EXHIBIT III
SHARE SUBSCRIPTION AGREEMENT
THIS SHARE SUBSCRIPTION AGREEMENT ("Agreement") is made and entered into as of
the 22 day of October, 2002 (the "Effective Date"), by and between INTERNATIONAL
ASSETS HOLDING CORPORATION, a Delaware corporation (the "Company"), and XXXX
XXXXXXXXX (the "Investor").
R E C I T A L S
A. The Company, directly or through its subsidiaries, operates a financial
services company, including a market making and proprietary trading brokerage
firm specializing in global securities.
B. The Company is a publicly held entity, having previously offered shares of
the Company's common stock pursuant to a registration statement, and continues
to file reports as to the Company's business.
C. The Board of Directors of the Company (the "Board") considers it essential to
the best interests of the Company that (i) additional common equity and (ii)
preferred equity will be sold to the Investor subject to the terms of this
Agreement.
D. The Investor is an "accredited investor" as such term is defined in Appendix
1, and is capable of evaluating the merits and risks of an investment in the
Company.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
hereinafter, the Company and the Investor agree as follows:
1. Recitals. All of the above recitals are true and correct.
2. Term. This Agreement shall commence on the Effective Date and shall
terminate at 12:01 a.m. EST on the date that is the later of five (5) business
days from the date of receipt by the Company of (i) the audited consolidated
financial statements for the fiscal year ended September 30, 2002; or (ii)
written confirmation from NASDAQ with respect to the transactions evidenced by
this Agreement, but in no event later than December 15, 2002 (the "Termination
Date") unless the Closing, as hereafter defined, has occurred before the
Termination Date. This Agreement may be extended by the mutual written agreement
of the Company and the Investor prior to the Termination Date.
3. Purchase of Securities.
(a) Subject to the terms and conditions of this Agreement, the Company
offers to the Investor and the Investor hereby subscribes to purchase (i)
117,581 shares of common stock, $.01 par value per share of the Company (such
shares of common stock are referred to herein as the "Common Securities"), and
(ii) 452,272 shares of preferred stock, $.01 par value per share of the Company
(such shares of preferred stock are referred to herein as the "Preferred
Securities") (the Common Securities and the Preferred Securities are
collectively referred to as the "Securities"), each at a fixed price per share
equal to $1.70 (the "Per Share Purchase Price"). The aggregate purchase price
for the purchased Securities shall be equal to the product of the Per Share
Purchase Price and the aggregate number of Common Securities and Preferred
Securities purchased by the Investor (the "Aggregate Purchase Price").
(b) The Preferred Securities will have the preferences, privileges,
restrictions and rights specified in Exhibit "A" to this Agreement. The Board
will promptly approve the terms of the Preferred Securities by adopting an
amendment to the Company's Certificate of Incorporation in the form of Exhibit
"A".
4. Xxxxxxx Money. The Investor will pay the Company a deposit in the amount of
$80,000 within three (3) days of the execution of this Agreement (the
"Deposit"). At the Closing, the Company will apply the Deposit to the Aggregate
Purchase Price as provided in Section 5. If the Agreement is terminated before
the Closing, as hereafter defined, pursuant to Subsection 7(a)(i), (ii) or (iii)
or Section 10 hereof, the Company will return the Deposit to the Investor. If
the Agreement is terminated before the Closing pursuant to Subsection 7(a)(iv)
hereof or if the Investor is unable to make full payment to the Company for the
purchased shares at Closing, the Investor will forfeit the Deposit.
5. Closing and Payment. The closing of the acquisition provided for in Section
3 of this Agreement (the "Closing") shall occur on a mutually agreeable date
prior to the Termination Date at the offices of Holland & Knight LLP in Orlando,
Florida or at such other time and place as the parties may agree. At the
Closing: (i) the Investor will pay the Aggregate Purchase Price less the Deposit
by either endorsing a certified or cashier's check made payable to the Company
or wiring immediately available funds to the Company's bank account (which
account number has been previously provided to the Investor), and (ii) the
Company will reimburse the Investor, together with the other Approved Investors,
up to the aggregate sum of $20,000 for amounts paid by the Approved Investors to
any intermediaries or brokers and for the legal and out-of-pocket expenses
incurred by the Approved Investors, provided that the Approved Investors shall
not be entitled to such reimbursement if the Closing does not occur for any
reason.
6. Conditions Precedent.
(a) The respective obligations of the Company and the Investor to effect the
Closing are subject to the satisfaction or waiver by the Company and the
Investor, prior to the Closing of each of the following conditions:
(i) There being no provision of applicable Law or any Court Order that
prohibits or otherwise makes illegal the consummation of the Closing.
(ii) All regulatory approvals required to consummate the transaction
contemplated hereby (other than the shareholder approval required for
the conversion of Preferred Securities) shall have been obtained and
shall remain in full force and effect.
(iii) No investigation, action, suit or proceeding by a Governmental
Authority shall be pending on the date of Closing, which challenges,
or might reasonably be
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expected to result in a challenge to this Agreement, or which might
reasonably be expected to give rise to a claim for damages in a
material amount as a result of the consummation of the transaction
contemplated by this Agreement.
(iv) The Company shall have consummated simultaneously with the
Closing, the transactions contemplated by Share Subscription
Agreements of even date herewith entered into by and between the
Company and each of Xxxxx X. Xxxxxx and Xxxx X. X'Xxxxxx, or any
assignee of each which has been approved in writing by the Company
(such persons, together with the Investor, the "Approved Investors").
(v) The Company shall have received the written confirmation from
NASDAQ that the transactions evidenced by this Agreement do not
require prior stockholder approval.
(b) The obligation of the Investor to effect the Closing is subject to the
satisfaction or waiver by the Investor of the following additional conditions:
(i) The Company shall have performed in all material respects
all of its material obligations under this Agreement required to be performed by
it at or before the Closing.
(ii) Any representation or warranties of the Company contained
in this Agreement shall be true and correct in all material respects as of the
Closing, as if made at and as of such time.
(iii) The Company and the Investor shall have entered into an
Employment Agreement in the form attached hereto as Exhibit "B" (the "Employment
Agreement").
(iv) The Company and the Investor shall have entered into a
Registration Rights Agreement in the form attached hereto as Exhibit "C" (the
"Registration Rights Agreement").
(v) The Board shall have duly adopted resolutions: (1)
approving the terms of (i) this Agreement, (ii) the terms of the Preferred
Securities, (iii) the Employment Agreement, and (iv) the Registration Rights
Agreement; (2) authorizing an employee share incentive program to allow for
options to be issued as provided in the Employment Agreement (the "Option Plan")
to be proposed to the stockholders of the Company for approval at the next
convened annual general meeting of stockholders currently scheduled to occur on
or before February 14, 2003 (the "Annual Meeting"); and (3) approving an
amendment to (i) the bylaws of the Company to require a supermajority vote of
the greater of (A) at least five directors or (B) at least seventy-five percent
(75%) of the directors to remove or change the Chairman of the Board, and (ii)
the Certificate of Incorporation of the Company to also require a vote of at
least seventy-five percent (75%) of the shares of common stock to remove or
change the Chairman of the Board to be proposed to the stockholders of the
Company at the Annual Meeting. Copies of these
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Board resolutions certified by the Secretary of the Company shall be made
available to the Investor no later than 14 business days after execution of this
Agreement.
(vi) The Company will have received a release from UBS Warburg
waiving any claim to compensation arising from this Agreement or the share
purchase evidenced hereby.
(vii) The Company will have secured letters of resignation from
all current directors not shown on Appendix 2 and shall appoint all new
directors shown on Appendix 2 effective as of the Closing.
(viii) The Company shall have entered into Employment Agreements
with Xxxxx Xxxxxx, Xxxxxx Xxxxxxxxxxx, Xxxxxxx Xxxxx, Xxxxx Xxxxxx, Will Xxxxxx,
Jr., Xxxx Xxxx, Xxxxx Xxxxx and Xxxxxxx Xxxxxxxxx. Neither Xxxxx Xxxxxx nor
Xxxxxx Xxxxxxxxxxx shall have terminated their Employment Agreement with the
Company.
(c) The Obligation of the Company to effect the Closing is subject to
satisfaction or waiver by the Company of the following conditions:
(i) The Investor shall have performed in all material respects
all of its material obligations under this Agreement required to be performed by
it at or before the Closing.
(ii) Any representation or warranties of the Investor contained
in this Agreement shall be true and correct in all material respects as of the
Closing, as if made at and as of such time.
7. Termination.
(a) This Agreement may be terminated at any time before the Closing:
(i) by the mutual agreement of the Investor and the Company;
(ii) By either the Company or the Investor, if the Closing has
not occurred by December 15, 2002, provided that the right to terminate this
Agreement under this clause will not be available to any party whose failure to
fulfill any of its obligations under this Agreement resulted in the failure to
consummate the Closing by such date;
(iii) By the Investor, if there has been a material breach of
any representation, warranty or covenant in this Agreement by the Company; or
(iv) By the Company, if there has been a material breach of
any representation, warranty or covenant in this Agreement by the Investor.
(b) The party terminating this Agreement pursuant to this Section will give
written notice of termination to the other party.
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8. Stockholder Approval. At the Annual Meeting, the Company shall seek the
approval of the stockholders of the Company: (i) to allow conversion of the
Preferred Securities to Common Securities; (ii) to adopt the Option Plan; (iii)
to elect the persons listed on Appendix 2 to the Board; and (iv) to amend the
Certificate of Incorporation of the Company to require a seventy-five percent
(75%) vote of the stockholders to remove or change the Chairman of the Board.
Upon the approval of the stockholders at the Annual Meeting, the Preferred
Securities will automatically be converted into the Common Securities pursuant
to the conversion provisions included in Exhibit "A" hereto (the "Conversion").
9. Redemption and Repurchase Rights.
(a) In the event the stockholders do not approve the resolutions permitting
conversion of the Preferred Securities into common stock and the amendment to
the Company's Certificate of Incorporation to require a seventy-five percent
(75%) vote of the stockholders to remove or change the Chairman of the Board at
the Annual Meeting: (i) the Investor will, at a redemption price equal to the
Aggregate Purchase Price, have the option to cause the Company to repurchase the
Common Securities and the Preferred Securities for a period beginning fifteen
(15) days after the Annual Meeting and extending to the date that is six months
from the Closing (the "Redemption Right"), and (ii) the Company will have the
right to repurchase the Common Securities and the Preferred Securities from the
Investor for a period beginning fifteen (15) days after the Annual Meeting and
extending to the date that is six months from the Closing at a price equal to
the Aggregate Purchase Price (the "Repurchase Right").
(b) In the event that prior to the Conversion: (i) the Investor is removed
as a director of the Company; or (ii) Xxxxx Xxxxxx'x employment is terminated by
the Company (other than for Cause, as such term is defined in the Employment
Agreement of even date herewith between the Company and Xxxxx Xxxxxx); or (iii)
Xxxx X'Xxxxxx'x employment is terminated by the Company (other than for Cause,
as defined in the Employment Agreement of even date herewith between the Company
and Xxxx X'Xxxxxx); or (iv) either Xxxx X'Xxxxxx or Xxxxx Xxxxxx is removed from
the Board, then the Company, at the Investor's option, shall repurchase the
Common Securities and the Preferred Securities from the Investor at a price
equal to the Aggregate Purchase Price within fifteen (15) days of such
termination of employment or removal of director.
(c) In the event the Annual Meeting is not held on or before March 15,
2003, the Investor will, at a redemption price equal to the Aggregate Purchase
Price, have the option to cause the Company to repurchase the Common Securities
and the Preferred Securities from the Investor at a price equal to the Aggregate
Purchase Price on or before March 30, 2003.
(d) In the event either the Investor or the Company exercise their
Redemption Right or Repurchase Right, as the case may be, pursuant to this
Section 9, the Company shall pay Investor a fee equal to six percent (6%) per
annum of the Aggregate Purchase Price for the period of time from the Closing
until the date of exercise of the Redemption Right or Repurchase Right.
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10. Adjusted Stockholders Equity Per Share. Notwithstanding anything to the
contrary in this Agreement, either party shall have the option to terminate
this Agreement prior to Closing in the event that stockholders' equity per
share as determined and adjusted pursuant to this Section (the "Adjusted
Stockholders Equity Per Share") is greater than $1.75 or less than $1.45.
Stockholder equity per share shall be determined as of September 30, 2002
by the independent public accountants then regularly servicing the Company,
in accordance with generally accepted accounting principles consistently
applied, based on the audited consolidated financial statements of the
Company, which determination shall be binding on the parties hereto.
Subject to compliance with auditor independence and corporate governance
considerations as effective or proposed by the SEC or NASDAQ, the Investor
shall have the right to consult with the independent public accountants
determining the Stockholder equity per share prior to such determination
and to approve any new accounting firm if the Company's accounting firm as
of the date of this Agreement resigns or is otherwise replaced.
Stockholders equity per share as so determined by the Company's accounting
firm shall then be adjusted as follows to determine the Adjusted
Stockholders Equity Per Share:
a. Stockholders equity per share shall include the value of the
Company's technology assets (which shall be deemed to be $300,000 in
aggregate at September 30, 2002) and the Company's deferred tax assets
(which shall be deemed to be $540,766 at September 30, 2002),
irrespective of the auditor's treatment thereof;
b. All costs related to the transaction contemplated by this Agreement
shall not be expensed but rather shall be debited directly against the
capital investment made by the Approved Investors. Such expenses shall
include legal and tax advisory fees, amounts paid to any
intermediaries or brokers and the legal and out of pocket expenses
incurred by the Investor (in aggregate with all other Approved
Investors, not to exceed $20,000). The aggregate of all such expenses
for entire aggregate investment by the Approved Investors is not to
exceed $200,000. Any excess beyond $200,000 to be deducted against
stockholder's equity per share; and
c. The resulting Stockholders equity per share shall then be reduced
by 7.5%.
11. Representations by the Investor. In connection with the purchase of the
Securities, the Investor acknowledges, warrants and represents to the
Company as follows:
a. The Investor is acquiring the Securities for investment for his own
account and without the intention of participating, directly or
indirectly, in a distribution of the Securities, and not with a view
to resale or any distribution of the Securities, or any portion
thereof.
b. The Investor has knowledge and experience in financial and business
matters and has consulted with its own professional representatives as
it has considered appropriate to assist in evaluating the merits and
risks of this investment. The Investor has had access to and an
opportunity to question the officers of the
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Company, or persons acting on their behalf, with respect to material
information about the Company and, in connection with the evaluation of
this investment, has, to the best of his knowledge, received all
information and data with respect to the Company that the Investor has
requested. The Investor has carefully reviewed all of the Company's filings
with the Securities and Exchange Commission. The Investor is acquiring the
Securities based solely upon its independent examination and judgment as to
the prospects of the Company.
c. The Securities were not offered to the Investor by means of publicly
disseminated advertisements or sales literature.
d. The Investor is acquiring the Securities without being furnished any
offering materials or prospectus.
e. The Investor acknowledges that an investment in the Securities is
speculative and involves a high degree of risk, including a risk of loss of
the entire investment in the Company, and the Investor may have to continue
to bear the economic risk of the investment in the Securities for an
indefinite period. The Investor acknowledges that the Securities are being
sold to the Investor without registration under any state or federal law
requiring the registration of securities for sale, and accordingly will
constitute "restricted securities" as defined in Rule 144 promulgated under
the Securities Act of 1933, as amended (the "Act"). The transferability of
the Securities is therefor restricted by applicable United States Federal
and state securities laws.
f. The Investor acknowledges that each certificate representing Securities
shall be subject to a legend substantially in the following form:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended or any state securities laws and neither
the securities nor any interest therein may be offered, sold, transferred,
pledged, or otherwise disposed of except pursuant to an effective
registration statement under such act or such laws or an exemption from
registration under such act and such laws which, in the opinion of counsel
for the holder, which counsel and opinion are reasonably satisfactory to
counsel for this entity, is available."
12. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor except as set forth on a Schedule of
Exceptions (the "Schedule of Exceptions") furnished to the Investor and its
counsel, and attached as Exhibit D hereto, specifically identifying the relevant
section hereof, which exceptions shall be deemed to be representations and
warranties as if made hereunder:
a. Corporate Existence. The Company and each of its subsidiaries are
entities duly formed under the laws of their respective places of
formation, are each in good standing and have a legal existence, with full
power and authority to own, operate or lease their respective properties
and conduct their respective businesses in the manner and in the places
where such properties are owned or leased or such businesses are conducted.
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b. Authorization of Transaction. Subject to the receipt of necessary
third party approvals or confirmations listed on Appendix 3 hereto
(the "Required Approvals"), the Company has the full power and
authority to execute, deliver and perform this Agreement and the other
agreements to be executed and delivered pursuant to this Agreement
(the "Ancillary Agreements"); to perform its obligations hereunder and
thereunder, and to carry out the transactions contemplated hereby and
thereby. All necessary action, corporate or otherwise, will have been
taken by the Company prior to the Closing to authorize the execution,
delivery and performance of this Agreement and each of the Ancillary
Agreements and the transactions contemplated hereby and thereby. Each
of this Agreement and the Ancillary Agreements has been, or will be at
the Closing, duly executed and delivered by the Company, and each of
this Agreement and the Ancillary Agreements is, or upon the Closing
will be, the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except
(a) as limited by applicable bankruptcy, insolvency or other laws of
general application affecting enforcement of creditors' rights; and
(b) general principles of equity that restrict the availability of
equitable remedies.
c. Capitalization. As of the date of this Agreement, the authorized
capital stock of the Company consists of 8,000,000 shares of common
stock, par value $.01 per share of which 2,375,575 shares are validly
issued and outstanding, fully paid and nonassessable on the date
hereof, and 5,000,000 shares of preferred stock, par value $.01 per
share, none of which are issued or outstanding. In addition, on the
date hereof, 527,224 shares of common stock are subject to issuance
pursuant to presently existing options and warrants. There are no
other outstanding options, warrants, rights, convertible securities or
exchange offers providing for the issuance of common stock or any
other capital stock of the Company.
d. Securities Duly Issued. Upon the issuance of the Securities at the
Closing, the Securities will be duly and validly issued, fully paid
and nonassessable, and will not be subject to any restrictions on
transfer other than those arising under applicable federal and state
securities laws.
e. Present Compliance with Obligations and Laws. Neither the Company
nor any of its subsidiaries are: (i) in violation of their respective
Organizational Documents; (ii) in default in the performance of any
obligation, agreement or condition of any debt instrument which (with
or without the passage of time or the giving of notice) affords to any
person the right to accelerate any indebtedness or terminate any
right; (iii) in default of or in breach of (with or without the
passage of time or the giving of notice) any other contract to which
it is a party or by which it or its assets are bound; or (iv) in
violation of any Court Order or Governmental Authorization that is
held by the Company or its subsidiaries or is applicable to any of the
Company or its subsidiaries or their respective businesses or assets.
Except as set forth on Section 12(e) of the Schedule of Exceptions,
the Company and its subsidiaries have conducted and are now conducting
their businesses and the ownership and operation of their assets in
compliance with all applicable Laws, except where the failure to be in
such compliance would not have a Material Adverse Effect.
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f. No Conflict of Transaction With Obligations and Laws. Except as set
forth on Schedule 12(f) of the Schedule of Exceptions, neither the
execution, delivery and performance of this Agreement or any Ancillary
Agreement, nor the performance of the transactions contemplated hereby
or thereby, will: (a) conflict with or constitute a breach or
violation of any provision of the Organizational Documents of the
Company or any of its subsidiaries; (b) require any Governmental
Authorization, (c) require any consent of any parties to loans,
contracts, leases, licenses and other agreements to which the Company
is a party; (d) constitute (with or without the passage of time or the
giving of notice) a breach of, or default under, any debt instrument
to which the Company or any of its subsidiaries is a party, or give
any person the right to accelerate any indebtedness or terminate,
modify or cancel any right; (e) constitute (with or without the
passage of time or giving of notice) a default under or breach of any
other agreement, instrument or obligation to which the Company or any
of its subsidiaries is a party or by which it or its assets are bound;
(f) result in the creation of any encumbrance upon any capital stock
or any of the assets of the Company or its subsidiaries; (g) conflict
with or result in a violation of any Court Order or Law, or give to
any other person, the right to exercise any remedy or obtain any
relief under any Court Order or Law, to which the Company or any of
its subsidiaries is subject or by which the properties or assets of
the Company or any of its subsidiaries are bound, or (h) result in a
violation of any of the terms or requirements of, or give any
Governmental Authority the right to revoke, suspend or otherwise
modify, any Government Authorization.
g. SEC Reports. The financial statements of the Company and the
related notes contained in the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 2001 and its Quarterly Report
on Form 10-Q for the quarter ended June 30, 2002 present fairly the
financial position of the Company as of the dates indicated therein
and the results of its operations and cash flows for the periods
therein specified. Such financial statements (including the related
notes) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the
periods therein specified and are true, correct and complete in all
respects.
h. Contracts and Commitments. Set forth on Section 12(h) of the
Schedule of Exceptions is a list of all (i) contracts, mortgages,
indentures, agreements, instruments and transactions to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries are bound which involve obligations of, or
payments to, such company in excess of $100,000 in the aggregate; (ii)
agreements between the Company or any of its subsidiaries and the
Investor; (iii) agreements between the Company or any of its
subsidiaries and any officer, director, consultant, stockholder,
employee, affiliate or predecessor company; and (iv) contracts,
agreements, arrangements or understandings which are material to the
business of the Company or any of its subsidiaries (collectively
referred to as the "Material Contracts"). Copies of all Material
Contracts listed in Section 12(h) of the Schedule of Exceptions have
previously been made available to the Investor. All of the Material
Contracts are valid, binding and in full force
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and effect in all material respects, subject to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of the creditors' rights
and rules or laws concerning equitable remedies. Neither the Company nor
any of its subsidiaries are in material default under any such contract.
Except as set forth in Section 12(h) of the Schedule of Exceptions, with
respect to each Material Contract, (a) the Company or its subsidiaries, as
the case may be, has performed in all material respects all obligations
required to be performed to date under such Material Contract; (b) to the
best knowledge of the Company, no party to such Material Contract is in
default, breach or arrears under the terms of such Material Contract; and
(c) to the best knowledge of the Company, no condition exists or event has
occurred that, with the giving of notice or lapse of time or both, would
constitute a material default under such Material Contract.
i. Litigation. Except as set forth in Section 12(i) of the Schedule of
Exceptions, there is no action, suit, claim, proceeding, investigation or
arbitration proceeding pending (or to the best knowledge of the Company,
threatened in writing) against or otherwise involving the Company or any of
its subsidiaries and there are no outstanding Court Orders to which the
Company or any of its subsidiaries is a party or by which any of their
respective assets are bound.
j. ERISA and Employee Benefits. Except as set forth on Section 12(j) of the
Schedule of Exceptions, neither the Company nor any of its subsidiaries has
contributed to or participated in any employee benefit plan subject to the
Employee Retirement Income Security Act of 1974 ("ERISA"), other than
medical benefit plans listed in Section 12(j) of the Schedule of Exceptions
with respect to which the Company or its subsidiary, as the case may be,
has made all required contributions. The Company and its subsidiary are in
compliance with all laws and regulations applicable to such plans under
ERISA, the violation of which, singly or in the aggregate, could have a
Material Adverse Effect.
k. Government Authorizations. The Company and each of its subsidiaries
holds all Government Authorizations which are required to own their
respective properties and assets and to permit the Company and its
subsidiaries to conduct their respective businesses as presently conducted,
except where the failure to hold such Governmental Authorization would not
have a Material Adverse Effect. Set forth in Section 12(k) of the Schedule
of Exceptions is a listing of all such Government Authorizations held by
the Company and its subsidiaries. No consent, approval or authorization of
(or designation, declaration of filing with) any Governmental Authority by
the Company or any of its subsidiaries is required in connection with the
valid execution and delivery of this Agreement, the Ancillary Agreements,
or the offer or sale of the Common Securities or the Preferred Securities,
or the consummation of any other transaction contemplated hereby or under
the Ancillary Agreements, except for Required Approvals shown on Appendix
3.
l. Related-Party Transactions. To the knowledge of the Company, except as
disclosed in SEC Filings made by the Company or listed on Section 12(1) of
the
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Schedule to Exceptions, no employee, officer, director or stockholder of
the Company or any of its subsidiaries or member of his or her immediate
family is directly or indirectly interested in any material contract
with the Company or any of its subsidiaries.
13. Affirmative Covenants of the Company. The Company hereby covenants with the
Investor that between the date of this Agreement and the Closing, except as the
Investor shall otherwise consent, the Company will do the following:
a. Conduct its business only in the ordinary course of business
consistent with past practice and refrain from changing or introducing
any method of management or operations except in the ordinary course
of business and consistent with prior practices;
b. Refrain from incurring any contingent liability as a guarantor or
otherwise with respect to the obligations of others, and from
incurring any other contingent or fixed obligations or liabilities
except those that are usual and normal in the ordinary course of
business;
c. Maintain its equipment and other assets in good working condition
and repair according to the standards that it maintained to the date of
this Agreement, subject only to ordinary wear and tear;
d. Refrain from making any change or incurring any obligation to make
a change in its Organizational Documents or its authorized or issued
capital stock;
e. Refrain from declaring, setting aside or paying any dividend or
making any other distribution in respect of capital stock, or making
any direct or indirect redemption, purchase or other acquisition of
its capital stock;
f. Refrain from merging, consolidating or reorganizing with, or
acquiring, any entity;
g. Use its best efforts to keep intact its business organization, to
keep available its present officers, agents and employees and to
preserve the goodwill of all suppliers, customers and others having
business relations with it;
h. Maintain true, correct and complete books of accounts and records
relating to its business;
i. Comply in all respects with all Laws applicable to the conduct of
its business or its properties or assets;
j. Promptly upon its knowledge thereof, advise the Investor in writing
of the termination or resignation of any key employee and the
circumstances therefore;
k. Pay all taxes, assessments, governmental charges or levies imposed
upon it or its income, profits or assets, or otherwise required to be
paid by it, nor fail to
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pay when due any liability or charge that if, unpaid, might become an
Encumbrance upon any such Company's assets; and
l. Promptly upon its knowledge thereof, advise the Investor in writing
of (i) any event, condition or circumstance occurring from the date
hereof until the Closing that would constitute a violation or breach
of any representation, warranty, covenant, agreement or provision
contained in this Agreement (provided, however, that such disclosure
shall not be deemed to cure any violation or breach of any such
representation, warranty, covenant, agreement or provision), or (ii)
any event, occurrence, transaction or other item that would have been
or required to have been disclosed on any Schedule, delivered
hereunder, had such event, occurrence, transaction or item existed on
the date hereof, and use its commercially reasonable efforts to
prevent or promptly remedy the same.
m. The Company will not, directly or indirectly, through any officer,
director, affiliate, agent or otherwise, solicit, initiate or
encourage submission of any proposal or offer from any person or
entity relating to the acquisition or merger of the Company or any of
its securities or assets or participate in any discussions or
negotiations regarding, furnish to any other person any information
with respect to, or otherwise cooperate in any way with, or assist or
participate in, or facilitate or encourage any effort or attempt by
any other person or entity to do or seek, any of the foregoing.
14. Consummation of Agreement. The Company and the Investor shall each use their
best efforts to perform and fulfill all conditions and obligations on their
respective parts to be performed and fulfilled under this Agreement, to the end
that the transaction contemplated by this Agreement shall be fully carried out.
To this end, each of the Company and the Investor will use best efforts to
obtain all Required Approvals.
15. Survival of Representations and Warranties. All of the representations and
warranties of the Company and the Investor contained in Sections 12 and 11,
respectively, of this Agreement shall survive from the date of this Agreement
until the Conversion.
16. Restrictions on Sale. In consideration of the acceptance of this
subscription, the Investor agrees that the Securities will not be offered for
sale, sold or transferred by the Investor other than pursuant to (i) an
effective registration under the Securities Act, an exemption available under
the Securities Act or a transaction that is otherwise in compliance with the
Securities Act; and (ii) an effective registration under the securities law of
any state or other jurisdiction applicable to the transaction, an exemption
available under such laws, or a transaction that is otherwise in compliance with
such laws.
17. No Review. The Investor understands that no U.S. federal or state agency
has passed upon the offering of the Securities or has made any finding or
determination as to the fairness of any investment in the Securities.
18. Confidentiality. The Investor agrees not to disclose or use any information
provided to the Investor by the Company or any of its agents in connection with
the
12
offering of the Securities, except for the purpose of evaluating an
investment in the Securities.
19. Indemnification.
a. Indemnification by Investor. The Investor agrees to indemnify and
hold harmless the Company and its officers, directors, partners,
employees, agents, and affiliates against any and all loss, liability,
claim, damage, and expense whatsoever (including, but not limited to,
any and all expenses reasonably incurred in investigating, preparing,
or defending against any litigation commenced or threatened or any
claim whatsoever) arising out of or based upon any false
representation or warranty or breach or failure by the Investor to
comply with any covenant or agreement made by the Investor herein or
in any other document furnished by the Investor to the Company to the
Investor in connection with this transaction.
b. Indemnification by Company. The Company agrees to indemnify and
hold harmless the Investor against any and all loss, liability, claim,
damage, and expense whatsoever (including, but not limited to, any and
all expenses reasonably incurred in investigating, preparing, or
defending against any litigation commenced or threatened or any claim
whatsoever) arising out of or based upon any false representation or
warranty or breach or failure by the Company to comply with any
covenant or agreement made by the Company herein or in any other
document furnished by the Company to the Investor in connection with
this transaction.
20. Definitions. In addition to the terms defined throughout this Agreement,
the following terms shall have the indicated respective meanings:
"Court Order" shall mean a court order, judgment, administrative or
judicial order, writ, decree, stipulation, arbitration award or injunction.
"Encumbrance" shall mean any lien, option (including right of first
refusal or first offer), encumbrance, charge, restriction, mortgage, pledge,
security interest, title exception, restriction, claim or charge of any kind or
character.
"Force Majeure" shall mean failure of any party to perform its obligations
under this Agreement due to fire, flood, strikes or other industrial
disturbances, accidents, war, acts of terrorism, riot, insurrection or other
causes beyond the reasonable control of the such party.
"Governmental Authority" shall mean any governmental body, whether
national, state, regional, local, or any subdivision or agency of any of the
foregoing.
"Governmental Authorization" shall mean any license, permit, order,
franchise agreement, concession, grant, authorization, consent or approval from
a Governmental Authority.
"Law" shall include any statute, law, ordinance, rule or regulation of a
13
Governmental Authority.
"Material Adverse Effect" shall mean an event which causes a material
adverse change in the condition, financial or otherwise, business operations,
properties, assets or liabilities of the Company except any material adverse
change resulting from a Force Majeure.
"NASDAQ" shall mean The Nasdaq Stock Market.
"Organizational Documents" shall mean the Certificate of Incorporation of
the Company as filed with the Secretary of State of the State of Delaware on the
date of this Agreement, as the same may be amended from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933.
21. Publicity and Disclosures. Except as may be otherwise required for
compliance with applicable stock exchange rules or securities laws, neither the
Investor nor the Company shall issue nor approve any news release or other
public announcement concerning this Agreement (or any schedules or exhibits
hereto) prior to the Closing without the prior written approval of the other.
22. Irrevocability; Binding Effect. The Investor hereby acknowledges and agrees
that the subscription hereunder is irrevocable by the Investor, that, except as
required by law, the Investor is not entitled to cancel, terminate, or revoke
this Agreement or any agreements of the Investor hereunder, and that this
Agreement and such other agreements shall survive the death or disability of the
Investor and shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives, and
permitted assigns. If the Investor is more than one person, the obligations of
the Investor hereunder shall be joint and several and the agreements,
representations, warranties, and acknowledgments herein contained shall be
deemed to be made by and be binding upon each such person and his heirs,
executors, administrators, successors, legal representatives, and permitted
assigns.
23. Modification. Neither this Agreement nor any provisions hereof shall be
waived, modified, discharged, or terminated except by an instrument in writing
signed by the party against whom any such waiver, modification, discharge, or
termination is sought.
24. Notices. Any notice or other communication required or permitted to be
given hereunder shall by in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given (a) if to the Company, at the address set on the signature page
hereof, or (b) if to the Investor, at the address set forth on the signature
page hereof (or, in either case, to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 25). Any
notice or other communication given by certified mail shall be deemed given at
the time of certification thereof, except for a notice changing a party's
address which shall be deemed given at the time of receipt thereof.
14
25. Assignability. This Agreement and the rights and obligations hereunder are
not transferable or assignable by any party without the prior written consent of
the other party.
26. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida as applied to residents of that
state executing contracts wholly to be performed in that state.
27. Arbitration. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by binding arbitration in Orlando,
Florida in accordance with the rules of American Arbitration Association then in
effect.
28. NOTICE TO FLORIDA RESIDENTS. PURSUANT TO SECTION 517.061(11)(A)(5) OF THE
FLORIDA SECURITIES AND INVESTOR PROTECTION ACT, A FLORIDA SUBSCRIBER HAS A RIGHT
TO RESCIND THE SUBSCRIPTION BY GIVING NOTICE OF SUCH RESCISSION BY TELEPHONE,
TELEGRAPH OR LETTER, WITHIN THREE DAYS AFTER THE CONSIDERATION HEREUNDER IS
FIRST TENDERED TO THE COMPANY. IF THE NOTICE IS TENDERED ORALLY, A WRITTEN
CONFIRMATION THAT IT HAS BEEN RECEIVED SHOULD BE REQUESTED. IT IS PRUDENT TO
SEND NOTICE OF RESCISSION BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO INSURE
THAT IT WAS RECEIVED. IF NOTICE IS NOT RECEIVED BY SUCH TIME, THE FOREGOING
RIGHT OF RESCISSION SHALL BE NULL AND VOID.
[THIS PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed by their authorized official, this Agreement, effective as of the date
first above written.
INTERNATIONAL ASSETS HOLDING
CORPORATION
By: /s/ Diego X. Xxxxxx
------------------------------
Printed Name: Diego X. Xxxxxx
--------------------
Title: Chairman of the Board
---------------------------
Address:__________________________
__________________________________
INVESTOR:
/s/ Xxxx Xxxxxxxxx
----------------------------------
Xxxx Xxxxxxxxx
Address:__________________________
__________________________________
16
APPENDIX 1 - ACCREDITED INVESTOR
An "Accredited Investor" within the meaning of Regulation D under the Securities
Act of 1933 (the "Act") includes the following:
Organizations
(1) A bank as defined in section 3(a)(2) of the Act, or any savings and
loan association or other institution as defined in section 3(a)(5)(A) of the
Act, whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to section 15 of the Securities Exchange Act of 1934;
insurance company as defined in section 2(13) of the Act; an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that act; a Small Business Investment
Company licensed by the U.S. Small Business Administration under section 301(c)
or (d) of the Small Business Investment Act of 1958; an employee benefit plan
within the meaning of Title I of the Employee Retirement Income Security Act of
1974, if the investment decision is made by a plan fiduciary, as defined in
section 3(21) of such act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors.
(2) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(3) A trust (i) with total assets in excess of $5,000,000, (ii) not
formed for the specific purpose of acquiring the Securities, (iii) whose
purchase is directed by a person who, either alone or with his/her purchaser
representative, has such knowledge and experience in financial and business
matters that he/she is capable of evaluating the merits and risks of the
proposed investment.
(4) A corporation, business trust, partnership, or an organization
described in section 501(c)(3) of the Internal Revenue Code, which was not
formed for the specific purpose of acquiring the Securities, and which has total
assets in excess of $5,000,000.
(5) Any entity in which all of the equity owners are "accredited
investors".
Individuals
(6) Individuals with income from all sources for each of the last two
full calendar years whose reasonably expected income for this calendar year
exceeds either of:
(i) $200,000 individual income; or
(ii) $300,000 joint income with spouse.
NOTE: Your "income" for a particular year may be calculated by adding to
your adjusted gross income as calculated for Federal income tax purposes any
deduction for long term capital gains, any deduction for depletion allowance,
any exclusion for tax exempt interest and any losses of a partnership allocated
to you as a partner.
(7) Individuals with net worth as of the date hereof (individually or
jointly with your spouse), including the value of home, furnishings, and
automobiles, in excess of $1,000,000.
(8) Directors, executive officers or general partners of the Issuer.
APPENDIX 2 - DIRECTORS SLATE
Xxxxx Xxxxxx Xxxxx Xxxxxx
Xxxxxx Xxxxxxxxxxx Xxxx X'Xxxxxx
Xx. Xxxxxx X. Xxxxxx [nominee of Xxxx Xxxxxxxxx]
APPENDIX 3 - THIRD PARTY APPROVALS
Written confirmation from NASDAQ.
INTERNATIONAL ASSETS HOLDING CORPORATION
CERTIFICATE OF DESIGNATION
OF
SERIES A PREFERRED STOCK
The undersigned, Diego X. Xxxxxx, certifies that he is the Chairman of the
Board of INTERNATIONAL ASSETS HOLDING CORPORATION, a corporation organized and
existing under the laws of the State of Delaware (the "Company"), and hereby
further certifies as follows:
A. Under the Certificate of Incorporation of the Company, the Company is
authorized to issue 5,000,000 shares, of preferred stock, par value $.01
per share (the "Preferred Stock").
B. Pursuant to the provisions of the Certificate of Incorporation of the
Company, the Board of Directors has adopted the following resolution
creating a series of Preferred Stock designated as "Series A Preferred
Stock":
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the corporation in accordance with the provisions of the
Certificate of Incorporation, a series of preferred stock, par value
$.01 per share, of the corporation be and hereby are created, and that
the designation and number of shares thereof and the voting and other
powers, preferences and relative, participating, optional or other
rights of the shares of such series and the qualifications,
limitations and restrictions thereof are as follows:
1. DIVIDEND RIGHTS.
(a) Participating Dividends. Holders of Series A Preferred shall
be entitled to receive, when and as declared by the Board of Directors, any
dividends payable to the holders of the Common Stock on the basis that the
Series A Preferred have been converted into Common Stock as of the record date
of such dividend pursuant to the provisions of Section 4.
2. VOTING RIGHTS.
(a) No General Rights. Except as otherwise provided herein or as
required by law, the Series A Preferred shall not be entitled to any voting
rights.
(b) Separate Vote of Series A Preferred. For so long as any share
of Series A Preferred remain outstanding, in addition to any other vote or
consent required herein or by law, the vote or written consent of the holders of
more than fifty percent (50%) of the then outstanding Series A Preferred shall
be necessary for effecting or validating the following actions:
(i) Any amendment, alteration, waiver or repeal of any provision
of the Certificate of Incorporation or the Bylaws of the Company (including any
filing of a Certificate of Designation); or
(ii) Any increase or decrease (other than by redemption or
conversion) in the authorized number of shares of Series A Preferred; or
(iii) Any issuance of any stock or any other securities
convertible into equity securities of the Company, other than the issuance of
common stock, par value $.01 per share (the "Common Stock"), upon the conversion
of the Series A Preferred or the issuance of Common Stock upon the conversion of
any convertible security outstanding as of October __, 2002; or
(iv) Any redemption or repurchase of shares of any stock or other
equity security of the Company; or
(v) Any agreement by the Company or its stockholders regarding an
Asset Transfer or Acquisition (each as defined in Section 3(c)); or
(vi) Any action that results in the payment or declaration of a
dividend on any shares of Common Stock or Preferred Stock.
3. LIQUIDATION RIGHTS.
(a) Liquidation Preference. Upon any liquidation, dissolution, or
winding up of the Company, whether voluntary or involuntary, before any
distribution or payment shall be made to the holders of any other class of stock
(a "Junior Stock"), the holders of Series A Preferred shall be entitled to be
paid out of the assets of the Company an amount per share of Series A Preferred
equal to the price paid for each share of Series A Preferred (the "Original
Issue Price") (as adjusted for any stock dividends, combinations, splits,
recapitalization and the like with respect to such shares) for each share of
Series A Preferred held by them (the "Liquidation Preference").
(b) Deemed Liquidations. The following events shall be considered a
liquidation under this Section 3:
(i) Any consolidation or merger of the Company with or into any
other corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of the Company immediately prior to
such consolidation, merger or reorganization, own less than 50% of the Company's
voting power immediately after such consolidation, merger or reorganization, or
any transaction or series of related transactions to which the Company is a
party in which in excess of fifty percent (50%) of the Company's voting power is
transferred (an "Acquisition"); or
(ii) A sale, lease or other disposition of all or substantially
all of the assets of the Company (an "Asset Transfer"); or
2
(c) Pro Rata Distribution. If, upon any liquidation,
distribution, or winding up, the assets of the Company shall be insufficient to
make payment in full to all holders of Series A Preferred of the Liquidation
Preference set forth in Section 3(a), then such assets shall be distributed
among the holders of Series A Preferred at the time outstanding, ratably in
proportion to the full amounts to which they would otherwise be respectively
entitled.
4. CONVERSION.
The Series A Preferred shall be converted into shares of Common Stock on
the following terms:
(a) Automatic Conversion. Subject to and in compliance with the
provisions of this Section 4, upon the approval by the shareholders of the
Company of the conversion provided for in this Section 4, the shares of Series A
Preferred will be automatically converted into fully-paid and nonassessable
shares of Common Stock. The number of shares of Common Stock to which a holder
of Series A Preferred shall be entitled upon conversion shall be the product
obtained by multiplying the "Series A Preferred Conversion Rate" then in effect
(determined as provided in Section 4(b)) by the number of shares of Series A
Preferred being converted.
(b) Series A Preferred Conversion Rate. The conversion rate in
effect at any time for conversion of the Series A Preferred (the "Series A
Preferred Conversion Rate") shall be the quotient obtained by dividing the
Liquidation Preference of the Series A Preferred by the "Series A Preferred
Conversion Price," calculated as provided in Section 4(c).
(c) Series A Preferred Conversion Price. The conversion price for
the Series A Preferred (the "Series A Preferred Conversion Price") shall
initially be the Original Issue Price of the Series A Preferred. Such initial
Series A Preferred Conversion Price shall be adjusted from time to time in
accordance with this Section 4. All references to the Series A Preferred
Conversion Price herein shall mean the Series A Preferred Conversion Price as so
adjusted.
(d) Mechanics of Conversion. Upon the conversion of the Series A
Preferred pursuant to this Section 4, the holder of the Series A Preferred shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Company or any transfer agent for the Series A Preferred. Thereupon, the
Company shall promptly issue and deliver at such office to such holder a
certificate or certificates for the number of shares of Common Stock to which
such holder is entitled. Such conversion shall be deemed to have been made at
the close of business on the date on which the Series A Preferred are converted
pursuant to Section 4(a), and the person entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder of such shares of Common Stock as of the close of business on
such date.
(e) Adjustment for Stock Splits and Combinations. If the Company
shall at any time or from time to time after the date that the first share of
Series A Preferred is issued (the "Original Issue Date") effect a subdivision of
the outstanding Common Stock without a
3
corresponding subdivision of the Preferred Stock, the Series A
Preferred Conversion Price in effect immediately before that subdivision shall
be proportionately decreased. Conversely, if the Company shall at any time or
from time to time after the Original Issue Date combine the outstanding shares
of Common Stock into a smaller number of shares without a corresponding
combination of the Preferred Stock, the Series A Preferred Conversion Price in
effect immediately before the combination shall be proportionately increased.
Any adjustment under this Section 4(e) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(f) Adjustment for Common Stock Dividends and Distributions. If
the Company at any time or from time to time after the Original Issue Date
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, in each such event the Series A Preferred Conversion
Price that is then in effect shall be decreased as of the time of such issuance
or, in the event such record date is fixed, as of the close of business on such
record date, by multiplying the Series A Preferred Conversion Price then in
effect by a fraction (i) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and (ii) the denominator
of which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date plus the number of shares of Common Stock issuable in payment of
such dividend or distribution; provided, however, that if such record date is
fixed and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Series A Preferred Conversion Price shall
be recomputed accordingly as of the close of business on such record date and
thereafter the Series A Preferred Conversion Price shall be adjusted pursuant to
this Section 4(f) to reflect the actual payment of such dividend or
distribution.
(g) Adjustment for Reclassification, Exchange and Substitution.
If at any time or from time to time after the Original Issue Date, the Common
Stock issuable upon the conversion of the Series A Preferred is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than an Acquisition or
Asset Transfer as defined in Section 3(b) or a subdivision or combination of
shares or stock dividend or a reorganization, merger, consolidation or sale of
assets provided for elsewhere in this Section 4), in any such event each holder
of Series A Preferred shall have the right thereafter to convert such stock into
the kind and amount of stock and other securities and property receivable upon
such recapitalization, reclassification or other change by holders of the
maximum number of shares of Common Stock into which such shares of Series A
Preferred could have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as provided herein
or with respect to such other securities or property by the terms thereof.
(h) Reorganizations, Mergers, Consolidations or Sales of Assets.
If at any time or from time to time after the Original Issue Date, there is a
capital reorganization of the Common Stock (other than an Acquisition or Asset
Transfer as defined in Section 3(b) or a recapitalization, subdivision,
combination, reclassification, exchange or substitution of shares provided for
elsewhere in this Section 4), as a part of such capital reorganization,
provision shall be
4
made so that the holders of the Series A Preferred shall thereafter be entitled
to receive upon conversion of the Series A Preferred the number of shares of
stock or other securities or property of the Company to which a holder of the
number of shares of Common Stock deliverable upon conversion would have been
entitled on such capital reorganization, subject to adjustment in respect of
such stock or securities by the terms thereof. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 4
with respect to the rights of the holders of Series A Preferred after the
capital reorganization to the end that the provisions of this Section 4
(including adjustment of the Series A Preferred Conversion Price then in effect
and the number of shares issuable upon conversion of the Series A Preferred)
shall be applicable after that event and be as nearly equivalent as practicable.
(i) Notices of Record Date. Upon (i) any taking by the Company of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or (ii) any Acquisition (as defined in Section 3(b)) or
other capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any merger or
consolidation of the Company with or into any other corporation, or any Asset
Transfer (as defined in Section 3(b)), or any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the Company shall mail to
each holder of Series A Preferred at least twenty (20) days prior to the record
date specified therein a notice specifying (A) the date on which any such record
is to be taken for the purpose of such dividend or distribution and a
description of such dividend or distribution, (B) the date on which any such
Acquisition, reorganization, reclassification, transfer, consolidation, merger,
Asset Transfer, dissolution, liquidation or winding up is expected to become
effective, and (C) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities) shall be entitled to exchange
their shares of Common Stock (or other securities) for securities or other
property deliverable upon such Acquisition, reorganization, reclassification,
transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or
winding up.
(j) Fractional Shares. No fractional shares of Common Stock shall
be issued upon conversion of Series A Preferred. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Series A Preferred by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional share, the Company shall, in lieu of
issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board
of Directors) on the date of conversion.
(k) Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Preferred, such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series A Preferred, the
Company will take such corporate action as
5
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(l) Payment of Taxes. The Company will pay all taxes (other than
taxes based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Series A Preferred, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series A Preferred
so converted were registered.
(m) No Dilution or Impairment. Without the consent of the holders
of then outstanding Series A Preferred as required under Section 2(b), the
Company shall not amend its Amended and Restated Certificate of Incorporation or
participate in any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or take any other voluntary action, for
the purpose of avoiding or seeking to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company, but shall at
all times in good faith assist in carrying out all such action as may be
reasonably necessary or appropriate in order to protect the conversion rights of
the holders of the Series A Preferred against dilution or other impairment.
5. NO REISSUANCE OF SERIES A PREFERRED.
No share or shares of Series A Preferred acquired by the Company by reason
of redemption, purchase, conversion or otherwise shall be reissued.
C. This Certificate of Designation has been duly adopted in accordance with
the provisions of Sections 151 of the General Corporation Law of the State
of Delaware by the Board of Directors of the Company.
IN WITNESS WHEREOF, International Assets Holding Corporation has caused
this Certificate of Designation be signed by its Chairman of the Board, on this
22 day of October, 2002.
INTERNATIONAL ASSETS HOLDING CORPORATION
By: /s/ Diego X. Xxxxxx
----------------------------------------
Diego X. Xxxxxx, Chairman of the Board
6
