EXHIBIT 10.44
LANDTEL COMMUNICATIONS, INC.
SUBSCRIPTION AGREEMENT, DATED DECEMBER 9, 1997
LANDTEL COMMUNICATIONS, INC.
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (the "Agreement") dated as of December 9, 1997,
among LANDTEL COMMUNICATIONS, INC., a Delaware corporation (the "Company"),
and the persons who execute this Agreement as investors (the "Investors").
R E C I T A L
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WHEREAS, the Company plans to carry out the business and financings
substantially as set forth on the Term Sheet attached hereto as Exhibit A
(the "Term Sheet");
WHEREAS, the Company is planning to acquire "Prince", a code-named Great
Britain telecommunications company (the "Major Transaction");
WHEREAS, in order to finance the Major Transaction, the Company desires to
sell to the Investors, and the Investors desire to purchase, shares of the
Company's Series A Convertible Redeemable Preferred Stock, $.001 par value
("Series A Preferred Stock"), having the terms set forth in the Certificate
of Designation of Terms, Preferences and Rights annexed to this Agreement as
Exhibit B (the "Certificate of Designation"), and the conversion price at
which shares of Common Stock of the Company, $.001 par value (the "Common
Stock") will be issuable upon conversion of the Series A Preferred Stock
shall initially be $.20, subject to the Certificate of Designation and the
terms and conditions set forth in this Agreement; and
WHEREAS, the Investors have reviewed this Agreement carefully, including
all Exhibits (collectively, the "Disclosure Material");
THE PARTIES AGREE AS FOLLOWS
1. Purchase and Sale of Stock
1.1. Sale and Issuance of Series A Preferred Stock. The Company shall
sell to the Investors and the Investors shall purchase from the Company, at a
price of $10.00 per share, a total of 100,000 shares of Series A Preferred
Stock. The shares of Series A Preferred Stock to be sold by the Company
pursuant to this Agreement are referred to herein as the "Purchased Shares".
The number of Purchased Shares to be purchased by each Investor from the
Company is set forth opposite the name of such Investor on Schedule A hereof
subject to acceptance, in whole or in part, by the Company.
1.2. Closing. The closing of the purchase and sale of the Purchased
Shares hereunder (the "Preferred Stock Closing") shall take place promptly
after subscriptions for all the Series A Preferred are delivered and the
conditions set forth in Section 6 are satisfied or waived. At the Preferred
Stock Closing:
(a) The Investors shall deliver to the Company or its designees
(i) by wire transfer or check, or such other method of payment as the Company
shall approve, the amount set forth for cash payment on Schedule A, (ii) an
executed 8% note (the "Note") in the form
attached hereto as Exhibit C for the balance of the purchase price, and (iii)
an executed pledge agreement in the form attached hereto as Exhibit D; and
(b) the Company shall issue and deliver to the account of each
Investor a certificate or certificates in form satisfactory to such Investor
for the portion of the Purchased Shares to be issued by the Company and
purchased by such Investor set forth opposite such Investor's name on the
signature page hereof.
All certificates shall have all necessary stock transfer tax stamps
(purchased at the expense of the Company) affixed.
2. Series B Preferred Commitment
(a) Upon the request of the Company setting forth an aggregate
number of shares (the "Series B Aggregate Number") of Series B Preferred
Stock (as defined below) to be issued by the Company (the "Series B Request")
for purposes of financing the Major Transaction, each Investor shall be
obliged to purchase, itself or through designees, a number of shares (the
"Holder's Number") of Series B Preferred Stock determined by multiplying (A)
the Series B Aggregate Number by (B) the quotient of (x) the number of shares
of Series A Preferred Stock owned by such Investor divided by (y) the total
number of shares of Series A Preferred Stock outstanding; provided (i) the
Company enters into the Major Transaction and (ii) Investors and their
designees purchase all shares of Series B Preferred Stock requested by the
Company. The Series B Request to purchase all or a portion of the Series B
Preferred Stock must be approved by a majority of the Board of Directors of
the Company.
(b) The sole remedy against any Investor (the "Default Holder")
who fails to purchase all or a portion (the "Defaulted Number") of his or its
Holder's Number within 90 days after the Series B Request (a "Series B
Default") shall be one of (x) the Company shall exercise its right to redeem
the Default Redemption Number (as defined below) of such Default Holder's
Purchased Shares pursuant to paragraph 9(b) of Part A of the Certificate of
Designation, or (y) the other Investors shall exercise their rights under the
Stockholders Agreement (described in the Term Sheet) to purchase up to the
Default Redemption Number of such Default Holder's Purchased Shares. In
connection with the purchase of the Series B Preferred, each party hereto
shall execute and deliver a subscription agreement substantially similar to
this Agreement. The "Default Redemption Number" shall be equal to the product
of (1) the quotient of (A) the Defaulted Number divided by (B) the Holder's
Number multiplied by (2) 50% multiplied by (3) the number of Purchased Shares
held by such Default Holder.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that, except as disclosed in the
Offering Memorandum:
3.1. Corporate Organization and Authority. The Company:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the corporate power and authority to own or lease its
properties as and in the places where such business is now conducted and to
carry on its business as now
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conducted.
There are no other states or jurisdictions in which the failure of the
Company or any of the Subsidiaries to qualify to transact business could
reasonably be expected to materially adversely affect business, financial
condition, operations or prospects of any of them.
3.2. Capitalization. On the date hereof, the authorized capital of
the Company consists of (i) 20,000,000 shares of Common Stock, $.001 par
value, of which on the date hereof, 450,000 shares are validly issued, fully
paid, non-assessable and outstanding, and (ii) 1,000,000 shares of Serial
Preferred Stock, of which on the date hereof no shares are issued and
outstanding. All outstanding shares were issued in compliance with all
applicable Federal and state securities laws. Except as contemplated by this
Agreement or the Term Sheet, there are (i) no outstanding subscriptions,
warrants, options, conversion privileges or other rights or agreements to
purchase or otherwise acquire or issue any shares of capital stock of the
Company (or shares reserved for such purpose), (ii) no preemptive rights or
rights of first refusal with respect to the issuance of additional shares of
capital stock of the Company, including the Purchased Shares and the shares
of Common Stock into which the Purchased Shares are convertible, and (iii) no
commitments or understandings (oral or written) of the Company to issue any
shares, warrants, options or other rights.
3.3. Validity of Purchased Shares. When issued, sold and delivered
in accordance with the terms and for the consideration expressed herein, the
Purchased Shares shall be duly authorized, validly issued, fully paid and
non-assessable.
3.4. Common Stock Issuable on Conversion of Purchased Shares. The
shares of Common Stock initially issuable upon conversion of the Purchased
Shares have been duly authorized and have been, and at all times prior to
such conversion will have been, duly reserved for issuance upon such
conversion and, when so issued, will be validly issued, fully paid and
non-assessable.
3.5. Changes in Condition. Except as set forth in the Disclosure
Material, there has been no substantial change in, or agreements to change,
the business plans or capitalization of the Company which are adverse to the
Investors.
3.6. Private Offering. Neither the Company nor anyone acting on its
behalf has offered any of the Purchased Shares for sale to, or solicited
offers to buy any thereof from, or otherwise approached or negotiated with
respect thereto with, any prospective purchaser other than the prospective
Investors.
3.7. Brokers and Finders. The Company has not retained any
investment banker, broker or finder in connection with the transactions
contemplated by this Agreement.
4. Representations and Warranties of the Investors. Each Investor
represents and warrants to the Company as follows:
4.1. Authorization. When executed and delivered by such Investor,
this agreement will constitute the valid and binding obligation of such
Investor.
4.2. Brokers and Finders. Such Investor has not retained any
investment banker,
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broker or finder in connection with the transactions contemplated by this
Agreement.
5. Securities Laws.
5.1. Securities Laws Representations and Covenants of Investors.
(a) This Agreement is made with each Investor in reliance upon
such Investor's representation to the Company, which by such Investor's
execution of this Agreement such Investor hereby confirms, that the Purchased
Shares to be received by such Investor will be acquired for investment for
such Investor's own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and that such Investor has
no present intention of selling, granting any participation in or otherwise
distributing the Purchased Shares.
(b) Each Investor understands and acknowledges that the
offering of the Purchased Shares pursuant to this Agreement will not be
registered under the Securities Act of 1933, as amended (the "Securities
Act") or qualified under any state "Blue Sky" laws ("State Securities Laws")
on the grounds that the offering and sale of the Purchased Shares are exempt
from registration and qualification, respectively, under the Securities Act
and the State Securities Laws, and that the Company's reliance upon such
exemption is predicated upon such Investor's representations set forth in
this Agreement.
(c) Each Investor covenants that, unless the Purchased Shares,
the shares of Common Stock issuable upon conversion of the Purchased Shares
or any shares of capital stock of the Company received in respect of the
foregoing have been registered under the Securities Act, such Investor will
not dispose of such shares unless and until (i) such Investor shall have
notified the Company of the proposed disposition and shall have furnished
the Company with a statement of the circumstances surrounding the proposed
disposition and (ii) such Investor shall have furnished the Company with an
opinion of counsel reasonably satisfactory in form and substance to the
Company to the effect that (x) such disposition will not require
registration under the Securities Act and (y) appropriate action necessary
for compliance with the Securities Act and any applicable state, local or
foreign law has been taken.
(d) In connection with the investment representations made
herein, each Investor represents that (i) such Investor is able to fend for
itself in the transactions contemplated by this Agreement; (ii) such Investor
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of such Investor's prospective
investment in the Purchased Shares; (iii) such Investor has the ability to
bear the economic risks of such Investor's prospective investment and can
afford the complete loss of such investment; (iv) such Investor has been
furnished with and has had access to such information as would be made
available in the form of a registration statement under the Securities Act
together with such additional information as is necessary to verify the
accuracy of the information supplied; and (v) such Investor has had access to
officers of the Company and an opportunity to ask questions of and receive
answers from such officers and has had all questions that have been asked by
such Investor satisfactorily answered by the Company.
(e) Each Investor further represents by execution of this
Agreement that such Investor is an accredited investor, as defined in Rule
501 promulgated under the Securities Act.
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(f) By acceptance hereof, each Investor agrees that the
Purchased Shares, the shares of Common Stock issued on conversion of the
Purchased Shares and any shares of capital stock of the Company received in
respect of the foregoing held by it may not be sold by such Investor without
registration under the Securities Act, or an exemption therefrom, and
therefore such Investor may be required to hold such shares for an
indeterminate period.
5.2. Legends. All certificates for the Purchased Shares and the shares
of Common Stock issued on conversion thereof, and each certificate
representing any shares of capital stock of the Company received in respect
of the foregoing, whether by reason of a stock split or share
reclassification thereof, a stock dividend thereon or otherwise and each
certificate for any such securities issued to subsequent transferees of any
such certificate (unless otherwise permitted herein) shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT, NOR MAY SUCH
SHARES BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE SUBSCRIPTION
AGREEMENT DATED AS OF DECEMBER 9, 1997, PURSUANT TO WHICH THEY WERE
ISSUED."
In addition, such certificates shall bear any legend that, in the opinion of
the Company's counsel, is required under the Stockholders Agreement
(described below), the By-laws of the Company or pursuant to any state, local
or foreign law governing the Purchased Shares or the shares of Common Stock
issued on conversion thereof.
6. Conditions to Investors' Obligations at the Closing. The
obligations of the Investors under Section 1.1 of this Agreement are subject
to the fulfillment at or before the Closing of each of the following
conditions, any of which may be waived in writing by the Investors or any of
them.
6.1. Representations and Warranties. The representations and
warranties contained in Section 3 shall be true and correct on and as of the
Closing Date with the same effect as if made on and as of the Closing Date.
6.2. Performance. The Company shall have performed or fulfilled
all terms, covenants and conditions contained herein required to be performed
or fulfilled by the Company before the Closing.
6.3. Certificate of Designation. The Certificate of Designation
shall have been approved by the Board of Directors of the Company in the
manner and by the vote required by Delaware law, and shall have been duly
filed with the Secretary of State of the State of Delaware and shall have
become effective.
6.4. Stockholders Agreement; Registration Rights. The Company
and each of the Investors shall have executed and delivered a Stockholders
Agreement and a Registration
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Agreement with substantially the terms outlined in the Term Sheet.
6.5. Board of Directors. Xxxxxxxx X. Xxxxxxx, X.X. Xxxxxxxx,
Xx., Xxxxx X. Xxxxx, Xxxxxxxx X. Xxxxxxxxx and Xxxxx Xxxxxxxx shall have been
elected as directors of the Company.
6.6. Proceedings Satisfactory. All corporate and legal
proceedings taken by the Company in connection with the transactions
contemplated by this Agreement and all documents and papers relating to such
transactions shall be reasonably satisfactory in form and substance to the
Investors.
7. Conditions to the Company's Obligations at the Closing. The
obligations of the Company under Section 1.1 of this Agreement are subject to
the fulfillment at or before the Closing of each of the following conditions,
any of which may be waived in writing by the Company:
7.1. Warranties True on the Closing Date. The representations
and warranties of each of the Investors contained in Sections 4 and 5 shall
be true on and as of the Closing with the same effect as though said
representations and warranties had been made on and as of the Closing.
8. Additional Covenants of the Company.
8.1. Access. From and after the date of this Agreement, the
Company will afford to representatives of the Investors full access during
normal business hours to the plant, properties, business and records of the
Company, and the opportunity to discuss the affairs of the Company with the
Company's officers.
8.2. Financial Statements, etc.
(a) If the Major Transaction is completed, the Company
shall deliver to each Investor within 90 days after the end of each fiscal
year of the Company a consolidated balance sheet of the Company as of the end
of such year and related consolidated statements of income, stockholders
equity and changes in financial position for such year, in reasonable detail
and stating in comparative form the figures as of the end of and for the
previous fiscal year and accompanied by the report of independent public
accountants of recognized standing selected by the Company. In addition, the
Company shall deliver to each Investor (i) within 45 days after the end of
each of the first three quarterly periods in each fiscal year of the Company,
an unaudited consolidated balance sheet of the Company as of the end of each
such quarter and an unaudited consolidated statement of income of the Company
for the portion of such fiscal year ended with the last day of such quarter,
all in reasonable detail and stating in comparative form the figures for the
corresponding date and period in the previous fiscal year and prepared and
certified by an authorized financial officer of the Company, subject,
however, to year-end adjustments.
(b) Reports. The Company shall cooperate with each
Investor in supplying such information as may be reasonably requested by such
Investor to complete and file any information reporting forms presently or
hereafter required by the SEC as a condition to the
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availability of an exemption, presently existing or hereafter adopted, from
the Securities Act for the sale of any of the Purchased Shares, shares of
Common Stock issued on conversion of Purchased Shares and shares of capital
stock of the Company received in respect of the foregoing.
(c) Reports. The Company shall deliver to each Investor,
contemporaneously with delivery to holders of Common Stock, a copy of each
report of the Company delivered to holders of Common Stock as such holders.
(d) Other Information. The Company shall deliver to each
Investor such other data and information as to the business operations or
assets, or the condition, financial or otherwise, of the Company or the
Subsidiaries as such Investor may reasonably request.
9. Miscellaneous
9.1. Entire Agreement; Successors and Assigns. This Agreement
constitutes the entire contract between the parties relative to the subject
matter hereof and no party shall be liable or bound to the other in any
manager by any warranties, representations or covenants except as
specifically set forth herein. Any previous agreement among the parties with
respect to the sale of the Purchased Shares is superseded by this Agreement.
The terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the respective executors' administrators, heirs, successors
and assigns of the parties. Except as expressly provided herein, nothing in
this Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.2. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
9.3. Counterparts. 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.
9.4. Headings. The headings of the sections of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
9.5. Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal
delivery, if sent by fax upon delivery, if sent by overnight mail delivery,
on the next day, or if sent by registered or certified mail five days after
deposit, addressed to a party at its address hereinafter shown below its
signature or at such other address as such party may designate by ten days
advance written notice to the other party. Any notice to the Investors shall
be sent to the address set forth on the signature page hereof. Any notice to
the Company shall be sent to Landtel Communications, Inc., 000 Xxxx 00xx
Xxxxxx Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Fax: 000 000 0000, Attention of
Xxxxxxxx Xxxxxxxxx, with a copy to Xxxx & Hessen LLP, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Fax: 000 000 0000, Attention of Xxxxx Xxxxxx.
9.6. Limitation on Representations and Warranties. All
representations and warranties made by the Company concerning the Major
Transaction are based solely upon the
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representations and warranties made by Xxxxxxx Xxxxxxx to the Company.
Nothing has come to the attention of the Company that the representations
and warranties concerning the Major Transaction are not true and correct in
all material respects and makes no further representations or warranties
concerning those matters.
9.7. Amendment of Agreement. The terms and provisions of this
Agreement may not be modified or amended except in writing.
9.8. Counsel. Each of the parties (i) acknowledges that Xxxx & Hessen
LLP has acted, and from time to time continues to act, as counsel to each of
the Investors, or affiliates thereof, as well as to the Company, (ii)
consents to the representation of the Company and such other representation
of the Investors by Xxxx & Hessen LLP and (iii) waives any conflicts of
interest claim which may arise therefrom. Without limitation on the
foregoing, Xxxx & Hessen LLP is authorized to disclose all information
concerning the Company and its plans to each of the Investors.
9.9. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such
provision or any other provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LANDOVER PRINCIPAL LTD.
By:___________________
NATIONAL WIRELESS HOLDINGS INC.
By:__________________________
______________________________
Xxxxx X. Xxxxx
______________________________
Xxxxxx X. Xxxxxxxxxxxx
DCI INVESTMENTS
By:____________________________
X.X. Xxxxxxxx, Xx.
LANDTEL COMMUNICATIONS, INC.
By:_______________________
Date:
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