EX-4.9
SECURITIES PURCHASE AGREEMENT (CONVERTIBLE PREFERRED STOCK)
SECURITIES PURCHASE AGREEMENT
(CONVERTIBLE PREFERRED STOCK)
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as
of May 30, 2006, is entered into by and among 5G Wireless, Inc, a
Nevada corporation (the "Company"), having its address at 0000 Xxx
Xxx Xxxxxx, Xxxxxx xxx Xxx, XX 00000, and Castellum Investments,
S.A. ("Purchaser").
WITNESSETH:
WHEREAS, the Company and the Purchaser are executing and
delivering this Agreement in accordance with and in reliance upon the
exemption from securities registration afforded, inter alia, by Rule
506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act"), and/or Section
4(2) of the 1933 Act; and
WHEREAS, the Purchaser wishes to purchase, upon the terms and
subject to the conditions of this Agreement, an aggregate amount of
$290,000 Series B 10% Preferred Stock, par value $0.001, of the
Company (the "Shares"), which will be convertible into shares of the
Company's Common Stock, par value $0.001 per share (the "Common
Stock"), upon the terms and subject to the conditions of the
Certificate of Designation for the Shares, in the form of Exhibit A
attached hereto and hereby incorporated herein by reference, subject
to acceptance of this Agreement by the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase.
(i) The undersigned Purchaser hereby agrees to purchase
the Shares from the Company on the terms and conditions set forth
below in this Agreement and the other Transaction Documents (as
defined below).
(ii) Subject to the terms and conditions of this Agreement
and the other Transaction Documents the Purchaser will purchase the
Shares at a single (the "Closing") to be held on the Closing Date (as
defined below).
(iii) The purchase price to be paid by the Purchaser (as to
such Purchaser, the "Purchase Price") shall equal purchase price of
$1.00 per Share (the "Price per Share") multiplied by the number of
Shares being purchased on the Closing Date by the Purchaser, as set
forth on the signature page to this Agreement.
b. Certain Definitions.
As used herein, each of the following terms has the meaning set
forth below, unless the context otherwise requires:
(i) "Affiliate" means, with respect to a specific Person
referred to in the relevant provision, another Person who or which
controls or is controlled by or is under common control with such
specified Person.
(ii) "Certificate of Designation" has the meaning set forth
in the recitals.
(iii) "Certificates" means the relevant Shares duly
executed on behalf of the Company and issued in the name of the
respective Purchaser.
(iv) "Closing" has the meaning set forth in Section
1(a)(ii).
(v) "Closing Date" means the respective dates on which the
Closings referred to in this Agreement are held.
(vi) "Common Stock" has the meaning set forth in the
recitals.
(vii) "Conversion Shares" means the shares of Common Stock
issuable upon conversion of the Shares.
(viii) "Effective Date" means the effective date of the
Registration Statement covering the Registrable Securities (as those
terms are defined in the Registration Rights Agreement defined below)
for the Shares issued on the Closing Date.
(ix) "Escrow" means the account described in Section 1(d)
to be maintained by the Company for purposes of holding in escrow any
funds received by it prior to the Closing Date.
(x) "Final Closing Date" shall have the meaning ascribed
to such term in Section 6(a).
(xi) "1933 Act" means the Securities Act of 1933, as
amended.
(xii) "Offering" means the offering by the Company of the
Shares for sale to the Purchasers pursuant to this Agreement.
(xiii) "Person" means any living person or any entity, such
as, but not necessarily limited to, a corporation, partnership or trust.
(xiv) "Price Per Share" has the meaning set forth in Section
1(a)(iii).
(xv) "Purchase Price" has the meaning set forth in Section
1(a)(iii).
(xvi) "Purchaser" has the meaning set forth in the preamble.
(xvii) "Registration Rights Agreement" has the meaning set
forth in Section 2(d).
(xviii) "Securities" has the meaning set forth in Section 2(d).
(xix) "Shares" has the meaning set forth in the recitals.
(xx) "Transaction Documents" means this Agreement, the
Certificate of Designation, the Shares and the Registration Rights
Agreement.
c. Form of Payment; Delivery of Certificates.
(i) The Purchaser shall pay the Purchase Price for the
Shares to be purchased by such Purchaser by delivering immediately
available good funds in United States Dollars to the Escrow prior to
the respective Closing on the applicable Closing Date, determined as
provided in Section 6.
Promptly following payment to the Company from the Escrow
of the Purchase Price to be paid for the purchase of the Shares being
purchased by such Purchaser, the Company shall deliver to the
Purchaser the Certificates purchased at such Closing.
d. Payment to the Escrow. All payments to the Escrow for
the purchase of the Shares shall be made at or prior to the Closing
by wire transfer of funds to the Escrow, as follows:
Beneficiary Account Name: Xxxxx Fargo Bank, 000 X. Xxxxx, Xxx
Xxxxx, XX 00000
Beneficiary Account No.: 100-0000000
ABA/Transit No.: 000000000
FBO: 5G Wireless Communications, Inc.
The Company hereby represents and warrants to the Purchasers that the
above-referenced Escrow account is free or any liens or encumbrances
(including without limitation any security interest, deposit account
control agreement or garnishment). The Company hereby agrees that it
shall not use, encumber or remove from the Escrow any funds deposited
in the Escrow until the Closing has occurred.
e. Closing, etc. The purchase and sale of the Shares
shall occur at the Closing on the Closing Date, as contemplated by
Section 6, following the satisfaction or waiver of the conditions
precedent to Closing set forth in Sections 7 and 8.
f. Failure to Close. If the Closing does not occur within
thirty (30) days after the execution and delivery by the parties of
this Agreement, then the Company shall immediately refund the
respective Purchase Price in full (if any) paid into the Escrow by
each Purchaser.
2. PURCHASERS' REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION. Each Purchaser represents
and warrants to, and covenants and agrees with, the Company as follows:
a. The Purchaser has been furnished with, and has carefully
read the Transaction Documents and is familiar with and understands
the terms of the Offering. With respect to tax and other economic
considerations involved in his investment, the Purchaser is not
relying on the Company. The Purchaser has carefully considered and
has, to the extent the Purchaser believes such discussion necessary,
discussed with the Purchaser's professional legal, tax, accounting and
financial advisors the suitability of an investment in the Company, by
purchasing the Shares, for the Purchaser's particular tax and
financial situation and has determined that the investment being made
by the Purchaser is a suitable investment for the Purchaser.
b. The Purchaser acknowledges that all documents, records,
and books pertaining to this investment which the Purchaser has
requested have been made available for inspection or the Purchaser has
had access thereto.
c. The Purchaser has had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on
behalf of the Company concerning the Offering, and if such opportunity
was taken all such questions have been answered to the full
satisfaction of the Purchaser.
d. The Purchaser will not sell the Shares without
registration under the 1933 Act or applicable state securities laws or
compliance with an exemption there from. The Shares have not been
registered under the 1933 Act or under the securities laws of any
state. The Purchaser represents that the Purchaser is purchasing the
Shares for the Purchaser's own account, for investment and not with a
view to resale or distribution. The Purchaser has not offered or sold
any portion of the Shares being acquired nor does the Purchaser have
any present intention of dividing the Shares with others or of
selling, distributing or otherwise disposing of any portion of the
Shares either currently or after the passage of a fixed or
determinable period of time or upon the occurrence or non-occurrence
of any predetermined event or circumstance. The Company has no
obligation to register the Shares being purchased and sold under this
Agreement, the Shares that may be issued in lieu of cash dividends on
the Shares or the Conversion Shares (collectively, the "Securities").
However, the Purchasers do have piggy-back registration rights as set
forth in the Registration Rights Agreement, of even date herewith,
between the Company and the Purchasers (the "Registration Rights
Agreement"), in the form attached hereto as Exhibit B.
e. The Purchaser recognizes that an investment in the
Shares involves substantial risks, including loss of the entire amount
of such investment. Purchaser also recognizes that there is presently
an extremely limited public trading market for the Company's
securities. Purchaser understands and agrees that there can be no
assurance that this public market for trading Company securities ever
will become more liquid nor can there be any assurance that such
public trading market for Company securities will continue to exist at all.
f. The Purchaser acknowledges that each certificate
representing the Shares or in payment of dividends on the Shares shall
be stamped or otherwise imprinted with a legend substantially in the
following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE
OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (ii) TO THE EXTENT THEN APPLICABLE, PURSUANT TO
RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
SUCH ACT.
g. The Purchaser acknowledges and agrees that it shall not
be entitled to seek any remedies with respect to the Offering from any
party other than the Company.
h. If this Agreement is executed and delivered on behalf of
a corporation, limited liability company, trust or partnership: (i)
such corporation, limited liability company, trust or partnership has
the full legal right and power and all authority and approval required
(a) to execute and deliver, or authorize execution and delivery of,
this Agreement and all other instruments executed and delivered by or
on behalf thereof in connection with the purchase of the Shares and
(b) to purchase and hold the Shares; and (ii) the signature of the
party signing on behalf of such corporation, limited liability
company, trust or partnership is binding upon it.
i. The Purchaser is not subscribing for the Shares as a
result of, or pursuant to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or meeting.
j. The Purchaser is purchasing the Shares for its own
account for investment, and not with a view toward the resale or
distribution thereof, except pursuant to sales registered or exempted
from registration under the 1933 Act; provided, however, that by
making the representations herein, Purchaser does not agree to hold
any of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an
exemption under the 1933 Act. Purchaser is neither an underwriter of,
nor a dealer in, the Shares or upon the payment of dividends thereon
and is not participating in the distribution or resale of the Securities.
k. The Purchaser is an "accredited investor" as defined in
Regulation D and as evidenced by the Offeree Questionnaire attached as
Exhibit C as completed by the Purchaser. In addition, the Purchaser
has such knowledge and experience in financial, tax and business
matters so as to enable the Purchaser to utilize the information made
available to the Purchaser in connection with the Offering to evaluate
the merits and risks of an investment in the Shares and to make an
informed investment decision with respect thereto.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Purchasers that:
a. Concerning the Shares and the Shares. There are no
preemptive rights of any stockholder of the Company to acquire the
Securities.
b. Reporting Company Status. The Company is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Nevada and has the requisite corporate power to own
its properties and to carry on its business as now being conducted.
The Company is duly qualified as a foreign corporation to do business
and is in good standing in the State of California and in each other
jurisdiction where the nature of the business conducted or property
owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a
material adverse effect on the business, operations or condition
(financial or otherwise) or results of operation of the Company and
its subsidiaries taken as a whole (a "Material Adverse Effect"). The
Company has registered its Common Stock pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the
Common Stock is listed and traded on the OTC Bulletin Board Market of
the National Association of Securities Dealers, Inc. (trading symbol:
FGWI). The Company has received no notice, either oral or written,
with respect to the continued eligibility of the Common Stock for
such listing, and the Company has maintained all requirements for the
continuation of such listing.
c. Authorized Shares. The authorized capital stock of the
Company consists of 5,010,000,000 shares of capital stock,
5,000,000,000 of which shares are designated as shares of Common
Stock, 10,000,000 shares of which are designated as shares of
Preferred Stock, par value $0.001 per share (3,000,000 of which are
designated as Series A Preferred Stock and 5,000,000 shares of which
are designated as shares of 10% Series B Convertible Preferred
Stock). The amount of shares of the Company's capital stock, however
denominated, and the amount and description of the Company's Common
Stock equivalents, issued and outstanding on the date of this
Agreement are set forth in Schedule 3(c) hereto, which is hereby
incorporated herein by reference. All issued and outstanding shares
of capital stock have been duly authorized and validly issued and are
fully paid and nonassessable. The Company has sufficient authorized
and unissued shares of preferred stock as may be necessary to effect
the issuance of the Shares, and has sufficient authorized and
unissued shares of Common Stock as may be necessary to effect the
issuance of the Conversion Shares as contemplated by this Agreement
and the Certificate of Designation. The Shares have been duly
authorized and, when issued at the Closing, the Shares will be duly
and validly issued, fully paid and non-assessable and will not
subject the holder thereof to personal liability by reason of being
such holder, and the issuance of the Conversion Shares has been duly
authorized and, when issued upon conversion of the Shares as
contemplated by this Agreement and the Certificate of Designation.
At all times, the Company shall keep available and reserved for
issuance to the holders of the Shares Common Stock duly authorized
for issuance against the Shares as Conversion Shares.
d. Securities Purchase Agreement; Registration Rights
Agreement. This Agreement and the Registration Rights Agreement and
the transactions contemplated hereby and thereby, have been duly and
validly authorized by the Company, this Agreement has been duly
executed and delivered by the Company. Each of this Agreement, the
Shares and the Registration Rights Agreement, when executed and
delivered by the Company, are and will be, valid, legal and binding
agreements of the Company enforceable in accordance with their
respective terms, subject as to enforceability to general principles
of equity and to bankruptcy, insolvency, moratorium, and other
similar laws affecting the enforcement of creditors' rights generally.
e. Non-contravention. The execution and delivery of this
Agreement, the Shares and the Registration Rights Agreement by the
Company, the issuance of the Shares and the Conversion Shares, and
the consummation by the Company of the other transactions
contemplated by the Transaction Documents and the Shares do not and
will not conflict with or result in a breach by the Company of any of
the terms or provisions of, or constitute a default under (i) the
articles of incorporation or by-laws of the Company, each as
currently in effect, (ii) any indenture, mortgage, deed of trust, or
other material agreement or instrument to which the Company is a
party or by which it or any of its properties or assets are bound,
including any listing agreement for the Common Stock, except as
herein set forth or an event which results in the creation of any
lien, charge or encumbrance upon any assets of the Company or of any
of its subsidiaries or the triggering of any preemptive or anti-
dilution rights or rights of first refusal or first offer on the part
of holders of the Company's securities, (iii) to its knowledge, any
existing applicable law, rule, or regulation or any applicable
decree, judgment, or order of any court, United States federal or
state regulatory body, administrative agency, or other governmental
body having jurisdiction over the Company or any of its properties or
assets, or (iv) the Company's listing agreement for its Common Stock,
except such conflict, breach or default which would not have a
Material Adverse Effect.
f. Approvals. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the stockholders of the
Company is required to be obtained by the Company for the issuance
and sale of the Securities to the Purchasers as contemplated by this
Agreement, except such authorizations, approvals and consents that
have been obtained, or such authorizations, approvals and consents,
the failure of which to obtain would not have a Material Adverse Affect.
g. SEC Filings. To the best of the Company's knowledge,
none of the Company's SEC Documents contained, at the time they were
filed, any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements made therein in light of the circumstances under which
they were made, not misleading. Except as set forth on Schedule 3(g)
to this Agreement, the Company has since December 31, 2004 timely
filed all requisite forms, reports and exhibits thereto with the SEC.
The Company is not aware of any event occurring on or prior to a
Closing Date (other than the transactions effected hereby) that would
require the filing of, or with respect to which the Company intends
to file, a Form 8-K after such date.
h. Absence of Certain Changes. Since December 31, 2004,
there has been no material adverse change and no material adverse
development in the business, properties, operations, condition
(financial or otherwise), or results of operations of the Company or
any of its subsidiaries, except as disclosed in the Company's SEC
Documents. Since December 31, 2004, except as provided in the
Company's SEC Documents, neither the Company nor any of its
subsidiaries has (i) incurred or become subject to any material
liabilities (absolute or contingent) except liabilities incurred in
the ordinary course of business consistent with past practices; (ii)
discharged or satisfied any material lien or encumbrance or paid any
material obligation or liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business
consistent with past practices; (iii) declared or made any payment or
distribution of cash or other property to stockholders with respect
to its capital stock, or purchased or redeemed, or made any
agreements to purchase or redeem, any shares of its capital stock;
(iv) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, except in the ordinary course of
business consistent with past practices; (v) suffered any substantial
losses or waived any rights of material value, whether or not in the
ordinary course of business, or suffered the loss of any material
amount of existing business; (vi) made any changes in employee
compensation, except in the ordinary course of business consistent
with past practices; or (vii) experienced any material problems with
labor or management in connection with the terms and conditions of
their employment.
i. Full Disclosure. There is no fact known to the Company
(other than general economic conditions known to the public generally
or as disclosed in the Company's SEC Documents) that has not been
disclosed in writing to the Purchasers that (i) would reasonably be
expected to have a Material Adverse Effect, (ii) would reasonably be
expected to materially and adversely affect the ability of the
Company to perform its obligations pursuant to this Agreement, the
Certificate of Designation or any of the agreements or instruments
contemplated hereby (collectively, including this Agreement, the
"Transaction Documents"), or (iii) would reasonably be expected to
materially and adversely affect the value of the rights granted to
the Purchasers in the Transaction Documents.
j. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries, wherein
an unfavorable decision, ruling or finding would have a Material
Adverse Effect or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company and its
subsidiaries taken as a whole to perform its obligations under, any
of the Transaction Documents. Neither the Company nor any of its
subsidiaries is a party to or subject to the provisions of, any
order, writ, injunction, judgement or decree of any court or
government agency or instrumentality which could reasonably be
expected to have a Material Adverse Effect.
k. Absence of Events of Default. Except as disclosed in the
Company's SEC Documents, no Event of Default (or its equivalent
term), as defined in the respective agreement, indenture, mortgage,
deed of trust or other instrument, to which the Company or any of its
subsidiaries is a party, and no event which, with the giving of
notice or the passage of time or both, would become an Event of
Default (or its equivalent term) (as so defined in such document),
has occurred and is continuing, which would have a Material Adverse
Effect.
l. Prior Issues. Except as set forth in the Company's SEC
Documents, during the twelve (12) months preceding the date hereof,
the Company has not issued any convertible securities or any shares
of Common Stock or preferred stock of any series.
m. No Undisclosed Liabilities or Events. The Company has no
liabilities or obligations other than those disclosed in the
Company's SEC Documents or those incurred in the ordinary course of
the Company's business since December 31, 2004, and which
individually or in the aggregate, do not or would not have a Material
Adverse Effect. No event or circumstances has occurred or exists
with respect to the Company or its properties, business, condition
(financial or otherwise), or results of operations, which, under
applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed. There are no proposals
currently under consideration or currently anticipated to be under
consideration by the Board of Directors or the executive officers of
the Company which proposal would (x) change the articles of
incorporation, by-laws or any other charter document of the Company,
each as currently in effect, with or without shareholder approval,
which change would reduce or otherwise adversely affect the rights
and powers of the shareholders of the Common Stock or (y) materially
or substantially change the business, assets or capital of the
Company, including its interests in subsidiaries.
n. No Default. Neither the Company nor any of its
subsidiaries is in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in
any material indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it or its
property is bound.
o. No Integrated Offering. Neither the Company nor any of
its affiliates nor any person acting on its or their behalf has,
directly or indirectly, at any time since May 31, 2004 made any offer
or sales of any security or solicited any offers to buy any security
under circumstances that would eliminate the availability of the
exemption from registration under Rule 506 of Regulation D in
connection with the offer and sale of the Securities as contemplated hereby.
p. Dilution. The number of Shares issuable upon conversion
of the Shares may increase substantially in certain circumstances,
including, but not necessarily limited to, the circumstance wherein
the market price of the Common Stock declines prior to the conversion
of the Shares. The Company's executive officers and directors have
studied and fully understand the nature of the securities being sold
hereby and recognize that they have a potential dilutive effect and
further that the conversion of the Shares and/or sale of the
Conversion Shares may have an adverse effect on the market price of
the Common Stock. The board of directors of the Company has
concluded, in its good faith business judgment, which such issuance
is in the best interests of the Company. The Company specifically
acknowledges that its obligation to issue the Conversion Shares upon
conversion of the Shares is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.
q. Regulatory Permits. The Company has all such permits,
easements, consents, licenses, franchises and other governmental and
regulatory authorizations from all appropriate federal, state, local
or other public authorities ("Permits") as are necessary to own and
lease its properties and conduct its businesses in all material
respects in the manner described in the Registration Statement and as
currently being conducted. All such Permits are in full force and
effect and the Company has fulfilled and performed all of its
material obligations with respect to such Permits, and no event has
occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or will result in any other
material impairment of the rights of the holder of any such Permit,
subject in each case to such qualification as may be disclosed in the
Prospectus. Such Permits contain no restrictions that would
materially impair the ability of the Company to conduct businesses in
the manner consistent with its past practices. The Company has not
received notice or otherwise has knowledge of any proceeding or
action relating to the revocation or modification of any such Permit.
r. Hazardous Materials. The Company is in compliance with
all applicable Environmental Laws in all respects except where the
failure to comply does not have and could not reasonably be expected
to have a Material Adverse Effect. For purposes of the foregoing:
"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986,
the Resource Conservation and Recovery Act, the Toxic Substances
Control Act, as amended, the Clean Air Act, as amended, the Clean
Water Act, as amended, any other "Superfund" or "Superlien" law or
any other applicable federal, state or local statute, law, ordinance,
code, rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning, the
environment or any Hazardous Material.
"Hazardous Material" means and includes any hazardous,
toxic or dangerous waste, substance or material, the generation,
handling, storage, disposal, treatment or emission of which is
subject to any Environmental Law.
s. Independent Public Accountants. Squar, Milner, Xxxxx &
Xxxxxxxxxx, LLP, of Newport Beach California, who has audited the
consolidated financial statements of the Company, including the notes
thereto, included in the Company's Annual Reports on Form 10-KSB for
the year ended December 31, 2004, is an independent registered public
accounting firm with respect to the Company, as required by the 1934
Act and the 1934 Act, the 1933 Act and the rules and regulations
promulgated thereunder.
t. Internal Accounting Controls. The Company maintains a
system of internal accounting controls sufficient to provide
reasonable assurances that (1) transactions are executed in
accordance with management's general or specific authorization; (2)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (3) access to
assets is permitted only in accordance with management's general or
specific authorization; and (4) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
u. No Brokers. The Company has not engaged any person to
act on its behalf in connection with the purchase and sale of the
Shares to the Purchasers hereunder and no person is entitled to
receive any consideration from the Company or any Purchaser arising
from any finder's agreement, brokerage agreement or other agreement
to which the Company is a party.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Purchaser acknowledges that
(1) the Shares have not been and are not being registered under the
provisions of the 1933 Act and, except as provided in the
Registration Rights Agreement, the Shares and the Conversion Shares
have not been and are not being registered under the 1933 Act, and
may not be transferred unless (A) subsequently registered thereunder
or (B) the Purchasers shall have delivered to the Company an opinion
of counsel, reasonably satisfactory in form, scope and substance to
the Company, to the effect that the Shares or Conversion Shares to be
sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities made
in reliance on Rule 144 promulgated under the 1933 Act may be made
only in accordance with the terms of said Rule and further, if said
Rule is not applicable, any resale of such Shares or Conversion
Shares under circumstances in which the seller, or the person through
whom the sale is made, may be deemed to be an underwriter, as that
term is used in the 1933 Act, may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC
thereunder and (4) neither the Company nor any other person is under
any obligation to register the Securities (other than pursuant to the
Registration Rights Agreement) under the 1933 Act or to comply with
the terms and conditions of any exemption thereunder.
b. Restrictive Legend. The Purchaser acknowledges and agree
that the Shares and the Conversion Shares, and, until such time as
the Shares and/or the Conversion Shares have been registered under
the 1933 Act as contemplated by the Registration Rights Agreement and
sold in accordance with an effective Registration Statement,
certificates and other instruments representing any of the Securities
shall bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of any such
Securities):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
c. Registration Rights Agreement. The parties hereto agree
to enter into the Registration Rights Agreement on or before the
Closing Date.
d. Filings. The Company undertakes and agrees to make all
necessary filings in connection with the sale of the Securities to
the Purchasers required under any United States laws and regulations
applicable to the Company (including without limitation state "blue
sky" laws), or by any domestic securities exchange or trading market,
and to provide a copy thereof to the Purchasers promptly after such filing.
e. Reporting Status. So long as the Purchaser beneficially
owns any of the Securities, the Company shall make its best effort to
timely file prior to or on the date when due all reports required to
be filed with the SEC pursuant to Section 13 or 15(d) of the 1934
Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or
the rules and regulations thereunder would permit such termination.
Except as otherwise set forth in this Agreement and the Transaction
Documents, the Company will take all reasonable action under its
control to obtain and to continue the listing and trading of its
Common Stock (including, without limitation, all Registrable
Securities) on the OTC Bulletin Board Market of the National
Association of Securities Dealers, Inc. and will comply in all
material respects with the Company's reporting, filing and other
obligations under the by-laws or rules of the National Association of
Securities Dealers, Inc. ("NASD").
f. Use of Proceeds. The Company will use the proceeds from
the sale of the Shares (excluding amounts paid by the Company for
fees to the Placement Agent and legal fees payable in connection with
the sale of the Shares) for internal working capital purposes.
g. Available Shares. The Company shall have at all times
authorized and reserved for issuance, free from preemptive rights,
shares of Common Stock equal to three hundred percent (300%) of the
number of Conversion Shares issuable upon conversion of the then-
outstanding Shares (including accrued interest thereon) as may be
required to satisfy the conversion rights of the Purchasers pursuant
to the terms and conditions of the Shares. The Company shall provide
to the Purchasers a certification to certifying the amount of shares
reserved as Conversion Shares. If at any time, the Company does not
have available an amount of authorized and non-issued shares of
Common Stock necessary to satisfy full conversion of the then
outstanding amount of the Shares, the Company shall, without notice
or demand by the Purchasers, call within thirty (30) days of such
occurrence and hold within sixty (60) days of such occurrence a
special meeting of shareholders, for the sole purpose of increasing
the number of shares of Common Stock authorized. Management of the
Company shall recommend to shareholders to vote in favor of
increasing the number of Common Stock authorized. Members of the
Company's Management shall also vote all of their own shares in favor
of increasing the number of Common Stock authorized. Alternatively,
to the extent permitted by applicable law, the Company may procure
the written consent of stockholders to increase the number of shares
authorized, and provide the stockholders with notice thereof as may
be required under applicable law (including without limitation
Section 14(c) of the 1934 Act and Regulation 14C thereunder). Upon
obtaining stockholder approval as aforesaid, the Company shall cause
the appropriate increase in its authorized shares of Common Stock
within one business day or as soon thereafter as permitted by
applicable law.
h. Reimbursement. If (i) any Purchaser, other than by
reason of its gross negligence, willful misconduct or breach of law,
becomes a party defendant in any capacity in any action or proceeding
brought by any stockholder of the Company, in connection with or as a
result of the consummation of the transactions contemplated by the
Transaction Documents, or if such Purchaser is named in any such
action, proceeding or investigation by any Person, or (ii) any
Purchaser, other than by reason of its gross negligence, willful
misconduct or breach of law, becomes a party defendant in any
capacity in any action or proceeding brought by the SEC against or
involving the Company or in connection with or as a result of the
consummation of the transactions contemplated by the Transaction
Documents, or if such Purchaser is named in any such action,
proceeding or investigation by any Person, then in any such case, the
Company will reimburse such Purchaser for its reasonable legal and
other expenses (including the cost of any investigation and
preparation) incurred in connection therewith. The reimbursement
obligations of the Company under this paragraph shall be in addition
to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any affiliates of the Purchaser
who are actually named in such action, proceeding or investigation,
and partners, directors, agents, employees and controlling persons
(if any), as the case may be, of the Purchaser and any such
Affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the
Company, the Purchasers and any such Affiliate and any such Person.
Except as otherwise set forth in the Transaction Documents, the
Company also agrees that neither any Purchaser nor any such
Affiliate, partners, directors, agents, employees or controlling
persons shall have any liability to the Company or any person
asserting claims on behalf of or in right of the Company in
connection with or as a result of the consummation of the Transaction
Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the gross
negligence or willful misconduct of such Purchaser or from a breach
of the representations, covenants and conditions contained herein or
from a breach of law.
i. No Integrated Offerings. The Company hereby covenants
and agrees that it neither the Company nor any of its affiliates or
subsidiaries nor any person acting on its or their behalf shall,
directly or indirectly, at any time make any offer or sales of any
security or solicit any offers to buy any security under
circumstances that would eliminate the availability of the exemption
from registration under Rule 506 of Regulation D in connection with
the Offering.
5. TRANSFER AGENT INSTRUCTIONS.
a. Promptly following the purchase by the Purchaser of the
Shares in accordance with Section 1(c) hereof, the Company will
irrevocably instruct its transfer agent in writing to (i) reserve
that number of shares of Common Stock as is equal to three hundred
percent (300%) of the number of shares of Common Stock issuable upon
conversion of the then-outstanding Shares (including accrued interest
thereon) as may be required to satisfy the conversion rights of the
Purchaser pursuant to the terms and conditions of the Shares, and
(ii) issue Common Stock from time to time upon conversion of the
Shares in such amounts as specified from time to time by the Company
to the transfer agent, bearing the restrictive legend specified in
Section 4(b) of this Agreement prior to registration of the Shares
under the 1933 Act, registered in the name of the respective
Purchaser or its permitted assigns and in such denominations to be
specified by such Purchaser in connection with each conversion of the
Shares. The Company warrants and covenants that if the Purchaser is
not in breach of the representations and warranties contained in this
Agreement, no instruction other than such instructions referred to in
this Section 5 and stop transfer instructions to give effect to
Section 4(a) hereof prior to registration and sale of the Conversion
Shares under the 1933 Act will be given by the Company to the
transfer agent and that the Conversion Shares shall otherwise be
freely transferable on the books and records of the Company as and to
the extent provided in this Agreement, the Registration Rights
Agreement, and applicable law. Nothing in this Section shall affect
in any way the Purchaser's obligations and agreement to comply with
all applicable securities laws upon resale of the Securities. If any
Purchaser provides the Company with an opinion of counsel reasonably
satisfactory to the Company that registration of a resale by such
Purchaser of any of the Securities in accordance with clause (1)(B)
of Section 4(a) of this Agreement is not required under the 1933 Act,
the Company shall (except as provided in clause (2) of Section 4(a)
of this Agreement) permit the transfer of the Securities (as the case
may be) and, in the case of the Conversion Shares, instruct the
Company's transfer agent to issue one or more certificates for Common
Stock without legend in such name and in such denominations as
specified by the Purchaser.
b. (i) The Company will permit the Purchaser to exercise
their rights to convert the Shares by faxing or delivering an
executed and completed Notice of Conversion to the Company. The
Company will within two (2) Business Days respond with its
endorsement so as to confirm the number of Shares held by such
Purchaser after giving effect to such conversion or shall reconcile
any difference with the Purchaser promptly after receiving such
Notice of Conversion.
(ii) The term "Conversion Date" means, with respect to any
conversion elected by the holder of the Shares, the date specified in
the Notice of Conversion, provided the copy of the Notice of
Conversion is given either via mail or facsimile to or otherwise
delivered to the Company in accordance with the provisions hereof so
that it is received by the Company on or before such specified date.
(iii) The Company will transmit the certificates
representing the Conversion Shares issuable upon conversion of any
Shares (together, unless otherwise instructed by the Purchaser, with
Shares not being so converted) to the Purchaser at the address
specified in the Notice of Conversion (which may be the Purchaser's
address for notices as contemplated by Section 12 hereof or a
different address) via express courier, by electronic transfer or
otherwise, within five (5) business days if the address for delivery
is in the United States and within seven (7) business days if the
address for delivery is outside the United States (such fifth
business day or seventh business day, as the case may be, the
"Delivery Date") after (A) the business day on which the Company has
received both of the Notice of Conversion (by facsimile or other
delivery) and the original certificate representing those Shares
being converted (and if the same are not delivered to the Company on
the same date, the date of delivery of the second of such items) or
(B) the date a dividend payment on the Shares, which the Company has
elected to pay by the issuance of Common Stock, as contemplated by
the Shares, was due.
c. From and after the date on which the Conversion Shares
have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement, the failure to issue unrestricted,
freely tradable Common Stock to the Purchasers upon conversion shall
be considered an Event of Default, which if not cured after ten (10)
days prior written notice, shall entitle the Purchasers (or any of
them) to demand that the Shares held by them be immediately redeemed
by a cash payment equal to 131% of the aggregate of the Purchase
Price paid for such Shares, together with all accrued but unpaid
dividends thereon (whether or not the terms of such Shares expressly
permit the redemption thereof). The foregoing shall be in addition
to any other remedies available to the Purchasers at law or in equity
(including without limitation the right to recover additional amounts
as compensation for any demonstrable damages (such as loss on buy-in)
that the Purchasers may suffer. The Company acknowledges that the
failure to honor a Notice of Conversion shall cause definable
financial hardship on the Purchaser.
d. The Company will authorize its transfer agent to provide
information to a Purchaser or such Purchaser's representative (which
may be the Placement Agent) relating to the transfer of the Company's
shares of Common Stock to the Purchaser, upon the reasonable request
of the Purchaser or any such representative. The Company will
provide such Purchaser with a copy of the authorization so given to
the transfer agent.
e. Each Purchaser shall be entitled to exercise its
conversion privilege with respect to the Shares notwithstanding the
commencement of any case under 11 U.S.C. 101 et seq. (the
"Bankruptcy Code"). In the event the Company is a debtor under the
Bankruptcy Code, the Company hereby waives, to the fullest extent
permitted, any rights to relief it may have under 11 U.S.C. 362 in
respect of such Purchaser's conversion privilege. The Company hereby
waives, to the fullest extent permitted, any rights to relief it may
have under 11 U.S.C. 362 in respect of the conversion of the Shares.
The Company agrees, without cost or expense to such Purchaser, to
take or to consent to any and all action necessary to effectuate
relief under 11 U.S.C. 362.
6. CLOSING DATE.
a. The purchases and sales of Shares will occur at a single
Closing under this Agreement, which shall occur after Purchasers have
deposited, in the aggregate, $290,000, representing the aggregate
Purchase Price of the Shares being issued and sold under this
Agreement, in the Escrow for the transactions contemplated under this
Agreement, on the Closing Date.
b. The Closing Date shall occur on or after the date (as
determined by the Placement Agent, acting in its sole discretion)
after each of the conditions contemplated by Sections 7 and 8 hereof
shall have either been satisfied or been waived by the party in whose
favor such conditions run.
c. The Closing of the purchase and issuance of Shares shall
occur on the respective Closing Date and shall take place no later
than 3:00 P.M., New York time, on such day or such other time as is
mutually agreed upon by the Company and the Purchaser.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Company's obligation to sell the Shares to the Purchaser at
the Closing on the Closing Date is conditioned upon:
a. Delivery from the Escrow to the Company of good funds as
payment in full of an amount equal to the Purchase Price for the
Shares in accordance with this Agreement;
b. The accuracy on the Closing Date of the representations
and warranties of the Purchasers contained in this Agreement, each as
if made on such date, and the performance by the Purchasers on or
before such date of all covenants and agreements of the Purchasers
required to be performed on or before such date; and
c. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or
requiring any consent or approval which shall not have been obtained.
8. CONDITIONS TO THE BUYERS' OBLIGATION TO PURCHASE.
The Purchaser's obligation of the Purchaser who is purchasing
Shares at the Closing on the Closing Date is conditioned upon:
a. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Company;
b. The Certificate of Designation shall have been filed by
the Company with the Secretary of State of the State of Nevada, said
Secretary shall have accepted the Certificate of Designation filing,
and the Company shall have delivered evidence of the same to the
Purchasers;
c. Delivery by the Company to the Purchaser of the Shares to
be purchased in accordance with this Agreement;
d. Delivery by the Company to the Purchasers of an opinion
of counsel to the Company, substantially in the form attached hereto
as Exhibit D and dated as of the Closing Date;
e. The accuracy in all material respects on the Closing Date
of the representations and warranties of the Company contained in
this Agreement, each as if made on such date, and the performance by
the Company on or before such date of all covenants and agreements of
the Company required to be performed on or before such date;
f. The Company shall have duly authorized the transactions
contemplated by the Transaction Documents (including without
limitation the issuance and sale of the Shares and the reservation of
the Common Stock as contemplated by Section 4(b);
g. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or
requiring any consent or approval which shall not have been obtained; and
h. From and after the date hereof to and including the
Closing Date, the trading of the Common Stock shall not have been
suspended by the SEC or the NASD and trading in securities generally
on the New York Stock Exchange or The NASDAQ/National Market System
shall not have been suspended or limited, nor shall minimum prices
been established for securities traded on The NASDAQ/National Market
System, nor shall there be any outbreak or escalation of hostilities
involving the United States or any material adverse change in any
financial market that in either case in the reasonable judgment of
the Purchasers makes it impracticable or inadvisable to purchase the Shares;
i. The Company shall have delivered to the Purchaser a
certification by its Secretary as to the matters set forth in
Sections 8(e) through (h) and as to the incumbency of those of its
officers who executed each Transaction Document on behalf of the Company.
9. GOVERNING LAW; MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York for contracts to be
wholly performed in such state and without giving effect to the
principles thereof regarding the conflict of laws. Each of the
parties consents to the jurisdiction of the federal courts whose
districts encompass any part of the City of New York or the state
courts of the State of New York sitting in the City and County of New
York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions. To the extent
determined by such court, the Company shall reimburse the Purchaser
for any reasonable legal fees and disbursements incurred by the
Purchaser in enforcement of or protection of any of its rights under
any of the Transaction Documents.
b. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof.
c. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto.
d. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
e. A facsimile transmission of this signed Agreement shall
be legal and binding on all parties hereto.
f. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original.
g. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation
of, this Agreement.
h. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement or the validity or enforceability of
this Agreement in any other jurisdiction.
i. This Agreement may be amended only by the written consent
of a majority in interest of the holders of the Shares and an
instrument in writing signed by the Company.
j. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject
matter hereof.
10. NOTICES.
Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of
a. the date delivered, if delivered by personal delivery as
against written receipt therefor or by confirmed facsimile
transmission,
b. the seventh business day after deposit, postage prepaid,
in the United States Postal Service by registered or certified mail, or
c. the third business day after mailing by next-day express
courier, with delivery costs and fees prepaid, in each case,
addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may
designate by ten (10) days' advance written notice similarly given to
each of the other parties hereto):
COMPANY:
5G Wireless Communications, Inc.
ATTN: Xxxxx Xxx, Chief Executive Officer
0000 Xxx Xxx Xxxxxx
Xxxxxx xxx Xxx, XX 00000
Fax No. 000-000-0000
With copies to
Xxxxx X. Xxxxxxxx, Esq.
00000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx Xxxxxxxxxx, XX 00000
Fax No. 000-000-0000
PURCHASERS:
At the address set forth on the signature page of this Agreement.
With copies to:
Castellum Investments, S.A.
ATTN: Xxxxxx Xxxxxxx
0 Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxxx
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and
the Purchasers' representations and warranties herein shall survive
for a period of fifteen (15) months after the execution and delivery
of this Agreement and shall inure to the benefit of the Purchasers
and the Company and their respective successors and assigns.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Purchasers and the Company as of the date set forth below.
Date: May 30, 2006
COMPANY:
5G WIRELESS COMMUNICATIONS, INC.
By: /s/ Xxxxx Xxx
Name: Xxxxx Xxx
Title: Chief Executive Officer
PURCHASER:
Name: Castellum Investments, S.A.
By: /s/ Xxxxxx Xxxxxxx
(Signature of Authorized Person)
Printed Name: Xxxxxx Xxxxxxx
Address: 0 Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxxx
EXHIBIT A
CERTIFICATE OF DESIGNATION
OF
10% SERIES B CONVERTIBLE PREFERRED STOCK
OF
5G WIRELESS COMMUNICATIONS, INC.
Pursuant to Section 78.195 of the
Revised Statutes of the State of Nevada
5G WIRELESS COMMUNICATIONS, INC., a corporation organized and
existing under the laws of the State of Nevada (the "Corporation"),
does hereby certify that, pursuant to the authority conferred on its
board of directors (the "Board of Directors") by its articles of
incorporation (the "Articles of Incorporation"), as amended, and in
accordance with Section 78.195 of the Revised Statutes of the State
of Nevada ("NRS"), the Board of Directors (or, as to certain matters
allowed by law, a duly authorized committee thereof) adopted the
following resolution establishing a series of 5,000,000 shares of
Preferred Stock of the Corporation designated as "10% Series B
Convertible Preferred Stock."
RESOLVED, that pursuant to the authority conferred on the Board
of Directors of this Corporation (the "Corporation") by the Articles
of Incorporation, a series of Preferred Stock, $0.001 par value, of
the Corporation be and hereby is established and created, and that
the designation and number of shares thereof and the voting and other
powers, preferences and relative, participating, optional or other
rights of the shares of such 10% Series B and the qualifications,
limitations and restrictions thereof are as follows:
Convertible Preferred Stock
1. Designation and Amount. There shall be a series of Preferred
Stock designated as "10% Series B Convertible Preferred Stock," and
the number of shares constituting such series shall be 5,000,000.
Such series is referred to herein as the "Convertible Preferred Stock."
2. Stated Capital. The amount to be represented in stated capital
at all times for each share of Convertible Preferred Stock shall be $.001.
3. Rank. All shares of Convertible Preferred Stock shall rank
prior to all of the Corporation's Common Stock, par value $.001 per
share (the "Common Stock"), now or hereafter issued, both as to
payment of dividends and as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary.
4. Dividends.
(a) Dividends on the Convertible Preferred Stock shall accrue
and shall be cumulative from the date of issuance of the Convertible
Preferred Stock (the "Dividend Commencement Date"). For each
outstanding share of Convertible Preferred Stock, dividends shall be
payable cumulatively, at the rate of 10% per annum multiplied by
$1.00 (subject to adjustment as appropriate in the event of
recapitalizations, reclassifications stock splits, stock dividends,
divisions of shares and similar events) (the "Face Amount"), (a) upon
any conversion (regardless of whether it is an Optional Conversion or
a Mandatory Conversion) for each share of Convertible Preferred
Stock, and (b) within thirty (30) days following March 31, June 30,
September 30 and December 31 of each year (each, a "Dividend Payment
Date"), commencing on March 31, 2006 and continuing until such share
is fully converted or fully redeemed, except that if any Dividend
Payment Date is not a business day, then such Dividend Payment Date
shall be the immediately preceding business day. Payment of the
Dividend shall be made at the Corporation's election (i) in cash, or
(ii) if all of the Required Stock Dividend Conditions (as defined
below) are satisfied, in such number of shares of Common Stock
determined by dividing the amount of the dividend by an amount equal
to eighty-five percent (85%) of the lowest close bid of the Common
Stock as reported by the Trading Market for the twenty (20) trading
days preceding the Dividend Payment Date.
(b) The "Required Stock Dividend Conditions" shall consist of
the following:
(i) The shares of Common Stock to be issued have been
registered as set forth in Section 13;
(ii) All shares of Common Stock issuable upon conversion of
the Convertible Preferred Stock to be issued as a dividend are
then (a) authorized and reserved for issuance and (b) eligible
for trading on a Trading Market; and
(iii) All amounts, if any, then accrued or payable under
this Certificate of Designation or the Registration Rights
Agreement shall have been paid.
5. Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution, or winding-up of the
Corporation, or if the Corporation consummates a sale, lease, or
other distribution of all or substantially all of its assets (in a
single transaction or in a series of related transactions) or a
merger or other business combination wherein the holders of voting
securities of the Corporation immediately prior to such transaction
hold fewer than 50% of the voting securities of the surviving or
successor corporation resulting from such transaction (each, a
"Liquidating Event"), then after distribution in full of the
preferential amounts, if any, to be distributed to the holders of
shares of any series or class of preferred stock, created prior to
the date hereof having by their express terms a priority on
liquidation superior to that of the Convertible Preferred Stock, the
holders of shares of Convertible Preferred Stock ("Holders") shall be
entitled to receive, in preference to the Holders of shares of any
series or class of preferred stock created after the date hereof and
in preference to the Holders of the Common Stock out of the remaining
assets of the Corporation available for distribution to its
stockholders, an amount per share of Convertible Preferred Stock
equal to the greater of (i) $1.50 per share (subject to adjustment as
appropriate in the event of recapitalizations, reclassifications
stock splits, stock dividends, divisions of shares and similar
events), plus all accrued, accumulated and unpaid dividends and
distributions thereon, (ii) such amount per share of Convertible
Preferred Stock as would have been payable had each such share been
tendered by the Holder for conversion into Common Stock immediately
prior to such Liquidating Event and (iii) if the Liquidating Event is
a Reorganization Event (as defined herein), such amount per share as
is payable pursuant to Section 8 hereof. If the assets of the
Corporation are insufficient to pay the entire liquidation amounts
payable to the Holders of the Convertible Preferred Stock as
aforesaid, then the Corporation shall distribute such assets to the
Holders of the Convertible Preferred Stock on a pro rata basis.
After payment in full of the liquidation amounts payable to the
Holders of the Convertible Preferred Stock as aforesaid, the
Corporation shall distribute any remaining assets to the Holders of
Common Stock in proportion to the number of shares of Common Stock
held by them.
6. Rights of Convertible Preferred Stock Holders.
(a) Voting Rights. Except as otherwise required by law, each
share of outstanding Convertible Preferred Stock shall entitle the
Holder thereof to vote on each matter submitted to a vote of the
stockholders of the Corporation and to have the number of votes equal
to the number (including any fraction) of shares of Common Stock into
which such share of Convertible Preferred Stock is then convertible
pursuant to the provisions hereof at the record date for the
determination of stockholders entitled to vote on such matters or, if
no such record date is established, at the date such vote is taken or
any written consent of stockholders becomes effective. Except as
otherwise required by law or by this Certificate, the Holders of
shares of Common Stock and Convertible Preferred Stock shall vote
together and not as separate classes.
(b) Dividends. If any dividend or other distribution payable
in cash, securities or other property, including a dividend payable
in shares of Common Stock, is declared on the Common Stock, each
Holder on the record date for such dividend or distribution shall be
entitled to receive on the date of payment or distribution of such
dividend or other distribution the same cash, securities or other
property which such Holder would have received on such record date if
such Holder was the Holder of record of the number (including any
fraction) of shares of Common Stock into which the shares of
Convertible Preferred Stock then held by such Holder are then
convertible. No dividend or other distribution shall be declared or
paid on the Common Stock unless an equivalent dividend or other
distribution that satisfies this Section 4 is declared or paid on the
Convertible Preferred Stock.
7. Mandatory Redemption at Holder's Election. In the event the
Corporation is prohibited from issuing shares of Common Stock upon
conversion of the Convertible Preferred Stock, then at the Holder's
election, the Corporation must pay to the Holder within ten (10)
business days after request by the Holder, that sum of money
determined by multiplying the unconverted Face Amount, together with
accrued but unpaid dividends thereon, of the amount of shares of
Convertible Preferred Stock designated by the Holder for mandatory
redemption by 110%.
8. Conversion Provisions.
(a) Conversion at Option of Holder. Provided that, and only to
the extent that, the Corporation has a sufficient number of shares of
authorized but unissued and unreserved Common Stock available to
issue upon conversion, each share of Convertible Preferred Stock
shall be convertible at the option of the Holder thereof, at any time
prior to the close of business on the date fixed by the Corporation
for redemption or conversion of such share as herein provided, into
fully paid and nonassessable shares of Common Stock and such other
securities and property as hereinafter provided, at a per share
conversion price (the "Conversion Price") equal to the lesser of: (i)
if converted without benefit of a registration statement, the
conversion price will be equal to seventy-five percent (75%) of the
lowest close bid of the Common Stock as reported by the market or
exchange on which the Common Stock is listed or quoted for trading or
quotation on the date in question (for example, the Nasdaq SmallCap
Market, the Over-the-Counter Bulletin Board, the American Stock
Exchange, the New York Stock Exchange or the Nasdaq National Market
(as applicable, the "Trading Market") for the twenty (20) trading
days preceding the Conversion Date for each full share of
Convertible Preferred Stock held; (ii) if converted with the benefit
of a registration statement, the conversion price will be equal to
eighty-five percent (85%) of the lowest close bid of the Common Stock
as reported by the Trading Market for the twenty (20) trading days
preceding the Conversion Date for each full share of Convertible
Preferred Stock held; or (iii) the Face Amount per share.
For the purpose of this Certificate of Designation, the term "Common
Stock" shall initially mean the class designated as Common Stock, par
value $.001 per share, of the Corporation as of January 1, 2006,
subject to adjustment as hereinafter provided.
(b) Mandatory Conversion. Upon the occurrence of a
Reorganization Event, each outstanding share of Convertible Preferred
Stock shall automatically be converted, at the Corporation's expense
and without cost to the Holder, on the terms set forth in this
Section into the number of fully paid and non-assessable shares of
Common Stock as specified by the Conversion Price that is in effect
at the time of conversion. A "Reorganization Event" shall be deemed
to occur upon either (i) effectiveness of a filing in the office of
the Secretary of State of Nevada, or such other state in which the
Corporation is legally domiciled, of Articles of Merger or
Consolidation of the Corporation into or with another corporation, as
a result of which the Corporation's existence shall be deemed to
cease; (ii) a transfer or conveyance of substantially all of the
assets of the Corporation to an unrelated person, provided however
that a transfer of the assets and business of the Corporation to a
wholly-owned subsidiary formed for that purpose shall not be deemed a
Reorganization event, or (iii) the effective date of any other
corporate action that results in the distribution to the shareholders
of the Corporation of a significant portion of the assets or business
of the Corporation, unless such action results in a distribution to
the Holders of the Convertible Preferred Stock of a proportionate
part of such assets or business, as specified by the Conversion Price
that is in effect at the time of such distribution.
(c) Mechanics of Conversion.
(i) Optional Conversion. Any Holder of shares of
Convertible Preferred Stock desiring to convert such shares into
Common Stock shall surrender the certificate or certificates for
such shares of Convertible Preferred Stock at the office of the
transfer agent for the Convertible Preferred Stock, which
certificate or certificates, if the Corporation shall so
require, shall be duly endorsed to the Corporation or in blank,
or accompanied by proper instruments of transfer to the
Corporation or in blank, accompanied by irrevocable written
notice to the Corporation that the Holder elects so to convert
such shares of Convertible Preferred Stock and specifying the
name or names (with address) in which a certificate or
certificates for Common Stock are to be issued.
No adjustments in respect of any dividend on the Common
Stock issued upon conversion shall be made upon the conversion
of any shares of Convertible Preferred Stock.
Any unpaid dividends on shares surrendered for conversion
shall be paid upon the conversion of any shares of Convertible
Preferred Stock by issuing additional shares of Common Stock
with an aggregate value (as defined below) equal to all accrued
and unpaid dividends on the shares of Convertible Preferred
Stock converted.
The Corporation will, as soon as practicable after such
deposit of certificates for Convertible Preferred Stock
accompanied by the written notice and, compliance with any other
conditions herein contained, deliver at the office of the
transfer agent to the person for whose account such shares of
Convertible Preferred Stock were so surrendered, or to his
nominee or nominees, certificates for the number of full shares
of Common Stock to which he shall be entitled as aforesaid,
together with a cash adjustment of any fraction of a share as
hereinafter provided. Subject to the following provisions of
this paragraph, such conversion shall be deemed to have been
made as of the date of such surrender of the shares of
Convertible Preferred Stock to be converted, and the person or
person entitled to receive the Common Stock deliverable upon
conversion of such Convertible Preferred Stock shall be treated
for all purposes as the record Holder or Holders of such Common
Stock on such date; provided, however, that the Corporation
shall not be required to convert any shares of Convertible
Preferred Stock while the stock transfer books of the
Corporation are closed for any purpose, but the surrender of
Convertible Preferred Stock for conversion during any period
while such books are so closed shall become effective for
conversion immediately upon the reopening of such books as if
the surrender had been made on the date of such reopening, and
the conversion shall be at the conversion rate in effect on such date.
(ii) Mandatory Conversion. The Corporation shall give
written notice to each Holder of a share of Convertible
Preferred Stock within ten (10) days after the effectiveness of
a Reorganization Event. Following the conversion of such
shares, each Holder of shares so converted may surrender the
certificate therefor at the office of the Corporation or any
transfer agent for the Convertible Preferred Stock. Upon such
surrender, the Corporation shall issue and deliver to each
Holder a certificate or certificates for the number of whole
shares of Common Stock to which such Holder is entitled. In
lieu of any fractional shares to which the Holder would
otherwise be entitled, the Corporation shall the next highest
whole number of shares of Common Stock.
The conversion of shares of Convertible Preferred Stock
shall be effective simultaneously with the effectiveness of a
Reorganization Event, whether or not the certificates
representing such shares of Convertible Preferred Stock shall
have been surrendered or new certificates representing the
shares of Common Stock into which such shares have been
converted shall have been issued and the person or persons
entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record
Holder or Holders of such shares of Common Stock on such date.
Any dividends or distributions declared but unpaid on the Common
Stock to which the Convertible Preferred Stock is entitled
pursuant to Section 64 above, shall be paid on the payment date therefore.
9. Protective Provisions.
(a) Reservation of Shares; Transfer Taxes; Etc. The
Corporation shall at all times serve and keep available, out of its
authorized and unissued stock, solely for the purpose of effecting
the conversion of the Convertible Preferred Stock, such number of
shares of its Common Stock free of preemptive rights as shall from
time to time be sufficient to effect the conversion of all shares of
Convertible Preferred Stock from time to time outstanding. The
Corporation shall from time to time, in accordance with the laws of
the State of Nevada, increase the authorized number of shares of
Common Stock if at any time the number of shares of Common Stock not
outstanding shall not be sufficient to permit the conversion of all
the then outstanding shares of Convertible Preferred Stock.
If any shares of Common Stock required to be reserved for
purposes of conversion of the Convertible Preferred Stock hereunder
require registration with or approval of any governmental authority
under any Federal or State law before such shares may be issued upon
conversion, the Corporation will in good faith and as expeditiously
as possible endeavor to cause such shares to be duly registered or
approved, as the case may be. If the Common Stock is listed on the
New York Stock Exchange or any other national securities exchange,
the Corporation will, if permitted by the rules of such exchange,
list and keep listed on such exchange, upon official notice of
issuance, all shares of Common Stock issuable upon conversion of the
Convertible Preferred Stock.
The Corporation will pay any and all issue or other taxes
that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of the Convertible Preferred Stock. The
Corporation shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue or
delivery of Common Stock (or other securities or assets) in a name
other than that which the shares of Convertible Preferred Stock so
converted were registered, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to
the Corporation the amount of such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(b) Prior Notice of Certain Events. In case:
(i) The Corporation shall (1) declare any dividend (or any
other distribution) on its Common Stock, other than (A) a
dividend payable in shares of Common Stock or (B) a dividend
payable in cash out of its retained earnings other than any
special or nonrecurring or other extraordinary dividend or (2)
declare or authorize a redemption or repurchase of in excess of
10% of the than-outstanding shares of Common Stock; or
(ii) the Corporation shall authorize the granting to the
Holders of Common Stock of rights or warrants to subscribe for
or purchase any shares of stock of any class or of any other
rights or warrants (other than any rights specified in paragraph
(c)(i)(1)(B) of this Section 9); or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from
no par value to par value), or of any consolidation or merger to
which the Corporation is a party and for which approval of any
stockholders of the Corporation shall be required, or of the
sale or transfer of all or substantially all of the assets of
the Corporation or of any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or other
property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer
agent for the Convertible Preferred Stock, and shall cause to be
mailed to the Holders of record of the Convertible Preferred
Stock, at their last address as they shall appear upon the stock
transfer books of the Corporation, at least 15 days prior to the
applicable record date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption or granting of rights or
warrants or, if a record is not to be taken, the date as of
which the Holders of Common Stock of record to be entitled to
such dividend, distribution, redemption, rights or warrants are
to be determined, or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that
Holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer, share exchange, dissolution, liquidation or
winding up (but no failure to mail such notice or any defect
therein or in the mailing thereof shall affect the validity of
the corporate action required to be specified in such notice).
10. Outstanding Shares. For purposes of this Certificate of
Designation, all shares of Convertible Preferred Stock shall be
deemed outstanding except (i) from the date of surrender of
certificates representing shares of Convertible Preferred Stock, all
shares of Convertible Preferred Stock converted into Common Stock;
(ii) the effective date of a Recapitalization Event defined in
Section 8(b), and (iii) from the date of registration of transfer,
all shares of Convertible Preferred Stock held of record by the
Corporation or any subsidiary of the Corporation.
11. Securities Not Registered Under the Securities Act of 1933.
Neither the shares of Convertible Preferred Stock nor the Common
Stock issuable upon conversion thereof has been registered under the
Securities Act of 1933 or the laws of any state of the United States
and may not be transferred without such registration or an exemption
from registration.
(a) Restrictive Legends. Each share of Convertible Preferred
Stock and certificate for Common Stock issued upon the conversion of
any shares of Convertible Preferred Stock, and each preferred stock
certificate issued upon the transfer of any such shares of
Convertible Preferred Stock or Common Stock (except as otherwise
permitted by this Section 11), shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The securities represented hereby have not been
registered under the Securities Act of 1933. Such
securities may not be sold or transferred in the
absence of such registration or an exemption
therefrom under said Act."
(b) Notice of Proposed Transfer; Opinions of Counsel. Except
as provided in paragraph (c) of this Section 11, prior to any
transfer of any such shares of Convertible Preferred Stock, or Common
Stock, the Holder thereof will give written notice to the Corporation
of such Holder's intention to effect such transfer and to comply in
all other respects with this Section 11. Each such notice (A) shall
describe the manner and circumstances of the proposed transfer in
sufficient detail to enable counsel to render the opinions referred
to below, and (B) shall designate counsel for the Holder giving such
notice (who may be house counsel for such Holder). The Holder giving
such notice will submit a copy thereof to the counsel designated in
such notice and the Corporation will promptly submit a copy thereof
to its counsel, and the following provisions shall apply:
(i) If in the opinion of each such counsel the proposed
transfer of such shares of Convertible Preferred Stock or Common
Stock may be effected without registration under the Act, the
Corporation will promptly notify the Holder thereof and such
Holder shall thereupon be entitled to transfer such shares of
Convertible Preferred Stock or Common Stock in accordance with
the terms of the notice delivered by such Holder to the
Corporation. Each share of Convertible Preferred Stock or
certificate, if any, issued upon or in connection with such
transfer shall bear the appropriate restrictive legend set forth
in paragraph (a) of this Section 11, unless in the opinion of
each such counsel such legend is no longer required to insure
compliance with the Act. If for any reason counsel for the
Corporation (after having been furnished with the information
required to be furnished by this paragraph (b)) shall fail to
deliver an opinion of the Corporation, or the Corporation shall
fail to notify such Holder thereof as aforesaid, within 20 days
after counsel for such Holder shall have delivered its opinion
to such Holder (with a copy to the Corporation), then for all
purposes of this Certificate of Designation the opinion of
counsel for the Corporation shall be deemed to be the same as
the opinion of counsel for such Holder.
(ii) If in the opinion of either or both of such counsel
the proposed transfer of such shares of Convertible Preferred
Stock or Common Stock may not be effected without registration
under the Act, the Corporation will promptly so notify the
Holder thereof and thereafter such Holder shall not be entitled
to transfer such share of Convertible Preferred Stock or Common
Stock until receipt of a further notice from the Corporation
under subparagraph (i) above or, in the case of Common Stock,
until registration of such Common stock under the Act has become
effective.
12. Preemptive Rights. The Convertible Preferred Stock is not
entitled to any preemptive or subscription rights in respect of any
securities of the Corporation.
13. Registration Rights. Should the Corporation file with the
Commission a Form SB-2 registration statement (the "Registration
Statement") (or such other form that it is eligible to use) in order
to register the shares of Common Stock to be issued upon conversion
of the Convertible Preferred Stock and the shares which could be
issued upon payment of the dividends as set forth in Section 4
(collectively, "Registrable Securities") for resale and distribution
under the 1933 Act, the Registrable Securities shall be reserved and
set aside exclusively for the benefit of each Holder. Additionally,
the Registration Statement will immediately be amended or additional
registration statements will be immediately filed by the Corporation
as necessary to register additional shares of Common Stock to allow
the public resale of all Common Stock included in and issuable by
virtue of the Registrable Securities.
The Corporation will use its best efforts to register or qualify
the Registrable Securities covered by such registration statement
under the securities or "blue sky" laws of such jurisdictions as the
Holders shall request in writing, provided, however, that the
Corporation shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general
service of process in any such jurisdiction. If applicable, list the
Registrable Securities covered by such registration statement with
any securities exchange on which the Common Stock of the Corporation
is then listed.
14. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective
and valid under applicable law, but if any provision hereof is held
to be prohibited by or invalid under applicable law, such provision
shall be ineffective only the extent of such prohibition or
invalidity, without invalidating or otherwise adversely affecting the
remaining provisions hereof. If a court of competent jurisdiction
should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a
particular percentage were increased or decreased, then such court
may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
IN WITNESS WHEREOF, 5G Wireless Communications, Inc. has caused
this certificate to be signed by its Chief Executive Officer, and its
corporate seal to be hereunto affixed and attested by its Secretary,
as of the 25th day of January, 2006.
5G WIRELESS COMMUNICATIONS, INC.
By: /s/ Xxxxx Xxx
Xxxxx Xxx, Chief Executive Officer
Attest:
By: /s/ Xxx Xxxxxxxx
Xxx Xxxxxxxx, Secretary
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
(CONVERTIBLE PREFERRED STOCK)
THIS REGISTRATION RIGHTS AGREEMENT, dated as of May 30, 2006
(this "Agreement"), is made by and between 5G Wireless, Inc, a Nevada
corporation (the "Company"), a Nevada corporation (the "Company"),
having its address at 0000 Xxx Xxx Xxxxxx, Xxxxxx xxx Xxx, XX 00000,
and Castellum Investments, S.A. ("Investor").
WITNESSETH:
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement, dated as of May 30, 2006, between the
Purchaser and the Company (the "Securities Purchase Agreement"; terms
not otherwise defined herein shall have the meanings ascribed to them
in the Securities Purchase Agreement), the Company has agreed to
issue and sell to the Investor Shares in the for the aggregate
Purchase Price of $290,000; and
WHEREAS, the Shares are convertible into shares of Common Stock
(the "Conversion Shares"; which term, for purposes of this Agreement,
shall include, without limitation, shares of Common Stock of the
Company issuable in lieu of accrued dividends as contemplated by the
Shares) upon the terms and subject to the conditions contained in the
Certificate of Designations; and
WHEREAS, to induce the Investor to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the "Securities Act"), with respect
to the Conversion Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Company and the Investor hereby agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
(a) "Investor" means an Investor and any permitted
transferee or assignee who agrees to become bound by the provisions
of this Agreement in accordance with Section 9 hereof and who holds
Shares or Registrable Securities.
(b) "Potential Material Event" means any of the following:
(i) the possession by the Company of material information not ripe
for disclosure in a registration statement, which shall be evidenced
by determinations in good faith by the Board of Directors of the
Company that disclosure of such information in the registration
statement would be detrimental to the business and affairs of the
Company; or (ii) any material engagement or activity by the Company
which would, in the good faith determination of the Board of
Directors of the Company, be adversely affected by disclosure in a
registration statement at such time, which determination shall be
accompanied by a good faith determination by the Board of Directors
of the Company that the registration statement would be materially
misleading absent the inclusion of such information.
(c) "Register," "Registered," and "Registration" refer to
a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the Securities Act and
pursuant to Rule 415 under the Securities Act or any successor rule
providing for offering securities on a continuous basis ("Rule 415"),
and the declaration or ordering of effectiveness of such Registration
Statement by the SEC.
(d) "Registrable Securities" means the Conversion Shares
and, to the extent applicable, any other shares of capital stock or
other securities of the Company or any successor to the Company that
are issued upon exchange of the Conversion Shares.
(e) "Registration Statement" means a registration
statement of the Company under the Securities Act.
(f) "SEC" means the United States Securities and Exchange
Commission.
2. Piggy-back Registration. From and after the date that is
ninety (90) days after the date of this Agreement and until the fifth
anniversary of the Closing Date, for so long as any of the
Registrable Securities are outstanding and are not the subject of an
effective registration statement, if the Company contemplates making
an offering of Common Stock (or other equity securities convertible
into or exchangeable for Common Stock) registered for sale under the
Securities Act or proposes to file a Registration Statement covering
any of its securities other than (i) a registration on Form S-8 or S-
4, or any successor or similar forms; and (ii) a shelf registration
under Rule 415 for the sole purpose of registering shares to be
issued in connection with the acquisition of assets, the Company will
at each such time give prompt written notice to the Investor of its
intention to do so and of the Investor's rights under this Section 2.
Upon the written request of any Investor made within thirty (30) days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and
the intended method of disposition thereof), the Company will use its
best efforts to effect the registration of all Registrable Securities
which the Company has been so requested to register by the Investor,
to the extent requisite to permit the disposition (in accordance with
the intended methods of disposition) of the Registrable Securities by
the Investor requesting registration, by inclusion of such
Registrable Securities in the Registration Statement which covers the
securities which the Company proposes to register; provided, that if,
at any time after giving written notice of its intention to register
any Registrable Securities and prior to the effective date of the
Registration Statement filed in connection with such registration,
the Company shall determine for any reason either not to register or
to delay registration of such Registrable Securities, the Company
may, at its election, give written notice of such determination to
the Investor requesting registration and, thereupon, (i) in the case
of a determination not to register, the Company shall be relieved of
its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the
expenses of registration in connection therewith), and (ii) in the
case of a determination to delay registering such Registrable
Securities, shall be permitted to delay registering any Registrable
Securities, for the same period as the delay in registering such
other securities.
3. Obligations of the Company. In connection with the
registration of the Registrable Securities as provided for under
Section 2 of this Agreement, the Company shall do each of the
following:
(a) Prepare promptly, and file with the SEC a Registration
Statement with respect to not less than the number of Registrable
Securities provided in Section 2 above, and thereafter use its
reasonable efforts to cause such Registration Statement relating to
Registrable Securities to become effective as promptly as possible
and keep the Registration Statement effective at all times during the
period (the "Registration Period") continuing until the earliest of
(i) the date that is five (5) years after the last day of the
calendar month following the month in which the Registration
Statement so filed is declared effective by the SEC, (ii) the date
when the Investor may sell all Registrable Securities under Rule 144,
or (iii) the date the Investor no longer own any of the Registrable
Securities, which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading;
(b) Prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration
Statement effective at all times during the Registration Period, and,
during the Registration Period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement until
such time as all of such Registrable Securities have been disposed of
in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in the Registration Statement;
(c) The Company shall permit a single firm of legal
counsel designated by the Investor (the "Investor's Counsel") to
review drafts of the Registration Statement and all amendments and
supplements thereto a reasonable period of time (but not less than
three (3) business days) prior to their filing with the SEC, and not
file any document in a form to which such Investor' Counsel
reasonably objects. If the Investor' Counsel objects, the Company
shall take under advisement such objections and shall endeavor to
promptly make such revisions to the Registration Statement (or
ancillary documents and/or SEC filings in connection therewith) as
are necessary to satisfy the objections of the Investor' Counsel;
(d) Notify the Investor's Counsel, and any managing
underwriters immediately (and, in the case of (i)(A) below, not less
than five (5) days prior to the contemplated date of such filing) and
confirm such notice in writing no later than one (1) business day
following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement
is proposed to be filed; (B) whenever the SEC notifies the Company
whether there will be a "review" of Registration Statement; (C)
whenever the Company receives (or a representative of the Company
receives on its behalf) any oral or written comments from the SEC
relating to a Registration Statement (copies or, in the case of oral
comments, summaries of such comments shall be promptly furnished by
the Company to the Investor); and (D) with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective; (ii) of any request by the SEC or any other
Federal or state governmental authority for amendments or supplements
to the Registration Statement or Prospectus or for additional
information; (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement covering
any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) if at any time the Company has
actual knowledge that any of the representations or warranties of the
Company contained in any agreement (including any underwriting
agreement) contemplated hereby ceases to be true and correct in all
material respects; (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for
sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (vi) of the occurrence of any event
that to the best knowledge of the Company makes any statement made in
the Registration Statement or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration
Statement, Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading. In addition, the Company shall
furnish the Investor with copies of all intended written responses to
the comments contemplated in clause (C) of this Section 3(d) not
later than one (1) business day in advance of the filing of such
responses with the SEC so that the Investor's Counsel shall have the
opportunity to comment thereon;
(e) Furnish to the Investor's Counsel (i) promptly after
the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, one (1) copy of the Registration Statement,
each preliminary Prospectus and Prospectus, and each amendment or
supplement thereto, and (ii) if so requested by any Investor, such
number of copies of a Prospectus, and all amendments and supplements
thereto and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable
Securities owned by such Investor;
(f) As promptly as practicable after becoming aware
thereof, notify the Investor of the happening of any event of which
the Company has actual knowledge, as a result of which the prospectus
included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement or
other appropriate filing with the SEC to correct such untrue
statement or omission, and deliver a number of copies of such
supplement or amendment to the Investor as such Investor may
reasonably request;
(g) As promptly as practicable after becoming aware
thereof, notify the Investor of the issuance by the SEC of a Notice
of Effectiveness or any notice of effectiveness or any stop order or
other suspension of the effectiveness of the Registration Statement
at the earliest possible time;
(h) Notwithstanding the foregoing, if at any time or from
time to time after the date of effectiveness of a Registration
Statement, the Company notifies the Investor in writing of the
existence of a Potential Material Event, the Investor shall not offer
or sell any Registrable Securities, or engage in any other
transaction involving or relating to the Registrable Securities, from
the time of the giving of notice with respect to a Potential Material
Event until such Investor receives written notice from the Company
that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event; provided,
however, that the Company may not so suspend the right to such
Holders of Registrable Securities for more than two twenty (20)
business day periods in the aggregate during any 12-month period
("Suspension Period") with at least a ten (10) business day interval
between such periods, during the periods the Registration Statement
is required to be in effect;
(i) Use its reasonable efforts to secure and maintain the
designation of all the Registrable Securities covered by the
Registration Statement on the NASDAQ/National Market System or the
"OTC Bulletin Board Market" or any successor thereto of the National
Association of Securities Dealers Automated Quotations System
("NASDAQ") within the meaning of Rule 11Aa2-1 of the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the quotation of the Registrable Securities on The NASDAQ National
Market System; and further use its efforts to arrange for at least
two market makers to register with the National Association of
Securities Dealers, Inc. ("NASD") as such with respect to such
Registrable Securities;
(j) Provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than three
(3) business days after the effective date of the Registration
Statement;
(k) Cooperate with the Investor to facilitate the timely
preparation and delivery of certificates for the Registrable
Securities to be offered pursuant to the Registration Statement and
enable such certificates for the Registrable Securities to be in such
denominations or amounts as the case may be, as the Investor may
reasonably request, and, within five (5) business days after a
Registration Statement which includes Registrable Securities is
ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel selected by the Company to deliver, to the
transfer agent for the Registrable Securities (with copies to the
Investor whose Registrable Securities are included in such
Registration Statement) an appropriate instruction and opinion of
such counsel;
(l) Take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of the
Registrable Securities pursuant to the Registration Statement;
(m) Not take, or omit to take, any actions that would
preclude the filing or effectiveness of the Registration Statement or
require the withdrawal of the Registration Statement;
(n) Not complete any acquisitions or business combinations
until the SEC has declared effective the registration statement that
registers the shares of Common Stock underlying the Shares.
4. Obligations of the Investor. In connection with the
registration of the Registrable Securities, the Investor shall have
the following obligations:
(a) It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement
with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the
intended method of disposition of the Registrable Securities held by
it, as shall be reasonably required to effect the registration of
such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably
request. At least ten (10) business days prior to the first
anticipated filing date of the Registration Statement, the Company
shall notify each Investor of the information the Company requires
from each such Investor (the "Requested Information") if such
Investor elects to have any of such Investor's Registrable Securities
included in the Registration Statement. If at least two (2) business
days prior to the filing date the Company has not received the
Requested Information from an Investor (a "Non-Responsive Investor"),
then the Company may file the Registration Statement without
including Registrable Securities of such Non-Responsive Investor;
(b) Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as
reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder,
unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described
in Section 3(e) or 3(f), above, such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until
such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(e) or 3(f) and, if so directed
by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in such Investor's possession,
of the prospectus covering such Registrable Securities current at the
time of receipt of such notice.
(d) Each holder of Registrable Securities that sells
Registrable Securities pursuant to a registration under this
Agreement agrees that in connection with registration as follows:
(i) Such seller shall cooperate as reasonably
requested by the Company with the Company in connection
with the preparation of the registration statement, and for
as long as the Company is obligated to file and keep
effective the registration statement, shall provide to the
Company, in writing, for use in the registration statement,
all such information regarding such seller and its plan of
distribution of the Registrable Securities as may
reasonably be necessary to enable the Company to prepare
the registration statement and prospectus covering the
Registrable Securities, to maintain the currency and
effectiveness thereof and otherwise to comply with all
applicable requirements of law in connection therewith; and
(ii) During such time as such seller may be engaged in
a distribution of the Registrable Securities, such seller
shall comply with Rules 10b-6 and 10b-7 promulgated under
the Securities Exchange Act and pursuant thereto it shall,
among other things; (x) not engage in any stabilization
activity in connection with the securities of the Company
in contravention of such rules; (y) distribute the
Registrable Securities under the registration statement
solely in the manner described in the registration
statement; and (z) cease distribution of such Registrable
Securities pursuant to such registration statement upon
written notice from the Company that the prospectus
covering the Registrable Securities contains any untrue
statement of a material fact required to be stated therein
or necessary to make the statements therein not misleading.
5. Expenses of Registration.
(a) All reasonable expenses (other than underwriting
discounts and commissions of the Investor) incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3,
but including, without limitation, all registration, listing, and
qualifications fees, printers, legal and accounting fees, the fees and
disbursements of counsel for the Company and a fee for the Investor'
Counsel (as a group and not individually) not exceeding $50,000 for
the Registration Statement covering the Registrable Securities
applicable to the Shares shall be borne by the Company.
(b) Neither the Company nor any of its subsidiaries has, as
of the date hereof, nor shall the Company nor any of its
subsidiaries, on or after the date of this Agreement, entered into
any agreement with respect to its securities that is inconsistent
with the rights granted to the Investor in this Agreement or
otherwise conflicts with the provisions hereof. Except as disclosed
in the Securities Purchase Agreement or the other documents entered
into simultaneously therewith, neither the Company nor any of its
subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any
Person. Without limiting the generality of the foregoing, without
the written consent of the Investor holding a majority of the
Registrable Securities, the Company shall not grant to any person the
right to request the Company to register any securities of the
Company under the Securities Act unless the rights so granted are
subject in all respects to the prior rights in full of the Investor
set forth herein, and are not otherwise in conflict or inconsistent
with the provisions of this Agreement and the other Transaction Documents.
6. Indemnification. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless the Investor who holds such Registrable
Securities, the directors, managers and members, if any, of the
Investor, the officers, if any, of the Investor, and each person, if
any, who controls the Investor within the meaning of the Securities
Act or the Exchange Act (each, an "Indemnified Person" or
"Indemnified Party"), against any losses, claims, damages,
liabilities or expenses (joint or several) incurred (collectively,
"Claims") to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims
(or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included
therein: (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any post-
effective amendment thereof or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact
contained in the final prospectus (as amended or supplemented, if the
Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light
of the circumstances under which the statements therein were made,
not misleading or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities
law or any rule or regulation under the Securities Act, the Exchange
Act or any state securities law (the matters in the foregoing clauses
(i) through (iii) being, collectively, "Violations"). Subject to
clause (b) of this Section 6, the Company shall reimburse the
Investor, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a) shall not
(I) apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of any Indemnified Person
expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (II) be available to the extent
such Claim is based on a failure of the Investor to deliver or cause
to be delivered the prospectus made available by the Company; (III)
apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld; or (IV) apply to any
violation or alleged violation by an Indemnified Person of the
Securities Act, the Exchange Act, any state securities laws or any
rule or regulation under the Securities Act, the Exchange Act, or any
state securities laws. Each Investor will indemnify the Company and
its officers, directors and agents (each, an "Indemnified Person" or
"Indemnified Party") against any claims arising out of or based upon
a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company, by or on behalf of
such Investor, expressly for use in connection with the preparation
of the Registration Statement, subject to such limitations and
conditions as are applicable to the Indemnification provided by the
Company to this Section 6. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investor pursuant to Section 9.
(b) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement
of any action (including any governmental action), such Indemnified
Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed,
to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be. In case any such action
is brought against any Indemnified Person or Indemnified Party, and
it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, assume the defense thereof, subject to the
provisions herein stated and after notice from the indemnifying party
to such Indemnified Person or Indemnified Party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such Indemnified Person or Indemnified Party under this Section 6
for any legal or other reasonable out-of-pocket expenses subsequently
incurred by such Indemnified Person or Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the
action to its final conclusion. The Indemnified Person or
Indemnified Party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the
fees and reasonable out-of-pocket expenses of such counsel shall not
be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably
satisfactory to the Indemnified Person or Indemnified Party. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as such expense, loss, damage
or liability is incurred and is due and payable.
7. Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying
party agrees to make the maximum contribution with respect to any
amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that (a) no
contribution shall be made under circumstances where the maker would
not have been liable for indemnification under the fault standards
set forth in Section 6; (b) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from
any seller of Registrable Securities who was not guilty of such
fraudulent misrepresentation; and (c) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount
of proceeds received by such seller from the sale of such Registrable
Securities.
8. Reports under Exchange Act. With a view to making
available to the Investor the benefits of Rule 144 promulgated under
the Securities Act or any other similar rule or regulation of the SEC
that may at any time permit the Investor to sell securities of the
Company to the public without registration ("Rule 144"), the Company
agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and
the Exchange Act;
(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company
and (iii) such other information as may be reasonably requested to
permit the Investor to sell such securities pursuant to Rule 144
without registration; and
(d) cause its counsel to deliver to its transfer agent
such opinions of law as shall be required to remove restrictive
legends on the shares to be sold.
9. Amendment of Registration Rights. Any provision of this
Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the
Company and Investor who hold a fifty (50%) percent interest of the
Registrable Securities. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor
and the Company.
10. Miscellaneous.
(a) A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company
shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
(b) Notices required or permitted to be given hereunder
shall be given in the manner contemplated by the Securities Purchase
Agreement, (i) if to the Company or to the Investor, to their
respective address contemplated by the Securities Purchase Agreement,
and (iii) if to any other Investor, at such address as such Investor
shall have provided in writing to the Company, or at such other
address as each such party furnishes by notice given in accordance
with this Section 12(b).
(c) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York for contracts to be
wholly performed in such state and without giving effect to the
principles thereof regarding the conflict of laws. Each of the
parties consents to the jurisdiction of the federal courts whose
districts encompass any part of the City of New York or the state
courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non coveniens, to the bringing
of any such proceeding in such jurisdictions. To the extent
determined by such court, the Company shall reimburse the Buyer for
any reasonable legal fees and disbursements incurred by the Buyer in
enforcement of or protection of any of its rights under this Agreement.
(e) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement or the validity or enforceability of
this Agreement in any other jurisdiction.
(f) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may
require.
(h) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
thereof.
(i) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement,
once executed by a party, may be delivered to the other party hereto
by telephone line facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
(j) The Company acknowledges that any failure by the
Company to perform its obligations under Section 3(a) hereof, or any
delay in such performance could result in loss to the Investor, and
the Company agrees that, in addition to any other liability the
Company may have by reason of such failure or delay, the Company
shall be liable for all direct damages caused by any such failure or
delay, unless the same is the result of force majeure. Neither party
shall be liable for consequential damages.
(k) This Agreement constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof. There
are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings among the parties hereto with
respect to the subject matter hereof. This Agreement may be amended
only by an instrument in writing signed by the party to be charged
with enforcement thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized
as of the day and year first above written.
COMPANY:
5G Wireless Communications, Inc.
By: /s/ Xxxxx Xxx
Name: Xxxxx Xxx
Title: Chief Executive Officer
INVESTOR:
Name: Castellum Investments, S.A.
By: /s/ Xxxxxx Xxxxxxx
(Signature of Authorized Person)
Printed Name: Xxxxxx Xxxxxxx
Address: 0 Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxxx
