SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Preferred Networks, Inc.
(Name of Issuer)
Common Stock, par value $.0001 per share
(Title of Class of Securities)
73990510
(CUSIP Number)
Thomas R. Stephens, Esq.
Bartlit Beck Herman Palenchar & Scott
511 Sixteenth Street Suite 700
Denver, Colorado 80202
(303) 592-3100
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 31, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*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).
(Continued on following page(s))
Page 1 of 20 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fleet Equity Partners VI, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,423,349
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,423,349
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,423,349
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.21%
14 TYPE OF REPORTING PERSON*
PN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fleet Growth Resources, II, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,423,349
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,423,349
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,423,349
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.21%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fleet Growth Resources, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Rhode Island
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,423,349
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,423,349
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,423,349
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.21%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fleet Venture Resources, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Rhode Island
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 3,321,150
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 3,321,150
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,321,150
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.59%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fleet Private Equity Co, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Rhode Island
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,744,499
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 4,744,499
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,744,499
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.68%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fleet Financial Group, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Rhode Island
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,744,499
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 4,744,499
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,744,499
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.68%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Silverado IV Corp.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,423,349
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,423,349
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,423,349
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.21%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Chisholm Partners II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 208,001
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 208,001
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
208,001
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.28%
14 TYPE OF REPORTING PERSON*
PN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Silverado II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 208,001
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 208,001
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
208,001
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.28%
14 TYPE OF REPORTING PERSON*
PN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Silverado II Corp.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 208,001
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 208,001
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
208,001
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.28%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert M. Van Degna
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES 3,000
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,952,500
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 3,000
PERSON 10 SHARED DISPOSITIVE POWER
WITH 4,952,500
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,955,500
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.65%
14 TYPE OF REPORTING PERSON*
IN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Habib Y. Gorgi
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,952,500
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 4,952,500
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,952,500
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.62%
14 TYPE OF REPORTING PERSON*
IN
* SEE INSTRUCTIONS BEFORE OUT!
INTRODUCTORY STATEMENT
Fleet Equity Partners VI, L.P., a Delaware limited partnership ("FEP
VI"), Fleet Venture Resources, Inc., a Rhode Island Corporation ("FVR"),
Chisholm Partners II, L.P., a Delaware limited partnership ("CP"), Fleet Growth
Resources II, Inc., a Delaware corporation ("FGRII"), Silverado IV Corp., a
Delaware corporation ("SCIV"), Fleet Growth Resources, Inc., a Rhode Island
corporation ("FGR"), Fleet Private Equity Co., Inc., a Rhode Island corporation
("FPEC"), Fleet Financial Group, Inc., a Rhode Island corporation ("FFGI"),
Silverado II, L.P., a Delaware limited partnership ("SLP"), Silverado II Corp.,
a Delaware corporation ("SCII"), Robert M. Van Degna and Habib Y. Gorgi
(collectively, the "Reporting Persons") previously filed a Statement on Schedule
13D in connection with the securities of Preferred Networks, Inc., a Delaware
corporation (the "Company"). In addition, the Reporting Persons also filed a
statement on Schedule 13D in connection with the Company's securities as a
member of a group of investors acting together for the purpose of acquiring
certain of the Company s securities (the "Investor Group"). On July 30, 1997,
the Investor Group members ceased to act together as a group when the Investor
Groups' option to acquire additional securities of the Company expired.
Accordingly, this Statement on Schedule 13D constitutes an amendment of the
Statement on Schedule 13D previously filed solely by the Reporting Persons, and
shall also be deemed an amendment to and restatement of the prior filing by the
Investor Group to the extent information in such prior group filing relates to
the Reporting Persons.
Items 5 of the Statement on Schedule 13D previously filed
solely by the Reporting Persons is hereby amended, and Items 6 and 7 of
such Statement are hereby amended and restated as set forth below.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
No change except for the addition of the following:
(a) FEP VI is the direct beneficial owner of 271,049 Shares and
1,152,300 Warrants, or approximately 8.21% of the sum of (i) the 16,193,534
shares deemed outstanding as of August 5, 1997, according to information
received from the Company (the "Outstanding Shares") plus (ii) such Warrants.
By virtue of the relationships previously reported under Item 2 of this
Statement, FGRII, FGR, FPEC, FFGI, SCIV and Messrs. Van Degna and Gorgi may be
deemed to share indirect beneficial ownership of the Shares and Warrants
directly beneficially owned by FEP VI. Messrs. Van Degna and Gorgi disclaim
beneficial ownership of the Shares and Warrants not held directly by them.
FVR is the direct beneficial owner of 632,450 Shares and 2,688,700
Warrants, or approximately 17.59% of the Outstanding Shares plus such Warrants.
By virtue of the relationship previously reported under Item 2 of this
Statement, FPEC, FFGI and Messrs. Van Degna and Gorgi may be deemed to share
indirect beneficial ownership of the Shares and Warrants directly beneficially
owned by FVR. Messrs. Van Degna and Gorgi disclaim beneficial ownership of the
Shares and Warrants not held directly by them.
CP is the direct beneficial owner of 139,001 Shares and 69,000
Warrants, or approximately 1.28% of the Outstanding Shares plus such Warrants.
By virtue of the relationship previously reported under Item 2 of this
Statement, SLP, SCII and Messrs. Van Degna and Gorgi may be deemed to share
indirect beneficial ownership of the Shares and Warrants directly beneficially
owned by CP. Messrs. Van Degna and Gorgi disclaim beneficial ownership of the
Shares and Warrants not held directly by them.
In addition to the Shares and Warrants directly held by FEP VI, FVR
and CP as identified above, Robert Van Degna holds 3,000 vested Shares and
12,000 unvested Shares, or less than 1% of the Outstanding Shares. Such
Shares are subject to certain vesting restrictions and were issued to
Mr. Van Degna in connection with his services to the Company as a director.
Except as specifically set forth in this Item 5(a), each of the
Reporting Persons disclaims beneficial ownership of Shares and Warrants held by
the other Reporting Persons.
(b) Mr. Van Degna has the direct power to vote the Shares
directly held by him, and the power to direct disposition of the vested
Shares directly held by him. Under the restrictions applicable to such
Shares, unvested Shares are not transferable.
(d) Mr. Van Degna has the right to receive and the power to
direct the receipt of dividends from, and proceeds from the sale of, the
Shares directly held by him.
(e) Not applicable. As indicated in the Introductory Statement of
this Statement, the Reporting Persons were previously part of the Investor
Group which acted together for the purpose of acquiring the Preferred Stock and
Warrants from the Company. On July 30, 1997, the members of the Investor
Group ceased to act together as a group when the Investor Group's option to
acquire additional securities of the Company expired.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Pursuant to a Purchase Agreement dated as of June 21, 1995, among
each of FEP VI, FVR and CP and certain other investors in the Company (the
"Stockholders") and the Company, as amended December 12, 1995 (the "Purchase
Agreement"), the Stockholders acquired certain securities of the Company and the
Company agreed, among other things, (i) to provide the Stockholders with certain
inspection and information rights, (ii) comply with certain covenants, and (iii)
reimburse the Stockholders for certain expenses. The foregoing summary of the
Purchase Agreement is qualified in its entirety by reference to the Purchase
Agreement attached as Exhibits 1 and 2 to this Statement.
Pursuant to a Stockholders Agreement dated as of June 21, 1995 among
each of the Stockholders, the Company and certain other persons (the
"Stockholders Agreement"), the Stockholders agreed to certain holdback
restrictions in connection with their sale of Shares. The foregoing summary of
the Stockholders Agreement is qualified in its entirety by reference to the
Stockholders Agreement attached as Exhibit 3 to this Statement.
Pursuant to a Registration Rights Agreement dated as of June 21,
1995, as amended June 17, 1997, among each of the Stockholders, the Company and
certain other persons, as amended (the "Registration Rights Agreement"), the
Stockholders have the right to exercise certain demand and piggyback
registration rights with respect to, and, subject to certain restrictions, the
Company is required to register, the Shares owned by the Stockholders. The
foregoing summary of the Registration Rights Agreement is qualified in its
entirety by reference to the Registration Rights Agreement attached as Exhibits
4 and 5 to this Statement.
Pursuant to a Class A Redeemable Preferred Stock Purchase Agreement
dated as of May 21, 1997, among each of the Stockholders and the Company, (the
"Preferred Stock Purchase Agreement"), the Stockholders acquired the Warrants
and the Preferred Stock and the Company agreed, among other things, (i) made
certain representations and warranties to the Stockholders, (ii) agreed to
provide the Stockholders with certain inspection and information rights, and
(iii) agreed to reimburse the Stockholders for certain expenses. The foregoing
summary of the Preferred Stock Purchase Agreement is qualified in its entirety
by reference to the Class A Redeemable Preferred Stock Purchase Agreement
attached as Exhibit 6 to this Statement.
The Preferred Stock held by FEP VI, FVR and CP and the other
Stockholders is entitled to a liquidation preference of $1.50 per share plus
accrued dividends. Dividends on the Preferred Stock will accrue at the rate of
$.15 per share annually, in preference to any dividends on the Shares and any
other class ranking junior to the Preferred Stock. The Preferred Stock will be
entitled to one vote per share and will be entitled to vote together with the
Shares on matters submitted to a vote of the Company's stockholders. In
addition, the Preferred Stock will be entitled to a class vote on certain
matters, including without limitation repurchases of Shares, material changes in
the Company's line of business, entering into any merger, consolidation or
amalgamation, sale of all or substantially all of the Company s assets,
acquisitions of more than $5,000,000, and incurring certain indebtedness. The
Preferred Stock is redeemable at any time by the Company at a price equal to
$1.50 plus accrued dividends, and each holder of Preferred Stock may require
that its Preferred Stock be redeemed at any time after the fifth anniversary of
the First Closing. The holders of Preferred Stock are entitled to preemptive
rights in connection with any new issuance of equity securities by the Company
in a private placement. In addition, the holders of Preferred Stock are
entitled to elect one director other than Messrs. Jeffrey Schutz and Van Degna.
The foregoing summary of the rights and preferences of the Preferred Stock is
qualified in its entirety by reference to the terms of the Preferred Stock
attached as Exhibit 7 to this Statement.
Each Warrant held by FEP VI, FVR and CP and the other Stockholders
permits a holder to acquire, at any time during the five year period commencing
on the initial issuance of the Warrant, one Share for an exercise price of $1.50
per Share, subject to adjustment as provided in the form of the Warrant.
Payment of the exercise price may be made in cash, Shares of Common Stock or
shares of Preferred Stock. The Company has the right to cancel Warrants to
acquire up to 500,000 Shares upon redemption of all of the Preferred Stock and,
if such redemption occurs following the first year after issuance of the
Warrants, payment of $750,000 (if such redemption and payment occurs during the
second year following such issuance) or $1,500,000 (if such redemption and
payment occurs during the third year following such issuance or thereafter).
Under some circumstances the holders of the Warrants may be required to exercise
the Warrants prior to their expiration. The Reporting Persons understand there
are a total of 11,500,000 Warrants outstanding, and any such redemption or
payment would be made pro rata among holders of the then outstanding Warrants.
The foregoing summary of the Warrants is qualified in its entirety by reference
to the form of the Warrant attached as Exhibit 8 to this Statement.
The restricted Shares held by Mr. Van Degna are subject to certain
restrictions set forth in a Director s Restricted Stock Agreement. The
foregoing summary of such agreement is qualified in its entirety by reference to
the form of the Directors Restricted Stock Agreement attached as Exhibit 9 to
this Statement.
Other than set forth above, none of the Reporting Persons or any of
the Fleet Directors and Officers has any contract, arrangement, understanding or
relationship (legal or otherwise) with any person with respect to securities of
the Company, including, but not limited to, transfer or voting of any such
securities, finder's fees, joint ventures, loans or option arrangements, puts or
calls, guarantees of profits, division of profits or losses, or the giving or
withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Purchase Agreement dated June 21, 1995 among Centennial
Fund IV, L.P., Fleet Equity Partners VI, L.P., Fleet Venture
Resources, Inc., Chisholm Partners II, L.P., Saugatuck Capital
Company Limited Partnership III, PNC Capital Corp., Primus Capital
Fund III Limited Partnership and Preferred Networks, Inc.,
incorporated by reference to Exhibit 10.6 to Preferred Networks,
Inc.'s Registration Statement on Form S-1 (No. 33-80507).
Exhibit 2. Amendment dated December 12, 1995 to Purchase Agreement
dated June 21, 1995 among Centennial Fund IV, L.P., Fleet Equity
Partners VI, L.P., Fleet Venture Resources, Inc., Chisholm Partners
II, L.P., Saugatuck Capital Company Limited Partnership III, PNC
Capital Corp., Primus Capital Fund III Limited Partnership and
Preferred Networks, Inc., incorporated by reference to Exhibit 4 to
the Statement on Schedule 13D filed on April 21, 1997 by Centennial
Fund IV, L.P. and certain other investors in connection with common
stock of Preferred Networks, Inc.
Exhibit 3. Stockholders Agreement dated June 21, 1995 among
Centennial Fund IV, L.P., Fleet Equity Partners VI, L.P., Fleet
Venture Resources, Inc., Chisholm Partners II, L.P., Saugatuck
Capital Company Limited Partnership III, PNC Capital Corp., Primus
Capital Fund III limited partnership, Preferred Networks, Inc., and
certain other persons, incorporated by reference to Exhibit 10.7 to
Preferred Networks, Inc.'s Registration Statement on Form S-1 (No.
33-80507).
Exhibit 4. Registration Rights Agreement dated June 21, 1995 among
Centennial Fund IV, L.P., Fleet Equity Partners VI, L.P., Fleet
Venture Resources, Inc., Chisholm Partners II, L.P., Saugatuck
Capital Company Limited Partnership III, PNC Capital Corp., Primus
Capital Fund III limited partnership, Preferred Networks, Inc., and
certain other persons, incorporated by reference to Exhibit 10.8 to
Preferred Networks, Inc.'s Registration Statement on Form S-1 (No.
33-80507).
Exhibit 5. Form of Amendment to Registration Rights Agreement dated
June 21, 1995 among Centennial Fund IV, L.P., Fleet Equity Partners
VI, L.P., Fleet Venture Resources, Inc., Chisholm Partners II, L.P.,
Saugatuck Capital Company Limited Partnership III, PNC Capital
Corp., Primus Capital Fund III limited partnership, Preferred
Networks, Inc., and certain other persons, incorporated by reference
to exhibit E to Exhibit A to Preferred Networks, Inc.'s proxy
statement dated May 21, 1997.
Exhibit 6. Class A Redeemable Preferred Stock Purchase Agreement
dated as of May 21, 1997 among Centennial Fund IV, L.P., Fleet
Equity Partners VI, L.P., Fleet Venture Resources, Inc., Chisholm
Partners II, L.P., Saugatuck Capital Company Limited Partnership
III, PNC Capital Corp., Primus Capital Fund III Limited Partnership
and Preferred Networks, Inc., incorporated by reference to Exhibit A
to Preferred Networks, Inc.'s proxy statement dated May 21, 1997.
Exhibit 7. Rights and Preferences of the Class A Redeemable
Preferred Stock of Preferred Networks, Inc., incorporated by
reference to exhibits C and D to Exhibit A to Preferred Networks,
Inc.'s proxy statement dated May 21, 1997.
Exhibit 8. Form of Common Stock Purchase Warrant to be issued
pursuant to the Class A Redeemable Preferred Stock Purchase
Agreement dated as of May 21, 1997 among Centennial Fund IV, L.P.,
Fleet Equity Partners VI, L.P., Fleet Venture Resources, Inc.,
Chisholm Partners II, L.P., Saugatuck Capital Company Limited
Partnership III, PNC Capital Corp., Primus Capital Fund III Limited
Partnership and Preferred Networks, Inc., incorporated by reference
to exhibit C to Exhibit A to Preferred Networks, Inc.'s proxy
statement dated May 21, 1997.
Exhibit 9. Form of Director s Restricted Stock Award Agreement
between Preferred Networks, Inc. and Robert Van Degna, incorporated
by reference to Exhibit 2 to the Statement on Schedule 13D filed on
April 21, 1997 by Centennial Fund IV, L.P. and certain other
investors in connection with common stock of Preferred Networks,
Inc.
Signature
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Date: August 6, 1997 /s/ Robert Van Degna
Robert Van Degna, individually and as Chairman and Chief
Executive Officer of Fleet Growth Resources II, Inc.,
general partner of Fleet Equity Partners VI, L.P.; as
Chairman and Chief Executive Officer of Silverado II
Corp., general partner of Silverado II, L.P., general
partner of Chisholm Partners II, L.P.; and as Chairman
and Chief Executive Officer of Fleet Growth Resources,
Inc., Fleet Venture Resources, Inc., Fleet Private
Equity Co., Inc. and Silverado IV Corp.
Date: August 6, 1997 /s/ William C. Mutterperl
William C. Mutterperl, Senior Vice President, Secretary
and General Counsel of Fleet Financial Group, Inc.
Date: August 6, 1997 /s/ Habib Y. Gorgi
Habib Y. Gorgi, individually
