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EXHIBIT 10.5
SUBSCRIPTION AGREEMENT
INTERAMERICAS COMMUNICATIONS CORPORATION
InterAmericas Communications Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
The undersigned, KA Investments, LDC (the "Purchaser"), understands that
InterAmericas Communications Corporation, a Texas corporation (the "Company"),
is offering for sale its 7% Convertible Debentures, in the form attached hereto
as Exhibit A, in the aggregate original principal amount of One Million Five
Hundred Thousand Dollars ($1,500,000) (the "Debentures"). and a warrant, in the
form attached hereto as Exhibit B (the "Warrant"), for the purchase of an
aggregate of One Hundred Thousand (100,000) shares of its common stock, $.00 1
par value per share (the "Common Stock"). The Purchaser further understands
that the offering is being made without registration of the Debentures, the
Warrant or the shares of Common Stock issuable upon conversion thereof (the
Debentures, the Warrant and the shares of Common Stock issuable upon conversion
thereof are hereinafter sometimes referred to as the "Securities") under the
Securities Act of 1933, as amended (the "Securities Act"), and is being made
only to "accredited investors" (as defined in Rule 501 of Regulation D under
the Securities Act).
1. Subscription. Subject to the terms and conditions hereof, the Company
agrees to sell. issue and deliver. and Purchaser hereby offers to purchase and
subscribes for (i) Debentures in the aggregate original principal amount of
$600,000, and (ii) a Warrant for the purchase of 40,000 shares of Common Stock,
for a purchase price equal to the aggregate original principal amount of the
Debentures so to be purchased.
2. The Closing. The closing of the transaction contemplated hereby (the
"Closing") shall take place on February 3, 1997 at the offices of Xxxxxxxx &
Xxxxxx, 000 00xx Xxxxxx, Xxxxxx, Xxxxxxxx 00000, at 9:30 a.m. or at such other
time and place as shall be agreed to by the Company and the Purchaser (the
"Closing Date"). At the Closing, payment shall be made by wire transfer against
delivery of the Debentures and the Warrant to be purchased by the Purchaser. In
addition, the Company shall deliver to the Purchaser an opinion of Company
counsel in the form of Exhibit C
3. Securities Act registration.
3.1. The Company shall use its best efforts to register promptly under the
Securities Act, at the Company's expense (other than underwriting discounts and
commissions, if any), all of the shares of Common Stock issuable upon the
conversion of the Debentures and exercise of the Warrants issued to the
Purchaser (the "Registrable Shares") and in that connection shall file, by no
later than ninety (90) days after the date hereof, a registration statement
with respect to the Registrable Shares (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC"). Notice of effectiveness of the
Registration Statement shall be furnished promptly to the Purchaser. The
Company shall use its best efforts to maintain the effectiveness of the
Registration Statement and from time to time will amend or supplement such
Registration Statement and the prospectus contained therein as and to the
extent necessary to comply with the Securities Act. The effectiveness of the
Registration Statement shall be maintained with respect to the Registrable
Shares until all of the Registrable Shares have been sold pursuant thereto or
such date as all of the Registrable Shares may be sold during any one period of
three (3) consecutive months pursuant to Rule 144 under the Securities Act or
otherwise without registration.
3.2 (a) If the Company shall determine to register any of its securities
either for its own account or the account of a security holder or holders
exercising their respective demand
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registration rights, other than a registration relating solely to employee
benefit plans, or a registration relating to a corporate reorganization or
other transaction under Rule 145, or a registration on any registration form
that does not permit secondary sales, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) use its best efforts to include in such registration (and any related
qualification under blue sky laws or other compliance), except as set forth in
Section 3.2(b) below and in any underwriting involved therein, all the
Registrable Shares specified in a written request or requests, made by any
Holder and received by the Company within ten (10) days after the written
notice from the Company described in clause (i) above is mailed or delivered by
the Company. Such written request may specify all or a part of a Holder's
Registrable Shares provided that such Registrable Shares have not previously
been registered pursuant to the Registration Statement filed pursuant to
Section 3.1.
(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
3.2(a). In such event, the right of any Holder to registration pursuant to this
Section 3.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Shares in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders of securities of the Company with registration rights to
participate therein distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 3.2, if the
representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the limitations set forth
below) exclude all Registrable Shares from, or limit the number of Registrable
Shares to be included in, the registration and underwriting. The Company shall
so advise all holders of securities requesting registration, and the number of
shares of securities that are entitled to be included in the registration and
underwriting shall be allocated first to the Company for securities being sold
for its own account. If any person does not agree to the terms of any such
underwriting, he shall be excluded therefrom by written notice from the Company
or the underwriter. Any Registrable Shares or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
3.3. In the event that the Company registers under the Securities Act any
of the Registrable Shares held by the Purchaser, the Company shall indemnify
and hold harmless the Purchaser and each underwriter of such shares (including
any broker or dealer through whom such of the shares may be sold) and each
person, if any, who controls the Purchaser or any such underwriter within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") from and against any and
all losses, claims, damages, expenses or liabilities, joint or several, to
which they or any of them become subject under the Securities Act or the
Exchange Act or otherwise, and, except as hereinafter provided, shall reimburse
the Purchaser and each of the underwriters and each such controlling person, if
any, for any legal or other expenses reasonably incurred by them or any of them
in connection with investigating or defending any actions whether or not
resulting in any liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or in the prospectus (or the Registration Statement or prospectus as
from time to time amended or supplemented by the Company) or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. unless such untrue statement or omission was made in
such Registration Statement or prospectus in reliance upon and in conformity
with information furnished in writing to the Company in connection therewith by
the Purchaser (insofar as indemnification of the Purchaser is concerned) or any
underwriter (insofar as indemnification of any such underwriter is
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concerned) relating thereto expressly for use therein. Promptly after receipt
by the Purchaser or any underwriter or any person controlling any of them, as
the case may be, of notice of a claim which the foregoing indemnification
applies, the Purchaser or such other person shall notify the Company in writing
of the commencement thereof, and, subject to the provisions hereinafter stated,
the Company shall assume the defense of such action (including the employment
of counsel, who shall be counsel reasonably satisfactory to the Purchaser or
such underwriter or controlling person, as the case may be. and the payment of
expenses) insofar as such action shall relate to any alleged liability in
respect of which indemnity may be sought against the Company. The Purchaser or
any underwriter or any such controlling person shall have the right to employ
separate counsel in any such action and to participate in the defense thereof
but the fees and expenses of such counsel shall not be at the expense of the
Company unless: (i) the employment of such counsel has been specifically
authorized by the Company. (ii) the Company has failed to assume the defense
and employ counsel, or (iii) the named parties of any such action, suit or
proceeding (including any impleaded parties) include both the person or persons
seeking indemnification (the "indemnified person") and the Company and such
indemnified person shall have been advised by its counsel that representation
of the indemnified person and the Company by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Company shall not
have the right to assume the defense of such action, suit or proceeding on
behalf of such indemnified person). The Company shall not be liable to
indemnify any person for any settlement by such person of any such action
effected without the Company's consent.
3.4. The Purchaser shall indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act, against all
losses, claims, damages, expenses or liabilities or actions to which they or
any of them become subject under the Securities Act or the Exchange Act or
otherwise, and shall reimburse the Company, its officers and directors and each
such controlling person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, insofar as such losses,
claims damages. expenses, liabilities or actions arise out of or are based upon
any information relating to the Purchaser furnished by or on behalf of the
Purchaser in writing specifically for inclusion in such Registration Statement.
Notwithstanding the above, the liability of the Purchaser under this Section
3.4 shall not exceed the proceeds (net of underwriting discounts or
commissions) received by the Purchaser upon the sale of the Registrable Shares.
3.5. Any losses, claims, damages, liabilities and reasonable expenses for
which an indemnified party is entitled to indemnification under Sections 3.3
and 3.4 of this Agreement shall be paid by the indemnifying party to the
indemnified party as such losses, claims, damages, liabilities and expenses are
incurred.
3.6. The Company shall prepare and file with the SEC such amendments and
supplements to the Registration Statement, and the prospectus used in
connection with such Registration Statement as, in the opinion of the counsel
to the Company, may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such Registration Statement.
3.7 The Company shall notify each seller of Registrable Shares covered by
the Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in light of the circumstances
then existing, and at the request of any such seller. prepare and furnish to
such seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include any untrue
statement of a material fact required to be stated therein or
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necessary to make the statements therein not misleading or incomplete in light
of the circumstances then existing.
3.8. The Company shall furnish to the Purchaser such number of copies of a
prospectus in conformity with the requirements of the Securities Act, and such
other documents as may reasonably be requested in order to facilitate the
disposition of the Registrable Shares owned by the Purchaser.
3.9. The Company shall use its best efforts to register and qualify the
securities covered by such Registration Statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Purchaser; provided, however, that the Company shall not be required in
connection therewith, or as a condition thereto, to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act.
3.10. The Company shall notify each holder of Registrable Shares covered
by such Registration Statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act and of the happening of
any event as a result of which the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
3.11. [Reserved]
3.12 The Company shall use its best efforts to maintain the listing of its
Common Stock on The Nasdaq SmaIlCap Market (or on The Nasdaq National Market,
the American Stock Exchange or the New York Stock Exchange), for at least the
thirty-six (36) month period commencing on the Closing Date.
3.13 The Company will make and keep public information regarding the
Company available as those terms are understood and defined in Rule 144 under
the Securities Act, at all times from and after ninety (90) days following the
effective date of the initial registration statement filed by the Company under
the Securities Act; and
3.14 The Company will file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Securities Exchange Act of I 934 as amended, for at least the thirty-six (36)
month period commencing on the Closing Date.
3.15 In the event that all of the Registrable Shares have not been
registered for resale on or before June 30, 1997, the Company shall, for each
day or portion thereof that said Registration Statement is not declared
effective, in addition to the interest accruing at the rate of 7% per annum
otherwise payable pursuant to the terms of the Debentures, pay the Purchaser
the premium set forth in Section 1 of the Debentures.
4. Representations. Warranties and Covenants of the Company. The Company
represents and warrants to the Purchaser as follows, such representations and
warranties to be true and correct as of the Closing Date.
(a) The Common Stock issuable upon the conversion of the Debentures has
been duly authorized and, when issued and delivered to the Purchaser in
accordance with the terms of said Debentures, will be validly issued, fully
paid and nonassessable.
(b) The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Texas with full corporate power
and authority to own, lease and
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operate its properties and to conduct its business as currently conducted, and
is duly registered and qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its properties or
the conduct of its business requires such registration or qualification. except
where the failure so to register or qualify does not have a material adverse
effect on the condition (financial or other), business, properties, net worth
or results of operations of the Company.
(c) The Company has registered its Common Stock pursuant to Section 12 of
the Exchange Act and the Common Stock is listed and trades on The Nasdaq
SmallCap Market. The Company has filed all material required to be filed
pursuant to all reporting obligations under either Section 13(a) or 15(d) of
the Exchange Act for a period of at least twelve (12) calendar months
immediately preceding the offer or sale of the Debentures (or for such shorter
period that the Company has been required to file such material).
(d) Neither the issuance and sale of the Securities, the execution.
delivery or performance of this Agreement by the Company, nor the consummation
by the Company of the transactions contemplated hereby (i) requires any
consent, approval, authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or other governmental
body, agency or official or conflicts or will conflict with or constitutes or
will constitute a breach of. or a default under, the certificate of
incorporation or by-laws, or other organizational documents, of the Company or
any of its subsidiaries or (ii) conflicts or will conflict with, or constitutes
or will constitute a material breach of, or default under, any material
agreement, indenture, lease or other instrument to which the Company or any of
its subsidiaries is a party or by which any of them or any of their respective
properties may be bound. or violates or will violate any statute, law, or any
of its subsidiaries or any of their respective properties, or will result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to the terms of
any agreement or instrument to which any of them is a party or by which any of
them may be bound or to which any of the property or assets of any of them is
subject.
(e) The execution and delivery of, and by the performance by the Company
of its obligations under this Agreement have been duly and validly authorized
by the Company, and this Agreement has been duly executed and delivered by the
Company and constitutes the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms. and the Company
has full corporate and legal power to enter into this Agreement and perform all
of its obligations hereunder.
(f) As of October 31, 1996, the Company has authorized Fifty Million
(50,000.000) shares of Common Stock, $001 par value per share, of which
16,152,518 shares are issued and outstanding and Ten Million (10,000,000)
shares of preferred stock, $001 par value per share. of which none are issued
and outstanding. All such shares have been duly and validly issued and are
fully paid and nonassessable. Except as set forth on Schedule 4(f) attached
hereto, the Company has outstanding no other shares of any class of capital
stock. There are no subscriptions, options, warrants, scrip, rights. calls,
convertible securities, or any other similar agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock,
or other securities of the Company obligating. or which may obligate the
Company to issue, deliver or sell or cause to be issued, delivered or sold.
additional shares of its capital stock or obligating or which may obligate the
Company to grant. extend or enter into any such subscription, option, warrant,
scrip, right, call, convertible security, or other similar agreement.
arrangement, or similar commitment.
(g) There are no legal or administrative proceedings investigation of any
kind or nature now pending or to the knowledge of the Company, threatened
before any court or administrative body against the Company nor is the Company
subject to any unsatisfied judgment, order or decree of any court of law,
administrative board, regulatory agency, arbitrator or arbitration panel.
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(h) Since September 30, 1996, the business of the Company has been
operated only in the ordinary and normal course, and there has not been, after
such date, any material adverse change in the earnings, assets, liabilities,
financial condition or in the operation of its businesses.
5. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
(a) The Purchaser is aware that no federal or state agency has passed upon
the Common Stock or made any finding or determination concerning the fairness
of this investment and that this investment is subject to numerous risks,
including those set forth on Schedule 5(a) hereto.
(b) The Purchaser has had an opportunity to ask questions of and receive
answers from representatives of the Company, concerning the terms and
conditions of this investment.
(c) The Securities for which the Purchaser hereby subscribes will be
acquired for the Purchaser's own account, for investment only and not with a
view toward resale or distribution in a manner which would require registration
under the Securities Act.
(d) The Purchaser acknowledges that, until the Registration Statement is
declared effective by the SEC, there are restrictions on the transferability of
shares of Common Stock as required pursuant to federal and state securities
laws. The Purchaser further agrees to be responsible for compliance with all
conditions on transfer imposed by any state blue sky or securities law. The
Purchaser acknowledges that each certificate representing the Registrable
Shares shall be stamped with a restrictive legend substantially similar to the
following:
"The securities evidenced by this certificate have not
been registered under the United States Securities Act of
1933. as amended (the "Act"), or any state securities
laws. and may not be offered or sold, transferred,
pledged, hypothecated or otherwise disposed of except (i)
pursuant to an effective registration statement under the
Act, (ii) to the extent applicable, Rule 144 under the
Act (or any similar rule under the Act relating to the
disposition of securities) or (iii) if an exemption from
registration under such Act is available.
Notwithstanding the foregoing, the securities evidenced
by this certificate are also subject to the registration
rights set forth in that certain Subscription Agreement
by and between the original holder hereof and the
Company, a copy of which is on file at the Company's
principal executive office."
(e) The Purchaser is an "accredited investor" as defined in Rule 501(a)
under the Securities Act. The Purchaser is an organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, and is a
corporation, Massachusetts or similar business trust or partnership not formed
for the specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000. The Purchaser agrees to furnish any additional
information requested to assure compliance with applicable federal and state
securities laws in connection with the purchase and sale of the Securities.
6. Brokers. Each of the Company and Purchaser hereby indemnifies and holds
the other harmless from any liability for any brokers' or finders' fee with
respect to this Agreement or the transactions contemplated hereby for which the
Company or the Purchaser, as the case may be, is responsible. It is
specifically acknowledged and agreed that the Company is liable for any fees
payable to Corporate Capital Management, L.L.C.
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7. Waiver. Amendment. Neither this Agreement nor any provisions hereof
shall be modified, changed, discharged or terminated except by an instrument in
writing, signed by the party against whom any waiver, change, discharge or
termination is sought.
8. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, their respective successors and
assigns, and no other person shall have any right or obligation hereunder.
Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by either the Company or the
Purchaser without the prior written consent of other party and any assignment
in violation hereof shall be void, provided that the Purchaser may assign its
rights and obligations hereunder to any person acquiring some or all of the
Securities, provided that such transfer (i) is made in accordance with Section
5 hereof and is not pursuant to the effective Registration Statement and (ii)
such person agrees in writing to be bound by the terms hereof.
9. Certain Agreements. The Company covenants and agrees that during the
sixty (60) days following the Closing Date, neither the Company, nor any
affiliate of the Company, nor any person acting on behalf of the Company shall,
without the prior written consent of the Purchaser, agree to enter. enter into,
or consummate any subsequent equity securities offering (including any debt
offering convertible into equity securities of the Company) except for : (i)
the issuance of stock options pursuant to the Company's existing stock option
plans and the issuance of Common Stock pursuant to presently outstanding stock
options and convertible securities; (ii) the firmly underwritten public
offering of its equity or debt securities; and (iii) the issuance of shares of
its capital stock in consideration in whole or in part for one or more
acquisitions made by the Company. Except as set forth above, the Company
further covenants and agrees that it shall not engage in any offering,
resulting in gross proceeds to the Company of less than $1,500,000, from the
period commencing with Closing Date and terminating one hundred twenty (120)
days after the Closing Date, without first offering the Purchaser the
opportunity (which shall remain open for a period often (10) business days from
the date the Purchaser receives notice thereof) to purchase up to all of such
additional securities (in the discretion of the Purchaser) on the terms and
conditions which the Company proposes to offer such additional securities to
third parties. Any proposed sale of securities on terms and conditions
different from those offered to the Purchaser. as well as any subsequent
proposed sale of any such additional securities by the Company, shall again be
subject to the first refusal rights of the Purchaser and shall require
compliance by the Company with the procedures described in this Agreement. The
Company further covenants and agrees to provide the Purchaser with prompt
notice (in any event not later than two (2) business days after the fact) of
the date of closing and the substantive terms and provisions of any such
offering with any third party which was the subject of the right of first offer
described in this Section 9.
10. Choice of Law; Conflict of Law; Jurisdiction and Venue. Except as
otherwise expressly provided herein, the terms, conditions and enforceability
of this Agreement shall be governed by and interpreted under the laws of the
State of Illinois. Any claim, dispute or disagreement relating to the terms
and conditions of this Agreement, or arising from this Agreement or the subject
matter of this Agreement, may be brought only in the Circuit Courts of Xxxx or
DuPage Counties in the State of Illinois or in the United States District Court
for the Northern District of Illinois, which shall have exclusive jurisdiction
thereof. The parties to this Agreement consent to such jurisdiction and venue
and hereby knowingly and voluntarily waive all objections thereto on the basis
of lack of personal jurisdiction, venue or convenience.
11. Section and Other Headings. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
12. Multiple Counterparts. This Agreement may be executed in one or more
counterparts. each of which will be deemed to be an original but all of which
will constitute one and the same instrument. However, in enforcing any party's
rights under this Agreement it will be necessary to produce only one copy of
this Agreement signed by the party to be charged.
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13. Notice. Any notice to be given or to be served upon any party in
connection with this Agreement must be in writing and will be deemed to have
been given and received upon confirmed receipt, if sent by facsimile, or two
(2) days after it has been submitted for delivery by Federal Express or an
equivalent carrier, charges prepaid and addressed to the following addresses
with a confirmation of delivery:
If to the Company, to:
InterAmericas Communications Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn.:Xxxxxxxx X. Northland, Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx Xxxxx, Esq.
Xxxxx & XxXxxxxx
Xxxxxxx Xxxxx - Xxxxx 0000
000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Purchaser, to:
KA Investments, LDC
Field Secretaries
c/o Bank of Xxxxxxxxxxx International Ltd.
X.X. Xxx 000
Xxxxxxxxxxx Xxxxx, Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx
Attn.:Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to;
Xxxxxxx X. Xxxx, Esq.
Xxxxxxxx & Xxxxxx
950 0 0xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may, at any time by giving notice to the other party, designate any
other address in substitution of an address established pursuant to the
foregoing to which such notice will be given.
15. Fees and Expenses. Each of Purchaser and the Company agrees to pay
its own expenses incident to the performance of its obligations hereunder
including, but not limited to, the fees and disbursements of such party's legal
counsel; provided, however, that the prevailing party in any action suit or
proceeding brought before or by any court or governmental agency or body,
domestic or foreign
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arising out of the transactions contemplated hereby shall be entitled to be
reimbursed for its reasonable legal fees and expenses.
16. Binding Effect. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns.
[SIGNATURE PAGE FOIIOWS]
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The undersigned acknowledges that this Agreement shall not be effective
unless and until accepted by the Company as indicated below.
Dated this 3rd day of February, 1997.
KA INVESTMENTS, LDC
By: /s/ Field Secretaries (Cayman) Ltd.
------------------------------------
Name: Field Secretaries (Cayman) Ltd.
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Title: Secretary
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THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 3RD DAY OF FEBRUARY,
1997.
INTERAMERICAS COMMUNICATIONS
CORPORATION
By: /s/ Xxxxxxxx X. Northland
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Name: Xxxxxxxx X. Northland
----------------------------------
Title: Chairman & CEO
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Exhibit A
THE SECURITIES REPRESENTED BY THE DEBENTURES AND THE SHARES OF COMMON STOCK OF
INTERAMERICAS COMMUNICATIONS CORPORATION TO BE ISSUED UPON ANY CONVERSION OF
THIS DEBENTURE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT
BE OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT,
(II) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE
UNDER THE ACT RELATING TO THE DISTRIBUTION OF SECURITIES) OR (III) IF AN
EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE. THE SECURITIES
EVIDENCED BY THIS DEBENTURE ARE ALSO SUBJECT TO THE REGISTRATION RIGHTS SET
FORTH IN THAT CERTAIN SUBSCRIPTION AND PURCHASE AGREEMENT BY AND BETWEEN THE
HOLDER HEREOF AND THE COMPANY, A COPY OF WHICH IS ON FILE AT THE COMPANY'S
PRINCIPAL EXECUTIVE OFFICE.
No.___ $_______
____ INTERAMERICAS COMMUNICATIONS CORPORATION
7% CONVERTIBLE DEBENTURE DUE FEBRUARY 3,2000
THIS DEBENTURE is one of a duly authorized issue of Debentures of
InterAmericas Communications Corporation, a corporation duly organized and
existing under the laws of the State of Texas (the "Company"), designated as
its 7% Convertible Debentures due February 3, 2000 in an aggregate original
principal amount not exceeding One Million Five Hundred Thousand Dollars
($1,500,000) (the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to KA Investments, LDC
registered holder hereof(the "Holder"), the principal sum of One Hundred Fifty
Thousand Dollars ($150,000) on February 3, 2000 (the "Maturity Date") and to
pay interest on the principal sum outstanding from time to time in arrears at
the rate of 7% per annum, compounded annually and payable on a semi-annual
basis commencing six months after the date hereof, computed on the basis of the
actual number of days elapsed in a 365-day year. Any accrued and unpaid
interest shall be payable in full on the Maturity Date or, if earlier, on each
Conversion Date (hereinafter defined). Accrual of interest shall commence on
the date hereof until payment in full of the principal sum has been made or
duly provided for. All accrued and unpaid interest shall bear interest at the
same rate from and after the due date of the interest payment until so paid.
The interest so payable, less any amounts required by law to be deducted or
withheld, will be paid on the Maturity Date or, if earlier, on each Conversion
Date, to the person in whose name the Debenture is registered on the records of
the Company regarding registration and transfers of the Debentures (the
"Debenture Register"); provided, however, that the Company's obligation to a
transferee of this Debenture arises only if such transfer, sale or other
disposition is made in accordance with the terms and conditions of the
Subscription Agreement executed by the original Holder in connection with the
purchase of the Debentures (the "Subscription Agreement"). The principal of,
and interest on, the Debentures is payable in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts, at the address last appearing on the Debenture
Register of the Company, as designated in writing by the Holder from time to
time. In lieu of a cash interest payment, the Holder may require the Company to
issue shares of its Common Stock, $.001 par value per share (the "Common
Stock"), or a combination of Common Stock and cash as payment of the interest
then due and payable. If the Holder elects to receive all or a portion of the
interest in Common Stock, the Company shall issue to the Holder such number of
fully paid and non-assessable shares of
12
Common Stock as shall have an aggregate average closing bid price (as reported
on the Nasdaq SmallCap Market) for the five (5) consecutive trading days ending
on the trading day prior to the date such interest is payable, equal in amount
to the interest which the Holder has elected to receive in kind.
This Debenture is subject to the following additional provisions:
1. In the event that the Company has not registered for resale all of the
Registrable Shares pursuant to Section 3 of the Subscription Agreement on or
before June 30, 1997, the Company shall, for each day or portion thereof that
such Registrable Shares are not registered for resale, in addition to the
interest accruing at the rate of 7% per annum otherwise payable pursuant to the
terms of the Debentures, pay the Holder a premium equal to one tenth of one
percent (0.1 O/O) of the aggregate outstanding principal amount of the
Debentures, payable weekly in arrears. commencing July 1, 1997. The premium to
be paid, if any, shall constitute liquidated damages for the Company's failure
to cause the registration of the Registrable Shares. The parties agree that the
foregoing damages are reasonable and that the anticipated damages for the
failure of the Company to effect such registration are uncertain in amount and
difficult to be proved. The premium shall accrue and be payable on a weekly
basis in cash or, in lieu of a cash premium payment the Holder may, at its
option, require the Company to issue shares of its Common Stock or a
combination of Common Stock and cash as payment of the premium then due and
payable until such time as the Holder receives notification of the
effectiveness of the Registration Statement or the registration to be effected
pursuant to Section 3.2 of the Subscription Agreement. If the Holder elects to
receive all or a portion of the premium in Common Stock, the Company shall
issue to the Holder such number of fully paid and non-assessable shares of
Common Stock as shall have an aggregate average closing bid price (as reported
on The Nasdaq SmalICap Market) for the five (5) consecutive trading days ending
on the trading day prior to the date such premium is payable, equal in amount
to the cash premium which the Company is required to pay in kind.
2. The Debentures are issuable in denominations of Fifty Thousand Dollars
($50,000) and integral multiples thereof. This Debenture is exchangeable for an
equal aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holder. No service charge will be made for
such registration or transfer or exchange.
3. The Company shall be entitled to withhold from all payments of interest
on this Debenture any amounts required to be withheld under the applicable
provisions of the United States income tax laws or any other applicable laws at
the time of such payments.
4. This Debenture has been issued subject to certain investment
representations of the original Holder hereof (set forth in Section 5 of the
Subscription Agreement) and may be offered, sold, transferred or exchanged only
in compliance with the Securities Act. Prior to due presentment for transfer of
this Debenture, the Company and any agent of the Company may treat the person
in whose name this Debenture is duly registered on the Debenture Register as
the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Debenture be overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary.
5. Subject to the provisions of Section 7 hereof, the Holder of this
Debenture shall have the option to convert up to One Hundred percent (100%) of
the of the principal amount of the Debentures originally issued to the Holder
at any time and from time to time into shares of the Company's Common Stock, at
a conversion price for each share of Common Stock equal to the lesser of (i)
the average closing bid price (as reported by The Nasdaq SmaIlCap Market) of
the Company's Common Stock for the five (5) consecutive trading days ending on
the trading day immediately preceding the date of the Debentures (the "Fixed
Conversion Price") or, (ii) eighty-three percent (83%) of the average closing
bid price (as reported by The Nasdaq SmalICap Market) of the Company's Common
Stock for the five (5) consecutive trading days ending on the trading day
immediately preceding the Conversion Date (hereinafter defined) (such lesser
value being hereinafter referred to as the 'Conversion Price"). Notwithstanding
the foregoing, in the event that the closing bid price (as reported by The
Xxxxxx
0
00
XxxxXXxx Xxxxxx) of the Company's Common Stock for ten (10) consecutive trading
days is equal to, or less than $2.25 (as adjusted for stock splits.
combinations and similar recapitalizations affecting the Common Stock), the
Company may. on one and only one occasion, suspend the Purchaser's ability to
convert any part of the outstanding Debentures for a period not to exceed
forty-five (45) days.
6. Conversion of this Debenture shall be effectuated by surrendering the
Debenture to the Company with the form of Notice of Conversion attached hereto
as Schedule 1. executed by the Holder of this Debenture evidencing such
Holder's intention to convert this Debenture or a specified portion (as
provided for above) hereof. The amount of accrued but unpaid interest as of the
Conversion Date shall be subject to conversion and paid in shares of Common
Stock valued. at the Conversion Price. No fractional shares of the Common
Stock or scrip representing fractional shares will be issued on conversion, but
the number of shares of Common Stock issuable shall be rounded to the nearest
whole share. The date on which Notice of Conversion is given shall be deemed to
be the date on which the Holder has delivered the Debentures with the Notice of
Conversion duly executed, to the Company, or if earlier, the date such Notice
of Conversion is delivered to the Company provided the Debentures are received
by the Company within five (5) trading days thereafter. Such date is referred
to herein as the "Conversion Date". Facsimile delivery of the Notice of
Conversion shall be accepted by the Company. The Company shall issue and
register, within three (3) trading days after delivery to the Company of such
Notice of Conversion, if the Company has received the original Notice of
Conversion and Debenture(s) being so converted by such date, the number of
shares of Common Stock to which the Holder shall be entitled, registered in
such street or nominee name as may be directed by the Holder in the Notice of
Conversion. The Company shall ensure that the shares of Common Stock are at all
times Depository Trust Corporation eligible. In the event that the Company
fails for any reason to effect delivery of such shares of Common Stock within
such three (3) trading day period; (i) the Company shall pay the Holder a
premium equal to one percent (1%) of the aggregate principal amount of the
Debentures then outstanding and held by the Holder, payable daily, commencing
on the fourth (4th) trading day after delivery to the Company of such Notice of
Conversion or(ii) the Holder may, in its sole discretion, revoke the relevant
Notice of Conversion by delivering a notice to such effect to the Company
whereupon the Company and the Holder shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion. The
parties agree that the foregoing damages are reasonable and that the
anticipated damages for the failure of the Company to effect such delivery are
uncertain in amount and difficult to be proved.
7. The Conversion Price and number of shares of Common Stock issuable upon
conversion shall be subject to adjustment from time to time as provided in this
Section 7.
(a) In the event the Company should at any time or from time to time after
the date of this Debenture fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly. additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split or subdivision if no record date is fixed), the Fixed
Conversion Price shall be appropriately decreased so that the number of shares
of Common Stock issuable on conversion of the Debentures shall be increased in
proportion to such increase in the aggregate number of shares of Common Stock
outstanding and those issuable with respect to such Common Stock Equivalents.
(b) If the number of shares of Common Stock outstanding at any time after
the date of the Debentures is decreased by a combination of the outstanding
shares of Common Stock. then, following the record date of such combination,
the Fixed Conversion Price shall be appropriately increased so that the number
of shares of Common Stock issuable on conversion of the Debentures shall be
decreased in proportion to such decrease in outstanding shares.
3
14
8. 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 Debentures, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
of the outstanding principal amount and accrued interest thereon; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of the Debentures, in addition to such
other remedies as shall be available to the Holder, the Company will take such
corporate action as 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 purposes, including, without limitation,
using its best efforts to obtain the requisite stockholder approval necessary
to increase the Company's authorized Common Stock.
9. The Company shall be entitled to prepay the entire amount of the
Debentures or any portion hereof, at anytime or from time to time, upon not
less than ten (10) (nor more than twenty (20)) days' prior written notice. The
prepayment price shall equal One Hundred Seventeen Percent (117%) of the
principal amount so to be prepaid plus all accrued and unpaid interest. Such
prepayment shall be effected by written notice to the Holder, accompanied by
prepayment by wire transfer of immediately available funds to an account
designated by the Holder. Any such prepayment shall be made pro rata among the
Debentures in proportion to the original principal amount thereof.
10. Any of the following shall constitute an "Event of Default":
a. The Company shall fail to make any payment
(whether principal, interest or otherwise) on the Debentures
as and when the same shall be due and payable and such default
shall continue for five (5) business days after the due date
thereof;
b. Any of the representations or warranties made by
the Company herein, in the Subscription Agreement, or in any
certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the
Company in connection with the execution and delivery of the
Debentures or the Subscription Agreement shall be false or
misleading in any material respect as of the date made;
c. The Company shall fail to perform or observe. in
any material respect, any other material covenant, term,
provision, condition, agreement or obligation of the Company
under the Debentures or the Subscription Agreement and such
failure shall continue uncured for a period of five (5)
business days after the first date on which such failure
arises (it being understood that in the case of defaults which
can not reasonably be cured within a 5-day period no grace
period shall be necessary as a precondition to the failure to
perform such covenant constituting an Event of Default);
d. The Company shall (1) make an assignment for the
benefit of its creditors or commence proceedings for its
dissolution; or (2) apply for or consent to the appointment of
a trustee, liquidator, custodian or receiver thereof, or for a
substantial part of its property or business;
e. A trustee, liquidator, custodian or receiver
shall be appointed for the Company or for a substantial part
of its property or business without its consent and shall not
be discharged within sixty (60) days after such appointment;
f. Bankruptcy, reorganization, insolvency or
liquidation proceedings or other proceedings for relief under
any bankruptcy law or any law for the relief of debtors
4
15
shall be instituted by or against the Company and. if
instituted against the Company, shall not he dismissed
within sixty (60) days after such institution or the
Company shall by any action or answer approve of; consent
to, or acquiesce in any such proceeding or admit the
material allegations of. or default in answering a petition
filed in any such proceeding;
g. The Company shall have its Common Stock delisted
from The Nasdaq SmaIlCap Market or suspended from trading
thereon, and shall not have its Common Stock relisted or have
such suspension lifted. as the case may be, within five (5)
business days;
h. The Company shall default on the payment of any
debts in excess of $100,000 beyond any applicable grace
period;
I. Any judgments, levies or attachments shall be
rendered against the Company or any of its assets or
properties in an aggregate amount in excess of $100,000 and
such judgments, levies or attachments shall not be dismissed.
stayed, bonded or discharged within thirty (30) days of the
date of entry thereof; or
j. The Company shall be a party to any merger or
consolidation or shall dispose of all or substantially all of
its assets in one or more transactions or shall redeem more
than a ~ minimis amount of its outstanding shares of capital
stock, other than (i) a merger or share exchange effected
solely for the purpose of reincorporating the Company or (ii)
a merger or share exchange in which the Company is the
surviving corporation and the stockholders of the Company
immediately prior to such merger or share exchange own more
than fifty percent (50%) of the outstanding voting stock of
the Company following the merger or share exchange.
Upon the occurrence of any Event of Default or at any time thereafter, and in
each and every such case, unless such Event of Default shall have been waived
in writing by the Holder (which waiver shall not be deemed to be a waiver of
any subsequent Event of Default) at the option of the Holder in the Holder's
sole discretion, the Holder may, upon written notice to the Company, accelerate
the maturity hereof, whereupon all principal and interest hereunder shall be
immediately due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived, anything herein or in any
note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights or remedies afforded by law.
11. The Company, should an Event of Default occur, expressly waives demand
and presentment for payment, notice of nonpayment, protest, notice of protest,
notice of dishonor, notice of acceleration or intent to accelerate, bringing of
suit and diligence in taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment of all sums owing
and to be owing hereon, regardless of and without any notice, diligence, act or
omission as or with respect to the collection of any amount called for
hereunder.
12. (a) Anything in this Debenture to the contrary notwithstanding, the
obligation of the Company to pay the principal of and interest in this
Debenture, and to discharge all its other obligations hereunder, shall be
subordinate and junior in right of payment, to (x) all obligations of the
Company to commercial banks for borrowed money, (y) all obligations of the
Company to commercials banks under guarantees by the Company of obligations of
wholly-owned subsidiaries of the Company to commercial banks for borrowed
money, in each case, whether such obligations are outstanding at the date of
this Debenture or created or incurred after the date of this Debenture but
prior to the maturity of this Debenture and (z) all obligations of the Company
to holders of the Company's indebtedness issued in
5
16
connection with one or more underwritten public offerings by the Company
(hereinafter referred to as "Senior Indebtedness").
(b) The term "Senior Indebtedness" does not include any indebtedness as to
which the instrument creating or evidencing it provides that such indebtedness
is on a parity with or otherwise not superior in right of payment to this
Debenture.
(c) No payment on account of principal or interest on this Debenture shall
be made if, at the time of such payment or immediately after giving effect
thereto, there shall exist with respect to any Senior Indebtedness any default
or any condition, event or act that, with notice or lapse of time, or both,
would constitute a default, unless waived, and if any such payments are
received by Holder, Holder shall forthwith deliver such payment to the holders
of the Senior Indebtedness, for application on account of the Senior
Indebtedness, and until so delivered, such payment shall be held in trust by
Holder as the property of the holders of the Senior Indebtedness.
(d) In the event of any insolvency proceedings, and any receivership.
liquidation or other similar proceedings in connection therewith, relative to
the Company or its property, and in the event of any proceedings for voluntary
or involuntary liquidation, dissolution or other winding-up of the Company,
whether or not involving insolvency, then the holders of Senior Indebtedness
shall be entitled to receive payment in full of all principal, interest fees
and charges. including without limitation post-petition interest, on all Senior
Indebtedness before Holder is entitled to receive any payment on account of
principal or interest upon this Debenture and no claim or proof of claim shall
be filed with the Company by or on behalf of Holder that shall assert any right
to receive any payments in respect of this Debenture, except subject to the
payment in full of the principal and interest on all of the Senior Indebtedness
then outstanding.
(e) If funds or assets which would otherwise be available to make payments
in respect of this Note are instead paid or distributed to the holders of
Senior Indebtedness on account of the subordination provisions of this Section
1.2, the Holder shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness.
13. No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of, and
interest on. this Debenture at the time, place, and rate, and in the coin or
currency, herein prescribed. This Debenture and all other Debentures now or
hereafter issued of similar terms are direct obligations of the Company. This
Debenture ranks equally with all other Debentures now or hereafter issued under
the terms set forth herein.
14. Any notice to be given or to be served upon any party in connection
with the Debentures must be in writing and will be deemed to have been given
and received upon confirmed receipt, if sent by facsimile, or two (2) days
after it has been submitted for delivery by Federal Express or an equivalent
carrier, charges prepaid and addressed to the following addresses with a
confirmation of delivery:
If to the Company, to:
InterAmericas Communications Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn.:Xxxxxxxx X. Northland, Chief Executive Officer
Telephone:(000)000-0000
Facsimile:(000) 000-0000
With copy to:
6
17
Xxxxxx Xxxxx, Esq.
Xxxxx & XxXxxxxx
Xxxxxxx Xxxxx - Xxxxx 0000
000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000-0000
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
If to the Holder, to:
KA Investments, LDC
Field Secretaries
do Bank of Xxxxxxxxxxx International Ltd
P.O. Box 705
Xxxxxxxxxxx House, Fort Street
Grand Cayman, Cayman Island
Attn.: Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to;
Xxxxxxx X. Xxxx, Esq.
Xxxxxxxx & Xxxxxx
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may, at any time by giving notice to the other party, designate, any
other address in substitution of an address established pursuant to the
foregoing to which such notice will be given.
15. Except as otherwise expressly provided herein, the terms, conditions
and enforceability of the Debentures shall be governed by and interpreted under
the laws of the State of Illinois. Any claim, dispute or disagreement relating
to the terms and conditions of the Debentures. or arising from the Debentures
or the subject matter of the Debentures, may be brought only in the Circuit
Courts of Xxxx or DuPage Counties in the State of Illinois or in the United
States District Court for the Northern District of Illinois, which shall have
exclusive jurisdiction thereof. The parties to the Debentures consent to such
jurisdiction and venue and hereby knowingly and voluntarily waive all
objections thereto on the basis of lack of personal jurisdiction, venue or
convenience.
[SIGNATURE PAGE FOLLOWS]
7
18
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: February 3,1997 INTERAMERICAS COMMUNICATIONS
CORPORATION
By:
--------------------------
Name:
-----------------------
Title:
-----------------------
8
19
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert the above Debenture No.
____ into _______________________ shares of Common Stock of InterAmericas
Communications Corporation (the "Company") according to the conditions hereof,
as of the date written below.
-------------------------
Date of Notice
-------------------------
Signature
-------------------------
Name
Address:
-------------------------
-------------------------
-------------------------
* The original Debenture and a manually signed original of this Notice of
Conversion must be received by the Company by the third business day
following the date of delivery of this Notice of Conversion by facsimile.
9
20
Exhibit B
THIS WARRANT AND THE SHARES OF COMMON STOCK OF INTERAMERICAS COMMUNICATIONS
CORPORATION TO BE ISSUED UPON ANY EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT'), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (II) TO THE EXTENT
APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING
TO THE DISTRIBUTION OF SECURITIES) OR (Ill) IF AN EXEMPTION FROM REGISTRATION
UNDER THE ACT IS AVAILABLE.
WARRANT
TO PURCHASE SHARES
OF
COMMON STOCK
OF
INTERAMERICAS COMMUNICATIONS CORPORATION
FEBRUARY 3, 1997
This certifies that, for value received, KA Investments, LDC ("KAI") and
any subsequent transferee pursuant to the terms of the Agreement (as defined
below) of even date herewith and this Warrant (each, a "Holder") is entitled to
purchase, subject to the provisions of this Warrant. from InterAmericas
Communications Corporations, a Texas corporation (the "Issuer"), at any time or
from time to time on or after the date hereof and on or before February 2, 2002
(the "Expiration Date"), One Hundred Thousand (1 00,000) fully paid and
nonassessable shares of common stock, par value $001 per share (the "Common
Stock"), of the Issuer at an exercise price of Five Dollars ($5.00) per share,
subject to adjustment pursuant to the terms hereunder (the "Exercise Price")
(such shares of Common Stock and other securities issued and issuable upon
exercise of this Warrant, the "Warrant Shares").
Section 1. Definitions. Except as otherwise specified herein, terms
defined herein shall have the meanings assigned to them in the Subscription
Agreement of even date herewith by and between KAI and the Issuer (the
"Agreement").
Section 2. Exercise of Warrant.
(a) Subject to the provisions hereof, this Warrant may be exercised,
in whole or in part, but not as to a fractional share, at any time or
from time to time on or after the date hereof and on or before the
Expiration Date, by presentation and surrender hereof to the Issuer at
the address which, in accordance with the provisions of Section 9 hereof,
is then effective for notices to the Issuer, with the Election to
Purchase Form annexed hereto as Schedule One. duly executed and
accompanied by payment to the Issuer as further set forth below in this
Section 2, for the account of the Issuer, of the Exercise Price for the
number of Warrant Shares specified in such form. If this Warrant should
be exercised in part only, the lssuer shall, upon surrender of this
Warrant, execute and deliver a new Warrant evidencing the rights of the
Holder hereof to purchase the balance of the Warrant Shares purchasable
hereunder. The Issuer shall maintain at its principal place of business a
register for the registration of this Warrant and registration of
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21
transfer of this Warrant. The Exercise Price for the number of Warrant
Shares specified in the Election to Purchase Form shall be payable in
United States Dollars by certified or official bank check payable to the
order of the Issuer or by wire transfer of immediately available funds to
an account specified by the Issuer for that purpose.
(b) Certificates representing Warrant Shares shall bear the following
restrictive legend:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended (the "Securities Act") or any state securities
laws. They may not be offered or transferred by sale,
assignment, pledge or otherwise unless (i) a
registration statement for the securities under the
Securities Act is in effect or (ii) the corporation
has received an opinion of counsel, which opinion is
satisfactory to the corporation, to the effect that
such registration is not required under the Securities
Act."
c) Notwithstanding any provisions herein to the contrary, if the
Fair Market Value (hereinafter defined) of one share of Common Stock is
greater than the Exercise Price (at the date of calculation as set forth
below), in lieu of exercising this Warrant for cash, the Holder may elect
to receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Issuer together with the properly
endorsed Notice of Exercise and notice of such election in which event
the Issuer shall issue to the Holder a number of shares of Common Stock
computed using the following formula:
X = Y(A-B)
------
A
Where X = the number of shares of Common Stock to be issued to the Holder
Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being canceled (at the date of such calculation)
A = the Fair Market Value of one share of the Issuer's Common Stock (at the date of such calculation)
B = Exercise Price (as adjusted at the date of such calculation)
For purposes of the above calculation, Fair Market Value of one share of
Common Stock shall be the average closing bid price (as reported by The
Nasdaq SmalICap Market) of the Issuer's Common Stock for the five (5)
consecutive trading days ending on the trading day immediately preceding
the date of the Election to Purchase.
Section 3. Reservation of Shares; Preservation of Rights of Holder. The
Issuer hereby agrees that there shall be reserved for issuance and/or delivery
upon exercise of this Warrant, such number of Warrant Shares as shall be
required for issuance or delivery upon exercise of this Warrant. The Warrant
surrendered upon exercise shall be canceled by the Issuer. After the Expiration
Date. no shares of Common Stock shall be subject to reservation in respect of
this Warrant. The Issuer further agrees (i) that it will not, by amendment of
its Articles of Incorporation or through reorganization. consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observation or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by the Issuer, (ii) promptly
to take such action as may be required of the lssuer to permit the Holder to
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22
exercise this Warrant and the Issuer duly and effectively to issue shares of
its Common Stock or other securities as provided herein upon the exercise
hereof, and (iii) promptly to take all action required or provided herein to
protect the rights of the Holder granted hereunder against dilution. Without
limiting the generality of the foregoing, should the Warrant Shares at any time
consist in whole or in part of shares of capital stock having a par value, the
Issuer agrees that before taking any action which would cause an adjustment of
the Exercise Price so that the same would be less than the then par value of
such Warrant Shares, the Issuer shall take any corporate action which may. in
the opinion of its counsel, be necessary in order that the Issuer may validly
and legally issue fully paid and nonassessable shares of such Common Stock at
the Exercise Price as so adjusted. The Issuer further agrees that it will not
establish a par value for its Common Stock while this Warrant is outstanding in
an amount greater than the Exercise Price.
Section 4. Exchange. Transfer. Assignment or Loss of Warrant. Any
attempted transfer of this Warrant, the Warrant Shares or any new Warrant not
in accordance with this Section shall be null and void, and the Issuer shall
not in any way be required to give effect to such transfer. No transfer of this
Warrant shall be effective for any purpose hereunder until (i) written notice
of such transfer and of the name and address of the transferee has been
received by the Issuer, and (!i) the transferee shall first agree in a writing
deposited with the Secretary of the Issuer to be bound by all the provisions of
this Warrant and the Agreement. Upon surrender of this Warrant to the Issuer by
any transferee authorized under the provisions of this Section 4, the Issuer
shall, without charge, execute and deliver a new Warrant registered in the name
of such transferee at the address specified by such transferee, and this
Warrant shall promptly be canceled. The Issuer may deem and treat the
registered holder of any Warrant as the absolute owner thereof for all
purposes, and the Issuer shall not be affected by any notice to the contrary.
Any Warrant, if presented by an authorized transferee, may be exercised by such
transferee without prior delivery of a new Warrant issued in the name of the
transferee.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Issuer will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute a separate contractual obligation on
the part of the Issuer, whether or not the Warrant so lost. stolen, destroyed
or mutilated shall be at any time enforceable by anyone.
Section 5 Rights of Holder. Neither a Holder nor his transferee by devise
or the laws of descent and distribution or otherwise shall be, or have any
rights or privileges o~ a shareholder of the Issuer with respect to any Warrant
Shares, unless and until certificates representing such Warrant Shares shall
have been issued and delivered thereto.
Section 6. Adjustments in Exercise Price and Warrant Shares. The Exercise
Price and Warrant Shares shall be subject to adjustment from time to time as
provided in this Section 6.
(a) If the Issuer is recapitalized through the subdivision or
combination of its outstanding shares of Common Stock into a larger or
smaller number of shares, the number of shares of Common Stock for which
this Warrant may be exercised shall be increased or reduced. as of the
record date for such recapitalization, in the same proportion as the
increase or decrease in the outstanding shares of Common Stock, and the
Exercise Price shall be adjusted so that the aggregate amount payable for
the purchase of all Warrant Shares issuable hereunder immediately after
the record date for such recapitalization shall equal the aggregate
amount so payable immediately before such record date.
(b) If the Issuer declares a dividend on Common Stock, or makes a
distribution to holders of Common Stock, and such dividend or
distribution is payable or made in Common Stock or securities convertible
into or exchangeable for Common Stock, or rights to purchase
Common Stock or securities convertible into or exchangeable for Common
Stock, the number of shares of
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Common Stock for which this Warrant may be exercised shall be increased,
as of the record date for determining which holders of Common Stock shall
be entitled to receive such dividend or distribution, in proportion to
the increase in the number of outstanding shares (and shares of Common
Stock issuable upon conversion of all such securities convertible into
Common Stock) of Common Stock as a result of such dividend or
distribution, and the Exercise Price shall be adjusted so that the
aggregate amount payable for the purchase of all the Warrant Shares
issuable hereunder immediately after the record date for such dividend or
distribution shall equal the aggregate amount so payable immediately
before such record date.
(c) If the Issuer declares a dividend on Common Stock (other than a
dividend covered by subsection (b) above) or distributes to holders of
its Common Stock, other than as part of its dissolution or liquidation or
the winding up of its affairs. any shares of its capital stock, any
evidence of indebtedness or any cash or other of its assets (other than
Common Stock or securities convertible into or exchangeable for Common
Stock), the Holder shall receive notice of such event as set forth in
Section 8 below.
(d) In case of any consolidation of the Issuer with, or merger of
the Issuer into, any other corporation (other than a consolidation or
merger in which the Issuer is the surviving or resulting corporation and
in which the stockholders of the Issuer immediately prior to the merger
or consolidation hold more than 50% of the voting stock of the Issuer
following the merger or consolidation), or in case of any sale or
transfer of all or substantially all of the assets of the Issuer, or in
the case of any statutory exchange of securities with another corporation
(including any exchange effected in connection with a merger of a third
corporation into the Issuer, except where the Issuer is the surviving
entity and the stockholders of the Issuer immediately prior to the
exchange hold more than 50% of the voting stock of the Issuer after the
exchange). the corporation formed by such consolidation or the
corporation resulting from such merger or the corporation which shall
have acquired such assets or securities of the Issuer as the case may be
shall execute and deliver to the Holder simultaneously therewith a new
Warrant, satisfactory in form and substance to the Holder, together with
such other document as the Holder may reasonably request, entitling the
Holder thereof to receive upon exercise of such Warrant the kind and
amount of shares of stock and other securities and property receivable
upon such consolidation, merger, sale, transfer, or exchange of
securities, or upon the dissolution following such sale or other
transfer, by a holder of the number of shares of Common Stock purchasable
upon exercise of this Warrant immediately prior to such consolidation,
merger, sale, transfer, or exchange. Such new Warrant shall contain the
same basic other terms and conditions as this Warrant and shall provide
for adjustments which, for events subsequent to the effective date of
such written instrument, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 6. The above
provisions of this paragraph (d) shall similarly apply to successive
consolidations, mergers, exchanges, sales or other, transfers covered
hereby.
(e) If the Issuer shall, at any time before the expiration of this
Warrant, sell all or substantially all of its assets and distribute the
proceeds thereof to the Issuer's shareholders, the Holder shall, upon
exercise of this Warrant have the right to receive, in lieu of the shares
of Common Stock of the Issuer that the Holder otherwise would have been
entitled to receive, the same kind and amount of assets as would have
been issued, distributed or paid to the Holder upon any such distribution
with respect to such shares of Common Stock of the Issuer had the Holder
been the holder of record of such shares of Common Stock receivable upon
exercise of this Warrant on the date for determining those entitled to
receive any such distribution. If any such distribution results in any
cash distribution in excess of the Exercise Price provided by this
Warrant for the shares of Common Stock receivable upon exercise of this
Warrant, the Holder may, at the Holder's option, exercise this Warrant
without making payment of the Exercise Price and, in such case, the
Issuer shall, upon distribution to the Holder, consider the Exercise
Price to have been paid in full and, in making settlement to the Holder,
shall obtain receipt of the Exercise
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Price by deducting an amount equal to the Exercise Price for the shares
of Common Stock receivable upon exercise of this Warrant from the amount
payable to the Holder.
(f) If an event occurs which is similar in nature to the events
described in this Section 6, but is not expressly covered hereby, the
Board of Directors of the Issuer shall make or arrange for an equitable
adjustment to the number of Warrant Shares and the Exercise Price.
(g) The term "Common Stock" shall mean the Common Stock of the
Issuer as the same exists at the Closing Date or as such stock may be
constituted from time to time, except that for the purpose of this
Section 6, the term "Common Stock" shall include any stock of any class
of the Issuer which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Issuer and which is not subject to
redemption by the Issuer.
(h) Whenever the number of Warrant Shares or the Exercise Price
shall be adjusted as required by the provisions of this Section 6, the
Issuer forthwith shall file in the custody of its secretary or an
assistant secretary, at its principal office, and furnish to each Holder
hereof. a certificate prepared in accordance with paragraph (h) above,
showing the adjusted number of Warrant Shares and the Exercise Price and
setting forth in reasonable detail the circumstances requiring the
adjustments.
(i) Notwithstanding any other provision, this Warrant shall be
binding upon and inure to the benefit of any successors and assigns of
the Issuer.
(j) No adjustment in the Exercise Price in accordance with the
provisions of this Section 6 need be made if such adjustment would amount
to a change in such Exercise Price of less than $.01; provided however,
that the amount by which any adjustment is not made by reason of the
provisions of this paragraph (k) shall be carried forward and taken into
account at the time of any subsequent adjustment in the Exercise Price.
(k) If an adjustment is made under this Section 6 and the event to
which the adjustment relates does not occur, then any adjustments in
accordance with this Section 6 shall be readjusted to the Exercise Price
and the number of Warrant Shares which would be in effect had the earlier
adjustment not been made.
Section 7. Taxes on Issue or Transfer of Common Stock and Warrant. The
Issuer shall pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of shares of Common Stock or
other securities on the exercise of this Warrant. The Issuer shall not be
required to pay any tax which may be payable in respect of any transfer of this
Warrant or in respect of any transfers involved in the issue or delivery of
shares or the exercise of this Warrant in a name other than that of the Holder
and the person requesting such transfer, issue or delivery shall be responsible
for the payment of any such tax (and the Issuer shall not be required to issue
or deliver said shares until such tax has been paid or provided for).
Section 8. Notice of Adjustment. So long as this Warrant shall be
outstanding, (a) if the Issuer shall propose to pay any dividends or make any
distribution upon the Common Stock, or (b) if the Issuer shall offer generally
to the holders of Common Stock the right to subscribe to or purchase any shares
of any class of Common Stock or securities convertible into Common Stock or any
other similar rights or (c) if there shall be any proposed capital
reorganization of the Issuer in which the Issuer is not the surviving entity,
recapitalization of the capital stock of the Issuer, consolidation or merger of
the Issuer with or into another corporation, sale, lease or other transfer of
all or substantially all of the property and assets of the Issuer, or voluntary
or involuntary dissolution, liquidation or winding up of the Issuer, or (d) if
the Issuer shall give to its stockholders any notice, report or other
communication respecting any significant or special action or event, then in
such event, the Issuer shall give to the
Holder, at least ten (10) days prior
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to the relevant date described below (or such shorter period as is reasonably
possible if thirty days is not reasonably possible), a notice containing a
description of the proposed action or event and stating the date or expected
date on which a record of the lssuer's stockholders is to be taken for any of
the foregoing purposes, and the date or expected date on which any such
dividend, distribution, subscription, reclassification, reorganization,
consolidation. combination, merger, conveyance, sale, lease or transfer,
dissolution, liquidation or winding up is to take place and the date or
expected date, if any is to be fixed, as of which the holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such event.
Section 9. Notice. Any notice to be given or to be served upon any party
in connection with the Warrant must be in writing and will be deemed to have
been given and received upon confirmed receipt, if sent by facsimile, or two
(2) days after it has been submitted for delivery by Federal Express or an
equivalent carrier, charges prepaid and addressed to the following addresses
with a confirmation of delivery:
If to the Issuer, to:
InterAmericas Communications Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn.:Patriclo E. Northland, Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000)000-0000
With copy to:
Xxxxxx Xxxxx, Esq.
Xxxxx & XxXxxxxx
Xxxxxxx Xxxxx - Xxxxx 0000
000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Holder, to:
KA Investments. LDC
Field Secretaries
do Bank of Xxxxxxxxxxx International Ltd.
P.O. Box 705
Xxxxxxxxxxx House, Fort Street
Grand Cayman, Cayman Island
Attn.:Jrwin Dikau
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
With a copy to;
Xxxxxxx X. Xxxx, Esq.
Xxxxxxxx & Xxxxxx
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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Any party may, at any time by giving notice to the other party, designate
any other address in substitution of an address established pursuant to the
foregoing to which such notice will be given.
Section 10. Choice of Law; Conflict of Law; Jurisdiction and Venue.
Except as otherwise expressly provided herein, the terms, conditions and
enforceability of the Warrant shall be governed by and interpreted under the
laws of the State of Illinois. Any claim, dispute or disagreement relating to
the terms and conditions of this Warrant, or arising from this Warrant or the
subject matter of this Warrant, may be brought only in the Circuit Courts of
Xxxx or DuPage Counties the State of Illinois or in the United States District
Court for the Northern District of Illinois, which shall have exclusive
jurisdiction thereof. The parties to the Warrant consent to such jurisdiction
and venue and hereby knowingly and voluntarily waive all objections thereto on
the basis of lack of personal jurisdiction. venue or convenience.
[SIGNATURE PAGE FOLLOWS)
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Dated: February 3, 1997
INTERAMERICAS COMMUNICATIONS
CORPORATION
By:
----------------------------
Name:
----------------------------
Title:
--------------------------
ATTEST:
----------------------------
,Secretary
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ScheduleOne
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise this Warrant and to
purchase _______ shares of InterAmericas Communications Corporation Common
Stock issuable upon the exercise of this Warrant. and requests that
certificates for such shares be issued in the name of:
------------------------------------------------------------------------------
(Name)
------------------------------------------------------------------------------
(Xxxxxxx)
------------------------------------------------------------------------------
(Xxxxxx Xxxxxx Social Security or other taxpayer
identifying number. if applicable)
and, if different from above, be delivered to:
------------------------------------------------------------------------------
(Name)
------------------------------------------------------------------------------
(Address)
and if the number of Warrant Shares so purchased are not all of the Warrant
Shares issuable upon exercise of this Warrant, that a Warrant to purchase the
balance of such Warrant Shares be registered in the name of, and delivered to,
the undersigned at the address stated below.
Date:
--------- ---
Name of Registered Owner:
----------------------------------------------------
------------------------------------------------------------------------------
Address:
---------------------------------------------------------------------
------------------------------------------------------------------------------
Signature:
-------------------------------------------------------------------
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