UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2 )*
INTERNET COMMUNICATIONS CORPORATION
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(Name of Issuer)
Common Stock, no par value
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(Title of Class of Securities)
46057T408
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(CUSIP Number)
Craig D. Slater Drake S. Tempest, Esq.
The Anschutz Corporation O'Melveny & Myers LLP
2400 Seventeenth Street The Citicorp Center
Denver, Colorado 80202 153 East 53rd Street, 54th Floor
(303) 298-1000 New York, New York 10022-4611
(212) 326-2000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 24, 1997
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(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
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* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be filed for the purpose of Section 18 of the Securities Exchange
Act of 1934 (Act) or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 46057T408
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1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Interwest Group, Inc.
84-0810486
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2 Check the Appropriate Box If a Member of a Group a. |X|
b. |_|
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3 SEC Use Only
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4 Source of Funds
WC
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Item
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
Colorado
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7 Sole Voting Power
Number of
Shares 0
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 2,873,568*
Person --------------------------------------------------------
With 9 Sole Dispositive Power
0
--------------------------------------------------------
10 Shared Dispositive Power
2,873,568*
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,873,568*
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12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares |_|
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13 Percent of Class Represented By Amount in Row (11)
52.9%*
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14 Type of Reporting Person
CO
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* Assuming the closing of the transaction contemplated by the Stock Purchase
Agreement and the exercise of the Warrants, as described in Item 5 hereto.
Page 2 of 8 Pages
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SCHEDULE 13D
CUSIP No. 46057T408
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Anschutz Company
84-1179412
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2 Check the Appropriate Box If a Member of a Group a. |X|
b. |_|
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3 SEC Use Only
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4 Source of Funds
WC
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Item
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
Delaware
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7 Sole Voting Power
Number of
Shares 0
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 2,873,568*
Person --------------------------------------------------------
With 9 Sole Dispositive Power
0
--------------------------------------------------------
10 Shared Dispositive Power
2,873,568*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,873,568*
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12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
52.9%*
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14 Type of Reporting Person
CO
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* Assuming the closing of the transaction contemplated by the Stock Purchase
Agreement and the exercise of the Warrants, as described in Item 5 hereto.
Page 3 of 8 Pages
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SCHEDULE 13D
CUSIP No. 46057T408
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Philip F. Anschutz
###-##-####
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2 Check the Appropriate Box If a Member of a Group a. |X|
b. |_|
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3 SEC Use Only
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4 Source of Funds
WC
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Item
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
United States of America
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares 0
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 2,873,563*
Person --------------------------------------------------------
With 9 Sole Dispositive Power
0
--------------------------------------------------------
10 Shared Dispositive Power
2,873,563*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,873,563*
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
52.9%*
- --------------------------------------------------------------------------------
14 Type of Reporting Person
IN
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* Assuming the closing of the transaction contemplated by the Stock Purchase
Agreement and the exercise of the Warrants, as described in Item 5 hereto.
Page 4 of 8 Pages
<PAGE>
This Amendment No. 2 to the Schedule 13D filed on September 27, 1996
by Interwest Group, Inc. ("Group"), Anschutz Company ("AC") and Philip F.
Anschutz ("Anschutz"), as amended by Amendment No. 1 to the Schedule 13D filed
on January 9, 1997 (such Schedule 13D, as amended, the "Schedule 13D") relates
to shares of Common Stock, no par value per share ("Common Stock"), of Internet
Communications Corporation (the "Company") and amends Items 3, 4 and 5 of the
Schedule 13D. Unless otherwise indicated, all capitalized terms used but not
defined herein shall have the same meaning as set forth in the Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The information previously furnished in response to this item is
amended to add the following:
The approximately $3,000,000 necessary to consummate the transaction
described in Item 4 below was provided by cash and short-term investments of
Group.
ITEM 4. PURPOSE OF TRANSACTION
The information previously furnished in response to this item is
amended to add the following:
On March 24, 1997, Group and the Company executed a Stock Purchase
Agreement dated as of February 25, 1997 (the "Stock Purchase Agreement"),
pursuant to which Group shall purchase from the Company 631,579 shares of Common
Stock (the "Shares") at a price of $4.75 per Share and warrants (the "Warrants")
to purchase an additional 63,158 shares of Common Stock (the "Warrant Shares"),
on or before the date that is five years after the Closing Date (as defined
below), at an exercise price of $5.70 per Warrant Share.
The Stock Purchase Agreement contains standard representations and
warranties, covenants and conditions. Conditions to the closing of the
transactions contemplated by the Stock Purchase Agreement include that (i) all
waiting, review or appeal periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, shall have terminated or expired and (ii)
Norwest Bank Colorado, N.A. ("Norwest"), shall have waived all defaults by the
Company under the Company's credit agreement with Norwest and the loan covenants
in such credit agreement shall have been renegotiated to the satisfaction of
Group.
The closing of the purchase of the Shares and Warrants (the "Closing
Date") is expected to take place on the second business day after the conditions
precedent to obligations of the parties under the Stock Purchase Agreement
Page 5 of 8 Pages
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shall have been satisfied or waived, but in no event later than April 30, 1997.
The Stock Purchase Agreement, which is incorporated herein by this reference
(including the Form of Warrant, Form of First Amendment to Registration Rights
Agreement (as defined below) and the other exhibits thereto),
is set forth as Exhibit 1 hereto.
In connection with the transactions contemplated by the Stock
Purchase Agreement, the Company and Group have agreed to amend the Registration
Rights Agreement pursuant to a First Amendment to Registration Rights Agreement
to provide that the Shares and the Warrant Shares constitute "Registrable
Securities" thereunder and to provide to Group one additional demand
registration right.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
The information previously furnished in response to this item is
amended to read as follows:
As of the date hereof, Group may be deemed to be the direct
beneficial owner, and AC and Anschutz may be deemed to be indirect beneficial
owners, of 2,178,831 shares of Common Stock. Based upon the number of shares of
Common Stock that were issued and outstanding on March 21, 1997 such number of
shares of Common Stock is equal to approximately 46.0% of the number of shares
of Common Stock outstanding then.
Based on the number of shares of Common Stock outstanding on March
21, 1997, and assuming the closing of the transactions contemplated by the Stock
Purchase Agreement and the issuance to Group of the Shares pursuant thereto, on
the Closing Date Group, AC and Anschutz would own 2,810,410 shares of Common
Stock, or approximately 52.3% of the shares of Common Stock that would be
outstanding after giving effect to the issuance of such Shares. In addition,
based on the number of shares of Common Stock outstanding on March 21, 1997, and
assuming the closing of the transactions contemplated by the Stock Purchase
Agreement and the issuance to Group of the Shares pursuant thereto and the
issuance to Group of the Warrant Shares upon exercise of the Warrant, on the
Closing Date Group, AC and Anschutz would own 2,873,568 shares of Common Stock,
or approximately 52.9% of the shares of Common Stock that would be outstanding
after giving effect to the issuance of such Shares and such Warrant Shares.
The Note previously disclosed in Item 4 of the Schedule 13D has been
repaid by the Company, and accordingly neither Group, AC nor Anschutz may be
deemed to be the beneficial owner of the Conversion Shares.
Page 6 of 8 Pages
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 3, 1997
INTERWEST GROUP, INC.
By /s/ THOMAS G. KUNDERT
--------------------------------
Thomas G. Kundert, Treasurer
S-1
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 3, 1997
ANSCHUTZ COMPANY
By /s/ PHILIP F. ANSCHUTZ
--------------------------------
Philip F. Anschutz
S-1
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 3, 1997
PHILIP F. ANSCHUTZ
/S/ PHILIP F. ANSCHUTZ
--------------------------------
S-1
<PAGE>
EXHIBIT INDEX
Exhibit 1: Stock Purchase Agreement dated as of February
25, 1997 between Internet Communications
Corporation and Interwest Group, Inc.
STOCK PURCHASE AGREEMENT
dated as of
February 25, 1997
between
INTERNET COMMUNICATIONS CORPORATION
and
INTERWEST GROUP, INC.
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
TRANSACTIONS.............................. 1
Section 1.1 Company and Purchaser............................ 1
Section 1.2 Adjustments...................................... 1
ARTICLE II
CLOSING................................ 2
Section 2.1 Closing.......................................... 2
Section 2.2 Location of Closing.............................. 2
ARTICLE III
CONDITIONS OF CLOSING......................... 2
Section 3.1 Conditions Precedent to Closing.................. 2
Section 3.2 Legends.......................................... 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 5
Section 4.1 Corporate Existence and Power.................... 5
Section 4.2 Authorization; Contravention; Modifications...... 6
Section 4.3 Approvals........................................ 6
Section 4.4 Binding Effect................................... 6
Section 4.5 Financial Information............................ 6
Section 4.6 Taxes............................................ 7
Section 4.7 Litigation....................................... 7
Section 4.8 Compliance with Laws............................. 7
Section 4.9 Insurance........................................ 7
Section 4.10 Debt............................................ 8
Section 4.11 No Default...................................... 8
Section 4.12 Capitalization.................................. 8
Section 4.13 Material Contracts.............................. 10
Section 4.14 Fees for Brokers and Finders................... 10
Section 4.15 Misstatements................................... 10
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Page
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Section 4.16 No Restrictions on Purchaser................... 11
Section 4.17 SEC Documents................................... 11
Section 4.18 Absence of Certain Changes or Events............ 11
Section 4.19 Director Approval............................... 11
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER............................ 12
Section 5.1 Corporate Existence and Power.................... 12
Section 5.2 Authorization; Contravention..................... 12
Section 5.3 Approvals........................................ 12
Section 5.4 Binding Effect................................... 12
Section 5.5 Litigation....................................... 12
Section 5.6 Investment Intent................................ 13
Section 5.7 Fees for Brokers and Finders..................... 13
ARTICLE VI
COVENANTS OF THE COMPANY........................ 13
Section 6.1 Affirmative Covenants............................ 13
Section 6.2 Negative Covenants............................... 14
ARTICLE VII
ADDITIONAL COVENANTS OF THE PARTIES.................. 15
Section 7.1 Mutual Covenants of the Parties.................. 15
Section 7.2 Additional Covenants of the Company.............. 16
ARTICLE VIII
HART-SCOTT-RODINO FILING........................ 17
Section 8.1 Best Efforts to Comply........................... 17
Section 8.2 Exchange of Information.......................... 17
ARTICLE IX
TERMINATION.............................. 17
ii
<PAGE>
Page
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Section 9.1 Termination...................................... 17
Section 9.2 Expenses and Fees................................ 18
ARTICLE X
MISCELLANEOUS............................. 18
Section 10.1 Notices......................................... 18
Section 10.2 No Waivers; Remedies; Specific Performance...... 19
Section 10.3 Amendments, Etc................................. 19
Section 10.4 Successors and Assigns.......................... 19
Section 10.5 Accounting Terms and Determinations............. 19
Section 10.6 Governing Law................................... 20
Section 10.7 Counterparts; Effectiveness..................... 20
Section 10.8 Severability of Provisions...................... 20
Section 10.9 Headings and References......................... 20
Section 10.10 Entire Agreement............................... 20
Section 10.11 Survival....................................... 20
Section 10.12 Exclusive Jurisdiction......................... 21
Section 10.13 Waiver of Jury Trial........................... 21
Section 10.14 Affiliate...................................... 21
iii
<PAGE>
ANNEX
Annex A - Definitions
EXHIBITS
Exhibit A - Form of Warrant
Exhibit B - Form of Amendment to Registration Rights Agreement
Exhibit 3.1(f)(1) - Certificate of Secretary of the Company
Exhibit 3.1(f)(2) - Certificate of Officer of the Company
Exhibit 3.1(f)(6) - Opinion of Counsel for the Company
iv
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement") dated as of February 25,
1997 between INTERNET COMMUNICATIONS CORPORATION, a Colorado corporation (the
"Company") and INTERWEST GROUP, INC. (the "Purchaser").
Purchaser previously acquired common stock of the Company pursuant
to an Amended and Restated Acquisition Agreement dated as of May 29, 1996 among
the Company, the Purchaser and Interwest Acquisition One, Inc. (the "Prior
Agreement").
Terms not otherwise defined in this Agreement have the meanings
stated in Annex A.
The parties agree as follows:
ARTICLE I
TRANSACTIONS
Section 1.1 Company and Purchaser. Subject to the terms and
conditions set forth in this Agreement, at the Closing the Company shall issue,
sell and deliver to the Purchaser, and the Purchaser shall purchase, accept and
acquire from the Company:
(a) 631,579 shares of common stock, no par value, of the
Company (the "Common Stock") (as such number of shares may be adjusted
pursuant to Section 1.2 (a), the "Shares"), at a price of $4.75 per Share
(as such price per Share may be adjusted pursuant to Section 1.2(a), the
"Share Price"), payable in cash; and
(b) warrants substantially in the form of Exhibit A attached
hereto (the "Warrants"), upon the exercise of which in accordance with the
terms thereof the Company shall sell, issue and deliver to or at the order
of the holder thereof up to 63,158 shares of Common Stock (as such number
of shares may be adjusted pursuant to the terms of the Warrants, the
"Warrant Shares"), on or before the date that is five years after the
Closing Date, at an exercise price of $5.70 per Warrant Share (as such
exercise price per share may be adjusted pursuant to the terms of the
Warrants, the "Warrant Exercise Price").
Section 1.2 Adjustments.
(a) The respective numbers of Shares and Warrant Shares and
the Share
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Price and Warrant Exercise Price, in each case as stated in this Section 1,
shall in each case be adjusted in the event of any change in Common Stock by
reason of the issuance of any Equity Securities, stock or other non-cash
dividends, extraordinary cash dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares or the like on or
before the Closing Date, such that, in each case the Purchaser shall receive
upon the payment of the Share Price and Warrant Exercise Price, as the case may
be, the number and class of shares or other securities or property that would
have been received in respect of a share of Common Stock, as the case may be, if
the Closing Date had occurred immediately prior to such event, or the record
date therefor, as applicable.
(b) No adjustment made pursuant to this Section 1.2 shall
constitute or be deemed a waiver by the Purchaser of any breach of any of the
representations, warranties or obligations of the Company contained in this
Agreement.
ARTICLE II
CLOSING
Section 2.1 Closing. The closing (the "Closing") of the transactions
subject to Section 1.1 (the "Closing Transactions") shall take place on March
14, 1997 or, at the election of the Purchaser, on the second Business Day after
the conditions precedent to the obligations of the parties under this Agreement
with respect thereto shall have been satisfied or waived, as the case may be, or
on such other date as the parties may agree in writing (the "Closing Date"), but
in no event later than April 30, 1997.
Section 2.2 Location of Closing. The Closing shall take place at the
executive offices of the Company at its address stated on the signature pages of
this Agreement or at such other location as agreed to by the parties.
ARTICLE III
CONDITIONS OF CLOSING
Section 3.1 Conditions Precedent to Closing. The respective
obligations of each party under this Agreement with respect to the Transactions
are subject to the satisfaction of each of the following conditions, unless
waived by the party entitled to the benefit thereof, at or before the Closing:
(a) all waiting, review or appeal periods under the
Hart-Scott-Rodino Act shall have terminated or expired;
(b) no Action shall be pending or, to the knowledge of a
party,
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threatened against such party or any other person that restricts in any material
respect or prohibits (or, if successful, would restrict or prohibit) the
conclusion of the Closing Transactions;
(c) the Company is not in violation of or default, in any
material respect, with respect to any Regulation of any Governmental Body or any
decision, ruling, order or award of any arbitrator applicable to it or its
business, properties or operations;
(d) neither party (1) would be in violation of or default, in
any material respect, with respect to any Regulation of any Governmental Body or
any decision, ruling, order or award of any arbitrator applicable to it or its
business, properties or operations in connection with or as a result of the
conclusion of the Closing Transactions, or (2) has received notice that, in
connection with or as a result of the conclusion of the Closing Transactions, it
is or would be in violation of or default, in any material respect, with respect
to the same;
(e) the representations and warranties of the other party
contained in each Transaction Document to which it is a party shall be true and
correct in all material respects on and as of the Closing Date, with the same
force and effect as though made on and as of the Closing Date;
(f) the other party shall have performed, in all material
respects, all of its covenants and other obligations required by each
Transaction Document required to be performed at or before the Closing; and
(g) the party shall have received from the other party the
following, each dated the Closing Date, in form and substance reasonably
satisfactory to the receiving party:
(1) from the Company, a certificate of the Secretary or an Assistant
Secretary of the Company, substantially in the form of Exhibit 3.1(f)(1),
with respect to (i) the certificate of incorporation or articles of
incorporation, as the case may be, of the Company, (ii) the bylaws of the
Company, (iii) the resolutions of the Board of Directors of the Company
approving each Transaction Document to which the Company is a party and
the other documents to be delivered by it under the Transaction Documents
and (iv) the names and true signatures of the officers of the Company
authorized to sign each Transaction Document to which the Company is a
party and the other documents to be delivered by the Company under the
Transaction Documents;
(2) from the Company, a certificate of the President or a Vice
President of the Company, substantially in the form of Exhibit 3.1(f)(2),
to the effect that (i) the representations and warranties of the Company
contained in the Transaction Documents to which it is a party are true and
correct in all material respects as of the Closing Date,
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and (ii) the Company has performed, in all material respects, all
covenants and other obligations required by the Transaction Documents to
which it is a party to be performed by it at or before the Closing;
(3) from the Company, certified copies, or other evidence
satisfactory to the Purchaser, of all Approvals of all Governmental Bodies
and other persons with respect to the Company referred to in Section 4.3;
(4) from the Purchaser, certified copies, or other evidence
satisfactory to the Company, of all Approvals of all Governmental Bodies
and other persons with respect to the Purchaser referred to in Section
5.3;
(5) from the Company, a certificate of the Secretary of State of the
jurisdiction in which the Company is incorporated, dated as of a recent
date, as to the good standing of and payment of taxes by the Company and
as to the charter documents of the Company on file in the office of the
Secretary of State; and
(6) from the Company, a favorable opinion of one or more counsel for
the Company, which together are substantially in the form of Exhibit
3.1(f)(6), and as to other matters reasonably requested by the receiving
party.
(h) the Company shall have duly executed and delivered to the
Purchaser one or more certificates representing the Shares;
(i) the Purchaser shall have delivered to the Company an
amount in immediately available funds equal to the aggregate purchase price for
the Shares;
(j) the Company and the Purchaser shall have executed and
delivered the Amendment to Registration Rights Agreement substantially in the
form of Exhibit B attached hereto, with such changes therein as shall have been
approved by the Company and the Purchaser;
(k) the Company shall have executed and delivered to the
Purchaser the Warrants substantially in the form of Exhibit A attached hereto,
with such changes therein as the Company and the Purchaser shall have approved,
and the Company shall have performed to the satisfaction of the Purchaser the
obligations of the Company then required to be performed thereunder;
(l) Norwest Bank Colorado, N.A. ("Norwest") shall have waived
all defaults by the Company under the Company's credit agreement with Norwest
and the loan covenants in such credit agreement shall have been renegotiated to
the satisfaction of Purchaser or its Affiliates; and
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(m) the identity of the insurance carrier that shall provide
the Company's director and officer liability insurance, and arrangements to
compensate the Purchaser or its Affiliates for such insurance in the event that
such insurance is provided under Purchaser's or its Affiliates' insurance
policies, shall have been established to the satisfaction of Purchaser or its
Affiliates.
Section 3.2 Legends.
(a) Each certificate for Shares and Warrants and each
certificate for Warrant Shares, and any certificate issued in exchange therefor
or on conversion or upon transfer, except certificates issued in connection with
a sale registered under the Securities Act and except as provided below, shall
bear legends to the following effect:
(1) "The securities represented by this certificate have not been
registered under the Securities Act of 1933 and may not be offered, sold,
transferred or otherwise disposed of except in compliance with said Act."
(2) "The shares represented by this certificate are subject to the
restrictions contained in the Registration Rights Agreement dated as of
May 29, 1996, as amended, a copy of which is on file at the office of the
Secretary of the Company."
(b) The legend stated in Section 3.2(a)(1) shall be removed
by delivery of one or more substitute certificates without such legend if the
holder thereof shall have delivered to the Company a copy of a letter from the
staff of the Securities and Exchange Commission or an opinion of counsel, in
form and substance reasonably satisfactory to the Company, to the effect that
the legend is not required for purposes of the Securities Act.
(c) The legend stated in Section 3.2(a)(2) shall be removed
at such time as the related securities are no longer subject to the Registration
Rights Agreement, as amended, referenced therein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
Section 4.1 Corporate Existence and Power. The Company (a) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Colorado, (b) has all necessary corporate power and
authority and all material licenses, authorizations, consents and approvals
required to own, lease, license or use its properties now owned, leased,
licensed or used and proposed to be owned, leased, licensed or used and to carry
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on its business as now conducted and proposed to be conducted, (c) is duly
qualified as a foreign corporation under the laws of each jurisdiction in which
both (1) qualification is required either (i) to own, lease, license or use its
properties now owned, leased, licensed and used or (ii) to carry on its business
as now conducted and (2) the failure to be so qualified could materially and
adversely affect either or both of (i) the business, properties, operations,
prospects or condition (financial or otherwise) of the Company, and (ii) the
ability of the Company to perform its obligations under any Transaction Document
to which it is or may become a party and (d) has all necessary corporate power
and authority to execute and deliver each Transaction Document to which it is or
may become a party.
Section 4.2 Authorization; Contravention; Modifications. Subject to
obtaining the Approvals referred to in Section 4.3, the execution and delivery
by the Company of each Transaction Document to which the Company is or may
become a party and the performance by it of its obligations under each such
Transaction Document have been duly authorized by all necessary corporate action
and do not and will not (a) contravene, violate, result in a breach of or
constitute a default under, (1) its articles of incorporation or bylaws, (2) any
Regulation of any Governmental Body or any decision, ruling, order or award of
any arbitrator by which the Company or any of its properties may be bound or
affected or (3) any agreement, indenture or other instrument to which the
Company is a party or by which the Company or its properties may be bound or
affected or (b) result in or require the creation or imposition of any Lien on
any of the properties now owned or hereafter acquired by the Company.
Section 4.3 Approvals. Except with respect to the Approval that may
be required under the Hart-Scott-Rodino Act, no Approval of any Governmental
Body or other person is required or advisable on the part of the Company for (a)
the due execution and delivery by the Company of any Transaction Document to
which it is or may become a party, (b) the conclusion of the Closing
Transactions, (c) the performance by the Company of its obligations under each
Transaction Document to which it is or may become a party and (d) the exercise
by the Purchaser of its rights and remedies under each such Transaction
Document.
Section 4.4 Binding Effect. Each Transaction Document to which the
Company is or may become a party is, or when executed and delivered in
accordance with this Agreement will be, the legally valid and binding obligation
of the Company, enforceable against it in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally and general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
6
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Section 4.5 Financial Information.
(a) The consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of the last day of its latest complete fiscal
quarter and as of the last day of its latest complete fiscal year (the "Balance
Sheet Dates") and the related consolidated statements of operations,
shareholders' equity and cash flows for the periods then ended, reported on by
the independent public accountants of the Company and filed with the Securities
and Exchange Commission in the Company's Quarterly Report on Form 10-Q for the
quarter ended October 31, 1996 and Annual Report on Form 10-K for the year ended
January 31, 1996, true and complete copies of which have been delivered to the
Purchaser, fairly present the consolidated financial position of the Company and
its Consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations and cash flows for the periods then ended, in accordance
with GAAP applied on a consistent basis except, in the case of the quarterly
financial statements, the absence of footnotes and normal year-end adjustments,
or as described in the footnotes to such financial statements or as disclosed in
writing to the Purchaser, which writing makes reference to this Agreement or the
Prior Agreement.
(b) The Company has made available to the Purchaser copies of
each management letter delivered to the Company by the independent public
accountants of the Company in connection with the financial statements referred
to in this Section 4.5 or relating to any review by them of the internal
controls of the Company and its Consolidated Subsidiaries during the three years
ended on its Balance Sheet Date or thereafter, and has made available for
inspection all reports and working papers produced or developed by them or
management in connection with their examination of those financial statements,
as well as all such reports and working papers for prior periods for which any
liability of the Company and its Subsidiaries for Taxes has not been finally
determined or barred by applicable statutes of limitation.
Section 4.6 Taxes. Each of the Company and its Subsidiaries has
filed all Tax Returns that are required to be filed with any Governmental Body
and has paid all Taxes due pursuant to the Tax Returns or any assessment
received by it or otherwise required to be paid, except Taxes being contested in
good faith by appropriate proceedings and for which adequate reserves or other
provisions are maintained, and except for the filing of Tax Returns as to which
the failure to file could not, individually or in the aggregate, have a Material
Adverse Effect.
Section 4.7 Litigation. There is no Action pending or, to the
Company's knowledge, threatened against the Company or its Subsidiaries or, to
the Company's knowledge, any other person or that involves any of the
Transactions or any property owned, leased, licensed or used by the Company
that, individually or in the aggregate, if determined adversely to the Company
or the other person, could have a Material Adverse Effect. The Company is not
aware of any facts or circumstances that might give rise to any Action against
the Company or its Subsidiaries or any other person that involves any of the
Transactions or any property owned, leased, licensed or used by the Company
that, individually or in the aggregate, if determined adversely to the Company
or the other person, could have a Material Adverse Effect.
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Section 4.8 Compliance with Laws. None of the Company and its
Subsidiaries is in, and none of them has received notice of a, violation of or
default with respect to any Regulation of any Governmental Body or any decision,
ruling, order or award of any arbitrator applicable to it or its business,
properties or operations, including individual products or services sold or
provided by it, except for violations or defaults that, individually or in the
aggregate, could not have a Material Adverse Effect.
Section 4.9 Insurance. The Company and its Subsidiaries are insured
with reputable insurers against all risks normally insured against in accordance
with generally prevailing practices in the communications industry and all of
such insurance policies and bonds maintained by or for the benefit of the
Company and such Subsidiary, as the case may be, are in full force and effect.
The Company and its Subsidiaries maintain insurance with reputable insurance
companies in such amounts and covering such risks as are usually carried by
companies engaged in the same or similar business and similarly situated. There
are no currently outstanding material losses for which the Company or such
Subsidiary has failed to give or present notice or claim under any policy. There
are no requirements by any insurance company or by any board of fire
underwriters or other body exercising similar functions or by any Governmental
Body of which the representing party has knowledge requiring any repairs or
other work to be done to any of the properties owned, leased, licensed or used
by the Company or such Subsidiary or requiring any equipment or facilities to be
installed on or in connection with any of the properties, the failure to
complete which could result in the cancellation of the policy of insurance.
Policies for all the insurance are in full force and effect and none of the
Company and its Subsidiaries is in default in any material respect under any of
the policies. The Company has no knowledge of the cancellation or proposed
cancellation of any of the insurance or of any proposed increase in the
contributions for workers' compensation or unemployment insurance or of any
conditions or circumstances applicable to the business of the Company or such
Subsidiary, as the case may be, which might result in a material increase in
those contributions.
Section 4.10 Debt. The Company has previously disclosed to the
Purchaser in writing, which writing makes reference to this Agreement or the
Prior Agreement, a correct and complete description and list of the following:
(a) all credit agreements, indentures, purchase agreements, Guarantees,
Capitalized Leases and other Investments, agreements and other arrangements
presently in effect providing for or relating to Debt in any amount greater than
$250,000 in respect of which any of the Company and its Subsidiaries is in any
manner directly or contingently obligated; (b) the maximum principal or face
amounts of such Debt outstanding or which may be outstanding under each of those
agreements and other arrangements; and (c) the maturity date or dates of such
Debt.
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Section 4.11 No Default. Except as previously disclosed to the
Purchaser in writing, which writing makes reference to this Agreement or the
Prior Agreement, none of the Company and its Subsidiaries is in default in
respect of any obligation under any credit agreement, indenture, purchase
agreement, Guarantee, Capitalized Lease and other Investment, agreement or
arrangement referred to in Section 4.12, which default either alone or together
with any other default, entitles another party thereto, with the giving of
notice or the passage of time or both, to terminate or modify the rights and
obligations of the parties thereunder or with respect thereto or to accelerate,
increase or otherwise modify any obligation of the Company or any of its
Subsidiaries thereunder.
Section 4.12 Capitalization.
(a) the authorized capital stock of the Company consists of
(1) 20,000,000 shares of Common Stock and (2) 100,000,000 shares of preferred
stock, par value $.0001 per share, of which no shares are issued and
outstanding;
(b) the number of shares of Common Stock as of the date
hereof (1) issued and outstanding, (2) held in the treasury of the Company, and
(3) reserved for issuance has been previously disclosed to the Purchaser in
writing, which writing makes reference to this Agreement or the Prior Agreement.
(c) Except as set forth above and except as provided in the
Transaction Documents, no Equity Securities of the Company are issued, reserved
for issuance or outstanding.
(d) All outstanding shares of capital stock of the Company
are, and all shares that may be issued pursuant to the exercise of outstanding
stock options granted by the Company ("Outstanding Options") or the Warrants,
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and are not subject to preemptive rights.
(e) Except with respect to the Outstanding Options and the
Transaction Documents, there are no outstanding bonds, debentures, notes or
other indebtedness or other securities of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which shareholders of the Company may vote.
(f) Except with respect to the Outstanding Options and the
Transaction Documents, there is no agreement or arrangement restricting the
voting or transfer of the Equity Securities of the Company.
(g) Except with respect to the Outstanding Options and the
Transaction Documents, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which any of the Company and its
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Subsidiaries is a party or by which any of them is bound obligating the Company
or such Subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other Equity Securities of the
Company or such Subsidiary or obligating the Company or such Subsidiary to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking.
(h) Except as previously disclosed to the Purchaser in
writing, which writing makes reference to this Agreement or the Prior Agreement,
there are no outstanding contractual obligations, commitments, understandings or
arrangements of any of the Company and its Subsidiaries to repurchase, redeem or
otherwise acquire, require or make any payment in respect of any shares of
Equity Securities of the Company or such Subsidiary.
(i) Except with respect to statutory restrictions of general
application, there are no legal, contractual or other restrictions on the
payment of dividends or other distributions or amounts on or in respect of any
of the Equity Securities of the Company.
(j) Except the Registration Rights Agreement and as
contemplated by the Amended Registration Rights Agreement, there are no
agreements or arrangements to which any of the Company and its Subsidiaries is a
party pursuant to which the Company is or could be required to register shares
of common stock or other securities under the Securities Act.
(k) Equity Securities of the Company that were issued and
reacquired by the Company were so reacquired (and, if reissued, so reissued) in
compliance with all applicable Regulations, and the Company has no liability
with respect to the reacquisition or reissuance of the Equity Securities.
Section 4.13 Material Contracts. The Company has previously
disclosed to the Purchaser in writing, which writing makes reference to this
Agreement or the Prior Agreement, a correct and complete description and list of
the following (collectively, the "Material Contracts") with respect to any of
the Company and its Subsidiaries:
(a) agreements with investment bankers, brokers, finders,
consultants and advisers engaged by or on behalf of the Company or such
Subsidiary with respect to the Transactions or other transactions contemplating
the recapitalization of the Company or such Subsidiary, the purchase or sale by
the Company or such Subsidiary of assets not in the ordinary course of business
or the issuance and sale by the Company or such Subsidiary of any Equity
Securities or Debt of the Company or such Subsidiary, as the case may be;
(b) agreements with any shareholder (other than the Purchaser
or its Affiliates) having beneficial ownership of 5.0% or more of the shares of
common stock of the Company then issued and outstanding, director or officer of
the Company or such Subsidiary and all shareholders' agreements and voting
trusts; and
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(c) agreements not made in the ordinary course of business
and which are materially adverse to the business of the Company or such
Subsidiary.
Section 4.14 Fees for Brokers and Finders. The Company and its
Subsidiaries and other Affiliates have not authorized any person to act as
financial advisor, broker, finder or other intermediary that might be entitled
to any fee, commission, expense reimbursement or other payment of any kind from
any of the Company, such Subsidiaries and such other Affiliates upon the
conclusion of or in connection with any of the Transactions.
Section 4.15 Misstatements. Except to the extent revised or
superseded by a subsequent certificate, schedule or report furnished to the
Purchaser, no information, certificate, schedule or report furnished by or on
behalf of the Company to the Purchaser with respect to any of the Company and
its Subsidiaries in connection with the negotiation of any Transaction Document
or the satisfaction of any condition under any Transaction Document contained as
of the date thereof any untrue statement of a material fact or omitted to state
a material fact necessary to make the statement contained therein, in the light
of the circumstances under which it was made, not misleading.
Section 4.16 No Restrictions on Purchaser. No provision of the
articles of incorporation or bylaws of the Company or any other agreement,
indenture or other instrument to which the Company or its properties are subject
(a) directly or indirectly restricts or impairs the right or ability of the
Purchaser to vote, or otherwise to exercise the rights and receive the benefits
of a shareholder with respect to, Equity Securities of the Company that may be
acquired or controlled by the Purchaser, including, without limitation,
restrictions based upon the size of the security holdings of the Purchaser, the
business in which it is engaged or other considerations applicable to it and not
to security holders generally, or (b) permits any other securityholder of the
Company to acquire securities of the Company on a basis not available to the
Purchaser if the Purchaser were to acquire Equity Securities of the Company.
Section 4.17 SEC Documents. The Company has filed with the
Securities and Exchange Commission all reports, schedules, forms, statements and
other documents required by the Exchange Act to be filed by the Company since
January 1, 1993 (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the "SEC
Documents"). The Company has delivered or made available to the Purchaser all
SEC Documents. As of their respective dates, except to the extent revised or
superseded by a subsequent filing with the Securities and Exchange Commission,
the SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of the SEC
Documents (including any and all financial statements included therein) as of
such dates contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company and the
Consolidated Subsidiaries included in all SEC Documents, including any
amendments thereto (the "SEC
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Financial Statements"), comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Securities and Exchange Commission with respect thereto.
Section 4.18 Absence of Certain Changes or Events. Since October 31,
1996, no circumstance has existed and no event has occurred that has had, will
have or could reasonably be expected to have a Material Adverse Effect on the
Company and its Subsidiaries.
Section 4.19 Director Approval. The Board of Directors of the
Company, at a meeting duly called and held, has duly determined that the
Transaction Documents and the Transactions, taken as a whole, are in the best
interests of the Company and its shareholders, and approved the Transaction
Documents and the Transactions. A majority of the disinterested directors of the
Company have approved the Transaction Documents and the Transactions for the
purposes of Section 7-108-501(2)(a) of the Colorado Business Corporation Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser represents and warrants as follows:
Section 5.1 Corporate Existence and Power. The Purchaser (a) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Colorado and (b) has all necessary corporate power and
authority to execute and deliver each Transaction Document to which it is or may
become a party.
Section 5.2 Authorization; Contravention. Subject to obtaining the
Approvals referred to in Section 5.3, the execution and delivery by the
Purchaser of each Transaction Document to which it is or may become a party and
the performance by it of its obligations under each of those Transaction
Documents have been duly authorized by all necessary corporate action and do not
and will not contravene, violate, result in a breach of or constitute a default
under, (a) its articles of incorporation or bylaws, (b) any Regulation or any
decision, ruling, order or award of any arbitrator by which the Purchaser or any
of its properties may be bound or affected or (c) any agreement, indenture or
other instrument to which it is a party or by which it or its properties may be
bound or affected.
Section 5.3 Approvals. Except with respect to the Approval that may
be required under the Hart-Scott-Rodino Act, no Approval of any Governmental
Body or other person is required or advisable on the part of the Purchaser, for
(a) the due execution and delivery by the Purchaser of any Transaction Document,
(b) the conclusion of the Transactions
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and (c) the performance by the Purchaser of its obligations under each
Transaction Document to which it is or may become a party.
Section 5.4 Binding Effect. Each Transaction Document to which the
Purchaser is or may become a party is, or when executed and delivered in
accordance with this Agreement will be, the legally valid and binding obligation
of the Purchaser, enforceable against it in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally and general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
Section 5.5 Litigation. There is no Action pending or, to the
Purchaser's knowledge, threatened against the Purchaser or, to its knowledge,
any other person or that involves any of the Transactions.
Section 5.6 Investment Intent. The Purchaser acknowledges that the
Company is issuing and selling the Shares and the Warrants (and, upon exercise
thereof, the Warrant Shares) pursuant to the terms of the Transaction Documents
in reliance upon the exemption afforded by Section 4(2) of the Securities Act
for transactions by an issuer not involving any public offering. The Purchaser
represents that (a) it is acquiring such securities for investment and without
any view toward distribution of any of the securities to any other person, (b)
it will not sell or otherwise dispose of the securities except in compliance
with the registration requirements or exemption provisions under the Securities
Act and (c) before any sale or other disposition of any of such securities other
than in a sale registered under the Securities Act, or pursuant to Rule 144
under the Securities Act unless the Company shall have been advised by counsel
that the sale does not meet the requirements of Rule 144 for the sale, it will
deliver to the Company an opinion of counsel reasonably satisfactory to the
Company to the effect that such registration is unnecessary.
Section 5.7 Fees for Brokers and Finders. The Purchaser has not
authorized any person to act as financial advisor, broker, finder or other
intermediary that might be entitled to any fee, commission, expense
reimbursement or other payment of any kind from the Purchaser upon the
conclusion of or in connection with any of the Transactions.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Affirmative Covenants. The Company agrees that prior to
the Closing Date, the Company shall do the following:
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(a) Maintenance of Records. Keep adequate records and books
of account reflecting all its financial transactions, keep minute books
containing accurate records of all meetings and accurately reflecting all
corporate action of its shareholders and its board of directors (including
committees) and keep stock books and ledgers correctly recording all transfers
and issuances of all capital stock.
(b) Maintenance of Properties. Maintain, keep and preserve
all its real property and personal property used or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
(c) Conduct of Business. Except as otherwise contemplated by
the Transaction Documents, continue to engage in an efficient and economical
manner solely in a business of the same general type as conducted by it on the
date of this Agreement in the ordinary course, consistent with past practices;
and use its best efforts to preserve the business of the Company and its
Subsidiaries and to preserve the goodwill of customers, suppliers and others
having business relations with the Company and its Subsidiaries.
(d) Maintenance of Insurance. Maintain insurance such that
the representations and warranties stated in Section 4.11 shall at all times
remain true.
(e) Compliance with Laws. Comply in all respects with each
Regulation of all Governmental Bodies and each decision, ruling, order or award
of all arbitrators applicable to it or its business, properties or operations,
including, but not limited to, all of the provisions of the Hart-Scott-Rodino
Act, if a failure to comply with any of the foregoing, individually or in the
aggregate, could have a Materially Adverse Effect or materially and adversely
affect the ability of the Company to perform its obligations under any
Transaction Document to which it is or may become a party.
(f) Payment of Taxes. Timely file all Tax Returns that are
required to be filed by it and pay before they become delinquent all Taxes due
pursuant to those Tax Returns or any assessment received by it or otherwise
required to be paid, except Taxes being contested in good faith by appropriate
proceedings and for which adequate reserves or other provisions are maintained,
and except for the filing of such Tax Returns as to which the failure to file
could not, individually or in the aggregate, have a Materially Adverse Effect.
Section 6.2 Negative Covenants. The Company agrees that, prior to
the Closing Date and except as contemplated by the Transaction Documents or with
the prior approval of the Purchaser, the Company shall not, and shall not permit
any of its Subsidiaries to, do any of the following or to enter into any
agreement or other arrangement (other than the Transaction Documents) with
respect to any of the following:
(a) Charter documents. Amend its articles of incorporation or
certificate of incorporation, as the case may be, or its bylaws.
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(b) Capitalization. Issue any shares of capital stock or
other Equity Securities other than Permitted Issuances.
(c) Mergers, Etc. Merge or consolidate with any person, sell,
lease, license or otherwise dispose of all or substantially all of its assets
(whether now owned or hereafter acquired) to any person or acquire all or
substantially all of the assets or the business of any person, in each case
whether in one transaction or in a series of transactions, except that a
Consolidated Subsidiary may merge into or transfer assets to the Company or a
Wholly-Owned Consolidated Subsidiary.
(d) Settle Litigation. Settle or compromise any litigation
(whether or not commenced prior to the date of this Agreement) or settle, pay or
compromise any claims not required to be paid (which are not payable or
reimbursable under policies of insurance maintained by or on behalf of any of
the Company and its Subsidiaries), individually in an amount in excess of
$25,000 and in the aggregate in an amount in excess of $100,000, other than in
consultation and cooperation with Purchaser, and, with respect to any such
settlement, with the prior written consent of Purchaser.
(e) Delisting. Take any action which would cause any
securities of the Company currently listed on a national securities exchange or
on NASDAQ/SCM to no longer be listed on the national securities exchange or on
NASDAQ/SCM or registered pursuant to Section 13 or 15(d) of the Exchange Act.
(f) Transaction Documents. Amend any Transaction Document
without the prior written approval of the Purchaser, which approval may be
granted, withheld, conditioned or delayed by the Purchaser in its sole
discretion.
ARTICLE VII
ADDITIONAL COVENANTS OF THE PARTIES
Section 7.1 Mutual Covenants of the Parties. Each party shall do the
following until the Closing and, with respect to Section 7.1(e), indefinitely
after the Closing:
(a) Maintenance of Existence. Preserve and maintain its
corporate existence and good standing in the jurisdiction of its incorporation
and qualify and remain qualified as a foreign corporation in each jurisdiction
in which both (1) qualification is required either (A) to own, lease, license or
use its properties now owned, leased, licensed or used and proposed to be owned,
leased, licensed or used or (B) to carry on its business as now conducted or
proposed to be conducted and (2) the failure to be so qualified could materially
and adversely affect either or both of (A) the business, properties, operations,
prospects or condition (financial
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or otherwise) of the party and (B) the ability of the party to perform its
obligations under any Transaction Document to which it is or may become a party.
(b) Compliance With Laws. Comply in all respects with all
Regulations of each Governmental Body and all decisions, rulings, orders and
awards of each arbitrator applicable to it or its business, properties or
operations, including, but not limited to, all of the provisions of the
Hart-Scott-Rodino Act, in connection with the Transactions.
(c) Best Efforts. Upon the terms and subject to the
conditions provided in the Transaction Documents, use its best efforts to take,
or cause to be taken, all action, and to do, or cause to be done, and to assist
and cooperate with the other party hereto in doing all things necessary, proper
or advisable under applicable Regulations to ensure that the conditions set
forth in Article III are satisfied and to conclude and make effective, in the
most expeditious manner practicable, the Transactions including, without
limitation, using its best efforts to obtain all necessary Approvals.
(d) Notification. Give prompt notice to the other parties to
this Agreement or any other Transaction Document, as the case may be, of (1) the
occurrence, or failure to occur, of any event that would be likely to cause any
representation or warranty of the party contained in the Transaction Document to
be untrue or inaccurate in any material respect at any time from the date of
this Agreement to the Closing Date and (2) any failure of the party to perform
or otherwise comply with, in any material respect, any covenant, condition or
agreement to be performed or complied with by it under the Transaction
Documents; which covenant of notification shall not limit the right of the other
party under Article III to require as a condition precedent to the performance
of its obligations under this Agreement the continuing accuracy and performance
of the representations and warranties and covenants of the notifying party made
in the Transaction Documents and to receive an unqualified certificate with
respect to the same.
(e) Further Assurances. Promptly upon request by any other
party, correct any defect or error that may be discovered in any Transaction
Document or in the execution or acknowledgement of any Transaction Document and
execute, acknowledge, deliver, file, re-file, register and re-register, any and
all such further acts, certificates, assurances and other instruments as the
requesting party may require from time to time in order (1) to carry out more
effectively the purposes of each Transaction Document, (2) to enable the
requesting party to exercise and enforce its rights and remedies and collect any
payments and proceeds under each Transaction Document and (3) to better
transfer, preserve, protect and confirm to the requesting party the rights
granted or now or hereafter intended to be granted to the requesting party under
each Transaction Document or under each other instrument executed in connection
with any Transaction Document.
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Section 7.2 Additional Covenants of the Company.
(a) Reserved Shares. The Company shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued shares of Common
Stock so that the Warrant Shares may be issued and sold by the Company in
accordance with the terms of the Transaction Documents, in each case without
additional authorization of Common Stock.
(b) NASDAQ/SCM. The Company shall take all action required,
if any, to cause the Shares and the Warrant Shares to be qualified for inclusion
in the National Association of Securities Dealers Automated Quotation/SmallCap
Market (the "NASDAQ/SCM"), and shall give such notice as required, if any, to
the National Association of Securities Dealers, Inc. with respect to the
Transaction Documents and the Transactions.
ARTICLE VIII
HART-SCOTT-RODINO FILING
Section 8.1 Best Efforts to Comply. Each party shall from time to
time use its best efforts to comply with any applicable requirements under the
Hart-Scott-Rodino Act relating to filing and furnishing information to the
Department of Justice and the Federal Trade Commission, including, but not
limited to, the following:
(1) assisting in the preparation and filing of the "Antitrust
Improvements Act Notification and Report Form for Certain Mergers and
Acquisitions" and taking all other action required by 16 C.F.R. Parts
801-803 (or any successor form or Regulation);
(2) complying with any additional request for documents or
information made by the Department of Justice or the Federal Trade
Commission or by a court; and
(3) causing all affiliated persons of the "ultimate parent entity"
of the party within the meaning of the Hart-Scott-Rodino Act to cooperate
and assist in the filing and compliance.
Section 8.2 Exchange of Information. Each party shall exchange
information as may reasonably be requested by the other in connection with the
matters referred to in this Article.
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ARTICLE IX
TERMINATION
Section 9.1 Termination.
(a) The obligations of the parties under Section 1.1 and
Articles VI and VII with respect to the Closing Transactions may be terminated
at any time prior to the Closing by:
(1) the mutual consent of the Company and the Purchaser;
(2) the Company, if the conditions outside the control of the
Company set forth in Section 3.1 shall not have been met with respect to
the Closing by April 30, 1997;
(3) the Company, if a representation, warranty or covenant of the
Purchaser set forth in a Transaction Document is breached or violated by
the Purchaser in any material respect;
(4) the Purchaser, if the conditions outside the control of the
Purchaser set forth in Section 3.1 shall not have been met (or, in the
reasonable judgment of the Purchaser, shall not be capable of being met)
with respect to the Closing by April 30, 1997;
(5) the Purchaser, if a representation, warranty or covenant of the
Company set forth in a Transaction Document is breached or violated by the
Company in any material respect;
(6) the Purchaser, if (A) the conclusion of the Closing Transactions
is challenged by the Department of Justice or the Federal Trade Commission
or any other Governmental Body by an action for preliminary injunction to
enjoin the conclusion of the Closing Transactions or (B) any other form of
equitable relief affecting either party is granted by the Department of
Justice, the Federal Trade Commission or any other Governmental Body with
respect to the Closing Transactions.
(b) Any termination of the obligations of the parties shall
be made by written agreement or by written notice from the terminating party to
the other parties.
(c) The termination of the obligations of the parties under
this Section 9.1 shall not relieve any party of any liability for a breach of
any warranty, covenant or agreement, or for any misrepresentation, under this
Agreement, or be deemed to constitute a
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waiver of any available remedy (including specific performance if available) for
any breach or misrepresentation.
Section 9.2 Expenses and Fees. Except as otherwise provided in this
Section 9.2, whether or not the Transactions are concluded, all costs and
expenses incurred in connection with the Transaction Documents and the
Transactions shall be paid by the party incurring such expenses. Notwithstanding
the foregoing, (i) the costs and expenses of obtaining and complying with the
antitrust requirements of any Governmental Body shall be paid by the Company and
(ii) the Company shall reimburse the Purchaser for Purchaser's legal fees
reasonably incurred in connection with the Transaction Documents and the
Transactions, up to a maximum of $10,000.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices. All notices, requests and other communications
to any party or under any Transaction Document shall be in writing.
Communications may be made by telecopy or similar writing. Each communication
shall be given to the party at its address stated on the signature pages of this
Agreement or at any other address as the party may specify for this purpose by
notice to the other party. Each communication shall be effective (1) if given by
telecopy, when the telecopy is transmitted to the proper address and the receipt
of the transmission is confirmed, (2) if given by mail, 72 hours after the
communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
Section 10.2 No Waivers; Remedies; Specific Performance.
(a) No failure or delay by any party in exercising any right,
power or privilege under any Transaction Document shall operate as a waiver of
the right, power or privilege. A single or partial exercise of any right, power
or privilege shall not preclude any other or further exercise of the right,
power or privilege or the exercise of any other right, power or privilege. The
rights and remedies provided in the Transaction Documents shall be cumulative
and not exclusive of any rights or remedies provided by law.
(b) In view of the uniqueness of the Transactions and the
business, properties, operations, prospects and condition (financial and
otherwise) of the Company and its Subsidiaries, the Purchaser would not have an
adequate remedy at law for money damages in the event that any of the
Transaction Documents is not performed in accordance with its terms, and
therefore the Company agrees that the Purchaser shall be entitled to specific
enforcement
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of the terms of each Transaction Document in addition to any other remedy to
which it may be entitled, at law or in equity.
Section 10.3 Amendments, Etc. No amendment, modification,
termination, or waiver of any provision of any Transaction Document, and no
consent to any departure by a party to a Transaction Document from any provision
of the Transaction Document, shall be effective unless it shall be in writing
and signed and delivered by the other parties to the Transaction Document, and
then it shall be effective only in the specific instance and for the specific
purpose for which it is given.
Section 10.4 Successors and Assigns.
(a) The Company may not assign its rights under the
Transaction Document. Any delegation in contravention of this Section shall be
void ab initio and shall not relieve the delegating party of any obligation
under this Agreement.
(b) The provisions of each Transaction Document shall be
binding upon and inure to the benefit of the parties to the Transaction Document
and their respective successors and permitted assigns.
Section 10.5 Accounting Terms and Determinations. Unless otherwise
specified, all accounting terms shall be interpreted, all accounting
determinations shall be made, all records and books of account shall be kept and
all financial statements required to be prepared or delivered shall be prepared
in accordance GAAP, applied on a basis consistent (except for changes approved
by the Company's independent public accountants) with the latest audited
financial statements referred to in Section 4.5.
Section 10.6 Governing Law. Each Transaction Document shall be
governed by and construed in accordance with the internal laws of the State of
Colorado. All rights and obligations of the Company and the Purchaser shall be
in addition to and not in limitation of those provided by applicable law.
Section 10.7 Counterparts; Effectiveness. Each Transaction Document
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if all signatures were on the same instrument.
Section 10.8 Severability of Provisions. Any provision of any
Transaction Document that is prohibited or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of the prohibition
or unenforceability without invalidating the remaining provisions of the
Transaction Document or affecting the validity or enforceability of the
provision in any other jurisdiction.
Section 10.9 Headings and References. Article and section headings
in any Transaction Document are included in the Transaction Document for the
convenience of
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reference only and do not constitute a part of the Transaction Document for any
other purpose. References to parties and articles and sections in any
Transaction Document are references to the parties to or the articles and
sections of the Transaction Document, as the case may be, unless the context
shall require otherwise.
Section 10.10 Entire Agreement. The Transaction Documents embody the
entire agreement and understanding of the respective parties and supersede all
prior agreements or understandings with respect to the subject matters of those
documents.
Section 10.11 Survival. Except as otherwise specifically provided in
any Transaction Document, and notwithstanding any investigation or notice to the
contrary or any waiver by any other party of a related condition precedent to
the performance by the other party of an obligation under the Transaction
Document, (1) each representation and warranty of each party to the Transaction
Document contained in or made pursuant to the Transaction Document shall survive
the Closing and remain in full force and effect until the date that is the first
anniversary of the Closing Date and (2) the other party may assert or commence
an Action against the party with respect to the breach of any such
representation or warranty of the party on or before such date and may maintain
any such Action thereafter. Each covenant or agreement of a party to a
Transaction Document required to be performed on or after the Closing shall
remain in full force and effect thereafter in accordance with its terms.
Section 10.12 Exclusive Jurisdiction. Each party (1) agrees that any
Action with respect to any Transaction Document shall be brought exclusively in
the courts of the State of Colorado or of the United States of America for the
District of Colorado, (2) accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of those courts and (3)
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any Action in those jurisdictions;
provided, however, that any party may assert in an Action in any other
jurisdiction or venue each mandatory defense, third-party claim or similar claim
that, if not so asserted in such Action, may thereafter not be asserted by such
party in an original Action in the courts referred to in clause (1) above.
Section 10.13 Waiver of Jury Trial. Each party waives any right to a
trial by jury in any Action to enforce or defend any right under any Transaction
Document or any amendment, instrument, document or agreement delivered, or which
in the future may be delivered, in connection with any Transaction Document and
agrees that any Action shall be tried before a court and not before a jury.
Section 10.14 Affiliate. Nothing contained in the Transaction
Documents shall constitute the Purchaser an "affiliate" of any of the Company
and its Subsidiaries within the meaning of Rule 13e-3 under the Exchange Act.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Stock Purchase Agreement as of the date first written above in Denver, Colorado.
INTERNET COMMUNICATIONS
CORPORATION
By:_____________________________________
Name:
Title:
Address: 7100 East Belleview Avenue
Suite 201
Greenwood Village, Colorado 80111
Telecopy: (303) 770-0588
INTERWEST GROUP, INC.
By:_____________________________________
Name:
Title:
Address: 12201 East Arapahoe Road
Suite C 10
Englewood, Colorado 80112
Telecopy: (303) 792-0227
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DEFINITION ANNEX
"Action" against a person means an action, suit, claim,
investigation, complaint or other proceeding pending against or affecting the
person or its property, whether civil or criminal, in law or equity or before
any arbitrator or Governmental Body.
"Affiliate" of a person means any other person (1) that directly or
indirectly controls, is controlled by or is under common control with, the
person or any of its Subsidiaries, (2) that directly or indirectly beneficially
owns or holds 5% or more of any class of voting stock of the person or any of
its Subsidiaries or (3) 5% or more of the voting stock of which is directly or
indirectly beneficially owned or held by the person or any of its Subsidiaries.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Stock Purchase Agreement.
"Amendment to Registration Rights Agreement" means the Amendment to
Registration Rights Agreement substantially in the form of Exhibit B attached
hereto.
"Approval" means an authorization, consent, approval or waiver of,
clearance by, notice to or registration or filing with, or any other similar
action by or with respect to a Governmental Body or any other person and the
expiration or termination of all prescribed waiting, review or appeal periods
with respect to any of the foregoing.
"Balance Sheet Dates" has the meaning stated in Section 4.5 of the
Agreement.
"beneficial ownership" has the meaning assigned to that term in
Section 13(d) of the Exchange Act.
"best efforts" means the use of all reasonable efforts, including,
without limitation, the expenditure of amounts reasonably related to the
objective sought to be achieved, with respect to matters and actions over which
the person has or could reasonably be expected to exert any control or
influence.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of Colorado or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.
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"Capitalized Lease" means any lease that is or should be capitalized
and appear on the balance sheet of the lessee.
"Closing" has the meaning stated in Section 2.1 of the Agreement.
"Closing Date" has the meaning stated in Section 2.1 of the
Agreement.
"Closing Transactions" has the meaning stated in Section 2.1 of the
Agreement.
"Common Stock" has the meaning stated in Section 1.1 of this
Agreement.
"Company" means Internet Communications Corporation, a Colorado
corporation, and its successors.
"Consolidated Subsidiary" of a person at any date means any
Subsidiary of the person or other entity the accounts of which would be
consolidated with those of the person in its consolidated financial statements
as of that date.
"Debt" of a person at any date means, without duplication, the sum
of (1) all obligations of the person (A) for borrowed money, (B) evidenced by
bonds, debentures, notes or other similar instruments, (C) to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business, (D) as lessee under Capitalized Leases, (E)
under letters of credit issued for the account of the person and (F) arising
under acceptance facilities, plus (2) all Debt of others Guaranteed by the
person, plus (3) all Debt of others secured by a Lien on any asset of the person
and whether or not such Debt is assumed by the person.
"Department of Justice" means the Department of Justice of the
United States of America.
"Dollars" and "$" refer to United States dollars and other lawful
currency of the United States of America from time to time in effect.
"Equity Securities" of a person means the capital stock of the
person and all other securities convertible into or exchangeable or exercisable
for any shares of its capital stock, all rights to subscribe for or to purchase,
all options for the purchase of, and all calls, commitments or claims of any
character relating to, any shares of its capital stock and any securities
convertible into or exchangeable or exercisable for any of the foregoing.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the related rules and regulations thereunder.
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"Federal Trade Commission" means the Federal Trade Commission of the
United States of America.
"GAAP" means generally accepted accounting principles as in effect
in the United States of America from time to time.
"Governmental Body" means any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state, county or local, domestic or foreign.
"Guarantee" by any person means any obligation, contingent or
otherwise, of the person directly or indirectly guaranteeing any Debt of any
other person or in any manner providing for the payment of any Debt of any other
person or the investment of funds in any other person or otherwise protecting
the holder of the Debt against loss (whether by agreement to indemnify, to lease
assets as lessor or lessee, to purchase assets, goods, securities or services,
or to take-or-pay or otherwise), but the term "guarantee" does not include
endorsements for collection or deposit in the ordinary course of business. The
term "guarantee" used as a verb has a correlative meaning.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the related rules, regulations and
published interpretations thereunder.
"Investment" of a person means any investment in any other person,
whether by means of loan, capital contribution, purchase of capital stock,
obligations or other securities, purchase of all or any integral part of the
business of the person or any commitment or option to make an investment or
otherwise.
"knowledge of the Company" with respect to a representation or
warranty of the Company contained in any Transaction Document means, after due
inquiry by the Company of each of the following persons, the actual knowledge of
any of the officers or other employees of the Company having managerial
responsibility for the portion of the operations, assets or liabilities of the
Company and its Subsidiaries with respect to which such knowledge of the Company
is being represented.
"Lien" means any mortgage, deed of trust, lien (statutory or
otherwise), pledge, hypothecation, charge, deposit arrangement, preference,
priority, security interest or encumbrance of any kind (including, but not
limited to, any conditional sale agreement or other title retention agreement,
any Capitalized Lease or financing lease having substantially the same economic
effect as the foregoing and the filing of or agreement to give any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction to evidence any of the foregoing).
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"Material Adverse Effect" means, with respect to a circumstance or
event subject to a representation, warranty, covenant or other agreement of a
person in any Transaction Document that includes a reference therein to the
possible occurrence of a Material Adverse Effect, whether considered
individually or together in the aggregate with all other circumstances or events
that are included in the same condition or are the subject either of the same
representation, warranty, covenant or other agreement or of other
representations, warranties, covenants or other agreements by such person in the
Transaction Documents, any one or more of the following:
(a) with respect to any person, a material adverse effect on the
business, properties, operations, prospects or condition (financial or
otherwise) of such person and its Subsidiaries, taken as a whole; or
(b) with respect to any person, a material adverse effect on the
ability of such person to perform its obligations under any Transaction
Document to which it is or may become a party; or
(c) with respect to any person, the term or condition of an
Approval, a Regulation, a decision, ruling, order or award of any
arbitrator applicable to such person or its business, properties or
operations or an Action, pending or threatened, in each case that
restricts in any material respect or prohibits (or, if successful, would
restrict or prohibit) the conclusion of any of the Transactions.
"Material Contract" means an agreement referred to in Section 4.13
of the Agreement.
"NASDAQ/SCM" has the meaning stated in Section 7.2(b) of the
Agreement.
"Outstanding Options" has the meaning stated in Section 4.12 of the
Agreement.
"Permitted Issuance" means the issuance of shares of Common Stock
after the date of this Agreement (a) pursuant to the exercise of Outstanding
Options in accordance with the terms thereof as of the date of this Agreement or
(b) with the approval of the Purchaser, which approval may be granted, withheld,
conditioned or delayed in its sole discretion.
"Permitted Liens" means, collectively, Liens the existence of which,
without regard to the giving of notice, the passage of time or the existence or
occurrence of any other condition, do not permit the holder of any Debt of the
Company or a Consolidated Subsidiary in an amount greater than $10,000
individually or $25,000 in the aggregate to cause such Debt to become due and
payable or to seek to enforce or realize upon the rights of the holder in or
with respect to property or assets of the Company or the Consolidated
Subsidiary, as the case may be, that secure such Debt.
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"person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
Governmental Body.
"Proprietary Rights" means all copyrights, uncopyrighted works,
trademarks, trademark rights, service marks, trade names, trade name rights,
patents, patent rights, unpatented inventions, licenses, permits, trade secrets,
know-how, inventions, computer software and intellectual property rights and
other proprietary rights together with applications and licenses for, and the
goodwill of the business relating to, any of the foregoing.
"Purchaser" means Interwest Group, Inc., a Colorado corporation, and
its successors.
"Registration Rights Agreement" means the Registration Rights
Agreement between the Purchaser and the Company dated as of May 29, 1996.
"Regulation" means (1) any applicable law, rule, regulation,
judgment, decree, ruling, order, award, injunction, recommendation or other
official action of any Governmental Body and (2) any official change in the
interpretation or administration of any of the foregoing by the Governmental
Body or by any other Governmental Body or other person responsible for the
interpretation or administration of any of the foregoing.
"SEC Documents" has the meaning stated in Section 4.17 of the
Agreement.
"SEC Financial Statements" has the meaning set forth in Section 4.17
of the Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and
the related rules and regulations thereunder.
"Share Price" has the meaning stated in Section 1.1(a) of the
Agreement.
"Shares" has the meaning stated in Section 1.1(a) of the Agreement.
"Subsidiary" of a person means (i) any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the person or (ii) a
partnership in which the person or a Subsidiary of the person is, at the date of
determination, a general or limited partner of such partnership, but only if the
person or its Subsidiary is entitled to receive more than fifty percent of the
assets of such partnership upon its dissolution.
"Taxes" means all taxes, charges, fees, levies, duties, imposts,
withholdings, restrictions, fines, interest, penalties, additions to tax or
other assessments or charges, including,
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but not limited to, income, excise, property, withholding, sales, use, gross
receipts, value added and franchise taxes, license recording, documentation and
registration fees and custom duties imposed by any Governmental Body.
"Tax Return" means a report, return or other information required to
be filed by a person with or submitted to a Governmental Body with respect to
Taxes, including, where permitted or required, combined or consolidated returns
for any group of entities that includes the person.
"Transaction Documents" means, collectively, the Agreement, the
Warrant and the Amendment to Registration Rights Agreement.
"Transactions" means, collectively, the transactions undertaken
pursuant to or otherwise contemplated by, the Transaction Documents, including,
without limitation, the Closing Transactions.
"transfer" means a sale, an assignment, a lease, a license, a grant,
a transfer or other disposition of an asset or any interest of any nature in an
asset. The term "transfer" used as a verb has a correlative meaning.
"Warrant Exercise Price" has the meaning stated in Section 1.1(b) of
the Agreement.
"Warrant Shares" has the meaning stated in Section 1.1(b) of the
Agreement.
"Warrants" has the meaning stated in Section 1.1(b) of the
Agreement.
"Wholly-Owned Consolidated Subsidiary" of a person means any
Consolidated Subsidiary all of the shares of capital stock or other ownership
interests of which, except directors' qualifying shares, are at the time
directly or indirectly owned by the person.
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EXHIBIT A
FORM OF
WARRANT TO PURCHASE COMMON STOCK
at $5.70 Per Share
The Warrant represented by this certificate and the shares of Common Stock
issuable upon the exercise hereof have not been registered under the Securities
Act of 1933, as amended, and may not be offered, sold, transferred or otherwise
disposed of except in compliance with said Act.
Certificate Number Certificate for
_____________ 63,158
Warrants
This certificate is transferable
in Denver, Colorado
INTERNET COMMUNICATIONS CORPORATION
Incorporated under the laws of the State of Colorado
THIS CERTIFIES THAT, for value received, INTERWEST GROUP, INC., a
Colorado corporation, or registered assigns, is entitled to purchase from
INTERNET COMMUNICATIONS CORPORATION, a Colorado corporation (the "Company"), at
any time and from time to time after the date of this Warrant and prior to 5:00
p.m., Mountain time, on the Expiration Date, at the purchase price of $5.70 per
share (as such price may be adjusted pursuant to Section 7, the "Warrant Price")
the total number of shares of common stock of the Company, no par value per
share (the "Common Stock"), which is equal to the number of Warrants set forth
above (as such number of shares may be adjusted pursuant to Section 7, the
"Warrant Shares"). Terms not otherwise defined herein have the meanings stated
in Section 20.
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Section 1. Transferability of Warrants.
1.1 Warrant Register and Registration. The Secretary of the Company
shall keep or cause to be kept at the office of the Company books for the
registration and transfer (the "Warrant Register") of this Warrant certificate
and any other Warrant certificate issued hereunder (collectively including the
initial Warrant, the "Warrants"). The Warrants shall be numbered and shall be
registered in the Warrant Register as they are issued. The Company and the
Secretary of the Company shall be entitled to treat a person as the owner in
fact for all purposes of each Warrant registered in such person's name (each
registered owner is herein referred to as a "holder" of such Warrant) and shall
not be bound to recognize any equitable or other claim to or interest in such
Warrant on the part of any other person, and shall not be liable for any
registration of transfer of Warrants that are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration of transfer, or with such knowledge of such facts
that its participation therein amounts to bad faith.
1.2 Transfer. The Warrants shall be transferable only on the Warrant
Register upon delivery thereof duly endorsed by the holder or by his duly
authorized attorney or representative, which endorsement shall be guaranteed by
a bank or trust company located in the United States of America or by a broker
or dealer that is a member of a registered national securities exchange, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or an official copy thereof, duly certified, shall be
deposited and remain with the Secretary of the Company. In case of transfer by
executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and may be required
to be deposited and remain with the Secretary of the Company in its discretion.
Upon any registration of transfer, the Company shall deliver a new Warrant or
Warrants to the persons entitled thereto. The holder may transfer the Warrants
and the Warrant Shares without registration under the Securities Act of 1933
only if the holder shall deliver to the Company an opinion of counsel of the
holder, which counsel shall be reasonably satisfactory to the Company
(including, without limitation, O'Melveny & Myers LLP and Holme Roberts & Owen
LLP, each of which shall be satisfactory to the Company for this purpose), to
the effect that such registration is unnecessary.
1.3 Form of Warrant. The Warrants shall be executed on behalf of the
Company by its Chairman of the Board, President or one of its Vice Presidents
and attested to by the Secretary of the Company or an Assistant Secretary. The
signature of any of such officers on the Warrants may be manual or facsimile.
Section 2. Exchange of Warrants. Each Warrant may be exchanged at the
option of the holder thereof for another Warrant or Warrants entitling the
holder thereof to purchase a like aggregate number of Warrant Shares as the
Warrant or Warrants surrendered then entitle such holder to purchase. Any holder
desiring to exchange a Warrant or Warrants shall make such
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request in writing delivered to the Secretary of the Company, and shall
surrender, properly endorsed, which endorsement shall be guaranteed as provided
in Section 1.2 hereof if the new Warrant or Warrants are to be issued other than
in the name of the holder, the Warrant or Warrants to be so exchanged at the
office of the Secretary of the Company. Thereupon, a new Warrant or Warrants, as
the case may be, as so requested, shall be delivered to the person entitled
thereto.
Section 3. Term of Warrants; Exercise of Warrants.
3.1 Term of Warrants. Each holder shall have the right, until 5:00
p.m., Mountain time, on the Expiration Date, to purchase from the Company the
number of fully paid and nonassessable Warrant Shares that the holder may at the
time be entitled to purchase on exercise of such Warrants at the Warrant Price.
After the Expiration Date, any previously unexercised Warrants shall be void,
have no value and be of no further effect.
3.2 Exercise of Warrants.
(a) A Warrant may be exercised upon surrender to the Company,
in care of the Secretary of the Company, of the Warrant to be exercised,
together with the duly completed and signed form of Election to Purchase
attached hereto, and upon payment to the Company of the Warrant Price for the
number of Warrant Shares in respect of which such Warrant is then exercised.
Payment of the aggregate Warrant Price shall be made by wire transfer of
immediately available funds in accordance with written wire transfer
instructions to be provided by the Company.
(b) Subject to Section 5, upon such surrender of the Warrant
and payment of the Warrant Price as aforesaid, the Company shall issue and cause
to be delivered with all reasonable dispatch to or upon the written order of the
holder and in such name or names as the holder may designate, a certificate or
certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants, together with cash, as provided in Section 5, in
respect of any fractional Warrant Share otherwise issuable upon such surrender.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Warrant Price; provided, however, that if, at the
date of surrender of such Warrant and payment of such Warrant Price, the
transfer books for the Warrant Shares or other class of stock purchasable upon
the exercise of such Warrant shall be closed, the certificates for the Warrant
Shares in respect of which such Warrant is then exercised shall be issuable as
of the date on which such books shall next be opened (whether before or after
the Expiration Date) and until such date the Company shall be under no duty to
deliver any certificate for such Warrant Shares; provided, further that the
transfer books, unless otherwise required by law, shall not be closed at any one
time for a period longer than 20 days.
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(c) The rights of purchase represented by the Warrant shall be
exercisable, at the election of the holders thereof, either in full or from time
to time in part. If a Warrant is exercised in respect of less than all of the
Warrant Shares purchasable on such exercise at any time prior to the Expiration
Date, a new Warrant evidencing the remaining Warrant Shares will be issued, and
the Company shall deliver the new Warrant pursuant to the provisions of this
Section 3.2.
(d) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a public
offering of Common Stock or a Business Combination (as defined below), such
exercise may at the election of the holder be conditioned upon the conclusion of
such transaction, in which case such exercise shall not be deemed to be
effective until the conclusion of such transaction.
Section 4. Adjustment of Warrant Price and Number of Warrant Shares. The
number and kind of securities purchasable upon the exercise of each Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as hereinafter described.
4.1 Mechanical Adjustments. The number of Warrant Shares purchasable
upon the exercise of each Warrant and the Warrant Price payable in connection
therewith shall be subject to adjustment from time to time as follows:
(a) If the Company shall at any time pay a dividend on its
Common Stock in shares of its Common Stock (including, if applicable, shares of
Common Stock held by the Company in treasury or by a Subsidiary), subdivide its
outstanding shares of Common Stock into a larger number of shares or combine its
outstanding shares of Common Stock into a smaller number of shares or otherwise
effect a reclassification or recapitalization of the Common Stock, then in each
such case the number of Warrant Shares thereafter issuable upon exercise of this
Warrant shall be adjusted so that this Warrant shall thereafter be exercisable
for the number of Warrant Shares equal to the number of shares of Common Stock
which the holder would have held after the occurrence of any of the events
described above had this Warrant been exercised in full immediately prior to the
occurrence of such event. An adjustment made pursuant to this paragraph (a)
shall become effective retroactively to the related record date in the case of a
dividend and shall become effective on the related effective date in the case of
a subdivision, combination, reclassification or recapitalization.
(b) If the Company or a Subsidiary shall at any time issue or
sell shares of Common Stock at a purchase price per share of Common Stock (the
value of any consideration, if other than cash, to be determined as provided in
Section 4.1(g)) less than the Adjustment Price per share of the Common Stock on
the date of issuance or sale (for the purpose of this paragraph (b), the
"Adjustment Date"), then in each such case (other than the issuance of shares
pursuant to stock options now issued or to be issued under option plans of the
Company existing on the date hereof), the number of Warrant Shares thereafter
issuable upon exercise of this Warrant after such Adjustment Date shall be
determined by multiplying the number of Warrant Shares issuable upon exercise of
this Warrant on the date immediately preceding such Adjustment Date
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by a fraction, the numerator of which shall be the sum of the number of shares
of Common Stock outstanding on such date of issuance or sale and the number of
additional shares of Common Stock so issued or sold, and the denominator of
which shall be the sum of the number of shares of Common Stock outstanding on
such date of issuance or sale and the number of shares of Common Stock which the
aggregate offering price of the total number of shares so offered would purchase
at such Adjustment Price. For the purposes of this paragraph (b), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company or by a Subsidiary.
(c) If the Company or a Subsidiary shall at any time issue or
sell Derivative Securities (as defined below) providing for the purchase of
shares of Common Stock upon the conversion, exchange or exercise thereof at a
price per share of Common Stock (taking into account any consideration received
by the Company upon the issuance or sale of such Derivative Securities and any
additional consideration to be received upon the conversion, exchange or
exercise thereof, the value of such consideration, if other than cash, to be
determined as provided in Section 4(g)) less than the Adjustment Price per share
of the Common Stock on the date of issuance or sale (for the purpose of this
paragraph (c), the "Adjustment Date"), then in each such case, the number of
Warrant Shares thereafter issuable upon exercise of this Warrant after such
Adjustment Date shall be determined by multiplying the number of Warrant Shares
issuable upon exercise of this Warrant on the date immediately preceding such
Adjustment Date by a fraction, the numerator of which shall be the sum of the
number of shares of Common Stock outstanding on such Adjustment Date and the
number of additional shares of Common Stock so offered for subscription or
purchase upon the conversion, exchange or exercise of such Derivative
Securities, and the denominator of which shall be the sum of the number of
shares of Common Stock outstanding on such Adjustment Date and the number of
shares of Common Stock which the aggregate offering price of the total number of
shares so offered would purchase at such Adjustment Price. Such adjustment shall
be made whenever any such Derivative Securities are issued, and shall become
effective on the date of issuance retroactive to the Adjustment Date. If all the
shares of Common Stock so offered for subscription or purchase are not delivered
upon the final conversion, exchange or exercise of such Derivative Securities,
then, upon the final conversion, exchange or exercise of such Derivative
Securities, or the expiration, cancellation or other termination thereof, the
number of Warrant Shares issuable upon exercise of this Warrant shall thereafter
be readjusted to the number of Warrant Shares which would have been in effect
had the numerator and the denominator of the foregoing fraction and the
resulting adjustment been made based upon the number of shares of Common Stock
actually delivered upon the conversion, exchange or exercise of such Derivative
Securities, or the expiration, cancellation or other termination thereof rather
than upon the number of shares of Common Stock so offered for subscription or
purchase. If the purchase price provided for in any Derivative Securities, the
additional consideration, if any, payable upon the conversion, exchange or
exercise of any Derivative Securities or the rate at which any Derivative
Securities are convertible into or exchangeable or exercisable for Common Stock
shall change at any time (including, without limitation, at the time of or after
such conversion, exchange or exercise), the number of Warrant Shares issuable
upon exercise of this Warrant in effect at the time of such change shall be
readjusted to the number of Warrant Shares issuable upon exercise of this
Warrant which would have been in effect at such time had
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such Derivative Securities still outstanding provided for such changed purchase
price, additional consideration or changed conversion rate, as the case may be,
on the related Adjustment Date, and such readjustment shall become effective on
the date of such change retroactive to the Adjustment Date; provided, that no
such readjustment shall have the effect of decreasing the number of Warrant
Shares issuable upon the exercise of this Warrant by an amount in excess of the
amount of the adjustment initially made with respect to the issuance or sale of
the Derivative Securities. For the purposes of this paragraph (c), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company or by a Subsidiary.
(d) If the Company shall at any time declare or pay a
dividend or other distribution on its Common Stock other than a stock dividend
payable solely in shares of Common Stock or a cash dividend paid out of current
earnings (the value of any such dividend or other distribution, if other than
cash, to be determined as provided in Section 4(g)), then in each such case, the
number of Warrant Shares thereafter issuable upon exercise of this Warrant after
the record date therefor (for the purpose of this paragraph (d), the "Adjustment
Date") shall be determined by multiplying the number of Warrant Shares issuable
upon exercise of this Warrant on the date immediately preceding such Adjustment
Date by a fraction, the numerator of which shall be the sum of the number of
shares of Common Stock outstanding on such Adjustment Date and the number of
additional shares of Common Stock which the aggregate value of such dividend or
distribution would purchase at such Average Market Price and the denominator of
which shall be the sum of the number of shares of Common Stock outstanding on
such Adjustment Date. For the purposes of this paragraph (d), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company or by a Subsidiary.
(e) If the Company or a Subsidiary shall at any time purchase
shares of Common Stock at a price per share of Common Stock (the value of any
consideration, if other than cash, to be determined as provided in Section 4(g))
greater than the Average Market Price per share of the Common Stock on the date
of such purchase (for the purpose of this paragraph (e), the "Adjustment Date"),
then in each such case, the number of Warrant Shares thereafter issuable upon
exercise of this Warrant after such Adjustment Date shall be determined by
multiplying the number of Warrant Shares issuable upon exercise of this Warrant
on the date immediately preceding such Adjustment Date by a fraction, the
numerator of which shall be the sum of the number of shares of Common Stock
outstanding on such Adjustment Date and the number of additional shares of
Common Stock which the aggregate purchase price of the total number of shares so
purchased would purchase at such Average Market Price and the denominator of
which shall be the sum of the number of shares of Common Stock outstanding on
such Adjustment Date and the number of shares of Common Stock so purchased. For
the purposes of this paragraph (e), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company or
by a Subsidiary.
(f) In case of any capital reorganization or any
reclassification (other than a change in par value) of the capital stock of the
Company, or of any exchange or conversion of the Common Stock for or into
securities of another corporation, or in case of the consolidation
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or merger of the Company with or into any other person (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock) or in case of any sale or
conveyance of all or substantially all of the assets of the Company, the person
formed by such consolidation or resulting from such capital reorganization,
reclassification or merger or which acquires such assets, as the case may be,
shall make provision such that this Warrant shall thereafter be exercisable for
the kind and amount of shares of stock, other securities, cash and other
property receivable upon such capital reorganization, reclassification of
capital stock, consolidation, merger, sale or conveyance, as the case may be, by
a holder of the shares of Common Stock equal to the number of Warrant Shares
issuable upon exercise of this Warrant immediately prior to the effective date
of such capital reorganization, reclassification of capital stock, merger,
consolidation, sale or conveyance, assuming (1) such holder of Common Stock of
the Company is not a person with which the Company consolidated or into which
the Company merged or which merged into the Company or to which such sale or
transfer was made as the case may be ("constituent entity"), or an affiliate of
a constituent entity, and (2) such person failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such capital reorganization, reclassification of
capital stock, consolidation, merger, sale or conveyance and, in any case
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to rights and
interests thereafter of the holder, to the end that the provisions set forth
herein (including the specified changes in and other adjustments of the number
of Warrant Shares issuable upon exercise of this Warrant) shall thereafter be
applicable, as near as reasonably may be, in relating to any shares of stock or
other securities or other property thereafter deliverable upon exercise of this
Warrant.
(g) If any shares of Common Stock or Derivative Securities
are issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor shall be deemed to be the net amount received by
the Company therefor. In case any shares of Common Stock or Derivative
Securities are issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Company shall be the fair
value of such consideration. The fair value of any consideration received by the
Company or dividends or distributions paid by the Company, in each case, other
than cash, shall be determined jointly by the Company and the holders of at
least a majority of the total number of Warrants (the "Required holders"). If
such persons are unable to reach agreement within a reasonable period of time,
such fair value shall be determined by an appraiser jointly selected by the
Company and the Required holders, whose determination shall be final and binding
on the Company and all holders of the Warrants. The fees and expenses of such
appraiser shall be paid by the Company.
(h) If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (1) to receive a dividend or other
distribution on its Common Stock or (2) to subscribe for or purchase shares of
Common Stock or Derivative Securities, then such record date shall be deemed to
be the date of the payment or distribution of such dividend or other
distribution or the date of issuance and sale of any shares of Common Stock
deemed to have been issued or sold in connection therewith.
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(i) All calculations under this Section 4 shall be made to
the nearest one-thousandth of a share of Common Stock.
(j) Whenever the number of Warrant Shares issuable upon the
exercise of this Warrant is adjusted or readjusted pursuant to paragraphs (a)
through (h), inclusive, above, the Warrant Price payable upon exercise of this
Warrant shall be adjusted or readjusted by multiplying such Warrant Price
immediately prior to the related Adjustment Date by a fraction, the numerator of
which shall be the number of Warrant Shares purchasable upon the exercise of
this Warrant immediately preceding such Adjustment Date, and the denominator of
which shall be the number of Warrant Shares so purchasable immediately
thereafter; provided that no such readjustment pursuant to paragraph (c) above
with respect to the conversion, exchange or exercise, or expiration,
cancellation or other termination, of any Derivative Securities shall have the
effect of increasing the Warrant Price by an amount in excess of the amount of
the adjustment initially made in respect of the issuance or sale of such
Derivative Securities.
(k) If any event occurs of the type contemplated by the
provisions of this Section 4 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company's
board of directors shall make an appropriate adjustment in the number of Warrant
Shares issuable upon exercise of this Warrant and Warrant Price so as to protect
the rights of this Warrant.
(l) For the purpose of this Section 4, the term "shares of
Common Stock" shall mean (1) the class of stock designated as the Common Stock
of the Company at the date of this Warrant or (2) any other class of stock
resulting from successive changes or reclassification of such shares consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to paragraphs (a) through (k), inclusive, above, the
holder shall become entitled to receive any shares of the Company other than
shares of Common Stock, thereafter the number of such other shares so receivable
upon exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
paragraphs (a) through (k), inclusive, above, and the provisions of Sections
4.2, 4.3, 4.4 and 4.5, inclusive, with respect to the Warrant Shares, shall
apply on like terms to any such other shares.
(m) In case of any merger or consolidation of the Company
with or into another entity (whether or not the Company is the surviving entity)
or in case of any sale, lease or conveyance of all or substantially all of the
assets of the Company, the Company or such successor or purchasing entity, as
the case may be, shall execute with the holder an agreement that the holder
shall have the right thereafter upon payment of the Warrant Price in effect
immediately prior to such action to purchase upon exercise of this Warrant the
kind and amount of shares and other securities, cash and property that the
holder would have owned or would have been entitled to receive after the
occurrence of such merger, consolidation, sale, lease or conveyance had this
Warrant been exercised in full immediately prior to such action, and if the
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successor or purchasing entity is not a corporation, such person shall provide
appropriate tax indemnification with respect to such shares or other securities
and property so that, upon exercise of this Warrant, the holder would have the
same benefits it otherwise would have had if such successor or purchasing person
were a corporation. Such agreement shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
paragraphs (a) through (l), inclusive, above. The provisions of this paragraph
(m) shall similarly apply to successive consolidations, mergers, sales or
conveyances.
4.2 Time of Adjustments. Each adjustment required by Section 4.1
shall be effective as and when the event requiring such adjustment occurs.
4.3 Notice of Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant or the Warrant Price is adjusted
as herein provided, the Company shall promptly mail by first class mail, postage
prepaid, to each holder a certificate of a firm of independent public
accountants selected by the Board of Directors of the Company (who may be the
regular accountants employed by the Company) setting forth the number of Warrant
Shares purchasable upon the exercise of each Warrant and the Warrant Price after
such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made;
provided that the Company shall not be required to give notice of any adjustment
in the Warrant Price unless and until the net effect of one or more adjustments,
determined as above provided, shall have resulted in a change of the Warrant
Price of at least two percent. Such certificate shall be conclusive evidence of
the correctness of such adjustment.
4.4 No Adjustment for Dividends. Except as provided in Section 4.1,
no adjustment shall be made during the term of a Warrant or upon the exercise of
a Warrant in respect of any dividends declared or paid on the Common Stock.
4.5 Statement on Warrants. Irrespective of any adjustments in the
Warrant Price or the number or kind of shares purchasable upon the exercise of
Warrants, Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the initial Warrant.
Section 5. Fractional Interests. No fractional Warrant Shares shall be
issued upon the exercise of Warrants, but in lieu thereof the Company shall pay
therefor in cash an amount equal to the product obtained by multiplying the
Closing Price per Warrant Share on the Trading Day immediately preceding the
date of exercise of the Warrant times such fraction. If more than one Warrant
shall be presented for exercise in full at the same time by the same holder, the
number of full Warrant Shares that shall be issuable upon the exercise thereof
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented.
Section 6. Taxes. The Company shall pay any and all issue and other taxes
that may be payable in respect of any issue or delivery of Warrant Shares upon
the exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes that
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may be payable in respect of any transfer involved in the issue or delivery of
any Warrant or certificates for Warrant Shares in a name other than that of the
registered holder of such Warrant, and no such issue or delivery shall be made
unless and until the person requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
Section 7. Reservation of Warrant Shares; Purchase of Warrants;
Cancellation of Warrants.
7.1 Reservation of Warrant Shares.
(a) There have been reserved, and the Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
exercise of the Warrants, the number of shares of Common Stock that shall from
time to time be sufficient to provide for the exercise of the rights of purchase
represented by the outstanding Warrants. All Warrants surrendered in the
exercise of the rights thereby evidenced shall thereupon be cancelled by the
Company and retired. Promptly after the Expiration Date, the Secretary of the
Company shall certify to the Company the aggregate number of Warrants then
outstanding, and thereafter no shares of Common Stock shall be subject to
reservation in respect of such Warrants. The Company shall from time to time, in
accordance with the laws of the State of Colorado, increase the authorized
amount of its Common Stock if at any time the number of shares of Common Stock
remaining unissued shall not be sufficient to permit the exercise of all the
then outstanding Warrants.
(b) All shares of Common Stock or other securities issued
upon exercise of the Warrants will, upon issuance in accordance with the terms
hereof, be validly issued, fully paid and nonassessable, free from all liens,
charges, security interests and encumbrances created by the Company with respect
to the issuance and delivery thereof and not subject to preemptive rights.
7.2 Purchase of Warrants by the Company. Any of the Company and its
Subsidiaries shall have the right, except as limited by law, other agreements or
herein, to purchase or otherwise acquire Warrants at such times, in such manner
and for such consideration as it may negotiate with the holder of such Warrants.
7.3 Cancellation of Warrants. If any of the Company and its
Subsidiaries shall purchase or otherwise acquire Warrants, the same shall
thereupon be cancelled by the Company and retired. The Company shall cancel any
Warrant surrendered for exchange, substitution, transfer or exercise in whole or
in part.
Section 8. Mutilated or Missing Warrants. If any Warrant shall be
mutilated, lost, stolen or destroyed and the Company shall receive evidence
thereof reasonably satisfactory to it, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest. An
applicant for
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such a substitute Warrant shall comply with such other reasonable requirements
and pay such reasonable charges as the Company may prescribe.
Section 9. No Rights as Stockholder. Nothing contained in this Warrant or
in any of the Warrants shall be construed as conferring upon the holders or
their transferees the right to vote or to receive dividends or to consent or to
receive notice as stockholders in respect of any meeting of stockholders for the
election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company.
Section 10. Notice to Holders. At any time prior to the expiration of the
Warrants and prior to their exercise, if any of the following events shall
occur:
(1) the Company shall declare any dividend (or any other
distribution) on Common Stock other than a cash dividend or shall declare
or authorize repurchase of in excess of 10% of the then outstanding shares
of Common Stock; or
(2) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares
of Common Stock or any Derivative Securities; or
(3) the Company shall propose any capital reorganization,
recapitalization, subdivision or reclassification of Common Stock (other
than a subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value or from no par
value to par value), or any consolidation or merger to which the Company
is a party for which approval of any stockholders of the Company shall be
required, or the sale, transfer or lease of all or substantially all of
the assets of the Company; or
(4) the voluntary or involuntary dissolution, liquidation or winding
up of the Company (other than in connection with a consolidation, merger,
or sale of all or substantially all of its property, assets and business
as an entirety) shall be proposed by a majority of the stockholders or the
board of directors of the Company;
then the Company shall give notice in writing of such event to the holders at
least 15 days prior to the date fixed as a record date or the date of closing
the transfer books for the determination of the stockholders entitled to such
dividend, distribution, or subscription rights, or for the determination of
stockholders entitled to vote on such proposed consolidation, merger, sale,
transfer or lease of assets, dissolution, liquidation or winding up. No failure
to give such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice.
Section 11. Notices. All notices, requests and other communications with
respect to the Warrants shall be in writing. Communications may be made by
telecopy or similar writing. Each communication shall be given to the holder at
the address in the Warrant Register and the Company at 7100 East Belleview
Avenue, Suite 201, Greenwood Village, Colorado 80111, or
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at any other address as the holder or the Company, as the case may be, may
specify for this purpose by notice to the other party. Each communication shall
be effective (1) if given by telecopy, when the telecopy is transmitted to the
proper address and the receipt of the transmission is confirmed, (2) if given by
mail, 72 hours after the communication is deposited in the mails properly
addressed with first class postage prepaid or (3) if given by any other means,
when delivered to the proper address and a written acknowledgement of delivery
is received.
Section 12. No Waivers; Remedies; Specific Performance.
(a) Prior to the Expiration Date, no failure or delay by any
holder in exercising any right, power or privilege with respect to the Warrants
shall operate as a waiver of the right, power or privilege. A single or partial
exercise of any right, power or privilege shall not preclude any other or
further exercise of the right, power or privilege or the exercise of any other
right, power or privilege. The rights and remedies provided in the Warrants
shall be cumulative and not exclusive of any rights or remedies provided by law.
(b) In view of the uniqueness of the Warrants, a holder would
not have an adequate remedy at law for money damages in the event that any of
the obligations arising under the Warrants is not performed in accordance with
its terms, and the Company therefore agrees that the holder shall be entitled to
specific enforcement of the terms of the Warrants in addition to any other
remedy to which they may be entitled, at law or in equity.
Section 13. Amendments, Etc. No amendment, modification, termination, or
waiver of any provision of a Warrant, and no consent to any departure from any
provision of the Warrant, shall be effective unless it shall be in writing and
signed and delivered by the Company and the holder, and then it shall be
effective only in the specific instance and for the specific purpose for which
it is given. The rights of the holder and the terms and provisions of this
Warrant including, without limitation, the performance of the obligations of the
Company hereunder, shall not be affected in any manner whatsoever by the terms
and provisions of any other agreement, whether entered into prior to or after
the date of this Warrant.
Section 14. Governing Law. The Warrants shall be governed by and construed
in accordance with the internal laws of the State of Colorado. All rights and
obligations of the Company shall be in addition to and not in limitation of
those provided by applicable law.
Section 15. Severability of Provisions. Any provision of the Warrants that
is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of the Warrants
or affecting the validity or enforceability of the provision in any other
jurisdiction.
Section 16. Headings and References. Headings in the Warrants are included
for the convenience of reference only and do not constitute a part of the
Warrants for any other purpose. References to parties and sections in the
Warrant are references to the parties or the sections of the Warrant, as the
case may be, unless the context shall require otherwise.
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Section 17. Nonexclusive Jurisdiction. Each of the Company and the holder,
by acceptance hereof, (1) agrees that any legal action with respect to the
Warrant may be brought in the courts of the State of Colorado or of the United
States of America for the District of Colorado, (2) accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts and (3) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
legal action in those jurisdictions.
Section 18. Waiver of Jury Trial. Each of the Company and the holder
waives, by acceptance hereof, any right to a trial by jury in any legal action
to enforce or defend any right under the Warrants or any amendment, instrument,
document or agreement delivered, or which in the future may be delivered, in
connection with the Warrants and agrees that any legal action shall be tried
before a court and not before a jury.
Section 19. Merger or Consolidation of the Company. The Company will not
merge or consolidate with or into any other corporation unless the corporation
resulting from such merger or consolidation (if not the Company) shall expressly
assume, by supplemental agreement, the due and punctual performance and
observance of each and every covenant and condition of this Warrant to be
performed and observed by the Company.
Section 20. Definitions. For the purpose of this Warrant, the following
terms have the following meanings:
(a) "Adjustment Price" means, as of any date, the greater of
(1) the Warrant Price or (2) the Average Market Price per share of Common Stock
as of such date.
(b) "Average Market Price" per share of Common Stock on any
date means the average of the daily Closing Prices for the fifteen (15)
consecutive Trading Days commencing twenty (20) Trading Days before the date of
declaration or authorization by the Board of Directors of the Company of such
issuance or distribution.
(c) "Business Day" means any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of the State of Colorado or
the State of New York or is a day on which Banking institutions located in
either state are authorized or required by law or other governmental action to
close.
(d) "Business Combination" means, whether concluded or
intended to be concluded in one transaction or series of transactions, each of
the following:
(1) the merger or consolidation of any of the Company and its
Subsidiaries with or into any person other than the Company or a
wholly-owned Subsidiary of the Company;
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(2) the transfer of a substantial portion of the assets of any of
the Company and its Subsidiaries to any person or group other than the
Company or a wholly-owned Subsidiary of the Company;
(3) an acquisition from any of the Company, it Subsidiaries and its
stockholders of any shares of Common Stock or other securities of the
Company; or
(4) any tender offer (including a self-tender offer) or exchange
offer, recapitalization, liquidation, dissolution or similar transaction
involving any of the Company and its Subsidiaries;
(e) "Closing Price" means the last reported sales price, regular
way, per share of Common Stock on such day, or if no such sale takes place
on such day, the average of the closing bid and asked prices, regular way,
in each case, as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on the NASDAQ National Market System or, if shares of such stock are not
listed or admitted to trading on the NASDAQ National Market System, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the shares of Common Stock are listed or admitted to trading, or,
if the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, on the NASDAQ SmallCap Market.
(f) "Derivative Securities" means securities convertible into
or exchangeable or exercisable for shares of Common Stock, rights or warrants to
subscribe for or purchase shares of Common Stock, options for the purchase of,
or calls, commitments or other claims of any character relating to, shares of
Common Stock or any securities convertible into or exchangeable for any of the
foregoing.
(g) "Expiration Date" means the date (or, if such day is not
a Business Day, on the next day that is a Business Day) that is the date that is
60 months after the date hereof.
(h) "Subsidiary" means (A) any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company or (B) a
partnership or limited liability company in which the Company or a Subsidiary of
the Company is, at the date of determination, a general or limited partner of
such partnership or a member of such limited liability company, but only if the
Company or its Subsidiary is entitled to receive more than fifty percent of the
assets of such partnership or limited liability company upon its dissolution.
(i) "Trading Day" means, as applied to any class of stock,
any day on which the New York Stock Exchange or, if shares of such stock are not
listed or admitted to trading on the New York Stock Exchange, the principal
national securities exchange on which the shares
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of such stock are listed or admitted for trading or, if the shares of such stock
are not listed or admitted for trading on any national securities exchange, any
Business Day.
(j) "Trading Price" means, as applied to any class of stock
on any date, the last reported sales price, regular way, per share of such stock
on such day, or if no such sale takes place on such day, the closing low bid
price, regular way, in each case, as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the NASDAQ National Market System or, if shares of such stock are not
listed or admitted to trading on the NASDAQ National Market System, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
shares of such stock are listed or admitted to trading, or, if the shares of
such stock are not listed or admitted to trading on any national securities
exchange, on the NASDAQ SmallCap Market.
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THIS WARRANT is executed and delivered by the Company on the date
set forth below in Denver, Colorado.
Dated: ____________, 1997 INTERNET COMMUNICATIONS
CORPORATION
Attest: ______________________ By:___________________________
Name: Name:
Title: Title:
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INTERNET COMMUNICATIONS CORPORATION
Election to Purchase
Mail Address
_________________ __________________
_________________ __________________
_________________ __________________
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for and to purchase thereunder,
shares of the stock provided for herein, and requests that certificates for such
shares be issued in the name of
__________________________________________________
__________________________________________________
(Please Print Name, Address and Social Security No.)
__________________________________________________
and, if said number of shares shall not be all the shares purchasable
thereunder, that a new Warrant Certificate for the balance remaining of the
shares purchasable under the within Warrant Certificate be registered in the
name of the undersigned holder of this Warrant or his Assignee as below
indicated and delivered to the address stated below.
Date: ____________, 19__.
Name of holder of this Warrant or Assignee: ___________________
(Please Print)
Address: ______________________
______________________
Signature: ________________________________
Note: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular without alteration or
enlargement or any change whatever unless this Warrant has been assigned.
Signature Guaranteed: _______________________
A-17
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[______________] ___________________
____________________________________
Attorney to transfer said Warrant on the books of the Company, with full power
of substitution in the premises.
DATED:___________, 19__.
Signature of Registered holder:_____________________
Note: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular without alteration or
enlargement or any change whatever unless this Warrant has been assigned.
Signature Guaranteed:_________________________
A-18
<PAGE>
EXHIBIT B
FIRST AMENDMENT TO
REGISTRATION RIGHTS AGREEMENT
FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT ("Amendment") dated
__________, 1997 between INTERNET COMMUNICATIONS CORPORATION, a Colorado
corporation (the "Company"), and INTERWEST GROUP, INC., a Colorado corporation
(the "Stockholder").
RECITALS
WHEREAS, the Company and the Stockholder entered into a Registration
Rights Agreement (the "Registration Rights Agreement") dated May 29, 1996
relating to the registration rights granted by the Company to the Stockholder in
respect of certain shares of common stock, no par value (the "Common Stock"), of
the Company issued or issuable by the Company to the Stockholder.
WHEREAS, pursuant to a Stock Purchase Agreement dated as of February
25, 1997 between the Company and the Stockholder, the Company has issued and
sold to the Stockholder (i) 631,579 shares of Common Stock (the "Shares") and
(ii) warrants to purchase an additional 63,158 shares of Common Stock (the
"Warrant Shares");
WHEREAS, the Company and the Stockholder wish to amend the
Registration Rights Agreement to take account of the issuance of Shares and the
future issuance of Warrant Shares referred to above and to make certain other
amendments thereto.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the adequacy and
sufficiency of which are hereby acknowledged by the parties, it is agreed as
follows:
Section (k) The Registration Rights Agreement shall be amended as follows:
(a) The last sentence of Recital A shall be deleted and replaced in
its entirety as follows:
The Company and the Stockholder have also executed and
delivered the Stock Purchase Agreement dated February 25, 1997,
B-1
<PAGE>
pursuant to which, among other things, the Stockholder has purchased
631,579 shares of common stock, no par value (the "Common Stock"),
of the Company (the "Shares") and warrants to purchase an additional
63,158 shares of Common Stock (the "Warrant Shares"). The Conversion
Shares, the Additional Shares, the Shares and the Warrant Shares are
collectively referred to as the "Registrable Shares".
(b) The first sentence of Section 1(a) shall be deleted and replaced
in its entirety as follows:
From and after the second anniversary of the First Closing
Date on one or more occasions when the Company shall have received
the written request of the Stockholder, any pledgee of Registrable
Shares from the Stockholder or holders of at least 50,000
Registrable Shares in the aggregate (as such number of shares may be
adjusted in the event of any change in the Registrable Shares by
reason of stock dividends, split-ups, reverse split-ups, mergers,
recapitalizations, subdivisions, conversions, exchanges of shares or
the like) that shall have been acquired directly or indirectly from
the Stockholder and to which rights under this Section 1(a) shall
have been assigned pursuant to Section 11(a), in each case in a
transaction or series of transactions not constituting a Rule 144
Transaction (as defined in Section 1(h)) (each such person, when
requesting registration under this Section 1(a) or under Section
1(b) and thereafter in connection with any such registration, being
hereinafter referred to as a "Registering Stockholder"), as
expeditiously as practicable the Company shall register the number
of Registrable Shares specified by the Registering Stockholder;
provided that the Company shall not be required to register fewer
than 50,000 Registrable Shares (as such number may be adjusted).
(c) Section 1(a)(1) shall be deleted and replaced in its entirety as
follows:
(1) the Company shall not be required to prepare and file
pursuant to this Section 1(a) more than six Registration Statements;
provided that a Registration Statement shall be deemed not to have
been prepared and filed if the same does not become effective;
provided, further, that if 10% or more of the Registrable Shares
requested to be registered by the Registering Stockholder initiating
a request for registration of Registrable Shares pursuant to this
Section 1(a) are excluded from any registration in accordance with
Section 1(a)(2), there shall be provided one additional registration
under this Section (1)(a)(1) in respect of each such exclusion; and
Section (l) Except as modified by the terms of this Amendment, the terms
of the Registration Rights Agreement shall continue in full force and effect.
Any reference in the Registration Rights Agreement to "this Agreement" shall be
deemed to include the amendments to the Registration Rights Agreement effected
by this Amendment.
B-2
<PAGE>
Section (m) This Amendment may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if all signatures
whereon the same instrument.
Section (n) This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Colorado.
B-3
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Amendment as of the date first written above in Denver, Colorado.
INTERNET COMMUNICATIONS
CORPORATION
By:_________________________________
Name:
Title:
Address: 7100 East Belleview Avenue
Suite 201
Greenwood Village, CO 80111
Telecopy: (303) 770-0588
INTERWEST GROUP, INC.
By:_________________________________
Name:
Title:
Address: 12201 East Arapahoe Road
Suite C10
Englewood, CO 80112
Telecopy: (303) 792-0227
B-4
<PAGE>
EXHIBIT 3.1(f)(1)
CERTIFICATE OF SECRETARY
OF
INTERNET COMMUNICATIONS CORPORATION
The undersigned is Secretary of Internet Communications Corporation,
a Colorado corporation (the "Company"). This certificate is executed and
delivered pursuant to Section 3.1(f)(1) of the Stock Purchase Agreement (the
"Stock Purchase Agreement") dated as of February 25, 1997 between the Company
and Interwest Group, Inc., a Colorado corporation. Terms not otherwise defined
in this certificate have the meanings stated in the Stock Purchase Agreement.
The undersigned hereby certifies that:
1. Attachment A is a true and complete copy of the articles of
incorporation of the Company dated __________, 19__, as amended by amendments
dated __________ [**list amendments**]. No proceedings for the amendment of the
articles of incorporation are pending or, to the best knowledge of the
undersigned, threatened or contemplated.
2. Attachment B is a true and complete copy of the bylaws of the
Company in effect on this date and at all times since __________, 19__. No
proceedings for the amendment of the bylaws are pending or, to the best
knowledge of the undersigned, threatened or contemplated.
3. Attachment C are true and complete copies of certain resolutions
adopted by the Board of Directors of the Company [** at a meeting duly held on
__________, 1997, at which a quorum for the transaction of business was present
and acting throughout **] [** by unanimous written consent dated __________,
1997 **]. The resolutions are in full force and effect on this date and have not
been modified, amended or revoked. The resolutions are the only resolutions
adopted by the Board of Directors of the Company or any of its committees
relating to the Transaction Documents or the Transactions.
4. The following are the directors of the Company on this date and
the date referred to in paragraph 3 above: __________.
3.1(f)(1)-1
<PAGE>
5. The following are officers of the Company on this date and
specimens of their signatures:
Name Office Signature
---- ------ ---------
President and Chief
Executive Officer
- ------------------------- ------------------------- -------------------------
Vice President
- ------------------------- ------------------------- -------------------------
Secretary
- ------------------------- ------------------------- -------------------------
Treasurer
- ------------------------- ------------------------- -------------------------
6. No proceedings for the merger, consolidation, liquidation,
dissolution or reorganization of the Company or for the sale of all or
substantially all the assets of the Company are pending or, to the best
knowledge of the undersigned, threatened or contemplated.
The undersigned has executed this certificate this _____ day of
__________, 1997.
_________________________________
Name: Arnell J. Galley
Title:Secretary
3.1(f)(1)-2
<PAGE>
EXHIBIT 3.1(f)(2)
CERTIFICATE OF OFFICER
OF
INTERNET COMMUNICATIONS CORPORATION
The undersigned is [** a/the **] __________ [** title **] of
Internet Communications Corporation, a Colorado corporation (the "Company").
This certificate is executed and delivered pursuant to Section 3.1(f)(2) of the
Stock Purchase Agreement (the "Stock Purchase Agreement") dated as of February
25, 1997 between the Company and Interwest Group, Inc., a Colorado corporation.
Terms not otherwise defined in this certificate have the meanings stated in the
Stock Purchase Agreement.
The undersigned hereby certifies as follows:
1. The representations and warranties of the Company contained in
the Transaction Documents are true and correct as of the date of this
certificate, except as otherwise contemplated by the Stock Purchase Agreement.
2. The Company has performed all covenants and other obligations
required by the Transaction Documents to be performed by it at or before the
date of this certificate.
The undersigned has executed this certificate this _____ day of
__________, 1997.
_____________________________________
Name:
Title:
3.1(f)(2)-1
<PAGE>
EXHIBIT 3.1(f)(5)
FORM OF
OPINION OF COUNSEL
INTERNET COMMUNICATIONS CORPORATION
__________, 1997
Interwest Group, Inc.
12201 East Arapahoe Road, Suite 201
Englewood, Colorado 80112
Re: Stock Purchase Agreement dated as of February 25, 1997 between
Internet Communications Corporation and Interwest Group, Inc.
Ladies and Gentlemen:
I have acted as counsel for Internet Communications Corporation, a
Colorado corporation (the "Company"), in connection with the Stock Purchase
Agreement dated as of February 25, 1997 (the "Stock Purchase Agreement") between
the Company and Interwest Group, Inc., a Colorado corporation ("Group"), and the
Transaction Documents and Transactions (as defined in the Stock Purchase
Agreement). This letter is delivered to you pursuant to Section 3.1(f)(6) of the
Stock Purchase Agreement. Terms not otherwise defined in this opinion have the
meanings stated in the Stock Purchase Agreement.
In connection with this opinion, I have examined, among other documents,
the following:
(1) the Stock Purchase Agreement, as executed;
(2) the Warrant, as executed;
(3) the Amendment to Registration Rights Agreement, as executed;
(4) the articles of incorporation of the Company, as amended through
the date hereof;
3.1(f)(5)-1
<PAGE>
(5) the bylaws of the Company, as amended through the date hereof;
(6) a long-form good standing certificate of the Secretary of State
of the State of Colorado dated __________, 1997, listing all charter
documents of the Company on file in that office as of that date;
(7) a certificate for __________ shares of Common Stock representing
the Shares, registered in the name of Group and dated as of the Closing
Date, as signed and authenticated;
(8) such corporate documents and records of the Company and such
other certificates and documents as I have deemed necessary or appropriate
for the purposes of this opinion.
The documents referred to in clauses (1) through (3) are, collectively, the
"Closing Transaction Documents", and the transactions contemplated thereby are
the "Closing Transactions".
In rendering my opinion, I have assumed the following:
(i) the absence of any requirement, consent, approval or
authorization by any Governmental Body or any other person with regard to
the execution, delivery or performance by Group of the Transaction
Documents;
(ii) that the execution, delivery and performance by Group of the
Transaction Documents do not violate any laws or regulations applicable to
Group;
(iii) that the Transaction Documents constitute the legal, valid and
binding obligations of the parties thereto, other than the Company,
enforceable against such persons in accordance with their terms;
(iv) the due authorization, execution and delivery of each
Transaction Document by each party to the Transaction Document, other than
the Company; and
(v) the genuineness of all signatures on all documents submitted to
me for my examination other than signatures of officers of the Company,
the authenticity of all documents submitted to me as originals, the
conformity to original documents of all documents submitted to me as
copies, and the legal capacity of all natural persons.
With respect to the portions of paragraphs 3, 6, 7 and 9 below which are
stated to be based on my knowledge, and with respect to the identification of
material agreements for purposes of clause (a)(iii) of paragraph 2, I have
relied upon the representations of the Company contained in the Transaction
Documents and such certificates as to factual matters as I have deemed
appropriate from officers of the Company, as the case may be, and upon inquiries
of attorneys presently with my firm who have within the last year given
substantive attention to the
3.1(f)(5)-2
<PAGE>
Company in the form of legal consultation or legal representation. Except to the
extent otherwise stated in this letter, for purposes of rendering my opinion
with respect to matters addressed in those portions of the paragraphs referred
to above, I have not made an independent review of any of the properties,
operations, business, transactions, contractual arrangements, orders or Actions
or other matters and affairs pertaining to the Company, discussed any of the
foregoing with other officers, employees or representatives of the Company or
undertaken to review my internal files or the files of the Company with respect
to any of the foregoing.
Based upon and subject to the foregoing and the further qualifications set
forth below, I am of the following opinion:
1. The Company (a) is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (b) has all necessary corporate power and authority to carry on
its business as now conducted and (c) has all necessary corporate power and
authority to execute and deliver each Transaction Document to which it is a
party.
2. The execution and delivery by the Company of each Transaction
Document to which it is a party and the performance by it on the date hereof of
its obligations under each of such Transaction Documents have been duly
authorized by all necessary corporate action and do not and will not (a)
contravene, violate, result in a breach of or constitute a default under, (i)
its articles of incorporation or bylaws, (ii) any Regulation of any Governmental
Body of the United States of America or any political subdivision thereof or any
decision, ruling, order or award of any arbitrator that I have, in the exercise
of customary professional due diligence, recognized as directly applicable to
the Company or (iii) any agreement, indenture or other instrument certified by
the Company to me as a material agreement to which the Company is a party or by
which the Company or its properties may be bound or affected or (b) except as
contemplated by the Transaction Documents, result in or require the creation or
imposition of any Lien on any of the properties now owned or hereafter acquired
by the Company.
3. Except as described on Schedule I, no Approval of any
Governmental Body of the United States of America or any political subdivision
thereof that I have, in the exercise of customary professional due diligence,
recognized as directly applicable to the Company or, to my knowledge, any other
person that is required or advisable on the part of the Company for (a) the due
execution and delivery by the Company of any Transaction Document to which it is
a party, (b) the performance by the Company on the date hereof of its
obligations under each Transaction Document to which it is a party or (c) the
exercise by Group of its rights and remedies under each Transaction Document.
Except as described on Schedule I, each such Approval has been obtained or made,
as the case may be, all actions by each person required to be taken in
connection with each such Approval have been taken and all prescribed waiting,
review or appeal periods with respect to each such Approval have terminated or
expired, as the case may be, in each case on or before the date hereof. No
opinion is expressed herein as to any Approvals required or advisable on the
part of the Company under federal or state securities or antitrust laws.
3.1(f)(5)-3
<PAGE>
4. Each Transaction Document to which the Company is a party has
been duly executed and delivered by the Company; and each Transaction Document
to which the Company is a party is the legally valid and binding obligation of
the Company, enforceable against it in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws relating to or affecting creditors' rights
generally and general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive relief, regardless
of whether considered in a proceeding in equity or at law; and provided that no
opinion is expressed as to the enforceability of indemnification provisions
insofar as they relate to securities laws of the United States of America.
5. The choice of law provisions in each Transaction Document which
selects Colorado law as the governing law, will be upheld and enforced by the
courts of the State of Colorado and federal courts sitting in and applying the
laws of the State of Colorado. I advise you that a Colorado court may not
strictly enforce certain limitations upon jurisdiction and upon place of trial
if it concludes that such enforcement in a document governed by Colorado law
would be contrary to public policy or unreasonable under the then existing
circumstances.
6. To my knowledge, except as previously disclosed to the Company in
writing, which writing refers to the Stock Purchase Agreement, there is no
Action pending or threatened against the Company or any property owned, leased,
licensed or used by the Company that, individually or in the aggregate, if
determined adversely to the Company, could have a Material Adverse Effect.
7. The Shares have been duly authorized and reserved for issuance
and, when issued and delivered to Group against payment therefor on the Closing
Date, will be validly issued, fully paid and non-assessable, and the issuance of
the Shares will not be subject to any preemptive rights.
8. The Warrant Shares to be issued and sold by the Company pursuant
to the terms of the Warrant have been duly authorized and reserved for issuance
and, when issued and delivered to Group against payment therefor as provided
pursuant to the terms of the Warrant, will be validly issued, fully paid and
non-assessable, and the issuance of the Warrant Shares will not be subject to
any preemptive rights.
9. The authorized capital stock of the Company consists of (A)
4,500,000 shares of Common Stock and (B) 100,000,000 shares of preferred stock,
par value $.0001 per share, of which no shares are issued and outstanding. As of
__________, 1997, there were (A) __________ shares of Common Stock issued and
outstanding, (B) __________ shares of Common Stock held in the treasury of the
Company and (C) __________ shares of Common Stock reserved for issuance upon
exercise of outstanding stock options issued by the Company to (1) current and
former directors or employees of the Company and its Consolidated Subsidiaries
under the 1995 Non-Employee Director Stock Option Plan or the 1996 Incentive
Stock Plan for the acquisition of 335,000 shares of Common Stock in the
aggregate (of which there are exercisable options for __________ shares at an
exercise price of $_____ per share and
3.1(f)(5)-4
<PAGE>
options for __________ shares at an exercise price of $_____ per share) and (2)
three persons to acquire 34,000 shares of Common Stock in the aggregate (of
which there are exercisable options for __________ shares with an exercise price
of $_____ per share, options for __________ shares at an exercise price of
$_____ per share and options for __________ shares at an exercise price of
$_____ per share). As of the date hereof, there are __________ shares of Common
Stock reserved for issuance. To my knowledge, the Company has no Equity
Securities outstanding except as disclosed in this paragraph. The holders of the
capital stock of the Company are not entitled to any preemptive rights to
subscribe to any additional shares of capital stock of the Company.
10. No Taxes (exclusive of income taxes, as to which no opinion is
expressed) which have not been paid are required to be paid in connection with
the execution and delivery of the Transaction Documents, the performance of any
obligations under the Transaction Documents or the creation of any indebtedness
under or evidenced by the Transaction Documents.
The foregoing opinions are subject to the following qualifications,
limitations and exceptions:
(A) With respect to the opinions stated in clause (a) of paragraph
1, I have relied upon certificates from the Secretary of State of the
State of Colorado and other public officials, which I assume to be true
copies and which are attached hereto.
(B) I express no opinion with respect to the following provisions to
the extent that the same are contained in the Transaction Documents:
(i) provisions purporting to waive rights to notices,
objections, demands, set-offs, legal defenses, statutes of
limitation, counterclaims, provisions of law, jury trial, or other
rights or benefits that cannot be waived under applicable law;
(ii) provisions granting powers of attorney or authority to
execute documents or to act by power of attorney on behalf of
another party;
(iii) provisions purporting to restrict access to courts or to
legal or equitable remedies or purporting to establish exclusive
forum jurisdiction or venue;
(iv) provisions providing for a set-off or subrogation; and
(v) provisions releasing, exculpating or exempting a party
from, or requiring indemnification of a party for, liability for its
own action or inaction or for misstatements or omissions, to the
extent that the same are inconsistent with public policy.
3.1(f)(5)-5
<PAGE>
(C) In rendering the opinion expressed in paragraph 2 above, I have
made no examination of any accounting or financial matters and express no
opinion with the respect thereto.
* * *
I do not express any opinion herein concerning any law other than
the laws of the State of Colorado and the federal law of the United States of
America.
The opinions set forth above are for your sole benefit with respect
to the transactions contemplated by the Transaction Documents. This letter may
not be used, circulated, quoted or otherwise referred to for any other purpose
and may not be relied upon by any other person without my prior written consent.
Very truly yours,
3.1(f)(5)-6
<PAGE>
SCHEDULE I
TO OPINION OF COUNSEL FOR
INTERNET COMMUNICATIONS CORPORATION
Approvals, Consents and Filings
3.1(f)(5)-7
