<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
DIGITEC 2000, INC.
------------------
(NAME OF ISSUER)
COMMON STOCK, PAR VALUE $.001 PER SHARE
---------------------------------------
(TITLE OF CLASS OF SECURITIES)
25387T106
---------
(CUSIP Number)
FRANK C. MAGLIATO, DIGITEC 2000, INC.
8 WEST 38TH STREET, 5TH FLOOR, NEW YORK, NEW YORK 10018
(212) 944-2829
-------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS)
March 31, 1998
--------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [_]
<PAGE>
- -----------------------
CUSIP NO. 25387T106 SCHEDULE 13D
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Premiere Communications, Inc.
Premiere Technologies, Inc.
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
WC
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
5 IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Premiere Communications, Inc.--Florida
Premiere Technologies, Inc.--Georgia
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SOLE VOTING POWER
7
NUMBER OF 587,302 shares of Common Stock
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
None
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 587,302 shares of Common Stock
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
None
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
587,302 shares of Common Stock
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
<PAGE>
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
8.53%* of Common Stock
*Based on 6,878,298 shares outstanding as of March 31, 1998, as was represented
by the Issuer in connection with the purchase of shares by the Reporting Person.
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON (See Instructions)
14
CO
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ITEM 1. SECURITY AND ISSUER.
-------------------
This statement (this "Statement") relates to the common stock, par
value $.001 per share (the "Common Stock"), of DigiTEC 2000, Inc. (the
"Issuer"), with its principal executive offices located at 8 West 38th Street,
5th Floor, New York, New York 10018.
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
(a)(b)(c) This Statement is filed on behalf of Premiere Technologies,
Inc. ("Technologies"), a Georgia corporation, and its wholly owned subsidiary,
Premiere Communications, Inc. ("Communications"), a Florida corporation
(together the "Reporting Persons"), both with principal executive offices at
3399 Peachtree Road, N.E., Lenox Building, Suite 600, Atlanta, Georgia 30326.
(d)(e) Neither of the foregoing companies have, during the last five
years, been convicted in a criminal proceeding or have been a party to a civil
proceeding of a judicial or administrative body and, as a result, subject to any
type of sanction under federal or state securities law.
(f) Citizenship: Communications is a Florida corporation;
Technologies is a Georgia corporation.
-------------------------------
(a)(b)(c) The executive officers and directors of the Reporting Persons
are as follows:
Boland T. Jones is the Chief Executive Officer and Chairman of the Board
of Technologies, and Chief Executive Officer and a Director of Communications.
His business address is 3399 Peachtree Road, N.E., Lenox Building, Suite 600,
Atlanta, Georgia 30326.
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Jeffrey A. Allred is an Executive Vice President and a Director of
Communications, and Executive Vice President of Strategic Development of
Technologies. His business address is 3399 Peachtree Road, N.E., Lenox Building,
Suite 600, Atlanta, Georgia 30326.
Patrick G. Jones is Senior Vice President and a Director of
Communications, and Senior Vice President of Technologies. His business address
is 3399 Peachtree Road, N.E. Lenox Building, Suite 600, Atlanta, Georgia 30326.
Roy B. Andersen, Jr. is President and Chief Executive Officer of Xpedite
Systems, Inc., and a director of Technologies. His business address is
1 Industrial Way, Eatontown, New Jersey 07724.
Curtis L. Garner is President of Communications. His business address is
3399 Peachtree Road, N.E., Lenox Building, Suite 600, Atlanta, Georgia 30326.
Daniel E. Mell is Chief Financial Officer of Communications. His business
address is 3399 Peachtree Road, N.E., Lenox Building, Suite 600, Atlanta,
Georgia 30326.
Raymond H. Pirtle, Jr. is a Director of Technologies, and Managing
Director of SunTrust Equitable Securities Corporation. His business address is
800 Nashville City Center, 511 Union Street, Nashville TN, 37219.
George W. Baker is a Director of Technologies. He is President, Director
and Chief Executive Officer of Taco Tico, Inc. His business address is 3399
Peachtree Road, N.E., Lenox Building, Suite 600, Atlanta, Georgia 30326
Eduard J. Mayer is a Director of Technologies, and President of Acorn
Ventures Inc. His business address is 65 Queen Street West, Suite 1404, Toronto,
Canada, M5H2M5.
(d)(e) None of the foregoing executive officers and directors have,
during the last five years, been convicted in a criminal proceeding or have been
a party to a civil proceeding of a judicial or administrative body and, as a
result, subject to any type of sanction under federal or state securities law.
(f) All of the foregoing executive officers and directors are citizens
of the United States of America, with the exception of Daniel E. Mell and Eduard
J. Mayer, who are citizens of Canada.
<PAGE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
The consideration (in the amount of $6,105,093.15) used by the Reporting
Persons to acquire 61,050 shares of Series A Preferred Stock ( the "Preferred
Shares") from the Issuer on March 31, 1998, was obtained from the Reporting
Persons' working capital. The Preferred Shares are currently convertible into
587,302 shares of the Issuer's Common Stock, pursuant to the terms and
conditions contained in the Certificate of Designation attached as (Exhibit 1).
ITEM 4. PURPOSE OF THE TRANSACTION.
--------------------------
The Reporting Persons acquired the Preferred Shares, which are currently
convertible into 587,302 shares of Common Stock, for investment purposes. Other
than as provided for in the Certificate of Designation (Exhibit 1), the
Reporting Persons have no plans or proposals which relate to or would result in
any action enumerated in subparagraphs (a)-(j) of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
(a)(b) The Reporting Persons presently beneficially own 61,050 Preferred
Shares, which are convertible into 587,302 shares of Common Stock of the Issuer,
pursuant to the terms and conditions contained in the Certificate of Designation
(Exhibit 1). Such shares of Common Stock represent approximately 8.53% of the
Issuer's outstanding shares of Common Stock as of March 31, 1998, based on
6,878,298 shares outstanding, which was the number of shares represented by
Issuer to be outstanding in connection with the purchase of the Preferred
Shares. The Reporting Persons have the sole power to vote and dispose of these
shares.
(c)-(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
---------------------------------------------------------------------
TO SECURITIES OF THE ISSUER.
---------------------------
See Certificate of Designation, (Exhibit 1), whereby DigiTEC 2000, Inc.
authorized Series A Preferred Stock with certain rights as to voting,
conversion, and redemption.
See Investor Agreement, (Exhibit 2), whereby Issuer, Premiere and Frank
C. Magliato agree that Premiere shall have certain rights of inclusion upon a
proposed transfer of shares of Common Stock of the Issuer by Frank G. Magliato.
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
Exhibit 1: Certificate of Designation of Series A Preferred Stock, filed
with the Secretary of State of Nevada on March 31, 1998.
Exhibit 2: Investor Agreement by and among DigiTEC 2000, Inc., Frank C.
Magliato and Premiere Communications, Inc., dated March 31,
1998.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete
and correct.
Date: April 9, 1998
-------------
Premiere Communications, Inc.
/s/ Patrick G. Jones
- ------------------------------------
By: Patrick G. Jones
Title: Senior Vice President
Premiere Technologies, Inc.
/s/ Patrick G. Jones
- ------------------------------------
By: Patrick G. Jones
Title: Senior Vice President
<PAGE>
EXHIBIT 1
CERTIFICATE OF DESIGNATION
OF DIGITEC 2000, INC.
In accordance with Sections 78.195 and 78.1955 of the General Corporation
Law of Nevada (the "GCLN"), DIGITEC 2000, INC. (the "Corporation"), a
corporation organized and existing under and by virtue of the GCLN, DOES HEREBY
CERTIFY:
1. The name of the corporation is DigiTEC 2000, Inc.
2. Pursuant to a resolution adopted by the Board of Directors of the
Corporation on March 31, 1998, 61,050 shares of the Corporation's
authorized preferred stock are hereby designated as Series A Preferred
Stock, which shall have the following rights, preferences and
privileges;
1. DEFINITIONS. For the purposes of this designation, the following terms
-----------
shall have the meanings specified below:
"Board of Directors" shall mean the board of directors of the Corporation;
------------------
any member of the Board of Directors being sometimes referred to herein as a
"Director," or any group thereof as "Directors."
"Common Stock" shall mean the common stock, $.001 par value per share, of
------------
the Corporation.
"Conversion Price" shall mean $10.395, except as otherwise adjusted as
----------------
provided in SECTION 4.
"Conversion Rate" shall have the meaning provided in SECTION 4(a).
---------------
"Corporation" shall mean DigiTEC 2000, Inc., a Nevada corporation.
-----------
"Designations" shall mean the preferences, powers, limitations and relative
------------
rights of the Series A Preferred Stock established hereby and set forth herein.
"Invested Amount" per share of Series A Preferred Stock shall mean $100.00
---------------
(as adjusted for changes in the Series A Preferred Stock by stock split, stock
dividend, or the like occurring after the Original Issue Date).
"Liquidation" shall have the meaning specified in SECTION 2.
-----------
"Original Issue Date" shall mean the date on which shares of Series A
-------------------
Preferred Stock are first actually issued by the Corporation pursuant to that
certain Investment Agreement dated March 31, 1998, by and between the
Corporation and Premier
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Communications, Inc. pursuant to which the initial issuance of shares of Series
A Preferred Stock is to occur.
"Securities Act" shall mean the federal Securities Act of 1933, as amended.
--------------
"Series A Preferred Stock" shall mean the 61,050 shares of Series A
------------------------
Cumulative Preferred Stock, $.001 par value per share, hereby designated.
2. LIQUIDATION RIGHTS. (a) In the event of the liquidation, dissolution
------------------
or winding up of the Corporation, or, if the Corporation has subsidiaries, such
of the Corporation's subsidiaries the assets of which constitute all or
substantially all the assets of the business of the Corporation and its
subsidiaries taken as a whole (a "LIQUIDATION"), the holders of the outstanding
shares of the Series A Preferred Stock shall, at their election, be entitled to
receive in exchange for and in redemption of their Series A Preferred Stock,
prior and in preference to the holders of Common Stock and the holders of any
other class or series of stock of the Corporation ranking junior to the Series A
Preferred Stock by reason of their ownership thereof, from any funds legally
available for distribution to shareholders, an amount per share equal to the
Invested Amount, plus an amount equal to accrued and unpaid dividends and
distributions thereon, to the date of payment.
(b) To the extent necessary, the Corporation shall cause such actions
to be taken by any of its subsidiaries so as to enable the proceeds of a
Liquidation to be distributed to the holders of shares of Series A Preferred
Stock in accordance with this SECTION 2. All preferential amounts to be paid to
the holders of the Series A Preferred Stock under this SECTION 2 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 the Common Stock or any class or series of stock of the Corporation ranking
junior to the Series A Preferred Stock in connection with a Liquidation. If the
assets or surplus funds to be distributed to holders of Series A Preferred Stock
are insufficient to permit the payment to such holders of the full amount
payable to such holders, the assets and surplus funds legally available for
distribution shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding.
3. VOTING RIGHTS. In addition to any other voting rights required by law,
-------------
the holders of Series A Preferred Stock shall have the following voting rights:
(a) Except as specifically set forth below, the holder of each share
of the Series A Preferred Stock shall be entitled to the number of votes per
share equal to the number of shares of Common Stock into which such share of
Series A Preferred Stock would be convertible under the circumstances described
in SECTION 4 on the record date for the vote or consent of shareholders, and
shall otherwise have voting rights and powers equal to the voting rights and
powers of the Common Stock. Except as otherwise provided herein or as required
by law, each holder of a share of the Series A Preferred Stock shall be entitled
to receive the same prior notice of any shareholders' meeting as provided to the
holders of Common Stock in accordance with the Bylaws of the Corporation, as
well as prior notice of all shareholder actions to be taken by legally available
means in lieu of meeting. Fractional votes shall not, however, be permitted,
and any fractions shall be disregarded in computing voting rights.
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<PAGE>
(b) Except as otherwise provided herein or required by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as a single class on all matters submitted to a
vote of shareholders of the Corporation.
(c) (i) Notwithstanding anything contained in this SECTION 3 to the
contrary, if the Corporation should fail for any reason to issue Common Stock in
conversion of the Series A Preferred Stock as provided in SECTION 4, and should
such failure continue for a period of ninety (90) consecutive days, then, at the
end of such period and for so long as said failure remains uncured, the holders
of Series A Preferred Stock shall be entitled (but not obligated), at any annual
meeting of the shareholders or any special meeting called for such purpose,
voting together as a single class, to elect two (2) members of the Board of
Directors, and the holders of Common Stock, voting as a single class, shall
elect the remaining Directors; provided, however, that if the total number of
members of the Board of Directors exceeds eight (8), then in such circumstances
the holders of the Series A Preferred Stock shall be entitled to elect three (3)
members of the Board of Directors and the holders of Common Stock, voting as a
single class, shall elect the remaining Directors. If, prior to the end of the
term of any Director elected as aforesaid by the holders of shares of the Series
A Preferred Stock, a vacancy in the office of such Director shall occur by
reason of death, resignation, removal or disability, or for any other reason,
the right to fill such vacancy shall be vested in the holders of the Series A
Preferred Stock unless the right of such holders to elect such Director shall
have ceased as provided hereafter.
(ii) At such time, if any, as the holders of the Series A Preferred
Stock shall obtain the conversion referred to in SECTION 3(c)(i), then the terms
of office of all persons elected as Directors by such holders shall forthwith
terminate, the number of Directors shall be reduced accordingly, and the holders
of Series A Preferred Stock, if any, shall once again have rights with respect
to the election of Directors as are provided in SECTION 3(a). The foregoing
remedy shall not be deemed exclusive and shall be in addition to all other
rights and remedies available at law or equity to the holders of Series A
Preferred Stock.
(d) Except as otherwise provided herein, holders of Series A Preferred
Stock shall have no special voting rights, and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
4. CONVERSION. The holders of the Series A Preferred Stock shall
----------
have conversion rights as follows (the "CONVERSION RIGHTS"):
(a) For purposes of this SECTION 4, the shares of Series A Preferred
Stock shall be convertible, at the times and under the conditions described in
this SECTION 4, at the rate (the "CONVERSION RATE") of one share of Series A
Preferred Stock to the number of shares of Common Stock that equals the quotient
obtained by dividing (i) the Invested Amount plus all accrued but unpaid
dividends and distributions on such share of Series A Preferred Stock by (ii)
the Conversion Price. Thus, the number of shares of Common Stock to which a
holder of Series A Preferred Stock shall be entitled upon any conversion
provided for in this SECTION 4 shall be the product obtained by multiplying the
Conversion Rate by the number of shares of Series A Preferred Stock being
converted. Such conversion shall be deemed to have been made
3
<PAGE>
immediately prior to the close of business on the date of the surrender of the
shares of Series A Preferred Stock to be converted in accordance with the
procedures described in SECTION 4(d).
(b) Each share of Series A Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the date of issuance of such
share at the office of the Corporation or any transfer agent for the Series A
Preferred Stock, into Common Stock at the then effective Conversion Rate.
(c) No fractional shares of Common Stock shall be issued upon
conversion of Series A Preferred Stock, and any shares of Series A Preferred
Stock surrendered for conversion that would otherwise result in a fractional
share of Common Stock shall be redeemed at the then effective Conversion Price
per share, payable as promptly as possible when funds are legally available
therefor.
(d) Before any holder of Series A Preferred Stock shall be entitled to
receive certificates representing the shares of Common Stock into which shares
of Series A Preferred Stock are converted in accordance with any provision of
this SECTION 4, such holder shall surrender the certificate or certificates for
such shares of Series A Preferred Stock, duly endorsed, at the office of the
Corporation or of any transfer agent for the Series A Preferred Stock, and shall
give written notice to the Corporation at such office of the name or names in
which such holder wishes the certificate or certificates for shares of Common
Stock to be issued, if different from the name shown on the books and records of
the Corporation. Said conversion notice shall also contain such representations
as may reasonably be required by the Corporation to the effect that the shares
to be received upon conversion are not being acquired and will not be
transferred in any way that might violate the then applicable securities laws.
The Corporation shall, as soon as practicable thereafter and in no event later
than thirty (30) days after the delivery of said certificates, issue and deliver
at such office to such holder of Series A Preferred Stock, or to the nominee or
nominees of such holder as provided in such notice, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled as aforesaid. The person or persons entitled to receive the shares
of Common Stock issuable upon a conversion pursuant to any provision of this
SECTION 4 shall be treated for all purposes as the record holder or holders of
such shares of Common Stock as of the effective date of conversion specified in
such section. All certificates issued upon the exercise or occurrence of the
conversion shall contain a legend governing restrictions upon such shares
imposed by law or agreement of the holder or his or its predecessors.
(e) In the event the Corporation at any time or from time to time
after the Original Issue Date effects a subdivision or combination of the
outstanding Common Stock into a greater or lesser number of shares without a
proportionate and corresponding subdivision or combination of the outstanding
Series A Preferred Stock, then and in each such event the Conversion Price (and
the corresponding Conversion Rate) shall be increased or decreased
proportionately.
(f) Subject to SECTION 5(a)(i), in the event that the Corporation at
any time or from time to time after the Original Issue Date shall make or issue,
or fix a record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into or
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<PAGE>
entitling the holder thereof to receive additional shares of Common Stock
(hereinafter referred to as "COMMON STOCK EQUIVALENTS") without payment of any
consideration by such holder of such Common Stock Equivalents or the additional
shares of Common Stock, and without a proportionate and corresponding dividend
or other distribution to holders of Series A Preferred Stock, then and in each
such event the maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for subsequent
adjustment of such number) of Common Stock issuable in payment of such dividend
or distribution or upon conversion or exercise of such Common Stock Equivalents
shall be deemed, for purposes of this SECTION 4(f), to be issued and outstanding
as of the time of such issuance or, in the event such a record date shall have
been fixed, as of the close of business on such record date. In each such event,
the Conversion Price shall be decreased as of the time of such issuance or, in
the event such a record date shall have been fixed, as of the close of business
on such record date, by multiplying the Conversion Price by a fraction,
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding or deemed to be issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date; and
(ii) the denominator of which shall be the total number of shares of
Common Stock (x) issued and outstanding or deemed pursuant to the terms hereof
to be issued and outstanding (not including any shares described in clause (y)
immediately below), immediately prior to the time of such issuance or the close
of business on such record date, plus (y) the number of shares of Common Stock
issuable in payment of such dividend or distribution or upon conversion or
exercise of such Common Stock Equivalents;
provided, however, that (i) if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Conversion Price (and the corresponding Conversion Rate)
shall be recomputed accordingly as of the close of business on such record date
and thereafter the Conversion Price (and the corresponding Conversion Rate)
shall be adjusted pursuant to this SECTION 4(f) as of the time of actual payment
of such dividend or distribution; or (ii) if such Common Stock Equivalents
provide, with the passage of time or otherwise, for any decrease in the number
of shares of Common Stock issuable upon conversion or exercise thereof (or upon
the occurrence of a record date with respect thereto), the Conversion Price (and
the corresponding Conversion Rate) computed upon the original issue thereof (or
upon the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such decrease becoming effective, be
recomputed to reflect such decrease insofar as it affects the rights of
conversion or exercise of the Common Stock Equivalents then outstanding; or
(iii) upon the expiration of any rights of conversion or exercise under any
unexercised Common Stock Equivalents, the Conversion Price (and the
corresponding Conversion Rate) computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed as if the
only additional shares of Common Stock issued were the shares of such stock, if
any, actually issued upon the conversion or exercise of such Common Stock
Equivalents.
5
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(g) (i) Except as otherwise provided in this SECTION 4(g), in the
event, and each time as, the Corporation sells or issues any Common Stock or
Common Stock Equivalents following the Original Issue Date, at a per share
consideration (as defined below) less than the Conversion Price then in effect,
then the Conversion Price shall be adjusted as provided in this SECTION 4(g),
and the Conversion Rate shall be appropriately adjusted. For purposes of the
foregoing, the per share consideration with respect to the sale or issuance of a
share of Common Stock shall be the price per share received by the Corporation,
prior to the payment of any expenses, commissions, discounts and other
applicable costs. With respect to the sale or issuance of Common Stock
Equivalents that are convertible into or exchangeable for Common Stock without
further consideration, the per share consideration shall be determined by
dividing the maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for subsequent
adjustment of such number) of Common Stock issuable with respect to such Common
Stock Equivalents into the aggregate consideration received by the Corporation
upon the sale or issuance of such Common Stock Equivalents. With respect to the
issuance of other Common Stock Equivalents, the per share consideration shall be
determined by dividing the maximum number of shares (as set forth in the
instrument relating thereto without regard to any provisions contained therein
for subsequent adjustment of such number) of Common Stock issuable with respect
to such Common Stock Equivalents into the aggregate consideration received by
the Corporation upon the sale or issuance of such Common Stock Equivalents plus
the total consideration receivable by the Corporation upon the conversion or
exercise of such Common Stock Equivalents. The issuance of Common Stock or
Common Stock Equivalents for no consideration shall be deemed to be an issuance
at a per share consideration of $.01. In connection with the sale or issuance
of Common Stock and/or Common Stock Equivalents for non-cash consideration, the
amount of consideration shall be determined by the Board of Directors of the
Corporation in good faith.
(ii) As used herein, "ADDITIONAL SHARES OF COMMON STOCK" shall mean
either shares of Common Stock issued, with respect to such adjustments to be
made to the Conversion Price and the Conversion Rate, subsequent to the Original
Issue Date, or, with respect to the issuance of Common Stock Equivalents, the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein for subsequent adjustment of
such number) of Common Stock issuable in exchange for, upon conversion of, or
upon exercise of such Common Stock Equivalents.
(iii) Upon each issuance of Common Stock for a per share
consideration less than the Conversion Price as in effect on the date of such
issuance, the Conversion Price as in effect on such date shall be adjusted by
multiplying it by a fraction:
(x) the numerator of which shall be the number of shares of
Common Stock deemed outstanding (as defined below) immediately
prior to the issuance of such Additional Shares of Common Stock
plus the number of shares of Common Stock that the aggregate net
consideration received by the Corporation for the total number of
such Additional Shares of Common Stock so issued would purchase
at the Conversion Price then in effect; and
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<PAGE>
(y) the denominator of which shall be the number of shares
of Common Stock deemed outstanding (as defined below) immediately
prior to the issuance of such Additional Shares of Common Stock
plus the number of shares of Common Stock so issued.
(iv) For the purposes of SECTION 4(g)(iii), the number of shares of
Common Stock deemed to be outstanding as of a given date shall be the sum of (x)
the number of shares of Common Stock actually outstanding, (y) the number of
shares of Common Stock into which the then outstanding shares of Series A
Preferred Stock could be converted if fully converted on the day immediately
preceding the given date, and (z) the number of shares of Common Stock that
could be obtained through the exercise or conversion of all other rights,
options and convertible securities on the day immediately preceding the given
date.
(v) Upon each issuance of Common Stock Equivalents that are
exchangeable without further consideration into Common Stock, for a per share
consideration less than the Conversion Price as in effect on the date of such
issuance, the Conversion Price shall be adjusted as provided in SECTION
4(g)(iii) on the basis that the Additional Shares of Common Stock are to be
treated as having been issued on the date of issuance of the Common Stock
Equivalents, and the aggregate consideration received by the Corporation for
such Common Stock Equivalents shall be deemed to have been received for such
Additional Shares of Common Stock.
(vi) Upon each issuance of Common Stock Equivalents other than those
described in SECTION 4(g)(v) for a per share consideration less than the
Conversion Price as in effect on the date of such issuance, the Conversion Price
shall be adjusted as provided in SECTION 4(g)(iii) on the basis that the
Additional Shares of Common Stock are to be treated as having been issued on the
date of issuance of such Common Stock Equivalents, and the aggregate
consideration received and receivable by the Corporation on conversion or
exercise of such Common Stock Equivalents shall be deemed to have been received
for such Additional Shares of Common Stock.
(vii) Once any Additional Shares of Common Stock have been treated as
having been issued for the purpose of this SECTION 4(g), they shall be treated
as issued and outstanding shares of Common Stock whenever any subsequent
calculations must be made pursuant hereto; provided that on the expiration of
any options, warrants or rights to purchase Additional Shares of Common Stock,
the termination of any rights to convert or exchange for Additional Shares of
Common Stock, or the expiration of any options or rights related to such
convertible or exchangeable securities on account of which an adjustment in the
Conversion Price has been made previously pursuant to this SECTION 4(g), such
Conversion Price shall forthwith be readjusted to the Conversion Price as would
have obtained had the adjustment made upon the issuance of such options,
warrants, rights, securities or options or rights related to such securities
been made upon the basis of the issuance of only the number of shares of Common
Stock actually issued upon the exercise of such options, warrants or rights,
upon the conversion or exchange of such securities or upon the exercise of the
options or rights related to such securities.
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<PAGE>
(viii) The foregoing notwithstanding, no adjustment of the Conversion
Price and the Conversion Rate shall be made pursuant to this SECTION 4(g) as a
result of the issuance of:
(v) any shares of Common Stock upon the conversion of shares
of Series A Preferred Stock;
(w) any shares of Common Stock pursuant to which the
Conversion Price and the Conversion Rate are adjusted under
SECTION 4(e) OR (f);
(x) any shares of Common Stock issued pursuant to the
exchange, conversion or exercise of any Common Stock Equivalents
that have previously been incorporated into computations
hereunder on the date when such Common Stock Equivalents were
issued;
(y) any shares of Common Stock issued at any time after the
Original Issue Date pursuant to (i) warrants or options to
purchase shares of Common Stock that have been granted by the
Corporation as of the Original Issue Date or (ii) options granted
under the Corporation's Stock Incentive Plan adopted in April
1997; and
(z) any shares of Common Stock or other securities of the
Corporation issued as consideration in a business combination
transaction, joint venture or investment involving the
Corporation so long as such transaction is negotiated and entered
into on an arms' length basis and no affiliate of the Corporation
receives any consideration in connection therewith other than
customary finders' fees.
(h) No adjustment to the Conversion Price (and, thereby, the
Conversion Rate) shall be made if such adjustment would result in a change in
the Conversion Price of less than $.01. Any adjustment of less than $.01 that
is not made shall be carried forward and shall be made at the time of and
together with any subsequent adjustment that, on a cumulative basis, amounts to
an adjustment of $.01 or more in the Conversion Price.
(i) Except as provided in SECTION 6, the Corporation shall not, by
amendment of its Articles of Incorporation or Bylaws or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but shall at all times in good faith assist in the
carrying out of all the provisions of this SECTION 4 and in the taking of all
such actions as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A Preferred Stock against
impairment.
(j) Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to this SECTION 4, the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and cause independent public
8
<PAGE>
accountants selected by the Corporation to verify such computation and prepare
and furnish to each holder of Series A Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of Series A Preferred Stock, furnish
or cause to be furnished to such holder a like certificate setting forth (i)
such adjustments and readjustments, (ii) the Conversion Price and the Conversion
Rate at that time in effect, and (iii) the number of shares of Common Stock and
the amount, if any, of other property that at that time would be received upon
the conversion of Series A Preferred Stock.
(k) In the event of any taking by the Corporation of a record of the
holders of Common Stock for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, any Common Stock
Equivalents or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, the Corporation shall mail to each holder of Series A Preferred
Stock, at least twenty (20) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or rights, and the amount and character of such
dividend, distribution or rights.
(l) The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A Preferred Stock;
and if at any time the number of authorized but unissued shares of Common Stock
shall be insufficient to effect the conversion of all then outstanding shares of
the Series A Preferred Stock, the Corporation shall take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
(m) The Corporation shall pay all taxes (other than taxes based upon
income) and other governmental charges that may be imposed with respect to the
issue or delivery of shares of Common Stock upon conversion of shares of Series
A Preferred Stock, excluding any tax or other charge imposed in connection with
any transfer involved in the issue and delivery of shares of Common stock in a
name other than that in which the shares of Series A Preferred Stock so
converted were registered.
(n) The Corporation may, at its option, cause all but not less than
all of the shares of Series A Preferred Stock to be converted into Common Stock
pursuant to this SECTION 4 on or after March 31, 1999, upon at least thirty (30)
and not more than sixty (60) days notice, but only if
(i) the average current market price of the Corporation's
Common Stock for any twenty (20) consecutive trading days (as
defined below) ending within ten (10) days prior to the date of
the notice of such redemption shall have equaled or exceeded one
hundred fifty percent (150%) of the Conversion Price, and the
average daily trading volume of such Common Stock during such
twenty (20) trading days is at least 25,000 shares (as adjusted
for changes in the Common Stock by stock
9
<PAGE>
split, stock dividend or the like occurring after the date of
this Certificate), and
(ii) all of the shares of Common Stock into which such
shares of Series A Preferred Stock may be converted shall be
registered for resale from time to time on any exchange or
trading system or in privately negotiated transactions under a
registration statement that has been declared effective by the
Commission. Such registration statement shall remain effective
for at least six (6) months after such conversion. This
requirement shall not be applicable at any time that Purchaser is
entitled to sell all of the Registrable Securities under Rule
144(k) under the Securities Act.
For purposes hereof, the "current market price," of the
Corporation's Common Stock on any date is the last sale price on
the NASDAQ national market or, if the Common Stock is listed on
an exchange, the last reported sales price on the principal
exchange on which the Common Stock is listed or, if the Common
Stock is not so traded or listed, then the average of the high
and low bid prices during such trading day. For purposes hereof,
"trading days" include any day on which shares of Common Stock
are purchased and sold on an exchange or trading system, but
exclude any such days in which purchases by the Corporation, its
officers or directors or any entity controlled by any of them
have taken place, unless such purchases do not exceed 25% of such
trading day's total trading volume and were made in compliance
with Rule 10b-18 promulgated by the Commission.
5. REDEMPTION OF PREFERRED STOCK. (a)(i) All, or any part of, the then
-----------------------------
outstanding shares of Series A Preferred Stock may be redeemed at the option of
the Corporation on a date specified in the Corporation's notice to redeem such
shares (the "REDEMPTION DATE"). Notice of any proposed redemption shall be
given by the Corporation by mailing a copy of such notice sixty (60) days prior
to the Redemption Date, to the holders of record of the shares to be redeemed at
their respective addresses then appearing on the books of the Corporation. Each
holder of Series A Preferred Stock shall have fifteen (15) days from the receipt
of the notice of redemption from the Corporation in which to notify the
Corporation that the holder of Series A Preferred Stock will convert his, her or
its shares into shares of Common Stock pursuant to SECTION 4. On the Redemption
Date, the Corporation shall deposit in trust, for the account of the holder of
shares to be redeemed, funds necessary for such redemption with a bank or trust
company organized under the laws of the United States of America or of the State
of Nevada which shall be designated in such notice of redemption. Notice of
redemption having been duly given, or said bank or trust company having been
irrevocably authorized by the Corporation to give such notice, and funds
necessary for such redemption having been deposited, all as aforesaid, all
shares with respect to which such deposit shall have been made shall forthwith,
whether or not the date fixed for such redemption shall have occurred or the
certificates for such shares shall have been surrendered for cancellation, be
deemed no longer to be outstanding for any purpose, and all rights with respect
to such shares shall thereupon cease and terminate, excepting only (x) the right
of conversion
10
<PAGE>
specified above and (y) the right of the holder of the certificates for such
shares to receive, out of the funds so deposited in trust, on the Redemption
Date, the redemption funds, without interest, to which he, she or it is
entitled.
(ii) On or before the Redemption Date, each holder of shares
required to be redeemed shall surrender the certificate representing such shares
to the Corporation and shall receive payment of the Redemption Price (as defined
below) in cash. If less than all the shares represented by a surrendered
certificate are redeemed, the Corporation shall issue a new certificate
representing the unredeemed shares.
(iii) From and after the Redemption Date, unless there shall have
been a default in payment of the Redemption Price, all rights of the holders of
shares of Series A Preferred Stock designated for redemption on such date
(except the right to receive the Redemption Price without interest upon
surrender of their certificate or certificates) shall cease with respect to such
shares, and such shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose whatsoever. If the
funds of the Corporation legally available for redemption of shares of Series A
Preferred Stock on any date scheduled for a redemption are insufficient to
redeem the total number of shares of Series A Preferred Stock to be redeemed on
such date, those funds that are legally available will be used to redeem the
maximum possible number of such shares ratably among the holders of such shares
to be redeemed based upon their holdings of Series A Preferred Stock. The
shares of Series A Preferred Stock not redeemed shall remain outstanding and
entitled to all the rights and preferences provided herein. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of shares of Series A Preferred Stock, such funds will
immediately be used to redeem the balance of the shares that the Corporation has
become obliged to redeem on any scheduled redemption date but that it has not
redeemed.
(b) The price payable for each redeemed share of Series A Preferred
Stock (the "REDEMPTION PRICE") shall be equal to the Invested Amount plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of payment.
6. PROTECTIVE PROVISIONS. (a) Actions Requiring Majority Approval of
--------------------- --------------------------------------
Series A Preferred Stock. In addition to any other rights provided by law, so
- ------------------------
long as any shares of Series A Preferred Stock are then outstanding, except
where the vote or written consent of the holders of a greater number of shares
is required by law or by another provision of the Articles of Incorporation,
without first obtaining the affirmative vote or written consent of the holders
of a majority of the total number of shares of Series A Preferred Stock
outstanding, voting together as a single class, the Corporation shall not
(except as provided below):
(i) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such other
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled; or
11
<PAGE>
(iii) amend or repeal any provision of, or add any provision to, the
Corporation's Articles of Incorporation or Bylaws, or file any certificate of
designations, preferences, limitations and relative rights of any series of
preferred stock, if such action would alter or change the preferences, rights,
privileges or powers of, or restrictions provided for the benefit of the Series
A Preferred Stock;
(iv) create or authorize the creation or increase the authorized
amount of any additional class or series of shares of stock, unless the same
ranks junior to the Series A Preferred Stock as to dividends, redemption and the
distribution of assets on the liquidation, dissolution or winding up of the
Corporation; increase the authorized amount of any additional class or series of
shares of stock unless the same ranks junior to the Series A Preferred Stock as
to dividends, redemption and the distribution of assets on the liquidation,
dissolution or winding up of the Corporation; or create or authorize any
obligation or security convertible into shares of Common Stock, Series A
Preferred Stock or any other class or series of stock, whether voting or non-
voting; regardless of whether any such creation, authorization or increase shall
be by means of amendment to the Articles of Incorporation, or by merger,
consolidation or otherwise;
(v) increase or decrease the authorized number of shares of the
Series A Preferred Stock or issue any additional shares of Series A Preferred
Stock to any person other than Premiere Communications, Inc. or any of its
affiliates;
(vi) enter into any agreement, commitment or plan regarding a
Liquidation;
(vii) purchase, redeem or otherwise acquire, other than as required
in SECTION 5, for value any shares of any class of its capital stock or cause or
permit any employee stock ownership plan, including any Employee Stock Ownership
Plan as defined in Section 4975(e)(7) of the Internal Revenue Code of 1986, as
amended, to purchase shares of any class of its capital stock, except pursuant
to a stock option or employee stock ownership plans or restricted stock
agreements or other contract of or with the Corporation, or in exercise of any
right of first refusal of the Corporation upon a proposed transfer that is, in
each case, in existence on the Original Issue Date; or
(viii) amend the provisions of this SECTION 6(a).
Provided, however, that the provisions of this SECTION 6(a) shall not apply to
any issuance of any class or series of shares of stock of the Corporation that
is pari pasu or senior to Series A Preferred Stock as to dividends, redemption,
distribution of assets on liquidation, dissolution or winding up or otherwise,
so long as such shares are issued as consideration in a business combination
transaction, joint venture or investment involving the Corporation which
transaction is negotiated and entered into on an arms'-length basis and in which
no affiliate of the Corporation receives any consideration in connection
therewith other than customary finder's fees.
(b) The Corporation shall not permit any Subsidiary (as defined
herein) of the Corporation to purchase or otherwise acquire for value any shares
of stock of the Corporation unless the Corporation could, under this SECTION 6,
purchase or otherwise acquire such shares at
12
<PAGE>
such time and in such manner. A "Subsidiary" means, for purposes of this SECTION
6(b), any corporation or other entity of which securities or other ownership
interests entitled to cast at least a majority of the votes that would be
entitled to be cast in an election of the board of Directors of such corporation
or other entity or other persons performing similar functions are beneficially
owned, directly or indirectly, by the Corporation or by any corporation or other
entity that is otherwise controlled by the Corporation.
7. NOTICES. Any notice required by the provisions hereof to be given to
-------
the holders of shares of Series A Preferred Stock shall be deemed given on the
third business day following (and not including) the date on which such notice
is deposited in the United States Mail, first-class, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
Corporation. Notice by any other means shall not be deemed effective until
actually received.
13
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed by the undersigned duly authorized officer, this 31st
day of March, 1998.
DIGITEC 2000, INC.
By: /s/ Frank Magliato
--------------------------------------
Name: FRANK MAGLIATO
Title: President
By: /s/ Diego E. Roca
--------------------------------------
Name: DIEGO E. ROCA
Title: Secretary
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
This instrument was acknowledged before me this 31st day of March, 1998 by
____________, the President of DigiTEC 2000, Inc.
---------------------------------
Notary Public
My Commission Expires:
---------
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<PAGE>
EXHIBIT 2
INVESTOR AGREEMENT
This INVESTOR AGREEMENT is dated as of March 31, 1998, by and among DIGITEC
2000, INC., a Nevada corporation (the "Company"), Frank C. Magliato (the
"Shareholder") and PREMIERE COMMUNICATIONS INC., a Florida corporation (the
"Investor").
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the terms of the Investment Agreement of even date
herewith (the "Investment Agreement") between the parties hereto, the Investor
purchased 61,050 shares of the Company's Series A Preferred Stock, par value
$.001 per share ("Series A Preferred Stock");
WHEREAS, the shares of Series A Preferred Stock are convertible pursuant to
their terms into shares of common stock of the Company, par value $.001 per
share (the "Common Stock") (such shares of Common Stock, along with any shares
of Common Stock or other equity securities of the Company that the Investor may
subsequently acquire, are referred to herein as the "Investor Shares"); and
WHEREAS, the Shareholder owns 1,137,510 shares of the Company's Common
Stock (such shares, along with any shares of Common Stock or other equity
securities of the Company that the Shareholder may subsequently acquire, are
referred to herein as the "Shareholder Shares").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. RIGHTS OF INCLUSION.
-------------------
(a) In the event the Shareholder proposes to Transfer (as such term
and other capitalized terms used herein are defined in SECTION 3 hereof), any
Shareholder Shares (the "Transferor Shares") to any Person (the "Buyer"), as a
condition to such Transfer, the Shareholder shall cause the Buyer to offer (the
"Inclusion Offer") to purchase from the Investor, at the option of the Investor,
up to that number of Investor Shares determined in accordance with SECTION 1(B)
on the same terms and conditions as are applicable to the Transferor Shares
(including any consideration to be received by the Shareholder in the form of
bonuses, consulting fees, noncompetition payments, pursuant to employment
arrangements or similar arrangements), provided, that the Investor shall not be
required to provide any representation, warranty or other undertaking other than
with respect to its ownership of, and authority to Transfer, such Investor
Shares free of any liens or encumbrances. The Shareholder shall provide prompt
written notice to the Investor (the "Inclusion Notice") setting forth all the
terms and conditions of the Inclusion Offer, and the Investor may accept the
Inclusion Offer in whole or in part by providing a written notice of acceptance
to the Shareholder within ten (10) days of delivery of the Inclusion Notice to
the Investor.
<PAGE>
(b) The Investor shall have the right to sell, pursuant to the Inclusion
Offer, Investor Shares representing the same percentage of all Investor Shares
as the Transferor Shares are of all Shareholder Shares. In the event the number
of Investor Shares for which the Investor elects to exercise such right, along
with the Transferor Shares, exceed the number of shares which the Buyer is
willing to purchase, the number of shares to be Transferred to the Buyer by each
transferor shall be reduced so that each transferor is entitled to Transfer the
same percentage of its shares as each other transferor. If the Investor elects
to exercise such right, the Investor may, in its sole discretion, determine the
composition of the Investor Shares (i.e., the number of shares of the Series A
Preferred Stock and Common Stock to be included in the Investor Shares) to be
Transferred to the Buyer pursuant to the Inclusion Offer. In the event the
Investor chooses to include any Series A Preferred Stock in the Investor Shares
to be Transferred to the Buyer pursuant to the Inclusion Offer, the Investor
shall, prior to or simultaneously with such Transfer, convert such Series A
Preferred Stock into shares of Common Stock so that such Investor will Transfer
only Common Stock to the Buyer.
(c) The Shareholder shall have ninety (90) days, commencing on the date of
the Inclusion Notice, in which to Transfer, on behalf of himself and the
Investor, up to the number of shares covered by the Inclusion Offer (including
the Transferor Shares) to the Buyer. The terms of such Transfer, including,
without limitation, price and form of consideration, shall be as set forth in
the Inclusion Notice. If at the end of such ninety (90) day period the
Shareholder has not completed the Transfer of the Transferor Shares and the
Investor Shares (if any) proposed to be Transferred, the Shareholder may not
proceed with such Transfer or any other Transfer without first giving a new
Inclusion Notice pursuant to the provisions of this SECTION 1.
(d) If the Shareholder is able to complete the Transfer of the Transferor
Shares and the Investor Shares (if any) proposed to be Transferred within such
ninety (90) day period, at the closing thereof, the Investor shall deliver to
the Buyer a certificate or certificates representing the Investor Shares to be
Transferred pursuant to the Inclusion Offer, free and clear of all liens and
encumbrances, and the Buyer shall pay to the Investor the purchase price for the
Investor Shares so Transferred pursuant to this SECTION 1 and shall furnish such
other evidence of the completion of such Transfer and the terms thereof as may
be reasonably requested by the Investor.
(e) The provisions of this SECTION 1 shall not apply to any Transfer or
proposed Transfer by the Shareholder of Shareholder Shares which, together with
all other Transfers by the Shareholder of Shareholder Shares on or prior to the
date of such Transfer represent ten percent (10%) or less of the Shareholder
Shares held by the Shareholder on the date hereof, appropriately adjusted to
reflect any stock split, stock dividend, recapitalization or similar event. If
any Transfer of the Shareholder Shares, either alone or together with all
previous Transfers, exceeds such ten percent (10%) threshold, the exclusion
provided by this SECTION 1(e) shall apply to the Transfer of that number of
Shareholder Shares needed to reach the ten percent (10%) threshold and the other
provisions of this SECTION 1 shall apply to the Transfer of all Shareholder
Shares in excess of such ten percent (10%) threshold. The Company shall not
recognize any purported transfer of the Shareholder Shares in violation of this
SECTION 1.
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<PAGE>
2. PREFERRED PROVIDER OF TELECOMMUNICATIONS SERVICES.
-------------------------------------------------
At any time from the date of this Agreement through the earlier of the
seventh anniversary of the date of this Agreement or the Company's redemption or
conversion of all of the Series A Preferred Stock held by the Investor, but in
any event for at least three years from the date hereof, if the Shareholder
determines, or if any Person with respect to which the Shareholder exercises
control determines, that it will require telecommunications services with
respect to the offering of any prepaid or other telephone calling card, the
Shareholder agrees that he will or that he will cause such other Person to
notify the Investor of the existence of any other telecommunications services
arrangement he or it proposes to enter into and the terms and conditions thereof
with respect to such offering and grant to the Investor a right of first refusal
with respect to providing such telecommunications services on the same or better
terms and subject to the same conditions contained in such other arrangement,
and upon receipt of such notice (setting forth in detail all relevant terms and
conditions of such alternative arrangement), the Investor will have five (5)
days thereafter in which to agree to provide all of the telecommunications
services on the same terms and conditions.
3. DEFINITIONS.
-----------
As used herein, the following terms shall have the respective meanings set
forth below:
"Buyer" shall have the meaning set forth in SECTION 1(a) hereof.
"Common Stock" shall have the meaning set forth in the WHEREAS clauses
hereof.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Investor" shall have the meaning set forth in the first paragraph
hereof.
"Investor Shares" means all Series A Preferred Stock and Common Stock
owned by the Investor.
"Inclusion Notice" shall have the meaning set forth in SECTION 1(a)
hereof.
"Investor Offer" shall have the meaning set forth in SECTION 1(a)
hereof.
"Person" means an individual corporation, partnership, limited liability
company, firm, association, joint venture, trust, unincorporated organization,
governmental body, agency, political subdivision or other entity.
"Series A Preferred Stock" shall have the meaning set forth in the
WHEREAS clauses hereof.
-3-
<PAGE>
"Shareholder" shall have the meaning set forth in the first paragraph
hereof.
"Shareholder Shares" shall have the meaning set forth in the WHEREAS
clauses hereof.
"Transfer" means, with respect to any security, any direct or indirect
sale, transfer, assignment, hypothecation, pledge or any other disposition of
such security or any interest therein, other than any sale into any public
market for the security where the buyer is not arranged by the Shareholder or
his agent.
"Transferor Shares" shall have the meaning set forth in SECTION 1(a)
hereof.
4. MISCELLANEOUS.
-------------
(a) In the event of a breach by any party to this Agreement of its
obligations under this Agreement, any party injured by such breach, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived.
(b) Except as otherwise provided herein, no modification, amendment or
waiver of any provision of this Agreement will be effective against any party
hereto unless such modification, amendment or waiver is approved in writing by
all parties hereto. The failure of any party to enforce any of the provisions of
this Agreement will in no way be construed as a waiver of such provisions and
will not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
(c) All covenants and agreements in this Agreement by or on behalf of
any of the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.
(d) All notices, requests and other communications hereunder must be
in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or sent by nationally recognized
overnight courier service to the parties at the following addresses or facsimile
numbers:
(i) If to Investor, to
Premiere Communications, Inc.
3399 Peachtree Road N.E.
The Lenox Building
Suite 600
Atlanta, Georgia 30326
Attn: Patrick G. Jones, Esq.
Facsimile No.: (404) 262-8540
-4-
<PAGE>
with a copy to:
Kilpatrick Stockton LLP
Suite 2800
1100 Peachtree Street
Atlanta, Georgia 30309-4530
Attn: David A. Stockton, Esq.
Facsimile No.: (404) 815-6555
(ii) If to the Shareholder, to:
Mr. Frank Magliato
8 West 38th Street
New York, New York 10018
with a copy to:
Edward F. Cox, Esq.
Patterson, Belknap, Webb & Tyler, LLP
1133 Avenue of the Americas
New York, New York 10036-6710
All such notices, requests and other communications will (x) if delivered
personally to the address as provided in the Section, be deemed given upon
delivery, (y) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt and (z) if delivered by
nationally recognized overnight courier service in the manner described above to
the address as provided in this Section, be deemed given on the business day
following the day it was sent (in each case regardless of whether such notice,
request or other communication is received by any other Person to whom a copy of
such notice is to be delivered pursuant to this Section. Any party from time to
time may change its address, facsimile number or other information for the
purpose of notices to that party by giving notice specifying such change to the
other parties hereto.
(e) The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
(f) If any provision of this Agreement is held to be illegal, invalid
or unenforceable, and if the rights or obligations of any party hereto under
this Agreement will not be materially and adversely affected thereby, (i) such
provision will be fully severable, (ii) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (iii) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as part of this Agreement a legal, valid and enforceable provision as similar in
terms to such illegal, invalid or unenforceable provision as may be possible.
-5-
<PAGE>
(g) This Agreement shall be governed by and construed in accordance
with the laws of the State of Georgia applicable to a contract executed and
performed in such State without giving effect to the conflicts of laws
principles thereof.
(h) This Amendment may be executed in any number of counterparts, each
of which will be deemed an original, but all of which together will constitute
one and the same instrument.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Investor Agreement
as of the date first written above.
PREMIERE COMMUNICATIONS, INC.
By: /s/ Patrick G. Jones
-------------------------------------
Title: Senior Vice President
/s/ Frank Magliato
----------------------------------------
FRANK MAGLIATO
DIGITEC 2000, INC.
By: /s/ Frank Magliato
-------------------------------------
Title: President
-7-
