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EXHIBIT "A"
SPLITROCK SERVICES, INC.
SUBSCRIPTION AGREEMENT
By execution of this Subscription Agreement (the "Subscription
Agreement"), the undersigned subscriber ("Subscriber") hereby offers to become
a shareholder of Splitrock Services, Inc., a Texas corporation (the "Company"),
subject to the terms and conditions stated herein. In connection therewith,
Subscriber makes the representations contained herein.
A. Subscription and Investment. Subscriber hereby subscribes for and
agreed to purchase 5,000,000 shares of common stock ("Shares") in the Company
at a price of $0.625 U.S. per Share.
B. Acceptance of Subscription. The Company agrees that if Subscriber
complies in full with the terms of this subscription, Company shall accept this
subscription by execution below.
C. Representations and Warranties of Subscriber. Subscriber hereby
represents and warrants to the Company, its agents and employees as follows:
(i) It 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 the
suitability of the Shares as an investment for it.
(ii) It is an Accredited Investor, as defined in Regulation D
promulgated by the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the
"1933 Act").
(iii) The Shares for which it hereby subscribes will be acquired
for investment and not with the view toward resale or
redistribution in violation of applicable state and federal
securities laws and regulations.
(iv) It has received no representations or warranties from the
Company, or its employees or agents, as to the viability of
the Company's operations or its capitalization other than
the fact that the Company has entered into contracts with
Prodigy Services Corporation ("Transaction Documents"). As
an affiliate of Prodigy Services, the undersigned has had
access to the Transaction Documents and is knowledgeable
about the terms and conditions of the Transaction Documents.
The undersigned acknowledges that Prodigy Services
Corporation represents the most significant source of income
for the Company.
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(v) It is able to bear the economic risk of the investment in
the Shares and it has sufficient net worth to sustain a loss
of the entire investment in the Company without economic
hardship if such a loss should occur.
(vi) It confirms that all documents, records and books pertaining
to its proposed investment in the Company which it has
requested have been made available to it.
(vii) It has had an opportunity to ask questions of and receive
satisfactory answers from Xxxxxxx X. Xxxxxx, Xxxx Xx, the
Company, or any person or persons acting on behalf of the
Company, concerning the terms and conditions of this
investment, and all such questions have been answered to the
full satisfaction of Subscriber.
(viii) Subscriber represents that it has made other investments of
a similar nature and, by reason of its business and
financial experience and of the business and financial
experience of those persons it has retained to advise it
with respect to its investment in the Company, has acquired
the capacity to protect its own interest in investments of
this nature.
(ix) Its representatives have visited with Xxxx Xx regarding the
technical aspects of the proposed operations of the Company.
(x) It acknowledges that the Company has been capitalized as of
the date of this Subscription Agreement, and prior to
acceptance of this Subscription Agreement, with $30,500,000
U. S. at a price of $0.625 U. S. per Share for 28,800,000
Shares, including 20,000,000 shares previously issued to
Subscriber and subject to the provisions of (xi) below with
regard to transactions subsequent to the date of transmittal
of this document. In addition, Xxxx Xx and Xxxxxxx X. Xxxxxx
received an aggregate of 28,000,000 Shares for their
contribution of services to the organization of the Company
and their negotiation of the transaction with Prodigy
Services Corporation. Assuming the issuance of all Shares
pursuant to the Company's Incentive Share Plan and
acquisition and exercise by Subscriber of the option granted
to it to acquire an additional 5,000,000 shares pursuant to
Subscription Agreement, Exhibit "A" attached hereto,
the ownership and capitalization of the Company would
be as follows:
Number of
Shareholder Shares % Ownership*
----------- --------- ------------
Xxxxxxx X. Xxxxxx 17,000,000 16.70
Xxxx Xx 11,000,000 10.81
Linsang Partners L.L.C. 28,000,000 27.50
Shares allocated to Incentive Share Plan 20,000,000 19.65
Xxx Xxxxxxx 800,000 0.79
Carso Global 20,000,000 19.65
Carso Global (Exhibit "A" option) 5,000,000 4.91
----------- ------
Total: 101,800,000 100.00
* rounded up to nearest integer
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(xi) It acknowledges that the Board of Directors of the Company
may issue additional Shares for such consideration as the
Board of Directors deems adequate. The Shares do not have
preemptive rights; therefore, in the event of such
issuances, the Subscriber's percentage ownership in the
Company as stated above would be diluted.
D. Indemnification. Subscriber acknowledges that it understands the
meaning and legal consequences of the representations and warranties in
paragraph C hereof, and it hereby agrees to indemnify and hold harmless the
Company, each shareholder thereof and their respective officers, directors,
shareholders, agents and employees from and against any and all loss, damage or
liability due to or arising out of a breach of any such representation or
warranties. Notwithstanding the foregoing, however, no representation, warranty,
acknowledgement or agreement made herein by Subscriber shall in any manner be
deemed to constitute a waiver of any rights granted to Subscriber under federal
or state securities laws. The representations and warranties set forth herein
shall survive the date upon which the Subscriber is admitted as a shareholder of
the Company.
E. Limitation on Transfer of Shares. Subscriber acknowledges that it is
aware that there are substantial restrictions on the transferability of the
Shares. Since the Shares will not be, and Subscriber has no right to require
that they be, registered under the 1933 Act, as amended, or any other
securities laws of any jurisdiction (collectively, the "Acts"), the Shares may
not be, and Subscriber agrees that they shall not be, sold, transferred,
pledged or hypothecated unless such sale is exempt from registration under the
Acts. Subscriber further acknowledges that the Shares may not be sold and the
purchaser substituted as a shareholder in the Company without the express
consent of the Company. Subscriber also acknowledges that it shall be
responsible for compliance with all conditions on transfer imposed by any blue
sky or securities law administrator and for any expenses incurred by the
Company for legal or accounting services in connection with reviewing such a
proposed transfer.
F. Compliance with Regulation D. Subscriber understands and agrees that
the following restrictions and limitations are applicable to its purchase and
resale, pledge, hypothecation or other transfer of the Shares pursued to
Regulation D under the 1933 Act, as amended:
(i) Subscriber agrees that the Shares shall not be sold,
pledged, hypothecated or otherwise transferred unless
either: (1) the Shares are registered under the 1933 Act, as
amended, and applicable state securities law; or, (2) the
sale of the Shares is exempt thereon;
(ii) a legend has been or will be placed on any certificate(s) or
other document(s) evidencing the Shares is substantially the
following form:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON
REGISTRATION, OR UPON DELIVERY TO THE COMPANY OF ANY OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
FOR SUCH TRANSFER OR SUBMISSION TO THE COMPANY OF
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SUCH EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.
G. The following exhibits are attached hereto:
1. Articles of Incorporation, as amended.
2. Bylaws of the Company.
ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, THE COMPANY WILL NOT
CONSIDER THIS SUBSCRIPTION OFFERED TO COMPANY ON A TIMELY BASIS AND COMPANY
WILL NOT CONSIDER THIS SUBSCRIPTION FOR ACCEPTANCE IF IT IS NOT RETURNED FULLY
COMPLETED AND SIGNED BY THE SUBSCRIBER AND COMPANY HAS NOT BEEN PAID BY
SUBSCRIBER IN FULL IN THE AMOUNT OF $3,125,000 U.S. IN GOOD FUNDS TO
THE CREDIT OF COMPANY ON OR BEFORE NOON C.D.T., SEPTEMBER 18, 1998.
THIS DOCUMENT WAS ATTACHED AS EXHIBIT "A" TO SUBSCRIPTION AGREEMENT SENT BY
COMPANY TO SUBSCRIBER ON SEPTEMBER 11, 1997.
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SPLITROCK SERVICES, INC.
SUBSCRIPTION AGREEMENT EXECUTION PAGE
If you are subject to backup withholding, please check this box:
Subscriber, as required by Regulations pursuant to the Internal Revenue
Code, certifies under penalty of perjury that (1) the Federal employer
identification number provided below is correct and (2) Subscriber is not
subject to backup withholding (unless the Backup Withholding Statement blank
above is checked) either because it has not been notified that it is subject to
backup withholding as a result of a failure to report all interest or
dividends, or because the Internal Revenue Service has notified him that it is
no longer subject to backup withholding. Executed as of the date set forth
below.
ORIENT STAR, A SUBSIDIARY OF CARSO GLOBAL
TELECOM, S.A. DE C.V., which owns a majority
interest in Orient Star.
Date: By:
----------- --------------------------------------------------
Name Typed of Printed: ------------------------------
Title:-----------------------------------------------
-----------------------------------------------------
Subscriber's Federal Employer Identification Number
Number of Shares: 5,000,000
Capital Contribution ($0.625 U. S. per share): $3,125,000 U. S.
ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, THE COMPANY WILL NOT
CONSIDER THIS SUBSCRIPTION OFFERED TO COMPANY ON A TIMELY BASIS AND COMPANY WILL
NOT CONSIDER IT FOR ACCEPTANCE IF IT IS NOT RETURNED FULLY COMPLETED AND SIGNED
BY THE SUBSCRIBER AND COMPANY HAS NOT BEEN PAID IN FULL IN THE AMOUNT OF
$3,125,000 U. S. IN GOOD FUNDS TO THE CREDIT OF COMPANY ON OR BEFORE NOON
C.D.T., SEPTEMBER 18, 1998.
THIS DOCUMENT WAS ATTACHED AS EXHIBIT "A" TO SUBSCRIPTION AGREEMENT SENT BY
COMPANY TO SUBSCRIBER ON SEPTEMBER 11, 1997.
ACCEPTED AND AGREED TO as of this day of , 199 .
SPLITROCK SERVICES, INC.
By:
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Xxxxxxx X. Xxxxxx, President
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