EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT, dated as of December 31, 1998, by and among IAT
Multimedia, Inc., a Delaware corporation (the "Company"), JNC Opportunity Fund
Ltd., a Cayman Islands corporation ("Opportunity"), and JNC Strategic Fund Ltd.,
a Cayman Islands corporation ("Strategic"). Opportunity and Strategic are
collectively referred to herein as the "Purchasers."
WHEREAS, the Company and the Purchasers are parties to a Securities
Purchase Agreement, dated as of June 19, 1998 (the "Purchase Agreement"),
pursuant to which, among other things, for a purchase price of $2,000,000, the
Company issued and sold to Strategic 198,255 shares (the "Shares") of the
Company's common stock, par value $.01 per share (the "Common Stock"); and
WHEREAS, the Company and Strategic have agreed to exchange (the "Exchange")
the Shares for 2,000 shares of the Company's to be created Series B Convertible
Preferred Stock, par value $.01 per share with a stated value of $1,000 per
share (the "Preferred Stock"), which shares shall be convertible into shares of
Common Stock and which have the rights, preferences and privileges set forth in
the Certificate of Designation of the Company in the form attached hereto as
Exhibit A, which the Company will file with the Delaware Secretary of State as
soon as practicable after the execution of this Exchange Agreement (the
"Certificate of Designation").
NOW THEREFORE, in consideration of the mutual covenants contained in this
Exchange Agreement and for other good and valuable consideration the receipt and
adequacy are hereby acknowledged, the Company and Purchasers, intending to be
legally bound, agree as follows:
Capitalized terms used but not defined herein that are defined in the
Purchase Agreement shall have the respective meaning ascribed to them in the
Purchase Agreement.
1. Exchange. Upon receipt of evidence satisfactory to Strategic of the
acceptance for filing of the Certificate of Designation by the Delaware
Secretary of State (the date of such receipt, the "Exchange Date"), the Company
will deliver to Strategic stock certificates representing an aggregate of 2,000
shares of the Preferred Stock, registered in the name of Strategic
(collectively, the "Preferred Shares"), and Strategic shall deliver to the
Company the original stock certificate evidencing its ownership of the Shares,
together with a completed stock power therefor.
2. Registration. No later than January 10, 1999, the Company shall prepare
and file with the Commission a supplement (the "Supplement") to the Company's
effective Registration Statement on Form S-3 (Registration No. 333-64111) (the
"Registration Statement") in order to provide that the Registration Statement
covers resales by Strategic of the shares of Common Stock issuable to Strategic
upon conversion of the Preferred Shares. The Company will provide Strategic with
a copy of the proposed Supplement no less than one (1) Business Day prior to the
filing thereof with the Commission.
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3. Purchase Agreement and Registration Rights Agreement. The Purchase
Agreement and the Registration Rights Agreement shall be deemed amended to the
extent required to provide for the Exchange. The term "Common Shares" in the
Registration Rights Agreement shall hereafter refer to the shares of Common
Stock issuable upon conversion of the Preferred Shares. Other than as expressly
amended hereby, the Purchase Agreement and the Registration Rights Agreement are
not amended and remain in full force and effect. The provisions of Section 3.1
of the Purchase Agreement shall apply with respect to the Preferred Shares.
4. Representation and Warranties of the Company.
The Company hereby represents and warrants as follows:
(a) The execution, delivery and performance by the Company of this Exchange
Agreement and the consummation of the transactions contemplated hereby (i) are
within the power of Company and (ii) have been duly authorized by all necessary
actions on the part of Company. Upon issuance, the Preferred Shares shall have
been duly authorized and issued and the Common Stock issuable upon conversion
thereof will be validly issued, fully paid and non-assessable, free and clear of
all Liens.
(b) This Exchange Agreement has been duly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of Company,
enforceable against the Company in accordance with its terms.
(c) The execution, delivery and performance of this Exchange Agreement by
the Company and the consummation by the Company of the transactions contemplated
thereby do not and will not conflict or violate any provision of its certificate
of incorporation, bylaws or other charter documents of the Company, each as
amended through the date hereof.
(d) The Company has paid no commission or other remuneration directly or
indirectly to any person for soliciting the Exchange.
5. Representation and Warranties of Strategic. Strategic hereby reaffirms
the representations and warranties given by it in Section 2.2 of the Purchase
Agreement and further represents and warrants as follows:
(a) The execution, delivery and performance by Strategic of this Exchange
Agreement and the consummation of the transactions contemplated hereby (i) are
within the power of Strategic, (ii) do not violate the charter or offering
documents of Strategic, and (iii) have been duly authorized by all necessary
actions on the part of Strategic.
(b) This Exchange Agreement has been duly executed and delivered by
Strategic and constitutes a legal, valid and binding obligation of Strategic,
enforceable against Strategic in accordance with its terms.
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6. Indemnification. Strategic shall indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses (as defined in the Registration Rights Agreement)
based upon or arising out of any misrepresentation or breach of any
representation or warranty made by Strategic in this Agreement. To the extent
that the foregoing undertaking by Strategic is found unenforceable for any
reason, Strategic shall make the maximum contribution to the payment and
satisfaction of such undertaking which is permissible under applicable law.
7. Governing Law. This Exchange Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of laws thereof. Each of the
Company and the Purchasers hereby irrevocably submit to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Purchasers hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by receiving a copy thereof sent to the Company at
the address in effect for notices to it under the Purchase Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.
8. Execution. This Exchange Agreement may be executed in counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Exchange Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
IAT MULTIMEDIA, INC.
By: /s/ Xxxxx Xxxxxxxxxx
--------------------------------------------
Name:
Title:
JNC STRATEGIC FUND LTD.
By: Encore Capital Management, L.L.C., its
Investment Advisor
By: /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx, Managing Member
JNC OPPORTUNITY FUND LTD. (solely to agree,
consent and acknowledge the amendment to the Purchase
Agreement and Registration Rights Agreement resulting from
the execution of this Exchange Agreement.)
By: Encore Capital Management, L.L.C., its
Investment Advisor
By: /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx, Managing Member
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