Exhibit 10.1
Form of Exchange Agreement dated as of December 31, 1998, by and between
ICC Technologies, Inc. and each of certain beneficial holders of the Rare
Medium, Inc., Secured Promissory Note, dated April 15, 1998.
ICC TECHNOLOGIES, INC.
EXCHANGE AGREEMENT
To: ICC TECHNOLOGIES, INC.
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx XX 00000
Dear Sirs:
In connection with ICC Technologies, Inc.'s ("ICC") acquisition of Rare
Medium, Inc. ("Rare Medium") by merger, which was effective on April 15, 1998,
ICC caused Rare Medium to issue to the stockholders of Rare Medium in partial
consideration for their shares of Rare Medium stock, a Secured Promissory Note,
dated April 15, 1998, in the original principal amount of $22,200,000 (the
"Note"). The principal amount of the Note is payable in two equal annual
installments on the second and third anniversaries of the date of issuance, and
interest accrues at the prime rate and is payable semi-annually. The initial
installment of accrued interest payable on October 1, 1998 has been satisfied by
delivery of a combination of common stock of ICC and an unsecured promissory
note of Rare Medium (the "Interest Note"). The Note is secured by all of the
assets of Rare Medium. In addition, ICC has guarantied the obligations of Rare
Medium under the Note pursuant to a Guaranty ("Guaranty"), dated April 15, 1998,
which Guaranty is secured by a pledge of all of the outstanding stock in Rare
Medium.
ICC desires to exchange the entire principal amount and accrued interest
payable under each of the Note and the Interest Note for shares of common stock
of ICC. Reference is made to the term sheet ("Term Sheet") attached hereto as
Exhibit A, which describes the terms of the offering ("Offering") of shares of
common stock of ICC to the holders of the Note (the "Note Holders") in exchange
for the entire principal amount of each of the Note and the Interest Note and
accrued and unpaid interest under each of the Note and Interest Note for the
period October 1, 1998 through December 31, 1998.
The undersigned Note Holder (hereinafter referred to as the "Investor")
hereby agrees as follows:
1. Subscription; Exchange. Subject to the terms and conditions set
forth in this Exchange Agreement, the Investor hereby agrees to acquire (a) the
number of shares of common stock in ICC set forth on the signature page hereto
in exchange for the entire principal amount payable to the Investor under the
Note, and (b) in exchange for Accrued Interest (as hereafter defined) under the
Note and Interest Note Obligations (as hereafter defined) under the Interest
Note, such number of additional shares of common stock in ICC determined by
dividing (x) the amount of accrued and unpaid interest payable to the Investor
under the Note for the period October 1, 1998 through December 31, 1998
("Accrued Interest"), plus the amount of principal and accrued and unpaid
interest payable to the Investor under the Interest Note for the period October
1, 1998 through December 31, 1998 (the "Interest Note Obligations"), by (y) the
price of $4.14 per share of ICC common stock. The aggregate number of shares of
common stock to be acquired by the Investor hereunder is herein referred to as
the "Shares."
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2. Payment; Conversion of Note; Delivery of Shares.
a. The Investor agrees that it is acquiring the Shares at a price
of $4.14 per Share in exchange for an equal amount of principal and Accrued
Interest payable under the Note to the Investor and an equal amount of Interest
Note Obligations payable to the Investor under the Interest Note. By executing
this Exchange Agreement and upon ICC's acceptance of this subscription, the
Investor hereby releases ICC and Rare Medium from all obligations under the
Note, the Guaranty and the Interest Note, and hereby terminates all security
interests and stock pledges granted as security for the Note and Guaranty. The
Investor shall not be permitted to subscribe for an amount of Shares which is
less than the aggregate amount of principal and Accrued Interest payable to the
Investor under the Note and the Interest Note Obligations payable to the
Investor under the Interest Note. If, however, ICC allocates fewer Shares to the
Investor than he has subscribed for at ICC's sole discretion, the Investor's
subscription for Shares shall be deemed to be in exchange for an equal amount of
principal payable to the Investor under the Note until satisfied in full, and
thereafter in exchange for an equal amount of Accrued Interest payable to the
Investor under the Note until satisfied in full, and thereafter in exchange for
an equal amount of Interest Note Obligations payable to the Investor under the
Interest Note. In such event, following Closing (hereinafter defined) ICC shall
promptly cause Rare Medium to deliver a promissory note payable to the Investor
in the principal amount equal to the unsatisfied Accrued Interest and/or
Interest Note Obligations payable to the Investor, which promissory note shall
contain terms substantially identical to the terms of the Interest Note. The
Investor hereby acknowledges and agrees that any such replacement note shall be
an unsecured obligation of Rare Medium, and shall not be guarantied by ICC.
b. Promptly following the Closing, ICC shall deliver a Stock
Certificate for the Shares (subject to the provisions of Section 2(a) and
Section 10 hereof) registered in the name of the Investor.
3. Representations and Warranties of Subscriber. To induce ICC to
accept this subscription for Shares of ICC common stock in exchange for amounts
payable to the Investor under the Note and the Interest Note, the Investor
hereby represents and warrants as follows:
a. The Investor has carefully read and fully understands this
Exchange Agreement, the Term Sheet and the following reports filed by ICC with
the Securities and Exchange Commission ("SEC"), copies of which the Investor has
been provided access to, and the Investor is fully capable of assessing and
bearing the risks associated with an investment in the Shares:
(i) Annual Report on Form 10-K, for the year ended December 31,
1997, as amended on Form 10-K/A filed with the SEC on April 30, 1998;
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(ii) Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998, June 30, 1998 and September 30, 1998;
(iii) Current Reports on Form 8-K, each filed with the SEC on March
13, 1998, as amended on April 29, 1998, on April 30, 1998, as amended on June
25, 1998, on August 20, 1998, on August 28, 1998, and on October 9, 1998, as
amended on November 13, 1998;
(iv) Amendment to Annual Report on Form 10-K/A for the year ended
December 31, 1996 filed with the SEC on February 2, 1998; and
(v) Proxy Statement for the Special Meeting of Stockholders held on
February 23, 1998, filed with the SEC on February 2, 1998.
b. The Investor has been provided an opportunity to ask questions
of, and has received answers thereto satisfactory to the Investor from, ICC and
ICC's representatives regarding the terms and conditions of the Offering and has
obtained all additional information requested by the Investor of ICC and ICC's
representatives to verify the accuracy of all information furnished to him
regarding the Offering.
c. The Investor has such knowledge and experience in financial
affairs and is capable of evaluating the merits and risks of acquiring the
Shares, and his financial situation is such that the Investor can afford to bear
the economic risk of holding the Shares of common stock in ICC for an indefinite
period of time and can afford to suffer the complete loss of his investment in
such Shares.
d. The Investor has not received any form of general solicitation
or advertising in connection with his decision to make an investment in ICC.
e. The Investor is acquiring the Shares in ICC for his own account
and not with a view to or for sale in connection with any distribution of all or
any part of such Shares.
f. The Investor has either consulted his own investment advisor,
attorney or accountant about the investment and proposed acquisition of Shares
and its suitability to the Investor, or the Investor has chosen not to do so,
despite ICC's recommendation that the Investor consult such professionals.
g. The Investor understands that the Shares have not been and will
not be registered under any federal or state securities laws and, therefore,
cannot be re-sold or otherwise disposed of unless such Shares are subsequently
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or unless an exemption from such registration is available.
h. The Investor agrees and understands that he will not sell or
otherwise transfer any Shares, or any interest therein, unless the undersigned
provides ICC with an opinion of counsel which is satisfactory to counsel for ICC
(both as to the issuer of the opinion and the form and substance thereof) that
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the transfer of Shares or any interest therein: (i) may be effected without
registration of the Shares under the Securities Act, and (ii) does not cause the
violation of any state securities law (including any investment suitability
standards) applicable to ICC.
i. The Investor agrees, acknowledges and understands that a legend
setting forth the restrictions set forth in subparagraphs (g) and (h) above will
be placed on each of the stock certificates representing the Shares acquired by
the Investor hereunder.
j. The Investor agrees and understands that (i) ICC has no
obligation or intention to register the Shares for resale under any federal or
state securities laws or to take any action (except as provided in Section 6
below) which would make available any exemption from the registration
requirements of such laws, and (ii) the Investor may be precluded from selling
or otherwise transferring or disposing of any Shares for an indefinite period of
time and may, therefore, have to bear the economic risk of investment in the
Shares for an indefinite period.
k. The Investor understands that no federal or state agency has
approved or disapproved the Shares, passed upon or endorsed the merits of the
offering thereof, or made any finding or determination as to the fairness of the
Shares for investment.
l. The Investor qualifies as an Accredited Investor within the
meaning of Regulation D promulgated by the SEC under the Securities Act by
meeting one or more of the following criteria as checked (Please check the
appropriate box):
| | Any executive officer of the issuer of the securities being
offered or sold.
| | Any individual whose individual net worth, or joint net
worth with that person's spouse, at the time of acquisition
exceeds $1,000,000.
| | Any individual who had an individual income in excess of
$200,000 in each of the two most recent years or joint income
with that person's spouse in excess of $300,000 in each of these
years and had a reasonable expectation of reaching the same
income level in the current year.
| | A bank as defined in Section 3(a)(2) of the Securities Act,
or a savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities 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 as amended (the "Exchange Act"); an
insurance company as defined in Section 2(13) of the Securities
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
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1958; a plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a
state or its political subdivisions for the benefit of its
employees, if such plan has total assets in excess of
$5,000,000; or an employee benefit plan within the meaning of
ERISA 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 assets
in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited
investors.
| | A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
| | An organization described in Section 501(c)(3) of the Code,
a corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring
the Shares, with total assets in excess of $5,000,000.
| | A trust with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Shares, whose
acquisition is directed by a sophisticated person as described
in Rule 506(b)(2)(ii) of the regulations promulgated by the SEC
under the Securities Act.
| | Any entity in which all of the equity owners are accredited
investors as that term is defined in Rule 501(a) of the
regulations promulgated by the SEC under the Securities Act.
m. The Shares that the Investor is acquiring should be certificated
and registered as follows (name and full address PRINTED exactly as the Shares
are to be registered):
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The full address for notices to which any communications should be
sent, if different from the registered address furnished in response to the
preceding requirement, is:
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n. The Investor understands that changes may have occurred in ICC
subsequent to the date of the Term Sheet and the execution and delivery of this
Exchange Agreement by the Investor.
o. The Investor acknowledges and understands that this investment
involves a high degree of risk and is suitable only for entities or persons
having substantial financial resources who understand the long-term nature, the
consequences of and the risks associated with, the investment. A subscription
for Shares in ICC will be accepted only from an Investor with respect to whom
ICC has reasonable grounds to believe, and shall believe immediately prior to
sale, after making reasonable inquiry, either (i) has knowledge and experience
in financial and business matters such that he is capable of evaluating the
merits and risks of this investment or (ii) individually or together with its
Purchaser Representative (as that term is defined in Regulation D promulgated
under the Securities Act) has such knowledge and experience in financial and
business matters that they are capable of evaluating the merits and risks of
this investment and that such person is able to bear the economic risk of this
investment.
p. If the Investor has utilized a purchaser representative, the
Investor has previously given ICC notice in writing of such fact, specifying
that such representative would be acting as the Investor's "purchaser
representative" as defined in Rule 501(h) of Regulation D under the Securities
Act.
q. The Investor understands that the Shares are being offered and
exchanged in reliance on specific exemptions from the registration requirements
of federal and state securities laws and that ICC and the controlling persons
thereof are relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings set forth herein
submitted by the undersigned to determine the applicability of such exemptions
and the suitability of the undersigned to acquire the Shares.
r. The Investor has the full right, power (and capacity, if the
undersigned is a natural person) and authority to execute and deliver this
Exchange Agreement and to perform his other obligations hereunder, and if the
undersigned is an entity, the person signing this Exchange Agreement on behalf
of such entity has been duly authorized by such entity to do so. Neither the
execution and delivery of this Exchange Agreement nor its performance will
violate, conflict with, or result in a breach of any provision of any law, rule,
regulation, order, permit, judgment, injunction, decree or other decision of any
court or other tribunal or any governmental authority binding on the Investor or
conflict with or result in the breach of any of the terms, conditions or
provisions of any contract, agreement, mortgage or other instrument or
obligation of any nature to which the Investor is a party or by which the
Investor is bound.
s. The Investor has notified the Stockholder Representative (as
such term is defined in the Note) that the Investor has elected to subscribe for
the Shares pursuant to this Exchange Agreement in exchange for principal and
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accrued interest payable to the Investor under the Note and Interest Note in
accordance with the terms hereof, and the Investor has instructed the
Stockholder Representative to accept the Shares on its behalf in exchange for
such principal and accrued interest due under the Note and Interest Note.
t. The Investor acknowledges that if he is acquiring the Shares
subscribed for hereby in a fiduciary capacity, the representations and
warranties in this Section 3 shall be deemed to have been made on behalf of each
person for whom he is so acquiring.
u. The Investor agrees that his representations, agreements,
acknowledgments, and understandings are all continuous and that all further
subscriptions will be governed by them. The Investor further agrees to advise
ICC promptly of any changes to any such representations.
4. Agreements with Other Note Holders. ICC represents that each other
Note Holder will be offered the opportunity to execute and deliver an exchange
agreement substantially identical to this Exchange Agreement (except as to the
amount of shares of common stock of ICC to be acquired), in which each such
other Note Holder will be asked to subscribe for and acquire shares of common
stock of ICC at the price of $4.14 per share in exchange for principal and
Accrued Interest payable to such Note Holder under the Note and Interest Note
Obligations payable to such Note Holder under the Interest Note, and to make the
same representations and warranties as are made by the Investor in Section 3
hereof. The acquisition of the Shares by the Investor hereunder and acquisition
of shares by any other Note Holder are to be separate acquisitions from ICC and
the exchange of the Shares with the Investor hereunder and exchange of shares
with any other Note Holder are to be separate exchanges by ICC.
5. Conditions to Closing. ICC's obligation to exchange the Shares at
the closing ("Closing") is subject to the fulfillment prior to or at the
Closing, of ICC's having received aggregate subscriptions from the Note Holders
representing at least 90% of the aggregate principal amount payable under the
Note ($19,980,000 principal amount).
6. Representations and Warranties of ICC. ICC hereby represents and
warrants to the Investor that, at the time of the Closing:
a. ICC shall be a corporation duly incorporated, validly existing
and in good standing under the laws of the state of its incorporation, and have
all requisite corporate power and authority to own, lease, and operate its
properties and to carry on its business as it is now being conducted and shall
be duly qualified and in good standing to do business in each jurisdiction in
which the nature of the business conducted by it or the ownership or leasing of
its properties makes such qualification necessary, other than where the failure
to be so duly qualified and in good standing would not have a material adverse
effect on ICC;
b. The execution and delivery of this Exchange Agreement by ICC and
the consummation by ICC of the transactions contemplated hereby have been duly
authorized by all necessary corporate action in accordance with applicable law
and the Certificate of Incorporation and By-Laws of ICC, and this Exchange
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Agreement shall constitute the valid and binding obligation of ICC, enforceable
in accordance with its terms;
c. Neither the execution and delivery of this Exchange Agreement
nor its performance will violate, conflict with, or result in a breach of any
provision of any law, rule, regulation, order, permit, judgment, injunction,
decree or other decision of any court or other tribunal or any governmental
authority binding on ICC or conflict with or result in the breach of any of the
terms, conditions or provisions of the Certificate of Incorporation and By-Laws
of ICC or any contract, agreement, mortgage or other instrument or obligation of
any nature to which ICC is a party or by which ICC is bound; and
7. Availability of Rule 144. ICC covenants that it will use its best
efforts to file the reports required to be filed by ICC under the Securities Act
and the Exchange Act, so as to enable the Investor to sell the Shares pursuant
to Rule 144 under the Securities Act. In connection with any sale by the
Investor of any Shares pursuant to Rule 144 under the Securities Act, ICC shall
cooperate with such Investor to facilitate the timely preparation and delivery
after such sale of stock certificates not bearing any Securities Act restrictive
legend.
8. Expenses. Each party hereto will pay its own expenses relating to
this Exchange Agreement and the acquisition of the Investor's Shares of common
stock in the ICC hereunder.
9. Amendments. With the exception of Section 5, neither this Exchange
Agreement nor any term hereof may be changed, waived, discharged or terminated
except with the written consent of the Investor and ICC.
10. Rejection of Subscription. The Investor acknowledges and agrees
that the subscription for the Shares contained herein may be reduced or rejected
by the ICC in its sole discretion at any time prior to the Closing.
11. Indemnification. The Investor hereby agrees to indemnify ICC and
its directors, officers and other affiliates and controlling persons against any
and all losses, damages, liabilities, costs and expenses (including attorneys'
fees and expenses) incurred or sustained by reason of, or in connection with,
any breach of any representation, warranty, covenant or agreement by Investor
contained in this Agreement.
12. Further Assurances. The Investor will execute, deliver,
acknowledge and file any and all further documents and provide any and all
further information which ICC may deem necessary or appropriate in connection
with the transactions contemplated by this Agreement, including, without
limitation, the cancellation, termination and release of all obligations under
the Note, the Guaranty, the Interest Note, and the security interest in the
assets of Rare Medium and pledge of stock of Rare Medium held by ICC securing
the Note and Guaranty.
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13. Confidentiality. The provisions of this Exchange Agreement are
highly confidential and will be treated as such by the Investor, excepting only
such disclosures that the Investor may confidentially make to the Investor's
personal accountant, attorney and investment advisor or the Stockholder
Representative. Other than these limited permissible disclosures, the Investor
agrees not to disclose any of the terms of this Exchange Agreement, whether
verbally or in writing, to any third party without ICC's prior written consent
in each case.
14. General. This Agreement (i) shall be binding upon the Investor and
the legal representatives, successors and assigns of the Investor, (ii) shall
survive the Closing of the sale of the Shares hereunder, and (iii) shall, if the
Investor consists of more than one person, be the joint and several obligation
of all such persons. Two or more duplicate originals of this Exchange Agreement
may be executed by the undersigned and accepted by ICC, each of which shall be
an original, but all of which together shall constitute one and the same
instrument. This Exchange Agreement shall be governed by the laws of the State
of Delaware. For purposes of this Exchange Agreement, words importing the
singular number include the plural and vice versa. In the case of joint
investors or signatories, each such investor or signatory is deemed to make each
statement and representation herein contained. Instances of gender or entity
specific usage (e.g. "his," "her" or "it") shall not be interpreted to preclude
the application of any provision of this Exchange Agreement to any individual or
entity.
[INVESTORS MUST COMPLETE THE FOLLOWING SIGNATURE PAGE]
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EXCHANGE AGREEMENT
Signature Page
Four copies of this Exchange Agreement should be completed, executed,
and mailed to ICC at its address appearing on page one of this Exchange
Agreement. A copy will be returned to the Investor upon acceptance by ICC.
IN WITNESS WHEREOF, the undersigned by its execution hereof, agrees to
be bound by this Exchange Agreement to be made effective as of December 31,
1998.
The undersigned subscribes for (a) __________ Shares of common stock
of ICC at $4.14 per share in exchange for the $______________ of principal
amount payable to the undersigned under the Note, and (b) such number of
additional Shares of common stock in ICC in exchange for Accrued Interest under
the Note and the obligations under the Interest Note, determined by dividing (x)
the amount of accrued and unpaid interest payable to the Investor under the Note
for the period October 1, 1998 through December 31, 1998, plus the amount of
principal and accrued and unpaid interest payable to the Investor under the
Interest Note for the period October 1, 1998 through December 31, 1998, by (y)
the price of $4.14 per share for the Shares.
Authorized signature of investor (stating
exact title of office or position, if
appropriate):
------------------------------------------
Name of Investor (please print))
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Signature and Title (if appropriate)
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Signature and Title (if appropriate)
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Employer Identification Number or
Taxpayer Identification Number
ICC Technologies, Inc. hereby accepts the foregoing Exchange Agreement
for ________ Shares of common stock as of December 31, 1998:
ICC TECHNOLOGIES, INC.
By: ______________________________
Title: ______________________________
Acknowledged and agreed to:
RARE MEDIUM, INC.
By: ______________________________
Title: ______________________________
