Mail, return receipt requested, and 15 days in which to cure
the violation.
10. Should the Declarant or Association be required to seek enforcement
of any provision of the Declaration or the rules and regulations for the
Complex, then and in that event, the offending Site Owner shall be responsible
for the actions or non-actions of its occupants, lessees, employees, customers,
contractors, and sub-contractors.
ARTICLE V
MAINTENANCE
1. All maintenance of a Site and all structures, parking areas and
other Improvements within a Site shall be the sole responsibility of the Owner
(and Occupant) thereof, who shall perform such maintenance in a neat and first
class appearance and in a manner consistent with the terms of this Declaration;
provided, however, if this work is not properly performed by the Owner, the
Association may perform it and assess the Owner for the costs and expenses of
such maintenance; provided, further, however, except when entry is required due
to an emergency situation, the Association shall afford the Owner reasonable
notice and an opportunity to cure the problem prior to such entry.
2. Buildings, landscaping and other Improvements shall be continuously
maintained by or on behalf of the Owner of each Site unless authorized in
writing to the contrary by the Declarant (or the Association after the Declarant
no longer owns any Site) so as to preserve a well-kept appearance especially
along the perimeters of any Site. The Association may from time to time without
obligation, inspect and observe Site and landscape maintenance to be performed
by or on behalf of the Owner of each Site and if not satisfied with the level of
maintenance on a Site shall notify the Owner in writing. The Site Owner shall
have fifteen (15) days from the date of receipt of notice to commence and
complete such maintenance; provided, however, if the necessary maintenance would
take longer to cure, the Site Owner's right to cure shall be extended as
reasonably required to perform such maintenance obligation, provided that the
Site Owner commences maintenance
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within fifteen (15) days of notice and diligently pursues same to completions.
If, within fifteen (15) days after notification, in the Association's opinion,
maintenance has not been brought to acceptable standards in conformance with the
following maintenance standards or the Site Owner has not commenced and
diligently pursued its maintenance obligations, the Association may order the
work done at the Site Owner's expense and may treat the charge as an assessment.
The Board may either directly or through a committee (designated by the Board),
enforce maintenance standards which shall include (but not be limited to) the
following:
A. Trash. All trash and garbage shall be placed in designated
containers of a maximum size established from time to time by the Board, or
within the Owner's contained service area and all trash areas shall be screened
and properly landscaped. Regular trash removal shall be the responsibility of
the Owner or Occupant of each Site.
B. Landscaping. All landscaped areas, including sodded areas, shall
be regularly irrigated as required, and shall receive regular maintenance
including trimming, fertilization, mowing, and replacement of diseased or dying
plant materials as required unless authorized in writing to the contrary by the
Declarant (or the Association after the Declarant no longer owns any Site). All
irrigation systems shall be underground, automatic, kept in good repair, and
shall not discolor any wall, sign or other structure. Perimeter landscaping
shall be maintained so as to avoid blight and preserve the beauty, quality and
value of the Complex and to maintain a uniform and sightly appearance unless
authorized in writing to the contrary by the Declarant (or the Association after
the Declarant no longer owns any Site).
C. Parking Lots and Sidewalks. Unless authorized in writing to the
contrary by the Declarant (or the Association after the Declarant no longer owns
any Site), all parking lots, sidewalks and other hard surface areas shall be
swept and cleaned regularly and cracks and damaged areas of sidewalks shall be
repaired or replaced as required. Damaged or eroding areas of the asphalt
parking surface shall be replaced as required and an overall resurfacing of the
parking area will be done as necessary. Broken bumper stops and/or curbing shall
be replaced as required and drainage inlets, storage sewers and any surface
drainage facilities shall be maintained in good repair and shall remain clear of
debris so as to enable the proper flow of water.
D. Lighting. Unless authorized in writing by Declarant (or by the
Association after the Declarant no longer owns any Site), levels of light
intensity in the areas of all exterior walkways and parking areas, and of all
illuminated signs, shall be maintained at safe levels and bulbs shall be
replaced expeditiously as failure occurs. Light standards shall be maintained in
good repair and shall be kept functional at all times.
E. Painting. All painted surfaces shall be repainted on a regular
schedule as required to maintain exterior appearance in a clean, neat and
orderly manner.
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F. Signs. All signs and sign walls shall be maintained in good
repair so as to be clear and legible. Any discoloration must be removed and
painted surfaces repainted as needed unless authorized in writing by Declarant
(or by the Association after the Declarant no longer owns any Site).
ARTICLE VI
ARCHITECTURAL CONTROL
No building, fence, wall, hedge, or other Improvement shall be
commenced, erected or maintained upon any Site, nor shall any exterior addition
to or change or alteration therein be made until the plans and specifications
("Plans") showing the nature, kind, shape, height, materials, location, and
costs of the same have been submitted to and approved in writing as to harmony
of external design and location in relation to the surrounding structures and
topography by the Declarant until Declarant no longer owns any Site whereupon
such approval shall be by the Board, provided such approval by Declarant and the
Board shall not be unreasonably withheld. In the event the Declarant or Board
(as applicable as having the authority to approve same) fails to approve or
disapprove such design and location within 30 days after such Plans are
submitted to it, then approval shall be deemed granted and this article shall be
deemed to have been fully complied with. Approval of the Plans by the Declarant
or the Board (as applicable as having the authority to approve same) shall not
obviate the requirement that all such Improvements comply with all applicable
governmental and quasi-governmental requirements. Further, the Board does not
have the right to approve of Plans that are in violation of any local ordinances
and/or regulations and/or the applicable building code. Further, should said
municipalities, county, and/or the applicable building code require as a
condition precedent, approval of a municipality, county, and/or a regional
commission, said shall be a condition precedent to submission to the Board.
ARTICLE VII
INDEMNIFICATION AND EXCULPATION
1. Indemnification.
A. The Association shall defend, indemnify and hold Declarant, its
directors, officers, agents and employees and the Association's directors,
officers, agents and employees (collectively the "Indemnified Parties") harmless
from and against any and all claims, suits, actions, threatened actions, injury,
loss, liability, damages, causes of action and expenses of any nature in
connection with enforcement or implementation of this Declaration (including,
but not limited to any derivative action brought by the Association on behalf of
any Owner or Occupant) ("Indemnified Loss") which may be incurred by the
Indemnified Parties in connection with or arising directly or indirectly from
any personal injury, loss of life and/or damage to property, directly or
indirectly unless caused by negligent or intentional acts or action of the
Indemnified Parties. The indemnification provided in this Section shall
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apply whether or not any Indemnified Party is acting in his capacity as
Declarant, director, officer, or agent at the time any Indemnified Loss is
incurred. Indemnified Losses pursuant to this Section shall include, but not be
limited to, all costs, attorneys' fees (including all appellate levels),
expenses, and liabilities.
B. The indemnification pursuant to this Section shall include any
and all expenses that any Indemnified Party incurs to enforce its rights
pursuant to this Declaration, including pursuance of an order for specific
enforcement of any of the provisions, conditions, covenants or restrictions
contained herein.
2. Exculpation.
A. No person, natural or in law, shall be liable for special or
consequential damages including, but not limited to, loss of profits or revenue,
loss of use, loss of capital, cost of substitute housing or equipment,
facilities or services, or claims by third parties.
B. Any rights, privileges, or warranties contained herein shall not
be assigned or assignable but are personal between the original Owners,
Occupants or the Association and the Declarant.
C. The Owners and Occupants agree that there have been no oral or
implied warranties by any person, natural or in law, affecting the Sites or the
Property.
ARTICLE VIII
ASSOCIATION EXPENSES, METHOD OF DETERMINING
ASSESSMENTS, AND MAINTENANCE OF EXTERIOR AREAS
1. The costs and expenses incurred by the Association with regard to
the enforcement of this Declaration shall be an Association Expense. The
Declarant shall have the right (but not the obligation) to advance any funds it
deems necessary to the Association for such purpose and then be reimbursed by
the Association for all such advances at the direction of the Declarant.
2. To defray the Association Expenses, there is hereby imposed upon
each Site and its Owner, the affirmative covenant and obligation to pay to the
Association; and upon the Association the right to assess, collect and expend,
the Association's Expenses and those expenses herein set forth as follows:
A. Fidelity Coverage. The cost to the Association of purchasing
adequate fidelity insurance or bonds to protect against dishonest acts on the
part of officers, directors, trustees, agents and employees of the Association
and all other persons who handle or are responsible for handling monies of the
Association (to the extent the Association elects to maintain such coverage).
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B. Optional Expenses. 'Me costs of administration for the
Association, including, but not limited to, expenses necessary to carry out the
rights and remedies of the Association under this Declaration, notwithstanding
the fact that some of these services may be expanded in providing services to
collecting sums owed by an Owner.
C. Indemnification. The cost to the Association to provide the
Indemnification provided in Article VIII above. Any contribution for such
purpose shall be paid only by Owners other than Institutional Mortgagees.
D. Special Assessments. Any special assessments that shall be levied
to defray (a) extraordinary items of Association Expense; and (b) such other
Association Expenses determined by the Board to be payable to the Association
and which are not inconsistent with the terms of this Declaration, the Articles
of Incorporation or the By-Laws.
E. Initiation Fees. Each Site Owner shall pay a one time initiation
fee of up to Seven Hundred Fifty Dollars ($750) per Site as determined by the
Association upon accepting the original deed from the Declarant. The amount of
the initiation fee shall be set by the Board of Directors and be due and payable
to the Association at the time grantee closes on the property with the
Declarant.
3. Method of Determining Assessments. The "assessments" (as hereinafter
defined) for Association Expenses shall be levied and paid for as follows:
A. It is hereby declared and all Owners and the Association agree
that the Association Expenses shall be paid by the Association out of funds
assessed and collected from and paid by all Site Owners, provided, however, that
the Declarant shall not be required to contribute any amounts for Association
Expenses on any portion of the Property owned by the Declarant with regard to
Sites owned by Declarant for which a certificate of occupancy of a principal
building on such Site has not been issued. Except as provided in the preceding
sentence, each Site Owner other than Declarant shall be required to pay the
Association Expenses.
B. As provided in the By-Laws of the Association the Board shall
prepare an estimated annual budget which shall reflect the estimated Association
Expenses. Thereupon, the Board shall allocate the Association Expenses to all
Sites (other than that owned by the Declarant) in accordance with the formula
for determining assessments as set out in Exhibit F hereof.
C. The assessments may be adjusted as necessary to allow for any
change in the amount of Association Expenses. The adjustment may be made by
allocating the total anticipated Association Expenses for the remainder of the
calendar year by formula for determining assessments as set out in Exhibit F
hereof.
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D. The assessments shall be payable no less frequently than
quarter-annually in advance on the first day of January, April, July and
October, or otherwise as the Board may determine.
E. In the event that assessments which are assessed to the Owners in
any fiscal year shall exceed the amount of the Association Expenses after
accounting for reasonable reserve, then any such excess monies shall be applied
toward assessments due by such Owner in the succeeding fiscal year.
ARTICLE IX
ESTABLISHMENT AND ENFORCEMENT OF LIENS
1. All assessments for Association Expenses, including special
assessments for same, and all installments thereof, (collectively, the
"assessments") with interest thereon and costs of collection, including
reasonable attorneys' fees at pre-trial level, trial level, appellate level, or
otherwise, are hereby declared to be a charge and a continuing lien upon each
Site against which such assessments are made. Each assessment against a Site,
together with such interest thereon at the highest rate allowed by law and costs
of collection thereof, including attorney's fees, shall be the personal
obligation of the person, persons or entity owning the Site assessed. Said lien
shall be effective only from and after the time of recordation amongst the
Public Records of the respective county in the State of Florida, of a written,
acknowledged statement by the Association setting forth the amount due to the
Association as of the date the statement is signed. Upon full payment of all
sums secured by that lien and costs and fees accrued, the party making payment
shall be entitled to a recordable Satisfaction of Lien. When any first mortgagee
obtains title to a Site as a result of a foreclosure, such acquirer of title,
his successors and assigns, shall not be liable for the share of assessments
pertaining to such Site or chargeable to the former Owner which became due prior
to the acquisition of title as a result of the foreclosure or deed in lieu of
foreclosure, unless such share is secured by a Claim of Lien for assessments and
recorded prior to the recordation of a mortgage. Such unpaid share of assessment
for which a Claim of Lien has not been recorded prior to the recording of the
foreclosed mortgage or deed given in lieu of foreclosure shall be deemed to be
assessments collectible from all other Sites, as the necessity may arise in the
discretion of the Board.
2. In the event any Owner shall fail to pay assessments or any
installment thereof charged to his Site within thirty (30) days after written
notice that the same has become due, the Association, through its Board, shall
have all of the following remedies to the extent permitted by law, to wit:
A. To accelerate the entire amount of any assessments for the
remainder of the calendar year notwithstanding any provisions for the payment
thereof in installments.
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B. To advance on behalf of said Owner funds to accomplish the needs
of the Association and the amount or amounts of money so advanced, including
reasonable attorney's fees and expenses which might have been reasonably
incurred because of or in connection with such advance, including costs and
expenses of the Association if it must borrow to pay expenses because of said
Owner, together with interest at the highest rate allowable by law, may
thereupon be collected or enforced by the Association against such Owner(s) and
such advance or loan by the Association shall not waive the default.
C. To file an action in equity to foreclose its lien against the
Site(s) of such Owner(s) for all sums due to the Association at any time after
the effective date thereof. The lien may be foreclosed by an action in the name
of the Association in a like manner as the foreclosure of a mortgage on real
property.
D. To file an action at law against such Owner(s) to collect said
assessments, plus interest at the highest rate allowable by law plus court
costs, without waiving any lien rights and/or rights of foreclosure by the
Association.
E. Charge such Owner(s) a late fee in the amount of five percent
(5%) of the amount due.
ARTICLE X
AMENDMENTS
1. This Declaration may be amended only by written consent of a
majority in interest of the Members (i.e., the Owner of each Site having one
vote in such determination), the written consent of the Institutional Mortgagee
with the highest aggregate mortgage indebtedness on the Sites and the written
consent of the Declarant (as long as Declarant owns any portion of the
Property). The aforementioned consent shall be in writing and affixed to the
Amendment to this Declaration.
2. Additionally, the Declarant may amend this Declaration in order to
correct a scrivener's error or other defect or omission without the consent of
any Institutional Mortgagees, the Owners or the Board; provided that such
amendment does not materially or adversely affect an Owner's property rights.
This amendment shall be signed by the Declarant alone and a copy of the
amendment shall be furnished to each Owner, the Association and all
Institutional Mortgagees as soon after recording thereof amongst the Public
Records of the respective county, Florida, as is practicable.
3. An amendment to the Declaration shall become effective upon
recordation amongst the Public Records of Broward County, Florida.
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ARTICLE XI
TERMINATION
1. This Declaration and the terms, provisions, conditions, covenants,
restrictions, reservations, regulations, burdens and liens contained herein
shall run with and bind the subject Property and inure to the benefit of the
Declarant, the Association, the Owners, Institutional Mortgagees and their
respective legal representatives, heirs, successors, and assigns for a term of
25 years from the date of recording of this Declaration amongst the Public
Records of Broward County, Florida. After which time, this Declaration shall be
automatically renewed and extended for successive periods of 10 years each,
unless, at least I year prior to the termination of such 25 year term or any
such 1 0 year extension, an instrument is recorded amongst the Public Records of
Broward County, Florida, that is signed by at least 80% of all Owners and at
least 80% of all Institutional Mortgagees holding mortgages encumbering Sites
evidencing their affirmation to terminate this Declaration, upon which event
this Declaration shall be terminated upon the expiration of 25 years or the 10
year extension thereof during which the termination instrument is recorded.
2. The Site Owners and their grantees, successors, and assigns by
acquiring title to a Site covenant and agree that no termination of this
Declaration shall be made for a period of 25 years from the date of recordation
of this Declaration unless approved in writing by one hundred percent (100%) of
the Site Owners and I 00% Institutional Mortgagees having liens against the
Property.
ARTICLE XII
MANAGEMENT
The Declarant, or a subsidiary thereof may be hired by the Board to
manage the Association. The Declarant/Manager shall be entitled to a reasonable
management fee and reimbursement for all out-of-pocket expenses for the
management of the Association. The Declarant will terminate its management
services (if any) on the Transfer Date.
ARTICLE XIII
MISCELLANEOUS
1. The failure of the Declarant, the Association, or any Owner to
object to an Owner's or other person's failure to comply with the covenants or
restrictions contained herein shall in no event be deemed a waiver of any right
to object to same and to seek compliance therewith in accordance with the
provisions herein.
2. Articles and paragraph captions inserted throughout this Declaration
are intended only as a matter of convenience and for reference only and in no
way shall such captions or headings define, limit or in any way affect any of
the terms and provision of this Declaration.
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3. Whenever the context requires, any pronoun used herein may be deemed
to mean the corresponding masculine, feminine or neuter form thereof and the
singular form of any nouns or pronouns herein may be deemed to mean the
corresponding plural form thereof and vice versa.
4. In the event any one of the provisions of this Declaration shall be
deemed invalid by a court of competent jurisdiction, said judicial determination
shall in no way affect any of the other provisions, hereof, which shall remain
in full force and effect.
5. The Association hereby agrees to pay all attorneys fees, court
costs, and other such expenses incurred by the Declarant in the event it becomes
necessary for the Declarant to defend any threatened, pending or completed
action, suit or other proceeding, whether or not the Declarant is found liable
as a result of such an action in connection with the enforcement or
implementation of this Declaration; provided, however, that in connection with
any litigation between the Association and the Declarant, the prevailing party
shall be entitled to recover reasonable attorneys' fees in connection with such
action. In the event the Declarant advances any funds to the Association in
order for the Association to discharge its obligations required under the
Declaration, the Declarant shall be reimbursed by the Association immediately
when the funds are available.
6. The Association is required to make available at a reasonable charge
to the Site Owners and to lenders, holders, insurers or guarantors of any first
mortgage, current copies of the Declaration, Articles of Incorporation, By-Laws,
rules and regulations and other such documents governing the Complex or the
Association, as well as the books, records, and financial statements of the
Association. "Available" shall be defined as obtainable for inspection, upon
written request after reasonable notice, during normal business hours or under
such other reasonable circumstances.
7. Upon the reasonable written request of any Owner made to the
Association and/or the Declarant (provided same shall not be more than twice in
a calendar year, without such Owner paying the reasonable costs of the
Association or Declarant to prepare such estoppel certificate), the Association
and/or the Declarant agree that they shall provide reasonable estoppel
information as to the amount of the assessment for such year and, to the best of
its knowledge, whether the Owner is current and in good standing of its
obligations under this Declaration.
8. Nothing contained in this Declaration shall be construed to limit
any Owner's right to mortgage, convey, encumber or lease or otherwise grant
interest in such Owner's Site, subject to the terms of this Declaration.
IN WITNESS WHEREOF, the Declaration of Covenants and Restrictions of
the Complex has been signed by the Declarant on the day and year first above set
forth. The Declarant has caused these presents to be executed in its name and
its corporate seal to be hereunto affixed by its proper officer thereunto duly
authorized.
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(signatures on the following page)
BANKATLANTIC, F.S.B
By:
-------------------------------------
Print Name:
-----------------------------
(Corporate Seal) Title:
-----------------------------
Address:
--------------------------------
----------------------------------------
STATE OF FLORIDA )
ss.
COUNTY OF BROWARD )
I HEREBY CERTIFY, that on this day before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by
_______________________ of BANKATLANTIC, F.S.B., freely and voluntarily under
authority duly vested in him/her by said federal savings bank. He/she is
personally to me known to me or has produced _______________ as identification.
WITNESS my hand and official seal in the County and State aforesaid
this _____ day of November, 1996.
----------------------------------------
Notary Public, State of Florida
----------------------------------------
Typed, printed or stamped name of Notary
My Commission Expires:
44
<PAGE> 46
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
The plat of GREATER CORAL SPRINGS RESEARCH AND DEVELOPMENT PARK
ADDITION V, recorded in Plat Book 161, Page 28, of the Public Records of Broward
County, Florida.
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EXHIBIT B
ARTICLES
ARTICLES OF INCORPORATION
FOR
RESEARCH PARK ASSOCIATION, INC.
(a corporation not for profit under the Laws of the State of Florida)
The undersigned by these Articles associate themselves for the purpose
of forming a corporation not for profit under Chapter 617, Florida Statutes as
amended, and certify as follows:
ARTICLE I
NAME
The name of the corporation shall be RESEARCH PARK ASSOCIATION, INC.
hereinafter referred to as the "Association", and the initial office of the
Association shall be at 1350 N.E. 56th Street, Ft. Lauderdale, Florida 33334.
ARTICLE II
PURPOSE
A. The purpose for which the Association is organized is to
provide an entity to own, maintain, and operate certain lands located in the
State of Florida, which lands are to be used in common by all the members of the
Association, which membership shall consist of all of the property owners at
Greater Coral Springs Research and Development Park Addition V, hereinafter
referred to as the "Property." The Association shall be responsible for the
management of the Property, in keeping with the terms and conditions as set
forth in the Declaration of Covenants and Restrictions for Greater Coral Springs
Research and Development Park Addition V, hereinafter referred to as the
"Declaration," and as same may be amended from time to time.
B. The Association shall make no distribution of income to its
members, directors or officers.
ARTICLE III
POWERS
The powers of the Association shall include and be governed by the
following provisions:
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A. The Association shall have all of the common law and statutory
powers of a corporation not for profit which are not in conflict with the terms
of these Articles, or with the terms of the Declaration.
B. The Association shall have all of the powers and duties set
forth in the Declaration, except as limited by the By-Laws, and all of the
powers and duties reasonably necessary to operate and administer the Property
pursuant to the Declaration, as it my be amended from time to time.
C. The Association shall not have the power to purchase a Site on
the Property except at sales in foreclosure of liens for assessments for
Association Expenses, at which sales the Association shall bid not more than the
amount secured by its lien.
D. All funds acquired by the Association and their proceeds shall
be held in trust for the members in accordance with the provisions of the
Declaration, these Articles, and the By-Laws of the Association.
E. The powers of the Association shall be subject to and shall be
exercised in accordance with the provisions of the Declaration.
ARTICLE IV
MEMBERS
A. The members of the Association shall consist of all of the
record owners of Sites in the Property.
B. Change of membership in the Association shall be established
by recording in the public records of the respective county, State of Florida, a
deed or other instrument establishing a record title to a Site at the Property,
and the delivery to the Association of a certified copy of such instrument. The
owner designated by such instrument thus becomes a member of the Association and
the membership of the prior owners is terminated as of the date of execution of
such instrument.
C. The share of a member in the funds and assets of the
Association cannot be assigned, hypothecated or transferred in any manner except
upon transfer of the title of its Site.
D. The owner of each Site shall be entitled to a vote as a member
of the Association, such vote to be a percentage based on the relative square
footage of the Owner's Site. The exact vote to be cast by a Site Owner and the
manner of exercising voting rights, shall be determined by the By-Laws of the
Association; subject however, to the terms and conditions of the Declaration.
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ARTICLE V
DIRECTORS
A. The affairs of the Association will be managed by a Board
consisting of not less than three (3) nor more than five (5) directors. After
the Declarant elects to divest control of the Association, the new directors
must be members of the Association.
B. Directors of the Association shall be elected at the annual
meeting of the members in the manner determined by the By-Laws. Directors may be
removed and vacancies on the Board of Directors shall be filled in the manner
provided by the By-Laws.
C. The first election of directors shall not be held until 120
days after the date of the closing of the last Site to be sold by the Declarant
in the Property, or until the Declarant elects to terminate its control of the
Association, whichever shall first occur ("Transfer Date"). The director's name
in these Articles shall serve until the first election of directors, and any
vacancies in their numbers occurring before the first election shall be filled
by the remaining directors.
D. The names and addresses of the members of the first Board of
Directors who shall hold office until their successors are elected and have
qualified, or until removed, are as follows:
JOHN E. ABDO 1350 N.E. 56th Street
Ft. Lauderdale, FL 33334
FRANK J. ABDO 1350 N.E. 56th Street
Ft. Lauderdale, FL 33334
ALEXANDER DUNN 1350 N.E. 56th Street
Ft. Lauderdale, FL 33334
ARTICLE VI
OFFICERS
The affairs of the Association shall be administered by the officers
designated in the By-Laws. The officers shall be elected by the Board of
Directors at its first meeting following the annual meeting of the members of
the Association and shall serve at the pleasure of the Board of Directors. The
names and addresses of the officers who shall serve until their successors are
designated by the Board of Directors are as follows:
President JOHN E. ABDO 1350 N.E. 56th Street
Ft. Lauderdale, FL 33334
Vice President FRANK J. ABDO 1350 N.E. 56th Street
Ft. Lauderdale, FL 33334
Secretary ALEXANDER DUNN 1350 N.E. 56th Street
Ft. Lauderdale, FL 33334
Treasurer ALEXANDER DUNN 1350 N.E. 56th Street
Ft. Lauderdale, FL 33334
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ARTICLE VII
INDEMNIFICATION AND EXCULPATION
A. Indemnification.
1. The Association shall defend, indemnify and hold Declarant,
its directors, officers, agents and employees and the Association's
directors, officers, agents and employees (collectively the
"Indemnified Parties") harmless from and against any and all claims,
suits, actions, threatened actions, injury, loss, liability, damages,
causes of action and expenses of any nature including, but not limited
to any derivative action brought by the Association on behalf of any
Owner or occupant, ("Indemnified Loss"), which may be incurred by the
Indemnified Parties in connection with or arising directly or
indirectly from any personal injury, loss of life and/or damage to
property in or about the Common Area, the Sites, or the Property, or
any part thereof, directly or indirectly from any act or omission of
the Indemnified Parties. The indemnification provided in this section
shall apply whether or not any Indemnified Party is acting in its
capacity as Declarant, director, officer, or agent at the time any
Indemnified Loss is incurred. Indemnified Losses pursuant to this
Section shall include, but not be limited to, all costs, attorneys'
fees (including all appellate levels), expenses, and liabilities.
2. The indemnification pursuant to this section shall include any
and all expenses that any Indemnified Party incurs to enforce its
rights pursuant to this Declaration, including pursuance of an order
for specific enforcement of any of the provisions, conditions,
covenants or restrictions contained herein.
B. Exculpation.
1. The Association and all Owners and occupants agree that any
liability of any person, corporation, partnership or other entity
arising out of or in connection with the Declaration, the Sites, the
Property or the Common Area shall be limited solely to the cost of
correcting defects in work, equipment or, components furnished that
were warranted in specific written warranties given by the Declarant to
such Owners and occupants.
2. No person, natural or in law, shall be liable for special or
consequential damages including, but not limited to, loss of profits or
revenue, loss of use, loss of capital, cost of substitute housing or
equipment, facilities or services, or claims by third parties. Repairs
or replacements shall not interrupt or prolong the term of any
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written warranty or extend the obligation of the Declarant to replace
or repair the property warranted.
3. Any rights, privileges, or warranties contained herein shall
not be assigned or assignable but are personal between the original
Owners, occupants or the Association and the Declarant.
4. The Owners and occupants agree that there have been no oral or
implied warranties by any person, natural or in law, affecting the
Sites, the Property or the Common Area.
5. A closing on any Site shall supersede and render null and void
any and all previous negotiations, arrangements, brochures, agreements,
and understandings, if any, except for specific written warranties made
by the Declarant.
6. The owners and occupants hereby acknowledge that there is no
warranty of merchantability or fitness for any particular purpose as to
the Sites, the Property or the Common Area.
7. Any claim against the Declarant, its directors, officers,
agents or employees, arising out of or in connection herewith shall be
decided by arbitration in accordance with the rules of the American
Arbitration Association. The award, if any, rendered by the arbitrators
shall be final and binding upon the parties. Judgment may be entered
upon any such decision by the arbitrators in accordance with the
applicable law in any court having jurisdiction over the parties.
8. The directors, officers, agents and employees of the Declarant
or the Association shall not be subject to personal liability of any
nature arising from or by reason of the construction, use or sale of
the Sites, the Property or the Common Area. Each Owner and occupant by
acceptance of a deed to any Site waives any claim or right that it may
have against such person and agrees that any and all claims for
liability or loss arising by reason of this Declaration, or the
construction, use or sale of the Sites, the Property or the Common Area
shall be against the Declarant only and shall be limited by and subject
to the provision of this Declaration.
ARTICLE VIII
BY-LAWS
The By-Laws of the Association shall be adopted by the Board of
Directors and may be altered, amended or rescinded in the manner provided by the
By-Laws.
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ARTICLE IX
AMENDMENTS
Amendments to the Articles of Incorporation shall be proposed and
adopted in the following manner:
A. Until the Declarant no longer owns or holds an interest in any
portion of the Property ("Amendment Date"), any amendment may be made by
Declarant without the necessity of consent of any Institutional Mortgagee, of
the Association and of any Owner, provided that such amendment does not
materially alter or change the scheme of the development.
B. The Declarant may also amend the Articles in order to correct
a scrivener's error or other defect or omission without the consent of any
Institutional Mortgagee, the Owners or the Board; provided that such amendment
does not materially or adversely affect an Owner's property rights.
C. After the Amendment Date, the Articles may be amended only as
follows:
a. Notice of the subject matter of a proposed amendment shall be
included in the notice of any meeting at which a proposed
amendment is considered.
b. A resolution adopting a proposed amendment may be proposed by
either the Board of Directors of the Association or by
one-third (1/3) of the members of the Association. Directors
and members not present in person or by proxy at the meeting
considering the amendment may express their approval in
writing, provided such approval is delivered to the Secretary
at or prior to the meeting. Except as elsewhere provided, such
approvals must be by:
1. Not less than sixty percent (60%) of the entire
membership of the Board of Directors and not less than
fifty-one percent (51%) of the votes of the membership of the
Association in person or by proxy; or
2. Not less than sixty percent (60%) of the votes of the
membership of the Association voting in person or by proxy.
D. Provided, however, that no amendment shall make any changes in
the qualifications for membership nor the voting rights of members without
approval in writing by all members, and joinder of all record owners of
mortgages upon the Sites. No amendment shall be made that is in conflict with
the Declaration or the Laws of the State of Florida.
ARTICLE X
TERM
The term of the Association shall be perpetual.
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ARTICLE XI
INCORPORATOR
The name and address of the INCORPORATOR of these Articles of
Incorporation is as follows:
John E. Abdo 1350 NE 56th Street
Fort Lauderdale, FL 33334
ARTICLE XII
REGISTERED AGENT AND OFFICE
The initial registered office of the corporation shall be located at:
John E. Abdo. The initial Registered Agent at said address shall be 1350 NE 56th
Street, Fort Lauderdale, FL 33334.
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IN WITNESS WHEREOF, the INCORPORATOR has affixed his or her signature this _____
day of ____________, 1996.
Witnesses: (SEAL)
--------------------------------------
John E. Abdo
- ---------------------------------
STATE OF FLORIDA
COUNTY OF BROWARD
I HEREBY CERTIFY, that on this day, before me, an officer duly authorized in the
State aforesaid and in the County aforesaid to take acknowledgments, the
foregoing instrument was acknowledged before me by John E. Abdo who is
personally known to me or provided identification.
WITNESS my hand and official seal in the County and State last aforesaid this
_____ day of _______________, 1996.
--------------------------------------
Notary Public, State of Florida
My Commission Expires:
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<PAGE> 55
CERTIFICATE DESIGNATING A REGISTERED OFFICE AND A
REGISTERED AGENT FOR THE SERVICE OF PROCESS WITHIN THE STATE
In pursuance of Chapter 48.091, Florida Statutes, the following is submitted in
compliance with said Act:
RESEARCH PARK ASSOCIATION, INC., desiring to organize under the laws of the
State of Florida, with its principal office, as indicated in the Articles of
Incorporation, at City of Fort Lauderdale, County of Broward, State of Florida,
has named John E. Abdo, located at 1350 NE 56th Street, Fort Lauderdale, FL
33334, as its agent to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the above state corporation,
at place designated in this certificate, I hereby accept to act in this
capacity, and agree to comply with the provision of said Act relative to keeping
open said office.
BY:
------------------------------------
John E. Abdo
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ARTICLE C
BYLAWS
BY-LAWS
FOR
RESEARCH PARK ASSOCIATION, INC.
(a corporation not for profit under the Laws of the State of Florida)
ARTICLE I
IDENTITY
These are the By-Laws of RESEARCH PARK ASSOCIATION, INC., hereinafter referred
to as the "Association" in these By-Laws, a corporation not for profit under the
Laws of the State of Florida, the Articles of Incorporation of which were filed
in the office of the Secretary of State on the 19th day of December 1996. The
Association has been organized for the use and purpose of owning and operating
certain lands located in Broward County, Florida, which lands are to be used in
common by all of the members of the Association, which members shall all be Site
Owners at GREATER CORAL SPRINGS RESEARCH AND DEVELOPMENT PARK ADDITION V,
hereinafter referred to as the "Property." Such operation by the Association
shall include the management, operation, administration and maintenance of the
Property in keeping with the terms and conditions as set forth in the
Declaration of Covenants and Restrictions for GREATER CORAL SPRINGS RESEARCH AND
DEVELOPMENT PARK ADDITION V, hereinafter refer-red to as the "Declaration," and
the enforcement of such covenants and restrictions.
A. The initial office of the Association shall be at 1350 N.E.
56th Street, Ft. Lauderdale, Florida 33334.
B. The fiscal year of the Association shall be the calendar year.
C. The seal of the corporation shall bear the name of the
corporation, the word "Florida", the words "corporation not for profit" and the
year of incorporation.
D. The words and phrases used in these By-Laws shall have the
same meanings herein as they have in the Articles of Incorporation for the
Association, and as they have in the Declaration.
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ARTICLE II
MEMBERS MEETINGS
A. The qualification of members, the manner of their admission to
membership in the Association, and the manner of the termination of such
membership shall be as set forth in Article IV of the Articles of Incorporation.
B. The annual members meeting shall be held at such location
within Broward County, Florida as shall be designated by the Notice of Meeting,
at 10:00 A.M., Eastern Standard Time, on the second Wednesday in March of each
year or at any other day and time as set by the Board of Directors, for the
purpose of electing directors and transacting any other business authorized to
be transacted by the members; provided, however, that if that day is a legal
holiday, the meeting shall be held at the same hour on the next day that is not
a legal holiday.
C. Special members meetings shall be held at any other such
location within Broward County, Florida as shall be designated by the Notice of
Meeting whenever called by the President or Vice President or by a majority of
the Board of Directors, and must be called by such officers upon receipt of a
written request from members entitled to cast one-third (1/3) of the votes of
the entire membership.
D. A written notice of all members meetings (annual or special)
shall be mailed to each member stating the time and place and the purpose(s) for
which the meeting is called, and shall be given by the President, Vice President
or Secretary unless waived in writing. Such notice shall be mailed to each
member at his address as it appears on the books of the Association, and shall
be mailed not less than ten (10) days nor more than sixty (60) days prior to the
date of the meeting. Proof of such mailing shall be given by the affidavit of
the person giving the notice. Notice of meeting may be waived before or after
meetings.
E. The membership may, at the discretion of the Board, act by
written agreement in lieu of a meeting; provided, however, that written notice
of the matters to be determined by such members is given to the membership at
the addresses and within the time periods set forth herein for notices of
meetings, or is duly waived by such members. Any determination by written
agreement shall be determined by the number of members capable of determining
the subject matter at a members meeting. The quorum requirements shall be the
same as for a members meeting. Any notice requesting the written agreement of
the membership shall set forth a time period in which a response may be made.
F. A quorum of the members shall consist of those persons
entitled to cast a majority of the votes of the entire membership. A member may
join in the action of a meeting by signing the minutes thereof, and such signing
shall constitute the presence of such member for the purpose of determining a
quorum. The acts approved by a majority of the votes present at a meeting at
which a quorum is present shall constitute the acts of the
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members except when approval by a greater number of members is required by the
Articles of Incorporation or these By-Laws.
G. If at any meeting of the membership there shall be less than a
quorum present, the President, and in the absence of the President, then the
majority of those present, may adjourn the meeting from time to time until a
quorum is present. Any business which might have been transacted at a meeting as
originally called may be transacted at any adjourned meeting thereof In case of
the adjournment of a meeting, notice to the members of such adjournment shall be
determined by the President or in his absence by the majority of the members
present.
H. Minutes of all meetings of the members shall be kept in a
businesslike manner and shall be available, upon reasonable notice and at
reasonable times, for inspection by the members and directors at the office of
the Association.
I. Voting. The Association shall have two (2) classes of
membership; "Class A" and "Class B" as follows:
1. Class A. "Class A" Members shall be all the Site Owners with
the exception of Declarant (as long as the "Class B" Membership shall
exist, and thereafter, Declarant shall be a "Class A" Member to the
extent it would otherwise qualify). Each "Class A" Member is entitled
to one (1) vote for his Unit or residential parcel.
2. Votes of "Class A" Members are assigned as follows: Each Site
Owner shall be entitled to one (1) weighted vote based on the formula
set forth in Exhibit "C" of the Declaration, to wit:
The vote attributable to each Site shall be a fraction, which fraction
shall be determined as follows: the numerator shall be the total square
footage of the Site and the denominator shall be the total square
footage of all Sites, less and except therefrom any portion(s) of the
Property dedicated to or maintained by a governmental or
quasi-governmental agency.
3. Class B. The "Class B" Member shall be Declarant, and its
successors and assigns, or a representative thereof designated by it in
a written notice to the Association, who shall have and cast one (1)
weighted vote (based on the formula set forth in Exhibit "C" of the
Declaration) in all Association matters, plus three (3) votes for each
vote which may be cast by the "Class A" Members. The "Class B" Member
may be removed and replaced by Declarant in its sole discretion. The
"Class B" Membership shall cease and terminate (and convert to a "Class
A" Membership) at such time as Declarant elects, but in no event later
than the Transfer Date.
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4. In any meeting of members, the Owner(s) of each Site shall be
entitled to cast his vote as the Owner of a Site, unless the decision
to be made is elsewhere required to be determined in another manner.
5. If a Site is owned by one person, his right to vote shall be
established by the record title to his Site. If a Site is owned by more
than one person, or is under lease, the person entitled to cast the
vote for the Site shall be designated by a certificate signed by all of
the record owners of the Site and filed with the Secretary of the
Association. If a Site is owned by a corporation or other entity, the
person entitled to cast the vote for the Site shall be designated by a
certificate signed by properly designated officers, principals or
general of the respective legal entity which owns the Site and filed
with the Secretary of the Association. Such certificates shall be valid
until revoked or until superseded by a subsequent certificate or until
a change in the ownership of the Site concerned. A certificate
designating the person entitled to cast the vote of a Site may be
revoked by any Owner of a Site. If such a certificate is not on file,
the vote of such Owner shall not be considered in determining the
requirement for a quorum nor for any other purpose.
6. Votes may be cast in person or by proxy. A proxy must be
designated in writing by any person entitled to vote, and shall be
valid only for the particular meeting designated in the proxy.
7. No member shall be allowed to exercise his vote or serve as a
director unless he is current on all assessments.
J. The order of business at annual members meetings and, as far
as practical at other members meetings, shall be:
1. Election of chairman of the meeting.
2. Calling of the roll and certifying of proxies.
3. Proof of notice of meeting or waiver of notice.
4. Reading and disposal of any unapproved minutes.
5. Report of officers.
6. Reports of committees.
7. Election of inspectors of elections.
8. Election of directors.
9. Unfinished business.
10. New business.
11. Adjournment.
K. Until the Declarant of the Property has completed all of the
contemplated Improvements and closed the sale of all of the Sites located in the
Property, or until the Declarant elects to terminate its control of the
Association, whichever shall first occur, the
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proceedings of all meetings of members of the Association shall have no effect
unless approved by the Board of Directors.
ARTICLE III
DIRECTORS
A. The affairs of the Association shall be managed by a board
which shall consist of not less than three (3) nor more than five (5) directors.
B. Election of directors shall be conducted in the following
manner:
1. Election of directors shall be held at the annual members
meeting.
2. A nominating committee consisting of at least three (3)
members shall be appointed by the Board of Directors not less than
thirty (30) days prior to the annual meeting; the nominating committee
may in fact be the then-sitting Board of Directors. The membership of
this nominating committee shall be comprised of the members of the
Association. The committee shall nominate one person for each director
then serving. Other nominations may be made from the floor.
3. The election shall be by ballot (unless dispensed with
unanimous consent) and by a plurality of the votes cast, each person
voting being entitled to cast his votes for each of as many nominees as
there are vacancies to be filled. There shall be no cumulative voting.
4. Except as to vacancies created by removal of directors by
members, vacancies in the Board of Directors occurring between annual
meetings of members shall be filled by the remaining directors.
5. Any director may be removed by concurrence of fifty-one
percent (51%) of the membership voting in person or by proxy at a
special meeting of the members called for that purpose. The vacancy in
the Board of Directors so created shall be filled by the members of the
Association at the same meeting.
6. Until one hundred twenty (120) days after the Declarant has
closed the last of the Sites to be sold by the Declarant in the
Property or until the Declarant elects to terminate its control of the
Association, whichever shall first occur, the first directors of the
Association shall serve, and in the event of vacancies, the remaining
directors shall fill the vacancies, and if there are no remaining
directors, the vacancies shall be filled by the Declarant. The right to
remove or recall a director by membership voting shall be void and not
applicable to the directors appointed by the Declarant, the Declarant
or first Board-appointed directors.
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C. The term of each director's service shall be the calendar year
following his election and subsequently until his successor is duly elected and
qualified or until he is removed in the manner elsewhere provided.
D. The organization meeting of a newly elected Board of Directors
shall be held within ten (10) days of its election at such place and at such
time as shall be fixed by the directors at the meeting at which they were
elected, and no further notice of the organization meeting shall be necessary.
E. Regular meetings of the Board of Directors may be called by
the President, and must be called by the Secretary at the written request of
two-thirds (2/3) of the directors. Not less than three (3) days' notice of the
meeting shall be given personally or by mail, telephone, or telegraph, which
notice shall state the time, place and purpose of the meeting.
F. Any director may waive notice of a meeting before or after the
meeting and such waiver shall be deemed equivalent to the giving of notice.
G. A quorum at directors' meetings shall consist of a majority of
the entire Board of Directors. The acts approved by a majority of those present
at a meeting at which a quorum is present shall constitute the acts of the Board
of Directors, except when approval by a greater number of directors is required
by the Articles of Incorporation or these By-Laws.
H. If at any meeting of the Board of Directors there be less than
a quorum present, the majority of those present may adjourn the meeting from
time to time until a quorum is present. At any adjourned meeting any business
that might have been transacted at the meeting as originally called may be
transacted without further notice.
I. The joinder of a director in the action of a meeting by
signing and concurring in the minutes of that meeting shall constitute the
presence of such director for the purpose of determining a quorum.
J. The presiding officer at directors' meetings shall be the
President. In the absence of the President, the directors present shall
designate one of their number to preside.
K. The order of business at directors meetings shall be as
follows:
1. Calling of the roll.
2. Proof of due notice of meeting.
3. Reading and disposal of any unapproved minutes.
4. Reports of officers and committees.
5. Election of officers.
6. Unfinished business.
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7. New business.
8. Adjournments.
L. Directors fees, if any, shall be determined by the majority of
the membership of the Association.
M. Minutes of all meetings of the Board of Directors shall be
kept in a businesslike manner and be available for inspection, upon reasonable
notice and at reasonable times, by members and directors at the office of the
Association.
N. Meetings of the Board of Directors shall be open to all
members. Unless a member serves as a director or unless he has been specifically
invited to participate in a meeting, a member shall not be entitled to
participate in any meeting of the Board of directors, but shall only be entitled
to act as an observer.
ARTICLE IV
POWERS AND DUTIES OF
THE BOARD OF DIRECTORS
A. All of the powers and duties of the Association existing under
the Articles of Incorporation and these By-Laws shall be exercised exclusively
by the Board of Directors, its agent, contractors or employees, subject only to
approval by Site Owners when such is specifically required. Such powers and
duties shall be exercised in accordance with the documents herein stated, and
shall include, but not be limited to, the following:
1. Making, establishing, amending and enforcing reasonable rules
and regulations governing portions of the Property, provided that
notice of any modification, addition or deletion of the regulations is
sent by U.S. Certified Mail, return receipt requested, to each member
of the Association at least thirty (30) days before said modification,
addition or deletion becomes effective.
2. Making, levying, collecting and enforcing assessments against
members to provide funds to pay the Association Expenses. Such
assessments shall be collected by the Association by payments made
directly to the Association by members in the manner set forth in the
documents described above.
3. Using the proceeds of assessments in the exercise of its
powers and duties.
4. Enforcing by legal means the provisions of the Declaration,
Articles, these By-Laws and rules and regulations as same may be
promulgated, modified, or amended from time to time, including levying
fines.
5. Retaining independent contractors and professional personnel
and entering into and terminating service, supply and management
agreements and contracts to
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provide for the administration, management, operation, repair and
maintenance of the portions of the Property over which the Association
has jurisdiction.
6. Hiring and retaining such employees and/or contractors for
reasonable compensation as are necessary to administer and carry out
the services required for the proper administration of the purposes of
the Association and delegating thereto all powers and duties of the
Association which are not specifically required by the Declaration, the
Articles or these By-Laws to have the approval of the Board of
Directors or the membership of the Association.
7. To do such other things as may be necessary in order to
perform the duties and to exercise the powers provided for the
Association in the Declaration except that the Association shall obtain
an affirmative vote of at least eighty percent (80%) of its membership
before any legal action be commenced which has the expected recovery of
at least Seven Thousand Five Hundred Dollars ($7,500.00).
ARTICLE V
OFFICERS
A. The executive officers of the Association shall be a
president, who shall be a director, a vice president, who shall be a director, a
treasurer, and a secretary, all of whom shall be elected annually by the Board
of Directors and who may be peremptorily removed by vote of the directors at any
meeting. Any person may hold two or more offices except that the President shall
not be also the Secretary or any Assistant Secretary. The Board of Directors,
from time to time, shall elect such other officers and designate their powers
and duties as the Board shall find to be required to manage the affairs of the
Association.
B. The President shall be the chief executive officer of the
Association. He shall have all of the powers and duties usually vested in the
office of the President of an association, including but not limited to the
power to appoint committees from among the members from time to time, as he in
his discretion may determine appropriate, to assist in the conduct of the
affairs of the Association.
C. The Vice President, in the absence or disability of the
President, shall exercise the powers and perform the duties of the President. He
also shall assist the President generally and exercise such other powers and
perform such other duties as shall be prescribed by the directors.
D. The Secretary shall keep the minutes of all proceedings of the
directors and members. He shall attend to the giving and serving of all notices
to the members and directors and other notices required by law. He shall have
custody of the seal of the Association and affix it to instruments requiring a
seal when duly signed. He shall keep the records of the Association, except
those of Treasurer, and shall perform all other duties incident to the office of
Secretary of an association and as may be required by the directors
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or the President. An Assistant Secretary shall perform the duties of the
Secretary when the Secretary is absent.
E. The Treasurer shall have custody of all property of the
Association, including funds, securities and evidences of indebtedness. He shall
keep the books of the Association in accordance with good accounting practices,
and he shall perform all other duties incident to the office of Treasurer.
F. The compensation of all employees of the Association shall be
fixed by the directors. The provision that directors' fees shall be determined
by members shall not preclude the Board of Directors from employing a director
as an employee of the Association.
ARTICLE VI
MISCELLANEOUS
A. The Association hereby agrees to pay all attorneys fees, court
costs, and other such expenses incurred by the Declarant or his representatives
in the event it becomes necessary for the Declarant or his representatives to
defend any threatened, pending or completed action, suit or other proceeding,
whether or not the Declarant is found liable as a result of such an action.
ARTICLE VII
FISCAL MANAGEMENT
The provisions for fiscal management of the Association set forth in the
Articles of Incorporation shall be supplemented by the following provisions:
A. Accounts. The expenditures of the Association shall be created
and charged to accounts under the following classifications as shall be
appropriate, all of which expenditures shall be Association Expenses:
1. Current/Operating Expense (i.e., maintenance, supplies,
administration, legal, insurance, management, and the like), which
shall include all expenses within the year for which the budget is
made, excluding those expenses chargeable to the accounts delineated in
Paragraphs 2 through 4 next herein.
2. Current/Operating Expense Contingency, which shall include an
allowance for the contingency where actual operating/current expenses
exceed the budgeted amount thereof.
3. Reserve for Deferred Maintenance and for Replacement. The
reserve for deferred maintenance shall include funds for maintenance
items that occur less frequently than annually. The reserve for
replacement shall include funds for repair or replacement required
because of damage, depreciation or obsolescence.
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4. Betterments, which shall include the funds to be used for
capital expenditures for additional Improvement or additional personal
property.
B. The Board of Directors shall adopt a budget for each year that
shall include the estimated funds required to defray the expenditures and to
provide and maintain funds for the foregoing accounts and reserves according to
good accounting procedure as follows:
1. Current/Operating expense.
2. Current/Operating expense contingency.
3. Reserve for deferred maintenance and for replacement.
4. Betterments, which shall include the funds to be used for
capital expenditures for additional Improvements; provided, however,
that expenditures in excess of One Thousand Dollars ($1,000.00) from
this fund for a single item or for a single purpose shall require the
vote of at least seventy-five percent (75%) of the members present at a
duly called meeting.
5. Copies of the budget and proposed assessments shall be
transmitted to each member of the Association before the end of the
calendar year, preceding the year for which the budget is made. If the
budget is amended subsequently, a copy of the amended budget shall be
furnished to each member.
C. Assessments against each Site Owner for his share of the
budget expenses shall be made for the year annually in advance before the end of
the calendar year preceding the year for which the assessments are made. If an
annual assessment is not made as required, an assessment shall be presumed to
have been made in the amount of the last prior assessment and semi-annual
installments on such assessment shall be due upon each installment payment date
until changed by an amended assessment. In the event that the annual assessment
proves to be insufficient, the budget and the assessments may be amended at any
time by the Board of Directors. After the Transfer Date, in the event that the
increase exceeds one hundred twenty percent (120%) of the annual assessment for
the preceding year, the Board of Directors, upon written application of ten
percent (10%) of the members of the Board, shall call a special meeting of
members within thirty (30) days, upon not less than ten (I 0) days written
notice to each member. At a special meeting, members shall consider and enact a
budget. In determining whether assessments exceed 120% of similar assessments in
prior years, any authorized provisions for reserves for deferred maintenance and
for replacement or for betterments shall be excluded from the computation. The
unpaid assessment for the remaining portion of the year for which the amended
assessment is made shall be due upon the date of the assessment if made on or
after July 1; and if made prior to July 1, one-half (1/2) of the increase shall
be due upon the date of the assessment and the balance of the assessment upon
the said July 1. The first assessment shall be determined by the Board of
Directors of the Association.
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D. If a member shall be in default in the payment of an
installment upon an assessment, the Board of Directors may accelerate the
remaining installments of the assessment upon notice to the member and the
unpaid balance of the assessment shall come due upon the date stated in the
notice, but not less than ten (10) days after delivery of the notice to the
member, or not less than twenty (20) days after the mailing of such notice to
him by registered or certified mail, whichever shall first occur.
E. After the Transfer Date, assessment for Association Expenses
or emergencies that cannot be paid from the annual assessments for Association
Expenses shall be made only after notice of the need for such expenditure is
given to the members concerned. After such notice and upon approval in writing
by persons entitled to cast more than one-half of the votes of the members
concerned, the assessment shall become effective and shall be due after thirty
(30) days notice in such manner as the Board of Directors of the Association may
require in the notice of assessment.
F. The depository of the Association shall be such bank or banks
and/or savings and loan association(s) as shall be designated from time to time
by the directors and in which the monies of the Association shall be deposited.
Withdrawals of monies from such accounts shall be only by checks signed by such
persons as are authorized by the directors.
G. After the Transfer Date, at the Annual Meeting of the
Association, the members present shall determine by a majority vote whether an
audit of the accounts of the Association for the year shall be made by a
Certified Public Accountant, a Public Accountant, or by an auditing committee
consisting of not less than three (3) members of the Association, none of whom
shall be Board members. The cost of the audit shall be paid by the Association
as an Association Expense.
H. Fidelity Bonds shall be required by the Board of Directors for
all directors, officers and employees of the Association and from any contractor
handling or responsible for the Association funds. The amount of such bonds
shall be described in the Declaration. The premium on such bonds shall be paid
by the Association.
I. The Declarant or his representative shall be entitled to
expend any and all Association funds, provided however, that they be spent for
the benefit of the Association. The Declarant shall not be required to budget
funds for contingencies, reserves, or betterments.
ARTICLE VII
PARLIAMENTARY RULES
These By-Laws may be amended in the following manner:
A. Until the Declarant no longer owns or holds an interest in any
portion of the Property ("Amendment Date"), any amendment may be made by
Declarant without the
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necessity of consent of any Institutional Mortgagee, of the Association and of
any Owner, provided that such amendment does not materially alter or change the
scheme of the development.
B. The Declarant may also amend the By-Laws in order to correct a
scrivener's error or other defect or omission without the consent of any
Institutional Mortgagee, the Owners or the Board; provided that such amendment
does not materially or adversely affect an Owner's property rights.
C. After the Amendment Date, the By-Laws may be amended only as
follows:
a. Notice of the subject matter of a proposed amendment shall be
included in the notice of any meeting at which a proposed
amendment is considered.
b. A resolution adopting a proposed amendment may be proposed by
either the Board of Directors of the Association or by
one-third (1/3) of the members of the Association. Directors
and members not present in person or by proxy at the meeting
considering the amendment may express their approval in
writing, provided such approval is delivered to the Secretary
at or prior to the meeting. Except as elsewhere provided, such
approvals must be by:
1. Not less than sixty percent (60%) of the entire
membership of the Board of Directors and not less than
fifty-one percent (51%) of the votes of the membership of the
Association in person or by proxy; or
2. Not less than sixty percent (60%) of the votes of the
membership of the Association voting in person or by proxy.
D. A copy of each amendment shall be attached to a certificate
certifying that the amendment was duly adopted as an amendment to the By-Laws,
which certificate shall be executed by the President of the Association with the
formality of the execution of the deed. The amendment shall be effective when
such certificate and copy of the amendment are recorded in the public records of
Broward County, Florida.
E. These By-Laws shall not be amended in any manner which shall
amend, abridge, modify, or conflict with the provisions of any institutional
mortgagee having a first mortgage on a Site, without the prior written consent
of the institutional mortgagee affected.
The foregoing were adopted as the By-Laws of the Association, a corporation not
for profit under the Laws of the State of Florida, at the first meeting of the
Board of Directors on the ________ day of ____________, 19____.
RESEARCH PARK ASSOCIATION, INC.
By:
----------------------------
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ATTEST:
By:
----------------------------
(Corporate Seal)
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EXHIBIT D
SITE A
Parcel 1 of GREATER CORAL SPRINGS RESEARCH AND DEVELOPMENT PARK ADDITION V,
according to the Plat thereof recorded in Plat Book 161, Page 28, of the Public
Records of Broward County, Florida.
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BILL OF SALE ABSOLUTE
KNOW ALL MEN BY THESE PRESENTS, That BANKATLANTIC, a Federal Savings
Bank, party of the first part, for and in consideration of the sum of Ten and
No/100 DOLLARS ($10.00) lawful money of the United States, to it paid by
UNIPOWER CORPORATION, a Delaware corporation, party of the second part, the
receipt whereof is hereby acknowledged, has granted, bargained, sold,
transferred and delivered, and by these presents does grant, bargain, sell,
transfer and deliver unto the said party of the second part, its successors and
assigns, the following goods and chattels:
Any and all improvements located on the property more particularly set
forth on Exhibit "A" attached hereto and made a part hereof, in its "AS IS"
"WHERE IS" condition.
TO HAVE AND TO HOLD the same unto the said party of the second part,
its successors and assigns forever.
IN WITNESS WHEREOF, the undersigned has executed this Bill of Sale this
___ day of December, 1996.
Signed, sealed and delivered
in presence of:
BANKATLANTIC, a Federal Savings Bank
By:
- -------------------------------- ---------------------------------
Name: Name:
--------------------------- -------------------------------
Title:
- -------------------------------- ------------------------------
Name:
---------------------------
Address: 1350 Northeast 56th Street,
Fort Lauderdale, FL 33334
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EXHIBIT "A"
Parcel 1 of GREATER CORAL SPRINGS RESEARCH AND DEVELOPMENT PARK ADDITION NO. V,
according to the Plat thereof recorded in Plat Book 161, at Page 28, of the
Public Records of Broward County, Florida.
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EXHIBIT "C"
RULES AND REGULATIONS
1. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the Premises or Building or on the inside of the Premises except as
provided herein, and as provided in this Lease
2. Tenant shall not occupy or permit any portion of the Premises
demised to it to be occupied or used for any purpose other than as specified in
the Lease. Tenant shall not engage or pay any employees in the Building, except
those actually working for Tenant at the Premises. The Premises shall not be
used for gambling, lodging, or sleeping or for any immoral or Illegal purposes.
3. Tenant shall not allow any object to be placed on the glass or
the windowsills. No materials shall be placed under the exterior stairways if
any nor shall any articles obstruct any air-conditioning supply or exhaust vent.
4. The water and wash closets and other plumbing fixtures shall
not be used for any purposes other than those for which they were constructed
and no sweepings, rubbish, rags, or other substances shall be thrown therein.
All damages resulting from any misuse of the fixtures by Tenant, its servants,
employees, agents, or licensees shall be borne by Tenant.
5. Unless Landlord's content is provided which shall not be
unreasonably withheld, conditioned or delayed, tenant shall not mark, paint,
drill into, or in any way deface any part of the Premises or the Building of
which they form a part. No boring, cutting, or stringing of wires shall be
permitted, except with the prior written consent of Landlord, and as it may
direct. Should Tenant require telegraphic, telephonic, annunciator or other
communication service, Landlord will direct the electricians where and how wires
are to be introduced and placed, and none shall be introduced or placed except
as Landlord shall direct. Electric current shall not be used for power or
heating without Landlord's prior written permission. Neither Tenant nor Tenant's
agents including, but not limited to, electrical repairmen and telephone
installers, shall lift, remove or in any way alter or disturb any of the
interior ceiling materials of the Premises or Building, nor shall any of same
have any access whatsoever to the area above the interior ceiling of the
Premises or the Building except with the prior written consent of Landlord and
in accordance with guidelines established by Landlord. No antennas shall be
permitted.
6. Tenant shall not cause or permit any unusual or objectionable
odors to be produced upon or permeate from the Premises.
7. Landlord shall have the right to retain a passkey and to enter
the Premises at any time, following notice to Tenant, to examine same or to make
and repairs as may be deemed necessary, or to exhibit same to prospective
tenants during normal business hours. Landlord shall not be entitled to show the
Premises to prospective tenants except during the final six months of the Lease
term.
8. Tenant shall not make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of this or neighboring
buildings or premises or those having business with them, whether by the use of
any musical instrument, radio, talking machine, unmusical noise, whistling,
singing, or in any other way.
9. Tenant shall place no additional locks or bolts of any kind
upon any of the door or windows, nor shall any changes be made in existing locks
or the mechanism thereof. Tenant must, upon the termination of his tenancy
restore to the Landlord all keys of offices and toilet rooms, either furnished
to, or otherwise procured by, Tenant. Tenant shall pay to the Landlord the cost
of any lost keys.
10. Tenant will refer all contractors, contractors'
representatives and installation technicians, rendering any service to Tenant,
to Landlord for Landlord's supervision, approval, and control before performance
of any contractual service. This provision shall apply to all work performed in
the Building, including installations of telephones, telegraph equipment,
electrical devices and attachments, and installations of any nature affecting
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floors, walls, woodwork, trim, windows, ceilings, equipment or any other
physical portion of the Building.
11. Unless included under Tenant's permitted use as set forth in
the Lease, no Tenant, nor any of Tenant's agents, shall at any time bring or
keep upon the Premises or in the Building any inflammable, combustible, or
explosive fluid, chemical, or substance.
12. Tenant shall remit the sum of TEN and NO/100 DOLLARS ($10.00)
per key to Landlord as security for any and all Building access keys provided to
Tenant by Landlord. Tenant shall remit the sum of TEN and NO/100 DOLLARS
($10.00) per key to Landlord in the event that Tenant or Tenant's agent(s) loses
one of the keys provided and requires a replacement.
13. Any person whose presence in the Building at any time shall,
in the judgment of Landlord, be prejudicial to the safety, character, reputation
and interests of the Building or its tenants or occupants may be denied access
to the Building or may be ejected therefrom. Landlord shall in no way be liable
to any Tenant for damages or loss arising from the admission, exclusion or
ejection of any person to or from Tenant's Premises or the Building under the
provision of this rule.
14 Tenant shall provide and comply with all fire extinguisher
code requirements. Additional fire code requirements that result from Tenant's
use after initial occupancy will be complied with by Tenant.
15. Tenant shall not make any penetrations of the roof systems
without prior written consent of the Landlord. If Tenant for any reason
whatsoever penetrates the roof systems and voids Landlord's roof warranty,
Tenant assumes liability for all repairs and damage.
16. Trash, pallets, packing material, and other foreign material
shall not be stored on the exterior of the Premises including the overflow of
such materials surrounding dumpsters. Upon 24 hour notice to Tenant, Landlord
may clean up any debris and invoice Tenant for the cost of such service as
Additional Rent. Dumpsters are to be closed at night and whenever else possible
to maintain a clean exterior appearance.
17. The maintenance and repair of vehicles on the property is
prohibited including the changing of oil, unless it is for the purpose of
emergency vehicle repair. Further routine maintenance of company vehicles should
be permitted in the loading dock area.
18. No vehicles are to be parked in designated and marked "no
parking" areas.
19. No residue or floor cleaning substance is to be washed from
Premises floors into the parking lot.
20. Materials are not to be stacked or leaned against demising
walls.
21. Landlord reserves the right to make such other and further
reasonable rules and regulations as in its judgment may from time to time be
needed for the safety, care and cleanliness of the Premises, and for the
preservation of good order therein and any such other or further rules and
regulations shall be binding upon the parties hereto with the same force and
effect as if they had been inserted herein at the time of the execution hereof.
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EXHIBIT "D"
LIST OF TENANT IMPROVEMENTS
The following tenant improvements shall be made by Landlord at Landlord's
expense no later than sixty days subsequent to occupancy:
A. 80' fire rated demising wall separating the landlord expansion space from
tenant's warehouse space.
B. Entry door from Tenant's office area to tenant's warehouse space.
C. Tombstone signage on 39th St. to include Tenant's name and logo in accordance
with the City of Coral Springs approval guidelines.
D. Landscape beautification enhancement at Tenant's entrance area.
E. Canopy extension at the Northwest section of the Premises covering the entire
loading dock area.
The following Tenant improvements may be made by Tenant at Tenant's cost and
expense, and in each instance in accordance with plans reasonably acceptable to
Landlord. These include a) Tenant may expand the loading dock area. b) Tenant
may alter and improve the main entrance to the Premises and c) Tenant may alter
the internal and external doors serving the Premises.
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EXHIBIT "E"
SECRETARY CERTIFICATE
OF PARK N' VIEW
I, ____________________, Secretary of Park N' View, a Delaware corporation (the
"Corporation"), deliver this Certificate in connection with the execution of
that certain Lease Agreement, dated ________________, 1997, between the
Corporation, as tenant, and Unipower Corporation, as landlord. The undersigned,
on behalf of the Corporation, hereby certifies that:
1. Attached hereto and made a part hereof as EXHIBIT I is a duly
executed Certificate of Corporate Empowerment, which serves to indicate
_______________ binding authority on behalf of the Corporation, independent of
the need for Board approval, to enter into the subject Lease Agreement. I
further certify that the attached certificate has not been rescinded or
countermanded by the Board of Directors.
2. Attached hereto and made a part hereof as EXHIBIT 2 and
EXHIBIT 3, respectively, are true and correct copies of the Corporation's
Articles of Incorporation, and Bylaws as in full force and effect on the date
hereof
3. Attached hereto and made a part hereof as EXHIBIT 4 is a
Certificate of Good Standing issued by the State of Florida Secretary of State.
Dated as of the _____ day of _____________, 1997.
/s/Anthony Allen , Secretary
----------------
CERTIFICATION
The undersigned Ian Williams, as Chairman and CEO of the Corporation,
certify that the duly elected, qualified and acting Secretary of the
Corporation, and that the signature appearing above is her genuine signature.
Dated as of the 11 day of August, 1997.
/s/ Ian Williams Chairman & CEO
-------------------
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EXHIBIT I
RESOLUTION AUTHORIZING EXECUTION OF LEASE
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EXHIBIT 2
ARTICLES OF INCORPORATION
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PARK 'N VIEW, INC.
The undersigned, being the duly elected and acting President of Park 'N
View, Inc., a corporation duly organized under the laws of the State of Delaware
on September 18, 1995, does hereby certify that this Amended and Restated
Certificate of Incorporation was duly adopted by the Board of Directors of Park
'N View, Inc. in accordance with Section 245 and Section 241 of the General
Corporation Law of the State of Delaware:
FIRST: The name of the Corporation is: PARK 'N VIEW, INC.
SECOND: The registered office of the Corporation is to be
located at 1013 Centre Road, in the City of Wilmington, County of New Castle,
State of Delaware, 19805. The name of its registered agent at that address is
Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any
lawful actor activity for which a corporation may be organized under the General
Corporation Law of Delaware.
FOURTH: The aggregate number of shares of stock which the
Corporation shall have authority to issue is 5,000,000 shares of common stock,
par value $.001 per share, all of which shall be designated "Common Stock" and
140,010 shares of preferred stock, par value $.01 per share, all of which are
designated "Series A Preferred Stock."
FIFTH: The name and mailing address of the Incorporator is
James M. O'Connell, 4101 Lake Boone Trail, Suite 400, Raleigh, North Carolina
27606.
SIXTH: The number of Directors of the Corporation may be
specified by the By-Laws. The number of Directors constituting the instant Board
of Directors shall be two (2), and the names and mailing addresses of the
persons who are to serve as Directors until the first annual meeting of the
shareholders or until the successors are elected and qualify are:
Name Address
Ian Williams 3403 NW 55th Street
Building 10
Fort Lauderdale, FL 33309
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Daniel O'Connell 5133 NW 93 Doral Way
Miami, FL 33178
SEVENTH: In furtherance and not in limitation of the powers
conferred by statute but subject to any limitations contained in any Certificate
of Designation, the board of directors is expressly authorized:
(a) to adopt, amend or repeal the By-Laws of the Corporation in
such manner and subject to such limitations, if any, as shall be set forth in
the By-Laws;
(b) to allot and authorized the issuance of the authorized but
unissued shares of the Corporation, including the declaration of dividends
payable in shares of any class to stockholders of any class;
(c) (i) with respect to the authorized shares of Preferred Stock,
the board of directors is expressly authorized, from time to time, (1) to fix
the number of shares of one or more series thereof; (2) to determine the
designation of any such series; (3) to determine or alter, without limitation or
restriction, the right, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series including, without limitation, dividend
rights, conversion rights, redemption privileges, and liquidation preferences,
as shall be stated in such resolution or resolutions, all to the fullest extent
permitted by the Delaware Statute; and (4) within the limits or restrictions
stated in any resolution or resolutions of the board of directors originally
fixing the number of shares constituting any series, to increase or decrease
(but not below the number of shares then outstanding) the number of shares of
any such series of such class subsequent to the issue of shares of that series,
(5) to determine and fix such voting powers, full or limited, or no voting
powers, and such other powers, designations, preferences and relative,
participating, optional and other rights, and the qualifications, limitations
and restrictions thereof. Without limiting the generality of the foregoing, the
resolution or resolutions providing for the establishment of any series of
Preferred Stock may, to the extent permitted by law, provide that such series
shall be superior to, rank equally with or be junior to any other series of
Preferred Stock.
The amendment of the terms of any certificate of designation of any
series of the Corporation's Preferred Stock of which shares are outstanding
shall require only (i) that the Corporation's board of directors adopt a
resolution setting forth the amendment proposed, declaring its advisability, and
either calling a special meeting of the holders of such series of Preferred
Stock for consideration of such amendment or directing that the amendment
proposed be considered at the next annual meeting of stockholders by the holders
of such series of Preferred Stock (in either event, subject to the ability of
such holders to act by written consent in lieu of voting at a meeting), and (ii)
that the holders of sixty-six and two thirds percent (66 2/3%) (or such greater
number as may be required by the certificate of designations of such series) of
the outstanding shares of such series of Preferred Stock have voted in favor of
the amendment. Except for holders of a series of Preferred Stock the
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terms of which are being amended, no holder of Common Stock and no holder of any
series of Preferred Stock shall be entitled to vote upon such amendment unless
the rights of such holders would be adversely affected by such amendment or such
vote shall otherwise be required by law or by any certificate of designation of
any series of Preferred Stock.
(ii) with respect to Common Stock, (1) Voting. Each holder of
shares of Common Stock shall be entitled to one vote for each share of Common
Stock held on all matters as to which holders of Common Stock shall be entitled
to vote. In any election of directors, no holder of shares of Common Stock shall
be entitled to cumulate his or her votes by giving one candidate more than one
vote per share.
(2) Other Rights. Each share of Common Stock issued and
outstanding shall be identical in all respects one with the other. In the event
any dividend is paid on all shares of Common Stock, the same dividend shall be
paid on all shares of Common Stock outstanding at the time of such payment.
Except for and subject to those rights expressly granted to the holders of the
Preferred Stock, or except as may be provided by the laws of the State of
Delaware, the holders of Common Stock shall have exclusively all other rights of
stockholders.
(d) to exercise all of the powers of the Corporation, insofar as
the same may lawfully be vested by this certificate in the board of directors.
EIGHTH: That thereafter by a written consent of the requisite
stockholders of the Corporation any amendment was approved and adopted by the
stockholders of the Corporation.
NINTH: That any said amendment was duly adopted in
accordance with the provision of Section 242 of the General Corporation Law of
the State of Delaware.
TENTH: If the Corporation has outstanding Preferred Stock
which is then in default on its obligations to pay dividends thereon or to
redeem such Preferred Stock, the primary duty of the directors of the
Corporation shall be to cause the Corporation to take such actions as may be
necessary in order to pay such dividends and make such redemption.
ELEVENTH: No director shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that to the extent required by the
provisions of Section 102(b)(7) of the General Corporation Law of the State of
Delaware or any successor statute, or any other laws of the State of Delaware,
this provision shall not eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware or (iv) for any transaction
from which the director derived an improper personal benefit. If the General
Corporation Law of the State of Delaware hereafter is amended to
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authorize the further elimination or limitation of the liability of directors,
then the liability of a director of the Corporation, in addition to the
limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended General Corporation Law of the State of
Delaware. Any repeal or modification of this paragraph ELEVENTH by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or modification.
The Board of Directors of the Corporation has, by unanimous written
consent, authorized the filing of this Amended and Restated Certificate of
Incorporation in compliance with Section 245 & 241(b) of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
October, 1995
/s/ Ian Williams
-----------------------
Ian Williams, President
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EXHIBIT 3
BYLAWS
AMENDED AND RESTATED BY-LAWS OF
PARK 'N VIEW, INC.
ARTICLE I
OFFICES
Section 1.1. Registered Office. The registered office of the
Corporation within the State of Delaware shall be located at the principal place
of business in said State of such corporation or individual acting as the
Corporation's registered agent in Delaware.
Section 1.2. Other Offices. The Corporation may also have offices and
places of business at such other places both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. Place of Meetings. All meetings of stockholders shall be
held at the principal office of the Corporation, or at such other place within
or without the State of Delaware as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2.2. Annual Meetings. The annual meeting of stockholders for
the election of directors shall be held at such time on such day, other than a
legal holiday, as the Board of Directors in each such year determines. At the
annual meeting, the stockholders entitled to vote for the election of directors
shall elect a Board of Directors and transact such other business as may
properly come before the meeting.
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Section 2.3. Special Meetings. Special meetings of stockholders, for
any purpose or purposes, may be called by a member of the Board of Directors.
Any such request shall state the purpose or purposes of the proposed meeting. At
any special meeting of stockholders, only such business may be transacted as is
related to the purpose or purposes set forth in the notice of such meeting.
Section 2.4. Notice of Meetings. Written notice of every meeting of
stockholders, stating the place, date and hour thereof and, in the case of a
special meeting of stockholders, the purpose or purposes thereof and the person
or persons by whom or at whose direction such meeting has been called and such
notice is being issued, shall be given not less than ten (10) nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
or at the direction of the Chairman of the Board, Secretary, or the persons
calling the meeting, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the stock transfer books of the Corporation. Nothing
herein contained shall preclude the stockholders from waiving notice as provided
in Section 4.1 hereof.
Section 2.5. Quorum. The holders of a majority of the issued and
outstanding shares of stock of the Corporation entitled to vote, represented in
person or by proxy, shall be necessary to and shall constitute a quorum for the
transaction of business at any meeting of stockholders. If, however, such quorum
shall not be present or represented at any meeting of stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At any such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. Notwithstanding the foregoing, if after any
such adjournment the Board of Directors shall fix a new record date for the
adjourned meeting, or if the adjournment is for more than thirty (30) days, a
notice of such adjourned meeting shall be given as provided in Section 2.4 of
these By-Laws, but such notice may be waived as provided in Section 4.1 hereof.
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Section 2.6. Voting. At each meeting of stockholders, each holder of
record of shares of stock entitled to vote shall be entitled to vote in person
or by proxy, and each such holder shall be entitled to one vote for every share
standing in his name on the books of the Corporation as of the record date fixed
by the Board of Directors or prescribed by law and, if a quorum is present, a
majority of the shares of such stock present or represented at any meeting of
stockholders shall be the vote of the stockholders with respect to any item of
business, unless otherwise provided by any applicable provision of law, by these
By-Laws or by the Certificate of Incorporation.
Section 2.7. Proxies. Every stockholder entitled to vote at a meeting
or by consent without a meeting may authorize another person or persons to act
for him by proxy. Each proxy shall be in writing executed by the stockholder
giving the proxy or by his duly authorized attorney. No proxy shall be valid
after the expiration of three (3) years from its date, unless a longer period is
provided for in the proxy. Unless and until voted, every proxy shall be
revocable at the pleasure of the person who executed it, or his legal
representatives or assigns except in those cases where an irrevocable proxy
permitted by statute has been given.
Section 2.8. Consents. Any action which is required or permitted to be
taken at a meeting of the stockholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed and dated
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 thereof were present and voted. Such signed
and dated action must be filed with the Secretary of the Corporation to be kept
in the corporate minute book.
Section 2.9. Stock Records. The Secretary or agent having charge of the
stock transfer books shall make, at least ten (10) days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order and showing
the address of and the number and class and series, if any, of shares held by
each. Such list, for a period of ten (10) days prior to such meeting, shall be
kept at the principal place of business of the Corporation or at the office of
the transfer agent or registrar of the Corporation and such other places as
required by statute and shall be subject to inspection
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by any stockholder at any time during usual business hours. Such list shall also
be produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any stockholder at any time during the meeting.
ARTICLE III
DIRECTORS
Section 3.1. Number. The number of directors of the Corporation which
shall constitute the entire Board of Directors shall initially be fixed by the
Incorporator and thereafter from time to time by a vote of a majority of the
entire Board and shall be not less than one (1) nor more than seven (7). If a
certificate of designation of a series of preferred stock provides that the
number of directors shall be increased upon the occurrence of certain events,
then the provisions of such certificate of designation shall supersede the
provisions of these By-laws.
Section 3.2. Resignation and Removal. Any director may resign at any
time upon notice of resignation to the Corporation. Any director may be removed
at any time by vote of the stockholders then entitled to vote for the election
of directors at a special meeting called for that purpose, either with or
without cause, except that directors elected by a class vote of holders of
preferred stock may only be removed by vote of the holders a majority of such
preferred stock.
Section 3.3. Newly Created Directorship and Vacancies. Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason whatsoever shall be
filled by vote of the Board. If the number of directors then in office is less
than a quorum, such newly created directorships and vacancies may be filled by a
vote of a majority of the directors then in office. Any director elected to fill
a vacancy shall be elected until the next meeting of stockholders at which the
election of directors is in the regular course of business, and until his
successor has been elected and qualified.
Section 3.4. Powers and Duties. Subject to the applicable provisions of
law, these By-Laws or the Certificate of Incorporation, but in furtherance and
not in limitation of any rights therein conferred, the Board of
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Directors shall have the control and management of the business and affairs of
the Corporation and shall exercise all such powers of the Corporation and do all
such lawful acts and things as may be exercised by the Corporation.
Section 3.5. Place of Meetings. All meetings of the Board of Directors
may be held either within or without the State of Delaware.
Section 3.6. Annual Meetings. An annual meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting to the newly elected directors shall
be necessary in order to legally constitute the meeting, provided a quorum shall
be present, or the newly elected directors may meet at such time and place as
shall be fixed by the written consent of all of such directors.
Section 3.7. Regular Meetings. Regular meetings of the Board of
Directors may be held upon such notice or without notice, and at such time and
at such place as shall from time to time be determined by the Board.
Section 3.8. Special Meetings. Special meetings of the Board of
Directors may be called by a member of the Board of Directors. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
Section 3.9. Notice of Meetings. Notice of each special meeting of the
Board (and of each regular meeting for which notice shall be required) shall be
given by the Secretary or an Assistant Secretary and shall state the place, date
and time of the meeting. Notice of each such meeting shall be given orally or
shall be mailed to each director at his residence or usual place of business. If
notice of less than three (3) days is given, it shall be oral, whether by
telephone or in person, or sent by special delivery mail or telegraph. If
mailed, the notice shall be given when deposited in the United States mail,
postage prepaid. Notice of any adjourned meeting, including the place, date and
time of the new meeting, shall be given to all directors not present at the time
of the adjournment, as well as to the other directors unless the place, date and
time of the new meeting is announced at the adjourned
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meeting. Nothing herein contained shall preclude the directors from waiving
notice as provided in Section 4.1 hereof.
Section 3.10. Quorum and Voting. At all meetings of the Board of
Directors a majority of the entire Board shall be necessary to and shall
constitute a quorum for the transaction of business at any meeting of directors,
unless otherwise provided by any applicable provision of law, by these By-Laws,
or by the Certificate of Incorporation. The act of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the Board of Directors, unless otherwise provided by an applicable
provision of law, by these By-Laws or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, until a
quorum shall be present.
Section 3.11. Compensation. The Board of Directors, by the affirmative
vote of a majority of the directors then in office, and irrespective of any
personal interest of any of its members, shall have authority to establish
reasonable compensation of all directors for services to the Corporation as
directors, officers or otherwise.
Section 3.12. Books and Records. The directors may keep the books of
the Corporation, except such as are required by law to be kept within the state,
outside of the State of Delaware, at such place or places as they may from time
to time determine.
Section 3.13. Action without a Meeting. Any action required or
permitted to be taken by the Board, or by a committee of the Board, may be taken
without a meeting if all members of the Board or the committee, as the case may
be, consent in writing to the adoption of a resolution authorizing the action.
Any such resolution and the written consents thereto by the members of the Board
or committee shall be filed with the minutes of the proceedings of the Board or
committee.
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Section 3.14. Telephone Participation. Any one or more members of the
Board, or any committee of the Board, may participate in a meeting of the Board
or committee by means of a conference telephone call or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
Section 3.15. Committees of the Board. The Board, by resolution adopted
by a majority of the entire Board, may designate one or more committees, each
consisting of one or more directors. The Board may designate one or more
directors as alternate members of any such committee. Such alternate members may
replace any absent member or members at any meeting of such committee. Each
committee (including the members thereof) shall serve at the pleasure of the
Board and shall keep minutes of its meetings and report the same to the Board.
Except as otherwise provided by law, each such committee, to the extent provided
in the resolution establishing it, shall have and may exercise all the authority
of the Board with respect to all matters. However, no such committee shall have
power or authority to:
(a) amend the Certificate of Incorporation;
(b) adopt an agreement of merger or consolidation;
(c) recommend to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets;
(d) recommend to the stockholders a dissolution of the
Corporation or a revocation of a dissolution;
(e) amend these By-Laws; and unless expressly so provided
by resolution of the Board, no such committee shall have power or authority to:
(1) declare a dividend; or
(2) authorize the issuance of shares of the
Corporation of any class.
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ARTICLE IV
WAIVER
Section 4.1. Waiver. Whenever a notice is required to be given by any
provision of law, by these By-Laws, or by the Certificate of Incorporation, a
waiver thereof in writing, whether before or after the time stated therein,
shall be deemed equivalent to such notice. In addition, any stockholder
attending a meeting of stockholders in person or by proxy without protesting
prior to the conclusion of the meeting the lack of notice thereof to him, and
any director attending a meeting of the Board of Directors without protesting
prior to the meeting or at its commencement such lack or notice, shall be
conclusively deemed to have waived notice of such meeting.
ARTICLE V
OFFICERS
Section 5.1. Executive Officers. The officers of the Corporation shall
be a President or Chief Executive Officer, a Treasurer and a Secretary. Any
person may hold two or more of such offices. The officers of the Corporation
shall be elected annually (and from time to time by the Board of Directors, as
vacancies occur), at the annual meeting of the Board of Directors following the
meeting of stockholders at which the Board of Directors was elected.
Section 5.2. Other Officers. The Board of Directors may appoint such
other officers and agents, including a Chief Financial Officer, Vice President,
Assistant Vice Presidents, Secretaries, Assistant Secretaries and Assistant
Treasurers, as it shall at any time or from time to time deem necessary or
advisable.
Section 5.3. Authorities and Duties. All officers, as between
themselves and the Corporation, shall have such authority and perform such
duties in the management of business and affairs of the Corporation as may be
provided in these By-Laws, or, to the extent not so provided, as may be
prescribed by the Board of Directors.
Section 5.4. Tenure and Removal. The officers of the Corporation shall
be elected or appointed to hold office until their respective successors are
elected or appointed. All officers shall hold office at the pleasure of the
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Board of Directors, and any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors for cause or
without cause at any regular or special meeting.
Section 5.5. Vacancies. Any vacancy occurring in any office of the
Corporation, whether because of death, resignation or removal, with or without
cause, or any other reason, shall be filled by the Board of Directors.
Section 5.6. Compensation. The salaries and other compensation of all
officers and agents of the Corporation shall be fixed by or in the manner
prescribed by the Board of Directors.
Section 5.7. President. The President shall have general charge of the
business and affairs of the Corporation and in the absence of the Chairman of
the Board, the President shall preside at all meetings of the stockholders and
the directors. The President shall perform such other duties as are properly
required of him by the Board of Directors.
Section 5.8. Vice President. Each Vice President, if any, shall perform
such duties as may from time to time be assigned to him by the Board of
Directors.
Section 5.9. Secretary. The Secretary shall attend all meetings of the
stockholders and all meetings of the Board of Directors and shall record all
proceedings taken at such meetings in a book to be kept for that purpose; he
shall see that all notices of meetings of stockholders and meetings of the Board
of Directors are duly given in accordance with the provisions of these By-Laws
or as required by law; he shall be the custodian of the records and of the
corporate seal or seals of the Corporation; he shall have authority to affix the
corporate seal or seals to all documents, the execution of which, on behalf of
the Corporation, under its seal, is duly authorized, and when so affixed it may
be attested by his signature; and in general, he shall perform all duties
incident to the office of the Secretary of a corporation, and such other duties
as the Board of Directors may from time to time prescribe.
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Section 5.10. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit, or cause to be deposited, in the name and to the
credit of the Corporation, all moneys and valuable effects in such banks, trust
companies, or other depositories as shall from time to time be selected by the
Board of Directors. He shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation; he shall render to the
President and to each member of the Board of Directors, whenever requested, an
account of all of his transactions as Treasurer and of the financial condition
of the Corporation; and in general, he shall perform all of the duties incident
to the office of the Treasurer of a corporation, and such other duties as the
Board of Directors may from time to time prescribe.
Section 5.11. Other Officers. The Board of Directors may also elect or
may delegate to the President the power to appoint such other officers as it may
at any time or from time to time deem advisable, and any officers so elected or
appointed shall have such authority and perform such duties as the Board of
Directors or the President, if he shall have appointed them, may from time to
time prescribe.
ARTICLE VI
PROVISIONS RELATING TO STOCK CERTIFICATES AND STOCKHOLDERS
Section 6.1. Form and Signature. The shares of the Corporation shall be
represented by a certificate signed by the President or any Vice President and
by the Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer, and shall bear the seal of the Corporation or a facsimile thereof.
Each certificate representing shares shall state upon its face (a) that the
Corporation is formed under the laws of the State of Delaware, (b) the name of
the person or persons to whom it is issued, (c) the number of shares which such
certificate represents and (d) the par value, if any, of each share represented
by such certificate.
Section 6.2. Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares of stock to receive dividends or other distributions, and to
vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of
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stock, and shall not be bound to recognize any equitable or legal claim to or
interest in such shares on the part of any other person.
Section 6.3. Transfer of Stock. Upon surrender to the Corporation or
the appropriate transfer agent, if any, of the Corporation, of a certificate
representing shares of stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, and, in the event that the
certificate refers to any agreement restricting transfer of the shares which it
represents, proper evidence of compliance with such agreement, a new certificate
shall be issued to the person entitled thereto, and the old certificate canceled
and the transaction recorded upon the books of the Corporation.
Section 6.4. Lost Certificates, etc. The Corporation may issue a new
certificate for shares in place of any certificate theretofore issued by it,
alleged to have been lost, mutilated, stolen or destroyed, and the Board may
require the owner of such lost, mutilated, stolen or destroyed certificate, or
his legal representatives, to make an affidavit of the fact and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation on account of the alleged loss,
mutilation, theft or destruction of any such certificate or the issuance of any
such new certificate.
Section 6.5. Record Date. For the purpose of determining the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express written consent to any corporate
action without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board may fix, in advance, a record date. Such date shall not be more than
sixty (60) nor less than ten (10) days before the date of any such meeting, nor
more than sixty (60) days prior to any other action.
Section 6.6. Regulations. Except as otherwise provided by law, the
Board may make such additional rules and regulations, not inconsistent with
these By-Laws, as it may deem expedient, concerning the issue,
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transfer and registration of certificates for the securities of the Corporation.
The Board may appoint, or authorize any officer or officers to appoint, one or
more transfer agents and one or more registrars and may require all certificates
for shares of capital stock to bear the signature or signatures of any of them.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Dividends and Distributions. Dividends and other
distributions upon or with respect to outstanding shares of stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, bonds, property, or in stock of the
Corporation. The Board shall have full power and discretion, subject to the
provisions of the Certificate of Incorporation or the terms of any other
corporate document or instrument to determine what, if any, dividends or
distributions shall be declared and paid or made.
Section 7.2. Checks, etc. All checks or demands for money and notes or
other instruments evidencing indebtedness or obligations of the Corporation
shall be signed by such officer or officers or other person or persons as may
from time to time be designated by the Board of Directors.
Section 7.3. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
Section 7.4. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 7.5. General and Special Bank Accounts. The Board may authorize
from time to time the opening and keeping of general and special bank accounts
with such banks, trust companies or other depositories as the Board may
designate or as may be designated by any officer or officers of the Corporation
to whom such
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power of designation may be delegated by the Board from time to time. The Board
may make such special rules and regulations with respect to such bank accounts,
not inconsistent with the provisions of these By-Laws, as it may deem expedient.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS
Section 8.1. Indemnification by Corporation. To the extent permitted by
law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment) the Corporation shall indemnify
any person against any and all judgments, fines, and amounts paid in settling or
otherwise disposing of actions or threatened actions, and expenses in connection
therewith, incurred by reason of the fact that he, his testator or intestate is
or was a director or officer of the Corporation or of any other corporation of
any type or kind, domestic or foreign, which he served in any capacity at the
request of the Corporation. To the extent permitted by law, expenses so incurred
by any such person in defending a civil or criminal action or proceeding shall
at his request be paid by the Corporation in advance of the final disposition of
such action or proceeding.
ARTICLE VIII
ADOPTION AND AMENDMENT
Section 9.1. Power to Amend. Subject to any limitation contained in any
certificate of designation, these By-Laws may be amended or repealed and any new
By-Laws may be adopted by the Board of Directors; provided that these By-Laws
and any other By-Laws amended or adopted by the Board of Directors may be
amended, may be reinstated, and new By-Laws may be adopted, by the stockholders
of the Corporation entitled to vote at the time for the election of directors.
THIS IS TO CERTIFY that the above Bylaws were duly adopted and include
all amendments adopted by the Board of Directors of the Corporation by action
taken at a meeting held on April 23, 1998, and subsequently
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approved by the holders of the Series A Preferred Stock, the Series B 7%
Cumulative Convertible Preferred Stock, and the Series C 7% Cumulative
Convertible Preferred Stock by written consent.
/s/ Anthony Allen
------------------------
Anthony Allen, Secretary
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<PAGE> 95
EXHIBIT 4
CERTIFICATE OF GOOD STANDING
[State of Florida]
I certify from the records of this office that PARK `N VIEW, INC., is a
corporation organized under the laws of Delaware, authorized to transact
business in the State of Florida, qualified on October 19, 1995.
The document number of this corporation is F95000005217.
I further certify that said corporation has paid all fees and penalties due this
office through December 31, 1997, that its most recent annual report was filed
on April 15, 1997, and its status is active.
I further certify that said corporatino has not filed a Certificate of
Withdrawal.
Given under my hand and the Great
Seal of the State of Florida, at Tallahassee, the
Capital, this Thirteenth day of August 1997
[Florida Seal] /s/ Sandra B. Mortham
------------------------
94
<PAGE> 1
EXHIBIT 10.15
SOFTWARE DEVELOPMENT AGREEMENT
THIS AGREEMENT is entered into on this 22 day of November, 1995,
between Green Light, Inc Technologies., a Tennessee corporation ("Green Light"),
and Park 'N View, Inc., a Delaware corporation ("PNV").
WHEREAS, PNV has designed and developed the concept and equipment ("the
System") to (i) enable truck drivers to: (a) receive and/or have access to cable
television services and telecommunications services; and (b) provide such truck
drivers programming consisting of video and audio services, and telephone, fax
or other data services while remaining in or near their vehicles parked at the
Truckstop; and
WHEREAS, Green Light has agreed to develop and deliver to PNV software
to be used to: (i) automate the System to permit activation of the Services
directly at truckstop sites or by telephone, in conjunction with other
telecommunications service providers, from each parking space and/or other
locations at which the Services are provided; and (ii) report usage volume and
provide multiple detailed report functions suitable for accounting, audit and
review purposes.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledge, the parties hereto agree as
follows:
1. Definitions "Software" means the ideas, routines, object and source
codes, specifications, flowcharts and other material and documentation, together
with all information, data and know-how, technical or otherwise, and any
changes, modifications or improvements related thereto developed by Green Light
for purposes of: (i) automating the System to permit activation of the Services
directly at the truckstop site or by telephone; and (ii) reporting usage and
providing multiple detailed report functions. After execution of this Agreement,
a description of the Software shall be appended hereto and incorporated herein
as Exhibit A.
2. Representations, Warranties and Covenants
(a) Green Light represents and warrants that Green Light is capable of
developing the Software pursuant to the terms of this Agreement and Green Light
is an expert in and fully acquainted with the hardware, operating system, other
software and peripherals constituting the System.
(b) Green Light and PNV acknowledge and agree that the Software
constitutes a trade secret and proprietary information and that the Software is
and shall be jointly owned by Green Light and PNV. Green Light does not have and
shall not be deemed to have an exclusive right, title or interest in the
Software, whether under trade secrecy, copyright, patent or related
<PAGE> 2
laws. Unless specifically authorized in writing by the other party, neither
Green Light nor PNV shall provide the Software to any third party or use the
Software in any application other than with the System.
(c) Green Light acknowledges and agrees that PNV is the exclusive owner
of the System, together with all information, data and know how, technical or
otherwise, and any changes, modifications or improvements related thereto.
3. Development Schedule The development schedule shall be as follows:
(a) Green Light shall deliver to PNV a working model of the
Software and related standard flowcharts on or before November 30, 1995. PNV
shall have fourteen (14) business days after receipt of the working model of the
Software to review the flowcharts and the model. If the Software is not
acceptable, Green Light shall, within ten (10) days of receipt of notice from
PNV, make such changes as are required by PNV and shall resubmit a working model
of the Software to PNV. PNV shall then have seven (7) business days to review
the model and shall at that time either accept the model, or reject the model,
in which case this Agreement shall be terminated.
4. Payment The payment schedule shall be as follows:
(a) Green Light acknowledges receipt of $10,000 from PNV on
November 9, 1995;
(b) If the Software is accepted by PNV, PNV shall pay to Green
Light: (i) $2,000 each time that the System and the Software are installed at a
truckstop at which PNV provides the Services; and (ii) one-half cent ($0.005)
each time that the Services are activated by means of the automated system
provided by the Software.
5. Alterations, Modifications PNV shall have the right to request Green
Light to make alterations, modifications, improvements, enhancements and updates
to the Software from time to time, which Green Light shall preform in a timely
manner.
6. Assignment Either party hereto shall have the right to assign this
Agreement only to: (i) any successor assignee of such party that may result from
any merger, consolidation or reorganization; or (ii) another corporation that
acquires all or substantially all of such party's assets, business and
liabilities.
7. Entire Agreement This Agreement contains the complete expression of the
agreement between the parties with respect to the matters addressed herein and
there are no promises,
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<PAGE> 3
representations, or inducements except as herein provided. The terms and
provisions of this Agreement may not be modified, supplemented or amended except
in writing signed by both parties hereto. All terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and permitted assigns of the parties hereto.
8. Governing Law This Agreement shall be governed by and construed and
enforced in accordance with the laws of Florida. The prevailing party in any
litigation concerning this Agreement shall be entitled to reimbursement of its
reasonable costs, including legal and accounting fees, incurred in connection
with any such matter.
9. Notice Any notice, request, consent or communication (collectively a
"Notice") under this Agreement shall be effective only if it is in writing and:
(a) personally delivered; (b) sent by certified or registered mail, return
receipt requested, postage prepaid; (c) sent by a nationally recognized
overnight delivery service, with delivery confirmed; or (d) telexed or
telecopied, with receipt confirmed, addressed as follows:
If to PNV: Park 'N View, Inc.
3403 NW 55th Street
Building #10
Ft. Lauderdale, Florida 33309
Attention: Ian Williams, President
If to Green Light: Green Light, Inc.
______________________________
______________________________
Attention:______________
or to such other address or addresses as shall be furnished in writing by any
party to the other party. A Notice shall be deemed to have been given as of the
date when: (i) personally delivered; (ii) three days after when deposited with
the United States mail properly addressed; (iii) the next day when delivered
during business hours to said overnight delivery service, properly addressed and
prior to such delivery service's cut-off time for next-day delivery; or (iv)
when receipt of the telex or telecopy is confirmed, as the case may be, unless
the sending party has actual knowledge that a Notice was not received by the
intended recipient.
10. Severability If any part or sub-part of this Agreement is found or held
to be invalid, that invalidity shall not affect the enforceability and binding
nature of any other part of this Agreement.
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<PAGE> 4
11. Section Headings The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
12. Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on
the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
PARK 'N VIEW, INC., a
Delaware corporation
By: /s/ Ian Williams
--------------------------------
Ian Williams, President
Green Light Technologies, Inc., a
Tennessee corporation
By: /s/ Jody Green
--------------------------------
Name:
------------------------------
Title:
-----------------------------
4
<PAGE> 1
EXHIBIT 10.16
TECHNOLOGY TRANSFER AND DEVELOPMENT AGREEMENT
THIS TECHNOLOGY TRANSFER AND DEVELOPMENT AGREEMENT ("Agreement") is
entered into effective as of the 4th day of November, 1996, between Green Light,
Inc., a Tennessee corporation ("Green Light"), JODY GREEN, an individual
residing in Tennessee ("Green"), LEWIS TATHAM, an individual residing in
Tennessee ("Tatham"), and PARK 'N VIEW, INC., a Delaware corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, the Company has designed and developed the concept and
equipment ("the System") to (i) enable truck drivers to: (a) receive and/or have
access to cable television services and telecommunications services; and (b)
provide such truck drivers programming consisting of video and audio services,
and telephone, fax or other data services while remaining in or near their
vehicles parked at truckstops (collectively, the "Services"); and
WHEREAS, Green Light, Green and Tatham have agreed to develop and
deliver to the Company software consisting of ideas, routines, object and source
codes, specifications, flowcharts and other material and documentation, together
with all information, data and know-how, technical or otherwise, and any
changes, modifications or improvements related thereto developed by Green Light,
Green and/or Tatham (collectively, the "Software") for purposes of: (i)
automating the System to permit activation of the Services directly at the
truckstop site or by telephone; and (ii) reporting usage and providing multiple
detailed report functions; and
WHEREAS, Green and Tatham are the sole shareholders, officers and
directors of Green Light and have been retained as employees of the Company to
perform services utilizing the Software.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises contained herein, Green Light, Green, Tatham and the
Company (collectively, the "Parties") hereto agree as follows:
1. Assignment of Software by Green Light. Green Light hereby:
a. assigns its full right, title and interest in and to
the Software to the Company. In connection therewith, Green Light shall, at the
time of execution of this Agreement, furnish to the Company copies of all ideas,
routines, object and source codes, specifications, flowcharts and other material
and documentation, together with all information, data and know-how, technical
or otherwise, and any changes, modifications or improvements related thereto.
b. assigns to the Company all of its rights in any
copyright, patent or trademark applications relating to the Software, whether or
not such applications have yet been filed.
<PAGE> 2
c. represents and warrants that, other than the rights
granted to the Company pursuant to that certain Software Development Agreement
between Green Light and the Company, it possesses all right, title and interest
in and to the Software, free and clear of any security interest, encumbrance or
other restriction and the transfer thereof to the Company does not and will not
infringe any copyright, trade secret or other right of any other person.
d. represents and warrants that it has, and does hereby
assign to the Company, the right to prevent unauthorized disclosures of the
Software (or any part thereof) by any person to whom Green Light has
confidentially communicated such information.
2. Assignment of Software by Green and Tatham. Green and Tatham,
in their capacities as individuals and as the sole shareholders, officers and
directors of Green Light, hereby:
a. assign their full right, title and interest in and to
the Software to the Company. In connection therewith, Green and Tatham shall, at
the time of execution of this Agreement, furnish to the Company copies of all
ideas, routines, object and source codes, specifications, flowcharts and other
material and documentation, together with all information, data and know-how,
technical or otherwise, and any changes, modifications or improvements related
thereto.
b. assign to the Company all of their rights in any
copyright, patent or trademark applications relating to the Software, whether or
not such applications have yet been filed.
c. represent and warrant that, other than the rights
held by Green Light and the Company pursuant to that certain Software
Development Agreement between Green Light and the Company, they posses all
right, title and interest in and to the Software, free and clear of any security
interest, encumbrance or other restriction and transfer thereof to the Company
does not and will not infringe any copyright, trade secret or other right of any
other person.
d. represent and warrant that they have, and do hereby
assign to the Company, the right to prevent unauthorized disclosures of the
Software (or any part thereof) by any person to whom Green and Tatham have
confidentially communicated such information.
3. Work for Hire. Green and Tatham hereby agree that any creative
work developed during their employment with the Company (the "Work") is a work
made for hire and that the Company is and shall be the owner of all of right,
title and interest in and to the Work, including all copyrights in the Work and
any adaptation or version of it, both in the United States and throughout the
world, and shall be entitled to secure such copyrights, and all renewals or
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<PAGE> 3
extensions thereof, by registering the same in the name of the Company or
otherwise for the sole benefit of the Company
4. Nondisclosure. Except in connection with Green and Tatham's
duties under this Agreement or any employment or other arrangement with the
Company, both Green and Tatham shall not, directly or indirectly, use, disclose
or disseminate any information relating to the Software to any person or
organization other than the Company; provided, however, that if any information
relating to the Software becomes generally known in the industry, then, with the
Company's prior written consent, the restrictions contained in this paragraph
shall cease with respect to such information which has become generally known.
5. Payment. In payment for the property and rights assigned to it
by Green Light, Green and Tatham, the Company shall:
a. pay the sum of $100.00 to Green Light in cash at the
time this Agreement is executed;
b. pay to each of Green and Tatham during the term of
their employment with the Company annual salaries in the amount of One Hundred
Thousand Dollars ($100,000);
c. provide to each of Green and Tatham the right to
receive incentive bonuses through their employment and performance with the
Company pursuant to incentive plans which may be approved by the Board of
Directors of the Company from time to time; and
d. grant to each of Green and Tatham options to purchase
37,878 shares of the common stock of the Company pursuant to the terms of those
certain Incentive Stock Option Award Agreements of even date herewith and the
Park 'N View Stock Option Plan.
6. Employment at Will. This Agreement is not intended to nor does
it create an employment contract for a specific term. The Parties agree that the
employment of either Green or Tatham may be terminated by the Company at any
time with or without cause. The Company shall have no liability to either Green
or Tatham, except for compensation accrued and unpaid at the time of
termination.
7. Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the Parties with respect to the subject
matter hereof, and no representations, promises, agreements or understandings,
written or oral, not herein contained shall be of any force or effect. Green
Light and the Company hereby acknowledge and agree that the Software Development
Agreement by and between Green Light and the Company is hereby terminated as of
the date hereof and that the parties thereto shall have no further liability or
obligation thereunder.
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<PAGE> 4
8. Section Headings. The section headings in this Agreement are
for convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
9. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida. The prevailing
party in any litigation concerning this Agreement shall be entitled to
reimbursement of its reasonable costs, including legal and accounting fees,
incurred in connection with any such matter.
10. Modification. This Agreement shall not be modified or amended
except by an instrument in writing executed by the Parties to this Agreement.
11. Severability. If any part of this Agreement is found or held
to be invalid, that invalidity shall not affect the enforceability and binding
nature of any other part of this Agreement.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed shall be deemed to be an original
and all of which together shall constitute one and the same instrument.
[Signature Page Follows]
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<PAGE> 5
IN WITNESS WHEREOF, the Parties hereto have caused this Technology
Transfer Agreement to be executed as of the day and year first above written.
PARK 'N VIEW, INC.
By: /s/ Ian Williams
-----------------------------------
Ian Williams, President
GREEN LIGHT, INC.
By: /s/ Jody Green
-----------------------------------
/s/ Jody Green
--------------------------------------
Jody Green
/s/ Lewis Tatham
--------------------------------------
Lewis Tatham
5
<PAGE> 1
EXHIBIT 10.17
ECHOSTAR
ECHOSTAR SATELLITE CORPORATION
CUSTOMER AGREEMENT
DATED: DECEMBER 17, 1997
ECHOSTAR SATELLITE CORPORATION
COMMERCIAL CUSTOMER SERVICE CENTER
Our Commercial Customer Service Center is open to serve your needs. The
telephone number is 1-800-454-0843. You may write to our Commercial Customer
Service Center at:
EchoStar Satellite Corporation
P.O. Box 6552
Englewood, Colorado 80155
DEFINITIONS
As used in this Agreement ("Agreement"):
"DBS" means the equipment (i.e., a DISH DBS receiver, satellite antenna, remote
control, and Smart Card) that is used in the reception of DISH Network
programming services.
"PNV System" means the concept and equipment to enable truck drivers to receive
and/or have access to cable television services and telecommunications services;
and (b) provide such truck drivers programming consisting of video and audio
services, and telephone, fax or other data services while remaining in their
vehicles parked at truckstops; and
"PNV Network" means all of the Truckstops in the Territory at which you have
installed the PNV System and which are described on Exhibit A hereto, as amended
from time to time.
"Truckstop" means a truckstop, located in the Territory, at which Park `N View
has installed the PNV System.
"Service(s)" means the DISH Network programming, subscription programming,
programming packages, business related pay-per-view services, and any other
services that we provide to you.
"Smart Card" means the access card inserted into the DISH DBS receiver to
authorize reception of DISH Network programming Services.
<PAGE> 2
"Territory" consists of the geographic boundaries of the continental United
States, its territories, possessions and commonwealths.
"Trademarks" means any trademarks, service marks, trade names or logos owned by
EchoStar Satellite Corporation, its affiliates, programming providers or any
other third parties, that are used in connection with any programming service
provided by EchoStar Satellite Corporation, including but not limited to DISH
Network.
"We", "Company", "us", "our" or "EchoStar" means EchoStar Satellite Corporation,
its employees or its authorized agents.
"You," "your" or "PNV" means Park `N View, Inc. and the Truckstops where the
DISH DBS equipment is located which are identified in the attached Customer
Information Report attached hereto as Exhibit A, which shall be updated from
time to time to reflect the additional Truckstops at which you have installed
the PNV System.
1. ECHOSTAR SATELLITE CORPORATION'S POLICIES AND PRACTICES
The policies and practices set forth below are used when providing you with DISH
Network programming or other Services to Truckstops. These policies and
practices may be changed from time to time without your consent to the extent
that such changes are required by programming providers or other third parties.
You authorize us to make inquiries into your credit worthiness. The individual
policies and practices in this document will continue to apply to your rights
and our rights following termination or expiration of the Services provided to
you.
2. BILLING POLICES AND PAYMENTS FOR SERVICES
You agree to pay all amounts billed for Services as described below and to pay
all applicable taxes, fees, and other charges, if any, which are now or may in
the future be assessed, by third parties or by us on behalf of third parties, on
the Services you receive from us. All rates, fees, and charges set forth in this
Agreement are based upon the number of wired stalls at all of the Truckstop in
the PNV Network.
Unless you prepay for a multi-month subscription to Services, we will bill you
each month in advance for services ordered by you until you cancel the Services.
The bills you receive will show the total amount due, the payment due date,
payments, credits, purchases and other charges to your account.
Unless you prepare for a multi-month subscription to the Services, you agree to
pay us in full monthly by the payment due date for the Services and for any
other charges due us, including late payment fees or any returned payment fees,
which are set forth in Section 6. Payment of your bill after the due date will
result in you paying us a late payment fee.
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<PAGE> 3
If partial payments are made, they will be applied first to the oldest
outstanding bill. If you send checks or money orders marked "payment in full" we
can accept them without losing any of our rights to collect any other amounts
owed by you , not withstanding your characterization of the payment. We do not
extend credit to our customers, and the late payment fee is not interest, a
credit service charge or a finance charge. You understand and agree that in the
case of late payment or non-payment for any Services ordered by you or for any
of the charges stated below, we may report such late payment or non-payment to
credit reporting agencies. If you do not pay your bill by the due date, we have
the right to disconnect your Services at any time thereafter, in our sole
discretion (unless their is a legitimate dispute as to amounts due). We will
require you to pay all past due charges, a reconnect fee, which is set forth in
Section 6, a deposit equal to a minimum of one month's advance charges, and all
outstanding balances accrued through the date of deactivation, before we
reconnect your Services. Deposits shall not earn or accrue interest.
If you paid for a multi-month subscription to any Services and your account is
past due for any amounts owned to us, at our option we may suspend any or all
Services until payment is received and/or offset by applying part of the amount
you paid for your multi-month subscription to any past due amounts and you will
continue to receive the Services only until the remaining amount (after the
offset) of your multi-month subscription has been exhausted, even though that
will be a shorter period of time than you originally requested.
If we use a collection agency or attorney to collect money that you owe us or to
assert any other right which we may have against you, you agree to pay the
reasonable costs of collection or other action. These costs might include, but
are not limited to, the costs of a collection agency, reasonable attorney's fees
and court costs.
If you at any time fail, neglect or refuse to make timely payments hereunder, or
if a petition in bankruptcy shall be filed on your behalf or against you, or if
you take advantage of any insolvency law or become insolvent or make an
assignment for the benefit of creditors, or if a receiver, liquidator or trustee
is appointed for your property or affairs, we shall be wholly relieved from our
obligations hereunder.
Unless specifically and expressly authorized by us in writing, no third party
(parties) may collect payments(s) for EchoStar Services. Accordingly, unless you
have been specifically and expressly authorized by us to do so, you shall not
pay for the Services through any third party. In all cases, however, you remain
primarily liable for the charges due under this Agreement.
If there are billing errors or other requests for credit, you can contact our
Commercial Customer Service Center by telephone or in writing. You must contact
us within sixty (60) days of the time you receive the billing statement for
which you are seeking corrections. Undisputed portions of the billing statement
must be paid before the next billing statement is issued to avoid an
administrative fee for late payment.
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3. COMPANY CHANGES IN SERVICES AND CHARGES
EchoStar shall design for and provide to PNV, a customized programming package
which is set forth on Exhibit B attached hereto as amended from time to time as
provided herein (the "Programming Schedule"). The charge to be paid for the
Programming Schedule is set forth on Exhibit B. The Parties acknowledge and
agree that EchoStar may make changes to the Dish Network Services and
Programming Schedules provided that EchoStar shall use its best efforts to
replace such services with other comparable services at comparable prices. In
the event that a programming provider asserts that EchoStar can no longer
furnish certain programming, programming packages or other DISH Network
Services, PNV understands and agrees that EchoStar shall have the right to
immediately terminate such programming, programming packages or other DISH
Network Services and that EchoStar shall use its best efforts to replace such
services with other comparable services at comparable prices.
In the event that a programming provider asserts that we can no longer furnish
certain programming, programming packages or other Services, or that we can no
longer furnish one or more Services to you, you understand and agree that we
have the right to immediately terminate such programming, programming packages
or other Services with no obligations or liabilities to you.
If you downgrade the Services that you receive, we will charge you a change of
service fee, which is set forth in Section 6. For month-to-month subscriptions,
you may downgrade the Services at any time. For multi-month subscriptions, you
may downgrade the Services only at the time of renewal. You may not downgrade
the Services during the term of the multi-month subscription.
4. TERM OF AGREEMENT; TERMINATION OF SERVICE
Unless terminated by PNV or EchoStar as provided in this Agreement, the term of
this Agreement shall be five (5) years commencing on the date hereof. After
termination of the initial five (5) year term, the term of this Agreement shall
automatically be renewed for successive one (1) year terms unless either party
provides the other party with notice of termination within 60 days of the
renewal date.
Notwithstanding the foregoing, you have the right to cancel your Services for
any reason at any time by notifying us. You understand that charges for
Services, once paid by you, are non-refundable. For multi-month subscriptions,
the cancellation will be effective as of the date the multi-month subscription
expires. For month-to-month subscriptions, the cancellation will be effective as
of the end of the current billing cycle. In the event you prepay for Services
and cancel the Services prior to expiration of a multi-month subscription or
prior to the end of a monthly billing cycle, you understand and agree that you
are not entitled to any refund of the unused portions of the subscription.
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<PAGE> 5
If you fail to pay your bill when it is due, we have the right to terminate your
Services by notifying you.
If you cancel your Services or fail to pay your bill when due, you are still
responsible for payment of all outstanding balances accrued, including late
payment fees and other charges permitted by law.
5. TRANSFER OF ACCOUNT, SERVICES OR EQUIPMENT
(a) We may sell, assign, transfer or otherwise dispose of our
interest in this Agreement (through a change of control or otherwise) provided
that the acquirer of such interest or assets shall assume our rights and
obligations hereunder and shall be bound by the terms of this Agreement, in
which case, you shall recognize the acquirer of this Agreement as us for
purposes of this Agreement.
(b) You may sell, assign, transfer or otherwise dispose of your
interest in the PNV System or this Agreement (through a change of control or
otherwise) provided that said acquirer shall assume all of your rights and
obligations hereunder and shall be bound by the terms of this Agreement. You may
pledge its interest in this Agreement to any party, including without
limitation, to any bank, recognized lending or leasing institution or investor
as collateral.
6. ADDITIONAL FEES AND CHARGES
CHANGE OF SERVICE FEE: We will charge you a change of service fee, which is set
forth in this Section 6, when you request a downgrade of service from one
programming package to another.
SMART CARD REPLACEMENT FEE: Smart Cards are non-transferable. Your Smart Card
will only work in the DISH DBS receiver unit which came with it. If you report
to the Commercial Customer Service Center that your Smart Card for your DISH DBS
receiver unit is lost, stolen, damaged, or defective, and our investigation does
not reveal unauthorized tampering, then we will replace the Smart Card. You will
be charged a Smart Card Replacement Fee as set forth in this Section 6. If you
request overnight delivery of the replacement Smart Card, you must pay an
Overnight Delivery Fee, as set forth in this Section 6.
DUPLICATE BILLING STATEMENT FEE: You will be charged a Duplicate Billing
Statement Fee for each statement you request to be copied, as set forth in this
Section 6.
ADDITIONAL FEE SUMMARY: In addition to the amounts due for Services, you agree
to pay the fees referenced below:
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<TABLE>
<S> <C>
Smart Card Replacement Fee $50.00
Late Payment Fee (per invoice) $ 5.00
Change of Service Fee (per Truckstop) $ 5.00
Duplicate Billing Statement Fee (per invoice) $ 2.00
Overnight Delivery Fee $18.00
Reconnect Fee (per Truckstop) $25.00
Returned Payment Fee $25.00
</TABLE>
We reserve the right to change the fees and charges set forth in this
Section 6 in our sole discretion subject to your right to terminate this
Agreement pursuant to Section 4 if you so desire.
7. SERVICE RENEWAL
Your subscription to any Services will be renewed automatically each month
unless you contact the Commercial Customer Service Center to cancel the
Services.
8. FURNISHING OF SERVICE
WE WILL NOT BE LIABLE FOR ANY INTERRUPTIONS IN SERVICE OR LIABLE FOR ANY DELAY
OR FAILURE TO PERFORM, IF SUCH DELAY OR NONPERFORMANCE ARISES IN CONNECTION WITH
ANY ACTS OF GOD, FIRES, EARTHQUAKES, FLOODS, TECHNICAL FAILURE, POWER FAILURE,
ACTS OF ANY GOVERNMENTAL BODY OR ANY OTHER CAUSE BEYOND OUR CONTROL. WE MAKE NO
WARRANTY, EITHER EXPRESSED OR IMPLIED, REGARDING THE DISH DBS EQUIPMENT OR ANY
SERVICES FURNISHED TO YOU. ALL SUCH WARRANTIES ARE EXPRESSLY EXCLUDED. IN NO
EVENT SHALL WE HAVE ANY LIABILITY FOR SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES RELATING TO THE DBS EQUIPMENT, OR RESULTING FROM OUR
FURNISHING OR FAILURE TO FURNISH ANY SERVICES TO YOU, OR FROM ANY FAULT FAILURE,
DEFICIENCY OR DEFECT IN SERVICE FURNISHED TO YOU, INCLUDING BUT NOT LIMITED TO
COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, LOSS OF PROFITS, LOSS OF
BUSINESS, LOSS OF USE OR INTERRUPTION OF BUSINESS. OUR LIABILITY SHALL NOT
EXCEED THE PROGRAMMING FEES DIRECTLY ATTRIBUTABLE TO THE PERIOD OF TIME THE
SERVICE WAS INTERRUPTED. IN ADDITION, WE SHALL HAVE NO LIABILITY TO YOU OR ANY
PERSON OR ENTITY DUE TO OR BASED ON THE CONTENT OF ANY OF THE SERVICES PROVIDED.
You acknowledge that your DBS equipment has been acquired separate and apart
from this Agreement. Any rights and remedies with respect to the DBS equipment
must be handled directly with the manufacturer or supplier of such equipment.
6
<PAGE> 7
9. PROGRAMMING AVAILABILITY
Certain Services transmitted by us, including but not limited to some
subscription Services and sports events, may be blacked out in your area of
reception. If you circumvent or attempt to circumvent any of these blackouts,
you may be subject to legal action. YOU AGREE TO INDEMNIFY, DEFEND, AND HOLD
ECHOSTAR SATELLITE, ITS AFFILIATES, ITS AND THEIR OFFICERS, EMPLOYEES, AGENTS
AND DIRECTORS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES,
LIABILITIES, EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES), LOSSES, ACTIONS
AND CAUSES OF ACTION, DIRECTLY OR INDIRECTLY RESULTING FROM YOUR BREACH OF ANY
OF YOUR OBLIGATIONS UNDER THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO CLAIMS
ARISING OUT OF EXHIBITION IN ANY "PUBLIC AREA" (AS DEFINED BELOW), COPYRIGHT
INFRINGEMENT OR CLAIMS OF PROGRAMMING PROVIDERS.
10. USE OF SERVICES
You agree to comply with the following terms concerning use of Echostar
Services:
a) PNV provides programming to its members as a service and PNV
does not resell programming. Any transmission, rebroadcasting
or cablecasting of the Service outside of the PNV Network is
prohibited;
b) If it comes to your attention, you must notify us of any
person transmitting, duplicating, rebroadcasting or using any
of the Services without our consent;
c) Additions, changes or modifications to any of the Services is
prohibited;
d) You agree not to use any Trademarks for any purpose;
e) You are prohibited from using the Services for an unlawful
purpose and you must comply with all federal, state and local
laws applicable to the use or exhibition of the service;
f) You agree that the Services shall be distributed only within
the Territory to the Truckstops in the PNV Network which are
listed on Exhibit A (as amended from time to time); and
g) You acknowledge that you own, operate, and/or manage the
satellite television system at each of the Truckstops in the
PNV Network which are listed as Exhibit A (as amended from
time to time) and that you are fully responsible for
compliance with all of the terms and conditions contained in
this Agreement.
7
<PAGE> 8
In addition to any other rights that we have set forth elsewhere in this
Agreement, if you breach any of the above referenced terms, or any of your other
obligations under this Agreement, we may, in our sole discretion, immediately
disconnect the Services provided to you, terminate this Agreement, and keep any
remaining subscription fees, if any, that you have paid for the Services. The
foregoing rights are without prejudice to us exercising any other rights and
remedies we may have.
You are solely responsible for obtaining, purchasing, installing, maintaining
and servicing any equipment necessary to receive the Services. You understand
that special equipment will be necessary to receive broadcasts via a satellite
master antenna television (SMATV) system, and that if you elect to use a SMATV
system, you will be solely responsible for all costs of, and relating to, any
SMATV equipment.
11. REPRESENTATIONS AND WARRANTIES OF PNV.
PNV is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has full power and authority: (i) to enter
into this Agreement; and (ii) to carry out the other transactions and agreements
contemplated by this Agreement.
The execution, delivery and performance of this Agreement by PNV has been duly
authorized by all necessary action of PNV. This Agreement and each of the other
documents to be executed and delivered by PNV pursuant to this Agreement have
been duly executed and delivered by PNV and are the valid and binding
obligations of PNV enforceable in accordance with their respective terms,
subject only as to enforceability affected by bankruptcy, insolvency or similar
laws affecting the rights of creditors generally and by general equitable
principles. The execution, delivery and performance of this Agreement and the
other documents to be executed, delivered and performed by PNV pursuant to this
Agreement will not: (i) conflict with or violate any provision of PNV's
organizational documents, or any law, ordinance or regulation or any decree or
order of any court or administrative or other governmental body which is either
applicable to, binding upon or enforceable against PNV; or (ii) result in any
breach of or default under or cause the acceleration of performance of any
mortgage, contract, agreement, indenture or other instrument which is either
binding upon or enforceable against PNV.
PNV is not required to obtain the approval, consent or waiver of any other
person or entity for the execution, delivery or performance of this Agreement.
All of the information contained in the representations and warranties of PNV
set forth in this Agreement or in any of the documents delivered or to be
delivered herewith or after the execution hereof as set forth in any provision
of this Agreement is true, accurate and complete.
8
<PAGE> 9
12. REPRESENTATIONS AND WARRANTIES OF ECHOSTAR.
EchoStar is a corporation duly organized, validly existing and in good standing
under the laws of Colorado and has full power and authority: (i) to enter into
this Agreement; and (ii) to carry out the other transactions and agreements
contemplated by this Agreement.
The execution, delivery and performance of this Agreement by EchoStar has been
duly authorized by all necessary action of EchoStar. This Agreement and each of
the other documents to be executed and delivered by EchoStar pursuant to this
Agreement have been duly executed and delivered by EchoStar and are the valid
and binding obligations of EchoStar enforceable in accordance with their
respective terms, subject only as to enforceability affected by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally and by
general equitable principles. The execution, delivery and performance of this
Agreement and the other documents to be executed, delivered and performed by
EchoStar pursuant to this Agreement will not: (i) conflict with or violate any
provision of EchoStar's organizational documents, or any law, ordinance or
regulation or any decree or order of any court or administrative or other
governmental body which is either applicable to, binding upon or enforceable
against EchoStar; or (ii) result in any breach of or default under or cause the
acceleration of performance of any mortgage, contract, agreement, indenture or
other instrument which is either binding upon or enforceable against EchoStar.
EchoStar is not required to obtain the approval, consent or waiver of any other
person or entity for the execution, delivery or performance of this Agreement.
All of the information contained in the representations and warranties of
EchoStar set forth in this Agreement or in any of the documents delivered or to
be delivered herewith or after the execution hereof as set forth in any
provision of this Agreement is true, accurate and complete.
13. RIGHT TO ENTER YOUR TRUCKSTOP
PNV hereby grants and conveys to EchoStar, subject to the rights of the owner or
operator of each Truckstop, for the term of this Agreement, access to the
premises of each Truckstop at which the PNV System is installed and the DISH
Network Services are provided for purposes of monitoring, maintaining,
repairing, replacing and operating the DISH Network Services.
14. PROGRAMMING REQUIRING TELEPHONE CONNECTION
We may require that the DISH DBS receiver unit(s) be directly and continuously
connected to a telephone line as a condition of the provision of certain
Services to you, or we may, in our discretion, disconnect such Services. If such
Services are disconnected,
9
<PAGE> 10
you are still responsible for payment of all outstanding balances for such
Services accrued through the date the Services are disconnected.
15. MINIMUM LEVEL OF SERVICE
As a condition of our furnishing certain Services to you, we will require that
you purchase and maintain the minimum level of Services which are set forth as
Exhibit C attached hereto.
16. LIABILITY FOR UNAUTHORIZED USE
If your DISH DBS equipment is stolen or otherwise removed from a Truckstop
without your authorization, you must notify our Commercial Customer Service
Center immediately, but in any event not more than three business (3) days after
knowledge of such removal to avoid liability for payment for unauthorized use of
the DBS System. You will not be liable for unauthorized use if we have received
your timely notification.
17. DISH DBS SMART CARDS
DISH DBS Smart Cards are our property and any tampering or other unauthorized
modification to the Smart Cards may result in, and subject you to, legal action.
18. APPLICABLE LAW
This Agreement, including all matters related to their validity, construction,
performance and enforcement, shall be governed by applicable federal law, the
rules and regulations of the Federal Communications Commission, and the laws of
the State of Colorado. These terms and conditions are subject to amendment,
modification or termination if required by such regulations or laws.
If any provision in this Agreement is declared to be illegal or in conflict with
any law or regulation, that provision may be deleted or modified, without
affecting the validity of the other provisions.
19. WARNING AGAINST PIRACY
It is against the law to receive the Services, or any portion of the Services,
without paying for them. Title 47, Section 605(c)4, United States Code (U.S.C.)
makes it a federal crime to modify the receiver to enable it to receive
encrypted (scrambled) DISH Network programming, or any other Services that we
provide to you without payment of required subscription fees. Conviction can
result in a fine of up to $500,000 and imprisonment for up to five years, or
both. Any owner of a DISH DBS receiver who procures or willfully causes its
modification is an accessory to that offense and may be punished in the same
manner. Investigative authority for violations lies with the Federal Bureau of
Investigation (FBI).
10
<PAGE> 11
20. CHANGE OF NAME, ADDRESS OR TELEPHONE NUMBER
You agree to give us prompt notice of your change of name, billing address or
telephone number. You may do this by notifying our Commercial Customer Service
Center by telephone or in writing.
21. NOTICE
If we send you notice, it will be considered given when received by you. Any
such notice may be provided on or with your billing statement. If you give
notice to us, it will be deemed given when received by us.
22. ACTIONS; FURTHER ASSURANCES.
Subject to the terms and conditions of this Agreement, each party agrees to use
its best efforts in good faith to: (i) take or cause to be taken as promptly as
practicable all actions and obligations arising herein; and (ii) do or cause to
be done all things that are within its power to fulfill and comply with its
obligations or the obligations of the other parties to consummate the
transactions contemplated herein.
23. PRESS RELEASES.
To the extent practical, PNV and EchoStar shall consult with each other as to
the form and content of all press releases and other public disclosures of
matters relating to this Agreement, the System and the DISH Network Services.
Nothing in this section shall prohibit PNV or EchoStar from making any
disclosure which its legal counsel deems necessary or advisable to fulfill such
party's disclosure obligations under applicable law. To the extent practical,
all public disclosures shall be transmitted by telecopier to the other party or
its counsel prior to publication or dissemination.
24. SECTION HEADINGS.
The section headings in this Agreement are for convenience of reference only and
shall not be deemed to alter or affect any provision hereof.
11
<PAGE> 12
25. LITIGATION; PREVAILING PARTY.
If litigation is brought with regard to this Agreement, the prevailing party
shall be entitled to receive from the non-prevailing party, and the
non-prevailing party shall immediately pay upon demand, all reasonable fees and
expenses of counsel of the prevailing party.
26. EXHIBITS.
The Exhibits attached to this Agreement are integral parts of this Agreement and
all references to this Agreement shall include the Exhibits.
27. MODIFICATION.
This Agreement shall not be modified or amended except by an instrument in
writing executed by the parties to this Agreement.
28. SUCCESSORS AND ASSIGNS.
This Agreement shall apply to, and be binding upon, the parties and their
respective successors and permitted assigns.
29. SEVERABILITY.
If any part or sub-part of this Agreement is found or held to be invalid, that
invalidity shall not affect the enforceability and binding nature of any other
part of this Agreement.
23. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which when
so executed shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
22. CERTIFICATION AND REPRESENTATIONS OF AUTHORITY
By signing this Agreement, you certify that the information set forth below is
true and correct, and that you will provide us promptly with updated information
if any of the information provided is no longer correct, including without
limitation a change in the
12
<PAGE> 13
number of Truckstops. Any fraud or misrepresentation shall constitute a breach
of this Agreement and grounds for termination. This Agreement is binding upon
the heirs, legal representatives, successors and assigns of both parties.
Neither party has the right or authority to make any representation, promise or
agreement on behalf of the other party.
[SIGNATURE PAGE TO FOLLOW]
13
<PAGE> 14
IN WITNESS WHEREOF, EchoStar and PNV have caused this Agreement to be
executed pursuant to appropriate legal authority duly given, as of the day and
year first above written.
PARK 'N VIEW, INC.,
a Delaware corporation
By: /s/ Steve Conkling
--------------------------------------------
Steve Conkling, Vice President-Finance
ECHOSTAR SATELLITE CORPORATION,
a Colorado corporation
By: /s/ Wiley H. Reed
--------------------------------------------
14
<PAGE> 15
EXHIBIT A
PRIVATE COMMERCIAL CUSTOMER AGREEMENT
CUSTOMER INFORMATION
<TABLE>
<S> <C>
=============================================================================================
Name: Park `N View, Inc. The Truckstops constituting the PNV Network are
Principal Place of Business: described in the attached letters to EchoStar as
11711 NW 39th Street amended and supplemented from time to time
Coral Springs, FL 33065
- ---------------------------------------------------------------------------------------------
Contact Name: Yves Maynard Telephone Number: (954) 745-7800
- ---------------------------------------------------------------------------------------------
Billing Address: Facsimile Number: (954) 745-7899
11711 NW 39th Street
Coral Springs, FL 33065
- ---------------------------------------------------------------------------------------------
Taxpayer ID No. 65-0612435
=============================================================================================
</TABLE>
15
<PAGE> 16
EXHIBIT B
CUSTOMIZED PROGRAMMING PACKAGE
The customized programming package currently includes: (i) Basic Package with
HBO; and (ii) add-on 6, which together consist of the following:
CNN
Headline News
ESPN
ESPN2
ESPNEWS
TNT
TBS
The Weather Channel
HBO
A&E
The History Channel
Discovery Channel
The Nashville Network
Cartoon Network
The charge for the current Programming Schedule shall be $6.95 per month per
wired stall and shall be reduced to $5.91 per month per wired stall effective as
of January 1, 1998.
16
<PAGE> 17
EXHIBIT C
MINIMUM LEVEL OF SERVICE
The minimum programming package consists of the Basic Package which currently
includes:
CNN
Headline News
ESPN
ESPN2
ESPNEWS
TNT
TBS
The Weather Channel
Cartoon Network
17
<PAGE> 1
EXHIBIT 10.18
PARK `N VIEW, INC.
COMPENSATION PLAN
THIS COMPENSATION PLAN (the "Plan") is hereby established by Park `N
View, Inc. (the "Corporation") in order to provide incentives for eligible key
employees of the Corporation to achieve individually-targeted and specific
corporate goals with respect to such employees' performance with the
Corporation.
1. EFFECTIVE DATE
This Plan shall be effective as of February 5, 1998.
2. ELIGIBLE EMPLOYEES
Prior to the beginning of each fiscal year, or as soon as
administratively possible thereafter, or from time to time as determined by the
Board of Directors of the Corporation (the "Board"), the Board in its sole
discretion shall determine those employees who shall be eligible to receive a
bonus for such year pursuant to the terms of the provisions of the Plan. Any
such employees determined by the Board to be eligible for a bonus hereunder, for
all or a portion of a fiscal year, shall be referred to herein as "Eligible
Employees". Following a determination as to eligibility, each such Eligible
Employee shall receive a schedule which sets forth the criteria for receiving a
bonus hereunder, as well as the amount of the bonus which such Eligible Employee
shall be eligible to receive (the "Schedule"). Such Schedule, described in
Sections 3 and 4 below, shall be substantially in the form and manner set forth
on Exhibit A attached hereto.
3. ESTABLISHMENT OF CORPORATE GOALS
As of the commencement of the Plan and prior to the beginning of each
fiscal year thereafter, the Board shall establish annual goals as to the
Corporation's earnings before interest, taxes, depreciation and amortization
("Corporate Goals"). The Corporate Goals shall be reflected in the Schedule
provided to each Eligible Employee under the Plan. The Board and an Eligible
Employee shall be entitled to modify any Corporate Goal during a fiscal year,
and all such modifications shall be documented by amending the Schedule provided
hereunder.
The amount of the bonus which each Eligible Employee shall be eligible
to receive for a fiscal year which is dependent upon achievement of the
Corporate Goals shall be set forth in the Schedule provided to such Eligible
Employee for such fiscal year. Following the close of a fiscal year the Board
shall make the determination of whether the Corporation has achieved the
Corporate Goals in its sole discretion based on the Corporation's financial
statements for such fiscal year.
-1-
<PAGE> 2
4. ESTABLISHMENT OF INDIVIDUAL GOALS
As of the commencement of the Plan and prior to the beginning of each
fiscal year thereafter, the Board shall establish one or more functional and/or
personal goals to be achieved by the Eligible Employee during each fiscal year
or the balance of such year (the "Individual Goals"). An Eligible Employee's
Individual Goals shall be reflected in the Schedule provided to the Eligible
Employee under the Plan. The Board and an Eligible Employee shall be entitled to
modify any such Individual Goal during a fiscal year, and all such modifications
shall be documented by amending the Schedule provided hereunder.
The amount of the bonus which each Eligible Employee shall be eligible
to receive for a fiscal year which is dependent on the Eligible Employee's
achievement of his or her Individual Goals shall be set forth in the Schedule
provided to such Eligible Employee for such fiscal year. The Board shall make
the determination of whether an Eligible Employee has achieved his or her
Individual Goals for a fiscal year in its sole discretion based the
Corporation's records of the Eligible Employee's performance during the fiscal
year.
5. ENTITLEMENT TO BONUS
(a) Any bonus payable to an Eligible Employee for a fiscal year
pursuant to the Plan shall be paid to the Eligible Employee in a lump sum in
cash and/or in stock (valued at fair market value of the stock at the date of
grant, all as determined by the Board in its sole discretion.
(b) Except as provided in subsection (c) below, notwithstanding any
other provision of the Plan, an Eligible Employee shall become entitled to a
bonus under this Plan for a fiscal year only if he or she is an employee of the
Corporation on the last day of such fiscal year.
(c) If an Eligible Employee's employment with the Corporation has been
terminated by the Corporation during a fiscal year without cause, as determined
by the Board in its sole discretion, the Eligible Employee shall not receive a
bonus for such fiscal year unless approved by the Board in its discretion.
6. ADMINISTRATION OF PLAN
The Board shall determine the rights of any individual to a bonus
hereunder and shall otherwise administer the Plan in its sole discretion. To the
extent necessary, or as otherwise determined by the Board, all duties and
responsibilities provided to the Board hereunder may be exercised by the
Compensation Committee of the Board in accordance with its charter. Furthermore,
the Board or the Compensation Committee of the Board may delegate any
administrative duties hereunder to an authorized officer of the Corporation.
7. SUCCESSOR TO THE COMPANY
This Plan shall be binding upon any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation, and the
Corporation shall require any such successor to expressly assume and agree to
perform this Plan. As used in this Plan, "Corporation" shall mean the
Corporation as defined herein and any successor to its business and/or assets.
-2-
<PAGE> 3
8. NO RIGHTS TO CONTINUED EMPLOYMENT
This Plan shall not be construed to give an Eligible Employee a right
of continued employment with, or the right to be retained in the employ of, the
Corporation.
9. TAXES
To the extent required by law, the Corporation shall withhold any
federal, state or local taxes from payments made under this Plan, including
social security (FICA) taxes.
10. AMENDMENT AND TERMINATION
The Corporation shall be entitled to amend or terminate this Plan at
any time by action of the Board; provided, however, that the Corporation shall
not amend or terminate the Plan in a manner that affects a bonus that has
already become payable hereunder to an Eligible Employee.
11. OTHER BONUSES
The establishment and maintenance of the Plan shall in no way affect
the Corporation's ability to award additional bonuses or stock options to
employees of the Corporation.
12. MISCELLANEOUS
(a) If any provision of this Plan shall be determined to be void by any
court of competent jurisdiction, then such determination shall not affect any
other provision of this Plan, all of which shall remain in full force and
effect.
(b) This Plan shall be construed and enforced in accordance with the
laws of the State of North Carolina.
IN WITNESS WHEREOF, the Corporation has executed this Plan under seal
through its duly authorized officers effective as of February 5, 1998
ATTEST: PARK `N VIEW, INC.
(Corporate Seal)
By: /s/ Stephen L. Conkling
--------------------------------
/s/ Anthony Allen Stephen Conkling,
- ---------------------------------- Chief Operating Officer
Anthony Allen, Secretary
-3-
<PAGE> 4
EXHIBIT A
Park `N View, Inc. Compensation Plan
Schedule of Eligible Employee's Performance Goals
and Amount of Bonus
Name:
--------------------------------------------
Fiscal year:
--------------------------------------------
1. DESCRIPTION OF GOALS
a. Corporate Goal(s):
[Describe]
b. Individual Goal(s):
[Describe]
2. POTENTIAL BONUS
a. Amount of Base Potential Bonus:
$ ( % of $ base salary).
------------- ------ -------------------
b. Percentage of Base Potential Bonus Tied to Achievement of
Corporate Goal(s):
% ($ ).
-------- --------------------
c. Percentage of Base Potential Bonus Tied to Achievement of
Individual Goal(s):
% ($ ).
-------- --------------------
-4-
<PAGE> 5
3. ACTUAL BONUS
a. Actual Bonus Tied to Achievement of Corporate Goal(s):
Percentage of Percentage of Base Potential
Corporate Goal(s) Achieved Bonus Specified in 2.b. Above
< 85% 0%
> 85% but < 90% 85% - 90%
- -
(pro-rata)
> 90% but < 110% 100%
-
> 110% but < 120% 125%
-
> 120% 135%
b. Actual Bonus Tied to Achievement of Individual Goal(s):
Percentage of Percentage of Base Potential
Individual Goal(s) Achieved Bonus Specified in 2.c. Above
< 85% 0%
> 85% but < 90% 85% - 90%
- -
(pro-rata)
> 90% 100%
Dated , 19 .
------------------- ----
-5-
<PAGE> 1
EXHIBIT 10.19
PARK 'N VIEW, INC.
STOCK OPTION PLAN
<PAGE> 2
PARK 'N VIEW, INC.
STOCK OPTION PLAN
1. General
(a) The Plan is designed for the benefit of the Company to secure and
retain the services of Eligible Participants. The Board believes the Plan will
promote and increase personal interest in the welfare of the Company by, and
provide incentive to, those who are primarily responsible not only for its
regular operations but also for shaping and carrying out the long-range plans of
the Company and aiding its continued growth and financial success.
(b) The Plan provides for the grant to Participants of Incentive Stock
Options and Nonqualified Stock Options.
2. Effective Date
The Plan shall be effective February 7, 1996 (the "Effective Date"). No
Incentive Stock Options may be granted under this Plan after the expiration of
ten years from and including the Effective Date.
3. Definitions
Except where the context otherwise indicates, the following definitions
shall apply:
(a) "Award Agreement" means the written agreement to be entered into by
and between the Company and the Participant evidencing each Stock Option granted
to a Participant under the Plan.
(b) "Board" means the Board of Directors of Park 'N View, Inc.
(c) "Code" means the Internal Revenue Code of 1986, as now in effect or
as hereafter amended. All citations to sections of the Code are to such sections
as they may from time to time be amended or renumbered.
(d) "Company" means Park 'N View, Inc., a Delaware corporation, and its
successors and assigns. The term "Company" shall include any corporation which
is a member of a controlled group of corporations (as defined in section 414(b)
of the Code, as modified by section 415(h) of the Code) which includes the
Company; any trade or business (whether or not incorporated) which is under
common control (as defined in section 414(c) of the Code, as modified by section
415(h) of the Code) with the Company; any organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in
section 414(m) of the Code) which includes the Company; and any other entity
required to be aggregated with the Company pursuant to regulations under section
414(o) of the Code. With respect to all
<PAGE> 3
purposes of the Plan, including, but not limited to, the establishment,
amendment, termination, operation and administration of the Plan, Park 'N View,
Inc. shall be authorized to act on behalf of all other entities included within
the definition of Company.
(f) "Disabled" or "Disability" means the inability of the Participant,
due to illness, accident, or any other physical or mental incapacity to perform
the services provided to the Company for an aggregate of one hundred eighty
(180) days within any period of twelve (12) consecutive months.
(g) "Eligible Participant" means an active full-time employee of the
Company, including officers and other employees of the Company, members of the
Board and consultants and independent contractors who provide services to the
Company, as determined by the Board in its discretion.
(h) "Fair Market Value" means the value assigned to the Stock for a given
day by the Board. The Board shall establish a reasonable method of determining
Fair Market Value that shall be consistent with the requirements of sections
421, 422 and 424 of the Code and the regulations thereunder (which method may be
changed at any time and from time to time), and shall make all determinations of
Fair Market Value in good faith.
(i) "Incentive Stock Option" means a stock option granted to an Eligible
Participant under section 5 of the Plan.
(j) "Nonqualified Stock Option" means a stock option granted to an
Eligible Participant under section 6 of the Plan.
(k) "Option Grant Date" means the date on which the Board grants the
Stock Option as specified in the Award Agreement entered into between the
Company and the Participant.
(l) "Participant" means an Eligible Participant to whom a Stock Option
has been granted and who has entered into an Award Agreement with the Company
evidencing the Stock Option.
(m) "Plan" means the Park 'N View, Inc. Stock Option Plan, as amended
from time to time.
(n) "Stock" means shares of common stock of Park 'N View, Inc., as may be
adjusted pursuant to the provisions of section 7(i) of this Plan.
(o) "Stock Option" means an Incentive Stock Option or a Nonqualified
Stock Option.
2
<PAGE> 4
(p) "Termination of Employment" means the discontinuance of employment of
a Participant with the Company for any reason.
(i) The determination of whether a Participant has discontinued
employment shall be made by the Board in its discretion.
(ii) A Participant shall not be deemed to have incurred a Termination
of Employment if the Participant takes any military leave, sick leave, or other
bona fide leave of absence approved by the Company of 90 days or less. In the
event of a leave of absence that exceeds 90 days, the Participant shall be
deemed to have incurred a Termination of Employment on the 91st day of the leave
or on such later date through which the Participant's right to reemployment
remains guaranteed by statute or contract.
4. Administration
(a) The Plan shall be administered by the Board. The Board, in its
discretion, may delegate to one or more of its members such of its powers as it
deems appropriate.
(b) The Board shall meet at such times and places as it determines. A
majority of its members shall constitute a quorum, and the decision of a
majority of those present at any meeting at which a quorum is present shall
constitute the decision of the Board. A memorandum signed by all of its members
shall constitute the decision of the Board without necessity, in such event, for
holding an actual meeting.
(c) The Board shall have the exclusive right to interpret, construe and
administer the Plan, to select the Eligible Participants who are eligible to
receive Stock Options, and to act in all matters pertaining to the granting of
Stock Options and the contents of the corresponding Award Agreements, including
without limitation, the determination of the number of Stock Options and the
form, terms, conditions and duration of each Stock Option, and any amendment
thereof consistent with the provisions of the Plan. All acts, determinations and
decisions of the Board made or taken pursuant to grants of authority under the
Plan or with respect to any questions arising in connection with the
administration and interpretation of the Plan, including the severability of any
and all of the provisions thereof, shall be conclusive, final and binding upon
all Participants, Eligible Participants and their beneficiaries.
(d) The Board may adopt such rules, regulations and procedures of general
application for the administration of this Plan, as it deems appropriate.
(e) The aggregate number of shares of Stock which are subject to grants
of Incentive Stock Options and Nonqualified Stock Options under the Plan shall
be 257,273 shares. Such shares shall be made available from authorized and
unissued shares of Stock. If,
3
<PAGE> 5
for any reason, any shares of Stock subject to purchase under the Plan are not
purchased, or are reacquired by the Company, for reasons including, but not
limited to, termination, expiration or cancellation of a Stock Option, such
shares of Stock shall not be charged against the aggregate number of shares of
Stock available for grants of Stock Options under the Plan and may again be
available for grants of Stock Options under the Plan.
(f) The Company shall not be required to issue or deliver any
certificates for shares of Stock prior to the completion of any registration or
qualification of such shares of Stock under any federal or state law, or any
ruling or regulation of any government body which the Company shall, in its
discretion, determine to be necessary or advisable.
(g) All certificates for shares of Stock delivered under the Plan shall
also be subject to such stop-transfer orders and other restrictions as the Board
may deem advisable under any applicable federal or state laws or any rules,
regulations, or other authority thereunder, and the Board may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions. In making such determination, the Board may rely upon an
opinion of counsel for the Company.
(h) In addition to such other rights of indemnification as they may have
as directors or as members of the Board, the members of the Board shall be
indemnified by the Company against reasonable expenses, including attorney's
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 Stock 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 or settlement in any such action,
suit or proceeding, except as to matters as to which the Board member has been
negligent or engaged in misconduct in the performance of his duties; provided,
that within 60 days after institution of any such action, suit or proceeding, a
Board member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
5. Incentive Stock Options
(a) Each provision of this section 5 and of each Incentive Stock Option
granted hereunder shall be construed in accordance with the provisions of
section 422 of the Code, and any provision hereof that cannot be so construed
shall be disregarded.
(b) Incentive Stock Options shall be granted only to Eligible
Participants who are in the active employment of the Company, and to individuals
to whom grants are conditioned upon active employment, each of whom may be
granted one or more such Incentive Stock
4
<PAGE> 6
Options for a reason related to his employment at such time or times determined
by the Board for a period of ten years from and including the Effective Date,
subject to the following conditions:
(i) The Incentive Stock Option exercise price per share shall be
set in the Award Agreement corresponding to the Incentive Stock Option, but
shall not be less than 100% of the Fair Market Value of the Stock on the Option
Grant Date. If the Participant owns more than 10% of the outstanding Stock (as
determined pursuant to section 424(d) of the Code) on the Option Grant Date, the
Incentive Stock Option exercise price per share shall not be less than 110% of
the Fair Market Value of the Stock on the Option Grant Date; provided, however,
that if an Incentive Stock Option is granted to such a Participant at an
exercise price per share that is less than 110% of Fair Market Value of the
Stock on the Option Grant Date, such Incentive Stock Option shall be treated as
a Nonqualified Stock Option.
(ii) The Incentive Stock Option may be exercised in whole or in part
from time to time as may be specified by the Board in the Award Agreement,
provided that no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the Option Grant Date (five (5) years if the
Participant owns more than 10% of the Stock on the Option Grant Date), provided,
that in any event, the Incentive Stock Option shall lapse and cease to be
exercisable upon, or within such period following, a Termination of Employment
as shall have been determined by the Board and as specified in the Award
Agreement; provided, however, that such period following a Termination of
Employment shall not exceed three months unless:
(A) employment shall have terminated as a result of death or
Disability, in which event, such period shall not exceed one year after the date
of death or Disability; or
(B) death shall have occurred following a Termination of
Employment and while the Incentive Stock Option was still exercisable, in which
event, such period shall not exceed one year after the date of death;
provided, further, that such period following a Termination of Employment shall
in no event extend the original exercise period of the Incentive Stock Option.
(iii) The aggregate Fair Market Value, determined as of the Option
Grant Date, of the shares of Stock with respect to which incentive stock options
(determined without regard to this subsection) are first exercisable during any
calendar year (under this Plan or any other Plan of the Company and its parent
and subsidiary corporations (within the meaning of section 424(e) and 424(f) of
the Code, respectively)) by any Participant shall not exceed $100,000. To the
extent the foregoing limitation would be exceeded with respect to a
5
<PAGE> 7
Participant for a calendar year, the Board, in its discretion, may treat all or
portion of any Incentive Stock Option as a Nonqualified Stock Option.
(iv) The Board may adopt any other terms and conditions which it
determines should be imposed for the Incentive Stock Option to qualify under
section 422 of the Code, as well as any other terms and conditions not
inconsistent with this Plan as determined by the Board.
(c) Notwithstanding any provision of this Plan, if a Participant is
subject to the terms of a shareholders' agreement or securityholders' agreement
(including but not limited to that certain Securityholders' Agreement dated
November 2, 1995 between the Company and all of its then current shareholders)
at the time shares of Stock are issued to the Participant pursuant to this Plan,
the terms of such shareholders' agreement or securityholders' agreement shall
apply to all shares of Stock issued to the Participant. If a Participant is not
subject to the terms of a shareholders' agreement or securityholders' agreement
at the time shares of Stock are issued to the Participant pursuant to this Plan,
the Participant shall enter into such agreement and the terms of such agreement
shall apply to all shares of Stock issued to the Participant.
(d) Notwithstanding any provision of this Plan, the Board, in its
discretion, may treat all or any portion of an Incentive Stock Option as a
Nonqualified Stock Option to the extent necessary for an Incentive Stock Option,
in whole or in part, to remain in compliance with the requirements of section
422 of the Code.
(e) The Board may at any time offer to buy out for a payment in cash or
Stock an Incentive Stock Option previously granted, based on such terms and
conditions as the Board shall establish and communicate to the Participant at
the time that such offer is made.
6. Nonqualified Stock Options
(a) Nonqualified Stock Options may be granted to Eligible Participants
under which the Eligible Participants shall be entitled to purchase shares of
Stock at such time or times determined by the Board, on or after the Effective
Date, subject to the terms and conditions of this section 6.
(b) The Nonqualified Stock Option exercise price per share shall be set
forth in the Award Agreement corresponding to the Nonqualified Stock Option and
may be less than 100% of the Fair Market Value of the Stock at the time of the
grant.
(c) Each Nonqualified Stock Option may be exercised in full or in part
from time to time within such period as may be specified by the Board in the
Award Agreement
6
<PAGE> 8
corresponding to the Nonqualified Stock Option; provided, that, in any event,
the Nonqualified Stock Option shall lapse and cease to be exercisable three
months following the Participant's Termination of Employment or on such other
date as may be specified by the Board in the Award Agreement corresponding to
the Nonqualified Stock Option.
(d) The Award Agreement for a Nonqualified Stock Option may include such
other terms and conditions not inconsistent with this section 6 or section 7, as
determined by the Board.
7. Incidents of Stock Options
(a) Each Stock Option granted under the Plan shall be evidenced by a
written Award Agreement in the form specified by the Board. Each Award Agreement
shall be subject to and incorporate, by reference or otherwise, the applicable
terms and conditions of the Plan, and any other terms and conditions, not
inconsistent with the Plan, as may be required by the Board.
(b) A Stock Option shall not be transferable by the Participant other
than by will or by the laws of descent and distribution, or, to the extent
otherwise allowed by applicable law, pursuant to a qualified domestic relations
order as defined by the Code or the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder, and shall be exercisable during the
lifetime of the Participant only by him or by his guardian or legal
representative. If any Participant makes a transfer in violation hereof, any
obligation of the Company pursuant to such Stock Option shall immediately
terminate.
(c) Shares of Stock purchased upon exercise of a Stock Option shall be
paid for in cash, stock of the Company or other property in such amounts, at
such times and upon such terms as shall be determined by the Board, subject to
limitations set forth in the corresponding Award Agreement.
(d) No cash dividends shall be paid on shares of Stock subject to
unexercised Stock Options.
(e) In the event of Disability or death, the Board, with the consent of
the Participant or his legal representative, may authorize payment, in cash or
in Stock, or partly in cash and partly in Stock, as the Board may direct, of an
amount equal to the difference at the time between the Fair Market Value of the
Stock subject to a Stock Option and the Stock Option price in consideration of
the surrender of the Stock Option.
(f) The Board, in its discretion, may make such provisions and take such
steps as it may deem necessary or appropriate for the withholding of any taxes
which the Company is
7
<PAGE> 9
required by any law or regulation of any governmental authority, whether
federal, state or local, domestic or foreign, to withhold in connection with any
Stock Option or the exercise thereof, including, but not limited to, the delay
in the issuance of all or any portion of the shares of Stock to be issued
pursuant to such Stock Option until the Participant makes payment to the Company
of the amount the Company is required to withhold with respect to such taxes, or
cancelling any portion of such Stock Option in an amount sufficient to withhold
or reimburse itself for the amount it is required to so withhold. The amount to
be withheld shall not exceed the statutory minimum federal and state income and
employment tax liability arising from the exercise transaction.
(g) The Board may permit the voluntary surrender of all or a portion of
any Stock Option granted under the Plan to be conditioned upon the granting to
the Participant of a new Stock Option for the same or a different number of
shares of Stock as the Stock Option surrendered, or may require such surrender
as a condition precedent to a grant of a new Stock Option to such Participant.
Subject to the provisions of the Plan and, if applicable, the requirements of
section 422 of the Code, such new Stock Option shall be exercisable at the
price, during such period and on such other terms and conditions as are
specified by the Board at the time the new Incentive Stock Option is granted.
Upon surrender, the Stock Option shall be canceled and the shares of Stock
previously subject to the Stock Option shall be available for the grant of other
Stock Options hereunder.
(h) Except as provided otherwise in the Plan or in a Award Agreement, no
Participant awarded a Stock Option shall have any right as a shareholder with
respect to any shares of Stock covered by the Stock Option prior to the date of
issuance to him or her of a certificate or certificates for such shares of
Stock.
(i) If any reorganization, recapitalization, reclassification, stock
split, stock dividend, or consolidation of shares of Stock, merger or
consolidation of the Company or sale or other disposition by the Company of all
or a portion of its assets, any other change in the Company's corporate
structure, or any distribution to shareholders other than a cash dividend
results in the outstanding shares of Stock, or any securities exchanged therefor
or received in their place, being exchanged for a different number or class of
shares of Stock or other securities of the Company, or for shares of Stock or
other securities of any other corporation; or new, different or additional
shares or other securities of the Company or of any other corporation being
received by the holders of outstanding shares of Stock, then equitable
adjustments shall be made by the Board in:
(i) the limitation on the aggregate number of shares of Stock that
may be subject to grants of Stock Options under the Plan, as specified in
section 4(e) of the Plan;
8
<PAGE> 10
(ii) the number and class of Stock that may be subject to the grant
of Stock Options and which have not been issued or transferred under an
outstanding Stock Option; and
(iii) the terms, conditions or restrictions of any Stock Option or
the corresponding Award Agreement, including the purchase price to be paid per
share of Stock under an outstanding Stock Option;
provided, however, that all adjustments made as the result of the foregoing in
respect of any Incentive Stock Option shall be made so that such Incentive Stock
Option shall continue to constitute an incentive stock option, as defined in
section 422 of the Code.
(k) The Board shall be authorized to make adjustments in the terms and
conditions of Stock Options, including the corresponding Award Agreements, in
recognition of unusual or nonrecurring events affecting the Company or its
financial statements or changes in applicable laws, regulations or accounting
principles. The Board may correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award Agreement in the manner and to the
extent it shall deem desirable. In the event the Company shall assume
outstanding employee benefit awards or the right or obligation to make future
such awards in connection with the acquisition of another corporation or
business entity, the Board may, in its discretion, make such adjustments in the
terms of Stock Options as it shall deem appropriate.
8. Amendment and Termination
(a) The Board, at any time and from time to time, may amend or terminate
the Plan. To the extent required by applicable law, no amendment, without
approval by the Company's shareholders, shall:
(i) alter the group of persons eligible to participate in the Plan;
(ii) increase the maximum number of shares of Stock which are
available for grants of Incentive Stock Options under the Plan; or
(iii) extend the period during which Incentive Stock Options may be
granted beyond the date which is ten years from and including the Effective
Date.
(b) No amendment to or discontinuance of this Plan or any provision
thereof by the Board or the shareholders of the Company shall, without the
written consent of the Participant, adversely affect, as shall be determined by
the Board, any Stock Option theretofore granted to such Participant under this
Plan; provided, however, the Board retains the right and power to treat any
outstanding Incentive Stock Option as a Nonqualified Stock Option in accordance
with sections 5(b)(i), 5(b)(iii) and 5(d) of this Plan.
9
<PAGE> 11
9. Miscellaneous
(a) Nothing in the Plan or any Stock Option granted hereunder shall
confer upon any Participant any right to continue in the employ of the Company,
or to serve as a director thereof, or interfere in any way with the right of the
Company to terminate his or her employment at any time. Unless agreed to by the
Board, no grant of a Stock Option shall be deemed salary or compensation for the
purpose of computing benefits under any employee benefit plan or other
arrangement of the Company for the benefit of its employees. No Participant
shall have any claim to a Stock Option until it is actually granted under the
Plan. To the extent that any person acquires a right to receive payments from
the Company under the Plan, such right shall, except as otherwise provided by
the Board, be no greater than the right of an unsecured general creditor of the
Company. All payments to be made hereunder shall be paid from the general funds
of the Company, and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such amounts, except as
otherwise provided by the Board.
(b) The Plan and the grant of Stock Options hereunder shall be subject to
all applicable federal and state laws, rules, and regulations and to such
approvals by any United States government or regulatory agency as may be
required.
(d) The terms of the Plan shall be binding upon the Company, and its
successors and assigns.
(e) This Plan and all actions taken hereunder shall be governed by the
laws of the State of Delaware.
(f) If any provision of this Plan or an Award Agreement is or becomes or
is deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award Agreement under any law deemed applicable by
the Board, such provision shall be construed or deemed amended to conform to
applicable laws or if it cannot be construed or deemed amended without, in the
determination of the Board, materially altering the intent of the Plan or the
Award Agreement, it shall be stricken and the remainder of the Plan or the Award
Agreement shall remain in full force and effect.
(g) Notwithstanding any other provision hereof, no Incentive Stock Option
granted hereunder may be exercised prior to the approval of the Plan by the
shareholders of the Company and, in the event the shareholders do not approve
the Plan within twelve months from the Effective Date, all Incentive Stock
Options granted hereunder shall be void.
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<PAGE> 12
PARK 'N VIEW, INC.
ATTEST: By: /s/ Ian Williams
-------------------------------------
Ian Williams, President
(Corporate Seal)
/s/ Anthony Allen
- ------------------------
Anthony Allen, Secretary
11
<PAGE> 1
EXHIBIT 10.20
PARK `N VIEW, INC.
SECURITIES PURCHASE AGREEMENT
SUBORDINATED NOTES
SERIES A PREFERRED STOCK
AND COMMON STOCK
DATED AS OF NOVEMBER 2, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
I. AUTHORIZATION AND FORM OF STOCK; CLOSING.............................................................5
1.1 Authorization of Stock and Subordinated Notes..................................................5
1.2 Initial Closing; Payment.......................................................................5
1.3 Interim Closing; Payment.......................................................................6
1.4 Final Closing: Payment.........................................................................7
II. OTHER AGREEMENTS....................................................................................7
2.1 Other Agreements...............................................................................7
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................................7
3.1 Organization and Qualification of the Company..................................................7
3.2 Capital Stock..................................................................................8
3.3 Title to Assets................................................................................9
3.4 Outstanding Debt...............................................................................9
3.5 Litigation, etc................................................................................9
3.6 Other Agreements, etc..........................................................................9
3.7 Company Authorizations.........................................................................9
3.8 Governmental Authorizations...................................................................10
3.9 Full Disclosure...............................................................................10
3.10 Required Approvals...........................................................................11
3.11 ERISA........................................................................................11
3.12 No Broker or Finder..........................................................................11
3.13 Extent of Offering...........................................................................11
3.14 Dividends....................................................................................12
3.15 Registration Rights..........................................................................12
3.16 No Registration..............................................................................12
3.17 No Obligation to Purchase....................................................................12
3.18 Other Offerings: Registration Exemptions.....................................................12
3.19 Illegal Payments.............................................................................13
3.20 Related Party Transactions...................................................................13
3.21 Financial Statements.........................................................................13
IV. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INVESTOR..............................................14
4.1 Investment Intent, etc........................................................................14
4.2 Sophistication, Financial Strength, Access, etc...............................................14
4.3 No Broker or Finder...........................................................................14
4.4 Authorization.................................................................................14
4.5 Binding Effect................................................................................15
4.6 Information and Nature of the Investment......................................................15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
V. CONDITIONS TO OBLIGATIONS OF PURCHASER..............................................................15
5.1 Initial Closing Conditions....................................................................15
5.2 Interim Closing Conditions....................................................................18
5.3 Final Closing Conditions......................................................................19
VI. COVENANTS OF THE COMPANY...........................................................................20
6.1 Selection of Independent Public Accountants...................................................20
6.2 Payment of Taxes: Corporate Existence and Licenses; Maintenance of Properties/Assets..........20
6.3 To Insure.....................................................................................21
6.4 Payment of Indebtedness, etc..................................................................21
6.5 Financial Statements and Information..........................................................22
6.6 Discussion and Inspection Rights..............................................................24
6.7 Tax Treatment of Dividends....................................................................25
6.8 Notice of Claimed Default or Deficiency.......................................................26
6.9 Composition of Board..........................................................................26
6.10 Blue Sky.....................................................................................27
6.11 Compliance with Laws.........................................................................27
6.12 Filing of Commission Reports.................................................................27
6.13 Transactions with Affiliates.................................................................27
6.14 Subsidiaries.................................................................................27
6.15 Expenditures.................................................................................27
6.16 No Registration Rights to Others.............................................................28
6.17 Use of Proceeds..............................................................................28
6.18 Restrictions on Employee Stock...............................................................28
6.19 Confidentiality..............................................................................28
6.20 Take or Pay Contracts........................................................................28
6.21 The Financing................................................................................29
6.22 Small Business Information...................................................................29
VII. TRANSFER OF SECURITIES............................................................................29
7.1 Restrictive Legends...........................................................................29
7.2 Notice of Proposed Transfer...................................................................30
7.3 Termination of Restrictions...................................................................30
7.4 Compliance with Rule 144 and Rule 144A........................................................31
7.5 Non-Applicability of Restrictions on Transfer.................................................31
VIII. MISCELLANEOUS....................................................................................32
8.1 Brokers; Indemnification......................................................................32
8.2 Stamp Tax and Delivery Costs..................................................................32
8.3 Place of Payment..............................................................................32
8.4 Amendment and Waiver..........................................................................33
8.5 Lost, Etc., Securities........................................................................33
8.6 Representations, Warranties and Covenants to Survive..........................................34
8.7 Severability..................................................................................34
8.8 Investigation of the Company..................................................................34
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
8.9 Listings......................................................................................34
8.10 Successors and Assigns.......................................................................35
8.11 Notices......................................................................................35
8.12 Governing Law................................................................................35
8.13 Counterparts.................................................................................35
8.14 Reproduction of Documents....................................................................35
8.15 Payment of Fees and Expenses of Purchasers...................................................36
8.16 Affiliates; Transfers........................................................................36
8.17 Table of Contents; Headings..................................................................36
8.18 Indemnification..............................................................................36
8.19 Effect of Failure to Make Agreed Purchases...................................................37
8.20 Entire Agreement; Exhibits and Schedules.....................................................37
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
Exhibit Document
- ------- --------
<S> <C>
A Names and addresses of Investors
A.1 List of Investors from Investor Group in Initial Investment
A.2 List of Investors from Investor Group in Interim Investment
A.3 List of Investors from Investor Group in Final Investment
B List of Existing Investors
1.1(a) Charter
1.1(b) Certificate of Designation
1.1(c) Form of Subordinated Note
1.2(d) By-laws
3. Exceptions to Representations and Warranties
3.2 Common Stock held by Existing Investors
3.3 List of Assets
3.6 Other Agreements
3.8(b) List of F.C.C. and other licenses.
3.12 Broker/Finder
3.21 Unaudited Financial Statements
5.1(f) Securities Restriction Agreement
5.1(g) Registration Rights Agreement
5.1(h) Stockholders' Agreement
5.1(k) Form of Legal Opinion of Petree Stockton, L.L.P.
5.2(c) Interim Funding Milestones
5.3(d) Final Funding Milestones
</TABLE>
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<PAGE> 6
PARK `N VIEW, INC.
SECURITIES PURCHASE AGREEMENT
SUBORDINATED NOTES
SERIES A PREFERRED STOCK
AND COMMON STOCK
As of November 2, 1995
To The Purchasers
Named in Exhibit A Hereto
and appearing on the
signature pages hereto
(collectively referred to herein
as "Investors"; individually, "Investor")
Executing Its Acceptance Hereof
Gentlemen:
Park `N View, Inc. hereby confirms its agreement with you as follows:
DEFINITIONS
"Affiliate" shall mean any entity controlling, controlled by or under
common control with a designated Person. For the purposes of this definition,
"control" shall have the meaning presently specified for that word in Rule 405
promulgated by the Securities and Exchange Commission under the Securities Act.
With respect to any Person who is a limited partnership, Affiliate shall also
after any general or limited partner of such limited partnership, or any Person
which is a general partner in a general or limited partnership which is a
general partner of such limited partnership.
"Agreement" shall mean, and the words "herein," "hereof," "hereunder"
and words of similar import shall refer to this Agreement and any amendment or
supplement hereto.
"Annual Budget" shall have the meaning set forth in Section 6.5 hereof.
"Assets" shall mean any interest in any kind of property or assets,
whether real, personal or mixed, or tangible or intangible as set forth on
Exhibit 3.3 attached hereto.
"Board" shall mean the Board of Directors of the Company.
"By-laws" shall have the meaning set forth in Section 1.2 hereof.
"Certificate of Designation" shall have the meaning set forth in
Section 1.1 hereof.
"Charter" shall have the meaning set forth in Section 1.1 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE> 7
"Common Stock" shall mean the Company's Common Stock, $.001 par value,
and any Stock into which such Common Stock may hereafter be converted.
"Company" shall mean Park N' View, Inc., a Delaware corporation, and
all successor corporations thereof.
"Consolidated" shall mean, with respect to Park N' View, Inc.,
financial statements of the Company including the results of its operations at
each truckstop, consolidated in accordance with generally accepted accounting
principles consistently applied, whether or not ordinarily consolidated by the
Company.
"Dividends Received Deduction" shall have the meaning set forth in
Section 6.7 hereof.
"Existing Investors" shall have the meaning of investors in Park `N
View, Ltd. immediately preceding the Initial Closing.
"Final Closing" shall have the meaning set forth in Section 1.4 hereof.
"Final Closing Date" shall have the meaning set forth in Section 1.4
hereof.
"Final Investment" shall have the meaning set forth in Section 1.4
hereof.
"Holders" shall mean the Persons who shall from time to time, own, of
record or beneficially, any Security. The term "Holder" shall mean any one of
the Holders.
"Indebtedness" shall have the meaning set forth in the Certificates of
Designation.
"Initial Closing" shall have the meaning set forth in Section 1.2
hereof.
"Initial Investment" shall have the meaning set forth in Section 1.2
hereof.
"Interim Closing" shall have the meaning set forth in Section 1.3
hereof.
"Interim Closing Date" shall have the meaning set forth in Section 1.3
hereof.
"Interim Investment" shall have the meaning set forth in Section 1.3
hereof.
"Investor Designee" shall have the meaning set forth in the
Stockholders' Agreement.
"Investors" shall have the meaning set forth in Section 2.1 hereof,
subject to the provisions of Section 9.16 hereof. "Investor" shall mean any one
of the Investors.
"Key-Man Policy" shall have the meaning set forth in Section 5.1
hereof.
"Losses" shall have the meaning set forth in Section 8.18 hereof.
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<PAGE> 8
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
"Other Agreements" shall have the meaning set forth in Section 2.1
hereof.
"Other Investors" shall have the meaning set forth in Section 2.1
hereof.
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a governmental organization or any
agency or political subdivision thereof.
"Preferred Stock" shall mean the Series A Preferred Stock, $.01 par
value.
"Registrable Stock" shall mean any securities which constitute
Registrable Stock pursuant to the Registration Rights Agreement.
"Registration Rights Agreement" shall have the meaning set forth in
Section 5.1 hereof.
"Registration Statement" shall mean any registration statement filed
with the Securities and Exchange Commission in accordance with the Securities
Act, together with all amendments or supplements thereto.
"Regulatory Problem" shall mean (a) any set of facts or circumstances
wherein it has been asserted by any governmental regulatory agency (or any
Holder believes that such assertion will be made) that such Holder (or any
Person that controls such Holder) is not entitled to hold, or exercise any
material right with respect to, all or any portion of the Securities or (b) when
any Holder and such Holder's Affiliates would own, control or have power
(including voting rights) over a greater quantity of Securities of any kind than
are permitted under any applicable law or regulation or any requirement of any
governmental authority.
"Related Entities" shall mean with respect to any Person:
a) if such Person is a limited or general partnership
any general partner of such partnership;
b) if such Person is a corporation, any Person holding,
directly or indirectly and alone or in the aggregate, not less than a
majority in voting power of the voting securities in such corporation;
c) any corporation in which such Person and/or any of
the Persons included as Related Entities pursuant to clause (a) of this
definition hold, directly or indirectly and alone or in the aggregate,
not less than a majority in voting power of the then outstanding voting
securities; and
d) any limited or general partnership in which such
Person and/or any of the Persons included as Related Entities pursuant
to clauses (a) to (c) of this definition is a
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<PAGE> 9
general partner, and any other partnership in which any partnership
included as a Related Entity pursuant to this clause (d) is a general
partner.
"Rule 144" shall have the meaning set forth in Section 7.3 hereof.
"Rule 144A" shall have the meaning set forth in Section 7.2 hereof.
"Securities" shall mean any debt or equity securities of the Company
whether now or hereafter authorized including the Subordinated Notes, and any
instrument convertible into or exchangeable for Securities or a Security. The
term "Security" shall mean any one of the Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended,
prior to or after the date of this Agreement, or any federal statute or statutes
which shall be enacted to take the place of such Act, together with all rules
and regulations promulgated thereunder.
"Securities and Exchange Commission" shall mean the United States
Securities and Exchange Commission or any successor to the functions of such
agency.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, prior to or after the date of this Agreement, or any federal
statute or statutes which shall be enacted to take the place of such Act,
together with all rules and regulations promulgated thereunder.
"Series A Stock" shall have the meaning set forth in Section 1.1
hereof.
"Service Revenue" shall mean the aggregate gross amount collected from
the sale of cable television, telecommunication services, excluding advertising,
data transmission or pay-per-view services, less the amount of taxes, if any,
and less any refunds for faulty service or equipment.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participation in, corporate stock.
"Stockholders' Agreement" shall have the meaning set forth in Section
5.1 hereof.
"Stock Restriction Agreement" shall have the meaning set forth in
Section 5.1 hereof.
"Subordinated Notes" shall mean the $1,000 subordinated promissory
notes with a 8% coupon payable semi-annually.
"Subsidiary" shall mean any corporation more than 50% of whose
outstanding Voting Stock shall at the time be owned directly or indirectly by
the Company or by one or more Subsidiaries or by the Company and one or more
Subsidiaries.
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"Voting Stock" as applied to the Stock of any corporation, shall mean
Stock of any class or classes (however designated) having ordinary voting power
for the election of a majority of the members of the Board of Directors (or
other governing body) of such corporation, other than Stock having such power
only by reason of the happening of a contingency.
I.
AUTHORIZATION AND FORM OF STOCK; CLOSING
1.1 Authorization of Stock and Subordinated Notes.
The Company has adopted the Amended Certificate of Incorporation (the
"Charter") in the form of Exhibit 1.1(a) attached hereto and made a part hereof.
The Company proposes to designate, authorize and create a series of its
preferred stock, designated the Series A Preferred Stock, having a par value of
$.01 per share ( the "Series A Stock"), consisting of 140,010 shares and having
the designation, powers, preferences and rights and the qualifications,
limitations or restrictions thereof set forth in the certificate of designation
with respect to such Series (the "Certificate of Designation") in the form of
Exhibit 1.1(b) attached hereto and made a part hereof. Pursuant to this
Agreement, the Company proposes to issue up to $6,000,000 principal amount of
its 8% Subordinated Promissory Notes due October 31, 2000 in the form of Exhibit
1.1(c) (the "Subordinated Notes").
1.2 Initial Closing; Payment.
(a) Subject to the terms and conditions of this Agreement,
including, without limitation, the valid adoption by the Company of the Charter
and the Certificate of Designation and the filing thereof with the Secretary of
State of Delaware, the valid adoption by the Company of its By-laws (the
"By-laws"), in the form of Exhibit 1.2(a) attached hereto and made a part
hereof, and upon the basis of the representations and warranties herein
contained or at such earlier or later date as the parties shall agree, the
Company hereby agrees to sell to you and issue to you or your nominee, and you
agree to purchase from the Company, (i) for the amount set forth to the right of
your name under the heading "Initial Subordinated Note Investment" on Exhibit
A.1 which is attached hereto and made a part hereof, that principal amount of
Subordinated Notes, (ii) for the amount set forth to the right of your name
under the heading "Initial Series A Preferred Stock Investment" on Exhibit A.1
which is attached hereto and made a part hereof, the number of shares of Series
A Stock set forth under the heading "Initial Series A Preferred Stock Purchased"
at a purchase price of $10.00 per share and (iii) for the amount set forth to
the right of your name under the heading "Common Stock Investment" on Exhibit
A.1 which is attached hereto and made a part hereof, the number of shares of
Common Stock, $.001 par value (the "Common Stock") set forth under the heading
"Common Stock Purchased" at a purchase price of $.05 per share (collectively,
the "Initial Investment"). The proceeds of $1.8 million from this Initial
Investment shall be disbursed to the Company in three installments of $600,000
as follows: (i)$600,000 which shall be comprised of proceeds from the sale of
32,210 shares of the Series A Stock, 2,000,000 shares of Common Stock and $0.178
million of
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Subordinated Notes, including $100,000 of Subordinated Notes in exchange for a
$100,000 secured promissory note issued by the Company on October 20, 1995, as
soon as possible following execution of this Agreement and satisfaction of the
terms and conditions set forth herein (the "Initial Closing"), (ii) $600,000 one
month following the Initial Closing which shall be comprised of proceeds from
the sale of $600,000 of Subordinated Notes and (iii) $600,000 three months
following the Initial Closing which shall be comprised of proceeds from the sale
of $600,000 of Subordinated Notes. Each Investor's Initial Investment shall be
paid to the Company by wire transfer of funds against delivery of shares of
Common Stock, Series A Stock and Subordinated Notes to be purchased by such
Investor at the Closing registered in such Investor's name or that of a nominee,
as such Investor may direct. Notwithstanding the foregoing, in the event that
the condition set forth in Section 5.1(p) hereof is not met by the Company
within five (5) months of the Initial Closing, the Investors shall have the
right to purchase up to an additional 349,651 shares of Common Stock from the
Company at a price of $.001 per share. Such shares of Common Stock shall be
purchasable by each Investor on a pro rata basis based on the number of shares
held by each Investor as set forth on Exhibit A.1 hereof.
(b) At the Initial Closing, Park `N View, Ltd. ("PNV") shall
transfer all of its Assets to the Company in exchange for 2,318,182 shares of
Common Stock of the Company which shall be distributed to Existing Investors as
set forth under the heading "Issuance of Common Stock" on Exhibit B which is
attached hereto and made a part hereof. The Initial Closing shall take place at
the offices of Shereff, Friedman, Hoffman & Goodman, LLP, or at such other time
and place as shall be agreed upon by the parties.
1.3 Interim Closing; Payment.
Subject to the terms and conditions of this Agreement, the Company
hereby agrees to sell to you and issue to you or your nominee, and you agree to
purchase from the Company (i) for the amount set forth to the right of your name
under the heading "Interim Subordinated Notes Investment" on Exhibit A.2 which
is attached hereto and made a part hereof, that principal amount of Subordinated
Notes and (ii) for the amount set forth to the right of your name under the
heading "Interim Series A Preferred Stock Investment" on Exhibit A.2 which is
attached hereto and made a part hereof, the number of shares of Series A Stock
set forth under the heading "Interim Series A Preferred Stock Purchased"
(collectively, the "Interim Investment"). Each Investor's Interim Investment
shall be paid by wire transfer of funds against delivery of certificates
evidencing the shares of Series A Stock and the issuance of Subordinated Notes
to be purchased by such Investor at the Interim Closing registered in such
Investor's name or that of a nominee as such Investor may direct. The Interim
Closing shall be effected at the offices of Shereff, Friedman, Hoffman &
Goodman, LLP, or at such other place as shall be agreed upon by the parties,
five months after the Initial Closing (the "Interim Closing") subject to the
satisfaction of the terms and conditions set forth in Section 5.2 of this
Agreement.
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1.4 Final Closing: Payment.
Subject to the terms and conditions of this Agreement, the Company
hereby agrees to sell to you and issue to you or your nominee, and you agree to
purchase from the Company (i) for the amount set forth to the right of your name
under the heading "Final Subordinated Notes Investment" on Exhibit A.3 which is
attached hereto and made a part hereof, that principal amount of Subordinated
Notes and (ii) for the amount set forth to the right of your name under the
heading "Final Series A Preferred Stock Investment", the number of shares of
Series A Stock set forth under the heading "Final Series A Preferred Stock
Purchased" (collectively, the "Final Investment"). Each Investor's Final
Investment shall be paid by wire transfer of funds against delivery of
certificates evidencing the shares of Series A Stock and the issuance of
Subordinated Notes to be purchased by such Investor at the Final Closing
registered in such Investor's name or that of a nominee as such Investor may
direct. The Final Closing shall be effected at the offices of Shereff, Friedman,
Hoffman & Goodman, LLP, or at such other place as shall be agreed upon by the
parties, nine months after the Initial Closing (the "Final Closing") subject to
the satisfaction of the terms and conditions set forth in Section 5.3 of this
Agreement.
II.
OTHER AGREEMENTS
2.1 Other Agreements.
The Company is entering into other agreements of even date herewith
(the "Other Agreements") with the Persons other than you listed on Exhibit A
hereto (the "Other Investors"). (You and the Other Investors are sometimes
hereinafter collectively referred to as the "Investors," and individually as an
"Investor.") Except for differences in the amounts to be invested, the Other
Agreements are identical to this Agreement.
III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and PNV, jointly and severally, represents and warrants to
you that, except as otherwise provided in this Article III or as set forth in
Exhibit 3 hereto, as of the date hereof and as of the Initial Closing:
3.1 Organization and Qualification of the Company.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own its Assets and to carry on its business as
contemplated pursuant to its business plan, and to carry out the transactions
contemplated by this Agreement and the Other Agreements. The Company is
qualified to do business in each of the jurisdictions in which the character of
its
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<PAGE> 13
Assets or the nature of its activities makes such qualification in such
jurisdictions necessary, except where the failure to so qualify would not have a
material adverse effect on the business of the Company. The Company has no
Subsidiaries and does not own of record or beneficially any securities of any
corporation or any instrument or investment in any partnership, association,
corporation, fund or business entity.
3.2 Capital Stock.
Subject to the valid filing of the Charter and the Certificate of
Designation with the Secretary of State of Delaware, the authorized capital
stock of the Company immediately following the completion of the Initial
Investment will consist of 5,000,000 shares of Common Stock and 140,000 shares
of Series A Preferred Stock. Immediately following the completion of the Initial
Investment, there will be:
(a) 2,318,182 fully paid and non-assessable shares of
Common Stock duly issued and outstanding, registered to the Existing
Investors as set forth in Exhibit B hereto;
(b) 2,000,000 fully paid and non assessable shares of
Common Stock duly issued and outstanding, registered to Investors as
set forth on Exhibit A.1 hereto.
(c) 32,200 fully paid and non-assessable shares of Series
A Stock duly issued and outstanding, registered to Investors as set
forth on Exhibit A.1 hereto, and 107,800 shares of Series A Stock duly
authorized and reserved for issuance in accordance with the provisions
of this Agreement and the Other Agreements.
Upon completion of the Initial Investment no other Stock will be
outstanding or authorized for issuance. Except as disclosed in this Section 3.2
and as otherwise provided for in or contemplated by this Agreement, upon
completion of the Initial Investment: (i) no Holder of any Security of the
Company (a) will be entitled to any preemptive rights or (b) will have any right
of first refusal to purchase any shares of Series A Stock to be issued and sold
or otherwise transferred to you and the Other Investors pursuant to this
Agreement and the Other Agreements, (ii) the Company will not have granted any
options, warrants or rights to purchase any of its Common Stock or authorized
any of its Common Stock for issuance, and (iii) no instrument or security is
outstanding which will be convertible into or exchangeable for, or which
entitles the Holder thereof to purchase, any Security. In addition to the shares
described above, the Company shall institute a stock option plan for the benefit
of its management. The Company shall reserve shares representing up to 5% of the
outstanding shares of Common Stock for issuance under the plan. The terms for
the grant and exercise of the options under the plan shall be approved by the
Board of Directors.
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<PAGE> 14
3.3 Title to Assets.
PNV and The Existing Investors have duly and validly transferred all of
their respective rights, title and interest in the assets set forth on Exhibit
3.3 (the "Assets") attached hereto and made a part hereof, to the Company and
the Company has good and marketable title to such Assets, and none of such
Assets is subject to any mortgage, pledge, security interest, lien, or other
encumbrance. The Assets constitute all of the Assets of PNV and all of the
Assets relating to the business to be carried on by the Company in which any of
the Existing Investors or their affiliates own any direct or indirect interest.
3.4 Outstanding Debt.
Immediately after the Initial Closing, the Company will not have any
Indebtedness other than Indebtedness incurred in connection with the formation
of the Company and the negotiation of this Agreement and the Other Agreements
including without limitation the Subordinated Notes.
3.5 Litigation, etc.
There are no actions, suits, proceedings or investigations pending or,
to the knowledge of the Company, PNV or the Existing Investors, threatened
against PNV, the Company, or any of the Existing Investors which relates to PNV
or the Company before any court or before any administrative agency or
administrative officer, nor is there any litigation pending or, to the knowledge
of the Company, PNV or the Existing Investors, threatened against the Company,
PNV or against the principal executive management of the Company by reason of
employment agreements, confidentiality agreements, noncompetition agreements or
other agreements or arrangements. Neither the Company nor any of its Assets is
subject to any judicial or administrative order, judgment or decree. The Company
has no knowledge of any existing violations by PNV, the Company or the principal
executive management of the Company of federal, state or local laws, regulations
or orders.
3.6 Other Agreements, etc.
The Company is not a party to any indenture, agreement or other
instrument, and has not issued any outstanding Indebtedness. Exhibit 3.6 is a
complete list of all contracts to which PNV or the Company is a party or which
are currently in negotiation.
3.7 Company Authorizations.
This Agreement, the Other Agreements, the Charter, the Certificate of
Designation, the By-laws, the Stock Restriction Agreement, the Registration
Rights Agreement, the Stockholders' Agreement and the Truck Stop Agreements (as
identified on Exhibit 3.6) have been duly authorized by PNV or the Company, as
the case may be, and each such agreement constitutes or, when executed by or
assigned to the Company, will constitute the legal, valid and binding
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<PAGE> 15
obligation of the Company, enforceable in accordance with its terms, except as
limited by bankruptcy, insolvency or other laws affecting the enforcement of
creditors' rights generally or by equitable principles in any action (legal or
equitable) or by public policy.
3.8 Governmental Authorizations.
(a) Except for the filing with the Secretary of State of Delaware
of the Charter and the Certificate of Designation and filings pursuant to
federal and state securities and blue sky laws, none of which securities or blue
sky law filings are required to be made prior to the Initial Closing, no
approval or authorization of, or registration, qualification or filing with, any
state regulatory body or any federal, state or municipal governmental authority
in the United States or in any foreign country is required in connection with
the execution, delivery or performance by the Company of this Agreement or the
Other Agreements or the issuance of the shares of Common Stock, Series A Stock
and Subordinated Notes sold in each of the Initial, Interim and Final
Investments or the performance by the Company of its obligations under the
Certificate of Designation.
(b) The Company holds the licenses or other permits issued by the
Federal Communications Commission ("FCC") and other state and federal agencies
listed on Exhibit 3.8(b) . Except for local construction permits, no other
licenses or permits are required to be obtained by the Company to operate its
business as contemplated.
3.9 Full Disclosure.
Neither the representations and warranties of the Company contained in
this Article III, nor any other written statement, including, without
limitation, the Business Plan of the Company, furnished by or on behalf of the
Company to you in connection with the negotiation of the issuance of the Common
Stock, Series A Stock and Subordinated Notes and the other transactions
contemplated by this Agreement and the Other Agreements, contains any untrue
statement of a material fact or omits a material fact necessary to make the
statements contained therein or herein, taken as a whole, not misleading;
provided, however, that plans, projections, estimates and other information with
respect to future results, activities and events, contained in any written
document furnished by or on behalf of the Company are not facts and as to such
matters the Company represents and warrants only that such information
represents the Company's best efforts to plan, project and estimate, based upon
current circumstances, such future results, activities and events and the good
faith belief that such activities and events can be accomplished. There is no
fact known to the Company which the Company has not disclosed to you which
materially adversely affects or, to the knowledge of the Company, could
reasonably be expected to materially adversely affect the business, Assets,
prospects, profits or condition, financial or otherwise, of the Company, or the
ability of the Company to perform its obligations under this Agreement, the
Other Agreements and the Charter.
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<PAGE> 16
3.10 Required Approvals.
Other than (i) the valid adoption by the Board and the Holders of
Common Stock of the resolution embodied in the Charter, (ii) the valid adoption
by the Board of the resolutions embodied in the Certificate of Designation,
(iii) the valid adoption by the Board of the resolution embodied in the By-laws,
(iv) the valid adoption by the Board of resolutions authorizing the execution
and delivery by the Company of this Agreement, the Other Agreements including
the Subordinated Notes, the consummation of the transactions contemplated hereby
and thereby and the performance by the Company of its obligations hereunder and
thereunder, and (v) the valid adoption by the Board of resolutions authorizing
the execution and delivery by the Company of the Stock Restriction Agreement,
the Registration Rights Agreement, the Stockholders' Agreement, the Subscription
Agreements and the performance by the Company of its obligations thereunder, no
approval or consent is required by law or by the Company's Charter or By-laws or
by any indenture, agreement or other instrument to which the Company is a party
or otherwise bound or to which its Assets is subject, or by any Indebtedness of
the Company, in connection with the issuance and sale or transfer of the Common
Stock, Series A Stock and Subordinated Notes to you and the Other Investors
pursuant to this Agreement and the Other Agreements, and the performance by the
Company of its obligations under this Agreement, the Other Agreements, the
Certificate of Designation and the Subordinated Notes. The execution and
delivery of this Agreement and the Other Agreements by the Company and
consummation of the transactions contemplated hereby and thereby, do not and
will not violate any provision of law, any order of any court or other agency of
government in a proceeding to which the Company is a party or by which it is
bound, or conflict with the Charter, the Certificate of Designation or the
By-laws of the Company or result in any breach of, or constitute a default
under, any contract, agreement or instrument to which the Company is a party or
by which it or any of its Assets is bound.
3.11 ERISA.
The Company does not now maintain or make contributions to any employee
pension plan or employee benefit plan, as such terms are defined in Section 3 of
the Employee Retirement Income Security Act of 1974, as amended.
3.12 No Broker or Finder.
Except as set forth on Exhibit 3.12, the Company has engaged no broker
or finder in connection with this Agreement and the Other Agreements or the
transactions contemplated hereby and thereby.
3.13 Extent of Offering.
Neither the Company nor any agent acting on its behalf has sold or
offered to sell any or all of the Common Stock, Series A Stock or Subordinated
Notes or any similar securities so as to bring the issuance or sale of the
Common Stock, Series A Stock or Subordinated Notes pursuant to this Agreement
and the Other Agreements within the provisions of Section 5 of the Securities
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<PAGE> 17
Act, and neither the Company nor any agent acting on its behalf will offer or
sell the Common Stock, Series A Stock or Subordinated Notes or any similar
securities so as to bring the issuance or sale of the Common Stock, Series A
Stock or Subordinated Notes pursuant to this Agreement and the Other Agreements
within such provisions.
3.14 Dividends.
The Company has taken no action which would require or permit it to
treat the Common Stock or Series A Stock as other than equity or dividends on
the Common Stock or Series A Stock as other than dividends on its books or
federal, state or local income tax returns.
3.15 Registration Rights.
Except for rights existing pursuant to the Registration Rights
Agreement contemplated hereby, as of the completion of the Initial Closing, no
holder of any Security will have any right to require the registration thereof
(or of Securities receivable upon the exercise or conversion thereof) under the
Securities Act or the right to include such Security (or any Security receivable
upon the exercise or conversion thereof) in a registration statement filed by
the Company under the Securities Act.
3.16 No Registration.
The Company has not registered any Securities under the Securities
Exchange Act. Except for the Investors and Existing Investors, the Company and
its predecessors have not offered any securities to any person within the past
two years.
3.17 No Obligation to Purchase.
As of the Initial Closing, except for rights provided pursuant to the
Other Agreements, the Company will not be a party to any agreement with any
Holder of any Securities which requires the Company to purchase any of such
Securities from such Holder under any circumstances.
3.18 Other Offerings: Registration Exemptions.
All the Securities issued and outstanding immediately after the Initial
Closing will have been offered and sold or will be offered and sold pursuant to
valid exemptions from the registration requirements of the Securities Act and
any applicable state securities and blue sky laws. As of the Initial Closing, no
agreements or instruments providing for the issuance or sale of shares of Common
Stock, Series A Stock or Subordinated Notes by the Company, other than this
Agreement and the Other Agreements will be in existence.
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<PAGE> 18
3.19 Illegal Payments.
The Company has never made any illegal payment of any kind, directly or
indirectly, including, without limitation, payments, gifts or gratuities, to
United States or foreign national, state or local government officials,
employees or agents.
3.20 Related Party Transactions.
(a) No Existing Investors, employee, officer or director of the
Company, no Affiliate of any Existing Investors, employee, officer or director
of the Company, and no member of the immediate family of any Existing Investor,
employee, officer or director of the Company is indebted to the Company or PNV.
(b) The Company and PNV are not indebted and are not committed to
make loans or extend or guarantee credit, to any Existing Investor, employee,
officer or director of the Company, or any Affiliate of any Existing Investor,
employee, officer or director of the Company, or any member of the immediate
family of any Existing Investor, employee, officer or director of the Company.
(c) No Existing Investors, employee of the Company and no member
of the immediate family of any employee of the Company is interested, directly
or indirectly, in any contract with the Company or PNV except by reason of their
ownership interest in the Company or PNV.
(d) No Existing Investor or party to this Agreement or the Other
Agreements is presently, directly or indirectly through such party's affiliation
with any other Person, a party to any transaction with the Company providing for
the furnishing of services by, or rental of real or personal property from, or
otherwise requiring cash payments to, any such Person pursuant to an agreement
that is material.
3.21 Financial Statements. Annexed hereto as Exhibit 3.21 is the
unaudited pro forma balance sheet of the Company ("Balance Sheet") as of the
date indicated thereon. The Balance Sheet was prepared in accordance with
general accepted accounting principles and accurately reflects and fairly
presents the financial condition of the Company as at such date. Since the date
of the Balance Sheet, the Company has not declared any dividends or made any
distributions; and except as set forth on Exhibit 3, made any commitments
involving more than $1,000; incurred any Indebtedness; or made any capital
expenditures.
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<PAGE> 19
IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF INVESTOR
4.1 Investment Intent, etc.
You represent and warrant that you are acquiring the Subordinated
Notes, the Series A Stock and the Common Stock, if any, purchased or otherwise
acquired hereunder for your own account for investment and not with a view to,
or for sale or other disposition in connection with, any distribution thereof,
nor with any present intention of selling or otherwise disposing of the same,
subject, nevertheless, to any requirement of law that the disposition of your
Assets shall at all times be within your control.
4.2 Sophistication, Financial Strength, Access, etc.
You represent, warrant and acknowledge that you are an Accredited
Investor (as that term is defined in Rule 501 promulgated by the Securities and
Exchange Commission under the Securities Act), that you have such knowledge and
experience in business and financial matters as to be capable of evaluating the
merits and risks of the investment contemplated to be made hereunder, and that
you were not formed or organized for the specific purpose of investing in the
Company; that you understand that such investment bears a high degree of risk
and could result in a total loss of your investment; that your principal place
of business is the address set forth on Exhibit A; and that you have sufficient
financial strength to hold your investment for an indefinite period and to bear
the economic risks of such investment (including possible loss of such
investment) for an indefinite period of time. You acknowledge that you are fully
informed that the Securities being sold to you hereunder are being sold pursuant
to a private offering exemption under the Securities Act and are not being
registered under the Securities Act or under the securities or blue sky laws of
any state or foreign jurisdiction; that such Securities must be held
indefinitely unless they are subsequently registered under the Securities Act
and any applicable state securities or blue sky laws, or unless an exemption
from registration is available thereunder; and that the Company has no
obligation to register such Securities except as expressly set forth in the
Registration Rights Agreement.
4.3 No Broker or Finder.
You represent and warrant that you have engaged no broker or finder in
connection with this Agreement or the transactions contemplated hereby.
4.4 Authorization.
You represent and warrant that as of the Initial Closing the execution,
delivery and performance of this Agreement, the Registration Rights Agreement,
the Stockholders' Agreement, the Stock Restriction Agreement and the
consummation of the transactions contemplated herein, have been duly authorized
by you. Subject to and in reliance upon the
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<PAGE> 20
accuracy of the Company's representations and warranties contained herein, the
fulfillment of and compliance with the terms of this Agreement, the Registration
Rights Agreement, the Stock Restriction Agreement and the Stockholders'
Agreement by you will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, or (iii) result in
a violation of, breach of or default under (a) your partnership agreement or
your articles or certificate of incorporation (as applicable) or any other
organizational document, (b) any law, statute, rule or regulation to which you
are subject, or (c) any agreement, instrument, order, judgment or decree to
which you are a party, bound or subject.
4.5 Binding Effect.
You represent and warrant that this Agreement constitutes a valid and
binding obligation of yours, enforceable in accordance with its terms, except
insofar as (i) such obligation may be limited by bankruptcy, insolvency or other
laws affecting the enforcement of creditors rights generally or by equitable
principles in any action (legal or equitable), (ii) the availability of
equitable relief may be subject to the discretion of the court before which any
proceeding thereof may be brought and (iii) the enforceability of the
indemnification provisions may be limited by applicable securities law or public
policy.
4.6 Information and Nature of the Investment.
You represent and warrant that you understand that the Company is a
recently organized corporation, which has been organized to acquire the business
of PNV, and that your investment in Subordinated Notes, Series A Stock and
Common Stock, if any, entails a high degree of risk. You represent that you have
been provided, and have reviewed, a copy of the Company's Business Plan and
understand that the accuracy of certain of the assumptions stated in the
Company's business plan is subject to industry performance, general business and
economic conditions, taxes and other matters, many of which are beyond the
Company's control.
V.
CONDITIONS TO OBLIGATIONS OF PURCHASER
5.1 Initial Closing Conditions.
Your obligation to purchase the Subordinated Notes, Series A Stock and
Common Stock, to be purchased by you at the Initial Closing and to consummate
the other transactions contemplated herein, as provided in Section 1.2 hereof,
shall be subject to the satisfaction of the following conditions, any of which
may be waived by you in writing:
(a) Representations and Warranties True at Closing:
Non-Occurrence of Default. The representations and warranties contained in
Article III hereof shall be true upon completion of the Initial Closing, there
shall exist no condition, event or fact constituting, or which, with notice or
passage of time or both would constitute, a default in the observance of any
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<PAGE> 21
of the Company's undertakings or covenants hereunder, under the Other Agreements
or pursuant to the Certificate of Designation, and all conditions precedent to
the Initial Closing to be performed by the Company shall have been complied
with; and the President and the Treasurer of the Company shall deliver to you at
the Initial Closing a certificate to such effect, executed by them.
(b) Corporate Proceedings. All corporate and other
proceedings required to be taken in connection with the transactions
contemplated hereby, by the Other Agreements, and by the Certificate of
Designation including, without limitation, the valid adoption and filing of the
Charter and the Certificate of Designation, and all documents incident hereto
and thereto, shall be satisfactory in form and substance to you, and you shall
have received all such counterpart originals or certified or other copies of
such documents as you shall reasonably request.
(c) Assets. PNV shall have transferred all of the Assets
to the Company as set forth on Exhibit 3.3 attached hereto and made a part
hereof.
(d) Other Agreements. Contemporaneously with the
execution of this Agreement, the Company shall have entered into the Other
Agreements with the Other Investors listed on Exhibit A hereto which, together
with this Agreement, provide for the purchase of an aggregate of $6 million
principal amount of Subordinated Notes, 140,000 shares of Series A Stock and
2,000,000 shares of Common Stock and the Initial Closing shall have taken place
under the Other Agreements contemporaneously with the Initial Closing under this
Agreement.
(e) Charter; Certificate of Designation. The Board and
the Holders of Common shall have adopted the resolution embodied in the Charter;
the Board shall have adopted the resolutions embodied in the Certificate of
Designation; and you shall have received a copy of the Charter and the
Certificate of Designation, certified as of the Initial Closing by the Secretary
of the Company; and the Charter and the Certificate of Designation shall have
been filed with the Secretary of State of Delaware, and their terms shall have
become effective, and you shall have received a copy of each of the Charter and
the Certificate of Designation, certified by the Secretary of State of Delaware.
(f) Securities Restriction Agreement. The Company, each
of the Existing Investors and each of the Investors shall have entered into a
Securities Restriction Agreement with the Company in the form attached hereto
and made a part hereof as Exhibit 5.1(f) (the "Securities Restriction
Agreement"), and a copy of the signed Securities Restriction Agreement shall
have been delivered to you.
(g) Registration Rights Agreement. The Company and each
of the Investors shall have entered into the Registration Rights Agreement in
the form attached hereto and made a part hereof as Exhibit 5.1(g) (the
"Registration Rights Agreement"), and a copy of the signed Registration Rights
Agreement shall have been delivered to you.
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(h) Securityholders' Agreement. The Company and each
Investor shall have entered into the Securityholders' Agreement in the form
attached hereto and made a part hereof as Exhibit 5.1(h) and a copy of the
signed Securityholders' Agreement shall have been delivered to you.
(i) By-laws Amendment. The Board shall have adopted the
resolutions embodied in the By-laws and you shall have received a copy of the
By-laws, certified as of the Initial Closing by the Secretary of the Company.
(j) Key-Man Life Insurance. The Company shall have
obtained a life insurance policy (the "Key-Man Policy") on the life of Ian
Williams with a death benefit of $1 million naming the Company as the sole
beneficiary from an insurer of recognized responsibility, and upon completion of
the Initial Closing, the Key-Man Policy shall be effective, in full force and
unencumbered, and all premiums, fees or charges which are due thereon shall have
been paid.
(k) Opinion of Counsel. You shall have received from
Petree Stockton, L.L.P., counsel to the Company, an opinion of counsel
substantially in the form attached hereto and made a part hereof as Exhibit
5.1(k).
(l) Small Business Information. The Company shall deliver
an undertaking to provide information, make reports and take such actions as may
be required under Section 1202(D)(1)(c) of the Internal Revenue Code of 1986, as
amended ("IRC"), in order to qualify the Common Stock and Series A Stock as
"small business stock" within the meaning of IRC Section 1202(c).
(m) Board Composition. The duly elected and acting
members of the Board shall be Robert Chefitz, Thomas Hirschfeld, Ian Williams
and Daniel O'Connell. The fifth seat shall be a designee mutually agreed upon by
a majority of the Investors and the Existing Investors as set forth in Section
6.9 hereof.
(n) Prior to the payment of the second installment of
$600,000, the Company shall have delivered an audited balance sheet of the
Company as at November 1, 1995 which is in all material respects consistent with
the Balance Sheet except for the investment made pursuant to this Agreement.
(o) At the Initial Closing, the principal officers of the
Company shall deliver a certificate confirming that the above-listed conditions
has been met.
(p) Within five months of the Initial Closing, the
Company shall have entered into Truck Stop Agreements with Pilot Corporation or
Truck Stops of America on terms (length of contract, fees, fee splitting, costs
and number of truck stops or stalls) substantially the same as or better than
the existing contract with Highway Service Ventures, Inc. or that is otherwise
acceptable to the Investors. In the event that the Company fails to enter into
such Truck Stop
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Agreement within such five (5) month period, the Investors shall have the right
to purchase from the Company an additional 347,658 shares of Common Stock (the
"Additional Shares") at a price of $0.001 per share.
5.2 Interim Closing Conditions.
Your obligation to purchase the Subordinated Notes and Series A Stock
at the Interim Closing shall be subject to the satisfaction of the following
conditions, any of which may be waived by you in writing, without effect upon
any Other Investor's or the Company's rights and/or obligations pursuant to the
Other Agreements except as specified pursuant to Section 2.1 hereof:
(a) Non-Occurrence of Default. There shall exist no
condition, event or fact constituting, or which, with notice or passage of time
or both, would constitute a default in the observance of any of the Company's
undertakings or covenants hereunder, under the Other Agreements or pursuant to
the Certificate of Designation, no material adverse change shall have occurred
in the business, Assets or condition (financial or otherwise) of the Company
since the Initial Closing, and all conditions precedent to the Interim Closing
to be performed by the Company shall have been complied with, and the President
and the Treasurer of the Company shall deliver to you at the Interim Closing a
certificate to such effect, executed by them.
(b) Other Agreements. The Interim Closing on the Interim
Closing Date shall have taken place under a sufficient number of the Other
Agreements contemporaneously with the Interim Closing under this Agreement such
that Investors, collectively, actually purchase the Subordinated Notes and
Series A Stock which all of the Investors, collectively, agreed to purchase at
the Interim Closing pursuant to this Agreement and the Other Agreements.
(c) Sufficient Progress. The President and Treasurer of
the Company shall have certified to the Board that the Company has met the
milestones specified in Exhibit 5.2(c) hereof, with respect to the Interim
Closing, and the Board, by a resolution adopted by action of a majority of the
directors, including all of the Investors' Designee(s) shall have concurred with
such determination and shall have deemed it advisable for the Interim Closing to
occur.
(d) Representations, Warranties and Covenants. The
Company shall deliver to the Investors a Certificate signed by an officer of the
Company certifying that the representations contained in Article III remain true
upon completion of this Interim Closing, and the Company is in compliance with
its Charter, Certificate of Designation and Other Agreements.
5.3 Final Closing Conditions.
Your obligation to purchase the Subordinated Notes, Series A Stock and
Common Stock at the Final Closing shall be subject to the satisfaction of the
following conditions, any of which may be waived by you in writing, without
effect upon any Other Investor's or the Company's
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<PAGE> 24
rights and/or obligations pursuant to the Other Agreements except as specified
pursuant to Section 2.1 hereof:
(a) Non-Occurrence of Default. There shall exist no
condition, event or fact constituting, or which, with notice or passage of time
or both, would constitute a default in the observance of any of the Company's
undertakings or covenants hereunder, under the Other Agreements or pursuant to
the Certificate of Designation, no material adverse change shall have occurred
in the business, Assets or condition (financial or otherwise) of the Company
since the Interim Closing Date, and all conditions precedent to the Final
Closing to be performed by the Company shall have been complied with, and the
President and the Vice President of Finance of the Company shall deliver to you
at the Final Closing a certificate to such effect, executed by them, dated the
Final Closing Date.
(b) Other Agreements. The Final Closing on the Final
Closing Date shall have taken place under a sufficient number of the Other
Agreements contemporaneously with the Final Closing under this Agreement such
that Investors agreed to purchase the requisite amount of Subordinated Notes,
Series A Stock and Common Stock at the Final Closing pursuant to this Agreement
and the Other Agreements.
(c) Interim Closing. The Interim Closing shall have taken
place.
(d) Sufficient Progress. The President and Treasurer of
the Company shall have certified to the Board that the Company has met the
milestones specified in Exhibit 5.3(d) hereof with respect to the Final Closing,
and the Board, by a resolution adopted by action of a majority of the directors,
which majority includes all Investor Designee(s), shall have concurred with such
determination and shall have deemed it advisable for the Final Closing to occur.
(e) Representations, Warranties and Covenants. The
Company shall deliver to the Investors a Certificate signed by an officer of the
Company certifying that the representations contained in Article III remain true
upon completion of this Final Closing, and the Company is in compliance with its
Charter, Certificate of Designation and Other Agreements.
VI.
COVENANTS OF THE COMPANY
The Company covenants and agrees that, except as otherwise provided in
this Article VI, from the Initial Closing and thereafter so long as any shares
of Series A Stock or Common Stock shall exist:
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6.1 Selection of Independent Public Accountants.
The Company shall retain as its independent public accountants an
independent public accounting firm of nationally recognized standing acceptable
to a majority in interest of the Investors to perform the annual audit required
pursuant to Section 6.5.
6.2 Payment of Taxes: Corporate Existence and Licenses;
Maintenance of Properties/Assets.
The Company shall and shall cause each Subsidiary to:
(a) (i) Pay and discharge promptly, or cause to be
paid and discharged promptly, when due and payable, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or upon any of
its Assets or upon any part thereof, as well as all claims of any kind
(including claims for labor, materials and supplies) which, if unpaid, might by
law become a lien, charge or encumbrance upon its Assets; (ii) withhold all
monies required to be withheld by the Company from employees for income taxes,
Social Security and unemployment insurance taxes; and (iii) complete and file,
on a timely basis, all tax returns and reports required to be filed by it;
provided, however, that the Company shall not be required to pay, or to cause
any subsidiary to pay, any tax, assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
reserves (segregated to the extent required by generally accepted accounting
principles) deemed by the Company adequate with respect thereto;
(b) Do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, and all of
its corporate rights, franchises, licenses and permits; provided, however, that
nothing in this Subsection (b) shall (i) prevent the abandonment or termination
of the Company's authorization to do business in any foreign state or
jurisdiction, if, in the opinion of the Board, such abandonment or termination
is in the best interest of the Company, (ii) require compliance with any law so
long as the validity or applicability thereof shall be disputed or contested in
good faith or (iii) prevent the Company from effecting a merger, consolidation
or voluntary dissolution upon obtaining the required approval of the Board
and/or the Holders of Common Stock of the Company; and
(c) Maintain and keep, or cause to be maintained and
kept, its Assets in good repair, working order and condition, and from time to
time make, or cause to be made, all repairs, renewals and replacements which, in
the opinion of the Board, are necessary and proper so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Subsection (c) shall prevent the
Company from selling or otherwise disposing of any Assets whenever in the good
faith judgment of the Company's management such Assets are obsolete, worn out,
without economic value, or unnecessary for the conduct of the business of the
Company.
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6.3 To Insure.
The Company shall:
(a) keep all of its insurable Assets insured against loss
or damage by fire and other risks;
(b) maintain public liability insurance against claims
for personal injury, death or property damage suffered by others upon or in or
about any premises occupied by it or arising from equipment owned by the Company
and leased to and located upon or in or about any premises occupied by any other
person;
(c) maintain all such workers' compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which it may be engaged in business;
(d) maintain a Key-Man Policy as described pursuant to
Section 5.1 hereof and not create or suffer the creation or maintenance of any
assignment, security interest or other encumbrance with respect to the Key-Man
Policy or the proceeds thereof.
All insurance for which provision has been made in this Section 6.3
shall (unless otherwise stated herein) be maintained against such risks and in
at least such amounts as shall be approved by the Board from time to time, and
all insurance herein provided for shall be effected and maintained in force
under a policy or policies issued by insurers of recognized responsibility,
except that the Company may effect workers' compensation or similar insurance in
respect of operations in any state or other jurisdiction either through an
insurance fund operated by such state or other jurisdiction or by causing to be
maintained a system or systems of self-insurance which is in accord with
applicable laws.
6.4 Payment of Indebtedness, etc.
The Company shall:
(a) Pay or cause to be paid the principal of, and the
interest and premium, if any, on, all material Indebtedness heretofore or
hereafter incurred or assumed by the Company, when and as the same shall become
due and payable, unless such Indebtedness shall be renewed or extended, in which
case such payments shall be made in accordance with the terms of such renewal or
extension;
(b) Faithfully observe, perform and discharge in all
material respects all the material covenants, conditions and obligations which
are imposed on it by any and all material indentures, agreements, or other
instruments securing or evidencing Indebtedness, if any, or pursuant to which
Indebtedness is issued, and not permit the occurrence or continuance of any act
or omission which is or under the provisions thereof may be declared to be a
material default thereunder, unless such default (other than a default in
payment of principal or interest) or the
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right to declare a default on account of such act or omission is waived pursuant
to the provisions thereof; provided, however, that the Company shall not be
required to make any payment or to take any other action by reason of this
Subsection (b) at any time while it shall be currently contesting in good faith
by appropriate proceedings its obligations to make such payment or to take such
action, if the Company shall have set aside on its books reserves (segregated or
classified to the extent required by generally accepted accounting principles)
deemed by it adequate with respect thereto;
(c) Not violate any provision of its Charter (including
the Certificate of Designation and any other certificates of designation filed
by the Company with the Secretary of State of Delaware with respect to any
series of the Company's preferred stock) or By-laws or any material provision of
any judgment, writ, decree, order, statute, rule or governmental regulation or
approval applicable to the Company, or any material provision of any contract,
agreement, indenture, mortgage, lien, lease, sublease or arbitration award to
which the Company is a party, by which it is bound or to which any of its Assets
is subject;
(d) Not prepay any Indebtedness heretofore or hereafter
incurred or assumed by it without the specific authorization of the Board other
than trade debt and professional fees and expenses incurred in the ordinary
course of business; provided, however, that, no prepayment shall be made at any
time that a breach of any of the covenants contained in this Article VI or of
any obligation of the Company under its Charter or the Certificate of
Designation has occurred and is continuing; and
(e) Not redeem, retire, purchase or acquire, directly or
indirectly, any shares of any class or series of stock of the Company except
pursuant to Section 5 of the Certificate of Designation.
6.5 Financial Statements and Information.
The Company shall furnish to each Holder of Subordinated Notes or
Series A Stock:
(a) Interim Financial Statements and Reports. Within 20
days after the end of each month, a consolidated balance sheet of the Company as
of the end of such month, together with related consolidated statements of
operations, changes in stockholders' equity and cash flows for such month and
year-to-date, prepared in accordance with generally accepted accounting
principles consistently applied (with the exception of full footnote
disclosures, schedules and precise period cutoffs) and certified by the
Treasurer of the Company, subject to usual year-end audit adjustments, together
with a written comparison of the results as reported on such financial
statements with the projections thereof contained in the applicable Annual
Budget (as defined herein).
(b) Annual Financial Statements and Reports. Within 90
days after the last day of each fiscal year of the Company, a copy of its audit
report containing a consolidated balance sheet of the Company at the end of the
fiscal year, together with related consolidated
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statements of operations, changes in stockholders' equity and cash flows for
such fiscal year, prepared in accordance with generally accepted accounting
principles consistently applied, all examined by and accompanied by a
certificate of opinion of the Company's independent public accountants, selected
in accordance with Section 6.1 hereof, together with consolidating statements,
which need not be certified, which set forth the eliminations of intercorporate
items. Together with each delivery of annual financial statements of the Company
pursuant to this Subsection (b), the Company will deliver a copy of a letter
addressed to the Company's independent public accountants informing such
accountants that a primary intent of the Company regarding the professional
services such accountants provided to the Company in preparing their audit
report was to benefit or influence the Holders of Subordinated Notes and Series
A Stock, and identifying such Holders as parties that the Company has indicated,
intend to rely on such professional services provided to the Company by such
accountants.
(c) Reports of Auditors. Promptly upon receipt thereof, a
copy of each report or management letter, if any, submitted to the Company by
independent public accountants in connection with each annual audit (and any
other audit which may be performed) of the books of the Company made by such
accountants.
(d) Annual Budgets and Strategic Plan. Not less than 40
days prior to the commencement of each fiscal year of the Company, an annual
operating strategic plan summary and corresponding annual budget (an "Annual
Budget") consisting of (i) projected consolidated statements of operations,
changes in stockholders' equity and cash flows, each on a monthly basis, for
each of the calendar months of such fiscal year; (ii) a projected consolidated
balance sheet as of the close of each calendar month; (iii) projected capital
expenditures for each month; and (iv) promptly upon making thereof, any revision
or updating which may be made of any such Annual Budget. Each such Annual Budget
and any revisions thereof shall be submitted for the approval of the Board,
which approval shall include the approval of any Investor designees, and be
subject to revision or updating by the Board.
(e) Additional Information. The Company shall provide
Investors with prompt notice of:
(i) any investigation by any federal or state
governmental or regulatory agency in connection with
which the Company is identified as an object of such
investigation;
(ii) any complaint or proceeding instituted against the
Company by any federal or state governmental or
regulatory agency;
(iii) any other action at law or suit in equity involving a
claim or claims against the Company which, if
concluded adversely to the Company or such truckstop,
could give rise to damages in excess of $20,000 in
the aggregate or could otherwise materially adversely
affect the business or Assets of the Company, and
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(iv) any other event which could reasonably be expected to
have a material adverse effect on the business or
Assets of the Company.
(f) Certificate of Independent Public Accountants. At
such times as the statements referred to in Subsection (b) of this Section 6.5
are furnished, the Company shall also furnish a certificate of the independent
public accountant whose certificate or opinion accompanies such statements
stating that nothing has come to his attention which would cause him to believe
that any condition, event or fact exists which would constitute, or which with
notice or passage of time or both would constitute, a violation which has not
previously been disclosed by a prior certificate of the principal financial
officer or controller, or their equivalent, of any of the then applicable
covenants of the Company contained herein or in the Certificate of Designation;
provided, however, that if any such violation exists, such certificate shall
specify the nature and period of existence of such violation; and provided,
further, that such certificate may state that tests of the accounting records
and other auditing procedures conducted with respect to the Company might, but
would not necessarily, reveal that such violations exist or that no violations
exist. The Company covenants that, upon obtaining knowledge of any such
violation, it will promptly deliver a certificate of its principal financial
officer or controller, or their equivalent, specifying the nature thereof, the
period of existence thereof, and what action the Company proposes to take with
respect thereto.
6.6 Discussion and Inspection Rights.
The Company shall permit any Holder who or which, alone or when
aggregated with the holdings of its Affiliates, owns not less than 5% of the
then existing Registrable Stock or not less than 5% of the then outstanding
Series A Stock and any Person designated from time to time by any such Holder,
at such Holder's expense, to discuss the affairs, finances and accounts of the
Company with the Company's directors, officers, other principal executives and
independent accountants, all at such reasonable times and as often as such
Holder may reasonably request; all books, documents, financial records and
vouchers relating to the business and affairs of the Company shall at all
reasonable times be open to inspection either by such Holder or such accountant
or other Person as shall from time to time be designated by such Holder, who may
make such copies thereof or extracts therefrom as such Holder reasonably deems
appropriate; and all facilities of the Company shall at all reasonable times be
open to inspection by such Holder or such Person as shall from time to time be
designated by such Holder.
6.7 Tax Treatment of Dividends.
So long as any Preferred Stock or Common Stock purchased pursuant to
this Agreement or the other Agreements is outstanding, the Company shall:
(a) Treat the shares of Preferred Stock and Common Stock
as Stock and not as Indebtedness, and treat the dividends paid (or accrued) with
respect to the shares of Preferred Stock as dividends within the meaning of
Section 316 of the Code, and not as interest.
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(b) Not take any action which could reasonably be
expected by it (i) to require the Company to treat the dividends paid with
respect to the Preferred Stock or Common Stock as interest for any purpose, (ii)
to cause the Preferred Stock or Common Stock to be treated as indebtedness for
purposes of Section 385 of the Code or any successor provision of the Code and
the regulations promulgated thereunder, or (iii) to cause the dividends received
deduction under Section 243 of the Code (the "Dividends Received Deduction") to
cease to be available, in whole or in part, with respect to dividends on the
Preferred Stock or Common Stock received by any corporate Holder.
(c) Without limiting the generality of the foregoing
Subsection (b), (i) not claim a deduction for dividends paid on the Preferred
Stock or Common Stock whether as interest or otherwise, in any federal income
tax return, claim for refund of federal income tax or other submission to the
Internal Revenue Service, and (ii) unless required to do so by generally
accepted accounting principles, not treat the Preferred Stock or Common Stock
other than as equity capital or the dividends paid thereon other than as
dividends paid on capital in any report to stockholders or any governmental body
having jurisdiction over the Company or otherwise.
(d) Not exercise any option or election that may at any
time be available under the Code or otherwise to deduct all or part of any
dividend paid with respect to the shares of Preferred Stock if so doing would
increase the amount of such dividend includable for federal, state or local
income tax purposes in the income of any corporate Holder of shares of Preferred
Stock or Common Stock.
(e) At the request of any corporate Holder of Preferred
Stock or Common Stock, join with such Holder in the submission to the Internal
Revenue Service of a request for a ruling that dividends paid on the Preferred
Stock will be eligible for the Dividends Received Deduction for federal income
tax purposes; in addition, the company shall cooperate with and support any
corporate Holder in any litigation, appeal or other proceeding challenging or
contesting any ruling, technical advice, finding or determination of the
Internal Revenue Service that dividends paid on the Preferred Stock are to be
treated as indebtedness for purposes of the Code or are not eligible for the
Dividends Received Deduction. The cooperation and support required of the
Company by the preceding sentence shall be at the expense of such corporate
Holder, except that the Company will pay all fees and expenses (whether incurred
by it or a corporate Holder) in connection with any such submission, litigation,
appeal or other proceeding necessitated or caused by a breach by the Company of
its covenants contained in this Section 6.7.
6.8 Notice of Claimed Default or Deficiency.
The Company, within ten days after receiving written notice of a
default or deficiency in excess of $10,000 from, or being served with a
complaint in law or in equity by, the Holder of any Indebtedness or other
Security of the Company, or a party to any agreement to which the Company is a
party or otherwise bound which calls for payments by or to the Company or such
Subsidiary in an aggregate amount in excess of $10,000, with respect to a
claimed default or event of default or claimed deficiency thereunder, shall
furnish to each Holder of Subordinated
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Notes, Series A Stock or Common Stock purchased pursuant to this Agreement or
the Other Agreements a written notice specifying the notice given or action
taken by such Person, as the case may be, and the nature of the claimed default
or event of default or claimed deficiency and what action the Company is taking
or proposes to take with respect thereto.
6.9 Composition of Board.
The Company's Board of Directors shall consist of not more than five
(5) members, of which one member shall be unaffiliated with any Investor or
Existing Investor and be mutually agreed upon by a majority of the Existing
Investors and a majority of the Investors. The Existing Investors shall have the
right to nominate and elect two members to the Board. Furthermore, so long as
the Series A Stock and the Subordinated Debt have not been redeemed and paid in
full or the Investors taken collectively as a group own 20% or more of the
outstanding Common Stock of the Company, a majority of such Investors shall have
the right to elect two directors to the Board and shall be entitled to approval
rights on each of the following: (a) incurrence by the Company of debt in excess
of $25,000 in the aggregate which does not relate to the expenditures for the
buildout of a truckstop approval by the Board; (b) capital expenditures of the
Company in excess of $25,000 in the aggregate, which does not relate to the
expenditures for the buildout of a truckstop approval by the Board; (c) issuance
by the Company of equity securities and (d) sale by the Company of substantially
all of the Company's Assets. In the event that the Investors taken collectively
as a group hold at least 10% but less than 20% of the outstanding Common Stock,
a majority of such Investors shall have the right to elect one member to the
Board. In all cases, all holders of Common Stock shall vote in favor of election
of all nominees of the Investors and Existing Investors.
6.10 Blue Sky.
The Company shall make any and all filings necessary (whether before or
after the Initial Closing) in connection with the offer, issuance and sale
and/or transfer of the Series A Stock and Common Stock to be purchased pursuant
to this Agreement or the Other Agreements under the securities or blue sky laws
of any jurisdiction in which such filing is required by law.
6.11 Compliance with Laws.
The Company shall comply in all material respects with all laws of any
jurisdiction which are applicable to the Assets, business or operations of the
Company.
6.12 Filing of Commission Reports.
If the Company becomes obligated to file reports with the Securities
and Exchange Commission under Section 13 or Section 15(d) of the Securities
Exchange Act by reason of its having a class of Securities registered under
Section 12 of the Securities Exchange Act, it shall regularly file reports
thereunder in a timely manner so long as it is required to do pursuant to the
provisions of the Securities Exchange Act. Unless and until required to do so by
law or to obtain
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or retain quotation of the Common Stock by NASDAQ or on any national securities
exchange registered under Section 6 of the Securities Exchange Act, and then not
without giving 30 days' prior written notice to the Holders of the Registrable
Stock, the Company shall not register the Series A Stock or Common Stock under
Section 12 of the Securities Exchange Act.
6.13 Transactions with Affiliates.
The Company shall not directly or indirectly engage in any transaction
or series of transactions providing for the furnishing of services by or to, or
rental of real or personal property from or to, or otherwise requiring cash
payments from or to any director, officer or stockholder of the Company, or any
of its Affiliates, unless any such transaction is (a) in the ordinary course of
the Company's business, (b) upon fair and reasonable terms comparable to that
which would obtain in an arm's length transaction with a Person that is not an
Affiliate and (c) approved by a majority of disinterested members of the Board.
6.14 Subsidiaries.
Obligations set forth in this Article VI shall be applicable to
Subsidiaries only at such times, if any, that one or more Subsidiaries shall be
in existence.
6.15 Expenditures.
The Company shall not make or commit to make aggregate expenditures of
any type greater than the aggregate expenditures of such type budgeted of such
fiscal year in the then applicable Annual Budget without the prior approval of
the majority of the Board, which majority includes all Investor Designees,
evidenced by a duly adopted resolution.
6.16 No Registration Rights to Others.
So long as any shares of Registrable Stock (as such term is defined
pursuant to the Registration Rights Agreement) exist, the Company shall not
grant to any Holder of its Securities the right to include such Securities in
any Registration Statement filed by the Company, except as provided in the
Registration Rights Agreement.
6.17 Use of Proceeds.
The proceeds of the sale of the Subordinated Notes, Series A Stock and
the Common Stock to be purchased pursuant to this Agreement and the Other
Agreements shall be used solely for the buildout of truckstops and the
development of stalls supplying advertising, cable television and telephone and
data transmission services.
6.18 Restrictions on Employee Stock.
So long as the Stock Restriction Agreement is in effect, the Company
shall not issue any Securities to officers, employees, agents or consultants of
the Company unless such Securities
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are subject to restrictions substantially similar to those contained in Section
2 of the Stock Restriction Agreement.
6.19 Confidentiality.
The Company shall use its best efforts to (a) protect the secrecy,
confidentiality and value of all trade secrets useful in the conduct of the
Company's business and (b) cause each Person who is or becomes an officer or key
employee of the Company, as the case may be, who shall have access to
confidential and proprietary information of the Company, to execute a
confidentiality agreement, as a condition to such employment, in such form as
shall be approved by the Board of Directors of the Company, which approval shall
include the approval of all Investor Designees. Such confidentiality agreements
shall not be amended in any material respect without the approval of the Board,
which approval shall include the approval of all Investor Designees.
6.20 Take or Pay Contracts.
The Company shall not enter into any agreement requiring it to pay for
goods or services whether or not it acquires such goods or services.
6.21 The Financing.
The Company shall not enter into any agreement requiring the Company to
make payments of principal or interest unless such agreement contains a
provision permitting any Holder of Series A Stock or Subordinated Notes to cure
any monetary default thereunder.
6.22 Small Business Information.
The Company shall provide information, make reports and take such
actions as may be required under Section 1202(D)(1)(c) of the Internal Revenue
Code of 1986, as amended ("IRC"), in order to qualify the Common Stock and
Series A Stock as "small business stock" within the meaning of IRC Section
1202(c).
VII.
TRANSFER OF SECURITIES
The Subordinated Notes, Series A Stock and the Common Stock purchased
pursuant to this Agreement and the Other Agreements shall not be transferable
except upon the conditions specified in this Article VII, which conditions are
intended to insure compliance with the provisions of the Securities Act and
state securities laws in respect of the transfer of any such Securities.
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<PAGE> 34
7.1 Restrictive Legends.
(a) Unless and until otherwise permitted by this Article,
each certificate for Series A Stock or Common Stock and purchased pursuant to
this Agreement and the Other Agreements issued to you or your nominee, or to any
subsequent transferee of such certificate shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
thus may not be offered for sale, sold, transferred or
otherwise disposed of unless registered under the Securities
Act of 1933, as amended, or unless an exemption from such
registration is available. Further, such transfer is subject
to the conditions specified in an Agreement dated as of
November 2, 1995, pursuant to which such shares were issued
and sold or otherwise transferred by Park 'N View, Inc. (the
"Company"), a copy of which Agreement is on file and may be
inspected at the principal office of the Company. A copy of
such Agreement will be furnished by the Company to the holder
hereof upon request and without charge. Under certain
circumstances specified in such Agreement, the Company has
agreed to deliver to the holder hereof a new certificate, not
bearing this legend, for all or part of the number of shares
evidenced hereby, as the case may be, registered in the name
of such holder or designated nominee."
(b) Each certificate for Series A Stock shall be stamped
or otherwise imprinted with a legend in substantially the following form:
"A statement of the relative rights and preferences of the
Company's Common Stock and its series of Preferred Stock will
be furnished by the Company to the holder hereof upon request
and without charge."
(c) The Company may order its transfer agents for
Subordinated Notes Series A Stock and Common Stock purchased pursuant to this
Agreement or the Other Agreements to stop the transfer of any shares of Series A
Stock or Common Stock purchased pursuant to this Agreement or the Other
Agreements bearing the legend set forth in Subsection (a) of this Section 7
until the conditions of this Article VII with respect to the transfer of such
shares have been satisfied.
7.2 Notice of Proposed Transfer.
If, prior to any transfer or sale of any Series A Stock or Common Stock
purchased pursuant to this Agreement or the Other Agreements, the Holder
desiring to effect such transfer or sale shall deliver a written notice to the
Company describing briefly the manner of such transfer or sale and a written
opinion of counsel for such Holder (provided that such counsel, and the form and
substance of such opinion, are reasonably satisfactory to the Company) to the
effect
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<PAGE> 35
that such transfer or sale may be effected without the registration of such
Securities under the Securities Act, the Company shall thereupon permit or cause
its transfer agent (if any) to permit such transfer or sale to be effected;
provided, however, that if in such written notice the transferring Holder
represents and warrants to the Company that the transfer or sale is to a
purchaser or transferee whom the transferring Holder knows or reasonably
believes to be a "qualified institutional buyer," as that term is defined in
Rule 144A promulgated by the Securities and Exchange Commission under the
Securities Act ("Rule 144A"), no opinion shall be required.
7.3 Termination of Restrictions.
(a) Notwithstanding the foregoing provisions of this
Article VII, the restrictions imposed by this Article VII upon the
transferability of Series A Stock and Common Stock purchased pursuant to this
Agreement or the Other Agreements shall terminate as to any particular share of
Series A Stock or share of Common Stock purchased pursuant to this Agreement or
the Other Agreements when (1) such Security shall have been effectively
registered under the Securities Act and sold by the Holder thereof in accordance
with such registration, or (2) a written opinion to the effect that such
restrictions are no longer required or necessary under any federal or state
securities law or regulation have been received from counsel for the Holder
thereof (provided that such counsel, and the form and substance of such opinion,
are reasonably satisfactory to the Company) or counsel for the Company, or (3)
such Security shall have been sold without registration under the Securities Act
in compliance with Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act ("Rule 144"), or (4) the Company is
reasonably satisfied that the Holder of such Security shall, in accordance with
the terms of Subsection (k) of Rule 144, be entitled to sell such Security
pursuant to such Subsection, or (5) a letter or an order shall have been issued
to the Holder thereof by the staff of the Securities and Exchange Commission or
such Commission stating that no enforcement action shall be recommended by such
staff or taken by such Commission, as the case may be, if such Security is
transferred without registration under the Securities Act in accordance with the
conditions set forth in such letter or order and such letter or order specifies
that no subsequent restrictions on transfer are required.
(b) Whenever the restrictions imposed by this Article VII
shall terminate, as hereinabove provided, the Holder of any particular share of
Series A Stock or share of Common Stock purchased pursuant to this Agreement or
the Other Agreements then outstanding as to which such restrictions shall have
terminated shall be entitled to receive from the Company, without expense to
such Holder, one or more new certificates for Series A Stock or Common Stock
purchased pursuant to this Agreement or the Other Agreements not bearing the
restrictive legend set forth in Section 7.1(a) hereof.
7.4 Compliance with Rule 144 and Rule 144A.
At the written request of any Holder of Series A Stock or Common Stock
purchased pursuant to this Agreement or the Other Agreements who proposes to
sell any of such Series A
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<PAGE> 36
Stock or Common Stock in compliance with Rule 144, the Company shall furnish to
such Holder, within ten days after receipt of such request, a written statement
as to whether or not the Company is in compliance with the filing requirements
of the Securities and Exchange Commission as set forth in such Rule. For
purposes of effecting compliance with Rule 144A, in connection with any resales
of any shares of Series A Stock or Common Stock purchased pursuant to this
Agreement or the Other Agreements that hereafter may be effected pursuant to the
provisions of Rule 144A, any Holder of shares of such Series A Stock or Common
Stock desiring to effect such resale and each prospective institutional
purchaser of such shares designated by such Holder shall have the right, at any
time the Company is not subject to Section 13 or 15(d) of the Securities and
Exchange Act, to obtain from the Company, upon the written request of such
Holder and at the Company's expense the documents specified in Section (d)(4)(i)
of Rule 144A, as such rule may be amended from time to time.
7.5 Non-Applicability of Restrictions on Transfer.
Notwithstanding the provisions of Section 7.2 hereof, any record owner
of Subordinated Notes, Series A Stock or Common Stock purchased pursuant to this
Agreement or the Other Agreements may from time to time transfer all or part of
such record owner's Subordinated Notes, Series A Stock or Common Stock purchased
pursuant to this Agreement or the Other Agreements (i) to a nominee identified
in writing to the Company as being the nominee of or for such record owner, and
any nominee of or for a beneficial owner of Subordinated Notes, Series A Stock
or Common Stock purchased pursuant to this Agreement or the Other Agreements
identified in writing to the Company as being the nominee of or for such
beneficial owner may from time to time transfer all or part of the Subordinated
Notes, Series A Stock or Common Stock purchased pursuant to this Agreement or
the Other Agreements registered in the name of such nominee but held as nominee
on behalf of such beneficial owner, to such beneficial owner, (ii) to an
Affiliate or related entity of such record owner, or (iii)if such record owner
is a partnership or the nominee of a partnership, to a partner, retired partner,
or estate of a partner or retired partner, of such partnership, so long as such
transfer is in accordance with the transferee's interest in such partnership and
is without consideration; provided, however, that each such transferee shall
remain subject to all restrictions on the transfer of Stock herein contained.
VIII.
MISCELLANEOUS
8.1 Brokers; Indemnification.
The Company will hold you free and harmless from any claim, demand,
liability for, or expense in connection with, any broker's or finder's fees or
commissions from any Person acting on behalf of the Company in connection with
this Agreement or the transactions contemplated hereby. Any Person acting on
behalf of an officer, director, employee or agent of the Company shall be acting
on behalf of the Company for purposes of this Section 8.1.
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<PAGE> 37
8.2 Stamp Tax and Delivery Costs.
The Company will pay all stamp and other taxes, if any, which may be
payable in respect of the sale or other transfer of Series A Stock and Common
Stock purchased pursuant to this Agreement or the Other Agreements to you and
the issuance thereof to you or your nominee, and will save you harmless against
any loss or liability resulting from nonpayment or delay in payment of any such
tax. The Company will also pay all reasonable costs of delivery to you, or your
nominee, of the Series A Stock to be purchased by you or otherwise transferred
to you hereunder and Common Stock, if any, acquired by you hereunder.
8.3 Place of Payment.
So long as you or your nominee shall be the Holder of any Subordinated
Note share of Series A Stock or Common Stock purchased hereunder, if any, the
Company will make, by wire transfer (or equally expeditious delivery) of
immediately available funds, all payments with respect to Subordinated Notes,
Series A Stock or Common Stock purchased hereunder, if any, owned by you or your
nominee at the address set forth below your name in Exhibit A hereto or such
other place as you may designate to the Company in writing.
8.4 Amendment and Waiver.
(a) Any term, covenant, agreement or condition contained in this
Agreement may be amended, or compliance therewith may be waived (either
generally or in particular instances and either retroactively or prospectively),
(i) if prior to the Initial Closing, by written instruments signed by you, the
Other Investors, and the Company, and (ii) if subsequent to the Initial Closing,
by written instruments signed by the Company and an aggregate of not less than
66.6% of the Investors; provided, however, that any provision of this Agreement
that would materially adversely affect any particular Investor without similarly
affecting all Investors shall not be valid unless consented to in writing by
such particular Investor.
(b) This Agreement shall not be altered, amended or supplemented
except by written instruments. Any waiver of any term, covenant, agreement or
condition contained in this Agreement shall not be deemed a waiver of any other
term, covenant, agreement or condition, and any waiver of any default in any
such term, covenant, agreement or condition shall not be deemed a waiver of any
later default thereof or of any other term, covenant, agreement or condition. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.
(c) Withstanding the foregoing provisions of this Section 8.4, no
amendment to or waiver of any provision of this Section 8.4 shall be effective
with respect to this Section 8.4 without the consent of 100% of the Investors.
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<PAGE> 38
8.5 Lost, Etc., Securities.
Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of any certificate of Series A Stock or Common
Stock or Subordinated Notes purchased pursuant to this Agreement or the Other
Agreements and (in case of loss, theft or destruction) receipt of indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such Series
A Stock or other Common Stock certificate or Subordinated Notes, if mutilated,
the Company will make, and deliver, in lieu of such Series A Stock or other
Common Stock certificate or Subordinated Notes, a new Series A Stock or other
Common Stock certificate or Subordinated Note of like tenor. Any Series A Stock
or other Common Stock certificate or Subordinated Note made and delivered in
accordance with the provisions of this Section 8.5 shall be dated as of the date
of the Series A Stock or other Common Stock certificate or Subordinated Note in
lieu of which such new Series A Stock or other Common Stock certificate or
Subordinated Note is made and delivered. If you or your Affiliate are the
beneficial owner of such lost, stolen or destroyed Series A Stock or other
Common Stock certificate or Subordinated Note, then the affidavit of you or your
Affiliate (if you or your Affiliate are a natural person) your or your
Affiliate's president (or other chief executive officer) and any vice president
or treasurer (if you or your Affiliate are a corporation) or your or your
Affiliates general partner (if you or your Affiliate are a partnership), setting
forth the fact of loss, theft or destruction and your or your Affiliate's
beneficial ownership of such Series A Stock or other Common Stock certificate or
Subordinated Note at the time of such loss, theft or destruction shall be
accepted as satisfactory evidence thereof, and no indemnity shall be required as
a condition to execution and delivery of a new Series A Stock or other Common
Stock certificate or Subordinated Note other than your or your Affiliate's
written agreement to indemnify the Company and its directors, officers and
agents. The term "outstanding" when used in this Agreement with reference to
Securities as of any particular time, shall not include other Series A Stock or
other Common Stock or Subordinated Note in lieu of which a new Series A Stock or
other Common Stock certificate or Subordinated Note has been made and delivered
by the Company in accordance with the provisions of this Section 8.5.
8.6 Representations, Warranties and Covenants to Survive.
All representations, warranties and covenants contained herein or made
in writing by the Company or by you in connection herewith shall survive the
execution and delivery of this Agreement, the issuance and sale or other
transfer of Subordinated Notes, Series A Stock or Common Stock, if any,
purchased hereunder.
8.7 Severability.
In the event that any court or any governmental authority or agency
declares all or any part of any Section of this Agreement to be unlawful or
invalid, such unlawfulness or invalidity shall not serve to invalidate any other
Section of this Agreement, and in the event that only a
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<PAGE> 39
portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
8.8 Investigation of the Company.
You shall have had the right prior to the Initial Closing to make such
reasonable investigation of the Company and the assets and business of the
Company as you shall deem necessary or advisable, but any such investigation
shall not affect the representations, warranties and covenants of the Company
contained herein or made pursuant hereto.
8.9 Listings.
In the event that the Common Stock shall be listed for trading on any
national securities exchange, such listing (to the extent permitted by the rules
of such exchange) shall include other Common Stock purchased pursuant to this
Agreement and the Other Agreements.
8.10 Successors and Assigns.
All representations, warranties, covenants and agreements of the
parties contained in this Agreement or made in writing in connection herewith,
shall, except as otherwise provided herein, be binding upon and inure to the
benefit of their respective nominees, successors and assigns and, in the case of
a natural Person, of his heirs and personal representatives.
8.11 Notices.
All communications provided for hereunder shall be in writing and
delivered by hand or by first-class or certified mail, postage prepaid, or by
telecopier, and, if to you or your nominee, addressed to you at the address set
forth below your name in Exhibit A hereto or at such other address as you may
designate to the Company in writing, if to the Other Investors or their
nominees, addressed to such Persons at the addresses set forth below their names
on Exhibit A hereto or at such other address as the Other Investors may
respectively designate to the Company in writing, and if to any Holders of
Subordinated Notes, Series A Stock or Common Stock purchased pursuant to this
Agreement or the Other Agreements other than you or your nominee or the Other
Investors or their nominees, addressed to such Holders at their addresses as
shown on the books of the Company or its transfer agent, and if to the Company,
at its offices at 3403 NW 55th Street, Bldg. 10, Ft. Lauderdale, Florida 33309,
Attention: President, or such other place as shall be designated by the company
in writing.
8.12 Governing Law.
The validity, meaning and effect of this Agreement shall be determined
in accordance with the domestic laws of the State of New York applicable to
contracts made and to be performed in that state without giving effect to any
choice or conflict of law provision or rule
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<PAGE> 40
(whether in the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
8.13 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall together constitute one
and the same document.
8.14 Reproduction of Documents.
This Agreement and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by you at the Closing or thereafter (except
stock certificates evidencing any Securities) and (c) financial statements,
certificates and other information previously or hereafter furnished to you, may
be reproduced by you by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process and you may destroy any original
document so reproduced. The Company agrees and stipulates that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and that any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence.
8.15 Payment of Fees and Expenses of Purchasers.
Whether or not the purchase herein provided for shall be consummated,
the Company will pay the legal and accounting fees, and reasonable due diligence
expenses as with respect to the purchase of securities under this Agreement of
you and the Other Investors, and the out-of-pocket expenses and disbursements
incurred, including without limitation expenses incurred with respect to the
production and reproduction of this Agreement and other documents used in
connection with the transactions herein contemplated, provided that if the
Initial Closing does not occur, the Company's obligation under this Section 8.15
shall be limited to $50,000.
8.16 Affiliates; Transfers.
Notwithstanding any other provision of this Agreement, if, after your
purchase of Subordinated Notes, Series A Stock or Common Stock, if any,
hereunder, you or your nominee transferred Subordinated Notes, Series A Stock
and Common Stock to any Affiliate or nominee of yours or the nominee of such
Affiliate, such transferee shall be entitled to all rights and benefits to which
the transferor would be entitled as an original Holder of the Securities so
transferred and such transferee shall be deemed an "Investor" hereunder.
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<PAGE> 41
8.17 Table of Contents; Headings.
The Table of Contents and the headings used herein are solely for the
convenience of the parties and shall not constitute a part hereof or serve to
modify or interpret the text.
8.18 Indemnification.
The Company shall indemnify and hold harmless each Holder of
Subordinated Notes, Series A Stock and/or Common Stock purchased pursuant to
this Agreement or the Other Agreements against and from any losses, claims,
damages, liabilities or expenses ("Losses") insofar as such Losses (or actions
in respect thereof) arise out of or are based upon (i) the falsity or
incorrectness as of the Initial Closing of any representation or warranty of the
Company contained in or made pursuant to Article III hereof or of the Other
Agreements, or (ii) the existence of any condition, event or fact constituting,
or which with notice or passage of time, or both, would constitute a default in
the observance of any of the Company's undertakings or covenants hereunder,
under the Other Agreements, the Registration Rights Agreement, the Stockholders'
Agreement or pursuant to the Certificate of Designation. The Company shall also
pay all attorney's and accountant's fees and costs and court costs incurred by
any Holder of Subordinated Notes, Series A Stock and/or Common Stock purchased
pursuant to this Agreement or the Other Agreements in enforcing the
indemnification provided for in this Section 8.18. Notwithstanding the
foregoing, the Company expressly agree and acknowledge that the right of
indemnification granted herein to each Holder of Subordinated Notes, Series A
Stock and/or Common Stock purchased pursuant to this Agreement or the Other
Agreements shall not be deemed to be the exclusive remedy available to such
Holder for any of the matters described in this Section 8.18.
8.19 Effect of Failure to Make Agreed Purchases.
The Company acknowledges and agrees that, as its sole remedy, if the
conditions specified in Section 5.2(c) or Section 5.3 (d), as the case may be,
hereof have been fulfilled and your obligation to purchase the Subordinated
Notes, Series A Stock and Common Stock, if any, at the Interim Closing or the
Final Closing, respectively, is not subject to any conditions and you fail to
purchase the Subordinated Notes, Series A Stock and Common Stock, if any, at
such Closing, then the Company shall have the option to repurchase from the
Investor Group, pro rata among Investors, the following amounts of Common Stock
at the same purchase price as paid by the Investor Group: (i) 1,520,000 shares
of Common Stock if the Interim Closing is not completed or (ii) 986,667 shares
of Common Stock if the Final Closing is not completed. Any shares so acquired
shall be retired by the Company.
8.20 Entire Agreement; Exhibits and Schedules.
This Agreement, the Other Agreements and the Exhibits and Schedules
hereto and thereto constitute and encompass the entire agreement and
understanding of the parties hereto and thereto with regard to the transactions
contemplated or provided for herein or therein. This
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<PAGE> 42
Agreement supersedes, replaces and terminates any prior agreements between the
Investor and the Company with respect to the purchase of Series A Preferred
Stock and Common Stock, if any, and Subordinated Notes by such Investor from the
Company and neither the Company nor the Investor shall have any liability under
any such prior agreement to the other for any reason whatsoever.
Very truly yours,
ATTEST: PARK N' VIEW, INC.
By /s/ Ian Williams
- ------------------------------ -----------------------------
Secretary President
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<PAGE> 43
EXHIBIT A
I. APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Robert Chefitz
------------------------------------------
Name: Robert Chefitz
Title: G.P.
II. APA EXCELSIOR IV OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR
By: /s/ Robert Chefitz
------------------------------------------
Name: Robert Chefitz
Title: G.P.
II. THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
------------------------------------------
Name: Robert Chefitz
Title: G.P.
/s/ Michael Willner
- -----------------------------------------------
Michael Willner
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<PAGE> 44
EXHIBIT A.1
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
INVESTOR COMMON COMMON INITIAL INITIAL SERIES A INITIAL SERIES A TOTAL
STOCK STOCK SUBORDINATED PREFERRED STOCK PREFERRED
INVESTMENT PURCHASED NOTES INVESTMENT STOCK
($) (SHARES) INVESTMENT($) PURCHASE
($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
APA Excelsior IV, L.P. 73,468 1,469,367 131,000 236,560 23,656 441,028
- -----------------------------------------------------------------------------------------------------------------------------
APA Excelsior IV Offshore, 12,965 259,300 23,000 41,750 4,175 77,715
L.P.
- -----------------------------------------------------------------------------------------------------------------------------
The P/A Fund 12,900 258,000 23,000 41,540 4,154 77,440
- -----------------------------------------------------------------------------------------------------------------------------
Michael Willner 667 13,333 1,000 2,150 215 3,817
- -----------------------------------------------------------------------------------------------------------------------------
TOTALS 100,000 2,000,000 178,000 322,000 32,200 600,000
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Including $100,000 of Subordinated Notes exchanged for a $100,000 secured
promissory note issued by the Company on October 20, 1995.
**Does not include the Additional Shares (See Section 5.1(p)).
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<PAGE> 45
EXHIBIT A.2
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
INVESTOR INTERIM INTERIM SERIES INTERIM SERIES A TOTAL
SUBORDINATED A PREFERRED PREFERRED STOCK
NOTES INVESTMENT STOCK PURCHASE
INVESTMENT
($)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
APA Excelsior IV, L.P. 1,192,000 277,710 27,771 1,469,710
- -----------------------------------------------------------------------------------------------------
APA Excelsior IV Offshore, 210,000 49,010 4,901 259,010
L.P.
- -----------------------------------------------------------------------------------------------------
The P/A Fund 209,000 48,760 4,876 257,760
- -----------------------------------------------------------------------------------------------------
Michael Willner 11,000 2,520 252 13,520
- -----------------------------------------------------------------------------------------------------
TOTALS 1,622,000 378,000 37,800 2,000,000
- -----------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 46
EXHIBIT A.3
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
INVESTOR FINAL FINAL SERIES FINAL SERIES A TOTAL
SUBORDINATED A PREFERRED PREFERRED STOCK
NOTES INVESTMENT STOCK PURCHASE
($) INVESTMENT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
APA Excelsior IV, L.P. 2,204,000 513,390 51,339 2,717,390
- ----------------------------------------------------------------------------------------------------
APA Excelsior IV Offshore, 389,000 90,650 9,065 479,650
L.P.
- ----------------------------------------------------------------------------------------------------
The P/A Fund 387,000 91,300 9,130 478,300
- ----------------------------------------------------------------------------------------------------
Michael Willner 20,000 4,660 466 24,660
- ----------------------------------------------------------------------------------------------------
TOTALS 3,000,000 700,000 70,000 3,700,000
- ----------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 47
EXHIBIT B
<TABLE>
<CAPTION>
Name of Existing Investor Number of Shares Held
- ------------------------- ---------------------
<S> <C>
Park 'N View General Partner, Inc. 22,950
Ian Williams 517,906
Sam Hashman 988,610
Monte Nathanson 517,906
Nelgo Investments 270,810
Total 2,318,182
=========
</TABLE>
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<PAGE> 48
EXHIBIT 1.1(a)
FORM OF CHARTER
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PARK `N VIEW, INC.
The undersigned, for the purposes of forming a corporation pursuant to
the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY as
follows:
FIRST: The name of the Corporation is: PARK `N VIEW, INC.
SECOND: The registered office of the Corporation is to be
located at 1013 Center Road, in the City of Wilmington, County of New Castle,
State of Delaware, 19805. The name of its registered agent at that address is
Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of Delaware.
FOURTH: The aggregate number of shares of stock which the
Corporation shall have authority to issue is 5,000,000 shares of common stock,
par value $.001 per share, all of which shall be designated "Common Stock" and
140,010 shares of preferred stock, par value $0.01 per share, all of which are
designated "Series A Preferred Stock."
FIFTH: The name and mailing address of the Incorporator is
James M. O'Connell, 4101 Lake Boone Trail, Suite 400, Raleigh, North Carolina
27606.
SIXTH: The number of Directors of the Corporation may be
specified by the By-laws. The number of Directors constituting the instant Board
of Directors shall be two (2), and the names and mailing addresses of the
persons who are to serve as Directors until the first annual meeting of the
shareholders or until the successors are elected and qualify are:
Name Address
Ian Williams 3403 NW 55th Street
Building 10
Fort Lauderdale, FL 33309
Daniel O'Connell 5133 NW 93 Doral Way
Miami, FL 33178
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<PAGE> 49
SEVENTH: In furtherance and not in limitation of the powers
conferred by statute but subject to any limitations contained in any Certificate
of Designation, the board of directors is expressly authorized:
(a) to adopt, amend or repeal the By-Laws of the Corporation in
such manner and subject to such limitations, if any, as shall be set forth in
the By-Laws;
(b) to allot and authorize the issuance of the authorized but
unissued shares of the Corporation, including the declaration of dividends
payable in shares of any class to stockholders of any class;
(c) (i) with respect to the authorized shares of Preferred Stock,
the board of directors is expressly authorized, from time to time, (1) to fix
the number of shares of one or more series thereof; (2) to determine the
designation of any such series; (3) to determine or alter, without limitation or
restriction, the right, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series including, without limitation, dividend
rights, conversion rights, redemption privileges and liquidation preferences, as
shall be stated in such resolution or resolutions, all to the fullest extent
permitted by the Delaware Statute; and (4) within the limits or restrictions
stated in any resolution or resolutions of the board of directors originally
fixing the number of shares constituting any series, to increase or decrease
(but not below the number of shares then outstanding) the number of shares of
any such series of such class subsequent to the issue of shares of that series,
(5) to determine and fix such voting powers, full or limited, or no voting
powers, and such other powers, designations, preferences and relative,
participating, optional and other rights, and the qualifications, limitations
and restrictions thereof. Without limiting the generality of the foregoing, the
resolution or resolutions providing for the establishment of any series or
Preferred Stock may, to the extent permitted by law, provide that such series
shall be superior to, rank equally with or be junior to any other series of
Preferred Stock.
The amendment of the terms of any certificate of designation of any
series of the Corporation's Preferred Stock of which shares are outstanding
shall require only (i) that the Corporation's board of directors adopt a
resolution setting forth the amendment proposed, declaring its advisability, and
either calling a special meeting of the holders of such series of Preferred
Stock for consideration of such amendment or directing that the amendment
proposed be considered at the next annual meeting of stockholders by the holders
of such series of Preferred Stock (in either event, subject to the ability of
such holders to act by written consent in lieu of voting at a meeting), and (ii)
that the holders of sixty-six and two thirds percent (66 2/3%) (or such greater
number as may be required by the certificate of designations of such series) of
the outstanding shares of such series of Preferred Stock have voted in favor of
the amendment. Except for holders of a series of Preferred Stock the terms of
which are being amended, no holder of Common Stock and no holder of any series
of Preferred Stock shall be entitled to vote upon such amendment unless the
rights of such holders would be adversely affected by such
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amendment or such vote shall otherwise be required by law or by any certificate
of designation of any series of Preferred Stock.
(d) With respect to Common Stock, (1) Voting. Each holder of
shares of Common Stock shall be entitled to one vote for each share of Common
Stock held on all matters as to which holders of Common Stock shall be entitled
to vote. In any election of directors, no holder of shares of Common Stock shall
be entitled to cumulate his or her votes by giving one candidate more than one
vote per share.
(2) Other Rights. Each share of Common Stock issued and
outstanding shall be identical in all respects one with the other. In the event
any dividend is paid on all shares of Common Stock, the same dividend shall be
paid on all shares of Common Stock outstanding at the time of such payment.
Except for and subject to those rights expressly granted to the holders of the
Preferred Stock, or except as may be provided by the laws of the State of
Delaware, the holders of Common Stock shall have exclusively all other rights of
stockholders.
(d) to exercise all of the powers of the Corporation, insofar as
the same may lawfully be vested by this certificate in the board of directors.
EIGHTH: That thereafter by a written consent of the requisite
stockholders of the Corporation any amendment was approved and adopted by the
stockholders of the Corporation.
NINTH: That any said amendment was duly adopted in
accordance with the provision of Section 242 of the General corporation Law of
the State of Delaware.
TENTH: If the Corporation has outstanding Preferred Stock
which is then in default on its obligations to pay dividends thereon or to
redeem such Preferred Stock, the primary duty of the directors of the
Corporation shall be to cause the Corporation to take such actions as may be
necessary in order to pay such dividends and make such redemption.
ELEVENTH: No director shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that to the extent required by the
provisions of Section 102(b)(7) of the General Corporation Law of the State of
Delaware or any successor statute, or any other laws of the State of Delaware,
this provision shall not eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware or (iv) for any transaction
from which the director derived an improper personal benefit. If the General
Corporation Law of the State of Delaware hereafter is amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation, in addition to the limitation on
personal liability provided herein, shall be limited to the fullest extent
permitted by the amended General Corporation Law of the State of Delaware. Any
repeal or modification of this paragraph ELEVENTH by the stockholders of the
Corporation shall be prospective only, and shall not
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adversely affect any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or modification.
The Board of Directors of the Corporation has, by unanimous written
consent, authorized the filing of this Amended and Restated Certificate of
Incorporation in compliance with Section 241(b) of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
October, 1995.
------------------------------
Ian Williams, President
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EXHIBIT 1.1(b)
FORM OF CERTIFICATE OF DESIGNATION
PARK `N VIEW, INC.
CERTIFICATE OF DESIGNATION RELATING
TO THE SERIES A PREFERRED STOCK WITH
A PAR VALUE OF $.01 PER SHARE
OF PARK `N VIEW, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
Park `N View, Inc., a Delaware corporation (the "Corporation"), hereby
certifies that pursuant to the authority contained in Article Fourth of the
Corporation's Certificate of Incorporation, and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware (the "DGCL"), the following resolution was duly adopted by the Board of
Directors of the Corporation, by the unanimous written consent of directors
pursuant to Section 141(f) of the DGCL, creating a series of its Preferred Stock
designated as Series A Preferred Stock:
RESOLVED, that there is hereby created and the Corporation be, and it
hereby is, authorized to issue 140,010 shares of a series of its Preferred Stock
designated Series A Preferred Stock (the "Series A Stock") to have the powers,
preferences and rights and the qualifications, limitations or restrictions
thereof hereinafter set forth in this resolution:
1. Preference. The preferences of each share of Series A Stock
with respect to distributions of the Corporation's assets upon voluntary or
involuntary liquidation, dissolution or winding up of the Corporation shall be
equal to the preferences of every other share of Series A Stock from time to
time outstanding in every respect and prior in right to such preferences of all
other equity Securities of the Corporation, whether now or hereafter authorized.
2. Voting Rights. Except as otherwise expressly provided herein,
in the Certificate of Incorporation or the By-laws of the corporation or by law,
the Holders of Series A Stock, by virtue of their ownership thereof, shall be
entitled to one vote for each share of Series A Stock and shall vote as a
separate class for any merger, consolidation, sale of assets or creation of any
class or series equal to or superior to the Series A Stock, upon the failure of
the Corporation to redeem the Series A Stock in accordance with Section 5(a)
hereof. The Holders of at least 66.6% of the shares of the then outstanding
Series A Stock voting as a separate class shall be entitled to elect a majority
of the total number of directors then constituting the Board and the balance of
the directors then constituting the Board may be elected by the Holders of
Common voting as a separate class. So long as Holders of Series A Stock are
entitled to elect a majority of the Board,
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the Corporation's directors shall have the primary duty to take such actions as
are necessary to pay to Holders of Series A Stock their accrued dividends (and
interest thereon) and Series A Stock value.
U3. Liquidation Rights. If the Corporation shall be voluntarily or
involuntarily liquidated, dissolved or wound up, at any time when any Series A
Stock shall be outstanding, each then outstanding share of Series A Stock shall
entitle the Holder thereof to a preference against the Assets of the corporation
available for distribution to the Holders of the Corporation's equity securities
equal to the Series A Stock Value plus an amount equal to all unpaid dividends
(including, without limitation, all accrued and unpaid interest thereon and the
Deferred Dividends, calculated in accordance with Section 4(B) hereof) accrued
on such share to the date of payment. If, upon any such liquidation, dissolution
or winding-up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributed among the Holders of Series A Stock shall be insufficient
to pay in full the aggregate preferential amounts on all of the then outstanding
shares of the Series A Stock, then such assets, or the proceeds thereof, shall
be distributed among such Holders equally and ratably in proportion to the full
liquidation preferences to which each such Holder is entitled. After such
payment shall have been made in full to the Holders of the outstanding Series A
Stock, or funds necessary for such payment shall have been set aside in trust
for the account of the Holders of Series A Stock so as to be, and continue to
be, available therefor, the Holders of Series A Stock shall be entitled to no
further participation in such distribution of assets of the Corporation. The
consolidation or merger of the Corporation into or with any corporation or
corporations (other than a merger with another corporation in which the
Corporation is the surviving corporation and which does not result in any
reclassification or change -- other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination -- of outstanding shares of the Corporation's Stock
of any class or series, whether now or hereafter authorized), or the sale or
transfer by the Corporation of all or substantially all of its assets otherwise
than to an Affiliate of the Corporation, or a Change-in-Control Transaction
shall be deemed to be a liquidation.
All of the preferential amounts to be paid to the Holders of Series A
Stock as provided in this Section 3 shall be paid or set apart for payment
before the payment or setting apart for payment of any amount for, or the
distribution of any Assets of the Corporation to, the Holders of any other
equity securities of the Corporation, whether now or hereafter authorized, in
connection with such liquidation, dissolution or winding up.
4. Dividends.
(a) Accrual of Dividends. Commencing with the first
anniversary of the Initial Closing pursuant to and as defined in the Purchase
Agreements, the Holders of Series A Stock shall be entitled to receive, when and
as declared by the Board of Directors out of funds legally available therefor,
cumulative dividends payable quarterly on March 15, June 15, September 15 and
December 15 of each year (each of such dates being a "Dividend Payment
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Date") in cash or in kind at a rate of 7% per annum, computed on the basis of
the Series A Stock Value. Such dividends shall be Series A Stock with respect to
each share of Series A Stock, from the later of the first anniversary of the
Initial Closing pursuant to and as defined in the Purchase Agreements and the
date of issuance of such share, and shall accrue until paid, whether or not
earned, whether or not declared by the Board and whether or not there are funds
legally available therefor on the date such dividends are payable. Dividends not
declared and paid on any Dividend Payment Date shall accrue dividends thereon at
the rate of 7% per annum until such dividends are declared and paid in full.
(b) Payment of Dividends. Dividends shall be payable at
the Corporation's option in cash or in kind to each Holder of Series A Stock in
quarterly installments on March 31, June 30, September 30, and December 31, in
each year commencing on March 31, 1996 (each a "Regular Dividend Payment Date"),
as declared by the Board out of funds legally available therefor. Dividends paid
in cash on the shares of Series A Stock in an amount less than the total amount
of such dividends shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board may fix a record date for the
determination of a dividend or distribution declared thereon, which record date
shall not be more than 30 days prior to the date fixed for the payment thereof.
(c) Limitation on Certain Distributions. Without the
written consent of the Holders of at least 66.6% of the then outstanding Series
A Stock, the Corporation shall not declare or pay any cash dividend on, or
redeem or repurchase or make any other cash distribution in respect of any other
equity Securities of the Corporation, unless at the time of such declaration,
payment or distribution the Corporation shall have paid all dividends on the
Series A Stock accrued through the most recent Regular Dividend Payment Date
preceding the date of such payment or distribution.
5. Redemption.
(a) Mandatory Redemption. The Corporation shall redeem
all of the issued and outstanding shares of Series A Stock at the earlier to
occur of (a) the fifth anniversary of the Initial Closing Date, as defined in
the Purchase Agreements, or (b) upon any involuntary or voluntary liquidation,
dissolution or winding up of the Corporation (including the sale of all or
substantially all of the Corporation's Assets or the acquisition of the
Corporation by a third party by means of a merger or consolidation resulting in
the exchange of the outstanding securities of the Corporation for securities or
other consideration issued by the acquirer) for cash at a redemption price per
share equal to the Series A Stock Value plus an amount equal to all unpaid
dividends accrued thereon to the date of redemption.
(b) Redemption Upon an Initial Public Offering. Upon the
closing of an underwritten public offering of Common Stock by means of a
registration statement filed by the Corporation under the Securities Act of
1933, as amended, which offering does not exclusively relate to securities under
an employee stock option, bonus or other compensation plan, and yielding
proceeds to the Corporation of not less than $15,000,000 million (net of
underwriting
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discounts and other expenses and including proceeds received by the Corporation
upon exercise of any over-allotment option by underwriters), the Corporation
shall redeem, for cash, all of the then outstanding shares of Series A Stock at
a redemption price per share equal to the Series A Stock Value plus an amount
equal to all unpaid dividends accrued thereon to the date of redemption.
(c) Optional Redemption.
(i) Upon (i) the occurrence of an Event of
Non-Compliance specified in any of clauses (i), (ii) or (iii) of the Definition
thereof set forth in Section 7 hereof, which remains uncured for 30 days, or
(ii) the occurrence of an Event of NonCompliance specified in any of clauses
(vi) or (vii) of the Definition thereof set forth in Section 7 hereof, the
Holders of at least 66.6% of the then outstanding shares of Series A Stock by
written notice, delivered by hand or by first-class, certified or overnight
mail, postage prepaid, or by telecopier to the Corporation may compel the
Corporation to redeem, for cash, all of the then outstanding shares of Series A
Stock. Upon receipt of such notice, the Corporation shall redeem all of the then
outstanding shares of Series A Stock at a redemption price per share equal to
the Series A Stock Value plus an amount equal to all unpaid dividends (and
interest thereon) accrued thereon to the date of redemption.
(ii) The Corporation shall have the option of
redeeming shares of Series A Stock at any time after the date of issuance of
such Series A Stock at a redemption price per share equal to the Series A Stock
Value plus an amount equal to all unpaid dividends (and interest thereon)
accrued thereon to the date of redemption.
(d) Availability of Funds for Redemption.
Notwithstanding anything in this Section 5 to the contrary, if
the Corporation has insufficient funds legally available on the redemption date
to redeem shares of Series A Stock pursuant to this Section 5, then funds to the
extent legally available shall be used to redeem such shares, in which case the
shares shall be redeemed pro rata from each holder thereof. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of the unredeemed shares of Series A Stock, such funds shall be
immediately used to redeem such shares.
6. Protective Provisions. So long as any shares of Series A Stock
shall be outstanding, the Corporation shall not, without the approval by the
vote or written consent of the Holders of at least 66.6% (or more if required by
law) of the then outstanding shares of Series A Stock:
(a) Amend, waive or repeal any provisions of, or add any
provision to, (i) this Certificate of Designation or (ii) any provision of the
Corporation's Certificate of Incorporation or any other certificate of
designation filed with the Secretary of State of Delaware by the Corporation
with respect to its preferred stock;
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(b) Amend, waive or repeal any provisions of, or add any
provision to, the Corporations By-Laws;
(c) Authorize, create, issue or sell any shares of
Equivalent Stock or Superior Stock; except as authorized in the Certificate of
Designation
(d) Issue any shares of Series A Stock other than
pursuant to the Purchase Agreements or upon transfers of outstanding shares of
Series A Stock;
(e) Enter into any agreement, indenture or other
instrument which contains any provisions restricting the Corporation's
obligation to pay dividends on or make redemptions of the Series A Stock in
accordance with Sections 4 and 5 hereof;
(f) Consolidate with or merge into any other Person or
permit any other Person to consolidate with or merge into it;
(g) Sell, lease, encumber, transfer, liquidate or
otherwise dispose of, in one transaction or a series of related transactions,
all or substantially all of the Assets of the Corporation; or
(h) Dissolve the Corporation.
7. Definitions. As used in this Certificate of Designation, the
following terms have the following meanings:
"Affiliate" shall mean any entity controlling, controlled by or under
common control with another entity. For the purposes of this definition,
"control" shall have the meaning presently specified for that word in Rule 405
promulgated by the Securities and Exchange Commission under the Securities Act.
"Assets" shall mean an interest in any kind of property or assets,
whether real, personal or mixed, or tangible or intangible.
"Board" shall mean the Board of Directors of the Corporation.
"Change-in-Control Transaction" means any transaction or series of
related transactions, whether involving the Corporation, the Holders of any
class or series of its Stock other than Series A Stock (whether now or hereafter
authorized), or both, resulting in any Person or group of Persons acting in
concert who were not theretofore the Holder or Holders of Voting Securities
enabling the Holder or Holders thereof to cast more than a majority of the votes
which may be cast for the election of directors becoming the Holder or Holders
of at least such amount of Voting Securities (for such purpose, treating
instruments or Securities issued in such transaction which are convertible into
or exchangeable or exercisable for Voting Securities as being so converted,
exchanged or exercised upon issuance, regardless of the terms thereof).
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"Common Stock" shall mean the Corporation's Common Stock, par value
$.001 per share, and any stock into which such stock may hereafter be changed.
"Definition" shall mean the definition of "Event of Non-Compliance"
hereunder.
"Equivalent Stock" shall mean any shares of any class or series of
Stock of the Corporation having any preference or priority as to dividends or
Assets on a parity with any such preference or priority of the Series A Stock
and no preference or priority as to dividends or Assets superior to any such
preference or priority of the Series A Stock and any instrument or Security
convertible into or exchangeable for Equivalent Stock. Without limiting the
generality of the foregoing, a dividend rate, mandatory or optional sinking fund
payment amounts or schedules or optional redemption provisions, the existence of
a conversion right or the existence of a liquidation preference of up to 100% of
the original issue price plus unpaid accrued dividends plus a premium of up to
the dividend rate or up to the percentage of the equity of the Corporation
represented by such Stock, with respect to any class or series of Stock,
differing from that of the Series A Stock, shall not prevent such class of Stock
from being Equivalent Stock.
"Event of Non-Compliance" shall mean any of the following:
(i) Any failure by the Corporation to declare and pay in
cash or in kind any dividend on the payment due dates and in the amounts
provided pursuant to Section 4 hereof, if such failure shall continue for a
period of five days from the payment due date;
(ii) Any failure by the Corporation to satisfy its
redemption obligations pursuant to Section 5 hereof if any such failure shall
continue for a period of five days from the appropriate redemption date;
(iii) Any failure by the Corporation to comply with the
provisions of Sections 4(c) or 6 hereof;
(iv) If any representation or warranty made by the
Corporation in the Purchase Agreements is or shall be untrue in any material
respect at the time it was made, if such representation or warranty remains
untrue after 10 days' written notice, with such notice delivered by hand or by
first-class, certified or overnight mail, postage prepaid, or by telecopier,
from any Holder of Series A Stock;
(v) Any material failure by the Corporation to comply
with, or any material breach by the Corporation of, any of the covenants,
agreements or obligations of the Corporation contained in the Purchase
Agreements which continues for a period of 10 days after written notice, with
such notice delivered by hand or by first-class, certified or overnight mail,
postage prepaid, or by telecopier, from any Holder of Series A Stock;
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(vi) Default by the Corporation in the performance or
observance of any obligation or condition with respect to any Indebtedness of
the Company; if the effect of such default is to accelerate the maturity of such
Indebtedness or cause such Indebtedness to be prepaid, purchased or redeemed or
to permit the holder or holders thereof, or any trustee or agent for such
holders, to cause such Indebtedness to become due and payable prior to its
expressed maturity or to cause such Indebtedness to be prepaid, purchased or
redeemed or to realize upon any collateral or security for such Indebtedness,
unless such default shall have been waived by the appropriate Person; and
(vii) If the Corporation shall:
(a) become insolvent or generally fail to pay,
or admits in writing its inability to pay, its debts as they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian for the
Corporation or any property thereof, or make a general assignment for the
benefit of creditors (any of which shall be referred to herein as a "Receiver");
(c) in the absence of such application, consent
or acquiescence, permit or suffer to exist the appointment of a Receiver, and
such Receiver shall not be discharged within 60 calendar days;
(d) commit any act of bankruptcy, permit or
suffer to exist the commencement of any bankruptcy reorganization, debt
arrangement or other case or proceeding under any bankruptcy or insolvency law,
or any dissolution, winding up or liquidation proceeding in respect of the
Corporation, and, if any such case or proceeding is not commenced by the
Corporation, such case or proceeding shall be consented to or acquiesced in by
the Corporation, or shall result in the entry of an order for relief and shall
remain for 30 calendar days undismissed; or
(e) take any corporate or other action
authorizing, or in furtherance of, any of the foregoing.
"Funded Debt" of any corporation shall mean all Indebtedness of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, more than one
year from, or is directly or indirectly renewable or extendible at the option of
the debtor to a date more than one year (including an option of the debtor under
a revolving credit or similar agreement obligating the lender or lenders to
extend credit over a period of more than one year) from, the date of the
creation thereof.
"Holders" shall mean the Persons who shall, from time to time, own of
record, or beneficially, any Security. The term "Holder" shall mean one of the
Holders.
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"Indebtedness" of any corporation shall mean the principal of (and
premium, if any) and unpaid interest on:
(i) indebtedness which is for money borrowed from others;
(ii) indebtedness guaranteed, directly or indirectly, in
any manner by such corporation, or in effect guaranteed, directly or indirectly,
by such corporation through an agreement, contingent or otherwise, to supply
funds to or in any manner invest in the debtor or to purchase indebtedness, or
to purchase Assets or services primarily for the purpose of enabling the debtor
to make payment of the indebtedness or of assuring the owner of the indebtedness
against loss;
(iii) all indebtedness secured by any mortgage, lien,
pledge, charge or other encumbrance upon Assets owned by such corporation, even
if such corporation has not in any manner become liable for the payment of such
indebtedness;
(iv) all indebtedness of such corporation created or
arising under any conditional sale, lease or other title retention agreement
with respect to Assets acquired by such corporation even though the rights and
remedies of the seller, lessor or lender under such agreement or lease in the
event of default are limited to repossession or sale of such Assets and provided
that obligations for the payment of rent under a lease of premises from which
the business of such corporation will be conducted shall not constitute
indebtedness; and
(v) renewals, extensions and refunding of any such
indebtedness.
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government organization or an agency
or political subdivision thereof.
"Purchase Agreements" shall mean those certain purchase agreements,
dated as of October ___, 1995, between the Corporation and each of the
Investors, as defined therein, providing for the purchase and sale of
Subordinated Notes, Series A Stock and Common Stock.
"Securities" shall mean any debt or equity securities of the
Corporation, whether now or hereafter authorized, and any instrument convertible
into or exchangeable for Securities or a Security. The term "Security" shall
mean one of the Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended
prior to or after the date hereof, or any federal statute or statutes which
shall be enacted to take the place of such Act together with all rules and
regulations promulgated thereunder.
"Securities and Exchange Commission" shall mean the United States
Securities and Exchange Commission or any successor to the functions of such
agency.
"Series A Stock Value" shall mean $10.00 per share of Series A Stock.
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"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, corporate stock.
"Subordinated Notes" shall mean the $1,000 subordinated promissory with
an 8% coupon purchasable pursuant to the Purchase Agreements.
"Superior Stock" shall mean any shares of any class or series of Stock
of the Corporation having any preference or priority as to dividends or Asset
superior to any such preference or priority of the Series A Stock and any
instrument or security convertible into or exchangeable for Superior Stock.
"Voting Securities," as applied to the securities of any corporation,
shall mean securities of any class or classes (however designated) having
ordinary voting power for the election of a member of the Board of Directors (or
other governing body) of such corporation, other than securities having such
power only by reason of the happening of a contingency.
IN WITNESS WHEREOF, Park `N View, Inc. has caused this Certificate to
be duly executed this ______ day of October, 1995.
PARK `N VIEW, INC.
By:
-----------------------------
President
Attest:
- ---------------------------
Secretary
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EXHIBIT 1.1(c)
PARK `N VIEW, INC.
8% Subordinated Note
Due November 1, 2000
$_______
New York, New York
__________, 199_
THIS NOTE (THE "NOTE") HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION OF THIS NOTE OR ANY INTEREST HEREIN MAY BE MADE OTHER THAN
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION
THEREFROM. PARK `N VIEW, INC. MAY REQUEST AS A CONDITION TO ANY SUCH TRANSACTION
A SATISFACTORY OPINION OF COUNSEL THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION DOES NOT REQUIRE REGISTRATION UNDER THE ACT.
PARK `N VIEW, INC., a Delaware corporation (the "Issuer"), for
value received, hereby promises to pay to _______________ (the "Holder") the
principal amount of ____________ Dollars ($_____).
This Note is one of a duly authorized issue of notes issued
pursuant to or in connection with a Securities Purchase Agreement ("Agreement")
by and among the Issuer, the Holder and certain other parties (collectively, the
"Notes;" such term also to include any Notes which may be issued in exchange
therefor or in replacement thereof).
Capitalized terms used herein but not otherwise defined shall
have the meanings ascribed to them in the Securities Purchase Agreement.
1. Principal. The Issuer will pay to Holder the principal sum of
____________ Dollars ($_____), plus all unpaid and accrued interest thereon on
the earlier to occur of (i) November 1, 2000; (ii) an Event of Default which is
not cured or waived as provided herein.
2. Interest. Interest on the outstanding principal amount of this Note
shall accrue from the date hereof at the rate of eight percent (8%) per annum,
computed on the basis of a 360-day year, and compounded semi-annually. Interest
shall become due and payable semi-annually, on June 30 and December 31 each year
(each, an "Interest Payment Date"), commencing on
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_________, 199_. The Issuer may elect to defer the payment of interest until the
principal of this Note shall become due and payable. Interest so deferred shall
bear interest at the rate of 8% per annum until fully paid.
3. Replacement or Exchange of this Note.
3.1 Replacement. Upon receipt by the Issuer of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Note,
and of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Issuer of all reasonable expenses incidental thereto, and
upon surrender for cancellation of this Note, if mutilated, the Issuer will make
and deliver a new Note of like terms, in lieu of this Note. Any Note made and
delivered in accordance with the provisions of this Section 3.1 shall be dated
the date hereof.
3.2 Exchange. Except as otherwise provided herein, in the
event that the Issuer has merged with, liquidated into, sold substantially all
of its assets to or combined with, another company, the surviving entity will,
at the request of the Holder, exchange this Note for a new instrument with the
same terms and covenants, having substituted said surviving entity for the
Issuer, executed by such surviving entity and in which the surviving entity
assumes all the Issuer's rights and obligations hereunder.
4. Prepayment.
4.1 Mandatory Prepayment. The Issuer may prepay the
outstanding principal amount of this Note plus accrued and unpaid Interest
thereon upon the registration of Stock of the Issuer under the Securities Act of
1933, as amended (the "Act") being declared effective by the Securities and
Exchange Commission.
4.2 Optional Prepayment. The Issuer may, at its option,
prepay this Note in full at any time upon five (5) days prior written notice.
Any payment received shall first be applied to the payment of any accrued but
unpaid interest and then to prepayment.
5. Subordination.
5.1 Subordination to Senior Indebtedness. The payment of
the principal of and interest on this Note is expressly subordinated to the
payment in full of all amounts payable on, under or in connection with Senior
Indebtedness, as hereinafter defined, to the extent set forth in this Article 5.
The term "Senior Indebtedness" shall mean all present and future Indebtedness
(as hereinafter defined) of the Issuer and its subsidiaries that is not by its
terms expressly subordinated to the Notes. The term "Indebtedness" means, (i)
the principal of or premium (if any) in respect of all indebtedness for money
borrowed and indebtedness evidenced by securities, debentures, bond or other
similar instruments (including purchase money obligations) for payment, and (ii)
all capital lease obligations, provided, however, that "Indebtedness" shall not
include any obligations to any subsidiary or affiliate of the Issuer or any
affiliate of any officer, director or 10% shareholder of the Issuer.
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5.2 Priority of Senior Indebtedness of Default. No
payment with respect to this Note shall be made by the Issuer or received by the
Holder if there is outstanding at the time such payment is to be made any Senior
Indebtedness and there exists at such time, or immediately after giving effect
to such payment there would exist, any default in the payment of principal of,
or any premium or interest on, any Senior Indebtedness or any other event of
default under the terms of any Senior Indebtedness then outstanding, which
default has not been waived or cured prior thereto; provided, however, that the
Issuer shall resume payments with respect to this Note on the six-month
anniversary of the date that notice of such default with respect to Senior
Indebtedness is first received by the Issuer if (i) the default is not the
subject of judicial proceedings and (ii) the maturity of the Senior Indebtedness
for which the default relates has not been accelerated.
5.3 Priority of Senior Indebtedness on Liquidation. Upon
any payment or distribution of assets of the Issuer of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution or
winding up or total or partial liquidation or reorganization of the Issuer,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due or to become due in respect of any and all
Senior Indebtedness shall first be paid in full and payment or distribution of
assets of the Issuer of any kind or character, whether in cash, property or
securities, to which the Holder would be entitled shall be paid to the holders
of Senior Indebtedness (pro rata to each such holder on the basis of the
respective amounts of Senior Indebtedness held by such holders of Senior
Indebtedness or on such other basis as the holders of Senior Indebtedness or a
court of competent jurisdiction shall direct) to the extent necessary to pay all
Senior Indebtedness in full after giving effect to any concurrent payment or
distribution to or from the holders of Senior Indebtedness, before any payment
or distribution is made to the Holder.
5.4 Duties of Holder to Holders of Senior Indebtedness.
In the event that any payment or distribution of assets of the Issuer of any
kind or character, whether in cash, property or securities, shall be received by
the Holder, in violation of Section 5.2 or Section 5.3, such payment or
distribution shall be (and shall be deemed to be) held in trust for the benefit
of, and shall be paid over or delivered to, the holders of such Senior
Indebtedness for application to the payment of all Senior Indebtedness remaining
unpaid (pro rata to each holder on the basis of the amount of Senior
Indebtedness held by such holder or on such other basis as the holders of Senior
Indebtedness or a court of competent jurisdiction shall direct) to the extent
necessary to pay all such Senior Indebtedness in full in accordance with its
terms, after giving effect to any concurrent payment or distribution to or for
the holders of such Senior Indebtedness.
5.5 Enforcement by Holders of Senior Indebtedness. The
provisions of Sections 5.2, 5.3 and 5.4 shall be for the benefit of the holders
of Senior Indebtedness and may be enforced directly by such holders against the
Holder without the necessity of joining the Issuer as a party.
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5.6 Subrogation. After all Senior Indebtedness is paid in
full, or a sum of money sufficient for the payment thereof shall have been set
aside for payment, and until this Note is paid in full, the Holder shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets of the Issuer applicable to the Senior
Indebtedness to the extent that payments or distributions otherwise payable to
the Holder have been applied to the payment of Senior Indebtedness.
5.7 Subordination Unimpaired. It is understood that the
provisions of this Article 5 are intended solely for the purpose of defining the
relative rights of the Holder on the one hand and the rights of holders of
Senior Indebtedness on the other, and nothing contained herein, including,
without limitation, any act or failure to act by the Issuer or the failure of
the Issuer to comply with the terms of the Notes, is intended to or shall impair
the right of any holder of Senior Indebtedness to enforce the subordination of
the Indebtedness evidenced by the Notes.
5.8 Subordination Agreements. In the event the Company
determines it reasonably necessary to incur Indebtedness and upon obtaining the
approval of a majority of the Holders, each Holder agrees to execute a
subordination agreement in favor of the holders of Senior Indebtedness.
6. Event of Default. (a) For purposes of this Note, an "Event of Default"
shall mean the occurrence of one or more of the following events:
(i) if the Issuer shall default in the payment
of the principal or interest of this Note when due at maturity, upon
acceleration, redemption or otherwise.
(ii) (A) the Issuer, pursuant to or within the
meaning of title 11, U.S. Code or any similar applicable federal or state law
for the relief of debtors ("Bankruptcy Law"): (1) commences a voluntary case,
(2) consents to the entry of an order for relief against it in an involuntary
case, (3) consents to the appointment of a Custodian of it or for all or
substantially all of its property, (4) makes a general assignment for the
benefit of its creditors or (5) generally is unable to pay its debts as the same
become due; or (B) a court of competent jurisdiction enters an order or decree
under Bankruptcy Law that: (1) is for relief against the Issuer in an
involuntary case, (2) appoints a receiver, trustee, assignee, liquidator or
similar official ("Custodian") of the Issuer or (3) orders the liquidation of
the Issuer and the order or decree remains unstayed and in effect for sixty (60)
days; or
(iii) the Issuer shall voluntarily or
involuntarily liquidate, dissolve or wind up, which shall include the sale of
all or substantially all of the Issuer's assets or the acquisition of the Issuer
by a third party by means of a merger or consolidation resulting in the exchange
of the outstanding shares of Stock of the Issuer for securities or consideration
by the third party acquirer;
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then and in each and every case, the Holder may declare the entire principal
amount of this Note outstanding and the interest accrued thereon to be due and
payable and, upon such declaration, such amount shall be immediately due and
payable.
7. Investment Representations and Restrictions on Transfer. The Holder, by
acceptance hereof, confirms such Holder's representations to and agreements with
the Issuer as follows:
(a) The Holder is acquiring this Note solely for the
purpose of investment and not with a view to the distribution thereof. The
Holder acknowledges that this Note will not be registered under Act and the
acquisition of this Note by the Holder will not be registered under the Act.
Therefore, the Holder acknowledges that this Note may not be transferred, sold,
hypothecated or otherwise disposed of except pursuant to the registration
provisions of the Act or pursuant to an applicable exemption therefrom and
subject to state securities laws, as applicable.
(b) The Holder acknowledges that this Note involves a
great deal of risk and that there is no existing or other market for the Notes.
The Holder is able to (i) bear the economic risk of the investment in the debt
of the Issuer, (ii) afford a complete loss of such investment and (iii) hold
this Note indefinitely. In reaching an informed decision to invest in the
Issuer, the Holder has obtained sufficient information to evaluate the merits
and risks of an investment in the capital stock of the Issuer.
(c) The Holder is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the Act.
(d) Each Note shall bear a legend in substantially the
following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). NO SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION OF
THE NOTE OR ANY INTEREST HEREIN MAY BE MADE OTHER THAN PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM. PARK `N VIEW,
INC. MAY REQUEST AS A CONDITION TO ANY SUCH TRANSACTION A SATISFACTORY OPINION
OF COUNSEL THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION DOES NOT
REQUIRE REGISTRATION UNDER THE ACT."
(e) The Holder acknowledges that the Issuer and any
transfer agent acting on its behalf may maintain appropriate "stop transfer"
notations with respect to such Notes.
8. Miscellaneous.
8.1 Notices. Any notice, demand, request, waiver, or
other communication under this Note shall be in writing (including facsimile or
similar writing) and shall be deemed to have been duly given (i) on the date of
service if personally served, (ii) on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, registered, return
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receipt requested, postage prepaid or (iii) on the date sent if sent by
facsimile, to the parties at the following addresses or facsimile numbers (or at
such other address or facsimile number for a party as shall be specified by like
notice):
If to the Holder, to:
Patricof & Co., Ventures, Inc.
445 Park Avenue
New York, New York 10022
Attention: Robert Chefitz
with a copy to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attention: Morris Orens, Esq.
If to the Issuer, to:
Park `N View, Inc.
3403 N.W. 55th Street, Building 10
Fort Lauderdale, Florida 33309
with a copy to:
Petree Stockton, L.L.P.
410 Lake Boone Trail, Suite 400
Raleigh, North Carolina 27607
Attention: James O'Connell, Esq.
8.2 Binding Effect; Assignment. This Note shall be binding upon
and inure to the benefit of the Issuer and the Holder and their respective
successors and assigns. This Note shall not confer any rights or remedies upon
any person other than the parties hereto and their respective successors and
permitted assigns.
8.3 Amendment or Modification; Waiver. This Note may be amended or
modified only by written agreement by the holders of at least a 66.6% of the
then outstanding principal amount of the Notes, except that no amendment or
modification of the maturity date or Articles 1, 2 and 6 hereof shall be binding
on any Holder without the prior written consent of such Holder. Any of the
parties hereto may extend the time for the performance of any of the obligations
or other acts of any other party hereto, waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or waive compliance with any of the covenants, agreements or
conditions contained herein. Any
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agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed by the party granting
such waiver. Such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or future failure. Any Holder of
Notes may waive any of his or her rights hereunder without obtaining the consent
of any other Holder of Notes.
8.4 Severability. In the event that any one or more of the
provisions contained in this Note shall for any reason be held to be invalid,
illegal or unenforceable in any respect, in whole or in part, the validity of
the remaining provisions shall not be affected and the remaining portion of any
provision held to be invalid, illegal or unenforceable shall in no way be
affected, prejudiced or disturbed thereby.
8.5 Waiver of Presentment. The Issuer hereby waives presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Issuer with respect to this Note.
8.6 Paying Agent. Initially, the Issuer will act as Paying Agent.
The Issuer may appoint a substitute Paying Agent.
8.7 Entire Agreement. This Note, the Notes, the Securities
Purchase Agreement and the agreements referenced therein set forth the entire
understanding and agreement of the parties with respect to their subject matter
and supersede any and all prior understandings, negotiations or agreements among
the parties hereto, both written and oral, with respect to such subject matter.
8.8 Governing Law: Consent to Jurisdiction. This Note shall be
construed in accordance with, and governed by, the internal laws of the State of
Delaware as applied to contracts made and to be performed entirely within the
State of Delaware. Any legal action, suit or proceeding arising out of or
relating to this Note may be instituted in any state or federal court located
within the County of New Castle, State of Delaware, and each party hereto agrees
not to assert, by way of motion, as a defense, or otherwise, in any such action,
suit or proceeding, any claim that it is not subject personally to the
jurisdiction of such court in an inconvenient forum, that the venue of the
action, suit or proceeding is improper or that this Note or the subject matter
hereof may not be enforced in or by such court. Each party hereto further
irrevocably submits to the jurisdiction of any such court in any such action,
suit or proceeding.
8.9 Gender and Number. Whenever used in this Note, the singular
number shall include the plural, the plural the singular, and the use of any
gender shall be applicable to all genders.
8.10 Headings of Subdivisions. Section headings contained in this
Note are included for convenience only and shall not affect the interpretation
of any provisions of this Note.
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IN WITNESS WHEREOF, the Issuer has duly caused this Note to be duly
executed as of this ___ day of ______, 199_.
PARK `N VIEW, INC.
By:
------------------------------------
Name:
Title:
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EXHIBIT 1.2(D)
FORM OF BY-LAWS
BY-LAWS OF
PARK `N VIEW, INC.
ARTICLE I
OFFICES
Section 1.1. Registered Office. The registered office of the
Corporation within the State of Delaware shall be located at the principal place
of business in said State of such corporation or individual acting as the
Corporation's registered agent in Delaware.
Section 1.2. Other Offices. The Corporation may also have offices and
places of business at such other places both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. Place of Meetings. All meetings of stockholders shall be
held at the principal office of the Corporation, or at such other place within
or without the State of Delaware as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2.2. Annual Meetings. The annual meeting of stockholders for
the election of directors shall be held at such time on such day, other than a
legal holiday, as the Board of Directors in each such year determines. At the
annual meeting, the stockholders entitled to
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vote for the election of directors shall elect a Board of Directors and transact
such other business as may properly come before the meeting.
Section 2.3. Special Meetings. Special meetings of stockholders, for
any purpose or purposes, may be called by a member of the Board of Directors.
Any such request shall state the purpose or purposes of the proposed meeting. At
any special meeting of stockholders, only such business may be transacted as is
related to the purpose or purposes set forth in the notice of such meeting.
Section 2.4. Notice of Meetings. Written notice of every meeting of
stockholders, stating the place, date and hour thereof and, in the case of a
special meeting of stockholders, the purpose or purposes thereof and the person
or persons by whom or at whose direction such meeting has been called and such
notice is being issued, shall be given not less than ten (10) nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
or at the direction of the Chairman of the Board, Secretary, or the persons
calling the meeting, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the stock transfer books of the Corporation. Nothing
herein contained shall preclude the stockholders from waiving notice as provided
in Section 4.1 hereof.
Section 2.5. Quorum. The holders of a majority of the issued and
outstanding shares of stock of the Corporation entitled to vote, represented in
person or by proxy, shall be necessary to and shall constitute a quorum for the
transaction of business at any meeting of
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stockholders. If, however, such quorum shall not be present or represented at
any meeting of stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At any such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed. Notwithstanding
the foregoing, if after any such adjournment the Board of Directors shall fix a
new record date for the adjourned meeting, or if the adjournment is for more
than thirty (30) days, a notice of such adjourned meeting shall be given as
provided in Section 2.4 of these By-Laws, but such notice may be waived as
provided in Section 4.1 hereof.
Section 2.6. Voting. At each meeting of stockholders, each holder of
record of shares of stock entitled to vote shall be entitled to vote in person
or by proxy, and each such holder shall be entitled to one vote for every share
standing in his name on the books of the Corporation as of the record date fixed
by the Board of Directors or prescribed by law and, if a quorum is present, a
majority of the shares of such stock present or represented at any meeting of
stockholders shall be the vote of the stockholders with respect to any item of
business, unless otherwise provided by any applicable provision of law, by these
By-Laws or by the Certificate of Incorporation.
Section 2.7. Proxies. Every stockholder entitled to vote at a meeting
or by consent without a meeting may authorize another person or persons to act
for him by proxy. Each proxy shall be in writing executed by the stockholder
giving the proxy or by his duly
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authorized attorney. No proxy shall be valid after the expiration of three (3)
years from its date, unless a longer period is provided for in the proxy. Unless
and until voted, every proxy shall be revocable at the pleasure of the person
who executed it, or his legal representatives or assigns except in those cases
where an irrevocable proxy permitted by statute has been given.
Section 2.8. Consents. Whenever a vote of stockholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action by any provision of statute, the Certificate of Incorporation or these
By-Laws, the meeting, prior notice thereof and vote of stockholders may be
dispensed with if the holders of all outstanding shares shall consent in writing
to the taking of such action.
Section 2.9. Stock Records. The Secretary or agent having charge of the
stock transfer books shall make, at least ten (10) days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order and showing
the address of and the number and class and series, if any, of shares held by
each. Such list, for a period of ten (10) days prior to such meeting, shall be
kept at the principal place of business of the Corporation or at the office of
the transfer agent or registrar of the Corporation and such other places as
required by statute and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder at any time during the meeting.
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ARTICLE III
DIRECTORS
Section 3.1. Number. The number of directors of the Corporation which
shall constitute the entire Board of Directors shall initially be fixed by the
Incorporator and thereafter from time to time by a vote of a majority of the
entire Board and shall be not less than one nor more than five. The first Board
of Directors shall consist of five members. If a certificate of designation of a
series of preferred stock provides that the number of directors shall be
increased upon the occurrence of certain events, then the provisions of such
certificate of designation shall supersede the provisions of these By-Laws.
Section 3.2. Resignation and Removal. Any director may resign at any
time upon notice of resignation to the Corporation. Any director may be removed
at any time by vote of the stockholders then entitled to vote for the election
of directors at a special meeting called for that purpose, either with or
without cause, except that directors elected by a class vote of holders of
preferred stock may only be removed by vote of the holders a majority of such
preferred stock.
Section 3.3. Newly Created Directorship and Vacancies. Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason whatsoever shall be
filled by vote of the Board. If the number of directors then in office is less
than a quorum, such newly created directorships and vacancies may be filled by a
vote of a majority of the directors then in office. Any director elected to fill
a vacancy shall be elected until the next meeting of stockholders at which the
election of
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directors is in the regular course of business, and until his successor has been
elected and qualified.
Section 3.4. Powers and Duties. Subject to the applicable provisions of
law, these By-Laws or the Certificate of Incorporation, but in furtherance and
not in limitation of any rights therein conferred, the Board of Directors shall
have the control and management of the business and affairs of the Corporation
and shall exercise all such powers of the Corporation and do all such lawful
acts and things as may be exercised by the Corporation.
Section 3.5. Place of Meetings. All meetings of the Board of Directors
may be held either within or without the State of Delaware.
Section 3.6. Annual Meetings. An annual meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting to the newly elected directors shall
be necessary in order to legally constitute the meeting, provided a quorum shall
be present, or the newly elected directors may meet at such time and place as
shall be fixed by the written consent of all of such directors.
Section 3.7. Regular Meetings. Regular meetings of the Board of
Directors may be held upon such notice or without notice, and at such time and
at such place as shall from time to time be determined by the Board.
Section 3.8. Special Meetings. Special meetings of the Board of
Directors may be called by a majority of the Board of Directors. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
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Section 3.9. Notice of Meetings. Notice of each special meeting of the
Board (and of each regular meeting for which notice shall be required) shall be
given by the Secretary or an Assistant Secretary and shall state the place, date
and time of the meeting. Notice of each such meeting shall be given orally or
shall be mailed to each director at his residence or usual place of business. If
notice of less than three (3) days is given, it shall be oral, whether by
telephone or in person, or sent by special delivery mail or telegraph. If
mailed, the notice shall be given when deposited in the United States mail,
postage prepaid. Notice of any adjourned meeting, including the place, date and
time of the new meeting, shall be given to all directors not present at the time
of the adjournment, as well as to the other directors unless the place, date and
time of the new meeting is announced at the adjourned meeting. Nothing herein
contained shall preclude the directors from waiving notice as provided in
Section 4.1 hereof.
Section 3.10. Quorum and Voting. At all meetings of the Board of
Directors a majority of the entire Board shall be necessary to and shall
constitute a quorum for the transaction of business at any meeting of directors,
unless otherwise provided by any applicable provision of law, by these By-Laws,
or by the Certificate of Incorporation. The act of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the Board of Directors, unless otherwise provided by an applicable
provision of law, by these By-Laws or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, until a
quorum shall be present.
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Section 3.11. Compensation. The Board of Directors, by the affirmative
vote of a majority of the directors then in office, and irrespective of any
personal interest of any of its members, shall have authority to establish
reasonable compensation of all directors for services to the Corporation as
directors, officers or otherwise.
Section 3.12. Books and Records. The directors may keep the books of
the Corporation, except such as are required by law to be kept within the state,
outside of the State of Delaware, at such place or places as they may from time
to time determine.
Section 3.13. Action without a Meeting. Any action required or
permitted to be taken by the Board, or by a committee of the Board, may be taken
without a meeting if all members of the Board or the committee, as the case may
be, consent in writing to the adoption of a resolution authorizing the action.
Any such resolution and the written consents thereto by the members of the Board
or committee shall be filed with the minutes of the proceedings of the Board or
committee.
Section 3.14. Telephone Participation. Any one or more members of the
Board, or any committee of the Board, may participate in a meeting of the Board
or committee by means of a conference telephone call or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
Section 3.15. Committees of the Board. The Board, by resolution adopted
by a majority of the entire Board, may designate one or more committees, each
consisting of one or more directors. The Board may designate one or more
directors as alternate members of any
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such committee. Such alternate members may replace any absent member or members
at any meeting of such committee. Each committee (including the members thereof)
shall serve at the pleasure of the Board and shall keep minutes of its meetings
and report the same to the Board.
Except as otherwise provided by law, each such committee, to the extent provided
in the resolution establishing it, shall have and may exercise all the authority
of the Board with respect to all matters. However, no such committee shall have
power or authority to:
(a) amend the Certificate of Incorporation;
(b) adopt an agreement of merger or consolidation;
(c) recommend to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets;
(d) recommend to the stockholders a dissolution of the
Corporation or a revocation of a dissolution;
(e) amend these By-Laws; and unless expressly so provided
by resolution of the Board, no such committee shall have power or authority to:
(1) declare a dividend; or
(2) authorize the issuance of shares of the
Corporation of any class.
ARTICLE IV
WAIVER
Section 4.1. Waiver. Whenever a notice is required to be given by any
provision of law, by these By-Laws, or by the Certificate of Incorporation, a
waiver thereof in writing, whether before or after the time stated therein,
shall be deemed equivalent to such notice. In
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addition, any stockholder attending a meeting of stockholders in person or by
proxy without protesting prior to the conclusion of the meeting the lack of
notice thereof to him, and any director attending a meeting of the Board of
Directors without protesting prior to the meeting or at its commencement such
lack of notice, shall be conclusively deemed to have waived notice of such
meeting.
ARTICLE V
OFFICERS
Section 5.1. Executive Officers. The officers of the Corporation shall
be a President or Chief Executive Officer, a Treasurer and a Secretary. Any
person may hold two or more of such offices. The officers of the Corporation
shall be elected annually (and from time to time by the Board of Directors, as
vacancies occur), at the annual meeting of the Board of Directors following the
meeting of stockholders at which the Board of Directors was elected.
Section 5.2. Other Officers. The Board of Directors may appoint such
other officers and agents, including a Chief Financial Officer, Vice President,
Assistant Vice Presidents, Secretaries, Assistant Secretaries and Assistant
Treasurers, as it shall at any time or from time to time deem necessary or
advisable.
Section 5.3. Authorities and Duties. All officers, as between
themselves and the Corporation, shall have such authority and perform such
duties in the management of business and affairs of the Corporation as may be
provided in these By-Laws, or, to the extent not so provided, as may be
prescribed by the Board of Directors.
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Section 5.4. Tenure and Removal. The officers of the Corporation shall
be elected or appointed to hold office until their respective successors are
elected or appointed. All officers shall hold office at the pleasure of the
Board of Directors, and any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors for cause or
without cause at any regular or special meeting.
Section 5.5. Vacancies. Any vacancy occurring in any office of the
Corporation, whether because of death, resignation or removal, with or without
cause, or any other reason, shall be filled by the Board of Directors.
Section 5.6. Compensation. The salaries and other compensation of all
officers and agents of the Corporation shall be fixed by or in the manner
prescribed by the Board of Directors.
Section 5.7. President. The President shall have general charge of the
business and affairs of the Corporation and in the absence of the Chairman of
the Board, the President shall preside at all meetings of the stockholders and
the directors. The President shall perform such other duties as are properly
required of him by the Board of Directors.
Section 5.8. Vice President. Each Vice President, if any, shall perform
such duties as may from time to time be assigned to him by the Board of
Directors.
Section 5.9. Secretary. The Secretary shall attend all meetings of the
stockholders and all meetings of the Board of Directors and shall record all
proceedings taken at such meetings in a book to be kept for that purpose; he
shall see that all notices of meetings of stockholders and meetings of the Board
of Directors are duly given in accordance with the provisions of
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these By-Laws or as required by law; he shall be the custodian of the records
and of the corporate seal or seals of the Corporation; he shall have authority
to affix the corporate seal or seals to all documents, the execution of which,
on behalf of the Corporation, under its seal, is duly authorized, and when so
affixed it may be attested by his signature; and in general, he shall perform
all duties incident to the office of the Secretary of a corporation, and such
other duties as the Board of Directors may from time to time prescribe.
Section 5.10. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit, or cause to be deposited, in the name and to the
credit of the Corporation, all moneys and valuable effects in such banks, trust
companies, or other depositories as shall from time to time be selected by the
Board of Directors. He shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation; he shall render to the
President and to each member of the Board of Directors, whenever requested, an
account of all of his transactions as Treasurer and of the financial condition
of the Corporation; and in general, he shall perform all of the duties incident
to the office of the Treasurer of a corporation, and such other duties as the
Board of Directors may from time to time prescribe.
Section 5.11. Other Officers. The Board of Directors may also elect or
may delegate to the President the power to appoint such other officers as it may
at any time or from time to time deem advisable, and any officers so elected or
appointed shall have such authority and perform such duties as the Board of
Directors or the President, if he shall have appointed them, may from time to
time prescribe.
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ARTICLE VI
PROVISIONS RELATING TO STOCK CERTIFICATES AND STOCKHOLDERS
Section 6.1. Form and Signature. The shares of the Corporation shall be
represented by a certificate signed by the President or any Vice President and
by the Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer, and shall bear the seal of the Corporation or a facsimile thereof.
Each certificate representing shares shall state upon its face (a) that the
Corporation is formed under the laws of the State of Delaware, (b) the name of
the person or persons to whom it is issued, (c) the number of shares which such
certificate represents and (d) the par value, if any, of each share represented
by such certificate.
Section 6.2. Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares of stock to receive dividends or other distributions, and to
vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of stock, and shall not be bound to
recognize any equitable or legal claim to or interest in such shares on the part
of any other person.
Section 6.3. Transfer of Stock. Upon surrender to the Corporation or
the appropriate transfer agent, if any, of the Corporation, of a certificate
representing shares of stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, and, in the event that the
certificate refers to any agreement restricting transfer of the shares which it
represents, proper evidence of compliance with such agreement, a new
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certificate shall be issued to the person entitled thereto, and the old
certificate canceled and the transaction recorded upon the books of the
Corporation.
Section 6.4. Lost Certificates, etc. The Corporation may issue a new
certificate for shares in place of any certificate theretofore issued by it,
alleged to have been lost, mutilated, stolen or destroyed, and the Board may
require the owner of such lost, mutilated, stolen or destroyed certificate, or
his legal representatives, to make an affidavit of the fact and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation on account of the alleged loss,
mutilation, theft or destruction of any such certificate or the issuance of any
such new certificate.
Section 6.5. Record Date. For the purpose of determining the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express written consent to any corporate
action without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board may fix, in advance, a record date. Such date shall not be more than
sixty (60) nor less than ten (10) days before the date of any such meeting, nor
more than sixty (60) days prior to any other action.
Section 6.6. Regulations. Except as otherwise provided by law, the
Board may make such additional rules and regulations, not inconsistent with
these By-Laws, as it may deem expedient, concerning the issue, transfer and
registration of certificates for the securities of the Corporation. The Board
may appoint, or authorize any officer or officers to appoint, one or
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more transfer agents and one or more registrars and may require all certificates
for shares of capital stock to bear the signature or signatures of any of them.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Dividends and Distributions. Dividends and other
distributions upon or with respect to outstanding shares of stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, bonds, property, or in stock of the
Corporation. The Board shall have full power and discretion, subject to the
provisions of the Certificate of Incorporation or the terms of any other
corporate document or instrument to determine what, if any, dividends or
distributions shall be declared and paid or made.
Section 7.2. Checks, etc. All checks or demands for money and notes or
other instruments evidencing indebtedness or obligations of the Corporation
shall be signed by such officer or officers or other person or persons as may
from time to time be designated by the Board of Directors.
Section 7.3. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
Section 7.4. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
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Section 7.5. General and Special Bank Accounts. The Board may authorize
from time to time the opening and keeping of general and special bank accounts
with such banks, trust companies or other depositories as the Board may
designate or as may be designated by any officer or officers of the Corporation
to whom such power of designation may be delegated by the Board from time to
time. The Board may make such special rules and regulations with respect to such
bank accounts, not inconsistent with the provisions of these By-Laws, as it may
deem expedient.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS
Section 8.1. Indemnification by Corporation. To the extent permitted by
law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment) the Corporation shall indemnify
any person against any and all judgments, fines, and amounts paid in settling or
otherwise disposing of actions or threatened actions, and expenses in connection
therewith, incurred by reason of the fact that he, his testator or intestate is
or was a director or officer of the Corporation or of any other corporation of
any type or kind, domestic or foreign, which he served in any capacity at the
request of the Corporation. To the extent permitted by law, expenses so incurred
by any such person in defending a civil or criminal action or proceeding shall
at his request be paid by the Corporation in advance of the final disposition of
such action or proceeding.
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ARTICLE IX
ADOPTION AND AMENDMENTS
Section 9.1. Power to Amend. Subject to any limitation contained in any
certificate of designation, these By-Laws may be amended or repealed and any new
By-Laws may be adopted by the Board of Directors; provided that these By-Laws
and any other By-Laws amended or adopted by the Board of Directors may be
amended, may be reinstated, and new By-Laws may be adopted, by the stockholders
of the Corporation entitled to vote at the time for the election of directors.
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EXHIBIT 3
Exceptions to Article III Representations and Warranties of the
Company.
Section 3.1
The Company is in the process of qualifying to do business in Arkansas
and Florida, the only two jurisdictions in which the character of its Assets or
the nature of its activities currently make such qualification necessary.
Section 3.3
The Company and PNV have pledged their rights under certain contracts
to APA Excelsior IV, L.P., and APA Excelsior IV Offshore, L.P.
Section 3.4
The Company's outstanding liabilities are set forth on Schedule 1.2 of
the Conveyance Agreement attached hereto as exhibit 3.3.
Section 3.5
Noteholders of Arden Technologies, Inc. have asserted claims against
PNV, Ian Williams and Monte Nathanson. PNV has provided the Investors with
copies of all correspondence regarding these claims.
Section 3.20(b)
The Company is indebted to Sam Hashman for the repayment of a $150,000
loan made to PNV on.
Mr. Hashman has agreed to modify his loan and make a contribution to
capital as provided in the attached agreement.
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EXHIBIT 3.2
Common Stock Held by Existing Investors
See Exhibit B
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EXHIBIT 3.3
List of Assets transferred to the Company by PNV
1. See Conveyance Agreement attached hereto pursuant to which PNV transferred
all of its assets to the Company.
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EXHIBIT 3.6
List of all Contracts to which either PNV or the Company
is a party or which are currently in negotiation
1. That certain lease relating to real property located at 3403 NW 55th Street,
Building #10, Ft. Lauderdale, Florida 33309.
2. That certain license relating to office space located at 301 South Perimeter
Park Drive. Suite 100, Nashville, Tennessee 37211.
3. That certain Park N' View Agreement dated May 27, 1994, by and between PNV
and Memphis Gateway Travel Center, Inc.
4. That certain Amended Cable Television and Television and Telephone Service
Agreement dated March 27, 1995 by and between PNV and National Auto/Truckstops,
Inc.
5. That certain Amended Cable Television and Telephone Service Agreement dated
August 27, 1995 by and between PNV and Ambest.
6. That certain Amended Cable Television and Telephone Service Agreement dated
September 29, 1995 by and between the Company and Highway Service Ventures.,
Inc.
7. That certain Amended Cable Television and Telephone Service Agreement dated
October 28, 1995 by and between Company and Travel Ports of America, Inc.
8. That certain Amended Cable Television and Telephone Service Agreement by and
between the Company and Pilot Corporation under negotiation.
9. That certain Agreement between the Company and Aquity Marketing dated October
2, 1995.
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EXHIBIT 3.8(B)
None
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EXHIBIT 3.12
Broker or Finder Fee
The Company entered into an Agreement with Cancap Investments Limited
pursuant to which the Company agreed to pay Cancap a finders fee as set forth in
the attached letter agreement.
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EXHIBIT 3.21
Unaudited Financial Statements
Park `N View, Inc.
(A Development Stage Enterprise)
Pro Forma Financial Statement - Income Tax Basis
September 30, 1995
MUKAMAL, APPEL, FROMBERG & MARGOLIES, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
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Park `N View, Inc.
(A Development Stage Enterprise)
Table of Contents
September 30, 1995
<TABLE>
<S> <C>
================================================================================
Accountants' Compilation Report............................................1
Financial Statement:
Pro Forma Statement of Assets, Liabilities and Stockholders' Equity-
Income Tax Basis...........................................................2-3
Selected Note to Pro Forma Financial Statement.............................4
</TABLE>
MUKAMAL, APPEL, FROMBERG & MARGOLIES, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
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MUKAMAL, APPEL, FROMBERG & MARGOLIES, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
One Biscayne Tower, Suite 3880
Two South Biscayne Boulevard
Miami, Florida 33131
Dade 305/530-0900 o Broward 305/765-0796
Telefax 305/530-1313
To the Board of Directors
Park `N View, Inc.
Ft. Lauderdale, Florida
We have compiled the accompanying pro forma statement of assets, liabilities and
stockholders' equity of Park `N View, Inc. (a development stage enterprise) as
of September 30, 1995 in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants. The financial statements have been prepared on the accounting basis
used by the company for income tax purposes, which is a comprehensive basis of
accounting other than generally accepted accounting principles.
A compilation is limited to the presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying pro forma statement of assets, liabilities and
stockholders' equity and, accordingly, do not express an opinion or any other
form of assurance on it.
Management has elected to omit substantially all of the disclosures and
assumptions required by generally accepted accounting principles. If the omitted
disclosures and assumptions were included in the pro forma financial statement,
they might influence the user's conclusions about the company's financial
position. Accordingly, this pro forma financial statement is not designed for
those who are not informed about such matters.
- -----------------------------------
Mukamal, Apel, Fromberg & Margolies, P.A.
Certified Public Accountants
Miami, Florida
October 26, 1994
Page 1
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<PAGE> 95
Park `N View, Inc.
(A Development Stage Enterprise)
Pro Forma Statement of Assets, Liabilities and Stockholders' Equity -
Income Tax Basis
September 30, 1995
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 33,938
Cash received from investors 100,000
Accounts receivable 5,000
Other receivables 100
Inventory 200
Prepaid expenses 7,000
-----------
Total current assets 148,238
Equipment and Leasehold improvements:
Office Equipment $ 3,829
Communication equipment 149,855
Leasehold improvements 28,244
Other receivables 100
Inventory 200
Prepaid expenses 7,000
-----------
Total current assets 179,728
Less: accumulated depreciation and amortization (50,782)
-----------
Net equipment and leasehold improvements 128,948
Other Assets:
Organization costs, net of accumulated amortization of $287 733
Start-up expenditures, net of accumulated amortization of $88,272 187,748
Goodwill, net of accumulated amortization of $31,540 530,171
Capitalized costs of raising capital 36,157
-----------
Total current assets 754,807
-----------
$ 1,029,991
</TABLE>
see accountants' compilation report
Page 2
MUKAMAL, APPEL, FROMBERG & MARGOLIES, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
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Park `N View, Inc.
(A Development Stage Enterprise)
Pro Forma Statement of Assets, Liabilities and Stockholders' Equity -
Income Tax Basis
September 30, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
Current Liabilities:
Accounts payable $ 73,534
Accrued expenses 18,874
Line of credit - related party 150,000
Loan payable - investors 100,000
----------
Total current assets 340,408
Stockholders' Equity:
Capital stock, per value $0.001, 5,000,000 shares authorized,
1,650,000 shares issued and outstanding 1,650
Additional paid in capital 1,340,607
Deficit accumulated during the development stage (652,674)
----------
Total stockholders' equity 689,583
----------
$1,029,991
==========
</TABLE>
see accountants' compilation report
Page 3
MUKAMAL, APPEL, FROMBERG & MARGOLIES, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
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Park `N View, Inc.
(A Development Stage Enterprise)
Selected Note to Pro Forma Financial Statement
September 30, 1995
1. PRO FORMA PRESENTATION/PARTNERSHIP TERMINATION
For purposes of this pro forma financial statement, all of the assets,
liabilities and partners' capital of Park `N View, Ltd. (a development stage
enterprise which is an operating partnership) have been recorded on the pro
forma statement of assets, liabilities and stockholders' equity of Park `N View,
Inc. as of September 30, 1995. The Partnership will terminate and transfer all
of its assets, rights, contracts, intangibles and liabilities to the newly
formed corporation in October 1995 in an anticipated "tax-free exchange". The
assets and liabilities when transferred to the successor corporation may be
valued on a fair market basis according to generally accepted accounting
principles.
Certain related party loans have been recorded as specified in contracts which
are expected to be consummated by investor entities. The entities loaned the
newly formed corporation $100,000. This loan has been recorded on the pro forma
September 30, 1995 statement of assets, liabilities and stockholders' equity -
income tax basis of the company.
Page 4
MUKAMAL, APPEL, FROMBERG & MARGOLIES, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
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EXHIBIT 5.1(F)
FORM OF SECURITIES RESTRICTION AGREEMENT
SECURITIES RESTRICTION AGREEMENT
SECURITIES RESTRICTION AGREEMENT ("Agreement") dated as of November 2,
1995, by and among PARK 'N VIEW, INC., a Delaware corporation (the "Company"),
the Existing Investors as set forth on Exhibit A attached hereto and made a part
hereof and the Investors as set forth on Exhibit B attached hereto and made a
part hereof. The parties hereto other than the Company are referred to herein
collectively as the "Securityholders" and each individually as a
"Securityholder."
Definitions. Terms initially capitalized but not otherwise defined
herein shall have the meanings given such terms in the Stock Purchase
Agreements, except for the following:
"Event of Option" shall mean the occurrence of any of the
following:
(a) if any Securityholder shall: (i) apply for, consent
to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or
other custodian or make a general assignment for the benefit of creditors for
itself or any of its property, (any of which shall be referred to herein as a
"Receiver"), or in the absence of such application, consent or acquiesce, permit
or suffer to exist the appointment of a Receiver and such Receiver shall not be
discharged within 60 calendar days; (ii) commit any act of bankruptcy or permit
or suffer to exist the commencement of any bankruptcy reorganization, debt
arrangement or other case or proceeding under any bankruptcy or insolvency law,
or any dissolution, winding up or liquidation proceeding in respect of itself,
and, if any such case or proceeding is not commenced by such Securityholder, if
such case or proceeding shall be consented to or acquiesced in by such
Securityholder, or shall result in the entry of an order for relief and shall
remain undismissed for 30 days; or (iii) take any corporate or other action
authorizing, or in furtherance of, any of the foregoing; or
(b) a writ of attachment, levy or other court order which
prevents a Securityholder from exercising his, her or its voting and/or other
rights in connection with all or a portion of his, her or its Stock in the
Company shall be entered and shall remain undismissed for 30 days.
"Non-Participating Investor" shall mean a Holder of Securities
that does not exercise its rights of first refusal under Section 3(a) of the
Securityholders' Agreement in connection with a transaction in which other
Holders of Securities purchase securities of the Company pursuant to such
section and any nominee for or Affiliate of such Holder unless such failure to
exercise its rights of first refusal under Section 3(a) of the Securityholders'
Agreement is due to a Regulatory Problem, as defined therein.
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"Prospective Purchaser" shall mean any person to whom a holder
shall desire to sell shares of Common Stock and who shall be identified by such
Securityholder to the Company and the Holders of Securities under the terms of
Subsection (A) of Section I hereof.
"Securities" shall mean at any time, the shares of then
outstanding Common Stock, Series A Preferred Stock and Subordinated Notes;
provided, however, that Securities shall not be deemed to include any shares of
Common Stock after such shares have been registered under the Securities Act and
sold pursuant to such registration or any shares sold without registration under
the Securities Act in compliance with Rule 144, or pursuant to any other
exemption from registration under the Securities Act to a person who is free to
resell such shares without registration under the Securities Act; and provided,
further, that at any time subsequent to the closing of the Initial Public
offering, Securities shall not include any shares which are eligible to be sold
without registration under the Securities Act in compliance with subsection (k)
of Rule 144.
"Sale" means the consolidation or merger of the Company into
or with any corporation or corporations (other than a merger with another
corporation in which the Company is the surviving corporation and which does not
result in any reclassification or change -- other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination -- of outstanding shares of the Company's
Stock of any class or series, whether now or hereafter authorized), or the sale
or transfer by the Company of all or substantially all of its assets.
"Securities Purchase Agreements" shall mean those certain
Securities Purchase Agreements dated as of hereof by and between the Company and
each of the Investors, as defined therein.
"Subordinated Notes" shall mean the subordinated promissory
notes, 8% coupon, sold pursuant to the Securities Purchase Agreements.
"Series A Preferred Stock" shall mean the $.01 par value
Preferred Stock designated as Series A Preferred Stock pursuant to the
Certificate of Designation referred to in the Securities Purchase Agreement.
1. Right of First Refusal; Right of Co-Sale.
(A) Right of First Refusal. (1) Except in the event of a
public offering, merger, consolidation, exchange of securities of the Company
approved by the stockholders of the Company, in the event that a Securityholder
desires to sell any or all of the shares of Common Stock owned by such
Securityholder and receives a bona fide offer therefor (the "Selling
Securityholder"), such Selling Securityholder shall so notify the Holders of
Securities in writing. The notice to the Holders of Securities shall be
delivered to them by hand, or by first-class, certified or overnight mail,
postage prepaid, or by telecopier, to their respective addresses as shown on the
books of the Company, which addresses shall be provided to the Selling
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Securityholder by the Company. Each notice shall set forth the identity and
mailing address of the prospective purchaser ("Prospective Purchaser"), the
quantity and description of the Common Stock proposed to be sold, the price per
share to be received therefor, the number of shares purchasable by each Holder
of Securities as determined in accordance herewith and the address of the
Selling Securityholder to which the Holders of Securities and/or the Company may
send notices to such Selling Securityholder required hereunder. If the Selling
Securityholder is also selling Series A Preferred Stock and/or Subordinated
Notes, then in order to exercise its right of first refusal, Holders or the
Company must purchase all Securities being sold.
The Selling Securityholder shall advise the Holders of
Securities by providing them with written notice, whereupon each Holder of
Securities shall be entitled, for a period of 20 days from the date of such
notice, to purchase upon the terms set forth in such notice, that proportion of
the Common Stock as such Securityholder's aggregate holding of Securities then
bears to the aggregate holding of Common Stock held by all Holders of Securities
exercising their right under this Subsection l(A)(1) (excluding all Securities
held by Non-Participating Investors) by the tender of an official bank check or
certified check for the appropriate amount to the Selling Securityholder, by
first class, certified or overnight mail, postage prepaid, addressed to the
Selling Securityholder at the address specified in the notice, within 30 days
after being notified of the availability of such rights pursuant hereto. Within
five days after the receipt of such official bank or certified check from the
Company, the Selling Securityholder shall surrender to the Company, by hand
delivery or by first class, certified or overnight mail, postage prepaid,
addressed to the Company as aforesaid, the certificate or certificates
representing the Common Stock sold in accordance herewith. If the certificate or
certificates surrendered by the Selling Securityholder represent a greater
number of shares of Common Stock than have been so sold, the Company shall
promptly issue to the Selling Securityholder a new certificate representing the
shares of Common Stock not so sold. Upon receipt by the Company of certificates
representing the Common Stock sold in accordance herewith, the Company shall
issue to each purchaser (or to the nominee of such purchaser) of such Common
Stock a new certificate representing such shares.
(2) If any Holders of Securities eligible to exercise the
right granted pursuant to Section (A)(1) of this Section 1 do not exercise such
right, in whole, the Selling Securityholder shall advise the Holders of
Securities who exercised their rights under Subsection (A)(1) of this Section 1
by providing them written notice, delivered by hand or by first-class, certified
or overnight mail, postage prepaid or by telecopier, within 5 days after the
earlier of (i) the expiration of the 20 day period specified in Subsection
(A)(1) above or (ii) the date the Selling Securityholder has determined the
total number of shares of Common Stock being purchased pursuant to Subsection
(A)(1) of this Section 1. Each such Holder of Securities shall thereupon be
entitled, for a period of 7 days from the date of such notice, to purchase some
or all of the shares of Common Stock not otherwise purchased under Subsection
(A) (1) of this Section 1; provided, however, that to the extent that more than
one such Holder desires to purchase shares of Common Stock exceeding that
proportion as such purchaser's aggregate holding of Securities then bears to the
aggregate holding of Securities then held by all Holders of
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Securities which exercised their rights granted under Subsection (A)(1) of this
Section 1 ("Excess Securities"), the amount of such Excess Securities which each
such Holder shall be entitled to purchase shall be reduced pro rata in
accordance with that proportion as the number of shares of Securities of which
such Holder is then the Holder bears to the total number of shares of Securities
then held by all such Holders desiring to purchase Excess Securities pursuant to
this Subsection (A)(2). The rights granted by this Subsection (A)(2) shall be
exercisable, in whole or in part, in the manner described in Subsection (A)(1)
of this Section 1.
(B) Right of Co-Sale. In the event that there are any shares
of Common Stock not purchased by one or more of the Holders of Securities
through the exercise of the rights granted in Subsection (A) of this Section 1,
no transfer of any of such shares shall be made other than in compliance with
this Subsection (B). The Selling Securityholder shall notify the Holders of
Securities, in the manner described in Subsection (A) of this Section 1, of the
number of shares of Common Stock remaining to be sold to the Prospective
Purchaser, restating the price to be paid in exchange therefor and the terms of
the proposed transaction. Such notice shall state the maximum number of shares
of Common Stock which may be sold to the Prospective Purchaser by each Holder of
Securities as determined in accordance herewith. With respect to any shares of
Common Stock which were unsold, each Holder of Securities shall thereupon be
entitled for a period of 20 days after the date of such notice to offer to sell
to the Prospective Purchaser, for such price and upon such terms, that
proportion (rounded to the nearest whole share) of the number of shares of
Common Stock proposed to be sold as such Holder's aggregate holding of
Securities then bears to the aggregate amount of Securities then held by all
Holders of Securities exercising their rights of co-sale under this Subsection
(B). The rights granted to the Holders of Securities in this Subsection (B) may
be exercised in whole or in part and shall be exercised by the tender,
conditioned upon receipt of the consideration for the Common Stock sold
hereunder, of the maximum number of shares of Common Stock the Holder thereof
desires to sell, endorsed and in transferable form, free and clear of liens,
claims, security interests and other encumbrances, to the Company, which shall
act as agent for purposes of such sale. On the first business day following the
date 20 days following the date of the first notice given to the Holders of
Securities, the Company shall notify the Selling Securityholder, the Holders of
Securities, and the Prospective Purchaser of the amount of Securities to be sold
under this Subsection (B) of Section 1, the price to be paid for any shares of
Common Stock and the price therefor. In such notice to the Prospective
Purchaser, the Company shall direct the Prospective Purchaser to furnish to the
Company, as agent, within 10 days of the date of such notice, the price of such
tendered shares of Common Stock in the form of an official bank or certified
check or checks in specified amounts. Promptly upon receipt of such check or
checks, the Company shall (i) transmit each check (duly endorsed, if necessary)
to the respective tendering Holder or Holders of Securities (ii) transfer the
shares so purchased on the books of the Company into the name of the purchaser
thereof, (iii) transmit certificates for such shares to the Prospective
Purchaser thereof by first class or certified mail, (iv) transmit tendered
shares not so purchased to the Holder thereof by first class or certified mail,
(v) notify the Holders of Securities in writing, delivered by hand or by
first-class, certified or overnight mail, postage prepaid, or by telecopier, of
such sale within 5 days following the completion thereof. In the event that, as
to any tender of
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shares of Common Stock or by the Holders of Securities pursuant hereto, the
entire purchase price for all shares of Common Stock duly tendered and eligible
for sale under this Subsection (B) is not received from the Prospective
Purchaser within the aforesaid 10-day period, the Company shall promptly (i)
return to the Holders of Securities all the shares of Common Stock tendered by
such Holders, delivered by hand or by first class, certified or overnight mail,
postage prepaid, and (ii) notify the Selling Securityholder of the return of
such shares of Common Stock . Any shares of Common Stock tendered by a Holder of
Securities as aforesaid received by the Company more than 20 days following the
date of the first notice given to the Holders of Securities pursuant to this
Subsection (B) shall be ineligible for sale in accordance with such notice and
the Company shall promptly return such shares of Common Stock to the tendering
Holder, delivered by hand or by first class, certified or overnight mail. The
balance of the number of shares of Common Stock to be sold to the Prospective
Purchaser, after deduction of the number of shares of Common Stock properly
tendered, if any, by one or more Holders of Securities in accordance herewith,
except in the event of a public offering, merger, consolidation, exchange of
securities of the Company approved by the stockholders of the Company, may be
sold by the Selling Securityholder to the Prospective Purchaser, at the price
and upon the terms set forth in the first notice given to the Holders of
Securities pursuant to this Subsection (B), not less than 20 days nor more than
60 days following the expiration of the 20-day period during which Holders of
Securities were entitled to exercise their rights of co-sale hereunder but only
if the Prospective Purchaser has timely paid the purchase price for all shares
properly tendered by such Holders and eligible for sale under this Subsection
(B).
(C) Non-Participating Investors. Notwithstanding the foregoing
provisions of this Section 1, a Non-Participating Investor shall not be entitled
to exercise any rights pursuant to Subsection (A) of this Section 1. However, a
Non-Participating Investor may participate in a sale pursuant to Subsection (B)
of this Section 1.
(D) Transfers to Affiliates. Notwithstanding anything in this
Section 1 to the contrary, any record owner of Common Stock purchased by a
Securityholder pursuant to the Securities Purchase Agreements may from time to
time transfer all or part of such record owner's Common Stock purchased pursuant
to the Securities Purchase Agreements: (i) to a nominee identified in writing to
the Company as being the nominee of or for such record owner, and any nominee of
or for a beneficial owner of Common Stock purchased pursuant to the Securities
Purchase Agreements identified in writing to the Company as being the nominee of
or for such beneficial owner may from time to time transfer all or part of
Common Stock purchased pursuant to the Securities Purchase Agreements registered
in the name of such nominee but held as nominee on behalf of such
Securityholder, to such Securityholder; (ii) an Affiliate of such
Securityholder; or (iii) if such Securityholder is a partnership or the nominee
of a partnership, to a partner, retired partner, or estate of a partner or
retired partner, of such partnership, so long as such transfer is in accordance
with the transferee's interest in such partnership and is without consideration;
provided, however, that each such transferee shall remain subject to all
restrictions on the transfer of Securities herein contained.
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(E) Termination of Provisions of this Section 1. The rights
granted and obligations imposed in this Section 1, shall terminate on the first
date on which shares of Common Stock are sold in an Initial Public Offering,
provided, however, that notwithstanding the foregoing provisions of this
Subsection l(E), all rights granted and obligations imposed in this Section 1
shall terminate on the date of consummation of Sale.
2. Sale of the Company.
(A) Obligation to Sell. Upon a Sale, each Securityholder shall
sell, exchange or otherwise transfer his shares of Common Stock in accordance
with the terms and conditions of the Sale if such Sale was approved by the
Holders of at least a majority of each class of the outstanding Securities. Each
Securityholder shall execute such documents and perform such acts, including,
without limitation, voting his, her or its shares of Common Stock, as may be
reasonably necessary to consummate such transfer of his shares of Common Stock;
provided, however, that no Securityholder who is not an officer of the Company
shall be required to make any representations or warranties in any such
document, other than with respect to the status of such Securityholder's title
to its or his share of Common Stock and whether or not it or he is an Accredited
Investor (as that term is defined in Rule 501 promulgated by the Securities and
Exchange Commission under the Securities Act).
3. Event of Option.
(A) Company's Right of Option. Upon the occurrence of an Event
of Option, the Securityholder who is the subject of the Event of Option (the
"Optioner") shall notify the Company in writing (such notice to be referred to
as the "Optioner's Notice"), delivered by hand or by first-class, certified or
overnight mail, postage prepaid, or by telecopier, within 5 days after the
occurrence of such Event of option, of its occurrence and nature. The Company
shall, within 7 days after its receipt of such notice, notify all Holders of
Securities other than the Optioner, such notice to be in writing, delivered by
hand, or by first-class, certified or overnight mail, postage prepaid, or by
telecopier, to their respective addresses as shown on the books of the Company.
Each such notice shall set forth the identity of the Optioner, the nature of the
Event of Option and the quantity and description of the Common Stock owned by
the Optioner.
The Company shall thereupon be entitled, for a period of 20
days after the delivery to it of the calculations of Fair Market Value to be
made pursuant to the last sentence of this Subsection (A), to purchase at a
price per share equal to the Fair Market Value of Common Stock, any or all of
the Optioner's shares of Common Stock by the tender of an official bank or
certified check for the appropriate amount to the Optioner. Within 3 days after
the receipt of such check from the Company, the Optioner shall surrender to the
Company by hand delivery or by first-class, certified or overnight mail, postage
prepaid, addressed to the Company, the certificates representing the shares of
Common Stock sold in accordance herewith. If the certificate or certificates
surrendered by the Optioner represent a greater number of shares of Common Stock
than have been sold, the Company shall promptly issue to the Optioner a new
certificate representing the shares of Common Stock not so sold. As used in this
Section 3, the
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term "Fair Market Value" shall mean the fair market value per share of Common
Stock on the date of the relevant Event of Option as applicable, as determined
by the firm of certified public accountants regularly engaged by the Company to
audit its financial statements, which determination the Company shall cause its
accountants to make and deliver to the Company no later than 20 days after its
receipt of the Optioner's Notice.
(B) Investors' Rights to Option.
(1) If the Company does not exercise, in whole, the option
granted under Subsection (A) of this Section 4 by the end of the 20 day option
period referred to therein, the Company shall so advise the Holders of
Securities other than the Optioner, by providing them with written notice as
aforesaid within 7 days after the expiration of the aforesaid 20 day period.
Each Holder of Securities, other than the Optioner and Non-Participating
Investors, shall thereupon be entitled, for a period of 20 days from the date of
such notice, to purchase that proportion of the Common Stock for which the
Company did not exercise its rights under Subsection (A) of this Section 3 as
such purchaser's aggregate holding of Securities then bears to the aggregate
holding of Securities then held by all Holders of Securities (excluding all
Securities held by Non-Participating Investors). The rights granted by this
Subsection (B)(1) shall be exercisable, in whole or in part, in the manner
described in Subsection (A) of this Section 3. In addition, upon receipt by the
Company of Common Stock sold in accordance herewith, the Company shall issue to
each purchaser of such Common Stock (or to the nominee of such purchaser) a new
certificate representing such shares.
(2) If any Holders of Securities eligible to exercise the
option granted pursuant to Section (B)(1) of this section 3 do not exercise such
right, in whole, the Company shall advise the Holders of Securities who
exercised their rights under Subsection (B)(1) of this Section 3 by providing
them written notice within 5 days after the expiration of the 20 day period
specified in Subsection (B)(1) above. Each such Holder of Securities shall
thereupon be entitled, for a period of 7 days from the date of such notice, to
purchase some or all of the shares of Common Stock not otherwise purchased under
Subsections (A) or (B) of this Section 3; provided, however, that to the extent
that more than one such Holder exercising its rights granted under this
Subsection (B)(2) desires to purchase Common Stock exceeding that proportion as
such purchaser's aggregate holding of Securities then bears to the aggregate
holding of Securities then held by all Holders of Securities which exercised
their rights granted under Subsection (B)(1) of this Section 3 ("Excess Option
Securities"), the amount of such Excess Securities which each such Holder shall
be entitled to purchase shall be reduced pro rata in accordance with that
proportion as the number of shares of Common Stock of which such Holder is then
the Holder bears to the total number of shares of Common Stock then held by all
such Holders desiring certificates representing the Common Stock, to purchase
Excess Option Securities pursuant to this Subsection (B)(2). The rights granted
by this Subsection (B)(2) shall be exercisable, in whole or in part, in the
manner described in Subsection (B)(1) of this Section 3.
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(C) Shares Not Purchased. Any shares not purchased pursuant to
Subsection (A) or (B) of this Section 3 shall continue to be subject to an open
option to purchase by the Company or by the Holders of any Securities other than
the Optioner. Any transfer, sale or disposition of such shares subject to this
option shall not be valid unless the intended transferee has executed and
delivered to the Company, a valid and binding agreement to such effect as a
condition to such transfer, sale, or disposition.
(D) Information. Upon the occurrence of an Event of Option,
the Optioner shall cease to be entitled to receive information pursuant to
Section 6.5 and 6.8 of the Securities Purchase Agreements and shall cease to
have any rights under Sections 6.6 of the Securities Purchase Agreements.
4. Limitations on Transfer: Legend.
(A) Transfer Limitations and Exceptions. For so long as this
Agreement shall remain in effect, the Securityholders shall not, directly or
indirectly, offer for sale, sell, assign, transfer, pledge, hypothecate,
encumber, convey in trust, gift, transfer by request, devise or descent or
otherwise dispose of, or subject to a security interest, any shares of Common
Stock or any interest therein whether now owned or hereafter acquired, owned
beneficially or of record (each of the above-described actions by any
Securityholder being referred to herein as a "Transfer"), except in strict
compliance with the provisions of this Agreement; provided, however, that this
Section 4 shall not restrict any transfer of shares of Common Stock by gift to
such Securityholder's spouse, lineal descendant or antecedent, brother or
sister, the adopted child or adopted grandchild, or spouse of any child, adopted
child, grandchild or adopted grandchild of such Securityholder or to a trust or
trusts for the exclusive benefit of such Securityholder or such Securityholder's
family members, or transfer by devise or descent or if such Securityholder is a
partnership, to any partners of such partnership, provided that in all cases,
the transferee or other recipient executes a counterpart copy of this Agreement
and becomes bound thereby.
(B) Prohibited Transfers. Any Transfer of shares of Common
Stock in violation of this Agreement (a "Prohibited Transfer") shall be null and
void. The Company shall not record any Prohibited Transfer on its books and
shall not recognize any equitable or other claim to, or any interest in,
Securities that are the subject of a Prohibited Transfer on the part of any
third party.
(C) Legend. All certificates representing shares of Common
Stock of the Company held or later acquired by the parties hereto shall bear a
legend in substantially the following form:
"This certificate and the shares represented hereby may not be
sold, assigned, bequeathed, transferred (including by will or pursuant to the
laws of descent and distribution or otherwise), pledged, encumbered or otherwise
disposed of or be made the subject of a security interest except as provided in
that certain Securities Restriction Agreement dated as of November 2, 1995, by
and among Park `N View, Inc. (the "Company") and the Securityholders of the
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Company, a copy of which agreement is on file at the office of the Company and
will be furnished to the holder of this certificate upon written request and
without charge. Any purported transfer in violation of that agreement shall be
void."
Upon termination of this Agreement, if a Securityholder shall
so request in writing, the Company shall promptly issue to such Securityholder a
new certificate not bearing the foregoing legend representing any shares of
Common Stock then held by such Securityholder.
(D) In the event the Company or Securityholders pursuant to
the Registration Rights Agreement propose to make an underwritten public
offering of Securities, all Securityholders shall agree not to sell any
Securities (including short sales) for a period to be determined by a majority
vote of each class of Securities except pursuant to such registration statement
without the prior written consent of the Company and the underwriter.
5. Failure to Deliver Securities If a Securityholder
becomes obligated to sell any shares of Common Stock to a Holder of Securities
or to the Company under this Agreement and fails to deliver such shares in
accordance with the terms of Agreement, such Holder or the Company, as the case
maybe, may at its option, in addition to all other remedies it may have, send to
such Securityholder the purchase price for such shares of Common Stock as is
herein specified. Thereupon, the Company upon written notice delivered by hand
or by first-class, certified or overnight mail, postage prepaid, or by
telecopier, to such Securityholder, (a) shall cancel on its books the
certificate or certificates represent the shares of Common Stock to be sold and
(b) shall issue, in lieu thereof, in the name of such Holder or the Company, as
the case may be, a certificate or certificates representing such shares of
Common Stock and thereupon all of such Securityholder's rights in and to such
shares of Common Stock shall terminate.
6. Miscellaneous.
(A) (i) Amendments. This Agreement may not be altered, amended
or supplemented except in a written instrument executed by the Company, Holders
of not less than a majority of each class of the then existing Securities.
(ii) Pledge. The parties to the Agreement hereby consent
to the pledge of Securities by Messrs. Williams and Nathanson to secure their
obligation to indemnify the Investors and the Company under that certain
Indemnification and Stock Pledge Agreement dated November 2, 1995.
(B) Successors and Assigns. The rights and benefits of this
Agreement shall inure to the benefit of, and be enforceable by, the successors
and assigns of the Company and the Holders of Securities. The rights and
obligations of the Securityholders under this Agreement may only be assigned
with the prior written consent of the Company and the Holders of at least a
majority of each class of the then outstanding Securities. This Agreement shall
be binding upon
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the Company and its successors and assigns and each Securityholder and his
heirs, personal representatives, successors and assigns.
(C) Further Execution. The parties hereto agree to execute any
additional documents or instruments necessary to carry out the purposes of this
Agreement.
(D) Governing Law. The validity, meaning and effect of this
Agreement shall be determined in accordance with the domestic laws of the State
of Delaware applicable to contracts made and to be performed in that state
without giving any effect to any choice or conflict of law provision or rule
(whether in the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.
(E) Headings. The headings herein are solely for the
convenience of the parties and shall not serve to modify or interpret the text
of the Sections at the beginning of which they appear.
(F) Severability. In the event that any court or any
governmental authority or agency declares all or any part of any Section of this
Agreement to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any other Section of this Agreement, and in the event that
only a portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
(G) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be an original but all of which shall
together constitute one and the same document.
(H) Entire Agreement. This Agreement constitutes the entire
agreement by and among the parties hereto with respect to the subject matter
hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first set forth above.
ATTEST: PARK 'N VIEW, INC.
By:
- ------------------------------- ----------------------------------------
Secretary
Existing Investors whose signatures appear
on Exhibit A hereto and Investors whose
signatures appear on Exhibit B hereto.
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EXHIBIT A
Park 'N View General Partner, Inc.
By:
------------------------------------
Name:
Title:
------------------------------------
Ian Williams
------------------------------------
Sam Hashman
------------------------------------
Monte Nathanson
Nelgo Investments
By:
------------------------------------
Name:
Title:
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EXHIBIT B
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1. APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By:
-------------------------------------
Name:
Title:
2. APA EXCELSIOR IV OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTOR ADVISOR
By:
-------------------------------------
Name:
Title:
3. THE P/A FUND
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By:
-------------------------------------
Name:
Title:
4.
---------------------------------
Michael Willner
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EXHIBIT 5.1(G)
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
November 2, 1995 by and among each of the Investors that signs a signature page
annexed hereto (collectively the "Investors") and Park N' View, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Investors and the Company have entered into
Securities Purchase Agreements dated October __, 1995 whereby the Investors have
purchased $6 million of Subordinated Notes, 140,000 shares of Series A Preferred
Stock and 2,000,000 shares of Common Stock.
ARTICLE 1.
DEFINITIONS
Section 1.1 Definitions. All terms not defined below shall have the
meaning set forth in the Securities Purchase Agreements dated November 2, 1995.
"Commission" means the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"Common Stock" means the Common Stock, par value $.001 per share, of
Park `N View, Inc., as it may exist from time to time.
"Demand Registration" means a Demand Registration as defined in Section
2.1.
"Holder" means any person who now holds or shall hereafter acquire and
hold Registrable Securities.
"Piggy-Back Registration" means a Piggy-Back Registration as defined in
Section 2.2.
"Registrable Securities" means the shares of Common Stock purchased
pursuant to the Securities Purchase Agreement until (i) a registration statement
covering such shares of Common Stock has been declared effective by the
Commission and such Common Stock have been disposed of pursuant to such
effective registration statement, or (ii) such shares of Common Stock are sold
or are sellable under circumstances in which all of the applicable conditions of
Rule 144 (or any similar provisions then in force) under the Securities Act are
met, including in a sale pursuant to the provisions of Rule 144(k), or (iii)
such shares of Common Stock have been otherwise transferred and the Company has
delivered a new certificate or other evidence of ownership for such Common Stock
not bearing the legend required pursuant to the Securities
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Purchase Agreement and such Common Stock may be resold by the person receiving
such certificate without registration under the Securities Act.
"Restricted Stock" means the Stock which may at the time be sold
pursuant to Rule 144(k) under the Securities Act or which may be otherwise sold
without registration under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Holder" means an Investor who is selling Registrable
Securities pursuant to a registration statement under the Securities Act.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal in an underwritten offering and not as part of such
dealer's market-making activities.
ARTICLE 2.
REGISTRATION RIGHTS
Section 2.1 Demand Registration. (a) Request for Registration. At any
time and from time to time Holders of a majority of Registrable Securities may
make written requests on the Company for the registration of the Common Stock
under the Securities Act, such requests hereinafter referred to as a Demand
Registration ("Demand Registration"). Subject to the penultimate sentence of
Section 2.1(b), the Company shall have no obligation to file more than two
registration statements under the Securities Act with respect to Demand
Registrations; provided, however, if the Registrable Securities may be
registered on Form S-3 (or any successor form with similar "short form"
disclosure requirements), the Investors shall have the right to request
registration of their shares on Form S-3, or such successor form, once per year.
Any such request will specify the number of shares or aggregate principal
amount, as the case may be, of Registrable Securities proposed to be sold and
will also specify the intended method of disposition thereof. The Company shall
give written notice of such registration request within 10 days after the
receipt thereof to all other Holders of Registrable Securities. Within 20 days
after receipt of such notice by any such Holder, such Holder may request in
writing that Registrable Securities be included in such registration and the
Company shall include in the registration statement for such Demand Registration
the Registrable Securities of all Holders requested to be so included. Each such
request by such other Holders shall specify the number of shares or aggregate
principal amount, as the case may be, of Registrable Securities proposed to be
sold and the intended method of disposition thereof.
(b) Effective Registration. A registration will not be deemed
to have been effected as a Demand Registration unless it has been declared
effective by the Commission and the Company has complied in all material
respects with its obligations under this Agreement with respect thereto;
provided that if, after it has become effective, the offering of shares of
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Common Stock pursuant to such registration is or becomes the subject of any stop
order, injunction or other order or requirement of the Commission or any other
governmental or administrative agency, or if any court prevents or otherwise
limits the sale of the shares of Common Stock pursuant to the registration at
any time within 180 days after the effective date of the registration statement,
such registration will be deemed not to have been effected. If (i) a
registration requested pursuant to this Section 2.1 is deemed not to have been
effected or (ii) the registration requested pursuant to this Section 2.1 does
not remain effective for a period of at least 180 days beyond the effective date
thereof or, with respect to an underwritten offering of Registrable Securities,
until 45 days after the commencement of the distribution by the Holders of the
Registrable Securities included in such registration statement, then the Company
shall continue to be obligated to effect such registration pursuant to this
Section 2.1. The Holders of Registrable Securities shall be permitted to
withdraw all or any part of the Registrable Securities from a Demand
Registration at any time prior to the effective date of such Demand
Registration; provided that in the event of such withdrawal, such Holders shall
be responsible for all fees and expenses (including counsel fees and expenses)
incurred by them prior to such withdrawal.
(c) Selection of Underwriter. If a majority of the Selling
Holders so elect, the offering of such Registrable Securities pursuant to such
Demand Registration shall be in the form of an underwritten offering. The
Selling Holders owning a majority of Common Stock to be sold shall select one or
more nationally recognized firms of investment bankers to act as the lead
managing Underwriter or Underwriters in connection with such offering and shall
select any additional investment bankers and managers to be used in connection
with the offering.
Section 2.2 Piggy-Back Registration. If at any time the Company
proposes to file a registration statement under the Securities Act with respect
to an offering by the Company for its own account or for the account of any of
its respective security holders (other than a registration statement on Form S-4
or S-8 (or any substitute form that may be adopted by the Commission), or a
Demand Registration pursuant to Section 2.1), then the Company shall give
written notice of such proposed filing to the Holders of Registrable Securities
as soon as practicable (but in no event less than 20 days before the anticipated
filing date), and such notice shall offer such Holders the opportunity to
register such number of Registrable Securities as each such Holder may request
(which request shall specify the Registrable Securities intended to be disposed
of by such Holder and the intended method of distribution thereof) (a
"Piggy-Back Registration"). The Company shall use its [reasonable] best efforts
to cause the managing Underwriter or Underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be included in a
Piggy-Back Registration to be included on the same terms and conditions as any
similar securities of the Company or any other security holder included therein
and to permit the sale or other disposition of such Registrable Securities in
accordance with the intended method of distribution thereof. Any Holder shall
have the right to withdraw its request for inclusion of its Registrable
Securities in any registration statement pursuant to this Section 2.2 by giving
written notice to the Company of its request to withdraw, provided that in the
event of such withdrawal, such Holder shall be responsible for all fees and
expenses (including fees and
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expenses of counsel) incurred by such Holder prior to such withdrawal. The
Company may withdraw a Piggy-Back Registration at any time prior to the time it
becomes effective.
No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Company of its
obligation to effect a registration upon the request of Holders pursuant to
Section 2.1, and no failure to effect a registration under this Section 2.2 and
to complete the sale of Registrable Securities in connection therewith shall
relieve the Company of any other obligation under this Agreement (including,
without limitation, the Company's obligations under Sections 3.2 and 4.1).
Section 2.3 Reduction of Offering. (a) Demand Registration. The Company
may include in a Demand Registration pursuant to Section 2.1 Registrable
Securities for the account of the Company and any other Persons who hold
Registrable Securities on the same terms and conditions as the Registrable
Securities to be included therein; provided, however, that (i) if the managing
Underwriter or Underwriters of any underwritten offering described in Section
2.1 have informed the Company in writing that it is their opinion that the
amount of Registrable Securities which Holders of Registrable Securities, the
Company and any other Persons desiring to participate in such registration
intend to include in such offering is such as to materially and adversely affect
the success of such offering, then the number of shares or aggregate principal
amount, as the case may be, to be offered for the account of the Company and for
the account of all such other Persons (other than the Holders) participating in
such registration shall be reduced or limited pro rata in proportion to the
respective number of shares or aggregate principal amount, as the case may be,
requested to be registered to the extent necessary to reduce the total number of
shares or aggregate principal amount, as the case may be, requested to be
included in such offering to the number of shares or aggregate principal amount,
as the case may be, if any, recommended by such managing Underwriters, and (ii)
if the offering is not underwritten, no other Person, including the Company,
shall be permitted to offer securities under any such Demand Registration unless
the Holders of a majority of the Registrable Securities participating in the
offering consent to the inclusion of such shares therein.
(b) Piggy-Back Registration. (1) Notwithstanding anything to
the contrary contained herein, if the managing Underwriter or Underwriters of
any underwritten offering described in Section 2.2 have informed, in writing,
the Holders of the Registrable Securities requesting inclusion in such offering
that it is their opinion that the total number of shares which the Company,
Holders of Registrable Securities and any other Persons desiring to participate
in such registration intend to include in such offering is such as to materially
and adversely affect the success of such offering, then the number of shares or
aggregate principal amount, as the case may be, to be offered shall be reduced
or limited in the following order of priority: first, the number of shares or
aggregate principal amount, as the case may be, to be offered by all other
holders of Stock of the Company other than the Holders of Registrable Securities
or other holders who have registration rights ("Demand Holders") to the extent
necessary to reduce the total number of shares or aggregate principal amount, as
the case may be, as recommended by such managing Underwriters; and second, if
further reduction or limitation is required, the
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number of shares or aggregate principal amount, as the case may be, to be
offered for the account of the Holders shall be reduced or limited on a pro rata
basis in proportion to the relative number of Registrable Securities of the
Holders participating in such registration, provided, however, that if the
registration is pursuant to a demand made by Demand Holders, then the number of
Registrable Securities to be included shall be determined under Section 2.3 (a).
(2) If the managing Underwriter or Underwriters of any
underwritten offering described in Section 2.2 notify the Holders of the
Registrable Securities requesting inclusion in such offering that the kind of
securities that the Holders, the Company and any other Persons desiring to
participate in such registration intend to include in such offering is such as
to materially and adversely affect the success of such offering, (x) the
Registrable Securities to be included in such offering shall be reduced as
described in clause (i) above or (y) if such reduction would, in the judgment of
the managing Underwriter or Underwriters, be insufficient to substantially
eliminate the adverse effect that inclusion of the Registrable Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering.
(c) If, as a result of the proration provisions of this
Section 2.3, any Holder shall not be entitled to include at least 50% of the
Registrable Securities in a Demand Registration or Piggy-Back Registration that
such Holder has requested to be included, such Holder may elect to withdraw his
request to include Registrable Securities in such registration (a "Withdrawal
Election"); provided, however, that a Withdrawal Election shall be irrevocable
and, after making a Withdrawal Election, a Holder shall no longer have any right
to include Registrable Securities in the registration as to which such
Withdrawal Election was made.
ARTICLE 3.
REGISTRATION PROCEDURES
Section 3.1 Filings; Information. Whenever the Company is required to
effect or cause the registration of Registrable Securities pursuant to Section
2.1, the Company will use its reasonable efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof as quickly as practicable, and in connection with any
such request:
(a) prepare and file with the Commission a registration
statement (which, in the case of an underwritten public offering pursuant to
Section 3, shall be on Form S-3 (unless the Company does not qualify for use of
Form S-3 in a registration involving only a secondary offering as provided in
the General Instructions to Form S-3 in such registration, in which case such
registration statement shall be a Form S-1) or other form of general
applicability satisfactory to the managing underwriter selected as therein
provided) with respect to such securities and use reasonable efforts to cause
such registration statement to become and remain effective until the completion
of the distribution; provided, however, the Company shall be required to keep
any registration statement effective for not less than 180 days;
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(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in Section 3.1(a) and as to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement in accordance with the intended method of
disposition set forth in such registration statement for such period.
(c) The Company will, prior to filing a registration statement
or prospectus or any amendment or supplement thereto, furnish to (i) each
Selling Holder, (ii) not more than [one counsel] representing all Selling
Holders, to be selected by a majority-in-interest of such Selling Holders, and
(iii) each Underwriter, if any, of the Registrable Securities covered by such
registration statement copies of such registration statement as proposed to be
filed, together with exhibits thereto, which documents will be subject to review
and approval by the foregoing within five days after delivery, and thereafter
furnish to such Selling Holders, counsel and Underwriters, if any, for their
review and comment such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein), the Prospectus included in
such registration statement (inducing each preliminary prospectus) and such
other documents or information as such Selling Holders, counsel or Underwriters
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Selling Holders.
(d) After the filing of the registration statement, the
Company will promptly notify each Selling Holder of Registrable Securities
covered by such registration statement of any stop order issued or threatened by
the Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered.
(e) The Company will use its reasonable efforts to (i)
register or qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States as any Selling Holder
reasonably (in light of such Selling Holder's intended plan of distribution)
requests, and (ii) cause such Registrable Securities to be registered with or
approved by such other governmental agencies or authorities in the United States
as may be necessary by virtue of the business and operations of the Company and
do any and all other acts and things that may be reasonably necessary or
advisable to enable such Selling Holder to consummate the disposition of the
Registrable Securities owned by such Selling Holder; provided that the Company
will not be required to (A) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this paragraph (e),
(B) subject itself to taxation in any such jurisdiction or (C) consent to
general service of process in any such jurisdiction.
(f) The Company will immediately notify each Selling Holder of
such Registrable Securities, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the Investors of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or
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omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and promptly make available to each
Selling Holder any such supplement or amendment.
(g) The Company and the Holders will enter into customary
agreements (including, if applicable, an underwriting agreement in customary
form and which is reasonably satisfactory to the Company) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities (the Selling Holders may, at their
option, require that any or all of the representations, warranties and covenants
of the Company or to or for the benefit of such Underwriters also be made to and
for the benefit of such Selling Holders).
(h) The Company will make available to each selling Holder of
such Registrable Securities (and will deliver to their counsel) and each
Underwriter, if any, subject to restrictions imposed by the United States
federal government or any agency or instrumentality thereof, copies of all
correspondence between the Commission and the Company, its counsel or auditors
and will also make available for inspection by any Selling Holder of such
Registrable Securities, any Underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
professional retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records") as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with such
registration statement. Records which the Company determines, in good faith, to
be confidential and which it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such registration
statement or (ii) the disclosure or release of such Records is requested or
required pursuant to oral questions, interrogatories, requests for information
or documents or a subpoena or other order from a court of competent jurisdiction
or other process; provided that prior to any disclosure or release pursuant to
clause (ii), the Inspectors shall provide the Company with prompt notice of any
such request or requirement so that the Company may seek an appropriate
protective order or waive such Inspectors' obligation not to disclose such
Records; and, provided further, that if failing the entry of a protective order
or the waiver by the Company permitting the disclosure or release of such
Records, the Inspectors, upon advice of counsel, are compelled to disclose such
Records, the Inspectors may disclose that portion of the Records which counsel
has advised the Inspectors that the Inspectors are compelled to disclose. Each
Selling Holder of such Registrable Securities agrees that information obtained
by it solely as a result of such inspections (not including any information
obtained from a third party who, insofar as is known to the Selling Holder after
reasonable inquiry, is not prohibited from providing such information by a
contractual, legal or fiduciary obligation to the Company) shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates unless and until
such information is made generally available to the public. Each Selling Holder
of such
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Registrable Securities further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
(i) In connection with an underwritten offering, the Company
will participate, to the extent reasonably requested by the managing Underwriter
for the offering or the Selling Holders, in customary efforts to sell the
securities under the offering, including, without limitation, participating in
"road shows"; provided that the Company shall not be obligated to participate in
more than one such offering in any 12-month period.
The Company may require each Selling Holder of Registrable
Securities to promptly furnish in writing to the Company such information
regarding the distribution of the Registrable Securities as the Company may from
time to time reasonably request and such other information as may be legally
required in connection with such registration including, without limitation, all
such information as may be requested by the Commission or the NASD. The Company
may exclude from such registration any Holder who fails to provide such
information.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
3.1(f) hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3.1(f) hereof, and,
if so directed by the Company, such Selling Holder will deliver to the Company
all copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. In the event the Company shall give such
notice, the Company shall extend the period during which such registration
statement shall be maintained effective (including the period referred to in
Section 3.1(a) hereof) by the number of days during the period from and
including the date of the giving of notice pursuant to Section 3.1(f) hereof to
the date when the Company shall make available to the Selling Holders of
Registrable Securities covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of Section 3.1(f)
hereof.
Section 3.2 Registration Expenses. In connection with the
Demand Registrations pursuant to Section 2.1 hereof and the Piggy-Back
Registrations under Section 2.2 hereof, the Company shall pay the following
registration expenses incurred in connection with the registration thereunder
(the "Registration Expenses"): (i) all registration and filing fees, (ii) fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv) the
Company's internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
(v) the fees and expenses incurred in connection with the listing of the
Registrable Securities, (vi) reasonable fees and disbursements of counsel for
the Company and customary
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fees and expenses for independent certified public accountants retained by the
Company (including the expenses of any comfort letters or costs associated with
the delivery by independent certified public accountants of a comfort letter or
comfort letters requested but not the cost of any audit other than a year end
audit), (vii) the reasonable fees and expenses of any special experts retained
by the Company in connection with such registration, and (viii) reasonable fees
and expenses of one firm of counsel for the Holders. The Company shall have no
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities, or the cost of any special audit
required, such costs to be borne by the Holder or Holders making the request.
ARTICLE 4.
INDEMNIFICATION AND CONTRIBUTION
Section 4.1 Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Selling Holder of Registrable Securities, its
partners, officers, directors, employees and agents, and each Person, if any,
who controls such Selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together with the partners,
officers, directors, employees and agents of such controlling Person
(collectively, the "Controlling Persons"), from and against any loss, claim,
damage, liability, reasonable attorneys' fees, cost or expense and costs and
expenses of investigating and defending any such claim (collectively, the
"Damages"), joint or several, and any action in respect thereof to which such
Selling Holder, its partners, officers, directors, employees and agents, and any
such Controlling Person may become subject under the Securities Act or
otherwise, insofar as such Damages (or proceedings in respect thereof) arise out
of, or are based upon, any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
the Registrable Securities or any preliminary prospectus, or arises out of, or
are based upon, any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are based upon information furnished
in writing to the Company by a Selling Holder or Underwriter expressly for use
therein, and shall reimburse each Selling Holder, its partners, officers,
directors, employees and agents, and each such Controlling Person for any legal
and other expenses reasonably incurred by that Selling Holder, its partners,
officers, directors, employees and agents, or any such Controlling Person in
investigating or defending or preparing to defend against any such Damages or
proceedings; provided, however, that the Company shall not be liable to any
Holder of Registrable Securities to the extent that any such Damages arise out
of or are based upon an untrue statement or omission made in any preliminary
prospectus if (i) such Holder failed to send or deliver a copy of the final
prospectus with or prior to the delivery of written confirmation of the sale by
such Holder of a Registrable Security to the Person asserting the claim from
which such Damages arise, and (ii) the final prospectus would have corrected
such untrue statement or such omission; and provided further, however, that the
Company shall not be liable in any such case to the extent that any such Damages
arise out of or are based upon an untrue statement or omission in any prospectus
if (x) such untrue statement or omission is corrected in an amendment or
supplement to such prospectus, and (y) having previously been
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furnished by or on behalf of the Company with copies of such prospectus as so
amended or supplemented, such Holder thereafter fails to deliver such prospectus
as so amended or supplemented prior to or concurrently with the sale of a
Registrable Security to the Person asserting the claim from which such Damages
arise. The Company also agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Selling Holders provided in this Section 4.1.
Section 4.2 Indemnification by Holders of Registrable Securities. Each
Selling Holder agrees, severally but not jointly, to indemnify and hold harmless
the Company, its officers, directors, employees and agents and each Person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, together with the partners, officers,
directors, employees and agents of such controlling Person, to the same extent
as the foregoing indemnity from the Company to such Selling Holder, but only
with reference to information related to such Selling Holder, or its plan of
distribution, furnished in writing by such Selling Holder or on such Selling
Holder's behalf expressly for use in any registration statement or prospectus
relating to the Registrable Securities, or any amendment or supplement thereto,
or any preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its officers, directors, employees or agents or any such
controlling Person or its officers, directors, employees or agents, in respect
of which indemnity may be sought against such Selling Holder, such Selling
Holder shall have the rights and duties given to the Company, and the Company or
its officers, directors, employees or agents, or such controlling Person, or its
officers, directors, employees or agents, shall have the rights and duties given
to such Selling Holder, by the preceding paragraph. Each Selling Holder also
agrees to indemnify and hold harmless any Underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Company provided in this Section 4.2. The Company shall be entitled to
receive indemnities from Underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution, to
the same extent as provided above, with respect to information so furnished in
writing by such Persons specifically for inclusion in any prospectus or
registration statement.
Section 4.3 Conduct of Indemnification Proceedings. Promptly after
receipt by any person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the Person against whom such indemnity may be
sought (an "Indemnifying Party"), notify the Indemnifying Party in writing of
the claim or the commencement of such action; provided that the failure to
notify the Indemnifying Party shall not relieve it from any liability which it
may have to an Indemnified Party otherwise than under Section 4.1 or 4.2 and
except to the extent of any actual prejudice resulting therefrom. If any such
claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified
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Indemnifying Party, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided that the Indemnified Party shall have the right to
employ separate counsel to represent the Indemnified Party and its controlling
Persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Indemnified Party against the Indemnifying
Party, but the fees and expenses of such counsel shall be for the account of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of the Company and such Indemnified Party, representation of
both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them, it being understood, however, that
the Indemnifying Party shall not, in connection with any one such claim or
action or separate but substantially similar or related claims or actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all Indemnified
Parties, or for fees and expenses that are not reasonable. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any claim or pending or threatened proceeding in respect of which
the Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Party, unless such settlement includes
an unconditional release of such Indemnified Party from all liability arising
out of such claim or proceeding. Whether or not the defense of any claim or
action is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.
Section 4.4 Contribution. If the indemnification provided for in this
Article 4 is unavailable to the Indemnified Parties in respect of any Damages
referred to herein, then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages (i) as between the Company and the
Selling Holders on the one hand and the Underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Holders on the one hand and the Underwriters on the
other from the offering of the Registrable Securities, or if such allocation is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of the Company and
the Selling Holders on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such Damages, as
well as any other relevant equitable considerations, and (ii) as between the
Company on the one hand and each Selling Holder on the other, in such proportion
as is appropriate to reflect the relative fault of the Company and of each
Selling Holder in connection with such statements or omissions, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Selling Holders on the one hand and the Underwriters on the
other shall be deemed to be in
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the same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and the Selling Holders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and the Selling
Holders on the one hand and of the Underwriters on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and the Selling
Holders or by the Underwriters. The relative fault of the Company on the one
hand and of each Selling Holder on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the Damages
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4.4, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Registrable Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and no Selling Holder shall be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Securities of such Selling Holder were offered to the public (less underwriting
discounts and commissions) exceeds the amount of any damages which such Selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Each Selling Holder's obligations to contribute
pursuant to this Section 4.4 is several in the proportion that the proceeds of
the offering received by such Selling Holder bears to the total proceeds of the
offering received by all the Selling Holders and not joint.
ARTICLE 5.
LIMITATIONS OF THE COMPANY'S OBLIGATIONS
Section 5.1 (a) The rights granted under this Agreement shall terminate
on the earlier to occur of the following; (i) after sale or other transfer
(other than a distribution to
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partners of a Holder or the transfer to a Holder which transfer includes the
registration rights granted hereunder), whether by registration, under Rule 144
under the Securities Act or otherwise, by the Holders of the Registrable
Securities held by the Holders, or (ii) at such time as all of the Registrable
Securities become sellable pursuant to Rule 144 under the Securities Act (or a
similar successor or additional exemption) without volume restrictions.
(b) The Company shall not be obligated under this Agreement to
register or include in any registration Registrable Securities that any Holder
has requested to be registered if the Company shall furnish such Holder with a
written opinion of counsel reasonably satisfactory to such Holder, that either
(i) all Registrable Securities that such Holder holds may be publicly offered,
sold and distributed without registration under the Securities Act pursuant to
Rule 144 under the Securities Act without restrictions as to the amount of
securities that can be sold, or (ii) such Registrable Securities are covered by
a registration statement that remains effective under the Securities Act.
(c) The Company shall have no obligation to register the
Registrable Securities of any Holder to an offering to which the Company is also
offering securities for sale for its own account, unless the Holder enters into
an underwriting agreement in customary form with the underwriter or underwriters
selected for the offering by the Company (which shall not require the Holder to
indemnify the underwriter with respect to misstatements or omissions in the
registration statement other than such misstatements or omissions in written
material supplied by such Holder expressly for inclusion in the registration
statement) and, if requested by the underwriter(s), an agreement appointing one
or more (but not more than three) persons approved by a majority in interest of
the Holders whose Registrable Securities are to be included in the registration,
to act as attorney-in-fact for the Holder and as escrow agent for the
Registrable Securities to be included in the offering in customary form.
(d) In any registered offering, each Holder shall provide the
Company in a writing signed by the Holder such information about the Holder as
in the opinion of securities counsel to the Company shall be either necessary or
reasonably appropriate to enable the Company to comply with the Securities Act
and applicable state securities laws. Such information shall be provided by the
Company within a reasonable time after written request is made by the Company
and shall be supplied by Holder whether or not any Registrable Securities of
Holder are to be included in the registration.
(e) The Company may in its discretion grant to any owner of
securities of the Company registration rights of any kind or nature.
ARTICLE 6.
MISCELLANEOUS
Section 6.1 Participation in Underwritten Registrations. No Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons
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entitled hereunder to approve such arrangements, and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and these registration rights.
Section 6.2 Lockup Agreement. For so long as the Holder has the right
to have Registrable Securities included in any registration pursuant to this
Agreement, the Holder agrees in connection with any registration of the
Company's securities, upon the request of the underwriters managing any
underwritten offering of the Company's securities, not sell, make any short sale
of, pledge, grant any option for the purchase of or otherwise dispose of any
Registrable Securities without the prior written consent of the Company or such
underwriters, as the case may be, during the seven days prior to and during the
180-day period beginning on the effective date of such registration, as the
Company or the underwriters may specify. This provision shall apply whether or
not any Registrable Securities of the Holder are included in the offering.
Section 6.3 Rule 144 and 144A. The Company covenants that it will file
any reports required to be filed by it under the Securities Act and the Exchange
Act and that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 or Rule 144A under the
Securities Act, as such Rules may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
Section 6.4 Notwithstanding the provisions of Section 3.1(a), the
Company's obligations to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for a
period not exceed 90 days if there exists at the time material non-public
information relating to the Company that, in the reasonable opinion of the
Company, should not be disclosed.
Section 6.5 Amendment and Modification. Any provision of this Agreement
may be waived, provided that such waiver is set forth in a writing executed by
the party against whom the enforcement of such waiver is sought. This Agreement
may not be amended, modified or supplemented other than by a written instrument
signed by holders of a majority of the Registrable Securities; provided,
however, that without the consent of the Holders, no amendment or modification
which materially and adversely affects the ability of such Holders to have
securities registered hereunder may be effected. No course of dealing between or
among any Persons having any interest in this Agreement will be deemed effective
to modify, amend or discharge any part of this Agreement or any rights or
obligations of any Person under or by reason of this Agreement.
Section 6.6 Successors and Assigns; Entire Agreement. This Agreement
and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their
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respective successors and assigns and executors, administrators and heirs. This
Agreement sets forth the entire agreement and understanding between the parties
as to the subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
Section 6.7 Separability. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
Section 6.8 Notices. All notices, demands, requests, consents or
approvals (collectively, "Notices") required or permitted to be given hereunder
or which are given with respect to this Agreement shall be in writing and shall
be personally served or mailed, registered or certified, return receipt
requested, postage prepaid (or by a substantially similar method), or delivered
by a reputable overnight courier service with charges prepaid, or transmitted by
hand delivery, telegram, telex or facsimile, addressed as set forth below, or
such other address as such party shall have specified most recently by written
notice:
(1) If to the Company:
Park `N View, Inc.
NW 55th Street, Building 10
Fort Lauderdale, FL 33309
with copies (which shall not constitute notice) to:
James O'Connell, Esq.
Petree Stockton, LLP
Lake Boone Trail, Suite 400
Raleigh, North Carolina 27607
(2) If to the Holder, at the most current address, and with a copy to
be sent to each additional address, given by such Holder to the Company in
writing, and copies sent to:
Shereff, Friedman, Hoffman & Goodman
Third Avenue
New York, NY 10022
Attention: Morris Orens, Esq.
Notice shall be deemed given or delivered on the date of service or transmission
if personally served or transmitted by telegram, telex or facsimile. Notice
otherwise sent as provided herein
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shall be deemed given or delivered on the third business day following the date
mailed or on the next business day following delivery of such notice to a
reputable overnight courier service.
Section 6.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS S OF LAW.
Section 6.10 Headings. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.
Section 6.11 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original instrument and
all of which together shall constitute one and the same instrument.
Section 6.12 Further Assurances. Each party shall cooperate and take
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
Section 6.13 Remedies. In the event of a breach or a threatened breach
by any party to this Agreement of its obligations under this Agreement, any
party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
inducing monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.
Section 6.14 Pronouns. Whenever the context may require, any pronouns
used herein shall be deemed also to include the corresponding neuter, masculine
or feminine forms.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PARK `N VIEW, INC.
By:
----------------------------
Name:
Title:
INVESTORS
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EXHIBIT A
Park 'N View General Partner, Inc.
By:
-------------------------------------
Name:
Title:
-------------------------------------
Ian Williams
-------------------------------------
Sam Hashman
-------------------------------------
Monte Nathanson
Nelgo Investments
By:
-------------------------------------
Name:
Title:
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EXHIBIT B
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1. APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By:
-------------------------------------
Name:
Title:
2. APA EXCELSIOR IV OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTOR ADVISOR
By:
-------------------------------------
Name:
Title:
3. THE P/A FUND
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By:
-------------------------------------
Name:
Title:
4.
-------------------------------------
Michael Willner
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EXHIBIT 5.1(H)
FORM OF STOCKHOLDERS' AGREEMENT
SECURITYHOLDERS' AGREEMENT
SECURITYHOLDERS' AGREEMENT, dated as of November 2, 1995 (the
"Securityholders' Agreement"), by and among Park `N View, Inc. a Delaware
corporation (the "Company"), the Existing Investors as set forth on Exhibit A
attached hereto and the Investors as set forth on Exhibit B attached hereto.
R E C I T A L S
1. Pursuant to those certain Securities Purchase Agreements by and
between the Company and the Investors dated as of November 2, Agreements"), the
Company agreed to sell to the Investors an aggregate of $6 million of
Subordinated Notes, an aggregate of 140,000 shares of the Company's Series A
Preferred Stock and an aggregate of 2,000,000 shares of the Company's Common
Stock.
2. As a condition to the consummation of the transactions contemplated
by the Securities Purchase Agreements, the Company, the Existing Investors and
the Investors (collectively referred to herein as the "Investors") have entered
into this Securityholders' Agreement to, among other things, grant certain
rights of first refusal regarding securities of the Company to the Investors,
grant certain additional rights and impose certain obligations and restrictions.
A G R E E M E N T S
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Defined Terms. Terms initially capitalized but not otherwise defined
herein shall have the meanings given such terms in the Securities Purchase
Agreements, except for the following:
"Existing Investors" shall mean those persons listed on Exhibit A
attached hereto and made a part hereof.
"Existing Stock" shall mean 2,318,182 of the shares of Common Stock
owned by the Existing Investors.
"Non-Participating Investor" shall mean an Investor that does not
exercise its rights of first refusal under Section 3(a) of this Securityholders'
Agreement in connection with a
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transaction in which other Investors purchase Securities of the Company pursuant
to such section and any nominee for or Affiliate of such Investor unless such
failure to exercise its rights of first refusal under Section 3(a) herein is due
to the existence of a Regulatory Problem.
"Securities" shall mean at any time, the shares of then outstanding
Common Stock and Series A Preferred Stock and Subordinated Notes owned by any
Investor or any such Investors direct or subsequent assignee pursuant to
Sections 1(B) and 4(A) of the Securities Restriction Agreement, provided,
however, that Securities shall not be deemed to include any shares of Common
Stock after such shares have been registered under the Securities Act and sold
pursuant to such registration or any shares sold without registration under the
Securities Act in compliance with Rule 144, or pursuant to any other exemption
from registration under the Securities Act to a person who is free to resell
such shares without registration under the Securities Act; and provided,
further, that at any time subsequent to the closing of the Initial Public
Offering, Securities shall not include any shares which are eligible to be sold
without registration under the Securities Act in compliance with subsection (k)
of Rule 144.
"Regulatory Problem" shall mean (a) any set of facts of circumstances
wherein it has been asserted by any governmental regulatory agency believes that
such assertion will be made that such Investor (or any Person that controls such
Investor) is not entitled to hold, or exercise any material right with respect
to, all or any portion of the securities or (b) when any Investors of Common
Stock, Series A Preferred Stock or Subordinated Notes and such Investor's
Affiliates would own, control or have power (including voting rights) over a
greater quantity of Securities of any kind than are permitted under any
applicable law or regulation or any requirement of any governmental authority.
"Subordinated Notes" shall mean the subordinated promissory notes, 8%
coupon sold pursuant to the Securities Purchase Agreement.
"Sale" shall have the meaning given such term in the Securities
Restriction Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series A Preferred Stock" shall mean the Preferred Stock of the
Company designated as Series A Preferred Stock pursuant to the Certificate of
Designation described in the Securities Purchase Agreement.
2. Entire Agreement. This Securityholders' Agreement constitutes the
entire agreement by and among the parties hereto with respect to the subject
matter hereof.
3. Right of First Refusal.
(a) If, after the Initial Investment, any Securities shall exist and
the Company proposes to issue any Stock (including, without limitation,
convertible debt) or any security convertible into or exchangeable for Stock, or
any unit of securities which includes Stock or any
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security convertible into or exchangeable or exercisable for Stock (in the case
of securities convertible into or exchangeable or exercisable for Stock, whether
or not so convertible or exchangeable or exercisable only upon payment of
additional consideration) but excluding Securities issuable pursuant to the
Securities Purchase Agreements, then the Company shall first offer such Stock or
securities to the Investors (excluding Non-Participating Investors). Such offer
shall be made by written notice, which notice shall (i) be delivered by hand or
by first-class, certified or overnight mail, postage prepaid, or by telecopier,
by the Company to such Investors and (ii) set forth the quantity and description
of the security proposed to be issued and the price to be received in exchange
therefor.
Each such Investor shall thereupon be entitled, for a period
of 30 days after the date of such notice to purchase at the price and upon the
terms set forth in such notice, that proportion of securities proposed to be
issued as the number of Securities held by such Investor bears to the total
number of Securities then held by all such Investors. The rights granted to such
Investors hereby may be exercised in whole or in part and shall be exercised by
the tender of an official bank or certified check for the appropriate amount to
the Company by hand delivery or by first-class, certified or overnight mail,
postage prepaid addressed to the Company's principal office (or at such other
place as the Company may designate) within 30 days after being notified of the
availability of such rights pursuant hereto. Within five days after the receipt
of such official bank or certified check, the Company shall issue and deliver to
such Investors who are exercising the rights granted by this Section 3 the
securities being purchased. The Company covenants and agrees that all securities
which may be issued upon the exercise of the rights granted hereby will, upon
issuance and payment therefor, be duly and validly issued and outstanding, fully
paid and non-assessable and free from all taxes, liens, and charges with respect
to the issue thereof. The Company further covenants and agrees that during the
period within which any such rights (and any conversion right inuring in any
security acquired pursuant to any such rights) may be exercised, the Company
will in the case where the Company issues Stock, at all times have authorized
and reserved for the purpose of issuance upon exercise of such rights (including
conversion rights) a sufficient number of shares of Stock of an appropriate
class and, if applicable, series, to provide for the exercise in full of such
rights (including conversion rights).
(b) If any Investor entitled to exercise rights under
Subsection (a) of this Section 3 does not exercise the rights granted hereunder,
in whole, after being notified of the availability of such rights, the Company
shall so advise the other Investors entitled to rights hereunder who have
purchased securities pursuant to this Section 3 by providing them with written
notice, transmitted as aforesaid within five days after the first to occur of
(i) being advised of the failure of a Investors to exercise such right or (ii)
the expiration of the 30-day period in which such right could have been
exercised. Each such other Investor shall thereupon for a period of 7 days from
the date of such notice be entitled to purchase some or all of the securities
which could have been purchased by the Investors who did not exercise the rights
granted under Subsection (a) of this Section 3; provided, however, that to the
extent that more than one such other Investors exercising its rights granted
under this Subsection (b) desires to
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purchase securities exceeding that proportion as the number of securities of
which such other Investors is then the Investors bears to the total number of
then held by all such other Investor who are exercising their rights under
Subsection (a) of this Section 3 ("Excess Securities"), the amount of such
Excess Securities which each such other Investors shall be entitled to purchase
shall be reduced pro rata in accordance with that proportion as the number of
securities of which such other Investor is then the Investor bears to the total
number of securities then held by all such other Investor desiring to purchase
Excess Securities pursuant to this Subsection (b). The rights granted by this
Subsection (b) shall be exercisable in the manner described in Subsection (a) of
this Section 3. Any securities not so purchased may be sold during the 90-day
period following the aforementioned 7-day period to Persons other than Investors
who are entitled to exercise rights under Subsection (a) of this Section 3 for
the price and upon the terms set forth in the notice first sent pursuant to said
Subsection (a).
(c) Notwithstanding the foregoing provisions of this Section
3, any purchase pursuant hereto of Securities may be made by an Investor only of
full units and not of fractions of units, any fraction to be rounded up to the
nearest whole unit and a Non-Participating Investor shall not be entitled to
exercise any rights pursuant to Section 3 from and after the date on which it
becomes a Non-Participating Investor.
(d) The provisions of this Section 3 shall not apply to (A)
Stock issued in connection with a pro rata stock dividend, stock split or in
substitution for the capital stock of the Company by reason of any combination,
recapitalization, reclassification or consolidation; (B) securities issued in
connection with a Sale of the Company in which the Investors will be selling all
of their Stock; or (C) capital stock sold in the Initial Public offering.
(e) In the event any subsidiary ever proposes to issue and/or
sell any Stock of the Company or a Subsidiary (including its own shares) or any
securities containing options or rights to acquire any shares of Stock
(including, without limitation, convertible debt) to any Person other than the
Company or another Subsidiary, then the Company shall first cause such
Subsidiary to enter into an agreement with the Investors substantially similar
to this Agreement.
4. Board Designees.
(a) Investors' Designee. The Board shall consist of not more
than five (5) members of which two members shall be designated by the Investors
as provided herein, two members shall be designated by the Existing Investors
and one member, who shall be unaffiliated with any Investor or any Existing
Investor, shall be designated by a majority of Investors and a majority of the
Existing Investors. So long as the Series A Preferred Stock and the Subordinated
Debt have not been redeemed and paid in full or the Investors taken collectively
as a group own 20% or more of the outstanding shares of Common Stock of the
Company, at each of the Company's annual or special meetings of stockholders at
which directors are to be elected, the Investors shall have the right to
designate in writing two nominees for election to the Board (each referred to
herein as an "Investor Designee" and collectively as the "Investor Designees")
unless the term of office of either Investor Designee does not expire at
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such meeting, in which case the Investors may not designate any nominees. The
Investor Designees shall initially be Robert Chefitz and Thomas Hirschfeld. At
such time as Robert Chefitz and/or Thomas Hirschfeld is unwilling or unable to
serve, any new Investor Designee(s) may be any Person(s) designated by the
Investors. The Investor Designees shall have approval rights on each of the
following: (a) incurrence by the Company of debt in excess of $25,000 which does
not relate to the expenditures for the buildout of a truckstop approved by the
Board; (b) capital expenditures of the Company in excess of $25,000, which does
not relate to the expenditures for the buildout of a truckstop approved by the
Board; (c) issuance by the Company of equity securities and (d) sale by the
Company of substantially all of the Company's Assets. In the event that the
Investors taken collectively as a group hold at least 10% but less than 20% of
the outstanding Common Stock, a majority of such Investors shall have the right
to elect one member to the Board. In all cases, all holders of Common Stock
shall vote in favor of election of all nominees of the Investors and the
Existing Investors.
(b) Best Efforts to Elect Designees. In the event that any
nominee or nominees are designated pursuant to Subsections 4(a) hereof, the
Company shall use its best efforts to cause such nominees to be elected to the
Board, and the Holders of Stock of shall vote, together as one class, such Stock
owned by them to elect those directors nominated in accordance with this
Section. The foregoing right shall also apply to election of the Board effected
by written consents of Holders of Stock rather than by meetings.
(c) Removal of Designees. At any special or annual meeting of
the Company's stockholders at which it is proposed to remove directors from
office or in connection with a solicitation of consents through which directors
are to be removed from office, for gross negligence, willful misconduct,
conviction of a felony or acts of fraud, each holder of Common Stock shall vote
(or give a written consent with respect to) all of its shares of Common Stock.
In all other situations, directors may only be removed with the majority vote of
the group that elected them in accordance with Section 4(a) hereof.
(d) Vacancies. Should a vacancy on the Board arise for any
reason with respect to one or both of the Investor Designees such vacancy may be
filled only by another Investor Designee. If the Investors desire that such
vacancy be filled, the Holders of Stock shall vote each class of Stock [together
as a single class] to elect such Investor Designee.
(e) Expenses. The Company shall reimburse all members of the
Board for all reasonable out-of-pocket travel and relate expenses incurred by
such Board members in attending Board meetings and meetings of committees of the
Board on which they serve.
5. Confidentiality. The Company shall use its best efforts to
(a) protect the secrecy, confidentiality and value of all trade secrets useful
the conduct of the company's businesses and (b) cause each Person who is or
becomes an officer or key employee of the Company who shall have access to
confidential and proprietary information of the Company to execute a
confidentiality agreement, as a condition to such employment, in such form as
shall be approved by the Board of Directors of the Company, which approval shall
include the approval of all of the
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Investor designees. Such confidentiality agreements shall not be amended in any
material respect without the approval of the Board of Directors of the Company
which approval shall include the approval of all of the Investor designees.
6. Miscellaneous.
7. Counterparts. This Securityholders' Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which shall together constitute on and the same document.
8. Amendments and Governing Law. This Securityholders' Agreement
may be amended, modified and supplemented, and compliance with any term,
covenant, agreement, or condition contained herein may be waived either
generally or in particular instances, and either retroactively or prospectively,
only by a written instrument executed by the Company and Investors who hold
66.6% of each class of the Securities; provided, however, that any provision of
this Agreement that would materially adversely affect any particular Investors
without similarly affecting all Investors shall not be valid unless consented to
in writing by such particular Investors. This Securityholders' Agreement shall
be governed by and construed in accordance with the domestic laws of the State
of Delaware applicable to contracts made and to be performed in that state
without giving any effect to any choice or conflict of law provision or rule
(whether in the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.
9. Application to Subsequent Investors. This Securityholders'
Agreement shall inure to the benefit of and be binding upon (i) the parties
hereto and their heirs, legal representatives successors and assigns and (ii)
any Person who, after the date hereof, shall become the Investors of any shares
of any Common Stock, Series A Preferred Stock and/or Subordinated Notes (such
Person's acceptance of such shares to be deemed to constitute his agreement to
be bound hereby) and such Person's heirs, legal representatives, successors and
assigns.
10. Termination. This Agreement shall terminate upon the first to
occur of: (i) the first date on which shares of Common Stock are sold in an
Initial Public Offering or (ii) the date of consummation of a Sale.
11. Headings. The headings herein are solely for the convenience
of the parties and shall not serve to modify or interpret the text of the
Sections at the beginning of which they appear.
12. Severability. In the event that any court or any governmental
authority or agency declares all or any part of any Section of this Agreement to
be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any other Section of this Agreement, and in the event that only a
portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
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13. Entire Agreement. This Agreement constitutes the entire
agreement by and among the parties hereto with respect to the subject matter
hereof.
14. Further Execution. The parties hereto agree to execute any
additional documents or instruments necessary to carry out the purposes of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first written above.
PARK `N VIEW, INC.
By:
-------------------------------------
Name:
Title:
ATTEST:
By:
-------------------------------
Secretary
Existing Investors whose signatures appear
on Exhibit A hereto and Investors whose
signatures appear on Exhibit B hereto.
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EXHIBIT A
Park 'N View General Partner, Inc.
By:
-------------------------------------
Name:
Title:
-------------------------------------
Ian Williams
-------------------------------------
Sam Hashman
-------------------------------------
Monte Nathanson
Nelgo Investments
By:
-------------------------------------
Name:
Title:
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EXHIBIT B
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1. APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By:
-------------------------------------
Name:
Title:
2. APA EXCELSIOR IV OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTOR ADVISOR
By:
-------------------------------------
Name:
Title:
3. THE P/A FUND
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By:
-------------------------------------
Name:
Title:
4.
-------------------------------------
Michael Willner
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EXHIBIT 5.1(K)
FORM OF LEGAL OPINION OF PETREE STOCKTON, L.L.P.
[LETTERHEAD OF PETREE STOCKTON, L.L.P.]
November 2, 1995
To each of the Purchasers who are parties
to the Securities Purchase Agreement referred
to below
Gentlemen:
We have acted as counsel to Park 'N View, Inc., a corporation organized
and existing under the laws of Delaware (the "Company"), in connection with the
sale of common stock, preferred stock and subordinated notes (collectively, the
"Securities") pursuant to the Securities Purchase Agreement, dated as of
November 2, 1995 (the "Securities Purchase Agreement"), by and among the Company
and each of the purchasers who are parties thereto (the "Purchasers").
Capitalized terms used herein without definition have the meanings ascribed to
them in the Securities Purchase Agreement. This opinion is being rendered
pursuant to Section 5.1(k) of the Securities Purchase Agreement.
In connection with this opinion, we have examined originals or copies
of the following documents:
Securities Purchase Agreement and all exhibits thereto;
Securities Restriction Agreement, the Securityholders'
Agreement and the Subordinated Notes (collectively, the
"Ancillary Agreements");
Certificate of Designation of the Company filed with the
Delaware Secretary of State's office on October 30, 1995;
Amended and Restated Certificate of Incorporation filed with
the Delaware Secretary of State's office on October 30, 1995;
Unanimous Written Consent of the Board of Directors of the
Company authorizing the execution, delivery and performance of
the Securities Purchase Agreement, the Ancillary Agreements,
the offer, issuance, sale and delivery of the Securities and
all transactions relating thereto and the adoption and filing
of the
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Amended and Restated Certificate of Incorporation and the
Certification of Designation;
copy of the charter documents of the Company, certified by the
Secretary of State of Delaware as of October 30, 1995;
Good Standing Certificate of the Company, issued by the
Secretary of State of Delaware as of November 1, 1995;
Bylaws of the Company, as amended to date; and
the Conveyance Agreement by and between the Company and Park
'N View, Ltd. (the "Conveyance Agreement").
In addition, we have examined originals (or copies certified or
otherwise identified to our satisfaction) of such other instruments,
certificates and documents as we have deemed necessary or appropriate for the
purposes of the opinions rendered below, including a certificate of an officer
of the Company (the "Officer's Certificate") upon which we have relied as to
certain factual matters in giving our opinion herein.
During the course of our examinations, with your permission and without
independent verification or investigation, we have assumed (i) the genuineness
of all signatures, (ii) the authenticity of all documents submitted to us as
originals, (iii) the conformity to original documents of all documents submitted
to us as certified, conformed or photostatic copies, (iv) that the corporate
minute book of the Company is complete and accurately reflects all of the
minutes of meetings and consents to actions of the directors and shareholders of
the Company, (v) the truth and accuracy of all matters stated in the Officer's
Certificate and (vi) the due authorization, valid execution and delivery of all
documents except where our opinion expressly addresses authorization, execution
and delivery.
As to the factual matters forming the basis of our opinion, whenever an
opinion with respect to the existence or absence of facts is qualified by the
phrases "to our knowledge" or "known to us" or "to the best of our knowledge,"
such phrases indicate only that, based on the actual knowledge (i.e., conscious
awareness of facts) of James M. O'Connell, the attorney in this firm who is
actively involved in and responsible for the handling of the Company's legal
affairs handled by this firm and a review of our files, we have no reason to
believe such opinions are not factually correct, and that no inference as to our
knowledge of such facts should be drawn from the fact of our representation of
the Company. We have, when relevant facts were not known to us or independently
established, relied upon the Officer's Certificate, and we have made no
independent investigation of such matters on the public records or otherwise
except to discuss them with the President of the Company. We have not reviewed
the files and records of the Company generally and have relied on the Company to
provide us with documents for review.
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Based on the foregoing and subject to the assumptions, limitations and
qualifications set forth herein, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has all
requisite corporate power and authority to own its properties and assets and
carry on its business as now conducted, and is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the location or
nature of its property or the character of its business makes such qualification
necessary, except where the failure to be so qualified would not materially
adversely affect the business, condition, prospects, properties or results of
operations of the Company (a "Material Adverse Effect").
2. The Company has the full corporate power and authority to execute
and deliver each of the Securities Purchase Agreement and the Ancillary
Agreements and to perform fully its obligations thereunder. The execution,
delivery and performance of the Securities Purchase Agreement and the Ancillary
Agreements, the adoption and filing of the Amended and Restated Certificate of
Incorporation and the Certificate of Designation with the Delaware Secretary of
State and the issuance of the Common Stock and Preferred Stock thereunder have
been duly authorized by all necessary action of the Company.
3. The Conveyance Agreement has been duly executed and delivered by and
constitutes a valid and binding obligation of the Company and Park 'N View, Ltd.
enforceable against the Company and Park 'N View, Ltd in accordance with its
terms. The Securities Purchase Agreement and Ancillary Agreements have been duly
executed and delivered by and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as enforceability may be limited by bankruptcy, insolvency, moratorium and other
rights affecting creditors rights generally or by general equitable principles
(regardless of whether such enforceability is considered in a proceeding at law
or equity).
4. The authorized capital stock of the Company consists of 5,000,000
shares of Common Stock, $0.001 par value per share, of which 4,318,182 shares
shall be issued as of the date hereof, and 140,010 shares of Preferred Stock,
$0.01 par value per share, all of which have been designated as Series A
Preferred Stock, and of which 32,200 shares shall be issued and outstanding on
the date hereof. The Common Stock and the Preferred Stock to be issued pursuant
to the Securities Purchase Agreement has been duly and validly authorized and,
when delivered and paid for, will be validly issued, fully paid and
non-assessable with no personal liability attaching to the ownership thereof,
and, assuming the accuracy of the Purchasers' representations contained in the
Securities Purchase Agreement, will have been issued by the Company in
compliance with all applicable federal and state securities laws and all
applicable rules and regulations thereunder provided, however, we express no
opinion or compliance with the antifraud provisions of the federal and state
securities laws. The relative rights, preferences, restrictions and other
matters relating to the Common Stock and the Preferred Stock are as
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reflected in the Amended and Restated Certificate of Incorporation and the
Certificate of Designation.
5. To the best of our knowledge, the Company is not in violation or
default of any provision of (i) its Certificate of Incorporation or Bylaws, or
(ii) any contract, agreement, obligation, commitment, license, indenture,
mortgage, deed of trust, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which any of its assets are
bound, except for violations with respect to clause (ii) that would not have a
Material Adverse Effect. The execution, delivery and performance of the
Securities Purchase Agreement, the Ancillary Agreements and the Conveyance
Agreement will not conflict with or, with or without the serving and/or receipt
of notice or the passage of time or both, result in any default or in any
material modification of (i) any provision of the Certificate of Incorporation
or Bylaws of the Company or (ii) to the best of our knowledge, the terms of any
material contract, agreement, obligation, commitment, license, indenture,
mortgage, deed of trust, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which any of its assets are
bound, or the creation of any lien, charge or encumbrance of any nature upon any
of the properties or assets of the Company. To best of our knowledge, the
execution, delivery and performance of the Securities Purchase Agreement, the
Ancillary Agreements and the Conveyance Agreement by the Company will not
violate any judgment, decree, order, statute, rule or regulation of any federal,
state or local government or agency having jurisdiction over the Company or its
assets.
6. To the best of our knowledge, no action, suit, claim, investigation,
inquiry or other proceeding by any governmental body or other person or legal or
administrative proceeding has been instituted or, to our knowledge, threatened
which questions the validity or legality of the transactions contemplated by the
Securities Purchase Agreement. Except as set forth on Exhibit 3 to the
Securities Purchase Agreement, there are no actions, suits, claims, proceedings,
investigations pending or, to our knowledge, threatened against the Company,
except for actions, suits, claims, investigations, inquiries or proceedings
that, singly or in the aggregate, could not result in a Material Adverse Effect.
7. To the best of our knowledge, no consent, approval, waiver or
authorization of or designation, declaration or filing with any governmental or
regulatory authority or any other person is required in connection with the
valid execution and delivery of the Securities Purchase Agreement, the Ancillary
Agreements and the other agreements contemplated thereunder (except for such
filings as may be necessary to qualify for exemption under the federal
Securities Act of 1933, as amended, and to comply with applicable state "Blue
Sky" securities laws).
The opinions expressed above are subject to the following
qualifications:
A. We are members of the North Carolina bar and we express no opinion
as to matters under or involving laws of any other jurisdiction
other than the corporate laws of the State of Delaware;
-139-
<PAGE> 145
B. Our opinions are limited to matters expressly stated herein and no
opinion is implied or may be inferred beyond the matters expressly
stated;
C. This opinion letter is furnished to the Purchases solely for their
benefit and may not be relied upon by nor copies delivered to any
other person or entity or in connection with any other transaction
without our prior written consent; and
D. Our opinions are rendered as of the date hereof and we do not assume
any responsibility to update or modify our opinions based upon new
or additional information or facts which arise or come to our
attention subsequent to delivery of this opinion.
Very truly yours,
PETREE STOCKTON, L.L.P.
-140-
<PAGE> 146
EXHIBIT 5.2(C)
INTERIM MILESTONES
1. Buildout of 6 truckstops totaling at least 1,200 wired stalls.
2. Hiring a Principal Financial Officer approved by a majority-in-interest of
the Investors.
3. Achieving an average Service Revenue per stall in the fifth month following
the Initial Closing of $27 per month for truckstops operating for the full
month.
-141-
<PAGE> 147
EXHIBIT 5.3(D)
FINAL MILESTONES
1. Buildout in the first nine months of 14 truckstops totaling at least 2,700
stalls.
2. Achieving an average Service Revenue per stall in the ninth month from the
Initial Closing of $45 per month for those truckstops which commence operations
within 180 days of the Initial Closing and $27 per month for those truckstops
which commence operations 180 to 240 days after the Initial Closing.
-143-
<PAGE> 1
EXHIBIT 10.21
May 18 1998
APA Excelsior IV, L.P.
APA Excelsior IV/Offshore, L.P.
The P/A Fund, L.P.
445 Park Avenue
New York, New York 10022
Michael Willner
126 East 56th Street
New York, New York 10022
Re: Waiver of Covenants Relating to Financing;
Termination of Registration Rights Agreement, dated November 2,
1995
Gentlemen:
Park `N View, Inc., a Delaware corporation (the "Company") and each of
the undersigned are parties to a Securities Purchase Agreement, dated as of
November 2, 1995 (the "Securities Purchase Agreement"). Section 6.21 of the
Securities Purchase Agreement prohibits the Company from entering into any
agreement requiring the Company to make payments of principal or interest
unless such agreement contains a provision permitting any holder of Series A
Preferred Stock to cure any monetary default thereunder. The Company wishes to
issue notes in the aggregate principal amount of up to $75,000,000, which notes
will require the Company to make payments of principal and interest. Each of
the undersigned hereby: (i) waives any requirement that the Company comply with
Section 6.21 of the Securities Purchase Agreement in connection with such notes
in the aggregate principal amount of up to $75,000,000 and the obligations
evidenced thereby, and (ii) acknowledges and agrees that such notes (and any
agreement executed in connection with such notes) will not be required to
include a provision permitting any holder of Series A Preferred Stock to cure
any monetary default under such notes or agreements.
The Company and each of the undersigned also are parties to a
Registration Rights Agreement, dated as of November 2, 1995 (the "1995 Rights
Agreement"). In connection with the issuance and sale of Series B 7% Cumulative
Convertible Preferred Stock, the Company and each of the undersigned executed a
Registration Rights Agreement, dated as of November 13,
<PAGE> 2
APA Excelsior IV, L.P.
APA Excelsior IV/Offshore, L.P.
The P/A Fund, L.P.
Michael Willner
May 18, 1998
1996 (the "1996 Rights Agreement"), which the Company and each of the
undersigned intended to supersede and terminate the 1995 Rights Agreement. The
Company and each of the undersigned acknowledge and agree that the 1996 Rights
Agreement superseded and terminated the 1995 Rights Agreement as of the date of
the 1996 Rights Agreement.
If the foregoing is consistent with your understandings, please sign
this letter below where indicated. If you have any questions or comments,
please call at your convenience.
Sincerely,
PARK `N VIEW, INC.
By: /s/ Steve Conkling
--------------------------------------------
Steve Conkling, Chief Operating Officer
2
<PAGE> 3
APA Excelsior IV, L.P.
APA Excelsior IV/Offshore, L.P.
The P/A Fund, L.P.
Michael Willner
May 18, 1998
The foregoing letter, dated May 18, 1998, is hereby acknowledged and
agreed:
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Robert Chefitz
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.
INVESTMENT ADVISOR
By: /s/ Robert Chefitz
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
/s/ Michael Willner
-----------------------------------
Michael Willner
3
<PAGE> 1
EXHIBIT 10.22
SECURITIES RESTRICTION AGREEMENT
SECURITIES RESTRICTION AGREEMENT ("Agreement") dated as of November 2,
1995, by and among PARK 'N VIEW, INC., a Delaware corporation (the "Company"),
the Existing Investors as set forth on Exhibit A attached hereto and made a
part hereof and the Investors as set forth on Exhibit B attached hereto and
made a part hereof. The parties hereto other than the Company are referred to
herein collectively as the "Securityholders" and each individually as a
"Securityholder."
Definitions. Terms initially capitalized but not otherwise defined
herein shall have the meanings given such terms in the Stock Purchase
Agreements, except for the following:
"Event of Option" shall mean the occurrence of any of the
following:
(a) if any Securityholder shall: (i) apply for, consent
to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or
other custodian or make a general assignment for the benefit of creditors for
itself or any of its property, (any of which shall be referred to herein as a
"Receiver"), or in the absence of such application, consent or acquiesce,
permit or suffer to exist the appointment of a Receiver and such Receiver shall
not be discharged within 60 calendar days; (ii) commit any act of bankruptcy or
permit or suffer to exist the commencement of any bankruptcy reorganization,
debt arrangement or other case or proceeding under any bankruptcy or insolvency
law, or any dissolution, winding up or liquidation proceeding in respect of
itself, and, if any such case or proceeding is not commenced by such
Securityholder, if such case or proceeding shall be consented to or acquiesced
in by such Securityholder, or shall result in the entry of an order for relief
and shall remain undismissed for 30 days; or (iii) take any corporate or other
action authorizing, or in furtherance of, any of the foregoing; or
(b) a writ of attachment, levy or other court order which
prevents a Securityholder from exercising his, her or its voting and/or other
rights in connection with all or a portion of his, her or its Stock in the
Company shall be entered and shall remain undismissed for 30 days.
"Non-Participating Investor" shall mean a Holder of Securities
that does not exercise its rights of first refusal under Section 3(a) of the
Securityholders' Agreement in connection with a transaction in which other
Holders of Securities purchase securities of the Company pursuant to such
section and any nominee for or Affiliate of such Holder unless such failure to
exercise its rights of first refusal under Section 3(a) of the Securityholders'
Agreement is due to a Regulatory Problem, as defined therein.
1
<PAGE> 2
"Prospective Purchaser" shall mean any person to whom a holder
shall desire to sell shares of Common Stock and who shall be identified by such
Securityholder to the Company and the Holders of Securities under the terms of
Subsection (A) of Section I hereof.
"Securities" shall mean at any time, the shares of then
outstanding Common Stock, Series A Preferred Stock and Subordinated Notes;
provided, however, that Securities shall not be deemed to include any shares of
Common Stock after such shares have been registered under the Securities Act
and sold pursuant to such registration or any shares sold without registration
under the Securities Act in compliance with Rule 144, or pursuant to any other
exemption from registration under the Securities Act to a person who is free to
resell such shares without registration under the Securities Act; and provided,
further, that at any time subsequent to the closing of the Initial Public
offering, Securities shall not include any shares which are eligible to be sold
without registration under the Securities Act in compliance with subsection (k)
of Rule 144.
"Sale" means the consolidation or merger of the Company into or
with any corporation or corporations (other than a merger with another
corporation in which the Company is the surviving corporation and which does
not result in any reclassification or change -- other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination -- of outstanding shares of the
Company's Stock of any class or series, whether now or hereafter authorized),
or the sale or transfer by the Company of all or substantially all of its
assets.
"Securities Purchase Agreements" shall mean those certain
Securities Purchase Agreements dated as of hereof by and between the Company
and each of the Investors, as defined therein.
"Subordinated Notes" shall mean the subordinated promissory
notes, 8% coupon, sold pursuant to the Securities Purchase Agreements.
"Series A Preferred Stock" shall mean the $.01 par value
Preferred Stock designated as Series A Preferred Stock pursuant to the
Certificate of Designation referred to in the Securities Purchase Agreement.
1. Right of First Refusal; Right of Co-Sale.
(A) Right of First Refusal. (1) Except in the event of a public offering,
merger, consolidation, exchange of securities of the Company approved by the
stockholders of the Company, in the event that a Securityholder desires to sell
any or all of the shares of Common Stock owned by such Securityholder and
receives a bona fide offer therefor (the "Selling Securityholder"), such
Selling Securityholder shall so notify the Holders of Securities in writing.
The notice to the Holders of Securities shall be delivered to them by hand, or
by first-class, certified or overnight mail, postage prepaid, or by telecopier,
to their respective addresses as shown on the books of the
2
<PAGE> 3
Company, which addresses shall be provided to the Selling Securityholder by the
Company. Each notice shall set forth the identity and mailing address of the
prospective purchaser ("Prospective Purchaser"), the quantity and description
of the Common Stock proposed to be sold, the price per share to be received
therefor, the number of shares purchasable by each Holder of Securities as
determined in accordance herewith and the address of the Selling Securityholder
to which the Holders of Securities and/or the Company may send notices to such
Selling Securityholder required hereunder. If the Selling Securityholder is
also selling Series A Preferred Stock and/or Subordinated Notes, then in order
to exercise its right of first refusal, Holders or the Company must purchase
all Securities being sold.
The Selling Securityholder shall advise the Holders of
Securities by providing them with written notice, whereupon each Holder of
Securities shall be entitled, for a period of 20 days from the date of such
notice, to purchase upon the terms set forth in such notice, that proportion of
the Common Stock as such Securityholder's aggregate holding of Securities then
bears to the aggregate holding of Common Stock held by all Holders of
Securities exercising their right under this Subsection l(A)(1) (excluding all
Securities held by Non-Participating Investors) by the tender of an official
bank check or certified check for the appropriate amount to the Selling
Securityholder, by first class, certified or overnight mail, postage prepaid,
addressed to the Selling Securityholder at the address specified in the notice,
within 30 days after being notified of the availability of such rights pursuant
hereto. Within five days after the receipt of such official bank or certified
check from the Company, the Selling Securityholder shall surrender to the
Company, by hand delivery or by first class, certified or overnight mail,
postage prepaid, addressed to the Company as aforesaid, the certificate or
certificates representing the Common Stock sold in accordance herewith. If the
certificate or certificates surrendered by the Selling Securityholder represent
a greater number of shares of Common Stock than have been so sold, the Company
shall promptly issue to the Selling Securityholder a new certificate
representing the shares of Common Stock not so sold. Upon receipt by the
Company of certificates representing the Common Stock sold in accordance
herewith, the Company shall issue to each purchaser (or to the nominee of such
purchaser) of such Common Stock a new certificate representing such shares.
(2) If any Holders of Securities eligible to exercise the
right granted pursuant to Section (A)(1) of this Section 1 do not exercise such
right, in whole, the Selling Securityholder shall advise the Holders of
Securities who exercised their rights under Subsection (A)(1) of this Section 1
by providing them written notice, delivered by hand or by first-class,
certified or overnight mail, postage prepaid or by telecopier, within 5 days
after the earlier of (i) the expiration of the 20 day period specified in
Subsection (A)(1) above or (ii) the date the Selling Securityholder has
determined the total number of shares of Common Stock being purchased pursuant
to Subsection (A)(1) of this Section 1. Each such Holder of Securities shall
thereupon be entitled, for a period of 7 days from the date of such notice, to
purchase some or all of the shares of Common Stock not otherwise purchased
under Subsection (A) (1) of this Section 1; provided, however, that to the
extent that more than one such Holder desires to purchase shares of Common
Stock exceeding that proportion as such purchaser's aggregate
3
<PAGE> 4
holding of Securities then bears to the aggregate holding of Securities then
held by all Holders of Securities which exercised their rights granted under
Subsection (A)(1) of this Section 1 ("Excess Securities"), the amount of such
Excess Securities which each such Holder shall be entitled to purchase shall be
reduced pro rata in accordance with that proportion as the number of shares of
Securities of which such Holder is then the Holder bears to the total number of
shares of Securities then held by all such Holders desiring to purchase Excess
Securities pursuant to this Subsection (A)(2). The rights granted by this
Subsection (A)(2) shall be exercisable, in whole or in part, in the manner
described in Subsection (A)(1) of this Section 1.
(B) Right of Co-Sale. In the event that there are any
shares of Common Stock not purchased by one or more of the Holders of
Securities through the exercise of the rights granted in Subsection (A) of this
Section 1, no transfer of any of such shares shall be made other than in
compliance with this Subsection (B). The Selling Securityholder shall notify
the Holders of Securities, in the manner described in Subsection (A) of this
Section 1, of the number of shares of Common Stock remaining to be sold to the
Prospective Purchaser, restating the price to be paid in exchange therefor and
the terms of the proposed transaction. Such notice shall state the maximum
number of shares of Common Stock which may be sold to the Prospective Purchaser
by each Holder of Securities as determined in accordance herewith. With respect
to any shares of Common Stock which were unsold, each Holder of Securities
shall thereupon be entitled for a period of 20 days after the date of such
notice to offer to sell to the Prospective Purchaser, for such price and upon
such terms, that proportion (rounded to the nearest whole share) of the number
of shares of Common Stock proposed to be sold as such Holder's aggregate
holding of Securities then bears to the aggregate amount of Securities then
held by all Holders of Securities exercising their rights of co-sale under this
Subsection (B). The rights granted to the Holders of Securities in this
Subsection (B) may be exercised in whole or in part and shall be exercised by
the tender, conditioned upon receipt of the consideration for the Common Stock
sold hereunder, of the maximum number of shares of Common Stock the Holder
thereof desires to sell, endorsed and in transferable form, free and clear of
liens, claims, security interests and other encumbrances, to the Company, which
shall act as agent for purposes of such sale. On the first business day
following the date 20 days following the date of the first notice given to the
Holders of Securities, the Company shall notify the Selling Securityholder, the
Holders of Securities, and the Prospective Purchaser of the amount of
Securities to be sold under this Subsection (B) of Section 1, the price to be
paid for any shares of Common Stock and the price therefor. In such notice to
the Prospective Purchaser, the Company shall direct the Prospective Purchaser
to furnish to the Company, as agent, within 10 days of the date of such notice,
the price of such tendered shares of Common Stock in the form of an official
bank or certified check or checks in specified amounts. Promptly upon receipt
of such check or checks, the Company shall (i) transmit each check (duly
endorsed, if necessary) to the respective tendering Holder or Holders of
Securities (ii) transfer the shares so purchased on the books of the Company
into the name of the purchaser thereof, (iii) transmit certificates for such
shares to the Prospective Purchaser thereof by first class or certified mail,
(iv) transmit tendered shares not so purchased to the Holder thereof by first
class or certified mail, (v) notify the Holders of Securities in writing,
delivered by hand or by first-class, certified or overnight mail, postage
prepaid, or by telecopier,
4
<PAGE> 5
of such sale within 5 days following the completion thereof. In the event that,
as to any tender of shares of Common Stock or by the Holders of Securities
pursuant hereto, the entire purchase price for all shares of Common Stock duly
tendered and eligible for sale under this Subsection (B) is not received from
the Prospective Purchaser within the aforesaid 10-day period, the Company shall
promptly (i) return to the Holders of Securities all the shares of Common Stock
tendered by such Holders, delivered by hand or by first class, certified or
overnight mail, postage prepaid, and (ii) notify the Selling Securityholder of
the return of such shares of Common Stock . Any shares of Common Stock tendered
by a Holder of Securities as aforesaid received by the Company more than 20
days following the date of the first notice given to the Holders of Securities
pursuant to this Subsection (B) shall be ineligible for sale in accordance with
such notice and the Company shall promptly return such shares of Common Stock
to the tendering Holder, delivered by hand or by first class, certified or
overnight mail. The balance of the number of shares of Common Stock to be sold
to the Prospective Purchaser, after deduction of the number of shares of Common
Stock properly tendered, if any, by one or more Holders of Securities in
accordance herewith, except in the event of a public offering, merger,
consolidation, exchange of securities of the Company approved by the
stockholders of the Company, may be sold by the Selling Securityholder to the
Prospective Purchaser, at the price and upon the terms set forth in the first
notice given to the Holders of Securities pursuant to this Subsection (B), not
less than 20 days nor more than 60 days following the expiration of the 20-day
period during which Holders of Securities were entitled to exercise their
rights of co-sale hereunder but only if the Prospective Purchaser has timely
paid the purchase price for all shares properly tendered by such Holders and
eligible for sale under this Subsection (B).
(C) Non-Participating Investors. Notwithstanding the
foregoing provisions of this Section 1, a Non-Participating Investor shall not
be entitled to exercise any rights pursuant to Subsection (A) of this Section
1. However, a Non-Participating Investor may participate in a sale pursuant to
Subsection (B) of this Section 1.
(D) Transfers to Affiliates. Notwithstanding anything in
this Section 1 to the contrary, any record owner of Common Stock purchased by a
Securityholder pursuant to the Securities Purchase Agreements may from time to
time transfer all or part of such record owner's Common Stock purchased
pursuant to the Securities Purchase Agreements: (i) to a nominee identified in
writing to the Company as being the nominee of or for such record owner, and
any nominee of or for a beneficial owner of Common Stock purchased pursuant to
the Securities Purchase Agreements identified in writing to the Company as
being the nominee of or for such beneficial owner may from time to time
transfer all or part of Common Stock purchased pursuant to the Securities
Purchase Agreements registered in the name of such nominee but held as nominee
on behalf of such Securityholder, to such Securityholder; (ii) an Affiliate of
such Securityholder; or (iii) if such Securityholder is a partnership or the
nominee of a partnership, to a partner, retired partner, or estate of a partner
or retired partner, of such partnership, so long as such transfer is in
accordance with the transferee's interest in such partnership and is without
consideration; provided, however, that each such transferee shall remain
subject to all restrictions on the transfer of Securities herein contained.
5
<PAGE> 6
(E) Termination of Provisions of this Section 1. The
rights granted and obligations imposed in this Section 1, shall terminate on
the first date on which shares of Common Stock are sold in an Initial Public
Offering, provided, however, that notwithstanding the foregoing provisions of
this Subsection l(E), all rights granted and obligations imposed in this
Section 1 shall terminate on the date of consummation of Sale.
2. Sale of the Company.
(A) Obligation to Sell. Upon a Sale, each Securityholder
shall sell, exchange or otherwise transfer his shares of Common Stock in
accordance with the terms and conditions of the Sale if such Sale was approved
by the Holders of at least a majority of each class of the outstanding
Securities. Each Securityholder shall execute such documents and perform such
acts, including, without limitation, voting his, her or its shares of Common
Stock, as may be reasonably necessary to consummate such transfer of his shares
of Common Stock; provided, however, that no Securityholder who is not an
officer of the Company shall be required to make any representations or
warranties in any such document, other than with respect to the status of such
Securityholder's title to its or his share of Common Stock and whether or not
it or he is an Accredited Investor (as that term is defined in Rule 501
promulgated by the Securities and Exchange Commission under the Securities
Act).
3. Event of Option.
(A) Company's Right of Option. Upon the occurrence of an
Event of Option, the Securityholder who is the subject of the Event of Option
(the "Optioner") shall notify the Company in writing (such notice to be
referred to as the "Optioner's Notice"), delivered by hand or by first-class,
certified or overnight mail, postage prepaid, or by telecopier, within 5 days
after the occurrence of such Event of option, of its occurrence and nature. The
Company shall, within 7 days after its receipt of such notice, notify all
Holders of Securities other than the Optioner, such notice to be in writing,
delivered by hand, or by first-class, certified or overnight mail, postage
prepaid, or by telecopier, to their respective addresses as shown on the books
of the Company. Each such notice shall set forth the identity of the Optioner,
the nature of the Event of Option and the quantity and description of the
Common Stock owned by the Optioner.
The Company shall thereupon be entitled, for a period of 20 days
after the delivery to it of the calculations of Fair Market Value to be made
pursuant to the last sentence of this Subsection (A), to purchase at a price
per share equal to the Fair Market Value of Common Stock, any or all of the
Optioner's shares of Common Stock by the tender of an official bank or
certified check for the appropriate amount to the Optioner. Within 3 days after
the receipt of such check from the Company, the Optioner shall surrender to the
Company by hand delivery or by first-class, certified or overnight mail,
postage prepaid, addressed to the Company, the certificates representing the
shares of Common Stock sold in accordance herewith. If the certificate or
certificates surrendered by the Optioner represent a greater number of shares
of
6
<PAGE> 7
Common Stock than have been sold, the Company shall promptly issue to the
Optioner a new certificate representing the shares of Common Stock not so sold.
As used in this Section 3, the term "Fair Market Value" shall mean the fair
market value per share of Common Stock on the date of the relevant Event of
Option as applicable, as determined by the firm of certified public accountants
regularly engaged by the Company to audit its financial statements, which
determination the Company shall cause its accountants to make and deliver to
the Company no later than 20 days after its receipt of the Optioner's Notice.
(B) Investors' Rights to Option.
(1) If the Company does not exercise, in whole, the option granted under
Subsection (A) of this Section 4 by the end of the 20 day option period
referred to therein, the Company shall so advise the Holders of Securities
other than the Optioner, by providing them with written notice as aforesaid
within 7 days after the expiration of the aforesaid 20 day period. Each Holder
of Securities, other than the Optioner and Non-Participating Investors, shall
thereupon be entitled, for a period of 20 days from the date of such notice, to
purchase that proportion of the Common Stock for which the Company did not
exercise its rights under Subsection (A) of this Section 3 as such purchaser's
aggregate holding of Securities then bears to the aggregate holding of
Securities then held by all Holders of Securities (excluding all Securities
held by Non-Participating Investors). The rights granted by this Subsection
(B)(1) shall be exercisable, in whole or in part, in the manner described in
Subsection (A) of this Section 3. In addition, upon receipt by the Company of
Common Stock sold in accordance herewith, the Company shall issue to each
purchaser of such Common Stock (or to the nominee of such purchaser) a new
certificate representing such shares.
(2) If any Holders of Securities eligible to
exercise the option granted pursuant to Section (B)(1) of this section 3 do not
exercise such right, in whole, the Company shall advise the Holders of
Securities who exercised their rights under Subsection (B)(1) of this Section 3
by providing them written notice within 5 days after the expiration of the 20
day period specified in Subsection (B)(1) above. Each such Holder of Securities
shall thereupon be entitled, for a period of 7 days from the date of such
notice, to purchase some or all of the shares of Common Stock not otherwise
purchased under Subsections (A) or (B) of this Section 3; provided, however,
that to the extent that more than one such Holder exercising its rights granted
under this Subsection (B)(2) desires to purchase Common Stock exceeding that
proportion as such purchaser's aggregate holding of Securities then bears to
the aggregate holding of Securities then held by all Holders of Securities
which exercised their rights granted under Subsection (B)(1) of this Section 3
("Excess Option Securities"), the amount of such Excess Securities which each
such Holder shall be entitled to purchase shall be reduced pro rata in
accordance with that proportion as the number of shares of Common Stock of
which such Holder is then the Holder bears to the total number of shares of
Common Stock then held by all such Holders desiring certificates representing
the Common Stock, to purchase Excess Option Securities pursuant to this
Subsection (B)(2). The rights granted by this Subsection (B)(2) shall be
exercisable, in whole or in part, in the manner described in Subsection (B)(1)
of this Section 3.
7
<PAGE> 8
(C) Shares Not Purchased
Any shares not purchased pursuant to Subsection (A) or (B) of
this Section 3 shall continue to be subject to an open option to purchase by
the Company or by the Holders of any Securities other than the Optioner. Any
transfer, sale or disposition of such shares subject to this option shall not
be valid unless the intended transferee has executed and delivered to the
Company, a valid and binding agreement to such effect as a condition to such
transfer, sale, or disposition.
(D) Information
Upon the occurrence of an Event of Option, the Optioner shall
cease to be entitled to receive information pursuant to Section 6.5 and 6.8 of
the Securities Purchase Agreements and shall cease to have any rights under
Sections 6.6 of the Securities Purchase Agreements.
4. Limitations on Transfer: Legend.
(A) Transfer Limitations and Exceptions. FOR SO LONG AS
THIS AGREEMENT SHALL REMAIN IN EFFECT, THE SECURITYHOLDERS SHALL NOT, DIRECTLY
OR INDIRECTLY, OFFER FOR SALE, SELL, ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE,
ENCUMBER, CONVEY IN TRUST, GIFT, TRANSFER BY REQUEST, DEVISE OR DESCENT OR
OTHERWISE DISPOSE OF, OR SUBJECT TO A SECURITY INTEREST, ANY SHARES OF COMMON
STOCK OR ANY INTEREST THEREIN WHETHER NOW OWNED OR HEREAFTER ACQUIRED, OWNED
BENEFICIALLY OR OF RECORD (EACH OF THE ABOVE-DESCRIBED ACTIONS BY ANY
SECURITYHOLDER BEING REFERRED TO HEREIN AS A "TRANSFER"), EXCEPT IN STRICT
COMPLIANCE WITH THE PROVISIONS OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT THIS
SECTION 4 SHALL NOT RESTRICT ANY TRANSFER OF SHARES OF COMMON STOCK BY GIFT TO
SUCH SECURITYHOLDER'S SPOUSE, LINEAL DESCENDANT OR ANTECEDENT, BROTHER OR
SISTER, THE ADOPTED CHILD OR ADOPTED GRANDCHILD, OR SPOUSE OF ANY CHILD,
ADOPTED CHILD, GRANDCHILD OR ADOPTED GRANDCHILD OF SUCH SECURITYHOLDER OR TO A
TRUST OR TRUSTS FOR THE EXCLUSIVE BENEFIT OF SUCH SECURITYHOLDER OR SUCH
SECURITYHOLDER'S FAMILY MEMBERS, OR TRANSFER BY DEVISE OR DESCENT OR IF SUCH
SECURITYHOLDER IS A PARTNERSHIP, TO ANY PARTNERS OF SUCH PARTNERSHIP, PROVIDED
THAT IN ALL CASES, THE TRANSFEREE OR OTHER RECIPIENT EXECUTES A COUNTERPART
COPY OF THIS AGREEMENT AND BECOMES BOUND THEREBY.
(B) PROHIBITED TRANSFERS. ANY TRANSFER OF SHARES OF
COMMON STOCK IN VIOLATION OF THIS AGREEMENT (A "PROHIBITED TRANSFER") SHALL BE
NULL AND VOID. THE COMPANY SHALL NOT RECORD ANY PROHIBITED TRANSFER ON ITS
BOOKS AND SHALL NOT RECOGNIZE ANY EQUITABLE OR OTHER CLAIM TO, OR ANY INTEREST
IN, SECURITIES THAT ARE THE SUBJECT OF A PROHIBITED TRANSFER ON THE PART OF ANY
THIRD PARTY.
(C) LEGEND. ALL CERTIFICATES REPRESENTING SHARES OF COMMON
STOCK OF THE COMPANY HELD OR LATER ACQUIRED BY THE PARTIES HERETO SHALL BEAR A
LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM:
8
<PAGE> 9
"THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY MAY NOT BE
SOLD, ASSIGNED, BEQUEATHED, TRANSFERRED (INCLUDING BY WILL OR PURSUANT TO THE
LAWS OF DESCENT AND DISTRIBUTION OR OTHERWISE), PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF OR BE MADE THE SUBJECT OF A SECURITY INTEREST EXCEPT AS
PROVIDED IN THAT CERTAIN SECURITIES RESTRICTION AGREEMENT DATED AS OF NOVEMBER
2, 1995, BY AND AMONG PARK `N VIEW, INC. (THE "COMPANY") AND THE
SECURITYHOLDERS OF THE COMPANY, A COPY OF WHICH AGREEMENT IS ON FILE AT THE
OFFICE OF THE COMPANY AND WILL BE FURNISHED TO THE HOLDER OF THIS CERTIFICATE
UPON WRITTEN REQUEST AND WITHOUT CHARGE. ANY PURPORTED TRANSFER IN VIOLATION OF
THAT AGREEMENT SHALL BE VOID."
Upon termination of this Agreement, if a Securityholder shall so
request in writing, the Company shall promptly issue to such Securityholder a
new certificate not bearing the foregoing legend representing any shares of
Common Stock then held by such Securityholder.
(D) In the event the Company or Securityholders pursuant
to the Registration Rights Agreement propose to make an underwritten public
offering of Securities, all Securityholders shall agree not to sell any
Securities (including short sales) for a period to be determined by a majority
vote of each class of Securities except pursuant to such registration statement
without the prior written consent of the Company and the underwriter.
5. Failure to Deliver Securities If a Securityholder becomes
obligated to sell any shares of Common Stock to a Holder of Securities or to
the Company under this Agreement and fails to deliver such shares in accordance
with the terms of Agreement, such Holder or the Company, as the case maybe, may
at its option, in addition to all other remedies it may have, send to such
Securityholder the purchase price for such shares of Common Stock as is herein
specified. Thereupon, the Company upon written notice delivered by hand or by
first-class, certified or overnight mail, postage prepaid, or by telecopier, to
such Securityholder, (a) shall cancel on its books the certificate or
certificates represent the shares of Common Stock to be sold and (b) shall
issue, in lieu thereof, in the name of such Holder or the Company, as the case
may be, a certificate or certificates representing such shares of Common Stock
and thereupon all of such Securityholder's rights in and to such shares of
Common Stock shall terminate.
6. Miscellaneous.
(A) (i) Amendments. This Agreement may not be altered,
amended or supplemented except in a written instrument executed by the Company,
Holders of not less than a majority of each class of the then existing
Securities.
(ii) Pledge. The parties to the Agreement hereby
consent to the pledge of Securities by Messrs. Williams and Nathanson to secure
their obligation to indemnify the Investors and the Company under that certain
Indemnification and Stock Pledge Agreement dated November 2, 1995.
(B) Successors and Assigns. The rights and benefits of
this Agreement shall inure to the benefit of, and be enforceable by, the
successors and assigns of the Company and the Holders of Securities.
9
<PAGE> 10
The rights and obligations of the Securityholders under this Agreement may only
be assigned with the prior written consent of the Company and the Holders of at
least a majority of each class of the then outstanding Securities. This
Agreement shall be binding upon the Company and its successors and assigns and
each Securityholder and his heirs, personal representatives, successors and
assigns.
(C) Further Execution. The parties hereto agree to execute
any additional documents or instruments necessary to carry out the purposes of
this Agreement.
(D) Governing Law. The validity, meaning and effect of
this Agreement shall be determined in accordance with the domestic laws of the
State of Delaware applicable to contracts made and to be performed in that
state without giving any effect to any choice or conflict of law provision or
rule (whether in the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Delaware.
(E) Headings. The headings herein are solely for the
convenience of the parties and shall not serve to modify or interpret the text
of the Sections at the beginning of which they appear.
(F) Severability. In the event that any court or any
governmental authority or agency declares all or any part of any Section of
this Agreement to be unlawful or invalid, such unlawfulness or invalidity shall
not serve to invalidate any other Section of this Agreement, and in the event
that only a portion of any Section is so declared to be unlawful or invalid,
such unlawfulness or invalidity shall not serve to invalidate the balance of
such Section.
(G) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original but all of which shall
together constitute one and the same document.
(H) Entire Agreement. This Agreement constitutes the
entire agreement by and among the parties hereto with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first set forth above.
ATTEST: PARK 'N VIEW, INC.
By: /s/ Ian Williams
- ------------------------------ --------------------------------
Secretary
Existing Investors whose signatures
appear on Exhibit A hereto, and the Investors whose signatures appear on
Exhibit B hereto.
10
<PAGE> 11
EXHIBIT A
Park 'N View General Partner, Inc.
By: /s/ Ian Williams
----------------------------------------------
Name: Ian Williams
Title: President
/s/ Ian Williams
-------------------------------------------------
Ian Williams
/s/ Sam Hashman
-------------------------------------------------
Sam Hashman
/s/ Monte Nathanson
-------------------------------------------------
Monte Nathanson
Nelgo Investments
By: /s/ Daniel K. O'Connell
---------------------------------
Name: Daniel K. O'Connell
Title: General Partner
11
<PAGE> 12
EXHIBIT B
I. APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Robert Chefitz
-------------------------------------------
Name: Robert Chefitz
Title: G.P.
II. APA EXCELSIOR IV OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR
By: /s/ Robert Chefitz
-------------------------------------------
Name: Robert Chefitz
Title: G.P.
III. THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
-------------------------------------------
Name: Robert Chefitz
Title: G.P.
/s/ Michael Willner
- ----------------------------------------------
Michael Willner
12
<PAGE> 1
EXHIBIT 10.23
PARK 'N VIEW
STOCK PURCHASE AGREEMENT
SERIES B 7% CUMULATIVE CONVERTIBLE PREFERRED STOCK
DATED AS OF NOVEMBER 13, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. DEFINITIONS..................................................................................................1
2. AUTHORIZATION AND FORM OF SERIES B STOCK; CLOSING............................................................7
2.1 Authorization of Series B Stock.................................................................7
2.2 Closing; Payment................................................................................7
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................................8
3.1 Organization and Qualification of the Company...................................................8
3.2 Capital Stock...................................................................................8
3.3 Title to Assets; Encumbrances..................................................................10
3.4 Outstanding Debt...............................................................................10
3.5 Litigation, Etc................................................................................10
3.6 Contracts and Commitments......................................................................10
3.7 Company Authorizations.........................................................................11
3.8 Compliance with Law; Permits...................................................................11
3.9 Full Disclosure................................................................................12
3.10 Required Approvals; No Conflict................................................................12
3.11 Benefit Plans..................................................................................13
3.12 Labor Relations................................................................................14
3.13 No Broker or Finder............................................................................14
3.14 Dividends......................................................................................15
3.15 No Obligation to Purchase......................................................................15
3.16 Other Offerings: Registration Exemptions.......................................................15
3.17 Illegal Payments...............................................................................15
3.18 Related Party Transactions.....................................................................15
3.19 Financial Statements; Liabilities..............................................................16
3.20 Absence of Specified Changes...................................................................16
3.21 Taxes..........................................................................................18
3.22 Proprietary Rights.............................................................................19
3.23 Insurance......................................................................................20
3.24 Environmental..................................................................................20
3.25 Minute Books...................................................................................21
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INVESTORS.......................................................21
4.1 Investment Intent, Etc.........................................................................21
4.2 Sophistication, Financial Strength, Access, Etc................................................21
4.3 No Broker or Finder............................................................................21
4.4 Authorization..................................................................................21
4.5 Binding Effect.................................................................................22
5. CONDITIONS TO OBLIGATIONS OF INVESTORS.......................................................................22
5.1 Representations and Warranties True at Closing: Non Occurrence of Default......................22
5.2 No Injunction..................................................................................22
5.3 Litigation.....................................................................................22
5.4 Regulatory Approvals...........................................................................23
5.5 Other Consents.................................................................................23
5.6 Good Standing Certificates.....................................................................23
5.7 Secretary's Certificate........................................................................23
5.8 Resolutions....................................................................................23
5.9 Compliance Evidence............................................................................24
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
5.10 Certificate of Designation.....................................................................24
5.11 Charter Amendment..............................................................................24
5.12 Series A Amendment.............................................................................24
5.13 Securities Restriction Agreement...............................................................24
5.14 Registration Rights Agreement..................................................................24
5.15 Amended Securityholders' Agreement and Exchange Agreement......................................24
5.16 By Laws Amendment..............................................................................25
5.17 Opinion of Counsel.............................................................................25
5.18 Board Composition..............................................................................25
5.19 Proceedings Satisfactory.......................................................................25
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS.....................................................................25
6.1 No Injunction..................................................................................25
6.2 Representations, Warranties and Agreements.....................................................25
6.3 Purchase Price.................................................................................25
7. COVENANTS OF THE COMPANY.....................................................................................26
7.1 Payment of Taxes: Corporate Existence and Licenses; Maintenance of Properties/Assets. ........26
7.2 Payment of Indebtedness, Etc...................................................................26
7.3 Financial Statements and Information...........................................................27
7.4 Discussion and Inspection Rights; Attendance at Board Meetings.................................29
7.5 Tax Treatment of Dividends.....................................................................30
7.6 Notice of Claimed Default or Deficiency........................................................31
7.7 Blue Sky.......................................................................................31
7.8 Compliance with Laws. ........................................................................31
7.9 Filing of Commission Reports...................................................................31
7.10 Transactions with Affiliates...................................................................31
7.11 Subsidiaries...................................................................................31
7.12 Expenditures...................................................................................32
7.13 No Registration Rights to Others...............................................................32
7.14 Use of Proceeds................................................................................32
7.15 Restrictions on Employee Stock.................................................................32
7.16 Confidentiality................................................................................32
7.17 Small Business Information.....................................................................32
7.18 Reservation of Common Stock....................................................................32
7.19 Publicity......................................................................................33
8. TRANSFER OF SECURITIES.......................................................................................33
8.1 Restrictive Legends............................................................................33
8.2 Notice of Proposed Transfer....................................................................34
8.3 Termination of Restrictions....................................................................34
8.4 Compliance with Rule 144 and Rule 144A.........................................................35
8.5 Non Applicability of Restrictions on Transfer..................................................35
9. MISCELLANEOUS................................................................................................35
9.1 Brokers; Indemnification.......................................................................35
9.2 Stamp Tax and Delivery Costs...................................................................36
9.3 Place of Payment...............................................................................36
9.4 Amendment and Waiver...........................................................................36
9.5 Lost, Etc. Securities..........................................................................36
9.6 Representations, Warranties and Covenants to Survive...........................................37
9.7 Severability...................................................................................37
9.8 Investigation of the Company...................................................................37
9.9 Successors and Assigns.........................................................................37
9.10 Notices........................................................................................38
9.11 Governing Law..................................................................................38
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
9.12 Counterparts...................................................................................38
9.13 Reproduction of Documents......................................................................38
9.14 Affiliates; Transfers..........................................................................38
9.15 Table of Contents; Headings....................................................................39
9.16 Indemnification................................................................................39
9.17 Expenses.......................................................................................39
9.18 Entire Agreement; Exhibits and Schedules.......................................................40
</TABLE>
iii
<PAGE> 5
EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
Exhibits Description
- -------- ------------
<S> <C>
A Form of Certificate of Designation
B Form of Charter Amendment
C Form of Series A Amendment
D Form of Securities Restriction Agreement
E Form of Registration Rights Agreement
F Form of Amended Securityholders' Agreement and Exchange Agreement
G Form of Amended By-Laws
H Form of Legal Opinion of Petree Stockton, L.L.P.
I Financial Statements
Schedules Description
- --------- -----------
2.2(a) Series B Stock Investment
2.2(b) Aggregate Shares Received
3.2(a) Common Stock (Existing Investors)
3.2(b) Options; Preemptive, Registration and Similar Rights
3.2(c) Series A Stock (Existing Investors)
3.3 Title to Assets; Encumbrances
3.4 Outstanding Debt
3.6(a) Contracts
3.6(b) Truck Stop Agreements
3.8(b) Permits
3.11 Benefit Plans
3.12 Labor Relations
3.13 No Broker or Finder - Company
3.15 No Obligation to Purchase
3.19 Financial Statements
3.20 Absence of Specified Changes
3.21 Taxes
3.22 Proprietary Rights
3.23 Insurance
4.3 Broker or Finder - Investors
</TABLE>
iv
<PAGE> 6
PARK `N VIEW, INC.
STOCK PURCHASE AGREEMENT
SERIES B 7% CUMULATIVE CONVERTIBLE PREFERRED STOCK
As of November 13, 1996
To The Purchasers
Named in Schedule 2.2(b) Hereto
and appearing on the
signature pages hereto
(collectively referred to herein
as "Investors"; individually, an "Investor")
Executing Their Acceptance Hereof
Gentlemen:
Park `N View, Inc. hereby confirms its agreement with each of the
Investors as follows:
1. DEFINITIONS
"Affiliate" shall mean any entity controlling, controlled by or under
common control with a designated Person. For the purposes of this definition,
"control" shall have the meaning presently specified for that word in Rule 405
promulgated by the Securities and Exchange Commission under the Securities Act.
With respect to any Person that is a limited partnership, Affiliate shall also
mean any general or limited partner of such limited partnership, or any Person
which is a general partner in a general or limited partnership which is a
general partner of such limited partnership.
"Agreement" shall mean, and the words "herein," "hereof," "hereunder"
and words of similar import shall refer to this Agreement and any amendment or
supplement hereto.
"Amended By-Laws" shall have the meaning set forth in Section 5.16
hereof.
"Amended Securityholders' Agreement and Exchange Agreement" shall have
the meaning set forth in Section 5.15 hereof.
"Annual Budget" shall have the meaning set forth in Section 7.3(d)
hereof.
"Assets" shall mean any interest in any kind of property or assets,
whether real, personal or mixed, or tangible or intangible.
1
<PAGE> 7
"Balance Sheet" shall have the meaning set forth in Section 3.19
hereof.
"Board" shall mean the Board of Directors of the Company.
"By-Laws" shall have the meaning set forth in Section 3.2 hereof.
"Certificate of Designation" shall have the meaning set forth in
Section 2.1 hereof.
"Charter" shall have the meaning set forth in Section 3.2 hereof.
"Charter Amendment" shall have the meaning set forth in Section 3.2
hereof.
"Closing" shall have the meaning set forth in Section 2.2 hereof.
"Closing Date" shall have the meaning set forth in Section 2.2 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, prior
to or after the date of this Agreement, or any federal statute or statutes which
shall be enacted to take the place of such Code, together with all rules and
regulations promulgated thereunder.
"Common Stock" shall mean the Company's common stock, $.001 par value,
and any Stock into which such Common Stock may hereafter be converted.
"Company" shall mean Park 'N View, Inc., a Delaware corporation, and
all predecessor and successor corporations thereof.
"Consolidated" shall mean, with respect to the Company, financial
statements of the Company including the results of its operations at each
truckstop, consolidated in accordance with generally accepted accounting
principles consistently applied, whether or not ordinarily consolidated by the
Company.
"Covered Person" shall have the meaning set forth in Section 9.16
hereof.
"Dividends Received Deduction" shall have the meaning set forth in
Section 7.5 hereof.
"Environmental Laws" shall mean any applicable federal, state, local or
foreign laws, statutes, rules, regulations, orders, consent decrees, judgments,
permits or licenses, relating to prevention, remediation, reduction or control
of pollution, or protection of the environment, natural resources and/or human
health and safety, including, without limitation, such applicable laws,
statutes, rules, regulations, orders, consent decrees, judgments, permits or
licenses relating to (a) solid waste and/or Hazardous Materials generation,
handling, transportation, use, treatment, storage or disposal, (b) air, water,
and noise pollution, (c) soil, ground, water or groundwater contamination, (d)
the manufacture, generation, processing, handling, distribution,
2
<PAGE> 8
use, treatment, storage, transportation or release, emission or discharge into
the environment of Hazardous Materials, (e) regulation of underground and above
ground storage tanks, (f) the obtaining, sale, use, storage, disposal or testing
of any medical waste.
"ERISA" shall have the meaning set forth in Section 3.11(a) hereof.
"Exchange" shall have the meaning set forth in Section 2.2(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, prior to or after the date of this Agreement, or any federal statute or
statutes which shall be enacted to take the place of such Act, together with all
rules and regulations promulgated thereunder.
"Existing Investors" shall mean the investors in the Company
immediately preceding the Closing, which investors are listed on Schedule 3.2(a)
attached hereto.
"Financial Statements" shall have the meaning set forth in Section 3.19
hereof.
"Hazardous Materials" shall mean any flammable or explosive materials,
petroleum (including crude oil and its fractions), radioactive materials,
hazardous wastes, toxic substances or related hazardous materials, chemicals,
pollutants and contaminants, including, without limitation, polychlorinated
biphenyls, friable asbestos, and any substances defined as, or included in the
definition of toxic or hazardous substances, wastes, or materials under any
federal or applicable state, local or foreign laws, ordinances, rules or
regulations including Environmental Laws.
"Holders" shall mean the Persons who shall from time to time, own, of
record or beneficially, any Security. The term "Holder" shall mean any one of
the Holders.
"Indebtedness" shall mean the principal of (and premium, if any) and
unpaid interest on (i) indebtedness which is for money borrowed from others;
(ii) indebtedness guaranteed, directly or indirectly, in any manner by the
Company, or in effect guaranteed, directly or indirectly, by the Company through
an agreement, contingent or otherwise, to supply funds to or in any manner
invest in the debtor or to purchase indebtedness, or to purchase Assets or
services primarily for the purpose of enabling the debtor to make payment of the
indebtedness or of assuring the owner of the indebtedness against loss; (iii)
all indebtedness secured by any mortgage, lien, pledge, charge or other
encumbrance upon Assets owned by the Company, even if the Company has not in any
manner become liable for the payment of such indebtedness; (iv) all indebtedness
of the Company created or arising under any conditional sale, lease or other
title retention agreement with respect to Assets acquired by the Company even
though the rights and remedies of the seller, lessor or lender under such
agreement or lease in the event of default are limited to repossession or sale
of such Assets and provided, that obligations for the payment of rent under a
lease of premises from which the business of the Company will be conducted shall
not constitute Indebtedness; and (v) renewals, extensions and refunding of any
such indebtedness.
3
<PAGE> 9
"IRS" shall mean the United States Internal Revenue Service or any
successor to the functions of such agency.
"Investment" shall have the meaning set forth in Section 2.4 hereof.
"Investors" shall have the meaning set forth in the preamble hereof,
subject to the provisions of Section 9.14 hereof. "Investor" shall mean any one
of the Investors.
"Losses" shall have the meaning set forth in Section 9.16 hereof.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
"Options" shall have the meaning set forth in Section 3.2(b) hereof.
"PBGC" shall have the meaning set forth in Section 3.11(b) hereof.
"Permits" shall have the meaning set forth in Section 3.8(b) hereof.
"Person" shall mean an individual, a corporation, a partnership, a
trust, a limited liability company, an unincorporated organization or a
governmental organization or any agency or political subdivision thereof.
"Plans" shall have the meaning set forth in Section 3.11(a) hereof.
"Preferred Stock" shall mean the Series A Stock and the Series B Stock.
"Qualifying Offering" shall mean that (i) the Company shall have
consummated a firm commitment underwritten public offering of its Common Stock
by a nationally recognized investment banking firm pursuant to an effective
registration under the Securities Act covering the offering and sale of both
primary and secondary shares of Common Stock which results in gross proceeds of
at least $20,000,000, (ii) the Common Stock is listed on either NASDAQ, the New
York Stock Exchange or the American Stock Exchange, and (iii) the price at which
the Common Stock is sold in such offering is at least equal to an amount which
(x) is 200% of the then effective conversion price or (y) would represent, on an
as converted basis, a compound annual rate of return of 35% on investment by the
Investors in the Series B Stock.
"Registrable Securities" shall mean any securities which constitute
Registrable Securities pursuant to the Registration Rights Agreement.
"Registration Rights Agreement" shall have the meaning set forth in
Section 5.14 hereof.
4
<PAGE> 10
"Registration Statement" shall mean any registration statement filed
with the Securities and Exchange Commission in accordance with the Securities
Act, together with all amendments or supplements thereto.
"Related Documents" shall mean the Certificate of Designation, the
Charter Amendment, the Series A Amendment, the Securities Restriction Agreement,
the Registration Rights Agreement and the Amended Securityholders' Agreement and
Exchange Agreement.
"Related Entities" shall mean with respect to any Person:
(a) if such Person is a limited or general partnership, any
general partner of such partnership;
(b) if such Person is a corporation, any Person holding,
directly or indirectly and alone or in the aggregate, not less than a
majority in voting power of the voting securities in such corporation;
(c) if such Person is limited liability company, any managing
members of such limited liability company;
(d) any corporation in which such Person and/or any of the
Persons included as Related Entities pursuant to clause (a) of this
definition hold, directly or indirectly and alone or in the aggregate,
not less than a majority in voting power of the then outstanding voting
securities; and
(e) any limited or general partnership or limited liability
company in which such Person and/or any of the Persons included as
Related Entities pursuant to clauses (a) to (d) of this definition is a
general partner, and any other partnership or limited liability company
in which any partnership or limited liability company included as a
Related Entity pursuant to this clause (e) is a general partner.
"Related Party" shall have the meaning set forth in Section 3.19
hereof.
"Rule 144" shall have the meaning set forth in Section 8.3 hereof.
"Rule 144A" shall have the meaning set forth in Section 8.2 hereof.
"Securities" shall mean any debt or equity securities of the Company
whether now or hereafter authorized, and any instrument convertible into or
exchangeable for Securities or a Security.
5
<PAGE> 11
"Securities Act" shall mean the Securities Act of 1933, as amended,
prior to or after the date of this Agreement, or any federal statute or statutes
which shall be enacted to take the place of such Act, together with all rules
and regulations promulgated thereunder.
"Securities and Exchange Commission" shall mean the United States
Securities and Exchange Commission or any successor to the functions of such
agency.
"Securities Restriction Agreement" shall have the meaning set forth in
Section 5.13 hereof.
"Series A Amendment" shall have the meaning set forth in Section 3.2
hereof.
"Series A Exchange" shall have the meaning set forth in Section 2.2(b)
hereof.
"Series A Stock" shall mean the Series A Preferred Stock, $.01 par
value.
"Series B Exchange" shall have the meaning set forth in Section 2.2(b)
hereof.
"Series B Stock" shall mean the Series B 7% Cumulative Convertible
Preferred Stock, $.01 par value.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participation in, corporate stock.
"Subordinated Notes" shall mean those certain subordinated promissory
notes currently outstanding and held by certain of the Existing Investors.
"Subsidiary" shall mean any corporation more than 50% of whose
outstanding Voting Stock shall at the time be owned directly or indirectly by
the Company or by one or more Subsidiaries or by the Company and one or more
Subsidiaries.
"Tax" and "Taxes" shall mean any and all taxes, charges, fees, levies
or other assessments, including, without limitation, all net income, gross
income, gross receipts, premium, sales, use, ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment, excise, estimated,
severance, stamp, occupation, property or other taxes, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties
(including penalties for failure to file in accordance with applicable
information reporting requirements), and additions to tax by any authority,
whether federal, state, or local or domestic or foreign.
"Tax Return" shall mean any report, return, form, declaration or other
document or information required to be supplied to any authority in connection
with Taxes.
6
<PAGE> 12
"Truck Stop Agreements" shall have the meaning set forth in Section
3.6(b) hereof.
"Voting Stock" as applied to the Stock of any corporation, shall mean
Stock of any class or classes (however designated) having ordinary voting power
for the election of a majority of the members of the Board of Directors (or
other governing body) of such corporation, other than Stock having such power
only by reason of the happening of a contingency.
2. AUTHORIZATION AND FORM OF SERIES B STOCK; CLOSING
2.1 Authorization of Series B Stock. The Company proposes to
designate, authorize and create a series of its preferred stock, designated the
Series B 7% Cumulative Convertible Preferred Stock, having a par value of $.01
per share (the "Series B Stock"), consisting of 1,372,370 shares and having the
designation, powers, preferences and rights and the qualifications, limitations
or restrictions thereof set forth in the certificate of designation with respect
to such series (the "Certificate of Designation") in the form of Exhibit A
attached hereto and made a part hereof.
2.2 Closing; Payment.
(a) Series B Stock Investment. Subject to the terms and
conditions of this Agreement, including without limitation the valid adoption by
the Company of the Certificate of Designation and the filing thereof with the
Secretary of State of Delaware, and upon the basis of the representations and
warranties herein contained, the Company hereby agrees to sell to the Investors
and issue to the Investors (or nominees thereof), and each of the Investors
agrees to purchase from the Company, for the amount set forth to the right of
such Investor's name under the heading "Series B Stock Investment" on Schedule
2.2(a) which is attached hereto and made a part hereof, the number of shares of
Series B Stock set forth under the heading "Shares Purchased" at a purchase
price of $10.93 per share. The Closing of the purchase and sale of shares of
Series B Stock (the "Closing") shall take place at the offices of Shereff,
Friedman, Hoffman & Goodman, LLP, 919 Third Avenue, New York, New York 10022 at
10:00 a.m. (New York City time), following the satisfaction of the conditions
set forth in Articles 5 and 6, on November 7, 1996 or at such other place, date
and time as the parties may agree in writing (the "Closing Date"). Each
Investor's investment (each, an "Investment"; collectively, the "Investment")
shall be paid to the Company by wire transfer of funds against delivery of
shares of Series B Stock to be purchased by such Investor at the Closing
registered in such Investor's name or that of a nominee, as such Investor may
direct.
(b) Stock Exchange; Aggregate Shares Received. In
addition, simultaneously with the consummation of the Investment, certain of the
Existing Investors shall exchange an aggregate of $3,000,000 principal amount of
Subordinated Notes, plus all accrued but unpaid interest, for an aggregate of
318,065 shares of Series A Stock (the "Series A Exchange"), as set forth under
the heading "Series A Shares - Exchange" on Schedule 2.2(b) attached hereto,
pursuant to the Amended Securityholders' Agreement and Exchange Agreement
attached hereto
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as Exhibit F. Pursuant to such Amended Securityholders' Agreement and Exchange
Agreement, such Existing Investors also shall exchange an aggregate of
$1,500,000 principal amount of Subordinated Notes and warrants to purchase
239,250 shares of Common Stock for an aggregate of 137,237 shares of Series B
Stock (the "Series B Exchange"; together with the Series A Exchange, the
"Exchange"), as set forth under the heading "Series B Shares - Exchange" on such
Schedule 2.2(b). The aggregate amount of shares of Series A Stock and Series B
Stock to be received by each Investor as a result of the Investment and the
Exchange is set forth to the right of each such Investor's name under the
headings "Series A Shares - Exchange" and "Aggregate Series B Shares Received",
respectively, on such Schedule 2.2(b).
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Investors that,
except as otherwise provided in this Article 3 or as set forth on the Schedules
annexed hereto, as of the date hereof and for the period from the date hereof to
and including the Closing Date:
3.1 Organization and Qualification of the Company. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own its Assets and to carry on its business as presently conducted
and as currently contemplated, and to carry out the transactions contemplated by
this Agreement and the Related Documents. The Company is duly qualified to do
business and is in good standing as a foreign corporation in each of the
jurisdictions in which the character of its Assets or the nature of its
activities makes such qualification in such jurisdictions necessary. The Company
has no Subsidiaries and does not own of record or beneficially any securities of
any corporation or any instrument or investment in any partnership, association,
joint venture, corporation, fund or business entity.
3.2 Capital Stock. Subject to the valid filing of the Certificate
of Designation with the Secretary of State of Delaware, the authorized capital
stock of the Company immediately following the completion of the Investment will
consist of 7,000,000 shares of Common Stock, 627,630 shares of Series A Stock
and 1,372,370 shares of Series B Stock. Immediately following the completion of
the Investment, there will be:
(a) 4,318,182 fully paid and non-assessable shares of
Common Stock duly issued and outstanding, registered to the Existing Investors
as set forth in Schedule 3.2(a) annexed hereto, and 1,624,260 shares of Common
Stock duly authorized and reserved for issuance (i) in accordance with the
provisions of this Agreement and (ii) upon exercise of the Options (as defined
in clause (b) below);
(b) options (the "Options") to purchase 251,890 shares of
Common Stock issued to employees of the Company pursuant to the Company's stock
option plan as set forth on Schedule 3.2(b) annexed hereto.
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(c) 388,065 fully paid and non assessable shares of
Series A Stock duly issued and outstanding, registered to the Existing Investors
as set forth on Schedule 3.2(c) annexed hereto.
(d) 1,372,370 fully paid and non-assessable shares of
Series B Stock duly issued and outstanding, registered to Investors as set forth
under the heading "Aggregate Series B Shares Received" on Schedule 2.2(b)
annexed hereto.
Upon completion of the Investment no other Stock of the
Company will be outstanding or authorized for issuance. The Series B Stock will
have the designation, powers, preferences and rights, and the qualifications,
limitations and restrictions thereof, set forth in the Certificate of
Designation, the form of which is attached hereto as Exhibit A, which will be
filed with the Secretary of State of the State of Delaware on or prior to the
Closing. The Company has duly reserved for issuance the shares of Common Stock
initially issuable upon conversion of the Series B Stock. When paid for by, and
issued to, the Investors, the Series B Stock will be duly and validly issued,
fully paid and non assessable, and will be free and clear of any encumbrances,
and except as set forth in this Agreement or the Related Documents, will not be
subject to any restriction on use, voting or transfer; and the shares of Common
Stock issuable to the Investors upon conversion of the Series B Stock, when
issued in accordance with the Certificate of Designation, will be duly and
validly issued, fully paid and non-assessable, and will be free and clear of any
encumbrances and except as set forth in this Agreement or the Related Documents,
will not be subject to any restriction on use, voting or transfer. No further
approval or authorization of the stockholders or the directors of the Company,
of any governmental body or of any other Person is required for the issuance and
sale of the Series B Stock or the shares of Common Stock issuable on conversion
thereof.
Except as disclosed herein or contemplated hereby or in the
Related Documents, or as set forth on Schedule 3.2(b) annexed hereto, there are
no outstanding options, rights, conversion rights, agreements or commitments of
any kind relating to the issuance, sale, purchase, redemption, voting or
transfer of any Security of the Company or any rights outstanding which permit
or allow the holder thereof to cause the Company to file a registration
statement or which permit or allow the holder thereof to include securities of
the Company in a registration statement filed by the Company. Except as
disclosed herein or contemplated hereby or in the Related Documents, or as set
forth on Schedule 3.2(b) annexed hereto, there are no preemptive or other
similar rights with respect to any Security. None of the outstanding Securities
of the Company were issued in violation of the Securities Act, or the securities
or blue sky laws of any state or other jurisdiction. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. The Company has delivered to the Investors copies of the Company's
Certificate of Incorporation, as amended (the "Charter") and By-laws (the
"By-Laws"), as currently in effect.
In addition, (i) prior to the consummation of the Investment,
the Company shall have filed (A) a Certificate of Amendment to the Charter
increasing the authorized shares of
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Common Stock (the "Charter Amendment"), the form of which is attached hereto as
Exhibit B, and (B) a Certificate of Amendment to the Certificate of Designation
relating to the Series A Stock modifying the terms of the Series A Stock so as
to make it pari passu in right of payment with the Series B Stock (the "Series A
Amendment"), the form of which is attached hereto as Exhibit C, and (ii)
simultaneously with the consummation of the Investment, certain of the Existing
Investors shall consummate the Exchange.
3.3 Title to Assets; Encumbrances. Except as set forth on Schedule
3.3 annexed hereto, (a) the Company has good and valid title to all Assets that
it purports to own and a valid leasehold interest in all properties that it has
leased, and is in compliance with any such leases, (b) all Assets owned by the
Company are owned free and clear of all encumbrances, except for security
interests incurred in connection with the purchase of Assets (such security
being limited to the Assets so acquired and securing the purchase price
therefor) or which are listed on Schedule 3.3 annexed hereto, and (c) the
Company is not a real property holding company within the meaning of Section 897
of the Code. All of the Assets owned or leased by the Company are in good
operating condition and repair, subject to normal wear and tear; none of such
Assets is in need of maintenance or repairs except for ordinary, routine
maintenance and such Assets are suitable for and operating according to their
intended use in accordance with industry standards.
3.4 Outstanding Debt. Except as set forth on Schedule 3.4 annexed
hereto, the Company is not a party to any indenture, agreement with respect to
Indebtedness or other instrument with respect to Indebtedness, and has not
issued any outstanding Indebtedness other than the Subordinated Notes; and
immediately after the Closing, the Company will not have any Indebtedness.
3.5 Litigation, Etc. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company which relate to the Company before any court or before any
administrative agency or administrative officer, nor is there any litigation
pending or, to the knowledge of the Company, threatened against the Company or
against the principal executive management of the Company by reason of
employment agreements, confidentiality agreements, noncompetition agreements or
other agreements or arrangements. Neither the Company nor any of its Assets is
subject to any judicial or administrative order, judgment or decree. The Company
has no knowledge of any existing violations by the Company or the principal
executive management of the Company of federal, state or local laws, regulations
or orders.
3.6 Contracts and Commitments.
(a) Contracts. Schedule 3.6(a) annexed hereto contains a
true and complete and accurate list and a brief description of all contracts,
agreements, understandings or other obligations (whether written or oral), other
than the Truck Stop Agreements (which are set forth in subsection (b) below) and
including the Company's form of membership contract and its contracts with
telephone and cable systems, to which the Company is a party or by which any of
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its Assets and, with respect to the business of the Company, its employees or
key consultants (including members of key personnel) are bound under which or
pursuant to which the Company is obligated to make cash payments of, or to
deliver products or render services with a value greater than $25,000 or receive
cash payments of or receive products or services with a value greater than
$25,000 or which are otherwise material to the Company. True, complete and
correct copies of the same have been delivered by the Company to the Investors.
All contracts, agreements, commitments, obligations and licenses to which the
Company is a party are valid and binding agreements and are in full force and
effect and enforceable in accordance with their terms; there are no existing
defaults (or events which, with notice or lapse of time or both, would
constitute a default) by the Company, or to the best of the Company's knowledge
any other party, thereunder.
(b) Truck Stop Agreements. Schedule 3.6(b) annexed hereto
contains a true and complete and accurate list and a brief description of all of
the Company's truck stop agreements (the "Truck Stop Agreements"). All of the
Truck Stop Agreements are valid and binding agreements and are in full force and
effect; there are no existing defaults (or events which, with notice or lapse of
time or both, would constitute a default) by the Company, or to the best of the
Company's knowledge any other party, thereunder.
(c) General. Except as set forth on Schedule 3.6(a) or
3.6(b), (i) the Company is not a party to or bound by any agreement which limits
the freedom of the Company to compete in any line of business and (ii) no
consent of any Person to the contracts listed on Schedule 3.6(a) or 3.6(b) is
required in connection with the execution, delivery and performance of this
Agreement by the Company.
3.7 Company Authorizations. This Agreement and the Related
Documents have been duly authorized by the Company, and each such document
constitutes or, when executed by the Company, will constitute the legal, valid
and binding obligation of the Company, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency or other laws affecting the
enforcement of creditors' rights generally or by equitable principles in any
action (legal or equitable) or by public policy.
3.8 Compliance with Law; Permits.
(a) Except for the filing with the Secretary of State of
Delaware of the Certificate of Designation, the Charter Amendment and the Series
A Amendment and filings pursuant to federal and state securities and blue sky
laws (none of which securities or blue sky law filings are required to be made
prior to the Closing), no approval or authorization of, or registration,
qualification or filing with, any state regulatory body or any federal, state or
municipal governmental authority in the United States or in any foreign country
is required in connection with the execution, delivery or performance by the
Company of this Agreement or the Related Documents or the issuance of the shares
of Series B Stock or the performance by the
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Company of its obligations under the Certificate of Designation, the Charter
Amendment or the Series A Amendment.
(b) Except as set forth on Schedule 3.8(b) annexed
hereto, the operations of the Company have been conducted in all material
respects in accordance with all applicable laws, regulations and other
requirements of all governmental bodies having jurisdiction over the Company.
The Company has not received any notification of any asserted present or past
failure to comply with any such laws, rules or regulations. The Company has all
franchises, consents, licenses, permits, registrations, orders or approvals
(collectively, "Permits") from governmental bodies required for the conduct of
its business as currently conducted and as proposed to be conducted. All of the
foregoing Permits are in full force and effect, and there exist no violations or
breaches of any such Permits.
3.9 Full Disclosure. Neither the representations and warranties of
the Company contained in this Article 3, nor any other written statement,
furnished by or on behalf of the Company to the Investors in connection with the
negotiation of the issuance of the Series B Stock and the other transactions
contemplated by this Agreement and the Related Documents, contains or will
contain any untrue statement of a material fact or omits or will omit a material
fact necessary to make the statements contained therein or herein, taken as a
whole, not misleading; provided, however, that plans, projections, estimates and
other information with respect to future results, activities and events,
contained in any written document furnished by or on behalf of the Company are
not facts and as to such matters the Company represents and warrants only that
such information represents the Company's best efforts to plan, project and
estimate, based upon current circumstances, such future results, activities and
events and the good faith belief that such activities and events can be
accomplished. There is no fact known to the Company which the Company has not
disclosed to the Investors which materially adversely affects or, to the
knowledge of the Company, could reasonably be expected to materially adversely
affect the business, Assets, prospects, profits or condition, financial or
otherwise, of the Company, or the ability of the Company to perform its
obligations under this Agreement or the Related Documents.
3.10 Required Approvals; No Conflict. Other than (i) the valid
adoption by the Board of the resolutions embodied in the Certificate of
Designation, the Charter Amendment and the Series A Amendment, (ii) the valid
adoption by the Board of resolutions authorizing the execution and delivery by
the Company of this Agreement and the Related Documents, (iii) the valid
adoption by the stockholders of the Company of the Charter Amendment and the
Amended By-Laws, (iv) the valid adoption by the holders of Series A Stock of the
Series A Amendment and (v) the consent by holders of 66K% of the Series A Stock
to the issuance of the Series B Stock, the consummation of the transactions
contemplated hereby and thereby and the performance by the Company of its
obligations hereunder and thereunder, no approval or consent is required by law
or by the Charter or By-Laws or by any indenture, agreement or other instrument
to which the Company is a party or otherwise bound or to which its Assets is
subject, or by any Indebtedness of the Company, in connection with the issuance
and sale or transfer of
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the Series B Stock to the Investors pursuant to this Agreement and the Related
Documents, and the performance by the Company of its obligations under this
Agreement and the Related Documents. The execution and delivery of this
Agreement and the Related Documents by the Company and consummation of the
transactions contemplated hereby and thereby, do not and will not (a) violate
any provision of law, any order of any court or other agency of government in a
proceeding to which the Company is a party or by which it is bound, (b) conflict
with any provision of the Charter, the Series A Amendment, the Certificate of
Designation or the By-Laws or (c) violate, or be in conflict with, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or excuse performance by any Person of any of its
obligations under, or cause the acceleration of the maturity of any debt or
obligation pursuant to, or result in the creation or imposition of any
encumbrance upon any Assets of the Company under, any material agreement or
commitment to which the Company is a party or by which any of its Assets is
bound, or to which any of the Assets of the Company is subject.
3.11 Benefit Plans.
(a) Attached hereto as Schedule 3.11 is a complete and
accurate list of all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and other
benefit plans or arrangements that are not subject to ERISA, such as employment
agreements and any other agreements containing "golden parachute" provisions and
deferred compensation agreements, which are currently maintained and/or
sponsored by the Company, or to which the Company currently contributes, or has
an obligation to contribute in the future (collectively, the "Plans"). No Plan
is an employee welfare benefit plan, employee pension benefit plan,
multi-employer plan or multi-employer welfare arrangement (as defined in
Sections 3(1), (2), (37) and (40), respectively, of ERISA), and no Plan is
intended to qualify under Section 401(a) of the Code. Except for the Plans, the
Company does not maintain or sponsor, nor is a contributing employer to, a
pension, profit-sharing, deferred compensation, stock option, employee stock
purchase or other employee benefit plan, employee welfare benefit plan, or any
other arrangement with its employees whether or not subject to ERISA.
(b) All Plans are in substantial compliance with all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable laws, and, in all material respects, have been
administered, operated and managed in substantial accordance with the governing
documents. Neither any Plan nor the Company has engaged in any transaction
prohibited under the provisions of Section 4975 of the Code or Section 406 of
ERISA. Further:
(i) with respect to Plans which qualified as
"group health plans" under Section 4980B of the Code and
Section 607(1) of ERISA and related regulations (relating to
the benefit continuation rights imposed by "COBRA"), the
Company has complied (and on the Closing Date will have
complied) in all respects with all reporting, disclosure,
notice, election and other benefit continuation requirements
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imposed thereunder as and when applicable to such plans, and
the Company has not incurred (and will not incur) any direct
or indirect liability and is not (and will not be) subject to
any loss, assessment, excise tax penalty, loss of federal
income tax deduction or other sanction, arising on account of
or in respect to any direct or indirect failure by the
Company, at any time prior to the Closing Date to comply with
any such federal or state benefit continuation requirement,
which is capable of being assessed or is asserted before or
after the Closing Date directly or indirectly against the
Company with respect to such group health plans;
(ii) the Company is not now nor has it been
within the past five years a member of a "controlled group" as
defined in ERISA Section 4001(a)(14);
(iii) there is no pending litigation, arbitration
or disputed claim, settlement or adjudication proceeding, and,
to the best of the Company's knowledge, there is no threatened
litigation, arbitration or disputed claim, settlement or
adjudication proceeding, or investigation with respect to any
Plan, or with respect to any fiduciary, administrator or
sponsor thereof (in their capacities as such), or any party in
interest thereof; and
(iv) the Balance Sheet reflects the approximate
total pension, medical and other benefit expense for all
Plans, and no material funding changes or irregularities are
reflected thereon which would cause such Balance Sheet to be
not representative of prior periods.
3.12 Labor Relations. Except as set forth on Schedule 3.12: (i) the
Company has paid and performed all material obligations with respect to its
employees, agents, officers and directors, including without limitation all
wages, salaries, commissions, bonuses, severance pay, vacation pay, benefits and
other direct compensation for all services performed by such Persons to the date
hereof and all amounts required to be reimbursed to such persons; (ii) the
Company is in compliance in all material respects with all federal, state, local
and foreign laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours; (iii) there is no
pending, or to the Company's knowledge threatened, charge, complaint,
allegation, application or other process against the Company before the National
Labor Relations Board or any comparable state, local or foreign agency,
governmental or administrative; (iv) there is no labor strike, dispute, slowdown
or work stoppage or other job action pending, or to the Company's knowledge,
threatened against or otherwise affecting or involving the Company; and (v) no
employees of the Company are covered by any collective bargaining agreements and
to the best knowledge of the Company no effort is being made by any union to
organize any of the Company's employees.
3.13 No Broker or Finder. Except as set forth on Schedule 3.13
annexed hereto, the Company has engaged no broker or finder in connection with
this Agreement and the Related Documents or the transactions contemplated hereby
and thereby.
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3.14 Dividends. The Company has taken no action which would require
or permit it to treat the Series A Stock and Series B Stock as other than equity
or dividends on the Series A Stock and Series B Stock as other than dividends on
its books or federal, state or local income tax returns.
3.15 No Obligation to Purchase. As of the Closing Date, except as
set forth on Schedule 3.15 annexed hereto and for rights provided pursuant to
the Related Documents, the Company will not be a party to any agreement with any
Holder of any Securities which requires the Company to purchase any of such
Securities from such Holder under any circumstances.
3.16 Other Offerings: Registration Exemptions. Assuming the truth
of the Investors' representations and warranties contained in Article 4, the
offer, sale and issuance of the Series B Stock (and any shares of Common Stock
issuable on conversion thereof) are exempt from the registration requirements of
the Securities Act and state securities laws. The Options and all of the other
Securities issued and outstanding immediately after the Closing will have been
offered and sold or will be offered and sold pursuant to valid exemptions from
the registration requirements of the Securities Act and any applicable state
securities and blue sky laws. As of the Closing Date, no agreements or
instruments providing for the issuance or sale of shares of Series B Stock by
the Company, other than this Agreement and the Related Documents, will be in
existence.
3.17 Illegal Payments. The Company has never made any illegal
payment of any kind, directly or indirectly, including, without limitation,
payments, gifts or gratuities, to United States or foreign national, state or
local government officials, employees or agents.
3.18 Related Party Transactions.
(a) No Existing Investor, employee, officer or director
of the Company, no Affiliate of any Existing Investor, employee, officer or
director of the Company, and no member of the immediate family of any Existing
Investor, employee, officer or director of the Company (any of the foregoing, a
"Related Party") is indebted to the Company.
(b) Other than with respect to the Subordinated Notes,
the Company is not indebted and is not committed to make loans or extend or
guarantee credit, to any Related Party.
(c) No Related Party is interested, directly or
indirectly, in any contract with the Company except by reason of their ownership
interest in the Company and/or their membership on the Board.
(d) No Existing Investor or party to this Agreement or
the Related Documents is presently, directly or indirectly through such party's
affiliation with any other Person, a party to any transaction with the Company
providing for the furnishing of services by, or rental of real
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or personal property from, or otherwise requiring cash payments to, any such
Person pursuant to an agreement that is material.
3.19 Financial Statements; Liabilities.
(a) The Company has delivered to the Investors a balance
sheet of the Company as of August 31, 1996 (such balance sheet shall hereafter
be referred to as the "Balance Sheet"), and the related income statements for
the period ended August 31, 1996 (together with the Balance Sheet, the
"Financial Statements"), which is attached hereto as Exhibit I. Except as set
forth on Schedule 3.19 annexed hereto, the Financial Statements (i) present
fairly the financial condition of the Company as of August 31, 1996 and the
results of operations for the period ended August 31, 1996, (ii) were prepared
in accordance with the books and records of the Company and U.S. generally
accepted accounting principles, (iii) are true and correct and complete and (iv)
present fairly the financial position of the Company as of the time and for the
periods referred to therein. Furthermore, except as set forth in Schedule 3.19,
the Company hereby specifically confirms that there have been no material
adverse changes during the period covered in the Financial Statements in the
Company's accounting principles and practices.
(b) As of the date hereof, except as set forth on
Schedule 3.19 annexed hereto, (i) the Company has no indebtedness or liabilities
of any nature (matured or unmatured, fixed or contingent, direct or indirect, as
guarantor or in any other capacity) which is not set forth on the Balance Sheet
and (ii) all reserves established by the Company and set forth on the Balance
Sheet are adequate for the purposes for which they were established.
3.20 Absence of Specified Changes. Except as disclosed on Schedule
3.20, since the date of the Balance Sheet, there has not been with respect to
the Company any:
(a) action which would result in a material adverse
change, whether direct or indirect, in the business, operations, condition
(financial or otherwise), prospects, liabilities or assets of the Company
whether or not insured;
(b) transaction not in the ordinary course of business,
including without limitation any sale of all or substantially all of the assets
of the Company or any merger of the Company and any other entity;
(c) unfulfilled commitment as of the date of this
Agreement requiring expenditures by the Company exceeding $10,000 (excluding
commitments expressly described elsewhere in this Agreement or the Schedules
hereto);
(d) material damage, destruction or loss, whether or not
insured;
(e) failure to maintain in full force and effect
substantially the same level and types of insurance coverage as in effect on the
date of the Balance Sheet or destruction, damage
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to, or loss of any asset of the Company (whether or not covered by insurance)
that materially and adversely affects the business, operations, condition
(financial or otherwise), prospects, liabilities or assets of the Company;
(f) change in accounting principles, methods or
practices, investment practices, claims, payment and processing practices or
policies regarding intercompany transactions;
(g) revaluation of any assets or material write down of
the value of any inventory;
(h) any declaration, setting aside, or payment of a
dividend or other distribution in respect of its Stock, or any direct or
indirect redemption, purchase or other acquisition of any shares of its Stock;
(i) issuance or sale of any shares of any equity security
or of any Security convertible into or exchangeable for equity securities;
(j) amendment to the Charter or By-Laws;
(k) sale, assignment or transfer of any tangible or
intangible asset, including any rights to intellectual property, except in the
ordinary course of business;
(l) disposition of or lapse of any patent, trademark,
trade name, service mark or copyright or any application for the foregoing, or
disposition of any technology, software or know-how, or any license, permit or
authorization to use any of the foregoing;
(m) mortgage, pledge or other encumbrance, including
liens and security interests, of any tangible or intangible asset;
(n) discharge or satisfaction of any lien or encumbrance
or payment or cancellation of any liability other than payment of current
liabilities in the ordinary course of business;
(o) cancellation of any debt or waiver or release of any
material contract, right or claim, except for cancellations, waivers and
releases in the ordinary course of business which do not exceed $10,000 in the
aggregate;
(p) indebtedness incurred for borrowed money or any
commitment to borrow money, any capital expenditure or capital commitment
requiring an expenditure of monies in the future, any incurrence of a contingent
liability or any guaranty or commitment to guaranty the indebtedness of others
entered into, by the Company, other than customary transactions in the ordinary
course of business not in excess of $10,000 in the aggregate;
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(q) amendment, termination or revocation of, or a failure
to perform obligations or the occurrence of any default under, any contract or
agreement to which the Company, is, or as of the date of the Balance Sheet was,
a party or of any license, permit or franchise required for the continued
operation of any business conducted by the Company on the date of the Balance
Sheet;
(r) increase or commitment to the increase of the salary
or other compensation payable or to become payable to any of its officers,
directors or employees, agents or independent contractors, or the payment of any
bonus to the foregoing Persons except in the ordinary course of business and
consistent with past practice and applicable policies and procedures of the
Company; or
(s) agreement or understanding to take any of the actions
described above in this Section 3.20.
3.21 Taxes.
(a) All Tax Returns for all periods that are or were
required to be filed by the Company have been or shall be filed on a timely
basis in accordance with the applicable laws of each governmental authority. All
such Tax Returns that have been filed were, when filed, and continue to be,
true, correct and complete in all material respects. All such franchise, income
or other Tax Returns that will be filed shall be true, correct and complete in
all material respects when filed.
(b) Schedule 3.21 annexed hereto lists all United States
federal, state, local and foreign income Tax Returns that have been filed since
January 1, 1990 by the Company that have been audited by any governmental
authority. There are no outstanding waivers or extensions of any statute of
limitations relating to the payment of Taxes by the Company for which the
Company may be liable, and no governmental authority has either formally or
informally requested such a waiver or extension. There is no action, suit,
proceeding or claim currently pending or threatened regarding Taxes with respect
to the Company.
(c) Except as set forth on Schedule 3.21 annexed hereto,
the Company has paid, or made adequate provision in the Financial Statements for
the payment of, all of its Taxes that have or may become due for all periods
which end prior to or which include the Closing Date, including all Taxes
reflected on the Tax Returns referred to in this Section 3.21, or in any
assessment, proposed assessment or notice, either formal or informal, received
by the Company except such Taxes, if any, as are set forth on Schedule 3.21
annexed hereto that are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been provided. All Taxes that
the Company is or was required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the
appropriate governmental authorities. There are no liens with respect to Taxes
on any Assets of the Company other than permitted liens for certain Taxes not
yet due.
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(d) None of the Assets of the Company are assets that the
Company is or shall be required to treat as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately before the enactment of the Tax
Reform Act of 1986, or is "tax-exempt use property" within the meaning of
Section 168(h)(1) of the Code.
(e) The Company has not agreed to make, nor is it
required to make, any adjustments under Section 481(a) of the Code by reason of
or change in accounting method or otherwise.
(f) The Company is not a party to any agreement,
contract, arrangement or plan that has resulted or would result, separately or
in the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(g) The Company has not been included, or considered to
be included or required to be included, in any federal, state, local or foreign
consolidated, combined or unitary Tax Return with any other Person, nor has it
become a party to any Tax allocation or Tax sharing agreement.
(h) The Company has not made, and will not make on or prior to
the Closing Date, an election under Section 341(f) of the Code.
3.22 Proprietary Rights.
(a) The Company owns or possesses, or has adequate and
enforceable licenses or other rights to use and license for all purposes, all
proprietary rights necessary for its business (as now conducted and as proposed
to be conducted) without any conflict with or infringement of the rights of
others. Schedule 3.22 annexed hereto contains an accurate and complete list of
all proprietary rights which the Company owns or is licensed or authorized to
use by others. The Company has the rights to use and/or own and/or develop and
license the proprietary rights as such rights are set forth on such Schedule
3.22, and, except as set forth on such Schedule 3.22, (i) no other Person has
been granted, by the Company or otherwise, any rights, or has any interest, in
such proprietary rights and (ii) to the knowledge of the Company, with respect
to any proprietary rights which have been assigned to the Company, the assigning
party is fully authorized to assign such rights to the Company without thereby
creating an obligation of the Company to any Person. All proprietary rights held
by the Company under licenses have been duly licensed to the Company, and,
except as set forth in such Schedule 3.22, the Company has rights to its
proprietary rights free and clear of any liens or other encumbrances. No claim
has been asserted or, to the knowledge of the Company, threatened, by any Person
regarding the use or licensing of any of the Company's proprietary rights by the
Company or challenging or questioning the validity, enforceability or
effectiveness of any licenses or agreements (including, without limitation,
assignments) relating to proprietary rights or asserting any rights in such
proprietary rights. The use of its proprietary rights by the Company does not
violate or infringe,
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and has not in the past violated or infringed, the rights of any Person. No
claims have been asserted by the Company against any other Person claiming
infringement of the Company's proprietary rights. The Company has not granted
any licenses to the Company's proprietary rights (other than those granted as a
result of the sales of any proprietary product of the Company in the ordinary
course of business), and is not aware of any third parties who are infringing or
violating any of such proprietary rights. Neither the Company nor, to the
knowledge of the Company, any other Person is in default under any license or
other agreement relating to the Company's proprietary rights (including without
limitation, assignments), and all such licenses and agreements are valid,
enforceable and in full force and effect.
(b) Except as set forth on Schedule 3.22 annexed hereto,
the Company has not granted rights to manufacture, produce, assemble, license,
market, or sell its products to any other Person and is not bound by any
agreement that affects the Company's exclusive right to develop, manufacture,
assemble, distribute, market, or sell its products. No supplier of components to
the Company is a sole source of such components, except for those components
that can be obtained from another supplier at substantially the same cost and
quantities in a similar time frame.
3.23 Insurance. Schedule 3.23 contains a complete and accurate list
of all insurance policies currently providing coverage in favor of the Company
specifying the insurer and type of insurance under each, together with the
policy limits thereon. Each current policy is in full force and effect and in
adequate and customary amounts for similarly situated companies in similar
businesses, and all premiums are currently paid and no notice of cancellation or
termination has been received with respect to any such policy. Such policies
have been sufficient for compliance with all material requirements of law. The
Company has not been refused any insurance with respect to its assets and
operations, nor has its coverage been limited by any insurance carrier to which
it has applied for any such insurance or with which it has carried insurance.
The insurance specified on Schedule 3.23 has been effective, in full force and
effect, without interruption since the date specified on Schedule 3.23 as the
initial date of coverage. Furthermore, except as set forth on such Schedule
3.23, there are no material claims, actions, suits or proceedings arising out of
or based upon any of such policies of insurance and, to the knowledge of the
Company, no basis for any such material claim, action, suit or proceeding
exists.
3.24 Environmental. The Company has operated its business in
compliance with all Environmental Laws in all material respects and the Company
has not received any communication (whether from a governmental entity, private
party, employee or otherwise) that alleges that the Company is not in such
compliance. To the Company's knowledge, no truckstop at which the Company has
installed its system is the subject of any environmental proceedings by any
state or federal agency. The Company has all Permits required under
Environmental Laws in connection with the operations of its business including
any Permits relating to disposal or emissions.
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3.25 Minute Books. The minute books of the Company contain a
complete summary of all meetings of directors and stockholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INVESTORS
4.1 Investment Intent, Etc. Each Investor represents and warrants
that it is acquiring the Series B Stock for its own account for investment and
not with a view to, or for sale or other disposition in connection with, any
distribution thereof, nor with any present intention of selling or otherwise
disposing of the same, subject, nevertheless, to any requirement of law that the
disposition of its assets shall at all times be within its control.
4.2 Sophistication, Financial Strength, Access, Etc. Each Investor
represents, warrants and acknowledges that it is an Accredited Investor (as that
term is defined in Rule 501 promulgated by the Securities and Exchange
Commission under the Securities Act), that it has such knowledge and experience
in business and financial matters as to be capable of evaluating the merits and
risks of the investment contemplated to be made hereunder, and that it was not
formed or organized for the specific purpose of investing in the Company; that
it understands that such investment bears a high degree of risk and could result
in a total loss of its investment; that its principal place of business is the
address set forth on Schedule 2.2; and that it has sufficient financial strength
to hold its investment for an indefinite period and to bear the economic risks
of its Investment (including possible loss of its Investment) for an indefinite
period of time. Each Investor acknowledges that it is fully informed that the
Securities being sold to it hereunder are being sold pursuant to a private
offering exemption under the Securities Act and are not being registered under
the Securities Act or under the securities or blue sky laws of any state or
foreign jurisdiction; that such Securities must be held indefinitely unless they
are subsequently registered under the Securities Act and any applicable state
securities or blue sky laws, or unless an exemption from registration is
available thereunder; and that the Company has no obligation to register such
Securities except as expressly set forth in the Registration Rights Agreement.
4.3 No Broker or Finder. Each Investor represents and warrants
that, except as set forth on Schedule 4.3 annexed hereto, it has engaged no
broker or finder in connection with this Agreement or the transactions
contemplated hereby.
4.4 Authorization. Each Investor represents and warrants that as
of the Closing the execution, delivery and performance of this Agreement and the
applicable Related Documents and the consummation of the transactions
contemplated herein and therein, have been duly authorized by each of the
Investors. Subject to and in reliance upon the accuracy of the Company's
representations and warranties contained herein, the fulfillment of and
compliance with the terms of this Agreement and the applicable Related Documents
by such Investor will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a
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default under, or (iii) result in a violation of, breach of or default under (a)
its partnership agreement or articles or certificate of incorporation (as
applicable) or any other organizational document, (b) any law, statute, rule or
regulation to which such Investor is subject, or (c) any agreement, instrument,
order, judgment or decree to which such Investor is a party, bound or subject.
4.5 Binding Effect. Each Investor represents and warrants that
this Agreement constitutes a valid and binding obligation of such Investor,
enforceable against such Investor in accordance with its terms, except insofar
as (i) such obligation may be limited by bankruptcy, insolvency or other laws
affecting the enforcement of creditors rights generally or by equitable
principles in any action (legal or equitable), (ii) the availability of
equitable relief may be subject to the discretion of the court before which any
proceeding thereof may be brought and (iii) the enforceability of the
indemnification provisions may be limited by applicable securities law or public
policy.
5. CONDITIONS TO OBLIGATIONS OF INVESTORS
Each Investor's obligation to purchase the Series B Stock to be
purchased by it at the Closing and to consummate the other transactions
contemplated herein, as provided in Section 2.2 hereof, shall be subject to the
satisfaction of the following conditions, any of which may be waived by it in
writing:
5.1 Representations and Warranties True at Closing: Non-Occurrence
of Default. The representations and warranties contained in Article 3 hereof
shall be true upon completion of the Closing, there shall exist no condition,
event or fact constituting, or which, with notice or passage of time or both
would constitute, a default in the observance of any of the Company's
undertakings or covenants hereunder or under the Related Documents, and all
conditions precedent to the Closing to be performed by the Company shall have
been complied with, and there shall have been no occurrence which has had or is
reasonable likely to have a material adverse effect on the Company's business or
condition; and the President and the Treasurer of the Company shall deliver to
the Investors at the Closing a certificate to such effect, executed by them.
5.2 No Injunction. There shall not be in effect any injunction,
order or decree of a court of competent jurisdiction that prohibits or delays
consummation of any or all of the Investments; and the President and the
Treasurer of the Company shall deliver to the Investors at the Closing a
certificate to such effect, executed by them.
5.3 Litigation. No action or proceeding shall be pending or
threatened by or before any Person, court or other governmental body to restrain
or prohibit or to recover damages in respect of the consummation of the
contemplated transactions, nor shall there be any other action or proceeding
pending or threatened which action, or other proceeding in the reasonable
opinion
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of the Investors, may result in a decision, ruling, or finding that individually
or in the aggregate has or may reasonably be expected to have a material adverse
effect on (a) the validity or enforceability of this Agreement or the Related
Documents, (b) the Company's ability to perform its obligations under this
Agreement or the Related Documents, or (c) the business or condition of the
Company.
5.4 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of governmental bodies necessary in the good
faith judgment of the Investors for the consummation of the contemplated
transactions to be effected at the Closing shall have been obtained on terms
satisfactory to the Investors and shall be in full force and effect.
5.5 Other Consents. Consents or waivers from parties other than
governmental bodies that are required in connection with the consummation of any
or all of the Investments shall have been obtained on terms satisfactory to the
Investors and shall be in full force and effect and signed copies thereof shall
have been delivered to the Investors.
5.6 Good Standing Certificates. The Investors shall have received
(a) a copy of the Certificate of Incorporation, as amended to the Closing Date,
certified as of a recent date by the Secretary of State of Delaware, and (b) a
Certificate of the Secretary of State of the State of Delaware with respect to
the Company as of a recent date showing the Company to be validly existing and
in good standing in such state.
5.7 Secretary's Certificate. The Investors shall have received a
Certificate of the Secretary of the Company certifying that (a) no document has
been filed relating to or affecting the Charter of the Company after the date of
the certificate of the Secretary of State of the State of Delaware furnished
pursuant to Section 5.6, (b) attached to the Certificate is a true and complete
copy of the Amended By-Laws as in full force and effect at the Closing and (c)
the names and true signatures of each officer of the Company who has been
authorized to execute and deliver this Agreement and/or any Related Document.
5.8 Resolutions. The Investors shall have received certified
copies of resolutions duly adopted by the Board (and stockholders, if necessary)
(a) authorizing the execution and delivery of this Agreement and each of the
other Related Documents, the issuance and sale of the Series B Stock and the
issuance and sale of the Common Stock issuable upon conversion thereof, the
reservation of the shares of Common Stock issuable upon conversion of the Series
B Stock, the adoption of the Amended By-Laws, and the performance of the
contemplated transactions, and certifying that such resolutions were duly
adopted, are in full force and effect and have not been rescinded or amended as
of the date of the Closing, and (b) electing or designating the Board designees
as specified in accordance with the Amended Securityholders' Agreement and
Exchange Agreement.
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5.9 Compliance Evidence. The Investors shall have received such
certificates, documents and information as they may reasonably request in order
to establish satisfaction of the conditions set forth in this Article 5.
5.10 Certificate of Designation. The Board shall have adopted the
resolutions embodied in the Certificate of Designation; and the Investors shall
have received a copy of the Certificate of Designation, certified as of the
Closing by the Secretary of the Company; and the Certificate of Designation
shall have been filed with the Secretary of State of Delaware, and its terms
shall have become effective, and the Investors shall have received a copy of the
Certificate of Designation, certified by the Secretary of State of Delaware.
5.11 Charter Amendment. The Board shall have adopted the
resolutions embodied in the Charter Amendment; and the Investors shall have
received a copy of the Charter Amendment, certified as of the Closing by the
Secretary of the Company; and the Charter Amendment shall have been filed with
the Secretary of State of Delaware, and its terms shall have become effective,
and the Investors shall have received a copy of the Charter Amendment, certified
by the Secretary of State of Delaware.
5.12 Series A Amendment. The Board shall have adopted the
resolutions embodied in the Series A Amendment; and the Investors shall have
received a copy of the Series A Amendment, certified as of the Closing by the
Secretary of the Company; and the Series A Amendment shall have been filed with
the Secretary of State of Delaware, and its terms shall have become effective,
and the Investors shall have received a copy of the Series A Amendment,
certified by the Secretary of State of Delaware.
5.13 Securities Restriction Agreement. The Company, each of the
Existing Investors and each of the Investors shall have entered into an
Securities Restriction Agreement with the Company in the form attached hereto
and made a part hereof as Exhibit D (the "Securities Restriction Agreement"),
and a copy of the signed Securities Restriction Agreement shall have been
delivered to the Investors.
5.14 Registration Rights Agreement. The Company, certain of the
Existing Investors and each of the Investors shall have entered into the
Registration Rights Agreement in the form attached hereto and made a part hereof
as Exhibit E (the "Registration Rights Agreement"), and a copy of the signed
Registration Rights Agreement shall have been delivered to the Investors.
5.15 Amended Securityholders' Agreement and Exchange Agreement. The
Company and certain of the Existing Investors shall have entered into an Amended
and Restated Securityholders' Agreement and Exchange Agreement in the form
attached hereto and made a part hereof as Exhibit F (the "Amended
Securityholders' Agreement and Exchange Agreement"), pursuant to which such
Existing Investors shall simultaneously with the making of the Investments
consummate the Exchange; and a copy of the signed Exchange Agreement shall have
been delivered to the Existing Investors.
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5.16 By-Laws Amendment. The Board shall have adopted (a) Amended
and Restated By-Laws, substantially in the form attached hereto and made a part
hereof as Exhibit G (the "Amended By-Laws"), expanding the permitted number of
directors on the Board, and (b) the resolutions embodied in such Amended
By-Laws; and the Investors shall have received a copy of the amendment to the
Amended By-Laws, certified as of the Closing by the Secretary of the Company.
5.17 Opinion of Counsel. The Investors shall have received from
Petree Stockton, L.L.P., counsel to the Company, an opinion of counsel
substantially in the form attached hereto and made a part hereof as Exhibit H.
5.18 Board Composition. Simultaneously with the Closing, the fifth
seat on the Board shall be filled by a designee of the Investors owning at least
66K% of the outstanding Series B Stock issued hereunder and under the Amended
Securityholders' Agreement and Exchange Agreement.
5.19 Proceedings Satisfactory. All certificates, opinions and other
documents to be delivered by the Company and all other matters to be
accomplished prior to or at the Closing shall be satisfactory in the reasonable
judgment of the Investors and their counsel.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligations of the Company to effect the Closing shall be subject
to the satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived pursuant to Section 9.4 hereof.
6.1 No Injunction. There shall not be in effect any injunction,
order or decree of a court of competent jurisdiction that prohibits or delays
the sale of the Series B Stock to the Investors.
6.2 Representations, Warranties and Agreements. (a) The
representations and warranties of the Investors set forth in this Agreement
shall be true and correct as of the date of this Agreement and as of the Closing
Date as though made at such time, and (b) the Investors shall have performed and
complied with the agreements contained in this Agreement required to be
performed and complied with by them prior to the Closing Date.
6.3 Purchase Price. Each Investor shall have delivered the
purchase price set forth opposite its name on Schedule 2.2 annexed hereto.
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7. COVENANTS OF THE COMPANY
The Company covenants and agrees that, except as otherwise provided in
this Article 7, from the Closing and thereafter so long as any shares of Series
B Stock shall exist:
7.1 Payment of Taxes: Corporate Existence and Licenses;
Maintenance of Properties/Assets. The Company shall, and shall cause each
Subsidiary to:
(a) (i) Pay and discharge promptly, or cause to be paid
and discharged promptly, when due and payable, all Taxes, assessments and
governmental charges or levies imposed upon it or upon its income or upon any of
its Assets or upon any part thereof, as well as all claims of any kind
(including claims for labor, materials and supplies) which, if unpaid, might by
law become a lien, charge or encumbrance upon its Assets; (ii) withhold all
Taxes required to be withheld by the Company; and (iii) complete and file, on a
timely basis, all Tax Returns and reports required to be filed by it; provided,
however, that the Company shall not be required to pay, or to cause any
subsidiary to pay, any Tax, assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
reserves (segregated to the extent required by generally accepted accounting
principles) deemed by the Company adequate with respect thereto;
(b) Do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, and all of
its corporate rights, franchises, licenses and permits; provided, however, that
nothing in this subsection (b) shall (i) prevent the abandonment or termination
of the Company's authorization to do business in any foreign state or
jurisdiction, if, in the opinion of the Board, such abandonment or termination
is in the best interest of the Company, (ii) require compliance with any law so
long as the validity or applicability thereof shall be disputed or contested in
good faith or (iii) prevent the Company from effecting a merger, consolidation
or voluntary dissolution upon obtaining the required approval of the Board
and/or the Holders of Common Stock of the Company; and
(c) Maintain and keep, or cause to be maintained and
kept, its Assets in good repair, working order and condition, and from time to
time make, or cause to be made, all repairs, renewals and replacements which, in
the opinion of the Board, are necessary and proper so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this subsection (c) shall prevent the
Company from selling or otherwise disposing of any Assets whenever in the good
faith judgment of the Company's management such Assets are obsolete, worn out,
without economic value, or unnecessary for the conduct of the business of the
Company.
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7.2 Payment of Indebtedness, Etc. The Company shall:
(a) Pay or cause to be paid the principal of, and the
interest and premium, if any, on, all material Indebtedness heretofore or
hereafter incurred or assumed by the Company, when and as the same shall become
due and payable, unless such Indebtedness shall be renewed or extended, in which
case such payments shall be made in accordance with the terms of such renewal or
extension;
(b) Faithfully observe, perform and discharge in all
material respects all the material covenants, conditions and obligations which
are imposed on it by any and all material indentures, agreements, or other
instruments securing or evidencing Indebtedness, if any, or pursuant to which
Indebtedness is issued, and not permit the occurrence or continuance of any act
or omission which is or under the provisions thereof may be declared to be a
material default thereunder, unless such default (other than a default in
payment of principal or interest) or the right to declare a default on account
of such act or omission is waived pursuant to the provisions thereof; provided,
however, that the Company shall not be required to make any payment or to take
any other action by reason of this Subsection (b) at any time while it shall be
currently contesting in good faith by appropriate proceedings its obligations to
make such payment or to take such action, if the Company shall have set aside on
its books reserves (segregated or classified to the extent required by generally
accepted accounting principles) deemed by it adequate with respect thereto;
(c) Not violate any provision of its Charter (including
the Certificate of Designation, the Charter Amendment, the Series A Amendment,
and any other certificates of designation filed by the Company with the
Secretary of State of Delaware with respect to any series of the Company's
preferred stock) or By-Laws or any material provision of any judgment, writ,
decree, order, statute, rule or governmental regulation or approval applicable
to the Company, or any material provision of any contract, agreement, indenture,
mortgage, lien, lease, sublease or arbitration award to which the Company is a
party, by which it is bound or to which any of its Assets is subject;
(d) Not redeem, retire, purchase or acquire, directly or
indirectly, any shares of any class or series of Stock of the Company except
pursuant to the Certificate of Designation relating to the Series A Stock (as
amended by the Series A Amendment) or the Certificate of Designation.
7.3 Financial Statements and Information. The Company shall furnish to
each Holder of Series B Stock:
(a) Interim Financial Statements and Reports. Within 20
days after the end of each month, a consolidated balance sheet of the Company as
of the end of such month, together with related consolidated statements of
operations, changes in stockholders' equity and cash flows for such month and
year-to-date, prepared in accordance with generally accepted accounting
principles consistently applied (with the exception of full footnote
disclosures, schedules and precise period cutoffs) and certified by the
Treasurer of the Company, subject to
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usual year-end audit adjustments, together with a written comparison of the
results as reported on such financial statements with the projections thereof
contained in the applicable Annual Budget.
(b) Annual Financial Statements and Reports. Within 90
days after the last day of each fiscal year of the Company, a copy of its audit
report containing a consolidated balance sheet of the Company at the end of the
fiscal year, together with related consolidated statements of operations,
changes in stockholders' equity and cash flows for such fiscal year, prepared in
accordance with generally accepted accounting principles consistently applied,
all examined by and accompanied by a certificate of opinion of the Company's
independent public accountants, together with consolidating statements, which
need not be certified, which set forth the eliminations of intercorporate items.
Together with each delivery of annual financial statements of the Company
pursuant to this Subsection (b), the Company will deliver a copy of a letter
addressed to the Company's independent public accountants informing such
accountants that a primary intent of the Company regarding the professional
services such accountants provided to the Company in preparing their audit
report was to benefit or influence the Holders of Series B Stock, and
identifying such Holders as parties that the Company has indicated intend to
rely on such professional services provided to the Company by such accountants.
(c) Reports of Auditors. Promptly upon receipt thereof, a
copy of each report or management letter, if any, submitted to the Company by
independent public accountants in connection with each annual audit (and any
other audit which may be performed) of the books of the Company made by such
accountants.
(d) Annual Budgets and Strategic Plan. Not less than 20
days prior to the commencement of each fiscal year of the Company, an annual
operating strategic plan summary and corresponding annual budget (an "Annual
Budget") consisting of (i) projected consolidated statements of operations,
changes in stockholders' equity and cash flows, each on a monthly basis, for
each of the calendar months of such fiscal year; (ii) a projected consolidated
balance sheet as of the close of each calendar month; (iii) projected capital
expenditures for each month; and (iv) promptly upon making thereof, any revision
or updating which may be made of any such Annual Budget. Each such Annual Budget
and any revisions thereof shall be submitted for the approval of the Board and
be subject to revision or updating by the Board.
(e) Additional Information. The Company shall provide the
Investors with prompt notice of:
(i) any investigation by any federal or state
governmental or regulatory agency in connection with
which the Company is identified as an object of such
investigation;
(ii) any complaint or proceeding instituted against the
Company by any federal or state governmental or
regulatory agency;
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(iii) any other action at law or suit in equity involving a
claim or claims against the Company which, if
concluded adversely to the Company or such truckstop,
could give rise to damages in excess of $25,000 in
the aggregate or could otherwise materially adversely
affect the business or Assets of the Company, and
(iv) any other event which could reasonably be expected to
have a material adverse effect on the business or
Assets of the Company.
(f) Certificate of Independent Public Accountants. At
such times as the statements referred to in subsection (b) of this Section 7.3
are furnished, the Company shall also furnish a certificate of the independent
public accountant whose certificate or opinion accompanies such statements
stating that nothing has come to his attention which would cause him to believe
that any condition, event or fact exists which would constitute, or which with
notice or passage of time or both would constitute, a violation which has not
previously been disclosed by a prior certificate of the principal financial
officer or controller, or their equivalent, of any of the then applicable
covenants of the Company contained herein or in the Certificate of Designation;
provided, however, that if any such violation exists, such certificate shall
specify the nature and period of existence of such violation; and provided,
further, that such certificate may state that tests of the accounting records
and other auditing procedures conducted with respect to the Company might, but
would not necessarily, reveal that such violations exist or that no violations
exist. The Company covenants that, upon obtaining knowledge of any such
violation, it will promptly deliver a certificate of its principal financial
officer or controller, or their equivalent, specifying the nature thereof, the
period of existence thereof, and what action the Company proposes to take with
respect thereto.
7.4 Discussion and Inspection Rights; Attendance at Board
Meetings. The Company shall permit any Holder who or which, alone or when
aggregated with the holdings of its Affiliates, owns not less than 5% of the
then existing Registrable Securities or not less than 5% of the then outstanding
Series B Stock and any Person designated from time to time by any such Holder,
at such Holder's expense, to discuss the affairs, finances and accounts of the
Company with the Company's directors, officers, other principal executives and
independent accountants, all at such reasonable times and as often as such
Holder may reasonably request; all books, documents, financial records and
vouchers relating to the business and affairs of the Company shall at all
reasonable times be open to inspection either by such Holder or such accountant
or other Person as shall from time to time be designated by such Holder, who may
make such copies thereof or extracts therefrom as such Holder reasonably deems
appropriate; and all facilities of the Company shall at all reasonable times be
open to inspection by such Holder or such Person as shall from time to time be
designated by such Holder. In addition, the Company shall permit any Investor
owning at least 100,000 shares of Series B Stock (or Common Stock into which it
is convertible), subject to adjustments for Reclassification Events (as defined
in the Certificate of Designation), to have one designee attend, but not vote
at, meetings of the Board
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(and business discussions immediately prior to such meetings) and to receive
information circulated to members of the Board at or prior to any such meetings.
7.5 Tax Treatment of Dividends. So long as any Series B Stock is
outstanding, the Company shall, except as required by law or generally accepted
accounting principles:
(a) Treat the shares of Series B Stock as Stock and not
as Indebtedness, and treat the dividends paid (or accrued) with respect to the
shares of Series B Stock as dividends within the meaning of Section 316 of the
Code, and not as interest.
(b) Not take any action which could reasonably be
expected (i) to require the Company to treat the dividends paid with respect to
the Series B Stock as interest for any purpose, (ii) to cause the Series B Stock
to be treated as indebtedness for purposes of Section 385 of the Code or any
successor provision of the Code and the regulations promulgated thereunder, or
(iii) to cause the dividends received deduction under Section 243 of the Code
(the "Dividends Received Deduction") to cease to be available, in whole or in
part, with respect to dividends on the Series B Stock received by any corporate
Holder.
(c) Without limiting the generality of the foregoing
subsection (b), (i) not claim a deduction for dividends paid on the Series B
Stock whether as interest or otherwise, in any federal income tax return, claim
for refund of federal income tax or other submission to the IRS, and (ii) unless
required to do so by generally accepted accounting principles, not treat the
Series B Stock other than as equity capital or the dividends paid thereon other
than as dividends paid on capital in any report to stockholders or any
governmental body having jurisdiction over the Company or otherwise.
(d) Not exercise any option or election that may at any
time be available under the Code or otherwise to deduct all or part of any
dividend paid with respect to the shares of Series B Stock if so doing would
increase the amount of such dividend includable for federal, state or local
income tax purposes in the income of any corporate Holder of shares of Series B
Stock.
(e) At the request of any corporate Holder of Series B
Stock, join with such Holder in the submission to the IRS of a request for a
ruling that dividends paid on the Series B Stock will be eligible for the
Dividends Received Deduction for federal income tax purposes; in addition, the
Company shall cooperate with and support any corporate Holder in any litigation,
appeal or other proceeding challenging or contesting any ruling, technical
advice, finding or determination of the IRS that dividends paid on the Series B
Stock are to be treated as indebtedness for purposes of the Code or are not
eligible for the Dividends Received Deduction. The cooperation and support
required of the Company by the preceding sentence shall be at the expense of
such corporate Holder, except that the Company will pay all fees and expenses
(whether incurred by it or a corporate Holder) in connection with any such
submission, litigation,
30
<PAGE> 36
appeal or other proceeding necessitated or caused by a breach by the Company of
its covenants contained in this Section 7.5.
7.6 Notice of Claimed Default or Deficiency. The Company,
within ten days after receiving written notice of a default or deficiency in
excess of $10,000 from, or being served with a complaint in law or in equity by,
the Holder of any Indebtedness or other Security of the Company, or a party to
any agreement to which the Company is a party or otherwise bound which calls for
payments by or to the Company or such Subsidiary in an aggregate amount in
excess of $10,000, with respect to a claimed default or event of default or
claimed deficiency thereunder, shall furnish to each Holder of Series B Stock a
written notice specifying the notice given or action taken by such Person, as
the case may be, and the nature of the claimed default or event of default or
claimed deficiency and what action the Company is taking or proposes to take
with respect thereto.
7.7 Blue Sky. The Company shall make any and all filings necessary
(whether before or after the Closing) in connection with the offer, issuance and
sale and/or transfer of the Series B Stock to be purchased pursuant to this
Agreement or the Related Documents under the securities or blue sky laws of any
jurisdiction in which such filing is required by law.
7.8 Compliance with Laws. The Company shall comply in all material
respects with all laws of any jurisdiction which are applicable to the Assets,
business or operations of the Company.
7.9 Filing of Commission Reports. If the Company becomes obligated
to file reports with the Securities and Exchange Commission under Section 13 or
Section 15(d) of the Exchange Act by reason of its having a class of Securities
registered under Section 12 of the Exchange Act, it shall regularly file reports
thereunder in a timely manner so long as it is required to do pursuant to the
provisions of the Exchange Act. Unless and until required to do so by law or to
obtain or retain quotation of the Common Stock by NASDAQ or on any national
securities exchange registered under Section 6 of the Exchange Act, and then not
without giving 30 days' prior written notice to the Holders of the Registrable
Securities, the Company shall not register the Series B Stock under Section 12
of the Exchange Act.
7.10 Transactions with Affiliates. The Company shall not directly
or indirectly engage in any transaction or series of transactions providing for
the furnishing of services by or to, or rental of real or personal property from
or to, or otherwise requiring cash payments from or to any director, officer or
stockholder of the Company, or any of its Affiliates, unless any such
transaction is (a) in the ordinary course of the Company's business, (b) upon
fair and reasonable terms comparable to that which would obtain in an arm's
length transaction with a Person that is not an Affiliate and (c) approved by a
majority of disinterested members of the Board.
7.11 Subsidiaries. Obligations set forth in this Article 7 shall be
applicable to Subsidiaries only at such times, if any, that one or more
Subsidiaries shall be in existence.
31
<PAGE> 37
7.12 Expenditures. The Company shall not make or commit to make
aggregate expenditures of any type greater than the aggregate expenditures of
such type budgeted of such fiscal year in the then applicable Annual Budget
without the prior approval of the majority of the Board, evidenced by a duly
adopted resolution.
7.13 No Registration Rights to Others. So long as any Registrable
Securities exist, the Company shall not grant to any Holder of its Securities
the right to include such Securities in any Registration Statement filed by the
Company, except as provided in the Registration Rights Agreement.
7.14 Use of Proceeds. The proceeds of the sale of the Series B
Stock to be purchased pursuant to this Agreement shall be used solely to fund
the capital investment required to build new sites and to fund general corporate
needs, working capital and capital expenditures.
7.15 Restrictions on Employee Stock. So long as the Securities
Restriction Agreement is in effect, the Company shall not issue any additional
Securities to officers, employees, agents or consultants of the Company unless
such Securities are subject to restrictions substantially the same as those
contained in Section 2 of the Securities Restriction Agreement.
7.16 Confidentiality. The Company shall use its best efforts to (a)
protect the secrecy, confidentiality and value of all trade secrets useful in
the conduct of the Company's business and (b) cause each Person who is or
becomes an officer or key employee of the Company, as the case may be, who shall
have access to confidential and proprietary information of the Company, to
execute a confidentiality agreement, as a condition to such employment, in such
form as shall be approved by the Board. Such confidentiality agreements shall
not be amended in any material respect without the approval of the Board.
7.17 Small Business Information. The Company shall provide
information, make reports and take such actions as may be required under Section
1202(d)(1)(C) of the Code in order to qualify the Common Stock and Series B
Stock as "small business stock" within the meaning of Code Section 1202(c) and
shall not take any actions (including without limitation repurchasing or
redeeming any Securities) that would disqualify such stock as "small business
stock."
7.18 Reservation of Common Stock. The Company shall reserve and
keep available out of its authorized but unissued Common Stock the number of
shares of Common Stock required for issuance upon the conversion of all of the
Series B Stock (including any additional shares of Common Stock which may become
so issuable by reason of the operation of anti-dilution provisions contained in
the Certificate of Designation).
32
<PAGE> 38
7.19 Publicity. The Company shall not identify any of the Investors
as a stockholder or affiliate of the Company in any advertising or promotional
material without the prior written consent of such Investor.
8. TRANSFER OF SECURITIES
The Series B Stock purchased pursuant to this Agreement shall not be
transferable except upon the conditions specified in this Article 8, which
conditions are intended to insure compliance with the provisions of the
Securities Act and state securities laws in respect of the transfer of any such
Securities.
8.1 Restrictive Legends.
(a) Unless and until otherwise permitted by this Article, each
certificate for Series B Stock issued to each Investor or its nominee, or to any
subsequent transferee of such certificate shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, and thus may not be offered for sale, sold,
transferred or otherwise disposed of unless
registered under the Securities Act of 1933, as
amended, or unless an exemption from such
registration is available. Further, such transfer is
subject to the conditions specified in an Agreement
dated as of November 13, 1996, pursuant to which such
shares were issued and sold or otherwise transferred
by Park 'N View, Inc. (the "Company"), a copy of
which Agreement is on file and may be inspected at
the principal office of the Company. A copy of such
Agreement will be furnished by the Company to the
holder hereof upon request and without charge. Under
certain circumstances specified in such Agreement,
the Company has agreed to deliver to the holder
hereof a new certificate, not bearing this legend,
for all or part of the number of shares evidenced
hereby, as the case may be, registered in the name of
such holder or designated nominee."
(b) Each certificate for Series B Stock shall be stamped
or otherwise imprinted with a legend in substantially the following form:
"A statement of the relative rights and preferences
of the Company's Common Stock and its series of
Preferred Stock will be
33
<PAGE> 39
furnished by the Company to the holder hereof upon
request and without charge."
(c) The Company may order its transfer agent(s) for the
Series B Stock to stop the transfer of any shares of Series B Stock purchased
pursuant to this Agreement bearing the legend set forth in subsection (a) of
this Section 8.1 until the conditions of this Article 8 with respect to the
transfer of such shares have been satisfied.
8.2 Notice of Proposed Transfer. If, prior to any transfer or sale
of any Series B Stock purchased pursuant to this Agreement, the Holder desiring
to effect such transfer or sale shall deliver a written notice to the Company
describing briefly the manner of such transfer or sale and a written opinion of
counsel (provided that such counsel, and the form and substance of such opinion,
are reasonably satisfactory to the Company) to the effect that such transfer or
sale may be effected without the registration of such Securities under the
Securities Act, the Company shall thereupon permit or cause its transfer agent
(if any) to permit such transfer or sale to be effected; provided, however, that
if in such written notice the transferring Holder represents and warrants to the
Company that the transfer or sale is to a purchaser or transferee whom the
transferring Holder knows or reasonably believes to be a "qualified
institutional buyer," as that term is defined in Rule 144A promulgated by the
Securities and Exchange Commission under the Securities Act ("Rule 144A"), no
opinion shall be required.
8.3 Termination of Restrictions. (a) Notwithstanding the foregoing
provisions of this Article 8, the restrictions imposed by this Article 8 upon
the transferability of Series B Stock purchased pursuant to this Agreement shall
terminate as to any particular share of Series B Stock purchased pursuant to
this Agreement when (1) such share of Series B Stock shall have been converted
into Common Stock in accordance with the terms of the Certificate of
Designation, (2) such Security shall have been effectively registered under the
Securities Act and sold by the Holder thereof in accordance with such
registration, (3) a written opinion to the effect that such restrictions are no
longer required or necessary under any federal or state securities law or
regulation have been received from counsel for the Holder thereof (provided that
such counsel, and the form and substance of such opinion, are reasonably
satisfactory to the Company) or counsel for the Company, (4) such Security shall
have been sold without registration under the Securities Act in compliance with
Rule 144 promulgated by the Securities and Exchange Commission under the
Securities Act ("Rule 144"), (5) the Company is reasonably satisfied that the
Holder of such Security shall, in accordance with the terms of subsection (k) of
Rule 144, be entitled to sell such Security pursuant to such Subsection, or (6)
a letter or an order shall have been issued to the Holder thereof by the staff
of the Securities and Exchange Commission or such Commission stating that no
enforcement action shall be recommended by such staff or taken by such
Commission, as the case may be, if such Security is transferred without
registration under the Securities Act in accordance with the conditions set
forth in such letter or order and such letter or order specifies that no
subsequent restrictions on transfer are required.
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<PAGE> 40
(b) Whenever the restrictions imposed by this Article 8
shall terminate, as hereinabove provided, the Holder of any particular share of
Series B Stock purchased pursuant to this Agreement then outstanding as to which
such restrictions shall have terminated shall be entitled to receive from the
Company, without expense to such Holder, one or more new certificates for Series
B Stock purchased pursuant to this Agreement not bearing the restrictive legend
set forth in Section 8.1(a) hereof.
8.4 Compliance with Rule 144 and Rule 144A. At the written request
of any Holder of Series B Stock who proposes to sell any of such Series B Stock
in compliance with Rule 144, the Company shall furnish to such Holder, within
ten days after receipt of such request, a written statement as to whether or not
the Company is in compliance with the filing requirements of the Securities and
Exchange Commission as set forth in such Rule. For purposes of effecting
compliance with Rule 144A, in connection with any resales of any shares of
Series B Stock that hereafter may be effected pursuant to the provisions of Rule
144A, any Holder of shares of such Series B Stock desiring to effect such resale
and each prospective institutional purchaser of such shares designated by such
Holder shall have the right, at any time the Company is not subject to Section
13 or 15(d) of the Exchange Act, to obtain from the Company, upon the written
request of such Holder and at the Company's expense the documents specified in
Section (d)(4)(i) of Rule 144A, as such rule may be amended from time to time.
8.5 Non-Applicability of Restrictions on Transfer. Notwithstanding
the provisions of Section 8.2 hereof, any record owner of Series B Stock may
from time to time transfer all or part of such record owner's Series B Stock (i)
to a nominee identified in writing to the Company as being the nominee of or for
such record owner, and any nominee of or for a beneficial owner of Series B
Stock identified in writing to the Company as being the nominee of or for such
beneficial owner may from time to time transfer all or part of the Series B
Stock registered in the name of such nominee but held as nominee on behalf of
such beneficial owner, to such beneficial owner, (ii) to an Affiliate or related
entity of such record owner, (iii) if such record owner is a partnership or the
nominee of a partnership, to a partner, retired partner, or estate of a partner
or retired partner, of such partnership, so long as such transfer is in
accordance with the transferee's interest in such partnership and is without
consideration or (iv) in the case of an Investor that is a public pension fund,
to a statutory successor to such Investor; provided, however, that each such
transferee shall remain subject to all restrictions on the transfer of Stock
herein contained.
9. MISCELLANEOUS
9.1 Brokers; Indemnification. The Company will hold each of the
Investors free and harmless from any claim, demand, liability for, or expense in
connection with, any broker's or finder's fees or commissions from any Person
acting on behalf of the Company in connection with this Agreement or the
transactions contemplated hereby. Any Person acting on behalf of an officer,
director, employee or agent of the Company shall be acting on behalf of the
Company for purposes of this Section 9.1.
35
<PAGE> 41
9.2 Stamp Tax and Delivery Costs. The Company will pay all stamp
and other taxes, if any, which may be payable in respect of the sale or other
transfer of Series B Stock (and the Common Stock issuable on conversion thereof)
to the Investors and the issuance thereof to the Investors or their nominees,
and will save each of the Investors harmless against any loss or liability
resulting from nonpayment or delay in payment of any such tax. The Company will
also pay all reasonable costs of delivery to the Investors, or their nominees,
of the Series B Stock to be purchased by the Investors or otherwise transferred
to the Investors hereunder.
9.3 Place of Payment. So long as the Investors or their nominees
shall be Holders of any share of Series B Stock purchased hereunder, if any, the
Company will make, by wire transfer (or equally expeditious delivery) of
immediately available funds, all payments with respect to Series B Stock or
Common Stock purchased hereunder, if any, owned by the Investors or their
nominees at the address set forth next to each Investor's name in Schedule 2.2
hereto or such other place as such Investor may designate to the Company in
writing.
9.4 Amendment and Waiver.
(a) Any term, covenant, agreement or condition contained
in this Agreement may be amended, or compliance therewith may be waived (either
generally or in particular instances and either retroactively or prospectively),
(i) if prior to the Closing Date, by written instruments signed by the Investors
and the Company, and (ii) if subsequent to the Closing Date, by written
instruments signed by the Company and Investors owning not less than 66K% of the
Series B Stock; provided, however, that any provision of this Agreement that
would materially adversely affect any particular Investor without similarly
affecting all Investors shall not be valid unless consented to in writing by
such particular Investor.
(b) This Agreement shall not be altered, amended or
supplemented except by written instrument. Any waiver of any term, covenant,
agreement or condition contained in this Agreement shall not be deemed a waiver
of any other term, covenant, agreement or condition, and any waiver of any
default in any such term, covenant, agreement or condition shall not be deemed a
waiver of any later default thereof or of any other term, covenant, agreement or
condition. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.
(c) Notwithstanding the foregoing provisions of this
Section 9.4, no amendment to or waiver of any provision of this Section 9.4
shall be effective with respect to this Section 9.4 without the consent of all
of the Investors.
9.5 Lost, Etc. Securities. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of any
certificate of Series B Stock purchased pursuant to this Agreement and (in case
of loss, theft or destruction) receipt of indemnity satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental
36
<PAGE> 42
thereto, and upon surrender and cancellation of such Series B Stock certificate,
if mutilated, the Company will make, and deliver, in lieu of such Series B Stock
certificate, a new Series B Stock certificate of like tenor. Any Series B Stock
certificate made and delivered in accordance with the provisions of this Section
9.5 shall be dated as of the date of the Series B Stock certificate in lieu of
which such new Series B Stock certificate is made and delivered. If an Investor
or its Affiliate is the beneficial owner of such lost, stolen or destroyed
Series B Stock certificate, then the affidavit of such Investor or its Affiliate
(if such Investor or its Affiliate is a natural person), the president (or other
chief executive officer) and any vice president or treasurer (if such Investor
or its Affiliate is a corporation) of such Investor or its Affiliate or a
general partner such Investor or its Affiliate (if such Investor or its
Affiliate is a partnership), setting forth the fact of loss, theft or
destruction and the beneficial ownership by such Investor or its Affiliates of
such Series B Stock certificate at the time of such loss, theft or destruction
shall be accepted as satisfactory evidence thereof, and no indemnity shall be
required as a condition to execution and delivery of a new Series B Stock
certificate other than the written agreement of such Investor or its Affiliate
to indemnify the Company and its directors, officers and agents. The term
"outstanding" when used in this Agreement with reference to Securities as of any
particular time, shall not include other Series B Stock certificate in lieu of
which a new Series B Stock certificate has been made and delivered by the
Company in accordance with the provisions of this Section 9.5.
9.6 Representations, Warranties and Covenants to Survive. All
representations, warranties and covenants contained herein or made in writing by
the Company or by the Investors in connection herewith shall survive the
execution and delivery of this Agreement and the issuance and sale or other
transfer of Series B Stock purchased hereunder.
9.7 Severability. In the event that any court or any governmental
authority or agency declares all or any part of any Section of this Agreement to
be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any other Section of this Agreement, and in the event that only a
portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
9.8 Investigation of the Company. The Investors shall have had the
right prior to the Closing to make such reasonable investigation of the Company
and the assets and business of the Company as the Investors shall deem necessary
or advisable, but any such investigation shall not affect the representations,
warranties and covenants of the Company contained herein or made pursuant
hereto.
9.9 Successors and Assigns. All representations, warranties,
covenants and agreements of the parties contained in this Agreement or made in
writing in connection herewith, shall, except as otherwise provided herein, be
binding upon and inure to the benefit of their respective nominees, successors
and assigns and, in the case of a natural Person, of his or her heirs and
personal representatives.
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<PAGE> 43
9.10 Notices. All communications provided for hereunder shall be in
writing and delivered by hand or by first-class or certified mail, postage
prepaid, or by telecopier (with telephonic confirmation of receipt), and, if to
an Investor or its nominee, addressed to the Investor at the address set forth
next to such Investor's name in Schedule 2.2 hereto or at such other address as
the Investor may designate to the Company in writing, and if to any Holders of
Series B Stock purchased pursuant to this Agreement other than an Investor or
its nominee, addressed to such Holders at their addresses as shown on the books
of the Company or its transfer agent, and if to the Company, at its offices at
3403 NW 55th Street, Bldg. 10, Ft. Lauderdale, Florida 33309, Attention:
President, or such other place as shall be designated by the Company in writing.
9.11 Governing Law. The validity, meaning and effect of this
Agreement shall be determined in accordance with the domestic laws of the State
of New York applicable to contracts made and to be performed in that state
without giving effect to any choice or conflict of law provision or rule
(whether in the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
9.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same document.
9.13 Reproduction of Documents. This Agreement and all documents
relating hereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by the
Investors at the Closing or thereafter (except stock certificates evidencing any
Securities) and (c) financial statements, certificates and other information
previously or hereafter furnished to the Investors, may be reproduced by the
Investors by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process and the Investors may destroy any original
document so reproduced. The Company agrees and stipulates that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Investors in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
9.14 Affiliates; Transfers. Notwithstanding any other provision of
this Agreement, if, after an Investor's purchase of Series B Stock hereunder,
the Investor or its nominee transferred Series B Stock to any Affiliate or
nominee of the Investor or the nominee of such Affiliate, such transferee shall
be entitled to all rights and benefits to which the transferor would be entitled
as an original Holder of the Securities so transferred and such transferee shall
be deemed an "Investor" hereunder.
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<PAGE> 44
9.15 Table of Contents; Headings. The Table of Contents and the
headings used herein are solely for the convenience of the parties and shall not
constitute a part hereof or serve to modify or interpret the text.
9.16 Indemnification. The Company shall indemnify, defend and hold
each Investor, its partners and each other Person which controls (within the
meaning of the Securities Act) such Investor or any of its partners
(collectively, "Covered Persons") harmless against and from any losses, claims,
damages, deficiencies, costs, judgments, amounts paid in settlement, interest,
penalties, assessments, out of pocket costs, liabilities (whether accrued,
contingent or otherwise) or expenses ("Losses") insofar as such Losses (or
actions in respect thereof) arise out of or are based upon (i) any breach or
alleged breach of any representation, warranty, covenant or agreement of the
Company contained herein or in any of the Related Documents, or (ii) the
existence of any condition, event or fact constituting, or which with notice or
passage of time, or both, would constitute a default in the observance of any of
the Company's undertakings or covenants hereunder or under the applicable
Related Documents. The Company shall also pay all reasonable attorney's and
accountant's fees and costs and court costs incurred by any Covered Person in
enforcing the indemnification provided for in this Section 9.16. Notwithstanding
the foregoing, the Company expressly agrees and acknowledges that the right of
indemnification granted herein to each Covered Person purchased pursuant to this
Agreement or the applicable Related Documents shall not be deemed to be the
exclusive remedy available to such Covered Person for any of the matters
described in this Section 9.16.
9.17 Expenses. The Company agrees, in the event the contemplated
transactions are consummated, to pay, and save the Investors harmless against
liability for the payment of (a) their reasonable out-of-pocket costs,
accounting fees, and legal fees arising in connection with the negotiation,
execution and Closing of the Investment, including without limitation (i)
expenses relating to the Investors' due diligence investigation with respect to
the Investment, and (ii) expenses of Shereff, Friedman, Hoffman & Goodman, LLP,
counsel for the Investors; (b) fees and expenses (including, without limitation,
reasonable attorneys' fees) incurred in respect of the enforcement by the
Investors or the holders of the Series B Stock of the rights granted to the
Investors or the holders of the Series B Stock under this Agreement or the
Related Documents, (c) fees and expenses (including, without limitation,
reasonable attorneys' fees) incurred in connection with any consent requested to
be given by the Investors or the holders of the Series B Stock pursuant to this
Agreement or the applicable Related Documents and (d) the fees of PaineWebber
Incorporated as set forth on Schedule 3.12 annexed hereto.
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<PAGE> 45
9.18 Entire Agreement; Exhibits and Schedules. This Agreement and
the Exhibits and Schedules hereto constitute and encompass the entire agreement
and understanding of the parties hereto with regard to the transactions
contemplated or provided for herein. This Agreement supersedes, replaces and
terminates any prior agreements between the Investors and the Company with
respect to the purchase of Series B Stock by the Investors from the Company and
neither the Company nor the Investors shall have any liability under any such
prior agreement to the other for any reason whatsoever.
Very truly yours,
ATTEST: PARK 'N VIEW, INC.
By: /s/ Ian Williams
- ---------------------------------------- --------------------------------
Secretary President
ACCEPTED AND AGREED:
STATE OF MICHIGAN RETIREMENT SYSTEM
By:/s/ Paul Rice
------------------------------------
Name:
Title:
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager For The Prudential
Insurance Co. of America,
Separate Account No. VCA-GA-5298
By:/s/ Sue DeCarlo
------------------------------------
Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK -1(A) Investment Fund
By:/s/ Fumio Takahashi
------------------------------------
Name:
40
<PAGE> 46
Title:
CREDIT SUISSE (GUERNSEY) LIMITED
as Trustee of Dynamic Growth Fund II
By: /s/ K C Wallbridge
------------------------------------
Name:
Title:
By: /s/ T J Woosley
------------------------------------
Name:
Title:
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Robert Chefitz
------------------------------------
Name:
Title:
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By: /s/ Robert Chefitz
------------------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
------------------------------------
Name:
Title:
/s/ Michael Willner
- ------------------------------------
Michael Willner
<PAGE> 47
SCHEDULE 2.2(A)
Series B Stock Investment
<TABLE>
<CAPTION>
Shares Purchase Price
------ ---------------
Name of Investor Address Purchased
- ---------------- ------- ---------
<S> <C> <C> <C>
State of Michigan Retirement 430 West Allegan Street 731,930 $8,000,000
System Lansing, MI 48922
Attn: David Turner
Telephone: 517-373-4330
Telecopier: 517-335-3668
Benefit Capital Management 39 Old Ridgebury Road 274,474 $3,000,000
Corporation, as Investment Danbury, CT 06817
Manager for The Prudential Attn: Susan DeCarlo
Insurance Co. of America, Telephone: 203-794-7348
Separate Account No. Telecopier: 203-794-2693
VCA-GA-5298
CSK Venture Capital Co., Ltd. 7th Floor, Kenchikukaiken 137,237 $1,500,000
5-26-20 Shiba, Minato-Ku
Tokyo 108, Japan
Attn: Kenji Suzuki
Telephone: 011-81-3-3457-5588
Telecopier: 011-81-3-3457-7070
Credit Suisse (Guernsey) Helvetia Court, P.O. Box 368 45,746 $ 500,000
Limited as Trustee of Dynamic St. Peter Port, Guernsey
Growth Fund II Channel Islands GY1 3YJ
Attn: Jason LaRoux
Telephone: 011-44-1-481-719-070
Telecopier: 011-44-1-481-724-676
with a copy to:
Yasuda Mutual Life Insurance Co.
Shinjuku Monolith Building, 23rd Flr.
3-1, Nishi-Shinjuku 2-Chrome
Shinjuku-ku, Tokyo 169-92 Japan
Attn: Hitoshi Takahashi
Telephone: 011-81-3-3349-6410
Telecopier: 011-81-3-3348-4495
APA Excelsior IV, L.P. c/o Patricof & Co. Ventures, Inc. 33,852 $ 370,000
455 Park Avenue
New York, NY 10022
Attn: Thomas Hirschfeld
Telephone: 212-753-6300
Telecopier: 212-319-6155
</TABLE>
<PAGE> 48
SCHEDULE 2.2(A)
(continued)
Series B Stock Investment
<TABLE>
<CAPTION>
Shares Purchase Price
------ --------------
Name of Investor Address Purchased
- ---------------- ------- ---------
<S> <C> <C> <C>
Coutts & Co. (Cayman) Ltd., c/o Patricof & Co. Ventures, Inc. 5,947 $ 65,000
Custodian for APA Excelsior 455 Park Avenue
IV/Offshore, L.P. New York, NY 10022
Attn: Thomas Hirschfeld
Telephone: 212-753-6300
Telecopier: 212-319-6155
The P/A Fund, L.P. c/o Patricof & Co. Ventures, Inc. 5,947 $ 65,000
455 Park Avenue
New York, NY 10022
Attn: Thomas Hirschfeld
Telephone: 212-753-6300
Telecopier: 212-319-6155
TOTAL 1,235,133 $13,500,000 (1)
</TABLE>
(1) In addition, an aggregate of $1.5 million of Subordinated Notes are
being exchanged by certain Existing Investors for Series B Stock in the
exchange.
<PAGE> 49
SCHEDULE 2.2(B)
Aggregate Shares Received
<TABLE>
<CAPTION>
Aggregate
---------
Series B Series B
-------- --------
Series A Shares - Series B Shares- Shares - Shares Aggregate
----------------- ---------------- --------- ------- ---------
Name of Investor Exchange Investment Exchange Received Monies Payable
- ---------------- -------- ------------ -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
State of Michigan n/a 731,930 n/a 731,930 $ 8,000,000
Retirement System
Benefit Capital n/a 274,474 n/a 274,474 $ 3,000,000
Management Corporation,
as Investment Manager
for The Prudential
Insurance Co. of
America, Separate
Account No. VCA-GA-5298
CSK Venture Capital n/a 137,237 n/a 137,237 $ 1,500,000
Co., Ltd.
Credit Suisse n/a 45,746 n/a 45,746 $ 500,000
(Guernsey) Limited as
Trustee of Dynamic
Growth Fund II
APA Excelsior IV, L.P. 233,778 33,852 100,878 134,730 $ 370,000(1)
Coutts & Co. (Cayman) 41,243 5,947 17,722 23,669 $ 65,000(2)
Ltd., Custodian for APA
Excelsior IV/Offshore,
L.P.
The P/A Fund, L.P. 40,924 5,947 17,722 23,669 $ 65,000(3)
Michael Willner 2,120 n/a 915 915 n/a(4)
TOTAL 318,065 45,746 137,237 1,372,370 $ 13,500,000(5)
- ------------------
(1) In addition, $1,102,604 of Subordinated Notes and warrants to purchase 175,863 shares of Common Stock
are being exchanged for Series B Stock in the exchange.
(2) In addition, $193,699 of Subordinated Notes and warrants to purchase 30,896 shares of Common Stock are
being exchanged for Series B Stock in the exchange.
(3) In addition, $193,699 of Subordinated Notes and warrants to purchase 30,896 shares of Common Stock are
being exchanged for Series B Stock in the exchange.
(4) In addition, $9,998 of Subordinated Notes and warrants to purchase 1,595 shares of Common Stock are
being exchanged for Series B Stock in the exchange.
(5) In addition, an aggregate of $1.5 million of Subordinated Notes and
warrants to purchase 175,863 shares of Common Stock are being exchanged
by certain Existing Investors for Series B Stock in the exchange.
</TABLE>
<PAGE> 50
SCHEDULE 3.2(A)
List of Existing Investors
(Common Stock)
<TABLE>
<CAPTION>
Name of Existing Investor Number of Shares Held
- ------------------------- ---------------------
<S> <C>
Park 'N View General Partner, Inc. 22,950
Ian Williams 517,906
Sam Hashman 988,610
MPN Partners, Ltd. 517,906
Nelgo Investments 270,810
APA Excelsior IV, L.P. 1,469,367
Coutts & Co., Custodian for APA Excelsior IV/Offshore L.P. 259,300
The P/A Fund, L.P. 258,000
Michael Willner 13,333
----------
TOTAL 4,318,182
</TABLE>
<PAGE> 51
SCHEDULE 3.2(B)
A. Outstanding Stock Options
<TABLE>
<CAPTION>
Name of Option Holder Shares
- --------------------- ------
<S> <C>
Tony Allen 37,878
Ralph Head 37,878
Bill Buzbee 37,878
Yves Maynard 37,878
Steve Conkling 67,878
Gerry Cooksey 20,000
Tony Ballerino 5,000
Richard Lucas 3,000
Tom Evans 3,000
Terry Glick 500
Barry Spaath 500
Tim Keys 500
-------
Total Outstanding Options 251,890
Remaining Unallocated Options
Available Under Plan 5,383
-------
Total Options Under Plan 257,273
</TABLE>
B. Registration, Preemptive and Similar Rights
Pursuant to Section 3 of that certain Securityholders' Agreement, dated
as of November 2, 1995, by and among the Company and the Existing Investors, the
Existing Investors (as defined therein) have a right of first refusal to
purchase any Securities (as defined therein) issued by the Company.
<PAGE> 52
SCHEDULE 3.2(C)
List of Existing Investors*
(Series A Stock)
<TABLE>
<CAPTION>
Name of Existing Investor Number of Shares Held
- ------------------------- ---------------------
<S> <C>
APA Excelsior IV, L.P. 285,205
Coutts & Co., Custodian for APA Excelsior
IV/Offshore, L.P. 50,319
The P/A Fund, L.P. 49,954
Michael Willner 2,587
-------
TOTAL 388,065
</TABLE>
- ---------------
* Pro forma after exchange of $3,000,000 in Subordinated Notes, plus all accrued
but unpaid interest.
<PAGE> 53
SCHEDULE 3.3
Title to Assets; Encumbrances
None
<PAGE> 54
SCHEDULE 3.4
Outstanding Debt
<TABLE>
<CAPTION>
Company Description Term Monthly Payment
- ------- ----------- ---- ---------------
<S> <C> <C> <C>
Case Credit Construction equipment 2 years $ 3,313.13
Ford Motor Credit Ford Escort 1 year $ 469.56
Ryder 2 trucks 3 years $ 2,802.19
AT&T Capital Lease Computers 21 months $ 508.84
AAA Rental & Sales Office furniture 3 years $ 416.17
BSFS Equipment Leasing Telephone 20 months $ 197.46
Mitel Finance Truckstop telephone 3 years $12,628.37
switches
</TABLE>
<PAGE> 55
SCHEDULE 3.6(A)
Contracts
1. Coleman Equipment
Construction Equipment Altec Planner
2. Greenlight Technologies
Software and Services
Date: November 15, 1995 Amended: 10/31/96
Payment: $3,000 per site plus transaction fees
3. Sprint Telecommunications Services Term Agreement (W. Memphis)
Telephone Service - Commission to Park 'N View
3 year term
Date: 7/13/94
4. Mitel Telecommunications Systems
Master Lease Agreement Telephone Switches
Term: 3 years on each switch
Date: 11/22/95
5. Prevue Networks, Inc.
Multimedia License Agreement
Term: 3 years
Date: 11/28/95
$450 per site per month
<PAGE> 56
SCHEDULE 3.6(B)
Truck Stop Agreements
1. Cable Television and Telephone Services Agreement between Park 'N View
and Pilot Corporation dated February, 1996.
2. Amended Cable Television and Telephone Service Agreement between Park
'N View and National Auto/Truckstops, Inc. dated March 28, 1995.
3. Cable Television and Telephone Service Agreement between Park 'N View,
AMBEST and Bosselman, Inc. of Iowa dated August 14, 1995.
4. Cable Television and Telephone Service Agreement between Park 'N View
and AMBEST dated August 14, 1995.
5. Cable Television and Telephone Service Agreement between Park 'N View
and Sapp Bros. Truckstops, Inc. dated April 22, 1996.
6. Cable Television and Telephone Service Agreement between Park 'N View
and Travel Ports of America, Inc. dated October 28, 1995.
7. Cable Television and Telephone Service Agreement between Park 'N View
and Professional Transportation Partners, LLC dated July 11, 1996.
8. Cable Television and Telephone Service Agreement between Park 'N View
and Highway Service Ventures, Inc. dated September 29, 1995.
9. Cable Television and Telephone Service Agreement between Park 'N View,
Professional Transportation Partners LLC and Perry Oil Company/
Beaverdam Truck Plaza dated September 4, 1996.
10. Operating Agreement between Park 'N View, National Auto/Truckstops,
Inc. and Southeast Interstate Services, Inc. dated December 13, 1995.
11. Operating Agreement between Park 'N View, National Auto/Truckstops,
Inc. and Hebron, Ohio truckstop dated May 23, 1996.
12. Operating Agreement between Park 'N View, National Auto/Truckstops,
Inc. and Oak Grove Interstate Corp. dated September 1, 1995.
13. Operating Agreement between Park 'N View, National Auto/Truckstops,
Inc., Albuquerque, NM dated May 24, 1996.
14. Operating Agreement between Park 'N View, National Auto/Truckstops,
Inc. and Ontario Auto/Truck Plaza dated January 29, 1996.
15. Operating Agreement between Park 'N View, National Auto/Truckstops,
Inc. and White's Truckstop, Inc. dated May 21, 1996.
<PAGE> 57
SCHEDULE 3.8(B)
Permits
None
<PAGE> 58
SCHEDULE 3.11
Benefit Plans
1. Park 'N View, Inc. Stock Option Plan.
2. Group Medical Insurance Plan for Florida Employees.
3. Group Dental Insurance Plan for Florida Employees.
4. Group Health Insurance Plan for Tennessee Employees.
5. Key Man Life Insurance Policy on Ian Williams.
6. Discretionary Severance Program.
<PAGE> 59
SCHEDULE 3.12
Labor Relations
None
<PAGE> 60
SCHEDULE 3.13
Broker/Finder - Company
The Company has agreed to pay PaineWebber Incorporated a broker's fee
of 3.5% of the aggregate gross proceeds realized from the sale of Series B Stock
to the Investors (other than those Investors that are Existing Investors) listed
on Schedule 2.2, plus reasonable out-of-pocket expenses.
<PAGE> 61
SCHEDULE 3.15
Obligations to Purchase Securities
The Company has certain mandatory obligations and optional rights to redeem
the Series A Stock pursuant to the terms of Section 5 of the Certificate of
Designation relating to the Series A Stock.
<PAGE> 62
SCHEDULE 3.19
Financial Statement
1. Horizon Capital
- Final payment of $15,000 due on November 1, 1996.
2. Cancap Investments Limited
- Final payment of $60,000 due on November 1, 1996.
<PAGE> 63
SCHEDULE 3.20
Absence of Specified Changes
1. Dividend on Series A due December 31, 1996.
2. Salary Increases.
- Luis Cairo $4,000 (11%)
- Tom Evans $6,000 (20%)
<PAGE> 64
SCHEDULE 3.21
Taxes
None
<PAGE> 65
SCHEDULE 3.22
Proprietary Rights
1. Software Development Agreement, dated November 15, 1995, between Green
Light, Inc. and Park 'N View, as amended, regarding (i) joint ownership
of software to run on computers at truck stops to operate phone and
video services; and (ii) joint ownership of software to run on
computers at Park 'N View's headquarters to authorize and administer
system.
2. Trademark Application pending with the U.S. Patent and Trademark
Office, filed April 30, 1996, Serial Number 75/096457, for the mark PNV
DRIVE
3. U.S. Trademark Registration, Reg. No. 1,948,428, issued January 16,
1996 for Park 'N View (and Design) for entertainment services;
Registrant Park 'N View, Ltd. In process of assigning mark of record to
Park 'N View, Inc.
<PAGE> 66
SCHEDULE 3.23
Insurance
<TABLE>
<CAPTION>
<S> <C> <C>
Insurance Company Type/Date of Policy/ Policy Limits
Property Covered
American Reliable Liab/Cargo/Phy Dam $ 100,000. BI
CANCELLED 2/6/96 11/8/95 to 11/8/96 300,000. BI
Ford Truck #B18407 50,000. PD
Ford Truck #B20536 10,000. PIP
Bvr Trailr # 10/20,000. UM
Bvr Trailr # 48,000. Phys Dmg
15,000. Cargo
Agricultural Ins. Co. Physical Damage $ 16,400. Phys Dmg
12/8/95 to 12/8/96
Bvr Trailr #011823
Bvr Trailr #044826
Bvr Trailr #044802
Bvr Trailr #044973
Empire Fire & Marine Liability Only $ 100,000. BI
1/12/96 to 1/12/97 300,000. BI
Ford Escort #394247 50,000. PD
ADDITION: 2/6/96
Ford Truck #B18407
Ford Truck #B20536
Interstate Fire & Casualty Physical Damage $ Value: ACV
1/12/96 to 1/12/97
Ford Escort #394247
ADDITION: 2/6/96 23,600. Phys Dmg
Ford Truck #B18407 23,600. Phys Dmg
Ford Truck #B20536
DELETE: 9/18/96 23,600. Phys Dmg
Ford Truck #B18107
ADDITION: 9/18/96 23,600. Phys Dmg
Ford Truck #B33430
TIG Specialty Ins. Co. General Liab/Proprty $1,000,000. Gen Liab/Aggr
2/12/96 to 2/12/97 1,000,000. Ped/Comp Ops
50,000. Pers/Adv Inj
1,000,000. Per Occurrance
50,000. Fire Legal
5,000. Med Expense
400,000. Property
GRE/Albany Ins. Co. Installation Floater $ 200,000. Property
2/12/96 to 2/12/97
Coverage for Property
on the two (2) Tractor/
Trailers in transit
TEMPORARY ADDITION: 20,000. per Promo Trailer
6/14/96 to 7/11/96
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
<S> <C> <C>
Insurance Company Type/Date of Policy/ Policy Limits
Property Covered
Clarendon Insurance Workers Compensation 100,000. Each Accident
4/8/96 until cancelled 500,000. Disease Limit
100,000. Dis/Each Emp.
Sphere Drake Ins. Co. On-Site Property $ 30,000. per Site
5/17/96 to 5/17/97
ADDITION: 6/3/96
BROADEN COVERAGE; Scheduled by Site
6/14/96
ADDITION: 8/17/96
ADDITION: 8/31/96
ADDITION: 10/31/96
Metropolitan Life Keyman Term $1,000,000
</TABLE>
<PAGE> 68
PARK 'N VIEW, INC.
ON-SITE COVERAGE SCHEDULE OF VALUES BY SITE
<TABLE>
<CAPTION>
SITE VALUE ACTIVATED
<C> <C> <C>
201 Vero Beach, FL $41,600.00 5/17/96
202 Knoxville, TN 48,800.00 5/17/96
203 West Memphis, AR 36,000.00 5/17/96
204 Ontario, CA 76,000.00 5/17/96
205 Buttonwillow, CA 51,200.00 5/17/96
206 Albuquerque, NM 41,600.00 6/3/96
401 Carnesville, GA 51,200.00 5/17/96
601 Madera, CA 51,200.00 5/17/96
680 Eric, PA 52,800.00 6/3/96
701 Denver, CO 60,400.00 5/17/96
683 Baltimore, MD 60,800.00 8/17/96
710 Des Moines, IA 51,240.00 8/17/96
682 Lake Station, IN 66,000.00 8/31/96
Florence, SC 48,000.00 10/31/96
</TABLE>
<PAGE> 69
SCHEDULE 4.3
Broker/Finder - Investors
None
-2-
<PAGE> 70
EXHIBIT A
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES B 7% CUMULATIVE CONVERTIBLE
PREFERRED STOCK OF PARK 'N VIEW, INC.
PARK 'N VIEW, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY THAT:
. Pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation") and pursuant to the provisions of ss. 151 of the Delaware
General Corporation Law, the Board of Directors, pursuant to unanimous written
consent dated November 11, 1996, adopted the following resolution providing for
the designations, preferences and relative, participating, optional and other
rights, and the qualifications, limitations and restrictions of the Series B 7%
Cumulative Convertible Preferred Stock.
WHEREAS, the Certificate of Incorporation of the Corporation provides
for two classes of shares known as common stock, $.001 par value per share (the
"Common Stock"), and preferred stock, $.01 par value per share ("Preferred
Stock"); and
WHEREAS, the Board of Directors of the Corporation is authorized by the
Certificate of Incorporation to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in such series and to fix the designations,
preferences and rights of the shares of each such series and the qualifications,
limitations and restrictions thereof.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors deems it
advisable to, and hereby does, designate a Series B 7% Cumulative Convertible
Preferred Stock and fixes and determines the rights, preferences,
qualifications, limitations and restrictions relating to the Series B 7%
Cumulative Convertible Preferred Stock as follows:
1. Designation. The shares of such series of Preferred Stock shall be
designated "Series B 7% Cumulative Convertible Preferred Stock" (referred to
herein as the "Series B Stock").
-3-
<PAGE> 71
2. Authorized Number. The number of shares constituting the Series B Stock
shall be 1,372,370.
3. Dividends. The holders of shares of Series B Stock shall be entitled to
receive, when and as declared by the Board of Directors of the Corporation, out
of assets legally available for such purpose, dividends at the rate of $0.7651
(i.e., 7%) per share per annum, which shall be payable when and if declared by
the Board of Directors or shall accrue quarterly on the last day of January,
April, July and October in each year, commencing on January 31, 1997; provided,
however, that upon an Event of Default (as hereinafter defined) and so long as
it shall continue, such dividend rate shall be $0.9837 (i.e., 9%) per share per
annum. Dividends on the Series B Stock shall be cumulative so that if, for any
dividend accrual period, cash dividends at the rate hereinabove specified are
not declared and paid or set aside for payment, the amount of accrued but unpaid
dividends shall accumulate and shall be added to the dividends payable for
subsequent dividend accrual periods and upon any redemption or conversion of
shares of Series B Stock. If any shares of Series B Stock are issued on a date
which does not coincide with a dividend payment date, then the initial dividend
accrual period applicable to such shares shall be the period from the date of
issuance thereof through whichever of January 31, April 30, July 31, or October
31 next occurs after the date of issuance. If the date fixed for payment of a
final liquidating distribution on any shares of Series B Stock, or the date on
which any shares of Series B Stock are redeemed or converted into Common Stock
does not coincide with a dividend payment date, then subject to the provisions
hereof relating to such payment, redemption or conversion, the final dividend
accrual period applicable to such shares shall be the period from whichever of
February 1, May 1, August 1 or November 1 most recently precedes the date of
such payment, conversion or redemption through the effective date of such
payment, conversion or redemption. Dividends paid in cash on the shares of
Series B Stock (or Series A Stock which shall rank pari passu with the Series B
Stock) in an amount less than the total amount of such dividends shall be
allocated pro rata so that the total value of dividends paid on the Series B
Stock and Series A Stock shall in all cases bear to each other the same ratio
that the total value of accrued and unpaid dividends on the Series B Stock and
Series A Stock bear to each other. Without the written consent of the holders of
at least 66_% of the then outstanding Series B Stock, the Corporation shall not
declare or pay any cash dividend on, or redeem or repurchase or make any other
cash distribution in respect of any other equity Securities of the Corporation
unless at the time of such declaration, payment or distribution all dividends on
the Series B Stock accrued for all past dividend accrual periods shall have been
paid and the full dividends thereon for the current dividend period shall be
paid or declared and set aside for payment.
-4-
<PAGE> 72
4. Liquidation.
(a) Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of the shares of Series B Stock
shall be entitled, before any distribution or payment is made upon any Common
Stock or any other class or series of stock ranking junior to the Series B Stock
as to distribution of assets upon liquidation (other than the Series A Preferred
Stock of the Corporation which shall rank pari passu with the Series B Stock),
to be paid an amount equal to $10.93 per share (as adjusted for Recapitalization
Events (as hereinafter defined)) plus all accrued and unpaid dividends to such
date (collectively, the "Liquidation Payments"). If upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the assets to be distributed among the holders of Series B Stock shall be
insufficient to permit payment in full to the holders of Series B Stock of the
Liquidation Payments, then the entire assets of the Corporation shall be
distributed ratably among such holders and the holders of any class of preferred
stock ranking on a parity with the Series B Stock in proportion to the full
respective distributive amounts to which they are entitled.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after the holders of Series B Stock shall have been paid in full the Liquidation
Payments, the remaining assets of the Corporation may be distributed ratably per
share in order of preference to the holders of Common Stock and any other class
or series of stock ranking junior to the Series B Stock as to distribution of
assets upon liquidation.
(c) Written notice of a liquidation, dissolution or winding up, stating
a payment date, the amount of the Liquidation Payments and the place where said
Liquidation Payments shall be payable, shall be given by mail, postage prepaid,
not less than 30 days prior to the payment date stated therein, to each holder
of record of Series B Stock at his post office address as shown by the records
of the Corporation.
5. Conversion.
The holders of the Series B Stock shall have the following conversion
rights:
(a) Optional Conversion. Each share of Series B Stock shall be
convertible at any time, at the option of the holder of record thereof, into
fully paid and nonassessable shares of Common Stock at the "conversion rate" (as
defined in paragraph (c) below) then in effect upon surrender to the Corporation
or its transfer agent of the certificate or certificates representing the Series
B Stock to be converted, as provided below, or if the holder notifies the
Corporation or its transfer agent that such certificate or certificates have
been lost, stolen or destroyed, upon the execution and delivery of an agreement
satisfactory to the Corporation to indemnify the Corporation from any losses
incurred by it in connection therewith.
-5-
<PAGE> 73
(b) Conversion on Qualifying Offering. Upon the consummation of a
Qualifying Offering (as defined below), upon not less than ten (10) days prior
written notice by the Corporation of the anticipated consummation of such
offering, each share of Series B Stock shall be converted into fully paid and
nonassessable shares of Common Stock at the conversion rate. A "Qualifying
Offering" means (i) the Corporation shall have consummated a firm commitment
underwritten public offering of its Common Stock by a nationally recognized
investment banking firm pursuant to an effective registration under the
Securities Act of 1933, as amended, covering the offering and sale of both
primary and secondary shares of Common Stock which results in gross proceeds of
at least $20,000,000, (ii) the Common Stock is listed on either NASDAQ, the New
York Stock Exchange or the American Stock Exchange, and (iii) the price at which
the Common Stock is sold in such offering is at least equal to an amount which
(x) is 200% of the then effective conversion price or (y) would represent, on an
as converted basis, a compound annual rate of return of 35% based upon the
original issuance price of the Series B Stock. Upon the achievement of (i), (ii)
and (iii) above and the giving of the mandatory conversion notice by the
Corporation, the outstanding shares of Series B Stock to be converted shall be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent.
(c) Basis For Conversion; Converted Shares. The basis for any conversion
under this Section 5 shall be the "conversion rate" in effect at the time of
conversion, which for the purposes hereof shall mean the number of shares of
Common Stock issuable for each share of Series B Stock surrendered for
conversion under this Section 5. Initially, the conversion rate shall be 1.0,
i.e., 1.0 shares of Common Stock for each share of Series B Stock being
converted. Such conversion rate shall be subject to adjustment as provided in
Section 7 below. As used herein, the term "conversion price" shall be an amount
computed by dividing $10.93 by the conversion rate then in effect. Initially,
the conversion price shall be $10.93 per share of Common Stock. If any
fractional interest in a share of Common Stock would be deliverable upon
conversion of Series B Stock, the Corporation shall pay in lieu of such
fractional share an amount in cash equal to the conversion price of such
fractional share (computed to the nearest one hundredth of a share) in effect at
the close of business on the date of conversion. Any shares of Series B Stock
which have been converted shall be cancelled and all dividends on converted
shares shall cease to accrue and the certificates representing shares of Series
B Stock so converted shall represent the right to receive (i) such number of
shares of Common Stock into which such shares of Series B Stock are convertible,
plus (ii) cash payable for any fractional share plus (iii) all accrued but
unpaid dividends relating to such shares through the immediately preceding
dividend payment date. Upon the conversion of shares of Series B Stock as
provided in this Section 5, the Corporation shall promptly pay all then accrued
but unpaid dividends to the holder of the Series B Stock being converted. The
Board of Directors of the Corporation shall at all times reserve a sufficient
number of authorized but unissued shares of Common Stock to be issued in
satisfaction of the conversion rights and privileges aforesaid.
-6-
<PAGE> 74
(d) Mechanics of Conversion. In the case of an optional conversion,
before any holder of Series B Stock shall be entitled to convert the same into
shares of Common Stock, it shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or its transfer agent
for the Series B Stock, and shall give written notice to the Corporation of the
election to convert the same and shall state therein the name or names in which
the certificate of certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series B Stock, or to the nominee or nominees of such
holder, a certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled as aforesaid. A certificate or
certificates will be issued for the remaining shares of Series B Stock in any
case in which fewer than all of the shares of Series B Stock represented by a
certificate are converted.
(e) Issue Taxes. The Corporation shall pay all issue taxes, if any,
incurred in respect of the issue of shares of Common Stock on conversion. If a
holder of shares surrendered for conversion specifies that the shares of Common
Stock to be issued on conversion are to be issued in a name or names other than
the name or names in which such surrendered shares stand, the Corporation shall
not be required to pay any transfer or other taxes incurred by reason of the
issuance of such shares of Common Stock to the name of another, and if the
appropriate transfer taxes shall not have been paid to the Corporation or the
transfer agent for the Series B Stock at the time of surrender of the shares
involved, the shares of Common Stock issued upon conversion thereof may be
registered in the name or names in which the surrendered shares were registered,
despite the instructions to the contrary.
6. Adjustment of Conversion Price and Conversion Rate. The number and
kind of securities issuable upon the conversion of the Series B Stock, the
conversion price and the conversion rate shall be subject to adjustment from
time to time in accordance with the following provisions:
(a) Certain Definitions. For purposes of this Certificate:
(i) The term "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued, or deemed to be issued by the Corporation
pursuant to paragraph (g) of this Section 6, after the Original Issue Date
except:
(A) shares of Common Stock issuable upon conversion of, or
distributions with respect to, the Series B Stock now or hereafter issued by the
Corporation; and
-7-
<PAGE> 75
(B) up to 400,000 shares of Common Stock issuable upon the
exercise of options issued to officers, directors and employees of the
Corporation under stock option plans maintained from time to time by the
Corporation and approved by the Board of Directors.
(ii) The term "Common Stock" shall be deemed to mean (i) the Common
Stock, $.001 par value, and (ii) the stock of the Corporation of any class, or
series within a class, whether now or hereafter authorized, which has the right
to participate in the distribution of either earnings or assets of the
Corporation without limit as to the amount or percentage.
(iii) The term "Convertible Securities" shall mean any evidence of
indebtedness, shares (other than Series B Stock) or other securities convertible
into or exchangeable for Common Stock.
(iv) The term "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities.
(v) The term "Original Issue Date" shall mean the date of the
initial issuance of the Series B Stock.
(vi) The term "Fair Market Price" shall mean with respect to a
share of Common Stock (i) prior to the first anniversary of the Original Issue
Date, the conversion price in effect on the Original Issue Date, and (ii)
subsequent to the first anniversary of the Original Issue Date, the average
closing bid price of the Common Stock as reported by NASDAQ (or the last sale
price if the Common Stock is traded on an exchange) for a period of thirty (30)
consecutive trading days ending on the third day prior to the date of
determination, or, if the Common Stock is not listed on NASDAQ or an exchange,
the fair market value as determined by the vote of 66_% of the Corporation's
Board of Directors or if the Board of Directors cannot reach such agreement, as
determined by a qualified independent investment banker appointed by the vote of
66_% of the Corporation's Board of Directors.
(b) Reorganization, Reclassification. In the event of a reorganization,
share exchange, or reclassification, other than a change in par value, or from
par value to no par value, or from no par value to par value or a transaction
described in subsection (c) or (d) below, each share of Series B Stock shall,
after such reorganization, share exchange or reclassification (a
"Reclassification Event"), be convertible at the option of the holder into the
kind and number of shares of stock or other securities or other property of the
Corporation which the holder of Series B Stock would have been entitled to
receive if the holder had held the Common Stock issuable upon conversion of his
Series B Stock immediately prior to such reorganization, share exchange, or
reclassification.
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(c) Consolidation, Merger. In the event of a merger or consolidation to
which the Corporation is a party each share of Series B Stock shall, after such
merger or consolidation, be convertible at the option of the holder into the
kind and number of shares of stock and/or other securities, cash or other
property which the holder of such share of Series B Stock would have been
entitled to receive if the holder had held the Common Stock issuable upon
conversion of such share of Series B Stock immediately prior to such
consolidation or merger.
(d) Subdivision or Combination of Shares. In case outstanding shares of
Common Stock shall be subdivided, the conversion price shall be proportionately
reduced as of the effective date of such subdivision, or as of the date a record
is taken of the holders of Common Stock for the purpose of so subdividing,
whichever is earlier. In case outstanding shares of Common Stock shall be
combined, the conversion price shall be proportionately increased as of the
effective date of such combination, or as of the date a record is taken of the
holders of Common Stock for the purpose of so combining, whichever is earlier.
(e) Stock Dividends. In case shares of Common Stock are issued as a
dividend or other distribution on the Common Stock (or such dividend is
declared), then the conversion price shall be adjusted, as of the date a record
is taken of the holders of Common Stock for the purpose of receiving such
dividend or other distribution (or if no such record is taken, as at the
earliest of the date of such declaration, payment or other distribution), to
that price determined by multiplying the conversion price in effect immediately
prior to such declaration, payment or other distribution by a fraction (i) the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to the declaration or payment of such dividend or other
distribution, and (ii) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after the declaration or payment
of such dividend or other distribution. In the event that the Corporation shall
declare or pay any dividend on the Common Stock payable in any right to acquire
Common Stock for no consideration, then the Corporation shall be deemed to have
made a dividend payable in Common Stock in an amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to acquire Common
Stock.
(f) Issuance of Additional Shares of Common Stock. If the Corporation
shall issue any Additional Shares of Common Stock (including Additional Shares
of Common Stock deemed to be issued pursuant to paragraph (g) below) after the
Original Issue Date (other than as provided in the foregoing subsections (b)
through (e)), for no consideration or for a consideration per share less than
the greater of (i) the Fair Market Price in effect on the date of and
immediately prior to such issue or (ii) the conversion price in effect on the
date of and immediately prior to such issue, then in such event, the conversion
price shall be reduced, concurrently with such issue, to a price equal to the
quotient obtained by dividing:
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(i) an amount equal to (x) the total number of shares of Common
Stock outstanding immediately prior to such issuance or sale multiplied by the
conversion price in effect immediately prior to such issuance or sale, plus (y)
the aggregate consideration received or deemed to be received by the Corporation
upon such issuance or sale, by
(ii) the total number of shares of Common Stock outstanding
immediately after such issuance or sale.
For purposes of the formulas expressed in paragraph 6(e) and 6(f), all
shares of Common Stock issuable upon the exercise of outstanding Options or
issuable upon the conversion of the Series B Stock or outstanding Convertible
Securities (including Convertible Securities issued upon the exercise of
outstanding Options), shall be deemed outstanding shares of Common Stock both
immediately before and after such issuance or sale.
(g) Deemed Issue of Additional Shares of Common Stock. In the event the
Corporation at any time or from time to time after the Original Issue Date shall
issue any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities then entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein designed to protect against dilution) of Common Stock issuable
upon the exercise of such Options, or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common Stock issued as of the time of
such issue of Options or Convertible Securities or, in case such a record date
shall have been fixed, as of the close of business on such record date, provided
that in any such case in which Additional Shares of Common Stock are deemed to
be issued:
(i) no further adjustments in the conversion price shall be made
upon the subsequent issue of Convertible Securities or shares of Common Stock
upon the exercise of such Options or the issue of Common Stock upon the
conversion or exchange of such Convertible Securities;
(ii) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase or decrease in
the consideration payable to the Corporation, or increase or decrease in the
number of shares of Common Stock issuable, upon the exercise, conversion or
exchange thereof, the conversion price computed upon the original issuance of
such Options or Convertible Securities (or upon the occurrence of a record date
with respect thereto), and any subsequent adjustments based thereon, upon any
such increase or decrease becoming effective, shall be recomputed to reflect
such increase or decrease insofar as it affects
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such Options or the rights of conversion or exchange under such Convertible
Securities (provided, however, that no such adjustment of the conversion price
shall affect Common Stock previously issued upon conversion of the Series B
Stock);
(iii) upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall not have
been exercised, the conversion price computed upon the original issue of such
Options or Convertible Securities (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon such
expiration, be recomputed as if:
(A) in the case of Options or Convertible Securities, the only
Additional Shares of Common Stock issued were the shares of Common Stock, if
any, actually issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration received therefor
was the consideration actually received by the Corporation (x) for the issue of
all such Options, whether or not exercised, plus the consideration actually
received by the Corporation upon exercise of the Options or (y) for the issue of
all such Convertible Securities which were actually converted or exchanged plus
the additional consideration, if any, actually received by the Corporation upon
the conversion or exchange of the Convertible Securities; and
(B) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued upon the exercise thereof
were issued at the time of issue of such Options, and the consideration received
by the Corporation for the Additional Shares of Common Stock deemed to have been
then issued was the consideration actually received by the Corporation for the
issue of all such Options, whether or not exercised, plus the consideration
deemed to have been received by the Corporation upon the issue of the
Convertible Securities with respect to which such Options were actually
exercised.
(iv) No readjustment pursuant to clause (ii) or (iii) above shall
have the effect of increasing the conversion price to an amount which exceeds
the lower of (x) the conversion price on the original adjustment date or (y) the
conversion price that would have resulted from any issuance of Additional Shares
of Common Stock between the original adjustment date and such readjustment date.
(v) In the case of any Options which expire by their terms not
more than 30 days after the date of issue thereof, no adjustment of the
conversion price shall be made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in the same manner provided in
clause (iii) above.
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(h) Determination of Consideration. For purposes of this Section 6, the
consideration received by the Corporation for the issue of any Additional Shares
of Common Stock shall be computed as follows:
(i) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be the aggregate amount of
cash received by the Corporation; and
(B) insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of the issue, as determined by
the vote of 66_% of the Corporation's Board of Directors or if the Board of
Directors cannot reach such agreement, by a qualified independent public
accounting firm, other than the accounting firm then engaged as the
Corporation's independent auditors, agreed upon by the Corporation on the one
hand and the holders of 66 2/3% of the outstanding shares of Series B Stock on
the other hand.
(ii) Options and Convertible Securities. The consideration per share
received by the Corporation for Additional Shares of Common Stock deemed to have
been issued pursuant to paragraph (g) above, relating to Options and Convertible
Securities shall be determined by dividing:
(A) the total amount, if any, received or receivable by the
Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against dilution) payable to the
Corporation upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities by
(B) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision contained
therein designed to protect against dilution) issuable upon the exercise of such
Options or conversion or exchange of such Convertible Securities.
(i) Adjustment of Conversion Rate. Upon each adjustment of the
conversion price under the provisions of this Section 6, the conversion rate
shall be adjusted to an amount determined by dividing (x) the conversion price
in effect immediately prior to the event causing such adjustment by (y) such
adjusted conversion price.
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(j) Other Provisions Applicable to Adjustment Under this Section. The
following provisions will be applicable to the adjustments in conversion price
and conversion rate as provided in this Section 6:
(i) Treasury Shares. The number of shares of Common Stock at any
time outstanding shall not include any shares thereof then directly or
indirectly owned or held by or for the account of the Corporation.
(ii) Other Action Affecting Common Stock. In case the Corporation
shall take any action affecting the outstanding number of shares of Common Stock
other than an action described in any of the foregoing subsections 6(b) to 6(g)
hereof, inclusive, which would have an inequitable effect on the holders of
Series B Stock, the conversion price shall be adjusted in such manner and at
such time as the Board of Directors of the Corporation on the advice of the
Corporation's independent public accountants may in good faith determine to be
equitable in the circumstances.
(iii) Minimum Adjustment. No adjustment of the conversion price
shall be made if the amount of any such adjustment would be an amount less than
one percent (1%) of the conversion price then in effect, but any such amount
shall be carried forward and an adjustment with respect thereof shall be made at
the time of and together with any subsequent adjustment which, together with
such amount and any other amount or amounts so carried forward, shall aggregate
an increase or decrease of one percent (1%) or more.
(iv) Certain Adjustments. The conversion price shall not be
adjusted upward except in the event of a combination of the outstanding shares
of Common Stock into a smaller number of shares of Common Stock or in the event
of a readjustment of the conversion price pursuant to Section 6(g)(ii) or (iii).
(k) Notices of Adjustments. Whenever the conversion rate and conversion
price is adjusted as herein provided, an officer of the Corporation shall
compute the adjusted conversion rate and conversion price in accordance with the
foregoing provisions and shall prepare a written certificate setting forth such
adjusted conversion rate and conversion price and showing in detail the facts
upon which such adjustment is based, and such written instrument shall promptly
be delivered to the recordholders of the Series B Stock.
7. Redemption.
(a) Mandatory Redemption. On each of the sixth and seventh anniversaries
of the date of issuance of the Series B Stock (each such anniversary date being
referred to herein as the "Anniversary Redemption Date") the Corporation shall
redeem one half (50%) of the number of
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shares of Series B Stock originally issued hereunder (or such lesser amount as
shall then be outstanding) at the "Redemption Price" per share defined in
paragraph (c) below, payable in each case in cash on the Anniversary Redemption
Date.
(b) Redemption on Change of Control. Upon a "Change of Control" of the
Corporation, each holder of the then outstanding shares of Series B Stock may
elect to have the Corporation redeem all (but not less than all) outstanding
shares of Series B Stock owned by such holder at the "Redemption Price" per
share defined in paragraph (c) below, payable in cash on any date within 100
days of the effective date of the Change of Control (such date being herein
referred to as the "Change of Control Redemption Date"). The election shall be
made by delivering written notice to the Corporation at least thirty (30) but no
more than sixty (60) days prior to the Change of Control Redemption Date. The
Corporation will then be required to redeem all the shares of Series B Stock
owned by such holder on the Change of Control Redemption Date. For purposes of
this Section 7, "Change of Control" means any one or more of the following
events:
(i) The Corporation shall consolidate with or merge into any
another person or any person shall consolidate with or merge into the
Corporation (other than a consolidation or merger of the Corporation and a
wholly-owned subsidiary of the Corporation in which all shares of the
Corporation's Common Stock outstanding immediately prior to the effectiveness
thereof are changed into or exchanged for the same consideration), in either
event pursuant to a transaction in which any of the Corporation's common stock
outstanding immediately prior to the effectiveness thereof is changed into or
exchanged for cash, securities or other property; or
(ii) the Corporation shall directly or indirectly convey, transfer
or lease, in one transaction or a series of transactions, all or substantially
all of its assets to any person or "group" (within the meaning of Section 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934 (the "1934 Act") (other than
to a wholly-owned subsidiary of the Corporation); or
(iii) there shall be a reorganization, share exchange, or
reclassification, other than a change in par value, or from par value to no par
value, or from no par value to par value; or
(iv) any person (other than the Corporation, any subsidiary of the
Corporation or an Existing Investor (as defined in the Purchase Agreement (as
hereinafter defined))), including a "group" (within the meaning of Section 13(d)
and 14(D)(2) of the 1934 Act) that includes such person, shall purchase or
otherwise acquire, directly or indirectly, beneficial ownership of securities of
the Corporation and, as a result of such purchase or acquisition, such person
(together with its associates and affiliates) shall directly or indirectly
beneficially own in the aggregate (1) more than 50% of the Common Stock, or (2)
securities representing more than 50%
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of the combined voting power of the Corporation's voting securities, in each
case under subclause (1) or (2), outstanding on the date immediately prior to
the date of such purchase or acquisition (or, if there be more than one, the
last such purchase or acquisition).
(c) The Redemption Price per share of Series B Stock shall equal the sum
of (x) $10.93 (as adjusted for Recapitalization Events) plus (y) all accrued and
unpaid dividends on such share of Series B Stock to the Anniversary Redemption
Date or Change of Control Redemption Date, as the case may be.
(d) The term "Redemption Date" as used in this paragraph (d) shall refer
to whichever of the Anniversary Redemption Date or the Change of Control
Redemption Date is applicable in a particular circumstance. On or prior to the
Redemption Date, the Corporation shall deposit the Redemption Price of all
outstanding shares of Series B Stock to be redeemed with a bank or trust
corporation having aggregate capital and surplus in excess of $100,000,000 as a
trust fund for the benefit of the holders of the shares of Series B Stock, with
irrevocable instructions and authority to the bank or trust corporation to pay
the Redemption Price for such shares to their respective holders on or after the
Redemption Date upon receipt of the certificate or certificates of the shares of
Series B Stock to be redeemed. From and after the Redemption Date, unless there
shall have been a default in payment of the Redemption Price, all rights of the
holders of shares of Series B Stock as holders of Series B Stock (except the
right to receive the Redemption Price upon surrender of their certificate or
certificates) shall cease as to those shares of Series B Stock redeemed, and
such shares shall not thereafter be transferred on the books of the Corporation
or be deemed to be outstanding for any purpose whatsoever. If on the Redemption
Date the funds of the Corporation legally available for redemption of shares of
Series B Stock (or Series A Stock which shall rank pari passu with the Series B
Stock) are insufficient to redeem the total number of shares of Series B Stock
or Series A Stock to be redeemed on such date, the Corporation will use those
funds which are legally available therefor to redeem the maximum possible number
of shares of Series B Stock and Series A Stock ratably among the holders of such
shares to be redeemed based upon their holdings of Series B Stock and Series A
Stock. Payments shall first be applied against accrued and unpaid dividends and
thereafter against the remainder of the Redemption Price. The shares of Series B
Stock not redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of shares of Series B Stock
such funds will immediately be used to redeem the balance of the shares of
Series B Stock to be redeemed. No dividends or other distributions shall be
declared or paid on, nor shall the Corporation redeem, purchase or acquire any
shares of, the Common Stock or any other class or series of stock of the
Corporation unless the Redemption Price of all shares elected to be redeemed
shall have been paid in full. Until the Redemption Price for a share of Series B
Stock elected to be redeemed shall have been paid in full, such share of Series
B Stock shall remain outstanding for all purposes and entitle the holder thereof
to all the rights and privileges provided herein, including, without limitation,
that dividends and
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interest thereon shall continue to accrue and, if unpaid prior to the date such
shares are redeemed, shall be included as part of the Redemption Price as
provided in paragraph (c) above. Notwithstanding anything in this Section 7 to
the contrary, even if a notice of redemption was delivered under paragraph (a)
or (b) of this Section 7, all shares of Series B Stock shall be convertible
pursuant to Section 5 at all times prior to the Redemption Date.
8. Notices of Record Dates and Effective Dates. In case: (a) the
Corporation shall declare a dividend (or any other distribution) on the Common
Stock payable otherwise than in shares of Common Stock; or (b) the Corporation
shall authorize the granting to the holders of Common Stock of rights to
subscribe for or purchase any shares of capital stock of any class or any other
rights; or (c) of any reorganization, share exchange or reclassification of the
capital stock of the Corporation (other than a subdivision or combination of
outstanding shares of Common Stock), or of any consolidation or merger to which
the Corporation is party or of the sale, lease or exchange of all or
substantially all of the property of the Corporation; or (d) of the voluntary or
involuntary dissolution, liquidation or winding up of the Corporation; or (e) of
a Change of Control, then the Corporation shall cause to be mailed to the
recordholders of the Series B Stock at least 20 days prior to the applicable
record date or effective date hereinafter specified, a notice stating (i) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights, or, if a record is not to be taken, the date as of which
the holders of record of Common Stock to be entitled to such dividend,
distribution or rights are to be determined or (ii) the date on which such
reclassification, reorganization, share exchange, consolidation, merger, sale,
lease, exchange, dissolution, liquidation, winding up or Change of Control is
expected to become effective, and the date as of which it is expected that
holders of record of Common Stock shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, reorganization share exchange, consolidation, liquidation,
merger, sale, lease, exchange, dissolution, liquidation, winding up or Change of
Control.
9. Voting Rights.
(a) Holders of Series B Stock shall be entitled to notice of any
stockholder's meeting. Except as otherwise required by law or provided herein,
at any annual or special meeting of the Corporation's stockholders, or in
connection with any written consent in lieu of any such meeting, each
outstanding share of Series B Stock shall be entitled to the number of votes
equal to the number of full shares of Common Stock into which such share of
Series B Stock is then convertible. Except as otherwise required by law or
provided herein, the Series B Stock and the Common Stock shall vote together on
each matter submitted to stockholders, and not by class or series.
(b) Prior to the consummation of a Qualifying Offering by the
Corporation of its Common Stock pursuant to an effective registration statement
under the Securities Act of 1933, as
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amended, the holders of the Series B Stock, voting together as a class, shall be
entitled to elect one (1) director to the Corporation's Board of Directors.
Subsequent to such Qualifying Offering, the holders of a majority of the Common
Stock issuable upon conversion of the Series B Stock shall be entitled to
nominate one (1) director for election to the Corporation's Board of Directors
which the Corporation shall nominate to management's slate for election;
provided, however, that the right provided for in this last sentence of
subsection 9(b) shall be effective only for so long as at least 50% of the
shares of Common Stock issuable upon conversion of the Series B Stock originally
issued remain outstanding.
Notwithstanding the foregoing, upon an Event of Default and so long as
it shall continue, the holders of the Series B Stock, voting together as a
class, shall be entitled at any annual meeting of the stockholders or special
meeting held in place thereof, or at a special meeting of the holders of the
Series B Stock called as hereinafter provided, to elect a majority of the Board
of Directors and such right to elect a majority of the Board of Directors shall
be in lieu of the aforesaid right of the holders of Series B Stock to elect one
director. Such right of the holders of the Series B Stock to elect a majority of
the Board of Directors may be exercised until an Event of Default shall be
cured, if curable, or waived, and when so cured or waived, the right of the
holders of Series B Stock to elect such number of directors shall cease and
their right to elect one director shall resume, but subject always to the same
provisions for the vesting of such special voting rights in the case of any such
future Event of Default. At any time when such special voting rights shall have
so vested in the holders of Series B Stock, the Secretary of the Corporation
may, and upon the written request of the holders of 10% or more of the number of
shares of the Series B Stock then outstanding addressed to him at the principal
office of the Corporation, shall, call a special meeting of the holders of the
Series B Stock for the election of a majority of the Board of Directors to be
elected by them as provided herein, to be held in the case of such written
request as soon as practicable after delivery of such request, and in either
case to be held at the place and upon the notice provided by law and in the
by-laws for the holding of meetings of stockholders. If at any such annual or
special meeting or adjournment thereof the holders of at least a majority of the
Series B Stock then outstanding shall be present or represented at such meeting,
the then authorized number of directors of the Corporation shall be increased to
the extent necessary to provide a majority of new directors to be elected and
the holders of the Series B Stock shall be entitled to elect the additional
directors so provided for. The directors so elected shall serve until the next
annual meeting or until their successors shall be elected and qualified,
provided, however, that whenever the holders of the Preferred Stock shall be
divested of the special rights to elect a majority of the Board of Directors as
above provided, the term of office of the persons so elected as directors by the
holders of the Series B Stock as a class, or elected to fill any vacancies
resulting from the death, resignation or removal of the directors so elected by
the holders of Series B Stock, shall forthwith terminate and the authorized
number of directors shall be reduced accordingly.
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If during any interval between any special meeting of the holders of the
Series B Stock for the election of directors to be elected by them as provided
above and the next ensuing annual meeting of stockholders, or between annual
meetings of stockholders for the election of directors, and while the holders of
the Series B Stock shall be entitled to elect a majority of the Board of
Directors, the directors who have been elected by the holders of the Series B
Stock shall, by reason of resignation, death or removal, have departed from the
Board, (i) the vacancies with respect to the directors elected by the holders of
the Series B Stock may be filled by a majority vote of the remaining directors
then in office, although less than a quorum, and (ii) if such vacancy or
vacancies be not so filled within twenty (20) days after the creation thereof,
the Secretary of the Corporation shall call a special meeting of the holders of
the Series B Stock and such vacancy or vacancies shall be filled at such special
meeting.
No director elected by the holders of Series B Stock as a class, or
elected by other directors to fill a vacancy resulting from the death,
resignation or removal of a director elected by such class vote, may be removed
from office by the vote or written consent of stockholders unless such vote or
written consent includes that of the holders of a majority of the outstanding
shares of Series B Stock.
(c) In addition to any other vote or consent of stockholders provided by
law or by the Corporation's Certificate of Incorporation, the Corporation shall
not, without the approval by vote or written consent of the holders of not less
than 66_% of the then outstanding shares of Series B Stock:
(i) amend, waive or repeal any provisions of, or add any provision
to, (i) this Certificate of Designation or (ii) any provision of the
Corporation's Certificate of Incorporation or any other certificate of
designation filed with the Secretary of State of Delaware by the Corporation
with respect to its preferred stock;
(ii) amend, waive or repeal any provisions of, or add any provision
to, the Corporation's By-Laws;
(iii) authorize, create, issue or sell any shares of Equivalent
Stock or Superior Stock (other than Series A Stock); except as authorized in
this Certificate of Designation;
(iv) issue any shares of Series B Stock other than pursuant to the
Purchase Agreements (as hereinafter defined) or upon transfers of outstanding
shares of Series B Stock;
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(v) enter into any agreement, indenture or other instrument which
contains any provisions restricting the Corporation's obligation to pay
dividends on or make redemptions of the Series B Stock in accordance herewith;or
(vi) dissolve the Corporation.
"Assets" shall mean an interest in any kind of property or assets,
whether real, personal or mixed, or tangible or intangible.
"Equivalent Stock" shall mean any shares of any class or series of Stock
of the Corporation having any preference or priority as to dividends or Assets
on a parity with any such preference or priority of the Series B Stock and no
preference or priority as to dividends or Assets superior to any such preference
or priority of the Series B Stock and any instrument or Security convertible
into or exchangeable for Equivalent Stock. Without limiting the generality of
the foregoing, a dividend rate, mandatory or optional sinking fund payment
amounts or schedules or optional redemption provisions, the existence of a
conversion right or the existence of a liquidation preference of up to 100% of
the original issue price plus unpaid accrued dividends plus a premium of up to
the dividend rate or up to the percentage of the equity of the Corporation
represented by such Stock, with respect to any class or series of Stock,
differing from that of the Series B Stock, shall not prevent such class of Stock
from being Equivalent Stock.
"Securities" shall mean any debt or equity securities of the
Corporation, whether now or hereafter authorized, and any instrument convertible
into or exchangeable for Securities or Security. The term "Security" shall mean
one of the Securities.
"Stock" shall include any and all shares, interests or other equivalents
(however designated) of, or participations in, corporate stock.
"Superior Stock" shall mean any shares of any class or series of Stock
of the Corporation having any preference or priority as to dividends or Assets
superior to any such preference or priority of the Series B Stock and any
instrument or security convertible into or exchangeable for Superior Stock.
(d) Notwithstanding anything else contained herein, the affirmative vote
or written consent of each holder of the outstanding shares of Series B Stock
shall be necessary to amend, alter or repeal any of the provisions of the
Corporation's Certificate of Incorporation or the Certificate of Designation
creating this Series B Stock which would alter or change (i) the dividend rate,
(ii) redemption provisions, (iii) anti-dilution provisions, (iv) the place or
currency of payments hereunder, (v) the right to institute suit for the
enforcement of any payment hereunder, (vi) the
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conversion provisions, or (vii) provisions of this Section 9, so as to affect
any of the foregoing adversely.
10. Preemptive Rights.
(a) The Corporation shall not issue or sell any shares of Common
Stock, Preferred Stock or other securities convertible into or exchangeable for
shares of Common Stock, other than any such issuance or sale (i) pursuant to a
Qualifying Offering, (ii) pursuant to a stock option plan approved by the Board
of Directors, (iii) as a form of consideration in connection with mergers or
acquisitions where the Corporation is the surviving entity or (iv) where the
aggregate gross proceeds are less than $500,000 in any single transaction,
provided that the sale price per share is not less than the then applicable
conversion price and, provided further, that the aggregate gross proceeds of all
such transactions shall not exceed $1,500,000 (the securities issued in such
transactions being referred to as the "Newly Issued Securities"), unless prior
to the issuance or sale of such Newly Issued Securities each holder of Series B
Stock shall have been given the opportunity (such opportunity being herein
referred to as the "Preemptive Right") to purchase (on the same terms as such
Newly Issued Securities are proposed to be sold) the same proportion of such
Newly Issued Securities being issued or offered for sale by the Corporation as
(x) the number of shares of Common Stock (calculated solely on account of
outstanding shares of Series B Stock on an as converted basis) held by such
holder on the day preceding the date of the Preemptive Notice (as defined
herein), as the case may be, bears to (y) the total number of shares of Common
Stock (calculated on a fully diluted basis) outstanding on that day.
(b) Prior to the issuance or sale by the Corporation of any Newly
Issued Securities, the Corporation shall give written notice thereof (the
"Preemptive Notice") to each holder of Series B Stock. The Preemptive Notice
shall specify (i) the name and address of the bona fide investor to whom the
Corporation proposes to issue or sell Newly Issued Securities, (ii) the total
amount of capital to be raised by the Corporation pursuant to the issuance or
sale of Newly Issued Securities, (iii) the number of Securities of such Newly
Issued Securities proposed to be issued or sold, (iv) the price and other terms
of their proposed issuance or sale, (v) the number of such Newly Issued
Securities which such holder is entitled to purchase (determined as provided in
subsection (a) above), and (vi) the period during which such holder may elect to
purchase such Newly Issued Securities, which period shall extend for at least
thirty (30) days following the receipt by such holder of the Preemptive Notice
(the "Preemptive Acceptance Period"). Each holder of Series B Stock who desires
to purchase Newly Issued Securities shall notify the Corporation within the
Preemptive Acceptance Period of the number of Newly Issued Securities he wishes
to purchase, as well as the number, if any, of additional Newly Issued
Securities he would be willing to purchase in the event that all of the Newly
Issued Securities subject to the Preemptive Right are not subscribed for by the
other holders of Series B Stock.
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(c) In the event a holder of Series B Stock declines to subscribe
for all or any part of its pro rata portion of any Newly Issued Securities which
are subject to the Preemptive Right (the "Declining Preemptive Purchaser")
during the Preemptive Acceptance Period, then the other holders of Series B
Stock shall have the right to subscribe for all (or any declined part) of the
Declining Preemptive Purchaser's pro rata portion of such Newly Issued
Securities (to be divided among the other holders of Series B Stock desiring to
exercise such right on a ratable basis).
(d) Any such Newly Issued Securities which none of the holders elect
to purchase in accordance with the provisions of this Section 10, may be sold by
the Corporation, within a period of three (3) months after the expiration of the
Preemptive Acceptance Period, to any other person or persons at not less than
the price and upon other terms and conditions not less favorable to the
Corporation than those set forth in the Preemptive Notice.
11. Events of Default. An Event of Default shall mean any of the
following:
(i) Any failure by the Corporation to pay in cash any dividend,
if and when declared by the Board of Directors, on the payment due dates and in
the amounts provided pursuant to Section 3 hereof, if such failure shall
continue for any two quarterly periods;
(ii) Any failure by the Corporation to satisfy its redemption
obligations pursuant to Section 7 hereof if any such failure shall continue for
a period of five days from the appropriate redemption date;
(iii) Any failure by the Corporation to comply with the provisions
of Sections 4, 5, 6, 8, 9 or 10 hereof;
(iv) If any representation or warranty made by the Corporation in
the Stock Purchase Agreement dated as of November 13, 1996 or the exhibits or
schedules thereto (the "Purchase Agreements") is or shall be untrue in any
material respect at the time it was made, if such representation or warranty
remains untrue after 10 days' written notice, with such notice delivered by hand
or by first-class, certified or overnight mail, postage prepaid, or by
telecopier, from any holder of Series B Stock, unless waived in writing by
holders of not less than 66_% of the outstanding shares of Series B Stock;
(v) Any failure by the Corporation to comply with, or any breach
by the Corporation of, any of the covenants, agreements or obligations of the
Corporation contained in the Purchase Agreements which continues for a period of
10 days after written notice, with such notice delivered by hand or by
first-class, certified or overnight mail, postage prepaid, or by telecopier,
from any holder of Series B Stock, unless waived in writing by holders of not
less than 66_% of the outstanding shares of Series B Stock;
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(vi) Default by the Corporation in the performance or observance
of any obligation or condition with respect to any Indebtedness of the
Corporation that is not cured or waived within 90 days or if the effect of such
default is to accelerate the maturity of such Indebtedness or cause such
Indebtedness to be prepaid, purchased or redeemed or to permit the holder or
holders thereof, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity or to
cause such Indebtedness to be prepaid, purchased or redeemed or to realize upon
any collateral or security for such Indebtedness, unless such default shall have
been waived by the appropriate person. Indebtedness of any corporation shall
mean the principal of (and premium, if any) and unpaid interest on (i)
indebtedness which is for money borrowed from others; (ii) indebtedness
guaranteed, directly or indirectly, in any manner by such corporation, or in
effect guaranteed, directly or indirectly, by such corporation through an
agreement, contingent or otherwise, to supply funds to or in any manner invest
in the debtor or to purchase indebtedness, or to purchase assets or services
primarily for the purpose of enabling the debtor to make payment of the
indebtedness or of assuring the owner of the indebtedness against loss; (iii)
all indebtedness secured by any mortgage, lien, pledge, charge or other
encumbrance upon assets owned by such corporation, even if such corporation has
not in any manner become liable for the payment of such indebtedness;
(vii) All indebtedness of such corporation created or arising under
any conditional sale, lease or other title retention agreement with respect to
assets acquired by such corporation even though the rights and remedies of the
seller, lessor or lender under such agreement or lease in the event of default
are limited to repossession or sale of such assets and provided that obligations
for the payment of rent under a lease of premises from which the business of
such corporation will be conducted shall not constitute indebtedness; and (v)
renewals, extensions and refunding of any such indebtedness;
(viii) If the Corporation shall:
(a) become insolvent or generally fail to pay, or admit in
writing its inability to pay, its debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment
of a trustee, receiver, sequestrator or other custodian for the Corporation or
any property thereof, or make a general assignment for the benefit of creditors
(any of which shall be referred to herein as a "Receiver");
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a Receiver, and such
Receiver shall not be discharged within 60 calendar days;
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(d) commit any act of bankruptcy, permit or suffer to exist
the commencement of any bankruptcy reorganization, debt arrangement or other
case or proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding in respect of the Corporation, and, if any
such case or proceeding is not commenced by the Corporation, such case or
proceeding shall be consented to or acquiesced in by the Corporation, or shall
result in the entry of an order for relief and shall remain for 30 calendar days
undismissed; or
(e) take any corporate or other action authorizing, or in
furtherance of, any of the foregoing.
B. The recitals and resolutions contained herein have not been modified,
altered or amended and are presently in full force and effect.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
this 12th day of November, 1996.
PARK 'N VIEW, INC.
By:
----------------------------------
Name: Ian Williams
Title: Chief Executive Officer
Attest:
- ----------------------------
Anthony Allen
Secretary
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EXHIBIT B
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
PARK `N VIEW, INC.
(Pursuant to Section 242 of the General Corporation Law of the State of
Delaware)
It is hereby certified that:
1. The name of the corporation is Park `N View, Inc. (the
"Corporation") The Certificate of Incorporation of the Corporation was
originally filed with the Secretary of State of the State of Delaware on October
30, 1995.
2. The Board of Directors of the Corporation duly adopted a resolution
proposing and declaring it advisable that Section 1 of Article FOURTH of the
Certificate of Incorporation of the Corporation be amended in its entirety to
read as follows:
"Section 1. Authorized Capitalization. The aggregate number of
shares of stock which the Corporation shall have authority to issue is
nine million (9,000,000), of which seven million (7,000,000) shares
hall be common stock par value $.001 per share ("Common Stock"), and
two million (2,000,000) shares shall be preferred stock, par value $.01
per share ("Preferred Stock")."
3. This amendment to the Certificate of Incorporation was duly adopted
in accordance with the applicable provisions of Section 242 of the General
Corporation Law of Delaware.
4. This amendment to the Certificate of Incorporation shall be
effective on and as of the date of filing of this Certificate of Amendment with
the office of the Secretary of State of the State of Delaware.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed in its name by its President and attested to by its Secretary this 6th
day of November, 1996 and the statements contained herein are affirmed as true
under penalties of perjury.
PARK `N VIEW, INC.
By
--------------------------------------
Ian Williams, President
ATTEST:
By:
-----------------------------
Anthony Allen, Secretary
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EXHIBIT C
PARK `N VIEW, INC.
AMENDED CERTIFICATE OF DESIGNATION
RELATING TO THE SERIES A PREFERRED STOCK
WITH A PAR VALUE OF $.01 PER SHARE
OF PARK `N VIEW, INC.
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Park `N View, Inc., a Delaware corporation (the "Corporation"), hereby
certifies that pursuant to the authority contained in Article Fourth of the
Corporation's Certificate of Incorporation, and in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware (the "DGCL"), the following resolution was duly adopted by the Board of
Directors of the Corporation, amending a series of its Preferred Stock
designated as Series A Preferred Stock:
WHEREAS, the amendment of the designations herein certified has been
duly adopted by the Corporation's Board of Directors and Holders of the Series A
Preferred Stock in accordance with Section 242 of the DGCL;
RESOLVED, that there is hereby created and the Corporation be, and it
hereby is, authorized to issue 627,630 shares of a series of its Preferred Stock
designated Series A Preferred Stock (the "Series A Stock") to have the powers,
preferences and rights and the qualifications, limitations or restrictions
thereof hereinafter set forth in this resolution:
Preference. The preferences of each share of Series A Stock with respect
to distributions of the Corporation's assets upon voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation shall be equal to the
preferences of every other share of Series A Stock and Series B 7% Cumulative
Convertible Preferred Stock of the Corporation (the "Series B Stock") from time
to time outstanding in every respect and prior in right to such preferences of
all other equity Securities of the Corporation, whether now or hereafter
authorized.
Voting Rights. Upon the failure of the Corporation to redeem the Series
A Stock in accordance with Section 5(a) hereof, except as otherwise expressly
provided herein, in the
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Certificate of Incorporation or the By-laws of the corporation or by law, the
Holders of Series A Stock, by virtue of their ownership thereof, shall be
entitled to one vote for each share of Series A Stock and shall be entitled to
vote as a separate class only in respect of any merger, consolidation, sale of
assets or creation of any class or series, other than Series B Stock, equal to
or superior to the Series A Stock. The Holders of at least 66.6% of the shares
of the then outstanding Series A Stock voting as a separate class shall be
entitled to elect two members of the Board of Directors.
3. Liquidation Rights. If the Corporation shall be voluntarily or
involuntarily liquidated, dissolved or wound up, at any time when any Series A
Stock shall be outstanding, each then outstanding share of Series A Stock shall
entitle the Holder thereof to a preference against the Assets of the corporation
available for distribution to the Holders of the Corporation's equity securities
equal to the Series A Stock Value plus an amount equal to all unpaid dividends
(including, without limitation, all accrued and unpaid interest thereon and the
Deferred Dividends, calculated in accordance with Section 4(B) hereof) accrued
on such share to the date of payment. If, upon any such liquidation, dissolution
or winding-up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributed among the Holders of Series A Stock shall be insufficient
to pay in full the aggregate preferential amounts on all of the then outstanding
shares of the Series A Stock, then such assets, or the proceeds thereof, shall
be distributed among such Holders equally and ratably in proportion to the full
liquidation preferences to which each such Holder is entitled. After such
payment shall have been made in full to the Holders of the outstanding Series A
Stock, or funds necessary for such payment shall have been set aside in trust
for the account of the Holders of Series A Stock so as to be, and continue to
be, available therefor, the Holders of Series A Stock shall be entitled to no
further participation in such distribution of assets of the Corporation.
All of the preferential amounts to be paid to the Holders of Series A
Stock as provided in this Section 3 shall be paid or set apart for payment
before the payment or setting apart for payment of any amount for, or the
distribution of any Assets of the Corporation to, the Holders of any other
equity securities of the Corporation (other than the Series B Stock which shall
rank pari passu with the Series A Stock), whether now or hereafter authorized,
in connection with such liquidation, dissolution or winding up.
4. Dividends.
(a) Accrual of Dividends. Commencing with the first anniversary of
the Initial Closing pursuant to and as defined in the Purchase Agreements, the
Holders of Series A Stock shall be entitled to receive, when and as declared by
the Board of Directors out of funds legally available therefor, cumulative
dividends payable quarterly on March 15, June 15, September 15 and December 15
of each year (each of such date being a "Dividend Payment
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Date") in cash or in kind at a rate of 7% per annum, computed on the basis of
the Series A Stock Value. Such dividends shall be Series A Stock with respect to
each share of Series A Stock, from the later of the first anniversary of the
Initial Closing pursuant to and as defined in the Purchase Agreements and the
date of issuance of such share, and shall accrue until paid, whether or not
earned, whether or not declared by the Board and whether or not there are funds
legally available therefor on the date such dividends are payable. Dividends not
declared and paid in cash on any Dividend Payment Date has paid in kind shall
accrue dividends thereon at the rate of 7% per annum until such dividends are
declared and paid in full in cash.
(b) Payment of Dividends. Dividends shall be payable at the
Corporation's option in cash or in kind to each Holder of Series A Stock in
quarterly installments on March 31, June 30, September 30, and December 31, in
each year commencing on March 31, 1996 (each a "Regular Dividend Payment Date"),
as declared by the Board out of funds legally available therefor. Dividends paid
in cash on the shares of Series A Stock (or Series B Stock which shall rank pari
passu with the Series A Stock) in an amount less than the total amount of such
dividends shall be allocated pro rata so that the total value of dividends paid
on the Series A Stock and Series B Stock shall in all cases bear to each other
the same ratio that the total value of accrued and unpaid dividends on the
Series A Stock and Series B Stock bear to each other. The Board may fix a record
date for the determination of a dividend or distribution declared thereon, which
record date shall not be more than 30 days prior to the date fixed for the
payment thereof.
(c) Limitation on Certain Distributions. Without the written consent of
the Holders of at least 66.6% of the then outstanding Series A Stock, the
Corporation shall not declare or pay any cash dividend on, or redeem or
repurchase or make any other cash distribution in respect of any other equity
Securities of the Corporation, unless at the time of such declaration, payment
or distribution the Corporation shall have paid all dividends on the Series A
Stock accrued through the most recent Regular Dividend Payment Date preceding
the date of such payment or distribution.
5. Redemption.
(a) Mandatory Redemption. On each of November 13, 2002 and November 13,
2003 (each such anniversary date being referred to herein as the "Anniversary
Redemption Date") the Corporation shall redeem one half (50%) of the number of
shares of Series A Stock originally issued hereunder (or such lesser amount as
shall then be outstanding) at the "Redemption Price" per share defined in
paragraph (e) below, payable in each case in cash on the Anniversary Redemption
Date.
(b) Redemption Upon an Initial Public Offering. Upon the consummation of
a Qualifying Offering (as defined below) (the date of such consummation being
referred to
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herein as a "Qualifying Offering Redemption Date"), upon not less than ten (10)
days prior written notice by the Corporation of the anticipated consummation of
such offering, each share of Series B Stock shall be redeemed for cash at the
Redemption Price. A "Qualifying Offering" means (i) the Corporation shall have
consummated a firm commitment underwritten public offering of its Common Stock
by a nationally recognized investment banking firm pursuant to an effective
registration under the Securities Act covering the offering and sale of both
primary and secondary shares of Common Stock which results in gross proceeds of
at least $20,000,000, (ii) the Common Stock is listed on either NASDAQ, the New
York Stock Exchange or the American Stock Exchange, and (iii) the price at which
the Common Stock is sold in such offering is at least equal to an amount which
(x) is 200% of the Redemption Price or (y) would represent a compound annual
rate of return of 35% based upon the original issuance price of the Series B
Stock.
(c) Redemption on Change of Control. Upon a "Change of Control" of the
Corporation, each holder of the then outstanding shares of Series A Stock may
elect to have the Corporation redeem all (but not less than all) outstanding
shares of Series A Stock owned by such holder at the Redemption Price per share,
payable in cash on any date within 100 days of the effective date of the Change
of Control (such date being herein referred to as the "Change of Control
Redemption Date"). The election shall be made by delivering written notice to
the Corporation at least thirty (30) but no more than sixty (60) days prior to
the Change of Control Redemption Date. The Corporation will then be required to
redeem all the shares of Series A Stock owned by such holder on the Change of
Control Redemption Date. For purposes of this Section, "Change of Control" means
any one or more of the following events:
(i) The Corporation shall consolidate with or merge into any
another person or any person shall consolidate with or merge into the
Corporation (other than a consolidation or merger of the Corporation and a
wholly-owned subsidiary of the Corporation in which all shares of the
Corporation's Common Stock outstanding immediately prior to the effectiveness
thereof are changed into or exchanged for the same consideration), in either
event pursuant to a transaction in which any of the Corporation's common stock
outstanding immediately prior to the effectiveness thereof is changed into or
exchanged for cash, securities or other property; or
(ii) the Corporation shall directly or indirectly convey, transfer
or lease, in one transaction or a series of transactions, all or substantially
all of its assets to any person or "group" (within the meaning of Section 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934 (the "1934 Act") (other than
to a wholly-owned subsidiary of the Corporation); or
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(iii) there shall be a reorganization, share exchange, or
reclassification, other than a change in par value, or from par value to no par
value, or from no par value to par value; or
(iv) any person (other than the Corporation, any subsidiary of the
Corporation or an Existing Investor, including a "group" (within the meaning of
Section 13(d) and 14(D)(2) of the 1934 Act) that includes such person), shall
purchase or otherwise acquire, directly or indirectly, beneficial ownership of
securities of the Corporation and, as a result of such purchase or acquisition,
such person (together with its associates and affiliates) shall directly or
indirectly beneficially own in the aggregate (1) more than 50% of the Common
Stock, or (2) securities representing more than 50% of the combined voting power
of the Corporation's voting securities, in each case under subclause (1) or (2),
outstanding on the date immediately prior to the date of such purchase or
acquisition (or, if there be more than one, the last such purchase or
acquisition).
(b) Optional Redemption.
(i) Intentionally omitted.
(ii) The Corporation shall have the option of redeeming shares of
Series A Stock at any time after the date of issuance of such Series A Stock at
a redemption price per share equal to the Series A Stock Value plus an amount
equal to all unpaid dividends (and interest thereon) accrued thereon to the date
of redemption.
(c) Redemption Price. The Redemption Price per share of Series A Stock
shall equal $10.00 plus all accrued and unpaid dividends (and interest thereon)
on such share of Series A Stock to the Anniversary Redemption Date, Qualifying
Offering Redemption Date or Change of Control Redemption Date, as the case may
be.
(d) Procedure. The term "Redemption Date" as used in this paragraph (f)
shall refer to whichever of the Anniversary Redemption Date, Qualifying Offering
Redemption Date or Change of Control Redemption Date is applicable in a
particular circumstance. On or prior to the Redemption Date, the Corporation
shall deposit the Redemption Price of all outstanding shares of Series A Stock
to be redeemed with a bank or trust corporation having aggregate capital and
surplus in excess of $100,000,000 as a trust fund for the benefit of the holders
of the shares of Series A Stock, with irrevocable instructions and authority to
the bank or trust corporation to pay the Redemption Price for such shares to
their respective holders on or after the Redemption Date upon receipt of the
certificate or certificates of the shares of Series A Stock to be redeemed. From
and after the Redemption Date, unless there shall have been a default in payment
of the Redemption Price, all rights of the holders of shares of Series A Stock
as holders of Series A Stock (except the right to receive the Redemption Price
upon surrender of their certificate or certificates) shall cease as to those
shares of Series A Stock redeemed, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever. If on the Redemption Date the funds of the Corporation
legally available for redemption of shares of Series A Stock (or Series B Stock
which shall rank pari passu with the Series
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A Stock) are insufficient to redeem the total number of shares of Series A Stock
or Series B Stock to be redeemed on such date, the Corporation will use those
funds which are legally available therefor to redeem the maximum possible number
of shares of Series A Stock and Series B Stock ratably among the holders of such
shares to be redeemed based upon their holdings of Series A Stock and Series B
Stock. Payments shall first be applied against accrued and unpaid dividends and
thereafter against the remainder of the Redemption Price. The shares of Series A
Stock not redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of shares of Series A Stock
such funds will immediately be used to redeem the balance of the shares of
Series A Stock to be redeemed. No dividends or other distributions shall be
declared or paid on, nor shall the Corporation redeem, purchase or acquire any
shares of, the Common Stock or any other class or series of stock of the
Corporation (other than the Series B Stock which shall rank pari passu with the
Series A Stock) unless the Redemption Price of all shares elected to be redeemed
shall have been paid in full. Until the Redemption Price for a share of Series A
Stock elected to be redeemed shall have been paid in full, such share of Series
A Stock shall remain outstanding for all purposes and entitle the holder thereof
to all the rights and privileges provided herein, including, without limitation,
that dividends (and interest thereon) shall continue to accrue and, if unpaid
prior to the date such shares are redeemed, shall be included as part of the
Redemption Price as provided in paragraph (e) above.
6. Protective Provisions. So long as any shares of Series A Stock shall be
outstanding, the Corporation shall not, without the approval by the vote or
written consent of the Holders of at least 66.6% (or more if required by law) of
the then outstanding shares of Series A Stock:
(a) Amend, waive or repeal any provisions of, or add any provision to,
(i) this Certificate of Designation or (ii) any provision of the Corporation's
Certificate of Incorporation or any other certificate of designation filed with
the Secretary of State of Delaware by the Corporation with respect to its
preferred stock;
(b) Amend, waive or repeal any provisions of, or add any provision to,
the Corporations By-Laws;
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(c) Authorize, create, issue or sell any shares of Equivalent Stock or
Superior Stock (other than Series B Stock); except as authorized in this
Certificate of Designation;
(d) Issue any shares of Series A Stock other than pursuant to the
Purchase Agreements or upon transfers of outstanding shares of Series A Stock;
(e) Enter into any agreement, indenture or other instrument which
contains any provisions restricting the Corporation's obligation to pay
dividends on or make redemptions of the Series A Stock in accordance with
Sections 4 and 5 hereof;
(f) Dissolve the Corporation.
7. Definitions. As used in this Certificate of Designation, the following
terms have the following meanings:
"Affiliate" shall mean any entity controlling, controlled by or under
common control with another entity. For the purposes of this definition,
"control" shall have the meaning presently specified for that word in Rule 405
promulgated by the Securities and Exchange Commission under the Securities Act.
"Assets" shall mean an interest in any kind of property or assets, whether
real, personal or mixed, or tangible or intangible.
"Board" shall mean the Board of Directors of the Corporation.
"Common Stock" shall mean the Corporation's Common Stock, par value $.001
per share, and any stock into which such stock may hereafter be changed.
"Equivalent Stock" shall mean any shares of any class or series of Stock of
the Corporation having any preference or priority as to dividends or Assets on a
parity with any such preference or priority of the Series A Stock and no
preference or priority as to dividends or Assets superior to any such preference
or priority of the Series A Stock and any instrument or Security convertible
into or exchangeable for Equivalent Stock. Without limiting the generality of
the foregoing, a dividend rate, mandatory or optional sinking fund payment
amounts or schedules or optional redemption provisions, the existence of a
conversion right or the existence of a liquidation preference of up to 100% of
the original issue price plus unpaid accrued dividends plus a premium of up to
the dividend rate or up to the percentage of the equity of the Corporation
represented by such Stock, with respect to any class or series of Stock,
differing from that of the Series A Stock, shall not prevent such class of Stock
from being Equivalent Stock.
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"Existing Investors" shall mean Ian Williams, Nelgo Investments, Samuel
Hashman, MPN Partners, Ltd., Park 'N View General Partner, Inc. and the
Investors (as defined in the Purchase Agreements).
"Holders" shall mean the Persons who shall, from time to time, own of
record, or beneficially, any Security. The term "Holder" shall mean one of the
Holders. "Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government organization or an agency
or political subdivision thereof.
"Purchase Agreements" shall mean those certain purchase agreements, dated
as of October 31, 1995, between the Corporation and each of the Investors, as
defined therein, providing for the purchase and sale of Subordinated Notes,
Series A Stock and Common Stock.
"Securities" shall mean any debt or equity securities of the Corporation,
whether now or hereafter authorized, and any instrument convertible into or
exchangeable for Securities or a Security. The term "Security" shall mean one of
the Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended prior to
or after the date hereof, or any federal statute or statutes which shall be
enacted to take the place of such Act together with all rules and regulations
promulgated thereunder.
"Securities and Exchange Commission" shall mean the United States
Securities and Exchange Commission or any successor to the functions of such
agency.
"Series A Stock Value" shall mean $10.00 per share of Series A Stock.
"Stock" shall include any and all shares, interests or other equivalents
(however designated) of, or participations in, corporate stock.
"Subordinated Notes" shall mean the $1,000 subordinated promissory with an
8% coupon purchasable pursuant to the Purchase Agreements.
"Superior Stock" shall mean any shares of any class or series of Stock of
the Corporation having any preference or priority as to dividends or Asset
superior to any such preference or priority of the Series A Stock and any
instrument or security convertible into or exchangeable for Superior Stock.
IN WITNESS WHEREOF, Park `N View, Inc. has caused this Amended Certificate
to be duly executed this 12th day of November, 1996.
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PARK `N VIEW, INC.
By:
---------------------------------------
Name: Ian Williams
Title: President
Attest:
---------------------------
Anthony Allen, Secretary
EXHIBIT D
SECURITIES RESTRICTION AGREEMENT
SECURITIES RESTRICTION AGREEMENT ("Agreement") dated as of November 13,
1996, by and among PARK 'N VIEW, INC. a Delaware corporation (the "Company"),
the Existing Investors set forth on Exhibit A attached hereto and made a part
hereof (the "Existing Investors") and the Investors set forth on Exhibit B
attached hereto and made a part hereof (the "Investors"). The Existing Investors
and the Investors are referred to herein collectively as the "Securityholders"
and each individually as a "Securityholder."
Definitions. Terms initially capitalized but not otherwise defined
herein shall have the meanings given such terms in the Securities Purchase
Agreement (as hereinafter defined), except for the following:
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"Qualified Sale" means a Sale or exchange of the Securities for cash or
other securities which is (a) approved by at least (x) 70% of the directors and
(y) two of the directors designated by the holders of the Preferred Stock and
(b) the stated consideration is at least equal to an amount which (i) would
represent, on an as converted basis, a compound annual rate of return of 35% to
the Investors based upon the original issuance price of the Series B Stock, or
(ii) is 200% of the then conversion price of the Series B Stock.
"Original Investors" shall mean Ian Williams, Nelgo Investments, Samuel
Hashman, MPN Partners, Ltd. and Park 'N View General Partner, Inc.
"Patricof Investors" shall mean the Existing Investors other than the
Original Investors.
"Prospective Purchase" shall mean any person to whom a holder shall
desire to sell shares of Common Stock and who shall be identified by such
Securityholder to the Company and the Holders of Securities under the terms of
Section 1 hereof.
"Sale" means (a) the consolidation or merger of the Company into or
with any corporation or corporations (other than a merger with another
corporation in which the Company is the surviving corporation and which does not
result in any reclassification or change of outstanding shares of the Company's
Stock of any class or series, whether now or hereafter authorized, other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), (b) the sale, lease
or transfer by the Company of all or substantially all of its assets, (c) the
capital reorganization of the Company or (d) a reclassification or change of
outstanding shares of the Company's Common Stock.
"Securities" shall mean at any time, the shares of then outstanding
Common Stock and Series B Stock; provided, however, that Securities shall not be
deemed to include any shares of Common Stock sold pursuant to an effective
registration or any shares sold without registration under the Securities Act in
compliance with Rule 144, or pursuant to any other exemption from registration
under the Securities Act to a person who is free to resell such shares without
registration under the Securities Act, and provided, further, that at any time
subsequent to the closing of an initial public offering, Securities shall not
include any shares which are eligible to be sold without registration under the
Securities Act in compliance with subsection (k) of Rule 144.
"Securities Purchase Agreement" shall mean that certain Stock Purchase
Agreement, dated as of the date hereof, by and between the Company and each of
the Investors.
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1. Right of Co-Sale
(A) Right of Co-Sale. (1) Prior to a Qualifying Offering and for so
long as the Investors and their Affiliates own 50% or more of the Securities
purchased pursuant to the Securities Purchase Agreement, in the event that an
Existing Investor desires to sell any or all of the shares of Common Stock
(excluding shares of Common Stock issuable upon conversion of Series B Stock)
owned by such Securityholder and receives a bona fide offer therefor (the
"Selling Securityholder"), such Selling Securityholder shall so notify the
Investors in writing. The notice to the Investors shall be delivered by hand, or
by first-class, certified or overnight mail or courier, postage prepaid, or by
telecopier (with telephonic confirmation of receipt), to their respective
addresses as shown on the books of the Company, which addresses shall be
provided to the Selling Securityholder by the Company. Each notice shall set
forth the identity and mailing address of the prospective purchaser
("Prospective Purchaser"), the quantity and description of the Common Stock
proposed to be sold, the price per share to be received therefor, the number of
shares which may be sold by each Investor as determined in accordance herewith
and the address of the Selling Securityholder to which the Investors may send
notices to such Selling Securityholder required hereunder.
Such notice shall state the maximum number of shares of Common Stock
which may be sold to the Prospective Purchaser by each Investor as determined in
accordance herewith. Each Investor shall thereupon be entitled for a period of
20 days after the date of such notice to offer to sell to the Prospective
Purchaser, for such price and upon such terms, the proportion (rounded to the
nearest whole share) of the number of shares of Common Stock proposed to be sold
as such Holder's aggregate holding of Securities then bears to the aggregate
amount of Securities then held by all Investors exercising their rights of
co-sale under this subsection (A). The rights granted to the Investors in this
subsection (A) may be exercised in whole or in part and shall be exercised by
the tender, conditioned upon receipt of the consideration for the Common Stock
sold hereunder of the maximum number of shares of Common Stock (or Series B
Stock convertible into such number of shares of Common Stock) the Holder thereof
desires to sell, endorsed and in transferable form, free and clear of liens,
claims, security interests and other encumbrances, to the Company, which shall
act as agent for purposes of such sale. On the first business day following the
date 20 days following the date of the first notice given to the Investors, the
Company shall notify the Selling Securityholder, the Investors, and the
Prospective Purchaser of the amount of Securities to be sold under this
subsection (A), the price to be paid for any shares of Common Stock and the
price therefor. In such notice to the Prospective Purchaser, the Company shall
direct the Prospective Purchaser to furnish to the Company, as agent, within 10
days of the date of such notice, the price of such tendered shares of Common
Stock in the form of an official bank or certified check or checks in specified
amounts. Promptly upon receipt of such check or checks, the Company shall (i)
transmit each check (duly endorsed, if necessary) to the respective tendering
Holder or Holder of Securities (ii) transfer the shares so
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purchased on the books of the Company into the name of the purchaser thereof,
(iii) transmit certificates for such shares to the Prospective Purchaser thereof
by first class or certified mail, (iv) transmit tendered shares not so purchased
to the Holder thereof by first class or certified mail, (v) notify the Investors
in writing, delivered by hand or by first-class, certified or overnight mail,
postage prepaid, or by telecopier, of such sale within 5 days following the
completion thereof. In the event that, as to any shares of Common Stock duly
tendered and eligible for sale under this subsection (A) is not received from
the Prospective Purchaser within the aforesaid 10-day period, the Company shall
promptly (i) return to the Investors all the shares of Common Stock tendered by
such Investors, delivered by hand or by first class, certified or overnight
mail, postage prepaid, and (ii) notifying the Selling Securityholder of the
return of such shares of Common Stock. Any shares of Common Stock tendered by an
Investor as aforesaid received by the Company more than 20 days following the
date of the first notice given to the Investors pursuant to this subsection (A)
shall be ineligible for sale in accordance with such notice and the Company
shall promptly return such shares of Common Stock to the tendering Holder,
delivered by hand or by first class, certified or overnight mail. The balance of
the number of shares of Common Stock to be sold to the Prospective Purchaser,
after deduction of the number of shares of Common Stock properly tendered, if
any, by one or more Investors in accordance herewith, except in the event of a
public offering, merger, consolidation, or exchange of securities of the Company
approved by the stockholders of the Company, may be sold by the Selling
Securityholder to the Prospective Purchaser, at a price and upon the terms set
forth in the first notice given to the Investors pursuant to this subsection
(A), not less than 20 days nor more than 60 days following the expiration of the
20-day period during which Investors have timely paid the purchase price for all
shares properly tendered by such Holders and eligible for sale under this
subsection (A).
(B) Transfers to Affiliates. Notwithstanding anything in this Section 1
to the contrary, each of the Patricof Investors may from time to time transfer
all or part of such record owner's Common Stock (i) to a nominee identified in
writing to the Company as being the nominee of or for such record owner, and any
nominee of or for a beneficial owner of Common Stock identified in writing to
the Company as being the nominee of or for such beneficial owner may from time
to time transfer all or part of the Common Stock held in the name of such
nominee but held as nominee on behalf of such Securityholder, to such
Securityholder, (ii) to an Affiliate of such Securityholder, or (iii) if such
Securityholder is a partnership or the nominee of a partnership, to a partner,
retired partner, or estate of a partner or retired partner, of such partnership,
so long as such transfer is in accordance with the transferee's interest in such
partnership and is without consideration; provided, however, that each such
transferee shall remain subject to all restrictions on the transfer of
Securities herein contained.
(C) De Minimis Transfers. Notwithstanding anything in this Section 1 to
the contrary, each of the Original Investors may transfer in the aggregate up to
50,000 shares of
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Common Stock owned by him or it free of the restrictions set forth in subsection
(A) of this Section 1.
(D) Termination of Provisions of this Section 1. The rights granted and
obligations imposed in this Section 1 shall terminate on the first date on which
shares of Common Stock are sold in a Qualifying Offering or the date of
consummation of Sale.
(E) Remedies. In the event that any Existing Investor should sell any
Securities in contravention of the participation rights of the Investors under
this Section 1 (a "Prohibited Transfer"), the Investors may, upon the
determination of holders of 66 2/3% in interest of the Securities held by such
Investors, proceed to protect and enforce their rights by suit in equity or by
action at law, whether for the specific performance of any term contained in
this Agreement or for an injunction against the breach of any such term or in
furtherance of the exercise of any power granted in this Section 1, or to
enforce any other legal or equitable right of the Investor or to take one or
more of such actions. In addition to any other remedy at law or in equity
available to the Investors, the Investors shall have the option to sell to such
Existing Investor a number of shares of Securities equal to the number of shares
of Securities sold by the Existing Investor in contravention of such rights on
the following terms and conditions:
(a) The price per share at which the shares are to be sold to such
Existing Investor shall be equal to the price per share paid to such Existing
Investor by the third party purchaser or purchasers of such Existing Investor's
Securities;
(b) The Investors shall deliver to such Existing Investor, within
ninety (90) days after it has received notice from such Existing Investor or
otherwise became aware of the Prohibited Transfer, the certificate or
certificates representing shares to be sold, each certificate to be properly
endorsed for transfer; and
(c) Such Existing Investor shall, upon receipt of the certificates
for the repurchased shares, pay the aggregate purchase price therefor, by
certified check or bank draft made payable to the order of the Investor and
shall reimburse the investor for any additional expenses, including legal fees
and expenses, incurred in effecting such purchase and resale.
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1. Sale of the Company-Obligation to Sell. Upon a Qualified Sale, each
Securityholder shall sell, exchange or otherwise transfer his, her of its
Securities in accordance with the terms and conditions of the Qualified Sale.
Each Securityholder shall execute such documents and perform such acts,
including, without limitation, voting his, her or its Securities, as may be
reasonably necessary to consummate the Qualified Sale including a transfer of
his, her or its Securities; provided, however, that no Securityholder who is not
an officer or director of the Company shall be required to make any
representations or warranties in any such document, other than with respect to
the status of such Securityholder's title to his, her or its shares of Common
Stock and whether or not he, she or it is an accredited investor (as that term
is defined in Rule 501 promulgated by the Securities and Exchange Commission
under the Securities Act).
2. Legend. All certificates representing shares of Common Stock of the
Company which are subject to Section 1(A) hereof shall bear a legend in
substantially the following form:
"This certificate and the shares represented hereby may not be sold,
assigned, bequeathed, transferred (including by will or pursuant to the laws of
descent and distribution or otherwise), pledged, encumbered or otherwise
disposed of or be made the subject of a security interest except as provided in
that certain Securities Restriction Agreement dated as of November 13, 1996."
3. Miscellaneous.
(A) Amendments. This Agreement may not be altered, amended or
supplemented except in a written instrument executed by (i) the Company, (ii)
Securityholders owning a majority of the Common Stock, (iii) Securityholders
owning a majority of the Series A Stock and (iv) Securityholders owning 66_% of
the Series B Stock.
(B) Successors and Assigns. The rights and benefits of this
Agreement shall inure to the benefit of, and be enforceable by, the successors
and assigns of the Company and the Investors. The rights and obligations of the
Securityholders under this Agreement may only be assigned with the prior written
consent of the Company and the Holders of at least a majority of each class of
the then outstanding Securities, other than an assignment permitted under
Section 1(B) which shall not require any consent hereunder. This Agreement shall
be binding upon the Company and its successors and assigns and each
Securityholder and his heirs, personal representatives, successors and permitted
assigns.
(C) Further Execution. The parties hereto agree to execute any
additional documents or instruments necessary to carry out the purposes of this
Agreement.
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(D) Governing Law. The validity, meaning and effect of this
Agreement shall be determined in accordance with the domestic laws of the State
of New York applicable to contracts made and to be performed in that state
without giving any effect to any choice or conflict of law provision or rule
(whether in the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
(E) Headings. The headings herein are solely for the convenience of
the parties and shall not serve to modify or interpret the text of the Sections
at the beginning of which they appear.
(F) Severability. In the event that any court or any governmental
authority or agency declares all or any part of any Section of this Agreement to
be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any other Section of this Agreement, and in the event that only a
portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
(G) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original but all of which shall together
constitute one and the same document.
(H) Entire Agreement. This Agreement constitutes the entire
agreement by and among the parties hereto with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first set forth above.
ATTEST: PARK 'N VIEW, INC.
By:
-------------------------------
Existing Investors whose signatures
appear on Exhibit A hereto, and the Investors whose signatures appear on Exhibit
B hereto
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<PAGE> 108
EXHIBIT A
Park 'N View General Partner, Inc.
By:
-----------------------------------------
Name:
Title:
--------------------------------------------
Ian Williams
--------------------------------------------
Sam Hashman
--------------------------------------------
MPN Partners
Nelgo Investments
By:
-----------------------------------------
Name:
Title:
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<PAGE> 109
EXHIBIT A
(continued)
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By:
---------------------------
Name:
Title:
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/ OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR
By:
----------------------------------
Name:
Title:
THE PA FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By:
----------------------------------
Name:
Title:
- -----------------------------
Michael Willner
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<PAGE> 110
EXHIBIT B
STATE OF MICHIGAN RETIREMENT SYSTEM
By:
----------------------------------
Name:
Title:
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No. VCA-GA-5298
By:
----------------------------------
Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK -1(A) Investment Fund
By:
----------------------------------
Name:
Title:
CREDIT SUISSE (GUERNSEY) LIMITED as Trustee
of Dynamic Growth Fund II
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
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<PAGE> 111
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.(Its General Partner)
By:
-------------------------------
Name:
Title:
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By:
----------------------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By:
-------------------------------
Name:
Title:
- ----------------------
Michael Willner
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<PAGE> 112
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
November 13, 1996, by and among PARK 'N VIEW, INC. a Delaware corporation (the
"Company"), the Patricof Investors set forth on Exhibit A attached hereto and
made a part hereof (the "Patricof Investors") and the New Investors set forth on
Exhibit B attached hereto and made a part hereof (the "New Investors"; together
with the Patricof Investors, the "Investors").
WHEREAS, the New Investors and the Company have entered into
that certain Stock Purchase Agreement, dated as of the date hereof (the
"Purchase Agreement"), whereby the New Investors have purchased 1,372,370 shares
of Series B 7% Cumulative Convertible Preferred Stock, par value $.01 per share
(the "Series B Stock").
WHEREAS, the Company desires to (a) amend the registration
rights previously granted to the Patricof Investors with respect to the Common
Stock held thereby and (b) grant registration rights to the New Investors with
respect to (i) the Series B Stock to be issued to the New Investors pursuant to
the Purchase Agreement and that certain Amended Securityholders' Agreement and
Exchange Agreement, dated as of the date hereof, by and among the Company, the
Existing Investors (as defined in the Purchase Agreement) and the New Investors,
and (ii) the shares of Common Stock into which the Series B Stock is
convertible.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and conditions contained herein and of other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. All terms not defined below shall have the
meaning set forth in the Purchase Agreement.
"Commission" means the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"Company Covered Persons" shall have the meaning set forth in
Section 4.2 hereof.
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"Damages" shall have the meaning set forth in Section 4.1
hereof.
"Demand Registration" means a Demand Registration as defined in
Section 2.1.
"Holder" means any person who now holds or shall hereafter
acquire and hold Registrable Securities.
"Holder Covered Persons" shall have the meaning set forth in
Section 4.1 hereof.
"Indemnified Party" shall have the meaning set forth in Section
4.3 hereof.
"Indemnifying Party" shall have the meaning set forth in
Section 4.3 hereof.
"Inspectors" shall have the meaning set forth in Section 3.1(h)
hereof.
"Minimum Offering Price" shall have the meaning set forth in
Section 2.1(a) hereof.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Notices" shall have the meaning set forth in Section 6.4
hereof.
"Original Investors" shall mean Ian Williams, Nelgo
Investments, Sam Hashman, MPN Partners, Ltd. and Park 'N View General Partner,
Inc.
"Piggy-Back Registration" means a Piggy-Back Registration as
defined in Section 2.2.
"Priority Registration" shall mean one Demand Registration
pursuant to Section 2.1(a) hereof as to which the Original Investors shall not
be entitled to exercise any registration rights they may have except in
accordance with Section 2.1(d) hereof.
"Records" shall have the meaning set forth in Section 3.1(h)
hereof.
"Registrable Securities" means (a) the shares of Common Stock
into which the Series B Stock is convertible, (b) any additional shares of
Common Stock acquired by the Holders by way of a dividend, stock split or other
distribution in respect of the Series B Stock and (c) any shares of Common Stock
currently held or hereafter acquired by any Patricof Investor. As to any
particular Registrable Securities, such securities shall cease to be Registrable
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Securities at such time as (i) a registration statement with respect to the sale
of such securities has been declared effective by the Commission and such
securities have been disposed of pursuant to such effective registration
statement, (ii) such securities have been distributed to the public pursuant to
the provisions of Rule 144, or (iii) such securities have ceased to be
outstanding.
"Registration Expenses" shall have the meaning set forth in
Section 3.2.
"Restricted Stock" means the Stock which may at the time be
sold pursuant to Rule 144(k) under the Securities Act or which may be otherwise
sold without registration under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Holder" means an Investor who is selling Registrable
Securities pursuant to a registration statement under the Securities Act.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
"Withdrawal Election" shall have the meaning set forth in
Section 2.3(c) hereof.
ARTICLE 2
REGISTRATION RIGHTS
SECTION 2.1 Demand Registration. (a) Request for Registration.
At any time and from time to time after January 1, 1999, Holders of the lesser
of (i) at least 25% of the Registrable Securities or (ii) Registrable Securities
having a minimum anticipated aggregate offering price of $7,500,000 (the
"Minimum Offering Price") may make written requests on the Company for the
registration of the Registrable Securities under the Securities Act, such
requests hereinafter referred to as a Demand Registration ("Demand
Registration"). Subject to the penultimate sentence of Section 2.1(b), the
Company be obligated to file at least three (3) registration statements under
the Securities Act with respect to Demand Registrations, one of which may be a
Priority Registration (as described in subsection (d) below); provided, however,
that if the Registrable Securities may be registered on Form S-3 (or any
successor form with similar "short form" disclosure requirements), the Investors
shall have the right to request registration of their shares on Form S-3, or
such successor form, without limit on the aggregate
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number of such registrations, once per year without regard to the Minimum
Offering Price. Any such request will specify the number of Registrable
Securities proposed to be sold, the intended method of disposition thereof and
whether the Demand Registration constitutes the Priority Registration. The
Company shall give written notice of such registration request within 10 days
after the receipt thereof to all other Holders of Registrable Securities and
shall use its reasonable best efforts to effect the Demand Registration within
30 days after the giving of such written notice. Within 20 days after receipt of
such notice by any such Holder, such Holder may request in writing that
Registrable Securities be included in such Demand Registration and the Company
shall include in the registration statement for such Demand Registration the
Registrable Securities of all Holders requested to be so included. Each such
request by such other Holders shall specify the number of Registrable Securities
proposed to be sold and the intended method of disposition thereof.
(b) Effective Registration. A registration will not be deemed
to have been effected as a Demand Registration unless it has been declared
effective by the Commission and the Company has complied in all material
respects with its obligations under this Agreement with respect thereto;
provided, that if, after it has become effective, the offering of shares of
Common Stock pursuant to such Demand Registration is or becomes the subject of
any stop order, injunction or other order or requirement of the Commission or
any other governmental or administrative agency, or if any court prevents or
otherwise limits the sale of the shares of Common Stock pursuant to the Demand
Registration at any time within 180 days after the effective date of the
registration statement, such Demand Registration will be deemed not to have been
effected. If (i) a requested Demand Registration is deemed not to have been
effected or (ii) the requested Demand Registration does not remain effective (A)
for a period of at least 180 days beyond the effective date thereof or (B) with
respect to an underwritten offering of Registrable Securities, until 45 days
after the commencement of the distribution by the Selling Holders (or, in either
event, until the Registrable Securities included in such Demand Registration
have been disposed of pursuant thereto), then the Company shall continue to be
obligated to effect such Demand Registration pursuant to this Section 2.1.
Selling Holders shall be permitted to withdraw all or any part of the
Registrable Securities from a Demand Registration at any time prior to the
effective date of such Demand Registration; provided, that in the event of such
withdrawal, such Selling Holders shall be responsible for all fees and expenses
(including counsel fees and expenses) incurred by them prior to such withdrawal;
and provided, further, that if all of the Selling Holders withdraw the
Registrable Securities from any Demand Registration prior to the effective date
of such Demand Registration and do not reimburse the Company for expenses
payable by the Company pursuant to Section 3.2 hereof and incurred by the
Company in connection with such Demand Registration, such Demand Registration
shall be deemed to have been effected pursuant to this Section 2.1, unless such
withdrawal is as a result of (i) a stop order (or notice from the Commission of
the possibility of a stop order) received by the
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Company, or (ii) any breach by the Company of its obligations hereunder, in
which case no reimbursement shall be made or required to be made by the Selling
Holders.
(c) Selection of Underwriter. If a majority of the Selling
Holders so elect, the offering of such Registrable Securities pursuant to such
Demand Registration shall be in the form of an underwritten offering. The
Selling Holders owning a majority of Common Stock to be sold shall select one or
more nationally recognized firms of investment bankers who are reasonably
satisfactory to the Company to act as the lead managing Underwriter or
Underwriters in connection with such offering and shall select any additional
investment bankers and managers to be used in connection with the offering.
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(d) Other Securities. With respect to the Priority
Registration, no securities of the Original Investors shall be included among
the securities covered by such Priority Registration unless the managing
Underwriter or Underwriters of such offering shall have advised in writing the
Holders of Registrable Securities to be covered by such registration that the
inclusion of such other securities would not adversely affect such offering.
SECTION 2.2 Piggy-Back Registration. If at any time the Company
proposes to file a registration statement under the Securities Act with respect
to an offering by the Company for its own account or for the account of any of
its respective Security holders (other than a registration statement on Form S-4
or S-8 (or any substitute form that may be adopted by the Commission), or a
Demand Registration pursuant to Section 2.1), then the Company shall give
written notice of such proposed filing to the Holders of Registrable Securities
as soon as practicable (but in no event less than 20 days before the anticipated
filing date), and such notice shall offer such Holders the opportunity to
register such number of Registrable Securities as each such Holder may request
(which request shall be made within 18 days of such notice and shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof) (a "Piggy-Back Registration"). The
Company shall use its reasonable best efforts to cause the managing Underwriter
or Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company or any
other Security holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Any Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any registration
statement pursuant to this Section 2.2 by giving written notice to the Company
of its request to withdraw, provided, that in the event of such withdrawal, such
Holder shall be responsible for all fees and expenses (including fees and
expenses of counsel) incurred by such Holder prior to such withdrawal. The
Company may withdraw a Piggy-Back Registration at any time prior to the time it
becomes effective; provided, that all expenses set forth in Section 3.2 hereof
shall be the sole responsibility of the Company in such case.
No Piggy-Back Registration, and no failure to effect a
Piggy-Back Registration, shall relieve the Company of its obligation to effect a
Demand Registration, and no failure to effect a Piggy-Back Registration and to
complete the sale of Registrable Securities in connection therewith shall
relieve the Company of any other obligation under this Agreement (including,
without limitation, the Company's obligations under Sections 3.2 and 4.1).
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SECTION 2.3 Reduction of Offering.
(a) Demand Registration. Except as otherwise provided in
Section 2.1(d) hereof in connection with the Priority Registration, the Company
may include in a Demand Registration Securities for the account of the Company
and any other Persons who hold Securities on the same terms and conditions as
the Registrable Securities to be included therein; provided, however, that (i)
if the managing Underwriter or Underwriters of any underwritten offering
described in Section 2.1 have informed the Company in writing that it is their
opinion that the amount of Securities which Holders of Registrable Securities,
the Company and any other Persons desiring to participate in such Demand
Registration intend to include in such offering is such as to materially and
adversely affect the success of such offering, then the number of Securities to
be offered for the account of the Company and for the account of all such other
Persons (other than the Holders) participating in such Demand Registration shall
be reduced or limited pro rata in proportion to the respective number of
Securities requested to be registered to the extent necessary to reduce the
total number of Securities requested to be included in such offering to the
number of shares, if any, recommended by such managing Underwriters, and (ii) if
the offering is not underwritten, no other Person, including the Company, shall
be permitted to offer Securities under any such Demand Registration unless all
Selling Holders consent in writing to the inclusion of such Securities therein.
(b) Piggy-Back Registration. Notwithstanding anything to the
contrary contained herein, if the managing Underwriter or Underwriters of any
underwritten offering in connection with a Piggy-Back Registration described in
Section 2.2 have informed, in writing, the Holders of the Registrable Securities
requesting inclusion in such offering that it is their opinion that the total
number of Securities which the Company, Holders of Registrable Securities and
any other Persons desiring to participate in such registration intend to include
in such offering is such as to materially and adversely affect the success of
such offering, then the number of Securities to be offered shall be reduced or
limited in the following order of priority: first, the number of Securities to
be offered by all holders of Securities of the Company other than the Holders of
Registrable Securities shall be reduced to the extent necessary to reduce the
total number of Securities to such number recommended by such managing
Underwriters; and second, if further reduction or limitation is required, the
number of Securities to be offered for the account of the Holders shall be
reduced or limited on a pro rata basis in proportion to the relative number of
Registrable Securities of the Holders participating in such registration.
(c) Withdrawal Election. If, as a result of the proration
provisions of this Section 2.3, any Holder shall not be entitled to include at
least 50% of the Registrable Securities in a Demand Registration or Piggy-Back
Registration that such Holder has requested to be included, such Holder may
elect to withdraw his, her or its request to include Registrable Securities in
such registration (a "Withdrawal Election"); provided, however, that a
Withdrawal Election shall be irrevocable and, after making a Withdrawal
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Election, a Holder shall no longer have any right to include Registrable
Securities in the registration as to which such Withdrawal Election was made.
ARTICLE 3.
REGISTRATION PROCEDURES
SECTION 3.1 Filings; Information. In connection with any Demand
Registration or Piggy-Back Registration, the Company will use its reasonable
best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as
quickly as practicable, and in connection with any such request:
(a) Registration Statements. The Company will prepare and file
with the Commission a registration statement (which, in the case of an
underwritten public offering, shall be on Form S-3 (unless the Company does not
qualify for use of Form S-3 in a registration involving only a secondary
offering as provided in the General Instructions to Form S-3 in such
registration, in which case such registration statement shall be a Form S-1) or
other form of general applicability satisfactory to the managing underwriter
selected as therein provided) with respect to such securities and use its
reasonable best efforts to cause such registration statement to become effective
and remain effective (i) until the completion of the distribution in the case of
a registration statement on Form S-3 or (ii) for no longer than 180 days in the
case of a registration statement on Form S-1; provided, however, that the
Company shall be required to keep each registration statement pursuant to a
Demand Registration effective for not less than 180 days (or until the
Registrable Securities included in such Demand Registration have been disposed
of pursuant thereto).
(b) Amendments and Supplements. The Company will prepare and
file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective for the period specified in
subsection (a) above and as to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by such
registration statement in accordance with the intended method of disposition set
forth in such registration statement for such period.
(c) Copies for Review. The Company will, as far in advance as
practicable, prior to filing a registration statement or prospectus or any
amendment or supplement thereto, furnish copies of such registration statement
as proposed to be filed, together with exhibits thereto if requested, to (i)
each Selling Holder, (ii) not more than one counsel representing all Selling
Holders, to be selected by a majority-in-interest of such Selling Holders, and
(iii) each
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Underwriter, if any, of the Registrable Securities covered by such registration
statement which documents will be subject to review and approval by the
foregoing within three (3) business days after delivery, and thereafter as far
in advance as practicable, furnish to such Selling Holders, counsel and
Underwriters, if any, for their review and comment such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference therein
if requested), the Prospectus included in such registration statement (inducing
each preliminary prospectus) and such other documents or information as such
Selling Holders, counsel or Underwriters may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Selling
Holders.
(d) Stop Orders. After the filing of the registration
statement, the Company will promptly notify each Selling Holder of Registrable
Securities covered by such registration statement of any stop order issued or
threatened by the Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered.
(e) Blue Sky. The Company will use its reasonable best efforts
to (i) register or qualify the Registrable Securities under such other
securities or blue sky laws of such jurisdictions in the United States as any
Selling Holder reasonably (in light of such Selling Holder's intended plan of
distribution) requests, and (ii) cause such Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
in the United States as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Selling Holder to consummate
the disposition of the Registrable Securities owned by such Selling Holder;
provided, that the Company will not be required to (x) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subsection (e), (y) subject itself to taxation in any such
jurisdiction or (z) consent to general service of process in any such
jurisdiction.
(f) Certain Events. The Company will immediately notify each
Selling Holder, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the Holders of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly make available to each Selling
Holder any such supplement or amendment. The Company will promptly prepare and
if required, cause to become effective, such supplement or amendment and deliver
sufficient copies thereof to each Selling Holder.
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(g) Agreements. The Company and the Selling Holders will enter
into customary agreements (including, if applicable, an underwriting agreement
in customary form and which is reasonably satisfactory to the Company) and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities; and the Selling Holders may, at
their option, require that any or all of the representations, warranties and
covenants of the Company or to or for the benefit of such Underwriters also be
made to and for the benefit of such Selling Holders.
(h) Other. The Company will use its reasonable best efforts to
(i) obtain an opinion of counsel for the Company covering such matters as the
Selling Holders or the Underwriter(s), if any, shall reasonably request; (ii)
obtain a cold comfort letter from the Company's independent public accountants
in customary form and covering such matters of the type customarily contained in
cold comfort letters as the Selling Holders or the Underwriter(s), if any, shall
reasonably request; and (iii) if reasonably requested by the Selling Holders,
cause the Registrable Securities included in such registration statement to be
(A) listed on each securities exchange, if any, on which similar securities
issued by the Company are then listed or (B) authorized to be quoted on the
NASD's Automated Quotation System ("Nasdaq") or the National Market System of
Nasdaq if the Registrable Securities so qualify.
(i) Due Diligence. The Company will make reasonably available
to each Selling Holder (and its counsel) and each Underwriter, if any, subject
to restrictions imposed by the United States federal government or any agency or
instrumentality thereof, copies of all correspondence between the Commission and
the Company, its counsel or auditors and will also make available for inspection
by any Selling Holder, any Underwriter participating in any disposition pursuant
to such registration statement and any attorney, accountant or other
professional retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records") as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with such
registration statement. Records which the Company determines, in good faith, to
be confidential and which it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such registration
statement or (ii) the disclosure or release of such Records is requested or
required pursuant to oral questions, interrogatories, requests for information
or documents or a subpoena or other order from a court of competent jurisdiction
or other process; provided, that prior to any disclosure or release pursuant to
clause (ii), the Inspectors shall provide the Company with prompt notice of any
such request or requirement so that the Company may seek an appropriate
protective order or waive such Inspectors' obligation not to disclose such
Records; and, provided, further, that if failing the entry of a protective order
or the waiver by the Company permitting the
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disclosure or release of such Records, the Inspectors, upon advice of counsel,
are compelled to disclose such Records, the Inspectors may disclose that portion
of the Records which counsel has advised the Inspectors that the Inspectors are
compelled to disclose. Each Selling Holder agrees that information obtained by
it solely as a result of such inspections (not including any information
obtained from a third party who, insofar as is known to the Selling Holder after
reasonable inquiry, is not prohibited from providing such information by a
contractual, legal or fiduciary obligation to the Company) shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates unless and until
such information is made generally available to the public (other than by the
Selling Holders). Each Selling Holder further agrees that it will, upon learning
that disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
(j) Sales Efforts. In connection with an underwritten offering,
the Company will participate, to the extent reasonably requested by the managing
Underwriter for the offering or the Selling Holders, in customary efforts to
sell the securities under the offering, including, without limitation,
participating in "road shows"; provided, that the Company shall not be obligated
to participate in more than one such offering in any 12-month period.
The Company may require each Selling Holder to promptly furnish
in writing to the Company such information regarding the distribution of the
Registrable Securities as the Company may from time to time reasonably request
and such other information as may be legally required in connection with such
registration including, without limitation, all such information as may be
requested by the Commission or the NASD. Notwithstanding anything contained
herein to the contrary, the Company may exclude from such registration any
Holder who fails to provide such information within a reasonable period of time
in advance of the filing of any registration statement hereunder or an amendment
thereto.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
subsection (f) hereof, such Selling Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Selling Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by subsection (f)
hereof, and, if so directed by the Company, such Selling Holder will deliver to
the Company all copies, other than permanent file copies then in such Selling
Holder's possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event the Company shall
give such notice, the Company shall extend the period during which such
registration statement shall be maintained effective (including the period
referred to in subsection (a) hereof) by the number of days during the period
from and including the date of the giving of
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notice pursuant to subsection (f) hereof to the date when the Company shall make
available to the Selling Holders of Registrable Securities covered by such
registration statement a prospectus supplemented or amended to conform with the
requirements of subsection (f) hereof.
SECTION 3.2 Registration Expenses. In connection with any
Demand Registration or Piggy-Back Registration, the Company shall pay the
following registration expenses incurred in connection with the registration
thereunder (the "Registration Expenses"): (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) processing, duplicating and
printing expenses, (iv) the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), (v) the fees and expenses incurred in connection
with the listing of the Registrable Securities, (vi) reasonable fees and
disbursements of counsel for the Company and customary fees and expenses for
independent certified public accountants retained by the Company (including the
expenses of any comfort letters or costs associated with the delivery by
independent certified public accountants of a comfort letter or comfort letters
requested but not the cost of any audit other than a year end audit), (vii) the
reasonable fees and expenses of any special experts retained by the Company in
connection with such registration, (viii) reasonable fees and expenses of one
firm of counsel for the Holders to be selected by the Holders of at least a
majority of the Registrable Securities to be included in such registration, and
(ix) any other fees and disbursements of underwriters customarily paid by
issuers of securities.
SECTION 3.3 Advice by Company. The Company will keep each
Holder advised as to the completion of any registration contemplated in this
Agreement. At its expense, the Company will furnish promptly to each Holder such
number or copies of prospectuses (including preliminary prospectuses), and all
amendments and supplements thereto, in conformity with the requirements of the
Securities Act, and such other documents as any such Holder from time to time
may reasonably request.
SECTION 3.4 Rule 144 and 144A. The Company covenants that it
will timely file any reports required to be filed by it under the Securities Act
and the Exchange Act and that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
Holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 or Rule
144A under the Securities Act, as such Rules may be amended from time to time,
or (b) any similar rule or regulation hereafter adopted by the Commission. Upon
the request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
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ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1 Indemnification by the Company. The Company agrees
to indemnify and hold harmless each Selling Holder, its partners, officers,
directors, employees and agents, and each Person, if any, who controls such
Selling Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, together with the partners, officers, directors,
employees and agents of such controlling Person (collectively, the "Holder
Covered Persons"), from and against any loss, claim, damage, liability,
reasonable attorneys' fees, cost or expense, costs and expenses of investigating
and defending any such claim, joint or several, and any action in respect
thereof (collectively, the "Damages"), to which such Selling Holder, its
partners, officers, directors, employees and agents, and any such Holder Covered
Person may become subject under the Securities Act or otherwise, insofar as such
Damages (or actions or proceedings, whether commenced or threatened, or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities or
any preliminary prospectus, or arise out of, or are based upon, any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of any federal or state securities law or any rule or regulation
thereof, except insofar as the same are based upon information furnished in
writing to the Company by a Selling Holder expressly for use therein, and shall
reimburse each Holder Covered Person for any legal and other expenses reasonably
incurred by that Holder Covered Person in investigating or defending or
preparing to defend against any such Damages or proceedings; provided, however,
that the Company shall not be liable to any Selling Holder to the extent that
any such Damages (or action or proceeding in respect thereof) arise out of or
are based upon an untrue statement or omission made in any preliminary
prospectus if (i) a copy of the final prospectus was not sent or delivered to
the Person asserting the claim from which such Damages arise on or prior to the
time such delivery is required by the Securities Act, and (ii) the final
prospectus would have corrected such untrue statement or such omission; provided
further, that the Company shall not be liable to any Selling Holder in any such
case to the extent that any such Damages arise out of or are based upon an
untrue statement or omission in any prospectus if (x) such untrue statement or
omission is corrected in an amendment or supplement to such prospectus, and (y)
having previously been furnished by or on behalf of the Company with copies of
such prospectus as so amended or supplemented, such Selling Holder thereafter
fails to deliver such prospectus as so amended or supplemented prior to or
concurrently with the sale of a Registrable Security to the Person asserting the
claim from which such Damages arise. The Company also agrees to indemnify any
Underwriters of the Registrable Securities, their officers and directors and
each Person who controls such Underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in this Section 4.1.
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SECTION 4.2 Indemnification by Selling Holders. Each Selling
Holder shall, severally but not jointly, indemnify and hold harmless the
Company, its officers, directors, employees and agents and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, together with the partners, officers,
directors, employees and agents of such controlling Person (collectively,
"Company Covered Persons"), to the same extent as the foregoing indemnity from
the Company to such Selling Holder, but only with reference to information
related to such Selling Holder, or its plan of distribution, furnished in
writing by such Selling Holder or on such Selling Holder's behalf expressly for
use in any registration statement or prospectus relating to the Registrable
Securities, or any amendment or supplement thereto, or any preliminary
prospectus and the aggregate amount which may be recovered from any Selling
Holder pursuant to the indemnification provided for in this Section 4.2 in
connection with any registration and sale of Registrable Securities shall be
limited to the total proceeds received by such Holder from the sale of such
Registrable Securities. In case any action or proceeding shall be brought
against any Company Covered Person in respect of which indemnity may be sought
against such Selling Holder, such Selling Holder shall have the rights and
duties given to the Company, and the Company Covered Persons shall have the
rights and duties given to such Selling Holder, by Section 4.1. Each Selling
Holder also agrees to indemnify and hold harmless any Underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 4.2.
SECTION 4.3 Conduct of Indemnification Proceedings. Promptly
after receipt by any person in respect of which indemnity may be sought pursuant
to Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the Person against whom such indemnity may be
sought (an "Indemnifying Party"), notify the Indemnifying Party in writing of
the claim or the commencement of such action; provided, that the failure to
notify the Indemnifying Party shall not relieve it from any liability which it
may have to an Indemnified Party otherwise than under Section 4.1 or 4.2 and
except to the extent of any actual prejudice resulting therefrom. If any such
claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided, that the Indemnified Party shall
have the right to employ separate counsel to represent the Indemnified Party and
its controlling Persons who may be subject to
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liability arising out of any claim in respect of which indemnity may be sought
by the Indemnified Party against the Indemnifying Party, but the fees and
expenses of such counsel shall be for the account of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) in the reasonable judgment of
the Company and such Indemnified Party, representation of both parties by the
same counsel would be inappropriate due to actual or potential conflicts of
interest between them, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties, or for fees
and expenses that are not reasonable. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
claim or pending or threatened proceeding in respect of which the Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding. Whether or not the defense of any claim or action
is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.
SECTION 4.4 Contribution. If the indemnification provided for
in this Article 4 is unavailable to the Indemnified Parties in respect of any
Damages referred to herein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Damages (i) as between the
Company and the Selling Holders on the one hand and the Underwriters on the
other, in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Holders on the one hand and the
Underwriters on the other from the offering of the Registrable Securities, or if
such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such Damages, as well as any other relevant equitable
considerations, and (ii) as between the Company on the one hand and each Selling
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each Selling Holder in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Holders on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and the Selling Holders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and the Selling
Holders on the one hand and of the Underwriters on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and the Selling
Holders or by the Underwriters. The relative fault of the
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Company on the one hand and of each Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 4.4 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4.4, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Registrable Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and no Selling Holder shall be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Securities of such Selling Holder were offered to the public (less underwriting
discounts and commissions) exceeds the amount of any damages which such Selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Each Selling Holder's obligations to contribute
pursuant to this Section 4.4 is several in the proportion that the proceeds of
the offering received by such Selling Holder bears to the total proceeds of the
offering received by all the Selling Holders and not joint.
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ARTICLE 5.
LIMITATIONS OF THE COMPANY'S OBLIGATIONS
SECTION 5.1 Other Registration Rights; Holdback. The Company
represents and warrants to the Holders that there is not in effect on the date
hereof any agreement by the Company pursuant to which any holders of Securities
of the Company have a right to cause the Company to register or qualify such
securities under the Securities Act or any securities or blue sky laws of any
jurisdiction that would conflict in any material respect with any provision of
this Agreement. The Company shall not in the future grant to any owner or
purchaser of Securities of the Company any demand registration rights, or any
piggyback registration rights unless (a) such piggyback registration rights are
made subordinate to the rights granted hereunder, including without limitation,
so that each Holder shall have priority to participate in any piggy-back
registration with respect to such other shares of Stock of the Company and (b)
if the offering by the Holders is underwritten, such owner or purchaser agrees
not to sell any shares of Stock of the Company during the period commencing ten
(10) days prior to any such underwritten offering and ending ninety (90) days
following any such underwritten offering (or for such shorter period of time as
is sufficient and appropriate, in the opinion of any managing Underwriter(s)).
If requested by managing Underwriter(s) in any such registration, the Company
shall cause the directors and executive officers of the Company to execute and
deliver similar holdback agreements.
SECTION 5.2 Participation in Underwritten Registrations.
Notwithstanding anything contained herein to the contrary, the Company shall
have no obligation to register the Registrable Securities of any Holder in an
offering to which the Company is also offering securities for sale for its own
account, unless the Holder (other than Benefit Capital Management Corporation in
the case of clause (b) below) enters into (a) an underwriting agreement in
customary form with the Underwriter(s) selected for the offering by the Company
(which shall not require the Holder to indemnify the Underwriter with respect to
misstatements or omissions in the registration statement other than such
misstatements or omissions in written material supplied by such Holder expressly
for inclusion in the registration statement) and (b) if requested by the
Underwriter(s), an agreement appointing one or more (but not more than three)
persons approved by a majority-in-interest of the Holders whose Registrable
Securities are to be included in the registration, to act as attorney-in-fact
for the Holder and as escrow agent for the Registrable Securities to be included
in the offering in customary form. In addition, each such Holder shall, if
requested by the Company, complete and execute any questionnaires and other
documents reasonably required under the terms of such underwriting arrangements
and these registration rights.
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SECTION 5.3 Holdback Agreement. For so long as the Holder has
the right to have Registrable Securities included in any registration pursuant
to this Agreement, the Holder agrees in connection with any underwritten
registration of the Company's securities, upon the request of the Underwriters
managing any underwritten offering of the Company's securities, not to effect
any public sale or distribution (including any sale pursuant to Rule 144 of the
Securities Act) of any Registrable Securities without the prior written consent
of the Company or such underwriters, as the case may be, within such periods of
time prior to or after the effective date of such registration, as the Company
or the Underwriters may reasonably specify, but in no event in excess of 180
days. This provision shall apply whether or not any Registrable Securities of
the Holder are included in the offering.
SECTION 5.4 Suspension of Obligation to File. Notwithstanding
the provisions of Section 3.1(a), the Company's obligations to file a
registration statement, or cause such registration statement to become and
remain effective, shall be suspended for a period not to exceed 90 days if there
exists at the time material non-public information relating to the Company that,
in the reasonable opinion of the Company, should not be disclosed.
SECTION 5.5 Satisfaction of Demand Registration Obligation. The
Company shall be deemed to have satisfied its obligations hereunder with regard
to a Demand Registration (including any obligation with regard to a request of
Selling Holders to register their Registrable Securities on Form S-3 as provided
in Section 2.1(a) hereof) if, at the time of a Demand Registration request
(including a request of Selling Holders to have their Registrable Securities
registered on Form S-3) under Section 2.1(a) hereof, the requesting Selling
Holders may sell their Registrable Securities in accordance with the method of
disposition elected by such Selling Holders pursuant to an effective
registration statement of the Company or pursuant to such registration statement
subject to the Company amending the same or supplementing the prospectus
included therein; provided, however, that the Company must effect such amendment
or file such supplement; and provided, further, that the Company must agree
thereafter to keep the registration statement effective, subject to the
limitations set forth herein, for at least 180 days following such request,
amendment effective date or supplement filing date, as the case may be.
ARTICLE 6.
MISCELLANEOUS
SECTION 6.1 Amendment and Modification. Any provision of this
Agreement may be waived, provided that such waiver is set forth in a writing
executed by the party against whom the enforcement of such waiver is sought.
This Agreement may not be amended, modified or supplemented other than by a
written instrument signed by holders of a majority of the Registrable
Securities; provided, however, that without the consent of the
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<PAGE> 130
Holders, no amendment or modification which materially and adversely affects the
ability of such Holders to have securities registered hereunder may be effected.
No course of dealing between or among any Persons having any interest in this
Agreement will be deemed effective to modify, amend or discharge any part of
this Agreement or any rights or obligations of any Person under or by reason of
this Agreement.
SECTION 6.1 No Waiver. No failure on the part of the Company or
the Investors in exercising any right, power or privilege granted hereunder
shall operate as a waiver thereof or of any other right, power or privilege, nor
shall any single or partial exercise of such right, power or privilege preclude
any other or further exercise thereof or of any other right, power or privilege.
SECTION 6.2 Successors and Assigns; Entire Agreement. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns and executors, administrators and heirs. This Agreement sets forth the
entire agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes all prior discussions, oral and written
agreements (including without limitation that certain Registration Rights
Agreement, dated as of November 2, 1995, by and among the Company and the
Existing Investors) and understandings of any and every nature among them.
SECTION 6.3 Severability. In the event that any provision of
this Agreement or the application of any provision hereof is declared to be
illegal, invalid or otherwise unenforceable by a court of competent
jurisdiction, the remainder of this Agreement shall not be affected except to
the extent necessary to delete such illegal, invalid or unenforceable provision
unless that provision held invalid shall substantially impair the benefits of
the remaining portions of this Agreement.
SECTION 6.4 Notices. All notices, demands, requests, consents
or approvals (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served or mailed, registered or certified, return
receipt requested, postage prepaid (or by a substantially similar method), or
delivered by a reputable overnight courier service with charges prepaid, or
transmitted by hand delivery, telegram, telex or facsimile, addressed as set
forth below, or such other address as such party shall have specified most
recently by written notice:
(1) If to the Company:
Park `N View, Inc.
3403 NW 55th Street, Building 10
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<PAGE> 131
Fort Lauderdale, FL 33309
Attention: President
Telephone: (954) 730-0565
Telecopy: (954) 730-2298
with a copy to:
James O'Connell, Esq.
Petree Stockton, LLP
4101 Lake Boone Trail, Suite 400
Raleigh, North Carolina 27607
Telephone: (919) 420-1700
Telecopy: (919) 420-1800
(2) If to the Holder, at the most current address, and with a
copy to be sent to each additional address, given by such Holder to the Company
in writing, and copies sent to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, NY 10022
Attention: Morris Orens, Esq.
Telephone: (212) 758-9500
Telecopy: (212) 758-9526
Notice shall be deemed given or delivered on the date of service or transmission
if personally served or transmitted by telegram, telex or facsimile (with
telephonic confirmation of receipt). Notice otherwise sent as provided herein
shall be deemed given or delivered on the third business day following the date
mailed or on the next business day following delivery of such notice to a
reputable overnight courier service.
SECTION 6.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 6.7 Headings. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.
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<PAGE> 132
SECTION 6.8 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute one and the same
instrument.
SECTION 6.9 Further Assurances. Each party shall cooperate and
take such action as may be reasonably requested by another party in order to
carry out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
SECTION 6.10 Remedies. In the event of a breach or a threatened
breach by any party to this Agreement of its obligations under this Agreement,
any party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
inducing monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.
SECTION 6.11 Pronouns. Whenever the context may require, any
pronouns used herein shall be deemed also to include the corresponding neuter,
masculine or feminine forms.
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<PAGE> 133
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PARK `N VIEW, INC.
By:
------------------------------------
Name:
Title:
INVESTORS
Existing Investors whose signatures
appear on Exhibit A hereto, and the Investors whose signatures appear on Exhibit
B hereto
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<PAGE> 134
EXHIBIT A
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By:
--------------------------
Name:
Title:
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/ OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR
By:
----------------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By:
----------------------------------
Name:
Title:
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<PAGE> 135
- ---------------------------------------------
Michael Willner
EXHIBIT B
STATE OF MICHIGAN RETIREMENT SYSTEM
By:
------------------------------------------
Name:
Title:
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No. VCA-GA-5298
By:
------------------------------------------
Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK -1(A) Investment Fund
By:
------------------------------------------
Name:
Title:
CREDIT SUISSE (GUERNSEY) LIMITED as
Trustee of Dynamic Growth Fund II
By:
------------------------------------------
Name:
Title:
By:
------------------------------------------
Name:
Title:
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<PAGE> 136
EXHIBIT B
(continued)
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.(Its General Partner)
By:
------------------------------
Name:
Title:
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By:
--------------------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By:
--------------------------------------
Name:
Title:
- ----------------------------------
Michael Willner
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<PAGE> 137
EXHIBIT F
AMENDED AND RESTATED
SECURITYHOLDERS' AGREEMENT AND EXCHANGE AGREEMENT
AMENDED AND RESTATED SECURITYHOLDERS' AGREEMENT AND EXCHANGE AGREEMENT,
dated as of November 13, 1996 (this "Agreement"), by and among Park `N View,
Inc. a Delaware corporation (the "Corporation"), the Existing Investors set
forth on Exhibit A attached hereto and the New Investors set forth on Exhibit B
attached hereto.
R E C I T A L S
I. WHEREAS, pursuant to those certain Securities Purchase
Agreements by and between the Corporation and certain of the Existing Investors
(the "Patricof Investors") dated as of November 2, 1995 (collectively, the "1995
Securities Purchase Agreements"), the Corporation agreed to sell to the Patricof
Investors an aggregate of $6 million of Subordinated Notes, an aggregate of
140,000 shares of the Corporation's Series A Preferred Stock and an aggregate of
2,000,000 shares of the Corporation's Common Stock.
II. WHEREAS, pursuant to that certain Stock Purchase Agreement by and
between the Corporation and the New Investors dated as of November 13, 1996 (the
"1996 Securities Purchase Agreement"), the Corporation agreed to sell to the New
Investors an aggregate of 1,372,370 shares of the Corporation's Series B 7%
Cumulative Convertible Preferred Stock (the "Series B Stock").
III. WHEREAS, the Patricof Investors desire to exchange (i) $3,000,000
aggregate principal amount of Subordinated Notes, plus all accrued but unpaid
interest, for 318,065 shares of Series A Preferred Stock and (ii) $1,500,000
aggregate principal amount of Subordinated Notes and warrants to purchase
239,250 shares of Common Stock for 137,237 shares of Series B Stock.
IV. WHEREAS, the parties hereto desire to amend and restate that
certain Security- holders' Agreement, dated as of November 2, 1995, for the
purposes set forth below.
V. WHEREAS, as a condition to the consummation of the transactions
contemplated by the 1996 Securities Purchase Agreement, the Corporation, the
Existing Investors and the New Investors (collectively referred to herein as the
"Investors") have entered into this Agreement to, among other things, grant
certain rights of first refusal regarding securities of the Corporation to the
Investors, effect the exchange referenced above, grant certain additional rights
and impose certain obligations and restrictions.
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<PAGE> 138
A G R E E M E N T S
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
I. Defined Terms. Terms initially capitalized but not otherwise
defined herein shall have the meanings given such terms in the 1995 Securities
Purchase Agreements, except for the following:
"Existing Investors" shall mean those persons listed on Exhibit A
attached hereto and made a part hereof.
"Original Investors" shall mean Ian Williams, Nelgo Investments, Samuel
Hashman, MPN Partners, Ltd. and Park 'N View General Partner, Inc.
"Subordinated Notes" shall mean the subordinated promissory notes, 8%
coupon sold pursuant to the 1995 Securities Purchase Agreements.
"Sale" shall have the meaning given such term in the Securities
Restriction Agreement, dated as of the date hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series A Stock" shall mean the Preferred Stock of the Corporation
designated as Series A Preferred Stock pursuant to the Certificate of
Designation described in the 1995 Securities Purchase Agreements.
II. Entire Agreement. This Agreement constitutes the entire agreement
by and among the parties hereto with respect to the subject matter hereof.
III. Exchange
Upon consummation of the transactions contemplated by the 1996
Securities Purchase Agreement, the Patricof Investors shall exchange with the
Corporation, pro rata, (i) $3,000,000 aggregate principal amount of Subordinated
Notes, plus all accrued but unpaid interest, for 318,065 fully paid and
nonassessable shares of Series A Stock and (ii) $1,500,000 aggregate principal
amount of Subordinated Notes and warrants to purchase 239,250 shares of Common
Stock for 137,237 fully paid and nonassessable shares of Series B Stock.
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<PAGE> 139
IV. Rights of First Refusal
(a) The Corporation shall not issue or sell any shares of Common
Stock, Preferred Stock or other securities convertible into or exchangeable for
shares of Common Stock, other than any such issuance or sale (i) pursuant to a
Qualifying Offering, (ii) pursuant to a stock option plan approved by the Board
of Directors, (iii) as a form of consideration in connection with mergers or
acquisitions where the Corporation is the surviving entity or (iv) where the
aggregate gross proceeds are less than $500,000 in any single transaction,
provided that the sale price per share is not less than the then applicable
conversion price of the Series B Stock and, provided further, that the aggregate
gross proceeds of all such transactions shall not exceed $1,500,000 (the
securities issued in such transactions being referred to as the "Newly Issued
Securities"), unless prior to the issuance or sale of such Newly Issued
Securities each Investor shall have been given the opportunity (such opportunity
being herein referred to as the "Preemptive Right") to purchase (on the same
terms as such Newly Issued Securities are proposed to be sold) the same
proportion of such Newly Issued Securities being issued or offered for sale by
the Corporation as (x) the number of shares of Common Stock (calculated on a
fully diluted basis) held by such Investor on the day preceding the date of the
Preemptive Notice (as defined herein) bears to (y) the total number of shares of
Common Stock (calculated on a fully diluted basis) outstanding on that day. A
"Qualifying Offering" means (i) the Corporation shall have consummated a firm
commitment underwritten public offering of its Common Stock by a nationally
recognized investment banking firm pursuant to an effective registration under
the Securities Act covering the offering and sale of both primary and secondary
shares of Common Stock which results in gross proceeds of at least $20,000,000,
(ii) the Common Stock is listed on either NASDAQ, the New York Stock Exchange or
the American Stock Exchange, and (iii) the price at which the Common Stock is
sold in such offering is at least equal to an amount which (x) is 200% of the
then effective conversion price of the Series B Stock or (y) would represent, on
an as converted basis, a compound annual rate of return of 35% based upon the
original issuance price of the Series B Stock.
(b) Prior to the issuance or sale by the Corporation of any Newly
Issued Securities, the Corporation shall give written notice thereof (the
"Preemptive Notice") to each Investor. The Preemptive Notice shall specify (i)
the name and address of the bona fide investor to whom the Corporation proposed
to issue or sell Newly Issued Securities, (ii) the total amount of capital to be
raised by the Corporation pursuant to the issuance or sale of Newly Issued
Securities, (iii) the number of such Newly Issued Securities proposed to be
issued or sold, (iv) the price and other terms of their proposed issuance or
sale, (v) the number of such Newly Issued Securities which such holder is
entitled to purchase (determined as provided in subsection (a) above), and (vi)
the period during which such Investor may elect to purchase such Newly Issued
Securities, which period shall extend for at least thirty (30) days following
the receipt by such holder of the Preemptive Notice (the "Preemptive Acceptance
Period"). Each Investor who desires to purchase Newly Issued Securities shall
notify the Corporation within the Preemptive Acceptance Period as to the number
of Newly Issued Securities he, she or it wishes to purchase, as well as the
number, if any, of additional Newly Issued Securities he, she or it would be
willing
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<PAGE> 140
to purchase in the event that all of the Newly Issued Securities subject
to the Preemptive Right are not subscribed for by the other Investors.
(c) In the event an Investor declines to subscribe for all or any
part of his, her or its pro rata portion of any Newly Issued Securities which
are subject to the Preemptive Right (the "Declining Preemptive Purchasers")
during the Preemptive Acceptance Period, then the other Investors shall have the
right to subscribe for all (or any declined part) of the Declining Preemptive
Purchaser's pro rata portion of such Newly Issued Securities (to be divided
among the other Investors desiring to exercise such right on a ratable basis).
(d) Any such Newly Issued Securities which none of the Investors
elect to purchase in accordance with the provisions of this Section 4, may be
sold by the Corporation, within a period of three (3) months after the
expiration of the Preemptive Acceptance Period, to any other Person or Persons
at not less than the price and upon other terms and conditions not less
favorable to the Corporation than those set forth in the Preemptive Notice.
V. Board Designees.
A. Investors' Designee. The Board shall consist of not more than seven
(7) members of which two members shall be designated by the Patricof Investors
as provided herein, one member shall be designated by the New Investors and two
members shall be designated by the Original Investors. It is contemplated that
an additional two directors shall be designated by the mutual agreement of the
Board of Directors and the New Investors. So long as the Series A Stock has not
been redeemed and paid in full, at each of the Corporation's annual or special
meetings of stockholders at which directors are to be elected, the Patricof
Investors shall have the right to designate in writing two nominees for election
to the Board (each referred to herein as a "Patricof Investor Designee" and
collectively as the "Patricof Investor Designees") unless the term of office of
either Patricof Investor Designee does not expire at such meeting, in which case
the Patricof Investors may not designate any nominees. The Patricof Investor
Designees shall initially be Robert Chefitz and Thomas Hirschfeld. At such time
as Robert Chefitz and/or Thomas Hirschfeld is unwilling or unable to serve, any
new Patricof Investor Designee(s) may be any person(s) designated by the
Patricof Investors. At each of the Corporation's annual or special meetings of
stockholders at which directors are to be elected, the Original Investors shall
have the right to designate in writing two nominees for election to the Board
(each referred to herein as an "Original Investor Designee" and collectively as
the "Original Investor Designees") unless the term of office of either Original
Investor Designee does not expire at such meeting; in which case the Original
Investors may not designate any nominees. The Original Investor Designees shall
initially be Ian Williams and Daniel K. O'Connell. At such time as Ian Williams
and/or Daniel K. O'Connell is unwilling or unable to serve, any new Original
Investor Designee(s) may be any person(s) designated by the Original Investors.
In all cases, all holders of voting securities shall vote in favor of election
of all nominees of the Patricof Investors and the Original Investors.
The New Investors shall have such rights to designate one member of the
Board of Directors as are provided in the Certificate of Designation of the
Series B Stock.
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<PAGE> 141
B. Best Efforts to Elect Designees. In the event that any nominee or nominees
are designated pursuant to Section 5(a) hereof, the Corporation shall use its
best efforts to cause such nominee(s) to be elected to the Board, and the
holders of voting securities shall vote, together as one class, such securities
owned by them to elect those directors nominated in accordance with this
Section. The foregoing right shall also apply to elections of Board members
effected by written consents of holders of securities rather than by meetings.
C. Rmoval of Designees. At any special or annual meeting of the
Corporation's stockholders at which it is proposed to remove directors from
office or in connection with a solicitation of consents through which directors
are to be removed from office, for gross negligence, willful misconduct,
conviction of a felony or acts of fraud, each holder of voting securities,
voting together as one class, shall vote (or give a written consent with respect
to) all of its shares of securities. In all other situations, directors may only
be removed with the majority vote of the group that elected them in accordance
with Section 5(a) hereof.
D. Vacancies. Should a vacancy on the Board arise for any reason with respect
to one or both of the Patricof Investor Designees, such vacancy may be filled
only by another Patricof Investor Designee. If the Patricof Investors desire
that such vacancy be filled, the holders of voting securities shall vote each
class of securities together as a single class to elect such Patricof Investor
Designee. Should a vacancy on the Board arise for any reason with respect to one
or both of the Original Investors Designees, such vacancy may be filled only by
another Original Investor Designee. If the Original Investors desire that such
vacancy be filled, the holders of voting securities shall vote each class of
securities together as a single class to elect such Original Investors Designee.
E. Expenses. The Corporation shall reimburse all members of the Board for all
reasonable out-of-pocket travel and relate expenses incurred by such Board
members in attending Board meetings and meetings of committees of the Board on
which they serve.
VI. Confidentiality. The Corporation shall use its best efforts to
(a) protect the secrecy, confidentiality and value of all trade secrets useful
to the conduct of the Corporation's businesses and (b) cause each Person who is
or becomes an officer or key employee of the Corporation who shall have access
to confidential and proprietary information of the Corporation to execute a
confidentiality agreement as a condition to such employment, in such form as
shall be approved by the Board of Directors of the Corporation. Such
confidentiality agreements shall not be amended in any material respect without
the approval of the Board of Directors of the Corporation.
VII. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute on and the same document.
VIII. Amendments and Governing Law. This Agreement may be amended,
modified and supplemented, and compliance with any term, covenant, agreement, or
condition
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<PAGE> 142
contained herein may be waived either generally or in particular
instances, and either retroactively or prospectively, only by a written
instrument executed by the Corporation and Investors who hold 66_% of each class
of the Securities; provided, however, that any provision of this Agreement that
would materially adversely affect any particular Investors without similarly
affecting all Investors shall not be valid unless consented to in writing by
such particular Investors. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York applicable to
contracts made and to be performed in that state without giving any effect to
any choice or conflict of law provision or rule (whether in the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
IX. Application to Subsequent Investors. This Agreement shall inure
to the benefit of and be binding upon (i) the parties hereto and their heirs,
legal representatives successors and assigns and (ii) any Person who, after the
date hereof, shall become a holder of any shares of any Common Stock, Series A
Stock and/or Series B Stock (such Person's acceptance of such shares to be
deemed to constitute his, her or its agreement to be bound hereby) and such
Person's heirs, legal representatives, successors and assigns.
X. Termination. This Agreement shall terminate upon the date of
consummation of a Sale or the written consent of all the parties hereto.
XI. Headings. The headings herein are solely for the convenience of
the parties and shall not serve to modify or interpret the text of the Sections
at the beginning of which they appear.
XII. Severability. In the event that any court or any governmental
authority or agency declares all or any part of any Section of this Agreement to
be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any other Section of this Agreement, and in the event that only a
portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
XIII. Entire Agreement. This Agreement constitutes the entire
agreement by and among the parties hereto with respect to the subject matter
hereof.
XIV. Further Execution. The parties hereto agree to execute any
additional documents or instruments necessary to carry out the purposes of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first written above.
PARK `N VIEW, INC.
By:
---------------------------
Name:
Title:
ATTEST:
By:
-----------------------------
Secretary
Existing Investors whose signatures
appear on Exhibit A hereto and
Investors whose signatures appear on
Exhibit B hereto.
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<PAGE> 143
EXHIBIT A
PARK 'N VIEW GENERAL PARTNER, INC.
By:
-------------------------------
Name:
Title:
- ----------------------------------
Ian Williams
- ----------------------------------
Sam Hashman
By:
-------------------------------
MPN Partners, Ltd.
NELGO INVESTMENTS
By:
-------------------------------
Name:
Title:
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<PAGE> 144
EXHIBIT A
(continued)
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By:
---------------------------
Name:
Title:
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTOR ADVISOR
By:
-------------------------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By:
----------------------------
Name:
Title:
- --------------------------------
Michael Willner
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<PAGE> 145
EXHIBIT B
STATE OF MICHIGAN RETIREMENT SYSTEM
By:
--------------------------------
Name:
Title:
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No.
VCA-GA-5298
By:
--------------------------------
Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK -1(A) Investment Fund
By:
--------------------------------
Name:
Title:
CREDIT SUISSE (GUERNSEY) LIMITED as Trustee
of Dynamic Growth Fund II
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
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<PAGE> 146
EXHIBIT B
(continued)
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC. (Its General Partner)
By:
------------------------------
Name:
Title:
COUTTS & CO., (CAYMAN) LTD. CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By:
-----------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By:
-----------------------------
Name:
Title:
- -----------------------------
Michael Willner
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<PAGE> 147
EXHIBIT G
AMENDED AND RESTATED BY-LAWS
OF
PARK `N VIEW, INC.
ARTICLE I
OFFICES
Section 1.1. Registered Office. The registered office of the
Corporation within the State of Delaware shall be located at the principal place
of business in said State of such corporation or individual acting as the
Corporation's registered agent in Delaware.
Section 1.2. Other Offices. The Corporation may also have offices and
places of business at such other places both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. Place of Meetings. All meetings of stockholders shall be
held at the principal office of the Corporation, or at such other place within
or without the State of Delaware as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2.2. Annual Meetings. The annual meeting of stockholders for
the election of directors shall be held at such time on such day, other than a
legal holiday, as the Board of Directors in each such year determines. At the
annual meeting, the stockholders entitled to vote
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for the election of directors shall elect a Board of Directors and transact such
other business as may properly come before the meeting.
Section 2.3. Special Meetings. Special meetings of stockholders, for
any purpose or purposes, may be called by a member of the Board of Directors.
Any such request shall state the purpose or purposes of the proposed meeting. At
any special meeting of stockholders, only such business may be transacted as is
related to the purpose or purposes set forth in the notice of such meeting.
Section 2.4. Notice of Meetings. Written notice of every meeting of
stockholders, stating the place, date and hour thereof and, in the case of a
special meeting of stockholders, the purpose or purposes thereof and the person
or persons by whom or at whose direction such meeting has been called and such
notice is being issued, shall be given not less than ten (10) nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
or at the direction of the Chairman of the Board, Secretary, or the persons
calling the meeting, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the stock transfer books of the Corporation. Nothing
herein contained shall preclude the stockholders from waiving notice as provided
in Section 4.1 hereof.
Section 2.5. Quorum. The holders of a majority of the issued and
outstanding shares of stock of the Corporation entitled to vote, represented in
person or by proxy, shall be necessary to and shall constitute a quorum for the
transaction of business at any meeting of stockholders. If, however, such quorum
shall not be present or represented at any meeting of stockholders, the
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stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At any such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. Notwithstanding the foregoing, if after any
such adjournment the Board of Directors shall fix a new record date for the
adjourned meeting, or if the adjournment is for more than thirty (30) days, a
notice of such adjourned meeting shall be given as provided in Section 2.4 of
these By-Laws, but such notice may be waived as provided in Section 4.1 hereof.
Section 2.6. Voting. At each meeting of stockholders, each holder of
record of shares of stock entitled to vote shall be entitled to vote in person
or by proxy, and each such holder shall be entitled to one vote for every share
standing in his name on the books of the Corporation as of the record date fixed
by the Board of Directors or prescribed by law and, if a quorum is present, a
majority of the shares of such stock present or represented at any meeting of
stockholders shall be the vote of the stockholders with respect to any item of
business, unless otherwise provided by any applicable provision of law, by these
By-Laws or by the Certificate of Incorporation.
Section 2.7. Proxies. Every stockholder entitled to vote at a meeting
or by consent without a meeting may authorize another person or persons to act
for him by proxy. Each proxy shall be in writing executed by the stockholder
giving the proxy or by his duly authorized attorney. No proxy shall be valid
after the expiration of three (3) years from its date, unless a longer period is
provided for in the proxy. Unless and until voted, every proxy shall be
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revocable at the pleasure of the person who executed it, or his legal
representatives or assigns except in those cases where an irrevocable proxy
permitted by statute has been given.
Section 2.8. Consents. Whenever a vote of stockholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action by any provision of statute, the Certificate of Incorporation or these
By-Laws, the meeting, prior notice thereof and vote of stockholders may be
dispensed with if the holders of all outstanding shares shall consent in writing
to the taking of such action.
Section 2.9. Stock Records. The Secretary or agent having charge of the
stock transfer books shall make, at least ten (10) days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order and showing
the address of and the number and class and series, if any, of shares held by
each. Such list, for a period of ten (10) days prior to such meeting, shall be
kept at the principal place of business of the Corporation or at the office of
the transfer agent or registrar of the Corporation and such other places as
required by statute and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder at any time during the meeting.
ARTICLE III
DIRECTORS
Section 3.1. Number. The number of directors of the Corporation which
shall constitute the entire Board of Directors shall initially be fixed by the
Incorporator and thereafter
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from time to time by a vote of a majority of the entire Board and shall be not
less than one nor more than seven. The first Board of Directors shall consist of
five members. If a certificate of designation of a series of preferred stock
provides that the number of directors shall be increased upon the occurrence of
certain events, then the provisions of such certificate of designation shall
supersede the provisions of these By-Laws.
Section 3.2. Resignation and Removal. Any director may resign at any
time upon notice of resignation to the Corporation. Any director may be removed
at any time by vote of the stockholders then entitled to vote for the election
of directors at a special meeting called for that purpose, either with or
without cause, except that directors elected by a class vote of holders of
preferred stock may only be removed by vote of the holders a majority of such
preferred stock.
Section 3.3. Newly Created Directorship and Vacancies. Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason whatsoever shall be
filled by vote of the Board. If the number of directors then in office is less
than a quorum, such newly created directorships and vacancies may be filled by a
vote of a majority of the directors then in office. Any director elected to fill
a vacancy shall be elected until the next meeting of stockholders at which the
election of directors is in the regular course of business, and until his
successor has been elected and qualified.
Section 3.4. Powers and Duties. Subject to the applicable provisions of
law, these By-Laws or the Certificate of Incorporation, but in furtherance and
not in limitation of any rights therein conferred, the Board of Directors shall
have the control and management of the business and affairs of the Corporation
and shall exercise all such powers of the Corporation and do all such lawful
acts and things as may be exercised by the Corporation.
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Section 3.5. Place of Meetings. All meetings of the Board of Directors
may be held either within or without the State of Delaware.
Section 3.6. Annual Meetings. An annual meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting to the newly elected directors shall
be necessary in order to legally constitute the meeting, provided a quorum shall
be present, or the newly elected directors may meet at such time and place as
shall be fixed by the written consent of all of such directors.
Section 3.7. Regular Meetings. Regular meetings of the Board of
Directors may be held upon such notice or without notice, and at such time and
at such place as shall from time to time be determined by the Board.
Section 3.8. Special Meetings. Special meetings of the Board of
Directors may be called by a majority of the Board of Directors. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
Section 3.9. Notice of Meetings. Notice of each special meeting of the
Board (and of each regular meeting for which notice shall be required) shall be
given by the Secretary or an Assistant Secretary and shall state the place, date
and time of the meeting. Notice of each such meeting shall be given orally or
shall be mailed to each director at his residence or usual place of business. If
notice of less than three (3) days is given, it shall be oral, whether by
telephone or in person, or sent by special delivery mail or telegraph. If
mailed, the notice shall be given when deposited in the United States mail,
postage prepaid. Notice of any adjourned meeting, including
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the place, date and time of the new meeting, shall be given to all directors not
present at the time of the adjournment, as well as to the other directors unless
the place, date and time of the new meeting is announced at the adjourned
meeting. Nothing herein contained shall preclude the directors from waiving
notice as provided in Section 4.1 hereof.
Section 3.10. Quorum and Voting. At all meetings of the Board of
Directors a majority of the entire Board shall be necessary to and shall
constitute a quorum for the transaction of business at any meeting of directors,
unless otherwise provided by any applicable provision of law, by these By-Laws,
or by the Certificate of Incorporation. The act of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the Board of Directors, unless otherwise provided by an applicable
provision of law, by these By-Laws or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, until a
quorum shall be present.
Section 3.11. Compensation. The Board of Directors, by the affirmative
vote of a majority of the directors then in office, and irrespective of any
personal interest of any of its members, shall have authority to establish
reasonable compensation of all directors for services to the Corporation as
directors, officers or otherwise.
Section 3.12. Books and Records. The directors may keep the books of
the Corporation, except such as are required by law to be kept within the state,
outside of the State of Delaware, at such place or places as they may from time
to time determine.
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Section 3.13. Action without a Meeting. Any action required or
permitted to be taken by the Board, or by a committee of the Board, may be taken
without a meeting if all members of the Board or the committee, as the case may
be, consent in writing to the adoption of a resolution authorizing the action.
Any such resolution and the written consents thereto by the members of the Board
or committee shall be filed with the minutes of the proceedings of the Board or
committee.
Section 3.14. Telephone Participation. Any one or more members of the
Board, or any committee of the Board, may participate in a meeting of the Board
or committee by means of a conference telephone call or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
Section 3.15. Committees of the Board. The Board, by resolution adopted
by a majority of the entire Board, may designate one or more committees, each
consisting of one or more directors. The Board may designate one or more
directors as alternate members of any such committee. Such alternate members may
replace any absent member or members at any meeting of such committee. Each
committee (including the members thereof) shall serve at the pleasure of the
Board and shall keep minutes of its meetings and report the same to the Board.
Except as otherwise provided by law, each such committee, to the extent provided
in the resolution establishing it, shall have and may exercise all the authority
of the Board with respect to all matters. However, no such committee shall have
power or authority to:
(a) amend the Certificate of Incorporation;
(b) adopt an agreement of merger or consolidation;
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(c) recommend to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets;
(d) recommend to the stockholders a dissolution of the
Corporation or a revocation of a dissolution;
(e) amend these By-Laws; and unless expressly so provided by
resolution of the Board, no such committee shall have power or authority to:
(1) declare a dividend; or
(2) authorize the issuance of shares of the
Corporation of any class.
ARTICLE IV
WAIVER
Section 4.1. Waiver. Whenever a notice is required to be given by any
provision of law, by these By-Laws, or by the Certificate of Incorporation, a
waiver thereof in writing, whether before or after the time stated therein,
shall be deemed equivalent to such notice. In addition, any stockholder
attending a meeting of stockholders in person or by proxy without protesting
prior to the conclusion of the meeting the lack of notice thereof to him, and
any director attending a meeting of the Board of Directors without protesting
prior to the meeting or at its commencement such lack of notice, shall be
conclusively deemed to have waived notice of such meeting.
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ARTICLE V
OFFICERS
Section 5.1. Executive Officers. The officers of the Corporation shall
be a President or Chief Executive Officer, a Treasurer and a Secretary. Any
person may hold two or more of such offices. The officers of the Corporation
shall be elected annually (and from time to time by the Board of Directors, as
vacancies occur), at the annual meeting of the Board of Directors following the
meeting of stockholders at which the Board of Directors was elected.
Section 5.2. Other Officers. The Board of Directors may appoint such
other officers and agents, including a Chief Financial Officer, Vice President,
Assistant Vice Presidents, Secretaries, Assistant Secretaries and Assistant
Treasurers, as it shall at any time or from time to time deem necessary or
advisable.
Section 5.3. Authorities and Duties. All officers, as between
themselves and the Corporation, shall have such authority and perform such
duties in the management of business and affairs of the Corporation as may be
provided in these By-Laws, or, to the extent not so provided, as may be
prescribed by the Board of Directors.
Section 5.4. Tenure and Removal. The officers of the Corporation shall
be elected or appointed to hold office until their respective successors are
elected or appointed. All officers shall hold office at the pleasure of the
Board of Directors, and any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors for cause or
without cause at any regular or special meeting.
Section 5.5. Vacancies. Any vacancy occurring in any office of the
Corporation, whether because of death, resignation or removal, with or without
cause, or any other reason, shall be filled by the Board of Directors.
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Section 5.6. Compensation. The salaries and other compensation of all
officers and agents of the Corporation shall be fixed by or in the manner
prescribed by the Board of Directors.
Section 5.7. President. The President shall have general charge of the
business and affairs of the Corporation and in the absence of the Chairman of
the Board, the President shall preside at all meetings of the stockholders and
the directors. The President shall perform such other duties as are properly
required of him by the Board of Directors.
Section 5.8. Vice President. Each Vice President, if any, shall perform
such duties as may from time to time be assigned to him by the Board of
Directors.
Section 5.9. Secretary. The Secretary shall attend all meetings of the
stockholders and all meetings of the Board of Directors and shall record all
proceedings taken at such meetings in a book to be kept for that purpose; he
shall see that all notices of meetings of stockholders and meetings of the Board
of Directors are duly given in accordance with the provisions of these By-Laws
or as required by law; he shall be the custodian of the records and of the
corporate seal or seals of the Corporation; he shall have authority to affix the
corporate seal or seals to all documents, the execution of which, on behalf of
the Corporation, under its seal, is duly authorized, and when so affixed it may
be attested by his signature; and in general, he shall perform all duties
incident to the office of the Secretary of a corporation, and such other duties
as the Board of Directors may from time to time prescribe.
Section 5.10. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit, or cause to be deposited, in the name and to the
credit of the Corporation, all moneys and valuable effects in such banks, trust
companies, or other depositories as shall from time to time be selected by the
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Board of Directors. He shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation; he shall render to the
President and to each member of the Board of Directors, whenever requested, an
account of all of his transactions as Treasurer and of the financial condition
of the Corporation; and in general, he shall perform all of the duties incident
to the office of the Treasurer of a corporation, and such other duties as the
Board of Directors may from time to time prescribe.
Section 5.11. Other Officers. The Board of Directors may also elect or
may delegate to the President the power to appoint such other officers as it may
at any time or from time to time deem advisable, and any officers so elected or
appointed shall have such authority and perform such duties as the Board of
Directors or the President, if he shall have appointed them, may from time to
time prescribe.
ARTICLE VI
PROVISIONS RELATING TO STOCK CERTIFICATES AND STOCKHOLDERS
Section 6.1. Form and Signature. The shares of the Corporation shall be
represented by a certificate signed by the President or any Vice President and
by the Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer, and shall bear the seal of the Corporation or a facsimile thereof.
Each certificate representing shares shall state upon its face (a) that the
Corporation is formed under the laws of the State of Delaware, (b) the name of
the person or persons to whom it is issued, (c) the number of shares which such
certificate represents and (d) the par value, if any, of each share represented
by such certificate.
Section 6.2. Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares of stock to receive
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dividends or other distributions, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
stock, and shall not be bound to recognize any equitable or legal claim to or
interest in such shares on the part of any other person.
Section 6.3. Transfer of Stock. Upon surrender to the Corporation or
the appropriate transfer agent, if any, of the Corporation, of a certificate
representing shares of stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, and, in the event that the
certificate refers to any agreement restricting transfer of the shares which it
represents, proper evidence of compliance with such agreement, a new certificate
shall be issued to the person entitled thereto, and the old certificate canceled
and the transaction recorded upon the books of the Corporation.
Section 6.4. Lost Certificates, etc. The Corporation may issue a new
certificate for shares in place of any certificate theretofore issued by it,
alleged to have been lost, mutilated, stolen or destroyed, and the Board may
require the owner of such lost, mutilated, stolen or destroyed certificate, or
his legal representatives, to make an affidavit of the fact and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation on account of the alleged loss,
mutilation, theft or destruction of any such certificate or the issuance of any
such new certificate.
Section 6.5. Record Date. For the purpose of determining the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express written consent to any corporate
action without a meeting, or for the purpose of determining
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stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board may fix, in advance, a record date. Such date shall not be
more than sixty (60) nor less than ten (10) days before the date of any such
meeting, nor more than sixty (60) days prior to any other action.
Section 6.6. Regulations. Except as otherwise provided by law, the
Board may make such additional rules and regulations, not inconsistent with
these By-Laws, as it may deem expedient, concerning the issue, transfer and
registration of certificates for the securities of the Corporation. The Board
may appoint, or authorize any officer or officers to appoint, one or more
transfer agents and one or more registrars and may require all certificates for
shares of capital stock to bear the signature or signatures of any of them.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Dividends and Distributions. Dividends and other
distributions upon or with respect to outstanding shares of stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, bonds, property, or in stock of the
Corporation. The Board shall have full power and discretion, subject to the
provisions of the Certificate of Incorporation or the terms of any other
corporate document or instrument to determine what, if any, dividends or
distributions shall be declared and paid or made.
Section 7.2. Checks, etc. All checks or demands for money and notes or
other instruments evidencing indebtedness or obligations of the Corporation
shall be signed by such
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officer or officers or other person or persons as may from time to time be
designated by the Board of Directors.
Section 7.3. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
Section 7.4. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 7.5. General and Special Bank Accounts. The Board may authorize
from time to time the opening and keeping of general and special bank accounts
with such banks, trust companies or other depositories as the Board may
designate or as may be designated by any officer or officers of the Corporation
to whom such power of designation may be delegated by the Board from time to
time. The Board may make such special rules and regulations with respect to such
bank accounts, not inconsistent with the provisions of these By-Laws, as it may
deem expedient.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS
To the extent permitted by law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide
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prior to such amendment) the Corporation shall indemnify any person against any
and all judgments, fines, and amounts paid in settling or otherwise disposing of
actions or threatened actions, and expenses in connection therewith, incurred by
reason of the fact that he, his testator or intestate is or was a director or
officer of the Corporation or of any other corporation of any type or kind,
domestic or foreign, which he served in any capacity at the request of the
Corporation. To the extent permitted by law, expenses so incurred by any such
person in defending a civil or criminal action or proceeding shall at his or her
request be paid by the Corporation in advance of the final disposition of such
action or proceeding.
ARTICLE IX
ADOPTION AND AMENDMENTS
Subject to any limitation contained in any certificate of designation, these
By-Laws may be amended or repealed and any new By-Laws may be adopted by the
Board of Directors; provided that these By-Laws and any other By-Laws amended or
adopted by the Board of Directors may be amended, may be reinstated, and new
By-Laws may be adopted, by the stockholders of the Corporation entitled to vote
at the time for the election of directors.
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EXHIBIT H
[LETTERHEAD OF PETREE STOCKTON, L.L.P.]
November 13, 1996
To each of the Investors
who is a party to the
Stock Purchase Agreement
referred to below
Gentlemen:
We have acted as counsel to Park 'N View, Inc., a corporation organized and
existing under the laws of Delaware (the "Company"), in connection with the sale
of Series B 7% Cumulative Convertible Preferred Stock (the "Securities")
pursuant to the Stock Purchase Agreement, dated as of November 13, 1996 (the
"Stock Purchase Agreement"), by and among the Company and each of the investors
who are parties thereto (the "Investors"). Capitalized terms used herein without
definition have the meanings ascribed to them in the Stock Purchase Agreement.
This opinion is being rendered pursuant to Section 5.17 of the Stock Purchase
Agreement.
In connection with this opinion, we have examined originals or copies of
the following documents:
1. Stock Purchase Agreement and all schedules and exhibits thereto;
2. Securities Restriction Agreement, the Amended and Restated
Securityholders' Agreement and Exchange Agreement and the
Registration Rights Agreement (collectively, the "Ancillary
Agreements");
3. Certificate of Designation of Series B Stock of the Company
filed with the Delaware Secretary of State on the date hereof;
4. Amended Certificate of Designation of Series A Stock of the
Company filed with the Delaware Secretary of State on the date
hereof;
5. Certificate of Amendment of Certificate of Incorporation filed
with the Delaware Secretary of State on the date hereof;
6. Unanimous Written Consent of the Board of Directors of the
Company, dated November 11, 1996, authorizing the execution,
delivery and performance of the Stock Purchase Agreement and
the Ancillary Agreements; the offer, issuance, sale and
delivery of the Securities and all transactions relating
thereto; the
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amendments to the Certificate of Incorporation and Bylaws of the
Corporation; the filing of the Certificate of Designation of the
Series B Stock; and the filing of the Amended Certificate of
Designation of the Series A Stock;
7. Uanimous Written Consent of the Shareholders of the Company, dated
November 11, 1996, authorizing the amendments to the Certificate
of Incorporation and Bylaws of the Corporation;
8. Written Consent of the Holders of the Series A Preferred Stock
of the Company, dated as of the date hereof, authorizing: (i)
the offer and sale of the Securities and the conversion of
subordinated notes and stock purchase warrants, (ii) the
amendment to the Certificate of Incorporation, (ii) the
amendment to the Certificate of Designation of Series A Stock,
and (iv) the Certificate of Designation of Series B Stock;
9. Certificate of Incorporation of the Company certified by the
Secretary of State of Delaware as of November 1, 1996;
10. Certificate of Good Standing of the Company issued by the
Secretary of State of Delaware on November 1, 1996; and
11. Amended and Restated Bylaws of the Company.
In addition, we have examined originals (or copies certified or otherwise
identified to our satisfaction) of such other instruments, certificates and
documents as we have deemed necessary or appropriate for the purposes of the
opinions rendered below, including a certificate of an officer of the Company
(the "Officer's Certificate") upon which we have relied as to certain factual
matters in giving our opinion herein.
During the course of our examinations, with your permission and without
independent verification or investigation, we have assumed (i) the genuineness
of all signatures, (ii) the authenticity of all documents submitted to us as
originals, (iii) the conformity to original documents of all documents submitted
to us as certified, conformed or photostatic copies, (iv) that the corporate
minute book of the Company is complete and accurately reflects all of the
minutes of meetings and consents to actions of the directors and shareholders of
the Company, (v) the truth and accuracy of all matters stated in the Officer's
Certificate and (vi) the due authorization, valid execution and delivery of all
documents except where our opinion expressly addresses authorization, execution
and delivery.
As to the factual matters forming the basis of our opinion, whenever an
opinion with respect to the existence or absence of facts is qualified by the
phrases "to our knowledge" or "known to us" or "to the best of our knowledge,"
such phrases indicate only that, based on the actual knowledge (i.e., conscious
awareness of facts) of James M. O'Connell, the only attorney in this firm who is
actively involved in and responsible for the handling of the Company's legal
affairs
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handled by this firm and a review of our files, we have no reason to
believe such opinions are not factually correct, and that no inference as to our
knowledge of such facts should be drawn from the fact of our representation of
the Company. We have, when relevant facts were not known to us or independently
established, relied upon the Officer's Certificate, and we have made no
independent investigation of such matters on the public records or otherwise
except to discuss them with the President of the Company. We have not reviewed
the files and records of the Company generally and have relied on the Company to
provide us with documents for review.
Based on the foregoing and subject to the assumptions, limitations and
qualifications set forth herein, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has all requisite
corporate power and authority to own its properties and assets and carry on its
business as now conducted, and is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the location or nature of its
property or the character of its business makes such qualification necessary,
except where the failure to be so qualified would not materially adversely
affect the business, condition, prospects, properties or results of operations
of the Company (a "Material Adverse Effect").
2. The Company has the full corporate power and authority to execute and
deliver each of the Stock Purchase Agreement and each of the Ancillary
Agreements and to perform fully its obligations thereunder. The execution,
delivery and performance of the Stock Purchase Agreement and each of the
Ancillary Agreements, the amendments to the Certificate of Incorporation and
Bylaws of the Corporation, the execution and filing of the Certificate of
Designation of the Series B Stock and the Amended Certificate of Designation for
the Series A Stock with the Delaware Secretary of State and the issuance of the
Series A Stock and the Series B Stock thereunder have been duly authorized by
all necessary action of the Company.
3. The Stock Purchase Agreement and each of the Ancillary Agreements has
been duly executed and delivered by and constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms (excluding Article 4 of the Registration Rights Agreement
regarding indemnification and contribution as to which no opinion is expressed),
except as enforceability may be limited by bankruptcy, insolvency, moratorium
and other rights affecting creditors rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding at law or equity).
4. The authorized capital stock of the Company consists of (a) 7,000,000
shares of Common Stock, $0.001 par value per share, of which 4,318,182 shares
are issued as of the date hereof, (b) 2,000,000 shares of Preferred Stock, $0.01
par value per share, of which (i) 627,630 shares have been designated as Series
A Preferred Stock and 388,065 shares of which are issued and outstanding on the
date hereof (the "Series A Preferred Stock"), and (ii) 1,372,370 shares have
been designated Series B 7% Cumulative Convertible Preferred Stock, all of which
have been issued and are outstanding on the date hereof (the "Series B Preferred
Stock"). The Series A Preferred Stock and the Series B Preferred Stock issued
pursuant to the Stock Purchase Agreement have been duly and validly authorized
and, when delivered and paid for, will be validly issued, fully paid and
non-assessable with no personal liability attaching to the ownership thereof,
and, assuming the accuracy of the Investors' representations contained in the
Stock Purchase
-55-
<PAGE> 166
Agreement, will be issued by the Company in compliance with all applicable
federal and state securities laws and all applicable rules and regulations
thereunder provided, however, we express no opinion with respect to compliance
with the antifraud provisions of the federal and state securities laws. The
relative rights, preferences, restrictions and other matters relating to the
Series A Preferred Stock and the Series B Preferred Stock are as reflected in
the Certificate of Incorporation, as amended, Certificate of Designation of
Series B Stock and Amended Certificate of Designation of Series A Stock.
5. To the best of our knowledge, the Company is not in violation or default
of any provision of (i) its Certificate of Incorporation or Bylaws, or (ii) any
contract, agreement, obligation, commitment, license, indenture, mortgage, deed
of trust, loan or credit agreement or any other agreement or instrument to which
the Company is a party or by which any of its assets are bound, except for
violations with respect to clause (ii) that would not have a Material Adverse
Effect. The execution, delivery and performance of the Stock Purchase Agreement
and each of the Ancillary Agreements do not and will not conflict with or, with
or without the serving and/or receipt of notice or the passage of time or both,
result in any default under, termination of, acceleration of the performance
required by, excuse of the performance of, or material modification, or result
in the creation or imposition of any encumbrance upon any assets of the Company
under, (i) any provision of the Certificate of Incorporation or Bylaws of the
Company or (ii) to the best of our knowledge, the terms of any material
contract, agreement, obligation, commitment, license, indenture, mortgage, deed
of trust, loan or credit agreement or any other agreement or instrument to which
the Company is a party or by which any of its assets are bound. To best of our
knowledge, the execution, delivery and performance of the Stock Purchase
Agreement and the Ancillary Agreements by the Company will not violate any
judgment, decree, order, statute, rule or regulation of any federal, state or
local government or agency having jurisdiction over the Company or its assets.
6. To the best of our knowledge, no action, suit, claim, investigation,
inquiry or other proceeding by any governmental body or other person or legal or
administrative proceeding has been instituted or, to our knowledge, threatened
which questions the validity or legality of the transactions contemplated by the
Stock Purchase Agreement. Except as set forth on the schedules to the Stock
Purchase Agreement, there are no actions, suits, claims, proceedings,
investigations pending or, to our knowledge, threatened against the Company,
except for actions, suits, claims, investigations, inquiries or proceedings
that, singly or in the aggregate, could not result in a Material Adverse Effect.
7. To the best of our knowledge, no consent, approval, waiver or
authorization of or designation, declaration or filing with any governmental or
regulatory authority or any other person is required in connection with the
valid execution, delivery and performance of the Stock Purchase Agreement, the
Ancillary Agreements and the other agreements contemplated thereunder, except
that compliance by the Company with the terms of the Registration Rights
-56-
<PAGE> 167
Agreement will require compliance with Federal and state laws, rules and
regulations regarding the registration of securities.
The opinions expressed above are subject to the following qualifications:
A. We are members of the North Carolina bar and we express no opinion
as to matters under or involving laws of any other
jurisdiction other than the corporate laws of the State of
Delaware;
B. Our opinions are limited to matters expressly stated herein and no
opinion is implied or may be inferred beyond the matters
expressly stated;
C. This opinion letter is furnished to the Purchases solely for
their benefit and may not be relied upon by nor copies
delivered to any other person or entity or in connection with
any other transaction without our prior written consent; and
D. Our opinions are rendered as of the date hereof and we do not
assume any responsibility to update or modify our opinions
based upon new or additional information or facts which arise
or come to our attention subsequent to delivery of this
opinion.
Very truly yours,
PETREE STOCKTON, L.L.P.
-57-
<PAGE> 168
EXHIBIT I
Financial Statements
PARK 'N VIEW, INC.
Balance Sheet
As of August 31, 1996
<TABLE>
<CAPTION>
-------------
31 - Aug - 96
-------------
<S> <C>
Assets:
Current assets:
Cash $ 363,205
Accounts receivable 42,228
Reserve for uncollectable (5,411)
Inventory 355,976
Deferred expenses 32,973
Prepaids and other 98,488
------------
Total current assets 887,458
Property and equipment, at cost
Site equipment and improvements 1,821,860
Construction Equipment 117,860
Vehicles 41,740
Furniture and Fixtures 22,260
Computer equipment 112,636
------------
2,116,468
Less accumulated depreciation and amortization 155,483
------------
1,960,985
Intangible assets
Other 202,781
------------
$ 3,051,224
</TABLE>
UNAUDITED FOR MANAGEMENT DISCUSSION ONLY
-58-
<PAGE> 169
PARK 'N VIEW, INC.
Balance Sheet
As of August 31, 1996
<TABLE>
<CAPTION>
--------------
31 - Aug - 96
--------------
<S> <C>
Liabilities and equity:
Current liabilities:
Account payable $ 423,695
Unearned revenue 57,253
Accrued liabilities 35,378
Notes payable 10,873
Current portion of capital lease obligations 102,385
-------------
Total current liabilities 629,585
Long-term liabilities:
Notes payable
Subordinated notes payable 3,797,200
Accrued interest subordinated notes 132,660
-------------
Total long-term liabilities 3,929,860
-------------
Total liabilities 4,559,445
Obligations Under Capital Leases 392,103
Redeemable Preferred Stock & Accrued Dividends 721,370
Shareholders' equity
Common Stock, $.001 par value, authorized
5,000,000 shares, issued and outstanding
4,318,182 at August 31, 1996 4,318
Additional paid-in capital 8,764
Retained earnings (1,982,607)
Current earnings (652,170)
-------------
Total shareholders' equity (2,621,694)
-------------
$ 3,051,224
-------------
</TABLE>
UNAUDITED FOR MANAGEMENT DISCUSSION ONLY
-59-
<PAGE> 170
PARK 'N VIEW, INC.
Income Statement
For the period ended August 31, 1996 compared to year to date
<TABLE>
<CAPTION>
YTD
31 - Aug - 96 31 - Aug - 96
--------------- -------------
<S> <C> <C>
Revenues
Service Revenue $ 47,193 $ 83,833
Equipment Sales 2,297 7,581
Advertising 2,500 5,000
Other 71 737
---------- ----------
Total revenues 52,061 97,152
Cost of goods sold
Service Cost 52,226 106,047
Service Depreciation 31,496 61,409
Equipment Cost 10,969 20,684
Advertising Cost 1,250 2,500
---------- ----------
Total cost of sales 95,941 190,641
---------- ----------
Gross profit (43,880) (93,489)
---------- ----------
Selling, general and administration expenses 244,473 509,019
---------- ----------
Net operating profit/(Loss) (288,473) (602,508)
---------- ----------
Interest expense 22,205 50,546
Interest expense (501) (885)
Prior month adjustment
Net operating loss before taxes (310,056) 652,169)
----------
UNAUDITED FOR MANAGEMENT DISCUSSION ONLY
</TABLE>
-60-
<PAGE> 1
EXHIBIT 10.24
SECURITIES RESTRICTION AGREEMENT
SECURITIES RESTRICTION AGREEMENT ("Agreement") dated as of November 13,
1996, by and among PARK 'N VIEW, INC. a Delaware corporation (the "Company"),
the Existing Investors set forth on Exhibit A attached hereto and made a part
hereof (the "Existing Investors") and the Investors set forth on Exhibit B
attached hereto and made a part hereof (the "Investors"). The Existing Investors
and the Investors are referred to herein collectively as the "Securityholders"
and each individually as a "Securityholder."
Definitions. Terms initially capitalized but not otherwise defined
herein shall have the meanings given such terms in the Securities Purchase
Agreement (as hereinafter defined), except for the following:
"Qualified Sale" means a Sale or exchange of the Securities for cash or
other securities which is (a) approved by at least (x) 70% of the directors and
(y) two of the directors designated by the holders of the Preferred Stock and
(b) the stated consideration is at least equal to an amount which (i) would
represent, on an as converted basis, a compound annual rate of return of 35% to
the Investors based upon the original issuance price of the Series B Stock, or
(ii) is 200% of the then conversion price of the Series B Stock.
"Original Investors" shall mean Ian Williams, Nelgo Investments, Samuel
Hashman, MPN Partners, Ltd. and Park 'N View General Partner, Inc.
"Patricof Investors" shall mean the Existing Investors other than the
Original Investors.
"Prospective Purchase" shall mean any person to whom a holder shall
desire to sell shares of Common Stock and who shall be identified by such
Securityholder to the Company and the Holders of Securities under the terms of
Section 1 hereof.
"Sale" means (a) the consolidation or merger of the Company into or
with any corporation or corporations (other than a merger with another
corporation in which the Company is the surviving corporation and which does not
result in any reclassification or change of outstanding shares of the Company's
Stock of any class or series, whether now or hereafter authorized, other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), (b) the sale, lease
or transfer by the Company of all or substantially all of its assets, (c) the
capital reorganization of the Company or (d) a reclassification or change of
outstanding shares of the Company's Common Stock.
"Securities" shall mean at any time, the shares of then outstanding
Common Stock and Series B Stock; provided, however, that Securities shall not be
deemed to include any shares of Common Stock sold pursuant to an effective
registration or any shares sold without registration
<PAGE> 2
under the Securities Act in compliance with Rule 144, or pursuant to any other
exemption from registration under the Securities Act to a person who is free to
resell such shares without registration under the Securities Act, and provided,
further, that at any time subsequent to the closing of an initial public
offering, Securities shall not include any shares which are eligible to be sold
without registration under the Securities Act in compliance with subsection (k)
of Rule 144.
"Securities Purchase Agreement" shall mean that certain Stock Purchase
Agreement, dated as of the date hereof, by and between the Company and each of
the Investors.
1. Right of Co-Sale
(A) Right of Co-Sale. (1) Prior to a Qualifying Offering
and for so long as the Investors and their Affiliates own 50% or more of the
Securities purchased pursuant to the Securities Purchase Agreement, in the event
that an Existing Investor desires to sell any or all of the shares of Common
Stock (excluding shares of Common Stock issuable upon conversion of Series B
Stock) owned by such Securityholder and receives a bona fide offer therefor (the
"Selling Securityholder"), such Selling Securityholder shall so notify the
Investors in writing. The notice to the Investors shall be delivered by hand, or
by first-class, certified or overnight mail or courier, postage prepaid, or by
telecopier (with telephonic confirmation of receipt), to their respective
addresses as shown on the books of the Company, which addresses shall be
provided to the Selling Securityholder by the Company. Each notice shall set
forth the identity and mailing address of the prospective purchaser
("Prospective Purchaser"), the quantity and description of the Common Stock
proposed to be sold, the price per share to be received therefor, the number of
shares which may be sold by each Investor as determined in accordance herewith
and the address of the Selling Securityholder to which the Investors may send
notices to such Selling Securityholder required hereunder.
Such notice shall state the maximum number of shares of Common Stock
which may be sold to the Prospective Purchaser by each Investor as determined in
accordance herewith. Each Investor shall thereupon be entitled for a period of
20 days after the date of such notice to offer to sell to the Prospective
Purchaser, for such price and upon such terms, the proportion (rounded to the
nearest whole share) of the number of shares of Common Stock proposed to be sold
as such Holder's aggregate holding of Securities then bears to the aggregate
amount of Securities then held by all Investors exercising their rights of
co-sale under this subsection (A). The rights granted to the Investors in this
subsection (A) may be exercised in whole or in part and shall be exercised by
the tender, conditioned upon receipt of the consideration for the Common Stock
sold hereunder of the maximum number of shares of Common Stock (or Series B
Stock convertible into such number of shares of Common Stock) the Holder thereof
desires to sell, endorsed and in transferable form, free and clear of liens,
claims, security interests and other encumbrances, to the Company, which shall
act as agent for purposes of such sale. On the first business day following the
date 20 days following the date of the first notice given to the Investors, the
Company shall notify the Selling Securityholder, the Investors, and the
2
<PAGE> 3
Prospective Purchaser of the amount of Securities to be sold under this
subsection (A), the price to be paid for any shares of Common Stock and the
price therefor. In such notice to the Prospective Purchaser, the Company shall
direct the Prospective Purchaser to furnish to the Company, as agent, within 10
days of the date of such notice, the price of such tendered shares of Common
Stock in the form of an official bank or certified check or checks in specified
amounts. Promptly upon receipt of such check or checks, the Company shall (i)
transmit each check (duly endorsed, if necessary) to the respective tendering
Holder or Holder of Securities (ii) transfer the shares so purchased on the
books of the Company into the name of the purchaser thereof, (iii) transmit
certificates for such shares to the Prospective Purchaser thereof by first class
or certified mail, (iv) transmit tendered shares not so purchased to the Holder
thereof by first class or certified mail, (v) notify the Investors in writing,
delivered by hand or by first-class, certified or overnight mail, postage
prepaid, or by telecopier, of such sale within 5 days following the completion
thereof. In the event that, as to any shares of Common Stock duly tendered and
eligible for sale under this subsection (A) is not received from the Prospective
Purchaser within the aforesaid 10-day period, the Company shall promptly (i)
return to the Investors all the shares of Common Stock tendered by such
Investors, delivered by hand or by first class, certified or overnight mail,
postage prepaid, and (ii) notifying the Selling Securityholder of the return of
such shares of Common Stock. Any shares of Common Stock tendered by an Investor
as aforesaid received by the Company more than 20 days following the date of the
first notice given to the Investors pursuant to this subsection (A) shall be
ineligible for sale in accordance with such notice and the Company shall
promptly return such shares of Common Stock to the tendering Holder, delivered
by hand or by first class, certified or overnight mail. The balance of the
number of shares of Common Stock to be sold to the Prospective Purchaser, after
deduction of the number of shares of Common Stock properly tendered, if any, by
one or more Investors in accordance herewith, except in the event of a public
offering, merger, consolidation, or exchange of securities of the Company
approved by the stockholders of the Company, may be sold by the Selling
Securityholder to the Prospective Purchaser, at a price and upon the terms set
forth in the first notice given to the Investors pursuant to this subsection
(A), not less than 20 days nor more than 60 days following the expiration of the
20-day period during which Investors have timely paid the purchase price for all
shares properly tendered by such Holders and eligible for sale under this
subsection (A).
(B) Transfers to Affiliates. Notwithstanding anything in
this Section 1 to the contrary, each of the Patricof Investors may from time to
time transfer all or part of such record owner's Common Stock (i) to a nominee
identified in writing to the Company as being the nominee of or for such record
owner, and any nominee of or for a beneficial owner of Common Stock identified
in writing to the Company as being the nominee of or for such beneficial owner
may from time to time transfer all or part of the Common Stock held in the name
of such nominee but held as nominee on behalf of such Securityholder, to such
Securityholder, (ii) to an Affiliate of such Securityholder, or (iii) if such
Securityholder is a partnership or the nominee of a partnership, to a partner,
retired partner, or estate of a partner or retired partner, of such partnership,
so long as such transfer is in accordance with the
3
<PAGE> 4
transferee's interest in such partnership and is without consideration;
provided, however, that each such transferee shall remain subject to all
restrictions on the transfer of Securities herein contained.
(C) De Minimis Transfers. Notwithstanding anything in
this Section 1 to the contrary, each of the Original Investors may transfer in
the aggregate up to 50,000 shares of Common Stock owned by him or it free of the
restrictions set forth in subsection (A) of this Section 1.
(D) Termination of Provisions of this Section 1. The
rights granted and obligations imposed in this Section 1 shall terminate on the
first date on which shares of Common Stock are sold in a Qualifying Offering or
the date of consummation of Sale.
(E) Remedies. In the event that any Existing Investor
should sell any Securities in contravention of the participation rights of the
Investors under this Section 1 (a "Prohibited Transfer"), the Investors may,
upon the determination of holders of 66 2/3% in interest of the Securities held
by such Investors, proceed to protect and enforce their rights by suit in equity
or by action at law, whether for the specific performance of any term contained
in this Agreement or for an injunction against the breach of any such term or in
furtherance of the exercise of any power granted in this Section 1, or to
enforce any other legal or equitable right of the Investor or to take one or
more of such actions. In addition to any other remedy at law or in equity
available to the Investors, the Investors shall have the option to sell to such
Existing Investor a number of shares of Securities equal to the number of shares
of Securities sold by the Existing Investor in contravention of such rights on
the following terms and conditions:
(a) The price per share at which the shares are
to be sold to such Existing Investor shall be equal to the price per share paid
to such Existing Investor by the third party purchaser or purchasers of such
Existing Investor's Securities;
(b) The Investors shall deliver to such Existing
Investor, within ninety (90) days after it has received notice from such
Existing Investor or otherwise became aware of the Prohibited Transfer, the
certificate or certificates representing shares to be sold, each certificate to
be properly endorsed for transfer; and
(c) Such Existing Investor shall, upon receipt
of the certificates for the repurchased shares, pay the aggregate purchase price
therefor, by certified check or bank draft made payable to the order of the
Investor and shall reimburse the investor for any additional expenses, including
legal fees and expenses, incurred in effecting such purchase and resale.
4
<PAGE> 5
2. Sale of the Company-Obligation to Sell. Upon a Qualified Sale,
each Securityholder shall sell, exchange or otherwise transfer his, her of its
Securities in accordance with the terms and conditions of the Qualified Sale.
Each Securityholder shall execute such documents and perform such acts,
including, without limitation, voting his, her or its Securities, as may be
reasonably necessary to consummate the Qualified Sale including a transfer of
his, her or its Securities; provided, however, that no Securityholder who is not
an officer or director of the Company shall be required to make any
representations or warranties in any such document, other than with respect to
the status of such Securityholder's title to his, her or its shares of Common
Stock and whether or not he, she or it is an accredited investor (as that term
is defined in Rule 501 promulgated by the Securities and Exchange Commission
under the Securities Act).
3. Legend. All certificates representing shares of Common Stock
of the Company which are subject to Section 1(A) hereof shall bear a legend in
substantially the following form:
"This certificate and the shares represented hereby may not be
sold, assigned, bequeathed, transferred (including by will or pursuant to the
laws of descent and distribution or otherwise), pledged, encumbered or otherwise
disposed of or be made the subject of a security interest except as provided in
that certain Securities Restriction Agreement dated as of November 13, 1996."
4. Miscellaneous.
(A) Amendments. This Agreement may not be altered,
amended or supplemented except in a written instrument executed by (i) the
Company, (ii) Securityholders owning a majority of the Common Stock, (iii)
Securityholders owning a majority of the Series A Stock and (iv) Securityholders
owning 66_% of the Series B Stock.
(B) Successors and Assigns. The rights and benefits of
this Agreement shall inure to the benefit of, and be enforceable by, the
successors and assigns of the Company and the Investors. The rights and
obligations of the Securityholders under this Agreement may only be assigned
with the prior written consent of the Company and the Holders of at least a
majority of each class of the then outstanding Securities, other than an
assignment permitted under Section 1(B) which shall not require any consent
hereunder. This Agreement shall be binding upon the Company and its successors
and assigns and each Securityholder and his heirs, personal representatives,
successors and permitted assigns.
(C) Further Execution. The parties hereto agree to
execute any additional documents or instruments necessary to carry out the
purposes of this Agreement.
5
<PAGE> 6
(D) Governing Law. The validity, meaning and effect of
this Agreement shall be determined in accordance with the domestic laws of the
State of New York applicable to contracts made and to be performed in that state
without giving any effect to any choice or conflict of law provision or rule
(whether in the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
(E) Headings. The headings herein are solely for the
convenience of the parties and shall not serve to modify or interpret the text
of the Sections at the beginning of which they appear.
(F) Severability. In the event that any court or any
governmental authority or agency declares all or any part of any Section of this
Agreement to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any other Section of this Agreement, and in the event that
only a portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
(G) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original but all of which shall
together constitute one and the same document.
(H) Entire Agreement. This Agreement constitutes the
entire agreement by and among the parties hereto with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first set forth above.
ATTEST: PARK 'N VIEW, INC.
/s/ Anthony Allen
- ---------------------------------
By: /s/ Ian Williams
------------------------
Existing Investors whose signatures appear on
Exhibit A hereto, and the Investors whose signatures appear on Exhibit B hereto
6
<PAGE> 7
EXHIBIT A
Park 'N View General Partner, Inc.
By: /s/ Ian Williams
-----------------------------------
Name:
Title:
/s/ Ian Williams
--------------------------------------
Ian Williams
/s /Sam Hashman
--------------------------------------
Sam Hashman
/s/ Monte Nathanson
--------------------------------------
MPN Partners
Nelgo Investments
By: /s/ James M. O'Connell
-----------------------------------
Name:
Title:
7
<PAGE> 8
EXHIBIT A
(continued)
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Robert Chefitz
--------------------------------------
Name:
Title:
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/ OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR
By: /s/ Robert Chefitz
--------------------------------------
Name:
Title:
THE PA FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
--------------------------------------
Name:
Title:
/s/ Michael Willner
--------------------------
Michael Willner
8
<PAGE> 9
EXHIBIT B
STATE OF MICHIGAN RETIREMENT SYSTEM
By: /s/ Paul Rice
--------------------------------------
Name:
Title:
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No. VCA-GA-5298
By: /s/ Sue DeCarlo
--------------------------------------
Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK -1(A) Investment Fund
By: /s/ Fumio Takahashi
--------------------------------------
Name:
Title:
CREDIT SUISSE (GUERNSEY) LIMITED as Trustee
of Dynamic Growth Fund II
By: /s/ K C Wallbridge
--------------------------------------
Name:
Title:
By: /s/ T J Woosley
--------------------------------------
Name:
Title:
9
<PAGE> 10
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.(Its General Partner)
By: /s/ Robert Chefitz
--------------------------------------
Name:
Title:
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By: /s/ Robert Chefitz
--------------------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
--------------------------------------
Name:
Title:
/s/ Michael Willner
-----------------------------------
Michael Willner
<PAGE> 1
EXHIBIT 10.25
AMENDED AND RESTATED
SECURITYHOLDERS' AGREEMENT AND EXCHANGE AGREEMENT
AMENDED AND RESTATED SECURITYHOLDERS' AGREEMENT AND EXCHANGE AGREEMENT,
dated as of November 13, 1996 (this "Agreement"), by and among Park `N View,
Inc. a Delaware corporation (the "Corporation"), the Existing Investors set
forth on Exhibit A attached hereto and the New Investors set forth on Exhibit B
attached hereto.
R E C I T A L S
1. WHEREAS, pursuant to those certain Securities Purchase
Agreements by and between the Corporation and certain of the Existing Investors
(the "Patricof Investors") dated as of November 2, 1995 (collectively, the "1995
Securities Purchase Agreements"), the Corporation agreed to sell to the Patricof
Investors an aggregate of $6 million of Subordinated Notes, an aggregate of
140,000 shares of the Corporation's Series A Preferred Stock and an aggregate of
2,000,000 shares of the Corporation's Common Stock.
2. WHEREAS, pursuant to that certain Stock Purchase Agreement by
and between the Corporation and the New Investors dated as of November 13, 1996
(the "1996 Securities Purchase Agreement"), the Corporation agreed to sell to
the New Investors an aggregate of 1,372,370 shares of the Corporation's Series B
7% Cumulative Convertible Preferred Stock (the "Series B Stock").
3. WHEREAS, the Patricof Investors desire to exchange (i)
$3,000,000 aggregate principal amount of Subordinated Notes, plus all accrued
but unpaid interest, for 318,065 shares of Series A Preferred Stock and (ii)
$1,500,000 aggregate principal amount of Subordinated Notes and warrants to
purchase 239,250 shares of Common Stock for 137,237 shares of Series B Stock.
4. WHEREAS, the parties hereto desire to amend and restate that
certain Security-holders' Agreement, dated as of November 2, 1995, for the
purposes set forth below.
5. WHEREAS, as a condition to the consummation of the
transactions contemplated by the 1996 Securities Purchase Agreement, the
Corporation, the Existing Investors and the New Investors (collectively referred
to herein as the "Investors") have entered into this Agreement to, among other
things, grant certain rights of first refusal regarding securities of the
Corporation to the Investors, effect the exchange referenced above, grant
certain additional rights and impose certain obligations and restrictions.
<PAGE> 2
A G R E E M E N T S
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Defined Terms. Terms initially capitalized but not otherwise
defined herein shall have the meanings given such terms in the 1995 Securities
Purchase Agreements, except for the following:
"Existing Investors" shall mean those persons listed on Exhibit A
attached hereto and made a part hereof.
"Original Investors" shall mean Ian Williams, Nelgo Investments, Samuel
Hashman, MPN Partners, Ltd. and Park 'N View General Partner, Inc.
"Subordinated Notes" shall mean the subordinated promissory notes, 8%
coupon sold pursuant to the 1995 Securities Purchase Agreements.
"Sale" shall have the meaning given such term in the Securities
Restriction Agreement, dated as of the date hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series A Stock" shall mean the Preferred Stock of the Corporation
designated as Series A Preferred Stock pursuant to the Certificate of
Designation described in the 1995 Securities Purchase Agreements.
2. Entire Agreement. This Agreement constitutes the entire
agreement by and among the parties hereto with respect to the subject matter
hereof.
3. Exchange
Upon consummation of the transactions contemplated by the 1996
Securities Purchase Agreement, the Patricof Investors shall exchange with the
Corporation, pro rata, (i) $3,000,000 aggregate principal amount of Subordinated
Notes, plus all accrued but unpaid interest, for 318,065 fully paid and
nonassessable shares of Series A Stock and (ii) $1,500,000 aggregate principal
amount of Subordinated Notes and warrants to purchase 239,250 shares of Common
Stock for 137,237 fully paid and nonassessable shares of Series B Stock.
2
<PAGE> 3
4. Rights of First Refusal
(a) The Corporation shall not issue or sell any shares of
Common Stock, Preferred Stock or other securities convertible into or
exchangeable for shares of Common Stock, other than any such issuance or sale
(i) pursuant to a Qualifying Offering, (ii) pursuant to a stock option plan
approved by the Board of Directors, (iii) as a form of consideration in
connection with mergers or acquisitions where the Corporation is the surviving
entity or (iv) where the aggregate gross proceeds are less than $500,000 in any
single transaction, provided that the sale price per share is not less than the
then applicable conversion price of the Series B Stock and, provided further,
that the aggregate gross proceeds of all such transactions shall not exceed
$1,500,000 (the securities issued in such transactions being referred to as the
"Newly Issued Securities"), unless prior to the issuance or sale of such Newly
Issued Securities each Investor shall have been given the opportunity (such
opportunity being herein referred to as the "Preemptive Right") to purchase (on
the same terms as such Newly Issued Securities are proposed to be sold) the same
proportion of such Newly Issued Securities being issued or offered for sale by
the Corporation as (x) the number of shares of Common Stock (calculated on a
fully diluted basis) held by such Investor on the day preceding the date of the
Preemptive Notice (as defined herein) bears to (y) the total number of shares of
Common Stock (calculated on a fully diluted basis) outstanding on that day. A
"Qualifying Offering" means (i) the Corporation shall have consummated a firm
commitment underwritten public offering of its Common Stock by a nationally
recognized investment banking firm pursuant to an effective registration under
the Securities Act covering the offering and sale of both primary and secondary
shares of Common Stock which results in gross proceeds of at least $20,000,000,
(ii) the Common Stock is listed on either NASDAQ, the New York Stock Exchange or
the American Stock Exchange, and (iii) the price at which the Common Stock is
sold in such offering is at least equal to an amount which (x) is 200% of the
then effective conversion price of the Series B Stock or (y) would represent, on
an as converted basis, a compound annual rate of return of 35% based upon the
original issuance price of the Series B Stock.
(b) Prior to the issuance or sale by the Corporation of
any Newly Issued Securities, the Corporation shall give written notice thereof
(the "Preemptive Notice") to each Investor. The Preemptive Notice shall specify
(i) the name and address of the bona fide investor to whom the Corporation
proposed to issue or sell Newly Issued Securities, (ii) the total amount of
capital to be raised by the Corporation pursuant to the issuance or sale of
Newly Issued Securities, (iii) the number of such Newly Issued Securities
proposed to be issued or sold, (iv) the price and other terms of their proposed
issuance or sale, (v) the number of such Newly Issued Securities which such
holder is entitled to purchase (determined as provided in subsection (a) above),
and (vi) the period during which such Investor may elect to purchase such Newly
Issued Securities, which period shall extend for at least thirty (30) days
following the receipt by such holder of the Preemptive Notice (the "Preemptive
Acceptance Period"). Each Investor who desires to purchase Newly Issued
Securities shall notify the Corporation within the Preemptive Acceptance Period
as to the number of Newly Issued Securities he, she or it wishes to purchase,
3
<PAGE> 4
as well as the number, if any, of additional Newly Issued Securities he, she or
it would be willing to purchase in the event that all of the Newly Issued
Securities subject to the Preemptive Right are not subscribed for by the other
Investors.
(c) In the event an Investor declines to subscribe for
all or any part of his, her or its pro rata portion of any Newly Issued
Securities which are subject to the Preemptive Right (the "Declining Preemptive
Purchasers") during the Preemptive Acceptance Period, then the other Investors
shall have the right to subscribe for all (or any declined part) of the
Declining Preemptive Purchaser's pro rata portion of such Newly Issued
Securities (to be divided among the other Investors desiring to exercise such
right on a ratable basis).
(d) Any such Newly Issued Securities which none of the
Investors elect to purchase in accordance with the provisions of this Section 4,
may be sold by the Corporation, within a period of three (3) months after the
expiration of the Preemptive Acceptance Period, to any other Person or Persons
at not less than the price and upon other terms and conditions not less
favorable to the Corporation than those set forth in the Preemptive Notice.
5. Board Designees.
(a) Investors' Designee. The Board shall consist of not
more than seven (7) members of which two members shall be designated by the
Patricof Investors as provided herein, one member shall be designated by the New
Investors and two members shall be designated by the Original Investors. It is
contemplated that an additional two directors shall be designated by the mutual
agreement of the Board of Directors and the New Investors. So long as the Series
A Stock has not been redeemed and paid in full, at each of the Corporation's
annual or special meetings of stockholders at which directors are to be elected,
the Patricof Investors shall have the right to designate in writing two nominees
for election to the Board (each referred to herein as a "Patricof Investor
Designee" and collectively as the "Patricof Investor Designees") unless the term
of office of either Patricof Investor Designee does not expire at such meeting,
in which case the Patricof Investors may not designate any nominees. The
Patricof Investor Designees shall initially be Robert Chefitz and Thomas
Hirschfeld. At such time as Robert Chefitz and/or Thomas Hirschfeld is unwilling
or unable to serve, any new Patricof Investor Designee(s) may be any person(s)
designated by the Patricof Investors. At each of the Corporation's annual or
special meetings of stockholders at which directors are to be elected, the
Original Investors shall have the right to designate in writing two nominees for
election to the Board (each referred to herein as an "Original Investor
Designee" and collectively as the "Original Investor Designees") unless the term
of office of either Original Investor Designee does not expire at such meeting;
in which case the Original Investors may not designate any nominees. The
Original Investor Designees shall initially be Ian Williams and Daniel K.
O'Connell. At such time as Ian Williams and/or Daniel K. O'Connell is unwilling
or unable to serve, any new Original Investor Designee(s) may be any person(s)
designated by the Original Investors. In all cases, all holders of voting
securities shall vote in favor of election of all nominees of the Patricof
Investors and the Original Investors.
4
<PAGE> 5
The New Investors shall have such rights to designate one member of the
Board of Directors as are provided in the Certificate of Designation of the
Series B Stock.
(b) Best Efforts to Elect Designees. In the event that any nominee or
nominees are designated pursuant to Section 5(a) hereof, the Corporation shall
use its best efforts to cause such nominee(s) to be elected to the Board, and
the holders of voting securities shall vote, together as one class, such
securities owned by them to elect those directors nominated in accordance with
this Section. The foregoing right shall also apply to elections of Board members
effected by written consents of holders of securities rather than by meetings.
(c) Removal of Designees. At any special or annual meeting of the
Corporation's stockholders at which it is proposed to remove directors from
office or in connection with a solicitation of consents through which directors
are to be removed from office, for gross negligence, willful misconduct,
conviction of a felony or acts of fraud, each holder of voting securities,
voting together as one class, shall vote (or give a written consent with respect
to) all of its shares of securities. In all other situations, directors may only
be removed with the majority vote of the group that elected them in accordance
with Section 5(a) hereof.
(d) Vacancies. Should a vacancy on the Board arise for any reason with
respect to one or both of the Patricof Investor Designees, such vacancy may be
filled only by another Patricof Investor Designee. If the Patricof Investors
desire that such vacancy be filled, the holders of voting securities shall vote
each class of securities together as a single class to elect such Patricof
Investor Designee. Should a vacancy on the Board arise for any reason with
respect to one or both of the Original Investors Designees, such vacancy may be
filled only by another Original Investor Designee. If the Original Investors
desire that such vacancy be filled, the holders of voting securities shall vote
each class of securities together as a single class to elect such Original
Investors Designee.
(e) Expenses. The Corporation shall reimburse all members of the Board for
all reasonable out-of-pocket travel and relate expenses incurred by such Board
members in attending Board meetings and meetings of committees of the Board on
which they serve.
1. Confidentiality. The Corporation shall use its best efforts to
(a) protect the secrecy, confidentiality and value of all trade secrets useful
to the conduct of the Corporation's businesses and (b) cause each Person who is
or becomes an officer or key employee of the Corporation who shall have access
to confidential and proprietary information of the Corporation to execute a
confidentiality agreement as a condition to such employment, in such form as
shall be approved by the Board of Directors of the Corporation. Such
confidentiality agreements shall not be amended in any material respect without
the approval of the Board of Directors of the Corporation.
5
<PAGE> 6
7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute on and the same document.
8. Amendments and Governing Law. This Agreement may be amended,
modified and supplemented, and compliance with any term, covenant, agreement, or
condition contained herein may be waived either generally or in particular
instances, and either retroactively or prospectively, only by a written
instrument executed by the Corporation and Investors who hold 66_% of each class
of the Securities; provided, however, that any provision of this Agreement that
would materially adversely affect any particular Investors without similarly
affecting all Investors shall not be valid unless consented to in writing by
such particular Investors. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York applicable to
contracts made and to be performed in that state without giving any effect to
any choice or conflict of law provision or rule (whether in the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
9. Application to Subsequent Investors. This Agreement shall
inure to the benefit of and be binding upon (i) the parties hereto and their
heirs, legal representatives successors and assigns and (ii) any Person who,
after the date hereof, shall become a holder of any shares of any Common Stock,
Series A Stock and/or Series B Stock (such Person's acceptance of such shares to
be deemed to constitute his, her or its agreement to be bound hereby) and such
Person's heirs, legal representatives, successors and assigns.
10. Termination. This Agreement shall terminate upon the date of
consummation of a Sale or the written consent of all the parties hereto.
11. Headings. The headings herein are solely for the convenience
of the parties and shall not serve to modify or interpret the text of the
Sections at the beginning of which they appear.
12. Severability. In the event that any court or any governmental
authority or agency declares all or any part of any Section of this Agreement to
be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any other Section of this Agreement, and in the event that only a
portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
13. Entire Agreement. This Agreement constitutes the entire
agreement by and among the parties hereto with respect to the subject matter
hereof.
14. Further Execution. The parties hereto agree to execute any
additional documents or instruments necessary to carry out the purposes of this
Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as of the day and year first written above.
PARK `N VIEW, INC.
By: /s/ Ian Williams
---------------------------
Name:
Title:
ATTEST:
By: /s/ Anthony Allen
-----------------------------
Secretary
Existing Investors whose signatures appear
on Exhibit A hereto and Investors whose
signatures appear on Exhibit B hereto.
7
<PAGE> 8
EXHIBIT A
PARK 'N VIEW GENERAL PARTNER, INC.
By:/s/ Ian Williams
-----------------------------
Name:
Title:
/s/ Ian Williams
---------------------------------
Ian Williams
/s/ Sam Hashman
--------------------------------
Sam Hashman
By:/s/ MPN Partners
-----------------------------
MPN Partners, Ltd.
NELGO INVESTMENTS
By: /s/ Daniel K. O'Connell
-----------------------------
Name:
Title:
8
<PAGE> 9
EXHIBIT A
(continued)
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTOR ADVISOR
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
/s/ Michael Willner
-----------------------------
Michael Willner
9
<PAGE> 10
EXHIBIT B
STATE OF MICHIGAN RETIREMENT SYSTEM
By: /s/ Paul E. Rice
-----------------------------
Name:
Title:
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The
Prudential Insurance Co.
of America, Separate Account No.
VCA-GA-5298
By: /s/ Sue DeCarlo
-----------------------------
Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK -1(A) Investment Fund
By: /s/ Fumio Takahashi
-----------------------------
Name:
Title:
CREDIT SUISSE (GUERNSEY) LIMITED as Trustee
of Dynamic Growth Fund II
By: /s/ K C Wallbridge
-----------------------------
Name:
Title:
By: /s/ T J Woosley
-----------------------------
Name:
Title:
10
<PAGE> 11
EXHIBIT B
(continued)
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC. (Its General Partner)
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
COUTTS & CO., (CAYMAN) LTD. CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
/s/ Michael Willner
-----------------------------
Michael Willner
11
<PAGE> 1
EXHIBIT 10.26
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
November 13, 1996, by and among PARK 'N VIEW, INC. a Delaware corporation (the
"Company"), the Patricof Investors set forth on Exhibit A attached hereto and
made a part hereof (the "Patricof Investors") and the New Investors set forth on
Exhibit B attached hereto and made a part hereof (the "New Investors"; together
with the Patricof Investors, the "Investors").
WHEREAS, the New Investors and the Company have entered into
that certain Stock Purchase Agreement, dated as of the date hereof (the
"Purchase Agreement"), whereby the New Investors have purchased 1,372,370 shares
of Series B 7% Cumulative Convertible Preferred Stock, par value $.01 per share
(the "Series B Stock").
WHEREAS, the Company desires to (a) amend the registration
rights previously granted to the Patricof Investors with respect to the Common
Stock held thereby and (b) grant registration rights to the New Investors with
respect to (i) the Series B Stock to be issued to the New Investors pursuant to
the Purchase Agreement and that certain Amended Securityholders' Agreement and
Exchange Agreement, dated as of the date hereof, by and among the Company, the
Existing Investors (as defined in the Purchase Agreement) and the New Investors,
and (ii) the shares of Common Stock into which the Series B Stock is
convertible.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and conditions contained herein and of other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. All terms not defined below shall have the
meaning set forth in the Purchase Agreement.
"Commission" means the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"Company Covered Persons" shall have the meaning set forth in
Section 4.2 hereof.
"Damages" shall have the meaning set forth in Section 4.1
hereof.
"Demand Registration" means a Demand Registration as defined
in Section 2.1.
<PAGE> 2
"Holder" means any person who now holds or shall hereafter
acquire and hold Registrable Securities.
"Holder Covered Persons" shall have the meaning set forth in
Section 4.1 hereof.
"Indemnified Party" shall have the meaning set forth in
Section 4.3 hereof.
"Indemnifying Party" shall have the meaning set forth in
Section 4.3 hereof.
"Inspectors" shall have the meaning set forth in Section
3.1(h) hereof.
"Minimum Offering Price" shall have the meaning set forth in
Section 2.1(a) hereof.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Notices" shall have the meaning set forth in Section 6.4
hereof.
"Original Investors" shall mean Ian Williams, Nelgo
Investments, Sam Hashman, MPN Partners, Ltd. and Park 'N View General Partner,
Inc.
"Piggy-Back Registration" means a Piggy-Back Registration as
defined in Section 2.2.
"Priority Registration" shall mean one Demand Registration
pursuant to Section 2.1(a) hereof as to which the Original Investors shall not
be entitled to exercise any registration rights they may have except in
accordance with Section 2.1(d) hereof.
"Records" shall have the meaning set forth in Section 3.1(h)
hereof.
"Registrable Securities" means (a) the shares of Common Stock
into which the Series B Stock is convertible, (b) any additional shares of
Common Stock acquired by the Holders by way of a dividend, stock split or other
distribution in respect of the Series B Stock and (c) any shares of Common Stock
currently held or hereafter acquired by any Patricof Investor. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities at such time as (i) a registration statement with respect to the sale
of such securities has been declared effective by the Commission and such
securities have been disposed of pursuant to such effective registration
statement, (ii) such securities have been distributed to the public pursuant to
the provisions of Rule 144, or (iii) such securities have ceased to be
outstanding.
"Registration Expenses" shall have the meaning set forth in
Section 3.2.
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<PAGE> 3
"Restricted Stock" means the Stock which may at the time be
sold pursuant to Rule 144(k) under the Securities Act or which may be otherwise
sold without registration under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Holder" means an Investor who is selling Registrable
Securities pursuant to a registration statement under the Securities Act.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
"Withdrawal Election" shall have the meaning set forth in
Section 2.3(c) hereof.
ARTICLE 2
REGISTRATION RIGHTS
SECTION 2.1 Demand Registration. (a) Request for Registration.
At any time and from time to time after January 1, 1999, Holders of the lesser
of (i) at least 25% of the Registrable Securities or (ii) Registrable Securities
having a minimum anticipated aggregate offering price of $7,500,000 (the
"Minimum Offering Price") may make written requests on the Company for the
registration of the Registrable Securities under the Securities Act, such
requests hereinafter referred to as a Demand Registration ("Demand
Registration"). Subject to the penultimate sentence of Section 2.1(b), the
Company be obligated to file at least three (3) registration statements under
the Securities Act with respect to Demand Registrations, one of which may be a
Priority Registration (as described in subsection (d) below); provided, however,
that if the Registrable Securities may be registered on Form S-3 (or any
successor form with similar "short form" disclosure requirements), the Investors
shall have the right to request registration of their shares on Form S-3, or
such successor form, without limit on the aggregate number of such
registrations, once per year without regard to the Minimum Offering Price. Any
such request will specify the number of Registrable Securities proposed to be
sold, the intended method of disposition thereof and whether the Demand
Registration constitutes the Priority Registration. The Company shall give
written notice of such registration request within 10 days after the receipt
thereof to all other Holders of Registrable Securities and shall use its
reasonable best efforts to effect the Demand Registration within 30 days after
the giving of such written notice. Within 20 days after receipt of such notice
by any such Holder, such Holder may request in writing that Registrable
Securities be included in such Demand
- 3 -
<PAGE> 4
Registration and the Company shall include in the registration statement for
such Demand Registration the Registrable Securities of all Holders requested to
be so included. Each such request by such other Holders shall specify the number
of Registrable Securities proposed to be sold and the intended method of
disposition thereof.
(b) Effective Registration. A registration will not be
deemed to have been effected as a Demand Registration unless it has been
declared effective by the Commission and the Company has complied in all
material respects with its obligations under this Agreement with respect
thereto; provided, that if, after it has become effective, the offering of
shares of Common Stock pursuant to such Demand Registration is or becomes the
subject of any stop order, injunction or other order or requirement of the
Commission or any other governmental or administrative agency, or if any court
prevents or otherwise limits the sale of the shares of Common Stock pursuant to
the Demand Registration at any time within 180 days after the effective date of
the registration statement, such Demand Registration will be deemed not to have
been effected. If (i) a requested Demand Registration is deemed not to have been
effected or (ii) the requested Demand Registration does not remain effective (A)
for a period of at least 180 days beyond the effective date thereof or (B) with
respect to an underwritten offering of Registrable Securities, until 45 days
after the commencement of the distribution by the Selling Holders (or, in either
event, until the Registrable Securities included in such Demand Registration
have been disposed of pursuant thereto), then the Company shall continue to be
obligated to effect such Demand Registration pursuant to this Section 2.1.
Selling Holders shall be permitted to withdraw all or any part of the
Registrable Securities from a Demand Registration at any time prior to the
effective date of such Demand Registration; provided, that in the event of such
withdrawal, such Selling Holders shall be responsible for all fees and expenses
(including counsel fees and expenses) incurred by them prior to such withdrawal;
and provided, further, that if all of the Selling Holders withdraw the
Registrable Securities from any Demand Registration prior to the effective date
of such Demand Registration and do not reimburse the Company for expenses
payable by the Company pursuant to Section 3.2 hereof and incurred by the
Company in connection with such Demand Registration, such Demand Registration
shall be deemed to have been effected pursuant to this Section 2.1, unless such
withdrawal is as a result of (i) a stop order (or notice from the Commission of
the possibility of a stop order) received by the Company, or (ii) any breach by
the Company of its obligations hereunder, in which case no reimbursement shall
be made or required to be made by the Selling Holders.
(c) Selection of Underwriter. If a majority of the
Selling Holders so elect, the offering of such Registrable Securities pursuant
to such Demand Registration shall be in the form of an underwritten offering.
The Selling Holders owning a majority of Common Stock to be sold shall select
one or more nationally recognized firms of investment bankers who are reasonably
satisfactory to the Company to act as the lead managing Underwriter or
Underwriters in connection with such offering and shall select any additional
investment bankers and managers to be used in connection with the offering.
- 4 -
<PAGE> 5
(d) Other Securities. With respect to the Priority
Registration, no securities of the Original Investors shall be included among
the securities covered by such Priority Registration unless the managing
Underwriter or Underwriters of such offering shall have advised in writing the
Holders of Registrable Securities to be covered by such registration that the
inclusion of such other securities would not adversely affect such offering.
SECTION 2.2 Piggy-Back Registration. If at any time the
Company proposes to file a registration statement under the Securities Act with
respect to an offering by the Company for its own account or for the account of
any of its respective Security holders (other than a registration statement on
Form S-4 or S-8 (or any substitute form that may be adopted by the Commission),
or a Demand Registration pursuant to Section 2.1), then the Company shall give
written notice of such proposed filing to the Holders of Registrable Securities
as soon as practicable (but in no event less than 20 days before the anticipated
filing date), and such notice shall offer such Holders the opportunity to
register such number of Registrable Securities as each such Holder may request
(which request shall be made within 18 days of such notice and shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof) (a "Piggy-Back Registration"). The
Company shall use its reasonable best efforts to cause the managing Underwriter
or Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company or any
other Security holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Any Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any registration
statement pursuant to this Section 2.2 by giving written notice to the Company
of its request to withdraw, provided, that in the event of such withdrawal, such
Holder shall be responsible for all fees and expenses (including fees and
expenses of counsel) incurred by such Holder prior to such withdrawal. The
Company may withdraw a Piggy-Back Registration at any time prior to the time it
becomes effective; provided, that all expenses set forth in Section 3.2 hereof
shall be the sole responsibility of the Company in such case.
No Piggy-Back Registration, and no failure to effect a
Piggy-Back Registration, shall relieve the Company of its obligation to effect a
Demand Registration, and no failure to effect a Piggy-Back Registration and to
complete the sale of Registrable Securities in connection therewith shall
relieve the Company of any other obligation under this Agreement (including,
without limitation, the Company's obligations under Sections 3.2 and 4.1).
- 5 -
<PAGE> 6
SECTION 2.3 Reduction of Offering.
(a) Demand Registration. Except as otherwise provided in
Section 2.1(d) hereof in connection with the Priority Registration, the Company
may include in a Demand Registration Securities for the account of the Company
and any other Persons who hold Securities on the same terms and conditions as
the Registrable Securities to be included therein; provided, however, that (i)
if the managing Underwriter or Underwriters of any underwritten offering
described in Section 2.1 have informed the Company in writing that it is their
opinion that the amount of Securities which Holders of Registrable Securities,
the Company and any other Persons desiring to participate in such Demand
Registration intend to include in such offering is such as to materially and
adversely affect the success of such offering, then the number of Securities to
be offered for the account of the Company and for the account of all such other
Persons (other than the Holders) participating in such Demand Registration shall
be reduced or limited pro rata in proportion to the respective number of
Securities requested to be registered to the extent necessary to reduce the
total number of Securities requested to be included in such offering to the
number of shares, if any, recommended by such managing Underwriters, and (ii) if
the offering is not underwritten, no other Person, including the Company, shall
be permitted to offer Securities under any such Demand Registration unless all
Selling Holders consent in writing to the inclusion of such Securities therein.
(b) Piggy-Back Registration. Notwithstanding anything to
the contrary contained herein, if the managing Underwriter or Underwriters of
any underwritten offering in connection with a Piggy-Back Registration described
in Section 2.2 have informed, in writing, the Holders of the Registrable
Securities requesting inclusion in such offering that it is their opinion that
the total number of Securities which the Company, Holders of Registrable
Securities and any other Persons desiring to participate in such registration
intend to include in such offering is such as to materially and adversely affect
the success of such offering, then the number of Securities to be offered shall
be reduced or limited in the following order of priority: first, the number of
Securities to be offered by all holders of Securities of the Company other than
the Holders of Registrable Securities shall be reduced to the extent necessary
to reduce the total number of Securities to such number recommended by such
managing Underwriters; and second, if further reduction or limitation is
required, the number of Securities to be offered for the account of the Holders
shall be reduced or limited on a pro rata basis in proportion to the relative
number of Registrable Securities of the Holders participating in such
registration.
(c) Withdrawal Election. If, as a result of the proration
provisions of this Section 2.3, any Holder shall not be entitled to include at
least 50% of the Registrable Securities in a Demand Registration or Piggy-Back
Registration that such Holder has requested to be included, such Holder may
elect to withdraw his, her or its request to include Registrable Securities in
such registration (a "Withdrawal Election"); provided, however, that a
Withdrawal Election shall be irrevocable and, after making a Withdrawal
Election, a Holder
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shall no longer have any right to include Registrable Securities in the
registration as to which such Withdrawal Election was made.
ARTICLE 3.
REGISTRATION PROCEDURES
SECTION 3.1 Filings; Information. In connection with any
Demand Registration or Piggy-Back Registration, the Company will use its
reasonable best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof as quickly as practicable, and in connection with any such request:
(a) Registration Statements. The Company will prepare and
file with the Commission a registration statement (which, in the case of an
underwritten public offering, shall be on Form S-3 (unless the Company does not
qualify for use of Form S-3 in a registration involving only a secondary
offering as provided in the General Instructions to Form S-3 in such
registration, in which case such registration statement shall be a Form S-1) or
other form of general applicability satisfactory to the managing underwriter
selected as therein provided) with respect to such securities and use its
reasonable best efforts to cause such registration statement to become effective
and remain effective (i) until the completion of the distribution in the case of
a registration statement on Form S-3 or (ii) for no longer than 180 days in the
case of a registration statement on Form S-1; provided, however, that the
Company shall be required to keep each registration statement pursuant to a
Demand Registration effective for not less than 180 days (or until the
Registrable Securities included in such Demand Registration have been disposed
of pursuant thereto).
(b) Amendments and Supplements. The Company will prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for the period specified
in subsection (a) above and as to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered by
such registration statement in accordance with the intended method of
disposition set forth in such registration statement for such period.
(c) Copies for Review. The Company will, as far in
advance as practicable, prior to filing a registration statement or prospectus
or any amendment or supplement thereto, furnish copies of such registration
statement as proposed to be filed, together with exhibits thereto if requested,
to (i) each Selling Holder, (ii) not more than one counsel representing all
Selling Holders, to be selected by a majority-in-interest of such Selling
Holders, and (iii) each Underwriter, if any, of the Registrable Securities
covered by such registration statement which documents will be subject to review
and approval by the foregoing within three (3) business days after delivery, and
thereafter as far in advance as practicable, furnish to such Selling
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Holders, counsel and Underwriters, if any, for their review and comment such
number of copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto and documents incorporated
by reference therein if requested), the Prospectus included in such registration
statement (inducing each preliminary prospectus) and such other documents or
information as such Selling Holders, counsel or Underwriters may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Selling Holders.
(d) Stop Orders. After the filing of the registration
statement, the Company will promptly notify each Selling Holder of Registrable
Securities covered by such registration statement of any stop order issued or
threatened by the Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered.
(e) Blue Sky. The Company will use its reasonable best
efforts to (i) register or qualify the Registrable Securities under such other
securities or blue sky laws of such jurisdictions in the United States as any
Selling Holder reasonably (in light of such Selling Holder's intended plan of
distribution) requests, and (ii) cause such Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
in the United States as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Selling Holder to consummate
the disposition of the Registrable Securities owned by such Selling Holder;
provided, that the Company will not be required to (x) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subsection (e), (y) subject itself to taxation in any such
jurisdiction or (z) consent to general service of process in any such
jurisdiction.
(f) Certain Events. The Company will immediately notify
each Selling Holder, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the Holders of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and promptly make available to each
Selling Holder any such supplement or amendment. The Company will promptly
prepare and if required, cause to become effective, such supplement or amendment
and deliver sufficient copies thereof to each Selling Holder.
(g) Agreements. The Company and the Selling Holders will
enter into customary agreements (including, if applicable, an underwriting
agreement in customary form and which is reasonably satisfactory to the Company)
and take such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities; and the Selling
Holders may, at their option, require that any or all of the
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<PAGE> 9
representations, warranties and covenants of the Company or to or for the
benefit of such Underwriters also be made to and for the benefit of such Selling
Holders.
(h) Other. The Company will use its reasonable best
efforts to (i) obtain an opinion of counsel for the Company covering such
matters as the Selling Holders or the Underwriter(s), if any, shall reasonably
request; (ii) obtain a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
contained in cold comfort letters as the Selling Holders or the Underwriter(s),
if any, shall reasonably request; and (iii) if reasonably requested by the
Selling Holders, cause the Registrable Securities included in such registration
statement to be (A) listed on each securities exchange, if any, on which similar
securities issued by the Company are then listed or (B) authorized to be quoted
on the NASD's Automated Quotation System ("Nasdaq") or the National Market
System of Nasdaq if the Registrable Securities so qualify.
(i) Due Diligence. The Company will make reasonably
available to each Selling Holder (and its counsel) and each Underwriter, if any,
subject to restrictions imposed by the United States federal government or any
agency or instrumentality thereof, copies of all correspondence between the
Commission and the Company, its counsel or auditors and will also make available
for inspection by any Selling Holder, any Underwriter participating in any
disposition pursuant to such registration statement and any attorney, accountant
or other professional retained by any such Selling Holder or Underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with such
registration statement. Records which the Company determines, in good faith, to
be confidential and which it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such registration
statement or (ii) the disclosure or release of such Records is requested or
required pursuant to oral questions, interrogatories, requests for information
or documents or a subpoena or other order from a court of competent jurisdiction
or other process; provided, that prior to any disclosure or release pursuant to
clause (ii), the Inspectors shall provide the Company with prompt notice of any
such request or requirement so that the Company may seek an appropriate
protective order or waive such Inspectors' obligation not to disclose such
Records; and, provided, further, that if failing the entry of a protective order
or the waiver by the Company permitting the disclosure or release of such
Records, the Inspectors, upon advice of counsel, are compelled to disclose such
Records, the Inspectors may disclose that portion of the Records which counsel
has advised the Inspectors that the Inspectors are compelled to disclose. Each
Selling Holder agrees that information obtained by it solely as a result of such
inspections (not including any information obtained from a third party who,
insofar as is known to the Selling Holder after reasonable inquiry, is not
prohibited from providing such information by a contractual, legal or fiduciary
obligation to the Company) shall be deemed confidential and shall not be used by
it as the basis for any
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<PAGE> 10
market transactions in the securities of the Company or its Affiliates unless
and until such information is made generally available to the public (other than
by the Selling Holders). Each Selling Holder further agrees that it will, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of the Records deemed
confidential.
(j) Sales Efforts. In connection with an underwritten
offering, the Company will participate, to the extent reasonably requested by
the managing Underwriter for the offering or the Selling Holders, in customary
efforts to sell the securities under the offering, including, without
limitation, participating in "road shows"; provided, that the Company shall not
be obligated to participate in more than one such offering in any 12-month
period.
The Company may require each Selling Holder to promptly
furnish in writing to the Company such information regarding the distribution of
the Registrable Securities as the Company may from time to time reasonably
request and such other information as may be legally required in connection with
such registration including, without limitation, all such information as may be
requested by the Commission or the NASD. Notwithstanding anything contained
herein to the contrary, the Company may exclude from such registration any
Holder who fails to provide such information within a reasonable period of time
in advance of the filing of any registration statement hereunder or an amendment
thereto.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
subsection (f) hereof, such Selling Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Selling Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by subsection (f)
hereof, and, if so directed by the Company, such Selling Holder will deliver to
the Company all copies, other than permanent file copies then in such Selling
Holder's possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event the Company shall
give such notice, the Company shall extend the period during which such
registration statement shall be maintained effective (including the period
referred to in subsection (a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to subsection (f)
hereof to the date when the Company shall make available to the Selling Holders
of Registrable Securities covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of subsection (f)
hereof.
SECTION 3.2 Registration Expenses. In connection with any
Demand Registration or Piggy-Back Registration, the Company shall pay the
following registration expenses incurred in connection with the registration
thereunder (the "Registration Expenses"): (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
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qualifications of the Registrable Securities), (iii) processing, duplicating and
printing expenses, (iv) the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), (v) the fees and expenses incurred in connection
with the listing of the Registrable Securities, (vi) reasonable fees and
disbursements of counsel for the Company and customary fees and expenses for
independent certified public accountants retained by the Company (including the
expenses of any comfort letters or costs associated with the delivery by
independent certified public accountants of a comfort letter or comfort letters
requested but not the cost of any audit other than a year end audit), (vii) the
reasonable fees and expenses of any special experts retained by the Company in
connection with such registration, (viii) reasonable fees and expenses of one
firm of counsel for the Holders to be selected by the Holders of at least a
majority of the Registrable Securities to be included in such registration, and
(ix) any other fees and disbursements of underwriters customarily paid by
issuers of securities.
SECTION 3.3 Advice by Company. The Company will keep each
Holder advised as to the completion of any registration contemplated in this
Agreement. At its expense, the Company will furnish promptly to each Holder such
number or copies of prospectuses (including preliminary prospectuses), and all
amendments and supplements thereto, in conformity with the requirements of the
Securities Act, and such other documents as any such Holder from time to time
may reasonably request.
SECTION 3.4 Rule 144 and 144A. The Company covenants that it
will timely file any reports required to be filed by it under the Securities Act
and the Exchange Act and that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
Holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 or Rule
144A under the Securities Act, as such Rules may be amended from time to time,
or (b) any similar rule or regulation hereafter adopted by the Commission. Upon
the request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1 Indemnification by the Company. The Company agrees
to indemnify and hold harmless each Selling Holder, its partners, officers,
directors, employees and agents, and each Person, if any, who controls such
Selling Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, together with the partners, officers, directors,
employees and agents of such controlling Person (collectively, the "Holder
Covered Persons"), from and against any loss, claim, damage, liability,
reasonable attorneys' fees, cost or expense, costs and expenses of investigating
and defending any such claim, joint or several, and any action in respect
thereof (collectively, the "Damages"), to which such Selling Holder, its
partners, officers, directors, employees and agents, and any such Holder
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<PAGE> 12
Covered Person may become subject under the Securities Act or otherwise, insofar
as such Damages (or actions or proceedings, whether commenced or threatened, or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities or
any preliminary prospectus, or arise out of, or are based upon, any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of any federal or state securities law or any rule or regulation
thereof, except insofar as the same are based upon information furnished in
writing to the Company by a Selling Holder expressly for use therein, and shall
reimburse each Holder Covered Person for any legal and other expenses reasonably
incurred by that Holder Covered Person in investigating or defending or
preparing to defend against any such Damages or proceedings; provided, however,
that the Company shall not be liable to any Selling Holder to the extent that
any such Damages (or action or proceeding in respect thereof) arise out of or
are based upon an untrue statement or omission made in any preliminary
prospectus if (i) a copy of the final prospectus was not sent or delivered to
the Person asserting the claim from which such Damages arise on or prior to the
time such delivery is required by the Securities Act, and (ii) the final
prospectus would have corrected such untrue statement or such omission; provided
further, that the Company shall not be liable to any Selling Holder in any such
case to the extent that any such Damages arise out of or are based upon an
untrue statement or omission in any prospectus if (x) such untrue statement or
omission is corrected in an amendment or supplement to such prospectus, and (y)
having previously been furnished by or on behalf of the Company with copies of
such prospectus as so amended or supplemented, such Selling Holder thereafter
fails to deliver such prospectus as so amended or supplemented prior to or
concurrently with the sale of a Registrable Security to the Person asserting the
claim from which such Damages arise. The Company also agrees to indemnify any
Underwriters of the Registrable Securities, their officers and directors and
each Person who controls such Underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in this Section 4.1.
SECTION 4.2 Indemnification by Selling Holders. Each Selling
Holder shall, severally but not jointly, indemnify and hold harmless the
Company, its officers, directors, employees and agents and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, together with the partners, officers,
directors, employees and agents of such controlling Person (collectively,
"Company Covered Persons"), to the same extent as the foregoing indemnity from
the Company to such Selling Holder, but only with reference to information
related to such Selling Holder, or its plan of distribution, furnished in
writing by such Selling Holder or on such Selling Holder's behalf expressly for
use in any registration statement or prospectus relating to the Registrable
Securities, or any amendment or supplement thereto, or any preliminary
prospectus and the aggregate amount which may be recovered from any Selling
Holder pursuant to the indemnification provided for in this Section 4.2 in
connection with any registration and sale of Registrable Securities shall be
limited to the total proceeds received by such Holder from the sale of such
Registrable Securities. In case any action or proceeding
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shall be brought against any Company Covered Person in respect of which
indemnity may be sought against such Selling Holder, such Selling Holder shall
have the rights and duties given to the Company, and the Company Covered Persons
shall have the rights and duties given to such Selling Holder, by Section 4.1.
Each Selling Holder also agrees to indemnify and hold harmless any Underwriters
of the Registrable Securities, their officers and directors and each Person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 4.2.
SECTION 4.3 Conduct of Indemnification Proceedings. Promptly after
receipt by any person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the Person against whom such indemnity may be
sought (an "Indemnifying Party"), notify the Indemnifying Party in writing of
the claim or the commencement of such action; provided, that the failure to
notify the Indemnifying Party shall not relieve it from any liability which it
may have to an Indemnified Party otherwise than under Section 4.1 or 4.2 and
except to the extent of any actual prejudice resulting therefrom. If any such
claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided, that the Indemnified Party shall
have the right to employ separate counsel to represent the Indemnified Party and
its controlling Persons who may be subject to liability arising out of any claim
in respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, but the fees and expenses of such counsel shall be for the
account of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) in the reasonable judgment of the Company and such Indemnified Party,
representation of both parties by the same counsel would be inappropriate due to
actual or potential conflicts of interest between them, it being understood,
however, that the Indemnifying Party shall not, in connection with any one such
claim or action or separate but substantially similar or related claims or
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for all
Indemnified Parties, or for fees and expenses that are not reasonable. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any claim or pending or threatened proceeding in
respect of which the Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such claim or proceeding. Whether or not the
defense of any claim or action is assumed by the
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Indemnifying Party, such Indemnifying Party will not be subject to any liability
for any settlement made without its consent, which consent will not be
unreasonably withheld.
SECTION 4.4 Contribution. If the indemnification provided for
in this Article 4 is unavailable to the Indemnified Parties in respect of any
Damages referred to herein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Damages (i) as between the
Company and the Selling Holders on the one hand and the Underwriters on the
other, in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Holders on the one hand and the
Underwriters on the other from the offering of the Registrable Securities, or if
such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such Damages, as well as any other relevant equitable
considerations, and (ii) as between the Company on the one hand and each Selling
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each Selling Holder in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Holders on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and the Selling Holders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and the Selling
Holders on the one hand and of the Underwriters on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and the Selling
Holders or by the Underwriters. The relative fault of the Company on the one
hand and of each Selling Holder on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 4.4 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4.4, no Underwriter shall be
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required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Selling Holder were
offered to the public (less underwriting discounts and commissions) exceeds the
amount of any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. Each Selling
Holder's obligations to contribute pursuant to this Section 4.4 is several in
the proportion that the proceeds of the offering received by such Selling Holder
bears to the total proceeds of the offering received by all the Selling Holders
and not joint.
ARTICLE 5.
LIMITATIONS OF THE COMPANY'S OBLIGATIONS
SECTION 5.1 Other Registration Rights; Holdback. The Company represents
and warrants to the Holders that there is not in effect on the date hereof any
agreement by the Company pursuant to which any holders of Securities of the
Company have a right to cause the Company to register or qualify such securities
under the Securities Act or any securities or blue sky laws of any jurisdiction
that would conflict in any material respect with any provision of this
Agreement. The Company shall not in the future grant to any owner or purchaser
of Securities of the Company any demand registration rights, or any piggyback
registration rights unless (a) such piggyback registration rights are made
subordinate to the rights granted hereunder, including without limitation, so
that each Holder shall have priority to participate in any piggy-back
registration with respect to such other shares of Stock of the Company and (b)
if the offering by the Holders is underwritten, such owner or purchaser agrees
not to sell any shares of Stock of the Company during the period commencing ten
(10) days prior to any such underwritten offering and ending ninety (90) days
following any such underwritten offering (or for such shorter period of time as
is sufficient and appropriate, in the opinion of any managing Underwriter(s)).
If requested by managing Underwriter(s) in any such registration, the Company
shall cause the directors and executive officers of the Company to execute and
deliver similar holdback agreements.
SECTION 5.2 Participation in Underwritten Registrations.
Notwithstanding anything contained herein to the contrary, the Company shall
have no obligation to register the Registrable Securities of any Holder in an
offering to which the Company is also offering securities for sale for its own
account, unless the Holder (other than Benefit Capital Management Corporation
in the case of clause (b) below) enters into (a) an
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underwriting agreement in customary form with the Underwriter(s) selected for
the offering by the Company (which shall not require the Holder to indemnify
the Underwriter with respect to misstatements or omissions in the registration
statement other than such misstatements or omissions in written material
supplied by such Holder expressly for inclusion in the registration statement)
and (b) if requested by the Underwriter(s), an agreement appointing one or more
(but not more than three) persons approved by a majority-in-interest of the
Holders whose Registrable Securities are to be included in the registration, to
act as attorney-in-fact for the Holder and as escrow agent for the Registrable
Securities to be included in the offering in customary form. In addition, each
such Holder shall, if requested by the Company, complete and execute any
questionnaires and other documents reasonably required under the terms of such
underwriting arrangements and these registration rights.
SECTION 5.3 Holdback Agreement. For so long as the Holder has
the right to have Registrable Securities included in any registration pursuant
to this Agreement, the Holder agrees in connection with any underwritten
registration of the Company's securities, upon the request of the Underwriters
managing any underwritten offering of the Company's securities, not to effect
any public sale or distribution (including any sale pursuant to Rule 144 of the
Securities Act) of any Registrable Securities without the prior written consent
of the Company or such underwriters, as the case may be, within such periods of
time prior to or after the effective date of such registration, as the Company
or the Underwriters may reasonably specify, but in no event in excess of 180
days. This provision shall apply whether or not any Registrable Securities of
the Holder are included in the offering.
SECTION 5.4 Suspension of Obligation to File. Notwithstanding
the provisions of Section 3.1(a), the Company's obligations to file a
registration statement, or cause such registration statement to become and
remain effective, shall be suspended for a period not to exceed 90 days if
there exists at the time material non-public information relating to the
Company that, in the reasonable opinion of the Company, should not be
disclosed.
SECTION 5.5 Satisfaction of Demand Registration Obligation.
The Company shall be deemed to have satisfied its obligations hereunder with
regard to a Demand Registration (including any obligation with regard to a
request of Selling Holders to register their Registrable Securities on Form S-3
as provided in Section 2.1(a) hereof) if, at the time of a Demand Registration
request (including a request of Selling Holders to have their Registrable
Securities registered on Form S-3) under Section 2.1(a) hereof, the requesting
Selling Holders may sell their Registrable Securities in accordance with the
method of disposition elected by such Selling Holders pursuant to an effective
registration statement of the Company or pursuant to such registration
statement subject to the Company amending the same or supplementing the
prospectus included therein; provided, however, that the Company must effect
such amendment or file such supplement; and provided, further, that the Company
must agree thereafter to keep the registration statement effective, subject to
the limitations set forth herein, for at least 180 days following such request,
amendment effective date or supplement filing date, as the case may be.
- 16 -
<PAGE> 17
ARTICLE 6.
MISCELLANEOUS
SECTION 6.1 Amendment and Modification. Any provision of this
Agreement may be waived, provided that such waiver is set forth in a writing
executed by the party against whom the enforcement of such waiver is sought.
This Agreement may not be amended, modified or supplemented other than by a
written instrument signed by holders of a majority of the Registrable
Securities; provided, however, that without the consent of the Holders, no
amendment or modification which materially and adversely affects the ability of
such Holders to have securities registered hereunder may be effected. No course
of dealing between or among any Persons having any interest in this Agreement
will be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any Person under or by reason of this
Agreement.
SECTION 6.1 No Waiver. No failure on the part of the Company
or the Investors in exercising any right, power or privilege granted hereunder
shall operate as a waiver thereof or of any other right, power or privilege,
nor shall any single or partial exercise of such right, power or privilege
preclude any other or further exercise thereof or of any other right, power or
privilege.
SECTION 6.2 Successors and Assigns; Entire Agreement. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns and executors, administrators and heirs. This Agreement sets forth the
entire agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes all prior discussions, oral and written
agreements (including without limitation that certain Registration Rights
Agreement, dated as of November 2, 1995, by and among the Company and the
Existing Investors) and understandings of any and every nature among them.
SECTION 6.3 Severability. In the event that any provision of
this Agreement or the application of any provision hereof is declared to be
illegal, invalid or otherwise unenforceable by a court of competent
jurisdiction, the remainder of this Agreement shall not be affected except to
the extent necessary to delete such illegal, invalid or unenforceable provision
unless that provision held invalid shall substantially impair the benefits of
the remaining portions of this Agreement.
SECTION 6.4 Notices. All notices, demands, requests, consents
or approvals (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served or mailed, registered or certified, return
receipt requested, postage prepaid (or by a substantially similar method), or
delivered by a reputable overnight courier service with charges prepaid, or
- 17 -
<PAGE> 18
transmitted by hand delivery, telegram, telex or facsimile, addressed as set
forth below, or such other address as such party shall have specified most
recently by written notice:
(1) If to the Company:
Park `N View, Inc.
3403 NW 55th Street, Building 10
Fort Lauderdale, FL 33309
Attention: President
Telephone: (954) 730-0565
Telecopy: (954) 730-2298
with a copy to:
James O'Connell, Esq.
Petree Stockton, LLP
4101 Lake Boone Trail, Suite 400
Raleigh, North Carolina 27607
Telephone: (919) 420-1700
Telecopy: (919) 420-1800
(2) If to the Holder, at the most current address, and
with a copy to be sent to each additional address, given by such Holder to the
Company in writing, and copies sent to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, NY 10022
Attention: Morris Orens, Esq.
Telephone: (212) 758-9500
Telecopy: (212) 758-9526
Notice shall be deemed given or delivered on the date of service or
transmission if personally served or transmitted by telegram, telex or
facsimile (with telephonic confirmation of receipt). Notice otherwise sent as
provided herein shall be deemed given or delivered on the third business day
following the date mailed or on the next business day following delivery of
such notice to a reputable overnight courier service.
- 18 -
<PAGE> 19
SECTION 6.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 6.7 Headings. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this
Agreement, nor shall they affect their meaning, construction or effect.
SECTION 6.8 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute one and the same
instrument.
SECTION 6.9 Further Assurances. Each party shall cooperate
and take such action as may be reasonably requested by another party in order
to carry out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
SECTION 6.10 Remedies. In the event of a breach or a
threatened breach by any party to this Agreement of its obligations under this
Agreement, any party injured or to be injured by such breach will be entitled
to specific performance of its rights under this Agreement or to injunctive
relief, in addition to being entitled to exercise all rights provided in this
Agreement and granted by law. The parties agree that the provisions of this
Agreement shall be specifically enforceable, it being agreed by the parties
that the remedy at law, inducing monetary damages, for breach of any such
provision will be inadequate compensation for any loss and that any defense or
objection in any action for specific performance or injunctive relief that a
remedy at law would be adequate is waived.
SECTION 6.11 Pronouns. Whenever the context may require, any
pronouns used herein shall be deemed also to include the corresponding neuter,
masculine or feminine forms.
- 19 -
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PARK `N VIEW, INC.
By: /s/ Ian Williams
--------------------------------
Name:
Title:
INVESTORS
Existing Investors whose signatures appear
on Exhibit A hereto, and the Investors whose signatures appear on Exhibit B
hereto
- 20 -
<PAGE> 21
EXHIBIT A
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/ OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
/s/ Michael Willner
-----------------------------
Michael Willner
- 21 -
<PAGE> 22
EXHIBIT B
STATE OF MICHIGAN RETIREMENT SYSTEM
By:/s/ Paul Rice
-----------------------------
Name:
Title:
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No. VCA-GA-5298
By: /s/ Sue DeCarlo
-----------------------------
Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK -1(A) Investment Fund
By: /s/ Fumio Takahashi
-----------------------------
Name:
Title:
CREDIT SUISSE (GUERNSEY) LIMITED as
Trustee of Dynamic Growth Fund II
By: /s/ K C Wallbridge
-----------------------------
Name:
Title:
By: /s/ T J Woosley
-----------------------------
Name:
Title:
- 22 -
<PAGE> 23
EXHIBIT B
(continued)
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.(Its General Partner)
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
-----------------------------
Name:
Title:
/s/ Michael Willner
-----------------------------
Michael Willner
<PAGE> 1
EXHIBIT 10.27
SERIES C 7% CUMULATIVE CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
BETWEEN
PARK 'N VIEW, INC.
AND
THE PURCHASERS LISTED ON EXHIBIT A
DATED AS OF AUGUST 22, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. SALE AND PURCHASE OF THE SERIES C PREFERRED STOCK.............................................1
SECTION 2. THE CLOSING...................................................................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................2
3.1 Corporate Existence, Power and Authority..................................................2
3.2 Capitalization............................................................................3
3.3 Subsidiary................................................................................5
3.4 No Defaults or Conflicts..................................................................5
3.5 Authorization of Securities...............................................................6
3.6 Securities Exemptions.....................................................................6
3.7. Disclosure Materials; Other Information..................................................7
3.8 Certain Events............................................................................7
3.9 Contracts, Agreements.....................................................................8
3.10 Title to Properties; Leasehold Interests.................................................9
3.11 Litigation...............................................................................9
3.12 Licenses, Permits and Approvals..........................................................9
3.13 Taxes ...................................................................................10
3.14 Employees; ERISA.........................................................................10
3.15. Disaster................................................................................11
3.16 Books and Records........................................................................11
3.17 Material Changes.........................................................................11
3.18 Registration Rights......................................................................11
3.19 Indebtedness.............................................................................12
3.20 Insurance................................................................................12
3.21 Brokers..................................................................................12
3.22 Proprietary Rights.......................................................................12
3.23 Related Party Transactions...............................................................13
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..............................................14
4.1 Purchaser Authority; Accredited Investor Status...........................................14
4.2 Reliance on Representations and Warranties by the Company and the Agent...................15
SECTION 5. COVENANTS OF THE COMPANY......................................................................16
5.1 Use of Proceeds...........................................................................16
5.2 Financial Information.....................................................................16
5.3 Notice of Events of Default; Litigation...................................................17
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
5.4 Access to Information..........................................................................17
5.5 Maintenance of Existence; Properties and Franchises; Compliance with Law; Taxes; Insurance.....18
5.6 No Change in Business..........................................................................19
5.7 Restrictive Agreements Prohibited..............................................................19
5.8 No Dividends; No Redemption....................................................................19
5.9 Consolidation, Merger and Sale.................................................................19
5.10 Transactions with Affiliates...................................................................20
5.11 Superior Classes or Series of Capital Stock; Amendment of Series C Certificate of Designation,
Certificate of Incorporation or By-Laws........................................................20
5.12 No Dilution or Impairment; No Changes in Capital Stock.........................................21
5.13 Reservation of Shares..........................................................................22
5.14 Private Placement Status.......................................................................22
5.15 Regulation D Filing............................................................................22
5.16 Access to Information and Documents............................................................22
5.17 Further Assurances.............................................................................23
5.18 Fees...........................................................................................23
5.19 Notices........................................................................................23
5.20 Redemption Obligations.........................................................................23
5.21 Board Nominee..................................................................................23
SECTION 6. CONDITIONS TO PURCHASERS' OBLIGATIONS...............................................................24
6.1 Series C Certificate of Designation............................................................24
6.2 Certificates for Shares........................................................................24
6.3 Accuracy of Representations and Warranties.....................................................24
6.4 Compliance with Agreements.....................................................................24
6.5 Officers' Certificates.........................................................................25
6.6 Material Adverse Change........................................................................25
6.7 Proceedings....................................................................................25
6.8 Legality; Governmental and Other Authorization.................................................25
6.9 Time of Purchase...............................................................................25
6.10 No Change in Law, etc..........................................................................26
6.11 Opinion of Counsel.............................................................................26
6.12 Other Documents and Opinions...................................................................26
6.13 Payment of Fees and Expenses...................................................................26
6.14 Issuance of the Agent's Warrant(s).............................................................26
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS.................................................................27
7.1 Payment.........................................................................................27
7.2 Representations and Warranties Correct..........................................................27
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 8. BROKERS............................................................................................27
SECTION 9. BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS................................................27
SECTION 10. SPECIFIC PERFORMANCE...............................................................................28
SECTION 11. EXPENSES...........................................................................................28
SECTION 12. AMENDMENTS AND WAIVERS.............................................................................29
SECTION 13. EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED
SHARES; REPLACEMENT................................................................................29
SECTION 14. NOTICES............................................................................................30
SECTION 15. MISCELLANEOUS......................................................................................31
</TABLE>
EXHIBIT A PURCHASER'S SIGNATURE PAGE
EXHIBIT B SERIES C CERTIFICATE OF DESIGNATION
Schedule 3.2(a) Registered Owners of the Company's Capital Stock
Schedule 3.8 Certain Events
Schedule 3.9 Material Contracts
Schedule 3.10 Real Property: Title to Properties
Schedule 3.14 Employee Benefits
Schedule 3.17 Material Changes
Schedule 3.19 Indebtedness
Schedule 3.20 Insurance
Schedule 3.22 Proprietary Rights
-iii-
<PAGE> 5
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement") dated as of August 22, 1997
by and between Park `N View, Inc., a Delaware corporation (the "Company"), and
those persons and entities listed on Exhibit A hereto (collectively, the
"Purchasers" and each, individually, a "Purchaser").
W I T N E S S E T H :
WHEREAS, the Company desires to sell to the Purchasers and the
Purchasers desire to purchase from the Company up to 3,750,000 shares of its
authorized but unissued 7% Series C Cumulative Convertible Preferred Stock, par
value $.01 per share (the "Series C Preferred Stock"), upon the terms and
provisions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1. SALE AND PURCHASE OF THE SERIES C PREFERRED STOCK
(a) Subject to the terms and conditions hereof and in
reliance upon the representations and warranties contained herein, the Company
agrees to sell to the Purchasers, and each Purchaser agrees to purchase from the
Company on the Closing Date specified in Section 2 hereof, the number of shares
of Series C Preferred Stock set forth opposite such Purchaser's name on Exhibit
A hereto (being an aggregate of up to a maximum of 3,750,000 shares of Series C
Preferred Stock) at a price of $8.00 per share for a maximum aggregate purchase
price of Thirty Million Dollars and No Cents ($30,000,000). The sales of the
shares of Series C Preferred Stock to the Purchasers as aforesaid are several
and separate sales and none of the Purchasers shall be responsible for, or
obligated with respect to, any act or default by any other Purchaser. The
obligation of each Purchaser to purchase any of the Shares (as hereinafter
defined) is subject to purchase by one or more other Purchasers at the Initial
Closing (as hereinafter defined) of not less than 1,875,000 shares of Series C
Preferred Stock in the aggregate at a price of $8.00 per share. The shares of
Series C Preferred Stock being purchased pursuant to this Agreement are
collectively referred to herein as the "Shares", containing rights and
privileges as more fully set forth in the Certificate of Designation for the
Series C Preferred Stock (the "Series C Certificate of Designation") attached
hereto as Exhibit B.
(b) The aggregate purchase price to be paid to the
Company by each Purchaser for the Shares to be purchased by such Purchaser
pursuant to this Agreement shall be the amount set forth opposite that
Purchaser's name on Exhibit A hereto. No further payment shall be required from
the Purchaser for the Shares.
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<PAGE> 6
SECTION 2. THE CLOSING
(a) Subject to the terms and conditions hereof, the
initial closing hereunder with respect to the purchase and sale of the Shares
shall take place at the offices of Piper & Marbury L.L.P., 36 South Charles
Street, Baltimore, Maryland 21201 at 1:00 p.m. Baltimore time, on August 21,
1997, or such other location, time and date as the parties hereto shall mutually
agree upon (the "Initial Closing"). The Company and Alex. Brown & Sons
Incorporated (the "Agent") may, in one or more additional closings under this
Agreement (the "Additional Closings", each of the Additional Closings and the
Initial Closing being sometimes referred to herein individually as a "Closing"
and collectively as the "Closings" and the date of each such Closing shall be
referred to herein as the "Closing Date") sell additional shares of Series C
Preferred Stock (up to a total of 3,750,000 shares in the Initial and all
Additional Closings) at a purchase price of not less than $8.00 per share, so
long as Shares sold at any Additional Closing are sold on the same terms and
conditions as the Shares sold at the Initial Closing. Any Additional Closings
shall be held at such time and place as the Company and the Agent shall mutually
agree upon.
(b) Subject to the terms and conditions hereof, the
escrow agent (the "Escrow Agent") for the Purchaser's funds previously deposited
in an escrow account will release from such escrow account and deliver to the
Company an amount equal to the purchase price for the Shares to be purchased by
the Purchaser except as set forth in Section 5.18. As soon as practicable
following each Closing, the Company will deliver to each Purchaser purchasing
Shares a certificate registered in the Purchaser's name (or the name of its
nominee, if any, as specified on Exhibit A hereto) evidencing the number of
Shares set forth opposite the Purchaser's name on Exhibit A dated as of the
Closing Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Purchasers as
follows as of the date hereof and as of the Closing as follows:
3.1 CORPORATE EXISTENCE, POWER AND AUTHORITY
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company is duly qualified, licensed and authorized to do business and is in
good standing in each jurisdiction in which it owns or leases any material
property or in which the conduct of its business requires it to so qualify or be
so licensed, except where the failure to so qualify or be licensed would not
have a material adverse effect on the Company. The Company has all requisite
corporate power, authority and legal right to own or to hold under lease and to
operate the properties it owns or holds and to conduct its business as it is now
being conducted and as it is proposed to be conducted except
-2-
<PAGE> 7
where the failure to have such requisite power, authority and legal right would
not have a material adverse effect on the Company.
(b) Subject to (x) obtaining the approval of the
Company's existing stockholders to the amendment of the Company's Amended
Certificate of Incorporation (the "Certificate of Amendment"), (y) filing of the
Certificate of Amendment, the Certificate of Amendment to the Certificate of
Designation relating to the Series A Preferred Stock, the Certificate of
Amendment to the Certificate of Designation relating to the Series B Preferred
Stock, and the Series C Certificate of Designation, and (z) obtaining all
necessary waivers and consents of stockholders of, and lenders to, the Company
under other agreements, the Company has all requisite power and authority to
enter into this Agreement, the Securities Restriction Agreement, as amended, by
and among the Company, the purchasers of the 7% Series B Cumulative Convertible
Preferred Stock ("Series B Preferred Stock"), Michael Willner and a group of
investment funds managed by Patricof & Co. Ventures, Inc. (the "Patricof-Managed
Funds"), the Company's original investors (the "Original Investors"), Alex.
Brown & Sons Incorporated (the "Agent") as the holder of a warrant to purchase
shares of the Company's Common Stock and the Purchasers (the "Securities
Restriction Agreement"), the Amended and Restated Securityholders' Agreement and
Exchange Agreement, as amended (the "Securityholders' Agreement"), and the
Registration Rights Agreement, as amended (as such agreement is defined in
Section 3.18 below, together with this Agreement, the Securities Restriction
Agreement, the Securityholders' Agreement and the Series C Certificate of
Designation, collectively, the "Transaction Documents"), to sell the Series C
Preferred Stock hereunder and to carry out and perform its obligations under the
terms of the Transaction Documents. Each of the Transaction Documents has been
duly executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
3.2 CAPITALIZATION
(a) As of the date hereof, the authorized
capital stock of the Company consists of 17,750,000 shares of capital stock, of
which 12,000,000 shares are classified as common stock (the "Common Stock"), of
which 4,318,182 shares are issued and outstanding, and 5,750,000 shares are
classified as preferred stock (the "Preferred Stock"), of which (i) 627,630
shares are designated as Series A Preferred Stock, of which 388,065 shares are
issued and outstanding, (ii) 1,372,370 shares are designated as Series B
Preferred Stock, of which 1,372,370 shares are issued and outstanding; and (iii)
3,750,000 shares are designated as Series C Preferred Stock, none of which are
issued and outstanding. As of the Initial Closing, all outstanding shares of
Common Stock and Preferred Stock will have been duly authorized and validly
issued, will be fully paid and non-assessable, and will have been issued in
compliance with all applicable state and federal laws concerning the issuance of
securities. As of the date hereof, there will be reserved for issuance: (i)
1,875,000 shares of Common Stock which may be issued upon conversion of shares
of Series B Preferred Stock; (ii) 3,750,000 shares of Common Stock which may be
issued upon conversion of shares of Series C Preferred Stock; (iii) 409,846
shares of
-3-
<PAGE> 8
Common Stock which may be issued pursuant to the exercise of options
previously granted to present and former employees of the Company; (iv) 115,154
shares of Common Stock which are available for future grants of options under
the Company's Stock Option Plan and (v) up to 186,750 shares of Common Stock
which may be issued pursuant to the exercise of a warrant or warrants to be
granted to the Agent at the Initial Closing and the Additional Closings, if any
(the "Agent's Warrant"). A complete list of all persons who are registered
owners of the capital stock of the Company as indicated in the Company's stock
ledger and similar records as of the date of this Agreement is attached hereto
as Schedule 3.2(a).
(b) Immediately after the Initial Closing, the
authorized capital stock of the Company will consist of 17,750,000 shares of
capital stock, comprised of 12,000,000 shares of Common Stock, of which
4,318,182 shares of Common Stock will be issued and outstanding and 5,750,000
shares of Preferred Stock, of which (i) 627,630 shares are designated as Series
A Preferred Stock, of which 388,065 shares will be issued and outstanding, (ii)
1,372,370 shares are designated as Series B Preferred Stock, of which 1,372,370
shares will be issued and outstanding and (iii) 3,750,000 shares are designated
as Series C Preferred Stock, of which 2,275,412 shares will be issued and
outstanding. As of immediately after the Initial Closing, there will be reserved
for issuance: (i) 1,875,000 shares of Common Stock which may be issued upon
conversion of shares of Series B Preferred Stock; (ii) 2,275,412 shares of
Common Stock which may be issued upon conversion of shares of Series C Preferred
Stock; (iii) 409,846 shares of Common Stock which may be issued pursuant to the
exercise of options previously granted to present and former employees of the
Company; (iv) 115,154 shares of Common Stock which are available for future
grants of options under the Company's Stock Option Plan; and (v) up to 186,750
shares of Common Stock which may be issued pursuant to the exercise of the
Agent's Warrant.
(c) Except as contemplated by (i) the Company's
Stock Option Plan; (ii) that certain Securities Restriction Agreement dated as
of November 13, 1996, relating to the sale and purchase of Shares of Common
Stock of the Company by and among the purchasers of Series B Preferred Stock,
the Patricof-Managed Funds, the Original Investors and the Company; (iii) that
certain Securities Restriction Agreement dated November 2, 1995 by and among the
Original Investors, the Patricof-Managed Funds and the Company; (iv) that
certain Amended and Restated Securityholders' Agreement and Exchange Agreement
dated as of November 13, 1996 by and among the purchasers of Series B Preferred
Stock, the Patricof-Managed Funds, the Original Investors and the Company, and
(v) those certain Securities Purchase Agreements dated November 2, 1995 and
November 13, 1996, respectively, by and among the Company and certain investors,
there are no outstanding rights, options, calls, warrants, conversion rights,
anti-dilution protections or other adjustment provisions, agreements or
preemptive rights to purchase or otherwise acquire shares of capital stock of
the Company and/or obligations of the Company to grant, extend or enter into any
such right, option, call, warrant, conversion right or agreement.
(d) Except as contemplated by (i) that certain
Securities Restriction Agreement dated as of November 13, 1996, relating to the
sale and purchase of Shares of
-4-
<PAGE> 9
Common Stock of the Company by and among the purchasers of Series B Preferred
Stock, the Patricof-Managed Funds, the Original Investors and the Company; (ii)
that certain Securities Restriction Agreement dated November 2, 1995 by and
among the Original Investors, the Patricof-Managed Funds and the Company; (iii)
that certain Amended and Restated Securityholders' Agreement and Exchange
Agreement dated as of November 13, 1996 by and among the purchasers of Series B
Preferred Stock, the Patricof-Managed Funds, the Original Investors and the
Company, and (iv) those certain Securities Purchase Agreements dated November 2,
1995 and November 13, 1996, respectively, by and among the Company and certain
investors, there is no agreement, restriction or encumbrance (including, without
limitation, any right of first refusal, right of first offer or voting trust
agreement) with respect to the sale or voting of any shares of the Company's
capital stock (whether outstanding or issuable upon conversion or exercise of
outstanding securities).
3.3 SUBSIDIARY
Other than as disclosed in the Confidential Private
Placement Memorandum dated as of June 4, 1997, as supplemented (the
"Memorandum"), the Company (i) does not control or own, directly or indirectly,
any shares or proprietary interest in any corporation or business entity, (ii)
is not under common control with, or controlled by, any other corporation or
other business entity and (iii) does not have any letter of intent, agreement in
principle or other binding or non-binding agreement to acquire any control of,
or equity interest in, any other corporation or other business entity.
3.4 NO DEFAULTS OR CONFLICTS
(a) The Company is not in violation or default
under any indenture, agreement or instrument to which it is a party or by which
it or its properties may be bound, which violation or default would have a
material adverse effect on the Company. The Company is not in violation of or
default under any law, rule, regulation, order, writ, injunction, judgment,
decree, award or other action of any court or governmental authority or
arbitrator(s), which violation or default would have a material adverse effect
on the Company. The Company is not restricted from carrying out its business
anywhere in the continental United States by any agreement or administrative or
judicial order, decree or process in any action or proceeding in which the
Company or any of its predecessors is a party. The Company is not in violation
of its Amended Certificate of Incorporation or By-Laws.
(b) The execution, delivery and performance by
the Company of the Transaction Documents and any of the transactions
contemplated hereby or thereby does not and will not (i) violate or conflict
with any provision of (A) the Amended Certificate of Incorporation or By-Laws of
the Company, subject to obtaining the approval of the existing stockholders of
the Company to the Certificate of Amendment, or (B) any law, rule, regulation or
order of any federal, state, county, municipal or other governmental authority,
or any judgment, writ, injunction, decree, award or other action of any court or
governmental authority or arbitrator(s),
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<PAGE> 10
or any agreement, indenture or other instrument applicable to any of the
properties or assets of the Company, (ii) result in the creation of any lien,
charge, security interest or encumbrance upon any of the Company's properties,
assets or revenues, (iii) require the consent, waiver, approval, order or
authorization of, or declaration, registration, qualification or filing with,
any person or entity (whether or not a governmental authority and including,
without limitation, any shareholder approval) except for required securities law
filings, and board of director and stockholder approvals and certain consents
which approvals, consents and waivers have been obtained or (iv) cause
anti-dilution clauses of any outstanding securities to become operative or give
rise to any preemptive or similar rights of purchase which have not been waived
by the holders thereof prior to the date hereof.
3.5 AUTHORIZATION OF SECURITIES
(a) All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the sale and
issuance of the Series C Preferred Stock and the performance by the Company of
its obligations under the Transaction Documents has been taken or will be taken
prior to the Initial Closing. The Company has or will have prior to the Initial
Closing duly reserved an aggregate of not less than 2,275,412 shares of Common
Stock for issuance upon conversion of the Series C Preferred Stock included in
the Initial Closing.
(b) The Series C Preferred Stock, when issued,
sold and delivered in accordance herewith, will be duly authorized, validly
issued and outstanding, fully paid and non-assessable and will not be subject to
any preemptive or other preferential rights or similar statutory or contractual
rights of others arising pursuant to any statute, rule or regulation or
agreement or instrument to which the Company is a party, except as disclosed in
the Memorandum. The issuance and delivery of shares of Common Stock to be issued
pursuant to the exercise of the Agent's Warrant will have been duly authorized
by all requisite corporate action on the part of the Company, and, when so
issued, such shares of Common Stock will be duly authorized, validly issued and
outstanding, fully paid and non-assessable and will not be subject to any
preemptive or other preferential rights or similar statutory or contractual
rights of others arising pursuant to any statute, rule or regulation or
agreement or instrument to which the Company is a party or otherwise, except as
disclosed in the Memorandum.
3.6 SECURITIES EXEMPTIONS
Assuming the accuracy of the representations and
warranties of the Purchasers, the Shares will be issued in transactions exempt
from registration under Regulation D under the Securities Act of 1933, as
amended (the "Securities Act"), and will not require registration or
qualification or filings under the Securities Act or any state securities or
"Blue Sky" law or any regulation thereunder, except for such registration or
qualification or filings under any such state securities or "Blue Sky" laws or
regulations thereunder which shall have been obtained or made on or prior to the
Initial Closing or which the Company shall obtain or make within the requisite
time period following each Closing.
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3.7. DISCLOSURE MATERIALS; OTHER INFORMATION
(a) The Company has previously furnished the
Memorandum to the Purchasers. The audited historical financial statements which
accompanied the Memorandum are true and correct, in accordance with the books
and records of the Company, fairly present the financial condition of the
Company, as of the respective dates thereof, and the results of operations of
the Company for such periods, and have been prepared in accordance with
generally accepted accounting principles consistently applied, except that any
unaudited statements may omit footnotes and may be subject to normal year-end
adjustments which in the aggregate are not material. The portions of the
Memorandum containing financial projections and other forward-looking statements
were prepared by the Company in good faith based upon assumptions which the
Company believes to be reasonable in light of facts known to the Company.
(b) Except as otherwise described in the
Memorandum, since March 31, 1997 (i) the business of the Company has been
conducted in the ordinary course, and (ii) there has been no material adverse
change in the assets, properties, liabilities, business, affairs, results of
operations, condition (financial or otherwise) or prospects of the Company. As
of each Closing and as of the date hereof, there are no material liabilities of
the Company which would be required to be provided for in a balance sheet of the
Company as of either such date prepared in accordance with generally accepted
accounting principles consistently applied, other than liabilities provided for
in the financial statements referred to in Section 3.7(a) above and other than
liabilities incurred in the ordinary course of business.
(c) The Company is not aware of any material
liabilities, contingent or otherwise, of the Company that have not been
disclosed in the financial statements (including the footnotes thereto) referred
to in Section 3.7(a) above or otherwise disclosed in the Memorandum other than
liabilities incurred in the ordinary course of business.
(d) Nothing has come to the attention of the
Company that would cause it to believe that the Memorandum contained or contains
a false or misleading statement of a material fact or omits to state any
material fact necessary in order to make the statements made therein not
misleading in light of the circumstances under which they were made; provided
that, with respect to projections and other forward-looking statements, the
Company represents only that such portions of the Memorandum were prepared by
the Company in good faith based upon assumptions which the Company believes to
be reasonable in light of facts known to the Company.
3.8 CERTAIN EVENTS
Except as disclosed in Schedule 3.8 hereto or the
Memorandum, since March 31, 1997, to the best of the Company's knowledge, there
has been no material adverse legislative or regulatory change relating to the
Company's business, and the Company has not to any material
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extent: (a) borrowed any funds or incurred or become subject to any obligations
or liabilities (absolute or contingent), except as incurred in the ordinary
course of business (in amounts consistent with prior operations); (b) discharged
or satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent) other than current liabilities reflected in or shown on
the financial statements contained in the Memorandum; (c) declared or paid any
dividends or distributions to its shareholders of any kind whatsoever; (d)
entered into any agreements or arrangements granting any preferential rights to
purchase any of the assets, properties or rights of the Company, or requiring
the consent of any party to a transfer or assignment of such assets, properties
or rights, or providing for the merger or consolidation of the Company into or
with another corporation or other business entity; (e) except in the ordinary
course of business, made or permitted any amendment or termination of any
material contract, agreement or license to which it is a party; (f) changed any
accounting methods or practice, including, without limitation, any change in
depreciation or amortization policies or rates; (g) made any loan to any person
or entity, including, without limitation, to any officer, director or employee
of the Company, or increased the compensation or benefits payable, or to become
payable, to any of the officers, directors or employees of the Company,
including, without limitation, in respect of any bonus payment or deferred
compensation; (h) entered into any transaction other than in the ordinary course
of business; or (i) entered into an agreement to do any of the foregoing
described in clauses (a) through (h) above.
3.9 CONTRACTS, AGREEMENTS
Except as disclosed in Schedule 3.9 hereto or the
Memorandum, the Company is not a party to any material written or oral (a)
contract for employment which may not be terminated by the Company, as the case
may be, on not more than ninety (90) days' notice without liability to the
Company; (b) pension or profit-sharing plans, retirement plans, bonus plans,
stock purchase or stock option plans or any similar plans, formal or informal,
whether covering one or more directors, officers or present or former employees;
(c) contracts involving payment by or to the Company of more than $100,000 in
the aggregate or in any one year or the performance of which may extend more
than ninety (90) days from the date hereof; or (d) other contracts, agreements
or understandings material to the Company. All such material contracts,
agreements and understandings are in full force and effect except as disclosed
in the Memorandum, and the Company or any other party thereto has not received
any notice of default or is in default, and no condition now exists which, with
notice or the lapse of time or both, would render the Company or, to the
knowledge of the Company, any other party, in default under any material
contracts, understandings or agreements to which the Company is or may be a
party. Except as disclosed in Schedule 3.9 hereto or in the Memorandum, there
are no disputes or proceedings relating to any such material contract,
understanding or agreement and the Company has not received any notice or
indication that any party to any such material contract, understanding or
agreement intends to cancel or terminate such contract, understanding or
agreement or intends to exercise or not exercise any options under such material
contract, understanding or agreement.
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3.10 TITLE TO PROPERTIES; LEASEHOLD INTERESTS
The Company has good and marketable title to each of
the properties and assets owned by it. The Company does not own any real
property. Certain real property used by the Company in the conduct of its
business is held under lease, and the Company is not aware of any pending or
threatened claim or action by any lessor of any such property to terminate or
materially alter any such lease. Except as set forth on Schedule 3.10, none of
the properties owned or leased by the Company is subject to any security
interest, mortgage, lien, encumbrance or charge which could reasonably be
expected to materially and adversely affect the assets, properties, liabilities,
business, affairs, results of operations, condition (financial or otherwise) or
prospects of the Company. Each lease or agreement to which the Company is a
party and pursuant to which the Company holds properties and assets is a valid
and subsisting agreement without any material default of the Company thereunder
and, to the best of the Company's knowledge, without any material default
thereunder of any other party thereto. No event has occurred and is continuing
which, with due notice or lapse of time or both, would constitute a default or
event of default by the Company under any such lease or, to the best of the
Company's knowledge, by any party thereto, except for such defaults that would
not individually or in the aggregate have a material adverse effect on the
Company. The Company's possession of such property has not been disturbed and,
to the best of the Company's knowledge, no claim adverse to its rights in such
leasehold interests has been asserted against it.
3.11 LITIGATION
Except as disclosed in the Memorandum, there is no
action, suit, proceeding, investigation or claim pending against the Company or,
to the knowledge of the Company, threatened against the Company in law, equity
or otherwise before any federal, state, municipal or local court, administrative
agency, commission, board, bureau, instrumentality or arbitrator which (i)
questions the validity of any of the Transaction Documents or any action taken
or to be taken pursuant hereto or thereto, (ii) might reasonably be expected to
adversely affect the right, title or interest of any Purchaser to the Shares, or
(iii) might reasonably be expected to result in a material adverse change in the
assets, properties, liabilities, business, affairs, results of operations,
condition (financial or otherwise) or prospects of the Company. Except as
disclosed in the Memorandum, there is no action or suit by the Company currently
pending or that the Company intends to initiate against others.
3.12 LICENSES, PERMITS AND APPROVALS
The Company owns or possesses and holds free from
restrictions or conflicts with the rights of others all franchises, licenses,
permits, consents, approvals and other authority (governmental or otherwise),
and all rights and privileges with respect to the foregoing, as are necessary
for the conduct of its business as it is now being conducted, and as proposed to
be conducted, except where the failure to own or possess and hold such
franchises, licenses, permits, consents, approvals and other authority
(governmental or otherwise) would not have a
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material adverse effect upon the Company. The Company is not in default in any
material respects under any of such franchises, licenses, permits, consents,
approvals or other authority.
3.13 TAXES
Except as disclosed in the Memorandum, (a) the
Company has filed all federal, state, local and other tax returns and reports,
and any other material returns and reports with any governmental authorities
(federal, state or local), required to be filed by it, (b) the Company has paid
or caused to be paid all taxes (including interest and penalties) that are due
and payable, except those which are being contested by it in good faith by
appropriate proceedings and in respect of which adequate reserves are being
maintained on its books in accordance with generally accepted accounting
principles consistently applied, and (c) the Company does not have any material
liabilities for taxes other than those incurred in the ordinary course of
business and in respect of which adequate reserves are being maintained by it in
accordance with generally accepted accounting principles consistently applied.
Federal and state income tax returns for the Company have not been audited by
the Internal Revenue Service or state authorities. No deficiency assessment with
respect to, or proposed adjustment of, the Company's federal, state, local or
other tax returns is pending or, to the best of the Company's knowledge,
threatened. There is no tax lien, whether imposed by any federal, state, local
or other tax authority outstanding against the assets, properties or business of
the Company. There are no applicable taxes, fees or other governmental charges
payable by the Company in connection with the execution and delivery of this
Agreement, except for governmental fees paid in connection with state and
federal securities law filings.
3.14 EMPLOYEES; ERISA
The Company has no knowledge of any pending or
threatened work stoppage, or union organizing effort involving the employees of
the Company. The Company has no knowledge as to any intention of any key
employee or any group of employees to leave the employ of the Company. Other
than as disclosed in Schedule 3.14 hereto or in the Memorandum, the Company has
not established, sponsored, maintained, made any contributions to or been
obligated by law to establish, maintain, sponsor or make any contributions to
any "employee pension benefit plan" or "employee welfare benefit plan" (as such
terms are defined in the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), including, without limitation, any "multi-employer plan".
Any such plans have been established and are being operated in compliance with
ERISA, and there exist no unfunded obligations of the Company with respect to
any such plan, except as could not reasonably be expected to have a material
adverse effect on the Company. The Company has complied with all applicable laws
relating to the employment of labor, including provisions relating to wages,
hours, equal opportunity, collective bargaining and the payment of Social
Security and other taxes, and with ERISA except to the extent that noncompliance
would not reasonably be expected to have a material adverse effect on the
Company, and the Company is not aware of any pending or threatened claim against
the Company with respect to the foregoing.
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3.15 DISASTER
Neither the business nor the properties of the
Company are currently affected (or has been affected at any time since December
31, 1996) by any fire, explosion, accident, strike, lockout or other dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance), of a kind which
(individually or in the aggregate) has materially adversely affected, or could
reasonably be expected to materially adversely affect, the assets, properties,
liabilities, business, affairs, results of operations, condition (financial or
otherwise) or prospects of the Company.
3.16 BOOKS AND RECORDS
The books and records of the Company, including,
without limitation, all stock ledgers and minute books containing minutes of
Board of Directors and stockholders meetings, are complete and correct in all
material respects. No action has been taken which requires the approval of the
Board of Directors or the stockholders of the Company which has not been so
approved and is not accurately reflected in the Company's minute books.
3.17 MATERIAL CHANGES
Except as disclosed in Schedule 3.17 hereto, since
the date of the Memorandum, there has been no material change in the information
set forth therein, except to the extent described in this Agreement or as
disclosed in the Exhibits and the Schedules hereto, and there have been no
material changes in the employment of personnel or in the condition (financial
or otherwise), operations or prospects of the Company, except changes occurring
in the ordinary course of business which have not had (and are not reasonably
anticipated to have) a material adverse effect on the Company.
3.18 REGISTRATION RIGHTS
Except as contemplated in the Registration Rights
Agreement dated as of November 13, 1996 (and amended as of the date hereof)
between the Company, the Original Investors, the Patricof-Managed Funds, the
purchasers of Series B Preferred Stock, the Agent and the Purchasers (the
"Registration Rights Agreement") or as disclosed in the Memorandum, no person,
other than certain holders of Common Stock, the holders of Series B Preferred
Stock, and the Agent, as holder of the Agent's Warrant, has the right to cause
the Company to effect the registration under the Securities Act of any shares of
capital stock or any other securities (including debt securities) of the
Company.
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3.19 INDEBTEDNESS
Schedule 3.19 hereto sets forth (i) the amount of all
indebtedness of the Company outstanding as of the Closing (excluding
indebtedness in individual amounts of less than $25,000, but not exceeding an
aggregate excluded amount of $100,000), (ii) any lien, charge, security interest
or encumbrance with respect to such indebtedness and (iii) a brief description
of each instrument or agreement governing such indebtedness. The Company has
provided counsel to the Agent a complete and correct copy of each such
instrument or agreement (including all amendments, supplements or modifications
thereto). No default exists with respect to or under any such indebtedness or
any instrument or agreement relating thereto which default would reasonably be
expected to have a material adverse effect on the Company.
3.20 INSURANCE
The Company holds valid policies with reputable
insurers covering insurance in the amounts and type that the Company reasonably
believes is appropriate and customary for entities in the same or similar
businesses to that of the Company or that are otherwise required to be
maintained by it and with such deductibles or coinsurance as is customary, and
such policies are in full force and effect. Schedule 3.20 lists all insurance
policies presently in effect for which the Company is a named beneficiary. The
Company has timely filed claims with its insurers with respect to all material
matters and occurrences for which it believes it has coverage.
3.21 BROKERS
Except for the Agent, the Company has no contract,
arrangement or understanding with any broker, finder or similar agent with
respect to the transactions contemplated by this Agreement.
3.22 PROPRIETARY RIGHTS
(a) The Company owns or possesses, or has
adequate and enforceable licenses or other rights to use and license for all
purposes, all proprietary rights necessary for its business (as now conducted
and as proposed to be conducted) without any conflict with or infringement of
the rights of others. Schedule 3.22 attached hereto contains an accurate and
complete list of all proprietary rights which the Company owns or is licensed or
authorized to use by others. The Company has the rights to use and/or own and/or
develop and license the proprietary rights as such rights are set forth on such
Schedule 3.22, and, except as set forth on such Schedule 3.22, (i) no other
person has been granted, by the Company or otherwise, any rights, or has any
interest, in such proprietary rights and (ii) to the knowledge of the Company,
with respect to any proprietary rights which have been assigned to the Company,
the assigning party is fully authorized to assign such rights to the Company
without thereby creating an obligation of the Company to any person. All
proprietary rights held by the Company under licenses have been
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<PAGE> 17
duly licensed to the Company, and, except as set forth in such Schedule 3.22,
the Company has rights to its proprietary rights free and clear of any liens or
other encumbrances. No claim has been asserted or, to the knowledge of the
Company, threatened, by any Person regarding the use or licensing of any of the
Company's proprietary rights by the Company or challenging or questioning the
validity, enforceability or effectiveness of any licenses or agreements
(including, without limitation, assignments) relating to proprietary rights or
asserting any rights in such proprietary rights. The use of its proprietary
rights by the Company does not violate or infringe, and has not in the past
violated or infringed, the rights of any person. No claims have been asserted by
the Company against any other person claiming infringement of the Company's
proprietary rights. The Company has not granted any licenses to the Company's
proprietary rights (other than those granted as a result of the sales of any
proprietary product of the Company in the ordinary course of business), and is
not aware of the third parties who are infringing or violating any of such
proprietary rights. Neither the Company nor, to the knowledge of the Company,
any other person is in default under any license or other agreement relating to
the Company's proprietary rights (including without limitation, assignments),
and all such licenses and agreements are valid, enforceable and in full force
and effect.
(b) Except as set forth on Schedule 3.22
attached hereto, the Company has not granted rights to manufacture, produce,
assemble, license, market, or sell its products to any other person and is not
bound by any agreement that affects the Company's exclusive right to develop,
manufacture, assemble, distribute, market, or sell its products. No supplier of
components to the Company is a sole source of such components, except for those
components that can be obtained from another supplier at substantially the same
cost and quantities in a similar time frame.
3.23 RELATED PARTY TRANSACTIONS
(a) No holder of the Company's Common Stock,
Series A Preferred Stock or Series B Preferred Stock (an "Existing Investor"),
employee, officer or director of the Company, no affiliate of any Existing
Investor, employee, officer or director of the Company, and no member of the
immediate family of any Existing Investor, employee, officer or director of the
Company (any of the foregoing, a "Related Party") is indebted to the Company,
with the exception of Bill J. Buzbee, Vice President - Truckstop Sales and
Business Development and Jody Green, Vice President - Product Development, as
described more fully in the Memorandum under the heading "Certain Transactions"
and Schedule 3.8 attached hereto.
(b) The Company is not indebted and is not
committed to make loans or extend or guarantee credit, to any Related Party.
(c) No Related Party is interested, directly or
indirectly, in any contract with the company except by reason of their ownership
interest in the Company and/or their membership on the company's Board of
Directors.
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<PAGE> 18
(d) No Existing Investor or party to this
Agreement is presently, directly or indirectly through such party's affiliation
with any other person, a party to any transaction with the Company providing for
the furnishing of services by, or rental of real or personal property from, or
otherwise requiring cash payments to, any such person pursuant to an agreement
that is material.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby severally represents and warrants to the Company
as follows as of the date hereof and as of the Closing:
4.1 PURCHASER AUTHORITY; ACCREDITED INVESTOR STATUS
(a) The Purchaser has all requisite power,
authority and legal right to execute, deliver, enter into, consummate and
perform this Agreement. The execution, delivery and performance of this
Agreement by the Purchaser have been duly authorized by all required corporate,
partnership or other actions on the part of the Purchaser. The Purchaser has
duly executed and delivered this Agreement, and this Agreement constitutes the
legal, valid and binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms.
(b) The Purchaser hereby represents to the
Company that it has substantial knowledge, skill and experience in making
investment decisions of this type, it is capable of evaluating the risk of its
investment in the Shares being purchased by it and is able to bear the economic
risk of such investment, including the risk of losing the entire investment,
that (except as the Purchaser has otherwise advised the Company and the
Purchaser's counsel in writing) it is purchasing the Shares to be purchased by
it for its own account, and that the Shares are being purchased by it for
investment and not with a present view to any distribution thereof in violation
of applicable securities laws. It is understood that the disposition of the
Purchaser's property shall at all times be within the Purchaser's control. If
the Purchaser should in the future decide to dispose of any of its Shares, it is
understood that it may do so only in compliance with the Securities Act,
applicable state securities laws and this Agreement. The Purchaser represents
that it is an "accredited investor" as defined in Rule 501(a) under the
Securities Act and that its investment in the Shares does not represent more
than 5% of such Purchaser's net worth. For purposes hereof, "net worth" means
total assets in excess of total liabilities, exclusive of home, home furnishings
and automobiles.
(c) The Purchaser has received (i) audited
financial statements for the nine month period ending March 31, 1997 and (ii)
the Memorandum and has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's management.
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(d) The Purchaser understands that (i) the
Shares have not been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) and Rule 506 promulgated under the
Securities Act, (ii) the Shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act and any applicable
state securities laws or is exempt from such registration or registrations (and
evidence satisfactory to the Company is provided by such Purchaser of the
availability of such exemptions, including the delivery, upon request, to the
Company of an opinion of counsel to such Purchaser, which opinion and counsel
are satisfactory to the Company), and (iii) the Shares will bear a legend to
such effect.
(e) The Purchaser represents that at no time was
the Purchaser presented with or solicited by or through any leaflet, public
promotional meeting, advertisement or any other form of general or public
advertising or solicitation. In addition, the Purchaser acknowledges that there
has never been any representation, guaranty or warranty made by the Company or
any agent or representative of the Company as to the amount of or type of
consideration or profit, if any, to be realized as a result of any investment by
the Purchaser in the Series C Preferred Stock or the Common Stock issuable upon
conversion of the Series C Preferred Stock.
(f) The Purchaser has discussed with his legal,
tax and financial advisors the suitability of an investment in the Company for
his particular tax and financial situation. All information which he has
provided to the Company concerning him and his financial position is correct and
complete as of the date of this Agreement, and if there should be any material
change in such information prior to the Closing Date, the Investor agrees
immediately to provide such information to the Company and the Agent.
(g) The information provided in the Investor
Questionnaire submitted to the Company by such Investor, is true, complete and
correct as of the date hereof.
(h) The Purchaser is a bona fide resident and
domiciliary of, or legal entity of, the state of address as set forth on Exhibit
A hereto.
(i) If the Purchaser is not a resident of the
United States, he understands that it is his responsibility to satisfy himself
as to the full observance of the laws of any relevant territory outside the
United States relating to his purchase of the Shares, including obtaining any
required governmental or other consents or observing any other applicable
formalities.
4.2 RELIANCE ON REPRESENTATIONS AND WARRANTIES BY THE
COMPANY AND THE AGENT
Each Purchaser hereby acknowledges that the Company
and the Agent are relying on the foregoing representations and warranties in
connection with the sale to such Purchaser of the Shares, and thereby agrees to
indemnify and hold harmless the Company and the Agent
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and their respective officers, directors, control persons, agents, partners and
affiliates harmless from and against any and all liabilities, losses, claims,
costs, damages, judgments, settlements and expenses (including reasonable
attorneys' fees and all expenses reasonably incurred in investigating, preparing
or defending against any litigation commenced or threatened or any claim
whatsoever) suffered or incurred by any of them as a result of the breach of any
of such representation and warranty. In no event, however, shall the liability
of any Purchaser for indemnification under this Section 4.2 exceed the purchase
price paid by the Purchaser to the Company in connection with such Purchaser's
purchase of the Shares.
SECTION 5. COVENANTS OF THE COMPANY
The Company covenants and agrees, so long as 20% or more of the Shares
issued hereunder are held of record by the Purchasers and have not been
converted into shares of the Common Stock, unless some other period is expressly
provided in any subsections of this Section 5, in which case such specific
period will govern, as follows:
5.1 USE OF PROCEEDS
The Company will use the proceeds from the sale of
the Shares as described in the section of the Memorandum entitled "Use of
Proceeds."
5.2 FINANCIAL INFORMATION
The Company will maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in accordance with generally accepted
accounting principles consistently applied. The Company will deliver the
following to each Purchaser thereof:
(i) as soon as practicable but in any event
within 120 days after the close of each fiscal year of the Company, (A) a
balance sheet of the Company as of the end of such fiscal year and (B)
statements of operations and cash flows of the Company for such fiscal year, in
each case setting forth in comparative form the corresponding financial
information for the immediately preceding fiscal year, all such balance sheets
and statements to be audited by an independent public accounting firm of
recognized national standing selected by the Company, and such statements shall
be accompanied by management's discussion and analysis of the differences
between the results for such fiscal year and the corresponding financial
information for the preceding fiscal year and between the budgeted amounts (as
supplied pursuant to paragraph (ii) below) and the results for such year and a
narrative discussion of the Company's liquidity and capital resources as of the
end of such year conforming in all material respects to the requirements
contained in Item 303 of Regulation S-K under the Securities Act. All financial
statements provided under this Section 5.2(i) shall be prepared in accordance
with GAAP,
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consistently applied, and shall be certified as to accuracy and completeness by
the Vice President of Finance or the President of the Company.
(ii) as soon as reasonably practicable, and in
any event within 60 days after the close of each of the Company's first three
(3) fiscal quarters, (A) an unaudited balance sheet of the Company as of the end
of such fiscal quarter and (B) unaudited statements of operations and cash flows
of the Company for the quarter just ended and for the portion of the fiscal year
ended with the end of such quarter, in each case in reasonable detail, certified
as to accuracy and completeness by the Vice President - Finance or the President
and Chief Executive Officer of the Company and setting forth in comparative form
the corresponding amounts for the comparable period one year prior thereto
(subject to normal year-end adjustments), together with a management's
discussion and analysis of differences between such results and the
corresponding financial information for the prior period; and
(iii) as soon as reasonably practicable, such
other information as may reasonably be requested by a holder of Shares (unless
reasonably objected to by the Company), regarding the assets, properties,
liabilities, business, affairs, results of operations or conditions (financial
or otherwise) of the Company. As a condition to receiving such information from
the Company, each holder (other than any parties that are (i) agencies,
instrumentalities or entities affiliated with any state government or (ii) a
government sponsored retirement system) of Shares requesting such information
shall, if requested by the Company, execute an appropriate confidentiality
agreement.
The obligation of the Company to furnish such financial information shall
terminate when the Company becomes subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended.
5.3 NOTICE OF EVENTS OF DEFAULT; LITIGATION
Promptly, but in any event within ten (10) days after
notice thereof is received by the Company, the Company will deliver to each
holder of Shares any notice of (i) a default by the Company in the observance or
performance of any material contract or agreement to which the Company is a
party, including, without limitation, any Transaction Document, and (ii) the
commencement of any investigation, action or proceeding at law or in equity or
before any federal or state court or governmental agency to which the Company is
a party an adverse result of which would, either individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business or financial condition of the Company.
5.4 ACCESS TO INFORMATION
At the request of holders of 20% or more of the
outstanding Shares, the Company will permit such Purchasers and any authorized
representative of such Purchasers, subject to (if requested by the Company)
execution by such Purchasers of a reasonable confidentiality
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agreement, full and complete access at the Company during normal business hours
and in a manner that will not unreasonably interfere with the conduct of the
Company's business, to the properties and books and records of the Company. The
Purchasers requesting such access shall bear all costs and expenses they or
their representatives incur in connection with such request and such access.
5.5 MAINTENANCE OF EXISTENCE; PROPERTIES AND FRANCHISES;
COMPLIANCE WITH LAW; TAXES; INSURANCE
The Company will:
(a) maintain its corporate existence, rights and
other franchises in full force and effect; provided, that the Company may
terminate or permit the termination or abandonment of rights or other
franchises, if in the opinion of the Company it is no longer in the Company's
best interests to maintain such rights or other franchises and such termination
or abandonment will not be prejudicial in any material respect to the holders of
the Shares;
(b) maintain its tangible assets in good repair,
working order and condition, ordinary wear and tear excepted, so far as
necessary to the proper carrying on of its business;
(c) comply with each provision of all leases to
which it occupies real or personal property if the breach of such provision
would reasonably be expected to have a material adverse effect on the condition,
financial or otherwise, or operations of the Company;
(d) comply with all applicable laws and with all
applicable orders, rules, rulings, certificates, licenses, regulations, demands,
judgments, writs, injunctions and decrees, the violation of which would
reasonably be expected to have a material adverse effect on the Company,
provided, that such compliance shall not be necessary so long as the
applicability or validity of any such law, order, rule, ruling, certificate,
license, regulation, demand, judgment, writ, injunction or decree shall be
contested in good faith by appropriate proceedings;
(e) pay when due all taxes, fees, assessments
and other government charges imposed upon its properties, assets or income and
all claims or indebtedness (including, without limitation, materialmen's,
vendor's, workmen's and like claims) prior to such claims becoming a lien upon
such properties or assets; provided, that payment of any such tax, fee,
assessment, charge, claim or indebtedness shall not be necessary so long as (i)
the applicability or validity thereof shall be contested in good faith by
appropriate proceedings and a reserve, if appropriate, shall have been
established with respect thereto and (ii) failure to make such payment will not
have a material adverse effect on the business or financial condition of the
Company; and
(f) keep adequately insured all of its
respective properties of a character customarily insured by entities in the
same or similar business as that of the Company, against
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loss or damage of the kinds and in amounts customarily insured against by such
entities and with such deductibles or coinsurance as is customary.
5.6 NO CHANGE IN BUSINESS
The Company will not, without the prior written
consent of holders owning a majority in interest of the Shares, engage in any
business other than the provision of certain advertising, entertainment and
communication services to long-haul professional truck drivers as described in
the Memorandum or reasonable extensions or expansions thereof.
5.7 RESTRICTIVE AGREEMENTS PROHIBITED
The Company shall not become a party to any agreement
which by its terms restricts the Company's ability to comply with and perform
its obligations under the Transaction Documents and the Series C Certificate of
Designation and the By-Laws of the Company.
5.8 NO DIVIDENDS; NO REDEMPTION
Subject to the provisions of the Transaction
Documents, the Company's Series C Certificate of Designation and the Company's
existing debt instruments, the Company will not (i) declare or make or permit to
be declared or made any payment of cash dividends on the Common Stock unless
equal cash dividends are declared and paid on the Series C Preferred Stock on
the same date or (ii) redeem or repurchase outstanding shares of Common Stock.
5.9 CONSOLIDATION, MERGER AND SALE
Without the consent of the holders of a majority of
the outstanding Shares, the Company will not do any of the following (or agree
to do any of the following): (a) wind up, liquidate or dissolve its affairs; (b)
sell, lease, transfer or otherwise dispose of 20% or more of its assets to any
other person other than in the ordinary course of business unless the proceeds
of such disposition are reinvested in assets of the general type used in the
business of the Company; (c) consolidate with, merge into or enter into a share
exchange with any other person; or (d) permit any other person (other than a
wholly-owned subsidiary on the date hereof) to merge into or sell, lease or
transfer all or substantially all of its property, assets or capital stock to
the Company, unless:
(i) the surviving entity is an entity incorporated
under the laws of a State of the United States of America;
(ii) immediately after such purchase, merger or
transfer, no default with respect to any material contracts,
understandings or agreements to which the Company is or may be
a party shall have occurred and be continuing;
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(iii) the consolidated net worth of the surviving
entity shall be equal to or greater than the net worth of the
Company immediately preceding such purchase, merger or
consolidation; and
(iv) either:
(A) the merger or consolidation is between
two or more wholly-owned subsidiaries of the Company
or between the Company and one or more wholly-owned
subsidiaries of the Company; or
(B) following the merger or consolidation,
the shareholders immediately prior to the transaction
hold as a group the right to cast at least 20% of the
votes of all holders of voting securities of the
resulting or surviving entity.
5.10 TRANSACTIONS WITH AFFILIATES
The Company will not, directly or indirectly, enter
into any transaction, series of transactions or agreement (including, without
limitation, the purchase, sale, distribution, lease or exchange of any property
or the rendering of any service) with any affiliate of the Company, other than a
wholly-owned subsidiary of the Company, unless such transaction, series of
transactions or agreement involves less than $100,000 per calendar year
individually or less than $500,000 per year in the aggregate and is on terms
that are no less favorable to the Company, as the case may be, than those which
might be obtained at the time of such transaction from a person who is not such
an affiliate; provided, however, that this Section 5.10 shall not limit, or be
applicable to, (i) contractual commitments of the Company that were entered into
prior to the date hereof; (ii) employment arrangements with any individual who
is an employee of the Company if such arrangements are approved by the Board of
Directors of the Company; (iii) the payment of reasonable and customary regular
fees to directors who are not employees of the Company and (iv) options
previously issued to present and former employees of the Company and options and
warrants to purchase up to 115,154 and 186,750 shares of Common Stock,
respectively, to be granted in the future (with fair market value exercise
prices).
5.11 SUPERIOR CLASSES OR SERIES OF CAPITAL STOCK;
AMENDMENT OF SERIES C CERTIFICATE OF DESIGNATION,
CERTIFICATE OF INCORPORATION OR BY-LAWS
Without the consent of the holders of at least 66
2/3% of the then outstanding Shares, the Company shall not (i) authorize,
create, issue or sell any class or series of equity security (other than Series
A or Series B Preferred Stock) having rights that are senior to, or pari passu
with, the Series C Preferred Stock except as authorized in the Series C
Certificate of Designation, or (ii) amend, waive or repeal any provisions of, or
add any provision to, the Series C Certificate of Designation, the Certificate
of Incorporation or any other certificate of
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designation filed with the Secretary of State of Delaware by the Company with
respect to its preferred stock, and/or By-Laws of the Company.
5.12 NO DILUTION OR IMPAIRMENT; NO CHANGES IN CAPITAL
STOCK
The Company will not, without the prior consent of
holders owning a majority of the outstanding Shares, by amendment of its Series
C Certificate of Designation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issuance or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of the Transaction Documents or impair or reduce
the rights of the holders of the Shares as a class. The Company will at all
times in good faith assist in the carrying out of all such terms, and in the
taking of all such action, as may be necessary or appropriate in order to
protect the rights of the holders of Shares as such rights are set forth in the
Transaction Documents and the Company's Series C Certificate of Designation,
against impairment. Without limiting the generality of the foregoing, the
Company: (a) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
non-assessable shares of the Company's Common Stock free from all taxes, liens
and charges with respect to the issue thereof, upon the conversion of the
Shares, from time to time, (b) will not take any action which results in any
adjustment of the basis of conversion of the shares described in the Company's
Series C Certificate of Designation if the total number of shares of the
Company's Common Stock issuable upon the conversion of all of the then
outstanding Shares would exceed the total number of shares of the Company's
Common Stock then designated under the Company's Series C Certificate of
Designation and authorized for the purpose of issuance upon such conversion, (c)
will not have any authorized Common Stock other than its existing authorized
class of Common Stock, (d) will not amend its Certificate of Incorporation to
change any terms of its Common Stock, (e) will not amend its Series C
Certificate of Designation in any manner to alter or change the powers,
privileges or preferences of the holders of the Series C Preferred Stock
(including without limitation amendments to its Series C Certificate of
Designation after any Shares have been called for redemption), (f) will not
create or authorize any obligation or security convertible into shares of Series
C Preferred Stock or into shares of any other class or series of stock unless
the same ranks junior to the Series C Preferred Stock as to the payment of
dividends and the distribution of assets on the liquidation, dissolution or
winding up of the Company, whether any such creation, authorization or increase
shall be by means of amendment to the Series C Certificate of Designation or by
merger, consolidation or otherwise and (g) after the date hereof, (i) will not
increase the number of shares of Common Stock covered under its Stock Option
Plan or any other option plan above 525,000 shares in the aggregate and (ii)
will not create or establish (or make any grants or awards under) any stock,
phantom stock, stock appreciation rights or other equity equivalent plan for
employees, officers, directors, agents or consultants of the Company whereby the
Company agrees to pay any person a percentage of, or an amount otherwise
determined by reference to, the earnings of the Company, the value of their
stock or the proceeds from a sale of their stock or upon their liquidation. Any
of the foregoing may be amended or waived with the consent of a majority in
interest of the outstanding Shares.
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5.13 RESERVATION OF SHARES
There have been reserved, and the Company shall at
all times keep reserved, free from preemptive rights, out of its authorized
Common Stock, a number of shares of Common Stock sufficient to provide for the
exercise of (i) the conversion rights of the Shares provided in the Company's
Series C Certificate of Designation and (ii) the Agent's Warrant. If at any time
the number of authorized but unissued shares of Common Stock of the Company
shall not be sufficient to effect the conversion of the Shares and the exercise
of the Agent's Warrant or otherwise to comply with the terms of this Agreement,
the Company will forthwith take such corporate and stockholder action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose. The Company will
obtain any authorization, consent, approval or other action by or make any
filing with any court or administrative body that may be required under
applicable federal or state securities laws in connection with the issuance of
shares of Common Stock upon conversion of the Shares or exercise of the Agent's
Warrant.
5.14 PRIVATE PLACEMENT STATUS
Neither the Company nor any agent nor other person
acting on the Company's behalf will do or cause to be done (or will omit to do
or to cause to be done) any act which act (or which omission) would result in
bringing the issuance or sale of the Shares, and the issuance of Common Stock
upon conversion of the Shares, within the provisions of Section 5 of the
Securities Act or the filing, notification or reporting requirements of any
state securities law, except for filings, notices or reports pursuant to state
securities laws which have already been made or which are contemplated in
connection with the private offering and sale of the Shares.
5.15 REGULATION D FILING
The Company will file on a timely basis a Form D
"Notice of Sale of Securities Pursuant to Regulation D" and any amendments
thereto required to be filed with the Securities and Exchange Commission
pursuant to Regulation D under the Securities Act, and all notices, filings and
registrations, and amendments to any thereof as shall be required under any
state securities or "Blue Sky" law or any regulation thereunder, and will
simultaneously furnish copies of such Form D or amendment thereto and each such
notice, filing registration or amendment thereof to the Agent and counsel to the
Purchasers on behalf of Purchasers.
5.16 ACCESS TO INFORMATION AND DOCUMENTS
Prior to each Closing, the Company shall give the
Purchasers and their respective counsel, accountants and other representatives,
reasonable access, during normal business hours and upon reasonable notice, to
all the properties, documents, contracts, records and appropriate personnel of
the Company. Prior to each Closing, the Company shall furnish the Purchasers
with
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copies of such documents and with such information with respect to the affairs
of the Company as the Purchasers may from time to time reasonably request.
5.17 FURTHER ASSURANCES
Subject to the terms and conditions of this
Agreement, the parties hereto shall use best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the sale of the Series C Preferred Stock pursuant to this Agreement.
5.18 FEES
The Company and each of the Purchasers shall bear
their own legal and other expenses with respect to this transaction, except that
upon each Closing, the Company shall pay (i) the fees, expenses and
disbursements of Piper & Marbury L.L.P., counsel to the Purchasers, and the
out-of-pocket expenses of the Agent in an aggregate amount not to exceed $75,000
without the prior approval of the Company, which approval shall not be
unreasonably withheld or delayed, and (ii) the Agent's cash commission, each as
provided in the engagement letter dated March 31, 1997, between the Company and
the Agent (the "Engagement Letter").
5.19 NOTICES
The Company will give to all holders of Shares copies
of all notices given by the Company to holders of its Common Stock concurrently
with the giving of such notices to the holders of Common Stock.
5.20 REDEMPTION OBLIGATIONS
The Company acknowledges its obligation to redeem for
cash 50% of the Shares on or before each of November 13, 2002 and November 13,
2003, respectively, in accordance with the terms of the Company's Series C
Certificate of Designation. If, the Company has insufficient capital resources
to redeem all such Shares, the Company covenants to use its reasonable best
efforts to obtain the funds necessary to effect such redemption in full as soon
as practicable, including engaging a nationally-known investment banking or
financial advisory firm reasonably acceptable to the holders of the Shares to
assist the Board of Directors and management in either (i) a recapitalization of
the Company or (ii) the sale of all or a portion of the Company's assets, in
order to generate sufficient funds to fully redeem such Shares.
5.21 BOARD NOMINEE
The Board of Directors of the Company shall consist
of no more than seven persons on the date hereof. Prior to the completion of a
Series C Qualifying Offering, as defined in the
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Memorandum, the Purchasers shall be entitled to elect one director of the
Company. Pursuant to the Purchasers' right to elect a director of the Company,
the Agent, on behalf of the Purchasers, shall, within three months after the
date hereof, provide the Company the name of an individual to be elected or
nominated to the Company's Board of Directors within six months after the date
hereof. By execution of this Agreement, the Purchasers agree that the Company
may rely upon this procedure for purposes of satisfying its obligations with
respect to the Series C director under the Series C Certificate of Designation.
SECTION 6. CONDITIONS TO PURCHASERS' OBLIGATIONS
The Purchasers' obligation to purchase Shares
hereunder is subject to satisfaction of the following conditions (any of which
may be waived by the Purchasers) as of the Closing:
6.1 SERIES C CERTIFICATE OF DESIGNATION
The Company's Series C Certificate of Designation, in
form and substance reasonably satisfactory to counsel to the Purchasers, shall
have been filed with the Delaware Secretary of State in substantially the form
attached hereto as Exhibit B and shall be in effect for the Company on and as of
the date of such Closing and the Purchasers shall have received evidence thereof
satisfactory to counsel to the Purchasers, and the Amendment to the Company's
Certificate of Incorporation to provide for an increased number of authorized
shares of the Company's capital stock shall have been duly approved in
accordance with Delaware law.
6.2 CERTIFICATES FOR SHARES
Each Purchaser shall concurrently receive the
certificate(s) for Shares as contemplated by Section 2(b) hereof.
6.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company in
this Agreement or in any certificate or document delivered pursuant hereto or
thereto shall be true and correct in all material respects on and as of the
Closing with the same effect as though made on and as of the Closing (after
giving effect to transactions contemplated by this Agreement).
6.4 COMPLIANCE WITH AGREEMENTS
The Company shall have performed under, obtained all
necessary consents and/or waivers with respect to and complied with all
agreements, covenants and conditions contained in the Transaction Documents and
any other document contemplated hereby or thereby which are required to be
performed or complied with by the Company on or before the Closing.
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6.5 OFFICERS' CERTIFICATES
The Purchasers shall have received a certificate
dated the Closing Date and signed by the President and Chief Executive Officer
and by the Vice President - Finance of the Company, to the effect that the
conditions of this Section 6 have been satisfied.
6.6 MATERIAL ADVERSE CHANGE
Except as disclosed in this Agreement or in any
Schedule or Exhibit hereto or in the Memorandum, there shall have been no
material adverse change in the business or financial condition or results of
operations of the Company since March 31, 1997.
6.7 PROCEEDINGS
All corporate and other proceedings in connection
with the transactions contemplated by the Transaction Documents (including the
issuance of the Agent's Warrant), and all documents incident thereto, shall be
in form and substance satisfactory to the Purchasers and Piper & Marbury L.L.P.,
their counsel, and the Purchasers shall have received all such originals or
certified or other copies of such documents as the Purchasers or their counsel
may reasonably request.
6.8 LEGALITY; GOVERNMENTAL AND OTHER AUTHORIZATION
The purchase of and payment for the Shares shall not
be prohibited by any law or governmental order, rule, ruling, regulation,
release, interpretation or opinion applicable to the Purchasers and shall not
subject the Purchasers to any penalty, tax, liability or other onerous
condition. Any necessary consents, approvals, licenses, permits, orders and
authorizations of, and any filings, registrations or qualifications with, any
governmental or administrative agency or other person with respect to the
transactions contemplated by this Agreement shall have been obtained or made and
shall be in full force and effect. The Company shall have delivered to the
Purchasers upon their reasonable request factual certificates or other evidence,
in form and substance satisfactory to the Purchasers and their counsel, setting
forth what is required to enable the Purchasers to establish compliance with
this condition.
6.9 TIME OF PURCHASE
Unless extended in writing by the Company and the
Agent, the final Closing shall not be later than 5:00 p.m., Baltimore, Maryland
time, on September 30, 1997.
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6.10 NO CHANGE IN LAW, ETC.
No legislation, order, rule, ruling or regulation
shall have been proposed, enacted or made by or on behalf of any governmental
body, department (including, but not limited to, the U.S. Department of
Transportation) or agency, and no legislation shall have been introduced in
either House of Congress, and no investigation by any governmental authority
shall have been commenced or threatened, and no action, suit or proceeding shall
have been commenced before, and no decision shall have been rendered by, any
court, other governmental body or arbitrator, which, in any such case, in the
reasonable judgment of the Purchasers or their counsel could adversely affect,
restrain, prevent or change the transactions contemplated by this Agreement
(including without limitation the issuance of the Shares hereunder and
thereunder) or materially and adversely affect the assets, properties,
liabilities, business, affairs, results of operations, condition (financial or
otherwise) or prospects of the Company.
6.11 OPINION OF COUNSEL
The Purchasers shall have received an opinion of
Kilpatrick Stockton LLP, counsel for the Company, dated the Closing Date and
addressed to the Purchasers, which opinion shall be in form and substance
reasonably satisfactory to the Agent and, on behalf of the Purchasers, Piper &
Marbury L.L.P.
6.12 OTHER DOCUMENTS AND OPINIONS
The Purchasers shall have received such other
documents and opinions, in form and substance satisfactory to the Purchasers and
their counsel, relating to matters incident to the transactions contemplated
hereby as the Purchasers may reasonably request.
6.13 PAYMENT OF FEES AND EXPENSES
Each of Piper & Marbury L.L.P. and the Agent shall
have received payment in cash via wire transfer of its fees, commissions and
expenses, as provided in the Engagement Letter.
6.14 ISSUANCE OF THE AGENT'S WARRANT(S)
The Company shall have issued to the Agent a five
year noncancelable warrant or warrants acceptable to the Company and the Agent
to purchase up to 186,750 shares of the Company's Common Stock for an exercise
price of $8.00 per share, subject to adjustment in certain circumstances.
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SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS
The Company's obligation to sell and issue the Shares at the
Closing is, at the option of the Company, subject to the fulfillment or waiver
of the following conditions:
7.1 PAYMENT
Simultaneously with each Closing and as described in
Section 2(b) hereof, the Company shall receive payment of $8.00 per share of
Series C Preferred Stock being purchased at such Closing by certified or
official bank check(s) or wire transfer(s) from the escrow agent for the
previously deposited funds of the Purchaser(s) except as provided in Section
5.18.
7.2 REPRESENTATIONS AND WARRANTIES CORRECT
The representations and warranties made by the
Purchasers in Section 5 hereof shall be true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of said date.
SECTION 8. BROKERS
Except for certain fees payable to the Agent (all of which fees will be
paid by the Company subject to the terms of the Engagement Letter), the Company
represents and warrants to the Purchasers that there is no liability for (and
the Company will pay and indemnify the Purchasers against) any fees or expenses
(or claims therefor) of any investment banker, finder or broker retained by the
Company or its affiliates (or that claims it was retained by the Company or its
affiliates) in connection with this Agreement or sale of the Series C Preferred
Stock. The Company will indemnify the Purchasers against all such fees or
expenses payable to the enumerated persons in the preceding sentence and against
any other such fees, expenses or claims of any person, unless such person was
engaged by the Purchasers in connection with this Agreement or any of the
transactions contemplated hereby.
SECTION 9. BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) The representations and warranties (as of the date hereof and as of
the Closing), covenants and agreements of the Company and of the Purchasers
contained in this Agreement or in any document or certificate delivered pursuant
hereto or in connection herewith shall survive, and shall continue in effect
following (i) the execution and delivery of this Agreement, (ii) the closings
hereunder and thereunder, (iii) any investigation at any time made by the
Purchasers or on their behalf or by any other person, and (iv) the issuance,
sale and delivery of the Shares, any disposition thereof and any payment,
conversion or cancellation of
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the Shares except, that Sections 3 and 5 shall terminate upon the earlier of (i)
the consummation of a Series C Qualifying Offering (as defined in the Series C
Certificate of Designation) or (ii) when less than 20% of the Shares remain
outstanding. All statements contained in any certificate delivered to the
Purchasers by or on behalf of the Company pursuant hereto shall constitute
representations and warranties by the Company hereunder.
(b) The Company agrees to indemnify and hold the
Purchasers harmless from and against, and will pay to the Purchasers the full
amount of, any loss, damage, liability or expense (including amounts paid in
settlement and reasonable attorneys' fees and expenses) incurred by the
Purchaser resulting directly or indirectly from any material breach of the
representations, warranties, covenants or agreements of the Company contained in
this Agreement or any certificate delivered to the Purchasers pursuant hereto or
in connection herewith; provided that the Company shall only be required to
indemnify the Purchasers for attorneys' fees of one counsel to the Purchasers
and provided, further, that in no event shall the Company be liable for any
amount in excess of the proceeds received by the Company from the sale of the
Shares.
SECTION 10. SPECIFIC PERFORMANCE
The parties (other than any parties that are (i) agencies,
instrumentalities or entities affiliated with any state government or (ii) a
government sponsored retirement system) agree that irreparable damage will
result in the event that this Agreement is not specifically enforced, and the
parties agree that any damages available at law for a breach of this Agreement
would not be an adequate remedy. Therefore, the provisions hereof and the
obligations of the parties hereunder shall be enforceable in a court of equity,
or other tribunal with jurisdiction, by a decree of specific performance, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies and all other remedies provided for in this Agreement
shall, however, be cumulative and not exclusive and shall be in addition to any
other remedies which a party may have under this Agreement or otherwise.
SECTION 11. EXPENSES
(a) Whether or not the transactions herein contemplated are
consummated, the Company will pay (i) the costs and expenses of the preparation
and production of the Memorandum, the issuance of the Shares and the furnishing
of all opinions by counsel for the Company, (ii) the fees and expenses of Piper
& Marbury L.L.P. in connection with this Agreement and the transactions
contemplated hereby, as provided in the Engagement Letter and, when combined
with the out-of-pocket expenses of the Agent referred to in subsection (iii)
below, not to exceed an aggregate amount of $75,000 without the Company's prior
consent (whether or not a closing occurs hereunder, and if a closing occurs, the
Company will make such payment on the Initial Closing Date and, if applicable,
each subsequent Closing Date), (iii) subject to the Engagement Letter, the fees
and out-of-pocket expenses of the Agent, and (iv) the
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fees and expenses (including reasonable attorneys' fees and expenses of one
counsel for all Purchasers) of any Purchaser in enforcing its rights against the
Company if the Company materially defaults in its obligations hereunder or under
the Series C Certificate of Designation.
(b) The Company agrees to pay, or to cause to be
paid, all documentary, stamp and other similar taxes levied under the laws of
the United States of America or any state or local taxing authority thereof or
therein in connection with the issuance and sale of the Shares and the execution
and delivery of this Agreement and any other documents or instruments
contemplated hereby or thereby and any modification of the Series C Certificate
of Designation or this Agreement or any such other documents or instruments and
will hold the Purchasers harmless without limitation as to time against any and
all liabilities with respect to all such taxes.
(c) The obligations of the Company under this
Section 11 shall survive the Closing hereunder and any termination of this
Agreement.
SECTION 12. AMENDMENTS AND WAIVERS
(a) The terms and provisions of this Agreement may be amended, waived,
modified or terminated only with the written consent of the holders of a
majority of the outstanding Shares. Each Purchaser acknowledges that by
operation hereof, the holders of a majority of the outstanding Shares (which may
not include such Purchaser) will have the right and power to diminish or
eliminate certain rights of such Purchaser under this Agreement.
(b) The Company agrees that it will make reasonable efforts to notify
all holders of Shares in advance of any proposed amendment, waiver, modification
or termination, but failure to give such notice shall not in any way affect the
validity of any such amendment, waiver, modification or termination. In
addition, promptly after obtaining the written consent of the holders as herein
provided, the Company shall transmit a copy of any amendment, waiver,
modification or termination which has been adopted to all holders of Shares then
outstanding, but failure to transmit copies shall not in any way affect the
validity of any such amendment, waiver, modification or termination.
SECTION 13. EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED SHARES; REPLACEMENT
(a) At any time at the request of any holder of Shares to the
Company at its address provided under Section 14 hereof, the Company at its
expense (except for any transfer tax arising out of the exchange) will issue and
deliver to or upon the order of the holder in exchange therefor a new
certificate or certificates therefor in such amount or amounts as such holder
may request in the aggregate representing the number of Shares represented by
such surrendered certificates, and registered in the name of such holder or
otherwise as such holder may direct.
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<PAGE> 34
(b) Any Share certificate which is converted into shares of Common
Stock in whole or in part shall be canceled by the Company, and no new Share
certificates shall be issued in lieu of any Shares which have been converted
into shares of Common Stock. The Company shall issue a new certificate with
respect to any Shares which were not converted into shares of Common Stock and
were represented by a certificate which was converted or exercised in part.
(c) Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of any Share certificate and, in the case
of any such loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender of such Share certificate (which surrendered Share certificate
shall be canceled by the Company), the Company will issue a new Share
certificate of like tenor in lieu of such lost, stolen, destroyed or mutilated
Share certificate as if the lost, stolen, destroyed or mutilated Share
certificate were then surrendered for exchange.
SECTION 14. NOTICES
All notices, requests, demands, consents and other communications
hereunder shall be in writing and shall be delivered by hand or shall be sent by
telex or telecopy (confirmed by registered, certified or overnight mail or
courier, postage and delivery charges prepaid), if to the Company at the address
indicated below, or if to a Purchaser at the address indicated on Exhibit A
hereto, or at such other address as a party may from time to time designate as
its address in writing to the other party to this Agreement. Whenever any notice
is required to be given hereunder, such notice shall be deemed given and such
requirement satisfied only when such notice is delivered or, if sent by telex or
telecopier, when received.
(a) If to the Company:
Park 'N View, Inc.
3403 NW 55th Street
Building 10
Fort Lauderdale, Florida 33309
Attention: Ian Williams, President and Chief Executive Officer
FAX: 954-730-2298
-30-
<PAGE> 35
with a copy to:
James M. O'Connell, Esquire
Kilpatrick Stockton LLP
4101 Lake Boone Trail
Suite 400
Raleigh, North Carolina 27607
FAX: 919-420-1800
(b) If to the Purchaser, at the address
of the Purchaser set forth on Exhibit A.
with copies to:
Richard M. Berkeley
Managing Director
Alex. Brown & Sons Incorporated
One South Street
Baltimore, Maryland 21202
FAX: 410-895-4482
and
Robert P. Irwin
Principal
Alex. Brown & Sons Incorporated
One South Street
Baltimore, Maryland 21202
FAX: 410-895-4663
and
Stephen A. Riddick, Esq.
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
FAX: 410-576-1763
SECTION 15. MISCELLANEOUS
(a) This Agreement (including all schedules and exhibits hereto)
and, upon the closing hereunder, the Series C Certificate of Designation,
together with any further
-31-
<PAGE> 36
agreements entered into by the Purchasers and the Company at the Closing
hereunder, contain the entire agreement between the Purchasers and the Company,
and supersede any prior oral or written agreements, commitments, terms or
understandings regarding the subject matter hereof.
(b) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
(other than any parties that are (i) agencies, instrumentalities or entities
affiliated with any state government or (ii) a government sponsored retirement
system) hereby waive any provision of law which may render any provision hereof
prohibited or unenforceable in any respect.
(c) Unless otherwise expressly provided herein, any provision of
this Agreement relating to the consent, determination, decision or waiver of a
holder or holders of Shares means such holder's consent, determination, decision
or waiver in such holder's sole discretion.
(d) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, whether so
expressed or not; provided, that the Company may not assign any of its rights,
duties or obligations under this Agreement, except in connection with a
transaction permitted by Section 5.9 or with the Purchasers' written consent.
(e) In addition to any assignment by operation of law, a Purchaser
may assign, in whole or in part, any or all of its rights (and/or obligations)
under this Agreement to any permitted transferee of any or all of its Shares,
except as provided under the terms of the Registration Rights Agreement, and
(unless such assignment expressly provides otherwise) any such assignment shall
not diminish the rights the Purchaser would otherwise have under this Agreement
or with respect to any remaining Shares held by such Purchaser.
(f) No course of dealing and no delay on the part of any party
hereto in exercising any right, power, or remedy conferred by this Agreement
shall operate as a waiver thereof or otherwise prejudice such party's rights,
powers and remedies. No single or partial exercise of any rights, powers or
remedies conferred by this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
(g) The headings and captions in this Agreement are for
convenience of reference only and shall not define, limit or otherwise affect
any of the terms or provisions hereof.
-32-
<PAGE> 37
(h) The Company hereby agrees that the Agent may rely upon the
Company's representations and warranties made to the Purchasers in Section 3
hereof as if such representations and warranties were made directly to the
Agent.
(i) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (other than any conflict of
laws rule which might result in the application of the laws of any other
jurisdiction). Each of the parties (other than any parties that are (i)
agencies, instrumentalities or entities affiliated with any state government or
(ii) a government sponsored retirement system) hereby irrevocably submits to the
jurisdiction of the state courts of the State of Delaware or any Federal court
sitting in the State of Delaware for purposes of any controversy, claim or
dispute arising out of or related to this Agreement.
(j) This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument, and all signatures need not appear on any one counterpart. The
authentic signature of any party received by facsimile transmission shall
constitute a valid and binding signature of such party.
-33-
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ATTEST: PARK 'N VIEW
/s/ S.L. Conkling By: /s/ Ian Williams
- ---------------------------------- -----------------------------------
Name: Ian Williams
Title: President and Chief Executive
Officer
-34-
<PAGE> 39
EXHIBIT A
Purchaser's Signature Page
to
Stock Purchase Agreement
with
Park 'N View, Inc.
Dated August 22, 1997
<TABLE>
<CAPTION>
Number of Shares Purchase
Name of Purchaser Purchased Price
- ----------------- ---------------- ---------
<S> <C> <C>
Venhill Limited Partnership 187,500 $1,500,000
Juliet Challenger, Inc. 625,000 $5,000,000
Henry L. Hillman, Elsie Hilliard Hillman and C.G.
Grefenstette, Trustees of the Henry L. Hillman
Trust U/A dated 11/18/85
187,500 $1,500,000
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Juliet Lea Hillman
62,500 $ 500,000
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Audrey Hilliard Hillman
62,500 $ 500,000
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Henry Lea Hillman, Jr.
62,500 $ 500,000
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for William Talbott Hillman
62,500 $ 500,000
Winfield Capital Corp. 93,750 $ 750,000
ABS Employees' Venture Fund Limited Partnership
17,662 $ 141,296
Franklin Antonio 15,750 $ 126,000
Arundel Lumber Company, Inc. 15,625 $ 125,000
E. Reid Curley 375 $ 3,000
Galen Cole Family Foundation 15,625 $ 125,000
Michael DelCollo 12,500 $ 100,000
</TABLE>
-1-
<PAGE> 40
<TABLE>
<S> <C> <C>
Gail G. Dougherty 12,500 $ 100,000
Michael K. Farr 3,125 $ 25,000
Richard M. Johnston Trust #2 12,500 $ 100,000
Kelly E. Green 31,250 $ 250,000
Richard Heftel 15,625 $ 125,000
Leon Kaplan 16,000 $ 128,000
Robert Klein and/or Myriam Gluck, as Tenants - by -
Entirety 16,250 $ 130,000
Gerald Korman & Wendy S. Korman, as Tenants - by -
Entirety 6,256 $ 50,048
James C. McMillan 12,500 $ 100,000
Alan Meltzer 37,500 $ 300,000
Spiegel Enterprises 15,625 $ 125,000
Tampsco Partnership XII 125,000 $ 1,000,000
Foundation Partners Fund, G.P. 125,000 $ 1,000,000
Tennyson Private Placement Fund, LLC 62,500 $ 500,000
Peter W. Wetherill 25,000 $ 200,000
Tri Ventures 15,625 $ 125,000
Benefit Capital Management Corporation as
Investment Manager for The Prudential Insurance
Company of America, Separate Account No. VCA-GA-5298
125,000 $ 1,000,000
State Treasurer of the State of Michigan, Custodian
of the Michigan Public School Employees' Retirement
System, State Employees' Retirement System,
Michigan State Police Retirement System, and
Michigan Judges Retirement System
125,000 $ 1,000,000
APA Excelsior IV, L.P. 92,500 $ 740,000
Coutts & Co. (Cayman) LTD., Custodians for
APA/Excelsior IV/Offshore, L.P. 16,250 $ 130,000
The P/A Fund, L.P. 16,250 $ 130,000
--------- -----------
Total 2,328,543 $18,628,344
========= ===========
</TABLE>
-2-
<PAGE> 41
See Omnibus Signature Page for Signature of Purchaser
Date executed: August 22, 1997
-3-
<PAGE> 42
EXHIBIT A
OMNIBUS SIGNATURE PAGE
CORPORATE INVESTOR
Park `N View, Inc. Alex. Brown & Sons Incorporated
3403 NW 55th Street/Building 10 One South Street
Ft. Lauderdale, Florida 33309 Baltimore, Maryland 21202
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' Agreement and Exchange Agreement, as amended (the
"Securityholders' Agreement") and (f) Securities Restriction Agreement, as
amended (the "Securities Restriction Agreement"). The undersigned represents and
agrees that THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE
EXECUTION OF EACH OF THE FOREGOING DOCUMENTS and, in addition, acknowledges,
certifies, represents and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the
Investor Questionnaire, including the undersigned's taxpayer identification
number, is complete and accurate as of the date hereof and may be relied upon by
you, and the undersigned will immediately notify you of any material change in
any of such information which may occur prior to the acceptance of the
undersigned's subscription and will promptly send you written confirmation
thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
<TABLE>
<S> <C>
Number of Shares Subscribed for:
---------
Aggregate purchase price (number of Shares x $8.00): $
----------
Amount of wire transfer: $
----------
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE> 43
Address to which Stock Certificates
should be delivered:
---------------------------------------
---------------------------------------
---------------------------------------
3. INVESTMENT AUTHORIZATION. The undersigned corporation has all
requisite authority to acquire the Shares hereby subscribed for, and to enter
into the Subscription Agreement, the Stock Purchase Agreement, the Registration
Rights Agreement, the Securityholders' Agreement and the Securities Restriction
Agreement; and further, the undersigned officer of the subscribing entity has
been duly authorized by all requisite action on the part of such entity to
execute this Omnibus Signature Page and on its behalf.
IN WITNESS WHEREOF, the undersigned represents, under penalty of
perjury, that the foregoing statements are true and correct and that it has
caused the Investor Questionnaire, the Subscription Agreement, the Stock
Purchase Agreement, the Registration Rights Agreement, the Securityholders'
Agreement and the Securities Restriction Agreement to be duly executed this ___
day of _______, 1997.
---------------------------------------
Name of Investor
By:
------------------------------------
Signature of Authorized Person
------------------------------------
Print name and title
NAME AND LOCATION OF YOUR ALEX. BROWN INVESTMENT REPRESENTATIVE:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
-5-
<PAGE> 44
OMNIBUS SIGNATURE PAGE
INDIVIDUAL INVESTOR
Park `N View Alex. Brown & Sons Incorporated
3403 NW 55th Street/Building 10 One South Street
Ft. Lauderdale, Florida 33309 Baltimore, Maryland 21202
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' and Exchange Agreement, as amended (the "Securityholders'
Agreement") and (f) Securities Restriction Agreement, as amended (the
"Securities Restriction Agreement"). The undersigned represents and agrees that
THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE EXECUTION OF EACH
OF THE FOREGOING DOCUMENTS and, in addition, acknowledges, certifies, represents
and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the Investor
Questionnaire, including the undersigned's taxpayer identification number, is
complete and accurate as of the date hereof and may be relied upon by you, and
the undersigned will immediately notify you of any material change in any of
such information which may occur prior to the acceptance of the undersigned's
subscription and will promptly send you written confirmation thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
Number of Shares Subscribed for: __________
Aggregate purchase price (number of Shares x $8.00): $__________
Amount of wire transfer: $__________
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
--------------------------------------------------------------------
-1-
<PAGE> 45
Form of joint ownership (if applicable). (If one of these
boxes is checked, subscriber and co-subscriber must both sign
all documents):
[ ] Tenants-by-Entirety
[ ] Tenants-In-Common
[ ] Joint Tenants
If the Shares hereby subscribed for are to be owned by more
than one person in any manner, the undersigned understands and
agrees that each of the co-investors in such Shares must sign
this Omnibus Signature Page and complete an Investor
Questionnaire in order for this subscription to be accepted.
Address to which Stock Certificates
should be delivered:
-----------------------
-----------------------
-----------------------
IN WITNESS WHEREOF, the undersigned represent(s), under penalty of
perjury, that the foregoing statements are true and correct and that he, she, or
they have executed the Investor Questionnaire, the Subscription Agreement, the
Stock Purchase Agreement, the Registration Rights Agreement, the
Securityholders' Agreement and the Securities Restriction Agreement on his, her
or their behalf this ___ day of __________, 1997.
- ------------------------------------------ --------------------------------
Please Print Name of Investor Signature of Investor
- ------------------------------------------ --------------------------------
Please Print Name of Co-Investor, if any Signature of Co-Investor, if any
- --------------------------------------------------------------------------------
NAME AND LOCATION OF YOUR ALEX. BROWN INVESTMENT REPRESENTATIVE:
-----------------------------------------------------------------
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
- 2 -
<PAGE> 46
OMNIBUS SIGNATURE PAGE
TRUST INVESTOR
Park `N View, Inc. Alex. Brown & Sons Incorporated
3403 NW 55th Street/Building 10 One South Street
Ft. Lauderdale, Florida 33309 Baltimore, Maryland 21202
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' Agreement and Exchange Agreement, as amended (the
"Securityholders' Agreement") and (f) Securities Restriction Agreement, as
amended (the "Securities Restriction Agreement"). The undersigned represents and
agrees that THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE
EXECUTION OF EACH OF THE FOREGOING DOCUMENTS and, in addition, acknowledges,
certifies, represents and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the Investor
Questionnaire, including the undersigned's taxpayer identification number, is
complete and accurate as of the date hereof and may be relied upon by you, and
the undersigned will immediately notify you of any material change in any of
such information which may occur prior to the acceptance of the undersigned's
subscription and will promptly send you written confirmation thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
Number of Shares Subscribed for: __________
Aggregate purchase price (number of Shares x $8.00): $__________
Amount of wire transfer: $__________
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
--------------------------------------------------------------------
-1-
<PAGE> 47
Address to which Stock Certificates
should be delivered:
-----------------------------
-----------------------------
-----------------------------
3. INVESTMENT AUTHORIZATION. The undersigned trust has all requisite
authority to acquire the Shares hereby subscribed for, and to enter into the
Subscription Agreement, the Stock Purchase Agreement, the Registration Rights
Agreement, the Securityholders' Agreement and the Securities Restriction
Agreement; and further, the undersigned trustee of the subscribing trust has
been duly authorized by all requisite action on the part of such trust to
execute this Omnibus Signature Page and on its behalf.
IN WITNESS WHEREOF, the undersigned represents, under penalty of
perjury, that the foregoing statements are true and correct and that it has
caused the Investor Questionnaire, the Subscription Agreement, the Stock
Purchase Agreement, the Registration Rights Agreement, the Securityholders'
Agreement and the Securities Restriction Agreement to be duly executed this ___
day of _______, 1997.
---------------------------------
Name of Investor
By:
---------------------------------
Signature of Authorized Trustee
---------------------------------
Print name
- --------------------------------------------------------------------------------
NAME AND LOCATION OF YOUR ALEX. BROWN INVESTMENT REPRESENTATIVE:
----------------------------------------------------------------
----------------------------------------------------------------
- --------------------------------------------------------------------------------
-2-
<PAGE> 48
OMNIBUS SIGNATURE PAGE
PARTNERSHIP INVESTOR
Park `N View, Inc. Alex. Brown & Sons Incorporated
3403 NW 55th Street/Building 10 One South Street
Ft. Lauderdale, Florida 33309 Baltimore, Maryland 21202
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' Agreement and Exchange Agreement, as amended (the
"Securityholders' Agreement") and (f) Securities Restriction Agreement, as
amended (the "Securities Restriction Agreement"). The undersigned represents and
agrees that THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE
EXECUTION OF EACH OF THE FOREGOING DOCUMENTS and, in addition, acknowledges,
certifies, represents and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the Investor
Questionnaire, including the undersigned's taxpayer identification number, is
complete and accurate as of the date hereof and may be relied upon by you, and
the undersigned will immediately notify you of any material change in any of
such information which may occur prior to the acceptance of the undersigned's
subscription and will promptly send you written confirmation thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
Number of Shares Subscribed for: __________
Aggregate purchase price (number of Shares x $8.00): $__________
Amount of wire transfer: $__________
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
--------------------------------------------------------------------
-1-
<PAGE> 49
Address to which Stock Certificates
should be delivered:
-----------------------------
-----------------------------
-----------------------------
3. INVESTMENT AUTHORIZATION. The undersigned partnership has all
requisite authority to acquire the Shares hereby subscribed for, and to enter
into the Subscription Agreement, the Stock Purchase Agreement, the Registration
Rights Agreement, the Securityholders' Agreement and the Securities Restriction
Agreement; and further, the undersigned general partner of the subscribing
entity has been duly authorized by all requisite action on the part of such
entity to execute this Omnibus Signature Page and on its behalf.
IN WITNESS WHEREOF, the undersigned represents, under penalty of
perjury, that the foregoing statements are true and correct and that it has
caused the Investor Questionnaire, the Subscription Agreement, the Stock
Purchase Agreement, the Registration Rights Agreement, the Securityholders'
Agreement and the Securities Restriction Agreement to be duly executed this ___
day of _______, 1997.
--------------------------------
Name of Investor
By:
--------------------------------
Signature of General Partner
--------------------------------
Print name and title
- --------------------------------------------------------------------------------
NAME AND LOCATION OF YOUR ALEX. BROWN INVESTMENT REPRESENTATIVE:
----------------------------------------------------------------
----------------------------------------------------------------
- --------------------------------------------------------------------------------
-2-
<PAGE> 50
OMNIBUS SIGNATURE PAGE
LIMITED LIABILITY COMPANY INVESTOR
Park `N View, Inc. Alex. Brown & Sons Incorporated
3403 NW 55th Street/Building 10 One South Street
Ft. Lauderdale, Florida 33309 Baltimore, Maryland 21202
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' Agreement and Exchange Agreement, as amended (the
"Securityholders' Agreement") and (f) Securities Restriction Agreement, as
amended (the "Securities Restriction Agreement"). The undersigned represents and
agrees that THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE
EXECUTION OF EACH OF THE FOREGOING DOCUMENTS and, in addition, acknowledges,
certifies, represents and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the Investor
Questionnaire, including the undersigned's taxpayer identification number, is
complete and accurate as of the date hereof and may be relied upon by you, and
the undersigned will immediately notify you of any material change in any of
such information which may occur prior to the acceptance of the undersigned's
subscription and will promptly send you written confirmation thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
Number of Shares Subscribed for: __________
Aggregate purchase price (number of Shares x $8.00): $__________
Amount of wire transfer: $__________
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
--------------------------------------------------------------------
-3-
<PAGE> 51
Address to which Stock Certificates
should be delivered:
----------------------------
----------------------------
----------------------------
3. INVESTMENT AUTHORIZATION. The undersigned limited liability company
has all requisite authority to acquire the Shares hereby subscribed for, and to
enter into the Subscription Agreement, the Stock Purchase Agreement, the
Registration Rights Agreement, the Securityholders' Agreement and the Securities
Restriction Agreement; and further, the undersigned officer of the subscribing
entity has been duly authorized by all requisite action on the part of such
entity to execute this Omnibus Signature Page and on its behalf.
IN WITNESS WHEREOF, the undersigned represents, under penalty of
perjury, that the foregoing statements are true and correct and that it has
caused the Investor Questionnaire, the Subscription Agreement, the Stock
Purchase Agreement, the Registration Rights Agreement, the Securityholders'
Agreement and the Securities Restriction Agreement to be duly executed this ___
day of _______, 1997.
------------------------------
Name of Investor
By:
------------------------------
Signature of Authorized Person
------------------------------
Print name and title
- --------------------------------------------------------------------------------
NAME AND LOCATION OF YOUR ALEX. BROWN INVESTMENT REPRESENTATIVE:
----------------------------------------------------------------
----------------------------------------------------------------
- --------------------------------------------------------------------------------
-4-
<PAGE> 52
OMNIBUS SIGNATURE PAGE
GOVERNMENT SPONSORED RETIREMENT SYSTEM INVESTOR
Park `N View, Inc. Alex. Brown & Sons Incorporated
3403 NW 55th Street/Building 10 One South Street
Ft. Lauderdale, Florida 33309 Baltimore, Maryland 21202
Ladies and Gentlemen:
The undersigned subscriber for shares of Series C Cumulative
Convertible Preferred Stock ("Shares") of Park `N View, Inc. (the "Company")
hereby submits to you this Omnibus Signature Page which constitutes the
signature page for the attached (a) Investor Questionnaire, (b) Subscription
Agreement, (c) Stock Purchase Agreement, (d) Registration Rights Agreement, as
amended (the "Registration Rights Agreement"), (e) Amended and Restated
Securityholders' Agreement and Exchange Agreement, as amended (the
"Securityholders' Agreement") and (f) Securities Restriction Agreement, as
amended (the "Securities Restriction Agreement"). The undersigned represents and
agrees that THE EXECUTION OF THIS OMNIBUS SIGNATURE PAGE CONSTITUTES THE
EXECUTION OF EACH OF THE FOREGOING DOCUMENTS and, in addition, acknowledges,
certifies, represents and agrees with you as follows:
1. INVESTOR QUESTIONNAIRE. The information contained in the Investor
Questionnaire, including the undersigned's taxpayer identification number, is
complete and accurate as of the date hereof and may be relied upon by you, and
the undersigned will immediately notify you of any material change in any of
such information which may occur prior to the acceptance of the undersigned's
subscription and will promptly send you written confirmation thereof.
2. SUBSCRIPTION INFORMATION (to be completed by investor).
Number of Shares Subscribed for: __________
Aggregate purchase price (number of Shares x $8.00): $__________
Amount of wire transfer: $__________
NAME(S) IN WHICH SHARES ARE TO BE REGISTERED:
--------------------------------------------------------------------
-5-
<PAGE> 53
Address to which Stock Certificates
should be delivered:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
-----------------------------
3. INVESTMENT AUTHORIZATION. The undersigned government sponsored
retirement system has all requisite authority to acquire the Shares hereby
subscribed for, and to enter into the Subscription Agreement, the Stock Purchase
Agreement, the Registration Rights Agreement, the Securityholders' Agreement and
the Securities Restriction Agreement; and further, the undersigned agent of the
subscribing entity has been duly authorized by all requisite action on the part
of such entity to execute this Omnibus Signature Page and on its behalf.
IN WITNESS WHEREOF, the undersigned represents, under penalty of
perjury, that the foregoing statements are true and correct and that it has
caused the Investor Questionnaire, the Subscription Agreement, the Stock
Purchase Agreement, the Registration Rights Agreement, the Securityholders'
Agreement and the Securities Restriction Agreement to be duly executed this ___
day of _______, 1997.
------------------------------
Name of Investor
By:
------------------------------
Signature of Authorized Agent
------------------------------
Print name and title
-6-
<PAGE> 54
- --------------------------------------------------------------------------------
NAME AND LOCATION OF YOUR ALEX. BROWN INVESTMENT REPRESENTATIVE:
---------------------------------------------------------------
---------------------------------------------------------------
- --------------------------------------------------------------------------------
7
<PAGE> 55
The following persons have executed the Omnibus Signature Page
<TABLE>
<CAPTION>
Number of Shares Purchase
Name of Purchaser Purchased Price
- ----------------- ---------------- ----------
<S> <C> <C>
Venhill Limited Partnership 187,500 $1,500,000
Juliet Challenger, Inc. 625,000 $5,000,000
Henry L. Hillman, Elsie Hilliard Hillman
and C.G. Grefenstette, Trustees of the
Henry L. Hillman Trust U/A dated
11/18/85 187,500 $1,500,000
C.G. Grefenstette and Thomas G. Bigley,
Trustees U/A/T dated 8/28/68 for Juliet
Lea Hillman 62,500 $ 500,000
C.G. Grefenstette and Thomas G. Bigley,
Trustees U/A/T dated 8/28/68 for Audrey
Hilliard Hillman 62,500 $ 500,000
C.G. Grefenstette and Thomas G. Bigley,
Trustees U/A/T dated 8/28/68 for Henry
Lea Hillman, Jr. 62,500 $ 500,000
C.G. Grefenstette and Thomas G. Bigley,
Trustees U/A/T dated 8/28/68 for William
Talbott Hillman 62,500 $ 500,000
Winfield Capital Corp. 93,750 $ 750,000
ABS Employees' Venture Fund Limited
Partnership 17,662 $ 141,296
Franklin Antonio 15,750 $ 126,000
Arundel Lumber Company, Inc. 15,625 $ 125,000
E. Reid Curley 375 $ 3,000
Galen Cole Family Foundation 15,625 $ 125,000
Michael DelCollo 12,500 $ 100,000
Gail G. Dougherty 12,500 $ 100,000
Michael K. Farr 3,125 $ 25,000
Richard M. Johnston Trust #2 12,500 $ 100,000
Kelly E. Green 31,250 $ 250,000
Richard Heftel 15,625 $ 125,000
</TABLE>
-8-
<PAGE> 56
<TABLE>
<S> <C> <C>
Leon Kaplan 16,000 $ 128,000
Robert Klein and/or Myriam Gluck, as
Tenants - by - Entirety 16,250 $ 130,000
Gerald Korman & Wendy S. Korman, as
Tenants - by - Entirety 6,256 $ 50,048
James C. McMillan 12,500 $ 100,000
Alan Meltzer 37,500 $ 300,000
Spiegel Enterprises 15,625 $ 125,000
Tampsco Partnership XII 125,000 $ 1,000,000
Foundation Partners Fund, G.P. 125,000 $ 1,000,000
Tennyson Private Placement Fund, LLC 62,500 $ 500,000
Peter W. Wetherill 25,000 $ 200,000
Tri Ventures 15,625 $ 125,000
Benefit Capital Management Corporation as
Investment Manager for The Prudential
Insurance Company of America, Separate
Account No. VCA-GA-5298 125,000 $ 1,000,000
State Treasurer of the State of Michigan,
Custodian of the Michigan Public School
Employees' Retirement System, State
Employees' Retirement System,
Michigan State Police Retirement System, and
Michigan Judges Retirement System 125,000 $ 1,000,000
APA Excelsior IV, L.P. 92,500 $ 740,000
Coutts & Co. (Cayman) LTD., Custodians
for APA/Excelsior IV/Offshore, L.P. 16,250 $ 130,000
The P/A Fund, L.P. 16,250 $ 130,000
--------- -----------
Total 2,328,543 $18,628,344
========= ===========
</TABLE>
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<PAGE> 57
EXHIBIT B
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES C 7% CUMULATIVE CONVERTIBLE
PREFERRED STOCK OF PARK 'N VIEW, INC.
Park `N View, Inc., a Delaware corporation (the "Corporation"), hereby
certifies that pursuant to the authority contained in Article Seventh of the
Corporation's Certificate of Incorporation, and in accordance with Section 242
of the General Corporation Law of the State of Delaware (the "DGCL"), the
following resolution was duly adopted by the Board of Directors of the
Corporation, amending a series of its Preferred Stock designated as Series C 7%
Cumulative Convertible Preferred Stock:
WHEREAS, the amendment of the designations herein certified has been
duly adopted by the Corporation's Board of Directors and Holders of the Series A
Preferred Stock (the "Series A Stock"), the Holders of the Series B 7%
Cumulative Convertible Preferred Stock (the "Series B Stock"), and the Holders
of the Series C 7% Cumulative Convertible Preferred Stock (the "Series C
Stock"); and
WHEREAS, the Certificate of Incorporation of the Corporation provides
for two classes of shares known as common stock, $.001 par value per share (the
"Common Stock"), and preferred stock, $.01 par value per share ("Preferred
Stock"); and
WHEREAS, the Corporation has created: (i) a series of Preferred Stock
designated as Series A Preferred Stock; (ii) a series of Preferred Stock
designated as Series B 7% Cumulative Convertible Preferred Stock; and (iii) a
series of Preferred Stock designated as Series C 7% Cumulative Convertible
Preferred Stock; and
WHEREAS, the Board of Directors of the Corporation is authorized by the
Certificate of Incorporation to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in such series and to fix the designations,
preferences and rights of the shares of each such series and the qualifications,
limitations and restrictions thereof.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors deems it
advisable to, and hereby does, designate a Series C 7% Cumulative Convertible
Preferred Stock and fixes and determines the rights, preferences,
qualifications, limitations and restrictions relating to the Series C 7%
Cumulative Convertible Preferred Stock as follows:
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<PAGE> 58
1. Designation. The shares of such series of Preferred Stock shall be
designated "Series C 7% Cumulative Convertible Preferred Stock" (referred to
herein as the "Series C Stock").
2. Authorized Number. The number of shares constituting the Series C
Stock shall be 3,750,000.
3. Dividends. The holders of shares of Series C Stock shall be entitled
to receive, when and as declared by the Board of Directors of the Corporation,
out of assets legally available for such purpose, dividends at the rate of $0.56
(i.e., 7%) per share per annum, which shall be payable when and if declared by
the Board of Directors or shall accrue quarterly on the last day of January,
April, July and October in each year, commencing on August 31, 1997; provided,
however, that upon an Event of Default (as hereinafter defined) and so long as
it shall continue, such dividend rate shall be $.72 (i.e., 9%) per share per
annum. Dividends on the Series C Stock shall be cumulative so that if, for any
dividend accrual period, cash dividends at the rate hereinabove specified are
not declared and paid or set aside for payment, the amount of accrued but unpaid
dividends shall accumulate and shall be added to the dividends payable for
subsequent dividend accrual periods and upon any redemption or conversion of
shares of Series C Stock. If any shares of Series C Stock are issued on a date
which does not coincide with a dividend payment date, then the initial dividend
accrual period applicable to such shares shall be the period from the date of
issuance thereof through whichever of January 31, April 30, July 31, or October
31 next occurs after the date of issuance. If the date fixed for payment of a
final liquidating distribution on any shares of Series C Stock, or the date on
which any shares of Series C Stock are redeemed or converted into Common Stock
does not coincide with a dividend payment date, then subject to the provisions
hereof relating to such payment, redemption or conversion, the final dividend
accrual period applicable to such shares shall be the period from whichever of
February 1, May 1, August 1 or November 1 most recently precedes the date of
such payment, conversion or redemption through the effective date of such
payment, conversion or redemption. Dividends paid in cash on the shares of
Series C Stock (or Series A Stock or Series B Stock, which shall rank pari passu
with the Series C Stock) in an amount less than the total amount of such
dividends shall be allocated pro rata so that the total value of dividends paid
on the Preferred Stock shall in all cases bear to each other the same ratio that
the total value of accrued and unpaid dividends on the Series A Stock, the
Series B Stock and Series C Stock bear to each other. Without the written
consent of the holders of at least 66 2/3% of the then outstanding Series C
Stock, the Corporation shall not declare or pay any cash dividend on, or redeem
or repurchase or make any other cash distribution in respect of any other equity
Securities (as defined herein) of the Corporation unless at the time of such
declaration, payment or distribution all dividends on the Series C Stock accrued
for all past dividend accrual periods shall have been paid and the full
dividends thereon for the current dividend period shall be paid or declared and
set aside for payment.
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<PAGE> 59
4. Liquidation.
(a) Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the
shares of Series C Stock shall be entitled, before any distribution or
payment is made upon any Common Stock or any other class or series of
stock ranking junior to the Series C Stock as to distribution of assets
upon liquidation (other than the Series A Preferred Stock and the
Series B Preferred Stock of the Corporation which shall rank pari passu
with the Series C Stock), to be paid an amount equal to $8.00 per share
(as adjusted for Recapitalization Events (as hereinafter defined)) plus
all accrued and unpaid dividends to such date (collectively, the
"Liquidation Payments"). If upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the
assets to be distributed among the holders of Series C Stock shall be
insufficient to permit payment in full to the holders of Series C Stock
of the Liquidation Payments, then the entire assets of the Corporation
shall be distributed ratably among such holders and the holders of any
class of preferred stock ranking on a parity with the Series C Stock in
proportion to the full respective distributive amounts to which they
are entitled.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after the holders of Series C Stock shall have been paid
in full the Liquidation Payments, the remaining assets of the
Corporation may be distributed ratably per share in order of preference
to the holders of Common Stock and any other class or series of stock
ranking junior to the Series C Stock as to distribution of assets upon
liquidation.
(c) Written notice of a liquidation, dissolution or winding
up, stating a payment date, the amount of the Liquidation Payments and
the place where said Liquidation Payments shall be payable, shall be
given by mail, postage prepaid, not less than 30 days prior to the
payment date stated therein, to each holder of record of Series C Stock
at its post office address as shown by the records of the Corporation.
5. Conversion.
The holders of the Series C Stock shall have the following
conversion rights:
(a) Optional Conversion. Each share of Series C Stock shall be
convertible at any time, at the option of the holder of record thereof,
into fully paid and nonassessable shares of Common Stock at the
"conversion rate" (as defined in paragraph (c) below) then in effect
upon surrender to the Corporation or its transfer agent of the
certificate or certificates representing the Series C Stock to be
converted, as provided below, or if the holder notifies the Corporation
or its transfer agent that such certificate or certificates have been
lost, stolen or destroyed, upon the execution and delivery of an
agreement satisfactory to the Corporation to indemnify the Corporation
from any losses incurred by it in connection therewith.
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<PAGE> 60
(b) Conversion on Qualifying Offering. Upon the consummation
of a Qualifying Offering (as defined below), upon not less than ten
(10) days prior written notice by the Corporation of the anticipated
consummation of such offering, each share of Series C Stock shall be
converted into fully paid and nonassessable shares of Common Stock at
the conversion rate. A "Qualifying Offering" means (i) the Corporation
shall have consummated a firm commitment underwritten public offering
of its Common Stock by a nationally recognized investment banking firm
pursuant to an effective registration under the Securities Act of 1933,
as amended, covering the offering and sale of both primary and
secondary shares of Common Stock which results in gross proceeds of at
least $20,000,000, (ii) the Common Stock is quoted or listed by either
The Nasdaq Stock Market (National Market) ("Nasdaq"), the New York
Stock Exchange or the American Stock Exchange, and (iii) the price at
which the Common Stock is sold in such offering is at least equal to an
amount which (x) is 200% of the then effective conversion price or (y)
would represent, on an as converted basis, a compound annual rate of
return of 35% based upon the original issuance price of the Series C
Stock, and (iv) all outstanding shares of the Series B Preferred Stock
shall have been converted into shares of common stock of the Company in
accordance with the Certificate of Designation relating to the Series B
Preferred Stock and all outstanding shares of the Series A Preferred
Stock shall have been redeemed in accordance with the Certificate of
Designation relating to the Series A Preferred Stock. Upon the
achievement of (i), (ii), (iii) and (iv) above and the giving of the
mandatory conversion notice by the Corporation, the outstanding shares
of Series C Stock to be converted shall be converted automatically
without any further action by the holders of such shares and whether or
not the certificates representing such shares are surrendered to the
Corporation or its transfer agent.
(c) Basis For Conversion; Converted Shares. The basis for any
conversion under this Section 5 shall be the "conversion rate" in
effect at the time of conversion, which for the purposes hereof shall
mean the number of shares of Common Stock issuable for each share of
Series C Stock surrendered for conversion under this Section 5.
Initially, the conversion rate shall be 1.0, i.e., 1.0 share of Common
Stock for each share of Series C Stock being converted. Such conversion
rate shall be subject to adjustment as provided in Section 7 below. As
used herein, the term "conversion price" shall be an amount computed by
dividing $8.00 by the conversion rate then in effect. Initially, the
conversion price shall be $8.00 per share of Common Stock. If any
fractional interest in a share of Common Stock would be deliverable
upon conversion of Series C Stock, the Corporation shall pay in lieu of
such fractional share an amount in cash equal to the conversion price
of such fractional share (computed to the nearest one hundredth of a
share) in effect at the close of business on the date of conversion.
Any shares of Series C Stock which have been converted shall be
canceled and all dividends on converted shares shall cease to accrue
and the certificates representing shares of Series C Stock so converted
shall represent the right to receive (i) such number of shares of
Common Stock into which such shares of Series C Stock are convertible,
plus (ii) cash payable for any fractional share plus (iii) all accrued
but unpaid dividends relating to such shares through
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<PAGE> 61
the immediately preceding dividend payment date. Upon the conversion of
shares of Series C Stock as provided in this Section 5, the Corporation
shall promptly pay all then accrued but unpaid dividends to the holder
of the Series C Stock being converted. The Board of Directors of the
Corporation shall at all times reserve a sufficient number of
authorized but unissued shares of Common Stock to be issued in
satisfaction of the conversion rights and privileges aforesaid.
(d) Mechanics of Conversion. In the case of an optional
conversion, before any holder of Series C Stock shall be entitled to
convert the same into shares of Common Stock, it shall surrender the
certificate or certificates therefor, duly endorsed, at the office of
the Corporation or its transfer agent for the Series C Stock, and shall
give written notice to the Corporation of the election to convert the
same and shall state therein the name or names in which the certificate
of certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver
at such office to such holder of Series C Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as
aforesaid. A certificate or certificates will be issued for the
remaining shares of Series C Stock in any case in which fewer than all
of the shares of Series C Stock represented by a certificate are
converted.
(e) Issue Taxes. The Corporation shall pay all issue taxes, if
any, incurred in respect of the issue of shares of Common Stock on
conversion. If a holder of shares surrendered for conversion specifies
that the shares of Common Stock to be issued on conversion are to be
issued in a name or names other than the name or names in which such
surrendered shares stand, the Corporation shall not be required to pay
any transfer or other taxes incurred by reason of the issuance of such
shares of Common Stock to the name of another, and if the appropriate
transfer taxes shall not have been paid to the Corporation or the
transfer agent for the Series C Stock at the time of surrender of the
shares involved, the shares of Common Stock issued upon conversion
thereof may be registered in the name or names in which the surrendered
shares were registered, despite the instructions to the contrary.
6. Adjustment of Conversion Price and Conversion Rate. The number and
kind of securities issuable upon the conversion of the Series C Stock, the
conversion price and the conversion rate shall be subject to adjustment from
time to time in accordance with the following provisions:
(a) Certain Definitions. For purposes of this
Certificate:
(i) The term "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued, or deemed to be
issued by the Corporation pursuant to paragraph (g) of this
Section 6, after the Original Issue Date except:
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<PAGE> 62
(A) shares of Common Stock issuable upon
conversion of, or distributions with respect to, the
Series B Stock or the Series C Stock now or hereafter
issued by the Corporation;
(B) up to 800,000 shares of Common Stock
issuable upon the exercise of options issued to
officers, directors and employees of the Corporation
under stock option plans maintained from time to time
by the Corporation and approved by the Board of
Directors, subject to adjustment for all subdivisions
and combinations;
(C) up to 186,750 shares of Common Stock
issuable upon the exercise of the Warrant held by
Alex. Brown & Sons Incorporated;
(D) up to 505,375 shares of Common Stock
issuable upon the exercise of warrants to be granted
to lenders in connection with loans to the
Corporation or to guarantors or purchasers of such
loans; and
(E) shares of Common Stock issued with
respect to adjustments of the conversion price
hereunder.
(ii) The term "Common Stock" shall be deemed to mean
(i) the Common Stock, $.001 par value, and (ii) the stock of
the Corporation of any class, or series within a class,
whether now or hereafter authorized, which has the right to
participate in the distribution of either earnings or assets
of the Corporation without limit as to the amount or
percentage.
(iii) The term "Convertible Securities" shall mean
any evidence of indebtedness, shares (other than Series B
Stock and Series C Stock) or other securities convertible into
or exchangeable for Common Stock.
(iv) The term "Options" shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire
Common Stock or Convertible Securities.
(v) The term "Original Issue Date" shall mean the
date of the initial issuance of the Series C Stock.
(vi) The term "Fair Market Price" shall mean with
respect to a share of Common Stock (i) prior to the first
anniversary of the Original Issue Date, the conversion price
in effect on the Original Issue Date, and (ii) subsequent to
the first anniversary of the Original Issue Date, the average
closing bid price of the Common Stock as reported by Nasdaq
(or the last sale price if the Common Stock is traded on an
exchange) for a period of thirty (30) consecutive trading days
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<PAGE> 63
ending on the third day prior to the date of determination,
or, if the Common Stock is not listed on Nasdaq or an
exchange, the fair market value as determined by the vote of
66 2/3% of the Corporation's Board of Directors or if the
Board of Directors cannot reach such agreement, as determined
by a qualified independent investment banker appointed by the
vote of 66 2/3% of the Corporation's Board of Directors.
(b) Reorganization, Reclassification. In the event of a
reorganization, share exchange, or reclassification, other than a
change in par value, or from par value to no par value, or from no par
value to par value or a transaction described in subsection (c) or (d)
below, each share of Series C Stock shall, after such reorganization,
share exchange or reclassification (a "Reclassification Event"), be
convertible at the option of the holder into the kind and number of
shares of stock or other securities or other property of the
Corporation which the holder of Series C Stock would have been entitled
to receive if the holder had held the Common Stock issuable upon
conversion of his Series C Stock immediately prior to such
reorganization, share exchange, or reclassification.
(c) Consolidation, Merger. In the event of a merger or
consolidation to which the Corporation is a party each share of Series
C Stock shall, after such merger or consolidation, be convertible at
the option of the holder into the kind and number of shares of stock
and/or other securities, cash or other property which the holder of
such share of Series C Stock would have been entitled to receive if the
holder had held the Common Stock issuable upon conversion of such share
of Series C Stock immediately prior to such consolidation or merger.
(d) Subdivision or Combination of Shares. In case outstanding
shares of Common Stock shall be subdivided, the conversion price shall
be proportionately reduced as of the effective date of such
subdivision, or as of the date a record is taken of the holders of
Common Stock for the purpose of so subdividing, whichever is earlier.
In case outstanding shares of Common Stock shall be combined, the
conversion price shall be proportionately increased as of the effective
date of such combination, or as of the date a record is taken of the
holders of Common Stock for the purpose of so combining, whichever is
earlier.
(e) Stock Dividends. In case shares of Common Stock are issued
as a dividend or other distribution on the Common Stock (or such
dividend is declared), then the conversion price shall be adjusted, as
of the date a record is taken of the holders of Common Stock for the
purpose of receiving such dividend or other distribution (or if no such
record is taken, as at the earliest of the date of such declaration,
payment or other distribution), to that price determined by multiplying
the conversion price in effect immediately prior to such declaration,
payment or other distribution by a fraction (i) the numerator of which
shall be the number of shares of Common Stock outstanding immediately
prior to the declaration or payment of such dividend or other
distribution,
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<PAGE> 64
and (ii) the denominator of which shall be the total number of shares
of Common Stock outstanding immediately after the declaration or
payment of such dividend or other distribution. In the event that the
Corporation shall declare or pay any dividend on the Common Stock
payable in any right to acquire Common Stock for no consideration, then
the Corporation shall be deemed to have made a dividend payable in
Common Stock in an amount of shares equal to the maximum number of
shares issuable upon exercise of such rights to acquire Common Stock.
(f) Issuance of Additional Shares of Common Stock. If the
Corporation shall issue any Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued
pursuant to paragraph (g) below) after the Original Issue Date (other
than as provided in the foregoing subsections (b) through (e)), for no
consideration or for a consideration per share less than the greater of
(i) the Fair Market Price in effect on the date of and immediately
prior to such issue or (ii) the conversion price in effect on the date
of and immediately prior to such issue, then in such event, the
conversion price shall be reduced as follows:
(i) For issuances of Additional Shares of Common
Stock on or before 9 months after the Original Issue Date, if
the issuance or sales price of the Additional Shares of Common
Stock is below $8.00, the conversion price shall be reduced so
as to equal such issuance or sales price.
(ii) For issuances of Additional Shares of Common
Stock at any time after 9 months after the Original Issue
Date, the conversion price shall be reduced concurrently with
any such issuance to a price equal to the quotient obtained by
dividing:
(A) an amount equal to (x) the total number of
shares of Common Stock outstanding immediately prior to such
issuance or sale multiplied by the conversion price in effect
immediately prior to such issuance or sale, plus (y) the
aggregate consideration received or deemed to be received by
the Corporation upon such issuance or sale, by
(B) the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
For purposes of the formulas expressed in paragraph 6(e) and
6(f), all shares of Common Stock issuable upon the exercise of
outstanding Options or issuable upon the conversion of the
Series B Stock and the Series C Stock or outstanding
Convertible Securities (including Convertible Securities
issued upon the exercise of outstanding Options), shall be
deemed outstanding shares of Common Stock both immediately
before and after such issuance or sale.
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<PAGE> 65
(g) Deemed Issue of Additional Shares of Common Stock. In the
event the Corporation at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities
or shall fix a record date for the determination of holders of any
class of securities then entitled to receive any such Options or
Convertible Securities, then the maximum number of shares (as set forth
in the instrument relating thereto without regard to any provisions
contained therein designed to protect against dilution) of Common Stock
issuable upon the exercise of such Options, or, in the case of
Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares
of Common Stock issued as of the time of such issue of Options or
Convertible Securities or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided that
in any such case in which Additional Shares of Common Stock are deemed
to be issued:
(i) no further adjustments in the conversion price
shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such
Options or the issue of Common Stock upon the conversion or
exchange of such Convertible Securities;
(ii) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise,
for any increase or decrease in the consideration payable to
the Corporation, or increase or decrease in the number of
shares of Common Stock issuable, upon the exercise, conversion
or exchange thereof, the conversion price computed upon the
original issuance of such Options or Convertible Securities
(or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, upon
any such increase or decrease becoming effective, shall be
recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange
under such Convertible Securities (provided, however, that no
such adjustment of the conversion price shall affect Common
Stock previously issued upon conversion of the Series C
Stock);
(iii) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the conversion
price computed upon the original issue of such Options or
Convertible Securities (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments
based thereon, shall, upon such expiration, be recomputed as
if:
(A) in the case of Options or Convertible
Securities, the only Additional Shares of Common Stock issued
were the shares of Common Stock, if any, actually issued upon
the exercise of such Options or the conversion or exchange of
such Convertible Securities and the consideration received
therefor was the consideration actually received by the
Corporation (x) for the issue of all
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<PAGE> 66
such Options, whether or not exercised, plus the consideration
actually received by the Corporation upon exercise of the
Options or (y) for the issue of all such Convertible
Securities which were actually converted or exchanged plus the
additional consideration, if any, actually received by the
Corporation upon the conversion or exchange of the Convertible
Securities; and
(B) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued upon the exercise thereof were issued at the time of
issue of such Options, and the consideration received by the
Corporation for the Additional Shares of Common Stock deemed
to have been then issued was the consideration actually
received by the Corporation for the issue of all such Options,
whether or not exercised, plus the consideration deemed to
have been received by the Corporation upon the issue of the
Convertible Securities with respect to which such Options were
actually exercised.
(iv) No readjustment pursuant to clause (ii) or
(iii) above shall have the effect of increasing the conversion
price to an amount which exceeds the lower of (x) the
conversion price on the original adjustment date or (y) the
conversion price that would have resulted from any issuance of
Additional Shares of Common Stock between the original
adjustment date and such readjustment date.
(v) In the case of any Options which expire by
their terms not more than 30 days after the date of issue
thereof, no adjustment of the conversion price shall be made
until the expiration or exercise of all such Options,
whereupon such adjustment shall be made in the same manner
provided in clause (iii) above.
(h) Determination of Consideration. For purposes of this
Section 6, the consideration received by the Corporation for the issue
of any Additional Shares of Common Stock shall be computed as follows:
(i) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be the
aggregate amount of cash received by the Corporation; and
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of the
issue, as determined by the vote of 66 2/3% of the
Corporation's Board of Directors or if the Board of Directors
cannot reach such agreement, by a qualified independent public
accounting firm, other than the accounting firm then engaged
as the Corporation's independent auditors, agreed upon by the
Corporation on the one hand and the holders of 66 2/3% of the
outstanding shares of Series C Stock on the other hand.
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<PAGE> 67
(ii) Options and Convertible Securities. The
consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued
pursuant to paragraph (g) above, relating to Options and
Convertible Securities shall be determined by dividing:
(A) the total amount, if any, received or
receivable by the Corporation as consideration for the issue
of such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration (as set forth in
the instruments relating thereto, without regard to any
provision contained therein designed to protect against
dilution) payable to the Corporation upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible
Securities by
(B) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without
regard to any provision contained therein designed to protect
against dilution) issuable upon the exercise of such Options
or conversion or exchange of such Convertible Securities.
(i) Adjustments Based Upon EBITDA for Fiscal Year Ending June 30,
2000.
(i) If the Corporation reports earnings before
interest, taxes, depreciation, and amortization, as determined
in accordance with generally accepted accounting principles
("EBITDA") for the fiscal year ending June 30, 2000 (the
"Period"), of greater than or equal to Twenty-seven Million
Six Hundred Fourteen Thousand and Five Hundred Dollars
($27,614,500), then the conversion price of the Series C Stock
will not be adjusted (except as otherwise provided in this
Certificate of Designations).
(ii) If the Corporation reports EBITDA for the
Period of less than or equal to Sixteen Million Five Hundred
Sixty Eight Thousand and Seven Hundred Dollars ($16,568,700),
then the conversion price of the Series C Stock will be
reduced to equal Five Dollars ($5.00); provided, however, that
if, prior to the end of the Period, the conversion price of
the Series C Stock has been reduced as otherwise provided in
this Certificate of Designations to less than Five Dollars
($5.00), the conversion price of the Series C Stock will not
be adjusted pursuant to this Section 6(i)(ii).
(iii) If the Corporation reports EBITDA for the
Period of less than Twenty Seven Million Six Hundred Fourteen
Thousand and Five Hundred Dollars ($27,614,500), but more than
Sixteen Million Five Hundred Sixty Eight Thousand and Seven
Hundred Dollars ($16,568,700), then the conversion price of
the Series
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C Stock will be reduced to equal: (i) the then-current
conversion price, less (ii) the product of (A) a fraction, the
numerator of which will be Twenty Seven Million Six Hundred
Fourteen Thousand and Five Hundred Dollars ($27,614,500),
minus the EBITDA reported by the Corporation for the Period,
and the denominator of which will be Twenty Seven Million Six
Hundred Fourteen Thousand and Five Hundred Dollars
($27,614,500), minus Sixteen Million Five Hundred Sixty Eight
Thousand and Seven Hundred Dollars ($16,568,700), multiplied
by (B) the then-current conversion price minus Five Dollars
($5.00); provided, however, that if, prior to the end of the
Period, the conversion price of the Series C Stock has been
reduced as otherwise provided in this Certificate of
Designations to less than Five Dollars ($5.00), the conversion
price of the Series C Stock will not be adjusted pursuant to
this Section 6(i)(iii).
(iv) Notwithstanding the foregoing provisions of this
Section 6(i), if, on or before December 31, 2000, the
Corporation sells all or substantially all of its assets,
merges or consolidates with any other business entity where
the Corporation is not the surviving corporation, or completes
a public offering of the Corporation's Common Stock pursuant
to an effective registration under the Securities Act of 1933,
as amended, then: (A) the provisions described in subsections
(i), (ii) and (iii) of this Section 6(i) (and the adjustments
described therein) will terminate immediately and the
conversion price of the Series C Stock will be immediately
adjusted as if subsections (i), (ii) and (iii) of this Section
6(i) (and the adjustments described therein) were of no force
or effect, and (B) if necessary to cause the holders of the
Series C Stock to obtain an internal rate of return ("IRR")
(as defined below) equal to thirty-five one hundredths
(35/100), calculated as if each such holder purchased such
shares of Series C Stock at the purchase price per share paid
by such holder on the date such holder purchased such shares,
the then-current conversion price will be reduced concurrently
with any such transaction to an amount that results in the
holders of the Series C Stock obtaining such an IRR in
connection with the purchase of the Series C Stock. For the
purposes of this Section 6(i)(iv), "IRR" will equal the number
that satisfies the following expression:
0 = C(0) + (C(1)/1+IRR) + (C(2)/(1+IRR)(2)) + . . . +
(CT/(1+IRR)(T))
where:
C = cash flows, including the purchase of shares of
Series C Stock and all dividends and other distributions paid
by the Corporation; provided, however, that for the purposes
of calculating IRR pursuant to the foregoing expression, the
fair market value of any consideration held or received by the
holders of the Series C Stock, including, without limitation,
shares of Series C Stock, in connection with or at the time of
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any transaction(s) that results in adjustment pursuant to this
Section 6(i)(iv), shall be deemed to constitute a cash flow
and shall be treated as if paid on the date of such
transaction; and
T = the number of years (which may be expressed as
a fraction to the nearest one-twelfth based upon completed
calendar months) since the purchase of shares of Series C
Stock.
(v) The Corporation shall prepare (or shall cause
its accountants to prepare) its financial statement and
calculate EBITDA for the Period on or before September 30,
2000.
(vi) The provisions of this Section 6(i) shall be
adjusted to reflect any prior or concurrent adjustment of the
conversion price and the conversion rate pursuant to any other
provision of Section 6.
(j) Adjustment of Conversion Rate. Upon each adjustment
of the conversion price under the provisions of this Section 6, the
conversion rate shall be adjusted to an amount determined by dividing
(x) the conversion price in effect immediately prior to the event
causing such adjustment by (y) such adjusted conversion price.
(k) Other Provisions Applicable to Adjustment Under this
Section. The following provisions will be applicable to the adjustments
in conversion price and conversion rate as provided in this Section 6:
(i) Treasury Shares. The number of shares of Common
Stock at any time outstanding shall not include any shares
thereof then directly or indirectly owned or held by or for
the account of the Corporation.
(ii) Other Action Affecting Common Stock. In case
the Corporation shall take any action affecting the
outstanding number of shares of Common Stock other than an
action described in any of the foregoing subsections 6(b) to
6(g) hereof, inclusive, which would have an inequitable effect
on the holders of Series C Stock, the conversion price shall
be adjusted in such manner and at such time as the Board of
Directors of the Corporation on the advice of the
Corporation's independent public accountants may in good faith
determine to be equitable in the circumstances.
(iii) Minimum Adjustment. No adjustment of the
conversion price shall be made if the amount of any such
adjustment would be an amount less than one percent (1%) of
the conversion price then in effect, but any such amount shall
be carried forward and an adjustment with respect thereof
shall be made at the time of and together with any subsequent
adjustment which, together with such amount
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and any other amount or amounts so carried forward, shall
aggregate an increase or decrease of one percent (1%) or more.
(iv) Certain Adjustments. The conversion price shall
not be adjusted upward except in the event of a combination of
the outstanding shares of Common Stock into a smaller number
of shares of Common Stock or in the event of a readjustment of
the conversion price pursuant to Section 6(g)(ii) or (iii).
(l) Notices of Adjustments. Whenever the conversion rate and
conversion price is adjusted as herein provided, an officer of the
Corporation shall compute the adjusted conversion rate and conversion
price in accordance with the foregoing provisions and shall prepare a
written certificate setting forth such adjusted conversion rate and
conversion price and showing in detail the facts upon which such
adjustment is based, and such written instrument shall promptly be
delivered to the recordholders of the Series C Stock.
7. Redemption.
(a) Mandatory Redemption. On the date six (6) months
immediately after the payment in full and satisfaction of all of the
obligations of the Corporation to the lenders who provide financing to
the Corporation in the aggregate principal amount of Seventy-five
Million Dollars ($75,000,000.00) (referred to herein as the "Mandatory
Redemption Date") the Corporation shall redeem all the shares of Series
C Stock originally issued hereunder (or such lesser amount as shall
then be outstanding) at the "Redemption Price" per share defined in
paragraph (c) below, payable in each case in cash on the Mandatory
Redemption Date.
(b) Redemption on Change of Control. Upon a "Change of
Control" of the Corporation, each holder of the then outstanding shares
of Series C Stock may elect to have the Corporation redeem all (but not
less than all) outstanding shares of Series C Stock owned by such
holder at the "Redemption Price" per share defined in paragraph (c)
below, payable in cash on any date within 100 days of the effective
date of the Change of Control (such date being herein referred to as
the "Change of Control Redemption Date"). The election shall be made by
delivering written notice to the Corporation at least thirty (30) but
no more than sixty (60) days prior to the Change of Control Redemption
Date. The Corporation will then be required to redeem all the shares of
Series C Stock owned by such holder on the Change of Control Redemption
Date. For purposes of this Section 7, "Change of Control" means any one
or more of the following events:
(i) The Corporation shall consolidate with or merge into
any another person or any person shall consolidate with or
merge into the Corporation (other than a consolidation or
merger of the Corporation and a wholly-owned subsidiary of the
Corporation in which all shares of the Corporation's Common
Stock
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outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration), in
either event pursuant to a transaction in which any of the
Corporation's common stock outstanding immediately prior to
the effectiveness thereof is changed into or exchanged for
cash, securities or other property; or
(ii) the Corporation shall directly or indirectly
convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all of its assets to any
person or "group" (within the meaning of Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the "1934
Act") (other than to a wholly-owned subsidiary of the
Corporation); or
(iii) there shall be a reorganization, share
exchange, or reclassification, other than a change in par
value, or from par value to no par value, or from no par value
to par value; or
(iv) any person (other than the Corporation, any
subsidiary of the Corporation or an Existing Investor (as
defined in the Purchase Agreement (as hereinafter defined))),
including a "group" (within the meaning of Section 13(d) and
14(D)(2) of the 1934 Act) that includes such person, shall
purchase or otherwise acquire, directly or indirectly,
beneficial ownership of securities of the Corporation and, as
a result of such purchase or acquisition, such person
(together with its associates and affiliates) shall directly
or indirectly beneficially own in the aggregate (1) more than
50% of the Common Stock, or (2) securities representing more
than 50% of the combined voting power of the Corporation's
voting securities, in each case under subclause (1) or (2),
outstanding on the date immediately prior to the date of such
purchase or acquisition (or, if there be more than one, the
last such purchase or acquisition).
(c) The Redemption Price per share of Series C Stock
shall equal the sum of (x) $8.00 (as adjusted for Recapitalization
Events) plus (y) all accrued and unpaid dividends on such share of
Series C Stock to the Mandatory Redemption Date or Change of Control
Redemption Date, as the case may be.
(d) The term "Redemption Date" as used in this paragraph
(d) shall refer to whichever of the Mandatory Redemption Date or the
Change of Control Redemption Date is applicable in a particular
circumstance. On or prior to the Redemption Date, the Corporation shall
deposit the Redemption Price of all outstanding shares of Series C
Stock to be redeemed with a bank or trust corporation having aggregate
capital and surplus in excess of $100,000,000 as a trust fund for the
benefit of the holders of the shares of Series C Stock, with
irrevocable instructions and authority to the bank or trust corporation
to pay the Redemption Price for such shares to their respective holders
on or after the Redemption Date upon receipt of the certificate or
certificates of the shares of
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Series C Stock to be redeemed. From and after the Redemption Date,
unless there shall have been a default in payment of the Redemption
Price, all rights of the holders of shares of Series C Stock as holders
of Series C Stock (except the right to receive the Redemption Price
upon surrender of their certificate or certificates) shall cease as to
those shares of Series C Stock redeemed, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed
to be outstanding for any purpose whatsoever. If on the Redemption Date
the funds of the Corporation legally available for redemption of shares
of Series C Stock (or Series A Stock and Series B Stock which shall
rank pari passu with the Series C Stock) are insufficient to redeem the
total number of shares of Preferred Stock to be redeemed on such date,
the Corporation will use those funds which are legally available
therefor to redeem the maximum possible number of shares of Preferred
Stock ratably among the holders of such shares to be redeemed based
upon their holdings of Series C Stock, Series B Stock and Series A
Stock. Payments shall first be applied against accrued and unpaid
dividends and thereafter against the remainder of the Redemption Price.
The shares of Series C Stock not redeemed shall remain outstanding and
entitled to all the rights and preferences provided herein. At any time
thereafter when additional funds of the Corporation are legally
available for the redemption of shares of Series C Stock such funds
will immediately be used to redeem the balance of the shares of Series
C Stock to be redeemed. No dividends or other distributions shall be
declared or paid on, nor shall the Corporation redeem, purchase or
acquire any shares of, the Common Stock or any other class or series of
stock of the Corporation unless the Redemption Price of all shares
elected to be redeemed shall have been paid in full. Until the
Redemption Price for a share of Series C Stock elected to be redeemed
shall have been paid in full, such share of Series C Stock shall remain
outstanding for all purposes and entitle the holder thereof to all the
rights and privileges provided herein, including, without limitation,
that dividends and interest thereon shall continue to accrue and, if
unpaid prior to the date such shares are redeemed, shall be included as
part of the Redemption Price as provided in paragraph (c) above.
Notwithstanding anything in this Section 7 to the contrary, even if a
notice of redemption was delivered under paragraph (a) or (b) of this
Section 7, all shares of Series C Stock shall be convertible pursuant
to Section 5 at all times prior to the Redemption Date.
(e) Notwithstanding any other term of this Certificate of
Designation, the Corporation shall not redeem (or have any obligation
to redeem) any shares of Series C Stock under any circumstances,
whether upon a Change of Control or otherwise, prior to the payment in
full and satisfaction of all of the obligations of the Corporation to
the lenders who provide financing to the Corporation in the aggregate
principal amount of $75,000,000.00. If the Corporation shall not have
paid in full or satisfied all of its obligations to such lenders on or
before any Redemption Date, upon such payment and satisfaction the
Corporation will immediately use any funds legally available therefor
to redeem the shares of Series C Stock to be redeemed.
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8. Notices of Record Dates and Effective Dates. In case: (a) the
Corporation shall declare a dividend (or any other distribution) on the Common
Stock payable otherwise than in shares of Common Stock; or (b) the Corporation
shall authorize the granting to the holders of Common Stock of rights to
subscribe for or purchase any shares of capital stock of any class or any other
rights; or (c) of any reorganization, share exchange or reclassification of the
capital stock of the Corporation (other than a subdivision or combination of
outstanding shares of Common Stock), or of any consolidation or merger to which
the Corporation is party or of the sale, lease or exchange of all or
substantially all of the property of the Corporation; or (d) of the voluntary or
involuntary dissolution, liquidation or winding up of the Corporation; or (e) of
a Change of Control, then the Corporation shall cause to be mailed to the
recordholders of the Series C Stock at least 20 days prior to the applicable
record date or effective date hereinafter specified, a notice stating (i) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights, or, if a record is not to be taken, the date as of which
the holders of record of Common Stock to be entitled to such dividend,
distribution or rights are to be determined or (ii) the date on which such
reclassification, reorganization, share exchange, consolidation, merger, sale,
lease, exchange, dissolution, liquidation, winding up or Change of Control is
expected to become effective, and the date as of which it is expected that
holders of record of Common Stock shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, reorganization share exchange, consolidation, liquidation,
merger, sale, lease, exchange, dissolution, liquidation, winding up or Change of
Control.
9. Voting Rights.
(a) Holders of Series C Stock shall be entitled to notice of
any stockholder's meeting. Except as otherwise required by law or
provided herein, at any annual or special meeting of the Corporation's
stockholders, or in connection with any written consent in lieu of any
such meeting, each outstanding share of Series C Stock shall be
entitled to the number of votes equal to the number of full shares of
Common Stock into which such share of Series C Stock is then
convertible. Except as otherwise required by law or provided herein,
the Series C Stock and the Common Stock shall vote together on each
matter submitted to stockholders, and not by class or series.
(b) Prior to the consummation of a Qualifying Offering by the
Corporation of its Common Stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended, the holders of
the Series C Stock, voting together as a class, shall be entitled to
elect one (1) director to the Corporation's Board of Directors.
Subsequent to such Qualifying Offering, the holders of a majority of
the Common Stock issuable upon conversion of the Series C Stock shall
be entitled to nominate one (1) director for election to the
Corporation's Board of Directors which the Corporation shall nominate
to management's slate for election; provided, however, that the right
provided for in this last sentence of subsection 9(b) shall be
effective only for so long as at least 66 2/3% of the shares of Common
Stock issuable upon conversion of the Series C Stock are held of
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record by the original Purchasers (as defined in the Purchase
Agreement) of the Series C Stock.
Notwithstanding the foregoing, upon an Event of Default and so
long as it shall continue, the holders of the Series B Stock and the
Series C Stock, voting together as a class, shall be entitled at any
annual meeting of the stockholders or special meeting held in place
thereof, or at a special meeting of the holders of the Series B Stock
and the Series C Stock called as hereinafter provided, to elect a
majority of the Board of Directors and such right to elect a majority
of the Board of Directors shall be in lieu of the right of the holders
of Series B Stock and the Series C Stock to each elect one director.
Such right of the holders of the Series B Stock and the Series C Stock
to elect a majority of the Board of Directors may be exercised until an
Event of Default shall be cured, if curable, or waived, and when so
cured or waived, the right of the holders of the Series B and the
Series C Stock to elect a majority of the Board of Directors shall
cease and the right of the holders of the Series B Stock and the
holders of the Series C Stock to each elect one director shall resume,
but subject always to the same provisions for the vesting of such
special voting rights in the case of any such future Event of Default.
At any time when such special voting rights shall have so vested in the
holders of the Series B and the Series C Stock, the Secretary of the
Corporation may, and upon the written request of the holders of 10% or
more of the number of shares of the Series B Stock and the Series C
Stock then outstanding addressed to him at the principal office of the
Corporation, shall, call a special meeting of the holders of the Series
B Stock and the Series C Stock for the election of a majority of the
Board of Directors to be elected by them as provided herein, to be held
in the case of such written request as soon as practicable after
delivery of such request, and in either case to be held at the place
and upon the notice provided by law and in the by-laws for the holding
of meetings of stockholders. If at any such annual or special meeting
or adjournment thereof the holders of at least a majority of the Series
B Stock and the Series C Stock then outstanding shall be present or
represented at such meeting, the then authorized number of directors of
the Corporation shall be increased to the extent necessary to provide a
majority of new directors to be elected and the holders of the Series B
Stock and the Series C Stock shall be entitled to elect the additional
directors so provided for. The directors so elected shall serve until
the next annual meeting or until their successors shall be elected and
qualified, provided, however, that whenever the holders of the
Preferred Stock shall be divested of the special rights to elect a
majority of the Board of Directors as above provided, the term of
office of the persons so elected as directors by the holders of the
Series B Stock and the Series C Stock as a class, or elected to fill
any vacancies resulting from the death, resignation or removal of the
directors so elected by the holders of the Series B Stock and the
Series C Stock, shall forthwith terminate and the authorized number of
directors shall be reduced accordingly.
If during any interval between any special meeting of the
holders of the Series B Stock and the Series C Stock for the election
of directors to be elected by them as provided above and the next
ensuing annual meeting of stockholders, or between annual
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meetings of stockholders for the election of directors, and while the
holders of the Series B Stock and the Series C Stock shall be entitled
to elect a majority of the Board of Directors, any of the directors who
have been elected by the holders of the Series B Stock and the Series C
Stock shall, by reason of resignation, death or removal, have departed
from the Board, the Secretary of the Corporation shall call a special
meeting of the holders of the Series B Stock and the Series C Stock and
such vacancy or vacancies shall be filled at such special meeting.
No director elected by the holders of Series C Stock as a
class, or elected by other directors to fill a vacancy resulting from
the death, resignation or removal of a director elected by such class
vote, may be removed from office by the vote or written consent of
stockholders unless such vote or written consent includes that of the
holders of a majority of the outstanding shares of Series C Stock.
(c) In addition to any other vote or consent of stockholders
provided by law or by the Corporation's Certificate of Incorporation,
the Corporation shall not, without the approval by vote or written
consent of the holders of not less than 66 2/3% of the then outstanding
shares of Series C Stock:
(i) amend, waive or repeal any provisions of, or add
any provision to, (i) this Certificate of Designation or (ii)
any provision of the Corporation's Certificate of
Incorporation or any other certificate of designation filed
with the Secretary of State of Delaware by the Corporation
with respect to its preferred stock;
(ii) amend, waive or repeal any provisions of, or add
any provision to, the Corporation's By-Laws;
(iii) authorize, create, issue or sell any shares of
Equivalent Stock or Superior Stock (other than Series A Stock
and Series B Stock); except as authorized in this Certificate
of Designation;
(iv) issue any shares of Series C Stock other than
pursuant to the Purchase Agreement or upon transfers of
outstanding shares of Series C Stock;
(v) enter into any agreement, indenture or other
instrument which contains any provisions restricting the
Corporation's obligation to pay dividends on or make
redemptions of the Series C Stock in accordance herewith;
(vi) dissolve the Corporation;
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(vii) enter into any agreement(s) that would restrict
the Corporation's ability to perform its obligations pursuant
to the Purchase Agreements (as defined in Section 11 below);
(viii) sell, lease or otherwise dispose of 20% or
more of the assets of the Corporation, other than in the
ordinary course of business, unless the proceeds of such sale,
lease or other disposition are reinvested in assets of the
general type used in the business of the Corporation;
(ix) issue equity securities to employees, officers or
directors of the Corporation, except (a) securities issuable
upon the exercise of outstanding options and warrants and
pursuant to existing contractual commitments and (b) options
to purchase up to 390,514 shares of Common Stock, together
with the Common Stock issuable upon exercise thereof;
(x) issue any securities for a price less than fair
market value, other than as may be required by existing
contractual commitments or as permitted by clause (ix) hereof;
(xi) enter into any transactions (or series of
transactions), including loans, with any officer or director
of the Corporation or to or with their affiliates and family
members involving $100,000.00 or more per year individually or
$500,000.00 or more per year in the aggregate except (a) as
may be contemplated by existing contractual commitments, (b)
reasonable compensation payable to officers and directors, and
(c) for options and warrants issued in compliance with clause
(ix) hereof; or
(xii) engage in any transaction (or series of
transactions) that would impair or reduce the rights and
preferences of the holders of the Series C Stock as a class
relative to the rights and preferences of the holders of any
other class of the Corporation's capital stock.
"Assets" shall mean an interest in any kind of property or
assets, whether real, personal or mixed, or tangible or intangible.
"Equivalent Stock" shall mean any shares of any class or
series of Stock of the Corporation having any preference or priority as to
dividends or Assets on a parity with any such preference or priority of the
Series C Stock and no preference or priority as to dividends or Assets superior
to any such preference or priority of the Series C Stock and any instrument or
Security convertible into or exchangeable for Equivalent Stock. Without limiting
the generality of the foregoing, a dividend rate, mandatory or optional sinking
fund payment amounts or schedules or optional redemption provisions, the
existence of a conversion right or the existence of a liquidation preference of
up to 100% of the original issue price plus unpaid accrued
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dividends plus a premium of up to the dividend rate or up to the percentage of
the equity of the Corporation represented by such Stock, with respect to any
class or series of Stock, differing from that of the Series C Stock, shall not
prevent such class of Stock from being Equivalent Stock.
"Securities" shall mean any debt or equity securities of the
Corporation, whether now or hereafter authorized, and any instrument convertible
into or exchangeable for Securities or Security. The term "Security" shall mean
one of the Securities.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in, corporate stock.
"Superior Stock" shall mean any shares of any class or series
of Stock of the Corporation having any preference or priority as to dividends or
Assets superior to any such preference or priority of the Series C Stock and any
instrument or security convertible into or exchangeable for Superior Stock.
(d) Notwithstanding anything else contained herein, the
affirmative vote or written consent of the holders of not less than 90%
of the then outstanding shares of Series C Stock shall be necessary to
amend, alter or repeal any of the provisions of the Corporation's
Certificate of Incorporation or the Certificate of Designation creating
this Series C Stock which would alter or change (i) the dividend rate,
(ii) redemption provisions, (iii) anti-dilution provisions, (iv) the
place or currency of payments hereunder, (v) the right to institute
suit for the enforcement of any payment hereunder, (vi) the conversion
provisions, or (vii) provisions of this Section 9, so as to affect any
of the foregoing adversely.
10. Preemptive Rights.
(a) The Corporation shall not issue or sell any shares of
Common Stock, Preferred Stock or other securities convertible into or
exchangeable for shares of Common Stock, other than any such issuance
or sale (i) pursuant to a Qualifying Offering, (ii) pursuant to a stock
option plan approved by the Board of Directors, (iii) as a form of
consideration in connection with mergers or acquisitions where the
Corporation is the surviving entity or (iv) where the aggregate gross
proceeds are less than $500,000 in any single transaction, provided
that the sale price per share is not less than the then applicable
conversion price and, provided further, that the aggregate gross
proceeds of all such transactions shall not exceed $1,500,000 (the
securities issued in such transactions being referred to as the "Newly
Issued Securities"), unless prior to the issuance or sale of such Newly
Issued Securities each holder of Series C Stock shall have been given
the opportunity (such opportunity being herein referred to as the
"Preemptive Right") to purchase (on the same terms as such Newly Issued
Securities are proposed to be sold) the same proportion of such Newly
Issued Securities being issued or offered for sale by the
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Corporation as (x) the number of shares of Common Stock (calculated
solely on account of outstanding shares of Series C Stock on an as
converted basis) held by such holder on the day preceding the date of
the Preemptive Notice (as defined herein), as the case may be, bears to
(y) the total number of shares of Common Stock (calculated on a fully
diluted basis) outstanding on that day.
(b) Prior to the issuance or sale by the Corporation of any
Newly Issued Securities, the Corporation shall give written notice
thereof (the "Preemptive Notice") to each holder of Series C Stock. The
Preemptive Notice shall specify (i) the name and address of the bona
fide investor to whom the Corporation proposes to issue or sell Newly
Issued Securities, (ii) the total amount of capital to be raised by the
Corporation pursuant to the issuance or sale of Newly Issued
Securities, (iii) the number of Securities of such Newly Issued
Securities proposed to be issued or sold, (iv) the price and other
terms of their proposed issuance or sale, (v) the number of such Newly
Issued Securities which such holder is entitled to purchase (determined
as provided in subsection (a) above), and (vi) the period during which
such holder may elect to purchase such Newly Issued Securities, which
period shall extend for at least thirty (30) days following the receipt
by such holder of the Preemptive Notice (the "Preemptive Acceptance
Period"). Each holder of Series C Stock who desires to purchase Newly
Issued Securities shall notify the Corporation within the Preemptive
Acceptance Period of the number of Newly Issued Securities he wishes to
purchase, as well as the number, if any, of additional Newly Issued
Securities he would be willing to purchase in the event that all of the
Newly Issued Securities subject to the Preemptive Right are not
subscribed for by the other holders of Series C Stock.
(c) In the event a holder of Series C Stock declines to
subscribe for all or any part of its pro rata portion of any Newly
Issued Securities which are subject to the Preemptive Right (the
"Declining Preemptive Purchaser") during the Preemptive Acceptance
Period, then the other holders of Series C Stock shall have the right
to subscribe for all (or any declined part) of the Declining Preemptive
Purchaser's pro rata portion of such Newly Issued Securities (to be
divided among the other holders of Series C Stock desiring to exercise
such right on a ratable basis).
(d) Any such Newly Issued Securities which none of the holders
elect to purchase in accordance with the provisions of this Section 10,
may be sold by the Corporation, within a period of three (3) months
after the expiration of the Preemptive Acceptance Period, to any other
person or persons at not less than the price and upon other terms and
conditions not less favorable to the Corporation than those set forth
in the Preemptive Notice.
(e) The preemptive rights afforded by this Section 10, and any
obligation for the Corporation to offer such shares of Common Stock,
Preferred Stock or other securities convertible into or exchangeable
for shares of Common Stock may be waived
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by a written instrument signed by the holders of sixty-six and
two-thirds percent (66 2/3 %) of the Series C Stock.
11. Events of Default. An Event of Default shall mean any of the
following:
(i) Any failure by the Corporation to pay in cash any
dividend, if and when declared by the Board of Directors, on the
payment due dates and in the amounts provided pursuant to Section
3 hereof, if such failure shall continue for any two quarterly
periods;
(ii) Any failure by the Corporation to satisfy its
redemption obligations pursuant to Section 7 hereof if any such
failure shall continue for a period of five days from the
appropriate redemption date;
(iii) Any failure by the Corporation to comply with the
provisions of Sections 4, 5, 6, 8, 9 or 10 hereof;
(iv) If any representation or warranty made by the
Corporation in the Stock Purchase Agreement dated as of August
22, 1997 or the exhibits or schedules thereto (the "Purchase
Agreements") is or shall be untrue in any material respect at the
time it was made, if such representation or warranty remains
untrue after 10 days' written notice, with such notice delivered
by hand or by first-class, certified or overnight mail, postage
prepaid, or by telecopier, from any holder of Series C Stock,
unless waived in writing by holders of not less than 66 2/3% of
the outstanding shares of Series C Stock;
(v) Any failure by the Corporation to comply with, or
any breach by the Corporation of, any of the covenants,
agreements or obligations of the Corporation contained in the
Purchase Agreements which continues for a period of 10 days after
written notice, with such notice delivered by hand or by
first-class, certified or overnight mail, postage prepaid, or by
telecopier, from any holder of Series C Stock, unless waived in
writing by holders of not less than 66 2/3% of the outstanding
shares of Series C Stock;
(vi) Default by the Corporation in the performance or
observance of any obligation or condition with respect to any
Indebtedness of the Corporation that is not cured or waived
within 90 days or if the effect of such default is to accelerate
the maturity of such Indebtedness or cause such Indebtedness to
be prepaid, purchased or redeemed or to permit the holder or
holders thereof, or any trustee or agent for such holders, to
cause such Indebtedness to become due and payable prior to its
expressed maturity or to cause such Indebtedness to be prepaid,
purchased or redeemed or to realize upon any collateral or
security for such Indebtedness, unless such default shall have
been waived by the appropriate
-32-
<PAGE> 80
person. Indebtedness of any corporation shall mean the principal
of (and premium, if any) and unpaid interest on (i) indebtedness
which is for money borrowed from others; (ii) indebtedness
guaranteed, directly or indirectly, in any manner by such
corporation, or in effect guaranteed, directly or indirectly, by
such corporation through an agreement, contingent or otherwise,
to supply funds to or in any manner invest in the debtor or to
purchase indebtedness, or to purchase assets or services
primarily for the purpose of enabling the debtor to make payment
of the indebtedness or of assuring the owner of the indebtedness
against loss; (iii) all indebtedness secured by any mortgage,
lien, pledge, charge or other encumbrance upon assets owned by
such corporation, even if such corporation has not in any manner
become liable for the payment of such indebtedness; (iv) all
indebtedness of such corporation created or arising under any
conditional sale, lease or other title retention agreement with
respect to assets acquired by such corporation even though the
rights and remedies of the seller, lessor or lender under such
agreement or lease in the event of default are limited to
repossession or sale of such assets and provided that obligations
for the payment of rent under a lease of premises from which the
business of such corporation will be conducted shall not
constitute indebtedness; and (v) renewals, extensions and
refunding of any such indebtedness;
(vii) If the Corporation shall:
(a) become insolvent or generally fail to pay, or
admit in writing its inability to pay, its debts as they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian for the
Corporation or any property thereof, or make a general assignment for the
benefit of creditors (any of which shall be referred to herein as a "Receiver");
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a Receiver, and such
Receiver shall not be discharged within 60 calendar days;
(d) commit any act of bankruptcy, permit or suffer
to exist the commencement of any bankruptcy reorganization, debt arrangement or
other case or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding in respect of the Corporation,
and, if any such case or proceeding is not commenced by the Corporation, such
case or proceeding shall be consented to or acquiesced in by the Corporation, or
shall result in the entry of an order for relief and shall remain for 30
calendar days undismissed; or
-33-
<PAGE> 81
(e) take any corporate or other action authorizing,
or in furtherance of, any of the foregoing.
B. The recitals and resolutions contained herein have not been
modified, altered or amended and are presently in full force and effect.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this ____ day of __________________, 1998.
PARK'N VIEW, INC.
By: /s/ Ian Williams
----------------------
Name: Ian Williams
Title: President
Attest:
/s/ Anthony Allen
- --------------------
Anthony Allen, Secretary
-34-
<PAGE> 82
SCHEDULE 3.2(A)
PARK 'N VIEW, INC.
SERIES A PREFERRED STOCK, PAR VALUE $.01 PER SHARE
AUTHORIZED 627,630 SHARES
ISSUED 388,065 SHARES
<TABLE>
<CAPTION>
===================================================================================================================================
NO.
NEW SHARES
NAME AND ADDRESS OF DATE CERT. NO. OF FROM WHOM DATE OF CERT. TRANS- BALANCE
SHAREHOLDER ISSUED NO. SHARES TRANSFERRED TRANSFER TO WHOM TRANSFERRED NO. FERRED HELD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
APA Excelsior IV, L.P. 11/02/95 PA-1 23,656 Original Issue 23,656
c/o Patricof & Co. Ventures, Inc.
455 Park Avenue
New York, NY 10022
Attn: Thomas Hirschfeld
- -----------------------------------------------------------------------------------------------------------------------------------
Coutts & Co. (Cayman) Ltd. 11/02/95 PA-2 4,175 Original Issue 4,175
Custodian for APA Excelsior
IV/Offshore, L.P.
c/o Patricof & Co. Ventures, Inc.
455 Park Avenue
New York, NY 10022
Attn: Thomas Hirschfeld
- -----------------------------------------------------------------------------------------------------------------------------------
The P/A Fund, L.P. 11/02/95 PA-3 4,154 Original Issue 4,154
c/o Patricof & Co. Ventures, Inc.
455 Park Avenue
New York, NY 10022
Attn: Thomas Hirschfeld
- -----------------------------------------------------------------------------------------------------------------------------------
Michael Willner 11/02/95 PA-4 215 Original Issue 215
Insight Communications
126 East 56th Street
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------------------
Michael Willner 03/29/96 PA-5 252 Original Issue 252
Insight Communications
126 East 56th Street
New York, NY 10022
===================================================================================================================================
</TABLE>
-35-
<PAGE> 83
<TABLE>
<CAPTION>
===================================================================================================================================
NO.
NEW SHARES
NAME AND ADDRESS OF DATE CERT. NO. OF FROM WHOM DATE OF CERT. TRANS- BALANCE
SHAREHOLDER ISSUED NO. SHARES TRANSFERRED TRANSFER TO WHOM TRANSFERRED NO. FERRED HELD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The P/A Fund, L.P. 03/29/96 PA-6 4,876 Original Issue 4,876
c/o Patricof & Co. Ventures, Inc.
455 Park Avenue
New York, NY 10022
Attn: Thomas Hirschfeld
- -----------------------------------------------------------------------------------------------------------------------------------
Coutts & Co. (Cayman), Ltd. 03/29/96 PA-7 4,901 Original Issue 4,901
Custodian for APA Excelsior
IV/Offshore, L.P.
c/o Patricof & Co. Ventures, Inc.
Attn: Thomas Hirschfeld
455 Park Avenue
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------------------
APA Excelsior IV, L.P. 03/29/96 PA-8 27,771 Original Issue 27,771
c/o Patricof & Co. Ventures, Inc.
Attn: Thomas Hirschfeld
455 Park Avenue
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------------------
APA Excelsior IV, L.P. 11/13/96 PA-9 233,778 Original Issue 233,778
c/o Patricof & Co. Ventures, Inc.
Attn: Thomas Hirschfeld
455 Park Avenue
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------------------
Coutts & Co. (Cayman) Ltd. 11/13/96 PA-10 41,243 Original Issue 41,243
Custodian for APA Excelsior
IV/Offshore, L.P.
c/o Patricof & Co. Ventures, Inc.
Attn: Thomas Hirschfeld
455 Park Avenue
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------------------
The P/A Fund, L.P. 11/13/96 PA-11 40,924 Original Issue 40,924
c/o Patricof & Co. Ventures, Inc.
Attn: Thomas Hirschfeld
455 Park Avenue
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------------------
Michael Willner 11/13/96 PA-12 2,120 Original Issue 2,120
Insight Communications
===================================================================================================================================
</TABLE>
-36-
<PAGE> 84
<TABLE>
<CAPTION>
===================================================================================================================================
NO.
NEW SHARES
NAME AND ADDRESS OF DATE CERT. NO. OF FROM WHOM DATE OF CERT. TRANS- BALANCE
SHAREHOLDER ISSUED NO. SHARES TRANSFERRED TRANSFER TO WHOM TRANSFERRED NO. FERRED HELD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
126 East 56th Street
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL 388,065
===================================================================================================================================
</TABLE>
-37-
<PAGE> 85
Schedule 3.8
Certain Events
1. On June 10, 1997 the Company granted Steven Conkling an option to
purchase 30,000 shares of common stock at $3.00 per share pursuant to
the terms of the Park'N View Stock Option Plan.
2. On June 10, 1997 the Company granted Anthony Allen an option to
purchase 30,000 shares of common stock at $3.00 per share pursuant to
the terms of the Park'N View Stock Option Plan.
3. On June 10, 1997 the Company granted William Buzzbee an option to
purchase 5,000 shares of common stock at $3.00 per share pursuant to
the terms of the Park `N View Stock Option Plan.
4. On June 10, 1997 the Company granted Samual White an option to purchase
5,000 shares of common stock at $3.00 per share pursuant to the terms
of the Park "N View Stock Option Plan.
5. On June 10, 1997 the Company granted Donald Glass an option to purchase
5,000 shares of common stock at $3.00 per share pursuant to the terms
of the Park "N View Stock Option Plan.
6. Within the next 30 to 60 days the Company may make a loan of up to
$25,000 to Jody Green pursuant to the relocation of Mr. Green and his
family from Nashville, Tennessee to the Company's headquarters in Ft.
Lauderdale, Florida. The loan will bear interest at the prime rate
announced in the Wall Street Journal and will be payable upon the
earlier of (i) sale of his residence in Nashville, Tennessee or (ii) 6
months from the date of the loan.
7. The Company is in the process of negotating a two year sublease for
25,000 square feet of warehouse/office space in the Ft. Lauderdale,
Florida. The lease payments are at a graduating rate of between $7.00
and $8.00 per square foot for the terms of the sublease.
-38-
<PAGE> 86
Schedule 3.9
Material Contracts
1. Contract with Natural Microsystems with respect to the purchase of
phone switches.
2 Contract with Multicom with respect to the purchase of cable headend
equipment and electronics. 3. Contract with Henkles and McCoy with
respect to construction of new sites.
4. Contract with Line Tech with respect to construction of new sites.
5. Contract with Red Line Construction with respect to construction of new
sites.
6. In negotiation with Echo Star with respect to the purchase of cable
programming.
7. In negotiation with Intermedia with respect to the purchase of long
distance backbone and frame relay services.
-39-
<PAGE> 87
Schedule 3.10
Real Property: Title to Properties
1. Certain lessors of equipment to the Company may currently have in
effect UCC-1 financing statements on the leased equipment.
-40-
<PAGE> 88
Schedule 3.14
Employee Benefits
1. Employee Pension Benefit Plans
The Company has not established, maintained or contributed to an
"employee pension benefit plan" within the meaning of ERISA.
2. Employee Welfare Benefit Plans
Park `N View, Inc. Medical and Dental Plan
Park `N View, Inc. Severance Program
-41-
<PAGE> 89
Schedule 3.14
Employee Benefits
1. Employee Pension Benefit Plans
The Company has not established, maintained or contributed to an
"employee pension benefit plan" within the meaning of ERISA.
2. Employee Welfare Benefit Plans
Park `N View, Inc. Medical and Dental Plan
Park `N View, Inc. Severance Program
-42-
<PAGE> 90
Schedule 3.17
MATERIAL CHANGES
None
-43-
<PAGE> 91
Schedule 3.19
Indebtedness
1. The Company has the obligation to redeem its Series A Stock on the
terms described in the Memorandum.
2. The Company has the obligation to redeem its Series B Stock on the
terms set forth in the Memorandum.
-44-
<PAGE> 92
Schedule 3.20
Insurance
<TABLE>
<CAPTION>
ANNUAL
PREMIUM
POLICY TYPE COMPANY LIMITS INCEPTION PAID
- ----------- ------- ------ --------- ----------
<S> <C> <C> <C> <C>
General Liability Mt. Vernon Fire $1,000,000.00 2/12/97 $19,219.00
Insurance
Property/Contents Lloyd's of London Florida 2/12/97 $10,080.00
$750,000.00
Tennessee
$200,000.00
Prop/Installation Floater GRE Insurance Group Per Site 2/12/97 $ 2,500.00
$100,000.00
Per Occasion
$200,000.00
In Transit
$200,000.00
Property/On Site Sphere Drake Scheduled to Value: 5/17/97 $ 8,000.00
$3,250,000.00
Commercial Auto Package Progressive $300,000.00CLS 1/12/97 $34,101.00
$ 10,000.00PIP
$ 20,000.00UM
Physical Damage
Scheduled by Vehicle
Workers Comp. Legion Insurance All States except 4/8/97 $30,053.37
Monopolistic
Employers Liability
$100,000.00 Each
Accident
$500,000.00 Disease
Limit
$100,00.00 Disease
Each Employer
Life Insurance Metropolitan Life $1,000,000.00 10/16/96 $12,280.00
Insurance Company
</TABLE>
-45-
<PAGE> 93
SCHEDULE 3.22
Proprietary Rights
1. Trademark Application pending with the U.S. Patent and Trademark
Office, filed April 30, 1996, Serial Number 75/096457, for the mark PNV
DRIVE.
2. U.S. Trademark Registration, Reg. No. 1,948,428, issued January 16,
1996 for Park `N View (and Design) for entertainment services;
Registrant Park `N View, Ltd., assigned of record to Park `N View, Inc.
effective November 12, 1996.
3. The Company is in the process of filing service mark applications with
the U.S. Patent and Trademark for the following marks: (i) INCAB PNV
(038); (ii) INCAB PNV (042); (iii) PNV USA (038); (iv) PNV USA (042);
(v) YOUR CAB. YOUR CABLE. YOUR CALL. (038); and (vi) YOUR CAB. YOUR
CABLE. YOUR CALL. (042).
-46-
<PAGE> 1
EXHIBIT 10.28
PARK 'N VIEW, INC.
AMENDMENT TO SECURITIES RESTRICTION AGREEMENT
THIS AMENDMENT (the "Amendment") is made as of the 22nd day of August,
1997, by and among Park 'N View, Inc., a Delaware corporation (the "Company"),
the investors set forth on Exhibit A attached hereto and made a part hereof (the
"Existing Investors"), the holders of Series B Preferred Stock set forth on
Exhibit B attached hereto and made a part hereof (the "Investors" or the "Series
B Holders"), the holders of shares of Series C Convertible Preferred Stock of
the Company set forth on Exhibit C attached hereto and made a part hereof (the
"Series C Holders") and Alex. Brown & Sons Incorporated as the holder of a
warrant to purchase shares of the Company's Common Stock (the "Agent" and
together with the Existing Investors, the Investors and the Series C Holders,
the "Securityholders").
WHEREAS, the Existing Investors, the Investors and the Company are
parties to a Securities Restriction Agreement dated November 13, 1996 (the
"Securities Restriction Agreement");
WHEREAS, in connection with the Company's (i) offering of 7% Series C
Cumulative Convertible Preferred Stock (the "Series C Stock") and (ii) issuance
to the Agent of a warrant (the "Agent's Warrant") to purchase shares of the
Company's Common Stock, the Company has agreed to grant the Series C Holders and
the Agent co-sale rights with respect to shares of the Common Stock of the
Company issuable upon conversion of the Series C Stock and issuable upon
exercise of the Agent's Warrant and the Series C Holders and the Agent have
agreed to sell their shares under certain circumstances;
WHEREAS, in connection with the sale of the Series C Stock, all parties
to the Securities Restriction Agreement desire to amend the Securities
Restriction Agreement to include the Common Stock issuable upon the conversion
of the Series C Preferred Stock and upon exercise of the Agent's Warrant as
Securities thereunder and to amend certain portions of the Securities
Restriction Agreement to reflect the agreement concerning co-sale rights and
obligations to sell Securities in certain circumstances among the Series C
Holders, the Agent and the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to amend the
Securities Restriction Agreement as follows:
-1-
<PAGE> 2
1. Definitions.
(a) The first sentence of the Definitions Section shall
be deleted in its entirety.
(b) The following terms shall be added to the Definitions
Section of the Securities Restriction Agreement:
"Affiliate" includes a person or organization that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with another person or organization.
"Holders" shall mean the Persons who shall, from time to time, own, of
record or beneficially, and Security. The term "Holder" shall mean any one of
the Holders.
"Person" means an individual, a corporation, a partnership, a trust, a
limited liability company, an unincorporated organization or a governmental
organization or any agency or political subdivision thereof.
"Series A Stock" shall mean the Preferred Stock of the Company
designated as Series A Preferred Stock, par value $.01 per share.
"Series B Qualified Sale" means a Sale or exchange of the then
outstanding Common Stock (except for shares of Common Stock issuable upon
conversion of the Series C Stock) and Series B Stock for cash or other
securities which is (a) approved by at least (x) 70% of the directors and (y)
two of the directors designated by the holders of the Series A Stock and the
Series B Stock and (b) the stated consideration is at least equal to an amount
which (i) would represent, on an as converted basis, a compound annual rate of
return of 35% to the Series B Holders based upon the original issuance price of
the Series B Stock, or (ii) is 200% of the then conversion price of the Series B
Stock.
"Series B Qualifying Offering" shall mean that (i) the Company shall
have consummated a firm commitment underwritten public offering of its Common
Stock by a nationally recognized investment banking firm pursuant to an
effective registration under the Securities Act of 1933, as amended, covering
the offering and sale of both primary and secondary shares of Common Stock which
results in gross proceeds of at least $20,000,000, (ii) the Common Stock is
quoted or listed on either The Nasdaq Stock Market (National Market), The New
York Stock Exchange or the American Stock Exchange, and (iii) the price at which
the Common Stock is sold in such offering is at least equal to an amount which
(x) is 200% of the then effective conversion price of the Series B Stock or (y)
would represent, on an as converted basis, a compound annual rate of return of
35% based upon the original issuance price of the Series B Stock.
-2-
<PAGE> 3
"Series B Stock" shall mean the Preferred Stock of the Company
designated as Series B 7% Cumulative Convertible Preferred Stock pursuant to the
Certificate of Designation for the Series B Stock.
"Series C Qualified Sale" means a Sale or exchange of the then
outstanding shares of Series c Stock and the shares of Common Stock issuable
upon conversion thereof for cash or other securities which is (a) approved by at
least (x) 70% of the directors and (y) the director designated by The Hillman
Company and (b) the stated consideration is at least equal to an amount which
(i) would represent, on an as converted basis, a compound annual rate of return
of 35% to the Series C Holders based upon the original issuance price of the
Series C Stock, or (ii) is 200% of the then conversion price of the Series C
Stock.
"Series C Qualifying Offering" shall mean that (i) the Company shall
have consummated a firm commitment underwritten public offering of its Common
Stock by a nationally recognized investment banking firm pursuant to an
effective registration under the Securities Act of 1933, as amended, covering
the offering and sale of both primary and secondary shares of Common Stock which
results in gross proceeds of at least $20,000,000, (ii) the Common Stock is
quoted or listed on either The Nasdaq Stock Market (National Market), The New
York Stock Exchange or the American Stock Exchange, (iii) the price at which the
Common Stock is sold in such offering is at least equal to an amount which (x)
is 200% of the then effective conversion price of the Series C Stock or (y)
would represent, on an as converted basis, a compound annual rate of return of
35% based upon the original issuance price of the Series C Stock and (iv) all
outstanding shares of the Company's Series B Stock shall have been converted
into shares of the Company's Common Stock in accordance with the Certificate of
Designation relating to the Series B Stock and all outstanding shares of the
Company's Series A Stock shall have been redeemed in accordance with the
Certificate of Designation relating to the Company's Series A Stock.
"Series C Securities Purchase Agreement" shall mean that certain Stock
Purchase Agreement, dated as of August 22, 1997, by and between the Company and
each of the Series C Holders.
"Series C Stock" shall mean the Preferred Stock of the Company
designated as Series C 7% Cumulative Convertible Preferred Stock pursuant to the
Certificate of Designation for the Series C Stock.
(c) The term "Qualified Sale" shall be deleted.
(d) The first clause of the term "Securities" shall be
amended as follows:
"Securities" shall mean at any time, the shares of then outstanding
Common Stock, Series B Stock and Series C Stock
-3-
<PAGE> 4
2. Rights of Co-Sale.
(a) The first sentence of Subsection (A) of Section 1
shall be amended to replace the term "Qualifying Offering" with "Series
B Qualifying Offering" delete the term "Investors" and replace such
term with "Series B Holders" and to insert the words "of record"
between the words "own" and "50%."
(b) Subsection (A) of Section 1 shall be amended to add
the following sentence as the second sentence of the first paragraph:
Prior to a Series C Qualifying Offering and for so long as the Series C
Holders and their Affiliates own of record 50% or more of the
Securities purchased pursuant to the Series C Securities Purchase
Agreement, in the event that a Selling Securityholder desires to sell
any or all of the shares of Common Stock (excluding shares of Common
Stock issuable upon conversion of Series C Stock) owned by such
Securityholder and receives a bona fide offer therefor, such Selling
Securityholder shall so notify the Series C Holders and the Agent in
writing.
(c) The parenthetical in the third sentence of the
second paragraph of Subsection (A) of Section 1 shall be replaced with
the following:
(or Series B Stock or Series C Stock convertible into such
number of shares of Common Stock)
3. Legend. The reference to the Securities Restriction Agreement
in the stock legend shall be amended as follows:
except as provided in that certain Securities Purchase
Agreement dated as of November 13, 1996 and amended on August
22, 1997.
4. Miscellaneous. Subsection (A) of Section 4 shall be amended to
replace the "and" immediately proceeding romanette (iv) with a comma and to add
romanette (v) as follows:
and (v) Securityholders owning 66 2/3% of the Series
C Stock.
5. Investor. Whenever referenced in Section 1 of the Securities
Restriction Agreement, the term "Investor" shall be deleted and replaced with
"Investor, Series C Holder and the Agent, as applicable" and the term
"Investors" shall be replaced with "Investors, the Series C Holders and the
Agent, as applicable."
6. Binding Agreement. The Registration Rights Agreement as
modified herein, shall remain in full force and effect as so modified.
-4-
<PAGE> 5
7. Counterparts. This Amendment may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. The authentic
signature of any party received by facsimile transmission shall constitute a
valid and binding signature of such party.
[The Remainder of this Page is Intentionally Left Blank]
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
__th day of ________________, 1997.
COMPANY Investors
/s/ Ian Williams
- ----------------------------------- ---------------------------------
Park 'N View, Inc. The Existing Investors whose
By: Ian Williams signatures appear on Exhibit A hereto,
President and Chief the Investors whose signatures
Executive Officer appear on Exhibit B hereto and the
Series C Holders whose signatures
appear on the respective Omnibus
Signature Pages
-6-
<PAGE> 7
EXHIBIT A
PARK 'N VIEW GENERAL PARTNER, INC.
By: /s/ Ian Williams
-----------------------------------
Name: Ian Williams
Title: President
/s/ Ian Williams /s/ Mark Wodlinger
- ----------------------------------- ---------------------------------
Ian Williams Mark Wodlinger
/s/ Sam Hashman /s/ Marilyn Wodlinger
- ----------------------------------- ---------------------------------
Sam Hashman Marilyn Wodlinger
/s/ for MPN Partners, Ltd.
- -----------------------------------
MPN Partners, Ltd.
NELGO INVESTMENTS
By: /s/ Daniel O'Connell
- -----------------------------------
Name: Daniel O'Connell
Title: General Partners
-7-
<PAGE> 8
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Robert Chefitz
----------------------------------------
Name: Robert Chefitz
Title: G.P.
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR
By: /s/ Robert Chefitz
----------------------------------------
Name: Robert Chefitz
Title: G.P.
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
----------------------------------------
Name: Robert Chefitz
Title: G.P.
/s/ Michael Willner
- -------------------------------------
Michael Willner
-8-
<PAGE> 9
EXHIBIT B
STATE OF MICHIGAN RETIREMENT SYSTEM
By: /s/ Linda Rose
--------------------------------
Name: Linda Rose
Title: Acting Administrator Alternative Investments Division
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No. VCA-GA-5298
By: /s/
--------------------------------
Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK-1(A), CSK(B), CSK-2 Investment Fund
By: /s/ Masahiro Aozono
--------------------------------
Name: Masahiro Aozono
Title: President
CREDIT SUISSE (GUERNSEY) LIMITED as
Trustee of Dynamic Growth Fund II
By: /s/ B. Morris-Rowland
--------------------------------
Name: B. Morris Rowland
Title: Member Senior Management
By: /s/ M E Zuning
--------------------------------
Name: M E Zuning
Title: Associate
-9-
<PAGE> 10
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC. (Its General Partner)
By: /s/ Robert Chefitz
-----------------------------------------
Name: Robert Chefitz
Title: G.P.
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By: /s/ Robert Chefitz
-----------------------------------------
Name: Robert Chefitz
Title: G.P.
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
-----------------------------------------
Name: Robert Chefitz
Title: G.P.
/s/ Michael Willner
- --------------------------------------
Michael Willner
-10-
<PAGE> 11
EXHIBIT C
Holders of Shares of Series C Preferred Stock
<TABLE>
<CAPTION>
Name Number of Shares
---- ----------------
<S> <C>
Venhill Limited Partnership 187,500
Juliet Challenger, Inc. 625,000
Henry L. Hillman, Elsie Hilliard Hillman and C.G.
Grefenstette, Trustees of the Henry L. Hillman
Trust U/A dated 11/18/85 187,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Juliet Lea Hillman 62,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Audrey Hilliard Hillman 62,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Henry Lea Hillman, Jr. 62,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for William Talbott Hillman 62,500
Winfield Capital Corp. 93,750
ABS Employees' Venture Fund Limited Partnership 17,662
Franklin Antonio 15,750
Arundel Lumber Company, Inc. 15,625
E. Reid Curley 375
Galen Cole Family Foundation 15,625
Michael DelCollo 12,500
Gail G. Dougherty 12,500
Michael K. Farr 3,125
</TABLE>
-11-
<PAGE> 12
<TABLE>
<S> <C>
Richard M. Johnston Trust #2 12,500
Kelly E. Green 31,250
Richard Heftel 15,625
Leon Kaplan 16,000
Robert Klein and/or Myriam Gluck, as Tenants - by -
Entirety 16,250
Gerald Korman & Wendy S. Korman, as Tenants - by -
Entirety 6,256
James C. McMillan 12,500
Alan Meltzer 37,500
Spiegel Enterprises 15,625
Tampsco Partnership XII 125,000
Foundation Partners Fund, G.P. 125,000
Tennyson Private Placement Fund, LLC 62,500
Peter W. Wetherill 25,000
Tri Ventures 15,625
Benefit Capital Management Corporation as
Investment Manager for The Prudential Insurance
Company of America, Separate Account No. VCA-GA-5298 125,000
State Treasurer of the State of Michigan, Custodian
of the Michigan Public School Employees' Retirement
System, State Employees' Retirement System,
Michigan State Police Retirement System, and
Michigan Judges Retirement System 125,000
APA Excelsior IV, L.P. 92,500
Coutts & Co. (Cayman) LTD., Custodians for
APA/Excelsior IV/Offshore, L.P. 16,250
The P/A Fund, L.P. 16,250
---------
Total 2,328,543
=========
</TABLE>
-12-
<PAGE> 1
EXHIBIT 10.29
PARK 'N VIEW, INC.
AMENDMENT TO AMENDED AND RESTATED SECURITYHOLDERS'
AGREEMENT AND EXCHANGE AGREEMENT
THIS AMENDMENT (the "Amendment") is made as of the 22nd day of August,
1997, by and among Park "N View, Inc., a Delaware corporation (the "Company"),
the Original Investors (the "Original Investors") ad the Patricof Investors (the
"Patricof Investors") set forth on Exhibit A attached hereto and made a part
hereof, the holders of Series B Preferred Stock set forth on Exhibit B attached
hereto and made a part hereof (the "Series B Holders" and, together with the
Original Investors and the Patricof Investors, the "Existing Investors") and the
holders of shares of Series C Stock (defined below) of the Company set forth on
Exhibit C attached hereto and made a part hereof (the "Series C Holders") and
Alex. Brown & Sons Incorporated as the holder of a warrant to purchase shares of
the Company's Common Stock (the "Agent" and together with the Existing Investors
and the Series C Holders, the "Investors").
WHEREAS, the Existing Investors and the Company are parties to an
Amended and Restated Securityholders' Agreement and Exchange Agreement dated as
of November 13, 1996 (the "Securityholders' Agreement");
WHEREAS, in connection with the Company's (i) offering of 7% Series C
Cumulative, Convertible Preferred Stock (the "Series C Stock") and (ii) issuance
to the Agent of a warrant (the "Agent's Warrant") to purchase shares of the
Company's Common Stock, the Company has agreed to grant the Series C Holders and
the Agent certain rights of first refusal;
WHEREAS, in connection with the Company's offering of the Series C
Stock, the Company has agreed to grant the Series C Holders the right to
designate one member of the Company's Board of Directors;
WHEREAS, in connection with the sale of the Series C Stock, all parties
to the Securityholders' Agreement desire to amend the Securityholders' Agreement
to include the Series C Holders and the Agent as Investors (as defined in the
Securityholders' Agreement) and to amend certain portions of the
Securityholders' Agreement to reflect (i) the agreement concerning rights of
first refusal among the Series C Holders, the Agent and the Company and (ii) the
agreement concerning the right of the Series C Holders to designate a member of
the Company's Board of Directors;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to amend the
Securityholders' Agreement as follows:
-1-
<PAGE> 2
1. Definitions.
(a) The first sentence of Section 1 shall be deleted in
its entirety.
(b) The following term set forth in Section 1 of the
Securityholders' Agreement shall be deleted in its entirety and shall hereafter
have the following meaning:
"Sale" shall have the meaning given such term in the
Securities Restriction Agreement, as amended, dated as of Auust 22, 1997.
(c) The following terms shall be added to Section 1 of
the Securityholders' Agreement:
Person" means an individual, a corporation, a partnership, a
trust, a limited liability company, an unincorporated organization or a
governmental organization or any agency or political subdivision thereof.
"Securities" means any debt or equity securities of the
Company whether now or hereafter authorized, and any instrument convertible into
or exchangeable for Securities or a Security.
"Series A Stock" shall mean the Preferred Stock of the Company
designated as Series A Preferred Stock pursuant to the Certificate of
Designation of the Series A Stock.
"Series B Stock" shall mean the Preferred Stock of the Company
designated as 7% Cumulative Convertible Series B Preferred Stock pursuant to the
Certificate of Designation of the Series B Stock.
"Series C Stock" shall mean the Preferred Stock of the Company
designated as 7% Cumulative Convertible Series C Preferred Stock pursuant to the
Certificate of Designation of the Series C Stock.
2. Rights of First Refusal.
(a) The term "Qualifying Offering" in romanette (i) in
Section 4(a) shall be replaced with "Series B Qualifying Offering or a Series C
Qualifying Offering".
(b) The term "Qualifying Offering" in the second
sentence of Section 4(a) shall be replaced with "Series B Qualifying Offering".
(c) Romanette (ii) within the definition of "Series B
Qualifying Offering" in Section 4(a) shall be deleted in its entirety and
replaced with the following:
-2-
<PAGE> 3
(ii) the Common Stock is quoted or listed on either The Nasdaq
Stock Market (National Market), the New York Stock Exchange or
the American Stock Exchange, and
(d) The following shall be added to the end of Section 4(a):
A "Series C Qualifying Offering" means (i) the Corporation
shall have consummated a firm commitment underwritten public
offering of its Common Stock by a nationally recognized
investment banking firm pursuant to an effective registration
under the Securities Act covering the offering and sale of
both primary and secondary shares of common Stock which
results in gross proceeds of at least $20,000,000, (ii) the
Common Stock is quoted or listed on either The Nasdaq Stock
Market (National Market), the New York Stock Exchange or the
American Stock Exchange, (iii) the price at which the Common
Stock is sold in such offering is at least equal to an amount
which (a) is 200% of the then effective conversion price of
the Series C Stock or (y) would represent, on an as converted
basis, a compound annual rate of return of 35% based upon the
original issuance price of the Series C Stock and (iv) all
outstanding shares of the Company's Series B Stock shall have
been converted into shares of the Company's Common Stock in
accordance with the Certificate of Designation relating to the
Series B Stock and all outstanding shares of the Company's
Series A Stock shall have been redeemed in accordance with the
Certificate of Designation relating to the Company's Series A
Stock.
(c) The following sentence shall be added to the end of
subsection (d) of Section 4:
In the event that such sale is not consummated within
such three (3) month period, then the Company must reoffer
such Newly Issued Securities to the Investors in accordance
with subsections (a), (b) and (c) of this Section 4 before any
such sale may be consummated.
3. Board Designees.
(a) The first two sentences of subsection (a) of Section 5
shall be deleted in their entirety and replaced with the following:
The Board shall consist of not more than seven (7)
members of which two (2) members shall be designated by the
-3-
<PAGE> 4
Patricof Investors as provided herein, one (1) member shall be
designated by the Series B Holders, one (1) member shall be
designated by the Series C Holders and two (2) members shall
be designated by the Original Investors. It is contemplated
that one (1) additional director shall be designated by the
mutual agreement of the Board of Directors, the Series B
Holders and Series C Holders.
(b) The last sentence of subsection (a) of Section 5 shall be
deleted in its entirety and replaced with the following:
The Series B Holders and the Series C Holders shall
each have such rights to designate one (1) member of the Board
of Directors as provided in the Certificate of Designation
relating to the Series B Stock and the Certificate of
Designation relating to the Series C Stock, respectively.
4. Application to Subsequent Investors. Romanette (ii) of Section
9 shall be deleted in its entirety and replaced with the following:
(ii) any Person who after the date hereof,
shall become a holder of any shares of any Common
Stock, Series A Stock, Series B Stock, and/or Series
C Stock (such Person's acceptance of such shares to
be deemed to constitute his, her or its agreement to
be bound hereby) and such Person's heirs, legal
representatives, successors and assigns.
5. Binding Agreement. The Securityholders' Agreement as modified
herein, shall remain in full force and effect as so modified.
6. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. The authentic
signature of any party received by facsimile transmission shall constitute a
valid and binding signature of such party.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
___ day of ____________, 1997.
COMPANY Investors
/s/ Ian Williams
- --------------------------------- -------------------------------------
Park 'N View, Inc. The Existing Investors whose
By: Ian Williams signatures appear on Exhibit A hereto
President and Chief and the Series C Holders whose
Executive Officer signatures appear on the respective
Omnibus Signature Pages
-5-
<PAGE> 6
EXHIBIT A
By: /s/ Ian Williams
-------------------------------
Name: Ian Williams
Title: President
/s/ Ian Williams /s/ Mark Wodlinger
------------------------------- -----------------------------
Ian Williams Mark Wodlinger
/s/ Sam Hashman /s/ Marilyn Wodlinger
------------------------------- -----------------------------
Sam Hashman Marilyn Wodlinger
/s/ for MPN Partners, Ltd.
-------------------------------
MPN Partners, Ltd.
NELGO INVESTMENTS
By: /s/ Daniel O'Connell
-------------------------------
Name: Daniel O'Connell
Title: General Partners
-6-
<PAGE> 7
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Robert Chefitz
--------------------------------
Name: Robert Chefitz
Title: G.P.
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR
By: /s/ Robert Chefitz
--------------------------------
Name: Robert Chefitz
Title: G.P.
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
--------------------------------
Name: Robert Chefitz
Title: G.P.
/s/ Michael Willner
- ---------------------------------
Michael Willner
-7-
<PAGE> 8
EXHIBIT B
By: /s/ Linda Rose
---------------------------------------
Name: Linda Rose
Title: Acting Administrator Alternative Investments Division
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No. VCA-GA-5298
By: /s/
---------------------------------------
Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK-1(A), CSK(B), CSK-2 Investment Fund
By: /s/ Masahiro Aozono
---------------------------------------
Name: Masahiro Aozono
Title: President
CREDIT SUISSE (GUERNSEY) LIMITED as
Trustee of Dynamic Growth Fund II
By: /s/ B. Morris-Rowland
---------------------------------------
Name: B. Morris Rowland
Title: Member Senior Management
By: /s/ M E Zuning
---------------------------------------
Name: M E Zuning
Title: Associate
APA EXCELSIOR IV, L.P.
-8-
<PAGE> 9
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC. (Its General Partner)
By: /s/ Robert Chefitz
----------------------------------
Name: Robert Chefitz
Title: G.P.
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By: /s/ Robert Chefitz
----------------------------------
Name: Robert Chefitz
Title: G.P.
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
----------------------------------
Name: Robert Chefitz
Title: G.P.
/s/ Michael Willner
- ------------------------------
Michael Willner
-9-
<PAGE> 10
EXHIBIT C
Holders of Shares of Series C Preferred Stock
<TABLE>
<CAPTION>
Name Number of Shares
---- ----------------
<S> <C>
Venhill Limited Partnership 187,500
Juliet Challenger, Inc. 625,000
Henry L. Hillman, Elsie Hilliard Hillman and C.G.
Grefenstette, Trustees of the Henry L. Hillman
Trust U/A dated 11/18/85 187,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Juliet Lea Hillman 62,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Audrey Hilliard Hillman 62,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Henry Lea Hillman, Jr. 62,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for William Talbott Hillman 62,500
Winfield Capital Corp. 93,750
ABS Employees' Venture Fund Limited Partnership 17,662
Franklin Antonio 15,750
Arundel Lumber Company, Inc. 15,625
E. Reid Curley 375
Galen Cole Family Foundation 15,625
Michael DelCollo 12,500
Gail G. Dougherty 12,500
Michael K. Farr 3,125
</TABLE>
-10-
<PAGE> 11
<TABLE>
<S> <C>
Richard M. Johnston Trust #2 12,500
Kelly E. Green 31,250
Richard Heftel 15,625
Leon Kaplan 16,000
Robert Klein and/or Myriam Gluck, as Tenants - by -
Entirety 16,250
Gerald Korman & Wendy S. Korman, as Tenants - by -
Entirety 6,256
James C. McMillan 12,500
Alan Meltzer 37,500
Spiegel Enterprises 15,625
Tampsco Partnership XII 125,000
Foundation Partners Fund, G.P. 125,000
Tennyson Private Placement Fund, LLC 62,500
Peter W. Wetherill 25,000
Tri Ventures 15,625
Benefit Capital Management Corporation as
Investment Manager for The Prudential Insurance
Company of America, Separate Account No. VCA-GA-5298 125,000
State Treasurer of the State of Michigan, Custodian
of the Michigan Public School Employees' Retirement
System, State Employees' Retirement System,
Michigan State Police Retirement System, and
Michigan Judges Retirement System 125,000
APA Excelsior IV, L.P. 92,500
Coutts & Co. (Cayman) LTD., Custodians for
APA/Excelsior IV/Offshore, L.P. 16,250
The P/A Fund, L.P. 16,250
---------
Total 2,328,543
=========
</TABLE>
-11-
<PAGE> 1
EXHIBIT 10.30
PARK 'N VIEW, INC.
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
THIS AMENDMENT (the "Amendment") is made as of the 22nd day of August,
1997, by and among Park 'N View, Inc., a Delaware corporation (the "Company"),
the Patricof Investors set forth on Exhibit A attached hereto and made a part
hereof (the "Patricof Investors"), the holders of 7% Series B Cumulative
Convertible Preferred Stock set forth on Exhibit B attached hereto and made a
part hereof (the "Series B Holders") and the holders of shares of Series C
Preferred Stock (defined below) of the Company set forth on Exhibit C attached
hereto and made a part hereof (the "Series C Holders") and Alex. Brown & Sons
Incorporated as the holder of a warrant to purchase shares of the Company's
Common Stock (the "Agent" and together with the Patricof Investors, the Series B
Holders and the Series C Holders, the "Investors").
WHEREAS, the Patricof Investors, the Series B Holders and the Company
are parties to a Registration Rights Agreement dated November 13, 1996 (the
"Registration Rights Agreement");
WHEREAS, in connection with the Company's (i) offering of 7% Series C
Cumulative Convertible Preferred Stock (the "Series C Preferred Stock") and (ii)
issuance to the Agent of a warrant (the "Agent's Warrant") to purchase shares of
Common Stock, the Company has agreed to grant the Series C Holders and the Agent
registration rights with respect to shares of the Common Stock of the Company
issuable upon conversion of the Series C Preferred Stock and issuable upon
exercise of the Agent's Warrant;
WHEREAS, in connection with the sale of the Series C Preferred Stock,
all parties to the Registration Rights Agreement desire to amend the
Registration Rights Agreement to include the Series C Holders and the Agent as
Holders (as defined in the Registration Rights Agreement), to include the Common
Stock issuable upon the conversion of the Series C Preferred Stock and upon
exercise of the Agent's Warrant as Registrable Securities thereunder and to
amend certain portions of the Registration Rights Agreement to reflect the
agreement concerning registration rights between the Series C Holders and the
Agent and the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to amend the
Registration Rights Agreement as follows:
1. Definitions.
1.1. The first sentence of Section 1.l shall be deleted in
its entirety.
-1-
<PAGE> 2
1.2. The following term set forth in Section 1 of the
Registration Rights Agreement shall be deleted in its entirety and shall
hereafter have the following meaning:
"Registrable Securities" means (a) the shares of Common Stock into
which the 7% Series B Cumulative Convertible Preferred Stock ("Series B
Preferred Stock") is convertible, (b) the shares of Common Stock into which the
7% Series C Cumulative Convertible Preferred Stock (the "Series C Preferred
Stock") is convertible, (c) the Common Stock issuable upon the exercise of the
Agent's Warrant, (d) any additional shares of Common Stock acquired by the
Holders by way of a stock dividend, stock split or other distribution in respect
of the Series B and Series C Preferred Stock and the Common Stock issuable upon
exercise of the Agent's Warrant and (e) any shares of Common Stock currently
held or hereafter acquired by any Patricof Investor. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
at such time as (i) a registration statement with respect to the sale of such
securities shall have been declared effective by the Commission and such
securities have been disposed of pursuant to such effective registration
statement, (ii) such securities have been distributed to the public pursuant to
the provisions of Rule 144 or (iii) such securities have ceased to be
outstanding.
1.3. The following terms shall be added to Section 1 of the
Registration Rights Agreement:
"Affiliate" includes a person or organization that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with another person or organization.
"Agreement" shall mean the Registration Rights Agreement, as amended by
this Amendment.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Person" means an individual, a corporation, a partnership, a trust, a
limited liability company, an unincorporated organization or a governmental
organization or any agency or political subdivision thereof.
"Securities" means any debt or equity securities of the Company whether
now or hereafter authorized, and any instrument convertible into or exchangeable
for Securities or a Security.
2. Registration Procedures.
Filings; Information. Subsection (i) of Section 3.1(e) shall
be deleted in its entirety and shall be replaced by the following:
-2-
<PAGE> 3
(e) register or qualify the Registrable
Securities under such other securities or blue sky laws of
such jurisdictions in the United States as any Selling Holder
reasonably (in light of such Selling Holder's intended plan of
distribution) request and as such registration or
qualification is required by such other securities or blue sky
laws
3. Notices.
(a) The name of the firm with which James O'Connell,
Esq. practices shall be deleted and replaced with "Kilpatrick
Stockton LLP."
(b) Subsection 2 of Section 6.5 shall be amended to
add subsections (i) and (ii) as follows:
(i) if to a holder of Registrable Securities
(other than the Series C Holders or the Agent:
(ii) if to the Series C Holders or the
Agent:
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
Attention: Stephen A. Riddick, Esq.
Telephone: (410) 576-1674
Telecopy: (410) 576-1763
4. Binding Agreement. The Registration Rights Agreement as
modified herein, shall remain in full force and effect as so modified.
5. Counterparts. This Amendment may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. The authentic
signature of any party received by facsimile transmission shall constitute a
valid and binding signature of such party.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
__th day of ________________, 1997.
COMPANY INVESTORS
/s/ Ian Williams
- ---------------------------------- ----------------------------------
Park 'N View, Inc. The Patricof Investors whose
By: Ian Williams signatures appear on Exhibit A hereto,
President and Chief the Series B Holders whose signatures
Executive Officer Executive Officer appear on
Exhibit B hereto and the Series
C Holders whose signatures appear
on the respective Omnibus Signature
Pages
-4-
<PAGE> 5
EXHIBIT A
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Robert Chefitz
----------------------------------
Name: Robert Chefitz
Title: G.P.
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR
By: /s/ Robert Chefitz
----------------------------------
Name: Robert Chefitz
Title: G.P.
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
----------------------------------
Name: Robert Chefitz
Title: G.P.
/s/ Michael Willner
- ---------------------------------
Michael Willner
-5-
<PAGE> 6
EXHIBIT B
STATE OF MICHIGAN RETIREMENT SYSTEM
By: /s/ Linda Rose
-------------------------------------------
Name: Linda Rose
Title: Acting Administrator Alternative Investments Division
BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No. VCA-GA-5298
By: /s/
-------------------------------------------
Name:
Title:
CSK VENTURE CAPITAL CO., LTD.
as Investment Manager for CSK-1(A) Investment Fund
By: /s/ Masahiro Aozono
-------------------------------------------
Name: Masahiro Aozono
Title: President
CREDIT SUISSE (GUERNSEY) LIMITED as
Trustee of Dynamic Growth Fund II
By: /s/ B. Morris-Rowland
-------------------------------------------
Name: B. Morris Rowland
Title: Member Senior Management
By: /s/ M E Zuning
-------------------------------------------
Name: M E Zuning
Title: Associate
-6-
<PAGE> 7
EXHIBIT B
(CONTINUED)
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC. (Its General Partner)
By: /s/ Robert Chefitz
----------------------------------
Name: Robert Chefitz
Title: G.P.
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
INVESTOR ADVISOR
By: /s/ Robert Chefitz
-------------------------------------------
Name: Robert Chefitz
Title: G.P.
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
-------------------------------------------
Name: Robert Chefitz
Title: G.P.
/s/ Michael Willner
- ---------------------------------
Michael Willner
-7-
<PAGE> 8
EXHIBIT C
Holders of Shares of Series C Preferred Stock
<TABLE>
<CAPTION>
Name Number of Shares
---- ----------------
<S> <C>
Venhill Limited Partnership 187,500
Juliet Challenger, Inc. 625,000
Henry L. Hillman, Elsie Hilliard Hillman and C.G.
Grefenstette, Trustees of the Henry L. Hillman
Trust U/A dated 11/18/85 187,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Juliet Lea Hillman 62,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Audrey Hilliard Hillman 62,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for Henry Lea Hillman, Jr. 62,500
C.G. Grefenstette and Thomas G. Bigley, Trustees
U/A/T dated 8/28/68 for William Talbott Hillman 62,500
Winfield Capital Corp. 93,750
ABS Employees' Venture Fund Limited Partnership 17,662
Franklin Antonio 15,750
Arundel Lumber Company, Inc. 15,625
E. Reid Curley 375
Galen Cole Family Foundation 15,625
Michael DelCollo 12,500
Gail G. Dougherty 12,500
Michael K. Farr 3,125
Richard M. Johnston Trust #2 12,500
Kelly E. Green 31,250
</TABLE>
-8-
<PAGE> 9
<TABLE>
<S> <C>
Richard Heftel 15,625
Leon Kaplan 16,000
Robert Klein and/or Myriam Gluck, as Tenants - by -
Entirety 16,250
Gerald Korman & Wendy S. Korman, as Tenants - by -
Entirety 6,256
James C. McMillan 12,500
Alan Meltzer 37,500
Spiegel Enterprises 15,625
Tampsco Partnership XII 125,000
Foundation Partners Fund, G.P. 125,000
Tennyson Private Placement Fund, LLC 62,500
Peter W. Wetherill 25,000
Tri Ventures 15,625
Benefit Capital Management Corporation as
Investment Manager for The Prudential Insurance
Company of America, Separate Account No. VCA-GA-5298 125,000
State Treasurer of the State of Michigan, Custodian
of the Michigan Public School Employees' Retirement
System, State Employees' Retirement System,
Michigan State Police Retirement System, and
Michigan Judges Retirement System 125,000
APA Excelsior IV, L.P. 92,500
Coutts & Co. (Cayman) LTD., Custodians for
APA/Excelsior IV/Offshore, L.P. 16,250
The P/A Fund, L.P. 16,250
---------
Total 2,328,543
=========
</TABLE>
-9-
<PAGE> 1
EXHIBIT 10.31
May 20, 1998
APA Excelsior IV, L.P.
APA Excelsior IV/Offshore, L.P.
The P/A Fund, L.P.
445 Park Avenue
New York, New York 10022
The Hillman Company
2000 Grant Building
Pittsburgh, Pennsylvania 15219
State of Michigan Retirement System
430 Allegan Street
Lansing, Michigan 48922
Benefit Capital Management Corporation
39 Old Ridgebury Road
Danbury, Connecticut 06817
Re: Amendment of Amended and Restated Registration Rights Agreement
Ladies and Gentlemen:
Park `N View, Inc., a Delaware corporation (the "Company") and each of
the undersigned are parties to a Registration Rights Agreement, dated as of
November 13, 1996, as amended by the Amendment to Registration Rights Agreement,
dated as of August 22, 1997 (collectively referred to as the "Registration
Rights Agreement"). Capitalized terms used in this letter that are not otherwise
defined in this letter will have the meanings ascribed to them in the
Registration Rights Agreement.
Section 5.1 of the Registration Rights Agreement prohibits the Company
from granting any demand registration rights, or any piggyback registration
rights except as provided therein, to any owner or purchaser of Securities,
which include any debt or equity securities of the Company. Pursuant to the
Purchase Agreement between the Company and Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), the Company intends to offer and sell its 13%
Senior Notes due 2008, in the aggregate principal amount of $75,000,000 (the
"Notes") and warrants to purchase 505,375 shares of Common Stock (the
"Warraants"), and to grant certain demand
<PAGE> 2
APA Excelsior IV, L.P.
APA Excelsior IV/Offshore, L.P.
The P/A Fund, L.P.
The Hillman Company
State of Michigan Retirement System
Benefit Capital Management Corporation
May 20, 1998
registration rights in connection therewith. The undersigned (who collectively
hold a majority of the Registrable Securities) acknowledge and agree that
Section 5.1 of the Registration Rights Agreement will be deemed to be amended
for all purposes to permit the Company to grant demand registration rights
pursuant to the A/B Exchange Registration Rights Agreement by and between the
Company and DLJ and the Warrant Registration Rights Agreement by and between the
Company and DLJ.
The undersigned further acknowledge and agree that Section 2.2 of the
Registration Rights Agreement will for all purposes be deemed to be amended to
provide that the Holders of the Registrable Securities will not have piggyback
registration rights with respect to any registration statements required to be
filed under the A/B Exchange Registration Rights Agreement or the Warrant
Registration Rights Agreement. The undersigned also acknowledge and agree that
the foregoing amendments will not materially or adversely affect the ability of
the Holders of the Registrable Securities to have securities registered.
The Registration Rights Agreement, as amended herein, shall remain in
full force and effect.
Please sign this letter agreement below as indicated. Thank you for
your assistance in this matter.
Sincerely,
PARK 'N VIEW, INC.
By: /s/ Steve Conkling
-------------------------------------
Steve Conkling, Chief Operating Officer
2
<PAGE> 3
APA Excelsior IV, L.P.
APA Excelsior IV/Offshore, L.P.
The P/A Fund, L.P.
The Hillman Company
State of Michigan Retirement System
Benefit Capital Management Corporation
May 20, 1998
The foregoing letter, dated May 20, 1998, is hereby acknowledged and
agreed:
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)
By: PATRICOF & CO. MANAGERS, INC.
(Its General Partner)
By: /s/ Robert Chefitz
Name:
------------------------
Title:
------------------------
COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.
INVESTMENT ADVISOR
By: /s/ Robert Chefitz
-----------------------------
Name:
------------------------
Title:
------------------------
THE P/A FUND, L.P.
By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)
By: /s/ Robert Chefitz
-----------------------------
Name:
------------------------
Title:
------------------------
VENHILL LIMITED PARTNERSHIP
By: /s/ Howard Hillman
----------------------------
Name:
------------------------
Title:
------------------------
3
<PAGE> 4
APA Excelsior IV, L.P.
APA Excelsior IV/Offshore, L.P.
The P/A Fund, L.P.
The Hillman Company
State of Michigan Retirement System
Benefit Capital Management Corporation
May 20, 1998
JULIET CHALLENGER, INC.
By: /s/ Andrew H. McQuarrie
---------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
HENRY L. HILLMAN, ELSIE HILLIARD
HILLMAN AND C. G. GREFENSTETTE,
TRUSTEES OF THE HENRY L. HILLMAN
TRUST U/A DATED 11/18/85
By: /s/ C.G. Grefenstette
---------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
C.G. GREFENSTETTE AND THOMAS G. BIGLEY,
TRUSTEES U/A/T DATED 8/28/68 FOR JULIET
LEA HILLMAN
By: /s/ C.G. Grefenstette
------------------------------------------
By: /s/ Thomas Bigley
---------------------------------------
C.G. GREFENSTETTE AND THOMAS G. BIGLEY,
TRUSTEES U/A/T DATED 8/28/68 FOR AUDREY
HILLIARD HILLMAN
By: /s/ C.G. Grefenstette
------------------------------------------
By: /s/ Thomas Bigley
----------------------------------------
C.G. GREFENSTETTE AND THOMAS G. BIGLEY,
TRUSTEES U/A/T DATED 8/28/68 FOR HENRY
LEA HILLMAN, JR.
By: /s/ C.G. Grefenstette
---------------------------------------
4
<PAGE> 5
APA Excelsior IV, L.P.
APA Excelsior IV/Offshore, L.P.
The P/A Fund, L.P.
The Hillman Company
State of Michigan Retirement System
Benefit Capital Management Corporation
May 20, 1998
By: /s/ Thomas Bigley
------------------------------------------
C.G. GREFENSTETTE AND THOMAS G. BIGLEY,
TRUSTEES U/A/T DATED 8/28/68 FOR WILLIAM
TALBOTT HILLMAN
By: /s/ C.G. Grefenstette
------------------------------------------
By: /s/ Thomas Bigley
------------------------------------------
STATE OF MICHIGAN RETIREMENT SYSTEM
By: /s/ Linda Rose
------------------------------------------
Name:
----------------------------------------
Title:
--------------------------------------
BENEFIT CAPITAL MANAGEMENT CORPORATION
AS INVESTMENT MANAGER FOR THE PRUDENTIAL
INSURANCE CO. OF AMERICA SEPARATE ACCOUNT NO.
VCA-GA-5298
By: /s/
------------------------------------------
Name:
----------------------------------------
Title:
--------------------------------------
5
<PAGE> 1
EXHIBIT 10.32
===============================================================================
PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
by and among
PARK `N VIEW, INC.
STATE STREET BANK AND TRUST COMPANY
as Trustee
and
STATE STREET BANK AND TRUST COMPANY
as Escrow Agent
May 27, 1998
===============================================================================
<PAGE> 2
PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
THIS PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT (this "Agreement"), dated as of
May 27, 1998, is by and among PARK `N VIEW, INC. (the "Company"), STATE STREET
BANK AND TRUST COMPANY, as trustee under the Indenture referred to below (the
"Trustee"), AND STATE STREET BANK AND TRUST COMPANY, in its capacity as
collateral agent for the Trustee and the Holders of the Notes hereinafter
described (the "Escrow Agent").
RECITALS
A. The Notes. Pursuant to that certain Indenture (the "Indenture") dated
as of May 27, 1998, by and between the Company and the Trustee, the Company will
issue $75,000,000 in aggregate principal amount of 13% Senior Notes due 2008
(collectively, the "Notes"). Immediately after receipt of payment for the Notes
(the "Deposit Time"), the Company will deposit $19,175,000 of the net proceeds
from the sale of the Notes (the "Escrow Proceeds") into a segregated cash
collateral trust account with the Escrow Agent at its office at 61 Broadway, New
York, New York 10006 in the name of State Street Bank and Trust Company, as
Escrow Agent, "Collateral Account for Park `N View, Inc." (the "Escrow
Account"). The Escrow Account and all balances and investments from time to time
therein shall be under the sole dominion and control of the Escrow Agent for the
benefit of the Holders of the Notes. Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Indenture.
B. Purpose. The parties hereto desire to set forth their agreement with
regard to the administration of the Escrow Account, the creation of a security
interest in the Collateral (as defined herein) and the conditions upon which
funds will be released from the Escrow Account and the conditions upon which the
security interest and Lien described herein will be released.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Security Interest.
1.1. Pledge and Assignment. The Company hereby irrevocably
pledges, assigns and sets over to the Trustee, and grants to the Trustee, for
the benefit of the Holders of the Notes, a first priority continuing security
interest in all of the Company's right, title and interest to all of the
following, whether now owned or existing or hereafter acquired or created
(collectively, the "Collateral"):
1.1.1. the Escrow Account;
1.1.2. all funds from time to time held in the Escrow
Account, including, without limitation, the Escrow Proceeds and all
certificates and instruments, if any, from time to time, representing
or evidencing the Escrow Account or the Escrow Proceeds;
1.1.3. all Pledged Securities (as defined herein), whether
the same shall constitute certificated securities, uncertificated
securities, investment property, instruments, general intangibles or
otherwise held by or registered in the name of the Escrow Agent or the
Trustee and all certificates and instruments, if any, from time to time
representing or evidencing the Pledged Securities;
1
<PAGE> 3
1.1.4. all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Trustee or the Escrow Agent for or on
behalf of the Company in substitution for or in addition to any or all
of the then existing Collateral;
1.1.5. all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Collateral; and
1.1.6. all proceeds of the foregoing including, without
limitation, cash proceeds.
The Company and the Trustee hereby appoint the Escrow Agent to act as the
Trustee's agent, on behalf of the Holders of the Notes, for purposes of
perfecting the foregoing pledge, assignment and security interest in the
Collateral, and the Escrow Agent hereby accepts such appointment. The Escrow
Agent hereby acknowledges the security interest in the Collateral granted by the
Company in favor of the Trustee hereunder. The Escrow Agent further acknowledges
that it is holding the Collateral for the benefit of the Holders of the Notes
subject to the pledge and security interest granted to the Trustee hereunder.
Without prejudice to the Trustee's rights under Section 7.07 of the Indenture,
for so long as the foregoing pledge, assignment and security interest remains in
effect, the Escrow Agent hereby waives any right of setoff or banker's lien that
it, in its individual capacity, may have with respect to any or all of the
Collateral.
1.2. Secured Obligations. This Agreement secures the due
and punctual payment and performance of all obligations and indebtedness of the
Company, whether now or hereafter existing, under the Notes and the Indenture
including, without limitation, interest accrued thereon after the commencement
of a bankruptcy, reorganization or similar proceeding involving the Company to
the extent permitted by applicable law (collectively, the "Secured
Obligations").
1.3. Delivery of Collateral. All certificates or
instruments, if any, representing or evidencing the Collateral shall be held by
or on behalf of the Escrow Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignments in blank, all in form and substance reasonably
satisfactory to the Trustee and the Escrow Agent. All securities in
uncertificated or book-entry form, if any, representing or evidencing the
Collateral shall be registered in the name of the Trustee or any of its nominees
by book-entry or as otherwise appropriate so as to properly identify the
interest of the Trustee therein. In addition, the Trustee shall have the right,
at any time following the occurrence of an Event of Default, and only for so
long as such Event of Default is continuing, to instruct the Escrow Agent to
release the Collateral and to transfer to or to register in the name of the
Trustee or any of its nominees any or all other Collateral. Except as otherwise
provided herein, all Collateral shall be deposited and held in the Escrow
Account. The Trustee shall have the right at any time to exchange certificates
or instruments representing or evidencing all or any portion of the Collateral
for certificates or instruments of smaller or larger denominations in the same
aggregate amount.
1.4. Further Assurances. Prior to, contemporaneously
herewith, and at any time and from time to time hereafter, the Company shall, at
the Company's expense, execute and deliver to the Trustee or the Escrow Agent
such other instruments and documents, and shall take all further action as it
deems reasonably necessary or advisable or as the Trustee or the Escrow Agent
may reasonably request, including, without limitation, an Opinion of Counsel,
upon which the Trustee or the Escrow Agent, as the
2
<PAGE> 4
case may be, may conclusively rely, to confirm or perfect the security interest
of the Trustee granted or purported to be granted hereby or to enable the
Trustee to exercise and enforce its rights and remedies hereunder with respect
to any Collateral, and the Company shall take all necessary action to preserve
and protect the security interest created hereby as a first priority, perfected
lien and encumbrance upon the Collateral. The Company shall pay all costs
incurred in connection with any of the foregoing.
1.5. Maintaining the Escrow Account. So long as this
Agreement is in full force and effect:
1.5.1. the Company shall establish and maintain the Escrow
Account with the Escrow Agent in New York, New York, and the Escrow
Account and the Collateral shall at all times remain under the
exclusive dominion and control of the Escrow Agent for the benefit of
the Holders of the Notes; and
1.5.2. it shall be a term and condition of the Escrow
Account, notwithstanding any term or condition to the contrary in any
other agreement relating to the Escrow Account and except as otherwise
provided by the provisions of Article 3 of this Agreement, that no
amount (including, without limitation, interest on or other proceeds of
the Escrow Account or on any Pledged Securities held therein) shall be
paid or released to or for the account of, or withdrawn by or for the
account of, the Company or any other person or entity other than the
Trustee from the Escrow Account.
1.5.3. the Escrow Agent shall have full and exclusive
control over the Collateral and no act or consent by the Company shall
be required for the Trustee to effect its duties hereunder. In the
event that inconsistent provisions are taken by the Trustee and the
Company, the Trustee's instructions shall govern.
1.6. Transfers and Other Liens. Until termination of this
Agreement pursuant to Section 8, the Company agrees that it shall not (i) sell,
assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any of the Collateral or (ii) create or permit to exist
any Lien upon or with respect to any of the Collateral, except for the security
interest under this Agreement.
1.7. Attorneys-in-Fact. In addition to all of the powers
granted to the Trustee pursuant to Article 6 of the Indenture, the Company
hereby irrevocably appoints each of the Trustee and the Escrow Agent as the
Company's attorney-in-fact, coupled with an interest, with full authority in the
place and stead of the Company and in the name of the Company or otherwise, from
time to time in the Trustee's or the Escrow Agent's discretion to, so long as
any Event of Default has occurred and is continuing, take any action and to
execute any instrument which the Trustee or the Escrow Agent may deem reasonably
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, endorse and collect all instruments made payable
to the Company representing any interest payment, dividend or other distribution
in respect of the Collateral or any part thereof and to give full discharge for
the same, and the expenses of the Trustee (including reasonable fees of its
agents and counsel) incurred in connection therewith shall be payable by the
Company.
1.8. Trustee or Escrow Agent May Perform. Without limiting
the authority granted under Section 1.7 and except with respect to the failure
of the Company to deliver investment instructions, which shall be governed by
the second paragraph of Section 2.1 hereof, if the Company fails to perform any
agreement contained herein, the Trustee or the Escrow Agent may, but shall not
be
3
<PAGE> 5
obligated to, itself perform, or cause performance of, such agreement, and the
expenses of the Trustee or the Escrow Agent incurred in connection therewith
shall be payable by the Company. In the event that the Trustee or the Escrow
Agent perform pursuant to this Section 1.8, the Company shall compensate,
reimburse and indemnify the Trustee or the Escrow Agent, as the case may be, in
the manner provided in Section 7.07 of the Indenture.
1.9. Escrow Account Statement. Each month, the Escrow
Agent shall deliver to the Company and the Trustee a statement in a form
satisfactory to the Company and the Trustee setting forth with reasonable
particularity the balance of funds then in the Escrow Account and the manner in
which such funds are invested. The parties hereto irrevocably instruct the
Escrow Agent that on the first date upon which the balance in the Escrow account
is reduced to zero, the Escrow Agent shall deliver to the Company and to the
Trustee a notice that the balance in the Escrow Account has been reduced to
zero.
2. Investment and Liquidation of Funds in Escrow Account. Funds
deposited in the Escrow Account shall be invested and reinvested by the Escrow
Agent on the following terms and conditions:
2.1. Pledged Securities. Subject to the provisions of
Articles 2 and 3, funds held by the Escrow Agent in the Escrow Account may, at
the written direction of the Company, be invested and reinvested solely in the
following ("Pledged Securities"): (x) securities that are (i) direct obligations
of the United States of America for the payment of which the full faith and
credit of the United States of America is pledged or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the United States of America the payment of which is unconditionally guaranteed
as a full faith and credit obligation by the United States of America, which in
either case, are not callable or redeemable at the option of the issuer thereof,
and (y) depository receipts issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any U.S. Government Obligation
which is specified in clause (x) above and held by such bank for the account of
the holder of such depository receipt, or with respect to any specific payment
of principal or interest on any U.S. Government Obligation which is so specified
and held, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of principal or interest of
the U.S. Government Obligation evidenced by such depository receipt ("U.S.
Government Obligations"), in each case, having a maturity date on or before the
date on which the payments of interest on the Notes to which such U.S.
Government Obligations are pledged to secure occur.
If the Company fails to give written investment instructions
to the Escrow Agent by 10:00 a.m. (New York time) on any Business Day (other
than the Closing Date) on which there is uninvested cash and/or maturing Pledged
Securities in the Escrow Account, the Trustee is hereby authorized and directed
to direct the Escrow Agent to, and the Escrow Agent shall, invest any such cash
or the proceeds of any maturing Pledged Securities in Pledged Securities
maturing on the next Business Day. On the Closing Date, the Company may direct
the Trustee, who shall direct the Escrow Agent, to invest the proceeds in the
Escrow Account in Pledged Securities until 2:00 p.m., which instructions shall
be executed no later than 12:00 noon on the Business Day immediately following
the Closing Date. The Company's failure to give such investment instructions
shall not constitute a default or an event of default hereunder.
2.2. Interest. All interest earned on funds invested in
Pledged Securities shall be held in the Escrow Account and reinvested in
accordance with the terms hereof and shall be subject to the security interest
granted hereunder to the Trustee.
4
<PAGE> 6
2.3. Limitation of Trustee's and Escrow Agent's Liability.
Subject to Section 9.12, in no event shall the Trustee or the Escrow Agent have
any liability to the Company or any other Person for investing the funds from
time to time in the Escrow Account in accordance with the provisions of this
Article 2, regardless of whether greater income or a higher yield could have
been obtained had the Escrow Agent invested such funds in different Pledged
Securities, or for any loss (including breakage costs or loss of principal)
associated with the sale or liquidation of Pledged Securities in accordance with
the terms of this Agreement.
2.4. Liquidation of Funds. In liquidating any Pledged
Securities in accordance with Article 3 of this Agreement, the Company shall
direct the Trustee or the Escrow Agent as to which Pledged Securities shall be
liquidated.
3. Interest Payments.
3.1. Not later than five (5) Business Days prior to the
date of each of the first four scheduled interest payments due on the Notes, the
Company shall, in writing, direct the Escrow Agent to transfer from the Escrow
Account to the Paying Agent funds necessary to provide for payment in full or
any portion of the next scheduled interest payment on the Notes (or, if a
portion of the Notes has been retired by the Company, funds representing the
lesser of (i) the amount sufficient to pay interest through and including May
15, 2000, on the Notes not so retired and (ii) the interest payments which have
not previously been made on such retired Notes for each scheduled interest
payment date through and including the scheduled interest payment date) or, if
the Company does not intend to utilize the funds in the Escrow Account for such
payment of interest, then the Company shall comply with Section 3.2 below. Upon
receipt of such written request, the Escrow Agent shall take any action
necessary to provide for the payment of such interest payment on the Notes
directly to the Holders of Notes from proceeds of the Collateral in the Escrow
Account. Concurrently with any release of funds to the Paying Agent pursuant to
this Section 3.1, the Company shall deliver to the Trustee a certificate
substantially in the form of Exhibit A hereto.
3.2. If the Company makes any interest payment or portion
of an interest payment from a source of funds other than the Escrow Account
("Company Funds"), the Company may, after payment in full of such interest
payment, direct the Trustee in writing to direct the Escrow Agent to release to
the Company or at the direction of the Company an amount of funds from the
Escrow Account equal to the lesser of (i) the amount of Company Funds so
expended and (ii) the amount of funds in the Escrow Account which exceeds the
amount sufficient, in the reasonable opinion of the Trustee, to provide for
payment in full of the first four scheduled interest payments on the Notes. Upon
receipt of the certificate described in the following sentence, the Trustee
shall direct the Escrow Agent to pay over to the Company the requested amount.
Concurrently with any release of funds to the Company pursuant to this Section
3.2, the Company shall deliver to the Trustee a certificate substantially in the
form of Exhibit A hereto.
3.3. Upon payment in full of the first four scheduled
interest payments on the Notes, the security interest in the Collateral
evidenced by this Agreement shall terminate and be of no further force and
effect. Furthermore, upon the release of any Collateral from the Escrow Account
in accordance with the terms of this Agreement, whether upon release of
Collateral to Holders as payment of interest, to the Company or otherwise, the
security interest evidenced by this Agreement in the Collateral so released
shall terminate and be of no further force and effect.
4. Representations and Warranties. The Company hereby represents
and warrants that:
5
<PAGE> 7
4.1. The execution, delivery and performance by the
Company of this Agreement are within the Company's corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the certificate of incorporation of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or result
in the creation or imposition of any Lien on any assets of the Company, except
for the security interests granted under this Agreement.
4.2. The Company is the record and beneficial owner of the
Collateral, free and clear of any and all Liens or claims of any person or
entity (except for the security interests granted under this Agreement). No
financing statement covering the Collateral is on file in any public office
other than the financing statements filed pursuant to this Agreement.
4.3. This Agreement has been duly executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or general principles of equity and commercial
reasonableness.
4.4. Upon the filing of financing statements required by
the Uniform Commercial Code (the "UCC"), the pledge of the Collateral pursuant
to this Agreement creates a valid and perfected first priority security interest
in and to the Collateral, securing the payment of the Secured Obligations for
the benefit of the Trustee and the ratable benefit of the Holders of Notes,
enforceable as such against all creditors of the Company and any persons
purporting to purchase any of the Collateral from the Company other than as
permitted by the Indenture.
4.5. No consent of any other Person and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either (1) for the
pledge by the Company of the Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by the Company (except for
any filings necessary to perfect Liens on the Collateral) or (2) for the
exercise by the Trustee of the rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement.
4.6. No litigation, investigation or proceeding of or
before any arbitrator or governmental authority is pending or, to the knowledge
of the Company, threatened by or against the Company with respect to this
Agreement or any of the transactions contemplated hereby.
4.7. The pledge of the Collateral pursuant to this
Agreement is not prohibited by any applicable law or governmental regulation,
release, interpretation or opinion of the Board of Governors of the Federal
Reserve System or other regulatory agency (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System).
4.8. The maturity dates of the U.S. Government Obligations
in which the Escrow Account are invested and reinvested so as to ensure that
sufficient funds (or, if a portion of the Notes has been retired by the Company,
funds representing the lesser of (i) the amount sufficient to pay interest
through and including May 15, 2000, on the Notes not so retired and (ii) the
interest payments which have not previously been made on such retired Notes for
each scheduled interest payment date through and including the scheduled
interest payment date) are available to make the full payments of the first four
scheduled interest payments on the Notes.
6
<PAGE> 8
5. Covenants
The Company covenants and agrees with the Escrow Agent, the
Trustee and the Holders of Notes from and after the date of this Agreement until
the earlier of payment in full in cash of (A) each of the first four scheduled
interest payments due on the Notes under the terms of the Indenture or (B) all
obligations (including, but not limited to all Obligations) due and owing under
the Indenture and the Notes in the event such obligations (including, but not
limited to all Obligations) become due and payable prior to the payment of the
first four scheduled interest payments on the Notes:
(i) The Company agrees that it shall not (a) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral or (b) create or permit to exist any Lien upon or with
respect to any of the Collateral (except for the lien created pursuant
to this Agreement) and, except as otherwise provided in this Agreement,
at all times shall be the sole beneficial owner of the Collateral.
(ii) The Company agrees that it shall not (a) enter into any
agreement or understanding that purports to or may restrict or inhibit
the Escrow Agent's or the Trustee's rights or remedies hereunder,
including, without limitation, the Trustee's right to sell or otherwise
dispose of the Collateral in accordance with the terms of this
Agreement or (b) fail to pay or discharge any tax, assessment or levy
of any nature not later than five days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment with
regard to the Collateral.
6. Remedies upon Default. If any Event of Default shall have
occurred and be continuing:
(i) The Trustee may, without notice to the Company except as
required by law and at any time or from time to time, direct the Escrow
Agent to liquidate all Pledged Securities and transfer all funds in the
Escrow Account to the Trustee or the Paying Agent to apply such funds
in accordance with the provisions of the Indenture.
(ii) The Escrow Agent and/or the Trustee may also exercise in
respect of the Collateral, in addition to the other rights and remedies
provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform Commercial
Code in effect at that time in the State of New York (the "Code")
(whether or not the Code applies to the affected Collateral), and may
also, without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private sale, at
any of the Trustee's or the Escrow Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as
the Trustee may deem commercially reasonable. The Company agrees that,
to the extent notice of sale shall be required by law, at least ten
days' notice to the Company of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Trustee and the Escrow Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. The Trustee or the Escrow Agent may adjourn any
public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(iii) Any cash held by the Escrow Agent as Collateral and all
net cash proceeds received by the Trustee or the Escrow Agent in
respect of any sale or liquidation of, collection from, or other
realization upon all or any part of the Collateral may, in the
discretion of the
7
<PAGE> 9
Trustee, be held by the Trustee or the Escrow Agent as collateral for,
and/or then or at any time thereafter be applied (after payment of any
costs and expenses incurred in connection with any sale, liquidation or
disposition of or realization upon the Collateral and the payment of
any amounts payable to the Trustee or the Escrow Agent) in whole or in
part by the Trustee or the Escrow Agent for the ratable benefit of the
Holders of the Notes against, all or any part of the Secured
Obligations in such order as the Trustee shall elect. Any surplus of
such cash or cash proceeds held by the Trustee or the Escrow Agent and
remaining after payment in full of all the Secured Obligations and the
costs and expenses incurred by and amounts payable to the Trustee or
the Escrow Agent hereunder or under the Indenture shall be paid over to
the Company or to whomsoever shall be lawfully entitled to receive such
surplus.
7. Indemnity and Authority of the Escrow Agent.
7.1. The Escrow Agent shall have and be entitled to
exercise all powers hereunder that are specifically granted to the Escrow Agent
by the terms hereof, together with such powers as are reasonably incident
thereto. The Escrow Agent may perform any of its duties hereunder or in
connection with the Escrow Account by or through agents or employees and shall
be entitled to retain counsel of its choice and to act in reliance upon the
advice of such counsel concerning all such matters. Neither the Escrow Agent,
the Trustee nor any director, officer, employee, attorney or agent of the Escrow
Agent or the Trustee (each, an "Indemnified Person") shall be responsible for
the validity, effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Escrow Agent and the Trustee and their directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document reasonably believed by it or them to be
genuine and correct and to have been signed or sent by the proper person or
persons. The Company agrees to indemnify and hold harmless the Escrow Agent and
the Trustee and each Indemnified Person from and against any and all costs,
expenses (including the reasonable fees and disbursements of counsel (including
the reasonably allocated costs of inside counsel)), claims and liabilities
incurred by the Escrow Agent or such Indemnified Person hereunder arising out of
or incurred in connection with such persons or in connection with the
performance of its duties or obligations hereunder or in the Indenture or
exercising any rights provided for hereunder or in the Indenture or exercising
any rights provided for hereunder or in the Indenture, unless such claim or
liability shall be attributable to bad faith, gross negligence or willful
misconduct on the part of the Escrow Agent or the Trustee or such Indemnified
Person.
7.2. The Company acknowledges that the rights and
responsibilities of the Escrow Agent under this Agreement with respect to any
action taken by the Escrow Agent or the exercise or non-exercise by the Escrow
Agent of any option, right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Agreement shall be governed by
the Indenture and, as between the Escrow Agent and the Company, the Escrow Agent
shall be conclusively presumed to be acting as agent for the Trustee with full
and valid authority so to act or refrain from acting, and the Company shall not
be obligated or entitled to make any inquiry respecting such authority.
7.3. No provision of this Agreement shall require the
Escrow Agent or the Trustee to expend or risk its own funds or incur any
liability. The Trustee shall be under no obligation to exercise any of its
rights and powers under this Agreement at the request of any Holders, unless
such Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
7.4. The obligations of the Company under this Section 7
shall survive the satisfaction and discharge of this Agreement.
8
<PAGE> 10
To secure the Company's payment obligations in this Section 7,
the Trustee or Escrow Agent shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee or the Escrow Agent, except that held
in trust to pay principal and interest on particular Notes. Such Lien shall
survive the satisfaction and discharge of this Agreement.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) of the Indenture occurs,
the expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
8. Termination.
8.1. This Agreement shall create a continuing security
interest in and to the Collateral and such security interest shall, unless
otherwise provided in the Indenture or in this Agreement, remain in full force
and effect until the earlier of payment in full in cash of (A) each of the first
four scheduled interest payments due on the Notes under the terms of the
Indenture or (B) all obligations (including, but not limited to, all
Obligations) due and owing under the Indenture and the Notes in the event such
obligations become payable prior to the payment of the first four scheduled
interest payments on the Notes. This Agreement shall be binding upon the
Company, its successors and assigns, and shall inure, together with the rights
and remedies of the Trustee hereunder, to the benefit of the Trustee, the Escrow
Agent, the Holders of Notes and their respective successors, transferees and
assigns.
8.2. Subject to the provisions of Section 9.3 hereof, this
Agreement shall terminate upon the earlier of payment in full in cash of (A)
each of the first four scheduled interest payments due on the Notes under the
terms of the Indenture or (B) all obligations (including, but not limited to,
all Obligations) due and owing under the Indenture and the Notes in the event
such obligations (including, but not limited to all Obligations) become payable
prior to the payment of the first four scheduled interest payments on the Notes.
At such time, the Trustee shall, at the written request of the Company, reassign
and redeliver to the Company all of the Collateral hereunder that has not been
sold, disposed of, retained or applied by the Trustee in accordance with the
terms of this Agreement and the Indenture. Such reassignment and redelivery
shall be without warranty (either express or implied) by or recourse to the
Trustee, except as to the absence of any prior assignments by or encumbrances
created by the Trustee on its interest in the Collateral, and shall be at the
expense of the Company.
9. Miscellaneous.
9.1. Waiver. Either party hereto may specifically waive
any breach of this Agreement by any other party, but no such waiver shall be
deemed to have been given unless such waiver is in writing, signed by the
waiving party, and specifically designates the breach waived, nor shall any such
waiver constitute a continuing waiver of similar or other breaches.
9.2. Invalidity. If, for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
9
<PAGE> 11
9.3. Survival of Provisions. All representations,
warranties and covenants of the Company contained herein shall survive the
execution and delivery of this Agreement, and shall terminate only upon the
termination of this Agreement; provided, however, that the Company's obligations
pursuant to Section 7 hereof shall survive the termination of this Agreement
(including any termination under applicable bankruptcy laws) or the resignation
or removal of the Trustee or the Escrow Agent.
9.4. Assignment. This Agreement shall inure to and be
binding upon the parties and their respective successors and permitted assigns;
provided, however, that the Company may not assign its rights or obligations
hereunder without the express prior written consent of the Trustee, acting at
the direction of the Holders as provided in the Indenture.
9.5. Entire Agreement Amendments. This Agreement and the
Indenture contain the entire agreement among the parties with respect to the
subject matter hereof and supersede any and all prior agreements, understandings
and commitments with respect thereto, whether oral or written; provided,
however, that this Agreement is executed and accepted by the Trustee and the
Escrow Agent subject to all terms and conditions of its acceptance of the trust
under the Indenture, as fully as if said terms and conditions were set forth at
length herein. This Agreement may be amended only by a writing signed by duly
authorized representatives of all parties. The Trustee and the Escrow Agent may
execute an amendment to this Agreement only if the requisite consent of the
Holders of the Notes required by Section 9.02 of the Indenture has been
obtained, unless no such consent is required by such Section 9.02 of the
Indenture.
9.6. Notices. All notices and other communications
required or permitted to be given or made under this Agreement to any party
hereto shall be delivered in writing by hand delivery or overnight delivery, or
shall be delivered by facsimile or telephonically with confirmation in writing
not more than twenty-four hours following such telephonic notice. A notice given
in accordance with the preceding sentence shall be deemed to have been duly
given upon the sending thereof, except for notice to the Trustee or the Escrow
Agent, which shall be deemed given only when received. Notices should be
addressed as follows:
To the Company:
Park `N View, Inc.
11711 NW 39th Street
Coral Springs, Florida 33065
Attention: Steve Conkling
Facsimile number:(954) 745-7899
Telephone number:(954) 745-7800
With copies to:
Kilpatrick Stockton, LLP
Suite 400
4101 Lake Boone Trial
Raleigh, North Carolina 27607
Attention: James M. O'Connell, Esq.
Facsimile number.: (919) 420-1800
Telephone number: (919) 420-1700
10
<PAGE> 12
To the Trustee:
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, CT 06103
Attention: Elizabeth Hammer
Facsimile number: (860) 244-1889
Telephone number: (860) 244- 1817
To the Escrow Agent:
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, CT 06103
Attention: Elizabeth Hammer
Facsimile number: (860) 244-1889
Telephone number: (860) 244-1817
or at such other address, facsimile number or phone number as the specified
entity most recently may have designated in writing in accordance with this
paragraph to the other parties.
9.7. Expenses. The Company shall from time to time pay to
the Trustee and the Escrow Agent their reasonable fees and expenses and any
reasonable fees and expenses of their counsel, that the Trustee and Escrow Agent
may incur in connection with (a) the administration of this Agreement; (b) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral; (c) the exercise or enforcement of any
of the rights of the Trustee and Escrow Agent and the Holders of Notes
hereunder; or (d) the failure by the Company to perform or observe any of the
provisions hereof, in each case other than any such expenses that arise from the
bad faith, gross negligence or willful misconduct of the Trustee or Escrow
Agent.
9.8. Security Interest Absolute. All rights of the Trustee
and the Holders of Notes and security interests hereunder, and all obligations
of the Company hereunder, shall be absolute and unconditional irrespective of
(a) any lack of validity or enforceability of the Indenture or any other
agreement or instrument relating thereto; (b) any change in the time, manner or
place of payment of, or in any other term of, all or any of the Secured
Obligations, or any other amendment or waiver of or any consent to any departure
from the Indenture; (c) any exchange, surrender, release or non-perfection of
any Liens on any other collateral for all or any of the Secured Obligations; or
(d) to the extent permitted by applicable law, any other circumstance which
might otherwise constitute a defense available to, or a discharge of, the
Company in respect of the Secured Obligations or of this Agreement.
9.9. 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. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.
9.10. Limitation by Law. All rights, remedies and powers
provided herein may be exercised only to the extent that they shall not render
this Agreement not entitled to be recorded, registered or filed under provisions
of any applicable law.
11
<PAGE> 13
9.11. Rights of Holders of Notes. No Holder of Notes shall
have any independent rights hereunder other than those rights granted to
individual Holders of Notes pursuant to Section 6.06 of the Indenture; provided
that nothing in this subsection shall limit any rights granted to the Trustee
under the Indenture.
9.12. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT
OF, CONNECTED WITH. RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THE COMPANY, THE TRUSTEE, THE ESCROW AGENT AND THE
HOLDERS OF NOTES IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING
IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE
WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS)
AND DECISIONS OF THE STATE OF NEW YORK.
(ii) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH AND IN
PARAGRAPH (vi) BELOW, THE COMPANY, THE TRUSTEE, THE ESCROW AGENT AND
THE HOLDERS OF NOTES AGREE THAT ALL DISPUTES BETWEEN OR AMONG THEM
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE,
SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK,
NEW YORK, BUT THE COMPANY, THE TRUSTEE, THE ESCROW AGENT AND THE
HOLDERS OF NOTES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY
HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK. THE
COMPANY WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS.
(iii) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS
CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF
NOTES, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION
REASONABLY SELECTED IN GOOD FAITH (AND HAVING PERSONAL OR IN REM
JURISDICTION OVER THE COMPANY OR ITS PROPERTY, AS THE CASE MAY BE) TO
ENABLE THE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE
COMPANY AGREES THAT IT SHALL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR
CROSS CLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON
SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
THE TRUSTEE, EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS
WHICH, IF NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE
BROUGHT OR ASSERTED. THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT IN WHICH
12
<PAGE> 14
THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iv) THE COMPANY, THE TRUSTEE AND THE ESCROW AGENT EACH
WAIVE ANY AND ALL RIGHTS TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT
OF, IN CONNECTION WITH, OR RELATING OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THEM PURSUANT TO, UNDER OR IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ALL DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN
A BENCH TRIAL WITHOUT A JURY.
(v) THE COMPANY HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION AS THE DESIGNEE, APPOINTEE AND AGENT OF THE COMPANY TO
RECEIVE, FOR AND ON BEHALF OF THE COMPANY, SERVICE OF PROCESS IN ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT. IT IS
UNDERSTOOD THAT NOTICE AND A COPY OF SUCH PROCESS SERVED ON SUCH AGENT
WILL BE FORWARDED PROMPTLY TO THE COMPANY, BUT THE FAILURE OF THE
COMPANY TO RECEIVE SUCH NOTICE AND COPY SHALL NOT AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS ADDRESS SET
FORTH IN SECTION 11.02 OF THE INDENTURE, SUCH SERVICE TO BECOME
EFFECTIVE FIVE (5) BUSINESS DAYS AFTER SUCH MAILING.
(vi) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ESCROW
AGENT, THE TRUSTEE OR ANY HOLDER OF NOTES TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
(vii) THE COMPANY AGREES THAT NEITHER THE TRUSTEE, THE ESCROW
AGENT NOR ANY HOLDER OF NOTES SHALL HAVE ANY LIABILITY TO THE COMPANY
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED
BY THE COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY
RELATING OR INCIDENTAL TO, THE TRANSACTIONS CONTEMPLATED AND THE
RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A
FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE
TRUSTEE, THE ESCROW AGENT OR SUCH HOLDER OF NOTES, AS THE CASE MAY BE,
THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF
THE TRUSTEE, THE ESCROW AGENT OR SUCH HOLDER OF NOTES, AS THE CASE MAY
BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(viii) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT
AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY WAIVES ALL RIGHTS
OF NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE
13
<PAGE> 15
TRUSTEE, THE ESCROW AGENT OR ANY HOLDER OF NOTES OF ITS RIGHTS DURING
THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH
JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR
OTHER SECURITY FOR THE SECURED OBLIGATIONS. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF THE TRUSTEE, THE ESCROW AGENT OR ANY HOLDER OF NOTES IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION
OF, REPLEVY. ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR
THE SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF THE TRUSTEE, THE ESCROW AGENT OR ANY HOLDER OF
NOTES, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING
ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT OR ANY
OTHER AGREEMENT OR DOCUMENT BETWEEN THE COMPANY ON THE ONE HAND AND THE
TRUSTEE, THE ESCROW AGENT AND/OR THE HOLDERS OF NOTES ON THE OTHER
HAND.
14
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Pledge, Escrow and Disbursement Agreement as of the day first
written above.
COMPANY: PARK `N VIEW, INC.
By /s/ Stephen L. Conkling
--------------------------------------
Name: Stephen L. Conkling
Title: CFO, COO
TRUSTEE: STATE STREET BANK AND TRUST COMPANY
By /s/ Steven Cimalore
----------------------------------------
Name: Steven Cimalore
Title: Vice President
ESCROW AGENT: STATE STREET BANK AND TRUST COMPANY
By /s/ Steven Cimalore
--------------------------------------
Name: Steven Cimalore
Title: Vice President
15
<PAGE> 17
EXHIBIT A
[Form of Certificate for Release of Funds to [Company] [Paying Agent]]
PARK `N VIEW, INC.
Date:__________
The undersigned officer of Park `N View, Inc., a Delaware corporation (the
"Company"), hereby certifies, pursuant to Section [3.l][3.2] of the Pledge,
Escrow and Disbursement Agreement dated as of May 27, 1998 (the "Escrow and
Disbursement Agreement") by and among the Company, State Street Bank and Trust
Company, as trustee (the "Trustee"), and State Street Bank and Trust Company as
escrow agent (the "Escrow Agent"), under the Indenture dated as of May 27, 1998
(the "Indenture"), between the Company and the Trustee, that:
The release of funds has been duly authorized by all necessary
corporation action and does not contravene, or constitute a default
under, any provision of applicable law or regulation or the certificate
of incorporation of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company
or result in the creation or imposition of any Lien on any assets of
the Company.
The Company hereby requests the Trustee to direct the Escrow
Agent to liquidate $_________ worth of Pledged Securities in the Escrow Account
by not later than 12:00 noon (New York time) on _________ , 199 and to transfer
$________ in immediately available funds to [the Company] [the Paying Agent].
Capitalized terms used herein without definition shall have
the meanings set forth in the Escrow and Disbursement Agreement.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
A-1
<PAGE> 1
EXHIBIT 10.33
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION IS AVAILABLE AND AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER IS DELIVERED TO SUCH
EFFECT.
Void after 5:00 p.m. New York, New York Time, on August 22, 2002.
WARRANT TO PURCHASE
SHARES OF
COMMON STOCK
OF
PARK `N VIEW, INC.
This is to certify that, FOR VALUE RECEIVED, ALEX. BROWN & SONS
INCORPORATED or its registered assigns pursuant to Section (d) hereof
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from PARK `N VIEW, INC., a Delaware corporation (the "Company"), 97,753 fully
paid, validly issued and nonassessable shares of Common Stock, par value $.01
per share ("Common Stock"), at the exercise price of $8.00 per share until
August 22, 2002. The number of shares of Common Stock to be received upon the
exercise of this Warrant and the price to be paid for each share of Common Stock
are subject to adjustment from time to time as hereinafter set forth. The shares
of Common Stock deliverable upon such exercise, and as adjusted from time to
time, are hereinafter sometimes referred to as "Warrant Shares," and the
exercise price for a share of Common Stock, as adjusted from time to time, is
hereinafter sometimes referred to as the "Exercise Price."
(a) EXERCISE OF WARRANT. The Warrant may be exercised in whole or in
part at any time or from time to time until 5:00 P.M. New York time on August
__, 2002 (the "Expiration Date"), provided, however, that if such day is a day
on which banking institutions in the State of New York are authorized by law to
close, then on the next succeeding day which shall not be such a day. The
Warrant may be exercised by presentation and surrender to the Company at its
principal office, or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto, duly executed (with signature guaranteed if
required by the Company or, if any, its stock transfer agent) and accompanied by
payment of the Exercise Price for the number of Warrant Shares specified in such
form and any applicable taxes. The purchase price for any Warrant Shares
purchased pursuant to the exercise of this Warrant shall be paid in full upon
such exercise in cash, by certified or bank check or by wire transfer of
immediately
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<PAGE> 2
available funds. Alternatively, this Warrant may be exchanged for Warrant Shares
as described in Section (k) hereof. As soon as practicable after each such
exercise of this Warrant, but not later than seven (7) business days from the
date of such exercise, the Company shall issue and deliver to the Holder a
certificate or certificates for the Warrant Shares issuable upon such exercise,
registered in the name of the Holder or the Holder's designee (subject to the
terms of this Warrant). If the Warrant should be exercised in part only, the
Company shall, upon surrender of the Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to purchase
the balance of the Warrant Shares purchasable thereunder. Upon receipt by the
Company of the Warrant at its office, or by the stock transfer agent of the
Company at its office, in proper form for exercise, together with the exercise
price thereof and taxes as aforesaid in cash, by certified or bank check or by
wire transfer of immediately available funds and the investment letter described
below, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing such
Warrant Shares shall not then be physically delivered to the Holder. Each stock
certificate so delivered shall be in such denomination as may be reasonably
requested by the Holder hereof and shall be registered in the name of the Holder
or such other name as shall be designated by the Holder (subject to the terms of
this Warrant). The Company shall pay all expenses, taxes and other charges
payable in connection with the preparation, execution and delivery of stock
certificates pursuant to this Section (a), except that, in case such stock
certificates shall be registered in a name or names other than the name of the
Holder of this Warrant, funds sufficient to pay all stock transfer taxes which
shall be payable upon the execution and delivery of such stock certificate or
certificates shall be paid by the Holder hereof to the Company.
The Holder hereby agrees to exercise Warrant upon completion of a
Series C Qualifying Offering (as defined in the Certificate of Designation
relating to the Company's Series C Convertible Preferred Stock).
In order to assure the availability of an exemption from registration
under the federal or applicable state securities laws, the Company may condition
the exercise of the Warrant upon the Holder delivering to the Company an
investment letter in the form as customarily used by the Company from time to
time in connection with the exercise of unregistered options and warrants issued
by the Company. It is further understood that certificates for the Warrant
Shares, if any, to be issued upon exercise of the Warrant may contain a
restrictive legend in accordance with Section (j) hereof.
(b) RESERVATION OF SHARES. The Company shall at all times reserve
for issuance and/or delivery upon exercise of this Warrant such number of shares
of its Common Stock as shall be required for issuance and delivery upon exercise
of this Warrant. If any shares of the Common Stock are or become listed or
quoted on any national securities exchange or The Nasdaq Stock Market (National
Market) other than pursuant to a Series C Qualifying Offering, the Company shall
also list the Warrant Shares, as the case may be, on such exchange or system, as
the case may be, subject to notice of issuance.
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<PAGE> 3
(c) FRACTIONAL SHARES. Fractional shares or scrip representing
fractional shares may be issued upon the exercise of this Warrant.
Alternatively, the Company may, at its option, with respect to any fraction of a
share issuable upon any exercise hereof, pay to the Holder an amount in cash
equal to such fraction multiplied by the greater of (i) the initial Exercise
Price per share or (ii) the current market value of the shares of the Company's
Common Stock. The current market value of a share of Common Stock shall be
determined as follows:
(l) If the Common Stock is listed on a national
securities exchange or admitted to unlisted trading privileges
on such exchange or listed for trading on The Nasdaq Stock
Market (National Market), the current market value shall be
the last reported sale price of the Common Stock on such
exchange or system on the last business day prior to the date
of exercise of this Warrant or if no such sale is made on such
day, the average closing bid and asked prices for such day on
such exchange or system;
(2) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current market value shall be
the mean of the last reported bid and asked prices for the
Common Stock reported by the National Quotation Bureau, Inc.,
on the last business day prior to the date of the exercise of
this Warrant; or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not
so reported, the current market value shall be an amount
reasonably determined by the Board of Directors of the
Company.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This
Warrant is exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company or at the office of its stock
transfer agent, if any, for other Warrants of different denominations entitling
(which may be reasonably requested by the Holder) the Holder thereof to purchase
in the aggregate the same number of shares of Common Stock purchasable
hereunder. Subject to Section (j) hereof, the Holder may transfer or assign this
Warrant, in whole or in part and from time to time. Upon surrender of this
Warrant to the Company at its principal office or at the office of its stock
transfer agent, if any, with the Assignment Form annexed hereto duly executed
(with signature guaranteed, if required by the Company or its stock transfer
agent) and funds sufficient to pay any transfer tax, the Company shall, without
charge, execute and deliver a new Warrant in the name of the assignee or
assignees named in such instrument of assignment and this Warrant shall promptly
be canceled. This Warrant may be divided into or combined with other Warrants
which carry the same rights upon presentation at the principal office of the
Company or at the office of its stock transfer agent, if any, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued and signed by the Holder hereof. The term "Warrant" as used herein
includes any Warrants into which this Warrant may be divided or exchanged, and
the term "Holder" includes any subsequent holder or holders of this Warrant or
any warrant for which this Warrant is exchanged or into which it is divided.
Upon receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in the case of loss, theft or
destruction, of reasonable satisfactory indemnification, and upon surrender and
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<PAGE> 4
cancellation of this Warrant, if mutilated, the Company will execute and deliver
a new Warrant of like tenor, date and amount. Any such new Warrant executed and
delivered shall constitute an additional contractual obligation on the part of
the Company, whether or not the original Warrant shall be at any time
enforceable by anyone.
(e) RIGHTS OF THE HOLDER. Subject to the provisions of Section
(l), the Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company, either at law or equity (including, without
limitation, any rights to dividends) and the rights of the Holder with respect
to the shares of Common Stock purchasable pursuant to this Warrant are limited
to those expressed in the Warrant and are not enforceable against the Company
except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. So long as this Warrant shall be
outstanding, the Exercise Price in effect at any time and the number and kind of
securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of certain events as follows:
(1) In case the Company shall: (i) declare a dividend or
make a distribution on its outstanding shares of Common Stock
in shares of Common Stock, (ii) issue shares of Common Stock
or securities convertible into Common Stock (other than shares
of Common Stock issued upon: (A) conversion of outstanding
shares of Series B Preferred Stock or Series C Preferred
Stock, (B) exercise of warrants to purchase Common Stock
outstanding as of August 22, 1997 or (C) exercise of any
option granted or hereafter granted to any officer, director,
employee, agent or consultant of the Company pursuant to a
stock option plan approved by the Company's Board of
Directors), for consideration less than the Exercise Price of
this Warrant on the date of grant of such option; (iii)
subdivide or reclassify its outstanding shares of Common Stock
into a greater number of shares, or (iv) combine or reclassify
its outstanding shares of Common Stock into a smaller number
of shares, then the Exercise Price in effect at the time of
the record date for such dividend or distribution, the sale of
such shares of Common Stock or the effective date of such
subdivision, combination or reclassification (such dividend or
distribution, sale of securities, subdivision, combination or
reclassification, collectively a "Dilution Event") shall be
proportionately adjusted as of the effective date of such
Dilution Event by multiplying such Exercise Price by a
fraction, the denominator of which shall be the outstanding
number of shares of Common Stock determined on a fully-diluted
basis immediately following such event and the numerator of
which shall be the outstanding number of shares of Common
Stock determined on a fully-diluted basis immediately prior
thereto plus, in the case of an adjustment pursuant to clause
(ii), the number of shares of Common Stock that would be
purchasable at the Exercise Price for the consideration per
share being paid for the shares being issued. For example, if
the Company declares a 2-for-1 stock split and the Exercise
Price immediately prior to such event was $8.00 per share, the
adjusted Exercise Price immediately after such event would be
$4.00 per share. Such adjustment shall be made successively
whenever any Dilution Event shall occur.
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<PAGE> 5
(2) Notwithstanding the provisions of paragraph (1) of
this Section (f), in the event the Company issues shares of
Common Stock or securities convertible into Common Stock,
other than securities referenced in clauses (A), (B) and (C)
of paragraph (1) of this Section (f), for consideration less
than the Exercise Price of this Warrant on the date of
issuance of such securities during the nine (9) month period
beginning on the date of the initial closing of the sale of
shares of Series C Convertible Preferred Stock of the Company
to certain purchasers pursuant to a Stock Purchase Agreement,
dated as of August 22, 1997, by and between the Company and
each purchaser (the "Series C Stock Purchase Agreement"), the
Exercise Price in effect on the date of issuance of such
securities shall be adjusted so as to equal the per share
consideration received by the Company in connection with such
issuance.
(3) Whenever the Exercise Price payable upon exercise of
this Warrant is adjusted pursuant to paragraphs (1) or (2)
above, the number of Warrant Shares purchasable upon exercise
of this Warrant shall simultaneously be adjusted by
multiplying the number of Warrant Shares issuable upon
exercise of this Warrant immediately prior to the Dilution
Event by the Exercise Price in effect immediately prior to the
Dilution Event and dividing the product so obtained by the
Exercise Price, as adjusted pursuant to paragraphs (1) or (2).
(4) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease
of at least $.05 in such price; provided, however, that any
adjustments which by reason of this paragraph (f)(4) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment required to be made
hereunder.
(5) Each computation required by this Section (f) for
purposes of determining whether the Exercise Price shall be
adjusted shall be performed by the Company's Chief Financial
Officer.
(6) Whenever the Exercise Price is adjusted, as herein
provided, the Company shall promptly cause a notice (certified
as correct by the Company's Chief Financial Officer) setting
forth the adjusted Exercise Price and adjusted number of
Warrant Shares issuable upon exercise of this Warrant to be
mailed to the Holder, at its address appearing in the Warrant
Register, and shall cause a certified copy thereof to be
mailed to its transfer agent, if any.
(7) All calculations under this Section (f) shall be made
to the nearest cent or to the nearest Warrant Share, as the
case may be.
(8) In the event that, as a result of application of
Section (i) of this Warrant, this Warrant shall become
exercisable for securities other than the Common Stock,
thereafter the number of shares of Common Stock receivable
upon exercise of this Warrant shall be subject to adjustment
from time to time in a manner and
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<PAGE> 6
on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock contained in this Section
(f).
(9) Irrespective of any adjustments in the Exercise Price
or the number or kind of Warrant Shares purchasable upon
exercise of this Warrant, Warrants theretofore or thereafter
issued may continue to express the same price and number and
kind of shares as are stated in this Warrant initially issued.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be
adjusted as required by the provisions of the foregoing, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, a certificate of the
Company's Chief Financial Officer showing the adjusted Exercise Price determined
as herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of additional shares of Common
Stock, if any, and such other facts as shall be necessary to show the reason for
and the manner of computing such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Holder or
any holder of this Warrant, and the Company shall, forthwith after each such
adjustment, mail, by certified mail, a copy of such certificate to the Holder or
any such holder.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall declare any dividend or make any
distribution upon the Common Stock, or (ii) if the Company shall generally offer
to the holders of the Common Stock, whether or not pursuant to any holders'
right of first refusal with respect to the purchase of new securities issued by
the Company, for subscription or purchase by them any shares of any class of the
Company's capital stock or any other rights to purchase shares of the Company's
capital stock, or (iii) if the Company proposes to register under the Securities
Act of 1933, as amended, any shares of its Common Stock pursuant to one or more
demand, piggyback or incidental registration rights granted to its stockholders,
or (iv) if any capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or transfer of all or substantially all of
the property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then in any such case, the Company shall cause to be mailed by
certified mail to the Holder of this Warrant, at least 10 days prior to the date
specified in (x), (y) or (z) below, as the case may be, a notice containing a
brief description of the proposed action and stating the date on which (x) a
record is to be taken for the purpose of such dividend, distribution or offer
for subscription or purchase, (y) such reorganization, reclassification,
consolidation, merger, sale, lease, transfer, dissolution, liquidation or
winding up is to take place and the date, if any is to be fixed, as of which the
holders of the Common Stock or other capital stock of the Company shall receive
cash or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up, or
(z) the date by which holders of the Common Stock or other capital stock of the
Company must elect to participate in the registration of securities pursuant to
clause (iii) above, or purchase securities by the Company pursuant to the
offering referred to in clause (ii) above.
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<PAGE> 7
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, conversion or capital reorganization of outstanding shares of
the Common Stock of the Company, or in case of any consolidation or merger of
the Company with or into another corporation (other than a merger with another
corporation in which merger the Company is the continuing corporation and which
does not result in any reclassification or capital reorganization of outstanding
shares of Common Stock of the Company issuable upon exercise of this Warrant) or
in case of any sale, lease or conveyance to another corporation of the property
of the Company substantially as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising this Warrant at any time
prior to the expiration of this Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification or capital reorganization and consolidation, merger, sale or
conveyance which would have been deliverable to the Holder of this Warrant on
the effective date of the reclassification, reorganization or merger had the
Holder exercised the Warrant immediately prior to the event described in this
Section (i). Any such provision shall include provision for subsequent
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section (i) shall similarly apply to successive reclassifications or capital
reorganizations of shares of the Common Stock and to successive consolidations,
mergers, sales or conveyances. In the event that in connection with any such
capital reorganization or reclassification, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for a security of the
Company other than Common Stock, any such issue shall be treated as an issue of
Common Stock covered by the provisions of paragraph (1) of Section (f) hereof.
(j) SECURITIES LAW COMPLIANCE.
(1) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Warrant Shares to be
issued upon exercise hereof are being acquired solely for the
Holder's own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell,
transfer, assign or otherwise dispose of this Warrant or any
Warrant Shares to be issued upon exercise hereof except under
circumstances that will not result in a violation of the
Securities Act of 1933, as amended (the "Act"), or any state
securities laws. Upon exercise of this Warrant, the Holder
shall, if requested by the Company, confirm in writing, in a
form satisfactory to the Company, that the shares of Common
Stock so purchased are being acquired solely for the Holder's
own account and not as a nominee for any other party, for
investment, and not with a view toward distribution or resale.
(2) If deemed necessary by counsel to the Company, this
Warrant, and all Warrant Shares issued upon exercise hereof
shall be stamped or imprinted with legends setting forth the
restrictions on transfer arising under applicable federal and
state securities laws.
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<PAGE> 8
(k) RIGHT TO CONVERT WARRANT INTO COMMON STOCK.
(1) Right to Convert. As an alternative to payment of the
Exercise Price in cash, the Holder shall have the right at any
time and from time to time to convert this Warrant into shares
of Common Stock (the "Conversion Right"). Upon exercise of the
Conversion Right, the Company shall deliver to the Holder
(without payment by the Holder of any Exercise Price or of any
other cash or other consideration) that number of shares of
Common Stock equal to the quotient obtained by dividing (x)
the value of this Warrant at the time the Conversion Right is
exercised (determined by subtracting the aggregate Exercise
Price in effect immediately prior to the exercise of the
Conversion Right from the aggregate fair market value of the
shares of Common Stock issuable upon exercise of this Warrant
immediately prior to the exercise of the Conversion Right) by
(y) the fair market value of one share of Common Stock
immediately prior to the exercise of the Conversion Right. For
purposes hereof, the fair market value of a share of Common
Stock shall be the greater of (i) a price per share of Common
Stock equal to the initial Exercise Price or (ii) the current
market value of the shares of the Company's Common Stock as
determined in accordance with Section (c) hereof.
(2) Method of Exercise. The Conversion Right may be
exercised by the Holder by the surrender of this Warrant at
the principal office of the Company together with a written
statement specifying that the Holder thereby intends to
exercise the Conversion Right. Certificates for the shares of
Common Stock issuable upon exercise of the Conversion Right
shall be delivered to the Holder within five (5) days
following the Company's receipt of this Warrant together with
the aforesaid written statement.
(l) ADDITIONAL RIGHTS OF THE HOLDER. So long as this Warrant shall
be outstanding, the Holder shall (i) be entitled to registration, co-sale,
pre-emptive and similar rights with respect to the shares of Common Stock
purchasable hereunder, (ii) be obligated under certain circumstances to sell a
portion of the shares of Common Stock purchasable hereunder, and (iii) be
entitled to receive various financial and related information from the Company,
each to the same extent as those purchasers purchasing shares of the Company's
Series C Preferred Stock pursuant to the Series C Stock Purchase Agreement.
(m) REPRESENTATIONS OF THE HOLDER.
(i) The Holder hereby represents and warrants to the
Company that it has substantial knowledge, skill and
experience in making investment decisions of the type
represented by this Warrant and the Warrant Shares, it is
capable of evaluating the risk of its investment in this
Warrant and the Warrant Shares and is able to bear the
economic risk of such investment, including the risk of losing
the entire investment, that it is acquiring this Warrant and
the Warrant Shares for its own account, and that this Warrant
and the Warrant Shares are being acquired by it for investment
and not with a present view to any distribution thereof in
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<PAGE> 9
violation of applicable securities law. If the Holder should
in the future decide to dispose of any of this Warrant and the
Warrant Shares, it is understood that it may do so only in
compliance with the Act and appliance state securities laws.
The Holder represents and warrants that it is an "accredited
investor" as defined in Rule 501(a) under the Act.
(ii) The Holder understands that (i) this Warrant and the
Warrant Shares have not been registered under the Act by
reason of their issuance in a transaction exempt from the
registration requirements of the Act, (ii) this Warrant and
the Warrant Shares must be held indefinitely unless a
subsequent disposition thereof is registered under the Act and
applicable state securities laws or is exempt from such
registrations (and evidence satisfactory to the Company is
provided by such Holder of the availability of such
exemptions, including the delivery to the Company of opinions
of counsel to such Holder, which opinions and counsel is
satisfactory to the Company), and (iii) this Warrant and the
Warrant Shares may bear a legend to such effect.
(n) AMENDMENTS. Neither the Warrant nor any term hereof may be
changed, waived, discharged or terminated without the prior written consent of
the Holder.
(o) NO IMPAIRMENT. The Company will not avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of any
Holder.
(p) GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Delaware.
(q) NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, addressed (a) if to the Holder; to Alex. Brown & Sons
Incorporated, One South Street, Baltimore, Maryland 21202, Attention: Richard M.
Berkeley, Managing Director, and Robert P. Irwin, Principal, or (b) if to the
Company, to Park `N View Corporation, 3403 NW 55th Street, Building 10, Ft.
Lauderdale, Florida 33309, Attention: Ian Williams, President and Chief
Executive Officer, or at such other address as the Company shall have furnished
to the Holder in writing.
IN WITNESS WHEREOF, Park `N View Corporation has caused this Warrant to
be executed by its officer thereunto duly authorized.
Dated: August __, 1997
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<PAGE> 10
PARK `N VIEW CORPORATION
By: /s/ Ian Williams
-----------------------------------------
Name: Ian Williams
Title: President and Chief Executive Officer
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<PAGE> 11
PURCHASE FORM
Dated _____________, ____
The undersigned hereby irrevocably elects to exercise its rights
pursuant to this Warrant to the extent of purchasing ________________ shares of
Common Stock of Park `N View Corporation, and hereby makes payment of
$________________, in cash, in payment of the exercise price thereof.
The undersigned hereby irrevocably elects to exercise its rights
pursuant to this Warrant to the extent of purchasing ____ shares of Common Stock
and hereby authorizes you to deliver such shares of Common Stock for sale to
________________, and to retain from the proceeds of such sale
$________________, in cash, in payment of the exercise price thereof and to
remit to the undersigned the balance of such proceeds.
--------------------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
- -------------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address
------------------------------------------------------------------------
Signature
----------------------------------------------------------------------
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<PAGE> 12
ASSIGNMENT FORM
FOR VALUE RECEIVED, ______________________________________ hereby
sells, assigns and transfers unto
Name
---------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address
------------------------------------------------------------------------
the right to purchase Common Stock of Park `N View Corporation (the "Company"),
represented by this Warrant to the extent of __________ shares as to which such
right is exercisable and does hereby irrevocably constitute and appoint as
Attorney, to transfer the same on the books of the Company with full power of
substitution in the premises.
Date ,
----------------- -----
Signature
------------------------------
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<PAGE> 1
EXHIBIT 10.34
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION IS AVAILABLE AND AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER IS DELIVERED TO SUCH
EFFECT.
Void after 5:00 p.m. New York, New York Time, on August 22, 2002.
WARRANT TO PURCHASE
SHARES OF
COMMON STOCK
OF
PARK `N VIEW, INC.
This is to certify that, FOR VALUE RECEIVED, ALEX. BROWN & SONS
INCORPORATED or its registered assigns pursuant to Section (d) hereof
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from PARK `N VIEW, INC., a Delaware corporation (the "Company"), 2,646 fully
paid, validly issued and nonassessable shares of Common Stock, par value $.01
per share ("Common Stock"), at the exercise price of $8.00 per share until
August 22, 2002. The number of shares of Common Stock to be received upon the
exercise of this Warrant and the price to be paid for each share of Common Stock
are subject to adjustment from time to time as hereinafter set forth. The shares
of Common Stock deliverable upon such exercise, and as adjusted from time to
time, are hereinafter sometimes referred to as "Warrant Shares," and the
exercise price for a share of Common Stock, as adjusted from time to time, is
hereinafter sometimes referred to as the "Exercise Price."
(a) EXERCISE OF WARRANT. The Warrant may be exercised in whole or in
part at any time or from time to time until 5:00 P.M. New York time on August
22, 2002 (the "Expiration Date"), provided, however, that if such day is a day
on which banking institutions in the State of New York are authorized by law to
close, then on the next succeeding day which shall not be such a day. The
Warrant may be exercised by presentation and surrender to the Company at its
principal office, or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto, duly executed (with signature guaranteed if
required by the Company or, if any, its stock transfer agent) and accompanied by
payment of the Exercise Price for the number of Warrant Shares specified in such
form and any applicable taxes. The purchase price for any Warrant Shares
purchased pursuant to the exercise of this Warrant shall be paid in full upon
such exercise in cash, by certified or bank check or by wire transfer of
immediately
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<PAGE> 2
available funds. Alternatively, this Warrant may be exchanged for
Warrant Shares as described in Section (k) hereof. As soon as practicable after
each such exercise of this Warrant, but not later than seven (7) business days
from the date of such exercise, the Company shall issue and deliver to the
Holder a certificate or certificates for the Warrant Shares issuable upon such
exercise, registered in the name of the Holder or the Holder's designee (subject
to the terms of this Warrant). If the Warrant should be exercised in part only,
the Company shall, upon surrender of the Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to purchase
the balance of the Warrant Shares purchasable thereunder. Upon receipt by the
Company of the Warrant at its office, or by the stock transfer agent of the
Company at its office, in proper form for exercise, together with the exercise
price thereof and taxes as aforesaid in cash, by certified or bank check or by
wire transfer of immediately available funds and the investment letter described
below, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing such
Warrant Shares shall not then be physically delivered to the Holder. Each stock
certificate so delivered shall be in such denomination as may be reasonably
requested by the Holder hereof and shall be registered in the name of the Holder
or such other name as shall be designated by the Holder (subject to the terms of
this Warrant). The Company shall pay all expenses, taxes and other charges
payable in connection with the preparation, execution and delivery of stock
certificates pursuant to this Section (a), except that, in case such stock
certificates shall be registered in a name or names other than the name of the
Holder of this Warrant, funds sufficient to pay all stock transfer taxes which
shall be payable upon the execution and delivery of such stock certificate or
certificates shall be paid by the Holder hereof to the Company.
The Holder hereby agrees to exercise Warrant upon completion of a
Series C Qualifying Offering (as defined in the Certificate of Designation
relating to the Company's Series C Convertible Preferred Stock).
In order to assure the availability of an exemption from registration
under the federal or applicable state securities laws, the Company may condition
the exercise of the Warrant upon the Holder delivering to the Company an
investment letter in the form as customarily used by the Company from time to
time in connection with the exercise of unregistered options and warrants issued
by the Company. It is further understood that certificates for the Warrant
Shares, if any, to be issued upon exercise of the Warrant may contain a
restrictive legend in accordance with Section (j) hereof.
(b) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
this Warrant. If any shares of the Common Stock are or become listed or quoted
on any national securities exchange or The Nasdaq Stock Market (National Market)
other than pursuant to a Series C Qualifying Offering, the Company shall also
list the Warrant Shares, as the case may be, on such exchange or system, as the
case may be, subject to notice of issuance.
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<PAGE> 3
(c) FRACTIONAL SHARES. Fractional shares or scrip representing
fractional shares may be issued upon the exercise of this Warrant.
Alternatively, the Company may, at its option, with respect to any fraction of a
share issuable upon any exercise hereof, pay to the Holder an amount in cash
equal to such fraction multiplied by the greater of (i) the initial Exercise
Price per share or (ii) the current market value of the shares of the Company's
Common Stock. The current market value of a share of Common Stock shall be
determined as follows:
(l) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on The Nasdaq Stock Market
(National Market), the current market value shall be the last
reported sale price of the Common Stock on such exchange or
system on the last business day prior to the date of exercise
of this Warrant or if no such sale is made on such day, the
average closing bid and asked prices for such day on such
exchange or system;
(2) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current market value shall be
the mean of the last reported bid and asked prices for the
Common Stock reported by the National Quotation Bureau, Inc.,
on the last business day prior to the date of the exercise of
this Warrant; or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not
so reported, the current market value shall be an amount
reasonably determined by the Board of Directors of the
Company.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling (which
may be reasonably requested by the Holder) the Holder thereof to purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder.
Subject to Section (j) hereof, the Holder may transfer or assign this Warrant,
in whole or in part and from time to time. Upon surrender of this Warrant to the
Company at its principal office or at the office of its stock transfer agent, if
any, with the Assignment Form annexed hereto duly executed (with signature
guaranteed, if required by the Company or its stock transfer agent) and funds
sufficient to pay any transfer tax, the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee or assignees named in such
instrument of assignment and this Warrant shall promptly be canceled. This
Warrant may be divided into or combined with other Warrants which carry the same
rights upon presentation at the principal office of the Company or at the office
of its stock transfer agent, if any, together with a written notice specifying
the names and denominations in which new Warrants are to be issued and signed by
the Holder hereof. The term "Warrant" as used herein includes any Warrants into
which this Warrant may be divided or exchanged, and the term "Holder" includes
any subsequent holder or holders of this Warrant or any warrant for which this
Warrant is exchanged or into which it is divided. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and in the case of
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<PAGE> 4
loss, theft or destruction, of reasonable satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor, date and amount. Any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not the original Warrant shall
be at any time enforceable by anyone.
(e) RIGHTS OF THE HOLDER. Subject to the provisions of Section (l), the
Holder shall not, by virtue hereof, be entitled to any rights of a shareholder
in the Company, either at law or equity (including, without limitation, any
rights to dividends) and the rights of the Holder with respect to the shares of
Common Stock purchasable pursuant to this Warrant are limited to those expressed
in the Warrant and are not enforceable against the Company except to the extent
set forth herein.
(f) ANTI-DILUTION PROVISIONS. So long as this Warrant shall be
outstanding, the Exercise Price in effect at any time and the number and kind of
securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of certain events as follows:
(1) In case the Company shall: (i) declare a dividend or make
a distribution on its outstanding shares of Common Stock in
shares of Common Stock, (ii) issue shares of Common Stock or
securities convertible into Common Stock (other than shares of
Common Stock issued upon: (A) conversion of outstanding shares
of Series B Preferred Stock or Series C Preferred Stock, (B)
exercise of warrants to purchase Common Stock outstanding as
of August 22, 1997 or (C) exercise of any option granted or
hereafter granted to any officer, director, employee, agent or
consultant of the Company pursuant to a stock option plan
approved by the Company's Board of Directors), for
consideration less than the Exercise Price of this Warrant on
the date of grant of such option; (iii) subdivide or
reclassify its outstanding shares of Common Stock into a
greater number of shares, or (iv) combine or reclassify its
outstanding shares of Common Stock into a smaller number of
shares, then the Exercise Price in effect at the time of the
record date for such dividend or distribution, the sale of
such shares of Common Stock or the effective date of such
subdivision, combination or reclassification (such dividend or
distribution, sale of securities, subdivision, combination or
reclassification, collectively a "Dilution Event") shall be
proportionately adjusted as of the effective date of such
Dilution Event by multiplying such Exercise Price by a
fraction, the denominator of which shall be the outstanding
number of shares of Common Stock determined on a fully-diluted
basis immediately following such event and the numerator of
which shall be the outstanding number of shares of Common
Stock determined on a fully-diluted basis immediately prior
thereto plus, in the case of an adjustment pursuant to clause
(ii), the number of shares of Common Stock that would be
purchasable at the Exercise Price for the consideration per
share being paid for the shares being issued. For example, if
the Company declares a 2-for-1 stock split and the Exercise
Price immediately prior to such event was $8.00 per share, the
adjusted Exercise Price immediately after
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<PAGE> 5
such event would be $4.00 per share. Such adjustment shall
be made successively whenever any Dilution Event shall
occur.
(2) Notwithstanding the provisions of paragraph (1) of this
Section (f), in the event the Company issues shares of Common
Stock or securities convertible into Common Stock, other than
securities referenced in clauses (A), (B) and (C) of paragraph
(1) of this Section (f), for consideration less than the
Exercise Price of this Warrant on the date of issuance of such
securities during the nine (9) month period beginning on the
date of the initial closing of the sale of shares of Series C
Convertible Preferred Stock of the Company to certain
purchasers pursuant to a Stock Purchase Agreement, dated as of
August 22, 1997, by and between the Company and each purchaser
(the "Series C Stock Purchase Agreement"), the Exercise Price
in effect on the date of issuance of such securities shall be
adjusted so as to equal the per share consideration received
by the Company in connection with such issuance.
(3) Whenever the Exercise Price payable upon exercise of this
Warrant is adjusted pursuant to paragraphs (1) or (2) above,
the number of Warrant Shares purchasable upon exercise of this
Warrant shall simultaneously be adjusted by multiplying the
number of Warrant Shares issuable upon exercise of this
Warrant immediately prior to the Dilution Event by the
Exercise Price in effect immediately prior to the Dilution
Event and dividing the product so obtained by the Exercise
Price, as adjusted pursuant to paragraphs (1) or (2).
(4) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease
of at least $.05 in such price; provided, however, that any
adjustments which by reason of this paragraph (f)(4) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment required to be made
hereunder.
(5) Each computation required by this Section (f) for purposes
of determining whether the Exercise Price shall be adjusted
shall be performed by the Company's Chief Financial Officer.
(6) Whenever the Exercise Price is adjusted, as herein
provided, the Company shall promptly cause a notice (certified
as correct by the Company's Chief Financial Officer) setting
forth the adjusted Exercise Price and adjusted number of
Warrant Shares issuable upon exercise of this Warrant to be
mailed to the Holder, at its address appearing in the Warrant
Register, and shall cause a certified copy thereof to be
mailed to its transfer agent, if any.
(7) All calculations under this Section (f) shall be made to
the nearest cent or to the nearest Warrant Share, as the case
may be.
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<PAGE> 6
(8) In the event that, as a result of application of Section
(i) of this Warrant, this Warrant shall become exercisable for
securities other than the Common Stock, thereafter the number
of shares of Common Stock receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this
Section (f).
(9) Irrespective of any adjustments in the Exercise Price or
the number or kind of Warrant Shares purchasable upon exercise
of this Warrant, Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of
shares as are stated in this Warrant initially issued.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be
adjusted as required by the provisions of the foregoing, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, a certificate of the
Company's Chief Financial Officer showing the adjusted Exercise Price determined
as herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of additional shares of Common
Stock, if any, and such other facts as shall be necessary to show the reason for
and the manner of computing such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Holder or
any holder of this Warrant, and the Company shall, forthwith after each such
adjustment, mail, by certified mail, a copy of such certificate to the Holder or
any such holder.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall declare any dividend or make any
distribution upon the Common Stock, or (ii) if the Company shall generally offer
to the holders of the Common Stock, whether or not pursuant to any holders'
right of first refusal with respect to the purchase of new securities issued by
the Company, for subscription or purchase by them any shares of any class of the
Company's capital stock or any other rights to purchase shares of the Company's
capital stock, or (iii) if the Company proposes to register under the Securities
Act of 1933, as amended, any shares of its Common Stock pursuant to one or more
demand, piggyback or incidental registration rights granted to its stockholders,
or (iv) if any capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or transfer of all or substantially all of
the property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then in any such case, the Company shall cause to be mailed by
certified mail to the Holder of this Warrant, at least 10 days prior to the date
specified in (x), (y) or (z) below, as the case may be, a notice containing a
brief description of the proposed action and stating the date on which (x) a
record is to be taken for the purpose of such dividend, distribution or offer
for subscription or purchase, (y) such reorganization, reclassification,
consolidation, merger, sale, lease, transfer, dissolution, liquidation or
winding up is to take place and the date, if any is to be fixed, as of which the
holders of the Common Stock or other capital stock of the Company shall receive
cash or other
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<PAGE> 7
property deliverable upon such reclassification, reorganization, consolidation,
merger, conveyance, dissolution, liquidation or winding up, or (z) the date by
which holders of the Common Stock or other capital stock of the Company must
elect to participate in the registration of securities pursuant to clause (iii)
above, or purchase securities by the Company pursuant to the offering referred
to in clause (ii) above.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, conversion or capital reorganization of outstanding shares of
the Common Stock of the Company, or in case of any consolidation or merger of
the Company with or into another corporation (other than a merger with another
corporation in which merger the Company is the continuing corporation and which
does not result in any reclassification or capital reorganization of outstanding
shares of Common Stock of the Company issuable upon exercise of this Warrant) or
in case of any sale, lease or conveyance to another corporation of the property
of the Company substantially as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising this Warrant at any time
prior to the expiration of this Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification or capital reorganization and consolidation, merger, sale or
conveyance which would have been deliverable to the Holder of this Warrant on
the effective date of the reclassification, reorganization or merger had the
Holder exercised the Warrant immediately prior to the event described in this
Section (i). Any such provision shall include provision for subsequent
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section (i) shall similarly apply to successive reclassifications or capital
reorganizations of shares of the Common Stock and to successive consolidations,
mergers, sales or conveyances. In the event that in connection with any such
capital reorganization or reclassification, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for a security of the
Company other than Common Stock, any such issue shall be treated as an issue of
Common Stock covered by the provisions of paragraph (1) of Section (f) hereof.
(j) SECURITIES LAW COMPLIANCE.
(1) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Warrant Shares to be
issued upon exercise hereof are being acquired solely for the
Holder's own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell,
transfer, assign or otherwise dispose of this Warrant or any
Warrant Shares to be issued upon exercise hereof except under
circumstances that will not result in a violation of the
Securities Act of 1933, as amended (the "Act"), or any state
securities laws. Upon exercise of this Warrant, the Holder
shall, if requested by the Company, confirm in writing, in a
form satisfactory to the Company, that the shares of Common
Stock so purchased are being acquired solely for the Holder's
own account and not as a nominee for any other party, for
investment, and not with a view toward distribution or resale.
-7-
<PAGE> 8
(2) If deemed necessary by counsel to the Company, this
Warrant, and all Warrant Shares issued upon exercise hereof
shall be stamped or imprinted with legends setting forth the
restrictions on transfer arising under applicable federal and
state securities laws.
(k) RIGHT TO CONVERT WARRANT INTO COMMON STOCK.
(1) Right to Convert. As an alternative to payment of the
Exercise Price in cash, the Holder shall have the right at any
time and from time to time to convert this Warrant into shares
of Common Stock (the "Conversion Right"). Upon exercise of the
Conversion Right, the Company shall deliver to the Holder
(without payment by the Holder of any Exercise Price or of any
other cash or other consideration) that number of shares of
Common Stock equal to the quotient obtained by dividing (x)
the value of this Warrant at the time the Conversion Right is
exercised (determined by subtracting the aggregate Exercise
Price in effect immediately prior to the exercise of the
Conversion Right from the aggregate fair market value of the
shares of Common Stock issuable upon exercise of this Warrant
immediately prior to the exercise of the Conversion Right) by
(y) the fair market value of one share of Common Stock
immediately prior to the exercise of the Conversion Right. For
purposes hereof, the fair market value of a share of Common
Stock shall be the greater of (i) a price per share of Common
Stock equal to the initial Exercise Price or (ii) the current
market value of the shares of the Company's Common Stock as
determined in accordance with Section (c) hereof.
(2) Method of Exercise. The Conversion Right may be exercised
by the Holder by the surrender of this Warrant at the
principal office of the Company together with a written
statement specifying that the Holder thereby intends to
exercise the Conversion Right. Certificates for the shares of
Common Stock issuable upon exercise of the Conversion Right
shall be delivered to the Holder within five (5) days
following the Company's receipt of this Warrant together with
the aforesaid written statement.
(l) ADDITIONAL RIGHTS OF THE HOLDER. So long as this Warrant shall
be outstanding, the Holder shall (i) be entitled to registration, co-sale,
pre-emptive and similar rights with respect to the shares of Common Stock
purchasable hereunder, (ii) be obligated under certain circumstances to sell a
portion of the shares of Common Stock purchasable hereunder, and (iii) be
entitled to receive various financial and related information from the Company,
each to the same extent as those purchasers purchasing shares of the Company's
Series C Preferred Stock pursuant to the Series C Stock Purchase Agreement.
-8-
<PAGE> 9
(m) REPRESENTATIONS OF THE HOLDER.
(i) The Holder hereby represents and warrants to the Company
that it has substantial knowledge, skill and experience in
making investment decisions of the type represented by this
Warrant and the Warrant Shares, it is capable of evaluating
the risk of its investment in this Warrant and the Warrant
Shares and is able to bear the economic risk of such
investment, including the risk of losing the entire
investment, that it is acquiring this Warrant and the Warrant
Shares for its own account, and that this Warrant and the
Warrant Shares are being acquired by it for investment and not
with a present view to any distribution thereof in violation
of applicable securities law. If the Holder should in the
future decide to dispose of any of this Warrant and the
Warrant Shares, it is understood that it may do so only in
compliance with the Act and appliance state securities laws.
The Holder represents and warrants that it is an "accredited
investor" as defined in Rule 501(a) under the Act.
(ii) The Holder understands that (i) this Warrant and the
Warrant Shares have not been registered under the Act by
reason of their issuance in a transaction exempt from the
registration requirements of the Act, (ii) this Warrant and
the Warrant Shares must be held indefinitely unless a
subsequent disposition thereof is registered under the Act and
applicable state securities laws or is exempt from such
registrations (and evidence satisfactory to the Company is
provided by such Holder of the availability of such
exemptions, including the delivery to the Company of opinions
of counsel to such Holder, which opinions and counsel is
satisfactory to the Company), and (iii) this Warrant and the
Warrant Shares may bear a legend to such effect.
(n) AMENDMENTS. Neither the Warrant nor any term hereof may be
changed, waived, discharged or terminated without the prior written consent of
the Holder.
(o) NO IMPAIRMENT. The Company will not avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of any
Holder.
(p) GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Delaware.
(q) NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, addressed (a) if to the Holder; to Alex. Brown & Sons
Incorporated, One South Street, Baltimore, Maryland 21202, Attention: Richard M.
Berkeley, Managing Director, and Robert P. Irwin, Principal, or (b) if to the
Company, to Park `N View Corporation, 3403 NW 55th Street, Building 10, Ft.
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<PAGE> 10
Lauderdale, Florida 33309, Attention: Ian Williams, President and Chief
Executive Officer, or at such other address as the Company shall have furnished
to the Holder in writing.
IN WITNESS WHEREOF, Park `N View Corporation has caused this Warrant to
be executed by its officer thereunto duly authorized.
Dated: August 22, 1997
PARK `N VIEW CORPORATION
By: /s/ Ian Williams
---------------------------------------------
Name: Ian Williams
Title: President and Chief Executive Officer
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<PAGE> 11
PURCHASE FORM
Dated _____________, ____
The undersigned hereby irrevocably elects to exercise its rights
pursuant to this Warrant to the extent of purchasing ________________ shares of
Common Stock of Park `N View Corporation, and hereby makes payment of
$________________, in cash, in payment of the exercise price thereof.
The undersigned hereby irrevocably elects to exercise its rights
pursuant to this Warrant to the extent of purchasing ____ shares of Common Stock
and hereby authorizes you to deliver such shares of Common Stock for sale to
________________, and to retain from the proceeds of such sale
$________________, in cash, in payment of the exercise price thereof and to
remit to the undersigned the balance of such proceeds.
--------------------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
- -------------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address
- -------------------------------------------------------------------------------
Signature
- -------------------------------------------------------------------------------
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<PAGE> 12
ASSIGNMENT FORM
FOR VALUE RECEIVED, ______________________________________ hereby sells,
assigns and transfers unto
Name
- --------------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address
- --------------------------------------------------------------------------------
the right to purchase Common Stock of Park `N View Corporation (the "Company"),
represented by this Warrant to the extent of __________ shares as to which such
right is exercisable and does hereby irrevocably constitute and appoint as
Attorney, to transfer the same on the books of the Company with full power of
substitution in the premises.
Date
-----------, ---
Signature
------------------------
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<PAGE> 1
EXHIBIT 10.35
[*] - Confidential treatment requested pursuant to Rule 406.
030498
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. IT MAY
NOT BE SOLD OR OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER
SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THE COMPANY
OR HOLDER'S COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED TO EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT
TO RULE 144.
PARK `N VIEW, INC.
WARRANT
DATED MARCH 12, 1998
THIS CERTIFIES that [*************************************] (the
"Warrantholder"), for value received, is entitled, upon the terms and subject to
the conditions set forth herein, to subscribe for and purchase up to 180,000
fully-paid and nonassessable shares (the "Shares") of the Common Stock, par
value $.01 per share (the "Stock"), of Park `N View, Inc., a Delaware
corporation (the "Company"), at the exercise price of $8.00 per share (the
"Initial Exercise Price"), which number of Shares and Initial Exercise Price
shall be adjusted pursuant to the provisions of Section 10 hereof (the "Exercise
Price").
1. Term. Except as otherwise provided for herein, the right to purchase the
Shares as granted herein shall become exercisable from time to time in
cumulative increments of [****] shares of Stock [*******************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
****************] provided however that this Warrant shall become exercisable in
full upon the first to occur of the following: (i)[****************************]
(ii) the sale of the Company, (iii) the consummation of a Qualifying Offering
(as hereinafter defined), (iv)[*************************************************
********************************************************************************
*******************************************************************************]
or (vi) at such other time as the Company may request pursuant to Section 3(g).
Except as otherwise provided, this Warrant shall terminate and cease to
be exercisable upon the first to occur of the following: (i) the Warrantholder's
purchase of all the Shares, (ii) [*********************************] (iii)
[********************************************************************* (iv)
********************************************************************************
********************************************************************************
<PAGE> 2
******************************************************************* In
addition, upon the occurrence of items (iii) or (iv) above, the Company shall
have the right to immediately repurchase any Stock previously purchased by
[*******] pursuant to the Warrant at a price of $8.00 per share (or at such
other prices paid by [******] as adjusted pursuant to the anti-dilution
provisions of the Warrant). In addition to the foregoing, if within five (5)
years of the date of this Warrant: (i) [********************************] (ii)
[***************************************************] and (iii)
[*******************************************************************************
********************************************************************************
********************************************************************************
***************************************************************************] (a)
Warrantholder shall have no further right to purchase any of such Shares
hereunder; and (b) [************************************************************
*******************************] previously purchased by [*******] pursuant to
the Warrant at a price of $8.00 per share (or at such other prices paid by
[******] as adjusted pursuant to the anti-dilution provisions of the Warrant).
Any stock certificate issued to [*****] pursuant to its exercise of all or any
part of the Warrant shall bear a legend indicating that such Shares are subject
to the Company's rights of repurchase under the terms of this Warrant and the
Company's rights shall survive the termination of this Warrant [*******].
Notwithstanding the foregoing, the Company's rights of repurchase under this
Warrant shall terminate upon a Qualifying Offering (defined below) or the sale
of the Company.
2. Exercise of Purchase Rights.
(a) Exercise. The purchase rights represented by this Warrant are
exercisable by the Warrantholder, in whole or in part, at any time, or from time
to time during the period set forth in Section 1 above, by tendering the Company
at its principal office a notice of exercise in the form attached hereto as
Exhibit A (the "Notice of Exercise"), duly completed and executed. Upon receipt
of the Notice of Exercise and the payment of the Exercise Price in accordance
with the terms set forth below, the Company shall issue to the Warrantholder a
certificate for the number of shares of Stock of the Company purchased and shall
execute the Notice of Exercise indicating the number of shares of Stock which
remain subject to future purchases, if any. The person or persons in whose
name(s) any certificate(s) representing shares of Stock shall be issued upon
exercise of this Warrant shall be deemed to have become the holder(s) of the
Shares represented thereby (and such shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, certificates for the Shares so purchased shall be delivered to the
Warrantholder or its designee as soon as practical and in any event within
thirty (30) days after receipt of such notice and, unless this Warrant has been
fully exercised or expired, a new Warrant representing the remaining portion of
the Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the Warrantholder as soon as possible and in
any event within such thirty (30) day period.
2
<PAGE> 3
(b) Method of Exercise. The purchase rights hereby represented may
be exercised, at the election of the Warrantholder, by the tender of the Notice
of Election and the surrender of this Warrant at the principal office of the
Company and by the payment to the Company, by check, cancellation of
indebtedness or other form of payment acceptable to the Company, of an amount
equal to the then applicable Exercise Price per share multiplied by the number
of Shares then being purchased.
(c) Termination in the Event of Initial Public Offering. Except as
otherwise provided, this Warrant shall terminate immediately upon the Company's
consummation of a firm underwritten commitment public offering of the Stock
pursuant to an effective registration under the Securities Act of 1933, as
amended, covering the offer and sale of both primary and secondary shares of
Stock which results in gross proceeds of least $20,000,000, the Stock is quoted
or listed on either The Nasdaq Stock Market, the New York Stock Exchange or the
American Stock Exchange and the price at which the Stock is sold in such
offering is at least equal to the Exercise Price (a "Qualifying Offering"). The
Company shall provide written notice of its proposed filing of a registration
statement relating to a Qualifying Offering at least 30 days prior to such
filing. The Warrantholder will be permitted to rescind any previously tendered
Notice of Election in the event that a proposed public offering is not
consummated for a per share price greater than the Exercised Price.
3. Piggyback Registration Rights.
(a) If the Company, at any time proposes to register shares of Stock
under the Securities Act of 1933, as amended (the "Securities Act") (other than
pursuant to a registration on Form S-4 or Form S-8 or any similar or successor
forms), it shall at least 30 days prior to the filing of the Registration
Statement relating to such registration with the Securities and Exchange
Commission give written notice to the Warrantholder of the Company's intention
to do so, which notice shall include a statement as to the estimated maximum
number of Shares that the Warrantholder may include in such registration. Within
15 days after receipt of any such notice, the Warrantholder shall notify the
Company in writing whether the Warrantholder wishes to register any Shares in
such registration, which notification shall specify the number of Shares
intended to be sold or disposed of by the Warrantholder and shall state the
intended method of disposition of such Shares. If the Warrantholder fails to
submit such notice within such 15 day period, it shall be deemed to have
notified the Company that the Warrantholder does not then wish to register any
Shares. Upon receipt of such notice, the Company shall promptly use best efforts
to effect the registration under the Securities Act of the specified number of
Shares; provided that the Company need not promptly register any Shares if the
Warrantholder has failed to comply with paragraph (c) hereof in a timely manner.
(b) Prior to the effectiveness of a registration statement pursuant to
which any of the Shares are being registered, the Warrantholder must exercise
the Warrant for at least the number of Shares being registered.
3
<PAGE> 4
(c) The Warrantholder will furnish to the Company in writing such
information as the Company may reasonably require from the Warrantholder, and
otherwise reasonably cooperate with the Company in connection with any
registration statement with respect to the Shares. The Company may exclude
Shares from registration to the extent that the Warrantholder fails to furnish
such information within a reasonable time after receiving such request.
(d) The Warrantholder may not participate in any underwritten
registration pursuant hereto unless the Warrantholder (a) agrees to sell Shares
on the basis provided in any underwriting arrangements approved by the Company
and (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required by the terms
of such underwriting arrangements. The Warrantholder shall be entitled at any
time to withdraw Shares from such registration prior to its effective date in
the event that the Warrantholder shall disapprove of any of the terms of the
related underwriting agreement but only if the Warrantholder is permitted to do
so by the managing underwriters or pursuant to any agreement therewith.
(e) In the event that the proposed registration by the Company is, in
whole or in part, an underwritten public offering of the Stock, if the managing
underwriter determines that the inclusion of the Shares proposed to be included
would jeopardize the successful marketing of securities by the Company or
another selling securityholder, then the number of Shares to be included in such
underwritten public offering by the Warrantholder shall be reduced or
eliminated, the total amount of such reduction or elimination to be in the
discretion of the managing underwriter, provided that the number of shares of
stock to be included in any such registration for the account of selling
securityholders, other than those referenced in Section 3(h) hereof, shall be
reduced pro rata based on the number of shares of stock which each such selling
securityholder has requested to be included in such registration.
(f) The Warrantholder agrees to notify the Company as promptly as
practicable of any inaccuracy or change in information previously furnished by
such Warrantholder to the Company or of the occurrence of any event in either
case as a result of which any Prospectus included in a registration statement
pursuant to which Shares are registered contains or would contain an untrue
statement of a material fact regarding such Warrantholder or such
Warrantholder's intended method of distribution of Shares or omits to state any
material fact regarding such Warrantholder or such Warrantholder's intended
method of distribution of Shares necessary to make the statements therein, in
light of the circumstances then existing, not misleading, and promptly to
furnish to the Company any additional information required to correct and update
any previously furnished information or required so that such Prospectus shall
not contain, with respect to such Warrantholder or intended method of
distribution of Shares, an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in light of the
circumstances then existing, not misleading.
(g) If Company at any time proposes to register shares of Stock for
sale to the public in a firm commitment underwritten public offering and the
underwriter(s) thereof requires as a condition to such offering that the
Warrantholder exercise the Warrant prior to such offering,
4
<PAGE> 5
then the Warrantholder agrees to exercise the Warrant if and to the extent the
Warrant is exercisable and the public offering price is at least equal to the
Exercise Price.
(h) Notwithstanding any provision hereof to the contrary, the
Warrantholder understands and acknowledges that there are in effect, and the
Warrantholder has been given the opportunity to review, agreements of the
Company pursuant to which the holders of the Company's preferred stock have
certain superior rights with respect to the Company's registration of their
offers and sales of the Stock under the Securities Act. The rights granted
hereunder to the Warrantholder are subordinate in all respects to the rights
granted under such prior agreements. Specifically, but without limitation, such
securityholders have priority over the Warrantholder with respect to inclusion
of securities in any registration statement of the Company with the result that,
among other things, the securities of such securityholders shall be included in
a registration statement filed by the Company prior to any inclusion in such
registration statement by the Warrantholder.
(i) In the event of any underwritten offering of securities by the
Company or other securityholders of the Stock, the Warrantholder agrees that it
will not sell any shares of Stock, regardless of whether the Warrantholder is a
selling securityholder in such offering, during the period commencing 10 days
prior to any such underwritten offering and ending 90 days following such
underwritten offering.
(j) The Company shall not be obligated to include any Shares in a
registration pursuant hereto, if at the time of the receipt of a request to
include such Shares, the Shares could be sold by the Warrantholder pursuant to
Rule 144 under the Securities Act (or any similar or successor rule in effect at
that time), provided that, the Company shall, at its expense, promptly provide,
to or on behalf of Warrantholder, such opinions of counsel and other
documentation as may be required in connection with all sales by Warrantholder
of the Shares pursuant to Rule 144 under the Securities Act (or any similar or
successor rule in effect at that time).
(k) The Company will take all such actions as may be reasonably
necessary to assure that the Shares issuable pursuant to this Warrant, upon
issuance, shall have been approved for listing upon any domestic stock exchange
upon which the Stock is then listed.
(l) The costs and expenses incurred in connection with the registration
of the Shares hereunder will be paid by the Company; provided, however, that the
Company will not bear the cost of nor pay for any (i) stock transfer taxes
imposed in respect of the transfer of any Shares, (ii) any underwriting
discounts or commission or similar fees related to an underwritten offering of
the Shares or (iii) any fees and disbursements of counsel representing the
Warrantholder.
4. Reservation of Shares.
(a) Authorization and Reservation of Shares. The Company will at all
times have authorized and reserved a sufficient number of Shares to provide for
the exercise of the rights to purchase Stock as provided herein. All such shares
of Common Stock will be duly
5
<PAGE> 6
authorized and, when issued upon exercise of this Warrant in accordance with the
terms hereof, shall be validly issued, fully paid and nonassessable with no
liability on the part of the holders thereof. The Company shall not at any time
while this Warrant remains outstanding allow the par value of its Common Stock
to exceed the then effective Exercise Price.
(b) Registration or Listing. If any shares of Stock required to be
reserved for purposes of exercise of this Warrant require registration with or
approval of any governmental authority under any Federal or State law (other
than any registration under the Securities Act of 1933, as then in effect, or
any similar Federal statute then enforced, or any state securities law, required
by reason of any transfer), or listing on any domestic securities exchange, or
if at the time of exercise the class of Stock into which this Warrant is then
exercisable is listed on any domestic securities exchange, the Company will, at
its expense and as expeditiously as possible, use its best efforts to cause such
shares to be duly registered, listed or approved for listing on such domestic
securities exchange, as the case may be.
5. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Warrantholder that, as of the Warrant Grant Date:
(a) Organization and Capitalization. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The authorized capital stock of the Company consists of
17,750,000 shares of capital stock, comprised of 12,000,000 shares of Common
Stock, of which 4,318,182 shares of Common Stock are issued and outstanding and
5,750,000 shares of Preferred Stock, of which (i) 627,630 shares are designated
as Series A Preferred Stock, of which 388,065 shares are issued and outstanding,
(ii) 1,372,370 shares are designated as Series B Preferred Stock, of which
1,372,370 shares are issued and outstanding, and (iii) 3,750,000 shares are
designated as Series C Preferred Stock, of which 2,275,412 shares are issued and
outstanding. There are reserved for issuance: (i) 1,875,000 shares of Common
Stock which may be issued upon conversion of Series B Preferred Stock; (ii)
2,275,412 shares of Common Stock which may be issued upon conversion of Series C
Preferred Stock; (iii) 409,846 shares of Common Stock which may be issued
pursuant to the exercise of options previously granted to present and future
employees of the Company; (iv) 390,154 shares of Common Stock which are
available for future grants of options under the Company's Stock Option Plan;
and (v) up to 186,750 shares of Common Stock which may be issued pursuant to the
exercise of a warrant issued to Alex. Brown & Sons Incorporated. Except as set
forth above, the Company has not issued or agreed to issue any stock purchase
rights or securities convertible into Common Stock; there are no preemptive
rights in effect with respect to the issuance of any shares of Common Stock. All
the issued and outstanding shares of the Company's capital stock have been
validly issued without violation of any preemptive or similar rights and are
fully paid and nonassessable. A copy of the Company's Certificate of
Incorporation, as in effect as of the Warrant Grant Date, is attached hereto as
Exhibit C.
(b) Authority. The Company has full corporate power and authority to
execute and deliver this Warrant and to perform all of its obligations
hereunder, and the
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<PAGE> 7
execution, delivery and performance hereof have been duly authorized by all
necessary corporate action on its part. This Warrant has been duly executed on
behalf of the Company and constitutes the legal, valid and binding obligation of
the Company enforceable in accordance with its terms.
(c) No Legal Bar. Except to the extent that any of the rights,
conflicts or requirements described in this paragraph may have been previously
waived or complied with, neither the execution, delivery or performance of this
Warrant will not (i) conflict with or result in a violation of the Company's
Certificate of Incorporation, as amended, or the Company's Bylaws, as amended,
(ii) conflict with or result in a violation of any law, statute, regulation,
order or decree applicable to the Company, (iii) require any consent or
authorization or filing with, or other act by or in respect of, any governmental
authority (other than compliance with federal and state securities requirements,
which requirements shall be complied with by the Company within the prescribed
periods), conflict with or result in a breach of, constitute a default under or
constitute an event creating rights of acceleration, termination or cancellation
under any mortgage, lease, contract, franchise, instrument or other agreement to
which the Company is a party or by which it is bound.
(d) Validity of Shares. When issued upon the exercise of this
Warrant as contemplated herein, shares of Common Stock will have been validly
issued and will be fully paid and nonassessable.
(e) Notice of Cash Dividends. The Company shall provide
Warrantholder with notice of the declaration of a cash dividend at least 15 days
prior to the record date for the payment of such dividend and shall provide
Warrantholder with such information as may be reasonably requested by
Warrantholder to allow Warrantholder to make a decision as to whether to
exercise all or some portion of this Warrant.
6. Covenants of the Company.
(a) No Breach or Amendment. The Company shall not by any action,
including, without limitation, amending its Certificate of Incorporation, as
amended, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant; the Company will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such reasonable action
as may be necessary or appropriate to protect the rights of the Warrantholder
against breach; provided, however, that nothing in this Section 6(a) will
restrict the Company's ability to enter into agreements for the incurrence of
indebtedness with financial or other institutional investors in the ordinary
course of business. Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any shares of Common Stock
issuable upon the exercise of this Warrant above the amount payable therefor
upon such exercise, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly issue fully paid and nonassessable shares
of Common Stock upon the exercise of this Warrant, and (iii) obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to
7
<PAGE> 8
perform its obligations under this Warrant. Upon the request of the
Warrantholder, the Company will at any time during the period this Warrant is
outstanding acknowledge in writing, in a form reasonably satisfactory to the
Warrantholder, the continued validity of this Warrant and the Company's
obligations hereunder.
(b) Availability of Information. The Company will cooperate with the
Warrantholder in supplying such information as may be reasonably necessary for
the Warrantholder to complete and file any information reporting forms presently
or hereafter required by the Securities and Exchange Commission as a condition
to the availability of an exemption from the Securities Act of 1933, as amended,
for the sale of this Warrant or any shares issued pursuant to this Warrant. So
long as this Warrant is outstanding, the Company will provide the Warrantholder
as soon as reasonably practicable but in any event (i) within 120 days after the
close of each fiscal year of the Company, audited financial statements as of the
end of such fiscal year; and (ii) within 60 days after the close of each of the
Company's first 3 fiscal quarters, an unaudited balance sheet of the Company as
of the end of such fiscal quarter and unaudited statements of operations and
cash flows of the Company for the quarter just ended and for the portion of the
fiscal year ended with the end of such quarter. In addition, simultaneous with
the distribution to its stockholders, the Company will provide the Warrantholder
with all notices to stockholders or other communications sent by or on behalf of
the Company to such stockholders.
(c) Certain Expenses. The Company will pay all expenses in
connection with, and all taxes (other than stock transfer, income and capital
gain taxes) and other governmental charges that may be imposed in respect of the
issuance and delivery of this Warrant or any shares issued or issuable pursuant
to this Warrant.
7. No Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of the Warrantholder's
rights to purchase Stock, but in lieu of such fractional shares the Company
shall make a cash payment therefor upon the basis of the fair market value of a
share of that stock at the time of exercise.
8. No Rights as Shareholder. This Warrant does not entitle the
Warrantholder to any voting rights or other rights as a shareholder of the
Company prior to the exercise of the Warrantholder's rights to purchase Stock as
provided for herein.
9. Warrantholder Registry. The Company shall maintain a registry
showing the name and address of the registered holder of this Warrant.
10. Adjustment Rights. The Exercise Price and the number of Shares of
Stock purchasable hereunder are subject to adjustment from time to time, as
follows:
(a) Reclassification or Merger. In case of any reclassification,
change or conversion of securities of the class issuable upon exercise of this
Warrant into the same or a different number of securities of any other class or
classes, or in case of any merger of the
8
<PAGE> 9
Company with or into another corporation (other than a merger with another
corporation in which the Company is the acquiring and the surviving corporation
and which does not result in any reclassification or change of outstanding
securities issuable upon exercise of this Warrant), or in case of any sale of
all or substantially all of the assets of the Company, the Company, or such
successor or purchasing corporation, as the case may be, shall duly execute and
deliver to the holder of this Warrant, so that the holder of this Warrant shall
have the right to receive, at a total purchase price not to exceed that payable
upon the exercise of the unexercised portion of this Warrant, and in lieu of the
Shares of Stock theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities, money and property receivable upon
such reclassification, change or merger by a holder of the number of Shares of
Stock then purchasable under this Warrant. Such new Warrant shall provide for
adjustment that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 10. The provisions of this subparagraph
(a) shall similarly apply to successive reclassifications, changes, mergers and
transfers.
(b) Subdivision or Combination of Shares. If the Company at any time
shall subdivide its Stock, the Exercise Price shall be proportionately decreased
and the number of Shares issuable pursuant to this Warrant shall be
proportionately increased. If the Company at any time shall combine its Stock,
the Exercise Price shall be proportionately increased and the number of Shares
issuable pursuant to this Warrant shall be proportionately decreased.
(c) Stock Dividends. If the Company at any time shall pay a dividend
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of Stock, or issue shares
of Common Stock at a price less than the Exercise Price (other than shares of
Common Stock issuable: (i) under the Park `N View Stock Option Plan; or (ii)
upon conversion of any outstanding preferred stock), then the Exercise Price
shall be adjusted, from and after the date of determination of stockholders
entitled to receive such dividend or distribution or the date of such issuance
to that price determined by multiplying the Exercise price in effect immediately
prior to such date of determination by a fraction (i) the numerator of which
shall be the total number of shares of Stock outstanding immediately prior to
such dividend or distribution, and (ii) the denominator of which shall be the
total number of shares of Stock outstanding immediately after such dividend,
distribution or issuance. The Warrantholder shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
Shares of Stock (calculated to the nearest whole share) obtained by multiplying
(i) the Exercise Price in effect immediately prior to such adjustment by (ii)
the number of Shares of Stock issuable upon the exercise hereof immediately
prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
(d) Reserved Shares Adjustment. The number of shares reserved for
issuance pursuant to this Warrant shall automatically be adjusted without
further action by the Company in the event of any adjustment of the number of
Shares issuable pursuant to this Warrant. In case of any event resulting in
adjustment pursuant to Section 10(a), 10(b) or 10(c) above, the Company shall
give written notice thereof to the Warrantholder stating the date on
9
<PAGE> 10
which such event is to take place (which shall be at least forty-five (45) days
after the Warrantholder's receipt of such notice).
10
<PAGE> 11
11. Compliance with Securities Act; Disposition of Warrant or Shares of
Stock.
(a) Compliance with Securities Act. The Warrantholder, by acceptance
hereof, agrees that this Warrant, and the Shares of Stock to be issued upon
exercise hereof, are being acquired for investment and that such Warrantholder
will not offer, sell or otherwise dispose of this Warrant, or any Shares of
Stock to be issued upon exercise hereof except under circumstances which will
not result in a violation of the Securities Act of 1933, as amended (the
"Securities Act"), or any applicable state securities laws. At the time of
exercise, the Warrantholder shall execute an Investment Letter in the form
attached hereto as Exhibit B stating (among other things) that the shares issued
pursuant to the Warrant have not been registered under federal or state
securities laws, and that such shares may not be transferred unless the shares
are so registered or unless the Company has received an opinion of the Company's
counsel or such holder's counsel reasonably acceptable to the Company that such
transfers are exempt from registration.
(b) Legend. This Warrant and all shares of Stock issued upon
exercise of this Warrant (unless registered under the Securities Act and any
applicable state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR OFFERED FOR SALE,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER SAID ACT OR
UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED TO EFFECTUATE SUCH TRANSACTION OR
UNLESS PURSUANT TO RULE 144."
(c) Representations and Warranties of Warrantholder. In addition, in
connection with the issuance of this Warrant, the Warrantholder specifically
represents to the Company by acceptance of this Warrant as follows:
(i) The Warrantholder is aware of the Company's business
affairs and financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this
Warrant. The Warrantholder is acquiring this Warrant for its own account for
investment purposes only and not with a view to, or for the resale in connection
with, any "distribution" thereof in violation of the Securities Act.
(ii) The Warrantholder understands that this Warrant has not
been registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the Warrantholder's investment intent as expressed herein.
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<PAGE> 12
(iii) The Warrantholder further understands that this Warrant
and any shares of Stock to be issued upon exercise hereof must be held
indefinitely unless subsequently registered under the Securities Act and
qualified under any applicable state securities laws, or unless exemptions from
registration and qualification are otherwise available.
(d) Disposition of Warrant or Shares. Subject to the terms and
conditions of Section 11(e), with respect to any offer, sale or other
disposition of this Warrant or any Shares of Stock acquired pursuant to the
exercise of this Warrant prior to registration of such Warrant or Shares, the
holder agrees to give written notice to the Company prior thereto, describing
briefly the manner thereof, together with an opinion of the Company's counsel or
such holder's counsel reasonably satisfactory to the Company, or other evidence,
if reasonably requested by the Company, to the effect that such offer, sale or
other disposition may be effected without registration or qualification (under
the Securities Act as then in effect or any federal or state securities law then
in effect) of this Warrant or such shares of Stock and indicating whether or not
under the Securities Act certificates for this Warrant or such shares of Stock
to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. Promptly upon receiving such written notice and reasonably
satisfactory opinion or other evidence, if so requested, the Company, as
promptly as practicable but no later than five (5) days after receipt of the
written notice, shall notify such holder that such holder may sell or otherwise
dispose of this Warrant or such shares of Stock, all in accordance with the
terms of the notice delivered to the Company. Notwithstanding the foregoing,
this Warrant or such shares of Stock may, as to such federal laws, be offered,
sold or otherwise disposed of in accordance with Rule 144 or 144A under the
Securities act, provided that the Company shall have been furnished with such
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 or 144A have been satisfied. Each
certificate representing this Warrant or the shares of Stock thus transferred
(except a transfer pursuant to Rule 144 or 144A) shall bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
such laws, unless in the aforesaid opinion of counsel for the Company or the
Warrantholder or pursuant to Rule 144 or 144A, such legend is not required in
order to ensure compliance with such laws. The Company may issue stop transfer
instruction to its transfer agent in connection with such restrictions.
(e) Prohibition Against Transfer. This Warrant, the rights of the
Warrantholder hereunder and the Shares may not be assigned or transferred except
to a parent or subsidiary entity of the Warrantholder that, in the case of a
parent, owns at least 80% of the Warrantholder, and, in the case of a
subsidiary, is 80% owned by the Warrantholder; provided however that such
transferee shall be bound by the terms and provisions hereof and the prohibition
on transfer of the Shares in this Section 11(e) shall terminate upon the
termination of all of the Company's rights to repurchase the Shares pursuant to
Section 1 hereof.
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<PAGE> 13
12. Miscellaneous.
(a) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder relating hereto, the
prevailing party shall be entitled to attorneys' fees and expenses and all costs
of proceedings incurred in enforcing this Warrant.
(b) Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
Delaware.
(c) Descriptive Headings. The descriptive headings of the paragraphs
of this Warrant are inserted for convenience only and do not constitute a part
of this Warrant.
(d) Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States mail, by registered or certified mail,
addressed (1) to the Warrantholder, at the address in the Warrant Register
maintained by the Company, and (ii) to the Company, at 11711 NW 39th Street,
Coral Springs, FL 33065, or at such other address as any such party may
subsequently designate by written notice to the other party.
(e) Lost Warrants. The Company covenants to the Warrantholder, that
upon receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate and,
in the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender and cancellation of such Warrant or stock certificate, the
Company will make and deliver a new Warrant or stock certificate of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.
(f) Severability. In the event any one or more of the provisions of
this Warrant shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Warrant shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, legal and enforceable provision, which comes closest to the intention of
the parties underlying the invalid, illegal or unenforceable provision.
(g) Modification and Waiver. This Warrant and any provision hereof
may be amended, waived, discharged or terminated only by an instrument in
writing signed by the party against whom enforcement of the same is sought.
(h) Application of Securityholders' Agreement. The Warrantholder
understands and acknowledges that there is in effect that certain Amended and
Restated SecurityHolders' and Exchange Agreement, as amended, (a copy of which
has been provided to the Warrantholder) and that the Shares and the
Warrantholder shall be subject to the terms and conditions thereof.
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<PAGE> 14
(i) Survival of Representations and Warranties. All of the
Warrantholders representations, warranties, agreements and obligations with
respect to the ownership of the Shares shall survive the termination of the
Warrant.
(j) Entire Agreement. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
IN WITNESS WHEREOF, this warrant has been duly executed and delivered by
the undersigned.
PARK `N VIEW, INC.
By: /s/ Ian Williams
-------------------------------
Ian Williams, President
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<PAGE> 15
Exhibit A
NOTICE OF EXERCISE FOR CASH
To: Park `N View, Inc.
11711 NW 39th Street
Coral Springs, FL 33065
Attention: President
1. The undersigned, hereby elects to purchase shares of the Common
Stock of Park `N View, Inc. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below:
Name Address
---- -------
Unless this Warrant has been fully exercised or expired, please
issue a new Warrant representing the remaining portion of the Shares, if any,
with respect to which this Warrant has not been exercised in the name of the
Warrantholders.
----------------------------------------
(SIGNATURE)
Date:
--------------------
15
<PAGE> 16
EXHIBIT B
FORM OF
INVESTMENT LETTER
___________, 19___
Park `N View, Inc.
11711 NW 39th Street
Coral Springs, FL 33065
Attention: President
Gentlemen:
The undersigned, ________________________ ("Purchaser") intends to
acquire up to _________ shares (the "Shares") of the Common Stock of Park `N
View, Inc. (the "Company") from the Company pursuant to the exercise of certain
Warrant held by Purchaser. The Shares will be issued to Purchaser in a
transaction not involving a public offering and pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with such purchase and in order to comply with the exemption from
registration relied upon by the Company, Purchaser represents, warrants and
agrees as follows:
1. Purchaser is acquiring the Shares for Purchaser's own account, to
hold for investment, and Purchaser shall not make any sale, transfer or other
disposition of the Shares in violation of the 1933 Act or the rules and
regulations promulgated thereunder by the Securities and Exchange Commission or
in violation of any applicable state securities law.
2. Purchaser has been advised that the issuance of the Shares is not
being registered under the 1933 Act on the ground that this transaction is
exempt from registration under Section 3(b) or 4(2) of the 1933 Act, as not
involving any public offering, and that reliance by the Company on such
exemptions is predicated in part on Purchaser's representations set forth in
this letter. Purchaser also has been advised that neither the Shares nor the
issuance thereof are being registered under the securities laws of any state.
3. Purchaser has been informed that the Shares must be held
indefinitely unless subsequently registered under the 1933 Act and applicable
state securities laws, or unless exemptions from such registration are available
with respect to any proposed transfer or disposition by Purchaser of the Shares.
Purchaser understands and agrees that the Company, as a condition to the
transfer of any of the Shares, may require that the request for transfer be
accompanied by an opinion of counsel satisfactory to the Company, in form and
substance satisfactory to the Company, to the effect that the proposed transfer
is exempt from registration
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<PAGE> 17
under 1933 Act and applicable state securities laws, unless such transfer is
covered by an effective registration statement under the 1933 Act and all
applicable state securities laws.
4. Purchaser understands and agrees that there will be placed on the
certificates for the Shares, or any substitutions therefor, a legend stating in
substance:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
nor under any state securities law and may not be pledged, sold,
assigned or transferred unless (i) a registration statement with
respect thereto is effective under the Act and any applicable state
securities laws or (ii) in the opinion of counsel acceptable to the
Company such securities may be pledged, sold, assigned or
transferred without an effective registration statement under the
Act or applicable state securities laws.
5. Purchaser has been furnished with or has had access to the
information it has requested from the Company in connection with the investment
represented by the Shares and has had an opportunity to discuss with the
officers and management of the Company the Company's business and financial
affairs. Purchaser has such knowledge and experience in business and financial
matters and with respect to investments in securities or in privately held
companies so as to enable it to understand and evaluate the risks of such
investment and form an investment decision with respect thereto.
Very truly yours,
-----------------------------------
Name:
Accepted as of the _____ day of ____________, 19____.
PARK `N VIEW, INC.
By:
---------------------------------
Name:
Title:
RALLIB01:470748.01
17
<PAGE> 1
EXHIBIT 10.36
[*] - Confidential treatment requested pursuant to Rule 406.
May 18, 1998
[**********]
Re: Waiver of Certain Adjustment Rights Pursuant to Warrant
Gentlemen:
Park `N View, Inc., a Delaware corporation (the "Company"), has
granted to [********************] (the "Warrantholder") a right to purchase up
to 180,000 shares of the Company's Common Stock pursuant to a Warrant, dated as
of March 12, 1998 (the "Warrant"). Section 10(c) of the Warrant provides that
the Exercise Price (as defined in the Warrant) and the number of Shares (as
defined in the Warrant) issuable upon exercise of the Warrant are subject to
adjustment in the event of, among other things, the issuance by the Company of
shares of the Company's Common Stock at a price less than the Exercise Price
under certain circumstances.
In connection with certain debt financing of the Company in the
aggregate principal amount of up to $75,000,000, the Company may grant to the
lenders, guarantors or purchasers of such loans (collectively referred to herein
as the "Lenders") warrants to purchase up to 505,375 shares of the Company's
Common Stock at an exercise price less than the Exercise Price. The
Warrantholder, on behalf of itself and any subsequent holder of the Warrant,
hereby waives any rights of the Warrantholder and/or any subsequent holder of
the Warrant to adjustment of the Exercise Price and/or the number of Shares
issuable upon exercise of the Warrant arising as a result of or in connection
with: (i) the issuance by the Company to the Lenders of warrants to purchase up
to 505,375 shares of the Company's Common Stock at an exercise price less than
the Exercise Price, or (ii) the issuance of shares of the Company's Common Stock
pursuant to any subsequent exercise of such warrants.
If you agree with the foregoing terms, please sign this letter below
as indicated.
Sincerely,
PARK `N VIEW, INC.
By:/s/ Steve Conkling
---------------------------------------
Steve Conkling, Chief Operating Officer
<PAGE> 1
EXHIBIT 10.37
[*] - Confidential treatment requested pursuant to Rule 406.
[AT&T LOGO]
AT&T CUSTOM OFFER ORDER FORM
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Customer Name (Full Legal Name):
Park 'N View, Inc. AT&T Corp.
("Customer") ("AT&T")
- --------------------------------------------------------------------------------------------------------------
Customer Address: AT&T Address:
11711 NW 39th STREET 100 W CYPRESS CREEK ROAD GERARD F. VENTOLO
- --------------------------------------------------------------------------------------------------------------
AT&T Contact Name:
CORAL SPRINGS, FL 33065 FORT LAUDERDALE, FL 33309 954-938-4692
- --------------------------------------------------------------------------------------------------------------
City State Zip Code City State Zip Code AT&T Contact Telephone Number:
- --------------------------------------------------------------------------------------------------------------
</TABLE>
CUSTOMER HEREBY PLACES AN ORDER FOR:
<TABLE>
<S> <C>
xxx[ ] New Custom Offer Agreement for AT&T Domestic Services [ ] Existing Custom Offer Agreement No. ____ for AT&T Domestic
(attachment required) Services (attachment required)
[ ] New Contract Tariff for AT&T International Services (attachment [ ] Existing AT&T Contract Tariff No. ____ (attachment required)
required)
</TABLE>
EXISTING PRICING PLAN REPLACEMENT/DISCONTINUANCE:
[ ] Check here and identify below any CT, COA or Pricing Plan being discontinued
in conjunction with this order. Also specify the CT No., COA No., Plan ID No. or
Main Billed Account No. (Note: Charges may apply as specified in the plan
being discontinued.)
1. Services will be provided under the Contract Tariff ("CT") and/or Custom
Offer Agreement ("COA") ordered hereunder, subject to the rates, terms and
conditions in the CT and/or COA as well as the AT&T tariffs (if any) referenced
in the CT or COA ("Applicable Tariffs"), as those Applicable Tariffs may be
modified from time to time.
2. This Form (including its addenda, if any), the CT and/or COA and the
Applicable Tariffs constitute the entire agreement (collectively the
"Agreement") between Customer and AT&T with respect to the services provided
under the CT and/or COA, and supersede any and all prior agreements, proposals,
representations, statements, or understandings, whether written or oral,
concerning such services or the rights and obligations relating to such
services. In the event of any inconsistency between the terms of this Form
(including its addenda, if any) and the CT, COA or Applicable Tariffs, the terms
of the Applicable Tariffs, CT and/or COA shall prevail. In the event of any
inconsistency between the terms of the COA and the Applicable Tariffs, the
terms of the COA shall prevail. In the event of any inconsistency between the
terms of the CT and the Applicable Tariffs, the terms of the CT shall prevail.
Except for changes to rates (to the extent permitted under the CT or COA) and
changes to the Applicable Tariffs, no change, modification or waiver of any of
the terms of this Agreement shall be binding unless reduced to writing and
signed by authorized representatives of both parties and, to the extent
required by law, filed with the FCC.
3. Except to the extent that federal law applies, the construction,
interpretation and performance of this Agreement shall be governed by the
substantive law of the State of New York, excluding its choice of law rules.
4. EXCEPT FOR ANY WARRANTIES EXPRESSLY MADE IN THIS AGREEMENT, AT&T EXCLUDES
ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. AT&T DOES
NOT AUTHORIZE ANYONE TO MAKE A WARRANTY OF ANY KIND ON ITS BEHALF AND CUSTOMER
SHOULD NOT RELY ON ANYONE MAKING SUCH STATEMENTS.
5. As to new CTs, Customer may, as its sole remedy, cancel this order for the
CT without liability before the CT becomes effective if, without Customer's
consent: (a) AT&T fails to file the CT with the FCC within 30 days after the
date this Form is signed by both parties; (b) the CT as filed is not consistent
with the attached illustrative copy; or (c) the CT does not go into effect
within 30 days after filing. In the event that Customer cancels a new CT order
pursuant to this provision, any order for a COA under this Form which could by
its terms only have been ordered if the Customer also ordered the affected CT
will also simultaneously be canceled.
6. Orders for existing CTs and existing COAs will be accepted and implemented
by AT&T only if the specified CT or COA is available when ordered and Customer
is eligible for the CT or COA.
7. Customer shall provide installation instructions and other information as
required by AT&T.
- ------------------------------------------------------------------------------
YOUR SIGNATURE ACKNOWLEDGES THAT YOU HAVE READ, UNDERSTAND AND AGREE TO THE
PROVISIONS OF THIS AGREEMENT AND THAT YOU ARE DULY AUTHORIZED TO SIGN THIS
AGREEMENT.
- ------------------------------------------------------------------------------
CUSTOMER AT&T CORP.
Full Legal Name: Park 'N View, Inc.
-------------------------
By: /s/ Stephen L. Conkling By: /s/ C.R. Fairbank
-------------------------------------- ------------------------------
(Authorized Customer Signature) (Authorized AT&T Signature)
Stephen L. Conkling C.R. Fairbank
- ----------------------------------------- ---------------------------------
(Typed or Printed Name and Title) (Typed or Printed Name and Title)
Date: 7/13/98 Date: 7/13/98
------------------------------------ ----------------------------
<PAGE> 2
AT&T COMMUNICATIONS CONTRACT TARIFF NO. 10019
Adm. Rates and Tariffs Original Title Page
Bridgewater, NJ 08807
Issued: July 21, 1998 Effective: July 22, 1998
** All material on this page is new. **
CONTRACT TARIFF NO. XXXX
TITLE PAGE
This Contract Tariff applies to AT&T Private Line Services, AT&T InterSpan
Frame Relay Service and AT&T Local Channel Services for interstate or foreign
communications in accordance with the Communications Act of 1934, as amended.
Telecommunication services provided under this Contract Tariff are furnished
by means of wire, radio, satellite, fiber optics or any suitable technology or
combination of technologies.
<PAGE> 3
AT&T COMMUNICATIONS CONTRACT TARIFF NO. 10019
Adm. Rates and Tariffs Original Page 1
Bridgewater, NJ 08807
Issued: July 21, 1998 Effective: July 22, 1998
** All material on this page is new. **
CONTRACT TARIFF NO. XXXX
CHECK SHEET
The Title Page and Pages 1 through 10 inclusive of this tariff are effective as
of the date shown.
TABLE OF CONTENTS
Page
----
Check Sheet................................................................. 1
List of Concurring, Connecting and Other Participating Carriers............. 1
Explanation of Symbols - Coding of Tariff Revisions......................... 1
Trademarks and Service Marks................................................ 2
Explanation of Abbreviations................................................ 2
General Provisions.......................................................... 2
Contract Summary............................................................ 4
LIST OF CONCURRING, CONNECTING AND OTHER PARTICIPATING CARRIERS
Concurring Carriers - NONE
Connecting Carriers - NONE
Other Participating Carriers - NONE
EXPLANATION OF SYMBOLS - Coding of Tariff Revisions
Revisions to this tariff are coded through the use of symbols. These symbols
appear in the right margin of the page. The symbols and their meanings are:
R - to signify reduction.
I - to signify increase.
C - to signify changed regulation.
T - to signify a change in text but no changes in rate
or regulation.
S - to signify reissued matter.
M - to signify matter relocated without change.
N - to signify new rate or regulation.
D - to signify discontinued rate or regulation.
Z - to signify a correction.
Other marginal codes are used to direct the tariff reader to a footnote for
specific information. Codes used for this purpose are lower case letters of the
alphabet, e.g. x, y and z. These codes may appear beside the page revision
number in the page header or in the right margin opposite specific text.
<PAGE> 4
AT&T COMMUNICATIONS CONTRACT TARIFF NO. 10019
Adm. Rates and Tariffs Original Page 2
Bridgewater, NJ 08807
Issued: July 21, 1998 Effective: July 22, 1998
** All material on this page is new. **
TRADEMARKS AND SERVICE MARKS - The following marks, to the extent, if any, used
throughout this tariff, are trademarks and service marks of AT&T Corp.
Trademarks Service Marks
---------- -------------
None ACCUNET
DATAPHONE
InterSpan
EXPLANATION OF ABBREVIATIONS
Adm. - Administrator
ASDS - ACCUNET Spectrum of Digital Access
GDA - Generic Digital Access
kbps - kilobits per second
Mbps - Megabits per second
GENERAL PROVISIONS
------------------
I. Customer's Initial Service Date: The date on which the term of this Contract
Tariff begins is referred to as the Customer's Initial Service Date (CISD). The
rates and discounts specified in this Contract Tariff will apply commencing at
the CISD. The CISD is the date that the Customer begins service under this
Contract Tariff.
<PAGE> 5
AT&T COMMUNICATIONS CONTRACT TARIFF NO. 10019
Adm. Rates and Tariffs Original Page 3
Bridgewater, NJ 08807
Issued: July 21, 1998 Effective: July 22, 1998
** All material on this page is new. **
GENERAL PROVISIONS (CONTINUED)
II. DETARIFFING - If during the term of this Contract Tariff, the AT&T
Tariffs referenced herein ("Applicable AT&T Tariffs") are detariffed in whole
or in part pursuant to a statutory change, order or requirement of a
governmental or judicial authority of competent jurisdiction, then following
such detariffing:
(i) the terms and conditions for the Services Provided will remain the same as
those in this Contract Tariff, except that the relevant terms and conditions
contained in the Applicable AT&T Tariffs will remain the same as those in
effect as of the date AT&T detariffs in whole or in part those Applicable AT&T
Tariff provisions, and will be incorporated as part of this Contract Tariff, and
(ii) the rates for the Services Provided will be:
(a) to the extent Applicable AT&T Tariff provisions remain filed and
effective, those rates specified in such Applicable AT&T Tariff
provisions, as amended from time to time; and
(b) to the extent that this Contract Tariff contains specific rates or
rate schedules that would apply in lieu of (or in addition to) the rates
or rate schedules in Applicable AT&T Tariffs, such specific Contract
Tariff rates and rate schedules; and
(c) to the extent Applicable AT&T Tariff provisions are detariffed, and
(b) preceding does not apply, those rates specified in the applicable
AT&T Price Lists, as amended from time to time.
In all cases (a, b or c), the applicable rates shall continue to be subject to
any discounts, waivers, credits, and restrictions on rate changes that may be
contained in this Contract Tariff. Where rates and rate changes (both increases
and decreases) would have been calculated by reference to a tariff rate that
has been detariffed, rates and rate changes shall instead be calculated during
the term of this Contract Tariff by reference to applicable AT&T Price Lists and
(to the extent changes to tariff rates were permitted under this Contract
Tariff) AT&T shall have the right to change its Price Lists from time to time.
All references to the AT&T Tariffs in this Contract Tariff shall be construed
to mean the AT&T Tariffs specified herein, as well as the documents which will
replace those tariffs, including the AT&T Price Lists, when AT&T cancels those
tariffs.
<PAGE> 6
AT&T COMMUNICATIONS CONTRACT TARIFF NO. 10019
Adm. Rates and Tariffs Original Page 4
Bridgewater, NJ 08807
Issued: July 21, 1998 Effective: July 22, 1998
** All material on this page is new. **
CONTRACT TARIFF NO. XXXX
1. SERVICES PROVIDED:
A. AT&T Private Line Services (AT&T Tariff F.C.C. No. 9)
B. AT&T InterSpan Frame Relay Services (FRS) (AT&T Tariff F.C.C. No. 4)
C. AT&T Local Channel Services (AT&T Tariff F.C.C. No. 11)
1.1 INITIAL QUANTITIES - Beginning in the 7th month following the CISD, the
Initial Quantities of AT&T InterSpan Frame Relay Services components are as
follows:
A. AT&T INTERSPAN FRAME RELAY SERVICES
200 - 128 kbps FRS Domestic Access Ports
2. CONTRACT TERM; RENEWAL OPTIONS - For the AT&T Private Line Services, AT&T
Switched Digital Services and AT&T Local Channel Services provided under this
Contract Tariff (CT), the term is 3 years beginning with a Customer's Selected
Date (CSD) which shall be no more than 7 months following the Customer's
Initial Service Date (CISD). The rates and discounts specified in this Contract
Tariff will apply commencing at the CISD. The CISD for the above services is
the date that the Customer begins service under this Contract Tariff. This CT
may be renewed in its entirety for an additional 1 year period, provided AT&T
receives, in writing, the Customer's order to renew at least 45 days prior to
the last day of the initial term.
3. MINIMUM COMMITMENTS/CHARGES
A. AT&T PRIVATE LINE, AT&T INTERSPAN FRAME RELAY AND AT&T LOCAL CHANNEL
SERVICES - The combined Data Minimum Annual Revenue Commitment (DMARC) for the
AT&T Private Line, FRS and AT&T Local Channel Services provided under this CT is
as follows:
<TABLE>
<CAPTION>
CT TERM YEAR YEAR 1 YEAR 2 YEAR 3
<S> <C> <C> <C>
DMARC $5,100,000 $7,700,000 $7,700,000
</TABLE>
The DMARC will be satisfied by the undiscounted recurring charges for
Multi-Service Volume Pricing Plan (MSVPP)-eligible service components as
specified in AT&T Tariff F.C.C. Nos. 9 and 11, as amended from time to time,
and by the undiscounted Frame Relay Volume Pricing Plan (FRVPP - Eligible FRS
Charges, as specified in AT&T Tariff F.C.C. Nos. 4, as amended from time to
time, and by undiscounted Monthly Charges for Domestic Access Ports as
specified in Section 7., following, for the Services Provided under this CT. If,
on any anniversary of the CISD, the Customer has failed to satisfy the DMARC
for the preceding year, the Customer will be billed a shortfall charge in an
amount equal to the difference between the DMARC and the sum of: (1) the total
of the actual undiscounted recurring Charges for the MSVPP-eligible service
components in service for that year under this CT, (2) the total of the actual
undiscounted FRVPP-Eligible FRS Charges for the FRS components in service for
that year under this CT, and (3) the actual undiscounted Monthly Charges for
the Domestic Access Ports, in service for that month.
<PAGE> 7
AT&T COMMUNICATIONS CONTRACT TARIFF NO. 10019
Adm. Rates and Tariffs Original Page 5
Bridgewater, NJ 08807
Issued: July 21, 1998 Effective: July 22, 1998
** All material on this page is new. **
4. CONTRACT PRICE
A. The Contract Price for the AT&T Services provided under this CT is the same
as the undiscounted Recurring and Nonrecurring Rates and Charges specified in
AT&T Tariffs listed in Section 1., preceding, as amended from time to time,
except for those Rates specified in Section 7., following.
5. DISCOUNTS - The following discounts are the only discounts that apply to
the Services Provided under this CT.
A. AT&T PRIVATE LINE SERVICES - The Customer will receive the following
discounts, each month, in lieu of the MSVPP/ABMVPP discounts. These discounts
will be applied to the Services listed below, and to the associated MSVPP
eligible service components, in the same manner as the MSVPP discounts as
specified in AT&T Tariff F.C.C. No. 9, as amended from time to time.
MONTHLY DISCOUNTS
- -------------------------------------------------------------------------------
<TABLE>
ASDS at ASDS at
speeds speeds
of of 128
64 kbps kbps ACCUNET ACCUNET ACCUNET ACCUNET ABMVPP-
and and T1.5 T32 T45 Fractional eligible
below above Service Service Service T45 Service DDS components
- ----- ----- ------- ------- ------- ----------- --- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
[***] [***] [***] [***] [***] [***] [***] [***]
</TABLE>
B. AT&T INTERSPAN FRAME RELAY SERVICES - The Customer will receive a discount
of [***], in lieu of the FRVPP discounts. This discount will be applied to the
sum of the FRVPP-Eligible FRS Charges and DOMESTIC ACCESS PORTS, AS SPECIFIED IN
SECTION 7., following in the same manner as the FRVPP discounts as specified in
AT&T Tariff F.C.C. No. 4, as amended from time to time.
C. AT&T LOCAL CHANNEL SERVICES - The Customer will receive the following
discounts, each month, in lieu of the MSVPP discounts. These discounts will be
applied to the Services listed below, and to the associated MSVPP eligible
service components, in the same manner as the MSVPP discounts as specified in
AT&T Tariff F.C.C. No. 11, as amended from time to time. The discount listed in
this Section does not apply to AT&T Terrestrial 1.544 Mbps Local Channel
Services listed in Section 5.D., following.
MONTHLY DISCOUNTS
- -----------------------------------------------------------------------------
<TABLE>
AT&T 9.6 kbps Digital 56/64 kbps
9.6/56/64 kbps Terrestrial Data Local Digital
ACCUNET Generic 1.544 Mbps Channel and Voice Data Local
Digital Access Local Channel Grade Local Channel
(GDA) Services Services Channel Services Services
- ---------------- ------------- ---------------- --------------
<S> <C> <C> <C>
[***] [***] [***] [***]
</TABLE>
<PAGE> 8
AT&T COMMUNICATIONS CONTRACT TARIFF NO. 10019
Adm. Rates and Tariffs Original Page 6
Bridgewater, NJ 08807
Issued: July 21, 1998 Effective: July 22, 1998
** All material on this page is new. **
5. DISCOUNTS (CONTINUED)
D. AT&T TERRESTRIAL 1.544 MBPS LOCAL CHANNEL SERVICES - The Customer will
receive the following discounts, each month, on the Monthly Recurring Charges
for AT&T Terrestrial 1.544 Mbps Local Channels and the associated Access
Coordination Functions. The discounts provided in this section are in lieu of
any discounts specified in AT&T Tariff F.C.C. No. 11, as amended from time to
time, for the same service components. Additionally, the discounts listed in
this Section do not apply to AT&T Terrestrial 1.544 Mbps Local Channel Services
listed in Section 5.C., preceding.
<TABLE>
<CAPTION>
Service Components Discount
------------------------------ --------
<S> <C>
Access Value Arrangement (AVA) with the Universal [***]
Terrestrial 1.544 Mbps Local Channels Access
Arrangement (AVA/UTA)* and associated Access
Coordination Functions.
24 Channel Terrestrial 1.544 Mbps Local Channels under [***]
an access Value Plan (AVP)** and associated Access
Coordination Functions.
</TABLE>
* An AVA with the Universal T1 Access (AVA/UTA) Arrangement is available to
Customers that connect their AT&T Terrestrial 1.544 Mbps Local Channel service
to an AT&T Switched Service or multiplexor provided under this CT. An AVA/UTA
Arrangement under this CT allows AT&T to terminate the Customer's AT&T switched
network minutes on the AVA/UTA Arrangement. The Customer must make available
for AT&T use, at each AVA location, a minimum of an average of four DSO
Channels for each Terrestrial 1.544 Mbps Local Channel in use at that
location. The term "AT&T switched network minutes" does not apply to nodal
services using the local channel service as an access facility for services
obtained at the AVA location nor to any switched network minutes billed to the
Customer's AVA location, other than LDMTS minutes associated with collect or
credit card calls.
** An AVP is available to Customers that connect their AT&T Terrestrial 1.544
Mbps Local Channel Service to an AT&T Switched Service or multiplexor provided
under this Contract Tariff. An AVP allows the Customer the use of all of the
24 channels in an AT&T Terrestrial 1.544 Mbps Local Channel.
<PAGE> 9
AT&T COMMUNICATIONS CONTRACT TARIFF NO. 10019
Adm. Rates and Tariffs Original Page 7
Bridgewater, NJ 08807
Issued: July 21, 1998 Effective: July 22, 1998
** All material on this page is new. **
6. CLASSIFICATIONS, PRACTICES AND REGULATIONS
A. Except as otherwise provided in this CT, the rates and regulations that
apply to the Services Provided specified in Section 1., preceding, are as set
forth in the AT&T Tariffs that are referenced in Section 1., preceding, as such
tariffs are amended from time to time.
B. MONITORING CONDITIONS - None
C. PROMOTIONS, CREDITS AND WAIVERS - The following credits and waivers will
be applied to the Customer's bill subject to the following limitations: (1)
all credits and waivers apply only to the Services Provided under this CT and
as specified below; (2) any waiver not applied by the end of the CT will be
declared null and void; (3) installation and monthly charge waivers apply only
to new service components (unless otherwise specified below) and do not apply
to service components disconnected and reconnected after the CISD; (4) the
service components must remain in service for a minimum period of 18 months
(unless otherwise specified below); and (5) the credits/waivers under this
section do not apply to Bandwidth Manager Service (BMS/BMS-E), Access
Protection Service (APC) and Network Protection Service (NPC). If any of the
installed services components are disconnected prior to the end of the minimum
retention period, AT&T will bill the Customer for the amount of the charges
that had been waived under this section for each service component
disconnected. Any such bill must be paid by the Customer within 30 days.
1. The following charges, as specified in AT&T Tariffs listed in Section 1.,
preceding, as amended from time to time, are waived.
(a) NONRECURRING CHARGES
I. The Installation Charges for AT&T Private Line Services MSVPP-eligible
service components and associated Function Connections.
II. The Installation Charges for FRVPP-Eligible FRS Components and DOMESTIC
ACCESS PORTS, AS SPECIFIED IN SECTION 7., FOLLOWING.
III. The Installation Charges for AT&T Local Channel Services MSVPP-eligible
service components (excluding AT&T Terrestrial 1.544 Mbps Local Channels
subscribed to under an Access Value Arrangement (AVA) or an Access Value Plan
(AVP)), but including those Local Channels specified in Section 5.D., preceding.
<PAGE> 10
AT&T COMMUNICATIONS CONTRACT TARIFF NO. 10019
Adm. Rates and Tariffs Original Page 8
Bridgewater, NJ 08807
Issued: July 21, 1998 Effective: July 22, 1998
** All material on this page is new. **
6.C.1. PROMOTIONS, CREDITS AND WAIVERS (CONTINUED)
(B) RECURRING CHARGES
I. The recurring Monthly Charges for each ACCUNET T1.5 Access
Connection, ACCUNET T1.5 M-24 Multiplexing Office Functions and ASDS Access
Connection as specified in AT&T Tariff F.C.C. No. 9, as amended from time to
time, and Access Coordination Functions as specified in AT&T Tariff F.C.C. No.
11, as amended from time to time, associated with AT&T Terrestrial 1.544 Mbps
and 56/64 Kbps ACCUNET GDA Local Channel Services provided under this CT,
provided such service components are associated directly with the FRS provided
under this CT. There is no minimum retention period associated with this
waiver.
D. DISCONTINUANCE. - In lieu of any Discontinuance With or Without Liability
provisions that are specified in the AT&T Tariffs referenced in Section 1.,
preceding, the following provisions shall apply.
1. If the Customer discontinues this CT for any reason between the CISD and
the CSD, the Customer will be billed an amount equal to 35% of the DMARC under
this CT for each year of the CT Term plus an amount equal to any nonrecurring
installation charge waivers, as specified in Section 6.C., preceding, that the
Customer has received. If this CT is not discontinued under this Condition,
the Conditions specified in 2 and/or 3, following, apply.
2. The Customer may discontinue this CT prior to the end of the CT Term,
provided the Customer replaces this CT with other AT&T Tariffed Interstate
Services or another AT&T CT for AT&T Tariffed Interstate Services having: (i)
equal or greater new DMARCs, and (ii) a new term equal to or greater than the
remaining term, but not less than 3 years. However, the Customer will be billed
a Shortfall Charge equal to the sum of the differences between: (1) each of the
prorated DMARCs for the year in which the Customer discontinues, and (2) the
total of the actual undiscounted recurring charges and/or the FRVPP-Eligible FRS
Charges used to satisfy the corresponding DMARC for that year under this CT,
provided the amount in (2) is less than the amount in (1).
3. If the Customer discontinues this CT for any reason other than specified
above, prior to the expiration of the CT Term, a Termination Charge will apply.
The Termination Charge will be an amount equal to 35% of the sum of the
unsatisfied DMARCs for the year in which the Customer discontinues this CT and
35% of the sum of the DMARCs for each year remaining in the CT Term.
<PAGE> 11
AT&T COMMUNICATIONS CONTRACT TARIFF NO. 10019
Adm. Rates and Tariffs Original Page 9
Bridgewater, NJ 08807
Issued: July 21, 1998 Effective: July 22, 1998
** All material on this page is new. **
6. CLASSIFICATION, PRACTICES AND REGULATIONS (CONTINUED)
E. OTHER REQUIREMENTS - Not Applicable.
F. AVAILABILITY - This CT is available only to Customers who: (1) will order
this CT only once, either by the Customer or any Affiliate of the Customer,
which is any entity that owns a controlling interest in either the Customer or
an Affiliate of the Customer, or an entity in which a controlling interest is
owned by either the Customer or an Affiliate of the Customer; (2) do not have
an existing AT&T Private Line MSVPP with more than 23 months remaining in the
plan; (3) do not have an AT&T Local Channel MSVPP with more than 23 months
remaining in the plan; (4) do not have an ACCUNET Bandwidth Manager Volume
Pricing Plan with more than 23 months remaining in the plan; (5) do not have a
commitment for AT&T Tariff F.C.C. Nos. 9 and 11 services with more than 23
months remaining in the term and (6) order service within 30 days after the
effective date of this CT for initial installation of the Services Provided
under this CT within 30 days after the date ordered.
<PAGE> 12
AT&T COMMUNICATIONS CONTRACT TARIFF NO. 10019
Adm. Rates and Tariffs Original Page 10
Bridgewater, NJ 08807
Issued: July 21, 1998 Effective: July 22, 1998
** All material on this page is new. **
7. RATES
A. FRS DOMESTIC ACCESS PORT CHARGES - When the service components
specified below are ordered together as a unit at the same location, the
Customer will be billed the following in lieu of the individual service
component charges:
1. Domestic Access Port (a Domestic Assess Port consists of one Domestic
Port, one Access Connection, one Digital Local Channel, and one Access
Coordination Function). Domestic Access Ports are only available in the 48
contiguous United States.
<TABLE>
<CAPTION>
Domestic Access Port Domestic Access Port
Monthly Charge Installation Charge
-------------- -------------------
<S> <C> <C>
128 kbps [***] [***]
Domestic Access Port
</TABLE>
<PAGE> 1
EXHIBIT 10.38
[AT&T LOGO]
AT&T CONTRACT TARIFF ORDER FORM
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
Customer Name (Full Legal Name):
Park N. View AT&T Corp.
("AT&T")
- -------------------------------------------------------------------------------------------------------
Customer Address: AT&T Address: AT&T Contract Name:
11711 NW 39th ST 460 NE 215th ST Suite 222A Bob Rizzo
- -------------------------------------------------------------------------------------------------------
City State Zip Code City State Zip Code AT&T Contact Telephone Number:
Coral Springs Fla 33065 Miami Fla 33179 954-493-6968
- -------------------------------------------------------------------------------------------------------
</TABLE>
Customer hereby places an order for:
[ ] New AT&T Contract Tariff [ ] Existing AT&T Contract Tariff
(attachment required) No. 9203 (attachment required)
Customer hereby agrees to the following term commitment:
TERM: 24 months (must be between 24 and 60 months)
$40,000
Existing Pricing Plan Replacement/Discontinuance:
[ ] Check here and identify below any AT&T CT or other AT&T pricing plan being
discontinued in conjunction with this order. Also specify the CT No., Plan ID
No. Or Main Billed Account No. (Note: Charges may apply as specified in the
plan being discontinued.)
1. Services will be provided under the Contract Tariff ("CT") ordered
hereunder, subject to the rates, terms and conditions in the CT as well as the
AT&T tariffs (if any) referenced in the CT ("Applicable Tariffs"), as those
Applicable Tariffs may be modified from time to time.
2. This Form (including its addenda, if any), the CT and the Applicable
Tariffs constitute the entire agreement (collectively the "Agreement") between
Customer and AT&T with respect to the services provided under the CT and
supersede any and all prior agreements, proposals, representations, statements,
or understandings, whether written or oral, concerning such services or the
rights and obligations relating to such services. In the event of any
inconsistency between the terms of this Form (including its addenda, if any)
and the CT or Applicable Tariffs, the terms of the Applicable Tariffs and CT
shall prevail. In the event of any inconsistency between the terms of the CT
and the Applicable Tariffs, the terms of the CT shall prevail. Except for
changes to rates (to the extent permitted under the CT) and changes to the
Applicable Tariffs, no change, modification or waiver of any of the terms of
this Agreement shall be binding unless reduced to writing and signed by
authorized representatives of both parties and, to the extent required by law,
filed with the FCC.
3. Except to the extent that federal law applies, the construction,
interpretation and performance of this Agreement shall be governed by the
substantive law of the State of New York, excluding its choice of law rules.
4. EXCEPT FOR ANY WARRANTIES EXPRESSLY MADE IN THIS AGREEMENT, AT&T EXCLUDES
ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. AT&T DOES
NOT AUTHORIZE ANYONE TO MAKE A WARRANTY OF ANY KIND ON ITS BEHALF AND CUSTOMER
SHOULD NOT RELY ON ANYONE MAKING SUCH STATEMENTS.
5. As to new CTs, Customer may, as its sole remedy, cancel this order for the
CT without liability before the CT becomes effective if, without Customer's
consent: (a) AT&T fails to file the CT with the FCC within 30 days after the
date this Form is signed by both parties; (b) the CT as filed is not consistent
with the attached illustrative copy; or (c) the CT does not go into effect
within 30 days after filing.
6. Orders for existing CTs will be accepted and implemented by AT&T only if
the specified CT is available when ordered and Customer is eligible for the CT.
The CUSTOMER'S Initial Service Date (CISD) referenced in the CT shall be one
(1) calendar day after the execution of this Agreement, unless it is a weekend
or holiday, in which event the CISD shall be the following business day.
7. Customer shall provide installation instructions and other information as
required by AT&T.
- -----------------------------------------------------------------------------
YOUR SIGNATURE ACKNOWLEDGES THAT YOU HAVE READ, UNDERSTAND AND AGREE TO THE
PROVISIONS OF THIS AGREEMENT AND THAT YOU ARE DULY AUTHORIZED TO SIGN THIS
AGREEMENT.
- -----------------------------------------------------------------------------
Customer AT&T Corp.
Full Legal Name: Park 'N View, Inc.
-----------------------
By: /s/ Stephen L. Conkling By: /s/
------------------------------------ -----------------------------------
(Authorized Customer Signature) (Authorized AT&T Signature)
Stephen L. Conkling, Chief Financial
- --------------------------------------- --------------------------------------
(Typed or Printed Name and Title) (Typed or Printed Name and Title)
Date: Date:
---------------------------------- ---------------------------------
<PAGE> 2
AT&T Contract Tariff Order Form Instructions
FOR INTERNAL AT&T USE ONLY
[Use to complete attached AT&T Contract Tariff Order Form and
then follow processing Instructions.]
1. Customer Information. Insert the Customer's full legal name and
corporate address in the space provided at the top of the form. If the
Customer has more than one address, insert the address to which AT&T
should send any official notices under this agreement.
2. AT&T Information. Insert the name of the primary AT&T account manager
(AT&T Contact Name), and the account manager's telephone number and
address in the space provided at the top of the form. This will be the
address to which the Customer sends notice to AT&T under this
agreement.
3. Check one or more of the applicable boxes on the front of the form
based upon this offer:
New AT&T CT - Attach copy of the applicable authorized CT
pages.
Existing AT&T CT: First verify that the CT is still available
and that the Customer is eligible for it. Then insert the
applicable CT number and attach the applicable authorized CT
pages.
4. Term: fill In the term, in months, that the customer is committing to.
5. Existing Pricing Plan Replacement/Discontinuance: Identify CT and/or
pricing plan (e.g. term plan or COA, etc. where customer has made a
revenue and/or term commitment to AT&T) being discontinued (if any) in
conjunction with this order, by specifying the CT No., Plan ID No.
or Main Billed Account No. of the discontinued plan(s). Note that the
discontinued CT/ pricing plan may require the Customer to pay
termination liability charges and/or other charges for early
termination pursuant to the provisions in those agreements.
6. Customer Signature: The authorized party for the Customer must complete
all entries in this section, including their title and the date that
the Customer is accepting AT&T's offer. Failure to complete all fields
may delay AT&T's acceptance and/or implementation of the offer.
7. AT&T Signature: The authorized party for AT&T acceptance for all custom
agreements (with the exception of Generic Contract Tariffs for data
services) should be the appropriate level manager in the Sales Branch
based upon the estimated projected annual revenues under the agreement.
Please see the AT&T Schedule of Authorizations to ensure the
appropriate level representative signs the Contract Tariff Order Form
on behalf of AT&T.
No Contract Tariff Order Form should be accepted by AT&T if the
agreement has been altered in any way from the agreement pages
presented to the Account Team, i.e., no unauthorized changes, no
handwritten modifications to the contract documents and no side letters
attached or referenced.
Also note that signed agreements will not be implemented until ALL
ORIGINAL PAPERWORK has been sent to the appropriate location outlined
below. The Account Team contact should keep a complete copy of each
agreement for their records.
8. Return Information: Based on the type of your offer, please return the
complete, original contract package consisting of: 1) the fully
executed Contract Tariff Order Form, 2) applicable new or existing
Contract Tariff pages and one copy of the complete, original contract
package to your Field Offer Manager, Field Marketing Manager, RRC
contact or Headquarters Generic Offer Manager.
<PAGE> 3
AT&T CONTRACT TARIFF ORDER
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
CUSTOMER AT&T
- -------- ----
<S> <C>
- ----------------------------------------------------------------------------------------
1. NAME: PARK N VIEW 6. CONTRACT TARIFF NO.
- ----------------------------------------------------------------------------------------
2. STREET: 11711 NW 39TH STREET 7. STREET: 100 W CYPRESS CREEK ROAD
- ----------------------------------------------------------------------------------------
3. CITY: CORAL SPRINGS 8. CITY: FT. LAUDERDALE
- ----------------------------------------------------------------------------------------
4. STATE & ZIP: FLORIDA 33065 9. STATE & ZIP: FL 33309
- ----------------------------------------------------------------------------------------
5. Att'n: 10. Att'n:
- ----------------------------------------------------------------------------------------
</TABLE>
1. CUSTOMER hereby orders and AT&T agrees to provide communications services
("Services") pursuant to the Contract Tariff ("CT") referenced above, a copy of
which is attached hereto and is incorporated by reference. The Availability
provisions of the CT may be revised by AT&T from time to time. Services will be
provided in accordance with the rates, terms and conditions described in the CT
and, except as provided in the CT, the rates, terms and conditions in Applicable
Tariffs pertaining to Services provided under this Agreement. Applicable Tariffs
are the AT&T tariffs referenced in CT, as such tariffs may be revised from time
to time.
2. The term of this Agreement is as specified in the CT. Notices pursuant to
this Agreement shall be in writing to the addresses specified above.
3. In the event of any inconsistency between the terms of any Applicable
Tariff and the CT, the terms of the CT shall prevail. In the event of any
inconsistency between the terms of this Agreement and any Applicable Tariff or
the CT, the terms of the Applicable Tariff or the CT shall prevail. Nothing
contained in this Agreement shall require AT&T to take any action prohibited or
omit to take any action required by the FCC or any other regulatory authorities.
4. EXCEPT FOR ANY WARRANTIES EXPRESSLY MADE IN THE CT OR THE APPLICABLE
TARIFFS, AT&T EXCLUDES ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. AT&T'S LIABILITY TO CUSTOMER IS SUBJECT TO THE LIMITATIONS
STATED IN THE CT AND APPLICABLE TARIFFS.
5. This Agreement (whether in contract, indemnity, warranty, strict
liability, tort or otherwise, except choice of law) shall be governed by the
law of the State of New York, or applicable federal statutes.
6. If any provision of the CT is held to be invalid or unenforceable, then
AT&T and CUSTOMER shall cooperate to develop a mutually agreeable replacement
for such provision. If the parties are unable to reach agreement on a
replacement for the CT provision within 30 days after the provision is held to
be invalid or unenforceable (or within such additional time as the parties
agree in writing), then this Agreement shall be immediately terminated.
CUSTOMER shall remain liable for all charges and liabilities for services
provided under the CT prior to such termination.
7. Neither party shall publish or use any advertising, sales promotions,
press releases or other publicity matters which use the other party's name,
logo, trademarks or service marks without the prior written approval of the
other party. Neither party is licensed hereunder to conduct business under any
name, logo, trademark, service mark or tradename (or any derivative thereof) of
the other party.
8. AT&T's relationship with CUSTOMER under this Agreement shall be that of
an independent contractor.
9. THIS AGREEMENT, THE CT, AND THE APPLICABLE TARIFFS CONSTITUTE THE ENTIRE
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SERVICES TO BE PROVIDED
HEREUNDER. THIS AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS, PROPOSALS,
REPRESENTATIONS, STATEMENTS, OR UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
CONCERNING SUCH SERVICES OR THE RIGHTS AND OBLIGATIONS RELATING THERETO. No
change, modification or waiver of any of the terms of this Agreement, except for
revisions to the Applicable Tariffs and the Availability provisions of the CT,
shall be binding unless reduced to writing and signed by authorized
representatives of both parties hereto.
10. Each party represents and warrants that the person executing this
Agreement on its behalf is fully authorized to do so.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
ORDERED BY CUSTOMER: ACCEPTED BY AT&T:
<S> <C>
- ----------------------------------------------------------------------------------------
11. Signature: 15. Signature:
- ----------------------------------------------------------------------------------------
12. Printed Name: 16. Printed Name:
- ----------------------------------------------------------------------------------------
13. Title: 17. Title:
- ----------------------------------------------------------------------------------------
14. Date: 18. Date:
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
[AT&T LOGO]
<TABLE>
UNIPLAN(R) SERVICES COMMITMENT FORM ATT535
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
CUSTOMER NAME: CUSTOMER ACCOUNT #: MASTER CUSTOMER # (MCN):
Park N View 019-136-5019.001
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
FULL ADDRESS (INCLUDE COUNTY & ZIP): CUSTOMER CONTACT: AT&T FULL ADDRESS (& ZIP):
11711 NW 39th St Steve Lenz 460 NE 215th Street Suite 222
Coral Springs, Fla 33065 TEL. #: 954-745-7800 Miami, Fla 33179
AT&T CONTACT: Bob Rizzo
TEL. #: 954-493-6968
EMAIL ID: [email protected]
- ----------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
TAX EXEMPTIONS: / /Yes (Complete Following / /No EXEMPTED BY:
If Exempt, Show # Assigned by That Authority:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
ACTIVITY:
- ----------------------------------------------------------------------------------------------------
PROMOTION* NAME/DESCRIPTION PROMOTION ASSOCIATED WITH: PROMOTION ID #s:
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
* I HAVE BEEN INFORMED OF APPLICABLE PROMOTION TERMS & LIMITATIONS.
CUSTOMER INITIALS: Date:
- -------------------------------------------------------------------------------
UNIPLAN OFFER: UniPlan OneRate
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Off-Peak Volume Discount Other Volume discount Plan (Specify in REMARKS)
- ----------------------------------------------------------------------------------------------------
DOMESTIC TERM PLAN Length of Term: 24 months Gross Monthly Commitment $ 40K
- ----------------------------------------------------------------------------------------------------
TERM PLAN Length of Term months Gross Monthly Commitment $
- ----------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
If T1.5 Access:
- -------------------------------------------------------------------------------
REMARKS:
- -------------------------------------------------------------------------------
THE SERVICES(S) AND PRICING PLANS(S) YOU HAVE SELECTED WILL BE GOVERNED BY THE
RATES, TERMS AND CONDITIONS IN THE APPROPRIATE AT&T TARIFFS AS MAY BE MODIFIED
FROM TIME TO TIME. YOUR SIGNATURE ACKNOWLEDGES THAT YOU UNDERSTAND THE TERMS
AND CONDITIONS UNDER WHICH THE SERVICES(S) SELECTED WILL BE PROVIDED AND THAT
YOU ARE DULY AUTHORIZED TO MAKE THE COMMITMENT(S) AND TO ORDER SERVICE FOR EACH
OF THESE LOCATIONS.
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
- ------------------------------------------- -------------------------------------------------
AUTHORIZING CUSTOMER SIGNATURE AUTHORIZING AT&T REPRESENTATIVE SIGNATURE
- ---------------- -------------------------- ------------------ ------------------------------
DATE TELEPHONE NUMBER DATE TELEPHONE NUMBER
- ------------------------------------------- -------------------------------------------------
NAME AND TITLE (please print) NAME AND TITLE (please type/print)
</TABLE>
Attach Other Documentation/Forms, as required. Attachments: / / Yes / / No
AT&T Retention: 3 Years After Termination of Agreement
10/24/97
<PAGE> 5
[AT&T logo]
UNIPLAN(R) SERVICES COMMITMENT FORM ATT535
JOB AID
This form incorporates pertinent information of a contractual nature stating the
type of UniPlan service sold, the terms of the UniPlan commitment, and any other
options sold including several T1.5 access offers. THIS FORM (which replaced the
basic function of Quality Assurance Checklist) IS REQUIRED WITH ALL UNIPLAN
SERVICES COMMITMENTS. This form also replaces the function Of the Network
Services Commitment Form for those T1.5 access offers sold in conjunction with
UniPlan Service. Please note signature/initialing requirements.
This form incorporates fill-in and drop-down boxes to allow you to customize the
information contained therein. Tab to access the fill-in and drop-down boxes.
Type the appropriate information in the fill-in boxes. Click on the drop-down
boxes to pop-up the available options/choices within the box: then
highlight/click on the appropriate selection. Information typed in the blanks
and items highlighted/selected from the drop-down boxes will populate and
ultimately print out on the finished form. To keep a field blank, either do not
type in it, or ensure the blank selection in the drop-down box remains
highlighted before you move to the next field. Please also note the Help Text
that appears at the bottom of the WORD screen when you access a fill-in or
drop-down box. This Help Text will further assist you in populating the form
correctly. All fields are required to be populated (mandatory), unless otherwise
stated, or those specific to an offer not applicable to the sale. PLEASE N0TE
THE CHANGES IN THE FORM.
Going from left to right across the form from the top of the form, please fill
in: a) The Customer's full Company Name; b) The customer's main 171 account
number, if known; c) The Customer's MCN (Master Customer Number): d) The
Customer's Full Address (Including County and Zip) (not P.O. Box); e) All the
requested Customer and AT&T contact information; and f) Your AT&T office's full
address.
Check the appropriate box if any Tax Exemptions. If Yes, tab to next 3 drop-down
boxes headed by (!) and make the appropriate selections. If tax exempted, also
provide the number assigned by that authority. Tab to next drop-down box and
make selection as appropriate or necessary, e.g. Other Tax Exemptions or
Remarks. Then tab to next fill-in box and populate as appropriate or necessary.
Tab to and Click on the drop-down box next to Activity and select the type of
account activity this form applies to. If Migration from other AT&T services, in
REMARKS please list those services and related account numbers being
discontinued in conjunction with this UniPlan commitment. If Conversion from
Competitive Provider, please tab to the next fill-in box and state the
competitive provider. If Other, please tab to that next fill-in box and specify
the Activity. Important Please ensure Credit Evaluation process requirements are
adhered to.
If any Promotions are part of the sale, it is required to populate the Promotion
Name or Description, the Service or Component the promotion is associated with
and the Promotion ID Numbers in the appropriate columns. Also, to ensure that
the customer has full knowledge of the applicable terms, conditions and
limitations of any associated Promotions, the Customer is required to initial
and date that statement accordingly in the section below the Promotions box.
Please note that Orders for services associated with any promotions submitted
without this section being initialed by the customer will be rejected back to
the salesperson. For further information on the available promotions, please
refer to the appropriate tariffs, sales briefs, and promotions
matrix/information in My Partner. Please ensure that promotions are permissible
and active, not expired.
Please tab to and click on the drop-down box next to UniPlan Offer and select
the appropriate UniPlan offer sold. (Please Note: The push is to migrate UniPlan
Classic to other offers; it should no longer be actively sold.) If UniPlan Extra
or Custom Contract Tariff is sold, fill any additional information (e.g., TAPT
ID, PLID, CTTN, etc.) in the REMARKS fill-in section. If World Bonus is sold in
conjunction with UniPlan w/FlatRate Pricing or International Term Plan
Commitment Migration is associated with UniPlan Basic, please also tab to and
click on the next drop-down box in that same row and make the appropriate
selection. If the Regional Trade Zone option is sold in conjunction with UniPlan
Basic, tab to next field in the next row and select "Regional Trade Zone:";
then tab to the next field and select the appropriate regional trade zone sold.
If the customer has committed to UniPlan Classic/Standard please tab to and
<PAGE> 6
[AT&T logo]
UNIPLAN(R) SERVICES COMMITMENT FORM ATT535
click on the next drop-down box (first one in the next row) headed by "!" and
select the appropriate applicable option (this field should not be used as
Classic should no longer be actively sold). If the customer desires other Volume
Discounts such as UniPlan Nation Option and/or PBA, tab to and click on the 2nd
drop-down box in that same row, and select the appropriate option.
For Term Plan information. You have the option of specifying the first Term Plan
listing as "Domestic" and the second Term Plan listing as "International" if so
desired. To do so, tab to and click on the drop-down box headed with a "!"
preceding the word "Term" and highlight "Domestic". Once that is done, tab to
the Length of Term drop-down box and select the appropriate number of months. If
you wish to change the Monthly Commitment from Gross to Net, click on the word
Gross and highlight "Net". Tab to and click on the next drop-down box and select
the appropriate Monthly $ Commitment up to $35K. If the commitment is between
$40K and $100K, tab to and click on the next drop-down box and select the
appropriate amount. If none of the choices are applicable, do not make a
selection, but tab to the next fill-in box and populate the appropriate Monthly
$ Commitment amount. You have the option of specifying the second Term Plan
listing as "International" if so desired. To do so, tab to and click on the
drop-down box headed with a "!" preceding the word "Term" and highlight
"International". Once that is done, tab to the Length of Term drop-down box and
select the appropriate number of months. If you wish to change the Monthly
Commitment from Gross to Net, click on the word Gross and highlight "Net". Tab
to and click on the next drop-down box and select the appropriate Monthly $
Commitment level. If none of the choices are applicable, do not make a
selection, but tab to the next fill-in box and populate the appropriate Monthly
$ Commitment amount. This section can be used for the commitment information the
International Term Plan Commitment Migration option in conjunction with UniPlan
Basic. Remember for these two (above & below) sections (UniPlan offers and T1.5
access offers) there as specifics on Approval Requirements, e.g., what level
approval required for the specific offer/version commitment.
If commitments were made regarding dedicated T1 .5 access offers in conjunction
with this UniPlan sale, please click on the "If T1.5 Access" box and select the
appropriate T1.5 access offer. Then tab to and click on the next drop-down box
to select the length of term commitment. If other than lengths shown, highlight
the last selection, tab to the next fill-in box, and state the number of months.
If any of these T1.5 access offers were sold, please also fill out the attached
T1.5 Circuit/Location Detail form with the information requested. Remember, this
form now replaces the Network Services Commitment Form for the above T1.5 access
offers; however, Attachment A's may be required.
REMARKS section. State any applicable remarks. If a UniPlan Contact Tariff offer
is sold (especially Extra or Custom), state the TAPT ID, PLID, and CTTN as
available. State my "Other" Volume Discount Plans as applicable. If the Activity
type is Migration from Other AT&T Service(s), list the service(s) and account
number(s) being discontinued in conjunction with this UniPlan commitment.
It is required that this form be signed and dated by both the Authorizing
Customer Representative and the Authorizing AT&T Representative, along with the
additional information requested. Orders for services submitted without the
above signatures will be rejected back to the salesperson. This form replaces
the need for a separate customer-signed Network Services Commitment Form and
Detail Attachment in regards to the stated T1.5 access offer plans/arrangements
per the following.
If T1.5 access offers have been sold in conjunction with the UniPlan offering,
please fill out the attached T1.5 Circuit/Location Detail form (which replaces
the Location Detail Attachment for the Network Services Commitment Form).
Populate the fill-in boxes with the Customer Full Name, Account # (if known) and
MCN (mandatory). Tab to and click on the drop-down box to select the applicable
UniPlan Offer type. Using the Key for assistance, tab to and click on the next
drop-down box to select the Type T1.5 access offer associated with the specific
T1 .5 circuit. Than tab to the next fill-in boxes and populate the customer
location of the T1.5 access circuit and/or the T1.5 circuit ID (if known).
Repeat this for all associated T1.5 access circuits. State any applicable
remarks, if necessary.
<PAGE> 7
[AT&T logo]
UNIPLAN(R) SERVICES COMMITMENT FORM ATT535
After the form(s) has been fully completed and all initials, and signatures
obtained, it is mandatory that a Xerox copy be sent/given to:
1a) For non-Middle Market branches send to: ATTN: UNIPLAN, AT&T Billing
Inquiry Center, 5500 Corporate Drive, Pittsburgh, PA 15237
1b) For Middle Market branches, the appropriate following AT&T Customer
Care Center for the branch:
AT&T -- Pleasanton Customer Care Center
Attn: Linda Sequeira Room 5280
4450 Rosewood Drive
Pleasanton, CA 94588
FAX 800-458-0613
AT&T -- McCandless (Pittsburgh)
Customer Care Center
Attn: Paula Chamberlain 5th Floor
5500 Corporate Drive
Pittsburgh, PA 15237
FAX 412-369-3456
AT&T -- Dallas Customer Care Center
Attn: Kerry Strong 9th Floor
5501 LBJ Freeway
Dallas, TX 75240
FAX 800-837-8792
AT&T -- Minneapolis Customer Care Center
Attn: Deb Teigen 9th Floor
901 Marquette Avenue
Minneapolis, MN 55402
FAX 800-355-3149
2) The Customer
3) The data gatherer (if other than the Customer Care representative)
(along with any RDS/date handoff forms).
4) Copies should also be forwarded to the appropriate parties that would
have received the Network Services Commitment Form in regards to the
T1.5 access plan/arrangement.
Attach other documentation/forms as required (e.g., Attachment A's) and make a
notation accordingly. The original should be filed with the customer's records
in the branch. (Note Document Retention requirements) A Xerox copy of this form
must also be included in the order documentation forwarded to the USSC.
Please Note: This form is not to be altered or changed in any way.
<PAGE> 8
Non-Disclosure
Agreement AIS-3057
(1-92)
[AT&T logo] QD
================================================================================
Customer Name ("Customer") AT&T
--------------------
Address Address
------------------------ ----------------------
------------------------ ----------------------
American Telephone and Telegraph Company ("AT&T") and you, the
Customer, anticipate the need to discuss unannounced products, features and
services in order to assist you in making business decisions concerning your
needs for these products, features and services. In consideration of the mutual
promises contained herein, and as a condition to the disclosure of information,
AT&T and you agree as follows:
1. This Agreement shall become effective when accepted in writing by AT&T and
shall continue for a period of two (2) years unless sooner terminated in writing
by either party. You agree that all of your obligations undertaken herein with
respect to Confidential Information received pursuant to this Agreement shall
survive and continue after any expiration or termination of this Agreement.
2. AT&T may, during the course of discussions, reveal to you certain
confidential, proprietary and/or trade secret information concerning products,
features and services some of which may not have been announced and are
generally not available. Such information may include, without limitation,
certain specifications, designs, plans, drawings, hardware, software, data,
prototypes or other business and technical information which relate in whole or
in part to processors, office automation products, communications products or
services and all related enhancements ("Confidential Information"). All
Confidential Information, in whatever form provided, shall remain the property
of AT&T.
3. For a period of three (3) years following the date of receipt of Confidential
Information, you shall:
A. only disclose such Confidential Information to those of your employees with a
need to know and not disclose to third parties except with the prior written
approval of AT&T:
B. advise employees who receive the Confidential Information Of the existence
and terms of this Agreement and of the obligations of confidentiality herein;
C. use and require your employees to use at least the same degree of care to
protect the Confidential Information as is used with your proprietary
information, with the degree of care, in no event, to be less than holding the
Confidential Information in confidence; and
D. use the Confidential Information only for the purpose of assisting you in
making business decisions concerning your needs for products, features and
services covered by the Confidential Information.
4. Notwithstanding anything to the contrary herein, you shall have no obligation
to preserve the confidentiality of any Confidential Information which:
A. prior to any disclosure by AT&T was known to you free of any obligation to
keep it confidential as evidenced by documentation in your possession:
B. is or becomes publicly available by other than unauthorized disclosure by
you.
C. is developed by or on behalf of you independent of any Confidential
Information; or
D. is received from a third party whose disclosure does not violate any
confidentiality obligation.
5. Neither this Agreement nor the disclosure or receipt of Confidential
Information shall constitute or imply any promise or intention by you to make
any purchase of products, features or services, or constitute or imply any
promise, intention or commitment by AT&T with respect to the present or future
marketing, sale or pricing of the products, features and services. In addition.
AT&T has no obligation to furnish you with any Confidential Information.
6. Confidential Information furnished in written, pictorial, magnetic and/or
other tangible form shall not be duplicated by you except as necessary for the
purposes of this Agreement. You shall return all tangible Confidential
Information (including copies, reproductions or otherwise containing
Confidential Information) within ton (10) business days of AT&T's written
request.
7. You agree that you shall not transmit, directly or indirectly, the
Confidential Information received from AT&T hereunder, or any portion thereof,
to any country outside of the United States.
8. Nothing contained in this Agreement shall be construed as granting or
conferring any rights by license or otherwise in any disclosed Confidential
Information or under any trademark, patent, copyright (except as provided in
Paragraph 6), mask work or any other intellectual property right of AT&T.
9. You agree not to announce or disclose to any third party your participation
in discussions with AT&T concerning any unannounced products, features or
services or the nature of any such discussions without first securing the prior
written approval of AT&T.
================================================================================
YOUR SIGNATURE ACKNOWLEDGES THAT YOU HAVE READ AND UNDERSTAND THE TERMS AND
CONDITIONS SET FORTH ABOVE.
================================================================================
AT&T
Accepted by:
--------------------------
---------------------------------- ---------------------------------------
(Customer) (Typed or Printed Name)
By:
---------------------------------- ---------------------------------------
(Authorized Customer Signature) (Title)
---------------------------------- ---------------------------------------
(Typed or Printed Name) (Address)
---------------------------------- ---------------------------------------
(Title) City State Zip Code
---------------------------------- ---------------------------------------
(Date) (Date)
<PAGE> 9
AT&T UNIPLAN(R) ONERATE SERVICE
ATTACHMENT "A"
1. SERVICES PROVIDED: AT&T UniPlan Service and the associated optional
AT&T 800 Services.
2. TERM OF THE CONTRACT TARIFF; RENEWAL OPTIONS: The Term of this
Contract Tariff is 2 years beginning with the first day of the first
full billing month [hereinafter referred to as the Customer's Initial
Service Date (CISD)] for the Services Provided under this Contract
Tariff; no renewal option.
3. MONTHLY USAGE COMMITMENT: The Customer has selected the following
Gross Monthly Minimum Revenue Commitment (MMRC) for AT&T UniPlan
Service and the Associated Optional AT&T 800 Services:
$40,000/per month
for the term of the Contract Tariff. If the Customer fails to meet the
annualized MMRC, the Customer will be billed the difference between
the annualized MMRC and the gross actual billed charges.
A. The Customer may increase the MMRC to a higher available MMRC
specified in the Contract Tariff, any time during the term of
this Contract Tariff. When the Customer increases the MMRC,
the term originally selected by the Customer will be
restarted beginning with the first day of the first full
billing month following the month in which the Customer
increased the MMRC.
B. If the Customer selects an MMRC of $3,000 or higher and
within 90 days following the CISD, the Customer fails to
satisfy the MMRC in any preceding billing month, the Customer
may at that time, decrease their MMRC one commitment level.
When the Customer decreases their MMRC, the term originally
selected by the Customer will be restarted beginning with the
first day of the first full billing month following the month
in which the Customer decreased the MMRC. The Customer may
exercise this option only once.
C. If the Customer selects an MMRC of $3,000 or higher and after
90 days following the CISD, the Customer migrates their
Service under this Contract Tariff from switched access to
dedicated access and as a result the Customer's revenue under
this Contract Tariff is decreased so that the Customer cannot
satisfy the annualized MMRC, the Customer may decrease the
MMRC to a lower level provided the value of the new MMRC and
term is equal to or greater than the remaining value of the
existing MMRC and term.
4. CONTRACT PRICE: The price for AT&T UniPlan Service and the Associated
Optional AT&T 800 Services is the same as specified in AT&T Tariff
F.C.C. Nos. 1, 2 and 14, as amended from time to time.
5. DISCOUNTS: The Customer will receive the following discounts
associated with the Services Provided under this Contract Tariff.
VOLUME DISCOUNTS BY COMMITMENT AND TERM LENGTH
A. The Customer has selected the following Contract Tariff Term
length:
24 Months
The Customer will receive the following discounts monthly, on
AT&T UniPlan Service and the Associated Optional AT&T 800
Services usage charges. The amount of the discount will be
based on the Customer selected Monthly Usage Commitment and
Term.
<TABLE>
<CAPTION>
Gross Monthly Usage Commitment Interstate Discount Intrastate Discount International Discount
------------------------------ ------------------- ------------------- ----------------------
<S> <C> <C> <C>
$40,000 36% 33% 33%
</TABLE>
6. CLASSIFICATIONS, PRACTICES AND REGULATIONS: Except as otherwise
provided, the terms, conditions, regulations and charges for AT&T
UniPlan Service as set forth in AT&T Tariff F.C.C. No. 1, as this
tariff is amended from time to time.
CUSTOMER INITIALS AND DATE__________________
Option III 36% ZZ407203/IN07501 Revised 6/11/98
AT&T Proprietary
(Restricted)
1
<PAGE> 10
AT&T UNIPLAN (R) ONERATE SERVICE
ATTACHMENT "A"
A. PROMOTIONS, CREDITS AND WAIVERS: The customer is ineligible for any
promotions, credits or waivers for the Services Provided under this
Contract Tariff, which are filed or which may be filed in the AT&T tariffs
specified in Section 1, preceding, except for promotions which: 1) waive
installation charges only; 2) waive monthly recurring charges only; 3)
waive installation and monthly recurring charges only; 4) waive charges
associated with AT&T Advanced 800 Service Features; or 5) waive charges or
apply a usage credit associated with AT&T Wireless Service for which the
customer qualifies under those promotions.
The preceding promotions will be applied to the Customer's bill for the
Services Provided under this Contract Tariff, provided the Customer is
current in payment to AT&T for all Services Provided under this Contract
Tariff at the time the promotion is to be applied.
There are no additional credits or waivers that will be applied to the
Customer's bill for the Services Provided under this Contract Tariff other
than those specified in Section 6.A. above.
B. MONITORING CONDITIONS: The Customer must satisfy the following conditions
at all times during the term of this Contract Tariff:
1. The Customer may have no more than 1,000 Customer Premises
associated with switched access at any time during the term of
this Contract Tariff.
Compliance with this provision shall be monitored annually, on each
anniversary of the CISD. If in any such monitoring period the Customer
has failed to satisfy the above monitoring condition, the Customer will be
billed an amount equal to the discount specified in section 5.A. preceding.
C. DISCONTINUANCE: In lieu of any Discontinuance With or Without Liability
provisions that are specified in the AT&T Tariff F.C.C. Nos. 1 and 2, the
following provisions shall apply, except for the AT&T UniPlan Service Term
Plan Satisfaction Guarantee.
The Customer may discontinue this Contract Tariff prior to the end of the
Contract Tariff Term, provided the Customer replaces this Contract Tariff
with other AT&T Tariff F.C.C. Nos. 1 and 2 Services applicable to Contract
Tariffs or another AT&T Contract Tariff for AT&T Tariff F.C.C. Nos. 1 and
2 Services Provided the value of the new term and commitment is equal to
or greater than the remaining value of the existing term and commitment.
However, the Customer will be billed an amount equal to the difference
between (1) the annualized MMRC for the year in which the Customer
discontinues, divided by 12, times the number of months the Customer was
in this Contract Tariff that year and (2) the undiscounted actual charges
incurred that year, provided the undiscounted charges are less than the
amount in (1).
If the Customer discontinues this Contract Tariff for any reason other
than specified above, prior to the expiration of the Contract Tariff Term,
a Termination Charge will apply. The Termination Charge for the AT&T
UniPlan Service and Associated Optional AT&T 800 Services will be an
amount equal to 100% of the unsatisfied MMRC for the year in which the
Customer discontinues this Contract Tariff and 100% of the annualized MMRC
for each year remaining in the term.
D. OTHER REQUIREMENTS - If during the term of this Contract Tariff, this
Contract Tariff and/or the AT&T Tariffs referenced herein ("Applicable
AT&T Tariffs") are detariffed in whole or in part pursuant to a statutory
change, order or requirement of a governmental or judicial authority of
competent jurisdiction, then following such detariffing:
(i) the terms and conditions for the Services Provided will remain the
same as those in effect as of the date AT&T detariffs in whole or in part
this Contract Tariff of the Applicable AT&T Tariff provisions, and will be
incorporated as part of the contract between the parties, and
(ii) the rates for the Services Provided will be:
CUSTOMER INITIALS AND DATE ______________
Option III 36% ZZ407203/IN07501 Revised 6/11/98
AT&T Proprietary
(Restricted)
2
<PAGE> 11
AT&T UNIPLAN (R) ONERATE SERVICE
ATTACHMENT "A"
a) to the extent Applicable AT&T Tariff provisions remain filed and
effective, those rates specified in such Applicable AT&T Tariff
provisions, as amended from time to time; and
b) to the extent this Contract Tariff contains specific rates or rate
schedules that would apply in lieu of (or in addition to) the rates or
rate schedules specified in the Applicable AT&T Tariffs, such
specific Contract Tariff rates or rate schedules; and
c) to the extent provisions of this Contract Tariff and Applicable AT&T
Tariffs are detarrifed, and (b) preceding does not apply, those rates
specified in the applicable AT&T Price Lists, as amended from time
to time.
In all cases (a, b or c), the applicable rates shall continue to be
subject to any discounts, waivers, credits, and restrictions on rate
changes that may be contained in this Contract Tariff. Where rates and
rate changes (both increases and decreases) would have been calculated by
reference to a tariff rate that has been detarrifed, rates and rate
changes shall instead be calculated during the term of this Contract Tariff
by reference to applicable AT&T Price Lists and (to the extent changes to
tariff rates were permitted under this Contract Tariff) those rates shall
be subject to AT&T's right to change its Price Lists from time to time.
E. AVAILABILITY: This Contract Tariff is available only to customers who:
1) will order this Contract Tariff and the Associated AT&T Contract Tariff
only once, either by the customer or any Affiliate of the Customer, which
is any entity that owns a controlling interest in either the Customer or
an Affiliate of the Customer, or any entity in which a controlling
interest is owned by either the Customer or an Affiliate of the Customer;
2) are current in payment to AT&T for its existing tariffed
telecommunications services; and 3) order services within 180 days after
the effective date of this Contract Tariff and requests initial
installation no later than 30 days after the date service is ordered.
CUSTOMER INITIALS AND DATE__________________
Option III 36% ZZ407203/IN07501 Revised 6/11/98
AT&T Proprietary
(Restricted)
3
<PAGE> 12
** All material on this page is new. **
CONTRACT TARIFF NO. 9203
TITLE PAGE
This Contract Tariff applies to ACCUNET T1.5 Access and Function Connections,
M-24 Multiplexing Office Functions, AT&T Terrestrial 1.544 Mbps Local Channel
Services and Access Coordination Functions for interstate or foreign
communications in accordance with the Communications Act of 1934, as amended.
Telecommunication services provided under this Contract Tariff are furnished by
means of wire, radio, satellite, fiber optics or any suitable technology or
combination of technologies.
<PAGE> 13
** All material on this page is new. **
CONTRACT TARIFF NO. 9203
CHECK SHEET
The Title Page and Pages 1 through 6 inclusive of this tariff are effective as
of the date shown.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Check Sheet........................................................... 1
List of Concurring, Connecting and Other Participating Carriers....... 1
Explanation of Symbols - Coding of Tariff Revisions................... 1
Trademarks and Service Marks.......................................... 2
Explanation of Abbreviations.......................................... 2
Contract Summary...................................................... 3
</TABLE>
LIST OF CONCURRING, CONNECTING AND OTHER PARTICIPATING CARRIERS
Concurring Carriers - NONE
Connecting Carriers - NONE
Other Participating Carriers - NONE
EXPLANATION OF SYMBOLS - Coding of Tariff Revisions
Revisions to this tariff are coded through the use of symbols. These symbols
appear in the right margin of the page. The symbols and their meanings are:
R - to signify reduction.
I - to signify increase.
C - to signify changed regulation.
T - to signify a change in text but no change in rate or regulation.
S - to signify reissued matter.
M - to signify matter relocated without change.
N - to signify new rate or regulation.
D - to signify discontinued rate or regulation.
Z - to signify a correction.
Other marginal codes are used to direct the tariff reader to a footnote for
specific information. Codes used for this purpose are lower case letters of the
alphabet, e.g., x, y and z. These codes may appear beside the page revision
number in the page header or in the right margin opposite specific text.
<PAGE> 14
** All material on this page is new. **
TRADEMARKS AND SERVICE MARKS - The following marks, to the extent, if any, used
throughout this tariff, are trademarks and service marks of AT&T Corp.
<TABLE>
<CAPTION>
Trademarks Service Marks
---------- -------------
<S> <C>
None ACCUNET
</TABLE>
EXPLANATION OF ABBREVIATIONS
Adm. - Administrator
Mbps - Megabits per second
GENERAL PROVISIONS
Detariffing - If during the term of this Contract Tariff, the AT&T Tariffs
referenced herein ("Applicable AT&T Tariffs") are detariffed in whole or in
part pursuant to a statutory change, order or requirement of a governmental or
judicial authority of competent jurisdiction, then following such detariffing:
(i) the terms and conditions for the Services Provided will remain the same as
those in this Contract Tariff, except that the relevant terms and conditions
contained in the Applicable AT&T Tariffs will remain the same as those in
effect as of the date AT&T detariffs in whole or in part those Applicable AT&T
Tariff provisions, and will be incorporated as part of this Contract Tariff, and
(ii) the rates for the Services Provided will be:
(a) to the extent Applicable AT&T Tariff provisions remain filed and
effective, those rates specified in such Applicable AT&T Tariff
provisions, as amended from time to time; and
(b) to the extent that this Contract Tariff contains specific rates or
rate schedules that would apply in lieu of (or in addition to) the
rates or rate schedules in Applicable AT&T Tariffs, such specific
Contract Tariff rates and rate schedules; and
(c) to the extent Applicable AT&T Tariff provisions are detariffed,
and (b) preceding does not apply, those rates specified in the
applicable AT&T Price Lists, as amended from time to time.
In all cases (a, b or c), the applicable rates shall continue to be subject to
any discounts, waivers, credits, and restrictions on rate changes that may be
contained in this Contract Tariff. Where rates and rate changes (both increases
and decreases) would have been calculated by reference to a tariff rate that
has been detariffed, rates and rate changes shall instead be calculated during
the term of this Contract Tariff by reference to applicable AT&T Price Lists
and (to the extent changes to tariff rates were permitted under this Contract
Tariff) AT&T shall have the right to change its Price Lists from time to time.
All references to the AT&T Tariffs in this Contract Tariff shall be construed
to mean the AT&T Tariffs specified herein, as well as the documents which will
replace those tariffs, including the AT&T Price Lists, when AT&T cancels those
tariffs.
<PAGE> 15
** All material on this page is new. **
CONTRACT TARIFF NO. 9203
1. Services Provided:
A. AT&T Private Line Service (AT&T Tariff F.C.C. No. 9) consisting of:
1. AT&T ACCUNET T1.5 Access Connections
2. AT&T ACCUNET T1.5 Function Connections
3. AT&T ACCUNET T1.5 M-24 Multiplexing Office Functions
B. AT&T Local Channel Service (AT&T Tariff F.C.C. No. 11) consisting of:
1. AT&T Terrestrial 1.5 Mbps Local Channel Service and Associated Access
Coordination Functions.
1.1. Initial Quantities - Beginning in the 1st month following the
CISD, the Initial Quantities of AT&T Local Channel Services components are as
follows:
1. AT&T Terrestrial 1.544 Mbps Local Channel
2. Term of Contract; Renewal Options - The Customer must select a term of not
less than 24 nor more than 60 months. The term begins with the Customer's
Initial Service Date (CISD). No renewal option is available for this Contract
Tariff.
3. Minimum Monthly Revenue Commitment - The undiscounted Minimum Monthly
Revenue Commitment (MMRC) is $275.00 for each month of the Contract Tariff
Term. If, in any month, the Customer fails to satisfy the MMRC, the Customer
will be billed an amount equal to the difference between the MMRC and the
undiscounted actual charges for that month.
4. Contract Price -
A. AT&T ACCUNET T1.5 Access Connections, Function Connections and M-24
Multiplexing Office Functions
1. The Contract Price for the ACCUNET T1.5 Access Connections, Function
Connections and M-24 Multiplexing Office Functions provided under this Contract
Tariff is the same as the undiscounted Recurring and Nonrecurring Rates and
Charges specified in AT&T Tariff F.C.C. No. 9, as amended from time to time.
B. AT&T Local Channel Services and Access Coordination Functions
1. The Contract price for the AT&T Terrestrial 1.544 Mbps Local Channel
Services and associated Access Coordination Functions provided under this
Contract Tariff is the same as the undiscounted Recurring and Nonrecurring
Rates and Charges specified in AT&T Tariff F.C.C. No. 11, as amended from time
to time.
<PAGE> 16
** All material on this page is new. **
5. Discounts - The following discounts are the only discounts for the
Services Provided under this Contract Tariff. No other discounts will apply.
Unless modified below, the Base Discounts listed in this Section are the same
discounts as specified in the AT&T tariffs referenced in Section 1, preceding,
as amended from time to time.
A. Base Discounts
1. In lieu of any discounts specified in AT&T Tariff F.C.C. Nos. 9 and 11,
the Customer will receive one of the following discounts, each month, on the
AT&T Terrestrial 1.544 Mbps Local Channels connected to Switched Services as
specified in AT&T Tariff F.C.C. Nos. 1 and 2 or M-24 Multiplexing Office
Functions as specified in AT&T Tariff F.C.C. No. 9, installed under this
Contract Tariff.
<TABLE>
<CAPTION>
Terrestrial Term Commitment
1.544 Local ---------------
Channels & M-24s 24 to 35 36 to 47 48 to 59 60
under an: months months months months
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVA* 39% 48% 51% 54%
AVP** 29% 34% 36% 38%
</TABLE>
* An AVA is available to Customers that connect their AT&T Terrestrial 1.544
Mbps Local Channel service to an AT&T Switched Service or multiplexor provided
under this Contract Tariff. An AVA allows the Customer the use of 20 of the 24
channels in an AT&T Terrestrial 1.544 Mbps Local Channel with the other 4
channels being used by AT&T to terminate the Customer's AT&T switched network
minutes. The term "AT&T switched network minutes" does not apply to nodal
services using the local channel service as an access facility for services
obtained at the AVA location nor to any switched network minutes billed to the
Customer's AVA location, other than LDMTS minutes associated with collect or
credit card calls.
** An AVP is available to Customers that connect their AT&T Terrestrial 1.544
Mbps Local Channel service to an AT&T Switched Service or multiplexor provided
under this Contract Tariff. An AVP allows the Customer the use of all of the
24 channels in an AT&T Terrestrial 1.544 Mbps Local Channel.
6. Classifications, Practices and Regulations -
A. Except as otherwise provided under this Contract Tariff, the rates and
regulations that apply to the Services Provided specified in Section 1. are as
set forth in the AT&T tariffs that are referenced in Section 1., as such tariffs
are amended from time to time.
B. Monitoring Conditions - None.
<PAGE> 17
** All material on this page is new. **
6. Classifications, Practices and Regulations - (continued)
C. WAIVERS - Customer is ineligible for a promotions, credits or waivers for
the services Provided under this Contract Tariff, which are filed or which may
be filed in AT&T Tariff F.C.C. Nos. 9 and 11 for the same services and service
components installed under this Contract Tariff.
The following waivers will be applied to the Customer's bill for the Services
Provided under this Contract Tariff, provided the Customer is current in
payment to AT&T for all services provided under this Contract Tariff at the
time the waiver is to be applied. If the Customer is not current in its
payment, the waiver will not be applied until payment is made for all
outstanding charges. If at the end of the Contract Tariff Term the Customer
has not fully used any or all of the waivers specified in this Section, the
residual value of any such waivers will be set to zero and will not be applied
to any other AT&T services.
1. AT&T will waive the nonrecurring Installation Charges for new AT&T
Terrestrial 1.544 Mbps Local Channels and associated ACCUNET T1.5 Access
Connections, ACCUNET T1.5 Function Connections, Access Coordination Functions
and M-24 Multiplexing Office Functions provided such service components: (1)
are installed on or after the CISD; (2) are not disconnected and reconnected
after the CISD and (3) remain in service for at least 12 months, except for
upgrades to higher speeds, moves and rearrangements. If a service component is
disconnected for any reason prior to the end of the 12 month period AT&T will
bill the Customer and the Customer is responsible for the amount of the
Installation Charges that have been waived under this Section for each service
component discontinued. However, the obligations to retain service for 12
months expires at the end of the Contract Tariff Term.
2. AT&T will waive the recurring Monthly Charges for new and/or existing
AT&T Terrestrial 1.544 Mbps Local Channel Access Coordination Functions.
ACCUNET T1.5 Access Connections and M-24 Mutliplexing Office Functions
associated with AT&T Terrestrial 1.544 Mbps Local Channels connected to AT&T
Switched Services as specified in AT&T Tariff F.C.C. Nos. 1 and 2, provided
such service components: (1) are installed and/or in service on or after the
CISD; (2) are not disconnected and reconnected after the CISD and (3) remain in
service for at least 12 months except for upgrades to higher speeds, moves and
rearrangements. If a service component is disconnected for any reason prior to
the end of the 12 month period AT&T will bill the Customer and the Customer is
responsible for the amount of the recurring Monthly Charges that had been
waived under this Section for each service component discontinued. However,
the obligation to retain service for 12 months expires at the end of the
Contract Tariff Term.
<PAGE> 18
6. Classifications, Practices and Regulations - (continued)
D. Discontinuance - In lieu of any Discontinuance Without Liability
provisions that are specified in the AT&T Tariffs referenced in Section 1.,
preceding, the following provisions shall apply.
The Customer may discontinue this Contract Tariff prior to the end of the
Contract Tariff Term, provided the Customer replaces this Contract Tariff with
other AT&T Tariff F.C.C. Nos. 9 and 11 Services or another AT&T Contract Tariff
for AT&T Tariff F.C.C. Nos. 9 and 11 Services having: (i) an equal or greater
new monthly revenue commitment(s) and (ii) a new term equal to or greater than
the remaining term, but not less than two years.
E. Other Requirements - Not Applicable
F. Availability - This Contract Tariff is available only to Customers who:
(1) will order this Contract Tariff only once, either by the Customer or any
Affiliate of the Customer, which is any entity that owns a controlling interest
in either the Customer or an Affiliate of the Customer, or any entity in which a
controlling interest is owned by either the Customer or an Affiliate of the
Customer; (2) order service within 90 days after the effective date of this
Contract Tariff for initial installation of the Services Provided under this
Contract Tariff within 60 days after the date ordered; (3) have received an
offer for substantially similar services from another provider at an equal or
lower price in which the nonrecurring installation charges have been waived; (4)
have an existing two year AT&T Switched Services commitment for $1,000 per month
or an existing two year AT&T InterSpan Frame Relay Service commitment of $500
per month and (5) maximum of 50 AT&T Terrestrial 1.544 Mbps Local Channels.
<PAGE> 1
EXHIBIT 12.1
PARK'N VIEW, INC.
COMPUTATION OF DEFICIENCY OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 18,
1995 (DATE OF NINE MONTHS ENDED
INCORPORATION) MARCH 31,
TO JUNE 30, YEAR ENDED ----------------------------------
1996 JUNE 30, 1997 1997 1998
-------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Net loss $ (1,961,237) $(6,045,020) $ (4,122,026) $ (8,120,352)
Preferred stock dividends (21,370) (852,850) (522,172) (1,781,960)
Amortization of preferred stock
Issuance costs -- (64,432) (41,986) (197,893)
------------ ----------- ---------- ------------
Deficiency of earnings to fixed charges
and preferred stock dividend requirements (1) $ (1,982,607) $(6,962,402) $(4,685,593) $(10,100,195)
============ =========== ========== ============
</TABLE>
(1) Because of the Company's historic losses, the Company has experienced a
deficiency of earnings to fixed charges throughout its existence. Fixed charges
consist of preferred stock dividends and amortization of preferred stock
issuance costs.
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Park 'N View, Inc. on
Form S-4 of our report dated September 5, 1997, appearing in the Prospectus,
which is part of this Registration Statement. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
DELOITTE & TOUCHE LLP
Fort Lauderdale, Florida
July 23, 1998
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
---------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
PARK `N VIEW, INC.
(Exact name of obligor as specified in its charter)
DELAWARE (65-0612435)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11711 N.W. 39TH STREET
CORAL SPRINGS, FLORIDA 33065
(Address of principal executive offices) (Zip Code)
13% SENIOR NOTES DUE 2008
(Title of indenture securities)
<PAGE> 2
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as
Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to
commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No.
1 to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by reference
thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange
Commission as Exhibit 3 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with
the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to
the Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Eastern Edison
Company (File No. 33-37823) and is incorporated herein by
reference thereto.
2
<PAGE> 3
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY SECTION
321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the Act
is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority is annexed hereto as Exhibit 7 and made a
part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Hartford and the
State of Connecticut, on the 18th day of June, 1998.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Elizabeth C. Hammer
--------------------------------
ELIZABETH C. HAMMER
VICE PRESIDENT
3
<PAGE> 4
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by PARK `N
VIEW, INC. of its 13% SENIOR NOTES DUE 2008, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Elizabeth C. Hammer
--------------------------------
ELIZABETH C. HAMMER
VICE PRESIDENT
DATED: JUNE 18, 1998
4
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business March 31, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ........................ 1,144,309
Interest-bearing balances ................................................. 9,914,704
Securities.......................................................................... 10,062,052
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge Subsidiary ....................................... 8,073,970
Loans and lease financing receivables:
Loans and leases, net of unearned income .................................. 6,433,627
Allowance for loan and lease losses ....................................... 88,820
Allocated transfer risk reserve............................................ 0
Loans and leases, net of unearned income and allowances ................... 6,344,807
Assets held in trading accounts .................................................... 1,117,547
Premises and fixed assets .......................................................... 453,576
Other real estate owned ............................................................ 100
Investments in unconsolidated subsidiaries ......................................... 44,985
Customers' liability to this bank on acceptances outstanding ....................... 66,149
Intangible assets .................................................................. 263,249
Other assets................................. ...................................... 1,066,572
-------------
Total assets ....................................................................... 38,552,020
=============
LIABILITIES
Deposits:
In domestic offices ....................................................... 9,266,492
Noninterest-bearing .............................................. 6,824,432
Interest-bearing ................................................. 2,442,060
In foreign offices and Edge subsidiary .................................... 14,385,048
Noninterest-bearing .............................................. 75,909
Interest-bearing ................................................. 14,309,139
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary ....................................... 9,949,994
Demand notes issued to the U.S. Treasury and Trading Liabilities ................... 171,783
Trading liabilities................................................................. 1,078,189
Other borrowed money ............................................................... 406,583
Subordinated notes and debentures .................................................. 0
Bank's liability on acceptances executed and outstanding ........................... 66,149
Other liabilities .................................................................. 878,947
Total liabilities .................................................................. 36,203,185
-------------
EQUITY CAPITAL
Perpetual preferred stock and related surplus...................................... 0
Common stock ...................................................................... 29,931
Surplus ........................................................................... 450,003
Undivided profits and capital reserves/Net unrealized holding gains (losses) ...... 1,857,021
Net unrealized holding gains (losses) on available-for-sale securities............. 18,136
Cumulative foreign currency translation adjustments ............................... (6,256)
Total equity capital .............................................................. 2,348,835
-------------
Total liabilities and equity capital .............................................. 38,552,020
-------------
</TABLE>
5
<PAGE> 6
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS AT JUNE 30, 1997 AND MARCH 31, 1998 AND THE STATEMENTS OF OPERATIONS FOR
THE YEAR ENDED JUNE 30, 1997 AND THE NINE MONTH PERIOD ENDED MARCH 31, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1998
<PERIOD-START> JUL-01-1996 JUL-01-1997
<PERIOD-END> JUN-30-1997 MAR-31-1998
<CASH> 4,717,394 4,776,451
<SECURITIES> 0 0
<RECEIVABLES> 16,937 165,540
<ALLOWANCES> 5,411 5,411
<INVENTORY> 259,825 480,193
<CURRENT-ASSETS> 5,127,358 5,538,656
<PP&E> 8,267,235 18,298,023
<DEPRECIATION> 616,482 1,902,354
<TOTAL-ASSETS> 12,938,783 22,410,888
<CURRENT-LIABILITIES> 2,610,552 2,394,845
<BONDS> 0 0
3,931,320 4,155,003
15,200,146 34,188,470
<COMMON> 4,318 4,318
<OTHER-SE> (8,936,245) (18,519,688)
<TOTAL-LIABILITY-AND-EQUITY> 12,938,783 22,410,888
<SALES> 888,397 2,106,455
<TOTAL-REVENUES> 888,397 2,106,455
<CGS> 2,077,689 4,128,735
<TOTAL-COSTS> 2,077,689 4,128,735
<OTHER-EXPENSES> 4,431,889 6,471,565
<LOSS-PROVISION> 594,691 0
<INTEREST-EXPENSE> (170,852) (373,493)
<INCOME-PRETAX> (6,045,020) (8,120,352)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (6,045,020) (8,120,352)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (6,045,020) (8,120,352)
<EPS-PRIMARY> (1.61) (2.34)
<EPS-DILUTED> (1.61) (2.34)
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
PARK 'N VIEW, INC.
OFFER TO EXCHANGE
SERIES B 13% SENIOR NOTES DUE 2008,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL
OUTSTANDING SERIES A 13% SENIOR NOTES DUE 2008
PURSUANT TO THE PROSPECTUS, DATED , 1998
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON ,
1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD NOTES MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Delivery to:
STATE STREET BANK AND TRUST COMPANY, EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight or Hand Delivery:
Corporate Trust Department Corporate Trust Department
P.O. Box 778 Two International Place, 4th Floor
Boston, Massachusetts 02102-0078 Boston, Massachusetts 02110
Attention: Kellie Mullen Attention: Kellie Mullen
</TABLE>
By Facsimile:
Corporate Trust Department
(617) 664-5290
Attention: Kellie Mullen
For information call:
(617) 664-5587
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
By execution hereof, the undersigned acknowledges receipt of the
Prospectus, dated , 1998 (the "Prospectus"), of Park 'N View, Inc., a
Delaware corporation (the "Company"), and this Letter of Transmittal of
Transmittal (this "Letter"), which together constitute the offer (the "Exchange
Offer") to exchange an aggregate principal amount of up to $75,000,000 of Series
B 13% Senior Notes due 2008 (the "New Notes") for an equal principal amount of
the outstanding Series A 13% Senior Discount Notes due 2008 (the "Old Notes").
State Street Bank and Trust Company is the exchange agent for the Exchange Offer
(the "Exchange Agent"). Capitalized terms used but not defined herein have the
respective meanings given to them in the Prospectus.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will accrue interest at 13% per annum. Interest on the
New Notes is payable semi-annually in arrears on May 15 and November 15 of each
year commencing November 15, 1998.
<PAGE> 2
Notwithstanding the foregoing, liquidated damages ("Liquidated Damages")
shall become payable in respect of the Old Notes as follows:
If (a) the Company fails to file a registration statement with respect to
the New Notes (the "Exchange Offer Registration Statement") or a shelf
registration statement covering resales of the Old Notes (the "Shelf
Registration Statement", and, collectively, the "Registration Statements") as
required by the Registration Rights Agreement on or before the date specified
for such filing, (b) any of such Registration Statements is not declared
effective by the Commission on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date"), (c) the Company fails to
consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement or (d) the
Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or usable in connection
with resales of Transfer Restricted Securities (as defined in "The Exchange
Offer -- Terms of the Exchange Offer" section of the Prospectus) during the
periods specified in the Registration Rights Agreement (each such event referred
to in clauses (a) through (d) above a "Registration Default"), then the Company
will pay Liquidated Damages as follows: to each holder of Transfer Restricted
Securities, with respect to such 90-day period immediately following the
occurrence of the first Registration Default in an amount equal to $0.05 per
week per $1,000 principal amount of Transfer Restricted Securities held by such
holder. The amount of the Liquidated Damages will increase by an additional
$0.05 per week per $1,000 principal amount of Transfer Restricted Securities
with respect to each subsequent 90-day period until all Registration Defaults
have been cured, up to a maximum amount of Liquidated Damages of $0.25 per week
per $1,000 principal amount of Transfer Restricted Securities. Following the
cure of all Registration Defaults, the accrual of Liquidated Damages will cease.
The Company reserves the right (i) to delay acceptance of any Old Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and not permit
acceptance of Old Notes not previously accepted if any of the conditions set
forth in "The Exchange Offer -- Conditions" section of the Prospectus shall have
occurred and shall not have been waived by the Company, by giving oral or
written notice of such delay, extension or termination to the Exchange Agent, or
(ii) to amend the terms of the Exchange Offer in any manner deemed by it to be
advantageous to the holders of the Old Notes. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral or written notice thereof to the Exchange Agent. If the Exchange Offer
is amended in a manner determined by the Company to constitute a material
change, the Company will promptly disclose such amendment in a manner reasonably
calculated to inform the holders of the Old Notes of such amendment.
This Letter of Transmittal is to be completed by a holder of Old Notes
either if certificates representing Old Notes are to be forwarded herewith or if
a tender of Old Notes is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer" section of the Prospectus by any financial institution that is a
participant in the Book-Entry Transfer Facility and whose name appears on a
security position listing as the owner of Old Notes. Holders of Old Notes whose
certificates are not immediately available, or who are unable to deliver their
certificates or confirmation of the book-entry tender of their Old Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required by this Letter of Transmittal to
the Exchange Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 1. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
2
<PAGE> 3
List below the Old Notes to which this Letter of Transmittal of Transmittal
relates. If the space provided below is inadequate, the certificate numbers and
principal amount of Old Notes should be listed on a separate signed schedule
affixed hereto.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- ------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL
AMOUNT OF OLD NOTES
NAMES(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) TENDERED (IF LESS
(PLEASE FILL IN, IF BLANK) CERTIFICATE NUMBER(S)* THAN ALL)**
- ------------------------------------------------------------------------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
TOTAL
---------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Need not to be completed by holders who wish to tender with respect to all Old Notes listed. See
Instruction 2. Old Notes tendered hereby must be in denominations of principal amount of $1,000 and any
integral multiple thereof. See Instruction 1.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
NAME OF TENDERING INSTITUTION
- --------------------------------------------------------------------------------
ACCOUNT NUMBER
- --------------------------------------------------------------------------------
TRANSACTION CODE NUMBER
- --------------------------------------------------------------------------------
HOLDERS WHO WISH TO TENDER THEIR OLD NOTES AND WHOSE OLD NOTES ARE NOT
IMMEDIATELY AVAILABLE, OR TIME WILL NOT PERMIT SUCH HOLDER'S OLD NOTES OR OTHER
REQUIRED DOCUMENTS TO REACH THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE, OR
WHO CANNOT COMPLETE THE PROCEDURE FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS, MAY
EFFECT A TENDER ACCORDING TO THE GUARANTEED DELIVERY PROCEDURES SET FORTH IN THE
PROSPECTUS UNDER THE CAPTION "TERMS OF THE EXCHANGE OFFER -- GUARANTEED DELIVERY
PROCEDURES."
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
NAME(S) OF REGISTERED HOLDER(S)
- --------------------------------------------------------------------------------
WINDOW TICKET NUMBER (IF ANY)
- --------------------------------------------------------------------------------
DATE OF EXECUTION OF NOTICE OF GUARANTEED DELIVERY
- --------------------------------------------------------------------
NAME OF INSTITUTION WHICH GUARANTEED DELIVERY
- --------------------------------------------------------------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
ACCOUNT NUMBER
- --------------------------------------------------------------------------------
TRANSACTION CODE NUMBER
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
NAME
- --------------------------------------------------------------------------------
ADDRESS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE> 4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Notes as are being tendered hereby. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent, its agent and
attorney-in-fact (with full knowledge that the Exchange Agent also acts as the
agent of the Company and as Trustee under the Indenture for the Old Notes and
the New Notes) with respect to the tendered Old Notes with full power of
substitution to (i) deliver certificates for such Old Notes to the Company, or
transfer ownership of such Old Notes on the account books maintained by DTC,
together, in either such case, with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Company and (ii) percent such Old
Notes, all in accordance with the terms of the Exchange Offer. The power of
attorney granted in this paragraph shall be deemed irrevocable and coupled with
an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents that any New Notes acquired in exchange
for Old Notes tendered hereby will have been acquired in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
the undersigned, that neither the holder of such Old Notes nor any such other
person is engaged in, or intends to engage in a distribution of such New Notes,
or has an arrangement or understanding with any person to participate in the
distribution of such New Notes, and that neither the holder of such Old Notes
nor any such other person is an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act"), of the Company.
The undersigned also acknowledges that this Exchange Offer is being made
based upon the Company's understanding of an interpretation by the staff of the
Securities and Exchange Commission (the "Commission") as set forth in no-action
letters issued to third parties, including Exxon Capital Holdings Corporation,
SEC No-Action Letter (available May 13, 1988), Morgan Stanley & Co.
Incorporated, SEC No-Action Letter (available June 5, 1991) and Shearman &
Sterling, SEC No-Action Letter (available July 2, 1993), that the New Notes
issued in exchange for the Old Notes pursuant to the Exchange Offer may be
offered for resale, resold and otherwise transferred by each holder thereof
(other than a broker-dealer who acquires such New Notes directly from the
Company for resale pursuant to Rule 144A under the Securities Act or any other
available exemption under the Securities Act or any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holder's business and such holder is not engaged in,
and does not intend to engage in, a distribution of such New Notes and has no
arrangement with any person to participate in the distribution of such New
Notes. If a holder of Old Notes is engaged in or intends to engage in a
distribution of the New Notes or has any arrangement or understanding with
respect to the distribution of the New Notes to be acquired pursuant to the
Exchange Offer, such holder may not rely on the applicable interpretations of
the staff of the Commission and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transaction. If the undersigned is a broker-dealer that will receive New
Notes for its own account in exchange for Old Notes, it represents that the Old
Notes to be exchanged for the New Notes were acquired by it as a result of
market-making activities or other trading activities and acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter of Transmittal and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer -- Withdrawal of Tenders" section of the Prospectus.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "Terms of the Exchange
Offer -- Procedures for Tendering" in the Prospectus and in the instructions
hereto will
4
<PAGE> 5
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Notes."
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged and/or New
Notes are to be issued in the name of and sent to someone other than the
person(s) whose signature(s) appear(s) on this Letter of Transmittal above, or
if Old Notes delivered by book-entry transfer which are not accepted for
exchange are to be returned by credit to an account maintained at the Book-Entry
Transfer Facility other than the amount indicated above.
Issue New Notes and/or Old Notes to:
Name
- -----------------------------------------------
- ------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
- ---------------------------------------------
------------------------------------------------------
(INCLUDING ZIP CODE)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
Credit unexchanged Old Notes delivered by book-entry transfer to the Book-Entry
Transfer Facility account set forth below.
- ------------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER, IF APPLICABLE)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged and/or New
Notes are to be sent to someone other than the person(s) whose signature(s)
appear(s) on this Letter of Transmittal above or to such person(s) at an address
other than shown in the box entitled "Description of Old Notes" on this Letter
of Transmittal above.
Mail New Notes and/or Old Notes to:
Name
- -----------------------------------------------
- ------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
- ----------------------------------------------
------------------------------------------------------
(INCLUDING ZIP CODE)
IMPORTANT: THIS LETTER (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A
BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF
GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M.,
NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
5
<PAGE> 6
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF OLD NOTES REGARDLESS OF WHETHER OLD
NOTES ARE BEING PHYSICALLY DELIVERED HEREUNDER)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF OWNER)
Dated: , 1998
---------
If a holder is tendering any Old Notes, this Letter of Transmittal must be
signed by the registered holder(s) as the name(s) appear(s) on the
certificate(s) for the Old Notes or by any person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s):
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
- -------------------------------------------------------------------------------
Address:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
----------------------------------------------
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
- ------------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
- ------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- ------------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER
(INCLUDING AREA CODE) OF FIRM)
- ------------------------------------------------------------------------------
(PRINTED NAME AND TITLE)
Dated: , 1998
- ---------------------------
6
<PAGE> 7
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer to Exchange Series B
13% Senior Notes due 2008, which have been registered under the Securities Act
of 1933, as amended, for any and all outstanding Series A 13% Senior Notes due
2008.
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES; GUARANTEED
DELIVERY PROCEDURES. This Letter is to be completed by holders of Old Notes
either if certificates are to be forwarded herewith or if tenders are to be made
pursuant to the procedures for delivery by book-entry transfer set forth in "The
Exchange Offer -- Book-Entry Transfer" section of the Prospectus. Certificates
for all physically tendered Old Notes, or Book-Entry Confirmation, as the case
may be, as well as a properly completed and duly executed Letter of Transmittal
and any other documents required by this Letter of Transmittal, must be received
by the Exchange Agent at the address set forth herein on or prior to the
Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders of Old Notes whose certificates for Old Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery procedures set forth
in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution (as defined below), (ii) prior to the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter of Transmittal and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by mail or hand delivery),
setting forth the name and address of the holder of Old Notes and the amount of
Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Notes, or a Book-Entry
Confirmation, as the case may be, and any other documents required by this
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent, and (iii) the certificates for all physically tendered Old
Notes, in proper form for transfer, or Book-Entry Confirmation, as the case may
be, and all other documents required by this Letter of Transmittal, are received
by the Exchange Agent within three NYSE trading days after the date of execution
of the Notice of Guaranteed Delivery.
The method of delivery of this Letter of Transmittal, the Old Notes and all
other required documents is at the election and risk of the tendering holders,
but the delivery will be deemed made only when actually received or confirmed by
the Exchange Agent. If Old Notes are sent by mail, it is suggested that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF OLD NOTES WHO TENDER BY
BOOK-ENTRY TRANSFER). If less than all of the Old Notes evidenced by a
submitted certificate are to be tendered, the tendering holder(s) should fill in
the aggregate principal amount of Old Notes to be tendered in the box above
entitled "Description of Old Notes -- Principal Amount Tendered." A reissued
certificate representing the balance of nontendered Old Notes will be sent to
such tendering holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, promptly after the Expiration Date. All of the Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
3. SIGNATURES OF THIS LETTER OF TRANSMITTAL OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered holder of the Old Notes tendered hereby, the signature must
correspond exactly with the name as written on the face of the certificates
without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all such owners must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
certificates.
When this Letter of Transmittal is signed by the registered holder of the
Old Notes specified herein and tendered hereby, no endorsements of certificates
or separate bond powers are required. If, however, the New Notes are to be
issued, or any untendered Old Notes are to be reissued, to a person other than
the registered holder, then endorsements of any certificates transmitted hereby
or separate bond powers are required. Signatures on such certificates must be
guaranteed by an Eligible Institution.
7
<PAGE> 8
If this Letter of Transmittal is signed by a person other than the
registered holder of any certificates specified herein, such certificates must
be endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name of the registered holder appears on the certificates and the
signatures on such certificates must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Old Notes or signatures on bond powers
required by this Instruction 3 must be guaranteed by a firm which is a member of
a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., by a commercial bank or trust company
having an office or correspondent in the United States or by an "eligible
guarantor" institution within the meaning of Rule 17Ad-15 under the Securities
Exchange Act of 1934 (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Old Notes are tendered: (i) by a registered
holder of Old Notes (which term, for purposes of the Exchange Offer, includes
any participant in the Book-Entry Transfer Facility system whose name appears on
a security position listing as the holder of such Old Notes) tendered who has
not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on this Letter of Transmittal, or (ii) for the account of
an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders of Old
Notes should indicate in the applicable box the name and address to which New
Notes issued pursuant to the Exchange Offer and/or substitute certificates
evidencing Old Notes not exchanged are to be issued or sent, if different from
the name or address of the person signing this Letter of Transmittal. In the
case of issuance in a different name, the employer identification or social
security number of the person named must also be indicated. A holder of Old
Notes tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such holder of Old Notes may designate hereon. If no such
instructions are given, such Old Notes not exchanged will be returned to the
name or address of the person signing this Letter of Transmittal.
5. TAX IDENTIFICATION NUMBER. Federal income tax law generally requires
that a tendering holder whose Old Notes are accepted for exchange must provide
the Company (as payor) with such Holder's correct Taxpayer Identification Number
("TIN") on Substitute Form W-9 below, which, in the case of a tendering holder
who is an individual, is his or her social security number. If the Company is
not provided with the current TIN or an adequate basis for an exemption, such
tendering holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, delivery of New Notes to such tendering holder may be
subject to backup withholding in an amount equal to 31% of all reportable
payments made after the exchange. If withholding results in an overpayment of
taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the "Substitute Form W-9" set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder
has not been notified by the Internal Revenue Service that such holder is
subject to a backup withholding as a result of a failure to report all interest
or dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Company a completed Form W-8, Certificate
of Foreign Status. These forms may be obtained from the Exchange Agent. If the
Old Notes are in more than one name or are not in the name of the actual owner,
such holder should consult the W-9 Guidelines for information on which TIN to
report. If such holder does not have a TIN, such holder should consult the W-9
Guidelines for instructions on applying for a TIN, check the box in Part 2 of
the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
checking this box and writing "applied for" on the form means that such holder
has already applied for a TIN or that such holder intends to apply for one in
the near future. If such holder does not provide its TIN to the Company within
60 days, backup withholding will begin and continue until such holder furnishes
its TIN to the Company.
6. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the transfer of Old Notes to it or its order pursuant to the
Exchange Offer. If, however, New Notes and/or substitute Old Notes not exchanged
are to be delivered to, or are to be registered or issued in the name of, any
person other than the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other than the
person signing this
8
<PAGE> 9
Letter of Transmittal, or if a transfer tax is imposed for any reason other than
the transfer of Old Notes to the Company or its order pursuant to the Exchange
Offer, the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
Except as provided in this Instruction 6, it is not necessary for transfer
tax stamps to be affixed to the Old Notes specified in this Letter of
Transmittal.
7. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Old Notes, by
execution of this Letter of Transmittal, shall waive any right to receive notice
of the acceptance of their Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to
the procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange
Agent, at the address and telephone number indicated above.
9
<PAGE> 10
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYER'S NAME: PARK 'N VIEW, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT TIN: -----------------------
SUBSTITUTE AND CERTIFY BY SIGNING AND DATING BELOW. (SOCIAL SECURITY NUMBER OR
FORM W-9 EMPLOYER IDENTIFICATION NUMBER)
----------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE PART 2 -- TIN APPLIED FOR.
----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
PAYER'S REQUEST FOR (1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER (OR I
TAXPAYER IDENTIFICATION AM WAITING FOR A NUMBER TO BE ISSUED TO ME),
NUMBER ("TIN") AND (2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE: (A) I AM EXEMPT FROM
CERTIFICATION BACKUP WITHHOLDING, OR (B) I HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE
(THE "IRS") THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO
REPORT ALL INTEREST OR DIVIDENDS, OR (C) THE IRS HAS NOTIFIED ME THAT I AM NO
LONGER SUBJECT TO BACKUP WITHHOLDING, AND
(3) ANY OTHER INFORMATION PROVIDED ON THIS FORM IS TRUE AND CORRECT.
SIGNATURE __________ DATE: ______________________________________________________
NAME (PLEASE PRINT)
--------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
YOU MUST CROSS OUT ITEM (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE
SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING OF INTEREST OR DIVIDENDS ON
YOUR TAX RETURN AND YOU HAVE NOT BEEN NOTIFIED BY THE IRS THAT YOU ARE NO LONGER
SUBJECT TO BACKUP WITHHOLDING.
</TABLE>
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER
IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER
(A) I HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A
TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE INTERNAL
REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION
OFFICE OR (B) I INTEND TO MAIL OR DELIVER AN APPLICATION IN
THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT PROVIDE A
TAXPAYER IDENTIFICATION NUMBER WITHIN 60 DAYS, 31% OF ALL
REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD
UNTIL I PROVIDE A NUMBER.
SIGNATURE DATE , 1998
--------------------------------------------------- -------------------------------------------------
NAME (PLEASE PRINT)
--------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
<C> <S> <C>
1. An individual's account. The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account The owner(3)
that is not a legal or valid
trust under State law
5. Sole proprietorship account The owner
- -----------------------------------------------------------
- -----------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
6. A valid trust, estate, or The legal entity (Do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title)(4)
7. Corporate account The corporation
8. Partnership account held in The partnership
the name of the business
9. Association, club, religious, The organization
charitable, or other
tax-exempt organization
10. A broker or registered nominee The broker or nominee
11. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives an agricultural
program payment
- -----------------------------------------------------------
</TABLE>
(1) List and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner. The name of the business or the "doing business
as" name may also be entered. Either the social security number or the
employer identification number may be used.
(4) List and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
11
<PAGE> 12
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
(CONTINUED)
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL dividend and
interest payments and on broker transactions include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(l).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE THE SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. COMPLETE THE SUBSTITUTE FORM W-9 AS
FOLLOWS: ENTER YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE
OF THE FORM, SIGN, DATE, AND RETURN THE FORM TO THE PAYER.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6042, 6044, 6045, 6049, 6050A and 6050N and the regulations thereunder.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsify
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TAXPAYER IDENTIFICATION NUMBERS. -- If the payer discloses or uses
taxpayer identification numbers in violation of Federal law, the payer may be
subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
12
<PAGE> 1
EXHIBIT 99.2
PARK 'N VIEW, INC.
NOTICE OF GUARANTEED DELIVERY
FOR
13% SENIOR NOTES DUE 2008
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Exchange Offer of Park 'N View, Inc. (the "Company")
made pursuant to the Prospectus, dated , 1998 (the "Prospectus"),
and the accompanying Letter of Transmittal (the "Letter of Transmittal") if
certificates representing Old Notes for purchase and payment are not immediately
available or if the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the Company
prior to 5:00 P.M., New York City time, on the Expiration Date of the Exchange
Offer. This form may be delivered by mail or hand delivery to State Street Bank
and Trust Company (the "Exchange Agent") as set forth below. In addition, in
order to utilize the guaranteed delivery procedure to tender Old Notes pursuant
to the Exchange Offer, a completed, signed and dated Letter of Transmittal must
also be received by the Exchange Agent prior to 5:00 P.M., New York City time,
on the Expiration Date. Capitalized terms used but not defined herein have the
respective meanings given to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON ,
1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD NOTES MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Delivery to:
STATE STREET BANK AND TRUST COMPANY, EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight or Hand Delivery:
Corporate Trust Department Corporate Trust Department
P.O. box 778 Two International Place, 4th Floor
Boston, Massachusetts 02102-0078 Boston, Massachusetts 02110
Attention: Kellie Mullen Attention: Kellie Mullen
</TABLE>
By Facsimile:
Corporate Trust Department
(617) 664-5290
Attention: Kellie Mullen
For information call:
(617) 664-5587
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON THE
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the aggregate principal amount of Old Notes set forth below, pursuant to
the guaranteed delivery procedure described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus.
The undersigned understands that tenders of Old Notes will be accepted only
in authorized denominations. The undersigned understands that tenders of Old
Notes pursuant to the Exchange Offer may not be withdrawn after 5:00 p.m., New
York City time, on the Expiration Date. Tenders of Old Notes may also be
withdrawn if the Exchange Offer is terminated without any such Old Notes being
exchanged thereunder or as otherwise provided in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
Signature(s) of Registered Owner(s) or Authorized Name(s) of Registered Holder(s):
Signatory:
- -------------------------------------------------- --------------------------------------------------
- -------------------------------------------------- --------------------------------------------------
- -------------------------------------------------- --------------------------------------------------
Principal Amount of Old Notes Tendered: Address:
- -------------------------------------------------- --------------------------------------------------
--------------------------------------------------
Certificate No(s). of Old Notes (if available): Area Code and Telephone No.:
- -------------------------------------------------- --------------------------------------------------
- -------------------------------------------------- If Old Notes will be delivered by book-entry
transfer at The Depository Trust Company, insert
Depository Account No.:
--------------------------------------------------
</TABLE>
THE ACCOMPANYING GUARANTEE MUST BE COMPLETED
- --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Old Notes exactly as its (their) name(s) appear on certificates for
Old Notes or on a security position listing as the owner of Old Notes, or by
person(s) authorized to become registered holder(s) by endorsements and
documents transmitted with this Notice of Guaranteed Delivery. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person must
provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm that is a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office correspondent in the United
States or any "eligible guarantor" institution within the meaning of Rule
17Ad-15 of the Securities Exchange Act of 1934, as amended, hereby (a)
guarantees to deliver to the Exchange Agent, at one its address set forth above,
the certificates representing all tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, together with a properly completed and
duly executed Letter of Transmittal, with any required signature guarantees, and
any other documents required by the Letter of Transmittal within three New York
Stock Exchange trading days after the date of execution of this Notice of
Guaranteed Delivery.
<TABLE>
<S> <C>
Name of Firm:
- --------------------------------------------------- -----------------------------------------------------
Authorized Signature
Address: Title:
- --------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------- Name:
Zip Code -----------------------------------------------------
Area Code and Telephone Number: Date:
- --------------------------------------------------- -----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DO NOT SEND OLD NOTES WITH THIS FORM. OLD NOTES SHOULD BE SENT TO THE EXCHANGE
AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL.
- --------------------------------------------------------------------------------
3
<PAGE> 1
EXHIBIT 99.3
PARK 'N VIEW, INC.
OFFER TO EXCHANGE
SERIES B 13% SENIOR NOTES DUE 2008,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL
OUTSTANDING SERIES A 13% SENIOR NOTES DUE 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON ,
1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD NOTES MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
To: Registered Holders and DTC Participants:
Upon and subject to the terms and conditions set forth in the Prospectus,
dated , 1998 (the "Prospectus"), and the enclosed Letter of
Transmittal (the "Letter of Transmittal"), an offer to exchange (the "Exchange
Offer") the registered Series B 13% Senior Notes due 2008 (the "New Notes") for
any and all outstanding Series A 13% Senior Notes due 2008 (the "Old Notes")
(CUSIP No. 700592AA6) is being made pursuant to such Prospectus. The Exchange
Offer is being made in order to satisfy certain obligations of Park 'N View,
Inc. (the "Company") contained in the Registration Rights Agreement, dated as of
May 27, 1998, between the Company and Donaldson, Lufkin and Jenrette Securities
Corporation.
We are requesting that you contact your clients for whom you hold Old Notes
regarding the Exchange Offer. For your information and for forwarding to your
clients for whom you hold Old Notes registered in your name or in the name of
your nominee, or who hold Old Notes registered in their own names, we are
enclosing the following documents:
1. Prospectus dated , 1998;
2. The Letter of Transmittal for your use and for the information of
your clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if certificates for Old Notes are not immediately available or time
will not permit all required documents to reach the Exchange Agent prior to
the Expiration Date (as defined below) or if the procedure for book-entry
transfer cannot be completed on a timely basis; and
4. A form of letter which may be sent to your clients for whose
account you hold Old Notes registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., New York City time, on , 1998 (the "Expiration Date") (30
calendar days following the commencement of the Exchange Offer), unless extended
by the Company. Old Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time before the Expiration Date.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal, with any required signature guarantees and any
other required documents, should be sent to the Exchange Agent and certificates
representing the Old Notes should be delivered to the Exchange Agent, all in
accordance with the instructions set forth in the Letter of Transmittal and the
Prospectus.
If holders of Old Notes wish to tender, but it is impracticable for them to
forward their certificates for Old Notes prior to the expiration of the Exchange
Offer or to comply with the book-entry transfer procedures on a timely basis, a
tender may be effected by following the guaranteed delivery procedures described
in the Prospectus under "The Exchange Offer--Guaranteed Delivery Procedures."
<PAGE> 2
Additional copies of the enclosed material may be obtained from the
Exchange Agent, State Street Bank and Trust Company, 61 Broadway, 15th Floor,
Corporate Trust Window, New York, NY 10006, telephone: (617) 664-5587.
Very truly yours,
STATE STREET BANK AND TRUST COMPANY
2
<PAGE> 1
EXHIBIT 99.4
PARK 'N VIEW, INC.
OFFER TO EXCHANGE
SERIES B 13% SENIOR NOTES DUE 2008,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL
OUTSTANDING SERIES A 13% SENIOR NOTES DUE 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON
, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF
OLD NOTES MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
To Our Clients:
Enclosed for your consideration is a Prospectus of Park 'N View, Inc., a
Delaware corporation (the "Company"), dated , 1998 (the
"Prospectus"), and a Letter of Transmittal (the "Letter of Transmittal")
relating to the offer to exchange (the "Exchange Offer") registered Series B 13%
Senior Notes due 2008 (the "New Notes") for any and all outstanding Series A 13%
Senior Notes due 2008 (the "Old Notes") (CUSIP No. 700592AA6), upon the terms
and subject to the conditions described in the Prospectus. The Exchange Offer is
being made in order to satisfy certain obligations of the Company contained in
the Registration Rights Agreement, dated as of May 27, 1998, between the Company
and Donaldson, Lufkin & Jenrette Securities Corporation.
This material is being forwarded to you as the beneficial owner of the Old
Notes carried by us in your account but not registered in your name. A tender of
such Old Notes may only be made by us as the holder of record and pursuant to
your instructions.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Old Notes held by us for your account, pursuant to the terms and
conditions set forth in the enclosed Prospectus and Letter of Transmittal. We
also request that you confirm that we may, on your behalf, make the
representations and warranties contained in the Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1998 (the "Expiration Date") (30 calendar
days following the commencement of the Exchange Offer), unless extended by the
Company. Any Old Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time before 5:00 p.m., New York City time on the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Notes.
2. The Exchange Offer is subject to certain conditions set forth in
the Prospectus in the section captioned "The Exchange Offer -- Conditions."
3. Any transfer taxes incident to the transfer of Old Notes from the
holder to the Company will be paid by the Company, except as otherwise
provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on the
Expiration Date unless extended by the Company.
If you wish to have us tender your Old Notes, please so instruct us by
completing, executing and returning to us the instruction form set forth below.
The Letter of Transmittal is furnished to you for information only and may not
be used directly by you to tender Old Notes.
<PAGE> 2
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
PARK 'N VIEW, INC.
OFFER TO EXCHANGE
SERIES B 13% SENIOR NOTES DUE 2008,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL
OUTSTANDING SERIES A 13% SENIOR NOTES DUE 2008
The undersigned acknowledge(s) receipt of your letter enclosing the
Prospectus, dated , 1998, of Park 'N View, Inc., a Delaware
corporation, and the related Letter of Transmittal.
This will instruct you to tender the Old Notes held by you for the account
of the undersigned, upon the terms and subject to the conditions set forth in
the Exchange Offer.
[ ] Please tender my Old Notes held by you for my account. If I do not
wish to tender all of the Old Notes held by you for my account, I
have identified on a signed schedule attached hereto the principal
amount of Old Notes that I do not wish tendered.
[ ] Please do not tender any Old Notes held by you for my account.
SIGN HERE
Signature(s)
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Please type or print name(s) here
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Please type or print address(es) here
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Area Code and Telephone Number
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Taxpayer Identification or
Social Security Number
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UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN IN THE SPACE PROVIDED, YOUR
SIGNATURE(S) HEREON SHALL CONSTITUTE AN INSTRUCTION TO US TO TENDER ALL OLD
NOTES.
2
