<PAGE> 1
REGISTRATION NO. 333-59889
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 1998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
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
PRESIDENT 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: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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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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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 SEPTEMBER 21, 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 Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchaser") (the "Registration Statement"). 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 that
governs the Old Notes and that will govern the New Notes by and between the
Company and State Street Bank and Trust Company (as trustee), dated as of May
27, 1998 (the "Indenture"). 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 10 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."
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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 integrated
telecommunications and entertainment network originated and operated by the
Company (the "PNV Network" or "Network") 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.
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Certain market data used throughout this Prospectus were obtained from
industry and government sources. The Company has not independently verified this
market data.
iii
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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 PNV Network, the only currently
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. The
Company markets and sells subscriptions to its Network to fleet trucking
companies and individual long-haul truck drivers. Based on independent market
research by Fletcher Spaght, Inc., which was commissioned by the Company to
conduct the research, 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 June 1998, the Company had over 25,000 active subscribers, an increase of
over 166% from the approximately 9,400 subscribers it had in July 1997. The
Company was formed in September 1995 and, as of June 30, 1998, had installed the
PNV Network in 118 truckstops located in 38 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 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). 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.
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
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<PAGE> 6
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 751 full-service truckstops under contract as of June 30, 1998,
approximately 413 are covered by contracts directly with the truckstop owner and
approximately 338 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 751
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 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 recently signed contracts
with five fleet trucking companies that have purchased monthly subscriptions for
an aggregate of approximately 2,329 drivers for periods ranging from one to
three years, subject to certain earlier termination rights.
Since its formation in September 1995, the Company has received
approximately $112.4 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 sale by the Company of the Old Notes on May 27, 1998 to 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, par value $.001 per share
("Common Stock"), in the form of units (the "Units") (such sale, the "Unit
Offering"). 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 has experienced a net loss and negative cash flow from
operations since it was incorporated and, as of June 30, 1998, had a common
stockholders' deficit of $20.3 million and total long-term debt of $70.6
million. The future success of the Company depends upon, among other things, its
ability to (i) satisfy its future capital requirements on terms satisfactory to
the Company, (ii) significantly increase its revenues which, in turn, depends
materially upon its ability to increase the number of subscribers to the PNV
Network, (iii) install the PNV Network at a significant number of additional
truckstops and add T-1 lines and certain additional equipment at all truckstops
at which the PNV Network is available, all on a timely and cost-effective basis,
and (iv) generate revenues from planned future services and recognize
cost-savings from planned enhancements to the PNV Network. See "Risk Factors."
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.
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RISK FACTORS
Prospective investors should carefully consider all of the information set
forth in this Prospectus and, in particular, should evaluate the specific risk
factors set forth under the caption "Risk Factors," beginning on page 10, for a
discussion of certain risks involved with an investment in the New Notes
including, without limitation, those risks associated with the Company's (i)
limited history of operations, (ii) history of losses and negative cash flow,
(iii) future significant capital requirements, (iv) ability to significantly
increase revenues and (v) substantial leverage and ability to service its
indebtedness (including the Notes).
THE OLD NOTES OFFERING
Old Notes.................. The Old Notes were sold by the Company on May 27,
1998 to the Initial Purchaser pursuant to the
Purchase Agreement together with the Warrants in
the form of the Units. 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
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<PAGE> 8
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
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
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<PAGE> 9
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 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."
Tax Considerations......... A holder of Old Notes will not recognize any
taxable gain or loss on the exchange of Old Notes
for New Notes pursuant to the Exchange Offer. See
"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
5
<PAGE> 10
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 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
U.S. Government Obligations (the "Pledged
Securities"). 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 all
liquidated damages then owing pursuant to the
Registration Rights Agreement (the "Liquidated
Damages"), 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
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 (the "Initial Public Equity
Offering"), 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 will 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 will 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
6
<PAGE> 11
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 in "Description of the New
Notes -- Repurchase at the Option of Holders"),
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. 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.
See "Risk Factors -- Risk of Inability to
Repurchase Notes Upon a Change of Control."
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
indebtedness of the Company and will rank senior in
right of payment to all existing and future
subordinated indebtedness of the Company. As of
September 10, 1998, the Company had no indebtedness
ranking pari passu with the Notes.
Covenants.................. 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.
7
<PAGE> 12
SUMMARY FINANCIAL DATA
The summary financial data for the Predecessor for 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 years
ended June 30, 1997 and 1998 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 set forth
below for the Predecessor for the year ended December 31, 1994 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
YEAR ENDED 1995 TO INCORPORATION) YEAR ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 2, TO JUNE 30, JUNE 30, JUNE 30,
1994 1995 1996 1997 1998
------------ ------------ --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................... $ 149,755 $ 888,397 $ 3,503,776
Cost of revenues(2)......................... 436,829 2,077,689 6,598,993
Selling, general and administrative
expenses.................................. $ 287,782 $ 475,891 1,576,209 5,026,580 10,413,622
----------- ----------- ----------- ---------- ------------
Loss from operations........................ (287,782) (475,891) (1,863,283) (6,215,872) (13,508,839)
Interest (expense) income and other, net.... (97,954) 170,852 (224,908)
----------- ----------- ----------- ---------- ------------
Net loss.................................... $ (287,782) $ (475,891) $(1,961,237) $(6,045,020) $(13,733,747)
=========== =========== =========== =========== ============
Net loss attributable to common
stockholders.............................. $(1,982,607) $(6,962,402) $(16,526,284)
OTHER OPERATING DATA:
EBITDA (3).................................. $ (287,782) $ (475,891) $(1,778,942) $(5,572,556) $(11,602,107)
Capital expenditures........................ 109,587 909 1,650,177 6,443,899 12,596,875
Amount that earnings were insufficient to
cover fixed charges (4)................... (1,961,237) (6,045,020) (13,733,747)
Amount that earnings were insufficient to
cover fixed charges and preferred stock
dividend requirements (4)................. (1,982,607) (6,962,402) (16,526,284)
Net cash flows used in operating
activities................................ (254,311) (398,809) (1,452,706) (3,400,128) (9,375,071)
Net cash flows used in investing
activities................................ (109,587) (909) (1,650,177) (6,443,899) (63,899,791)
Net cash flows provided by financing
activities................................ 369,449 380,070 3,468,614 14,197,690 88,368,124
</TABLE>
<TABLE>
<CAPTION>
SUCCESSOR(1)
PREDECESSOR(1) ------------------------------------------
-------------- JUNE 30,
DECEMBER 31, ------------------------------------------
1994 1996 1997 1998
-------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents....................... $ 19,856 $ 365,731 $4,717,394 $ 19,810,656
Working capital................................. 6,521 (81,610) 2,813,544 66,652,141
Total assets.................................... 174,711 2,898,125 12,938,783 94,578,127
Total long-term debt............................ 216,667 3,387,934 425,430 70,604,740
Total redeemable preferred stock................ 721,370 19,131,466 39,133,924
Partnership deficiency/common stockholders'
deficit....................................... (55,292) (1,969,525) (8,931,927) (20,269,763)
</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 and
for the year ended December 31, 1994 and the period from January 1, 1995 to
November 2, 1995, the date the net liabilities were 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, 1997 and
8
<PAGE> 13
1998 and for the period from September 18, 1995 (date of incorporation) to
June 30, 1996 and for the years ended June 30, 1997 and 1998.
(2) Includes service depreciation of $84,000, $643,000 and $1,907,000 for the
period from September 18, 1995 (date of incorporation) to June 30, 1996 and
the years ended June 30, 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. EBITDA is an
earnings calculation that is used by certain investors and in particular
debt holders as one measure of an ability to service debt, pay taxes and
provide for working capital and capital expenditure requirements. However,
it does not reflect cash generated because it does not include changes in
working capital or capital expenditures. It also is not an accounting
measure that is in conformity with GAAP because it does not include
interest, taxes, depreciation and amortization which are significant
components in understanding and assessing the Company's financial
performance. The trend in EBITDA must be evaluated by taking into
consideration the trend in interest, taxes, depreciation and amortization
expenses. If these expenses are considered, a trend in EBITDA may reflect
the Company's utilization of financial debt and fixed asset resources. Also,
management believes that in a capital intensive business that is highly
leveraged, the earnings coverage for interest is important to debt holders
and investors in the Company as an indicator of whether there may be a
potential default to the debt holders because of the inability to cover
interest and principal. The Company's computation of EBITDA may not be
comparable to similarly titled measures reported by other companies.
(4) In calculating the ratio of earnings to fixed charges and 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.
9
<PAGE> 14
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
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 New
Notes. 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.
HISTORY OF LOSSES, NEGATIVE CASH FLOW AND NEGATIVE GROSS MARGIN
The Company has experienced a net loss and negative cash flow from
operations in each quarter since it was incorporated. As of June 30, 1998, the
Company had a common stockholders' deficit of $20.3 million. The Company expects
to incur a significant net loss and negative cash flow from operations in the
fiscal year ending June 30, 1999 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 June 1998, the
Company had approximately 25,000 active subscribers of whom approximately 17,100
had subscribed on a monthly basis (including subscription sales at the Company's
vending machines at truckstops, pursuant to a monthly subscription program
referred to as the "Power Plan Program" and pursuant to the Company's contracts
with fleet trucking companies) and 8,100 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
10
<PAGE> 15
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 between 200 and 250, depending on site location, size and other
factors. As of June 30, 1998, the PNV Network was installed and operating at 118
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 April 1998 Company data indicates that approximately
70% renewed their subscriptions at least once between such subscription and July
1998. In October 1997, the Company implemented the Power Plan Program, which was
designed to increase monthly subscription renewals. 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 June 30, 1998, the Company had 9,500 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." As of June 30, 1998, the Company has entered into
contracts with five fleet trucking companies for a minimum of 2,329
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. At June
30, 1998, the Company had total long-term debt of $70.6 million and a common
stockholders' deficit of $20.3 million. The Company's earnings were insufficient
to cover its fixed charges and preferred stock dividend requirements by
approximately $7.0 and $16.5 million for fiscal 1997 and 1998, respectively. See
"Capitalization" and "Selected Financial Data." The Company will be permitted to
incur additional indebtedness in the future under the Indenture, subject to the
restrictions set forth therein. See " -- Restrictive Covenants" and "Description
of the New Notes -- Certain Covenants -- Incurrence of Indebtedness and Issuance
of Disqualified Stock."
11
<PAGE> 16
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 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
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. During August 1998, the Company installed the PNV Network at approximately
14 truckstops. 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.
12
<PAGE> 17
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
contracts 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.
MINIMUM REQUIREMENTS CONTRACTS
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. These
contracts 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, including its ability to make
payments on the Notes.
FUTURE REVENUE STREAMS; COST SAVINGS
The Company's ability to achieve its objectives depends significantly on
its ability to generate revenues from planned future services and recognize
cost-savings from planned enhancements to the PNV Network. See
"Business -- Future Products and Services." 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, including its ability to make payments on the Notes.
13
<PAGE> 18
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, 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,
including its ability to make payments on the Notes.
In addition, as of June 30, 1998, the Company had contracts to install the
PNV Network at approximately 338 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
three executive officers during the last 12 months. As of June 30, 1998, the
number of the Company's full-time employees had increased to 174 from 74 as of
June 30, 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
14
<PAGE> 19
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, 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, including its ability to make
payments on the Notes.
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
15
<PAGE> 20
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.
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
16
<PAGE> 21
compliance process could have a material adverse effect on the Company's results
of operations and financial condition. See "Business -- Regulatory Matters."
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 software developed by the Company (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. 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
17
<PAGE> 22
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 has not made any
progress is assessing its non-information technology systems. These types of
systems are more difficult to assess and repair than information technology
systems and the Company may have to replace the non-information technology
system that can not be repaired. The Company will begin reviewing its
non-information technology systems in second half of 1999. The Company will
utilize both internal and, if 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. The Company has a preliminary
estimate of $300,000 as the maximum cost of evaluating, testing, reprogramming,
and modifying software. This estimate is based on the belief that no major
problems will be encountered in becoming Year 2000 compliant. Based on its
preliminary internal review, the Company believes that the PNV Software is Year
2000 compliant. However, the Company plans to do more extensive testing of its
PNV Software during the next year which may require the use of independent
consultants to assist in the Company's evaluation to assure a correct assessment
of cost and risk. In addition, the Company relies on third party vendors which
must also become Year 2000 compliant. The Company has a significant reliance on
outside vendors such as telephone companies, satellite system providers,
electrical providers and the wide area network supplier. These services are
critical in the Company's ability to generate revenue. The ability of third
parties with whom the Company transacts business to adequately address their
2000 issue is outside the Company's control. The Company is planning to create a
comprehensive list of all internal and external software to assure that a full
review of such software is completed. 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
18
<PAGE> 23
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 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 "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.
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<PAGE> 24
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,
dated as of May 27, 1998, among the Company, the Trustee and State Street Bank
and Trust Company, as Escrow Agent (the "Escrow Agreement") to foreclose upon
and sell Pledged Securities upon the occurrence of an Event of Default (as
defined in "Description of the New Notes -- Certain Covenants -- Events of
Default and Remedies") 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."
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.
20
<PAGE> 25
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, cash equivalents and short-term
and restricted investments and capitalization of the Company as of June 30,
1998. The following table should be read in conjunction with the financial
statements and notes thereto of the Company included elsewhere herein.
<TABLE>
<CAPTION>
JUNE 30, 1998
-------------
<S> <C>
Cash, cash equivalents and short term and restricted
investments(1)............................................ $ 71,113,572
============
Long-term debt:
13% Senior Notes due 2008................................. $ 70,419,566
Other long-term debt, less current portion................ 185,174
------------
Total long-term debt, excluding current portion... 70,604,740
------------
Series A Redeemable Preferred Stock (including accrued
dividends of $542,538), par value $.01 per share; 627,630
shares authorized; 388,075 shares issued and
outstanding............................................... 4,301,345
Series B Redeemable 7% Cumulative Convertible Preferred
Stock (including accrued dividends of $1,712,083), par
value $.01 per share; 1,372,370 shares authorized, issued
and outstanding........................................... 16,316,432
Series C Redeemable 7% Cumulative Convertible Preferred
Stock (including accrued dividends of $1,115,631), par
value $.01 per share; 3,750,000 shares authorized;
2,328,543 shares issued and outstanding................... 18,516,147
Common Stockholders' Deficit:
Common stock, par value $.001 per share; 12,000,000 shares
authorized; 4,318,182 shares issued and outstanding.... 4,318
Additional paid-in capital................................ 5,197,212
Accumulated deficit....................................... (25,471,293)
------------
Total common stockholders' deficit.......................... (20,269,763)
------------
Total capitalization.............................. $ 89,468,901
============
</TABLE>
- ---------------
(1) Includes the aggregate principal amount of the Pledged Securities of
approximately $19.3 million. See "Description of the Notes."
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<PAGE> 26
SELECTED FINANCIAL DATA
The selected financial data for the Predecessor for 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 years
ended June 30, 1997 and 1998 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 set forth
below for the Predecessor for the period from November 19, 1993 (date of
inception) to December 31, 1993 and the year ended December 31, 1994 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
INCEPTION) TO YEAR ENDED 1995 TO INCORPORATION) YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, NOVEMBER 2, TO JUNE 30, JUNE 30, JUNE 30,
1993 1994 1995 1996 1997 1998
------------- ------------ ------------ -------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................... $ 149,755 $ 888,397 $ 3,503,776
Cost of revenues(2)........... 436,829 2,077,689 6,598,993
----------- ----------- ------------
Gross margin.................. (287,074) (1,189,292) (3,095,217)
Selling, general and
administrative expenses..... $ 7,792 $ 287,782 $ 475,891 1,576,209 4,431,889 10,378,471
Write-down of equipment....... 594,691 35,151
-------- --------- --------- ----------- ----------- ------------
Loss from operations.......... (7,792) (287,782) (475,891) (1,863,283) (6,215,872) (13,508,839)
Interest expense.............. 103,079 157,416 1,030,594
Interest income and other..... (5,125) (328,268) (805,686)
-------- --------- --------- ----------- ----------- ------------
Net loss...................... $ (7,792) $(287,782) $(475,891) $(1,961,237) $(6,045,020) $(13,733,747)
======== ========= ========= =========== =========== ============
Net loss attributable to
common stockholders......... $(1,982,607) $(6,962,402) $(16,526,284)
OTHER OPERATING DATA:
EBITDA(3)..................... $ (7,792) $(287,782) $(475,891) $(1,778,942) $(5,572,556) $(11,602,107)
Capital expenditures.......... 65,404 109,587 909 1,650,177 6,443,899 12,596,875
Amount that earnings were
insufficient to cover fixed
charges(4).................. (1,961,237) (6,045,020) (13,733,747)
Amount that earnings were
insufficient to cover fixed
charges and preferred stock
dividend requirements(4).... (1,982,607) (6,962,402) (16,526,284)
Net cash flows used in
operating activities........ (7,792) (254,311) (389,809) (1,452,706) (3,400,128) (9,375,071)
Net cash flows used in
investing activities........ (65,404) (109,587) (909) (1,650,177) (6,443,899) (63,899,791)
Net cash flows provided by
financing activities........ 87,500 369,449 380,070 3,468,614 14,197,690 88,368,124
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR(1) SUCCESSOR(1)
------------------------------ ------------------------------------------
AS OF DECEMBER 31, AS OF JUNE 30,
------------------------------ ------------------------------------------
1993 1994 1996 1997 1998
------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............... $14,304 $ 19,856 $ 365,731 $ 4,717,394 $ 19,810,656
Working capital......................... 14,304 6,521 (81,610) 2,813,544 66,652,141
Total assets............................ 79,708 174,711 2,898,125 12,938,783 94,578,127
Total long-term debt.................... 87,500 216,667 3,387,934 425,430 70,604,740
Total redeemable preferred stock........ -- -- 721,370 19,131,466 39,133,924
Partnership deficiency/common
stockholders' deficit................. (7,792) (55,292) (1,969,525) (8,931,927) (20,269,763)
</TABLE>
22
<PAGE> 27
- ---------------
(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 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 the net
liabilities were 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, 1997 and 1998 and for the period from September 18, 1995 (date of
incorporation) to June 30, 1996 and for the years ended June 30, 1997 and
1998.
(2) Includes service depreciation of $84,000, $643,000, and $1,907,000 for the
period from September 18, 1995 (date of incorporation) to June 30, 1996 and
the years ended June 30, 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. EBITDA is an earnings calculation that is used by
certain investors and in particular debt holders as one measure of an
ability to service debt, pay taxes and provide for working capital and
capital expenditure requirements. However, it does not reflect cash
generated because it does not include changes in working capital or capital
expenditures. It also is not an accounting measure that is in conformity
with GAAP because it does not include interest, taxes, depreciation and
amortization which are significant components in understanding and assessing
the Company's financial performance. The trend in EBITDA must be evaluated
by taking into consideration the trend in interest, taxes, depreciation, and
amortization expenses. If these expenses are considered, a trend in EBITDA
may reflect the Company's utilization of financial debt and fixed asset
resources. Also, management believes that in a capital intensive business
that is highly leveraged, the earnings coverage for interest is important to
debt holders and investors in the Company as an indicator of whether there
may be a potential default to the debt holders because of the inability to
cover interest and principal. The Company's computation of EBITDA may not be
comparable to similarly titled measures reported by other companies.
(4) In calculating the ratio of earnings to fixed charges and 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.
23
<PAGE> 28
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 or significant selling
expenses 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 June 30, 1998, the PNV Network was
available at 118 full-service truckstops. During June 1998, the Company had over
25,000 subscribers (including approximately 2,329 drivers sponsored by five
fleets under contracts with the Company), an increase of over 166% from the
9,400 subscribers the Company had in July 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 June
30, 1998 was available at approximately 52% of the truckstops as permitted by
the truckstop owner) for which it charges $5 for daily access. As of June 30,
1998, the Company has experienced a 16% penetration rate for this service.
The Company currently sells equipment (extender kits) at a price of $9.99
directly to the truckstop for distribution to the truck driver. All sales are
final with no price protection or right of return.
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.
24
<PAGE> 29
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 on a
contract basis.
The Company generally recognizes service revenue in the period earned.
Prepaid service revenues are recorded as deferred revenue until earned. Fees
received relating to Power Plan Program and monthly subscription sales are
recorded as revenue ratably over the subscription period.
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 after deducting promotions and sales tax of approximately
$8.60 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 after deducting promotions and sales tax of approximately $8.60 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.
All direct cost incurred in producing an advertising ad is expensed. Direct
cost would include video editing and filming time.
Equipment sales cost are comprised of component and labor costs of building
extension and starter kits. Extension kits are expensed when sold to the truck
stop. Starter kits are expensed when new members subscribe to the network.
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
25
<PAGE> 30
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.
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, travel and marketing 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 174 as of June 30, 1998
from 74 as of June 30, 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 as it expands its marketing
and sales 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
YEAR ENDED JUNE 30, 1998 COMPARED TO THE YEAR ENDED JUNE 30, 1997
Revenues. The Company's revenues increased 295% to $3,504,000 for the year
ended June 30, 1998 from $888,000 for the year ended June 30, 1997. The
significant component of the Company's revenues was service revenue which
increased 342% to $3,334,000 for the year ended June 30, 1998 from $755,000 for
the year ended June 30, 1997 primarily due to an increase in subscription sales
and an increase in subscription fees initiated in May 1997.
Cost of Revenues. Cost of revenues, excluding service depreciation,
increased 227% to $4,692,000 for the year ended June 30, 1998 from $1,434,000
for the year ended June 30, 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 Expenses. Selling expenses increased 281% to $5,195,000 for the
year ended June 30, 1998 from $1,365,000 for the year ended June 30, 1997. The
primary components of the Company's selling expenses are salaries, travel and
marketing expenses in the amount of $4,967,000 for the year ended June 30, 1998
and $1,285,000 for the year ended June 30, 1997. The increase primarily reflects
the addition of sales personnel and marketing efforts for new sites and added
support staff to execute "Power Plan" sales.
General and Administrative Expenses. General and administrative expenses
increased 70% to $5,183,000 for the year ended June 30, 1998 from $3,067,000.
The primary components of the Company's general and administrative expenses are
salaries and travel expenses in the amount of $3,858,000 for the year ended June
30, 1998 and $2,558,000 for the year ended June 30, 1997. The increase is due to
additional administrative personnel to support additional sites.
Service Depreciation. Service depreciation increased 197% to $1,907,000
for the year ended June 30, 1998 from $643,000 for the year ended June 30, 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 decreased $396,000 to $(225,000) for the year ended June 30, 1998 from
$171,000 for the year ended June 30, 1997, reflecting an increase in interest
income of $477,000 from investment of cash in short-term investments and an
26
<PAGE> 31
increase in interest expense of $873,000. The increase in interest expense is
primarily related to interest on the Notes. See Note 5 to the financial
statements.
Net Loss. The Company's net loss increased 127% to $13,734,000 for the
year ended June 30, 1998 from $6,045,000 for the year ended June 30, 1997
primarily as a result of the foregoing factors.
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"). The significant component of the
Company's revenues was service revenue which increased $687,000 for the year
ended June 30, 1997 to $755,000 from $68,000 for 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 Expenses. Selling expenses increased $868,000 to $1,365,000 for
the year ended June 30, 1997 from $497,000 for the fiscal 1996 period. The
primary components of the Company's selling expenses are salaries, travel and
marketing expenses in the amount of $1,285,000 for the year ended June 30, 1997
and $497,000 for the fiscal 1996 period. The increase consists primarily of
additional sales personnel for new sites built during the year.
General and Administrative Expenses. General and administrative expenses
increased $1,988,000 to $3,067,000 for the year ended June 30, 1997 from
$1,079,000 for the fiscal 1996 period. The primary components of the Company's
general and administrative expenses are salaries and travel expense in the
amount of $2,558,000 for the year ended June 30, 1997 and $517,000 for the
fiscal 1996 period. The increase is primarily from adding administrative
personnel to support sites built through the year.
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 5 to the 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, certain debt securities and the Units
(an aggregate of $112.4 million) and cash generated from operations.
From November 1995 to November 1996, in connection with the capitalization
of the Company, certain investment limited partnerships managed by Patricof &
Co. Ventures, Inc. (the "Patricof Managed Funds") 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
27
<PAGE> 32
$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 to the 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 after commissions, but before offering expenses, of $72,375,000. See
"Use of Proceeds."
Net cash used in operating activities was $9,375,000 and $3,400,000 for the
years ended June 30, 1998 and 1997, respectively, and $1,453,000 for the fiscal
1996 period. The $5,975,000 increase in net cash used in operating activities
for the year ended June 30, 1998 as compared to the year ended June 30, 1997
resulted primarily from increased marketing and additional staff to support the
larger number of sites and subscribers. The $1,947,000 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 $63,900,000 and $6,444,000 and
for the years ended June 30, 1998 and 1997, respectively, and $1,650,000 for the
fiscal 1996 period. The $57,456,000 increase in net cash used in investing
activities for the year ended June 30, 1998 as compared to the year ended June
30, 1997 resulted primarily from the additional buildout of the PNV Network and
the purchase of short-term investment securities. 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 $88,368,000 and $14,198,000
for the year ended June 30, 1998 and 1997, respectively, and $3,469,000 for the
fiscal 1996 period. The $74,170,000 increase in net cash provided by financing
activities for the year ended June 30, 1998 as compared to the year ended June
30, 1997 resulted primarily from the issuance of Series C Preferred Stock and
the Unit Offering. The $10,729,000 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 to the 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. 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.
In addition, the Company's contract with AT&T for long distance and other
telephone services requires the Company for a term of two years to purchase each
month, at minimum, services having an undiscounted price of $40,000 based upon
standard AT&T rates. Discounts are available under each contract. The Company
may terminate the contracts with AT&T at any time, but, upon termination, the
Company generally would become obligated to pay to AT&T the remaining aggregate
undiscounted required minimum amounts under each contract. See
"Business -- Product and Services -- Future Products and Services" and "Risk
Factors -- Minimum Requirements Contracts." At June 30, 1998, the Company's
minimum commitments under capital leases and noncancellable operating leases
with terms in excess of one year, which do not include commitments under
contracts relating to the lease of T-1 lines and the purchase of long distance
and other telephone services, totaled $632,913, $422,639, $316,541, $188,637 and
$28,962 for the five years ending June 30, 1999 through 2003, respectively. See
Note 4 to the financial statements. In addition, the Company currently plans to
make capital expenditures associated with the installation of certain routing
and switching equipment at each truckstop at which the PNV Network is available
estimated at an aggregate expenditure of
28
<PAGE> 33
$3.8 million ($15,000 per site) through June 1999. Such installation, together
with the installation of the T-1 lines, will substantially complete the
Company's planned enhancements to the PNV Network. See "Business -- Network and
Technology."
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 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 has not
made any progress is assessing its non-information technology systems. These
types of systems are more difficult to assess and repair than information
technology systems and the Company may have to replace the non-information
technology systems that can not be repaired. The Company will begin reviewing
its non-information technology systems in second half of 1999. The Company will
utilize both internal and, if 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. The Company has a
preliminary estimate of $300,000 as the maximum cost of evaluating, testing,
reprogramming, and modifying software. This estimate is based on the belief that
no major problems will be encountered in becoming Year 2000 compliant. Based on
its preliminary internal review, the Company believes that the Company-developed
software is Year 2000 compliant. However, the Company plans to do more extensive
testing of its PNV Software during the next year which may require the use of
independent consultants to assist in the Company's evaluation to assure a
correct assessment of cost and risk. In addition, the Company relies on third
party vendors which must also become Year 2000 compliant. The Company has a
significant reliance on outside vendors such as telephone companies, satellite
system providers, electrical providers and the wide area network supplier. These
services are critical in the Company's ability to generate revenue. The ability
of third parties with whom the Company transacts business to adequately address
their 2000 issue is outside of the Company's control. The Company is planning to
create a comprehensive list of all internal and external software programs to
assure that a full review of such software is completed. 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.
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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 June 1998, the Company had over 25,000
active subscribers, an increase of over 166% from the approximately 9,400
subscribers it had in July 1997. The Company was formed in September 1995 and,
as of June 30, 1998, had installed the PNV Network in 118 truckstops located in
38 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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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 751 full-service
truckstops under contract as of June 30, 1998, approximately 413 are covered by
contracts directly with the truckstop owner and approximately 338 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 751 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 June 30, 1998, the Company has
entered into long-term contracts to provide telecommunications and
entertainment services to long-haul drivers at approximately 751 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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basis. The Company recently signed contracts with five fleet trucking companies
that have purchased monthly subscriptions for an aggregate of approximately
2,329 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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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 118 sites as of June 30,
1998 to a total of approximately 650 truckstop sites (see "-- Network
Build-Out; Truckstop Relationships and Contracts");
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- Expanding its current products and services offering (see "-- Products
and Services -- Future Products and Services");
- Enhancing the PNV Network by increasing its capacity and functionality
(see "-- Network and Technology -- Proposed Enhanced PNV Network Design);
and
- Expanding its marketing and sales program to further penetrate the fleet
and individual driver segments as the number of sites at which the PNV
Network is available increases and in connection with the Company's
expansion of its products and services and enhancement of the capacity
and functionality of the PNV Network (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>
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<PAGE> 39
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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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. To date
the revenues generated by the Company through sales of advertising on the DEN
have been insignificant. However, 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 substantially complete the expansion of its voice and
data communication services by the second half of 1999 by increasing the network
functionality and capacity through the installation of T-1 lines and switching
and routing equipment throughout the PNV Network. 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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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 for a three-year term beginning after the start-up period,
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, from AT&T
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 term 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 118 sites
as of June 30, 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> 42
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. The
Company believes that the installation of the PNV Network at approximately 650
full-service sites will not be complete until after 2001. Such installation will
be subject to, among other things, the Company's ability to satisfy significant
capital requirements associated with such installation. See "Risk Factors --
Expansion of PNV Network Installation and Services" and "-- Future Capital
Requirements; Uncertainty of Additional Financing."
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 751 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 338 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
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<PAGE> 43
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-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 June 30, 1998.
<TABLE>
<CAPTION>
TOTAL NO. OF LOCATIONS
NO. OF LOCATIONS INSTALLED
---------------- ----------------
<S> <C> <C>
TRUCKSTOP CHAINS AND OWNERS
TA Operating Corporation.................................... 121 21
Pilot Corporation........................................... 119 31
Kiel Brothers Oil Co........................................ 2 0
Petro Stopping Centers, Inc................................. 44 6
Travelports of America, Inc................................. 16 8
All American Travel Plaza's, Inc............................ 9 5
MAPCO Marketing, Inc........................................ 3 1
Sapp Brothers Truckstops, Inc............................... 7 6
Bosselman's Travel Plazas................................... 4 3
Hamburg Enterprises, Inc.................................... 5 2
Bruce's Truckstops, Inc..................................... 4 1
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
Burns Brother Travel Plaza.................................. 18 0
Additional Owners of a Single Truckstop..................... 42 24
--- ---
Subtotal.......................................... 413 118
TRUCKSTOP ASSOCIATIONS
Professional Transportation Partners, LLC................... 127 29(1)
North American Truckstop Network, Inc....................... 109 8(1)
Ambest, Inc................................................. 102 28(1)
---
Subtotal.......................................... 338 -0-
Total............................................. 751
===
</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 June 30, 1998, the Company is in negotiations to enter into
additional exclusive contracts with several truckstop chains and independent
owners that collectively own more than 130 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
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<PAGE> 44
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.
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 2,329 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
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<PAGE> 45
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.
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 June 30, 1998, the Company has two RMs, 12 ASMs and approximately 68 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
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<PAGE> 46
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 diagram depicts lines drawn from an irregularly shaped box
containing the letters "PSTN": (1) to the left to an illustration labeled "Host
Server" and to a second illustration labeled "VoiceMail/Driver Tracking Server,"
each of which is contained in a rectangle labeled "Park 'N View Headquarters,"
(2) to the right to an illustration labeled "PBX" which is contained in a
rectangle labeled "Fleet Headquarters," and (3) down to an illustration labeled
"Site Server" and to a second illustration labeled "Authorization Modem," each
of which is contained in a rectangle labeled "Truckstop." In the rectangle
labeled "Truckstop," there are lines drawn to the left from the illustration
labeled "Site Server" to a rectangle labeled "66 Block," from which there is a
line drawn to the left to a rectangle labeled "PED Box." There also are lines
drawn up from the illustration labeled "Site Server" to an illustration labeled
"Authorization Model" and to the right to an illustration labeled "Video Control
Unit." The illustration labeled "Video Control Unit" also is connected by a line
to the left to a rectangle labeled "PED Box" and by a line to the right to an
illustration labeled "Modulators." The illustration labeled "Modulators" is
connected by a line to the left to a rectangle labeled "PED Box" and by a line
up to an illustration labeled "Receivers," which is in turn connected by a line
up to an illustration labeled "Digital Satellite Dish." There also are two lines
to the left from the rectangle labeled "PED Box" to a semicircular illustration
labeled "Bollard," which is connected by four lines to a rectangle labeled
"Driver Truck Cab." The rectangle labeled "Driver Truck Cab" includes the words
"Telephone," "Laptop Computer," "Fax," and "TV," each with an appropriate
illustration.]
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 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.
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<PAGE> 47
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, 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. The Company plans to significantly
enhance the functionality and capacity of the PNV Network by the second half of
1999 to expand the scope of services offered and reduce operational costs. See
"Risk Factors -- Expansion of PNV Network Installation and Services" and
"-- Future Revenue Streams; 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 architecture of the PNV
Network. In the top center of the diagram is the word "Internet" in an
irregularly shaped box connected by a line labeled "Gateway" to an irregularly
shaped box labeled "Frame Relay Network," which has three lines from it, each
going to a different rectangle labeled "IXC." Each of the three rectangles
labeled "IXC" is connected to an irregularly shaped box labeled "PSTN." The
rectangle labeled "IXC" that appears at the left is connected by a line to the
left to an illustration labeled "DSU/Router/VOIP," which appears in a rectangle
labeled "Park 'N View Headquarters." The rectangle labeled "IXC" that appears at
the right is connected by a line to the right labeled "T-1" to an illustration
labeled "DSU/Router/Modems/VOIP," which appears in a rectangle labeled "Fleet
Headquarters." The rectangle labeled "IXC" at the bottom is connected by a line
down labeled "T-1" to an illustration labeled "DSU/Router/Modems/VOIP" in a
rectangle labeled "Truckstop." In the rectangle labeled "Park 'N View
Headquarters," the illustration labeled "DSU/Router/VOIP" is connected by a line
to the left to an illustration labeled "Host Server" and by a second line to the
left to an illustration labeled "Voice Mail/Driver Tracking Server." In the
rectangle labeled "Fleet Headquarters," the illustration labeled
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<PAGE> 48
"DSU/Router/Modems/VOIP" is connected by a line to the right to an illustration
labeled "PC Based Communications Server," which is then connected by a line up
to an illustration labeled "PBX." In the rectangle labeled "Truckstop," there is
a line from the illustration labeled "DSU/Router/Modems/VOIP" down to an
illustration labeled "Site Server." There are lines drawn to the left from the
illustration labeled "Site Server" to a rectangle labeled "66 Block," from which
there is a line drawn to the left to a rectangle labeled "PED Box." There also
is a line drawn to the right from the illustration labeled "Site Server" to an
illustration labeled "Video Control Unit." The illustration labeled "Video
Control Unit" also is connected by a line to the left to a rectangle labeled
"PED Box" and by a line to the right to an illustration labeled "Modulators."
The illustration labeled "Modulators" is connected by a line to the left to a
rectangle labeled "PED Box" and by a line up to an illustration labeled
"Receivers," which is in turn connected by a line up to an illustration labeled
"Digital Satellite Dish." There also are two lines to the left from the
rectangle labeled "PED Box" to a semicircular illustration labeled "Bollard,"
which is connected by four lines to a rectangle labeled "Driver Truck Cab." The
rectangle labeled "Driver Truck Cab" includes the words "Telephone," "Laptop
Computer," "Fax," and "TV," each with an appropriate illustration.]
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 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
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<PAGE> 49
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 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
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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 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
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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 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.
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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.
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,"
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"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 June 30, 1998, the Company had 189 employees, including 15 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
In July 1998, Lorenzo and Pat Ortiz instituted an action against a
truckstop chain, as well as a contractor utilized by the Company in connection
with the installation of the PNV Network at a truckstop owned by the chain, in
the 111th Judicial District, Webb County, Texas, seeking unspecified actual and
punitive damages allegedly resulting from an injury suffered by Mr. Ortiz at
such truckstop in connection with such installation. Although the Company is not
currently named as a party to this action, pursuant to the contract between the
Company and the truckstop chain defendant, the Company agreed, among other
things, to indemnify the truckstop chain for claims relating to the
installation, operation or repair of the PNV Network. Further, pursuant to such
contract, the Company and the truckstop chain each agreed to maintain at least
$1,000,000 of liability insurance on each truckstop at which the PNV Network is
available and the Company agreed to name the truckstop chain as an additional
insured on its insurance policy. Similar indemnification and insurance
maintenance provisions are included in the standard contract between the Company
and other truckstop owners/operators as well as the independent contractors that
Company hires to install the PNV Network. The Company inadvertently failed to
timely name the truckstop chain defendant as an additional insured with the
result that the Company's general liability insurance carrier has denied
coverage with respect to this action. The Company and the truckstop chain have
agreed that the Company shall assume the defense of this action, agree to
indemnify the truckstop chain from any and all losses or expenses relating to
the action and provide the truckstop chain with a letter of credit or surety
bond in the amount of $200,000 securing such indemnity.
In addition, the Company is currently a defendant in a lawsuit in Lake
County, Indiana, for actual damages relating to a slip and fall incident at a
truckstop at which the PNV Network is available. The Company's commercial
general liability insurance carrier has also denied coverage with respect to
this lawsuit due to the Company's alleged failure to notify the carrier of the
incident on a timely basis. The Company is in the process of investigating the
denial of coverage. The Company's present understandings of both actions is
preliminary. Based such understandings, however, management does not believe
that the outcome of either such action will have a material adverse effect on
the Company's financial condition or results of operations.
The Company has received a demand that it pay $50,000 to reimburse a
worker's compensation insurance carrier for amounts paid to one of its insured
relating to injuries allegedly related to the PNV Network. The Company is in the
preliminary stages of investigating this claim. The Company has also received
notice from truckstop owners/operators of 12 to 15 slip and fall incidents
relating to the PNV Network. It has advised its insurance carrier of these
incidents and the carrier has denied coverage on several of these incidents. The
Company has not yet received notice of any claims relating to these incidents.
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The Company anticipates that it will be, from time to time, subject to
claims and suits for personal injury arising in the ordinary course of its
business. Management anticipates that such claims and suits, to the extent for
actual damages, will generally be covered by insurance.
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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 Chairman of the Board, Chief Executive Officer and
Director
Stephen L. Conkling....................... 53 President and Chief Operating Officer
R. Michael Brewer......................... 55 Vice President-Finance and Chief Financial 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 Chairman of the Board
since August 1998 and as Chief Executive Officer and a director of the Company
since the Company's incorporation in September 1995. From September 1995 to July
1998, Mr. Williams served as the Company's President. From 1993 to 1995, Mr.
Williams served as President of Park 'N View, Ltd., the predecessor 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 President of the Company since August
1998 and as Chief Operating Officer since December 1997. Mr. Conkling served as
Vice President-Finance of the Company from April 1996 to July 1998. 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.
R. MICHAEL BREWER has served as Chief Financial Officer of the Company
since August 1998. Prior to joining the Company, from January 1994 to August
1998, Mr. Brewer was Vice President of Finance and Chief Financial officer for
Boca Research, Inc., a computer peripheral manufacturing company. From 1978 to
January 1994 Mr. Brewer was Vice President of Finance for the U.S. operations of
Mitel Corporation, a
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Canadian company which manufactured PBX telephone equipment and semiconductors.
Mr. Brewer is a graduate of the University of Minnesota where he earned a degree
in business administration. Mr. Brewer received his Florida CPA Certificate in
1975.
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 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,
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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 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
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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.
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
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<PAGE> 59
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 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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<PAGE> 60
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($)(1)
- --------------------------- --------- -----------
<S> <C> <C>
Ian Williams................................................ 157,500 --
Chairman of the Board, Chief Executive Officer and
Director
Stephen L. Conkling......................................... 132,501 --
President and Chief Operating Officer
Jody Green.................................................. 127,500 --
Vice President-Product Development
A. Alexander Ezazi(2)....................................... 87,083 27,500
Vice President-Marketing
Richard Brenner(2).......................................... 73,333 27,500
Vice President-Sales
</TABLE>
- ---------------
(1) Represents guaranteed cash bonuses paid for fiscal 1997.
(2) Mr. Ezazi's employment by the Company commenced in September 1997 and Mr.
Brenner's employment by the Company commenced in November 1997.
Stock Options
The following table summarizes the number and value of unexercised options
held by Named Executive Officers as of June 30, 1998. No Named Executive
Officers exercised any options during the year ended June 30, 1998.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AS OF JUNE 30, 1998(#) AS OF JUNE 30, 1998($)(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 less the per share exercise price. Such value was
determined by the Board of Directors based on the value of the Warrants
agreed upon by the Company and the initial investors in the Units in the
Unit Offering.
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
56
<PAGE> 61
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.
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.
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<PAGE> 62
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, 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 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 50% was owned by James Green and the remaining 50% was
owned by Lewis Tatham, who is also an employee of the Company, provided certain
software programming consulting services to the Company relating to the
58
<PAGE> 63
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 Mr. Tatham 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 in such promissory
note). This note was satisfied in August 1997.
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<PAGE> 64
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> 65
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> 66
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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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 in the immediately succeeding paragraph), 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 in the immediately succeeding paragraph),
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), 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. 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
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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.
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 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.
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 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 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
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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 ("-- Preferred Stock -- Series A Preferred Stock"), 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.
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
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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 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
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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 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
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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 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
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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 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
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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
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
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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 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
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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, and does not intend to engage in, a distribution of such New Notes and has
no arrangement or understanding
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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 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 amendment to such
Registration Statement that cures such failure and that is itself declared
effective
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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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<PAGE> 81
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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<PAGE> 82
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 reasonable 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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<PAGE> 83
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 prior to the Expiration Date, 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 under
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<PAGE> 84
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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<PAGE> 86
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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<PAGE> 87
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", 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. If
the Trustee, the Holders of at least 25% in principal amount of the then
outstanding Notes, the Holders of a majority in principal amount of the then
outstanding Notes or, under certain limited circumstances, a Holder of Notes,
notifies the Company of an Event of Default based on such
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<PAGE> 88
a sale, lease, transfer, conveyance or other disposition of less than all of the
Company's assets, the Company could dispute the occurrence of such an Event of
Default and, in such event, such persons could sue the Company to resolve among
other things, the uncertainty regarding the phrase "substantially all." See
"Description of New Notes -- Certain Covenants -- Events of Default and
Remedies."
"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 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 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,
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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
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 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 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
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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 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
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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 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
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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 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
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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.
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
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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 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."
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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 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
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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 (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
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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 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
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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 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.
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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.
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
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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 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
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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 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
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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 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
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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.
"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.
"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).
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"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.
"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
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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 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).
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"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, (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
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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.
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
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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 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.
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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 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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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 will 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 will 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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<PAGE> 111
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
107
<PAGE> 112
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.
108
<PAGE> 113
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 June 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, 1997 and 1998 and
for the period from September 18, 1995 (date of incorporation) to June 30, 1996
and the years ended June 30, 1997 and 1998; and of Park 'N View, Ltd. for 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.
109
<PAGE> 114
PARK 'N VIEW, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Balance Sheets as of June 30, 1997 and 1998................. F-3
Statements of Operations for the Predecessor 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 years ended
June 30, 1997 and 1998.................................... F-4
Statements of Changes in Partnership Capital for the
Predecessor 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 years ended June 30, 1997 and 1998... F-5
Statements of Cash Flows for the Predecessor 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 years ended June
30, 1997 and 1998......................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE> 115
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, 1997 and 1998, 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 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 years ended June 30,
1997 and 1998. 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, 1997 and 1998,
and the results of operations and cash flows of the Predecessor 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 years
ended June 30, 1997 and 1998, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Certified Public Accountants
Fort Lauderdale, Florida
September 11, 1998
F-2
<PAGE> 116
PARK 'N VIEW, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
--------------------------
1997 1998
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 4,717,394 $19,810,656
Short-term investments.................................... 32,039,916
Restricted investments (Note 5)........................... 19,263,000
Accounts receivable, net of allowance for doubtful
accounts of $5,400 at June 30, 1997 and 1998........... 11,526 184,180
Inventory................................................. 259,825 362,738
Prepaid expenses and other................................ 138,613 100,877
----------- -----------
Total current assets.............................. 5,127,358 71,761,367
Property and Equipment, Net (Note 3)........................ 7,650,753 18,448,601
Deferred Financing Costs.................................... 143,869 3,744,366
Other Assets................................................ 16,803 623,793
----------- -----------
Total............................................. $12,938,783 $94,578,127
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable.......................................... $ 1,116,464 $ 2,067,113
Accrued expenses.......................................... 866,759 2,471,719
Deferred revenue.......................................... 31,929 205,853
Current portion of capital lease obligations (Note 4)..... 265,032 330,814
Current portion of long-term debt (Note 5)................ 33,630 33,727
----------- -----------
Total current liabilities......................... 2,313,814 5,109,226
----------- -----------
Obligations Under Capital Leases (Note 4)................... 366,566 185,174
----------- -----------
Long-Term Debt (Note 5)..................................... 58,864 70,419,566
----------- -----------
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 $542,538 as of June 30, 1997 and
1998, respectively). (Note 6)............................. 3,931,320 4,301,345
----------- -----------
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 and $1,712,083 as of June 30, 1997 and 1998).
(Note 6).................................................. 15,200,146 16,316,432
----------- -----------
Series C Redeemable Convertible Preferred Stock and Accrued
Dividends -- Par value $.01 per share; 3,750,000 shares
authorized, 2,328,543 issued and outstanding ($8.00 per
share liquidation preference, including accrued dividends
of $1,115,631 as of June 30, 1998). (Note 6).............. 18,516,147
-----------
Common Stockholders' Deficit:
Common stock -- par value $.001 per share; 7,000,000 and
12,000,000 shares authorized at June 30, 1997 and 1998,
respectively; 4,318,182 shares issued and
outstanding............................................ 4,318 4,318
Additional paid-in capital................................ 8,764 5,197,212
Accumulated deficit....................................... (8,945,009) (25,471,293)
----------- -----------
Total common stockholders' deficit................ (8,931,927) (20,269,763)
----------- -----------
Total............................................. $12,938,783 $94,578,127
=========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 117
PARK 'N VIEW, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------ --------------------------------------------------
PERIOD FROM
SEPTEMBER 18, 1995
PERIOD FROM (DATE OF
JANUARY 1, 1995 TO INCORPORATION) TO YEAR ENDED YEAR ENDED
NOVEMBER 2, 1995 JUNE 30, 1996 JUNE 30, 1997 JUNE 30, 1998
------------------ ------------------ ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Service revenue................... $ 68,451 $ 755,057 $ 3,333,564
Equipment sales................... 76,953 51,909 97,489
Advertising....................... 4,050 22,500
Other............................. 301 58,931 72,723
----------- ----------- ------------
Total revenues............ 149,755 888,397 3,503,776
----------- ----------- ------------
Cost of Revenues
Service cost...................... 287,792 996,260 3,336,176
Service depreciation.............. 84,341 643,316 1,906,732
Equipment cost.................... 62,821 422,557 1,356,085
Advertising....................... 1,875 15,556
----------- ----------- ------------
Total cost of revenues.... 436,829 2,077,689 6,598,993
----------- ----------- ------------
Gross margin........................ (287,074) (1,189,292) (3,095,217)
Selling, general and administrative
expenses.......................... $ 475,891 1,576,209 4,431,889 10,378,471
Write-down of equipment............. 594,691 35,151
--------- ----------- ----------- ------------
Loss from operations................ (475,891) (1,863,283) (6,215,872) (13,508,839)
Interest expense.................... 103,079 157,416 1,030,594
Interest income and other........... (5,125) (328,268) (805,686)
--------- ----------- ----------- ------------
Net loss.................. $(475,891) (1,961,237) (6,045,020) (13,733,747)
=========
Preferred stock dividends
and amortization of
preferred stock issuance
costs................... (21,370) (917,382) (2,792,537)
----------- ----------- ------------
Net loss attributable to
common stockholders..... $(1,982,607) $(6,962,402) $(16,526,284)
=========== =========== ============
Basic loss per share...... $ (0.46) $ (1.61) $ (3.83)
=========== =========== ============
</TABLE>
See notes to financial statements.
F-4
<PAGE> 118
PARK 'N VIEW, INC.
STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL AND
COMMON STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
PARTNERSHIP
PREDECESSOR CAPITAL
- ----------- -----------
<S> <C> <C>
Balance, January 1, 1995.......................... $ (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)
Dividends accrued for Series A
preferred stock.................... (330,286) (330,286)
Dividends accrued for Series B
preferred stock.................... (1,050,015) (1,050,015)
Dividends accrued for Series C
preferred stock.................... (1,115,631) (1,115,631)
Amortization of preferred stock
issuance cost...................... (296,605) (296,605)
Issuance of common stock warrants.... 5,188,448 5,188,448
Net loss............................. (13,733,747) (13,733,747)
--------- ------ ---------- ------------ ------------
Balance, June 30, 1998............... 4,318,182 $4,318 $5,197,212 $(25,471,293) $(20,269,763)
========= ====== ========== ============ ============
</TABLE>
See notes to financial statements.
F-5
<PAGE> 119
PARK 'N VIEW, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
--------------- --------------------------------------------------
PERIOD FROM
PERIOD FROM SEPTEMBER 18, 1995
JANUARY 1, 1995 (DATE OF
TO NOVEMBER 2, INCORPORATION) TO YEAR ENDED YEAR ENDED
1995 JUNE 30, 1996 JUNE 30, 1997 JUNE 30, 1998
--------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C>
Operating Activities:
Net loss....................................... $(475,891) $(1,961,237) $(6,045,020) $(13,733,747)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................ 27,966 174,360 705,418 2,117,387
Write-down of equipment...................... 594,691 35,151
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 (172,653)
Inventories................................ (141,698) (118,127) (102,912)
Prepaid expenses and other................. (5,000) (116,917) (21,696) 37,737
Other assets............................... (13,027) (3,776) (285,567)
Accounts payable........................... 54,116 399,090 717,374 950,649
Accrued expenses........................... 210,556 744,622 1,604,960
Deferred revenue........................... 48,557 (16,628) 173,924
--------- ----------- ----------- ------------
Net cash used in operating activities... (398,809) (1,452,706) (3,400,128) (9,375,071)
--------- ----------- ----------- ------------
Investing Activities:
Purchase of short-term investments........... (32,039,916)
Purchase of restricted investments........... (19,263,000)
Purchases of property and equipment.......... (909) (1,650,177) (6,443,899) (12,596,875)
--------- ----------- ----------- ------------
Net cash used in investing activities... (909) (1,650,177) (6,443,899) (63,899,791)
--------- ----------- ----------- ------------
Financing Activities:
Proceeds from issuance of long-term debt and
common stock warrants, net of offering
commission................................... 3,000,000 1,500,000 72,375,000
Proceeds from issuance of common and preferred
stock........................................ 800,000 13,500,000 18,628,344
Contributions from partners.................... 70,070
Loans from partners............................ 310,000
Payment of stock and debt issuance costs and
other........................................ (152,000) (509,560) (1,225,705)
Payment of obligation under capital lease...... (227,327) (365,412)
Deferred financing costs....................... (195,434) (143,869) (1,010,700)
Notes payable.................................. 16,048 76,446 (33,403)
--------- ----------- ----------- ------------
Net cash provided by financing
activities............................ 380,070 3,468,614 14,197,690 88,368,124
--------- ----------- ----------- ------------
Net Increase (Decrease)In Cash And Cash
Equivalents.................................... (19,648) 365,731 4,351,663 15,093,262
Cash And Cash Equivalents, Beginning Of Period... 19,856 365,731 4,717,394
--------- ----------- ----------- ------------
Cash And Cash Equivalents, End Of Period......... $ 208 $ 365,731 $ 4,717,394 $ 19,810,656
========= =========== =========== ============
Supplemental Cash Flow Information:
Interest paid.................................. $ 14,660 $ 48,987 $ 33,030
=========== =========== ============
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 $ 249,801
=========== =========== ============
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
===========
Issuance of common stock warrants.............. $ 538,998
============
</TABLE>
See notes to financial statements.
F-6
<PAGE> 120
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, 1998, the Company
has 118 sites in operation. The Company has contracts to provide their service
to over 600 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 liabilities were recorded by the
Company at the 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 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, 1997 and 1998 and for the
period from September 18, 1995 (date of incorporation) to June 30, 1996 and for
the years ended June 30, 1997 and 1998.
The Company has experienced net operating losses since its inception and as
of June 30, 1998 had an accumulated deficit of $25.5 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.
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. The Company's cash and cash equivalents are primarily
composed of bank deposits and overnight funds held by a bank.
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,
F-7
<PAGE> 121
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
generally three to ten years. Expenditures for improvements that
substantially extend the capacity or useful life of an asset are
capitalized. Routine repairs and maintenance are expensed as incurred.
The Company currently expenses the costs associated with developing
internal use proprietary software. In March 1998, the American Institute of
Certified Public Accountants issued Statement of Position 98-1 ("SOP
98-1"), Accounting for the Cost of Computer Software Developed or Obtained
for Internal Use. SOP 98-1 establishes that computer software costs that
are incurred in the preliminary project stage should be expensed as
incurred. Once the application development stage criteria is met, certain
costs are required to be capitalized. SOP 98-1 is effective for financial
statements for fiscal years beginning after December 15, 1998. Adoption of
SOP 98-1 is not expected to have a material impact on the Company's
financial position or results of operations.
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 -- For the Company's monthly and
"power plan" programs, net revenues from the sale of such subscriptions are
amortized to revenue over the period of the subscription. The amount of net
revenue associated with the unexpired portion of the subscription is
reported as deferred revenue. Fleet subscriptions are sold and paid on a
calendar month basis, therefore revenue received for such subscriptions
relates to and is recognized in the specific month for which it is billed.
Fees from the daily and premium programs, which allow access for a 24 hour
period, are recognized as revenue when sold. Revenues from equipment sales
are derived from the sale by the Company of cable and telephone line
extension kits to truckstops for resale to truckdrivers.
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 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 -- Management reviews long-lived assets for possible
impairment whenever events or circumstances indicate that the carrying
amount of an asset may not be recoverable. If there is an indication of
impairment, management prepares an estimate of future cash flows
(undiscounted and without interest charges) expected to result from the use
of the asset and its eventual disposition. If these cash flows are less
than the carrying amount of the asset, an impairment loss is recognized to
write down the asset to its estimated fair value. Assets, if any, which
management has committed to a plan to dispose, whether by sale or
abandonment, are reported at the lower of carrying amount or fair value,
less cost to sell. Preparation of estimated expected future cash flows is
inherently subjective and is based on management's best estimate of
assumptions concerning future conditions.
Financial Instruments -- The carrying amount for cash, accounts
receivable and accounts payable approximates fair value due to their
short-term maturity. Short-term investments consist of commercial
F-8
<PAGE> 122
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
paper that is carried at amortized cost, which approximates fair value.
Restricted investments consist of US Treasury securities that are actively
traded and are carried at fair value, with unrealized gains and losses
included in earnings.
The fair value of the Company's long-term debt approximates carrying
value based on the quoted market prices for the same or similar issues or
on the current rate offered to the Company for debt of the same remaining
maturities. The Company believes that it is not practical to estimate a
fair value different from the preferred stocks' carrying value as these
securities have numerous features unique to these securities.
Basic Loss Per Share -- Basic 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 potential common stock
would have been antidilutive and therefore basic loss per share for the
Company is equivalent to diluted loss per share. The weighted average
common shares outstanding was 4,318,182 for the period from September 18,
1995 to June 30, 1996 and the years ended June 30, 1997 and 1998.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per
Share. This statement supercedes Accounting Principles Board ("APB")
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. The adoption by the Company of this standard had no effect
on the Company's reported net loss per share.
Reclassifications -- Certain 1996 and 1997 amounts have been
reclassified to conform with the 1998 presentation.
New Accounting Pronouncement -- In June 1997, the Financial Accounting
Standards Board issued SFAS No. 131, Disclosure about Segments of an
Enterprise and Related Information. This standard is effective for
financial statements for fiscal years beginning after December 15, 1997.
SFAS No. 131 establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information
about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. The Company
has not yet determined the effect, if any, that SFAS No. 131 will have on
its financial statements and notes thereto.
F-9
<PAGE> 123
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
1997 1998
---------- -----------
<S> <C> <C>
Site equipment and improvements............................. $5,404,620 $16,484,956
Construction equipment...................................... 127,912 150,059
Computer equipment.......................................... 231,907 352,643
Vehicles.................................................... 255,467 451,382
Furniture, fixtures and other equipment..................... 28,739 65,869
---------- -----------
Subtotal.......................................... 6,048,645 17,504,909
Less accumulated depreciation............................... 616,482 2,630,706
---------- -----------
Subtotal.......................................... 5,432,163 14,874,203
Component inventory......................................... 2,218,590 3,574,398
---------- -----------
Property and equipment, net................................. $7,650,753 $18,448,601
========== ===========
</TABLE>
Component inventory represents equipment that is awaiting installation at a
site. Upon installation the cost of the related equipment is transferred to site
equipment and improvements and depreciation commences once the site is
operational.
During the year ended June 30, 1997, the Company replaced certain telephone
switches with updated technology. At the time this equipment was taken out of
service there existed a related capital lease obligation of $538,957. The
Company is continuing to make the scheduled capital lease payments and has
written-off the idle equipment, which had a carrying value $594,691.
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>
1999........................................................ $ 277,528 $355,385
2000........................................................ 268,759 153,880
2001........................................................ 272,083 44,458
2002........................................................ 188,637 --
2003........................................................ 28,962 --
---------- --------
Total............................................. $1,035,969 553,723
==========
Imputed interest on capital leases.......................... (37,735)
--------
Present value of capital leases............................. 515,988
Current portion............................................. 330,814
--------
Long-term portion........................................... $185,174
========
</TABLE>
Rent expense was $77,569, $149,401 and $355,765 for the period ended June
30, 1996 and for the years ended June 30, 1997 and 1998, respectively.
In July 1998, the Company entered into contracts with AT&T to lease T-1
lines and purchase long distance and local telephone service. The minimum lease
payments for the T-1 lines approximate $5.1 million, $7.7 million and $7.7
million per year during the first, second, and third years of the lease,
respectively. The Company's minimum purchase for the long distance and local
telephone service is $480,000 per year for a two year term.
F-10
<PAGE> 124
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
In August 1998, the Company entered into an operating lease for a wide area
network. The annual minimum rental amount approximates $1.2 million for a three
year term.
5. NOTES PAYABLE
In May 1998, the Company issued $75 million of 13% Senior Notes (the
"Senior Notes"). The Senior 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 Senior Notes have a maturity date of May 15,
2008. Interest will be paid semiannually on May 15 and November 15 to holders of
record on the immediately preceding May 1, and November 1, respectively. The
Company placed $19.2 million of the net proceeds from the Senior Notes in an
escrow account. The escrow account is pledged as security for payment of the
first four scheduled interest payments on the Senior Notes. The amount in this
escrow account is presented as restricted investments in the accompanying
balance sheet.
The Senior 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. At any time prior to May 15, 2001, the Company,
at its option, may redeem up to 35% of the then outstanding Senior Notes with
the net proceeds of an initial public equity offering at a redemption price of
113% of the principal amount and accrued interest. The Senior Notes are
mandatorily redeemable at the option of the holders in the event of a change in
control or an asset sale.
The Senior Notes were issued together with warrants in the form of units.
The relative fair market values for the Senior Notes and warrants were
determined by the negotiations with the purchasers of the units. The agreed upon
original issue discount resulted in an allocation of $70,350,000 of the proceeds
to the Senior Notes and $4,650,000 to the warrants.
At June 30, 1997 and 1998, the Company had outstanding $92,494 and $59,092,
respectively, 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.
Scheduled debt maturities are as follows:
<TABLE>
<CAPTION>
YEAR ENDING JUNE 30
- -------------------
<S> <C>
1999................................................... $ 33,727
2000................................................... 25,365
2001................................................... --
2002................................................... --
2003................................................... --
Thereafter............................................. 75,000,000
-----------
Subtotal 75,059,092
Less debt discount 4,605,799
-----------
Total $70,453,293
===========
</TABLE>
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. 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
F-11
<PAGE> 125
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
$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 $212,252 and
$542,538 at June 30, 1997 and 1998, 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) six months after the
Senior Notes are paid in full, (b) upon the receipt of proceeds of an initial
public offering of not less than $20 million, net of underwriting expenses
("Qualifying Offer"), (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
has the option to redeem shares of Series A Preferred at any time for $10 per
share plus all accrued dividends thereon. The Company may not redeem any shares
of Series A Preferred until the Company pays the Senior Notes in full.
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 and Series C
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 (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 date
for two consecutive quarterly periods, (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, (d) failure to comply with covenants in the agreement, (e) failure
by the Company to comply with its obligations upon liquidation, dissolution or
winding up, or (f) insolvency. Cumulative unpaid dividends accrued were $662,068
and $1,712,083 at June 30, 1997 and 1998.
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) six months after
the Senior Notes are paid in full, (b) upon receipt of a Qualifying Offer, (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 may not redeem any shares of
Series B Preferred until the Company pays the Senior Notes in full.
The shareholders of Series B Preferred can convert their shares at any time
at the option of the holder into Common Stock at a conversion rate of one Series
B Preferred Share for 1.37 shares 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 or securities convertible into Common Stock.
F-12
<PAGE> 126
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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 a 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 66.6% 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, together with the shareholders of Series C Preferred,
have the exclusive right to elect a majority of the Board of Directors.
Series C Redeemable Preferred Stock -- 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. Upon an Event of Default, the annual dividend rate will be 9%. The
Series C Preferred votes 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. Cumulative unpaid
dividends accrued were $1,115,631 at June 30, 1998.
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) six months after the
Senior Notes are paid in full, (b) upon receipt of a Qualifying Offer, (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 may not redeem any shares of
Series C Preferred until the Company pays the Senior Notes in full.
The shareholders of Series C 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 C Preferred share for one share of Common Stock. Under antidilution
provisions, the conversion price of Series C Preferred will be adjusted upon the
Company's issuance of additional shares of Common Stock, warrants or rights to
purchase Common Stock.
Series C 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 C
Preferred is then convertible. Shareholders of Series C Preferred and Common
Stock shall vote together on each matter submitted to stockholders and not by
class or series. Prior to the consummation of a Qualifying Offer, the
shareholders of the Series C 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 66.6% of the shares of Series C Preferred originally issued
remain outstanding, the holders of a majority of the shares of Common Stock
issuable upon conversion of the Series C Preferred shall be entitled to nominate
one director. Upon the occurrence of an event of default, the shareholders of
the Series C Preferred, together with the shareholders of Series B Preferred, as
a class have the exclusive right to elect a majority of the Board of Directors.
7. RELATED PARTY TRANSACTIONS
A common stockholder of the Company is also a partner in a law firm that
provides legal services to the Company. Fees and expenses paid to the law firm
were $293,647 for the year ended June 30, 1998. Fees and expenses paid to the
law firm for the period ended June 30, 1996 and for the year ended June 30, 1997
were not significant.
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 advances were satisfied in August 1997.
F-13
<PAGE> 127
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
8. STOCK OPTIONS AND WARRANTS
The Company has incentive and non-qualified stock option plans for
directors and key employees and has 800,000 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 and 1998 is as follows:
<TABLE>
<CAPTION>
AVERAGE
NUMBER EXERCISE PRICE RANGE OF
OF SHARES PER SHARE EXERCISE PRICE
--------- -------------- --------------
<S> <C> <C> <C>
Granted options:
Granted during the year ended June 30, 1997 and
outstanding at June 30, 1997................... 409,846 $1.42 $1.00-$3.00
Forfeited during the year ended June 30, 1998..... (500) 1.00 1.00
-------
Outstanding at June 30, 1998...................... 409,346 1.42 1.00-3.00
=======
Vested options:
Exercisable at June 30, 1997...................... 81,969 1.42 1.00-3.00
Vested during the year ended June 30, 1998........ 81,869 1.42 1.00-3.00
Forfeited during the year ended June 30, 1998..... (100) 1.00 1.00
-------
Exercisable at June 30, 1998...................... 163,738 1.42 1.00-3.00
=======
</TABLE>
The weighted average remaining contractual life of options outstanding is
9.5 years and 8.4 years at June 30, 1997 and 1998, respectively.
The Company accounts for stock options in accordance with APB Opinion No.
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
compensation in accordance with APB Opinion No. 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. No options were granted during the year ended June
30, 1998. The fair value of the options granted during the year ended June 30,
1997 were 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 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.
F-14
<PAGE> 128
PARK 'N VIEW, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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
years ended June 30, 1997 and 1998 would have been as follows:
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Net loss:
As reported............................................. $ (6,045,020) $(13,733,747)
Pro forma............................................... (6,082,726) (13,771,453)
Loss per share:
As reported............................................. (1.61) (3.83)
Pro forma............................................... (1.62) (3.84)
</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.
The Company has warrants outstanding which allow the holders to purchase
280,399 shares of Common Stock at $8 per share.
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 $20.6 million in net operating loss carryforwards at June 30, 1998
for income tax purposes, with approximately $2 million expiring in 2011, $5.4
million expiring in 2012 and $13.2 million expiring in 2013.
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, 1997 and 1998 are
as follows:
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward........................... $ 2,385,208 $ 6,876,586
Nondeductible lease accrual............................... 237,876 88,932
Bad debt reserve.......................................... 2,164 2,164
Vacation accrual.......................................... 14,536 45,981
----------- -----------
2,639,784 7,013,662
----------- -----------
Deferred tax liabilities:
Differences between book and tax basis of property........ 409 45,771
Amortization.............................................. 14,095 8,821
----------- -----------
14,504 54,592
----------- -----------
Valuation allowance......................................... (2,625,280) (6,959,070)
----------- -----------
Net deferred tax asset............................ $ -- $ --
=========== ===========
</TABLE>
F-15
<PAGE> 129
- ------------------------------------------------------
- ------------------------------------------------------
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.......................... 10
Use of Proceeds....................... 21
Capitalization........................ 21
Selected Financial Data............... 22
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 24
Business.............................. 30
Management............................ 50
Certain Transactions.................. 57
Principal Stockholders................ 59
Description of Capital Stock.......... 61
The Exchange Offer.................... 73
Description of the New Notes.......... 80
Federal Income Tax Considerations..... 105
Plan of Distribution.................. 108
Legal Matters......................... 108
Experts............................... 108
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
---------------------
SEPTEMBER , 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 130
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> 131
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> 132
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.
<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.
</TABLE>
II-3
<PAGE> 133
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S> <C>
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.
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.
</TABLE>
II-4
<PAGE> 134
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S> <C>
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.
23.1 -- Consent of Kilpatrick Stockton LLP (included in Exhibit 5.1)
23.2 -- Consent of Deloitte & Touche LLP.
23.3 -- Consent of Fletcher Spaght, Inc.
25.1* -- Statement on Form T-1 of Eligibility of Trustee.
27.1 -- Financial Data Schedule (for SEC use only).
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>
II-5
<PAGE> 135
- ---------------
* Previously filed.
+ Portions of this Exhibit are omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment.
(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.
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
II-6
<PAGE> 136
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-7
<PAGE> 137
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 September 21, 1998.
PARK 'N VIEW, INC.
By: /s/ STEPHEN L. CONKLING
------------------------------------
Stephen L. Conkling
President and Chief Operating
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on the 21st day
of September, 1998, in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE POSITION
--------- --------
<C> <S>
/s/ IAN WILLIAMS Chairman of the Board, Chief Executive Officer
- ----------------------------------------------------- and Director (Principal Executive Officer)
Ian Williams
/s/ R. MICHAEL BREWER Vice President-Finance and Chief Financial
- ----------------------------------------------------- Officer (Principal Financial and Accounting
R. Michael Brewer Officer)
* Director
- -----------------------------------------------------
Robert M. Chefitz
* Director
- -----------------------------------------------------
Thomas P. Hirschfeld
* Director
- -----------------------------------------------------
Richard M. Johnston
* Director
- -----------------------------------------------------
Daniel K. O'Connell
* Director
- -----------------------------------------------------
David C. Turner
*By: /s/ STEPHEN L. CONKLING
------------------------------------------------
Stephen L. Conkling
Attorney-in-Fact
</TABLE>
II-8
<PAGE> 138
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> 139
<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> 140
<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.
23.3 -- Consent of Fletcher Spaght, Inc.
25.1* -- Statement on Form T-1 of Eligibility of Trustee.
27.1 -- Financial Data Schedule (for SEC use only).
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>
- ---------------
* Previously filed.
+ 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 5.1
Attorneys at Law
Suite 400
KILPATRICK STOCKTON LLP 4101 Lake Boone Trail
Raleigh, North Carolina 27607-6519
Telephone: 919.420.1700
Facsimile: 919.420.1800
September 18, 1998
Park `N View, Inc.
11711 N.W. 39th Street
Coral Springs, Florida 33065
Re: Registration Statement on Form S-4 (No. 333-59889)
Ladies and Gentlemen:
We have acted as counsel to Park `N View, Inc., a Delaware
corporation (the "Company") in connection with a Registration Statement on Form
S-4 (the "Registration Statement") filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act") relating to
the 13% Series B Senior Notes due 2008 (the "New Notes") of the Company to be
offered in exchange for all outstanding 13% Series A Senior Notes due 2008 (the
"Old Notes") of the Company. The New Notes will be issued pursuant to an
indenture (the "Indenture"), dated as of May 27, 1998, by and between the
Company and State Street Bank and Trust Company, as trustee.
We have participated in the preparation of the Registration Statement
and have reviewed originals or copies, certified or otherwise identified to our
satisfaction, of such documents and records of the Company and such other
instruments and other certificates of public officials, officers and
representatives of the Company and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis for the opinions
expressed below.
In rendering the opinions expressed below, we have assumed the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies. In addition, we have
assumed and have not verified (i) the accuracy as to factual matters of each
document we have reviewed and (ii) that the Old Notes and the New Notes conform
or will conform to the forms thereof that we have reviewed and have been or will
be duly authenticated in accordance with their terms and the terms of the
Indenture.
Based on the foregoing, and subject to the further assumptions and
qualifications set forth below, it is our opinion that:
<PAGE> 2
KILPATRICK STOCKTON LLP
Park `N View, Inc.
September 18, 1998
Page 2
The New Notes have been duly and validly authorized by the Company,
and when the New Notes have been duly executed and authenticated in accordance
with their terms and the terms of the Indenture, and duly issued and delivered
by the Company in exchange for an equal principal amount of Old Notes pursuant
to the terms set forth in the Registration Rights Agreement (in the form filed
as an exhibit to the Registration Statement), the prospectus comprising part of
the Registration Statement and the Letter of Transmittal (in the form filed as
an exhibit to the Registration Statement), the New Notes will constitute the
legal, valid and binding obligations of the Company.
Insofar as the foregoing opinions relate to the legality, validity or
binding effect of any agreement or obligation of the Company, (a) we have
assumed that each party to such agreement or obligation has satisfied those
legal requirements that are applicable to it to the extent necessary to make
such agreement or obligation enforceable against it; (b) such opinions are
subject to applicable bankruptcy, insolvency, fraudulent conveyance and similar
laws affecting creditors' rights generally and to general principles of equity;
and (c) we express no opinion as to sections of the Indenture which pertain to
severability of illegal provisions or waiver of protection under stay, extension
or usury laws.
We are licensed in the State of North Carolina. Our opinions are
limited to the laws of the State of North Carolina and the applicable laws of
the State of Delaware, and we express no opinion concerning the laws of any
other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus included in the Registration Statement. In
giving such consent, we do not thereby admit that we are "experts" within the
meaning of the Act or the rules and regulations of the Securities and Exchange
Commission issued thereunder with respect to any part of the Registration
Statement, including this exhibit.
Very truly yours,
/s/ Kilpatrick Stockton LLP
<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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<PAGE> 2
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
-2-
<PAGE> 3
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
-3-
<PAGE> 4
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
-4-
<PAGE> 5
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.
-5-
<PAGE> 6
(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
-6-
<PAGE> 7
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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<PAGE> 8
(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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<PAGE> 9
(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.
-9-
<PAGE> 10
(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,
-10-
<PAGE> 11
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>
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<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>
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<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>
-40-
<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>
-41-
<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>
-42-
<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>
-43-
<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>
-46-
<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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<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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<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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<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>
-53-
<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.
2
<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
3
<PAGE> 5
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
4
<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.
5
<PAGE> 7
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,
6
<PAGE> 8
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
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 "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:
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<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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<PAGE> 51
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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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
------------------------
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<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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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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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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<PAGE> 22
(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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<PAGE> 23
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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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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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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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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<PAGE> 50
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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<PAGE> 51
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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<PAGE> 52
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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<PAGE> 53
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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<PAGE> 87
EXHIBIT 3.2
Common Stock Held by Existing Investors
See Exhibit B
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<PAGE> 88
Exhibit 3.3
List of Assets Transferred to the Company by PNV
The Partnership shall transfer all of its Assets to the Corporation
as of the Effective Date including, without limitation, all of the Assets listed
below.
A. Equipment, Furniture, Fixtures and Software
All computer equipment
All furniture and fixtures
All software
All office equipment
All cable and telephone equipment relating to the installation and operation of
the cable television and telephone system at the West Memphis, Arkansas test
site.
All plans, sketches, maps, designs and other materials relating to the
installation of telephone and cable television systems at truckstops.
All cable and telephone equipment currently in inventory or under purchase
order.
All electrical, engineering, and testing equipment.
B. Leases, Contracts and Agreements
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 among
the Partnership and Memphis Gateway Travel Center, Inc.
4. That certain Amended Cable Television and Telephone Service
Agreement dated March 27, 1995 by and among the Partnership and National
Auto/Truckstops, Inc.
5. That certain Amended Cable Television and Telephone Service
Agreement dated August 27, 1995 by and among the Partnership and Ambest.
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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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<PAGE> 90
EXHIBIT 3.8(B)
None
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<PAGE> 91
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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<PAGE> 92
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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<PAGE> 93
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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<PAGE> 94
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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<PAGE> 96
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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<PAGE> 97
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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<PAGE> 98
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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<PAGE> 99
"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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<PAGE> 100
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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<PAGE> 101
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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<PAGE> 102
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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<PAGE> 139
EXHIBIT B
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<PAGE> 140
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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<PAGE> 144
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;
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<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.
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<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.
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<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.
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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 on the [*] of each of the [*];
provided however that this Warrant shall become exercisable in full upon the
first to occur of the following: (i) 18 months following [*], (ii) the sale of
the Company, (iii) the consummation of a Qualifying Offering (as hereinafter
defined), (iv) the Company's termination [*] for any reason other than [*], or
(v) the Company's [*] 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) the fifth anniversary of [*],
(iii) [*] for any reason other than [*] or (iv) [*] as a result of a [*]. 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) the Warrantholder sells, disposes of or otherwise transfers
its interest [*]; (ii) the total number of [*] is less than [*]; and (iii) the
acquiror does not [*] or [*], that increment of the Warrant relating to [*]
shall immediately be null and void and (a) Warrantholder shall have no further
right to purchase any of such Shares hereunder; and (b) the Company shall have
the right to immediately repurchase any Shares relating to [*] 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.
<PAGE> 2
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.
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<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,
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<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
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<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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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
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<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
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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
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which such event is to take place (which shall be at least forty-five (45) days
after the Warrantholder's receipt of such notice).
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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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(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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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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(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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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:
--------------------
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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
16
<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> 2
The foregoing letter, dated May 18, 1998, is hereby acknowledged and
agreed:
[*]
By: /s/
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
2
<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 12.1
PARK'N VIEW, INC.
COMPUTATION OF DEFICIENCY OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 18,
1995 (DATE OF
INCORPORATION)
TO JUNE 30, YEAR ENDED YEAR ENDED
1996 JUNE 30, 1997 JUNE 30, 1998
-------------- ------------- ------------
<S> <C> <C> <C>
Net loss $ (1,961,237) $(6,045,020) $(13,733,747)
Preferred stock dividends (21,370) (852,850) (2,495,932)
Amortization of preferred stock
Issuance costs -- (64,432) (296,605)
------------ ----------- ------------
Deficiency of earnings to fixed charges
and preferred stock dividend requirements (1) $ (1,982,607) $(6,962,402) $(16,526,284)
============ =========== ============
</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 Amendment No. 1 to Registration Statement No.
333-59889 of Park 'N View, Inc. on Form S-4 of our report dated September 11,
1998, 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
September 18, 1998
<PAGE> 1
EXHIBIT 23.3
CONSENT
We hereby consent to the reference to the market assessment of the number
of long-haul truck drivers performed by Fletcher Spaght, Inc., for Park 'N
View, Inc. (the "Company") in the Company's registration statement on Form S-1.
FLETCHER SPAGHT, INC.
By: /s/ John Fletcher
Name: John Fletcher
Title: Chief Executive Officer
Date: September 18, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS AT JUNE 30, 1997 AND JUNE 30, 1998 AND THE STATEMENTS OF OPERATIONS FOR
THE YEAR ENDED JUNE 30, 1997 AND THE YEAR ENDED JUNE 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1998
<PERIOD-START> JUL-01-1996 JUL-01-1997
<PERIOD-END> JUN-30-1997 JUN-30-1998
<CASH> 4,717,394 19,810,656
<SECURITIES> 0 51,302,916
<RECEIVABLES> 16,937 189,580
<ALLOWANCES> 5,411 5,410
<INVENTORY> 259,825 362,738
<CURRENT-ASSETS> 5,127,358 71,761,367
<PP&E> 8,267,235 21,079,307
<DEPRECIATION> 616,482 2,630,706
<TOTAL-ASSETS> 12,938,783 94,578,127
<CURRENT-LIABILITIES> 2,313,814 5,109,226
<BONDS> 0 0
3,931,320 4,301,345
15,200,146 34,832,579
<COMMON> 4,318 4,318
<OTHER-SE> (8,936,245) (20,274,081)
<TOTAL-LIABILITY-AND-EQUITY> 12,938,783 94,578,127
<SALES> 888,397 3,503,776
<TOTAL-REVENUES> 888,397 3,503,776
<CGS> 2,077,689 6,598,993
<TOTAL-COSTS> 2,077,689 6,598,993
<OTHER-EXPENSES> 4,431,889 10,378,471
<LOSS-PROVISION> 594,691 35,151
<INTEREST-EXPENSE> (170,852) 224,905
<INCOME-PRETAX> (6,045,020) (13,733,747)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (6,045,020) (13,733,747)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (6,045,020) (13,733,747)
<EPS-PRIMARY> (1.61) (3.83)
<EPS-DILUTED> (1.61) (3.83)
</TABLE>
