SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)*
INTERNET COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, no par value
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(Title of Class of Securities)
46057T408
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(CUSIP Number)
Cannon Y. Harvey Thomas A. Richardson, Esq.
The Anschutz Corporation Holme Roberts & Owen LLP
555 Seventeenth Street, Suite 2400 1700 Lincoln Street, Suite 4100
Denver, CO 80202 Denver, CO 80203
(303) 298-1000 (303) 861-7000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 11, 1999
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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 that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. / /
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7 for other
parties to whom copies are to be sent.
* 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>
CUSIP Number: 46057T408
- --------------------------------------------------------------------------------
1 Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons (entities only)
Interwest Group, Inc.
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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 if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) / /
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6 Citizenship or Place of Organization
Colorado
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Number of 7 Sole Voting Power
Shares 0
Beneficially ------------------------------------
Owned by 8 Shared Voting Power
Each Reporting 5,949,542**
Person With ------------------------------------
9 Sole Dispositive Power
0
------------------------------------
10 Shared Dispositive Power
5,949,542**
------------------------------------
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,949,542**
- --------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes
Certain Shares / /
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13 Percent of Class Represented by Amount in Row (11)
68.7%**
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14 Type of Reporting Person
CO
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** The reporting persons have a right to acquire 3,039,132 shares, as
described in Item 4 herein, Schedule 13D Amendment No. 2, and Schedule
13D Amendment No. 4. The stated number of shares and aggregate amount
beneficially owned by each reporting person assumes the acquisition of
these shares. Likewise, the total number of shares outstanding, used to
calculate the stated percentage of class ownership, assumes these
shares are outstanding.
Page 2 of 11 Pages
<PAGE>
CUSIP Number: 46057T408
- --------------------------------------------------------------------------------
1 Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons (entities only)
Anschutz Company
- --------------------------------------------------------------------------------
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 if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) / /
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6 Citizenship or Place of Organization
Delaware
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Number of 7 Sole Voting Power
Shares 0
Beneficially ------------------------------------
Owned by 8 Shared Voting Power
Each Reporting 5,949,542**
Person With ------------------------------------
9 Sole Dispositive Power
0
------------------------------------
10 Shared Dispositive Power
5,949,542**
------------------------------------
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,949,542**
- --------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes
Certain Shares / /
- --------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)
68.7%**
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14 Type of Reporting Person
CO
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** The reporting persons have a right to acquire 3,039,132 shares, as
described in Item 4 herein, Schedule 13D Amendment No. 2, and Schedule
13D Amendment No. 4. The stated number of shares and aggregate amount
beneficially owned by each reporting person assumes the acquisition of
these shares. Likewise, the total number of shares outstanding, used to
calculate the stated percentage of class ownership, assumes these
shares are outstanding.
Page 3 of 11 Pages
<PAGE>
CUSIP Number: 46057T408
- --------------------------------------------------------------------------------
1 Names of Reporting Persons (entities only)
I.R.S. Identification Nos. of Above Person
Philip F. Anschutz
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2 Check the Appropriate Box if a Member of a Group
(a)/X/
(b)/ /
- --------------------------------------------------------------------------------
3 SEC Use Only
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4 Source of Funds
WC
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5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
United States of America
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Number of 7 Sole Voting Power
Shares 0
Beneficially ------------------------------------
Owned by 8 Shared Voting Power
Each Reporting 5,949,542**
Person With ------------------------------------
9 Sole Dispositive Power
0
------------------------------------
10 Shared Dispositive Power
5,949,542**
------------------------------------
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,949,542**
- --------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes
Certain Shares / /
- --------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)
68.7%**
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14 Type of Reporting Person
IN
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** The reporting persons have a right to acquire 3,039,132 shares, as
described in Item 4 herein, Schedule 13D Amendment No. 2, and Schedule
13D Amendment No. 4. The stated number of shares and aggregate amount
beneficially owned by each reporting person assumes the acquisition of
these shares. Likewise, the total number of shares outstanding, used to
calculate the stated percentage of class ownership, assumes these
shares are outstanding.
Page 4 of 11 Pages
<PAGE>
This Amendment No. 5 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, as amended by Amendment No. 2 to the Schedule 13D filed on April 3,
1997, as amended by Amendment No. 3 to the Schedule 13D filed on June 10, 1998,
and as further amended by Amendment No. 4 to the Schedule 13D filed on March 10,
1999 (such Schedule 13D, as amended, the "Schedule 13D") relates to shares of
Common Stock, no par value per share, of Internet Communications Corporation
(the "Company") ("Common Stock") and amends Items 2, 3, 4, 5, 6, and 7 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 2. IDENTITY AND BACKGROUND
The information previously furnished in response to this Item is amended to read
as follows:
This statement is filed on behalf of Group, a Colorado corporation, AC, a
Delaware corporation, and Anschutz. Anschutz owns 100% of the outstanding common
stock of AC, and AC owns 100% of the outstanding common stock of Group. Anschutz
may be deemed to control AC and TAC.
Group, AC, and their affiliated companies are principally engaged in exploration
and development of natural resources, real estate development,
telecommunications, and professional sports.
The name, business or residence address, and present principal occupation or
employment, and the name, principal business, and address of any corporation or
other organization in which such employment is conducted, of Group, AC,
Anschutz, and each executive officer and director of Group and AC are set forth
below. Each individual listed below is a citizen of the United States of
America.
<TABLE>
<CAPTION>
Filing Persons and
Executive Officers
and Directors of
Group and AC Present Principal Occupation or Employment Business or Residence Address
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Group N/A 7100 East Belleview Avenue
Suite 201
Greenwood Village, CO 80111
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AC N/A 555 Seventeenth Street
Suite 2400
Denver, CO 80202
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Anschutz Group: Director 555 Seventeenth Street
AC: Chairman, Chief Executive Officer, and Suite 2400
Director Denver, CO 80202
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Harvey, Cannon Y. AC: President, Chief Operating Officer, and 555 Seventeenth Street
Director Suite 2400
Denver, CO 80202
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Couzens, John M. Group: Director 7100 East Belleview Avenue
Suite 201
Greenwood Village, CO 80111
</TABLE>
Page 5 of 11 Pages
<PAGE>
<TABLE>
<CAPTION>
Filing Persons and
Executive Officers
and Directors of
Group and AC Present Principal Occupation or Employment Business or Residence Address
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hurley, Michael P. Group: Assistant Secretary 7100 East Belleview Avenue
Suite 201
Greenwood Village, CO 80111
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Jones, Richard M. AC: Vice President, General Counsel, and 555 Seventeenth Street
Assistant Secretary Suite 2400
Denver, CO 80202
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Kundert, Thomas G. Group: Treasurer 555 Seventeenth Street
AC: Treasurer and Assistant Secretary Suite 2400
Denver, CO 80202
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Polson, Douglas L. Group: Director 555 Seventeenth Street
AC: Vice President, Assistant Secretary, and Suite 2400
Director Denver, CO 80202
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Rooney, Norman L. Group: Chairman, Chief Executive Officer, and 7100 East Belleview Avenue
Director Suite 201
Greenwood Village, CO 80111
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Shamas, Jim E. Group: President, and Director 7100 East Belleview Avenue
Suite 201
Greenwood Village, CO 80111
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Slater, Craig D. Group: Director 555 Seventeenth Street
AC: Executive Vice President, and Director Suite 2400
Denver, CO 80202
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Williams, Miles A. AC: Executive Vice President, and Director 555 Seventeenth Street
Suite 2400
Denver, CO 80202
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Wood, Lynn T. Group: Senior Vice President, Secretary, and 555 Seventeenth Street
General Counsel Suite 2400
AC: Secretary Denver, CO 80202
</TABLE>
During the past five years, none of Group, AC, Anschutz, or any executive
officer or director of Group and AC has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or had been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree, or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
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 $1,900,000 paid by Group to the Company to consummate the
transaction described in Item 4 below was provided by working capital of Group.
Page 6 of 11 Pages
<PAGE>
ITEM 4. PURPOSE OF TRANSACTION
The information previously furnished in response to this Item is amended to add
the following:
On August 11, 1999, Group and Company entered into a Securities Purchase
Agreement ("Agreement"). Pursuant to the Agreement, Group purchased from the
Company 19,000 shares of Series B Convertible Preferred Stock and 100,000
Warrants to purchase Common Stock. Group paid to Company approximately
$1,900,000.
Group has the right to purchase 100,000 shares of Common Stock pursuant to the
Warrants, at an exercise price of $2.9063 per share of Common Stock. The
Warrants expire on August 11, 2003. The consideration for the Warrants was not
separately specified in the Securities Purchase Agreement or the Warrants.
The 19,000 shares of Series B Convertible Preferred Stock are convertible into
653,752 shares of Common Stock, at a conversion price of $2.9063 per share of
Common Stock. Group paid $100.00 per share for the Series B Convertible Stock.
In the future, Group may, under certain circumstances, acquire 5,000 additional
shares of Series B Convertible Preferred Stock pursuant to the Agreement. Group
committed to fund up to $500,000 of a particular business promotion. The
$500,000 may be drawn by Company in incremental amounts. Each time, if ever,
that the total amount drawn reaches $100,000, Company will convert the debt to
1,000 shares of Series B Convertible Preferred and issue the 1,000 shares to
Group.
The purpose of the transaction was for Group to acquire additional securities of
the Company and for Company to gain additional working capital, in part related
to the particular business promotion.
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 2,910,410
shares of Common Stock, exclusive of shares that the reporting persons have a
right to acquire. Group, Anschutz, and AC have shared power to vote or direct
the vote and shared power to dispose or direct the disposition of such shares.
Based upon the number of shares of Common Stock that were issued and outstanding
on August 10, 1999, exclusive of shares that the reporting persons have a right
to acquire, such number of shares of Common Stock is equal to approximately
51.8% of the number of shares of Common Stock then outstanding.
Including (i) the 653,752 shares of Common Stock that Group has a right to
acquire pursuant to the shares of Series B Convertible Preferred Stock referred
to Item 4 above (together with all common stock acquirable upon conversion of
convertible stock, the "Conversion Shares") and the 100,00 shares of Common
Stock that Group has a right to acquire pursuant to the Warrants referred to
Item 4 above (together with all common stock acquirable upon exercise of
warrants, the "Warrant Shares"), (ii) the 2,222,222 Conversion Shares referred
to in Amendment No. 4 to this Schedule 13D, and (iii) the 63,158 Warrant Shares
referred to in Amendment No. 2 to this Schedule 13D, 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 5,949,542 shares of Common Stock.
Group, Anschutz, and AC have shared power to vote or direct the vote and shared
power to dispose or direct the disposition of such shares. Based upon the number
of shares of Common Stock that were issued and outstanding on August 10, 1999,
after giving effect to the issuance of the Warrant Shares and Conversion Shares,
such number of shares of Common Stock is equal to approximately 68.7% of the
number of shares of Common Stock then outstanding.
All transactions in Common Stock effected by Group, Anschutz, and AC since the
filing of Amendment No. 4 to the Schedule 13D are described in Item 4 above.
Page 7 of 11 Pages
<PAGE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
As stated in Item 2 above, Anschutz owns 100% of the outstanding common stock of
AC, and AC owns 100% of the outstanding common stock of Group. Anschutz may be
deemed to control AC and TAC.
Reference is made to Item 4 above and the Exhibits filed herewith regarding the
transaction as set forth in the Securities Purchase Agreement, the Warrants, and
the Articles of Amendment to the Articles of Incorporation of Internet
Communications Corporation.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
A. Statement of Filing Persons Pursuant to Rule 13d-1(k)(1)(iii)
B. Securities Purchase Agreement, dated as of August 11, 1999
C. Articles of Amendment to the Articles of Incorporation of Internet
Communications Corporation (Annex I to the Securities Purchase
Agreement)
D. Warrant to Purchase Common Stock at $2.9063 Per Share (Annex II to the
Securities Purchase Agreement)
Page 8 of 11 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.
INTERWEST GROUP, INC.
By: /s/ THOMAS G. KUNDERT September 10, 1999
--------------------------- --------------------------
Thomas G. Kundert Date
Treasurer
Page 9 of 11 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.
ANSCHUTZ COMPANY
By: Philip F. Anschutz
Chairman
By: /s/ THOMAS A. RICHARDSON September 10, 1999
----------------------------------- --------------------------
Thomas A. Richardson*** Date
Attorney-in-fact
*** Philip F. Anschutz executed a power of attorney that authorizes Thomas A.
Richardson to sign this Amendment No. 5 to the Schedule 13D on his behalf as an
individual and on his behalf as Chairman of Anschutz Company. A copy of the
power of attorney was previously filed with the Securities and Exchange
Commission as an Exhibit to a Form 4 filed on November 9, 1998, and is hereby
incorporated by reference into this Amendment No. 5 to the Schedule 13D.
Page 10 of 11 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.
PHILIP F. ANSCHUTZ
By: /s/ THOMAS A. RICHARDSON September 10, 1999
----------------------------------- ---------------------------
Thomas A. Richardson*** Date
Attorney-in-fact
*** Philip F. Anschutz executed a power of attorney that authorizes Thomas A.
Richardson to sign this Amendment No. 5 to the Schedule 13D on his behalf as an
individual and on his behalf as Chairman of Anschutz Company. A copy of the
power of attorney was previously filed with the Securities and Exchange
Commission as an Exhibit to a Form 4 filed on November 9, 1998, and is hereby
incorporated by reference into this Amendment No. 5 to the Schedule 13D.
Page 11 of 11 Pages
EXHIBIT A
Statement of Filing Persons pursuant to Rule 13d-1(k)(1)(iii)
Each of Interwest Group, Inc., Anschutz Company, and Philip F. Anschutz ("Filing
Persons") hereby agree that this Schedule 13D Amendment No. 3 is filed on behalf
of each of the Filing Persons.
INTERWEST GROUP, INC.
By: /s/ THOMAS G. KUNDERT September 10, 1999
--------------------------- --------------------------
Thomas G. Kundert Date
Treasurer
ANSCHUTZ COMPANY
By: Philip F. Anschutz
Chairman
By: /s/ THOMAS A. RICHARDSON September 10, 1999
----------------------------------- --------------------------
Thomas A. Richardson*** Date
Attorney-in-fact
PHILIP F. ANSCHUTZ
By: /s/ THOMAS A. RICHARDSON September 10, 1999
----------------------------------- --------------------------
Thomas A. Richardson*** Date
Attorney-in-fact
*** Philip F. Anschutz executed a power of attorney that authorizes Thomas A.
Richardson to sign this Amendment No. 5 to the Schedule 13D on his behalf as an
individual and on his behalf as Chairman of Anschutz Company. A copy of the
power of attorney was previously filed with the Securities and Exchange
Commission as an Exhibit to a Form 4 filed on November 9, 1998, and is hereby
incorporated by reference into this Amendment No. 5 to the Schedule 13D.
EXHIBIT B
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT ("this Agreement"), dated as of
August 11, 1999, is entered into by and between Internet Communications
Corporation, a Colorado corporation (the "Company"), and Interwest Group, Inc.,
a Colorado corporation ("Buyer").
RECITALS
WHEREAS, the Company and Buyer are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded, inter alia, by Rule 506 under Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act"), and/or
Section 4(2) of the 1933 Act; and
WHEREAS, the Company wishes to sell to Buyer and Buyer wishes to
purchase from the Company, upon the terms and subject to the conditions of this
Agreement, shares of Series B Convertible Preferred Stock (the "Convertible
Preferred Stock") of the Company, which will be convertible into shares of
Common Stock of the Company (the "Common Stock") upon the terms and subject to
the conditions of such Convertible Preferred Stock;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase; Certain Definitions.
(i) The Company agrees to sell to Buyer and Buyer agrees to
purchase from the Company up to 24,000 shares of Convertible Preferred Stock
having the terms and conditions set forth in the Articles of Amendment to the
Articles of Incorporation of the Company attached hereto as Annex I (the
"Articles of Amendment") at a purchase price of $100 per share.
Buyer is the holder of all of the Company's Series A
Convertible Preferred Stock and hereby consents to the issuance of Convertible
Preferred Stock and warrants contemplated hereby, and agrees that neither such
issuances nor the subsequent exercise or conversion thereof shall result in any
adjustment to the conversion price for the Series A Convertible Preferred Stock.
(ii) Capitalized terms used and not defined herein shall have the
meanings given to them in the Articles of Amendment.
1
<PAGE>
(iii) As used herein, the term "Securities" means the Preferred
Stock and the Common Stock issuable upon conversion of the Preferred Stock.
(iv) As used herein, the term "Purchase Price" means the purchase
price for the Preferred Stock.
b. Form of Payment; Delivery of Preferred Stock.
(i) Upon execution and delivery of this agreement, Buyer is paying
the Purchase Price for the Preferred Stock by delivering the following:
(A) $1,900,000 in immediately available funds to the
Company;
(B) A commitment to fund up to $500,000 ("Commitment") for a
business digital subscriber line promotion ("DSL
Promotion") as follows:
(1) Buyer has agreed to fund the initial hardware and
install costs related to the DSL Promotion as
presented to Buyer, for a period of one year.
(2) Buyer requires for funding that the Company have
on file a signed contract for each customer
listed on the draw request.
(3) Buyer will allow minimum draws of $50,000 against
the Commitment, each draw will be charged
interest at prime plus 1% (based on the prime
rate established by Norwest Bank Colorado, N.A.)
and interest shall be payable monthly.
(4) The Company will convert the draws and issue
1,000 shares of Convertible Preferred Stock, duly
executed by or on behalf of the Company, to
Buyer, upon the draws totaling $100,000.
(ii) Upon execution and delivery of this Agreement, the Company is
delivering one certificate representing 19,000 shares of Convertible
Preferred Stock, duly executed by or on behalf of the Company, to Buyer
and a warrant to purchase 100,000 shares of the Company common stock
having the terms and conditions set forth in the Warrant To Purchase
Common Stock attached hereto as Annex II (the "Warrant").
2. BUYER REPRESENTATIONS AND WARRANTIES.
Buyer represents and warrants to, and covenants and agrees with, the
Company as follows:
a. Buyer is purchasing the Preferred Stock and will be acquiring the
shares of Common Stock issuable upon conversion of the Preferred Stock (the
"Converted Shares") for its own account for investment only and not with a view
towards the public sale or distribution thereof and not with a view to or for
sale in connection with any distribution thereof.
2
<PAGE>
b. All subsequent offers and sales of the Preferred Stock and the
shares of Common Stock representing the Converted Shares (such Common Stock
sometimes referred to as the "Shares") by Buyer shall be made pursuant to
registration of the Shares under the 1933 Act or pursuant to an exemption from
registration.
c. This Agreement has been duly and validly authorized, executed and
delivered on behalf of Buyer and is a valid and binding agreement of Buyer
enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.
3. COMPANY REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to Buyer that:
a. Concerning the Preferred Stock and the Shares. The Preferred Stock
has been duly authorized, and when issued, will be duly and validly issued,
fully paid and non-assessable and will not subject the holder thereof to
personal liability by reason of being such holder. There are no preemptive
rights of any stockholder of the Company, as such, to acquire the Preferred
Stock or the Shares.
b. Reporting Company Status. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the business, operations
or condition (financial or otherwise) of the Company. The Company has registered
its Common Stock pursuant to Section 12 of the 1934 Act, and the Common Stock is
listed and traded on The NASDAQ/SmallCap Market.
c. Authorized Shares. The Company has sufficient authorized and
unissued Shares as may be reasonably necessary to effect the conversion of the
Preferred Stock. The Converted Shares have been duly authorized and, when issued
upon conversion of, or as dividends on, the Preferred Stock in accordance with
the terms of the Articles of Amendment will be duly and validly issued, fully
paid and non-assessable and will not subject the holder thereof to personal
liability by reason of being such holder.
d. Securities Purchase Agreement and Stock. This Agreement and the
transactions contemplated thereby have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered by the Company and
this Agreement is the valid and binding agreement of the Company enforceable in
accordance with its terms, subject as to enforceability to general principles of
equity and to bankruptcy, insolvency, moratorium, and other similar laws
affecting the enforcement of creditors' rights generally; and the Preferred
Stock will be duly and validly authorized and, when executed and delivered on
behalf of the Company in accordance with this Agreement, is a valid and binding
obligation of the Company in accordance with its terms, subject to general
principles of equity and to bankruptcy, insolvency, moratorium, or other similar
laws affecting the enforcement of creditors' rights generally.
3
<PAGE>
e. Non-contravention.. The execution and delivery of this Agreement and
the issuance of the Securities, and the consummation by the Company of the other
transactions contemplated by this Agreement and the Preferred Stock do not and
will not conflict with or result in a breach by the Company of any of the terms
or provisions of, or constitute a default under (i) the articles of
incorporation or by-laws of the Company, each as currently in effect, (ii) any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which the Company is a party or by which it or any of its properties or assets
are bound, including any listing agreement for the Common Stock, (iii) any
existing applicable law, rule, or regulation or any applicable decree, judgment,
or order of any court, United States federal or state regulatory body,
administrative agency, or other governmental body having jurisdiction over the
Company or any of its properties or assets, or (iv) the Company's listing
agreement for its Common Stock.
f. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the shareholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
g. SEC Filings. None of the Company's filings with the Securities and
Exchange Commission ("SEC") contained, at the time they were filed, any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements made therein in light of
the circumstances under which they were made, not misleading. The Company has
made and will timely make in the future all required filings with the SEC.
h. Absence of Certain Changes. Since January 1, 1999, there has been no
material adverse change and no material adverse development in the business,
properties, operations, condition (financial or otherwise), or results of
operations of the Company, except as disclosed in the Company's SEC filings.
Since January 1, 1999, except as disclosed in the Company's SEC filings, the
Company has not (i) incurred or become subject to any material liabilities
(absolute or contingent) except liabilities incurred in the ordinary course of
business consistent with past practices; (ii) discharged or satisfied any
material lien or encumbrance or paid any material obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business consistent with past practices; (iii) declared or made any
payment or distribution of cash or other property to stockholders with respect
to its capital stock, or purchased or redeemed, or made any agreements to
purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred any other tangible assets, or canceled any debts or claims, except
in the ordinary course of business consistent with past practices; (v) suffered
any substantial losses or waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of
existing business; (vi) made any changes in employee compensation, except in the
ordinary course of business consistent with past practices; or (vii) experienced
any material problems with labor or management in connection with the terms and
conditions of their employment.
4
<PAGE>
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. Buyer acknowledges that (1) the Securities
have not been and are not being registered under the provisions of the 1933 Act
and, except as provided in the Registration Rights Agreement, the Securities
have not been and are not being registered under the 1933 Act, and may not be
transferred unless (A) subsequently registered thereunder or (B) Buyer shall
have delivered to the Company an opinion of counsel, reasonably satisfactory in
form, scope and substance to the Company, to the effect that the Securities to
be sold or transferred may be sold or transferred pursuant to an exemption from
such registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of such
Securities under circumstances in which the seller, or the person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder.
b. Restrictive Legend. Buyer acknowledges and agrees that the
Securities shall bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of any such
Securities):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
c. Filings and Shareholder Consent. (i) The Company undertakes and
agrees to make all necessary filings in connection with the sale of the
Preferred Stock to Buyer under any United States laws and regulations applicable
to the Company, or by any domestic securities exchange or trading market, and to
provide a copy thereof to Buyer promptly after such filing.
d. Available Shares. The Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, shares of Common Stock
sufficient to satisfy the conversion rights of Buyer pursuant to the terms and
conditions of the Preferred Stock.
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5. GOVERNING LAW: MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Colorado for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of Denver or the
state courts of the State of Colorado sitting in the City of Denver in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non conveniens, to the bringing of any such proceeding in such
jurisdictions.
b. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
c. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
d. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
e. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
f. A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto.
g. This Agreement may be signed in one or more counterparts, each of
which shall be deemed an original.
h. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
i. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
j. This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement thereof.
k. This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.
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6. NOTICES.
Any notice required or permitted hereunder shall be given in writing
(unless otherwise specified herein) and shall be deemed effectively given on the
earliest of
(a) the date delivered, if delivered by personal delivery as against
written receipt therefor or by confirmed facsimile transmission,
(b) the seventh business day after deposit, postage prepaid, in the
United States Postal Service by registered or certified mail, or
(c) the third business day after mailing by international express
courier, with delivery costs and fees prepaid,
in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):
COMPANY: Internet Communications Corporation
7100 East Belleview Avenue, Suite 201
Greenwood Village, Colorado 80111
BUYER: Lynn Wood
Interwest Group, Inc.
2400 Anaconda Tower
555 - 17th Street Denver, CO 80202
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The Company's and Buyer's representations and warranties herein shall
survive the execution and delivery of this Agreement and the delivery of the
Preferred Stock and payment of the Purchase Price, and shall inure to the
benefit of Buyer and the Company and their respective successors and assigns.
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IN WITNESS WHEREOF, the parties have caused this Securities Purchase Agreement
to be duly executed this 11th day of August, 1999.
Interwest Group, Inc.
By: /s/ CRAIG D. SLATER
-------------------
Craig D. Slater
Internet Communications Corporation
By: /s/ JOHN M. COUZENS
-------------------
John M. Couzens
8
EXHIBIT C
ANNEX I
MAIL TO: SECRETARY OF STATE
CORPORATIONS SECTION
PLEASE INCLUDE A TYPED
SELF-ADDRESSED ENVELOPE
1560 BROADWAY, SUITE 200
DENVER, CO 80202
(303) 894-2251
FAX (303) 894-2242
MUST BE TYPED
FILING FEE: $25.00
MUST SUBMIT TWO COPIES
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF INTERNET COMMUNICATIONS CORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is INTERNET COMMUNICATIONS CORPORATION
SECOND: The following amendment to the Articles of Incorporation was adopted
August 5, 1999, as prescribed by the Colorado Business Corporation Act, in the
manner marked with an X below:
[ ] No shares have been issued or Directors Elected - Action by
Incorporators
[ ] No shares have been issued but Directors Elected - Action by
Directors
[X] Such amendment was adopted by the board of directors where
shares have been issued.
[ ] Such amendment was adopted by a vote of the shareholders.
The number of shares voted for the amendment was sufficient
for approval.
THIRD: The following section shall be added to the end of Section 2 of Article
IV:
(b) SERIES B PREFERRED STOCK. The Board of Directors by resolution has
designated 24,000 of the shares of Preferred Stock "Series B Preferred Stock"
(the "Series B Preferred"). The relative rights, preferences, privileges, and
restrictions granted to or imposed upon the Series B Preferred or the holders
thereof are as follows:
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(i) DIVIDEND PREFERENCE.
(A) When, as and if declared by the Board of Directors, the holders
of Series B Preferred shall be entitled to receive, out of funds legally
available therefor, dividends at an annual rate equal to $7.375 (as adjusted for
combinations, consolidations, subdivisions, or stock splits with respect to such
shares) for each outstanding share of Series B Preferred held by them, in
preference and priority to the payment of dividends on any shares of Common
Stock (other than those payable solely in Common Stock) and pari passu with the
Series A Preferred Stock (the "Series A Preferred"). The dividends payable to
the holders of the Series B Preferred shall accrue and be cumulative and shall
not compound. Dividends shall be payable quarterly in arrears commencing
December 31, 1999, in (i) cash or (ii) shares of Common Stock, as the
Corporation shall elect. If all or any portion of a dividend payment is to be
paid in Common Stock, the number of shares to be issued will be equal to the
amount of the dividend (or portion thereof) divided by the Closing Price of the
Common Stock on the dividend payment date. The "Closing Price" shall be the
average last reported sales prices, regular way, per share of Common Stock on
the preceding 10 trading days, or if no such sale takes place on any such day,
the average of the closing bid and asked prices, regular way, for that day, in
each case, as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on a national
securities exchange, or, if shares of such stock are not listed or admitted to
trading on a national securities exchange, on the Nasdaq National Market or the
Nasdaq Small Cap Market, as the case may be, or, if such last sales price or
closing bid and asked prices are not so reported, the average of the closing bid
and asked prices on the preceding 10 trading days as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for such purpose, or if no such prices are available, the fair market value of
the Common Stock as determined in good faith by the Board of Directors.
(ii) LIQUIDATION PREFERENCE.
(A) Each holder of Series B Preferred outstanding after the closing
of a Liquidation Event (as defined below) shall be entitled to receive, prior
and in preference to any distribution of any of the assets or surplus funds of
the Corporation to the holders of Common Stock and pari passu with the Series A
Preferred, by reason of their ownership of such stock, the amount of $100.00
(the "Original Series B Issue Price") per share (as adjusted for combinations,
consolidations, subdivisions, or stock splits with respect to such shares) for
each share of Series B Preferred then held by such holder, plus an amount equal
to all accrued and unpaid dividends on such shares of Series B Preferred
(collectively, the "Series B Preference"). If, upon the occurrence of a
Liquidation Event, the assets and funds available to be distributed among the
holders of Series A Preferred and Series B Preferred shall be insufficient to
permit the payment to such holders of the full Series B Preference and the
amount due to the holders of Series A Preferred (the "Series A Preference"),
then the entire assets and funds of the Corporation legally available for
distribution to the holders of Series B Preferred shall be distributed ratably
based on the total Series A Preference and Series B Preference due each such
holder under this Section IV.2(b)(ii)(A) and Section IV.2(a)(ii)(A).
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<PAGE>
(B) In the event of any liquidation, dissolution, or winding up of
the Corporation, whether voluntary or not, or the sale, lease, assignment,
transfer, conveyance or disposal of all or substantially all of the assets of
the Corporation, or the acquisition of this Corporation by another entity by
means of consolidation, corporate reorganizations or merger, or other
transaction or series of related transactions in which more than 50% of the
outstanding voting power of this Corporation is disposed of for cash or other
assets other than securities (each a "Liquidation Event"), distributions to the
shareholders of the Corporation shall be made in the following manner:
(1) After payment has been made to the holders of Series A Preferred
and Series B Preferred of the full amounts to which they are entitled pursuant
to paragraph (ii)(A) above, the remaining assets of the Corporation available
for distribution to shareholders shall be distributed ratably among the holders
of Common Stock.
(2) The value of securities and property paid or distributed
pursuant to this Section IV.2(b)(ii)(B) shall be computed at fair market value
at the time made available to shareholders, all as determined by the Board of
Directors in the good faith exercise of its reasonable business judgment,
provided that (i) if such securities are listed on any established stock
exchange or a national market system, their fair market value shall be the
closing sales price for such securities as quoted on such system or exchange (or
the largest such exchange) for the date the value is to be determined (or if
there are no sales for such date, then for the last preceding business day on
which there were sales), as reported in the Wall Street Journal or similar
publication, and (ii) if such securities are regularly quoted by a recognized
securities dealer but selling prices are not reported, their fair market value
shall be the mean between the high bid and low asked prices for such securities
on the date the value is to be determined (or if there are no quoted prices for
such date, then for the last preceding business day on which there were quoted
prices).
(3) Nothing hereinabove set forth shall affect in any way the right
of each holder of Series B Preferred to convert such shares at any time and from
time to time into Common Stock in accordance with Section IV.2(b)(iv) hereof.
(iii) VOTING RIGHTS.
(A) Except as otherwise required by law or hereunder, the holder of
each share of Common Stock issued and outstanding shall have one vote and the
holder of each share of Series B Preferred shall be entitled to the number of
votes equal to the number of shares of Common Stock into which such share of
Series B Preferred could be converted at the record date for determination of
the shareholders entitled to vote on such matters, or, if no such record date is
established, at the date such vote is taken or any written consent of
shareholders is solicited, such votes to be counted together with all other
shares of stock of the Corporation having general voting power and not
separately as a class. Fractional votes by the holders of Series B Preferred
shall not, however, be permitted and any fractional voting rights shall (after
aggregating all shares into which shares of Series B Preferred held by each
holder could be converted) be rounded to the nearest whole number (with one-half
being rounded upward). Holders of Series B Preferred shall be entitled to notice
of any shareholders' meeting in accordance with the Bylaws of the Corporation.
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<PAGE>
(iv) CONVERSION.
(A) OPTIONAL CONVERSION. Shares of Series B Preferred may be
converted into shares of Common Stock, as follows:
(1) Subject to and upon compliance with the provisions of this
Section IV.2(b)(iv), at the option of the holder of such shares, shares of
Series B Preferred or any portion thereof may be converted into shares of Common
Stock ("Conversion Shares"), as said shares shall be constituted on the date on
which such shares shall be surrendered for conversion and notice given in
accordance with the provisions of this Section (the "Conversion Date"). The
number of Conversion Shares to be received on conversions shall be the quotient
of (A) the sum of the Original Series B Issue Price and all accrued and unpaid
dividends on such share of Series B Preferred, accrued to the date of
conversion, divided by (B) $2.9063 (the "Conversion Price").
(2) In order to exercise the conversion privilege, the holder shall
surrender such shares to the Corporation at its executive offices, together with
the conversion notice in the form attached hereto as Exhibit A (or similar
separate written notice) duly executed, and, if so required by the Corporation,
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder or by its duly authorized attorney in writing. As
promptly as practicable after the surrender of such shares for conversion as
aforesaid, but in no event later than 30 days after surrender, the Corporation
shall deliver at its executive office to such holder, or on its written order, a
certificate or certificates for the number of Conversion Shares deliverable upon
such conversion and a check or cash in amount equal to any unconverted
fractional share. Such conversion shall be deemed to have been effected on the
date on which such notice shall have been received at said executive offices and
such shares shall have been surrendered as aforesaid, and the person or persons
in whose name or names any certificate or certificates for Conversion Shares
shall be deliverable upon such conversion shall be deemed to have become on said
date the holder or holders of record of the shares represented thereby;
PROVIDED, HOWEVER, that any such surrender on any date when the stock transfer
books of the Corporation shall be closed shall constitute the person or persons
in whose name or names the certificates are to be delivered as the record holder
or holders thereof for all purposes on the next succeeding day on which such
stock transfer books are open, but such conversion shall be at the Conversion
Price in effect on the date of such surrender.
(3) Notwithstanding any other provision hereof, (A) if the
conversion is to be made in connection with a merger, acquisition, tender offer
or other business combination, the exercise of the conversion privilege 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 and (B) if the issuance of any
Conversion Shares is not exempt from the applicable requirements under the
Hart-Scott-Rodino Act, the exercise of the conversion privilege shall be
conditioned upon the compliance by the Corporation, the holder and all other
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<PAGE>
persons with such requirements, in which case such exercise shall not be deemed
to be effective until all such requirements are satisfied. The holder may by
written notice withdraw any such exercise of such conversion privilege before
the effectiveness thereof. Any such exercise or withdrawal shall not impair or
otherwise affect the other rights and remedies of the holder permitted by law,
equity or contract or as set forth herein.
(B) CORPORATION'S RIGHT TO AUTOMATICALLY CONVERT. If at any time the
Closing Price of the Corporation's Common Stock for 45 consecutive trading days
is equal to or greater than $10.00, the Corporation shall thereafter have the
right to automatically convert the Series B Preferred in accordance with the
provisions of this Section IV.2(b)(iv).
(C) FRACTIONAL INTERESTS. The Corporation shall not be required to
deliver fractions of shares of Common Stock upon conversions of shares of Series
B Preferred. If any fractional interest in a share of Common Stock would be
deliverable upon the conversion of shares of Series B Preferred, the Corporation
shall make an adjustment therefor in cash equal to the Closing Price per share
of the Common Stock on the Conversion Date.
(D) MECHANICAL ADJUSTMENTS. The number of Conversion Shares issuable
upon the conversion of shares of Series B Preferred and the Conversion Price
shall be subject to adjustment from time to time, as follows:
(1) If the Corporation 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 Corporation in treasury or by a Subsidiary (as defined
below), 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 Conversion Shares thereafter
issuable upon conversion of shares of Series B Preferred shall be adjusted so
that shares of Series B Preferred shall thereafter be convertible into the
number of Conversion 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 such shares of Series B Preferred been converted in full immediately
prior to the occurrence of such event. An adjustment made pursuant to this
paragraph (i) 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.
(2) Except with respect to Permitted Issuances (as defined below),
if the Corporation 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 in good faith by the Board
of Directors) less than the Closing Price on the date the Corporation or such
Subsidiary agrees to the issuance or sale (for the purpose of this paragraph
(2), the "Adjustment Date"), then in each such case, the number of Conversion
Shares thereafter issuable upon conversion of shares of Series B Preferred after
such Adjustment Date shall be determined by multiplying the number of Conversion
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<PAGE>
Shares issuable upon conversion of shares of Series B Preferred 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 immediately
before 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 immediately before such 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 the Closing Price. For the
purposes of this paragraph (2), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Corporation or
by a Subsidiary.
(3) If the Corporation 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 Corporation 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 in good faith by the Board of Directors (the "Aggregate Derivative
Consideration")) less than the Closing Price on the date the Corporation or such
Subsidiary agrees to the issuance or sale (for the purpose of this paragraph
(3), the "Adjustment Date"), then in each such case, the number of Conversion
Shares thereafter issuable upon conversion of the Series B Preferred after such
Adjustment Date shall be determined by multiplying the number of Conversion
Shares issuable upon conversion of shares of Series B Preferred 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 Derivative Consideration
for the total number of shares so offered would purchase at the Closing 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 Conversion Shares issuable upon conversion of
shares of Series B Preferred shall thereafter be readjusted to the number of
Conversion 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 convertible into Common Stock shall change
at any time (including, without limitation, at the time of or after such
conversion, exchange or exercise), the number of Conversion Shares issuable upon
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<PAGE>
conversion of shares of Series B Preferred in effect at the time of such change
shall be readjusted to the number of Conversion Shares issuable upon conversion
of shares of Series B Preferred which would have been in effect at such time had
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 Conversion
Shares issuable upon the conversion of shares of Series B Preferred 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 (3), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Corporation or by a
Subsidiary.
(4) If the Corporation shall at any time declare or pay a dividend
or other distribution on its Common Stock other than (x) a stock dividend
payable solely in shares of Common Stock or (y) a cash dividend paid out of
current earnings (the value of any such dividend or other distribution, if other
than cash, to be determined in good faith by the Board of Directors), then in
each such case, the number of Conversion Shares thereafter issuable upon
conversion of shares of Series B Preferred after the declaration date therefor
(for the purpose of this paragraph (4), the "Adjustment Date") shall be
determined by multiplying the number of Conversion Shares issuable upon
conversion of shares of Series B Preferred 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 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 (4), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Corporation or by a Subsidiary.
(5) In case of any capital reorganization or any reclassification
(other than a change in par value) of the capital stock of the Corporation, or
of any exchange or conversion of the Common Stock for or into securities of
another corporation, or in case of the consolidation or merger of the
Corporation 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 a Liquidation Event) or in case of any
sale or conveyance of all or substantially all of the assets of the Corporation
(other than a Liquidation Event), 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 shares
of Series B Preferred shall thereafter be convertible into the kind and amount
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<PAGE>
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 Conversion Shares issuable upon conversion
of shares of Series B Preferred immediately prior to the effective date of such
capital reorganization, reclassification of capital stock, consolidation,
merger, sale or conveyance, assuming (1) such holder of Common Stock of the
Corporation is not a person with which the Corporation consolidated or into
which the Corporation merged or which merged into the Corporation 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 Conversion Shares issuable upon conversion of shares of Series B Preferred)
shall thereafter be applicable, as near as reasonably may be, in relation to any
shares of stock or other securities or other property thereafter deliverable
upon conversion of shares of Series B Preferred.
(6) For the purposes of this Section IV.2(b)(iv)(D):
(X) "DERIVATIVE SECURITIES" means securities
convertible into or exchangeable or convertible into 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;
(Y) "PERMITTED ISSUANCES" means the issuance
of shares of Common Stock after the date hereof (x) pursuant to
the exercise of options and warrants authorized on the date
hereof, in each case in accordance with the terms thereof as of
the date hereof and (y) pursuant to the conversion of shares of
Series B Preferred and Series A Preferred; and
(Z) "SUBSIDIARIES" means any corporation or
other entity in which the Corporation is entitled by virtue of
its ownership of securities (or equivalent interests) to elect a
majority of the directors (or persons performing equivalent
functions).
(7) 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
Corporation 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 Corporation shall be the fair
value of such consideration, except where such consideration consists of
marketable securities, in which case the amount of consideration received by the
Corporation shall be the market price thereof as of the date of receipt. In case
any shares of Common Stock or Derivative Securities are issued to the owners of
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the non-surviving entity in connection with any merger or other business
combination in which the Corporation is the surviving entity, the amount of
consideration therefor shall be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such shares of Common Stock or Derivative Securities, as the case may be. The
fair value of any consideration other than cash or marketable securities shall
be determined jointly by the Corporation and the holders of more than 50% of the
outstanding shares of Series A Preferred. If such parties are unable to reach
agreement within a reasonable period of time, such fair value shall be
determined by an appraiser jointly selected by the Corporation and such holders,
whose determination shall be final and binding on the Corporation and the
holders. The fees and expenses of such appraiser shall be paid by the
Corporation.
(8) If the Corporation takes a record of the holders of Common Stock
for the purpose of entitling them (A) to receive a dividend or other
distribution on its Common Stock or (B) 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 thereto.
(9) All calculations under this Section IV.2(b)(iv)(D) shall be made
to the nearest share of Common Stock (with one-half being rounded upward)
(10) Whenever the number of Conversion Shares issuable upon the
conversion of shares of Series B Preferred is adjusted or readjusted pursuant to
paragraphs (1) through (9), inclusive, above, the Conversion Price shall be
adjusted or readjusted by multiplying the Conversion Price immediately prior to
the related Adjustment Date by a fraction, the numerator of which shall be the
number of Conversion Shares receivable upon the conversion of shares of Series B
Preferred immediately preceding such Adjustment Date, and the denominator of
which shall be the number of Conversion Shares so purchasable immediately
thereafter; PROVIDED that no such readjustment pursuant to paragraph (3) 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 Conversion 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.
(11) If any event occurs of the type contemplated by the provisions
of this Section IV.2(b)(iv)(D) 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
Corporation's Board of Directors shall make an appropriate adjustment in the
number of Conversion Shares issuable upon conversion of shares of Series B
Preferred and the Conversion Price so as to protect the rights of the holders of
shares of Series B Preferred.
(12) For the purpose of this Section IV.2(b)(iv)(D), the term "Shares
of Common Stock" means (W) the class of stock designated as the Common Stock of
the Corporation at the date hereof or (X) 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
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par value. In the event that at any time, as a result of an adjustment made
pursuant to paragraphs (1) through (4), inclusive, above, the holders of shares
of Series B Preferred shall become entitled to receive any shares of the
Corporation other than shares of Common Stock, thereafter the number of such
other shares so receivable upon conversion of shares of Series B Preferred and
the Conversion 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 Conversion Shares contained in paragraphs (1) through (4),
inclusive, above, and the provisions of Sections IV.2(b)(iv)(D), (E), and (F),
inclusive, with respect to the Conversion Shares, shall apply on like terms to
any such other shares.
(13) Notwithstanding anything herein to the contrary, there shall be
no adjustment in the number of Conversion Shares or in the Conversion Price in
respect of Permitted Issuances.
(14) In case of any consolidation or merger of the Corporation with
or into another entity (whether or not the Corporation is the surviving entity)
or in case of any sale, transfer or lease of all or substantially all of the
assets of the Corporation, the Corporation or such successor or purchasing
entity, as the case may be, shall execute with the holders of shares of Series B
Preferred an agreement that such holders shall have the right thereafter to
receive upon conversion of shares of Series B Preferred the kind and amount of
shares and other securities, cash and property that such holders would have
owned or would have been entitled to receive after the happening of such
consolidation, merger, sale, transfer, lease or conveyance had their shares of
Series B Preferred been converted in full immediately prior to such action, and
if the 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 conversion of shares of Series B Preferred,
the holders thereof would have the same benefits they 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 (1) through (13), inclusive,
above. The provisions of this paragraph (14) shall similarly apply to successive
consolidations, mergers, sales or conveyances.
(E) TIME OF ADJUSTMENTS; MINIMUM ADJUSTMENTS. Each adjustment
required by Section IV.2(b)(iv)(D) shall be effective as and when the event
requiring such adjustment occurs. Notwithstanding the provisions of this Section
IV.2(b)(iv)(E), no adjustment of less than one percent of the number of
Conversion Shares shall be made until the earlier of (x) such time as the total
of all previous adjustments that were less than one percent of the number of
Conversion Shares shall equal three percent of the number of Conversion Shares
and (y) conversion of the Series B Preferred in accordance with the provisions
hereof.
(F) NOTICE OF ADJUSTMENT. Whenever the number of Conversion Shares
issuable upon the conversion of shares of Series B Preferred or the Conversion
Price is adjusted as herein provided, the Corporation shall promptly mail by
first class mail, postage prepaid, to each holder of shares of Series B
Preferred a certificate provided by, at the discretion of such holder, an
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officer of the Corporation or a firm of independent public accountants selected
by the Board of Directors of the Corporation (who may be the regular accountants
employed by the Corporation) setting forth the number of Conversion Shares
purchasable upon the conversion of shares of Series B Preferred and the
Conversion 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.
(G) NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Section
IV.2(b)(iv)(D), no adjustment in respect of any dividends declared or paid on
the Common Stock shall be made prior to or upon the conversion of shares of
Series B Preferred.
(H) TAXES. The issuance of stock certificates on conversions of
shares of Series B Preferred shall be made without charge to the holders thereof
for any tax in respect of the issue thereof. The Corporation shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares in any name other than that of the
holders, and the Corporation shall not be required to issue or deliver any such
stock certificate unless and until the person or persons requesting the issue
thereof shall have paid to the Corporation the amount of such tax or shall have
established to the satisfaction of the Corporation that such tax has been paid.
(I) RESERVATION OF SHARES. The Corporation shall at all times
reserve and keep available out of the aggregate of its authorized but unissued
shares or its issued shares held in its treasury, or both, for the purpose of
effecting the conversion of shares of Series B Preferred, such number of its
duly authorized shares of Common Stock as shall from time to time be sufficient
to effect the conversion, exchange or exercise of outstanding securities of the
Corporation convertible into or exchangeable or exercisable for any shares of
the Common 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 Common Stock and any securities convertible into or
exchangeable or exercisable for any of the foregoing.
(J) REGISTRATION OR APPROVAL. If any shares of Common Stock reserved
or to be reserved for the purpose of conversion of shares of Series B Preferred
require registration with or approval of any governmental authority under any
federal or state law before such shares may be validly delivered upon
conversion, including, without limitation, the Hart-Scott-Rodino Act, then the
Corporation covenants that it will in good faith and as expeditiously as
possible endeavor to secure such registration or approval, as the case may be,
at the Corporation's expense.
(K) VALIDLY ISSUED, ETC. The Corporation covenants that all shares
of Common Stock which may be delivered upon conversion of shares of Series B
Preferred shall upon delivery be validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issue or delivery
thereof.
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(L) NOTICE. In the event:
(1) that the Corporation shall pay any dividend or
make any distribution to the holders of shares of Common Stock
otherwise than in cash charged against capital surplus,
consolidated net earnings or retained earnings of the
Corporation and its Subsidiaries; or
(2) that the Corporation shall offer for subscription
or purchase, pro rata, to all of the holders of shares of Common
Stock any additional shares of stock of any class or any
securities convertible into or exchangeable for stock of any
class; or
(3) of any reclassification or change of outstanding
shares of the class of Common Stock issuable upon the conversion
of shares of Series B Preferred (other than a change in par
value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination),
or of any merger or consolidation of the Corporation with, or
merger of the Corporation into, another corporation (other than
a merger or consolidation in which the Corporation is the
continuing corporation and which does not result in any
reclassification or change of outstanding shares of Common Stock
issuable upon conversion of shares of Series B Preferred), or of
any sale or conveyance to another corporation of the property of
the Corporation as an entirety or substantially as an entirety
or of any other similar business combination transaction;
then, and in any one or more of such events, the Corporation will give
to the holders of shares of Series B Preferred written notice thereof at least
15 days prior to (A) the record date fixed with respect to any of the events
specified in (1) and (2) above, and (B) the effective date of any of the events
specified in (3) above. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such dividend, distribution,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up.
(M) SPECIFIC PERFORMANCE. The Corporation acknowledges that the
failure of the Corporation to perform its obligations under this Section
IV.2(b)(iv) will not be compensable by the payment of monetary damages and
hereby waives any defense to a claim by the holders of shares of Series B
Preferred that the provisions of this Section IV.2(b)(iv) be specifically
enforced.
(N) REGISTRATION RIGHTS. The Conversion Shares shall be deemed to be
"Registrable Shares" subject to the terms of the Registration Rights Agreement
between the Corporation and Interwest Group, Inc. dated as of May 29, 1996, as
amended.
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(v) COVENANTS.
In addition to any other rights provided by law, the Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of a majority of the outstanding shares of Series B Preferred, voting as
a single class:
(A) amend or repeal any provision of, or add any provision to, the
Corporation's Articles of Incorporation or Bylaws if such action would alter or
change the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Series B Preferred;
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(B) authorize or issue shares of any class or series of stock having
any preference or priority as to dividends or redemption rights, liquidation
preferences, conversion rights, or voting rights, superior to or on a parity
with any preference or priority of the Series B Preferred;
(C) authorize or issue any bonds, debentures, notes or other
obligations convertible into or exchangeable for, or having option rights to
purchase, any shares of stock of this Corporation having any preference or
priority as to dividends or redemption rights, liquidation preferences,
conversion rights, or voting rights, superior to or on a parity with any
preference or priority of the Series B Preferred;
(D) reclassify any shares of capital stock of this Corporation into
shares having any preference or priority as to dividends or redemption rights,
liquidation preferences, conversion rights, or voting rights, superior to or on
a parity with any preference or priority of any series of the Series B
Preferred;
(E) apply any of its assets to the redemption, retirement, purchase
or acquisition, directly or indirectly, through Subsidiaries (as defined in
Section 425 of the Internal Revenue Code of 1986) or otherwise, of any shares of
any class or series of Common Stock;
(F) engage in any transaction or series of related transactions
constituting a Liquidation Event;
(G) declare or pay dividends on or make any distributions with
respect to the Corporation's Common Stock;
(H) increase or decrease the authorized number of shares of
Preferred Stock; or
(I) sell, lease, assign, transfer, convey or otherwise dispose of
the securities of any Subsidiary.
FOURTH: In connection with the Articles of Amendment to the Corporation's
Articles of Incorporation set forth herein, no change in the outstanding capital
stock is being effected.
FIFTH: The manner in which such amendment effects a change in the amount of
stated capital, and the amount of stated capital as changed by such amendment,
is as follows: NONE
SIXTH: The foregoing amendment was adopted by the Board of Directors without
shareholder action, except for the consent of the holder of the Series A
Preferred, which was obtained. No other shareholder action was required.
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Executed at Denver, Colorado this 11th day of August, 1999.
INTERNET COMMUNICATIONS CORPORATION
By: /s/ JOHN M. COUZENS
--------------------------------------
John M. Couzens, President and CEO
15
EXHIBIT D
ANNEX II
WARRANT TO PURCHASE COMMON STOCK
AT $2.9063 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
2 100,000
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 $2.9063
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 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
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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.
(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
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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
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
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<PAGE>
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 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
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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 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
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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.
(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
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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
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,
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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 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.
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(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 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
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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 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.
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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.
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:
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(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;
(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.
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(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
48 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 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: August 11, 1999 INTERNET COMMUNICATIONS
CORPORATION
Attest: /s/ T. TIMOTHY KERSHISNIK By: /s/ JOHN M. COUZENS
---------------------------- ---------------------
Name: T. Timothy Kershisnik Name: John M. Couzens
Title: Secretary Title: President and CEO
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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:
-----------------------------
<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:
-----------------------------
