EXHIBIT 6-9
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT, dated as of December 22,
1997 (this "AGREEMENT"), between InnovaCom, Inc., a Nevada corporation (the
"COMPANY"), and JNC Opportunity Fund Ltd., a Cayman Islands company (the
"PURCHASER").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchaser and the
Purchaser desires to purchase an aggregate principal amount of $5,000,000
of the Company's 7% Convertible Debentures, due December 22, 2002 (the
"DEBENTURES"), which are convertible into shares of the Company's common
stock, par value $.001 per share (the "COMMON STOCK").
IN CONSIDERATION of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF DEBENTURES; CLOSING
1I.1 THE CLOSING.
(a) THE CLOSING. (i) Subject to the terms and conditions set
forth in this Agreement, the Company shall issue and sell to the Purchaser
and the Purchaser shall purchase the Debentures for an aggregate purchase
price of $5,000,000. The closing of the purchase and sale of the
Debentures (the "CLOSING") shall take place at the offices of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP (the "ESCROW AGENT"), ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, immediately following the execution
hereof or such later date as the parties shall agree. The date of the
Closing is hereinafter referred to as the "CLOSING DATE."
(ii) Prior to the Closing, the parties shall deliver or
shall cause to be delivered to the Escrow Agent such items as are required
to be delivered by them in accordance with and subject to the terms and
conditions of the Escrow Agreement, dated as of the date hereof, by and
among the Company, the Purchaser and the Escrow Agent (the "ESCROW
AGREEMENT"), including the following: (A) the Company shall deliver (1)
Debentures, registered in the name of the Purchaser, with an aggregate
principal amount of $5,000,000, (2) two Common Stock Purchase Warrants in
the forms of Exhibit D1 and Exhibit D2 attached hereto (collectively, the
"WARRANTS"), each registered in the name of the Purchaser, and (3) the
legal opinion of ▇▇▇▇▇▇ Eng Linn & ▇▇▇▇▇▇▇▇, substantially in the form of
EXHIBIT C ("LEGAL OPINION"); (B) the Purchaser shall deliver $5,000,000;
and (C) each party hereto shall deliver all other executed instruments,
agreements and certificates as are required to be delivered hereunder by or
on their behalf at the Closing.
1I.2 FORM OF DEBENTURES. The Debentures shall be in the form of
EXHIBIT A.
For purposes of this Agreement, "CONVERSION PRICE," "ORIGINAL
ISSUE DATE," "CONVERSION DATE" "TRADING DAY" and "PER SHARE MARKET VALUE"
shall have the meanings set forth in the Debentures; "MARKET PRICE" as at
any date shall mean the average Per Share Market Value for the five (5)
Trading Days immediately preceding such date, and "BUSINESS DAY" shall mean
any day except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to close.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2II.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to the
Purchaser:
(a) ORGANIZATION AND QUALIFICATION. The Company is a
corporation, duly incorporated, validly existing and in good standing under
the laws of the Nevada, with the requisite corporate power and authority to
own and use its properties and assets and to carry on its business as
currently conducted. The Company has no subsidiaries other than as set
forth in SCHEDULE 2.1(A) attached hereto (collectively, the
"SUBSIDIARIES"). Each of the Subsidiaries is a corporation, duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the full power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. Each of the Company and the Subsidiaries is duly qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to
be so qualified or in good standing, as the case may be, could not,
individually or in the aggregate, (x) adversely affect the legality,
validity or enforceability of this Agreement, the Escrow Agreement, the
Debentures, the Warrants or the Registration Rights Agreement, dated the
date hereof, between the Company and the Purchaser (the "REGISTRATION
RIGHTS AGREEMENT" and, together with this Agreement, the Escrow Agreement,
the Debentures and the Warrants, the "TRANSACTION DOCUMENTS"), (y) have a
material adverse effect on the results of operations, assets, prospects, or
condition (financial or otherwise) of the Company and the Subsidiaries,
taken as a whole, or (z) adversely impair the Company's ability to perform
fully on a timely basis its obligations under any Transaction Document (any
of the foregoing, a "MATERIAL ADVERSE EFFECT").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to
carry out its obligations thereunder. The execution and delivery of each
of the Transaction Documents by the Company and the consummation by it of
the transactions contemplated thereby have been duly authorized by all
necessary action on the part of the Company. Each of the Transaction
Documents has been duly executed by the Company and when delivered in
accordance with the terms thereof shall constitute the legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of general
application. Neither the Company nor any Subsidiary is in violation of any
of the provisions of its respective articles of incorporation, by-laws or
other charter documents.
(c) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is set forth in SCHEDULE 2.1(C). No shares of
Common Stock are entitled to preemptive or similar rights, nor is any
holder of the Common Stock entitled to preemptive or similar rights arising
out of any agreement or understanding with the Company by virtue of any of
the Transaction Documents. Except as disclosed in SCHEDULE 2.1(C), there
are no outstanding options, warrants, script rights to subscribe to, calls
or commitments of any character whatsoever relating to, or, except as a
result of the purchase and sale of the Debentures and Warrants hereunder,
securities, rights or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire any shares of
Common Stock, or contracts, commitments, understandings, or arrangements by
which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. To the knowledge of the Company,
except as specifically disclosed in the SEC Documents (as defined below) or
SCHEDULE 2.1(C), no Person (as defined below) beneficially owns (as
determined pursuant to Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT")) or has the right to acquire
by agreement with or by obligation binding upon the Company, beneficial
ownership of in excess of 5% of the Common Stock. There are no agreements
or arrangements under which the Company or any Subsidiary is obligated to
register the sale or resale of any of their securities under the Securities
Act (other than as contemplated in the Registration Rights Agreement). A
"PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
(d) ISSUANCE OF DEBENTURES AND WARRANTS. The Debentures and the
Warrants are duly authorized, and, when issued in accordance with the terms
hereof, shall be validly issued, fully paid and nonassessable, free and
clear of all liens, encumbrances and rights of first refusals of any kind
(collectively, "LIENS"). The Company has and at all times while the
Debentures and the Warrants are outstanding will maintain an adequate
reserve of duly authorized shares of Common Stock to enable it to perform
its conversion, exercise and other obligations under this Agreement, the
Warrants and the Debentures and in no circumstances shall such reserved and
available shares of Common Stock be less than the sum of (i) two times the
number of shares of Common Stock as would be issuable upon conversion in
full of the Debentures, assuming such conversion were effected on the
Original Issue Date or the Filing Date (as defined in the Registration
Rights Agreement), whichever yields a lower Conversion Price, (ii) the
number of shares of Common Stock as are issuable as payment of interest on
the Debentures, and (iii) the number of shares of Common Stock as are
issuable upon exercise in full of the Warrants. The shares of Common Stock
issuable upon conversion of the Debentures, as payment of interest in
respect thereof and upon exercise of the Warrants are sometimes referred to
herein as the "UNDERLYING SHARES," and the Debentures, Warrants and
Underlying Shares are, collectively, the "SECURITIES." When issued in
accordance with the terms of the Debentures and the Warrants, the
Underlying Shares will be duly authorized, validly issued, fully paid and
nonassessable, free and clear of all Liens.
(e) NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated thereby do not and will not (i)
conflict with or violate any provision of the Company's articles of
incorporation, bylaws or other charter documents (each as amended through
the date hereof) or (ii) subject to obtaining the consents referred to in
Section 2.1(f), conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument (evidencing a
Company debt or otherwise) to which the Company is a party or by which any
property or asset of the Company is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the
Company is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company is bound or
affected, except in the case of each of clauses (ii) and (iii), as could
not, individually or in the aggregate, have or result in a Material Adverse
Effect. The business of the Company is not being conducted in violation of
any law, ordinance or regulation of any governmental authority, except for
violations which, individually or in the aggregate, do not have a Material
Adverse Effect.
(f) CONSENTS AND APPROVALS. Except as specifically set forth in
SCHEDULE 2.1(F), neither the Company nor any Subsidiary is required to
obtain any consent, waiver, authorization or order of, or make any filing
or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents other
than (i) the filing of a registration statement covering the resale of the
Underlying Shares by the Purchaser (the "UNDERLYING SECURITIES REGISTRATION
STATEMENT") with the Securities and Exchange Commission (the "COMMISSION"),
which shall be filed in the time period set forth in the Registration
Rights Agreement, (ii) the application for the listing of the Underlying
Shares on or with any national securities exchange, market or quotation
system on which the Common Stock is hereafter listed for trading, (iii)
blue sky securities filings as contemplated by Section 3.5, (iv) the filing
of a Form D with the Commission and (v) other than, in all other cases,
where the failure to obtain such consent, waiver, authorization or order,
or to give or make such notice or filing, could not have or result in,
individually or in the aggregate, a Material Adverse Effect (together with
the consents, waivers, authorizations, orders, notices and filings referred
to in SCHEDULE 2.1(F), the "REQUIRED APPROVALS").
(g) LITIGATION; PROCEEDINGS. Except as specifically disclosed
in the Disclosure Materials (as hereinafter defined), there is no action,
suit, notice of violation, proceeding or investigation pending or, to the
best knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries or any of their respective properties before or
by any court, governmental or administrative agency or regulatory authority
(Federal, state, county, local or foreign) which (i) adversely affects or
challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) could, individually or in
the aggregate, have or result in a Material Adverse Effect.
(h) NO DEFAULT OR VIOLATION. Neither the Company nor any
Subsidiary (i) is in default under or in violation of (and no event has
occurred which has not been waived which, with notice or lapse of time or
both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is
in default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound, (ii) is in
violation of any order of any court, arbitrator or governmental body, or
(iii) is in violation of any statute, rule or regulation of any
governmental authority, except as could not individually or in the
aggregate, have or result in, individually or in the aggregate, a Material
Adverse Effect.
(i) PRIVATE OFFERING. Assuming the accuracy of the
representations and warranties of the Purchaser set forth in Section
2.2(b)-(f), the issuance and sale of the Securities to the Purchaser as
contemplated hereby are exempt from the registration requirements of the
Securities Act. Neither the Company nor any Person acting on its behalf
has taken or will take any action which might subject the offering,
issuance or sale of the Securities to the registration requirements of the
Securities Act.
(j) SEC DOCUMENTS. The Company has provided to the Purchaser
the Company's Form 10SB filed with the Commission on December 12, 1997 (the
"SEC DOCUMENTS" and, together with the Schedules to this Agreement and
other documents and information furnished by or on behalf of the Company at
any time prior to the Closing, the "DISCLOSURE MATERIALS") on a timely
basis or has received a valid extension of such time of filing and has
filed any such SEC Documents prior to the expiration of any such extension.
As of their respective dates and subject to comments by the Commission, the
SEC Documents complied in all material respects with the requirements of
the Securities Act and the Exchange Act and the rules and regulations of
the Commission promulgated thereunder, and none of the SEC Documents, when
filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Documents comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved, except
as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position
of the Company as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case
of unaudited statements, to normal year-end audit adjustments. Since
January 1, 1997, except as specifically disclosed in the SEC Documents, (a)
there has been no event, occurrence or development that has had or that
could have or result in a Material Adverse Effect, (b) the Company has not
incurred any liabilities (contingent or otherwise) other than (x)
liabilities incurred in the ordinary course of business consistent with
past practice and (y) liabilities not required to be reflected in the
Company's financial statements pursuant to GAAP, (c) the Company has not
altered its method of accounting or the identity of its auditors and (d)
the Company has not declared or made any payment or distribution of cash or
other property to stockholders or officers or directors (other than in
compliance with existing Company stock option plans) with respect to its
capital stock, or purchased, redeemed (or made any agreements to purchase
or redeem) any shares of capital stock. The Company last filed audited
financial statements with the Commission on December 12, 1997, and has not
received any comments from the Commission in respect thereof.
(k) INVESTMENT COMPANY. The Company is not, and is not an
Affiliate of an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(l) CERTAIN FEES. Except for fees payable to Cardinal Capital
Management, Inc., CDC Consulting, Inc. and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, no fees or
commissions will be payable by the Company to any broker, financial
advisor, finder, investment banker, or bank with respect to the
transactions contemplated hereby. The Purchaser shall have no obligation
with respect to such fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated hereby.
The Company shall indemnify and hold harmless the Purchaser, its respective
employees, officers, directors, agents, and partners, and their respective
Affiliates (as such term is defined under Rule 405 promulgated under the
Securities Act), from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses
suffered in respect of any such claimed or existing fees.
(m) SOLICITATION MATERIALS. The Company has not (i) distributed
any offering materials in connection with the offering and sale of the
Securities other than the Disclosure Materials and any amendments and
supplements thereto or (ii) solicited any offer to buy or sell the
Securities by means of any form of general solicitation or advertising.
(n) EXCLUSIVITY. The Company shall not issue and sell
Debentures to any Person other than the Purchaser.
(o) LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. The
Company has not in the two years preceding the date hereof received written
notice from any stock exchange, market or trading facility on which the
Common Stock is or has been listed or quoted to the effect that the Company
is not in compliance with the listing, maintenance or other requirements of
such exchange, market, trading or quotation facility. The Company has no
reason to believe that it does not now or will not in the future meet any
such requirements.
(p) PATENTS AND TRADEMARKS. The Company has, or has rights to
use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and rights which are
necessary for use in connection with its business and which the failure to
so have would have a Material Adverse Effect (collectively, the
"INTELLECTUAL PROPERTY RIGHTS"). To the best knowledge of the Company,
there is no existing infringement of any of the Intellectual Property
Rights.
(r) DISCLOSURE. All information relating to or concerning the
Company set forth in the Transaction Documents or provided to the Purchaser
or its representatives and counsel in connection with the transactions
contemplated hereby is true and correct in all material respects and does
not fail to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which
they were made, not misleading. The Company confirms that it has not
provided to the Purchaser or any of its agents or counsel any information
that constitutes or might constitute material nonpublic information. The
Company understands and confirms that the Purchaser shall be relying on the
foregoing representation in effecting transactions in securities of the
Company.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby makes the following representations and warranties to the Company.
(a) ORGANIZATION; AUTHORITY. The Purchaser is an entity
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to
enter into and to consummate the transactions contemplated by the
Transaction Documents and to carry out its obligations thereunder. The
acquisition of the Securities to be acquired hereunder by the Purchaser has
been duly authorized by all necessary action on the part of the Purchaser.
Each of this Agreement, the Registration Rights Agreement and the Escrow
Agreement has been duly executed and delivered by the Purchaser and
constitutes the valid and legally binding obligation of the Purchaser,
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity.
(b) INVESTMENT INTENT. The Purchaser is acquiring the
Securities to be acquired hereunder by the Purchaser for its own account
for investment purposes only and not with a view to or for distributing or
reselling such Securities or any part thereof or interest therein, without
prejudice, however, to the Purchaser's right, subject to the provisions of
this Agreement and the Registration Rights Agreement, at all times to sell
or otherwise dispose of all or any part of such Securities pursuant to an
effective registration statement under the Securities Act and in compliance
with applicable state securities laws or under an exemption from such
registration.
(c) PURCHASER STATUS. At the time the Purchaser was offered the
Securities, it was, at the date hereof, it is, and at the Closing Date, it
will be, an "accredited investor" as defined in Rule 501(a) under the
Securities Act.
(d) EXPERIENCE OF PURCHASER. The Purchaser either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment.
(e) ABILITY OF PURCHASER TO BEAR RISK OF INVESTMENT. The
Purchaser acknowledges that the Securities are speculative investments and
involve a high degree of risk and the Purchaser is able to bear the
economic risk of an investment in the Securities and, at the present time,
is able to afford a complete loss of such investment.
(f) ACCESS TO INFORMATION. The Purchaser acknowledges receipt
of the Disclosure Materials and further acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities, and
the merits and risks of investing in the Securities, (ii) access to
information about the Company and the Company's financial condition,
results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment, and (iii) the
opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment and to verify the accuracy and completeness of the information
contained in the Disclosure Materials. Neither such inquiries nor any
other investigation conducted by or on behalf of the Purchaser or its
representatives or counsel shall modify, amend or affect the Purchaser's
right to rely on the truth, accuracy and completeness of the Disclosure
Materials and the Company's representations and warranties contained in the
Transaction Documents.
(g) RELIANCE. The Purchaser understands and acknowledges that
(i) the Securities to be acquired by it hereunder are being offered and
sold to it without registration under the Securities Act in a private
placement that is exempt from the registration provisions of the Securities
Act and (ii) the availability of such exemption, depends in part on, and
the Company will rely upon the accuracy and truthfulness of, the foregoing
representations and such Purchaser hereby consents to such reliance.
The Company acknowledges and agrees that the Purchaser makes no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 TRANSFER RESTRICTIONS. (a) Securities may only be disposed of
pursuant to an effective registration statement under the Securities Act,
to the Company or pursuant to an available exemption from or in a
transaction not subject to the registration requirements thereof. In
connection with any transfer of any Securities other than pursuant to an
effective registration statement or to the Company, the Company may require
the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor, the form and substance of which opinion shall
be reasonably satisfactory to the Company, to the effect that such transfer
does not require registration under the Securities Act. Notwithstanding
the foregoing, the Company hereby consents to and agrees to register any
transfer by the Purchaser to an Affiliate of the Purchaser, or any
transfers among any such Affiliates provided that the transferee certifies
to the Company that it is an "accredited investor" as defined in Rule
501(a) under the Securities Act. The Purchaser or Affiliate transferee
shall have the rights of the Purchaser under this Agreement and the
Registration Rights Agreement.
(b) The Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS.
[FOR DEBENTURES ONLY] THIS DEBENTURE IS SUBJECT TO CERTAIN
RESTRICTIONS ON CONVERSION SET FORTH IN SECTION 3.8 OF A CONVERTIBLE
DEBENTURE PURCHASE AGREEMENT, DATED AS OF DECEMBER 22, 1997, BETWEEN
INNOVACOM, INC. (THE "COMPANY") AND THE ORIGINAL HOLDER HEREOF. A
COPY OF THAT AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY.
Underlying Shares shall not contain the legend set forth above if
the conversion of Debentures, exercise of Warrants or other issuances of
Underlying Shares as contemplated hereby, as the case may be, occurs at any
time while an Underlying Securities Registration Statement is effective
under the Securities Act or, in the event there is not an effective
Underlying Securities Registration Statement at such time, if in the
opinion of counsel to the Company such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission).
In the event the legend referenced above is required pursuant to this
Section 3.1(b) at the time of the initial issuance of Underlying Shares,
the Company agrees that it will provide the Purchaser, upon request, with a
certificate or certificates representing Underlying Shares, free from such
legend at such time as such legend is no longer required hereunder. The
Company may not make any notation on its records or give instructions to
any transfer agent of the Company which enlarge the restrictions of
transfer set forth in this Section 3.1(b).
3.2 ACKNOWLEDGEMENT OF DILUTION. The Company acknowledges that the
issuance of Underlying Shares upon (i) conversion of the Debentures and as
payment of interest thereon and (ii) exercise of the Warrants may result in
dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further
acknowledges that its obligation to issue Underlying Shares in accordance
with the Debentures and the Warrants is unconditional and absolute
regardless of the effect of any such dilution.
3.3 FURNISHING OF INFORMATION. As long as the Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to
Section 13(a) or 15(d) of the Exchange Act. If at any time prior to the
date on which the Purchaser may resell all of their Underlying Shares
without volume restrictions pursuant to Rule 144(k) promulgated under the
Securities Act (as determined by counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the
Company's transfer agent for the benefit of and enforceable by the
Purchaser) the Company is not required to file reports pursuant to such
sections, it will prepare and furnish to the Purchaser and make publicly
available in accordance with Rule 144(c) promulgated under the Securities
Act annual and quarterly financial statements, together with a discussion
and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act
in the time period that such filings would have been required to have been
made under the Exchange Act. The Company further covenants that it will
take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person
to sell Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including the legal opinion referenced above in this
Section. Upon the request of any such Person, the Company shall deliver to
such Person a written certification of a duly authorized officer as to
whether it has complied with such requirements.
3.4 USE OF DISCLOSURE MATERIALS. The Company consents to the use
of the Disclosure Materials and any information provided by or on behalf of
the Company pursuant to Section 3.3, and any amendments and supplements
thereto, in connection with resales of the Securities other than pursuant
to an effective registration statement.
3.5 BLUE SKY LAWS. In accordance with the Registration Rights
Agreement, the Company shall qualify the Underlying Shares under the
securities or Blue Sky laws of such jurisdictions as the Purchaser may
request and shall continue such qualification at all times until the
Purchaser notifies the Company in writing that it no longer own Securities;
PROVIDED, HOWEVER, that neither the Company nor its Subsidiaries shall be
required in connection therewith to qualify as a foreign corporation where
they are not now so qualified or to take any action that would subject the
Company to general service of process in any such jurisdiction where it is
not then so subject.
3.6 INTEGRATION. The Company shall not and shall use its best
efforts to ensure that no Affiliate shall sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer
or sale of the Securities in a manner that would require the registration
under the Securities Act of the issue or sale of the Securities to the
Purchaser.
3.7 INCREASE IN AUTHORIZED SHARES. At such time as the Company
would be, if a notice of conversion or exercise (as the case may be) were
to be delivered on such date, precluded from (a) converting the full
outstanding principal amount of Debentures (and paying any accrued but
unpaid interest in respect thereof in shares of Common Stock) that remain
unconverted at such date or (b) honoring the exercise in full of the
Warrants due to the unavailability of a sufficient number of shares of
authorized but unissued or re-acquired Common Stock, the Board of Directors
of the Company shall promptly (and in any case within 30 Business Days from
such date) prepare and mail to the shareholders of the Company proxy
materials requesting authorization to amend the Company's restated
certificate of incorporation to increase the number of shares of Common
Stock which the Company is authorized to issue to at least such number of
shares as reasonably requested by the Purchaser in order to provide for
such number of authorized and unissued shares of Common Stock to enable the
Company to comply with its conversion, exercise and reservation of shares
obligations as set forth in this Agreement, the Debentures and the
Warrants. In connection therewith, the Board of Directors shall (a) adopt
proper resolutions authorizing such increase, (b) recommend to and
otherwise use its best efforts to promptly and duly obtain stockholder
approval to carry out such resolutions (and hold a special meeting of the
shareholders no later than the 60th day after delivery of the proxy
materials relating to such meeting) and (c) within 5 Business Days of
obtaining such shareholder authorization, file an appropriate amendment to
the Company's certificate of incorporation to evidence such increase.
3.8 PURCHASER OWNERSHIP OF COMMON STOCK. The Purchaser shall not
convert Debentures or exercise its Warrant to the extent such conversion or
exercise would result in it beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules thereunder)
in excess of 4.999% of the then issued and outstanding shares of Common
Stock, including shares issuable upon conversion of the Debentures held by
it after application of this Section. To the extent that the limitation
contained in this Section applies, the determination of whether Debentures
are convertible (in relation to other securities owned by the Purchaser)
and of which portion of the principal amount of such Debentures are
convertible shall be in the sole discretion of the Purchaser, and the
submission of Debentures for conversion shall be deemed to be the
Purchaser's determination of whether such Debentures are convertible (in
relation to other securities owned by the Purchaser) and of which portion
of such Debentures are convertible, in each case subject to such aggregate
percentage limitation, and the Company shall have no obligation to verify
or confirm the accuracy of such determination. Nothing contained herein
shall be deemed to restrict the right of the Purchaser to convert
Debentures at such time as such conversion will not violate the provisions
of this Section. The provisions of this Section may be waived by the
Purchaser upon not less than 75 days prior notice to the Company, and the
provisions of this Section shall continue to apply until such 75th day (or
later, if stated in the notice of waiver).
3.9 LISTING OF UNDERLYING SHARES. The Company will use its best
efforts to list the Common Stock for trading on the Nasdaq SmallCap Market
or Nasdaq National Market as soon as possible after the Closing Date. If
the Common Stock hereafter is listed for trading on the Nasdaq National
Market, Nasdaq SmallCap Market (or on the American Stock Exchange or New
York Stock Exchange, or any other national securities market or exchange),
then the Company shall (1) take all necessary steps to list the Underlying
Shares thereon, including the preparation of any required additional
listing applications therefor covering at least the sum of (i) two times
the number of Underlying Shares as would be issuable upon a conversion in
full of the then outstanding principal amount of Debentures (plus all
Underlying Shares are issuable as payment of interest thereon, assuming all
such interest were paid in shares of Common Stock) and upon exercise in
full of the then unexercised portion of the Warrants and (2) provide to the
Purchaser evidence of such listing, and the Company shall thereafter
maintain the listing of its Common Stock on such exchange or market as long
as Underling Shares are issuable and/or outstanding.
3.10 CONVERSION PROCEDURES. EXHIBIT F sets forth the procedures
with respect to the conversion of the Debentures, including the form of
legal opinion, if necessary, that shall be rendered to the Company's
transfer agent and such other information and instructions as may be
reasonably necessary to enable the Purchaser to exercise its right of
conversion smoothly and expeditiously.
3.11 PURCHASER'S RIGHTS IF TRADING IN COMMON STOCK IS SUSPENDED OR
DELISTED. If at any time while the Purchaser (or any assignee thereof)
owns any Securities, the average value of shares of Common Stock traded on
the OTC Bulletin Board in each week, measured over a four week period, on a
rolling basis, is less than $750,000 or there are fewer than ten (10)
market makers actively making a market in the Common Stock (or, if after
the Closing Date the Common Stock is listed for trading on any of the
exchanges, markets or trading facilities contemplated in Section 3.9, if
the Common Stock is delisted or suspended from trading on such exchange,
market or trading facility, other than as a result of the suspension of
trading in securities on such market or exchange generally, or temporary
suspensions pending the release of material information) for more than
three (3) Trading Days, then, notwithstanding anything to the contrary
contained in any Transaction Document, at the Purchaser's option
exercisable by written notice to the Company, the Company shall repay the
entire principal amount of then outstanding Debentures (and all accrued and
unpaid interest thereon) and redeem all then outstanding Underlying Shares
then held by the Purchaser, at an aggregate purchase price equal to the sum
of (I) the aggregate outstanding principal amount of Debentures then held
by the Purchaser divided by the Conversion Price on (a) the day prior to
the date of such suspension or delisting, (b) the day of such notice or (c)
the date of payment in full of the repurchase price calculated under this
Section, whichever is less, and multiplied by the Market Price preceding
(x) the day prior to the date of such suspension or delisting, (y) the day
of such notice and (z) the date of payment in full of the repurchase price
calculated under this Section, whichever is greater, (II) the aggregate of
all accrued but unpaid interest and other non-principal amounts (including
liquidated damages, if any) then payable in respect of all Debentures to be
repaid, (III) the number of Underlying Shares then held by the Purchaser
multiplied by the Market Price immediately preceding (x) the day prior to
the date of such suspension or delisting, (y) the date of the notice or (z)
the date of payment in full by the Company of the repurchase price
calculated under this Section, whichever is greater, and (IV) interest on
the amounts set forth in I - III above accruing from the 5th day after such
notice until the repurchase price under this Section is paid in full at the
rate of 15% per annum.
3.12 USE OF PROCEEDS. The Company shall use all of the net
proceeds from the sale of the Securities for working capital and general
corporate purposes and not for the satisfaction of any Company debt (except
for reductions of the Company's indebtedness up to a maximum of $500,000)
or to redeem Company any equity or equity-equivalent securities. Pending
application of the proceeds of this placement in the manner permitted
hereby the Company will invest such proceeds in interest bearing accounts
and/or short-term, investment grade interest bearing securities.
3.13 NOTICE OF BREACHES. Each of the Company and the Purchaser
shall give prompt written notice to the other of any breach by it of any
representation, warranty or other agreement contained in any Transaction
Document, as well as any events or occurrences arising after the date
hereof, which would reasonably be likely to cause any representation or
warranty or other agreement of such party, as the case may be, contained in
the Transaction Document to be incorrect or breached as of such Closing
Date. However, no disclosure by either party pursuant to this Section
shall be deemed to cure any breach of any representation, warranty or other
agreement contained in any Transaction Document.
Notwithstanding the generality of the foregoing, the Company shall
promptly notify the Purchaser of any notice or claim (written or oral) that
it receives from any lender of the Company to the effect that the
consummation of the transactions contemplated by the Transaction Documents
violates or would violate any written agreement or understanding between
such lender and the Company, and the Company shall promptly furnish by
facsimile to the holders of the Debentures a copy of any written statement
in support of or relating to such claim or notice.
3.14 CONVERSION OBLIGATIONS OF THE COMPANY. The Company shall
honor conversions of the Debentures and exercises of the Warrants and shall
deliver Underlying Shares in accordance with the respective terms and
conditions and time periods set forth in the Debentures and the Warrants.
3.15 RIGHT OF FIRST REFUSAL; SUBSEQUENT REGISTRATIONS; CERTAIN
CORPORATE ACTIONS. (a) The Company shall not, directly or indirectly,
without the prior written consent of Encore Capital Management, L.L.C.
("ENCORE"), offer, sell, grant any option to purchase, or otherwise dispose
of (or announce any offer, sale, grant or any option to purchase or other
disposition) any of its or its Affiliates' equity or equity-equivalent
securities or any instrument that permits the holder thereof to acquire
Common Stock at any time over the life of the security or investment at a
price that is less than the market price of the Common Stock at the time of
issuance of such security or investment (a "SUBSEQUENT FINANCING") for a
period of 180 days after the Closing Date, except (i) the granting of
options or warrants to employees, officers and directors, and the issuance
of shares upon exercise of options granted, under any stock option plan
heretofore or hereinafter duly adopted by the Company, (ii) shares issued
upon exercise of any currently outstanding warrants and upon conversion of
any currently outstanding convertible preferred stock in each case
disclosed in SCHEDULE 3.1(C), and (iii) shares of Common Stock issued upon
conversion of Debentures, as payment of interest thereon, or upon exercise
of the Warrants in accordance with their respective terms, unless (A) the
Company delivers to Encore a written notice (the "SUBSEQUENT FINANCING
NOTICE") of its intention to effect such Subsequent Financing, which
Subsequent Financing Notice shall describe in reasonable detail the
proposed terms of such Subsequent Financing, the amount of proceeds
intended to be raised thereunder, the Person with whom such Subsequent
Financing shall be affected, and attached to which shall be a term sheet or
similar document relating thereto and (B) Encore shall not have notified
the Company by 5:00 p.m. (New York City time) on the tenth (10th) Trading
Day after its receipt of the Subsequent Financing Notice of its willingness
to cause the Purchaser to provide (or to cause its sole designee to
provide), subject to completion of mutually acceptable documentation,
financing to the Company on substantially the terms set forth in the
Subsequent Financing Notice. If Encore shall fail to notify the Company of
its intention to enter into such negotiations within such time period, the
Company may effect the Subsequent Financing substantially upon the terms
and to the Persons (or Affiliates of such Persons) set forth in the
Subsequent Financing Notice; PROVIDED, that the Company shall provide
Encore with a second Subsequent Financing Notice, and Encore shall again
have the right of first refusal set forth above in this paragraph (a), if
the Subsequent Financing subject to the initial Subsequent Financing Notice
shall not have been consummated for any reason on the terms set forth in
such Subsequent Financing Notice within thirty (30) Trading Days after the
date of the initial Subsequent Financing Notice with the Person (or an
Affiliate of such Person) identified in the Subsequent Financing Notice.
(b) Except Underlying Shares and other "Registrable Securities"
(as such term is defined in the Registration Rights Agreement) to be
registered in accordance with the Registration Rights Agreement, and other
than Company securities to be registered for resale in connection with
financings permitted pursuant to paragraph (a)(i) through (iii) of this
Section (other than the registration of securities on behalf of investment
consultants of the Company), the Company shall not, without the prior
written consent of the Purchaser, (i) issue or sell any of its or any of
its Affiliates' equity or equity-equivalent securities pursuant to
Regulation S promulgated under the Securities Act, or (ii) register for
resale any securities of the Company for a period of not less than 90
Trading Days after the date that the Underlying Securities Registration
Statement is declared effective by the Commission. Any days that the
Purchaser is unable to sell Underlying Shares under the Underlying
Securities Registration Statement shall be added to such 90 Trading Day
period for the purposes of (i) and (ii) above.
(c) As long as there are Debentures outstanding, the
Company shall not and shall cause the Subsidiaries not to, without the
consent of the holders of the Debentures, (i) amend its certificate of
incorporation, bylaws or other charter documents so as to adversely affect
any rights of the holders of Debentures; (ii) repay, repurchase or offer to
repay, repurchase or otherwise acquire shares of its Common Stock other
than as to the Underlying Shares; or (iii) enter into any agreement with
respect to any of the foregoing.
3.16 TRANSFER OF INTELLECTUAL PROPERTY RIGHTS. Except in
connection with the sale of all or substantially all of the assets of the
Company that are covered under the Debentures, the Company shall not
transfer, sell or otherwise dispose of, any Intellectual Property Rights,
or allow the Intellectual Property Rights to become subject to any Liens,
or fail to renew such Intellectual Property Rights (if renewable and would
otherwise expire), without the prior written consent of the Purchaser.
3.17 CERTAIN SECURITIES LAWS DISCLOSURES; PUBLICITY. (a) The
Company shall timely file with the Commission a Form D promulgated under
the Securities Act as required under Regulation D promulgated under the
Securities Act and provide a copy thereof to the Purchaser promptly after
the filing thereof. The Company shall (i) issue a press release acceptable
to the Purchaser disclosing the transactions contemplated hereby within
three (3) Business Days after the Closing Date and (ii) file a Report on
Form 8-K disclosing this Agreement and the transactions contemplated hereby
within ten (10) Business Days after the Closing Date.
(b) In furtherance and in addition to the obligation of the
Company set forth in Section 3.18(a) above, the Company and the Purchaser
shall consult with each other in issuing any press releases or otherwise
making public statements with respect to the transactions contemplated
hereby and neither party shall issue any such press release or otherwise
make any such public statement without the prior written consent of the
other, which consent shall not be unreasonably withheld or delayed, except
that no prior consent shall be required if such disclosure is required by
law, in which such case the disclosing party shall provide the other party
with prior notice of such public statement.
3.18 CONVERSION TO PREFERRED STOCK. The parties hereto agree that
the Company shall have the right, exercisable by notice to the Purchaser
given not more than 45 days after the Closing Date, to require an exchange
of all Debentures issued and sold on the Closing Date into newly created
senior convertible preferred stock of the Company having such dividend,
conversion, redemption and other terms as are identical to the Debentures,
MUTATIS MUTANDIS; provided, that such exchange right may only be exercised
if (a) such exchange would not delay the filing or effectiveness of the
Underlying Securities Registration Statement, (b) such exchange would not
impair the conversion rights of the Purchaser as set forth in the
Debentures, as reasonably determined by the Purchaser and (c) the articles
of incorporation of the Company shall have been duly amended to provide for
the issuance of such preferred stock, as evidenced by a legal opinion of
the Company's outside legal counsel reasonably acceptable to the Purchaser.
The terms of such preferred stock shall be prepared at the expense of the
Company. Any and all representations, warranties, agreements, obligations
and remedies available to the holders of Debentures (including the
Purchaser) under the Transaction Documents with respect to the Debentures
shall be deemed to be available to and binding upon the holders of the
preferred stock and the Company, and the terms of the preferred stock shall
thereafter become a Transaction Document hereunder retroactive to the
Closing Date.
ARTICLE IV
MISCELLANEOUS
4.1 FEES AND EXPENSES. The Company shall pay the Purchaser at
the Closing $25,000 for their legal fees and disbursements in connection
with the preparation and negotiation of the Transaction Documents and for
their due diligence expenses and disbursements in connection with the
transactions contemplated hereby. Other than the amounts contemplated by
the immediately preceding sentence, and except as set forth in the
Registration Rights Agreement, each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The
Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Debentures pursuant hereto. The Purchaser shall
be responsible for its own respective tax liability that may arise as a
result of the investment hereunder or the transactions contemplated by this
Agreement.
4.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with
the Exhibits and Schedules hereto, the Debentures and the Warrants contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters.
4.3 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior
to 7:00 p.m. (New York City time) on a Business Day, (ii) the Business Day
after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in the
Purchase Agreement later than 7:00 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date, (iii) the
Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the
party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:
If to the Company: InnovaCom, Inc.
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
If to Purchaser: JNC Opportunity Fund Ltd.
Olympia Capital (Cayman) Ltd.
c/o Olympia Capital (Bermuda) Ltd.
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With copies to: Encore Capital Management, L.L.C.
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or such other address as may be designated in writing hereafter, in the
same manner, by such Person.
4.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchaser; or, in the case of a
waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of either party to exercise any
right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.
4.5 HEADINGS. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
4.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any rights
or obligations hereunder without the prior written consent of the
Purchaser. Except as set forth in Section 3.1(a), the Purchaser may assign
this Agreement or any rights or obligations hereunder without the prior
written consent of the Company. The assignment by a party of this
Agreement or any rights hereunder shall not affect the obligations of such
party under this Agreement.
4.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns and, other than with respect to permitted assignees
under Section 4.6, is not for the benefit of, nor may any provision hereof
be enforced by, any other person.
4.8 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
New York without regard to the principles of conflicts of law thereof.
Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts sitting in the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of the any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law.
4.9 SURVIVAL. The representations, warranties, agreements and
covenants contained in this Agreement shall survive the Closing and the and
conversion of the Debentures and exercise of the Warrants.
4.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that
any signature is delivered by facsimile transmission, such signature shall
create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) the same with the same force and effect
as if such facsimile signature page were an original thereof.
4.11 SEVERABILITY. In case any one or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the
validity and enforceability of the remaining terms and provisions of this
Agreement shall not in any way be affecting or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision which
shall be a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Debenture
Purchase Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.
INNOVACOM, INC.
By:___________________________
Name:
Title:
JNC OPPORTUNITY FUND LTD.
By:___________________________
Name:
Title:
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
Between
INNOVACOM, INC.
and
JNC OPPORTUNITY FUND LTD.
_____________________________
December 22, 1997
______________________________