EXHIBIT 2.4
MUTUAL AGREEMENT OF
TERMS AND CONDITIONS
This Mutual Agreement of Terms and Conditions is
entered into by and between Grupo Information,
Satellites & Advertising, S.A. de C.V. ( ISA ),
Renaissance Capital Partners II Limited (Renaissance),
certain holders of the $1.8 million Bridge Loan (
Bridge Lenders ) and Coded Communications Corporation
(Coded) this 1st day of May, 1996.
Whereas, all the parties to this agreement desire
to recapitalize Coded so as to enable Coded to operate
efficiently and effectively for the benefit of it
customers, shareholders, investors and employees; and
Whereas, the parties have a desire to avoid the
liquidation or foreclosure of the assets of Coded;
Now, therefore, in consideration of mutual
promises by and between the parties to this agreement,
and for other valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
1.0 Current Arrangements between Coded and ISA
1.1 ISA Order and Deposit.
Upon execution of this agreement and
implementation of paragraph 1.2, ISA shall immediately
place an order for approximately One Million Dollars
($US) worth of goods and/or services with Coded and
shall deposit $500,000 ($US) against this order placed
with Coded.
1.2 Management and Control.
Upon receiving the approximately $1.0 million
dollar ($US) order and receiving the $500,000 ($US)
deposit, Coded shall be deemed to have granted ISA the
right to manage and control the day to day operations
of Coded, including but not limited to the right to
negotiate and enter into agreements on behalf of Coded
to restructure the trade payables and other debt of
Coded. ISA will work with Coded to preserve working
relationships and vendor good will to the extent that
such can or should be preserved. Coded shall execute
such debt restructure agreements negotiated by ISA on
Coded's behalf as partial consideration for the order
and deposit being placed by ISA and the other
provisions of this agreement. This grant to ISA shall
terminate upon the expiration of the Option period
described below.
1.3 Grant of Option to ISA
Coded hereby grants to ISA an option to (1)
acquire 66.7% of the Coded common stock and (2) to
become the exclusive distributor for Coded in all of
Mexico, Central and South America during the eighteen
months following exercise of the option (provided that
while ISA is the exclusive distributor for Coded in
these areas ISA can not sell products competitive to
the Coded product line), all in exchange for $400,000
in cash, a loan of $1.0 million, the promise to place
at least $10.0 million in orders over eighteen months
from the signing of this agreement and for inducing
Renaissance and the Bridge Lenders to make
modifications to their positions, the other
consideration set forth herein, all as more
definitively set forth in this Agreement. This option
may be exercised if at all by faxing a written exercise
of option to Coded at (▇▇▇) ▇▇▇-▇▇▇▇ within sixty days
of execution of this agreement. ISA may, at its sole
option, extend this time period to a date twenty days
after shareholder approval is secured for those terms
of this agreement that require shareholder approval.
Upon exercise of the option, Coded shall
immediately issue to ISA an amount of Coded common
shares on an "after-conversion" basis (see paragraph
4.1) equal to 66.7% of outstanding common shares. By
way of example, ISA shall be issued 49,008,703 common
shares if there are outstanding on an
"after-conversion" basis 73,441,005 shares of common
stock on the date of the closing of this transaction
as shown in paragraph 4.1. This common stock shall
have one demand registration right with reasonable
registration costs to be borne by Coded. The terms of
the registration right will be at least as favorable as
the terms of the registration right agreement between
Renaissance and Coded entered into at the time of the
original Debenture.
1.4 Contribution to Pay Bridge Loan. Upon
signing of this agreement, ISA shall place $400,000
into escrow at a United States banking or trust
institution selected by Renaissance in the name of
Coded to be released as a capital contribution to Coded
or returned as follows:
(a) If the shareholders decline to approve the
transactions described in this agreement that require
shareholder approval within sixty days (or as extended
at ISA's sole option), then the funds shall be
returned to ISA immediately. Notwithstanding any
other provision of this agreement, if the shareholders
decline to so approve, then ISA shall be deemed to have
been granted a three year exclusive distributorship for
Coded products for Mexico, Central and South America
without any performance requirements, but otherwise
with terms similar to distributorship agreements that
Coded presently has with others.
(b) If the shareholders approve the
transactions described in this agreement within sixty
days (or as extended at ISA's sole option) and ISA does
not exercise the Option, then $200,000 shall be
released to Coded. Then remaining $200,000 shall be
immediately returned to ISA.
(c) If the shareholders approve the
transactions described in this agreement within sixty
days (or as extended at ISA's sole option) and ISA
exercises the Option, then $400,000 shall be released
to Coded.
Coded agrees the sum released to Coded will be used to
pay down the Bridge Loan. See paragraph 3.2.1. This
provision will constitute irrevocable instructions to
the escrow holder.
2.0 Post Option Exercise Arrangements between ISA and
Coded.
2.1 ISA Orders to Coded. During the 18 month
period commencing on the date of this agreement and
provided the Option is exercised, ISA will cause to be
placed with Coded, orders for at least $10 million.
Such orders shall be negotiated at arms length with
terms comparable to Coded's customary terms, prices and
conditions offered to its most favored customer, agent
or dealer similarly situated in any part of the world.
2.2 Escrow of Stock. ISA shall place 24 million
shares of common stock received through exercise of the
Option into an escrow account. During such time as the
shares are held in escrow, ISA shall have the right to
vote all shares and will enjoy any other benefits
derived from the beneficial ownership of such shares
including dividends. In the event ISA does not cause
to be placed with Coded over an 18 month period
beginning on the date of execution of this agreement
(and provided the Option is exercised), orders for
$10,000,000 (which includes the initial $1.0 million
order referred to in paragraph 1.1 above) with terms
and conditions as described in paragraph 2.1 above,
then any shares remaining in escrow shall be
transferred to Coded treasury and retired. The number
of shares to be transferred to Coded shall be equal to
an amount calculated by multiplying the difference
between $10 million in orders and the actual amount of
orders placed with Coded over the 18 month period,
times 2.4. By way of example, if $8.5 million in
orders are placed or caused to be placed by ISA over
the eighteen month period, then Coded shall receive and
retire 3.6 million shares from the escrow. During the
18 month period ISA shall receive shares certificates
on an as earned basis from the escrow with distribution
of share certificates to occur quarterly.
2.3 ISA Loan to Coded. At the transaction
closing, ISA shall advance cash of $1,000,000 to Coded
in exchange for a secured promissory note. The
promissory note shall have a maturity date of 12
months, with an interest rate of 6%, interest payable
quarterly. The promissory note shall be collateralized
by a senior security interest in the assets of Coded
and its subsidiaries Decom Systems Inc. and Coded
Mobile Communications. The amount of the funds
advanced may be increased from time to time at the sole
discretion of ISA and such advance will be reflected in
the secured promissory note. ISA shall have the right
to convert the entire amount of the initial $1.0
million loan to common stock at the conversion rate of
$0.25 to one share of common. This conversion right
will be protected from dilution as follows:
Split up or Combination of Shares:
In case issued and outstanding shares of
Common Stock shall be subdivided or
split up into a greater number of shares
of Common Stock, the Conversion Price
shall be proportionally decreased, and
in the case issued and outstanding
shares of Common Stock shall be combined
into a smaller number of shares of
Common Stock, the Conversion Price shall
be proportionately increased, such
increase or decrease, as the case may
be, becoming effective at the time of
record of the split-up or combination,
as the case may be.
Adjustment for Mergers, Consolidations, Etc.:
(I) In case of any capital
reorganization, reclassification of the
stock of Borrower (other than a change
in par value or as a result of a stock
dividend, subdivision, split up or
combination of shares), or consolidation
or merger of Borrower with or into
another person or entity (other than a
consolidation or merger in which
Borrower is the continuing corporation
and which does not result in any change
in the Common Stock) or of the sale,
exchange, lease, transfer or other
disposition of all or substantially all
of the properties and assets of Borrower
as an entity or the participation by
Borrower in share exchange as the
corporation the stock of which is to be
acquired, this shall be convertible into
kind and number of shares of stock or
other securities or property of Borrower
(or of the corporation resulting from
such consolidation or surviving such
merger or to which such properties and
assets shall have been sold, exchanged,
leased, transferred or otherwise
disposed, or which was the corporation
whose securities were exchanged for
those of Borrower), to which the holder
herein would have been entitled to
receive if the Holder owned the Common
Stock issuable upon conversion of this
instrument immediately prior to the
occurrence of such event. The
provisions of these foregoing sentence
shall similarly apply to successive
organizations, reclassifications,
consolidations, mergers, sales,
exchanges, leases, transfers or other
dispositions or other share exchanges.
2.4 Board. After the Option is exercised Coded
shall cooperate to cause ISA to have the right to
appoint a majority of the members of the Coded Board of
Directors, including the Chairman of the Board.
2.5 Exclusive Distributorship. Provided ISA
provides orders of at least $10 million during the
eighteen month period following the execution of this
agreement then ISA's appointment pursuant to paragraph
1.3 as the exclusive distributor for Coded in Mexico,
Central and South America shall become an exclusive
distributorship for an additional three year period
with continuing three year extensions to ISA provided
ISA's performance has been reasonably satisfactory.
While ISA is the exclusive distributor for Coded in
these areas ISA can not sell products competitive to
the Coded product line. This exclusive
distributorship shall be on customary terms similar to
existing distributorship agreements that Coded
presently has with others. Should a dispute arise as to
what are customary terms, it shall be settled by
arbitration.
3.0 Modification of Senior Secured Debt Positions Upon
Exercise of the Option.
Should ISA decide, in its sole discretion, that a
restructure of the trade payable and other debt of
Coded is feasible, secures enforceable written
agreements evidencing reductions in those debts and it
exercises the Option, then Renaissance and the Bridge
Lenders shall be deemed to have immediately modified
their positions with Coded as follows:
3.1 Restructuring of $4.0 Million Debenture
3.1.1 Amendment of Debenture. Upon
exercise of the Option, Renaissance, ISA and Coded
agree that Renaissance will amend the $4.0 million
principal amount, 12% Convertible Debenture, and all
interest accrued and payable thereon through the date
of execution of this agreement, totaling $4.8 million,
for a 6% debenture convertible as set forth below into
Series B Preferred Stock of Coded.
3.1.2 Terms of New Debenture. The amended
debenture shall include the following terms and
conditions and otherwise be in the specific form as
agreed upon and distributed to Renaissance, ISA and
Coded which is attached hereto as Exhibit A;
(a) principal amount of $4.8 million;
(b) Interest to accrue at 6% per annum, payable
semi-annually with interest to be paid 50% in the
common stock of Coded and 50% in cash;
(c) maturity date to 7 years from the Transaction
closing date;
(d) collateralized by existing security interests
in assets of Coded and its Coded Mobile Communications
and Decom Systems subsidiaries such security interest
in the assets to be subordinated to existing senior
debt, future working capital debt, the Bridge Lenders
as set forth herein and the ISA promissory note
described herein.
3.1.3 Conversion Right. The amended
debenture shall be converted into Series B Preferred
Stock under the following conditions:
(a) at any time that the value of the shares of
common stock to be issued upon the conversion of Series
B Preferred Stock is equal to 70% or more of the
principal amount of the 6% debenture ($3.36 million if
the principal amount of the 6% debenture is $4.8
million) or
(b) at a time prior to the Coded common stock
being listed for trading on the NASDAQ SmallCap Market
or National Market System and Coded shareholders
equity, under generally accepted accounting principals
( GAAP ), shall equal or exceed $3.0 million,
including the conversion of the 6% debenture into
common or preferred stock.
(c) Minimum Valuation. ISA agrees that
Renaissance shall be guaranteed against a market
decline in the underlying value of the 7,344,101 Coded
common shares so as to maintain a minimum valuation of
$3.36 million dollars. Therefore, it is agreed that if
at the end of three years from the date of closing, the
underlying Coded common stock market value of the
Series B Preferred Stock is less than $3.36 million,
then ISA will convey to Renaissance up to a maximum of
7,344,000 shares of Coded common stock so as to
compensate (as far as that number of shares goes) for
the market value deficit below $3.36 million. To
assure performance, ISA shall concurrently with the
conversion of the Renaissance convertible debenture
into Series B Preferred Stock, escrow 7,344,000 shares
of Coded common owned by ISA with an independent party.
ISA shall have the right to vote all shares and will
enjoy any other benefits derived from the beneficial
ownership of such shares including dividends.
Renaissance agrees that Coded may require the
conversion of the Debenture into Series B Preferred
Stock any time after August 1, 1996 if either of the
following two conditions occur:
o Coded's net worth equals or exceeds
$1.0 million with no more than $500,000 of that net
worth attributable to reversal of balance sheet
reserves; or
o at Renaissance's option Coded's net
worth equals or exceeds $500,000 with no reversal of
balance sheet reserves.
Net worth as used in this paragraph shall not include
any goodwill arising on the balance sheet subsequent to
the Closing of this transaction and shall treat the
convertible debenture as converted and, thus, as
equity.
(d) The Series B Preferred Stock is convertible
into 7,344,101 shares of Coded common stock. With
respect to Series B Preferred Stock, it is callable by
Coded at any time after the value of the shares of
common stock into which the Series B Preferred Stock is
convertible is first equal to or more than 1.5 times
the liquidation preference of the Series B Preferred
Stock. Value per share shall be determined by the
average of the bid price of Coded common stock for the
20 trading days following the filing of a Coded 10Q or
10K, as quoted by the NASD, NASDAQ or other applicable
over-the-counter market or applicable stock exchange.
(e) This conversion right will be protected from
dilution as follows:
Split up or Combination of Shares:
In case issued and outstanding shares of
Common Stock shall be subdivided or
split up into a greater number of shares
of Common Stock, the Conversion Price
shall be proportionally decreased, and
in the case issued and outstanding
shares of Common Stock shall be combined
into a smaller number of shares of
Common Stock, the Conversion Price shall
be proportionately increased, such
increase or decrease, as the case may
be, becoming effective at the time of
record of the split-up or combination,
as the case may be.
Adjustment for Mergers, Consolidations, Etc.:
In case of any capital reorganization,
reclassification of the stock of
Borrower (other than a change in par
value or as a result of a stock
dividend, subdivision, split up or
combination of shares), or consolidation
or merger of Borrower with or into
another person or entity (other than a
consolidation or merger in which
Borrower is the continuing corporation
and which does not result in any change
in the Common Stock) or of the sale,
exchange, lease, transfer or other
disposition of all or substantially all
of the properties and assets of Borrower
as an entity or the participation by
Borrower in share exchange as the
corporation the stock of which is to be
acquired, this Debenture shall be
convertible into kind and number of
shares of stock or other securities or
property of Borrower (or of the
corporation resulting from such
consolidation or surviving such merger
or to which such properties and assets
shall have been sold, exchanged, leased,
transferred or otherwise disposed, or
which was the corporation whose
securities were exchanged for those of
Borrower), to which the holder of the
Debenture would have been entitled to
receive if the Holder owned the Common
Stock issuable upon conversion of the
Debenture immediately prior to the
occurrence of such event. The
provisions of these foregoing sentence
shall similarly apply to successive
organizations, reclassifications,
consolidations, mergers, sales,
exchanges, leases, transfers or other
dispositions or other share exchanges.
3.1.4 Non Conversion. Notwithstanding
the above, the 6% debenture will not be automatically
converted into Series B Preferred Stock until such time
as not more than $1.0 million in past due and disputed
vendor claims shall be outstanding.
3.1.5 Terms of Series B Preferred The
Series B Preferred Stock shall include the following
terms and conditions:
(a) liquidation preference in the amount of $4.8
million or the principal amount of the 6% debenture if
lower;
(b) dividend rate of 6%, cumulative, payable
semi-annually, 50% in common stock and 50% in cash;
(c) no dividend shall be declared or accrue
after such time that the value of the shares of common
stock into which the Series B Preferred Stock is
convertible is first equal to or more than 1.5 times
the liquidation preference of the Series B Preferred
Stock;
(d) convertible into shares of Coded common
stock in an amount equal to 10% of the outstanding
common shares, calculated on an "after-conversion"
basis as shown specifically in section 4.1 (by way of
example, a total of 7,344,101 common shares assuming
that the "after-conversion" number of outstanding
common shares is equal to 73,441,005 shares at the time
of the transaction closing date); and
(e) the common shares underlying the Series B
Preferred Stock shall have one demand registration
right, with reasonable registration costs to be borne
by Coded.
For purposes of this Agreement, value per share shall
be determined by the average of the bid price of Coded
common stock for the 20 trading days following the
filing of a Coded 10Q or 10K, as quoted by the NASD,
NASDAQ or other applicable over-the-counter market or
applicable stock exchange.
3.1.6 Appointment of Director.
Renaissance will have the right to appoint one director
to the Coded Board of Directors or to have one person
attend board meetings as an advisory member, until its
preferred stock is converted to common. It is the
intent of Coded to initially have a five (5) person
Board of Directors.
3.2 Restructuring of $1.8 Million Bridge Loan
3.2.1 Restructure. The Bridge Lenders,
ISA and Coded agree that upon exercise of the Option,
the $1.8 million principal amount Bridge Loan shall be
deemed to be restructured such that in lieu of all
existing rights against Coded, Bridge Lenders accept
the following:
(a) principal in the amount of $400,000 shall be
paid when all shareholder approvals have been secured
for the transactions described in this agreement. This
will be paid from escrowed funds described in paragraph
1.4;
(b) principal amount of $600,000 payable with 6
percent annual interest payable quarterly shall be all
due one year from the transaction closing date. The
existing Bridge Lenders security interest in the assets
of Coded, including the interest in the assets of Decom
Systems, Inc. and Coded Mobile Communications, Inc.
shall continue as it presently exists to secure this
$600,000 debt, except the Bridge Lenders shall upon
Option exercise subordinate its security interest in
the accounts receivable of Coded Communications
Corporation and Mobile Data Communications, Inc. to
future working capital debt. The security for the
$1.0 million loan to Coded from ISA shall be junior to
the security for this $600,000 loan. If a sale of
Decom should occur earlier than the one year date, then
the net cash proceeds, after expenses of sale, will be
applied to the obligation up to the then unpaid
balance. This would also be convertible to common
stock of Coded at the conversion rate of $0.25 to one
share of common. This conversion right will be
protected from dilution as follows:
Split up or Combination of Shares:
In case issued and outstanding shares of
Common Stock shall be subdivided or
split up into a greater number of shares
of Common Stock, the Conversion Price
shall be proportionally decreased, and
in the case issued and outstanding
shares of Common Stock shall be combined
into a smaller number of shares of
Common Stock, the Conversion Price shall
be proportionately increased, such
increase or decrease, as the case may
be, becoming effective at the time of
record of the split-up or combination,
as the case may be.
Adjustment for Mergers, Consolidations, Etc.:
In case of any capital reorganization,
reclassification of the stock of
Borrower (other than a change in par
value or as a result of a stock
dividend, subdivision, split up or
combination of shares), or consolidation
or merger of Borrower with or into
another person or entity (other than a
consolidation or merger in which
Borrower is the continuing corporation
and which does not result in any change
in the Common Stock) or of the sale,
exchange, lease, transfer or other
disposition of all or substantially all
of the properties and assets of Borrower
as an entity or the participation by
Borrower in share exchange as the
corporation the stock of which is to be
acquired, this shall be convertible into
kind and number of shares of stock or
other securities or property of Borrower
(or of the corporation resulting from
such consolidation or surviving such
merger or to which such properties and
assets shall have been sold, exchanged,
leased, transferred or otherwise
disposed, or which was the corporation
whose securities were exchanged for
those of Borrower), to which the holder
herein would have been entitled to
receive if the Holder owned the Common
Stock issuable upon conversion of this
instrument immediately prior to the
occurrence of such event. The
provisions of these foregoing sentence
shall similarly apply to successive
organizations, reclassifications,
consolidations, mergers, sales,
exchanges, leases, transfers or other
dispositions or other share exchanges.
(c) principal amount of $800,000 to be
converted into Series A Preferred Stock, first position
liquidation preference of $800,000, dividend rate of 8%
payable semi-annually, payment to be made 50% in common
stock and 50% in cash. Series A Preferred Stock is to
be convertible into Coded common stock in an amount
equal to 2,400,000 shares. With respect to Series A
Preferred Stock, it is callable by Coded at any time
after the value of the shares of common stock into
which the Series A Preferred Stock is convertible is
first equal to or more than 1.5 times the liquidation
preference of the Series A Preferred Stock. Value per
share shall be determined by the average of the bid
price of Coded common stock for the 20 trading days
following the filing of a Coded 10Q or 10K, as quoted
by the NASD, NASDAQ or other applicable
over-the-counter market or applicable stock exchange.
(d) All rights under the Share Purchase Warrant
Certificate or any other rights other that set forth
herein to acquire stock rights cease to exist upon
exercise of the Option by ISA.
3.2.2 Distribution to Bridge Lenders. All
cash payments and shares of Series A Preferred Stock
shall be distributed by Coded to the Bridge Lenders
pro-rata based upon the principal amount of the Bridge
Loan, or in such other amounts and manner as the Bridge
Loan lenders shall mutually agree amongst themselves.
4.0 Other Terms and Conditions
4.1 Post Transaction Stock Ownership. The
respective "after-conversion" common stock ownership
interest of Coded, assuming the closing of this
transaction, will be the following:
Common shares
(outstanding March 1, 1996) 14,688,201 20.0%
ISA (including escrowed shares) 49,008,703 66.7%
Renaissance (for $4.8 million
Series B Preferred) 7,344,101 10.0%
Bridge Loan lenders (for $0.8
million Series A Preferred) 2,400,000 3.3%
73,441,005 100.0%
4.2 Contracts and Instruments to Implement
Agreement. The parties anticipate that Coded shall
remain a publicly-held Delaware corporation, and that
the contracts and instruments prepared to effect the
terms of this agreement will contain terms, conditions
and obligations requiring compliance by all parties
with applicable United States and State securities laws
and regulations. Coded's shareholder approval will be
required for certain provisions of the final
transaction which the board of Coded will use its best
efforts to secure as soon as possible. Coded
represents and warrants that to the best of its
knowledge there is no provision of the federal or state
securities laws that would prevent them from carrying
out the terms of this agreement.
4.3 Bonus Shares. Coded shall cause to be
issued and held in escrow for the benefit of
Renaissance and the Bridge Lenders, 3.0 million
authorized common shares to be delivered to Renaissance
and the Bridge Lenders upon exercise of the Option by
ISA as follows:
(a) one million shares when Coded common stock is
trading at or above $0.25 per share, distributed as
follows
o 200,000 pro rata to the holders of
Series A Preferred Stock
o 800,000 to Renaissance;
(b) one million shares when Coded common stock is
trading at or above $0.50 per share distributed as
follows
o 200,000 pro rata to the holders of
Series A Preferred stock
o 800,000 to Renaissance;
(c) one million shares when Coded common stock is
trading at or above $1.00 per share distributed as
follows
o 200,000 pro rata to the holders of
Series A Preferred Shares
o 800,000 to Renaissance;
For purposes of this Agreement, Coded value per share
shall be determined by the average of the bid price of
Coded common stock for the 20 trading days following
the filing of a Coded 10Q or 10K, as quoted by the
NASD, NASDAQ or other applicable over-the-counter
market or stock exchange. The issuance of these shares
will dilute each of those shown on the table in 4.1
above.
4.4 Stock Option Plans. ISA and Coded intend to
install a stock option plan for the benefit and
incentive of the employees and management of Coded .
The options available under the Plan shall not exceed
fifteen percent of the total outstanding common stock
of Coded, counting all conversion rights to acquire
common stock as if exercised. Options eventually
exercised, if any, under the stock option plan shall be
dilutive of the shareholders then existing.
4.5 Authorized Shares. The parties understand
that certain of the share issuances contemplated herein
are subject to shareholder approval of the increase in
the authorized shares. If the shareholders fail to
approve such increase ISA, may, at its sole option,
withdraw from this agreement and have no obligation to
any party.
4.6 Disclosure of Employment Agreements. ISA
and the senior management of Coded shall immediately
disclose to Renaissance any pending oral or written
agreements concerning compensation or other employment
arrangements that may go into effect during the Option
period or at exercise of the Option. After exercise of
the Option Renaissance shall be provided with reports
and information consistent with its representation on
the board of directors.
4.7 Mutual Agreement. During the Option period
Renaissance shall not commence foreclosure under any of
its security agreements with Coded without first
securing the written consent of ISA. Under the terms
of this agreement ISA cannot foreclose without
Renaissance's written agreement.
4.8 Mutual Agreement. During the Option period
the Bridge Lenders shall not commence foreclosure under
any of its security agreements with Coded without first
securing the written consent of ISA. Under the terms of
this agreement ISA cannot foreclose without the Bridge
Lenders written agreement.
4.9 Closing. The Closing date is hereby
defined to be as soon as possible but no later than the
tenth day following execution and delivery by fax of a
writing evidencing ISA's approval of the debt
restructuring accomplished and exercise of the Option.
4.10 Time is of the Essence. The parties agree to
use their best efforts to close the transaction
contemplated by this Agreement in a timely manner with
due haste.
4.11 Post Option Exercise Board of Directors.
Upon exercise of the ISA Option, the authorized number
of Coded directors will be changed by resolution of the
board to five members. Then the present members of the
board of directors, except ▇▇▇▇ ▇▇▇▇▇▇▇▇, shall resign
seriatim so that ISA may appoint three directors and
Renaissance may appoint one director. Should ▇▇▇▇
▇▇▇▇▇▇▇▇ resign or be removed for any reason from the
board of directors, then a committee composed of one
representative of ISA and one representative of
Renaissance shall submit a replacement nominee to the
board of directors.
5.0 Important Miscellaneous Provisions
Each of the parties hereto has read and agrees to
the important miscellaneous provisions which follows
the signatory page of this contract.
6.0 Authority as Signatories
6.1 The individuals executing this Agreement for
and on behalf of the parties hereto hereby warrant
and represent that they are duly authorized to enter
into this Agreement for and on behalf of said parties
by a resolution of the Board of Directors, or other
governing body, of the respective parties.
6.2 This Agreement may be signed in counterparts
and when so signed shall be fully enforceable as if
each party signed one agreement.
IN WITNESS WHEREOF, this Agreement is
executed by the parties effective as of May 1, 1996.
Grupo Information, Satellites & Advertising, S.A. de
C.V.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Its: President
Dated: May 1, 1996
Coded Communications Corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Its: President
Dated: May 1,1996
Renaissance Capital Partners II LTD.
(as Bridge Lender and as Debenture Holder)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Its: President
Dated: April 19, 1996
Bridge Lender
JERSEY INVEST, LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Its: President & CEO
Dated: May 2, 1996
Bridge Lender
▇▇▇▇▇▇▇ LEASING COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: Vice President, Secretary
Dated: May 2, 1996
Bridge Lender
MINDFUL PARTNERS, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: General Partner
Dated: May 2, 1996
Bridge Lender
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its:
Dated: May 2, 1996
Bridge Lender
MAHROOK DRIVER
By: /s/ Mahrookh Driver
Its:
Dated: May 3, 1996
Bridge Lender
▇▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its:__________________________
Dated: May 2, 1996
IMPORTANT MISCELLANEOUS PROVISIONS
Entire Agreement
This Agreement constitutes the entire Agreement
between the parties on the subject matter hereof and
supersedes all previous discussions, promises,
representations or agreements respecting the subject
matter contained herein,except the parties acknowledge
the continuing existence of security agreements and
registration rights agreements. There are no
representations, agreements, arrangements, promises or
understandings, oral or written, between and among the
Parties relating to the subject matter of this
Agreement that are not fully expressed herein. No
alteration or modification of this Agreement shall be
valid unless agreed to in writing and duly signed by
both the parties. This Agreement was drafted by
representatives of both parties and shall not be
construed against either party on the basis of that
party being the drafter of the Agreement.
Amendments
The provisions of this Agreement may be amended by
the written consent of the Parties. Any amendment of
this Agreement shall be in writing, dated, and executed
by all Parties. If any conflict arises between the
provisions of any amendment and the original Agreement
as previously amended, the most recent provisions shall
control.
Successors
Subject to the restrictions against assignment
contained herein, this Agreement shall inure to the
benefit of and shall be binding upon the assigns,
successors in interest, personal representatives,
estates, heirs, and legatees of each of the parties
hereto.
Governing Law; Forum; Arbitration
All matters affecting the interpretation, form,
validity, enforcement and performance of this Agreement
shall be decided under the laws of the State of
California and in a forum located in San Diego County,
California. This forum selection and choice of law
selection are material considerations for entering
into this contract. Any and all disputes concerning
the rights and obligations of the parties hereto except
claims of monetary default or misrepresentation or
fraud in the inducement but including any other claimed
breach shall be resolved by binding arbitration under
the rules of the American Arbitration Association and
if international problems are present using the rules
of the International Chamber of Commerce. The parties
shall have the right to conduct full discovery, as
that term is commonly used under California Law, in
the arbitration. The decision of the arbitrator(s)
shall be final and binding upon the parties without
right of appeal.
Waiver and Estoppel
The failure of either party hereto to enforce, or the
delay by either party in enforcing, any of its rights
under this Agreement shall not be deemed a continuing
waiver or a modification hereof and either party may,
within the time provided by applicable law, commence
appropriate legal proceedings to enforce any or all of
such rights. Only an admitted oral representation (or
promise) or a writing clearly and unequivocally
expressing either a waiver of a known right or a
promise not to enforce a particular provision in the
future shall be sufficient to prevent any party from
taking any action sanctioned or allowed by this
agreement. No party will be deemed to be estopped
from taking any action sanctioned by this agreement on
account of any other alleged conduct.
Severability
In case any of the provisions contained in this
Agreement should be held invalid, illegal or
unenforceable in any respect, then the validity,
legality and enforceability of the remaining
provisions shall not in any way be affected or
impaired thereby unless the provision was a material
consideration inducing one or both of the parties to
enter into this agreement. In such a case the parties
hereto agree to attempt to negotiate a substitution for
the provision held invalid, illegal or unenforceable.
Should that effort fail, then the matter shall be
referred to arbitration and the arbitrator is empowered
to amend or modify any of the terms of this agreement
to compensate for the loss of the provision held
invalid, illegal or unenforceable.
Representations and Warranties.
The parties hereto, and each of them, represent and
warrant to each other and agree with each other, as
follows:
(a) Each of the parties hereto has had the
opportunity to receive independent legal advice from
attorneys of its, or his own choice, with respect to
the advisability of entering into this contract and,
prior to the execution of this Agreement.
(b) In negotiating this Agreement, each
party and its or his attorneys have made various
statements and representations to other parties and
their attorneys. Nevertheless, each party specifically
does not rely upon any statement, representation, legal
opinion, or promise of any other party in executing
this Agreement, except as expressly stated in this
Agreement.
(c) There have been no other agreements
or understandings between the parties hereto concerning
this restructuring, except as stated in this Agreement.
(d) Each party, together with its or his
attorneys, has had the opportunity to make such
investigation of the facts and of the law pertaining to
this Agreement, and of all the matters pertaining
thereto, as it or he deems necessary.
(e) The terms of this Agreement are
contractual, not a mere recital.
(f) This Agreement has been carefully read
by, the contents hereof are known and understood by,
and it is signed freely by each person executing this
Agreement.
(g) Each party hereto agrees that such
party will not take any action which would interfere
with the performance of this Agreement by the other
party hereto or which would adversely affect any of the
rights provided for herein.
(h) The parties each represent and warrant
that he has the right to grant the rights granted to
the other parties in this contract and represents that
no portion of the rights granted herein has been
assigned or transferred or given as security to a
person, firm or entity which is not a party to this
agreement. In the event that any claim, demand or suit
shall be made or instigated against any party because
of any such purported assignment, transfer or grant of
security interest, each party hereto as the case may be
hereby indemnifies and holds the other free and
harmless from and against any such claim or demand.
Subsequent Attorneys' Fees.
(a) In the event that any action, suit, or
other proceeding is instituted to remedy, prevent, or
obtain relief from a breach of this Agreement, or
arising out of a breach of this Agreement, the
prevailing party shall recover all of such party's
attorneys' fees incurred in each and every such
action, suit, or other proceeding, including any and
all appeals or petitions therefrom.
(b) As used herein, attorneys' fees shall
be deemed to mean the full and actual cost of any legal
services actually performed in connection with the
matters involved, calculated on the basis of the usual
fees charged by the attorneys performing such services
and shall not be limited to "reasonable attorneys'
fees" as defined in any statute or rule of court.
SECOND AGREEMENT
This Agreement is entered into as of July 17,
1996, by and among Grupo Information, Satellites &
Advertising, S.A. de C.V. ("ISA"), Renaissance Capital
Partners II Limited ("RenCap"), and Coded
Communications Corporation, a California corporation
("Coded"), each of whom agree as follows:
1. Recitals. This Agreement is entered into
based on the following essential facts, the accuracy of
which the parties acknowledge:
2. Coded is suffering severe cash flow problems
and needs financing for working capital and the
retirement of debt. In an attempt to satisfy its
financial needs, Coded entered into the Mutual
Agreement of Terms and Conditions as of May 1, 1996,
with ISA, RenCap, and others (the "Multi-Party
Agreement").
3. Because of the delays in closing the
transactions contemplated by the Multi-Party Agreement
and in restructuring the debt of Coded, ISA's
relationship with Coded has become strained and Coded's
potential business opportunities in Mexico and Latin
America are in jeopardy if it does not soon provide its
products and services.
4. To help meet Coded's needs, ISA is willing to
immediately make the $1,000,000.00 loan to Coded
described in Section 2.3 of the Multi-Party Agreement
(the "Loan"), and to concurrently convert the Loan into
equity in accordance with the Multi-Party Agreement.
By the conversion, Coded will avoid the burden of
additional debt, and improve its liquidity and capital
position.
5. ISA additionally is willing to accelerate its
purchase orders described in the Multi-Party Agreement
(to which ISA is not required to make). In accordance
with this Agreement, ISA will place $1,000,000.00 in
purchase orders with Coded (along with a $250,000.00
deposit in accordance with Coded's standard
international terms of sale), thereby raising the
amount of its purchase orders with Coded to
$2,000,000.00 (which is approximately 20 percent of its
total order requirement under the Multi-Party
Agreement). The parties intend that ISA receive Five
Million of the approximately Forty-Nine Million shares
to which ISA is entitled under the Multi-Party
Agreement (which represents about ten percent of the
shares released to ISA on account of ISA's potential
purchase orders).
6. The parties intend that ISA accelerate an
additional $1,000,000.00 of purchase orders to Coded
(along with an additional $250,000.00 advance in
accordance with Coded's standard international terms of
sale), on which Coded is expected to realize a gross
margin of $450,000.00, in exchange for the issuance to
ISA of an One Million shares of Coded's stock.
7. Upon consummation of this Agreement, Coded
will have received $3,000,000.00 of the $10,000,000.00
(i.e., Thirty Percent) worth of orders to which ISA may
ultimately be committed under the Multi-Party Agreement
(which includes $1,000,000.00 of ISA's orders placed
with Coded before the date of this Agreement), along
with total deposits on such orders in the amount of
$1,000,000.00, as well as $1,000,000.00 of additional
equity; and ISA will own Ten Million shares of Coded's
common stock.
8. ISA Orders to Coded.
9. Acceleration of Orders Under Multi-Party
Agreement. On or before July 24, 1996, ISA shall place
with Coded a binding purchase order for at least One
Million Dollars (US $1,000,000) worth of Coded's goods
and services, and shall deposit Two Hundred Fifty
Thousand Dollars (US $250,000) with Coded towards the
purchase order. The purchase order will be made
pursuant to the Multi-Party Agreement, and the order
will be credited towards the purchase orders required
by ISA under Section 2.1 of the Multi-Party Agreement.
Because ISA is accelerating the purchase orders to
Coded, promptly on Coded's receipt of the orders
described in this paragraph, Coded shall issue ISA or
its assignee Five Million shares of Coded's common
stock. Such shares will be credited towards the stock
to be issued to ISA under Section 1.3 of the Multi-
Party Agreement (i.e., Forty-Four Million Eight
Thousand Seven Hundred and Three [44,008,703] shares of
Coded's common stock will remain subject to the Option
described in the Multi-Party Agreement). The Shares
will be issued in the name of ISA or its permitted
assignee, in the form of five separate certificates,
each in the amount of One Million shares, and ISA or
its assignee will be entitled to one demand
registration right of the same nature to which ISA is
entitled in connection with the stock it receives under
the Multi-Party Agreement.
10. Additional Orders for Additional Shares. On
or before July 24, 1996, ISA shall place with Coded a
binding purchase order for an additional One Million
Dollars (US $1,000,000) worth of Coded's goods and
services and shall deposit Two Hundred Fifty Thousand
Dollars (US $250,000) with Coded towards the purchase
order. The purchase order will be credited towards the
purchase orders referenced in the Multi-Party
Agreement. In consideration of, and promptly on
receipt of, the additional purchase order and deposit
described in the preceding sentence, Coded shall issue
ISA or its assignee One Million shares of Coded's
common stock. Such shares do not apply to the stock to
be issued to ISA under Section 1.3 of the Multi-Party
Agreement. The shares will be issued in the form of a
single certificate in the name of ISA or its permitted
assignee, and ISA or its assignee will be entitled to
one demand registration right of the same nature to
which ISA is entitled in connection with the stock it
receives under the Multi-Party Agreement.
11. Production of ISA Orders. Ing. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, a representative of ISA, may inspect, monitor
and coordinate Coded's production and delivery of
products and services to ISA. Coded shall reimburse
ISA Ten Thousand Dollars (US $10,000) per month for
ISA's costs of retaining ▇▇. ▇▇▇▇▇▇ until Coded
completes the products and services under the purchase
orders made in accordance with Section 1.2 above. ▇▇.
▇▇▇▇▇▇ will be granted access to the operations of
Coded as reasonably necessary to inspect, monitor and
coordinate such orders, except that ▇▇. ▇▇▇▇▇▇ will not
be provided access to any areas, documents, or
information relating to Coded's (or its subsidiaries')
operations pursuant to contracts with the United States
Department of Defense (the "DOD") or to any areas,
documents or information relating to material deemed
classified by the DOD. ▇▇. ▇▇▇▇▇▇ will have no right
to control any aspect of Coded's (or any of Coded's
subsidiaries') operations and in no way may ▇▇. ▇▇▇▇▇▇
be deemed an agent or employee of Coded or any
subsidiary of Coded. ISA is solely responsible for ▇▇.
▇▇▇▇▇▇'▇ employment and actions.
12. Funding of ISA Loan and Exercise of
Conversion Election. ISA shall make the Loan on or
before July 24, 1996. ISA elects that the Loan
immediately be converted to shares of Coded's common
stock in accordance with Section 2.3 of the Multi-Party
Agreement, so that immediately on Coded's receipt of
the Loan funds: (a) Coded shall issue ISA the shares of
Coded's common stock required under the conversion
provisions of Section 2.3 of the Multi-Party Agreement,
(i.e., four million shares); and (b) the Loan is
extinguished and Coded has no repayment obligation in
connection with the Loan funds.
13. No Shareholder Approval Required. This
Agreement is effective immediately on mutual execution
by ISA and Coded and no approval by Coded's
shareholders is required. The enforceability of this
Agreement is unaffected by any approval or disapproval
by Coded's shareholders of the transactions
contemplated by the Multi-Party Agreement.
14. ISA's Rights as Shareholder. Upon ISA's or
its assignee's receipt of the shares issued to it under
this Agreement, ISA will own all legal and beneficial
right, title and interest in and to the shares, subject
to the rights of no other person or entity, and ISA
will have all rights of a common-stock shareholder in
Coded, including the right to vote its shares.
15. Waiver of Conversion Price Reduction Under
Debenture. RenCap waives the provisions of
Paragraph 5(b)(i) and (ii) of the Coded 12% Convertible
Debentures as such provisions would apply to the
issuance of Coded's shares under this Agreement,
notwithstanding the fact that the shares being issued
to ISA in connection with this Agreement are at a value
per share less than the conversion price set forth in
the Coded 12% Convertible Debentures.
16. Miscellaneous.
17. Governing Law, Venue and Jurisdiction. This
Agreement is governed by and construed in accordance
with the laws of the State of California, irrespective
of California's choice-of-law principles. All actions
and proceedings arising in connection with this
Agreement must be tried and litigated exclusively in
the State and Federal courts located in the County of
San Diego, State of California, which courts have
personal jurisdiction and venue over each of the
parties to this Agreement for the purpose of
adjudicating all matters arising out of or related to
this Agreement. Each party authorizes and accepts
service of process sufficient for personal jurisdiction
in any action against it as contemplated by this
paragraph by registered or certified mail, return
receipt requested, postage prepaid, to its address for
the giving of notices set forth in this Agreement.
18. Further Assurances. Each party to this
Agreement shall execute and deliver all instruments and
documents and take all actions as may be reasonably
required or appropriate to carry out the purposes of
this Agreement.
19. Counterparts. This Agreement may be executed
in counterparts, each of which is deemed an original
and all of which together constitute one document.
20. Time of Essence. Time and strict and
punctual performance are of the essence with respect to
each provision of this Agreement.
21. Attorney's Fees. The prevailing party(ies)
in any litigation, arbitration, mediation, bankruptcy,
insolvency or other proceeding ("Proceeding") relating
to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party(ies) all costs,
expenses, and actual attorney's fees (including expert
witness and other consultants' fees and costs) relating
to or arising out of (a) the Proceeding (whether or not
the Proceeding proceeds to judgment), and (b) any post-
judgment or post-award proceeding including, without
limitation, one to enforce or collect any judgment or
award resulting from the Proceeding. All such
judgments and awards shall contain a specific provision
for the recovery of all such subsequently incurred
costs, expenses, and actual attorney's fees.
22. Modification. This Agreement may be modified
only by a contract in writing executed by the party to
this Agreement against whom enforcement of the
modification is sought.
23. Prior Understandings. This Agreement and all
documents specifically referred to and executed in
connection with this Agreement: (a) contain the entire
and final agreement of the parties to this Agreement
with respect to the subject matter of this Agreement,
and (b) supersede all negotiations, stipulations,
understandings, agreements, representations and
warranties, if any, with respect to such subject
matter, which precede or accompany the execution of
this Agreement.
24. Partial Invalidity. Each provision of this
Agreement is valid and enforceable to the fullest
extent permitted by law. If any provision of this
Agreement (or the application of such provision to any
person or circumstance) is or becomes invalid or
unenforceable, the remainder of this Agreement, and the
application of such provision to persons or
circumstances other than those as to which it is held
invalid or unenforceable, are not affected by such
invalidity or unenforceability.
25. Successors-in-Interest and Assigns. This
Agreement is binding on and inures to the benefit of
the successors-in-interest and assigns of each party to
this Agreement.
CODED COMMUNICATIONS CORPORATION,a California
corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇,
President and Chief Executive Officer
GRUPO INFORMATION, SATELLITES & ADVERTISING, S.A.
de C.V.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, President
RENAISSANCE CAPITAL PARTNERS II LTD.
By: Renaissance Capital Group, Inc.,
its Managing General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇,
Executive Vice-President
