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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: December 20, 1996
Able Telcom Holding Corp.
(Exact name of registrant as specified in charter)
Florida 0-21986 65-0013218
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
1601 Forum Place, Suite 1110, West Palm Beach, Florida 33401
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (561) 688-0400
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Item 5. Other Events.
On December 20, 1996, in a private placement transaction (the "Private
Placement") exempt from registration pursuant to Section 4(2) of the Securities
Act of 1933, as amended (the "Act"), the Registrant sold to each of Credit
Suisse First Boston Corporation and Silverton International Fund Limited
(collectively, the "Purchasers") 500 shares (the "Series A Preferred Shares") of
its Series A Preferred Stock, par value $.10 per share, and issued to each
purchaser a contingent warrant (the "Warrant") to purchase 100,000 shares of the
Registrant's common stock, par value $.001 per share ("Common Stock"). The
Purchasers each paid the Registrant $3,000,000 for the Series A Preferred Shares
and the Warrant. The Private Placement was effected pursuant to a Series A
Preferred Stock Agreement by and among the Purchasers and the Registrant dated
December 20, 1996 (the "Agreement"). Pursuant to the Agreement, so long as the
Series A Preferred Shares are issued and outstanding, if the Registrant conducts
a private offering of any equity securities, each of the Purchasers that holds
Series A Preferred Shares has a right of first refusal to purchase all of such
equity securities for cash at an amount equal to the price for which such
securities are proposed to be sold. The Warrants are exercisable one year from
the effective date of the Private Placement provided that the Series A Preferred
Stock is not converted to Common Stock prior to the first anniversary of the
Private Placement.
In connection with the Agreement, on December 20, 1996, the Registrant
filed Articles of Amendment (the "Articles") to its Articles of Incorporation
designating the Series A Preferred Stock. Pursuant to the Articles, cumulative
dividends on the Series A Preferred Shares accrue at an annual rate of 5% of the
"Liquidation Preference" (as defined below) and are payable quarterly in arrears
in cash or through a dividend of additional shares of Series A Preferred Stock,
at the option of the Registrant. In the event of a liquidation, dissolution or
winding up of the Registrant, the holders of Series A Preferred Stock are
entitled to receive a preferential distribution of the assets of the Registrant
equal to $6,000.00 per share of Series A Preferred Stock (the "Liquidation
Preference").
Holders of Series A Preferred Stock have the right to convert their shares
at any time after April 30, 1997 into shares of Common Stock ("Conversion
Shares"). The number of Conversion Shares is to be determined by dividing the
Liquidation Preference per share by the lesser of (i) $9.82 (the "Fixed
Conversion Price") or (ii) by application of an applicable percentage discount
(ranging from 10% to 20% depending on the date of the conversion notice) to the
average closing bid price of a share of Common Stock for the three trading days
immediately preceding the date of the conversion notice (the "Floating
Conversion Price"). The lesser of the Fixed Conversion Price or the Floating
Conversion Price is hereinafter referred to as the "Conversion Factor."
Upon the occurrence of certain enumerated events in the Articles (a
"Redemption Event"), holders of shares of Series A Preferred Stock have the
right to sell such holder's shares of Series A Preferred Stock to the Registrant
at a price equal to the Liquidation Preference (plus any accrued and unpaid
dividends or distributions thereon) for each share being redeemed plus the
product of the number of shares of Common Stock into which such shares are then
convertible multiplied by an amount equal to the difference between (i) the
average closing bid price of Common Stock for the three trading days immediately
following the date of the redemption notice and (ii) the Conversion Factor.
At any time after December 20, 1997 and provided that there exists an
effective registration statement covering the Conversion Shares, the Registrant
has the right to redeem all of the outstanding shares of Series A Preferred
Stock at a purchase price equal to the Liquidation Preference (plus any accrued
and unpaid dividends or distributions thereon) if the closing bid price of the
Common Stock for each of five consecutive trading days prior to the date of the
redemption notice is at or greater than 150% of the Fixed Conversion Price (as
adjusted pursuant to the Articles). The Registrant also has a right to redeem
shares of Series A Preferred Stock, if the closing bid price of Common Stock is
less than $4.50 per share for five consecutive trading days and the Registrant
receives a conversion notice within three days thereafter, at a price equal to
the difference between (i) the average closing bid price of Common Stock for the
three trading days immediately following the date of the redemption notice and
(ii) the Conversion Factor.
Provided that the purchasers have not converted the Series A Preferred
Stock to Common Stock, the Warrants are exercisable after December 20, 1997 at a
purchase price per share equal to $9.82; provided, however, if there does not
exist an effective registration statement covering the shares issuable upon the
exercise of the Warrants, the Purchasers may exercise the Warrant in whole or in
part in exchange for the number of shares of Common Stock equal to the product
of (i) the number of shares as to which the Warrant is being exercised
multiplied by (ii) a fraction, the
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numerator of which is the "Market Price" (as defined in the Warrant) less $9.82,
and the denominator of which is the Market Price. The number of shares issuable
upon exercise of the Warrant will be reduced by 200 for each share of Series A
Preferred Stock that such holder was issued in connection with the Private
Placement that is converted into Common Stock prior to the first anniversary of
the Private Placement. If the Registrant delivers a redemption notice with
respect to the Series A Preferred Stock, the Registrant shall also deliver
notice to the holders of the Warrants stating that such holders have ninety (90)
days to exercise the Warrant at a purchase price equal to $9.82 per share, or
the Registrant will redeem the Warrant with respect to any shares of Common
Stock issuable upon exercise of the Warrant ("Warrant Stock") not so converted,
at a price equal to $.01 per underlying share of Warrant Stock. The Registrant
may then redeem the Warrant with respect to any portion thereof that has not
been converted into shares of Warrant Stock.
In connection with the sale of the Series A Preferred Shares, the
Purchasers and the Registrant entered into a Registration Rights Agreement dated
December 20, 1996. Pursuant to the Registration Rights Agreement, the Registrant
has agreed to file a registration statement with the Securities and Exchange
Commission (the "Commission") relating to (i) the Conversion Shares and (ii)
shares of Common Stock issuable upon exercise of the Warrants (collectively, the
"Registrable Shares"), and has agreed to use its best efforts to cause such
registration statement to be declared effective by the Commission on or before
ninety days after the date on which the Registrant files its Form 10-K (but in
no event later than May 14, 1997). If the registration statement is not
effective by such date, the Company has agreed to pay to the Investors the
aggregate sum of $4,000 per day until the earlier to occur of (i) the effective
date of the registration statement or (ii) the sixtieth day following date. The
failure by the Company to register the Conversation Shares pursuant to an
effective registration statement by the later of 150 from the date that the
Company files its Annual Report on Form 10-K or July 14, 1996 constitutes a
Redemption Event. If any time after April 1, 1997 (i) the Company does not have
an effective registration statement covering the Registrable Shares, (ii) the
Purchasers have exercised their rights in the event of a Redemption Event and,
(iii) within fifteen days of such exercise the Company has not delivered the
redemption price, then holders of at least fifty-one percent of the aggregate
amount of Series A Preferred Shares, Registrable Shares and Warrants not yet
registered and sold have the right to make one demand to register the
Registrable Shares. In addition, the holders of Registrable Shares, Preferred
Stock and Warrants have piggyback registration rights each time the Company
proposes to register any shares of Common Stock under the Act for its own
account or on behalf of any other securities holder, subject to a pro rata
cutback in the event of an underwritten offering.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
<TABLE>
<S> <C>
Exhibit No. Description
3.1 Amendment to Articles of Incorporation of the Registrant
filed with the Secretary of State of the State of Florida on
December 20, 1996
10.1 Series A Stock Purchase Agreement by and among Credit
Suisse First Boston Corporation, Silverton International
Fund Limited and the Registrant dated December 20, 1996
10.2 Registration Rights Agreement by and among Credit
Suisse First Boston Corporation, Silverton International
Fund Limited and the Registrant dated December 20,
1996.
10.3 Form of Warrant
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ABLE TELCOM HOLDING CORP.
By: /s/Daniel L. Osborne
--------------------------------
Daniel L. Osborne
Chief Accounting Officer
Dated: December 31, 1996
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Exhibit 3.1
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
ABLE TELCOM HOLDING CORP.
------------------------------------------
Pursuant to Section 607.0602 of the
Florida Business Corporation Act
------------------------------------------
Pursuant to Section 607.0602 of the Florida Business Corporation Act (the
"FBCA"), Able Telcom Holding Corp. (the "Corporation") hereby adopts the
following Amendment to its Articles of Incorporation (the "Amendment"):
1. The name of the Corporation is Able Telcom Holding Corp.
2. The Amendment set forth below was duly adopted on December 13, 1996 by
the Board of Directors pursuant to a special meeting, duly called and held in
accordance with Section 607.0820 of the FBCA.
3. This Amendment to the Corporation's Articles of Incorporation shall
amend Article III in its entirety as follows:
Article III
The number of shares of stock that this Corporation is authorized to have
outstanding at any one time is:
TWENTY-SIX MILLION (26,000,000) SHARES CONSISTING OF TWENTY-FIVE MILLION
(25,000,000) SHARES OF COMMON STOCK HAVING A PAR VALUE OF ONE TENTH OF A
CENT ($.001) AND ONE MILLION (1,000,000) SHARES OF PREFERRED STOCK (ONE
THOUSAND TWO HUNDRED (1,200) SHARES OF WHICH SHALL BE DESIGNATED "SERIES A
CONVERTIBLE PREFERRED STOCK") HAVING A PAR VALUE OF TEN CENTS ($.10) PER
SHARE.
The Board of Directors of the Corporation, by resolution, shall establish
the rights, privileges, vote, liquidation preference, series, convertibility,
dividend (whether cumulative or non-cumulative), and redemption provisions of
the Preferred Stock (other than Series A Convertible Preferred Stock, the
rights, privileges, vote, liquidation preference, series, convertibility,
dividend (whether cumulative or non-cumulative) and redemption provisions for
which are set forth below).
The holders of the Preferred Stock shall be entitled to dividends thereon
at the rate established by the Board of Directors (except for dividends on
Series A Convertible Preferred Stock, the rate for which is set forth below).
All remaining profits which the Board of Directors may determine to apply in
payment of dividends shall be distributed among the holders of Common Stock
exclusively, except as may otherwise be set forth below. Except as otherwise set
forth below with respect to Series A Convertible Preferred Stock, upon
dissolution, whether voluntary or involuntary, the holders of Preferred Stock
shall first be entitled to receive, out of the net assets of the Corporation,
the liquidating value established by the Board of Directors, of their shares
plus unpaid accumulated dividends and any other distributions declared thereon,
without interest.
A. SERIES A CONVERTIBLE PREFERRED STOCK
1. Designation and Amount. The shares of such series shall be designated
"Series A Convertible Preferred Stock" (herein referred to as "Series A
Preferred Stock"), having a par value per share equal to $.10, and the number of
shares constituting such series shall be 1,200.
2. Dividend Provisions.
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(a) Dividends Payable. Cumulative dividends ("Dividends") on the
Series A Preferred Stock shall accrue at an annual rate of 5.0% of the
Liquidation Preference (as defined below) per share (such rate subject to
ratable adjustment in the event of any stock split or combination and to an
equitable adjustment in the event of a reclassification or other similar event),
subject to the remaining terms and conditions of this subsection. Dividends
shall accrue, whether or not declared, on each share of Series A Preferred Stock
from December 20, 1996 (the "Purchase Date") through the date on which such
dividends are paid and shall be payable in cash or through a dividend of
additional shares of Series A Preferred Stock (as more fully described below),
at the Corporation's option, quarterly in arrears, on each March 20, June 20,
September 20 and December 20 following the date on which the shares of Series A
Preferred Stock are issued for so long as any shares of Series A Preferred Stock
shall be outstanding. Shares of Series A Preferred Stock to be issued as stock
dividends shall be issued at a price per share equal to the Liquidation
Preference.
(b) Cash Dividends. In case the Corporation at any time or from time
to time shall declare, order, pay or make a cash dividend on the Nonpreferred
Stock (as defined below) of the Corporation, the Board of Directors shall, at
the same time or times declare, order, pay and make a cash dividend on each
share of Series A Preferred Stock in an amount equal to the product of the
amount of such dividend declared, ordered, paid or made on each share of
Nonpreferred Stock, multiplied by the number of shares of Common Stock into
which a share of Series A Preferred Stock is convertible on the record date for
such action.
(c) Other Distributions. In case the Corporation at any time or from
time to time shall declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of other or additional stock or
other securities or property or rights or warrants to subscribe for securities
of the Corporation or any of its subsidiaries by way of dividend or spin-off,
reclassification, recapitalization or similar corporate rearrangement) on its
Nonpreferred Stock, other than a dividend payable in cash or shares of the
Corporation's Nonpreferred Stock, then the Board of Directors shall, at the same
time or times, declare, order pay and make a dividend or other distribution on
each share of Series A Preferred Stock which is equivalent to such dividend or
other distribution declared, ordered, paid or made on each share of Nonpreferred
Stock, multiplied by the number of shares of Common Stock into which a share of
Series A Preferred Stock is convertible on the record date for such action. So
long as any shares of Series A Preferred Stock are outstanding, the Corporation
shall not declare, order, pay or make any such dividend or other distribution
unless it likewise declares, orders, pays or makes such dividend or other
distribution on all shares of Nonpreferred Stock.
(d) Limitation on Distributions. No deposit, payment, dividend or
distribution of any kind shall be made with respect to the Nonpreferred Stock
unless all accumulations of dividends payable on the Series A Preferred Stock
shall have been paid. So long as any Series A Preferred Stock shall remain
outstanding, no dividend or other distribution (except in Junior Shares (as
defined below)) shall be paid or made on the Nonpreferred Stock of the
Corporation (except in accordance with subsections (b) and (c) of this Section
2) or on other Junior Shares of the Corporation and no share of Nonpreferred
Stock or other Junior Shares shall be purchased or otherwise acquired by the
Corporation or any subsidiary of the Corporation.
Subject to the above limitations, dividends may be paid on the
Nonpreferred Stock out of any funds legally available for such purpose when and
as declared by the Board of Directors, provided that dividends are also paid on
the Series A Preferred Stock in accordance with this Section 2.
(e) Certain Definitions.
As used in this Section 2 and elsewhere in these Articles of Amendment,
unless the context otherwise requires:
(i) The term "business day" shall mean any day on which the
New York Stock Exchange and commercial banks in New York and Florida are open
for business.
(ii) The term "Common Stock" shall mean the Corporation's
authorized Common Stock, $.001 par value, as constituted on the Purchase Date,
and any stock into which such Common Stock may thereafter be changed, and shall
also include stock of the Corporation of any class, which is not preferred as to
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dividends or assets over any other class of stock of the Corporation issued to
the holders of shares of Common Stock upon any reclassification thereof.
(iii) The term "Control Transaction" shall have the meaning
set forth in subsection 8(a)(ii) below.
(iv) The term "Junior Shares" shall mean any class or series
of stock junior to the Series A Preferred Stock as to dividends or distribution
of assets upon liquidation or otherwise.
(v) The term "Liquidation Event" shall mean the liquidation,
dissolution or winding up of the Corporation, either voluntary or involuntary.
(vi) The term "Nonpreferred Stock" shall mean the Common
Stock and shall also include stock of the Corporation of any other class
that has no preference as to dividends or distributions of assets, upon
liquidation or otherwise, over any other class of stock of the Corporation and
that is not subject to redemption.
3. Liquidation Preference.
(a) In the event of any Liquidation Event, the holders of Series A
Preferred Stock shall be entitled to receive, prior to and in preference of any
distribution of any of the assets of this Corporation to the holders of
Nonpreferred Stock and other Junior Shares by reason of their ownership thereof,
an amount per share equal to the sum of (i) $6,000 for each outstanding share of
Series A Preferred Stock (the "Liquidation Preference") and (ii) all
accumulations of unpaid dividends and other distributions on each share of
Series A Preferred Stock. If upon the occurrence of such Liquidation Event, the
assets and funds thus distributed among the holders of the Series A Preferred
Stock shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock in proportion to the amount of
such Series A Preferred Stock owned by each such holder.
(b) After the distribution in subsection 3(a) has been paid, the
remaining assets of the Corporation available for distribution to shareholders
shall be distributed among the holders of Junior Shares in accordance with their
respective rights thereto and the holders of Series A Preferred Stock shall not
be entitled to any further participation in any distribution of the assets of
the Corporation.
4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Optional Conversion.
(i) Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time following April
30, 1997, at the office of the Corporation or any transfer agent for the Series
A Preferred Stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Liquidation Preference per share
by the lesser of the Fixed Conversion Price (as defined below) or the Floating
Conversion Price (as defined below) in effect at the time of conversion. The
lesser of the Fixed Conversion Price or the Floating Conversion Price, as
applicable at any given time, is hereinafter referred to as the "Conversion
Factor." The Conversion Factor for the Series A Preferred Stock shall be subject
to adjustment as set forth in this Section 4.
(ii) For purposes hereof, the following definitions shall
apply:
(A) The "Fixed Conversion Price" is $9.82.
(B) The "Floating Conversion Price" shall be
determined by application of the applicable percentage discount, as set
forth below, to the average closing bid price of a share of the Common Stock on
the Nasdaq National Market, or other principal securities market on which its
Common Stock is traded, for the three trading days immediately preceding the
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date of the Conversion Notice (as defined below) or, in the case of a redemption
pursuant to Section 8 hereof, the Redemption Notice (as defined below) (or, if
the Common Stock is not traded or listed on the Nasdaq National Market or any
other principal securities market, the average of the closing bid price in the
over-the-counter market on such days as reported by Nasdaq or any comparable
system, or if not so reported, as reported by any New York Stock Exchange member
firm selected by the Corporation for such purpose). The applicable discount
shall be determined pursuant to the following table:
<TABLE>
<S> <C> <C>
Conversion or
Redemption Notice Percentage
Received By: Discount
May 20, 1997 10.0
June 20, 1997 12.5
July 20, 1997 12.5
August 20, 1997 15.0
September 20, 1997 15.0
October 20, 1997 17.5
November 20, 1997 17.5
December 20, 1997 and thereafter 20.0
</TABLE>
(b) Upon any conversion of Series A Preferred Stock, payment shall
be made by the Corporation to each holder of the Series A Preferred Stock so
converted on account of dividends and other distributions accrued but unpaid on
the Series A Preferred Stock.
(c) Mechanics of Conversion. If the holder of shares of Series A
Preferred Stock desires to exercise the right of conversion described in
subsection 4(a), he shall give written notice to the Corporation (a "Conversion
Notice") of his or its election to convert a stated number of shares of Series A
Preferred Stock (the "Conversion Shares") into shares of Common Stock (provided,
however, that the number of Conversion Shares must in all events be sufficient
to result in the issuance of at least 1,000 shares of Common Stock), and
immediately upon delivery of the Conversion Notice by the holder, the holder
shall deliver to the Corporation a facsimile of the certificate or certificates
representing the Conversion Shares, and concurrently therewith shall send the
original certificate or certificates to the Corporation's transfer agent via
overnight courier. The Conversion Notice shall also contain a statement of the
name or names (with addresses) in which the certificate or certificates for
Common Stock shall be issued. Notwithstanding the foregoing, the Corporation
shall not be required to issue any certificates to any person other than the
holder thereof unless the transaction is covered by an effective registration
statement under the Securities Act of 1933, as amended (the "1933 Act") or
unless the Corporation has obtained reasonable assurance that such transaction
is exempt from the registration requirements of the 1933 Act, and all applicable
state securities laws, including, if necessary in the reasonable judgment of the
Corporation or its legal counsel, receipt of an opinion to such effect from
counsel reasonably satisfactory to the Corporation. Notwithstanding the
foregoing, such opinion would not be required if the shares of Common Stock
could, upon conversion, be resold pursuant to Rule 144 or Rule 144A under the
1933 Act (unless such opinion is required by the Corporation's transfer agent).
Promptly, but in no event later than three (3) trading days after the receipt of
the Conversion Notice and subject to the Corporation's verification of its
transfer agent's receipt of the original certificate or certificates
representing the Conversion Shares, the Corporation shall issue and deliver, or
cause to be delivered, to the holder of the Conversion Shares or his nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
issuable upon the conversion of such Conversion Shares. Such conversion shall be
deemed to have been effected immediately prior to the close of business on the
date the Corporation received the Conversion Notice, and shall be treated for
all purposes as the holder or holders of record of such shares of Common Stock
as of the close of business on such date.
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(d) Conversion Limit. Notwithstanding anything contained in this
Section 4 to the contrary, a holder of shares of Series A Preferred Stock may
not convert a number of shares of Series A Preferred Stock that would result in
such holder beneficially owning shares of Common Stock in excess of 4.99% of the
Corporation's then outstanding Common Stock upon such conversion; provided,
however, that the limitation described in this subsection 4(d) shall not prevent
a holder's conversion of shares of Series A Preferred Stock at any other time
that does not result in the holder exceeding such limit.
(e) Conversion Factor Adjustments.
(i) In the event the Corporation should at any time or from
time to time after the Purchase Date fix a record date for the effectuation of a
split or subdivision of the outstanding shares of Nonpreferred Stock or the
determination of holders of Nonpreferred Stock entitled to receive a dividend or
other distribution payable in additional shares of Nonpreferred Stock, then, as
of such record date (or, if no record date is fixed, as of the close of business
on the date on which the Board of Directors adopts the resolution relating to
such dividend, distribution, split or subdivision), the Fixed Conversion Price
shall be multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior thereto and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
thereafter. So long as any shares of Series A Preferred Stock are outstanding,
the Corporation shall not fix a record date for, or effect, such a dividend,
distribution, split or subdivision on any shares of Nonpreferred Stock unless it
likewise fixes a record date for, or effects such a dividend, distribution,
split or subdivision on all shares of Nonpreferred Stock.
(ii) If the number of shares of Nonpreferred Stock outstanding
at any time after the Purchase Date is decreased by a combination of the
outstanding shares of Nonpreferred Stock, then following such combination, the
Fixed Conversion Price shall be multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior
thereto and the denominator of which shall be the number of shares of Common
Stock outstanding immediately thereafter. So long as any shares of Series A
Preferred Stock are outstanding, the Corporation shall not combine any shares of
Nonpreferred Stock unless it likewise combines all shares of Nonpreferred Stock.
(f) Recapitalization, etc. If any capital reorganization or
reclassification of the Common Stock of the Corporation (other than as set forth
in subsection 2(b)), or consolidation or merger of the Corporation with or into
another corporation, or the sale or conveyance of all or substantially all of
its assets to another corporation, shall be effected, then, as a condition of
such reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holders of the Series A Preferred
Stock shall thereafter have the right to receive, in lieu of the shares of
Common Stock of the Corporation immediately theretofore receivable with respect
to such shares of Series A Preferred Stock, such shares of stock, securities or
assets as would have been issued or payable with respect to or in exchange for
the shares of Common Stock which such holders would have held had the shares of
Series A Preferred Stock been converted immediately prior to such
reorganization, reclassification, consolidation, merger or sale. In any such
case, appropriate provisions shall be made with respect to the rights and
interests of the holders of the Series A Preferred Stock to the end that such
conversion rights (including, without limitation, provisions for adjustment of
the Conversion Factor) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise thereof. The Corporation shall not consummate any
such reorganization, reclassification, consolidation, merger or sale unless it
provides the holders of the Series A Preferred Stock at least twenty (20) days
advance notice thereof.
(g) No Impairment. The Corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, reclassification,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, directly or indirectly,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will 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 action as may be necessary or appropriate in order
to protect the conversion and other rights of the holders of the Series A
Preferred Stock against impairment. Without limiting the foregoing, the Company
will not effect any transaction described in
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subsection 4(f), the result of which is to adversely affect any of the rights of
holders of Common Stock relative to the rights of holders of any other
Nonpreferred Stock.
(h) Stock Transfer Taxes. The issuance of stock certificates upon
the conversion of the Series A Preferred Stock shall be made without charge to
the converting holder for any tax in respect of such issuance. The Corporation
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of shares in any name
other than that of the holder of such shares of Series A Preferred Stock
converted, and the Corporation shall not be required to issue or deliver any
such stock certificate unless and until the persons requesting the issuance
thereof shall have paid to the Corporation the amount of such tax, if any.
(i) No Fractional Shares; Certificate as to Adjustments.
(i) No fractional shares shall be issued upon conversion of
the Series A Preferred Stock. In lieu of any fractional shares which would
otherwise be issuable, the Corporation shall pay cash equal to the product of
such fraction multiplied by the fair market value of one share of Common Stock
on the date of conversion, as determined by the closing price of such share on
the three (3) trading days immediately preceding the date of conversion as
reported on the Nasdaq National Market or such other principal securities market
on which the shares of Common Stock are traded (or, if the Corporation's Common
Stock is not traded or listed on the Nasdaq National Market or any other
principal securities market, the average of the closing bid prices in the
over-the-counter market on such days or reported by Nasdaq or any comparable
system, or if not so reported, as reported by any New York Stock Exchange member
firm selected by the Corporation for such purpose).
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Factor of Series A Preferred Stock pursuant to subsections 4(e)
or (f), the Corporation, at its expense, shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Series A Preferred Stock a certificate setting forth such
adjustment or readjustment and the method upon which it 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 (A) such adjustment or readjustment, (B) the
Conversion Factor at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of Series A Preferred Stock.
(j) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class of
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
right, and the amount and character of such dividend, distribution or right.
(k) Reservation of Stock Issuable Upon Conversion. 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, free from any preemptive right or other
obligation, 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 not be sufficient to effect the conversion of all of the
then outstanding shares of the Series A Preferred Stock, then, in addition to
such other remedies as shall be available to the holder of such Series A
Preferred Stock, the Corporation will take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes. The Corporation shall
prepare and shall use its best efforts to obtain and keep in force such
governmental or regulatory permits or other authorization as may be required by
law, and shall comply with all requirements as to registration, qualification or
listing of the Common Stock, in order to enable the Corporation lawfully to
issue and deliver to each holder of record of Series A Preferred Stock such
number of shares of its Common Stock as shall from time to time be sufficient to
effect the conversion of all Series A Preferred Stock then outstanding and
convertible into shares of Common Stock.
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(l) Notices. Unless otherwise provided, any notice required or
permitted under this Article III shall be given in writing and addressed to the
party to be notified at the address or facsimile number indicated for such party
in the records of the Corporation maintained for such purpose as may be changed
from time to time by written notice of such change, or, in the case of the
Corporation, at 1601 Forum Place, Suite 1110, West Palm Beach, Florida 33401,
attention Daniel Osborne, Chief Accounting Officer. Such notice shall be deemed
effectively given upon (i) personal delivery to the party to be notified, or
(ii) delivery via overnight courier to the party to be notified, or (iii) on the
fifth (5th) business day following deposit with the United States Post Office,
by registered or certified mail, postage prepaid or (iv) delivery via facsimile
and confirmation generated by the sender's facsimile machine.
5. Voting Rights. The holders of Series A Preferred Stock shall vote as a
class on all matters required by applicable law to be submitted to such holders
for a vote. Until conversion of shares of Series A Preferred Stock into Common
Stock, as provided herein, the holders of Series A Preferred Stock shall not
have or exercise any rights as holders of Common Stock solely by virtue of being
a holder of Series A Preferred Stock.
6. Protective Provisions.
(a) So long as shares of Series A Preferred Stock are outstanding,
the Corporation shall not, without first obtaining the approval (by vote or
written consent) of the holders of all of the then outstanding shares of Series
A Preferred Stock (voting in accordance with Section 5), alter or change the
rights, preferences or privileges of the shares of Series A Preferred Stock so
as to affect adversely the shares; and
(b) So long as shares of Series A Preferred Stock are outstanding,
the Corporation shall not, without first obtaining the approval (by vote or
written consent) of the holders of 66.6% of the then outstanding shares of
Series A Preferred Stock (voting in accordance with Section 5), (i) increase the
number of authorized shares of Series A Preferred Stock, create or designate any
new series of stock (including without limitation, any Preferred Stock) or any
other securities convertible into equity securities of the corporation having a
preference over, or being on a parity with, the Series A Preferred Stock with
respect to voting, dividends, distribution of assets or conversion rights, or
(ii) amend the Articles of Incorporation or Bylaws of the Corporation or take
any action or enter into any other agreements which prohibit or conflict with
the Corporation's obligations hereunder with respect to the holders of Series A
Preferred Stock.
7. Status of Converted Stock. In the event any shares of Series A
Preferred Stock shall be converted pursuant to Section 4 hereof, the shares so
converted shall be canceled and thereupon restored to the status of authorized
but unissued Preferred Stock not designated as to class or series and the
Corporation shall not thereafter, through its Board of Directors or otherwise,
designate any such undesignated shares of Preferred Stock as Series A Preferred
Stock or any other series of Preferred Stock having rights and preferences
substantially similar to those of Series A Preferred Stock so long as any shares
of Series A Preferred Stock are outstanding.
8. Redemption.
(a) Mandatory Redemption. Upon the occurrence of any of the events
described in subsections 8(a)(i) through 8(a)(vi) hereof (each a "Mandatory
Event"), any holder of shares of Series A Preferred Stock that have not been
converted into Common Stock may elect to sell, and the Corporation shall
repurchase, any or all of such holder's shares of Series A Preferred Stock as
may be designated in the Redemption Notice (as defined in Section 8(c) below),
at a price equal to the Liquidation Preference (plus any accrued and unpaid
dividends or distributions thereon) for each share of Series A Preferred Stock
being redeemed plus the product of the number of shares of Common Stock into
which such shares of Series A Preferred Stock are then convertible multiplied by
an amount equal to the difference between (x) the average closing bid price
quoted on a share of Common Stock on the Nasdaq National Market for the three
(3) trading days immediately following the date of the Redemption Notice (or if
the Corporation's Common Stock is not traded or listed on the Nasdaq National
Market or any other principal securities market, the average of the closing bid
prices in the over-the-counter market on such days as reported by Nasdaq or any
comparable system, or if not so reported, as reported by any New York Stock
Exchange member firm selected by the Corporation for such purpose) and (y) the
Conversion Factor:
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(i) on the date that is three years after the Purchase Date
and at any time thereafter;
(ii) immediately prior to the consummation of a sale,
conveyance or disposition of all or substantially all of the assets of the
Corporation or the effectuation by the Corporation or its shareholders of a
transaction or series of related transactions in which more than 50% of the
voting power of the Corporation is transferred or otherwise disposed of (each a
"Control Transaction") or a consolidation or merger of the Corporation with or
into any other corporation or corporations (other than a merger that is not part
of a Control Transaction and that, pursuant to the provisions of Section
607.1103(7) of the FBCA, does not require approval by the shareholders of the
Corporation);
(iii) at any time on or after the date on which the Common
Stock of the Corporation is no longer quoted on the Nasdaq National Market
System or other principal securities market;
(iv) at any time on or after the later of (x) 150 days
following the date on which the Form 10-K for the fiscal year ended October 31,
1996 is filed by the Corporation with the Securities and Exchange Commission
(the "SEC"), and (y) July 14, 1997, if: (A) a registration statement registering
the shares of Common Stock issuable upon conversion of the Series A Preferred
Stock has not been declared effective by the SEC; or (B) at any time after such
effective date if the SEC shall have issued any stop order or other order
suspending the effectiveness of such registration statement or the effectiveness
of such registration statement has been suspended or has lapsed for any other
reason or the registration statement is unavailable for use, and the Corporation
shall have failed to reestablish the effectiveness or availability of the
registration statement within thirty (30) days after the SEC's order or within
thirty (30) days after the date upon which the effectiveness of the registration
statement was suspended or lapsed or became unavailable for use for any other
reason, as the case may be; or (C) an insufficient number of shares of Common
Stock have been registered to allow the conversion of the all of the Series A
Preferred Stock, in which case, the Corporation shall only be required to
repurchase those shares of Series A Preferred Stock for which no shares of
Common Stock have been registered;
(v) at any time on or after the date on which the Form 10-K
for the fiscal year ended October 31, 1996 is filed by the Corporation with the
SEC if the auditors' letter to the Corporation with respect to the financial
statements contained in such Form 10-K is qualified in any respect; or
(vi) at any time on or after the date on which a holder or
holders of Series A Preferred Stock or Warrants has determined that a conversion
of such shares or exercise of such Warrants, when taken together with all other
past and potential future conversions of Series A Preferred Stock or exercises
of Warrants, will result in such holder or holders having acquired that number
of shares of Common Stock exceeding 19.99% of the Corporation's outstanding
Common Stock as of the Purchase Date; provided however, that in each such case,
the mandatory redemption by the Corporation shall only apply to the number of
shares of Series A Preferred Stock the conversion of which causes the number of
shares of Common Stock to be in excess of such limits.
(b) Optional Redemption.
(i) At any time after the first anniversary of the Purchase
Date and provided that there exists an effective registration statement filed
pursuant to the 1933 Act covering the Corporation's Common Stock issuable upon
conversion of the Series A Preferred Stock, the Corporation may issue a
Redemption Notice (as defined below) to redeem all of the outstanding shares of
Series A Preferred Stock, which Redemption Notice shall be delivered on the next
business day following the date on which the closing bid price of a share of the
Corporation's Common Stock on the Nasdaq National Market, or other principal
securities market on which its Common Stock is traded (or if the Corporation's
Common Stock is not traded or listed on the Nasdaq National Market or any other
principal securities market, the closing bid price in the over-the-counter
market as reported by Nasdaq or any comparable system, or if not so reported, as
reported by any New York Stock Exchange member firm selected by the Corporation
for such purpose), for each of the five (5) consecutive trading days immediately
prior to the date of receipt by the Investors of such Redemption Notice is at or
greater than 150% of the then Fixed Conversion Price as adjusted pursuant to
Section 4(e) hereof. The purchase price per share for such shares of Series A
Preferred Stock to be redeemed by the
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Corporation under this subsection 8(b)(i) shall be equal to the Liquidation
Preference (plus any accrued and unpaid dividends or distributions thereon).
Each of the Investors shall have ninety (90) days after its
receipt of a Redemption Notice delivered pursuant to this Section 8(b)(i) to
deliver a Conversion Notice or Notices to the Corporation with respect to any or
all of the shares of Series A Preferred Stock identified by such Redemption
Notice. Upon an Investor's delivery of any such Conversion Notice to the
Corporation, the provisions of Section 4 hereof shall apply with respect to
those shares of Series A Preferred Stock identified in the Conversion Notice. If
an Investor does not deliver a Conversion Notice or Notices covering all of the
shares of Series A Preferred Stock held by it within ninety (90) days after its
receipt of the Redemption Notice, the Corporation shall have the right to redeem
the remaining shares of Series A Preferred Stock for a purchase price equal to
the Liquidation Preference (plus any accrued and unpaid dividends or
distributions thereon) for such shares. The ninety (90) day period set forth in
this Section 8(b)(i) shall be extended by the number of days during which a
registration statement is not effective or otherwise not available for use by
the Investors.
(ii) In the event that the closing bid price of a share of the
Corporation's Common Stock on the Nasdaq National Market, or other principal
securities market on which its Common Stock is traded (or if the Corporation's
Common Stock is not traded or listed on the Nasdaq National Market or any other
principal securities market, the closing bid price in the over-the-counter
market as reported by Nasdaq or any comparable system, or if not so reported, as
reported by any New York Stock Exchange member firm selected by the Corporation
for such purpose), for five (5) consecutive trading days is at or less than
$4.50 and the Corporation receives a Conversion Notice from one or more
Investors within three (3) business days thereafter, the Corporation may, within
three (3) business days after the Corporation's receipt of such Conversion
Notice, elect to redeem the shares of Series A Preferred Stock identified by
such Conversion Notice for a purchase price equal to the Liquidation Preference
(and any accrued and unpaid dividends or distributions thereon) for each share
of Series A Preferred Stock being redeemed plus the product of the number of
shares of Common Stock into which the shares of Series A Preferred Stock are
then convertible multiplied by an amount equal to the difference between (x) the
average closing bid price quoted on a share of Common Stock on the Nasdaq
National Market for the three (3) trading days immediately following the date of
the Redemption Notice (or if the Corporation's Common Stock is not traded or
listed on the Nasdaq National Market or any other principal securities market,
the average of the closing bid prices in the over-the-counter market on such
days as reported by Nasdaq or any comparable system, or if not so reported, as
reported by any New York Stock Exchange member firm selected by the Corporation
for such purpose) and (y) the Conversion Factor.
(c) The party or parties effecting the redemption rights described
in this Section 8 shall provide written notice to the Corporation or the holders
of shares of Series A Preferred Stock as the case may be (the "Redemption
Notice"), which Redemption Notice shall contain the number of shares of Series A
Preferred Stock to be redeemed and the purchase price per share, determined in
accordance herewith. No later than (i) in the case of a redemption effected
pursuant to subsections 8(a) or 8(b)(ii), five (5) days after delivery of the
applicable Redemption Notice, or (ii) in the case of a redemption effected
pursuant to subsection 8(b)(i), ninety-seven (97) days (which period may be
extended as provided in the last sentence of Section 8(b)(i) hereof) after
delivery of the applicable Redemption Notice, the holders of Series A Preferred
Stock shall deliver their share certificates to the Corporation, endorsed in
blank or with separate stock powers, and, upon receipt of such share
certificates, the Corporation shall deliver the full purchase price for such
shares in immediately available funds to the holders via wire transfer or
cashier's check, together with certificates for any shares of Series A Preferred
Stock that remain outstanding, if any.
IN WITNESS WHEREOF, the Corporation has caused the foregoing Articles of
Amendment to the Articles of Incorporation to be signed on December 20, 1996.
ABLE TELCOM HOLDING CORP.
By: /s/William J. Mercurio
-------------------------------
Name: William J. Mercurio
Title:President and Chief
Executive Officer
<PAGE>
Exhibit 10.1
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is
made and entered into as of December 20, 1996 by and among Able Telcom Holding
Corp., a Florida corporation (the "Corporation"), and the parties listed on the
Schedule of Investors attached to this Agreement as Exhibit A (each hereinafter
individually referred to as an "Investor" and collectively referred to as the
"Investors").
W I T N E S S E T H:
WHEREAS, the Corporation desires to sell to the Investors, and the
Investors desire to purchase from the Corporation, shares of the Corporation's
Series A Preferred Stock on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. AGREEMENT TO PURCHASE AND SELL STOCK.
1.1 Authorization. As of the Closing (as defined below) the
Corporation will have authorized the issuance, pursuant to the terms and
conditions of this Agreement, of (i) up to 1,200 shares of the Corporation's
Series A Preferred Stock, $.10 par value per share (the "Series A Stock") having
the rights, preferences, privileges and restrictions set forth in the Articles
of Amendment to the Articles of Incorporation of the Corporation attached to
this Agreement as Exhibit B (the "Articles of Amendment"), (ii) such number of
shares of the Corporation's Common Stock, par value $.001 per share (the "Common
Stock"), as may be issuable upon conversion of the Series A Stock (the
"Conversion Shares"), (iii) warrants to purchase an aggregate of 200,000 shares
of Common Stock (the "Warrants"), and (iv) 200,000 shares of Common Stock
issuable upon exercise of the Warrants (the "Warrant Shares").
1.2 Agreement to Purchase and Sell. Upon the terms and subject to
the conditions set forth herein, the Corporation agrees to sell to each Investor
at the Closing, and each Investor agrees, severally and not jointly, to purchase
from the Corporation at the Closing, the number of shares of Series A Stock set
forth beside such Investor's name on Exhibit A, at a price of $6,000 per share
(the "Purchase Price"). The shares of Series A Stock purchased and sold pursuant
to this Agreement will be collectively hereinafter referred to as the "Purchased
Shares".
1.3 Issuance of Warrants. The Corporation agrees to issue to each
Investor, at the time of the Closing, that portion of the Warrants set forth
beside such Investor's name on Exhibit A.
2. CLOSING.
2.1 The Closing. The purchase and sale of the Purchased Shares and
the issuance of the Warrants will take place at the offices of Holland & Knight,
Suite 1300, One East Broward Boulevard, Ft. Lauderdale, Florida 33301, at 1:00
p.m. Eastern Time, on December 20, 1996 or at such other time and place as the
Corporation and the Investors mutually agree upon (which time and place are
referred to in this Agreement as the "Closing"). At the Closing, the Corporation
will deliver to each Investor (A) a certificate, such certificate to be in the
form approved by the Investors prior to the Closing, representing the number of
Purchased Shares that such Investor has agreed to purchase hereunder as shown on
Exhibit A, against delivery of the full Purchase Price for such Purchased Shares
to the Corporation by the Investors, paid by wire transfer of funds to the
Corporation, and (B) that portion of the Warrants in the number set forth beside
such Investor's name on Exhibit A, such Warrants to be in the form of the "Form
of Warrant" attached hereto as Exhibit C.
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3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
The Corporation hereby represents and warrants to each Investor that the
statements in the following paragraphs of this Section 3 are true and correct as
of the date hereof:
3.1 Organization, Good Standing and Qualification. The Corporation
and each of its subsidiaries other than the Excluded Subsidiaries (as defined
below), (each, a "Subsidiary" and collectively, the "Subsidiaries"), are
corporations duly organized, validly existing and in good standing under the
laws of the state in which they are incorporated and have all requisite
corporate power and authority to own their respective properties and assets and
to carry on their respective businesses as now conducted and as presently
proposed to be conducted. The Corporation and each Subsidiary are qualified to
do business as foreign corporations in each jurisdiction where failure to be so
qualified would have a material adverse effect on the financial condition,
business, prospects or operations of the Corporation and the Subsidiaries, taken
as a whole.
3.2 Capitalization. Immediately prior to the Closing the
capitalization of the Corporation will consist of the following:
(a) Preferred Stock. A total of 1,000,000 authorized shares of
preferred stock, $.10 par value per share (the "Preferred Stock"), consisting of
1,200 shares designated as Series A Preferred Stock, none of which will be
issued and outstanding. The rights, preferences and privileges of the Series A
Stock will be as stated in the Articles of Amendment and as provided by law.
(b) Common Stock. A total of 25,000,000 authorized shares of
Common Stock, of which 8,311,701 shares will be issued and outstanding.
(c) Options, Warrants, Reserved Shares. Except as described on
Schedule 3.2(c) hereof, there are no outstanding options, warrants, rights
(including conversion or preemptive rights) or agreements for the purchase or
acquisition from the Corporation of any shares of its capital stock or any
securities convertible into or ultimately exchangeable or exercisable for any
shares of the Corporation's capital stock. Apart from the exceptions noted on
Schedule 3.2(c) and the Investors' right of first refusal set forth in Section 5
hereof, no shares of the Corporation's outstanding capital stock, or stock
issuable upon exercise or exchange of any outstanding options, warrants or
rights, or other stock issuable by the Corporation, are subject to any rights of
first refusal or other rights to purchase such stock (whether in favor of the
Corporation or any other person), pursuant to any agreement or commitment to
which the Corporation is a party or by which it or any of its assets are bound.
Except as described on Schedule 3.2(c) hereof, the Corporation is not a party to
any shareholders' or other agreement affecting the rights of the holders of
Common Stock.
3.3 Subsidiaries. Except as described in the SEC Documents (as
defined below) or on Schedule 3.3 hereof, the Corporation does not presently own
or control, directly or indirectly, any interest in any other corporation,
partnership, trust, joint venture, association, or other entity.
3.4 Due Authorization. All corporate action on the part of the
Corporation, its officers, directors and shareholders necessary for the
authorization, execution, delivery of, and the performance of all obligations of
the Corporation under, this Agreement, the Registration Rights Agreement (as
defined below), the Warrants and all other documents, certificates or
instruments executed and delivered by the Corporation at the Closing
(collectively, the "Transaction Documents"), and the authorization, issuance,
reservation for issuance and delivery of all of the Purchased Shares, the
Conversion Shares, the Warrants and the Warrant Shares has been taken or will be
taken prior to the Closing, and the Transaction Documents constitute, or when
executed, will constitute, valid and legally binding obligations of the
Corporation, enforceable in accordance with their respective terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or other
laws of general application relating to or affecting the enforcement of
creditors' rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies.
3.5 Valid Issuance of Stock.
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(a) The Purchased Shares and the Warrants, when issued, sold
and delivered in accordance with the terms of this Agreement for the
consideration provided for herein, will be duly and validly issued, fully paid
and nonassessable, free and clear of any liens, claims, encumbrances, or
preemptive rights. The Conversion Shares and the Warrant Shares have been duly
and validly reserved for issuance and, upon issuance in accordance with the
terms of the Articles of Amendment, will be duly and validly issued, fully paid
and nonassessable, free and clear of any liens, claims, encumbrances or
preemptive rights. The Purchased Shares shall have the rights, privileges and
preferences set forth in the Articles of
Amendment.
(b) Based on the representations and warranties made by the
Investors in Section 6 hereof, and assuming compliance by Cruttenden Roth (the
"Placement Agent") with all of the requirements of Regulation D governing the
offering of the Purchased Shares and the Warrants, the Purchased Shares
(assuming no unlawful distribution of the Purchased Shares or the Warrants by
Investors), the Conversion Shares and the Warrant Shares will be issued in full
compliance with the registration and prospectus delivery requirements of the
Securities Act of 1933 (as in effect on the date hereof), or in compliance with
applicable exemptions therefrom, and with the securities laws of those states of
the United States (as in effect on the date hereof) in which the addresses shown
on Exhibit A are located.
(c) The outstanding shares of the capital stock of the
Corporation are duly and validly issued, fully paid and nonassessable, and such
shares of such capital stock, and all outstanding options, warrants, convertible
notes and other securities of the Corporation, have been issued in full
compliance with the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "1933 Act"), or in compliance with
applicable exemptions therefrom, the registration and qualification requirements
of all applicable securities laws of states of the United States, or in
compliance with applicable exemptions therefrom, and all other provisions of
applicable securities laws of states of the United States, including, without
limitation, anti-fraud provisions.
3.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Corporation is required in connection with the consummation of the
transactions contemplated by this Agreement and all other Transaction Documents,
except for (i) any necessary filings and/or qualifications under applicable
state securities laws, and (ii) such other qualifications or filings under the
1933 Act and the regulations thereunder as may be required in connection with
the transactions contemplated by this Agreement. All such qualifications and
filings will, in the case of qualifications, be effective on the Closing and
will, in the case of filings, be made within the time prescribed by law.
3.7 Litigation. Except as set forth in the SEC documents (as defined
below) and as described on Schedule 3.7 hereof, there is no action, suit,
proceeding, claim, arbitration or investigation ("Action") pending (or, to the
best of the Corporation's or applicable Subsidiary's knowledge, currently
threatened) against the Corporation or any Subsidiary, its activities,
properties or assets or, to the best of the Corporation's or applicable
Subsidiary's knowledge, against any officer, director or employee of the
Corporation or any Subsidiary in connection with such officer's, director's or
employee's relationship with, or actions taken on behalf of, the Corporation or
any Subsidiary. To the best of the Corporation's knowledge, there is no factual
or legal basis for any such Action that might result, individually or in the
aggregate, in any material adverse change in the business, properties, assets,
financial condition, affairs or prospects of the Corporation. The Corporation or
any Subsidiary is not a party to or subject to the provisions of, any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality and, except as described on Schedule 3.7, there is no Action by
the Corporation or any Subsidiary currently pending. For purposes of this
Section 3, the "Corporation's or applicable Subsidiary's knowledge" shall mean
the actual knowledge of the directors or officers of the Corporation or the
applicable Subsidiary; the "Corporation's knowledge" shall mean the actual
knowledge of the directors or officers of the Corporation.
3.8 Status of Proprietary Assets.
(a) Ownership. The Corporation and each Subsidiary have full
title to and ownership of, or have license to, all patents, patent applications,
trademarks, service marks, trade names, copyrights, trade secrets, confidential
and proprietary information, compositions of matter, formulas, designs,
proprietary rights, know-how and processes (all of the foregoing collectively
hereinafter referred to as the "Proprietary Assets") necessary to enable them
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to carry on their respective businesses as now conducted and as presently
proposed to be conducted. To the best of the Corporation's knowledge, no third
party has any ownership right to, title to, interest in, claim in or lien on any
of the Corporation's or any Subsidiary's Proprietary Assets and the Corporation
has taken, and in the future the Corporation will use its best efforts to take,
all steps reasonably necessary to preserve its legal rights in, and the secrecy
of, all such Proprietary Assets, except those for which disclosure is required
for legitimate business or legal reasons.
(b) Licenses; Other Agreements. Except as set forth on
Schedule 3.8(b) hereof, the Corporation or any Subsidiary has not granted, and,
to the best of the Corporation's knowledge, there are not outstanding, any
options, licenses or agreements of any kind relating to any Proprietary Asset of
the Corporation or any Subsidiary, nor is the Corporation or any Subsidiary
bound by or a party to any option, license or agreement of any kind with respect
to any such Proprietary Assets. Except as set forth on Schedule 3.8(b), the
Corporation or any Subsidiary is not obligated to pay any royalties or other
payments to third parties with respect to the marketing, sale, distribution,
manufacture, license or use of any Proprietary Asset or any other property or
rights.
(c) No Infringement. To the best of the Corporation's
knowledge, the Corporation or any Subsidiary has not violated or infringed, and
is not currently violating or infringing, and the Corporation or any Subsidiary
has not received any communications alleging that the Corporation or any
Subsidiary (or any of their respective employees or consultants) has violated or
infringed or, by conducting its business as proposed, would violate or infringe,
any Proprietary Asset of any other person or entity.
3.9 Compliance with Law, Charter Documents and Material Agreements.
The Corporation or any Subsidiary is not in violation or default of any
provisions of its Articles of Incorporation or Bylaws, both as amended, except
for any violations that individually and in the aggregate would not have a
material adverse effect on the Corporation and its Subsidiaries, taken as a
whole; the Corporation or any Subsidiary is in compliance with all applicable
statutes, laws, regulations and executive orders of the United States of America
and all states, foreign countries or other governmental bodies and agencies
having jurisdiction over its business or properties. The Corporation or any
Subsidiary has not received any notice of any violation of such statutes, laws,
regulations or orders which has not been remedied prior to the date hereof. The
execution, delivery and performance of this Agreement and the other Transaction
Documents, and the consummation of the transactions contemplated hereby or
thereby, will not result in any such violation or be in conflict with or
constitute, with or without the passage of time or the giving of notice or both,
(i) a violation of either the Corporation's or any Subsidiary's Articles of
Incorporation or Bylaws, both as amended, or, (ii) to the best of the
Corporation's knowledge, a violation of any statutes, laws, regulations or
orders, or (iii) a breach of or conflict with any material agreement to which
the Corporation or any Subsidiary is a party or by which any of them is bound,
or (iv) an event which results in the creation of any lien, charge or
encumbrance upon any asset of the Corporation or any Subsidiary.
3.10 SEC Documents. The Corporation has filed with the United States
Securities and Exchange Commission (the "SEC") its Annual Report on Form 10-K
and its Annual Report to Shareholders for the year ended October 31, 1995, all
Quarterly Reports on Form 10-Q due to be filed with the SEC since October 31,
1995, all necessary Current Reports on Form 8-K since October 31, 1995, and the
Corporation's Proxy Statement for its 1995 Annual Meeting of Shareholders
(collectively, the "SEC Documents"). Each of the SEC Documents, as of the date
the same were filed with the SEC, conformed in all material respects to the
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, and, as of their filing date, none of such documents
contained an untrue statement of material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. Except as set forth on Schedule 3.10 hereof, the Company is not
aware of any event which would require the filing of a Form 8-K after the date
hereof and all material agreements required to be filed as exhibits to the SEC
Documents have been filed as required. The Corporation and each Subsidiary is
not presently in breach, nor, to the Corporation's knowledge, is any other party
to any such material agreement in breach, of any such material agreement.
3.11 Registration Rights. Except as provided in the Registration
Rights Agreement and as described on Schedule 3.11 hereof, the Corporation has
not granted or agreed to grant to any person or entity any rights (including
piggyback registration rights) to have any securities of the Corporation
registered with the SEC or any other governmental authority.
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3.12 Financial Statements. The consolidated financial statements,
including the related notes, of the Corporation and the Subsidiaries included in
the SEC Documents (the "Financial Statements") were prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, and fairly present the financial position and results of
operations of the Corporation and the Subsidiaries, on a consolidated basis, at
the dates and for the periods presented. The Corporation and each Subsidiary
make and keep accurate books and records reflecting their respective assets and
maintain internal accounting controls that provide reasonable assurance that (i)
transactions are executed in accordance with management's authorization, (ii)
transactions are recorded as necessary to permit preparation of consolidated
Financial Statements in accordance with generally accepted accounting principles
and to maintain accountability for the assets of the Corporation and each
Subsidiary, (iii) access to the assets of the Corporation and each Subsidiary is
permitted only in accordance with management's authorization, and (iv) the
recorded accountability for assets of the Corporation and of each Subsidiary is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. The Corporation and each Subsidiary have
good and marketable title to all of the assets set forth on the most recent
consolidated balance sheet included in the Financial Statements, except for such
assets as have been used, sold or transferred in the ordinary course of business
since such date and subject to such liens, claims, security interests and other
encumbrances arising in the ordinary course of business and that do not
materially affect the Corporation's or such Subsidiary's use of such properties
and assets.
3.13 ERISA Plans. Except as set forth in the SEC Documents and
except for those described on Schedule 3.13 hereof, the Corporation and each
Subsidiary does not have any Employee Pension Benefit Plan as defined in Section
3 of the Employee Retirement Income Security Act of 1974, as amended.
3.14 Insurance. The Corporation and each Subsidiary have in full
force and effect fire and casualty insurance policies, with extended coverage,
sufficient in amount (subject to reasonable deductibles) to allow them to
replace any of their respective properties that might be damaged or destroyed.
3.15 Tax Returns and Payments. The Corporation has timely filed all
tax returns and reports required by law, except where the failure to do so did
not or would not have a material adverse effect on the Corporation's financial
condition or results of operations. All tax returns and reports of the
Corporation are true and correct in all material respects. The Corporation has
paid all taxes and other assessments due, except those, if any, currently being
contested by it in good faith.
3.16 Labor Agreements and Actions. The Corporation is not bound by
or subject to any contract, commitment or arrangement with any labor union, and
to the Corporation's best knowledge, no labor union has requested, sought or
attempted to represent any employees, representatives or agents of the
Corporation. There is no strike or other labor dispute involving the Corporation
pending nor, to the Corporation's best knowledge, threatened, nor is the
Corporation aware of any labor organization activity involving its employees.
3.17 Environmental Matters. Except as set forth in the SEC
Documents and on Schedule 3.17 hereof:
(a) During the period that the Corporation or any Subsidiary
has leased or owned its properties or owned or operated any facilities, there
have been no material disposals, releases or threatened releases of Hazardous
Materials (as defined below) on, from or under such properties or facilities.
The Corporation has no knowledge of any material disposals, releases or
threatened releases of Hazardous Materials on, from or under any of such
properties or facilities, which may have occurred prior to the Corporation or
any Subsidiary having taken possession of any of such properties or facilities.
For purposes of this Agreement, the terms "disposal," "release" and "threatened
release" shall have the definitions assigned thereto by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. ss.
9601 et seq., as amended ("CERCLA"). For the purposes of this Section "Hazardous
Materials" shall mean any hazardous or toxic substance, material or waste which
is or becomes prior to the Closing regulated under, or defined as a "hazardous
substance," "pollutant," "contaminant," "toxic chemical," "hazardous material,"
"toxic substance," or "hazardous chemical" under (1) CERCLA; (2) the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; (3)
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.; (4)
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; (5) the
Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq.; (6)
regulations promulgated
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under any of the above statutes; or (7) any applicable state or local statute,
ordinance, rule, or regulation that has a scope or purpose similar to those
statutes identified above.
(b) The Corporation or any Subsidiary has not received any
notice of, nor, to the best of the Corporation's knowledge, are any of the
Corporation's or any Subsidiary's properties or facilities in violation of any
federal, state, or local law, ordinance, regulation, or order relating to
industrial hygiene or to the environmental conditions on, under or about such
properties or facilities, including, but not limited to, soil and ground water
condition. During the time that the Corporation or any Subsidiary has owned or
leased its properties and facilities, neither the Corporation or any Subsidiary
nor, to the Corporation's knowledge, any third party, has used, generated,
manufactured or stored on, under or about such properties or facilities or
transported to or from such properties or facilities any Hazardous Materials.
(c) During the time that the Corporation or any Subsidiary has
owned or leased its properties and facilities, there has been no litigation
brought or threatened against the Corporation or any Subsidiary, or any
settlement reached by the Corporation or any Subsidiary with, any party or
parties alleging the presence, disposal, release or threatened release of any
Hazardous Materials on, from or under any of such properties or facilities.
(d) During the period that the Corporation or any Subsidiary
has owned or leased its properties and facilities, no Hazardous Materials have
been transported from such properties or facilities to any site or facility now
listed or proposed for listing on the National Priorities List, at 40 C.F.R.
Part 300, or any list with a similar scope or purpose published by any state
authority.
3.18 Trading on Nasdaq. The Common Stock is authorized for quotation
on the Nasdaq National Market or the Nasdaq SmallCap Market and trading in the
Common Stock on Nasdaq has not been suspended.
3.19 Solicitation; Offering. Neither the Corporation or any
Subsidiary, nor any of their respective affiliates or, to such entity's
knowledge, any person acting on its or their behalf, (i) has engaged in any form
of general solicitation or general advertising (within the meaning of Regulation
D under the 1933 Act) in connection with the offer or sale of the Series A Stock
or (ii) has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under any circumstances that would
require registration of the Series A Stock under the 1933 Act.
3.20 Fees. The Corporation is not obligated to pay any compensation
or other fees to any broker, agent or other representative in connection with
this Agreement or the transactions contemplated hereby other than the Placement
Agent.
3.21 Excluded Subsidiaries. With respect to Georgia Electric Company
and Dial Communications, Inc. (the "Excluded Subsidiaries"), the representations
and warranties which were made to the Corporation in the respective stock
purchase agreements in which the Corporation acquired all of the issued and
outstanding shares of common stock of each of the Excluded Subsidiaries, are
true and correct as though made as of the date hereof without regard to any
dates set forth therein.
3.22 Changes Since Balance Sheet Date. Except as set forth on
Schedule 3.22 hereof, since the date of the most recent balance sheet included
in the Financial Statements, there has not been:
(a) to the Corporation's knowledge, any event or condition of any
character which would materially and adversely affect the assets, properties,
financial condition, operating results or business of the Corporation and the
Subsidiaries, taken as a whole; or
(b) any indebtedness or liabilities incurred in excess of $100,000
individually or $500,000 in the aggregate.
3.23 Shareholder Approval.The Non-Quantitative Designation Criteria
for Nasdaq National Market Issuers do not require shareholder approval for the
issuance of the Series A Stock or the Warrants.
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4.AGREEMENTS OF THE CORPORATION. The Corporation agrees with the Investors
that, at all times subsequent to the Closing up to and including the date which
is three years from the date of the Closing, it will comply with the following
agreements:
4.1 Financial and Other Information. The Corporation will send to
the Investors, (i) promptly following the filing thereof with the SEC, its
annual reports on Form 10-K, quarterly reports on Form 10-Q, any current reports
on Form 8-K, and proxy statements and (ii) promptly following the issuance
thereof, any press releases.
4.2 [INTENTIONALLY OMITTED]
4.3 Reservation of Shares.
(a) The Corporation will at all times have authorized and
reserved for issuance a sufficient number of shares of Common Stock in order to
provide for the issuance of the Conversion Shares. In the event that, upon
conversion of the Series A Stock, the Corporation has not authorized and
reserved a sufficient number of shares of Common Stock to effect such conversion
(a "Conversion Default"), the Corporation shall issue and deliver, in accordance
with the Instruction Letter, to the holder or holders of such Series A Stock, on
a pro rata basis, all of the shares of Common Stock then available for issuance.
The Corporation will immediately thereafter issue a written notice of such
Conversion Default to all holders of Series A Stock and will use its best
efforts to authorize an appropriate additional number of shares of Common Stock.
In the event that a Conversion Default remains outstanding for
a period of thirty (30) days, each holder of Series A Stock shall have the
right, effective upon written notice to the Corporation (a "Redemption Notice"),
to require the Corporation to redeem any or all such Series A Stock at a price
equal to the Liquidation Preference (as defined in the Articles of Amendment),
plus any accrued and unpaid dividends, for each share of Series A Stock being
redeemed, plus the product of the number of shares of Common Stock into which
the shares of Series A Stock are then convertible multiplied by an amount equal
to the difference between (x) the average closing bid price quoted on a share of
Common Stock on the Nasdaq National Market, or other principal securities market
on which the Common Stock is traded, for the three (3) trading days immediately
following the date of the Redemption Notice (or if the Corporation's Common
Stock is not traded or listed on the Nasdaq National Market, or other principal
securities market, the average of the closing bid prices in the over-the-counter
market on such days as reported by Nasdaq or any comparable system, or if not so
reported, as reported by any New York Stock Exchange member firm selected by the
Corporation for such purpose) and (y) the lesser of the then applicable Floating
Conversion Price (as defined in the Articles of Amendment, except that the term
"Redemption Notice" contained in the definition of Floating Conversion Price
shall refer to the Redemption Notice referred to in this Section 4.3(a)) and the
Fixed Conversion Price (as defined below), payable in each such case within five
(5) days of receipt by the Corporation of such Redemption Notice. Shares of
Series A Stock that have not been so redeemed following a Conversion Default
shall continue to be governed by the provisions of this Agreement, the Articles
of Amendment and the Registration Rights Agreement. The "Fixed Conversion Price"
is $9.82, which is an amount equal to 125% of the average closing bid price for
a share of the Corporation's Common Stock on the Nasdaq National Market for the
three trading days immediately preceding the date preceding the date on which
the shares of Series A Stock are issued.
(b) The Corporation will at all times have authorized and
reserved for issuance a sufficient number of shares of Common Stock in order to
provide for the issuance of the Warrant Shares. In the event that, upon exercise
of the Warrants, the Corporation has not authorized and reserved a sufficient
number of shares of Common Stock to effect such exercise (a "Warrant Exercise
Default"), the Corporation shall issue and deliver, in accordance with the
Instruction Letter, to the holder or holders of such Warrants, on a pro rata
basis, all shares of Common Stock then available
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for issuance. The Corporation will immediately thereafter issue a notice of such
Warrant Exercise Default to all holders of Warrants and will use its best
efforts to authorize an appropriate additional number of shares of Common Stock.
In the event that a Warrant Exercise Default remains
outstanding for a period of thirty (30) days, each holder of Warrants shall have
the right, effective upon written notice to the Corporation (a "Purchase
Notice"), to require the Corporation to redeem any or all such Warrants at a
price per underlying Warrant Share equal to the difference between (x) the
average closing bid price quoted on a share of Common Stock on the Nasdaq
National Market, or other principal securities market on which the Common Stock
is traded, for the three (3) business days immediately following the date of the
Purchase Notice (or if the Corporation's Common Stock is not traded or listed on
the Nasdaq National Market, or other principal securities market, the average of
the closing bid prices in the over-the-counter market on such days as reported
by Nasdaq or any comparable system, or if not so reported, as reported by any
New York Stock Exchange member firm selected by the Corporation for such
purpose) and (y) $9.82, as adjusted pursuant to the terms of the Warrants
(provided, however, that the difference between (x) and (y) is positive),
payable in each such case within five (5) days of receipt by the Corporation of
such Purchase Notice.
4.4 Use of Proceeds. The Corporation will use the proceeds of the sale
of the Series A Stock for general corporate purposes.
4.5 Use of Investor Names. The Corporation will refrain from using,
directly or indirectly, the name of any Investor in any advertisement,
announcement, press release or other similar communication unless it has
received the prior written consent of such Investor with respect to the specific
use contemplated.
5. INVESTORS' RIGHT OF FIRST REFUSAL. So long as any shares of Series A
Stock are issued and outstanding, if the Corporation conducts a private offering
of any equity securities, the Corporation shall offer the Investors that still
hold such shares of Series A Stock the right to purchase all of such equity
securities for cash at an amount equal to the price or other consideration for
which such securities are to be sold. The Corporation shall provide written
notice thereof to such Investors, which notice shall describe the securities
proposed to be sold and specify the number, price and payment terms. Such
Investors may accept the Corporation's offer on a pro rata basis, in proportion
to the relative number of shares of Series A Stock that each such Investor then
holds, or any lesser number of securities, by delivering written notice thereof
to the Corporation within ten (10) days after such Investor's receipt of written
notice from the Corporation (such tenth day hereinafter referred to as the
"Notice Date"). If any Investor chooses not to purchase all or any portion of
the securities it is entitled to purchase under this Section 5, then the
Corporation shall notify in writing all of the other eligible Investors that
such securities are available for purchase by such remaining Investors on a pro
rata basis, in proportion to the number of shares of Series A Stock that each
such remaining Investor holds in relation to those shares of Series A Stock held
by all of the other remaining Investors. Each such remaining Investor shall
notify the Corporation within five (5) days after its receipt of the
Corporation's written notice of its intent to purchase such remaining
securities. In the event that all of such securities are not purchased by the
Investors pursuant to this Section 5, the Corporation may at any time prior to
sixty (60) days after the Notice Date, offer and sell to any third party the
number of securities not agreed to be purchased by such eligible Investors, at a
price and on payment terms no less favorable to the Corporation than those set
forth in the written notice by the Corporation to the Investors. However, if
such third party sale or sales are not consummated within such sixty (60) day
period, the Corporation shall not sell such securities as have not been
purchased within such period without again complying with this Section 5.
6. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF INVESTORS. Each
Investor hereby represents and warrants to, and agrees with, the Corporation,
severally and not jointly, that:
6.1 Authorization. This Agreement constitutes such Investor's valid
and legally binding obligation, enforceable in accordance with its terms except
as may be limited by (i) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of
creditors' rights generally and (ii) principles governing the availability of
equitable remedies. Each Investor represents that such Investor has full power
and authority to enter into this Agreement, the Registration Rights Agreement,
and all other Transaction Documents to which such Investor is a party and to
consummate the transactions contemplated hereby and thereby.
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6.2 Purchase for Own Account. The Purchased Shares to be purchased
by such Investor hereunder will be acquired for investment for such Investor's
own account, not as a nominee or agent, and not with a view to the public resale
or distribution thereof within the meaning of the 1933 Act, and such Investor
has no present intention of selling, granting any participation in, or otherwise
distributing the same; provided, however, that in making such representations,
the Investor does not agree to hold the Purchased Shares for any minimum or
other specific term and reserves the right to dispose of the Purchased Shares at
any time in accordance with the other provisions of this Agreement and with
Federal and state securities laws applicable to such disposition. If not an
individual, such Investor also represents that such Investor has not been formed
for the specific purpose of acquiring the Purchased Shares.
6.3 Disclosure of Information. Such Investor or its representative
has received or has had full and complete access to all the information it
considers necessary or appropriate and material to make an informed investment
decision with respect to the Purchased Shares to be purchased by such Investor
under this Agreement, including, without limitation, copies of the SEC
Documents. The foregoing, however, does not in any way limit or modify the
representations and warranties made by the Corporation in Section 3. Each
Investor acknowledges that it is acquiring the Purchased Shares without being
furnished any offering literature or prospectus.
6.4 Accredited Investor Status. Such Investor is an "accredited
investor" within the meaning of Regulation D promulgated under the 1933 Act.
6.5 Restricted Securities. Such Investor understands that the
Purchased Shares are characterized as "restricted securities" under the 1933 Act
inasmuch as they are being acquired from the Corporation in a transaction not
involving a public offering and that under the 1933 Act and applicable
regulations thereunder such securities may be resold without registration under
the 1933 Act only in certain limited circumstances. In this connection, such
Investor represents that such Investor is familiar with Rule 144 of the SEC, as
presently in effect, and understands the resale limitations imposed thereby and
by the 1933 Act. Such Investor understands that the Corporation is under no
obligation to register any of the securities sold hereunder except as provided
in the Registration Rights Agreement.
6.6 Further Limitations on Disposition. Without in any way limiting
the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Purchased Shares or the Conversion
Shares unless and until:
(i) there is then in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(ii) such Investor shall have furnished the Corporation, at
the expense of the Investor, with an opinion of counsel, reasonably satisfactory
to the Corporation, that such disposition will not require registration of such
securities under the 1933 Act; and
(iii) with respect to the Purchased Shares only, the
Corporation has consented in writing to such disposition, which consent will not
be unreasonably withheld.
Notwithstanding the provisions of paragraphs (i), (ii) and (iii)
above, no such registration statement or opinion of counsel (unless required by
the Transfer Agent with respect to the Conversion Shares) shall be required: (i)
for any transfer of any Purchased Shares or Conversion Shares in compliance with
SEC Rule 144 or Rule 144A; (ii) for any transfer of any Purchased Shares or
Conversion Shares by an Investor that is a partnership or a corporation to (A) a
partner of such partnership or an "affiliate" (as such term is defined in
Regulation D under the 1933 Act) of such corporation (in which case no consent
of the Corporation as described in paragraph (iii) above shall be required), (B)
a retired partner of such partnership who retires after the date hereof, or (C)
the estate of any such partner or shareholder; or (iii) for the transfer by
gift, will or intestate succession by any Investor to his or her spouse or
lineal descendants or ancestors or any
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trust for any of the foregoing; provided that in each of the foregoing cases the
transferee agrees in writing to be subject to the terms of this Section 6 (other
than Section 6.4) to the same extent as if the transferee were an original
Investor hereunder.
6.7 Legends.
(a) It is understood that the certificates evidencing the
Conversion Shares and the Warrant Shares will bear the legends set forth below:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
(b) The legend set forth in (a) above shall be removed by the
Corporation from any certificate evidencing Purchased Shares or Conversion
Shares or Warrant Shares at such time as a Registration Statement is in effect
with respect to such securities or upon delivery to the Corporation of an
opinion by counsel, reasonably satisfactory to the Corporation, that such
security can be freely transferred in a public sale without such a registration
statement being in effect and that such transfer will not jeopardize the
exemption or exemptions from registration pursuant to which the Corporation
issued the Purchased Shares or Conversion Shares or Warrant Shares.
7.CONDITIONS TO INVESTORS' OBLIGATIONS AT CLOSING. The obligations of each
Investor under Section 2 of this Agreement are subject to the fulfillment or
waiver, on or before the Closing, of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
to such waiver, which consent may be given by written, oral or telephone
communication to the Corporation, its counsel or to special counsel to the
Investors:
7.1 Representations and Warranties True. Each of the representations
and warranties of the Corporation contained in Section 3 shall be true and
correct on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.
7.2 Performance. The Corporation shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement
that are required to be complied with or performed by it on or before the
Closing and shall have obtained all approvals, consents and qualifications
necessary to complete the purchase and sale described herein.
7.3 Articles of Amendment Effective. The Articles of Amendment shall
have been duly adopted by the Corporation by all necessary corporate action of
its Board of Directors and shareholders, and shall have been duly filed with and
accepted by the Florida Department of State.
7.4 Compliance Certificate. The Corporation shall have delivered to
each Investor at the Closing a certificate signed on its behalf by its
President, Chief Executive Officer or Chief Financial Officer certifying that
the conditions specified in Sections 7.1, 7.2 and 7.3 have been fulfilled.
7.5 Securities Exemptions. The offer and sale of the Purchased
Shares to the Investors pursuant to this Agreement shall be exempt from the
registration requirements of the 1933 Act and/or the qualification requirements
of all applicable state securities laws.
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7.6 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to each Investor and to the Investors' special counsel, and they shall
each have received all such counterpart originals and certified or other copies
of such documents as they may reasonably request. Such documents shall include
(but not be limited to) the following:
(a) Certified Charter Documents. A copy of the Articles of
Incorporation and the Bylaws of the Corporation (in each case as amended through
the date of the Closing), certified by the Secretary of the Corporation as true
and correct copies thereof as of the Closing.
(b) Secretary's Incumbency Certificate. A certificate of the
Secretary or an Assistant Secretary or other officer of the Corporation
certifying the names of the officers of the Corporation authorized to sign this
Agreement, the Registration Rights Agreement, the certificates for the Purchased
Shares and the other documents, instruments or certificates to be delivered
pursuant to this Agreement by the Corporation or any of its officers, together
with the true signatures of such officers.
(c) Corporate Actions. A copy of the resolutions of the Board
of Directors and, if required, the shareholders of the Corporation adopting the
Articles of Amendment and providing for the authorization of the Series A Stock,
the Warrants, the Conversion Shares and the Warrant Shares, the approval of this
Agreement and all other Transaction Documents, the issuance of the Purchased
Shares, the Warrants, the Conversion Shares and the Warrant Shares and the other
matters contemplated hereby.
(d) Good Standing Certificates. A good standing certificate
issued by the Florida Department of State dated within ten (10) days of the
Closing.
7.7 No Material Change. There shall have been, in the reasonable
judgment of such Investor, no material adverse change in the business, affairs,
prospects, operations, properties, assets or condition of the Corporation.
7.8 Opinion of Corporation Counsel. Each Investor shall have
received an opinion from Holland & Knight, counsel for the Corporation, dated as
of the date of the Closing, in the form attached hereto as Exhibit D.
7.9 Opinion of Hunton & Williams. Each Investor shall have received
an opinion from Hunton & Williams, New York, dated as of the date of the
Closing, in the form attached as Exhibit E.
7.10 Registration Rights Agreement. The Corporation and each
Investor shall have executed and delivered the Registration Rights Agreement in
the form attached to this Agreement as Exhibit F (the "Registration Rights
Agreement").
7.11 Issuance of Warrants. The Corporation shall have executed and
delivered Warrants in the form attached as Exhibit C to each Investor in the
amounts noted on Exhibit A.
7.12 Management Lock-Up Agreements. The Corporation shall have
caused Daniel Osborne and William J. Mercurio to have executed and delivered the
Lock-Up Agreements in the form attached as Exhibit G.
7.13 Market Conditions. There shall not have occurred: (i) any
suspension of trading generally on any national securities exchange or
association; (ii) a general moratorium on commercial banking activities in New
York; or (iii) any outbreak or escalation of hostilities; or (iv) any adverse
change in financial markets or any other crisis or calamity; which, in the sole
judgment of such Investor, makes the purchase of the Series A Stock inadvisable.
8. CONDITIONS TO THE CORPORATION'S OBLIGATIONS AT CLOSING. The obligations
of the Corporation to each Investor under this Agreement are subject to the
fulfillment or waiver on or before the Closing of each of the following
conditions by such Investor:
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8.1 Representations and Warranties. The representations and
warranties of such Investor contained in Section 6 shall be true and correct on
the date of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
8.2 Payment of Purchase Price. Each Investor shall have delivered to
the Corporation the purchase price specified for such Investor on Exhibit A in
accordance with the provisions of Section 2 hereof.
8.3 Articles of Amendment Effective. The Articles of Amendment shall
have been duly adopted by the Corporation by all necessary corporate action of
its Board of Directors and shareholders, and shall have been duly filed with and
accepted by the Secretary of State of the State of Florida.
8.4 Securities Exemptions. The offer and sale of the Purchased
Shares to the Investors pursuant to this Agreement shall be exempt from the
registration requirements of the 1933 Act and the registration and/or
qualification requirements of all other applicable state securities laws.
8.5 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Corporation and to the Corporation's legal counsel, and the
Corporation shall have received all such counterpart originals and certified or
other copies of such documents as it may reasonably request.
9. INDEMNIFICATION.
9.1 Indemnity by Corporation. The Corporation agrees to indemnify
and hold harmless each Investor, and its officers, employees, shareholders,
affiliates and agents, from and against any loss, claim, liability, damage or
expense, including reasonable legal fees and expenses (collectively, "Losses"),
as incurred, that arise out of or in connection with any breach by the
Corporation, or any of the Subsidiaries, of any of their respective
representations, warranties or agreements set forth in this Agreement or any
other Transaction Document, except that any person or entity seeking
indemnification hereunder will not be entitled to such indemnification to the
extent that any such Loss is the result of the negligence or willful misconduct
on the part of such person or
entity.
9.2 Indemnity by Investors. Each Investor agrees, severally and not
jointly, to indemnify and hold harmless the Corporation, the Subsidiaries, and
each of their respective officers, employees, shareholders, affiliates and
agents, from and against any Losses, as incurred, that arise out of or in
connection with any breach by such Investor of any of its representations,
warranties or agreements set forth in this Agreement or any other Transaction
Document, except that any person or entity seeking indemnification hereunder
will not be entitled to such indemnification to the extent that any such Loss is
the result of the negligence or willful misconduct on the part of such person or
entity.
10. MISCELLANEOUS.
10.1 Survival. The representations, warranties, covenants and
indemnities of the Corporation and the Investors contained in or made pursuant
to this Agreement shall survive the execution and delivery of this Agreement and
the Closing until the earlier of the third anniversary of the date hereof or the
conversion of all of the Purchased Shares into Common Stock (as provided in the
Articles of Amendment) and shall in no way be affected by any investigation of
the subject matter thereof made by or on behalf of any of the Investors, their
counsel or the Corporation, as the case may be.
10.2 Successors and Assigns. The Investors may assign their rights
hereunder to any transferee permitted by the terms of Section 6.6 hereof;
provided, however, that any such assignment shall not diminish the rights of the
Investors with respect to any shares of Series A Stock or Warrants still owned
by the Investors. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties.
10.3 Governing Law. This Agreement shall be governed by and
construed under the internal laws of the State of New York, without reference to
principles of conflict of laws or choice of laws.
12
<PAGE>
10.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.5 Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
10.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and addressed to the
party to be notified at the address or facsimile number indicated for such party
on Exhibit A or, in the case of the Corporation, at 1601 Forum Place, Suite
1110, West Palm Beach, Florida 33401, attention Daniel Osborne, Chief Accounting
Officer, or at such other address as any Investor or the Corporation may
designate by giving ten (10) days advance written notice to all other parties.
Such notice shall be deemed effectively given upon (i) personal delivery to the
party to be notified or (ii) delivery by overnight courier to the party to be
notified or (iii) on the fifth (5th) business day following deposit with the
United States Post Office, by registered or certified mail, postage prepaid or
(iv) delivery via facsimile and confirmation generated by the sender's facsimile
machine.
10.7 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Corporation and the holders
of Purchased Shares, Conversion Shares, Warrants and/or Warrant Shares
representing at least 66.6% of the aggregate number of shares of Common Stock
into which the Purchased Shares then are convertible and/or have been converted
and for which the Warrants are exercisable or have been exercised (excluding any
of such shares that have been sold to the public or pursuant to SEC Rule 144).
Any amendment or waiver effected in accordance with this subsection 10.7 shall
be binding upon each holder of any Purchased Shares, Conversion Shares, Warrants
and/or Warrant Shares at the time outstanding, each future holder of such
securities, and the Corporation;provided, however, that no such amendment or
waiver that adversely affects the rights of any holder of Purchased Shares,
Conversion Shares, Warrants or Warrant Shares shall be effective without the
written consent of all of such holders, and that no condition set forth in
Section 5 may be waived with respect to any Investor who does not consent
thereto.
10.8 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
10.9 Entire Agreement. This Agreement, together with all exhibits
and schedules hereto, all of the other Transaction Documents, and the other
agreements to be delivered by the parties at the Closing, constitutes the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings duties or obligations between the parties with
respect to the subject matter hereof.
10.10 Further Assurances. From and after the date of this Agreement,
upon the request of any Investor or the Corporation, the Corporation and the
Investors shall execute and deliver such instruments, documents or other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
10.11 Independent Nature of Investors' Rights. The obligations of
each Investor hereunder are several and not joint, and neither Investor shall be
responsible for the obligations of the other Investor hereunder. Nothing
contained herein or in any other agreement or document to be delivered at the
Closing, and no action taken by the Investors pursuant hereto or thereto, shall
be deemed to constitute the Investors as a partnership, an association, a joint
venture or
13
<PAGE>
any other kind of entity. Each Investor shall be entitled to protect and enforce
its rights arising out of this Agreement and out of any such other agreement or
document and it shall not be necessary for the other Investor to be joined as an
additional party in any proceeding for such purpose.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
THE CORPORATION: THE INVESTORS:
ABLE TELCOM HOLDING CORP., CREDIT SUISSE FIRST BOSTON
a Florida corporation CORPORATION
By: /s/William J. Mercurio By: ____________________________________
---------------------------
William J. Mercurio Print Name:
President and Chief Title:________________________
Executive Officer
SILVERTON INTERNATIONAL FUND LIMITED
By: ______________________________
Print Name:
Title:_______________________
14
<PAGE>
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
LIST OF SCHEDULES AND EXHIBITS
<TABLE>
<S> <C>
SCHEDULES:
Schedule 3.2(c) Outstanding Options, Warrants, Rights and Agreements
Schedule 3.3 Ownership Interests of Corporation
Schedule 3.7 Litigation
Schedule 3.8(b) Licenses
Schedule 3.10 Material Agreements Not Filed with SEC
Schedule 3.11 Securities Rights Granted
Schedule 3.13 Employee Benefits Plans
Schedule 3.17 Environmental Matters
Schedule 3.21 Excluded Subsidiaries
Schedule 3.22 Changes Since Balance Sheet Date
EXHIBITS:
Exhibit A - Schedule of Investors
Exhibit B - Articles of Amendment to Articles of Incorporation
Exhibit C - Form of Warrant
Exhibit D - Form of Opinion of Corporation Counsel
Exhibit E - Form of Opinion of Hunton & Williams - New York
Exhibit F - Form of Registration Rights Agreement
Exhibit G - Form of Lock-Up Agreement
</TABLE>
<PAGE>
EXHIBIT A
Schedule of Investors
<TABLE>
<CAPTION>
Number of
Shares
of Common
Shares of Series A Stock
Stock Purchased Subject to Purchase
Investor Warrant Price
- -------- ------- -----
<S> <C> <C> <C>
Credit Suisse First Boston
Corporation
11 Madison Avenue
3rd Floor
New York, NY 10010 500 100,000 $3,000,000
Facsimile No. (212) 325-8102
Silverton International
Fund Limited
129 Front Street
Hamilton HM12 Bermuda 500 100,000 $3,000,000
Facsimile No. (203) 625-8676
TOTALS: 1,000 200,000 $6,000,000
</TABLE>
=========================== ================= =============== ==============
<PAGE>
EXHIBIT B
Articles of Amendment to Articles of Incorporation
See Attached
<PAGE>
EXHIBIT C
Form of Warrant
See Attached
<PAGE>
EXHIBIT D
Form of Opinion of Corporation's Counsel
See Attached
<PAGE>
EXHIBIT E
Form of Opinion of Hunton & Williams
See Attached
<PAGE>
EXHIBIT F
Form of Registration Rights Agreement
See Attached
<PAGE>
EXHIBIT G
Form of Lock-Up Agreement
See Attached
<PAGE>
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as
of the 20th day of December, 1996 by and among ABLE TELCOM HOLDING CORP., a
Florida corporation (the "Company") and the parties identified on Schedule I
attached hereto (the "Investors").
WHEREAS, the Company and the Investors have entered into that certain
Series A Preferred Stock Purchase Agreement, dated as of the date hereof (the
"Stock Purchase Agreement"); and
WHEREAS, the Company has agreed to provide certain registration rights to
the Investors in connection with the sale of shares of Preferred Stock (as
defined below) and Warrants (as defined below) delivered to the Investors
pursuant to the Stock Purchase Agreement;
Therefore, the parties hereto hereby agree as follows:
(a) Definitions. Unless the context otherwise requires, the terms defined
in this Section 1 shall have the meanings herein specified for all purposes of
this Agreement, applicable to both the singular and plural forms of any of the
terms herein defined.
"Agreement" means this Registration Rights Agreement, as the same may be
amended, modified or supplemented in accordance with the terms hereof.
"Board" means the Board of Directors of the Company.
"Business day" means any day on which the New York Stock Exchange and the
commercial banks in Florida and New York are open for business.
"Common Stock" means the Common Stock, $.001 par value per share, of the
Company.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning assigned to it in the introductory paragraph of
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Forms" has the meaning assigned to it in Section 3(a) of this
Agreement.
"Investors" has the meaning assigned to it in the introductory paragraph
of this Agreement.
"Other Shares" has the meaning assigned to it in Section 3(d) of this
Agreement.
"Person" includes any natural person, corporation, trust, association,
company, partnership, joint venture and any other entity and any government,
governmental agency, instrumentality or political subdivision.
"Preferred Stock" means the shares of Series A Preferred Stock, $.10 par
value per share, of the Company, issued to the Investors under the Stock
Purchase Agreement, in the amounts set forth on Schedule 1 attached hereto.
"Proposed Registration" has the meaning assigned to it in Section 3(a) of
this Agreement.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing in compliance with the Securities
Act (as defined herein) a registration statement on any form other than any of
the Excluded Forms, and the declaration or ordering of the effectiveness of such
registration statement.
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<PAGE>
"Registrable Stock" means (i) shares of Common Stock issuable pursuant to
the conversion of Preferred Stock in accordance with the Company's Articles of
Incorporation, as amended, (ii) any shares of Common Stock issued or issuable
with respect to such shares of Common Stock upon any stock split, stock
dividend, recapitalization or similar event, (iii) shares of Common Stock
issuable upon exercise of the Warrants and (iv) any shares of Common Stock
issued as stock dividends in connection with the Preferred Stock; provided,
however, that shares of Common Stock issuable upon conversion of the Preferred
Stock shall only be registrable pursuant to this Agreement if and so long as
they have not been (i) sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, or (ii) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Section 4(1) thereof so that all transfer restrictions
and restrictive legends with respect to such shares of Common Stock are removed
upon the consummation of such sale and the seller and purchaser of such shares
of Common Stock shall have received an opinion of counsel for the Company, which
shall be in form and content reasonably satisfactory to the seller and buyer and
their respective counsel, to the effect that such shares of Common Stock in the
hands of the purchaser are freely transferable without restriction or
registration under the Securities Act in any public or private transaction.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrant Stock" means those shares of Common Stock issuable under the
Warrants.
"Warrants" mean those warrants to purchase an aggregate of 200,000 shares
of Common Stock delivered by the Company to the Investors under the Stock
Purchase Agreement, of even date herewith, in the amounts set forth on Schedule
1 hereto.
(b) Required Registration. The Company agrees that it will file a
registration statement with the Commission for the registration of those shares
of Common Stock issuable (i) upon the conversion of all of the outstanding
shares of Preferred Stock and (ii) upon the exercise of the Warrants, and the
Company will exercise its best efforts to cause such registration statement to
become effective on or before ninety (90) days after the date on which the
Company files its Form 10-K for the fiscal year ended October 31, 1996 with the
Commission, but in no event later than May 14, 1997 (the "Target Effective
Date").
(i) If the registration statement is not effective by the Target
Effective Date, the Company shall pay to the Investors the aggregate sum of
$4,000 per day until the earlier to occur of (i) the effective date of the
registration statement or (ii) the sixtieth day following the Target Effective
Date. Said payment shall be made to the Investors on a pro rata basis, in
amounts proportionate to the Investors' then relative ownership of the Preferred
Stock and the Registrable Stock.
(ii) If at any time after April 1, 1997 (x) the Company shall not
have an effective a registration statement that includes all of the Registrable
Stock, and (y) the Investors shall have exercised their mandatory redemption
rights under the Articles of Amendment of the Company, of even date herewith,
and, within fifteen (15) days of said exercise the Company shall not have
delivered the redemption price thereunder: the Investors, thereafter and until
all Registrable Stock has been registered and sold, holding at least 51% of the
aggregate amount of Registrable Stock (assuming conversion of all Preferred
Stock and exercise of all Warrants) not yet registered and sold (the "Demanding
Investors") may make one demand (the "Demand") that the Company register under
the Securities Act all or any portion of such Investors' Registrable Stock for
sale in the manner specified in such Demand. Notwithstanding anything to the
contrary contained herein, no request may be made under this subsection 2(b)
within 120 days after the effective date of any registration statement filed by
the Company covering an underwritten public offering in which the holders of
Registrable Stock shall have been entitled to join pursuant to Section 3 hereof.
(iii) Following receipt of any Demand under subsection 2(b), the
Company shall (i) immediately notify all holders of Preferred Stock, Warrants or
Registrable Stock from whom such request has been received, (ii) file a
registration statement with respect to such Registrable Stock within ninety (90)
days of such Demand and (iii) use its best efforts to achieve the effectiveness
of such registration statement. If the holders initiating such Demand intend to
distribute the Registrable Stock included in the Demand by means of an
underwritten public offering, the underwriter will be selected by a majority in
interest of such holders and shall be reasonably acceptable to the Company.
2
<PAGE>
(iv) The Company shall be entitled to include in any registration
statement referred to in this Section 2 for sale, shares of Common Stock to be
sold by the Company for its own account.
(v) Notwithstanding the foregoing, if in their good faith judgment,
the Investors or the managing underwriter of any registration statement referred
to in this Section 2 determines and advises in writing that the inclusion in the
underwritten public offering, of any issued and outstanding shares of Common
Stock proposed to be included therein by holders other than the holders of
Registrable Stock, Preferred Stock or Warrants ("Other Holders"), or Common
Stock owned by the Company (such other shares hereinafter collectively referred
to as the "Other Shares"), would materially interfere with the successful
marketing of the Registrable Stock, then the number of shares to be included in
such underwritten public offering shall be reduced in the following order:
first, Other Shares owned by Other Holders; second, shares of Common Stock owned
by the Company; and third, Registrable Stock pro rata in accordance with the
number of shares requested to be registered by each holder thereof. In the event
that all of the Demanding Investors' Registrable Stock is not included in any
registration statement referred to in this Section 2, said registration
statement shall not be deemed to have satisfied the Demand and the Investors
shall be entitled to an additional Demand.
(c) Piggyback Registration.
(i) Each time that the Company proposes for any reason to register
any of its Common Stock under the Securities Act in connection with the proposed
offer and sale of its Common Stock for money either for its own account or on
behalf of any other security holder ("Proposed Registration"), other than
pursuant to a registration statement on any Excluded Form, the Company shall
promptly give written notice of such Proposed Registration to all holders of
Registrable Stock, Preferred Stock or Warrants and shall offer such holders the
right to request inclusion of the shares of Registrable Stock in the Proposed
Registration to the extent such shares are not already registered pursuant to an
effective registration statement. In the event that the Proposed Registration by
the Company is, in whole or in part, an underwritten public offering, the
Company shall so advise the holders as part of the written notice given pursuant
to this Section 3(a).
(ii) Each holder of Registrable Stock, Preferred Stock or Warrants
shall have 30 days from the receipt of such notice to deliver to the Company a
written request specifying the number of shares of Common Stock such holder
intends to sell and the holder's intended method of disposition.
(iii) In the event that the offering pursuant to the Proposed
Registration is to be an underwritten offering, the shares of Common Stock shall
be included in the underwriting on the same terms and conditions as the shares
of Common Stock, if any, otherwise being sold through underwriters under such
registration. The right of any holder of Registrable Stock shall be conditioned
upon such holder's participation in the underwriting and such holder's
Registrable Stock shall be included in the underwriting to the extent provided
herein. All holders of Registrable Stock, Preferred Stock or Warrants proposing
to distribute their shares of Common Stock through such underwritten offering
agree to enter into an underwriting agreement with the underwriter or
underwriters selected for such underwriting by the Company and the other holders
distributing the securities through such underwriting.
(iv) Notwithstanding the foregoing, if in its good faith judgment,
the managing underwriter of the Proposed Registration determines and advises in
writing that the inclusion of all of the shares of Common Stock issued or
issuable with respect to the Preferred Stock or Warrants proposed to be included
in the underwritten public offering, together with any other issued and
outstanding shares of Common Stock proposed to be included therein by holders
other than the holders of Registrable Stock, Preferred Stock or Warrants, would
materially interfere with the successful marketing of such securities, then the
number of such shares to be included in such underwritten public offering shall
be reduced in proportion, as nearly as practicable, to the respective amounts of
securities requested to be included in such registration by all such
shareholders at the time of filing such registration statement.
(d) Preparation and Filing. If and whenever the Company undertakes to
effect the registration of any Registrable Stock pursuant to this Agreement, the
Company shall, as expeditiously as practicable:
3
<PAGE>
(i) furnish to each holder of Registrable Stock, Preferred Stock and
Warrants, prior to the filing of a registration statement pertaining to any
shares of Registrable Stock or any prospectus, amendment or supplement thereto,
copies of each such registration statement as proposed to be filed, which
documents will be subject to the reasonable review and comments of such holders
(and their respective attorneys), and the Company will not file any such
registration statement, any prospectus or any amendment or supplement thereto
(or any other documents incorporated by reference) to which such holders shall
reasonably object in writing;
(ii) prepare and file with the Commission a registration statement
under the Securities Act with respect to such securities and use its best
efforts to cause such registration statement to become and remain effective in
accordance with Sections 2 and 4(c) hereof;
(iii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith and do any and all other acts or things as may be necessary to keep
such registration statement effective until the earlier of (i) the sale of all
Registrable Stock covered thereby or (ii) the expiration of three (3) years from
the effective date of the registration statement, and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all shares of Registrable Stock covered by such registration statement;
(iv) apply, prior to or concurrently with the filing of any such
registration statement, to the Nasdaq National Market (or, if the Company is not
listed on the Nasdaq National Market, any other principal securities market on
which the Company's Common Stock is then listed) for the listing of the
Registrable Stock being registered pursuant to such registration statement and
use its best effort to obtain the listing of such stock;
(v) use its best efforts to register or qualify the shares of
Registrable Stock covered by such registration statement under or otherwise
comply with the securities or blue sky laws of such jurisdictions as each holder
whose shares of Registrable Stock are being registered pursuant to such
registration statement shall reasonably request in writing from time to time and
do any and all other acts or things which may be necessary or advisable to
enable such holder to consummate the public sale or other disposition in such
jurisdictions of such shares of Registrable Stock; provided, however, that the
Company shall not be required to consent to general service of process for all
purposes in any jurisdiction where it is not then subject to process, qualify to
do business as a foreign corporation where it would not be otherwise required to
qualify or submit to liability for state or local taxes where it is not liable
for such taxes;
(vi) at any time when a prospectus relating thereto covered by such
registration statement is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 4(b) hereof, notify each
holder whose shares of Registrable Stock are being registered pursuant to such
registration statement of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and, at the request of
such holder, as promptly as practicable prepare, file and furnish to such holder
a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing;
(vii) if the Company has delivered preliminary or final prospectuses
to the holders of Registrable Stock being registered pursuant to such
registration statement, and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify such holders and, if requested, such holders shall immediately cease
making offers of shares of Registrable Stock and return all prospectuses to the
Company. The Company shall promptly provide such holders with revised
prospectuses and, following receipt of the revised prospectuses, such holders
shall be free to resume making offers of the shares of Registrable Stock;
(viii)furnish, at the request of any holder of Registrable Stock
being registered pursuant to such registration statement, on the date that such
shares of Registrable Stock are delivered to the underwriters for sale in
4
<PAGE>
connection with a registration pursuant to this Agreement, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, such number of copies of any summary
prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act and such other documents
as such holder may reasonably request in order to facilitate the public sale of
such shares of Registrable Stock;
i. give the holders of Registrable Stock being registered pursuant
to such registration statement, and any attorney, accountant or other
professional retained thereby (collectively, the "Inspectors"), the opportunity
to participate in the preparation of such registration statement and give each
of them (provided such Inspectors agree not to use any information so obtained
for any purpose other than preparation of the registration statement, except to
the extent the holders would be entitled to receive such information without
restriction as stockholders under applicable provisions of Florida law), such
access to its and its subsidiaries' books, records and other documents, and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be appropriate, in the opinion of such holders' counsel, to enable them to
exercise their due diligence responsibilities, if any, in connection with such
registration statement;
j. make generally available to its securities holders earnings
statements, which need not be audited, satisfying the provisions of Section
11(a) of the Securities Act;
k. promptly notify each holder whose shares of Registrable Stock are
being registered pursuant to such registration statement of the issuance or
threatened issuance of any stop order or other order suspending the
effectiveness of a registration statement or preventing or suspending the use of
any preliminary prospectus, prospectus or prospectus supplement, use reasonable
efforts to prevent the issuance of any such threatened stop order or other
order, and, if any such order is issued, use its best efforts to obtain the
lifting or withdrawal of such order at the earliest possible moment and promptly
notify each holder of any such lifting or withdrawal;
l. if requested by any holder of Registrable Shares, the Company
will promptly incorporate in a prospectus supplement or post-effective amendment
to a registration statement such information concerning such holder and such
holder's intended method of distribution as such holder requests to be included
therein (and which is not violative of an applicable law, rule or regulation, in
the reasonable judgment of the Company, after consultation with its outside
legal counsel), including, without limitation, with respect to any change in the
intended method of distribution, the amount or kind of shares being offered by
such holder, the offering price for such shares or any other terms of the
offering or distribution of the shares, and the Company will make all required
filings of such prospectus supplement or post-effective amendment as soon as
possible after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment;
m. cooperate with such holders, their respective legal counsel and
any other interested party (including any interested broker-dealer) in making
any filings or submissions required to be made, and the furnishing of all
appropriate information in connection therewith, with the NASD;
n. enter into an appropriate underwriting agreement if required in
connection with the Investors' exercise of the Demand provided for in Section
2(b) hereof and take all actions required to be taken in accordance with such
underwriting agreement;
o. if, at any time after the effective date of a registration
statement filed by the Company (other than on an Excluded Form), and while such
registration statement is still in effect, additional shares of Common Stock are
necessary to satisfy the Company's obligations to provide a sufficient number of
shares of Conversion Stock or Warrant Stock under the Stock Purchase Agreement
or the Warrants, respectively, and the number of shares of Common Stock
initially registered pursuant to Section 2 hereof is inadequate for such
purpose, the Company shall file one or more post-effective amendments to such
effective registration statement, or such additional registration statements as
may be required by applicable law, on a timely basis to register that number of
additional shares of Common Stock that the Company reasonably believes is
necessary to meet its obligations to the Investors; and
5
<PAGE>
p. maintain the effectiveness of any such registration statement,
uninterrupted until the earlier of (i) the third (3rd) anniversary of the date
of this Agreement, (ii) until all shares of Registrable Stock are freely
tradeable under Rule 144(k) of the Securities Act, or (iii) all Preferred Stock
shall have been converted and all Registrable Stock shall have been sold.
(e) Expenses. The Company shall pay all expenses incurred by the Company
in complying with Sections 2, 3 and 4 of this Agreement, including, without
limitation, (i) all registration and filing fees (including all expenses
incident to filing with the National Association of Securities Dealers, Inc.),
(ii) fees and expenses of complying with securities and blue sky laws, (iii)
printing expenses, (iv) fees and disbursements of Company's counsel and (v) fees
and disbursements of counsel for the Investors up to a maximum of $15,000;
provided, however, that all underwriting discounts and selling commissions
applicable to the shares of Common Stock covered by registration effected
pursuant to this Agreement hereof and other expenses, including attorney's fees
incurred by the selling holders shall be borne by such holder thereof, in
proportion to the number of shares of Common Stock sold by such holder.
(f) Indemnification.
a. The Company shall indemnify and hold harmless any selling holder
of Registrable Stock, as well as any of such holder's officers, employees,
shareholders, partners, affiliates and agents, and any Person who controls any
of the foregoing persons within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, from and against any losses, claims,
damages or liabilities, joint or several, to which any of the foregoing persons
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such shares of
Common Stock were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or any document incident to registration or qualification of any shares
of Common Stock pursuant to Section 4(e) hereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
or, with respect to any prospectus, necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or any
violation by the Company of the Securities Act, the Exchange Act, or state
securities or blue sky laws applicable to the Company and relating to action or
inaction required of the Company in connection with such registration or
qualification under the Securities Act or such state securities or blue sky laws
as to which the Company has received timely notice pursuant to subsection 4(e).
The Company shall pay (after receipt of appropriate documentation) such selling
holder, officers, employees, shareholders, partners, affiliates and agents, or
any Person who controls any of the foregoing persons within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act for any
legal or any other out-of-pocket expenses reasonably incurred, as and when
incurred, by any of them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said prospectus, or said
amendment or supplement or any document incident to registration or
qualification of any shares of Common Stock in reliance upon and in conformity
with written information furnished to the Company by such selling holder for use
in the preparation thereof.
b. Before shares of Common Stock held by any Investor shall be
included in any registration statement filed pursuant to this Agreement, such
Investor and any underwriter acting on its behalf, severally and not jointly,
shall have agreed to indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 6(a)) the Company, and its officers,
employees, shareholders, affiliates, agents, and any Person who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, but only with respect to any untrue statement or alleged
untrue statement of a material fact or omission to state a material fact from
such registration statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, if such untrue
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company by such Investor or such underwriter
specifically for use in the preparation of such registration statement,
preliminary prospectus, final prospectus or amendment or supplement.
6
<PAGE>
c. Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in Section 6(a) or (b),
such indemnified party will, if a claim in respect thereof is made against an
indemnifying party, give written notice to the latter of the commencement of
such action. Failure to provide such notice shall not release an indemnifying
party from its obligations hereunder except to the extent that such failure
shall have prejudiced the indemnifying party. In case any such action is brought
against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its election so as to
assume the defense thereof, the indemnifying party shall be responsible for any
legal or other expenses subsequently incurred by the latter in connection with
the defense thereof; provided, however, that, if any indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to such indemnified party which are different from or additional to those
available to the indemnifying party, there is an actual or potential conflict of
interest between the indemnified and the indemnifying party, or that such claim
or litigation involves or could have an effect upon matters beyond the scope of
the indemnity agreement provided in this Section 6, the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party, and such indemnifying party shall reimburse such indemnified
party and any Person controlling such indemnified party for the reasonable fees
and expenses of counsel retained by the indemnified party which are reasonably
related to the matters covered by the indemnity agreement provided in this
Section 6; provided, however, that in no event shall any indemnification by an
Investor under this Section 6 exceed the net proceeds from the offering received
by such Investor. The indemnified party shall not make any settlement of any
claims indemnified against hereunder without the written consent of the
indemnifying party or parties, which consent shall not be unreasonably withheld.
No indemnifying party, in defense of any such claim or litigation, shall, except
with the consent of such indemnified party, consent to entry of any judgment or
enter into any settlement unless (a) such settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party a release from all liability in respect to such claim or
litigation, (b) there is no finding or admission of any violation of law or any
violation of the rights of any person and no effect on any other claims that may
be made against the indemnified party and (c) the sole relief provided is
monetary damages that are paid in full by the indemnifying party.
d. In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
shares of Common Stock or Registrable Stock exercising rights under this
Agreement, or any controlling Person of any such holder, makes a claim for
indemnification pursuant to this Section 6, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 6 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
selling holder or any such controlling Person in circumstances for which
indemnification is provided under this Section 6; then, in each such case, the
Company and such holder will contribute to the aggregate losses, claims, damages
or liabilities to which they may be subject as is appropriate to reflect the
relative fault of the Company and such holders in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, it
being understood that the parties acknowledge that the overriding equitable
consideration to be given effect in connection with this provision is the
ability of one party or the other to correct the statement or omission which
resulted in such losses, claims, damages or liabilities, and that it would not
be just and equitable if contribution pursuant hereto were to be determined by
pro rata allocation or by any other method of allocation which does not take
into consideration the foregoing equitable considerations. Notwithstanding the
foregoing, (i) no such holder will be required to contribute any amount in
excess of the proceeds to it of all shares of Common Stock sold by it pursuant
to such registration statement, and (ii) no person or entity who is guilty of
fraudulent misrepresentation, within the meaning of Section 12(f) of the
Securities Act, shall be entitled to contribution from any person or entity who
is not guilty of such fraudulent misrepresentation.
(g) Reporting Requirements Under the Exchange Act. The Company agrees to
file timely such information, documents and reports as the Commission may
require or prescribe under Section 13 or 15(d) (whichever is applicable) of the
Exchange Act. The Company forthwith upon request agrees to furnish to any holder
of Registrable Stock (a) a written statement by the Company that it has complied
with such reporting requirements, (b) a copy of the most recent annual or
quarterly report of the Company and (c) such other reports and documents filed
by the Company with the Commission as such holder may reasonably request in
availing itself of an exemption for the sale of Registrable Stock
7
<PAGE>
without registration under the Securities Act. The Company acknowledges and
agrees that the purposes of the requirements contained in this Section 7 are (a)
to enable any such holder to comply with the current public information
requirement contained in paragraph (c) of Rule 144 under the Securities Act
should such holder ever wish to dispose of any of the securities of the Company
acquired by it without registration under the Securities Act in reliance upon
Rule 144 (or any other similar exemptive provision) and (b) to qualify the
Company for the use of registration statements on Form S-3. In addition, the
Company agrees to take such other measures and file such other information,
documents and reports, as shall be required of it hereafter by the Commission as
a condition to the availability of Rule 144 under the Securities Act (or any
similar exemptive provision hereafter in effect) and the use of Form S-3.
(h) Shareholder Information. The Company may request each holder of
Preferred Stock, Warrants or Registrable Stock as to which any registration is
to be effected pursuant to this Agreement to furnish the Company with such
information with respect to such holder and the distribution of such Registrable
Stock as the Company may from time to time reasonably request in writing and as
shall be required by law or by the Commission in connection therewith, and each
holder of Registrable Stock as to which any registration is to be effected
pursuant to this Agreement agrees to furnish the Company with such information.
(i) Forms. All references in this Agreement to particular forms of
registration statements are intended to include, and shall be deemed to include,
references to all successor forms which are intended to replace, or to apply to
similar transactions as, the forms herein referenced.
(j) Termination of Rights. The rights of the holders to register shares of
Common Stock pursuant to this Agreement, and the Company's obligations to effect
such registration shall terminate as to all of the Company's obligations
hereunder on the date on which all shares of Registrable Stock have been
registered and sold under applicable federal and state securities laws;
provided, however, that the provisions of Section 6 hereof shall survive until
the expiration of the applicable statute of limitations.
(k) Granting of Registration Rights. The Company shall not grant any
registration rights inconsistent with those granted hereunder or that give any
security holder a position with respect to the underwriter's cut-back option
that is superior to the Investors' position as granted herein, without the
consent of all of the holders of the Registrable Stock (voting together as a
single class).
(l) Miscellaneous.
(i) Waivers and Amendments. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and thereof.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated orally, except pursuant to a written consent of all the holders of
the Registrable Stock.
(ii) Rights of Holders Inter Se. Each holder shall have the absolute
right to exercise or refrain from exercising any right or rights which such
holder may have by reason of this Agreement, including, without limitation, the
right to consent to the waiver of any obligation of the Company under this
Agreement and to enter into an agreement with the Company for the purpose of
modifying this Agreement or any agreement effecting any such modification, and
such holder shall not incur any liability to any other holder of holders with
respect to exercising or refraining from exercising any such right or rights.
(iii) Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and addressed to the
party to be notified at the address or facsimile number indicated for such party
set forth on Schedule 1 hereto or, in the case of the Company, at 1601 Forum
Place, Suite 1110, West Palm Beach, Florida 33401, attention Daniel Osborne,
Chief Accounting Officer, or at such other address as any Investor or the
Company may designate by giving ten (10) days advance written notice to all
other parties. Such notice shall be deemed effectively given upon (i) personal
delivery to the party to be notified or (ii) delivery by overnight courier to
the party to be notified or (iii) on the fifth (5th) business day following
deposit with the United States Post Office, by registered or certified mail,
postage prepaid or (iv) delivery via facsimile and confirmation generated by the
sender's facsimile machine.
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<PAGE>
(iv) Severability. Should any one or more of the provisions of this
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement,
shall be given effect separately from the provision or provisions determined to
be illegal or unenforceable and shall not be affected thereby.
e. Successors. All the covenants and provisions of this Agreement
shall be binding upon, and inure to the benefit of, the Company, the Investors
and their respective successors and assigns.
f Headings. The headings of the sections, subsections and paragraphs
of this Agreement have been inserted for convenience of reference only and do
not constitute a part of this Agreement.
g. Choice of Law. It is the intention of the parties that the
internal substantive laws, and not the laws of conflicts, of the State of New
York should govern the enforceability and validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of the
parties.
h. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
9
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed personally or by a duly authorized representative thereof as of
the day and year first above written.
THE COMPANY:
ABLE TELCOM HOLDING CORP.
By: /s/William J. Mercurio
-------------------------------------------------
Name: William J. Mercurio
Title:President and Chief Executive Officer
INVESTORS:
CREDIT SUISSE FIRST BOSTON CORPORATION
By:______________________________________________
Name:
Title:
SILVERTON INTERNATIONAL FUND LIMITED
By:______________________________________________
Name:
Title:
10
<PAGE>
SCHEDULE 1
INVESTORS
<TABLE>
<CAPTION>
Number of
Shares
of Common
Shares of Series A Stock
Stock Purchased Subject to
Investor Warrant
- -------- -------
<S> <C> <C>
Credit Suisse First Boston
Corporation
11 Madison Avenue
3rd Floor
New York, NY 10010 500 100,000
Facsimile No. (212) 325-8102
Silverton International
Fund Limited
129 Front Street
Hamilton HM12 Bermuda 500 100,000
Facsimile No. (203) 625-8676
TOTALS: 1,000 200,000
</TABLE>
=========================== ================= ===============
11
<PAGE>
Exhibit 10.3
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM AND WITH THE CONSENT OF THE ISSUER.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS
OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
Warrant No. A-1 Date of Issuance: December __, 1996
ABLE TELCOM HOLDING CORP.
Common Stock Purchase Warrant
Able Telcom Holding Corp. (the "Company"), for value received, hereby
certifies that ________________________, or its registered assigns (the
"Registered Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company, at any time and from time to time on or after the
first anniversary of the date hereof (except as provided in Section 8 hereof)
and on or before the Expiration Date (as defined in Section 6 below) (the
"Exercise Period") ______ shares of Common Stock of the Company, par value $.001
per share (the "Common Stock"), at a purchase price per share equal to $9.82.
The shares purchasable upon exercise of this Warrant, and the purchase price per
share shall be adjusted from time to time pursuant to the provisions of this
Warrant and are hereinafter referred to as the "Warrant Stock" and the "Purchase
Price," respectively.
This Warrant is issued pursuant to, and is subject to the terms and
conditions of the Series A Preferred Stock Purchase Agreement dated December 20,
1996, by and among the Company and certain Investors (the "Purchase Agreement").
1. Number of Shares. Subject to the terms and conditions hereinafter set
forth, the Registered Holder is entitled, upon surrender of this Warrant, to
purchase from the Company up to ________ shares of Common Stock, subject to
adjustment as set forth herein.
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised by the Registered
Holder, in whole or in part, by surrendering this Warrant at any time during the
Exercise Period, with the purchase form appended hereto as Exhibit A duly
executed by such Registered Holder or by such Registered Holder's duly
authorized attorney, at the principal office of the Company, or at such other
office or agency as the Company may designate in writing, accompanied by payment
in full of the Purchase Price payable in respect of the number of shares of
Warrant Stock purchased upon such exercise, and applicable documentary stamp or
other taxes. The total purchase price may be paid by cash, check, wire transfer,
or if requested by Registered Holder in the purchase form, in the manner set
forth in the following paragraph. Notwithstanding the foregoing, the Registered
Holder may only exercise this Warrant for such number of shares of Common Stock
that would result in such Registered Holder being the beneficial owner of up to,
but no more than 4.99% of the Company's then outstanding Common Stock; provided,
however, that the limitation described in this subsection 2(a) shall not prevent
a Registered Holder from exercising this Warrant at any other time thereafter
that does not result in the Registered Holder exceeding such limit.
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<PAGE>
In addition to the method of payment set forth above and in lieu of any
cash payment required, the Registered Holder shall have the right, at any time
that there does not exist an effective registration statement filed pursuant to
the Securities Act covering the Warrant Stock, to exercise this Warrant in full
or in part by surrendering this Warrant in the manner specified above in
exchange for the number of shares of Warrant Stock equal to the product of (x)
the number of shares as to which this Warrant is being exercised multiplied by
(y) a fraction, the numerator of which is the Market Price (as defined below)
less the Purchase Price, and the denominator of which is the Market Price. For
purpose of this paragraph, the term "Market Price" shall mean the average
closing bid price quoted on a share of Common Stock on the Nasdaq National
Market for the three (3) trading days immediately prior to the date of the
delivery to the Company of a purchase form (or if the Company's Common Stock is
not traded or listed on the Nasdaq National Market or any other principal
securities market, the average of the closing bid prices in the over-the-counter
market on such days as reported by Nasdaq or any comparable system, or if not so
reported, as reported by any New York Stock Exchange member firm selected by the
Company for such purpose.
(b) Effective Time of Exercise. Each exercise of this Warrant shall
be deemed to have been effected immediately prior to the close of business on
the day on which this Warrant shall have been surrendered to the Company as
provided in Section 2(a) above. At such time, the person or persons in whose
name or names any certificates for Warrant Stock shall be issuable upon such
exercise as provided in Section 2(c) below shall be deemed to have become the
holder or holders of record of the Warrant Stock represented by such
certificates.
(c) Delivery to Registered Holder. As soon as practicable after the
exercise of this Warrant in whole or in part, and in any event within three (3)
trading days thereafter, the Company, at its expense, will cause to be issued in
the name of, and delivered to, the Registered Holder, or as such Registered
Holder (upon payment by such Registered Holder of any applicable transfer taxes)
may direct:
(i)a certificate or certificates for the number of shares of Warrant Stock
to which such Registered Holder shall be entitled, and
(ii) in case such exercise is in part only, a new warrant or warrants
(dated the date hereof) of like tenor, calling in the aggregate on the face or
faces thereof for the number of shares of Warrant Stock equal (without giving
effect to any adjustment therein) to the number of such shares called for on the
face of this Warrant minus the number of such shares purchased by the Registered
Holder upon such exercise as provided in Section 2(a) above.
3. Adjustments.
(a) If outstanding shares of the Common Stock shall be subdivided
into a greater number of shares, or if a dividend in Common Stock shall be paid
in respect of Common Stock, the Purchase Price in effect immediately prior to
such subdivision or at the record date of such dividend shall simultaneously
with the effectiveness of such subdivision or immediately after the record date
of such dividend be proportionately reduced. If outstanding shares of Common
Stock shall be combined into a smaller number of shares, the Purchase Price in
effect immediately prior to such combination shall, simultaneously with the
effectiveness of such combination, be proportionately increased. When any
adjustment is required to be made in the Purchase Price, the number of shares of
Warrant Stock purchasable upon the exercise of this Warrant shall automatically
be changed to equal the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect immediately prior to
such adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.
(b) In the case of any reclassification or change in the number of
outstanding securities of the Company or in the case of any reorganization of
the Company (or any other corporation the stock or securities of which are at
the time receivable upon the exercise of this Warrant) or any similar corporate
reorganization on or after the date hereof, then and in each such case the
holder of this Warrant, upon the exercise hereof at any time after the
consummation of such reclassification, change, reorganization, merger or
conveyance, shall be entitled to receive, in lieu of the
2
<PAGE>
stock or other securities and property receivable upon the exercise hereof prior
to such consummation, the stock or other securities or property to which such
holder would have been entitled upon such consummation if such holder had
exercised this Warrant immediately prior thereto, all subject to further
adjustment as provided in subsection 3(a); and in each such case, the terms of
this Section 3 shall be applicable to the shares of stock or other securities
properly receivable upon the exercise of this Warrant after such consummation.
(c) Issuance of Common Stock Below Purchase Price. In case the
Company shall issue or sell shares of Common Stock or rights, options, warrants
or convertible or exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock (other than upon conversion of Series A
Preferred Stock, exercise of a Warrant, pursuant to an employee benefit plan or
in consideration for the acquisition of the majority of the common stock or all
or substantially all of the assets of another business entity), in any
transaction which is not subject to the right of first refusal contained in
Section 5 of that certain Series A Preferred Stock Purchase Agreement, dated
December 20, 1996, among the Company, Credit Suisse First Boston Corporation and
Silverton International Fund Limited at a price per share of Common Stock
(determined, in the case of rights, options, warrants or convertible or
exchangeable securities, by dividing (A) the total amount receivable by the
Company in consideration of the issuance and sale of such rights, options,
warrants or convertible or exchangeable securities, plus the total consideration
payable to the Company upon exercise, conversion or exchange thereof, by (B) the
total number of shares of Common Stock covered by such rights, options, warrants
or convertible or exchangeable securities) that is lower (at the date of such
sale or issuance) than the Purchase Price, or for no consideration, then in each
case the number of shares of Common Stock thereafter issuable upon the exercise
of all Warrants then outstanding shall be increased in a manner determined by
multiplying the number of shares of Common Stock theretofore issuable upon the
exercise of all Warrants then outstanding by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding immediately prior to
the sale or issuance plus the number of additional shares of Common Stock
offered for subscription or purchase or to be issued upon conversion or exchange
of such convertible or exchangeable securities, and of which the denominator
shall be the number of shares of Common Stock outstanding immediately prior to
the sale or issuance plus the number of shares of Common Stock which the
"aggregate consideration to be received by the Company" (as defined in the
following paragraph) in connection with such sale or issuance would purchase at
the Purchase Price.
For the purpose of such adjustments the "aggregate consideration to be
received by the Company" therefor shall be deemed to be the consideration
received by the Company for such Common Stock, rights options, warrants or
convertible or exchangeable securities plus any consideration or premiums stated
in such rights, options, warrants or convertible or exchangeable securities to
be paid for the shares of Common Stock covered thereby.
In case the Company shall issue or sell shares of Common Stock or rights,
options, warrants or convertible or exchangeable securities containing the right
to subscribe for or purchase shares of Common Stock for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then in determining the "price per share of Common Stock" and the
"consideration" receivable by or payable to the Company for purposes of this
Section 3(c), the Board of Directors of the Company shall determine, in good
faith, the fair value of such property. In case the Company shall issue and sell
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock, together with one
or more other securities as part of a unit at a price per unit, then in
determining the "price per share of Common Stock" and the "consideration"
receivable by or payable to the Company for purposes of this Section 3(c), the
Board of Directors of the Company shall determine, in good faith, the fair value
of the rights, options, warrants or convertible or exchangeable securities then
being sold as part of such unit.
Any increase of the number of shares of Common Stock issuable upon
exercise of all Warrants then outstanding made pursuant to this Section 3(c)
shall be allocated among such Warrants on a pro rata basis.
(d) Expiration of Rights, Options and Conversion Privileges. Upon
the expiration of any rights, options, warrants or conversion or exchange rights
that have previously resulted in an adjustment under this Section 3(c), if any
thereof shall not have been exercised, the number of shares of Common Stock
issuable upon the exercise of each Warrant shall be readjusted and shall
thereafter, upon any future exercise, be such as they would have been had
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<PAGE>
they been originally adjusted (or had the original adjustment not been required,
as the case may be) as if (i) the only shares of Common Stock so issued were the
shares of Common Stock, if any, actually issued or sold upon the exercise of
such rights, options, warrants or conversion or exchange rights and (ii) such
shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise plus the consideration, if
any, actually received by the Company for issuance, sale or grant of all such
rights, options, warrants or conversion or exchange rights whether or not
exercised; provided that no such readjustment shall have the effect of
decreasing the number of shares issuable upon exercise of each Warrant by a
number that is in excess of the amount or number of the adjustment initially
made in respect of the issuance, sale or grant of such rights, options, warrants
or conversion or exchange rights or shall have the effect of decreasing the
number of shares of Common Stock that have been issued upon exercise of any
Warrants prior to the date of such readjustment.
(e) Adjustment of Exercise Price. Whenever the number of shares of
Common Stock purchasable upon the exercise of each Warrant is adjusted, as
provided in Section 3(c), the Purchase Price of each share of Common Stock
payable upon exercise of such Warrant shall be adjusted by multiplying such
Purchase Price immediately prior to such adjustment by a fraction, the numerator
of which shall be the number of shares issuable upon the exercise of each
Warrant immediately prior to such adjustment, and the denominator of which shall
be the number of shares so issuable immediately thereafter.
(f) When any adjustment is required to be made in the Purchase
Price, the Company shall promptly mail to the Registered Holder a certificate
setting forth the Purchase Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Such certificate shall also
set forth the kind and amount of stock or other securities or property into
which this Warrant shall be exercisable following the occurrence of any of the
events specified in subsections 3(a) or (b) above.
(g) Subject to the provisions of Section 8 hereof, in the event
that, prior to the first anniversary of the date hereof, the Registered Holder
has converted any shares of Series A Preferred Stock issued to such Registered
Holder on the date hereof into Common Stock, the number of shares of Common
Stock issuable upon the exercise of this Warrant shall be reduced by an amount
equal to 200 shares of Common Stock (as adjusted as provided herein) for each
share of Series A Preferred Stock which has been converted into Common Stock.
4. Transfers.
(a) This Warrant and all rights hereunder are being issued in
connection with the issuance of the Series A Preferred Stock and are
transferable, in whole or in part, only with the prior written consent of the
Company, which consent will not be unreasonably withheld, and in compliance with
subsections 4(b) through 4(d) hereof, upon surrender of this Warrant with a
properly executed assignment (in the form of Exhibit B hereto) at the principal
office of the Company.
(b) Each holder of this Warrant acknowledges that this Warrant and
the Warrant Stock have not been registered under the Securities Act, and agrees
not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose
of this Warrant or any Warrant Stock issued upon its exercise in the absence of
(i) an effective registration statement under the Securities Act as to this
Warrant or the Warrant Stock and registration or qualification of this Warrant
or the Warrant Stock under any applicable blue sky or state securities law then
in effect, or (ii) an opinion of counsel, reasonably satisfactory to the
Company, that such registration and qualification are not required. Each
certificate or other instrument for Warrant Stock issued upon the exercise of
this Warrant shall bear a legend substantially to the foregoing effect.
Notwithstanding the foregoing, no such registration statement or opinion of
counsel (unless required by the transfer agent of the Company with respect to
the Warrant Stock) shall be required (A) for any transfer of any Warrant or
Warrant Stock in compliance with Rule 144 or Rule 144A of the Securities Act;
(B) for any transfer of Warrants or Warrant Stock by a Registered Holder that is
a partnership or a corporation to (x) a partner of such partnership or an
"affiliate" (as such term is defined in Regulation D under the Securities Act)
of such corporation (in which case no consent of the Company pursuant to Section
4(a) above shall be required), (y) a retired partner of such partnership who
retires after the date hereof or (z) the estate of any such partner or
shareholder; or (C) for the transfer by gift, will or intestate succession by
any Registered Holder to his or her spouse or lineal descendants
4
<PAGE>
or successors or any trust for any of the foregoing. Each holder of this
Warrant, by acceptance hereof, acknowledges that the Warrant and the Warrant
Stock are being (and will be) acquired solely for such holder's own account and
not as nominee for any other party, and for investment; provided, however, that
in making such representation, the holder shall not be required to hold the
Warrant or any Warrant Stock for any minimum or other specific term, except as
required by Federal and applicable state securities laws.
(c) A Registered Holder shall deliver written notice of any transfer
of this Warrant permitted hereunder, in the form of Exhibit B hereto, to the
Company within three (3) business days after such transfer. Such notice shall
include the name and address of the transferee of this Warrant. The Company will
maintain a register containing the names and addresses of the Registered Holders
of this Warrant, and the Company shall enter thereon the name and address of any
transferee of this Warrant within three (3) business days after its receipt of
written notice thereof from the Registered Holder. Any Registered Holder may
change such Registered Holder's address as shown on the warrant register by
written notice to the Company requesting such change.
(d) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Registered Holder of this Warrant as the
absolute owner hereof for all purposes; provided, however, that if and when this
Warrant is properly assigned in blank, the Company may (but shall not be
required to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
5. No Impairment. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will (subject to Section 15 below) at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.
6. Termination. This Warrant (and the right to purchase securities upon
exercise hereof) shall terminate three (3) years after the date hereof (the
"Expiration Date").
7. Notices of Certain Transactions. In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon the exercise of
this Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution, or to receive any right to subscribe for or
purchase any shares of stock of any class or any other securities, or to receive
any other right, to subscribe for or purchase any shares of stock of any class
or any other securities, or to receive any other right, or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company, any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the surviving entity), or any transfer of all or substantially all of the
assets of the Company, or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon such reorganization, reclassification, consolidation,
merger, transfer, dissolution, liquidation or winding-up) are to be determined.
Such notice shall be mailed at least twenty (20) days prior to the record date
or effective date for the event specified in such notice.
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8. Optional Redemption. If, at any time, the Company delivers a written
redemption notice to the Registered Holder under subsection 8(b)(i) of Article
III of the Articles of Incorporation of the Company, as amended, with regard to
the shares of Series A Preferred Stock owned by Registered Holder, the Company,
concurrently with such written redemption notice, shall deliver a separate
written notice to the Registered Holder stating that the Registered Holder has
ninety (90) days from the date such separate written notice is delivered to the
Registered Holder to exercise the Warrant for the Purchase Price or the Company
will redeem the Warrant with respect to any shares of Warrant Stock not so
converted at a purchase price of $.01 per underlying share of Warrant Stock on
the date that is thirty (30) days after the date of such separate written
notice. At the end of such ninety (90) day period, the Company may redeem the
Warrant with respect to any portion thereof that has not been converted into
shares of Warrant Stock by delivering to the Registered Holder the purchase
price stated in this Section 8 with respect to such unconverted portion of the
Warrant via check or wire transfer. The ninety (90) day period set forth in this
Section 8 shall be extended by the number of days during which a registration
statement is not effective or otherwise not available for use by the Registered
Holders.
9. Reservation of Stock. The Company will at all times reserve and keep
available, solely for the issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Stock and other stock, securities and property,
as from time to time shall be issuable upon the exercise of this Warrant.
10. Exchange of Warrants. Upon the surrender by the Registered Holder of
any Warrant or Warrants, properly endorsed, to the Company at the principal
office of the Company, the Company will, subject to the provisions of Section 4
hereof, issue and deliver to or upon the order of such Registered Holder, at the
Company's expense, a new Warrant or Warrants of like tenor, in the name of such
Registered Holder or as such Registered Holder (upon payment by such Registered
Holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face or faces of the Warrant or Warrants so surrendered.
11. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement in an amount reasonably satisfactory to the Company, or (in
the case of mutilation) upon surrender and cancellation of this Warrant, the
Company will issue, in lieu thereof, a new Warrant of like tenor.
12. Notices. Unless otherwise provided, any notice required or permitted
under this Warrant shall be given in writing and addressed to the party to be
notified at the address or facsimile number indicated for such party set forth
in the records of the Company for such purpose or, in the case of the Company,
at 1601 Forum Place, Suite 1110, West Palm Beach, Florida 33401, attention
Daniel Osborne, Chief Accounting Officer, or at such other address as any
Registered Holder or the Company may designate by giving ten (10) days advance
written notice to all other parties. Such notice shall be deemed effectively
given upon (i) personal delivery to the party to be notified or (ii) delivery by
overnight courier to the party to be notified or (iii) on the fifth (5th)
business day following deposit with the United States Post Office, by registered
or certified mail, postage prepaid or (iv) delivery via facsimile and
confirmation generated by the sender's facsimile machine.
13. No Rights as Shareholder. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a shareholder of the Company solely by reason of being a holder
of this Warrant.
14. No Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Common Stock on the date of exercise, as determined by the average closing bid
price, as reported on the Nasdaq National Market (or such other principal
securities market on which the shares of Common Stock are traded) of one such
share for the three (3) trading days immediately preceding the date of exercise.
15. Amendment or Waiver. Any term of this Warrant may be amended or waived
upon written consent of the Company and all of the holders hereof.
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16. Headings. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
17. Governing Law. This Warrant shall be governed, construed and
interpreted in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of law.
ABLE TELCOM HOLDING CORP.
By:/s/William J. Mercurio
----------------------------------------
Name: William J. Mercurio
Title:President and Chief Executive Officer
Address: 1601 Forum Place, Suite 1110
West Palm Beach, Florida 33401
Facsimile Number: (561) 688-0455
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EXHIBIT A
PURCHASE FORM
To: Able Telcom Holding Corp.
Dated:________________________
The undersigned, pursuant to the provisions set forth in the attached
Warrant, hereby irrevocably elects to purchase _______ shares of the Common
Stock covered by such Warrant and herewith makes payment of $_________,
representing the full purchase price for such shares at the price per share
provided for in such Warrant. The undersigned [does] [does not] choose to pay
the purchase price pursuant to a cashless exercise of the Warrants. The
undersigned certifies to the Company that its election to purchase does not
cause the undersigned to be the beneficial owner of more than 4.99% of the
Common Stock of the Company as of the date hereof.
The undersigned further acknowledges that it has reviewed the
representations and warranties contained in Section 4 of the Purchase Agreement
(as defined in the Warrant) and by its signature below hereby makes such
representations and warranties to the Company. Defined terms contained in such
representations and warranties shall have the meanings assigned to them in the
Purchase Agreement, provided that the term "Investor" shall refer to the
undersigned and the term "Purchased Shares" shall refer to the Warrant Stock.
HOLDER:
------------------------------------
By:_________________________________
Title:____________________________________
Address:____________________________
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED,_________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant with respect to the number of shares of Common Stock covered thereby set
forth below,unto:
Name of Assignee Address/Facsimile Number No. of Shares
The undersigned hereby certifies to the Company that (i) the undersigned
is the Registered Holder of the attached Warrant and (ii) Assignee is a person
or entity identified in subsection 4 of the Warrant.
Dated:_______________________________
Signature:____________________________
Witness:_____________________________
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