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EXHIBIT 10.4
PURCHASE AGREEMENT
PURCHASE OF SHARES
THIS PURCHASE AGREEMENT is made as of the 18th day of September, 1995
by and between the purchaser, whose name and address are shown on the signature
page to this Purchase Agreement (the "Purchaser") and Phoenix Network, Inc., a
Delaware Corporation, with its principal offices at 000 Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Xxxxxx Xxxxxx of America (the "Company").
WHEREAS, the Company has duly authorized the issuance, sale and
delivery of up to 2,300,000 shares (the "Shares"), of its common stock, par
value $0.001 per share.
WHEREAS, the Shares are being offered and sold by the Company to
Purchaser in reliance upon and in conformity with an exemption from the
registration requirements of the United States Securities Act of 1933, as
amended (the "Securities Act") pursuant to Regulation S under the Securities Act
("Regulation S");
WHEREAS, the placement of the Shares has been arranged by Xxxxx,
Xxxxxxxxxxxx & Co. S.A., ("OFCO") as placement agent, (the "Placement Agent")
pursuant to an agreement (the "Placement Agent Agreement") between the Company
and OFCO;
WHEREAS, the Company has prepared and Purchaser has received an
Offering Memorandum dated September 7, 1995 describing, among other things, the
Shares and providing material information about the Company and the terms of
the offering (the "Offering Memorandum");
WHEREAS, the Company wishes to offer and sell to Purchaser, and
Purchaser wishes to buy from the Company, the aggregate number of Shares set
opposite Purchaser's address on the signature page to this Purchase Agreement
for delivery in accordance with this Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Purchase Agreement, the undersigned agree as
follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE THE SHARES.
(a) On the basis of the representations, warranties and agreements
contained in this Purchase Agreement but subject to the terms and conditions
set forth in this Purchase Agreement, the Company agrees to issue and sell to
Purchaser, and Purchase agrees to buy from the Company, on September 18, 1995
or on such other date as may be agreed upon by the Company and Purchaser (the
"Closing Date"), the aggregate number of Shares set out opposite Purchaser's
address on the signature page of this Purchase Agreement (the "Designated
Shares"). The price for the Designated Shares shall be $2.75 per Designated
Share, and Purchaser shall pay to the Company the aggregate amount set out
opposite Purchaser's address on the signature page to this Purchase Agreement
(the "Purchase Price"). Payment of the Purchase Price for the
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Designated Shares shall be made by Purchaser to the Company on the Closing Date
by wire transfer of immediately available funds in United States Dollars to the
account of Phoenix Network Inc. at Union Bank, 000 Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000. Account Number: 7000139402. ABA Number: 121000496.
Attention Xxxxx Xxxx (415/705-7177).
(b) The Company intends to offer and sell other Shares to other
investors (together with Purchaser, the "Purchasers") pursuant to separate
substantially identical purchase agreements (together with this Purchase
Agreement, the "Purchase Agreements").
(c) completion of the sale and purchase of the Shares (the
"Closing") shall take place at the offices of Xxxxx, Xxxxxxxxxxxx & Co.
Limited, agent for Xxxxx, Xxxxxxxxxxxx and Co. S.A. at Xxxxx Xxxxx, 0-0 Xx.
Xxxxx'x Xxxxxx, Xxxxxx XX0X 0XX at 4:00 p.m. local time on the Closing Date.
At the Closing, the Company shall deliver to OFCO for the account of Purchaser,
one or more stock certificates representing the Shares registered in the name
of Purchaser or its nominee, against payment of the Purchase Price therefor in
immediately available funds to the account of the Company designated in section
1 (a) of this Purchase Agreement.
(d) In the event of any change in the issued and outstanding
Common Stock of the Company by reason of stock dividends, split-up or
combination of the Common Stock, reclassification of the capital stock of the
Company or recapitalization of the Company which occurs on or before the
Closing, the number of shares Common Stock to be delivered to Purchaser at the
Closing and the Purchase Price therefor shall be appropriately adjusted. In
addition, in the event that any cash dividends on the Common Stock of the
Company shall be payable to shareholders of record as of a record date that
falls on any date within the period on and from the time of execution of this
Purchase Agreement to and including the Closing Date, the price per Designated
Share payable by Purchaser shall be reduced by the amount of such cash dividend
per share of Common Stock.
(e) The obligation of Purchaser to purchase Designated Shares at
the Closing shall be conditional upon the delivery by the Company to OFCO, on
behalf of all the Purchasers, of:
(i) a written opinion of Xxxxxx Godward Xxxxxx Xxxxxxxxx
& Xxxxx, San Francisco, California, United States counsel to the Company, in
the form attached hereto as Schedule 1 dated the Closing Date; and
(ii) to the extent that the Closing Date shall be a date
other than the date of this Purchase Agreement, a certificate of an officer of
the Company as to the correctness in all material respects of the
representations and warranties of the Company contained in Section 2 of this
Purchase Agreement as of the Closing Date, in the form attached hereto as
Schedule 2 dated the Closing Date.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to Purchaser as follows:
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2.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all the requisite corporate power and authority to
own and lease its properties and to conduct its business as presently conducted
and as described in the Offering Memorandum. The Company is duly qualified to
do business as a foreign corporation and is in good standing in every
jurisdiction where such qualification is required by controlling law and where
the failure to so qualify would have a material adverse effect on the Company
and its subsidiaries, taken as a whole. Each Principal Subsidiary (as defined
below) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to own and lease its properties and to conduct
its business as presently conducted and described in the Offering Memorandum.
Each Principal Subsidiary of the Company is duly qualified to do business as a
foreign corporation and is in good standing in every jurisdiction where such
qualification is required by controlling law and where the failure to so qualify
would have a material adverse effect on the Company and its subsidiaries, taken
as a whole. The principal subsidiaries of the Company (collectively, the
"Principal Subsidiaries") are:
Phoenix Telecom, Inc., a wholly owned subsidiary incorporated in Delaware and
Phoenix Network of New Hampshire, a wholly owned subsidiary incorporated in New
Hampshire.
2.2 AUTHORIZED CAPITAL STOCK. The authorized and outstanding
capital stock of the Company is as set out in the Offering Memorandum, and all
the issued shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable. All of the
outstanding shares of capital stock of the Principal Subsidiaries have been
duly and validly authorized and issued and are fully paid and non-assessable.
All of the outstanding shares of capital stock of the Principal Subsidiaries
that are owned directly by the Company are owned by the Company free and clear
of any claim, lien, security interest, mortgage, pledge, charge or other
encumbrance of any nature whatsoever, except that:
All of the outstanding shares of capital stock of the Principal Subsidiaries
that are owned indirectly by the Company through a subsidiary, are owned by
such subsidiary free and clear of any claim, lien, security interest, mortgage,
pledge, charge or other encumbrance of any nature whatsoever. Except for the
capital stock of the subsidiaries of the Company listed in Schedule 2.2
attached hereto and as disclosed in the Offering Memorandum, the Company does
not own, directly or indirectly, any equity or debt securities of any other
company, corporation, partnership, joint venture or other entity.
2.3 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE PURCHASE
AGREEMENT. The execution, delivery and performance of the Purchase Agreements
by the Company (a) have been duly authorized by all requisite corporate action
of the Company, and (b) will not violate (i) the Certificate of Incorporation
or By-laws of the Company or (ii) any law applicable to the Company or any of
its subsidiaries or (iii) any provision of any indenture, mortgage, agreement,
contract or other instrument to which the Company or any of its Principal
Subsidiaries is bound or to which any of the properties or assets of the
Company or any of the Principal Subsidiaries are subject, or be in conflict
with, or result in a breach of or constitute (upon notice or lapse of
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time or both) a default under any such indenture, mortgage, agreement, contract
or other instrument or result in the creation or imposition of any claim, lien,
security interest, mortgage, pledge, charge or other encumbrance of any nature
whatsoever upon any of the properties or assets of the Company or any of the
Principal Subsidiaries (except for such violation or conflict described in (b)
(iii) above which would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole). Upon execution and delivery by the
Company, the Purchase Agreements will constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except as the enforceability thereof may be limited by
any applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting the enforcement of creditors' rights generally and by
general equitable principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
2.4 ISSUANCE AND DELIVERY OF THE SHARES. The offer, issuance,
sale and delivery of the Shares in accordance with the Purchase Agreements,
have been duly authorized by all requisite corporate action of the Company.
The Shares conform to the description of the Common Stock contained in the
Offering Memorandum and conform to the terms of the Common Stock contained in
the Company's Certificate of Incorporation. The Shares in the, as and when
issued and sold to Purchaser pursuant to this Purchase Agreement, and upon
receipt by the Company of the Purchase Price therefor, will be duly and validly
issued and outstanding, fully paid and non-assessable, will not be subject to
any pre-emptive or similar right, and Purchaser will receive good and valid
record title to the shares, free and clear of any claim, lien, security
interest, mortgage, pledge, charge or other encumbrance of any nature
whatsoever, except such as may have been created by Purchaser.
2.5 OFFERING MEMORANDUM.
(a) The Offering Memorandum, as of its date and at the
Closing Date, and any amendment thereof or supplement thereto, as of their
respective dates and the Closing Date, did not and will not as of such dates,
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions relating to matters of foreign law or made in reliance
upon and in conformity with information furnished in writing to the Company
expressly for use therein by any broker-dealer participating in the offering as
a placement agent therefor.
(b) The documents attached as exhibits to the Offering
Memorandum, at the time they were filed with the United States Securities and
Exchange Commission (the "Commission"), complied in all material respects with
the requirements of the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, and, when
read together with the other information in the Offering Memorandum, will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
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(c) Except as otherwise disclosed in the Offering
Memorandum, the consolidated financial statements of the Company and its
subsidiaries included in the Offering Memorandum present fairly the
consolidated financial condition of the Company and its subsidiaries as of the
respective dates thereof and the consolidated results of operations of the
Company and its subsidiaries for the respective periods covered thereby, all in
conformity with accounting principles generally accepted in the United States
applied on a consistent basis throughout the entire periods involved.
2.6 LEGAL PROCEEDINGS. Except as otherwise described in the
Offering Memorandum, there are no actions, suits, investigations or proceedings
pending to which the Company or any of its subsidiaries is a party before or by
any court or governmental agency or body, which in the opinion of management of
the Company would result, individually or in the aggregate, in any material
adverse change in the financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, or which would materially and
adversely affect the consolidated properties or assets thereof; and to the best
knowledge of the Company's management, no such actions, suits, investigations
or proceedings are threatened by any person, corporation or governmental agency
or body.
2.7 NO MATERIAL CHANGE. Except as disclosed in or contemplated by
the Offering Memorandum, there has been no material adverse change or, to the
best knowledge of the Company's management, any development which will result
in a material adverse change, in or affecting the business operations,
management, financial position, stockholders' equity or results of operations of
the Company and its subsidiaries since December 31, 1994.
2.8 PROPERTIES AND ASSETS. Each of the Company and each of the
Principal Subsidiaries has good and marketable title to all properties and
assets described in the Offering Memorandum as owned by it, free and clear of
all claims, liens, security interests, mortgages, pledges, charges or other
encumbrances of any nature whatsoever except as disclosed in the Offering
Memorandum or are not material to the business of the Company and its
subsidiaries, taken as a whole. Each of the Company and the Principal
Subsidiaries has valid, subsisting and enforceable leases for the properties
described in the Offering Memorandum as leased by it, with such exception as
are not material and do not materially interfere with the use made and proposed
to be made of such properties by the Company and such subsidiaries. Except as
otherwise disclosed in the Offering Memorandum, each of the Company and the
Principal Subsidiaries owns or possesses or is the valid licensee of all
patents, trademarks, service marks and trade names necessary to carry on its
business as described in the Offering Memorandum, and neither the Company nor
any such subsidiary has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which, if the
subject of an unfavorable decision, ruling or finding, would result,
individually or in the aggregate, in any material adverse change in, or
affecting the business, operations, financial position or business prospects of
the Company and its subsidiaries, taken as a whole.
2.9 COMPLIANCE WITH APPLICABLE REGULATIONS. Except as disclosed
in the Offering Memorandum, each of the Company and the Principal Subsidiaries
(a) has all governmental licenses, permits, consents, orders, approvals and
other authorizations necessary to carry on its
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business as described in the Offering Memorandum (including, but not limited to,
any such licenses, permits, consents, orders, approvals and other authorizations
required by the United States Federal Communications Commission and the States
where it offers service, (b) complies in all material respects with, and
conducts its business in substantial conformity with (except for failures to
conform which would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole), all laws, regulations and orders applicable to
it or its business, and (c) complies in all material respects with, and conducts
its business in substantial conformity with (except failures to conform which
would not have a material adverse effect on the Company and its subsidiaries,
taken as a whole), all such licenses, permits, consents, orders, approvals,
authorizations issued by, and all agreements of the Company and/or any of the
Principal Subsidiaries with, any governmental agency or body having jurisdiction
over the Company and the Principal Subsidiaries.
2.10 INVESTMENT COMPANY ACT OF 1940. The Company is not an
"investment company" or an "affiliated person" of, or "promoter" or "principal"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
2.11 COMPLIANCE WITH REGULATION S. The Company is a "reporting
issuer" (as defined in Regulation S). The Company, its affiliates and any
person acting on behalf of, or as agent of, any of the foregoing, whether as
principal or agent, (a) has offered and sold the Units to the Purchasers only
in an "offshore transaction" (as defined in Regulation S), (b) has not engaged
with respect to the Securities in any "directed selling efforts" (as defined in
Regulation S), in or directed toward the United States, (c) has complied with
all "offering restrictions" (as defined in Regulation S) in respect of the
Securities, (d) has not delivered the Offering Memorandum or any revision or
amendment thereof or supplement thereto to any "U.S. person" (as defined in
Regulations S) (other than its professional advisers), (e) has not made any
offers or sales of any of the Units or any interest therein in the United
States or to, or for the account or benefit of, any "U.S. person" (as defined
in Regulation S), and (f) has not made any sales of any of the Units or any
interest therein to any person other than the Purchasers; provided, however,
that insofar as this representation and warranty involves any broker-dealer
participating in the offering, any affiliate of such broker-dealer or any
officer, director, employee or agent of such broker-dealer, to the extent such
broker-dealer is acting as placement agent for the offering of the Units, such
representation and warranty is made by the Company solely on the basis of and
in reliance upon the representations and warranties of such broker-dealer.
2.12 REPRESENTATION AND WARRANTIES AT THE CLOSING. Each of the
representations and warranties contained in this Section 2 is true and correct
in all material respects as of the date of this Purchase Agreement. The
Company will make the same representations and warranties at the Closing and
such representations and warranties when so made will be true and correct in
all material respects as of the Closing Date.
SECTION 3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby
covenants and agrees with Purchaser as follows:
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(a) As soon as practicable after the date hereof, but not later
than three (3) business days prior to the Closing Date, the Company will
prepare and furnish to Purchaser the Offering Memorandum, which will be in
substantially the form of the Preliminary Offering Memorandum.
(b) The Company will make available to Purchaser prior to the
Closing Date the opportunity to ask questions and receive answers concerning
the terms and conditions of the offering of the Shares and to obtain any
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of the
information furnished in accordance herewith.
(c) Within seven (7) business days after the Restricted Period (as
hereinafter defined) or at any time thereafter, the Company will deliver to
Purchaser or its nominee who is acting as custodian therefor or any subsequent
holder who has received a stock certificate representing the Shares which bears
the legend described in section 4.5 (a) of this Purchase Agreement (the
"Legended Stock Certificate"), without cost to such Purchaser or subsequent
holder, a substitute stock certificate without restrictive legend described in
section 4.5 (a) of this Purchase Agreement. The Company shall be required to
deliver such substitute stock certificate only upon surrender of the Legended
Stock Certificate which, in the case of any holder subsequent to Purchaser,
must be duly endorsed for transfer or surrender.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
Purchaser hereby represents, warrants and covenants to the Company as follows:
4.1 COMPLIANCE WITH UNITED STATES SECURITIES LAWS. Purchaser
understands and acknowledges that (a) the Shares have not been and will not be
registered under the Securities Act, and may not be offered or sold in the
United States or to, or for the account or benefit of, any "U.S. person" (as
defined in Regulation S, which definition is set out in Schedule 3 hereto, a
"U.S. Person"), unless such securities are registered under the Securities Act
or such offer or sale is made pursuant to an exemption from the registration
requirements of the Securities Act, and (b) the Shares are being offered and
sold pursuant to the terms of Regulation S under the Securities Act, which
permits securities to be sold to non-U.S. Persons in "offshore transactions"
(as defined in Regulation S), subject to certain terms and conditions.
4.2 STATUS OF PURCHASER.
(a) Purchaser is purchasing the Designated Shares for its
own account or for persons or accounts as to which it exercises investment
discretion. Neither Purchaser nor such person or account is a U.S. Person.
Purchaser has executed this Purchase Agreement outside the United States. The
offer to Purchaser and sale of the Designated Shares has occurred outside the
United States.
(b) Purchaser (and any person or account on whose behalf
Purchaser is purchasing) is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
restricted securities such as the Designated Shares and has requested,
received, reviewed and considered all information it deems relevant in making
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a decision to execute this Purchase Agreement and to purchase the Designated
Shares. Purchaser acknowledges that it is capable of evaluating the merits and
risks of an investment in the Designated Shares.
(c) Purchaser acknowledges that the Company has made
available to Purchaser the opportunity to ask questions and receive answers
concerning the terms and conditions of the offering of the Shares and to obtain
any additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of the
information furnished in accordance herewith.
(d) Purchaser has agreed to purchase the Designated
Shares for investment purposes and not with a view to a distribution. To the
extent that the Shares are registered in the name of Purchaser's nominee,
Purchaser confirms that such nominee is acting as custodian for Purchaser of
such securities.
4.3 RESTRICTIONS ON RE-SALE.
(a) For a period of forty (40) days following the Closing
Date (the "Restricted Period"), Purchaser shall not engage in any activity for
the purpose of, or which may reasonably be expected to have the effect of,
conditioning the market in the United States for the Shares. Purchaser shall
not deliver the Preliminary Offering Memorandum, the Offering Memorandum or any
revision or amendment thereof or supplement thereto to any person (other than
its professional advisers).
(b) Purchaser understands that the Shares or any interest
therein are only transferable on the books and records of the Transfer Agent and
Registrar of the Common Stock of the Company and, with respect to the Warrants,
on the books and records of the Company. Purchaser further understands that the
Transfer Agent and Registrar will not register any transfer of the Shares, or
any interest therein and that the Company will not register any transfer of the
Shares or any interest therein which the Company in good faith believes violates
the restrictions set forth herein.
(c) Unless registered under the Securities Act, any
proposed offer, sale or transfer during the Restricted Period of any of the
Shares, or any interest therein shall be subject to the condition that
Purchaser must deliver to the Company (i) a written certification that neither
record nor beneficial ownership of the Shares, or any interest therein, as the
case may be, has been offered or sold in the United States or to, or for the
account or benefit of, any "U.S. person" (as defined in Regulation S), (ii) a
written certification of the proposed transferee that such transferee (or any
account for which such transferee is acquiring such Shares, or any interest
therein, as the case may be) is not a "U.S. person" (as defined in Regulation
S), that such transferee is acquiring such Shares, or such interest therein, as
the case may be, for such transferee's own account (or an account over which it
has investment discretion), and that such transferee is knowledgeable of and
agrees to be bound by the restrictions on re-sale set forth in this section and
Regulation S during the Restricted Period, and (iii) a written opinion of
United States counsel, in form and substance satisfactory to the Company, to
the effect that the offer,
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sale and transfer of such Shares, or any interest therein, as the case may be,
are exempt from registration under the Securities Act.
(d) Purchaser will not, directly or indirectly,
voluntarily offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) its
rights under this Purchase Agreement, the Shares any interest therein otherwise
than in compliance with the Securities Act, any applicable state securities or
blue sky laws and any applicable securities laws of jurisdictions outside the
United States, and the rules and regulations promulgated thereunder.
4.4 LEGENDS.
(a) Purchaser agrees for the duration of the Restricted
Period the stock certificates representing the Shares included in the
Designated Units and the stock certificates representing the Warrant Shares
issuable upon exercise of the Warrants included in the Designated Units shall
bear the legend set forth below:
"The shares of Common Stock represented by this stock
certificate have not been and will not be registered under the
Securities Act of 1933, as amended, of the United States of
America (the "Act") or any other securities laws and have been
issued in reliance upon the exemption from such registration
contained in Regulation S under the Act. The shares of Common
Stock represented by this stock certificate may not be
offered, sold or transferred in the United States or to, or
for the account or benefit of, any "U.S. person" (as defined
in Regulation S under the Act) prior to 40 days following the
date of the closing of the last Unit sold pursuant to the
Offering Memorandum dated September 7, 1995 unless registered
under the Act or an exemption from the registration
requirements of the Act is available."
4.5 RE-OFFERS BY PURCHASER IN THE UNITED STATES. If Purchaser
publicly re-offers all or any part of the Shares, Purchaser (and/or certain
persons who participate in any such re-offer) may be deemed, under certain
circumstances, to be an "underwriter" as defined in Section 2 (11) of the
Securities Act. If Purchaser plans to make any such re-offer, it will consult
with its counsel prior to any such re-offer in order to determine its
liabilities and obligations under this Purchase Agreement, the Securities Act
and any applicable state securities or blue sky laws.
4.6 DUE EXECUTION. Delivery and Performance of the Purchase
Agreement and Other Obligations. Purchaser has full right, power, authority
and capacity to enter into this Purchase Agreement and to consummate the
transaction contemplated hereby; if Purchaser is a company or corporation, the
execution, delivery and performance of this Purchase Agreement by Purchaser
have been duly authorized by all requisite corporate action of Purchaser. Upon
the execution and delivery of this Purchase Agreement by Purchaser, this
Purchase Agreement shall constitute the legal, valid and binding obligations of
Purchaser, except as the enforceability
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thereof may be limited by any applicable bankruptcy, insolvency, reorganization
or other similar laws relating to or affecting the enforcement of creditors'
rights generally and by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
4.7 AUTHORIZATION OF OFL TO ACCEPT DELIVERY OF THE DESIGNATED
SHARES. Purchaser has authorized OFCO, on behalf of Purchaser (a) to accept
delivery at the Closing on behalf of Purchaser during the Restricted Period,
(b) to hold the Designated Shares on behalf of Purchaser during the Restricted
Period, and (c) to obtain from the Company within seven (7) business days after
the Restricted Period a substitute stock certificate or certificates
representing the Shares without the restrictive legend described in Section 4.5
(a) of this Purchase Agreement.
4.8 REPRESENTATIONS AND WARRANTIES AT THE CLOSING. Each of the
representations and warranties contained in this Section 4 is true and correct
as of the date of this Purchase Agreement. Purchaser will make the same
representations and warranties on the Closing Date and such representations and
warranties when so made will be true and correct as of the Closing Date.
SECTION 5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by either party to this
Purchase Agreement, all covenants, agreements, representations and warranties
made by the Company and Purchaser herein and in the Designated Shares delivered
pursuant hereto shall survive the execution of this Purchase Agreement, the
delivery to Purchaser of the Designated Shares and the receipt by the Company
of payment for the Designated Shares.
SECTION 6. NOTICES.
All notices, demands, consents or other communications under this
Purchase Agreement shall be given or made in writing and shall be delivered
personally, or sent by certified or registered airmail, postage prepaid, or
sent by facsimile transmission with a confirmation copy sent by mail as
aforesaid, and shall be deemed given when so personally delivered, or if mailed
as aforesaid, ten (10) days after the same shall have been posted or if sent by
facsimile, at the earlier of (i) as soon as written or telephonic confirmation
is received both from the party to whom it was sent that the message has been
received or (ii) ten (10) days after the confirmation is posted:
(a) if to the Company, at its address as set out at the head of
this Purchase Agreement, or at such address or addresses as may have been
furnished to Purchaser in writing by the Company;
(b) if to Purchaser, at its address as set out following
Purchaser's signature on the signature page to this Purchase Agreement, or at
such other address or addresses as may have been furnished to the Company in
writing by Purchaser; or
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(c) if to any transferee or transferees of Purchaser, at such
address or addressees as shall have been furnished to the Company at the time
of the transfer or transfers, or at such other address or addresses as may have
been furnished by such transferee or transferees to the Company in writing.
SECTION 7. AMENDMENT.
No amendment, interpretation or waiver of any of the provisions of
this Purchase Agreement shall be effective unless made in writing and signed by
the parties to this Purchase Agreement.
SECTION 8. HEADINGS.
The headings of the sections and sub-sections of this Purchase
Agreement are used for convenience only and shall not affect the meaning or
interpretation of the contents of this Purchase Agreement.
SECTION 9. ENFORCEMENT.
The failure to enforce or to require the performance at any time of
any of the provisions of this Purchase Agreement shall in no way be construed
to be a waiver of such provisions, and shall not affect either the validity of
this Purchase Agreement or any part hereof or the right of any party thereafter
to enforce each and every provision in accordance with the terms of this
Purchase Agreement.
SECTION 10. GOVERNING LAW.
This Purchase Agreement and the relationships of the parties in
connection with the subject matter of the Purchase Agreement shall be governed
by and determined in accordance with the substantive laws of the State of
California, in the United States of America, applicable to agreements made and
to be performed entirely therein.
SECTION 11. SEVERABILITY.
If any provision of this Purchase Agreement is held to be invalid or
unenforceable by any judgement of a tribunal of competent jurisdiction, the
remainder of the Purchase Agreement shall not be affected by such judgement,
and the Purchase Agreement shall be carried out as nearly as possible according
to its original terms and intent.
SECTION 12. COUNTERPARTS.
This Purchase Agreement may be executed in counterparts, all of which
shall constitute one agreement, and each such counterpart shall be deemed to
have been made, executed and delivered on the date set out at the head of this
Purchase Agreement without regard to the dates or times when such counterparts
may actually have been made, executed or delivered.
11.
12
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
PHOENIX NETWORK, INC. PURCHASER'S NAME
By:
-------------------------------- ------------------------------------
Name:
------------------------------ ------------------------------------
Title:
----------------------------- ------------------------------------
Duly executed by:
------------------------------------
Title:
Aggregate number of
Designated Shares: PURCHASER'S ADDRESS:
------------------------------------
----------------------------------- ------------------------------------
------------------------------------
Total purchase price
----------------------------------- ------------------------------------
Stock certificate resignation instructions:
Name of Holder:
----------------------------------------------------------------
Address of Holder:
--------------------------------------------------------------
--------------------------------------------------------------------------------
12.
13
SCHEDULE 1
TO THE
PURCHASE AGREEMENT
FORM OF LEGAL OPINION
OF COUNSEL TO THE COMPANY
(_____), 1995
To each of the Purchasers
Listed on Schedule A hereto
Gentlemen:
We have acted as counsel to Phoenix Network, Inc., a Delaware
corporation (the "Company"), in connection with the issuance and sale by the
Company to the purchasers listed on Schedule A hereto (the "Purchasers"), of an
aggregate of ____________ Shares (the "Shares"), of the Company's common stock,
par value $.001 per share (the "Common Stock") between the Company and the
Purchasers each dated as of ___________, 199__ (the "Purchase Agreements").
This opinion is furnished to you pursuant to section 1 (e) (i) of the Purchase
Agreements. Capitalized terms used and not otherwise defined herein have the
respective meanings ascribed to such terms in the Purchase Agreements.
We have participated in the preparation of the Offering Memorandum
dated (XXX) (the "Offering Memorandum"), have examined executed counterparts of
each Purchase Agreement, have examined the proceedings of the Company in
connection with the approval thereof and the authorization of the transactions
contemplated thereby and have further examined such corporate records and
documents of the Company and certificates of officers of the Company and public
officials as we have deemed relevant and necessary to enable us to render this
opinion.
For the purpose of our opinions set forth below, to the extent they
are qualified by "to our knowledge," we have not conducted any independent
inquiry other than (i) a review of those documents which we have deemed
relevant and necessary as a basis for the opinion expressed herein, and (ii)
discussions with officers of the Company and the Principal Subsidiaries.
However, nothing has come to our attention in the course of our representation
of the Company as described above which would cause us to believe that the
opinions expressed herein are inaccurate. In addition, opinions given "to our
knowledge" are based on the actual knowledge of lawyers in our firm who have
devoted substantive attention to the representation of the Company.
We have relied on the accuracy of certain representations and
warranties of the Company and the Purchasers contained in the Purchase
Agreements and have relied upon such records, documents and certificates with
respect to the accuracy of certain factual matters without
1.
14
independent verification of the matters covered thereby. In our examination of
such records, documents and certificates, we have assumed the authenticity of
all documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as certified or photostatic copies of original
documents, the authenticity of the originals of such latter documents, and the
accuracy of the statements contained in such certificates.
We express our opinion solely as to the laws of the general corporate
laws of the State of California, the general corporate laws of the State of
Delaware and the laws of the United States. For Principal Subsidiaries that
are incorporated in jurisdictions other than California or Delaware, for the
purpose of our opinion in the first sentence of paragraph 4 below, we have
relied solely on our review of the certificates of incorporation of such
Principal Subsidiaries and on certificates of good standing for the appropriate
governmental authorities in those jurisdictions. For the purpose of our
opinion in paragraph 2 and the second sentence of paragraph 4 below, we have
relied solely on the certificate (the "Officers' Certificate") of officers of
the Company as to certain matters of fact, a copy of which is attached hereto
as Schedule B, and on certificates of good standing from the appropriate
governmental authorities in the specified jurisdictions.
Based upon the foregoing and in reliance thereon, we are of the
opinion that:
1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own and lease its properties and to
conduct its business as presently conducted and as described in the Offering
Memorandum.
2. The Company is duly qualified to do business as a foreign
corporation and is in good standing in every jurisdiction indicated in the
Officer's Certificate where it is stated to have significant contacts and where
the failure to so qualify would have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
3. To our knowledge, the authorized and outstanding capital stock
of the Company is as set out in the Offering Memorandum.
4. Each of the Principal Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own and lease its properties and to conduct its business as
presently conducted and as described in the Offering Memorandum. Each
Principal Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing in every jurisdiction indicated in the Officer's
Certificate where it is stated to have significant contact and where the
failure to so qualify would have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
5. To our knowledge, all of the outstanding shares of capital
stock of the Principal Subsidiaries that are owned directly by the Company are
owned by the company, free and clear of any claim, lien, security interest,
mortgage, pledge, charge, encumbrance or other restriction
2.
15
of any nature whatsoever, except as disclosed in the Offering Memorandum or as
described in the Purchase Agreements. To our knowledge, all of the outstanding
shares of capital stock of the Principal Subsidiaries that are owned indirectly
by the Company through a subsidiary, are owned by such a subsidiary, free and
clear of any claim, lien, security interest, mortgage, pledge, charge,
encumbrance or other restriction of any nature whatsoever.
6. The Company has the corporate power and authority to authorize
the issuance, sale and delivery of, and to issue, sell and deliver, the Units
on the terms and conditions set forth in the Purchase Agreements, free of any
pre-emptive rights. To our knowledge, no consent or approval by the
stockholders of the Company is required to be obtained by the Company for the
consummation of the issuance, sale and delivery of the Units by the Company to
the Purchasers pursuant to the Purchase Agreements or the Warrant Shares
pursuant to the terms of the Warrants.
7. The Securities comprising the Units conform to the description
thereof contained in the Offering Memorandum and the Shares and the Warrant
Shares conform to the terms of the Common Stock contained in the Company's
Certificate of Incorporation.
8. The offer, issuance, sale and delivery of the Units to the
Purchasers pursuant to the Purchase Agreements have been duly authorized by all
necessary corporate action on the part of the Company. The Shares, as and when
issued and delivered to the Purchasers pursuant to the Purchase Agreements, and
upon receipt by the Company of the payment by the Purchasers of the purchase
price therefor, will be validly issued and outstanding, fully paid and
non-assessable, will not be subject to any pre-emptive or similar right, and
the Purchasers will receive valid and marketable title to the Shares, free of
any adverse claim, assuming that such Purchasers have no notice of any adverse
claim, except such as may have been created by the Purchasers in respect of the
Shares purchased by such Purchasers and except for restrictions on transfer
imposed by the Securities Act. The Warrants have been duly and validly
executed and delivered by the Company and constitute the valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as the enforceability thereof
may be limited by any applicable bankruptcy, insolvency, reorganization or
other similar laws relating to or affecting the enforcement of creditors'
rights generally and by general equitable principles, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
9. The Warrant Shares have been duly and validly authorized and
reserved for issuance. The Warrant Shares, as and when issued and delivered in
accordance with the terms of the Warrants, and upon receipt by the Company of
the exercise price therefor, will be duly and validly issued and outstanding,
fully paid and non-assessable, and will not be subject to any pre-emptive or
similar right.
10. The Purchase Agreements have been duly authorized, executed
and delivered by the Company and, assuming due execution and delivery thereof
by the Purchasers, constitute valid and legally binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, except as the enforceability thereof may be limited by
3.
16
any applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting the enforcement of creditors' rights generally and by
general equitable principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
11. The execution, delivery and performance of the Purchase
Agreements by the Company does not, and the issuance sale and delivery by the
Company to the Purchasers of the Units and Warrant Shares will not, result in a
breach or violation by the Company of, or constitute a default by the Company
under, (a) the Company's Certificate of Incorporation or By-laws or (b) to our
knowledge, any statute of law applicable to the Company or any of the Principal
Subsidiaries or any order, rule or regulation applicable to the Company or any
of the Principal Subsidiaries of any court, governmental agency or body having
jurisdiction over the Company, any such Principal Subsidiary or any of their
respective properties.
12. To our knowledge, the execution, delivery and performance of
the Purchase Agreements by the Company does not, and the issuance, sale and
delivery by the Company to the Purchasers of the Units and the Warrant shares
will not, violate or conflict with or result in a breach of or constitute a
default (or an event which might, with the passage of time or the giving of
notice, or both, constitute a default) under, or result in the creation or
imposition of any claim, lien, security interest, mortgage, pledge, charge or
other encumbrance of any nature upon any of the properties or assets of the
Company or any of the Principal Subsidiaries pursuant to the terms of, any
indenture, mortgage, agreement, contract, deed of trust, promissory note, or
other agreement or instrument to which the Company or any of the Principal
Subsidiaries is a party or by which any of them is bound or to which any of the
properties or the Company of any of the Principal Subsidiaries is subject.
13. To our knowledge, except as disclosed in, or by information
incorporated by reference in, the Offering Memorandum, there are no actions,
suits, investigations of proceedings pending to which the Company or any of its
subsidiaries is a party, before or by any court or governmental agency or body
in which in our opinion would result, individually or in the aggregate, in any
material adverse change in the financial conditions or results of operations of
the Company and its subsidiaries, taken as a whole, or which would materially
and adversely affect the properties or assets thereof, taken as a whole; and no
such actions, suits, investigations or proceedings are threatened by any
person, corporation or governmental agency or body.
14. No consent, approval, authorization or order of, or
registration or qualification with, any court or governmental agency or body or
national securities exchange, and which has not been made or obtained by the
Company, is required to be obtained by the Company for the issuance, sale or
delivery of the Units to the Purchasers pursuant to the Purchase Agreements or
the Warrant Shares pursuant to the terms of the Warrants.
15. The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
4.
17
The foregoing opinions are subject to the following qualification:
a. We express no opinion as to the enforceability of any
disclaimer, limitation of liability, release or legal or equitable discharge of
any defence, provision for liquidated damages, waiver of a constitutional,
statutory or common law right, consent to jurisdiction or provision releasing
or indemnifying a party against liability for its own wrongful or negligent
acts.
This opinion is rendered solely of the benefit of the Purchasers with
respect to the Units issued, sold and delivered under the Purchase Agreements
and is not to be used, circulated, quoted or referred to, or otherwise relied
upon by any person, without our prior written consent.
Very truly yours,
5.
18
SCHEDULE 2
TO THE
PURCHASE AGREEMENT
CERTIFICATE OF THE COMPANY
The undersigned, Xxxxxxx Xxxxxxx, Chief Executive Officer of Phoenix
Network, Inc., (the "Company") does hereby certify that the representations and
warranties of the Company as set out in Section 2 of the Purchase Agreements
each dated as of ____________, 199__ by and between the Company and the
Purchasers named therein, are true and correct in all material respects on and
as of the date hereof with the same effect as though such representations and
warranties had been made on and as of the date hereof, except to the extent
that such representations and warranties expressly relate to an earlier date.
DATED this __________ day of _____________, 199_____
--------------------------------
Xxxxxxx Xxxxxxx
Chief Executive Officer
1.
19
SCHEDULE 2.2
TO THE
PURCHASE AGREEMENT
SUBSIDIARIES OF THE COMPANY
Phoenix Telecom, Inc. a wholly owned subsidiary incorporated in Delaware.
Phoenix Network of New Hampshire, a wholly owned subsidiary incorporated in New
Hampshire.
1.
20
SCHEDULE 3
TO THE
PURCHASE AGREEMENT
DEFINITION OF U.S. PERSON UNDER REGULATION S
1. U.S. Person
(a) "U.S. person" means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or
incorporated under the laws of the United States;
(iii) Any estate of which any executor or administrator is
a U.S. person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign entity located in
the United States;
(vi) Any non-discretionary account or similar account
(other than an estate or trust) held by a dealer or
other fiduciary for the benefit or account of a U.S.
person;
(vii) Any discretionary account or similar account (other
than an estate or trust) held by a dealer other
fiduciary, organized, incorporated, or (if an
individual) resident in the United States; and
(viii) Any partnership or corporation if: (A) organized or
incorporated under the laws of any foreign
jurisdiction; and (B) formed by a U.S. person
principally for the purpose of investing in
securities not registered under the Securities Act,
unless it is organized or incorporated, and owned, by
accredited investors (as defined in Rule 501 (a) of
the Securities Act) who are not natural persons,
estates or trusts.
(b) Notwithstanding paragraph (1) (a) of this rule, any
discretionary account or similar account (other than and
estate or trust) held for the benefit or account of a non-U.S.
person by a dealer or other professional fiduciary organized,
incorporated, or (if an individual) resident in the United
States shall not be deemed a "U.S. person."
1.
21
(c) Notwithstanding paragraph (1) (a), any estate of which any
professional fiduciary acting as executor or administrator is
a U.S. person shall not be deemed a U.S. person if:
(i) An executor or administrator of the estate who is not
a U.S. person has sole or shared investment
discretion with respect to the assets of the estate;
and
(ii) The estate is governed by foreign law.
(d) Notwithstanding paragraph (1) (a), any trust of which any
professional fiduciary acting as a trustee is a U.S. person
shall not be deemed a U.S. person if a trustee who is not a
U.S. person has sole or shared investment discretion with
respect to the trust assets, and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. person.
(e) Notwithstanding paragraph (1) (a), an employee benefit plan
established and administered in accordance with the law of a
country other than the United States and customary practices
and documentation of such country shall not be deemed a U.S.
person.
(f) Notwithstanding paragraph (1) (a), any agency or branch of a
U.S. person located outside the United States shall not be
deemed a "U.S. person" if:
(i) The agency or branch operates for valid business
reasons; and
(ii) The agency or branch is engaged in the business of
insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the
jurisdiction where located.
(g) The International Monetary Fund, the International Bank for
Reconstruction and Development, the International American
Development Bank, the Asian Development Bank, the African
Development Bank, the United Nations, and their agencies,
affiliates and pension plans and any other similar
international organizations, their agencies, affiliates and
pension plans shall not be deemed "U.S. persons."
2. United States. "United States" means the United States of America,
its territories and possessions, any State of the United States, and
the District of Columbia.
2.
22
SCHEDULE A
TO THE
PURCHASE AGREEMENT
SCHEDULE OF PURCHASERS
NAME AND ADDRESS NUMBER OF SHARES PURCHASE PRICE
Chemical Bank 30,000 $82,500
0 Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Further Bank of Bermuda
(Isle of Man) Ltd.
A/C 100400002
As for Register
(Ground Floor, Receive Window)
Xxxx & Co. 109,000 $299,750
M&T Trust Co.
X.X. Xxx 0000
Xxxxxxx, XX 00000
Xxxxxx Xxxx XXxxx Xxxxxxxxxxxx 12,000 $33,000
Xxxxxx'x Xxxxx Xxxxx
Xxxxxxxxx, Xxxxx XX0 0XX
Xxxxx Xxxxx West 23,000 $63,250
Xxxxxxx Xxxxx
Xxxxxxxx
Xx. Xxxxxxxxx
Xxxx, Xxxxxxx XX00 0XX
Wood Gundy London Limited 200,000 $550,000
Xxxxxx'x Xxxxxx
Xxxxxxx Xxxx
Xxxxxx, Xxxxxxx XX0 0XX
Benin Limited 11,000 $30,250
XX Xxx 000
St Peter's House
Xx Xxxxxxx
Xx Xxxxx Xxxx
Xxxxxxxx XX0 0XX
1.
23
NAME AND ADDRESS NUMBER OF SHARES PURCHASE XXXXX
Xxxx Xxxxxx Xxxxxxx 10,000 $27,500
00 Xxxxxx Xxxx
Xxxxxx,Xxxxxxx W.2 5.JJ
Xxxxxx Xxxx XxxXxxxxx 5,000 $13,750
00 Xxxxxx Xxxx
Xxxxxx, Xxxxxxx XX00 0XX
Xxxxxx XxxXxxxxx 5,000 $13,750
00 Xxxxxx Xxxx
Xxxxxx, Xxxxxxx XX00 0XX
Xxxxxx Associates 200,000 $550,000
0xx Xxxxx, Xxxxx Xxxxx
0-0 Xx Xxxxx'x Xx.
Xxxxxx, Xxxxxxx XX0X 0XX
R.H.G. Xxxxxxxx 10,000 $27,500
C/X Xxxxx, Xxxxxxxxxxxx & Co. Ltd.
Xxxxx Xxxxx
0-0 Xx Xxxxx'x Xx.
Xxxxxx, Xxxxxxx XX0X 0XX
Xxxx Xxxx Co. Ltd. 150,000 $412,500
Xxxx 000
Xxxxxxxx Xxxxx
00 Xxx Xxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Xxxx & Co. 415,000 $1,141,250
U.S. Custodian:
Chase Manhattan Bank N.A.
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Xxxx & Co. 145,000 $398,750
U.S. Custodian:
Chase Manhattan Bank N.A.
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
2.
24
NAME AND ADDRESS NUMBER OF SHARES PURCHASE PRICE
Xxxxx Xxxxxxxxxxxx Executive 3,000 $8,250
Death Benefit & Retirement
Scheme No.2 (DJLF)
Xxxxx Xxxxx
0-0 Xx. Xxxxx'x Xxxxxx
Xxxxxx, Xxxxxxx XX0X 0XX
XXXX & Co. 181,000 $497,750
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Spear Leeds & Xxxxxxx 60,000 $165,000
000 Xxxxxxxx
Xxx Xxxx, XX 00000
XXX
Attn: Xx. Xxxxxx Xxxxxx
For A/C 49 WN 5519
Xxxxx, Xxxxxxxxxxxx & Co. Ltd. 273,000 $750,750
A/C Client
Xxxxx Xxxxx
0-0 Xx. Xxxxx'x Xx.
Xxxxxx Xxxxxxx XX0X 0XX
Tuvalu Limited 11,000 $30,250
XX Xxx 000
St Peter's House
Xx Xxxxxxx
St Xxxxx Port
Guernsey GY1 6AX
Xxxxx, Xxxxxxxxxxxx & Co. Ltd. 32,000 $88,000
A/C Client
Xxxxx Xxxxx
0-0 Xx. Xxxxx'x Xx.
Xxxxxx, Xxxxxxx XX0X 0XX
Solar Group S.A. 200,000 $550,000
14 Camden North
Paget
Bermuda DV-03
3.
25
NAME AND ADDRESS NUMBER OF SHARES PURCHASE PRICE
Willbro Nominees Limited 90,000 $247,500
XX Xxx 000
0 Xxxxxxxxx
Xxxxxx, Xxxxxxx XX0X 0XX
Royal Skandia Life Assurance Ltd. 100,000 $275,000
Skandia House
Xxxxx Road
Douglas
Isle of Man
Xxxxx, Xxxxxxxxxxxx & Co. Ltd. 25,000 $68,750
A/C Client
Xxxxx Xxxxx
0-0 Xx. Xxxxx'x Xx.
Xxxxxx, Xxxxxxx XX0X 0XX
2,300,000 $6,325,000
4.
