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EXHIBIT 10.1
NOTE EXCHANGE AGREEMENT
THIS AGREEMENT, dated as of June 5, 1997, is by and among XXXXXXX
COMMUNICATIONS CORPORATION, an Iowa corporation (the "Company"), XXXXXXX XXXXXX
& COMPANY LEASING, INC. ("BFCL"), XXXXXXX XXXXXX & COMPANY ("BFC") and X.X.
XXXXXXX INVESTMENT, L.P. ("TJB") (BFCL, BFC and TJB are collectively referred
to as the "Investors").
RECITALS
A. BFCL is the holder of a $750,000 term note issued by the Company dated
January 31, 1997, and each of BFC and TJB is the holder of a $500,000
promissory note issued by the Company dated December 31, 1996 (together, the
"Notes").
B. The Company desires to purchase, and BFCL, BFC and TJB desire to sell
the Notes in exchange for shares of the Company's common stock (the "Shares").
AGREEMENTS
In consideration of the recitals and the mutual agreements set forth
below, the parties agree:
1. Purchase of Notes.
(a) Purchase of Notes. The Company agrees to purchase from BFCL BFC
and TJB, and each such Investor agrees to sell to the Company, the Notes in
exchange for, in the aggregate, 465,625 Shares.
(b) Issuance of Stock; Surrender of Notes. Upon receipt of the Notes,
marked "paid in full," the Company agrees to issue the Shares to the Investors,
allocated as set forth on Exhibit A.
(c) Adjustment Shares. If the "Adjustment Price" (as defined below)
is less than $4.00, additional Shares (the "Adjustment Shares") will be issued
to the Investors within ten business days after the end of the 90-day period
beginning on the effective date of the Company's registration statement
covering the Shares (the "Effective Date"). "Adjustment Price" means the
lowest average closing bid price of the Shares during any period of 30
consecutive days during the period beginning on the date of this Agreement and
ending 90 days after the Effective Date. If the Adjustment Price is $4.00 or
greater, no Adjustment Shares will be issued. The maximum number of Adjustment
Shares that may be issued is 187,067 Shares.
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(i) Adjustment Shares Issued to BFCL. The Adjustment shares to be
issued BFCL shall be the lesser of (1) 129,375 or (2) (862,500/Adjustment
Price) less 215,625.
(ii) Adjustment Shares Issued to BFC. The Adjustment Shares to be
issued BFC shall be the lesser of (1) 28,846 or (2) (500,000/Adjustment Price)
less 125,000.
(iii) Adjustment Shares Issued to TJB. The Adjustment Shares to be
issued TJB shall be the lesser of (1) 28,846 or (2) (500,000/Adjustment Price)
less 125,000.
2. Representations and Warranties of the Company. In order to induce the
Investors to enter into and perform their obligations under this Agreement, the
Company makes the following representations and warranties:
(a) Existence and Rights. The Company is a corporation duly
organized and validly existing under the laws of the State of Iowa. The
Company has the corporate power and authority to enter into and perform this
Agreement. The execution and performance of this Agreement by the Company
have been duly authorized.
(b) The Shares. The Shares issuable to the Investors under this
Agreement have been duly authorized and, when issued in accordance with the
terms of this Agreement, will be duly and validly issued, fully paid and
nonassessable.
3. Representations and Warranties of the Investors. In order to induce
the Company to enter into and perform its obligations under this Agreement,
each Investor severally and individually makes the following representations
and warranties:
(a) Existence and Rights. Such Investor is a limited partnership or
corporation, as applicable, duly organized and validly existing under the laws
of its jurisdiction of organization. Such Investor has the requisite power and
authority to enter into and perform this Agreement. The execution and
performance of this Agreement by such Investor have been duly authorized.
(b) Ownership. The Note to be sold to the Company by such Investor is
owned beneficially and of record by the Investor and will be transferred to the
Company by the Investor free and clear of any lien, charge, encumbrance,
security interest, pledge or other restriction.
(c) Accredited Investor. Except for TJB, the Investor is an
"accredited investor" as such term is defined in Rule 501(a) promulgated under
the
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Securities Act of 1933, as amended (the "Securities Act"). Each Investor is
an entity which has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an investment
in the Company and able to bear the substantial economic risks of such an
investment. The Investor has relied on consultations with the Investor's
legal, financial and tax advisers with respect to this Agreement, and its
investment in the Company, and has reviewed the information set forth in the
Company's prospectus dated October 21, 1996 and all reports filed by the
Company under the Securities Exchange Act of 1934 with the Securities and
Exchange Commission (the "SEC"), receipt of which are hereby acknowledged. The
Investor has not relied upon any statements or representations of the Company
with respect to its investment in the Company, except as specifically set forth
in this Agreement. The Shares will not be sold or transferred by the Investor
in violation of the Securities Act or any state or other jurisdiction's
securities laws. The Investor is aware that the Shares have not been registered
under the Securities Act or any state or other jurisdiction's securities laws,
that they must be held indefinitely unless subsequently registered or an
exemption from such registration is available. The Investor is aware that any
exemption from the registration requirements of the Securities Act pursuant to
Rule 144 promulgated thereunder is not presently available. The Investor
confirms that the Company has made available to the Investor the opportunity to
ask questions of its officers and to acquire such additional information about
the business and financial condition of the Company as the Investor has
requested, which additional information, if so requested, has been
satisfactorily received.
4. Registration.
(a) Shelf Registration. The Company will file a shelf registration
statement with the SEC covering the resale by the Investors of up to 652,692
Shares no later than July 10, 1997. The Company will use its best efforts to
cause such shelf registration statement to be effective no later than November
1, 1997. In connection with such registration, the Investors undertake to
provide all such information and materials and to take all such actions as may
be required in order to permit the Company to comply with all applicable
requirements of the SEC and to obtain acceleration of the effective date of the
registration statement. Sections 4(b) through 4(d) will apply only if the
Company fails to register the Shares (on or prior to November 1, 1997) pursuant
to this section 4(a) and the Investors still hold any Shares.
(b) Piggyback Rights. Whenever the Company proposes or is requested
or receives a demand to register the sale of any Shares under the Securities Act
and the registration form to be used may be used for the registration of the
sale of the Shares, the Company shall give prompt written notice to the
Investor of its intention to effect such a registration (a "Notification") and,
subject to section 4(c) below, will include in such registration all Shares
with respect to which the Company has received a written request (a "Piggyback
Request") for
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inclusion therein within fifteen days after the receipt by any Investor of the
Notification (a "Piggyback Registration"). No Piggyback Request shall be made
for fewer than 25,000 Shares. No Piggyback Request may be made later than two
years from the date hereof and if not so made, the Investors shall have no
right to a Piggyback Registration.
(c) Priorities. If a Piggyback Registration is an underwritten
primary registration on behalf of the Company, and the managing underwriter
advises the Company in writing that in its opinion the number of Shares
requested to be included in such registration exceeds the number which can be
sold in such offering without a material adverse effect on the offering, the
Company shall include in such registration (i) first, the Shares the Company
proposes to sell on its own behalf, (ii) second, the Shares stock to be sold by
other shareholders who have registration rights pursuant to agreements executed
prior to the date hereof, pro rata among such other shareholders (if all of
such shares may not be sold) on the basis of the number of Shares owned by such
other shareholders, (iii) third, the Shares to be sold by the Investor, and
(iv) fourth, any other Shares requested to be included in such registration. If
a Piggyback Registration is an underwritten secondary registration on behalf of
shareholders other than the Company, and the managing underwriter advises the
Company in writing that in its opinion the number of Shares requested to be
included in such registration exceeds the number which can be sold in such
offering without a material adverse effect on the offering, the Company shall
include in such registration, (i) first, the Shares requested to be included
therein by the holders requesting such registration, (ii) second, the Shares of
other stockholders who have registration rights pursuant to agreements executed
prior to the date hereof, pro rata among such other shareholders (if all of
such Shares may not be sold) on the basis of the number of shares owned by such
other shareholders, (iii) third, the Shares to be sold by the Investors, and
(iv) fourth, the other Shares requested to be included in such registration.
(d) Undertakings. Any Piggyback Request shall express the Investors'
present intent to offer the Shares to be included in the registration statement
for distribution and contain an undertaking to provide all such information and
materials and to take all such actions as may be required in order to permit
the Company to comply with all applicable requirements of the SEC and to obtain
acceleration of the effective date of the registration statement.
(e) Compliance. As long as any Investor owns Shares issued under this
Agreement, the Company agrees to file all reports required to be filed by it
under the Securities Exchange Act of 1934 and to use its best efforts to comply
with the public information provisions of Rule 144 promulgated thereunder. In
addition, the Company will register the Shares issued under this Agreement or
NASDAQ upon the Effective Date.
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5. Investors' Options. If the registration statement described in section
4(a) is not declared effective by the SEC on or prior to November 1, 1997, each
Investor shall have the option, exercisable prior to December 1, 1997, to put
the Shares held by it back to the Company in exchange for a promissory note
identical in all material respects to such Investor's Note described in Recital
A of this Agreement.
6. Costs and Expenses. Subject to this section 6, below, the entire cost
and expense of the registration pursuant to section 4 shall be borne by the
Company. The costs and expenses of such registration shall include, without
limitation, the fees and expenses of the Company's counsel and its independent
accountants and all other out-of-pocket costs and expenses of the Company
incident to the preparation and filing under the Securities Act of the
registration statement and all amendments and supplements thereto and the
prospectus contained therein; provided, however, that under no circumstances
shall the Company be liable or responsible for printing expenses, expenses of
distributing prospectuses and related documents, the fees and expenses of
counsel and accountants of the Investors or underwriting discounts and
commissions payable in connection with any sale of the Shares.
7. Miscellaneous. Any change or amendment to this Agreement must be in
writing and signed by the party or parties against whom such change, amendment
or waiver is sought to be enforced. This Agreement contains the entire
agreement among the parties hereto with respect to the transactions
contemplated herein. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
XXXXXXX COMMUNICATIONS CORPORATION
BY /s/ Xxxxx X. Xxxxxxx
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Its Chief Financial Officer
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XXXXXXX XXXXXX & COMPANY
LEASING, INC.
BY /s/ Xxxxxx Xxxxxxx
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Its President
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XXXXXXX XXXXXX & COMPANY
BY /s/ Xxxxxx Xxxxxxx
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Its President
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X.X. XXXXXXX INVESTMENTS, L.P.
BY /s/ Xxxxxx Xxxxxxx
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Its President and General Partner
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EXHIBIT A
Investor Allocation
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Xxxxxxx Xxxxxx & Company
Leasing, Inc. 215,625 Shares
X.X. Xxxxxxx Investments, L.P. 125,000 Shares
Xxxxxxx Xxxxxx & Company 125,000 Shares
