Exhibit 1
SHARE SUBSCRIPTION AGREEMENT
THIS SHARE SUBSCRIPTION AGREEMENT ("Agreement") is made and entered into as of
the 22 day of October, 2002 (the "Effective Date"), by and between INTERNATIONAL
ASSETS HOLDING CORPORATION, a Delaware corporation (the "Company"), and XXXXX X.
XXXXXX (the "Investor").
R E C I T A L S
A. The Company, directly or through its subsidiaries, operates a financial
services company, including a market making and proprietary trading brokerage
firm specializing in global securities.
B. The Company is a publicly held entity, having previously offered shares of
the Company's common stock pursuant to a registration statement, and continues
to file reports as to the Company's business.
C. The Board of Directors of the Company (the "Board") considers it essential
to the best interests of the Company that (i) additional common equity and (ii)
preferred equity will be sold to the Investor subject to the terms of this
Agreement.
D. The Investor is an "accredited investor" as such term is defined in Appendix
1, and is capable of evaluating the merits and risks of an investment in the
Company.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
hereinafter, the Company and the Investor agree as follows:
1. Recitals. All of the above recitals are true and correct.
2. Term. This Agreement shall commence on the Effective Date and shall
terminate at 12:01 a.m. EST on the date that is the later of five (5) business
days from the date of receipt by the Company of (i) the audited consolidated
financial statements for the fiscal year ended September 30, 2002; or (ii)
written confirmation from NASDAQ with respect to the transactions evidenced by
this Agreement, but in no event later than December 15, 2002 (the "Termination
Date") unless the Closing, as hereafter defined, has occurred before the
Termination Date. This Agreement may be extended by the mutual written agreement
of the Company and the Investor prior to the Termination Date.
3. Purchase of Securities.
(a) Subject to the terms and conditions of this Agreement, the Company
offers to the Investor and the Investor hereby subscribes to purchase (i)
151,717 shares of common stock, $.01 par value per share of the Company (such
shares of common stock are referred to herein as the "Common Securities"), and
(ii) 583,577 shares of preferred stock, $.01 par value per share of the Company
(such shares of preferred stock are referred to herein as the "Preferred
Securities") (the Common Securities and the Preferred Securities are
collectively referred to as the "Securities"), each at a fixed price per share
equal to $1.70 (the "Per Share Purchase Price"). The aggregate purchase price
for the purchased Securities shall be equal to the product of the Per Share
Purchase Price and the aggregate number of Common Securities and Preferred
Securities purchased by the Investor (the "Aggregate Purchase Price").
(b) The Preferred Securities will have the preferences, privileges,
restrictions and rights specified in Exhibit "A" to this Agreement. The Board
will promptly approve the terms of the Preferred Securities by adopting an
amendment to the Company's Certificate of Incorporation in the form of Exhibit
"A".
4. Xxxxxxx Money. The Investor will pay the Company a deposit in the amount of
$80,000 within three (3) days of the execution of this Agreement (the
"Deposit"). At the Closing, the Company will apply the Deposit to the Aggregate
Purchase Price as provided in Section 5. If the Agreement is terminated before
the Closing, as hereafter defined, pursuant to Subsection 7(a)(i), (ii) or (iii)
or Section 10 hereof, the Company will return the Deposit to the Investor. If
the Agreement is terminated before the Closing pursuant to Subsection 7(a)(iv)
hereof or if the Investor is unable to make full payment to the Company for the
purchased shares at Closing, the Investor will forfeit the Deposit.
5. Closing and Payment. The closing of the acquisition provided for in Section
3 of this Agreement (the "Closing") shall occur on a mutually agreeable date
prior to the Termination Date at the offices of Holland & Knight LLP in Orlando,
Florida or at such other time and place as the parties may agree. At the
Closing: (i) the Investor will pay the Aggregate Purchase Price less the Deposit
by either endorsing a certified or cashier's check made payable to the Company
or wiring immediately available funds to the Company's bank account (which
account number has been previously provided to the Investor), and (ii) the
Company will reimburse the Investor, together with the other Approved Investors,
up to the aggregate sum of $20,000 for amounts paid by the Approved Investors to
any intermediaries or brokers and for the legal and out-of-pocket expenses
incurred by the Approved Investors, provided that the Approved Investors shall
not be entitled to such reimbursement if the Closing does not occur for any
reason.
6. Conditions Precedent.
(a) The respective obligations of the Company and the Investor to effect the
Closing are subject to the satisfaction or waiver by the Company and the
Investor, prior to the Closing of each of the following conditions:
(i) There being no provision of applicable Law or any Court Order that
prohibits or otherwise makes illegal the consummation of the Closing.
(ii) All regulatory approvals required to consummate the transaction
contemplated hereby (other than the shareholder approval required for the
conversion of Preferred Securities) shall have been obtained and shall
remain in full force and effect.
(iii) No investigation, action, suit or proceeding by a Governmental
Authority shall be pending on the date of Closing, which challenges, or
might reasonably be expected to result in a challenge to this Agreement, or
which might reasonably be
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expected to give rise to a claim for damages in a material amount as a
result of the consummation of the transaction contemplated by this
Agreement.
(iv) The Company shall have consummated simultaneously with the
Closing, the transactions contemplated by Share Subscription Agreements
of even date herewith entered into by and between the Company and each
of Xxxx X. X'Xxxxxx and Xxxx Xxxxxxxxx, or any assignee of each which
has been approved in writing by the Company (such persons, together
with the Investor, the "Approved Investors").
(v) The Company shall have received the written confirmation from
NASDAQ that the transactions evidenced by this Agreement do not require
prior stockholder approval.
(b) The obligation of the Investor to effect the Closing is subject to the
satisfaction or waiver by the Investor of the following additional conditions:
(i) The Company shall have performed in all material
respects all of its material obligations under this Agreement required to be
performed by it at or before the Closing.
(ii) Any representation or warranties of the Company
contained in this Agreement shall be true and correct in all material respects
as of the Closing, as if made at and as of such time.
(iii) The Company and the Investor shall have entered into an
Employment Agreement in the form attached hereto as Exhibit "B" (the "Employment
Agreement").
(iv) The Company and the Investor shall have entered into a
Registration Rights Agreement in the form attached hereto as Exhibit "C" (the
"Registration Rights Agreement").
(v) The Board shall have duly adopted resolutions: (1)
approving the terms of (i) this Agreement, (ii) the terms of the Preferred
Securities, (iii) the Employment Agreement, and (iv) the Registration Rights
Agreement; (2) authorizing an employee share incentive program to allow for
options to be issued as provided in the Employment Agreement (the "Option Plan")
to be proposed to the stockholders of the Company for approval at the next
convened annual general meeting of stockholders currently scheduled to occur on
or before February 14, 2003 (the "Annual Meeting"); and (3) approving an
amendment to (i) the bylaws of the Company to require a supermajority vote of
the greater of (A) at least five directors or (B) at least seventy-five percent
(75%) of the directors to remove or change the Chairman of the Board, and (ii)
the Certificate of Incorporation of the Company to also require a vote of at
least seventy-five percent (75%) of the shares of common stock to remove or
change the Chairman of the Board to be proposed to the stockholders of the
Company at the Annual Meeting. Copies of these Board resolutions certified by
the Secretary of the Company shall be made available to the Investor no later
than 14 business days after execution of this Agreement.
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(vi) The Company will have received a release from UBS
Warburg waiving any claim to compensation arising from this Agreement or the
share purchase evidenced hereby.
(vii) The Company will have secured letters of resignation
from all current directors not shown on Appendix 2 and shall appoint all new
directors shown on Appendix 2 effective as of the Closing.
(viii) The Company shall have entered into Employment
Agreements with Xxxxx Xxxxxx, Xxxxxx Xxxxxxxxxxx, Xxxxxxx Xxxxx, Xxxxx Xxxxxx,
Will Xxxxxx, Jr., Xxxx Xxxx, Xxxxx Xxxxx and Xxxxxxx Xxxxxxxxx. Neither Xxxxx
Xxxxxx nor Xxxxxx Xxxxxxxxxxx shall have terminated their Employment Agreement
with the Company.
(c) The Obligation of the Company to effect the Closing is subject to
satisfaction or waiver by the Company of the following conditions:
(i) The Investor shall have performed in all material
respects all of its material obligations under this Agreement required to be
performed by it at or before the Closing.
(ii) Any representation or warranties of the Investor
contained in this Agreement shall be true and correct in all material respects
as of the Closing, as if made at and as of such time.
7. Termination.
(a) This Agreement may be terminated at any time before the Closing:
(i) by the mutual agreement of the Investor and the
Company;
(ii) By either the Company or the Investor, if the Closing
has not occurred by December 15, 2002, provided that the right to terminate this
Agreement under this clause will not be available to any party whose failure to
fulfill any of its obligations under this Agreement resulted in the failure to
consummate the Closing by such date;
(iii) By the Investor, if there has been a material breach of
any representation, warranty or covenant in this Agreement by the Company; or
(iv) By the Company, if there has been a material breach of
any representation, warranty or covenant in this Agreement by the Investor.
(b) The party terminating this Agreement pursuant to this Section will
give written notice of termination to the other party.
8. Stockholder Approval. At the Annual Meeting, the Company shall seek the
approval of the stockholders of the Company: (i) to allow conversion of the
Preferred Securities to Common Securities; (ii) to adopt the Option Plan; (iii)
to elect the persons listed on Appendix 2 to the Board; and (iv) to amend the
Certificate of Incorporation of the Company to require a seventy-five percent
(75%) vote of the stockholders to remove or change the Chairman of the Board.
Upon the approval of the stockholders at the
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Annual Meeting, the Preferred Securities will automatically be converted into
the Common Securities pursuant to the conversion provisions included in Exhibit
"A" hereto (the "Conversion").
9. Redemption and Repurchase Rights.
(a) In the event the stockholders do not approve the resolutions
permitting conversion of the Preferred Securities into common stock and the
amendment to the Company's Certificate of Incorporation to require a
seventy-five percent (75%) vote of the stockholders to remove or change the
Chairman of the Board at the Annual Meeting: (i) the Investor will, at a
redemption price equal to the Aggregate Purchase Price, have the option to cause
the Company to repurchase the Common Securities and the Preferred Securities for
a period beginning fifteen (15) days after the Annual Meeting and extending to
the date that is six months from the Closing (the "Redemption Right"), and (ii)
the Company will have the right to repurchase the Common Securities and the
Preferred Securities from the Investor for a period beginning fifteen (15) days
after the Annual Meeting and extending to the date that is six months from the
Closing at a price equal to the Aggregate Purchase Price (the "Repurchase
Right").
(b) In the event that prior to the Conversion: (i) the Investor's
employment is terminated by the Company (other than for Cause, as such term is
defined in the Employment Agreement); or (ii) the Investor is removed as a
director of the Company; or (iii) Xxxx X'Xxxxxx'x employment is terminated by
the Company (other than for Cause, as defined in the Employment Agreement of
even date herewith between the Company and Xxxx X'Xxxxxx); or (iv) either Xxxx
X'Xxxxxx or the nominee of Xxxx Xxxxxxxxx is removed from the Board, then the
Company, at the Investor's option, shall repurchase the Common Securities and
the Preferred Securities from the Investor at a price equal to the Aggregate
Purchase Price within fifteen (15) days of such termination of employment or
removal of director. In the event that prior to the Conversion, the Investor's
employment is terminated by the Company for Cause, as such term is defined in
the Employment Agreement, the Company shall have the option to repurchase the
Common Securities and the Preferred Securities from the Investor at a price
equal to the Aggregate Purchase Price within fifteen (15) days of such
termination of employment.
(c) In the event the Annual Meeting is not held on or before March 15,
2003, the Investor will, at a redemption price equal to the Aggregate Purchase
Price, have the option to cause the Company to repurchase the Common Securities
and the Preferred Securities from the Investor at a price equal to the Aggregate
Purchase Price on or before March 30, 2003.
10. Adjusted Stockholders Equity Per Share. Notwithstanding anything to the
contrary in this Agreement, either party shall have the option to terminate this
Agreement prior to Closing in the event that stockholders' equity per share as
determined and adjusted pursuant to this Section (the "Adjusted Stockholders
Equity Per Share") is greater than $1.75 or less than $1.45. Stockholder equity
per share shall be determined as of September 30, 2002 by the independent public
accountants then regularly servicing the Company, in accordance with generally
accepted accounting principles consistently applied, based on the audited
consolidated financial statements of the Company, which determination shall be
binding on the parties hereto. Subject to compliance with auditor independence
and corporate governance considerations as effective or proposed by the
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SEC or NASDAQ, the Investor shall have the right to consult with the
independent public accountants determining the Stockholder equity per share
prior to such determination and to approve any new accounting firm if the
Company's accounting firm as of the date of this Agreement resigns or is
otherwise replaced. Stockholders equity per share as so determined by the
Company's accounting firm shall then be adjusted as follows to determine
the Adjusted Stockholders Equity Per Share:
a. Stockholders equity per share shall include the value of the
Company's technology assets (which shall be deemed to be $300,000 in
aggregate at September 30, 2002) and the Company's deferred tax assets
(which shall be deemed to be $540,766 at September 30, 2002),
irrespective of the auditor's treatment thereof;
b. All costs related to the transaction contemplated by this Agreement
shall not be expensed but rather shall be debited directly against the
capital investment made by the Approved Investors. Such expenses shall
include legal and tax advisory fees, amounts paid to any
intermediaries or brokers and the legal and out of pocket expenses
incurred by the Investor (in aggregate with all other Approved
Investors, not to exceed $20,000). The aggregate of all such expenses
for entire aggregate investment by the Approved Investors is not to
exceed $200,000. Any excess beyond $200,000 to be deducted against
stockholder's equity per share; and
c. The resulting Stockholders equity per share shall then be reduced
by 7.5%.
11. Representations by the Investor. In connection with the purchase of
the Securities, the Investor acknowledges, warrants and represents to the
Company as follows:
a. The Investor is acquiring the Securities for investment for his own
account and without the intention of participating, directly or
indirectly, in a distribution of the Securities, and not with a view
to resale or any distribution of the Securities, or any portion
thereof.
b. The Investor has knowledge and experience in financial and business
matters and has consulted with its own professional representatives as
it has considered appropriate to assist in evaluating the merits and
risks of this investment. The Investor has had access to and an
opportunity to question the officers of the Company, or persons acting
on their behalf, with respect to material information about the
Company and, in connection with the evaluation of this investment,
has, to the best of his knowledge, received all information and data
with respect to the Company that the Investor has requested. The
Investor has carefully reviewed all of the Company's filings with the
Securities and Exchange Commission. The Investor is acquiring the
Securities based solely upon its independent examination and judgment
as to the prospects of the Company.
c. The Securities were not offered to the Investor by means of
publicly disseminated advertisements or sales literature.
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d. The Investor is acquiring the Securities without being furnished
any offering materials or prospectus.
e. The Investor acknowledges that an investment in the Securities is
speculative and involves a high degree of risk, including a risk of
loss of the entire investment in the Company, and the Investor may
have to continue to bear the economic risk of the investment in the
Securities for an indefinite period. The Investor acknowledges that
the Securities are being sold to the Investor without registration
under any state or federal law requiring the registration of
securities for sale, and accordingly will constitute "restricted
securities" as defined in Rule 144 promulgated under the Securities
Act of 1933, as amended (the "Act"). The transferability of the
Securities is therefor restricted by applicable United States Federal
and state securities laws.
f. The Investor acknowledges that each certificate representing
Securities shall be subject to a legend substantially in the following
form:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended or any state securities laws and
neither the securities nor any interest therein may be offered, sold,
transferred, pledged, or otherwise disposed of except pursuant to an
effective registration statement under such act or such laws or an
exemption from registration under such act and such laws which, in the
opinion of counsel for the holder, which counsel and opinion are
reasonably satisfactory to counsel for this entity, is available."
12. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor except as set forth on a Schedule
of Exceptions (the "Schedule of Exceptions") furnished to the Investor and
its counsel, and attached as Exhibit D hereto, specifically identifying the
relevant section hereof, which exceptions shall be deemed to be
representations and warranties as if made hereunder:
a. Corporate Existence. The Company and each of its subsidiaries are
entities duly formed under the laws of their respective places of formation, are
each in good standing and have a legal existence, with full power and authority
to own, operate or lease their respective properties and conduct their
respective businesses in the manner and in the places where such properties are
owned or leased or such businesses are conducted.
b. Authorization of Transaction. Subject to the receipt of necessary
third party approvals or confirmations listed on Appendix 3 hereto
(the "Required Approvals"), the Company has the full power and
authority to execute, deliver and perform this Agreement and the other
agreements to be executed and delivered pursuant to this Agreement
(the "Ancillary Agreements"); to perform its obligations hereunder and
thereunder, and to carry out the transactions contemplated hereby and
thereby. All necessary action, corporate or otherwise, will have been
taken by the Company prior to the Closing to authorize the execution,
delivery and performance of this Agreement and each of the Ancillary
Agreements and the transactions contemplated hereby and thereby. Each
of this Agreement and the Ancillary Agreements has been, or will be at
the Closing, duly executed and delivered by the Company, and each of
this Agreement and the
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Ancillary Agreements is, or upon the Closing will be, the legal, valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms except (a) as limited by applicable
bankruptcy, insolvency or other laws of general application affecting
enforcement of creditors' rights; and (b) general principles of equity
that restrict the availability of equitable remedies.
c. Capitalization. As of the date of this Agreement, the authorized
capital stock of the Company consists of 8,000,000 shares of common
stock, par value $.01 per share of which 2,375,575 shares are validly
issued and outstanding, fully paid and nonassessable on the date
hereof, and 5,000,000 shares of preferred stock, par value $.01 per
share, none of which are issued or outstanding. In addition, on the
date hereof, 527,224 shares of common stock are subject to issuance
pursuant to presently existing options and warrants. There are no
other outstanding options, warrants, rights, convertible securities or
exchange offers providing for the issuance of common stock or any
other capital stock of the Company.
d. Securities Duly Issued. Upon the issuance of the Securities at the
Closing, the Securities will be duly and validly issued, fully paid
and nonassessable, and will not be subject to any restrictions on
transfer other than those arising under applicable federal and state
securities laws.
e. Present Compliance with Obligations and Laws. Neither the Company
nor any of its subsidiaries are: (i) in violation of their respective
Organizational Documents; (ii) in default in the performance of any
obligation, agreement or condition of any debt instrument which (with
or without the passage of time or the giving of notice) affords to any
person the right to accelerate any indebtedness or terminate any
right; (iii) in default of or in breach of (with or without the
passage of time or the giving of notice) any other contract to which
it is a party or by which it or its assets are bound; or (iv) in
violation of any Court Order or Governmental Authorization that is
held by the Company or its subsidiaries or is applicable to any of the
Company or its subsidiaries or their respective businesses or assets.
Except as set forth on Section 12(e) of the Schedule of Exceptions,
the Company and its subsidiaries have conducted and are now conducting
their businesses and the ownership and operation of their assets in
compliance with all applicable Laws, except where the failure to be in
such compliance would not have a Material Adverse Effect.
f. No Conflict of Transaction With Obligations and Laws. Except as set
forth on Schedule 12(f) of the Schedule of Exceptions, neither the
execution, delivery and performance of this Agreement or any Ancillary
Agreement, nor the performance of the transactions contemplated hereby
or thereby, will: (a) conflict with or constitute a breach or
violation of any provision of the Organizational Documents of the
Company or any of its subsidiaries; (b) require any Governmental
Authorization, (c) require any consent of any parties to loans,
contracts, leases, licenses and other agreements to which the Company
is a party; (d) constitute (with or without the passage of time or the
giving of notice) a breach of, or default under, any debt instrument
to which the Company or any of its subsidiaries is a party, or give
any person the right to accelerate any indebtedness or terminate,
modify or cancel any right; (e) constitute (with or without the
passage of time or giving of notice) a default under or breach of any
other agreement, instrument or
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obligation to which the Company or any of its subsidiaries is a party
or by which it or its assets are bound; (f) result in the creation of
any encumbrance upon any capital stock or any of the assets of the
Company or its subsidiaries; (g) conflict with or result in a
violation of any Court Order or Law, or give to any other person, the
right to exercise any remedy or obtain any relief under any Court
Order or Law, to which the Company or any of its subsidiaries is
subject or by which the properties or assets of the Company or any of
its subsidiaries are bound, or (h) result in a violation of any of the
terms or requirements of, or give any Governmental Authority the right
to revoke, suspend or otherwise modify, any Government Authorization.
g. SEC Reports. The consolidated financial statements of the Company
and the related notes contained in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 2001 and its Quarterly
Report on Form 10-Q for the quarter ended June 30, 2002 present fairly
the financial position of the Company as of the dates indicated
therein and the results of its operations and cash flows for the
periods therein specified. Such consolidated financial statements
(including the related notes) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods therein specified and are true, correct and
complete in all respects.
h. Contracts and Commitments. Set forth on Section 12(h) of the
Schedule of Exceptions is a list of all (i) contracts, mortgages,
indentures, agreements, instruments and transactions to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries are bound which involve obligations of, or
payments to, such company in excess of $100,000 in the aggregate; (ii)
agreements between the Company or any of its subsidiaries and the
Investor; (iii) agreements between the Company or any of its
subsidiaries and any officer, director, consultant, stockholder,
employee, affiliate or predecessor company; and (iv) contracts,
agreements, arrangements or understandings which are material to the
business of the Company or any of its subsidiaries (collectively
referred to as the "Material Contracts"). Copies of all Material
Contracts listed in Section 12(h) of the Schedule of Exceptions have
previously been made available to the Investor. All of the Material
Contracts are valid, binding and in full force and effect in all
material respects, subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of the creditors'
rights and rules or laws concerning equitable remedies. Neither the
Company nor any of its subsidiaries are in material default under any
such contract. Except as set forth in Section 12(h) of the Schedule of
Exceptions, with respect to each Material Contract, (a) the Company or
its subsidiaries, as the case may be, has performed in all material
respects all obligations required to be performed to date under such
Material Contract; (b) to the best knowledge of the Company, no party
to such Material Contract is in default, breach or arrears under the
terms of such Material Contract; and (c) to the best knowledge of the
Company, no condition exists or event has occurred that, with the
giving of notice or lapse of time or both, would constitute a material
default under such Material Contract.
i. Litigation. Except as set forth in Section 12(i) of the Schedule of
Exceptions, there is no action, suit, claim, proceeding, investigation
or arbitration proceeding
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pending (or to the best knowledge of the Company, threatened in
writing) against or otherwise involving the Company or any of its
subsidiaries and there are no outstanding Court Orders to which the
Company or any of its subsidiaries is a party or by which any of their
respective assets are bound.
j. ERISA and Employee Benefits. Except as set forth on Section 12(j)
of the Schedule of Exceptions, neither the Company nor any of its
subsidiaries has contributed to or participated in any employee
benefit plan subject to the Employee Retirement Income Security Act of
1974 ("ERISA"), other than medical benefit plans listed in Section
12(j) of the Schedule of Exceptions with respect to which the Company
or its subsidiary, as the case may be, has made all required
contributions. The Company and its subsidiary are in compliance with
all laws and regulations applicable to such plans under ERISA, the
violation of which, singly or in the aggregate, could have a Material
Adverse Effect.
k. Government Authorizations. The Company and each of its subsidiaries
holds all Government Authorizations which are required to own their
respective properties and assets and to permit the Company and its
subsidiaries to conduct their respective businesses as presently
conducted, except where the failure to hold such Governmental
Authorization would not have a Material Adverse Effect. Set forth in
Section 12(k) of the Schedule of Exceptions is a listing of all such
Government Authorizations held by the Company and its subsidiaries. No
consent, approval or authorization of (or designation, declaration of
filing with) any Governmental Authority by the Company or any of its
subsidiaries is required in connection with the valid execution and
delivery of this Agreement, the Ancillary Agreements, or the offer or
sale of the Common Securities or the Preferred Securities, or the
consummation of any other transaction contemplated hereby or under the
Ancillary Agreements, except for Required Approvals shown on Appendix
3.
l. Related-Party Transactions. To the knowledge of the Company, except
as disclosed in SEC Filings made by the Company or listed on Section
12(1) of the Schedule to Exceptions, no employee, officer, director or
stockholder of the Company or any of its subsidiaries or member of his
or her immediate family is directly or indirectly interested in any
material contract with the Company or any of its subsidiaries.
13. Affirmative Covenants of the Company. The Company hereby covenants
with the Investor that between the date of this Agreement and the Closing,
except as the Investor shall otherwise consent, the Company will do the
following:
a. Conduct its business only in the ordinary course of business
consistent with past practice and refrain from changing or introducing
any method of management or operations except in the ordinary course
of business and consistent with prior practices;
b. Refrain from incurring any contingent liability as a guarantor or
otherwise with respect to the obligations of others, and from
incurring any other contingent or fixed obligations or liabilities
except those that are usual and normal in the ordinary course of
business;
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c. Maintain its equipment and other assets in good working condition and
repair according to the standards that it maintained to the date of this
Agreement, subject only to ordinary wear and tear;
d. Refrain from making any change or incurring any obligation to make a
change in its Organizational Documents or its authorized or issued capital
stock;
e. Refrain from declaring, setting aside or paying any dividend or making
any other distribution in respect of capital stock, or making any direct or
indirect redemption, purchase or other acquisition of its capital stock;
f. Refrain from merging, consolidating or reorganizing with, or
acquiring, any entity;
g. Use its best efforts to keep intact its business organization, to keep
available its present officers, agents and employees and to preserve the
goodwill of all suppliers, customers and others having business relations
with it;
h. Maintain true, correct and complete books of accounts and records
relating to its business;
i. Comply in all respects with all Laws applicable to the conduct of its
business or its properties or assets;
j. Promptly upon its knowledge thereof, advise the Investor in writing of
the termination or resignation of any key employee and the circumstances
therefore;
k. Pay all taxes, assessments, governmental charges or levies imposed
upon it or its income, profits or assets, or otherwise required to be paid
by it, nor fail to pay when due any liability or charge that if, unpaid,
might become an Encumbrance upon any such Company's assets; and
l. Promptly upon its knowledge thereof, advise the Investor in writing of
(i) any event, condition or circumstance occurring from the date hereof
until the Closing that would constitute a violation or breach of any
representation, warranty, covenant, agreement or provision contained in
this Agreement (provided, however, that such disclosure shall not be deemed
to cure any violation or breach of any such representation, warranty,
covenant, agreement or provision), or (ii) any event, occurrence,
transaction or other item that would have been or required to have been
disclosed on any Schedule, delivered hereunder, had such event, occurrence,
transaction or item existed on the date hereof, and use its commercially
reasonable efforts to prevent or promptly remedy the same.
m. The Company will not, directly or indirectly, through any officer,
director, affiliate, agent or otherwise, solicit, initiate or encourage
submission of any proposal or offer from any person or entity relating to
the acquisition or merger of the Company or any of its securities or assets
or participate in any discussions or negotiations regarding, furnish to any
other person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, or
11
facilitate or encourage any effort or attempt by any other person or
entity to do or seek, any of the foregoing.
14. Consummation of Agreement. The Company and the Investor shall each use
their best efforts to perform and fulfill all conditions and obligations on
their respective parts to be performed and fulfilled under this Agreement, to
the end that the transaction contemplated by this Agreement shall be fully
carried out. To this end, each of the Company and the Investor will use best
efforts to obtain all Required Approvals.
15. Survival of Representations and Warranties. All of the representations and
warranties of the Company and the Investor contained in Sections 12 and 11,
respectively, of this Agreement shall survive from the date of this Agreement
until the Conversion.
16. Restrictions on Sale. In consideration of the acceptance of this
subscription, the Investor agrees that the Securities will not be offered for
sale, sold or transferred by the Investor other than pursuant to (i) an
effective registration under the Securities Act, an exemption available under
the Securities Act or a transaction that is otherwise in compliance with the
Securities Act; and (ii) an effective registration under the securities law of
any state or other jurisdiction applicable to the transaction, an exemption
available under such laws, or a transaction that is otherwise in compliance with
such laws.
17. No Review. The Investor understands that no U.S. federal or state agency
has passed upon the offering of the Securities or has made any finding or
determination as to the fairness of any investment in the Securities.
18. Confidentiality. The Investor agrees not to disclose or use any information
provided to the Investor by the Company or any of its agents in connection with
the offering of the Securities, except for the purpose of evaluating an
investment in the Securities.
19. Indemnification.
a. Indemnification by Investor. The Investor agrees to indemnify and hold
harmless the Company and its officers, directors, partners, employees,
agents, and affiliates against any and all loss, liability, claim, damage,
and expense whatsoever (including, but not limited to, any and all expenses
reasonably incurred in investigating, preparing, or defending against any
litigation commenced or threatened or any claim whatsoever) arising out of
or based upon any false representation or warranty or breach or failure by
the Investor to comply with any covenant or agreement made by the Investor
herein or in any other document furnished by the Investor to the Company to
the Investor in connection with this transaction.
b. Indemnification by Company. The Company agrees to indemnify and hold
harmless the Investor against any and all loss, liability, claim, damage,
and expense whatsoever (including, but not limited to, any and all expenses
reasonably incurred in investigating, preparing, or defending against any
litigation commenced or threatened or any claim whatsoever) arising out of
or based upon any false representation or warranty or breach or failure by
the
12
Company to comply with any covenant or agreement made by the Company herein
or in any other document furnished by the Company to the Investor in
connection with this transaction.
20. Definitions. In addition to the terms defined throughout this Agreement,
the following terms shall have the indicated respective meanings:
"Court Order" shall mean a court order, judgment, administrative or
judicial order, writ, decree, stipulation, arbitration award or injunction.
"Encumbrance" shall mean any lien, option (including right of first refusal
or first offer), encumbrance, charge, restriction, mortgage, pledge, security
interest, title exception, restriction, claim or charge of any kind or
character.
"Force Majeure" shall mean failure of any party to perform its obligations
under this Agreement due to fire, flood, strikes or other industrial
disturbances, accidents, war, acts of terrorism, riot, insurrection or other
causes beyond the reasonable control of the such party.
"Governmental Authority" shall mean any governmental body, whether
national, state, regional, local, or any subdivision or agency of any of the
foregoing.
"Governmental Authorization" shall mean any license, permit, order,
franchise agreement, concession, grant, authorization, consent or approval from
a Governmental Authority.
"Law" shall include any statute, law, ordinance, rule or regulation of a
Governmental Authority.
"Material Adverse Effect" shall mean an event which causes a material
adverse change in the condition, financial or otherwise, business operations,
properties, assets or liabilities of the Company except any material adverse
change resulting from a Force Majeure.
"NASDAQ" shall mean The Nasdaq Stock Market.
"Organizational Documents" shall mean the Certificate of Incorporation of
the Company as filed with the Secretary of State of the State of Delaware on the
date of this Agreement, as the same may be amended from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933.
21. Publicity and Disclosures. Except as may be otherwise required for
compliance with applicable stock exchange rules or securities laws, neither the
Investor nor the Company shall issue nor approve any news release or other
public announcement concerning this Agreement (or any schedules or exhibits
hereto) prior to the Closing without the prior written approval of the other.
13
22. Irrevocability; Binding Effect. The Investor hereby acknowledges and agrees
that the subscription hereunder is irrevocable by the Investor, that, except as
required by law, the Investor is not entitled to cancel, terminate, or revoke
this Agreement or any agreements of the Investor hereunder, and that this
Agreement and such other agreements shall survive the death or disability of the
Investor and shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives, and
permitted assigns. If the Investor is more than one person, the obligations of
the Investor hereunder shall be joint and several and the agreements,
representations, warranties, and acknowledgments herein contained shall be
deemed to be made by and be binding upon each such person and his heirs,
executors, administrators, successors, legal representatives, and permitted
assigns.
23. Modification. Neither this Agreement nor any provisions hereof shall be
waived, modified, discharged, or terminated except by an instrument in writing
signed by the party against whom any such waiver, modification, discharge, or
termination is sought.
24. Notices. Any notice or other communication required or permitted to be
given hereunder shall by in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given (a) if to the Company, at the address set on the signature page
hereof, or (b) if to the Investor, at the address set forth on the signature
page hereof (or, in either case, to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 25). Any
notice or other communication given by certified mail shall be deemed given at
the time of certification thereof, except for a notice changing a party's
address which shall be deemed given at the time of receipt thereof.
25. Assignability. This Agreement and the rights and obligations hereunder are
not transferable or assignable by any party without the prior written consent of
the other party.
26. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida as applied to residents of that
state executing contracts wholly to be performed in that state.
27. Arbitration. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by binding arbitration in Orlando,
Florida in accordance with the rules of American Arbitration Association then in
effect.
28. NOTICE TO FLORIDA RESIDENTS. PURSUANT TO SECTION 517.061(11)(A)(5) OF THE
FLORIDA SECURITIES AND INVESTOR PROTECTION ACT, A FLORIDA SUBSCRIBER HAS A RIGHT
TO RESCIND THE SUBSCRIPTION BY GIVING NOTICE OF SUCH RESCISSION BY TELEPHONE,
TELEGRAPH OR LETTER, WITHIN THREE DAYS AFTER THE CONSIDERATION HEREUNDER IS
FIRST TENDERED TO THE COMPANY. IF THE NOTICE IS TENDERED ORALLY, A WRITTEN
CONFIRMATION THAT IT HAS BEEN RECEIVED SHOULD BE REQUESTED. IT IS PRUDENT TO
SEND NOTICE OF RESCISSION BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO INSURE
THAT IT WAS RECEIVED. IF NOTICE IS NOT RECEIVED BY SUCH TIME, THE FOREGOING
RIGHT OF RESCISSION SHALL BE NULL AND VOID.
14
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed by their authorized official, this Agreement, effective as of the date
first above written.
INTERNATIONAL ASSETS HOLDING
CORPORATION
By: /S/ Diego X. Xxxxxx
---------------------------------
Printed Name: Diego X. Xxxxxx
-----------------------
Title: Chairman of the Board
------------------------------
Address:_____________________________
_____________________________________
INVESTOR:
/s/ Xxxxx X. Xxxxxx
-------------------------------------
XXXXX X. XXXXXX
15
APPENDIX 1 - ACCREDITED INVESTOR
An "Accredited Investor" within the meaning of Regulation D under the Securities
Act of 1933 (the "Act") includes the following:
Organizations
(1) A bank as defined in section 3(a)(2) of the Act, or any savings and
loan association or other institution as defined in section 3(a)(5)(A) of the
Act, whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to section 15 of the Securities Exchange Act of 1934;
insurance company as defined in section 2(13) of the Act; an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that act; a Small Business Investment
Company licensed by the U.S. Small Business Administration under section 301(c)
or (d) of the Small Business Investment Act of 1958; an employee benefit plan
within the meaning of Title I of the Employee Retirement Income Security Act of
1974, if the investment decision is made by a plan fiduciary, as defined in
section 3(21) of such act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors.
(2) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(3) A trust (i) with total assets in excess of $5,000,000, (ii) not formed
for the specific purpose of acquiring the Securities, (iii) whose purchase is
directed by a person who, either alone or with his/her purchaser representative,
has such knowledge and experience in financial and business matters that he/she
is capable of evaluating the merits and risks of the proposed investment.
(4) A corporation, business trust, partnership, or an organization
described in section 501(c)(3) of the Internal Revenue Code, which was not
formed for the specific purpose of acquiring the Securities, and which has total
assets in excess of $5,000,000.
(5) Any entity in which all of the equity owners are "accredited
investors".
Individuals
(6) Individuals with income from all sources for each of the last two full
calendar years whose reasonably expected income for this calendar year exceeds
either of:
(i) $200,000 individual income; or
(ii) $300,000 joint income with spouse.
NOTE: Your "income" for a particular year may be calculated by adding to your
adjusted gross income as calculated for Federal income tax purposes any
deduction for long term capital gains, any deduction for depletion allowance,
any exclusion for tax exempt interest and any losses of a partnership allocated
to you as a partner.
(7) Individuals with net worth as of the date hereof (individually or
jointly with your spouse), including the value of home, furnishings, and
automobiles, in excess of $1,000,000.
(8) Directors, executive officers or general partners of the Issuer.
APPENDIX 2 - DIRECTORS SLATE
Xxxxx Xxxxxx Xxxxx Xxxxxx
Xxxxxx Xxxxxxxxxxx Xxxx X'Xxxxxx
Xx. Xxxxxx X. Xxxxxx [nominee of Xxxx Xxxxxxxxx]
APPENDIX 3 - THIRD PARTY APPROVALS
Written confirmation from NASDAQ.
EXHIBIT "A"
TERMS OF PREFERRED STOCK
EXHIBIT A
INTERNATIONAL ASSETS HOLDING CORPORATION
CERTIFICATE OF DESIGNATION
OF
SERIES A PREFERRED STOCK
The undersigned, Diego X. Xxxxxx, certifies that he is the
Chairman of the Board of INTERNATIONAL ASSETS HOLDING CORPORATION, a corporation
organized and existing under the laws of the State of Delaware (the "Company"),
and hereby further certifies as follows:
A. Under the Certificate of Incorporation of the Company, the
Company is authorized to issue 5,000,000 shares, of
preferred stock, par value $.01 per share (the "Preferred
Stock").
B. Pursuant to the provisions of the Certificate of
Incorporation of the Company, the Board of Directors has
adopted the following resolution creating a series of
Preferred Stock designated as "Series A Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the corporation in accordance with the provisions
of the Certificate of Incorporation, a series of preferred stock,
par value $.01 per share, of the corporation be and hereby are
created, and that the designation and number of shares thereof
and the voting and other powers, preferences and relative,
participating, optional or other rights of the shares of such
series and the qualifications, limitations and restrictions
thereof are as follows:
1. DIVIDEND RIGHTS.
(a) Participating Dividends. Holders of Series A Preferred
shall be entitled to receive, when and as declared by the Board of Directors,
any dividends payable to the holders of the Common Stock on the basis that the
Series A Preferred have been converted into Common Stock as of the record date
of such dividend pursuant to the provisions of Section 4.
2. VOTING RIGHTS.
(a) No General Rights. Except as otherwise provided herein
or as required by law, the Series A Preferred shall not be entitled to any
voting rights.
(b) Separate Vote of Series A Preferred. For so long as any
share of Series A Preferred remain outstanding, in addition to any other
vote or consent required herein or by law, the vote or written consent of
the holders of more than fifty percent (50%) of the then outstanding Series
A Preferred shall be necessary for effecting or validating the following
actions:
(i) Any amendment, alteration, waiver or repeal of
any provision of the Certificate of Incorporation or the Bylaws of the
Company (including any filing of a Certificate of Designation); or
(ii) Any increase or decrease (other than by
redemption or conversion) in the authorized number of shares of Series A
Preferred; or
(iii) Any issuance of any stock or any other securities
convertible into equity securities of the Company, other than the issuance
of common stock, par value $.01 per share (the "Common Stock"), upon the
conversion of the Series A Preferred or the issuance of Common Stock upon
the conversion of any convertible security outstanding as of October __,
2002; or
(iv) Any redemption or repurchase of shares of any
stock or other equity security of the Company; or
(v) Any agreement by the Company or its stockholders
regarding an Asset Transfer or Acquisition (each as defined in Section
3(c)); or
(vi) Any action that results in the payment or
declaration of a dividend on any shares of Common Stock or Preferred Stock.
3. LIQUIDATION RIGHTS.
(a) Liquidation Preference. Upon any liquidation,
dissolution, or winding up of the Company, whether voluntary or
involuntary, before any distribution or payment shall be made to the
holders of any other class of stock (a "Junior Stock"), the holders of
Series A Preferred shall be entitled to be paid out of the assets of the
Company an amount per share of Series A Preferred equal to the price paid
for each share of Series A Preferred (the "Original Issue Price") (as
adjusted for any stock dividends, combinations, splits, recapitalization
and the like with respect to such shares) for each share of Series A
Preferred held by them (the "Liquidation Preference").
(b) Deemed Liquidations. The following events shall be
considered a liquidation under this Section 3:
ii
(i) Any consolidation or merger of the Company with
or into any other corporation or other entity or person, or any other
corporate reorganization, in which the stockholders of the Company
immediately prior to such consolidation, merger or reorganization, own less
than 50% of the Company's voting power immediately after such
consolidation, merger or reorganization, or any transaction or series of
related transactions to which the Company is a party in which in excess of
fifty percent (50%) of the Company's voting power is transferred (an
"Acquisition"); or
(ii) A sale, lease or other disposition of all or
substantially all of the assets of the Company (an "Asset Transfer"); or
(c) Pro Rata Distribution. If, upon any liquidation,
distribution, or winding up, the assets of the Company shall be
insufficient to make payment in full to all holders of Series A Preferred
of the Liquidation Preference set forth in Section 3(a), then such assets
shall be distributed among the holders of Series A Preferred at the time
outstanding, ratably in proportion to the full amounts to which they would
otherwise be respectively entitled.
4. CONVERSION.
The Series A Preferred shall be converted into shares of Common Stock
on the following terms:
(a) Automatic Conversion. Subject to and in compliance with
the provisions of this Section 4, upon the approval by the shareholders of
the Company of the conversion provided for in this Section 4, the shares of
Series A Preferred will be automatically converted into fully-paid and
nonassessable shares of Common Stock. The number of shares of Common Stock
to which a holder of Series A Preferred shall be entitled upon conversion
shall be the product obtained by multiplying the "Series A Preferred
Conversion Rate" then in effect (determined as provided in Section 4(b)) by
the number of shares of Series A Preferred being converted.
(b) Series A Preferred Conversion Rate. The conversion rate
in effect at any time for conversion of the Series A Preferred (the "Series
A Preferred Conversion Rate") shall be the quotient obtained by dividing
the Liquidation Preference of the Series A Preferred by the "Series A
Preferred Conversion Price," calculated as provided in Section 4(c).
(c) Series A Preferred Conversion Price. The conversion
price for the Series A Preferred (the "Series A Preferred Conversion
Price") shall initially be the Original Issue Price of the Series A
Preferred. Such initial Series A Preferred Conversion Price shall be
adjusted from time to time in accordance with this Section 4. All
references to the Series A Preferred Conversion Price herein shall mean the
Series A Preferred Conversion Price as so adjusted.
(d) Mechanics of Conversion. Upon the conversion of the
Series A Preferred pursuant to this Section 4, the holder of the Series A
Preferred shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the
iii
Company or any transfer agent for the Series A Preferred. Thereupon, the
Company shall promptly issue and deliver at such office to such holder a
certificate or certificates for the number of shares of Common Stock to
which such holder is entitled. Such conversion shall be deemed to have been
made at the close of business on the date on which the Series A Preferred
are converted pursuant to Section 4(a), and the person entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder of such shares of Common Stock as of
the close of business on such date.
(e) Adjustment for Stock Splits and Combinations. If the
Company shall at any time or from time to time after the date that the
first share of Series A Preferred is issued (the "Original Issue Date")
effect a subdivision of the outstanding Common Stock without a
corresponding subdivision of the Preferred Stock, the Series A Preferred
Conversion Price in effect immediately before that subdivision shall be
proportionately decreased. Conversely, if the Company shall at any time or
from time to time after the Original Issue Date combine the outstanding
shares of Common Stock into a smaller number of shares without a
corresponding combination of the Preferred Stock, the Series A Preferred
Conversion Price in effect immediately before the combination shall be
proportionately increased. Any adjustment under this Section 4(e) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.
(f) Adjustment for Common Stock Dividends and
Distributions. If the Company at any time or from time to time after the
Original Issue Date makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Common Stock, in each such
event the Series A Preferred Conversion Price that is then in effect shall
be decreased as of the time of such issuance or, in the event such record
date is fixed, as of the close of business on such record date, by
multiplying the Series A Preferred Conversion Price then in effect by a
fraction (i) the numerator of which is the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date, and (ii) the denominator of
which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on
such record date plus the number of shares of Common Stock issuable in
payment of such dividend or distribution; provided, however, that if such
record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Series A
Preferred Conversion Price shall be recomputed accordingly as of the close
of business on such record date and thereafter the Series A Preferred
Conversion Price shall be adjusted pursuant to this Section 4(f) to reflect
the actual payment of such dividend or distribution.
(g) Adjustment for Reclassification, Exchange and
Substitution. If at any time or from time to time after the Original Issue
Date, the Common Stock issuable upon the conversion of the Series A
Preferred is changed into the same or a different number of shares of any
class or classes of stock, whether by recapitalization, reclassification or
otherwise (other than an Acquisition or Asset Transfer as defined in
Section 3(b) or a subdivision or combination of shares or stock dividend or
iv
a reorganization, merger, consolidation or sale of assets provided for
elsewhere in this Section 4), in any such event each holder of Series A
Preferred shall have the right thereafter to convert such stock into the
kind and amount of stock and other securities and property receivable upon
such recapitalization, reclassification or other change by holders of the
maximum number of shares of Common Stock into which such shares of Series A
Preferred could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further
adjustment as provided herein or with respect to such other securities or
property by the terms thereof.
(h) Reorganizations, Mergers, Consolidations or Sales of
Assets. If at any time or from time to time after the Original Issue Date,
there is a capital reorganization of the Common Stock (other than an
Acquisition or Asset Transfer as defined in Section 3(b) or a
recapitalization, subdivision, combination, reclassification, exchange or
substitution of shares provided for elsewhere in this Section 4), as a part
of such capital reorganization, provision shall be made so that the holders
of the Series A Preferred shall thereafter be entitled to receive upon
conversion of the Series A Preferred the number of shares of stock or other
securities or property of the Company to which a holder of the number of
shares of Common Stock deliverable upon conversion would have been entitled
on such capital reorganization, subject to adjustment in respect of such
stock or securities by the terms thereof. In any such case, appropriate
adjustment shall be made in the application of the provisions of this
Section 4 with respect to the rights of the holders of Series A Preferred
after the capital reorganization to the end that the provisions of this
Section 4 (including adjustment of the Series A Preferred Conversion Price
then in effect and the number of shares issuable upon conversion of the
Series A Preferred) shall be applicable after that event and be as nearly
equivalent as practicable.
(i) Notices of Record Date. Upon (i) any taking by the
Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, or (ii) any Acquisition (as defined in
Section 3(b)) or other capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company,
any merger or consolidation of the Company with or into any other
corporation, or any Asset Transfer (as defined in Section 3(b)), or any
voluntary or involuntary dissolution, liquidation or winding up of the
Company, the Company shall mail to each holder of Series A Preferred at
least twenty (20) days prior to the record date specified therein a notice
specifying (A) the date on which any such record is to be taken for the
purpose of such dividend or distribution and a description of such dividend
or distribution, (B) the date on which any such Acquisition,
reorganization, reclassification, transfer, consolidation, merger, Asset
Transfer, dissolution, liquidation or winding up is expected to become
effective, and (C) the date, if any, that is to be fixed as to when the
holders of record of Common Stock (or other securities) shall be entitled
to exchange their shares of Common Stock (or other securities) for
securities or other property deliverable upon such Acquisition,
reorganization, reclassification, transfer, consolidation, merger, Asset
Transfer, dissolution, liquidation or winding up.
(j) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of Series A Preferred. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than
one share of Series A
v
Preferred by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion
would result in the issuance of any fractional share, the Company shall, in
lieu of issuing any fractional share, pay cash equal to the product of such
fraction multiplied by the Common Stock's fair market value (as determined
by the Board of Directors) on the date of conversion.
(k) Reservation of Stock Issuable Upon Conversion. The
Company shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting
the conversion of the shares of the Series A Preferred, such number of its
shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Series A Preferred. If at
any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding shares
of the Series A Preferred, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
(l) Payment of Taxes. The Company will pay all taxes (other
than taxes based upon income) and other governmental charges that may be
imposed with respect to the issue or delivery of shares of Common Stock
upon conversion of shares of Series A Preferred, excluding any tax or other
charge imposed in connection with any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which the
shares of Series A Preferred so converted were registered.
(m) No Dilution or Impairment. Without the consent of the
holders of then outstanding Series A Preferred as required under Section
2(b), the Company shall not amend its Amended and Restated Certificate of
Incorporation or participate in any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or take any
other voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but shall at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate
in order to protect the conversion rights of the holders of the Series A
Preferred against dilution or other impairment.
5. NO REISSUANCE OF SERIES A PREFERRED.
No share or shares of Series A Preferred acquired by the Company by
reason of redemption, purchase, conversion or otherwise shall be reissued.
C. This Certificate of Designation has been duly adopted in accordance with
the provisions of Sections 151 of the General Corporation Law of the State
of Delaware by the Board of Directors of the Company.
vi
IN WITNESS WHEREOF, International Assets Holding Corporation has caused
this Certificate of Designation be signed by its Chairman of the Board, on this
22 day of October, 2002.
INTERNATIONAL ASSETS HOLDING CORPORATION
By: /s/ Diego X. Xxxxxx,
------------------------
Diego X. Xxxxxx
---------------
Chairman of the Board
vii
