COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
January 26, 2001 by and between World Wide Wireless Communications, Inc., a
Nevada corporation (the "Company"), and Grenville Finance Ltd. (the
"Purchaser").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to Purchaser from
time to time as provided herein, and Purchaser shall purchase, up to the
$50,000,000 of Common Stock (as defined below) and Warrants (as defined below);
and
WHEREAS, such investments will be made by the Purchaser as statutory
underwriter of a registered indirect primary offering of such Common Stock by
the Company.
NOW, THEREFORE, in consideration of the foregoing premises, and the
promises and covenants herein contained, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain Definitions.
(a) "Draw Down" shall have the meaning assigned to such term
in Section 6.1(a) hereof.
(b) "Draw Down Pricing Period" shall mean a period of
twenty-two (22) consecutive Trading Days beginning on the date
specified in the Draw Down Notice (as defined in Section 6.1(e)
hereof); provided, however, the Draw Down Pricing Period shall not
begin before the day on which receipt of such notice is confirmed by
the Purchaser.
(c) "Effective Date" shall mean the date the Registration
Statement of the Company covering the Shares being subscribed for
hereby is declared effective by the Securities and Exchange Commission
(the "SEC").
(d) "GAAP" shall mean the United States Generally Accepted
Accounting Principles as those conventions, rules and procedures are
determined by the Financial Accounting Standards Board and its
predecessor agencies.
(e) "Investment Amount" shall have the meaning assigned to
such term in Section 6.1(e) hereof.
(f) "Material Adverse Effect" shall mean any adverse effect
on the business, operations, properties, prospects or financial
condition of the Company that is material and adverse to the Company
and its subsidiaries and affiliates, taken as a whole and/or any
condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to perform any of
its material obligations under this Agreement or the Registration
Rights Agreement or to perform its obligations under any other
Material Agreement (as defined in Section 3.1(u)).
(h) "Principal Market" shall mean initially the OTC Bulletin
Board and shall include the American Stock Exchange, Nasdaq Small-Cap
Market, Nasdaq National Market or the New York Stock Exchange if the
Company becomes listed and trades on such market or exchange after the
date hereof.
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(i) "Purchase Price" shall mean 85% of the VWAP on the date
in question.
(j) "Registration Statement" shall mean the registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"), to be filed with the Securities and Exchange
Commission for the registration of the Shares pursuant to the
Registration Rights Agreement attached hereto as Exhibit A (the
"Registration Rights Agreement).
(k) "SEC Documents" shall mean the Company's latest Form
10-K or Form 10-KSB as of the time in question, all Forms 10-Q or
10-QSB and 8-K filed thereafter, and the Proxy Statement for its
latest fiscal year as of the time in question until such time as the
Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights
Agreement.
(l) "Settlement Period" shall have the meaning assigned to
such term in Section 6.1(b).
(m) "Shares" shall mean, collectively, the shares of Common
Stock of the Company being subscribed for hereunder (the "Draw Down
Shares") and those shares of Common Stock issuable to the Purchaser
upon exercise of the Warrant (the "Warrant Shares").
(n) "Threshold Price" shall mean the lowest VWAP during any
Draw Down Pricing Period at which the Company will sell its Common
Stock in accordance with this Agreement.
(o) "Trading Day" shall mean any day on which the Principal
Market is open for business.
(p) "VWAP" shall mean the daily volume weighted average
price of the Company's Common Stock on the Principal Market as
reported by Bloomberg Financial L.P. (based on a trading day from 9:30
am EST to 4:02 pm EST) using the VAP function on the date in question.
(q) "Warrant" shall mean the meaning assigned to such term
in Section 5.2(f) hereof.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
Section 2.1. Purchase and Sale of Stock. Subject to the terms and
conditions of this Agreement, the Company may sell and issue to the Purchaser
and the Purchaser shall be obligated to purchase from the Company up to an
aggregate purchase price of fifty million dollars ($50,000,000) of the Company's
Common Stock (the "Commitment Amount"), $0.001 par value per share (the "Common
Stock"), and the Warrant, based on Draw Downs of up to one million five hundred
thousand dollars ($1,500,000) per Draw Down.
Section 2.2. The Shares. The Company has authorized and has reserved
and covenants to continue to reserve, free of preemptive rights and other
similar contractual rights of stockholders, a sufficient number of its
authorized but unissued shares of Common Stock to cover the Shares to be issued
in connection with all Draw Downs requested under this Agreement. Anything in
this Agreement to the contrary notwithstanding, the Company may not make a Draw
Down to the extent that, after such purchase by the Purchaser, the sum of the
number of shares of Common Stock and Warrants beneficially owned by the
Purchaser and its affiliates would result in beneficial ownership by the
Purchaser and its affiliates of more than 9.9% of the then outstanding shares of
Common Stock. For purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act.
Section 2.3. Purchase Price and Initial Closing. The Company agrees to
issue and sell to the Purchaser and, in consideration of and in express reliance
upon the representations, warranties, covenants, terms and conditions of this
Agreement, the Purchaser agrees to purchase that number of the Shares to be
issued in connection
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with each Draw Down. The delivery of executed documents under this Agreement and
the other agreements referred to herein and the payment of the fees set forth in
Article I of the Escrow Agreement, attached as Exhibit B hereto, (the "Initial
Closing") shall take place at the offices of Xxxxxxx Xxxxxx & Green, P.C., 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (i) within fifteen (15) days from the date
hereof, or (ii) such other time and place or on such date as the Purchaser and
the Company may agree upon (the "Initial Closing Date"). Each party shall
deliver all documents, instruments and writings required to be delivered by such
party pursuant to this Agreement at or prior to the Initial Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representation and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) Organization, Good Standing and Power. The Company is a
corporation duly incorporated validly existing and in good standing
under the laws of the State of Nevada and has all requisite corporate
authority to own, lease and operate its properties and assets and to
carry on its business as now being conducted. The Company does not
have any subsidiaries and does not own more than fifty percent (50%)
of or control any other business entity except as set forth in the SEC
Documents. The Company is duly qualified to do business and is in good
standing as a foreign corporation in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure so to
qualify would not have a Material Adverse Effect.
(b) Authorization, Enforcement. (i) The Company has the
requisite corporate power and corporate authority to enter into and
perform its obligations under this Agreement, the Registration Rights
Agreement, the Escrow Agreement (collectively, the "Transaction
Documents") and to issue the Draw Down Shares pursuant to their
respective terms, (ii) the execution and delivery of the Transaction
Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders
is required, and (iii) the Transaction Documents have been duly
executed and delivered by the Company and at the Initial Closing shall
constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership
or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of
general application. The Company has duly and validly authorized and
reserved for issuance shares of Common Stock sufficient in number for
the issuance of the Draw Down Shares.
(c) Capitalization. The authorized capital stock of the
Company consists of 100,000,000 shares of Common Stock of which
89,417,795 shares are issued and outstanding and no shares of
preferred stock. All of the outstanding shares of the Company's Common
Stock have been duly and validly authorized and are fully paid and
non-assessable, except as set forth in the SEC Documents. Except as
set forth in this Agreement and the Registration Rights Agreement and
as set forth in the SEC Documents, or on Schedule 3.1(c) hereto, no
shares of Common Stock are entitled to preemptive rights or
registration rights and there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company. Furthermore, except as set
forth in this Agreement and as set forth in the SEC Documents or on
Schedule 3.1(c), there are no contracts, commitments, understandings,
or arrangements by which the Company is or may become bound to issue
additional shares of the capital stock of the Company or options,
securities or rights convertible into shares of capital stock of the
Company. Except as set forth on Schedule 3.1(c), the Company is not a
party to any agreement granting registration rights to any person with
respect to any of its equity or debt securities. Except as set forth
on Schedule 3.1(c), the Company is not a party to, and it has no
knowledge
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of, any agreement restricting the voting or transfer of any shares of
the capital stock of the Company. Except as set forth in the SEC
Documents or on Schedule 3.1(c) hereto, the offer and sale of all
capital stock, convertible securities, rights, warrants, or options of
the Company issued prior to the Initial Closing complied with all
applicable federal and state securities laws, and no stockholder has a
right of rescission or damages with respect thereto which would have a
Material Adverse Effect on the Company's financial condition or
operating results. The Company has made available to the Purchaser
true and correct copies of the Company's articles or certificate of
incorporation as in effect on the date hereof (the "Charter"), and the
Company's bylaws as in effect on the date hereof (the "Bylaws"). The
Company has not received any notice from the Principal Market
questioning or threatening the continued inclusion of the Common Stock
on such market.
(d) Issuance of Shares. The Warrant Shares to be issued
under this Agreement have been duly authorized by all necessary
corporate action and, when paid for and issued in accordance with the
terms hereof and the Warrant, the Warrant Shares shall be validly
issued and outstanding, fully paid and non-assessable, and the
Purchaser shall be entitled to all rights accorded to a holder of
Common Stock.
(e) No Conflicts. Except as set forth on Schedule 3.1(e),
the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated herein do not and will not (i) violate any provision of
the Company's Charter or Bylaws, (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation to which the Company is a party, (iii) create
or impose a lien, charge or encumbrance on any property of the Company
under any agreement or any commitment to which the Company is a party
or by which the Company is bound or by which any of its respective
properties or assets are bound, or (iv) result in a violation of any
federal, state, local or other foreign statute, rule, regulation,
order, judgment or decree (including any federal or state securities
laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any
of its subsidiaries are bound or affected, except, in all cases, for
such conflicts, defaults, termination, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Company
and its subsidiaries is not being conducted in violation of any laws,
ordinances or regulations of any governmental entity, except for
possible violations that singularly or in the aggregate do not and
will not have a Material Adverse Effect. The Company is not required
under any federal, state or local law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this
Agreement, or issue and sell the Shares in accordance with the terms
hereof (other than any filings which may be required to be made by the
Company with the SEC or state securities administrators subsequent to
the Initial Closing and any registration statement which may be filed
pursuant hereto); provided that, for purpose of the representation
made in this sentence, the Company is assuming and relying upon the
accuracy of the relevant representations and agreements of the
Purchaser herein.
(f) SEC Documents, Financial Statements. The Common Stock of
the Company is registered pursuant to Section 12(g) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and, except
as disclosed in the SEC Documents or on Schedule 3.1(f) hereto, the
Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to
the reporting requirements of the Exchange Act, including material
filed pursuant to Section 13(a) or 15(d) of the Exchange Act (all of
the foregoing including filings incorporated by reference therein
being referred to herein as the "SEC Documents"). The Company has
delivered or made available to the Purchaser, through the XXXXX system
or otherwise, true and complete copies of the SEC Documents filed with
the SEC since December 31, 1998. The Company has not provided to the
Purchaser any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but
which has not been so disclosed, other than with respect to the
transactions contemplated by this Agreement. As of their respective
filing dates, the SEC Documents complied in all material respects with
the requirements of the Exchange Act or the Securities Act, as
applicable, and the rules and regulations of the SEC promulgated
thereunder applicable to such documents, and, as of their respective
filing dates, none of the SEC Documents
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contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the
Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements under GAAP
and the published rules and regulations of the SEC or other applicable
rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements), and
fairly present in all material respects the financial position of the
Company and its subsidiaries as of the dates thereof and the results
of operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments).
(g) Subsidiaries. The SEC Documents or Schedule 3.1(g)
hereto sets forth each subsidiary of the Company, showing the
jurisdiction of its incorporation or organization and showing the
percentage of the Company's ownership of the outstanding stock or
other interests of such subsidiary. For the purposes of this
Agreement, "subsidiary" shall mean any corporation or other entity of
which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently)
for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company
and/or any of its other subsidiaries. All of the issued and
outstanding shares of capital stock of each subsidiary have been duly
authorized and validly issued, and are fully paid and non-assessable.
There are no outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or binding upon
any subsidiary for the purchase or acquisition of any shares of
capital stock of any subsidiary or any other securities convertible
into, exchangeable for or evidencing the rights to subscribe for any
shares of such capital stock. Neither the Company nor any subsidiary
is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of the capital stock of any
subsidiary or any convertible securities, rights, warrants or options
of the type described in the preceding sentence. Neither the Company
nor any subsidiary is a party to, nor has any knowledge of, any
agreement restricting the voting or transfer of any shares of the
capital stock of any subsidiary.
(h) No Material Adverse Effect. Since the date of the
financial statement contained in the most recently filed Form 10-Q (or
10-QSB) or Form 10-K (or 10-KSB), whichever is most current, no
Material Adverse Effect has occurred or exists with respect to the
Company, except as disclosed in the SEC Documents or on Schedule
3.1(h) hereto.
(i) No Undisclosed Liabilities. Except as disclosed in the
SEC Documents or on Schedule 3.1(i) hereto, neither the Company nor
any of its subsidiaries has any liabilities, obligations, claims or
losses (whether liquidated or unliquidated, secured or unsecured,
absolute, accrued, contingent or otherwise) that would be required to
be disclosed on a balance sheet of the Company or any subsidiary
(including the notes thereto) in conformity with GAAP which are not
disclosed in the SEC Documents, other than those incurred in the
ordinary course of the Company's or its subsidiaries' respective
businesses since such date and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect on the
Company or its subsidiaries.
(j) No Undisclosed Events or Circumstances. Since the date
of the financial statement contained in the most recently filed Form
10- Q (or 10-QSB) or Form 10-K (or 10-KSB), whichever is most current,
no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, prospects, operations or
financial condition, that, 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
in the SEC Documents.
(k) Indebtedness. The SEC Documents or Schedule 3.1(k)
hereto sets forth as of the date hereof all outstanding secured and
unsecured Indebtedness of the Company or any subsidiary, or for which
the Company or any subsidiary has commitments. For the purposes of
this Agreement, "Indebtedness" shall mean (A) any liabilities for
borrowed money or amounts owed in excess of $250,000 (other than trade
accounts
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payable incurred in the ordinary course of business), (B) all
guaranties, endorsements and contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be
reflected in the Company's balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business; and (C) the present value of any lease payments in excess of
$250,000 due under leases required to be capitalized in accordance
with GAAP. Neither the Company nor any subsidiary is in default with
respect to any Indebtedness.
(l) Title to Assets. Each of the Company and the
subsidiaries has good and marketable title to all of its real and
personal property reflected in the SEC Documents, free of any
mortgages, pledges, charges, liens, security interests or other
encumbrances, except for those indicated in the SEC Documents or on
Schedule 3.1(1) hereto or such that do not cause a Material Adverse
Effect. All said leases of the Company and each of its subsidiaries
are valid and subsisting and in full force and effect.
(m) Actions Pending. There is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any subsidiary which
questions the validity of this Agreement or the transactions
contemplated hereby or any action taken or to be taken pursuant hereto
or thereto. Except as set forth in the SEC Documents or on Schedule
3.1(m) hereto, there is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened,
against or involving the Company, any subsidiary or any of their
respective properties or assets. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against the Company or any subsidiary.
(n) Compliance with Law. The Company and each of its
subsidiaries have all franchises, permits, licenses, consents and
other governmental or regulatory authorizations and approvals
necessary for the conduct of their respective businesses as now being
conducted by them unless the failure to possess such franchises,
permits, licenses, consents and other governmental or regulatory
authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(o) Taxes. The Company and each subsidiary has filed all Tax
Returns which it is required to file under applicable laws; all such
Tax Returns are true and accurate and have been prepared in compliance
with all applicable laws; the Company has paid all Taxes due and owing
by it or any subsidiary (whether or not such Taxes are required to be
shown on a Tax Return) and has withheld and paid over to the
appropriate taxing authorities all Taxes which it is required to
withhold from amounts paid or owing to any employee, stockholder,
creditor or other third parties; and since December 31, 1999, the
charges, accruals and reserves for Taxes with respect to the Company
(including any provisions for deferred income taxes) reflected on the
books of the Company are adequate to cover any Tax liabilities of the
Company if its current tax year were treated as ending on the date
hereof.
No claim has been made by a taxing authority in a
jurisdiction where the Company does not file tax returns that the
Company or any subsidiary is or may be subject to taxation by that
jurisdiction. There are no foreign, federal, state or local tax audits
or administrative or judicial proceedings pending or being conducted
with respect to the Company or any subsidiary; no information related
to Tax matters has been requested by any foreign, federal, state or
local taxing authority; and, except as disclosed above, no written
notice indicating an intent to open an audit or other review has been
received by the Company or any subsidiary from any foreign, federal,
state or local taxing authority. There are no material unresolved
questions or claims concerning the Company's Tax liability. The
Company (A) has not executed or entered into a closing agreement
pursuant to ss. 7121 of the Internal Revenue Code or any predecessor
provision thereof or any similar provision of state, local or foreign
law; and (B) has not agreed to or is required to make any adjustments
pursuant to ss. 481 (a) of the Internal Revenue Code or any similar
provision of state, local or foreign law by reason of a change in
accounting method initiated by the Company or any of its subsidiaries
or has any knowledge that the IRS has proposed any such adjustment or
change in accounting method, or has any application pending with any
taxing authority requesting permission for any changes in accounting
methods that relate to the business or operations of the Company. The
Company has not been a United States real
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property holding corporation within the meaning of ss. 897(c)(2) of
the Internal Revenue Code during the applicable period specified in
ss. 897(c)(1)(A)(ii) of the Internal Revenue Code.
The Company has not made an election under ss. 341(f) of the
Internal Revenue Code. The Company is not liable for the Taxes of
another person that is not a subsidiary of the Company under (A)
Treas. Reg. ss. 1.1502-6 (or comparable provisions of state, local or
foreign law), (B) as a transferee or successor, (C) by contract or
indemnity or (D) otherwise. The Company is not a party to any tax
sharing agreement. The Company has not made any payments, is not
obligated to make payments nor is it a party to an agreement that
could obligate it to make any payments that would not be deductible
under ss. 280G of the Internal Revenue Code.
For purposes of this Section 3.1(o):
"IRS" means the United States Internal Revenue Service.
"Tax" or "Taxes" means federal, state, county, local,
foreign, or other income, gross receipts, ad valorem, franchise,
profits, sales or use, transfer, registration, excise, utility,
environmental, communications, real or personal property, capital
stock, license, payroll, wage or other withholding, employment, social
security, severance, stamp, occupation, alternative or add-on minimum,
estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest
attributable thereto) whether disputed or not.
"Tax Return" means any return, information report or filing
with respect to Taxes, including any schedules attached thereto and
including any amendment thereof.
(p) Certain Fees. Except as set forth on Schedule 3.1(p)
hereto, no brokers, finders or financial advisory fees or commissions
will be payable by the Company or any subsidiary with respect to the
transactions contemplated by this Agreement.
(q) Disclosure. To the best of the Company's knowledge,
neither this Agreement or the Schedules hereto nor any other
documents, certificates or instruments furnished to the Purchaser by
or on behalf of the Company or any subsidiary in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements made herein or therein, in
the light of the circumstances under which they were made herein or
therein, not misleading.
(r) Operation of Business. The Company and each of the
subsidiaries owns or possesses all patents, trademarks, service marks,
trade names, copyrights, licenses and authorizations as set forth in
the SEC Documents or on Schedule 3.1(r) hereto, and all rights with
respect to the foregoing, which are necessary for the conduct of its
business as now conducted without any conflict with the rights of
others.
(s) Insurance. Except as disclosed in the SEC Documents or
on Schedule 3.1(s) hereto, the Company carries or will have the
benefit of insurance in such amounts and covering such risks as is
adequate for the conduct of its business and the value of its
properties and as is customary for companies engaging in similar
businesses and similar industries.
(t) Books and Records. The records and documents of the
Company and its subsidiaries accurately reflect in all material
respects the information relating to the business of the Company and
the subsidiaries, the location and collection of their assets, and the
nature of all transactions giving rise to the obligations or accounts
receivable of the Company or any subsidiary.
(u) Material Agreements. Except as set forth in the SEC
Documents, or on Schedule 3.1(u) hereto, neither the Company nor any
subsidiary is a party to any written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, a copy of
which would be required to be filed with
7
the SEC as an exhibit to a registration statement on Form S-1 or other
applicable form (collectively, "Material Agreements") if the Company
or any subsidiary were registering securities under the Securities
Act. Except as set forth on Schedule 3.1(u), the Company and each of
its subsidiaries has in all material respects performed all the
obligations required to be performed by them to date under the
foregoing agreements, have received no notice of default and, to the
best of the Company's knowledge are not in default under any Material
Agreement now in effect, the result of which could cause a Material
Adverse Effect. Except as set forth in the SEC Documents, no written
or oral contract, instrument, agreement, commitment, obligation, plan
or arrangement of the Company or of any subsidiary limits or shall
limit the payment of dividends on the Company's Common Stock.
(v) Transactions with Affiliates. Except as set forth in the
SEC Documents or on Schedule 3.1(v) hereto, there are no loans,
leases, agreements, contracts, royalty agreements, management
contracts or arrangements or other continuing transactions exceeding
$100,000 between (A) the Company, any subsidiary or any of their
respective customers or suppliers on the one hand, and (B) on the
other hand, any officer, employee, consultant or director of the
Company, or any of its subsidiaries, or any person owning 5% or more
of the capital stock of the Company or any subsidiary or any member of
the immediate family of such officer, employee, consultant, director
or stockholder or any corporation or other entity controlled by such
officer, employee, consultant, director or stockholder, or a member of
the immediate family of such officer, employee, consultant, director
or stockholder.
(w) Securities Laws. The Company has complied and will
comply with all applicable federal and state securities laws in
connection with the offer, issuance and sale of the Shares hereunder.
Neither the Company nor anyone acting on its behalf, directly or
indirectly, has or will sell, offer to sell or solicit offers to buy
the Shares or similar securities to, or solicit offers with respect
thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person (other than the
Purchaser), so as to bring the issuance and sale of the Shares under
the registration provisions of the Securities Act and applicable state
securities laws. Neither the Company nor any of its affiliates, nor
any person acting on its or their behalf, has engaged in any form of
general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or
sale of the Shares.
(x) Employees. Neither the Company nor any subsidiary has
any collective bargaining arrangements or agreements covering any of
its employees. Except as set forth in the SEC Documents or on Schedule
3.1(x) hereto, neither the Company nor any subsidiary is in breach of
any employment contract, agreement regarding proprietary information,
noncompetition agreement, nonsolicitation agreement, confidentiality
agreement, or any other similar contract or restrictive covenant,
relating to the right of any officer, employee or consultant to be
employed or engaged by the Company or such subsidiary. Since the date
of the December 31, 1999 Form 10-K (or 10-KSB), no officer, consultant
or key employee of the Company or any subsidiary whose termination,
either individually or in the aggregate, could have a Material Adverse
Effect, has terminated or, to the knowledge of the Company, has any
present intention of terminating his or her employment or engagement
with the Company or any subsidiary.
(y) Absence of Certain Developments. Except as disclosed in
SEC Documents or on Schedule 3.1(y) hereto, since the date of the
financial statement contained in the most recently filed Form 10-Q (or
10-QSB) or Form 10-K (or 10KSB), whichever is most current, neither
the Company nor any subsidiary has:
(i) issued any stock, bonds or other corporate
securities or any rights, options or warrants with respect
thereto;
(ii) borrowed any amount or incurred or become
subject to any liabilities (absolute or contingent) except
current liabilities incurred in the ordinary course of
business which are comparable in nature and amount to the
current liabilities incurred in the ordinary course of
business during the comparable portion of its prior fiscal
year, as adjusted to reflect the current nature and volume
of the Company's or such subsidiary's business;
8
(iii) discharged or satisfied any lien or
encumbrance or paid any obligation or liability (absolute or
contingent), other than current liabilities paid in the
ordinary course of business;
(iv) declared or made any payment or distribution
of cash or other property to stockholders with respect to
its stock, or purchased or redeemed, or made any agreements
so to purchase or redeem, any shares of its capital stock;
(v) sold, assigned or transferred any other
tangible assets, or canceled any debts or claims, except in
the ordinary course of business;
(vi) sold, assigned or transferred any patent
rights, trademarks, trade names, copyrights, trade secrets
or other intangible assets or intellectual property rights,
or disclosed any proprietary confidential information to any
person except to customers in the ordinary course of
business or to the Purchaser or its representatives;
(vii) suffered any material losses (except for
anticipated losses consistent with prior quarters) 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 prospective business;
(viii) made any changes in employee compensation
except in the ordinary course of business and consistent
with past practices;
(ix) made capital expenditures or commitments
therefor that aggregate in excess of $500,000;
(x) entered into any other material transaction,
whether or not in the ordinary course of business;
(xi) suffered any material damage, destruction or
casualty loss, whether or not covered by insurance;
(xii) experienced any material problems with labor
or management in connection with the terms and conditions of
their employment; or
(xiii) effected any two or more events of the
foregoing kind which in the aggregate would be material to
the Company or its subsidiaries.
(z) Governmental Approvals. Except as set forth in the SEC
Documents or on Schedule 3.1(z) hereto, and except for the filing of
any notice prior or subsequent to any Settlement Date that may be
required under applicable federal or state securities laws (which if
required, shall be filed on a timely basis), including the filing of a
registration statement or post-effective amendment pursuant to this
Agreement, no authorization, consent, approval, license, exemption of,
filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in connection with, the
delivery of the Shares, or for the performance by the Company of its
obligations under this Agreement.
(aa) Use of Proceeds. The proceeds from the sale of the
Shares will be used by the Company and its subsidiaries for general
corporate purposes, and potentially including retirement of
convertible debentures previously issued by the Company.
(bb) Acknowledgment Regarding Purchaser's Purchase of
Shares. Company acknowledges and agrees that Purchaser is acting
solely in the capacity of arm's length purchaser with respect to this
Agreement and the transactions contemplated hereunder. The Company
further acknowledges that the
9
Purchaser is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this Agreement
and the transactions contemplated hereunder. The Company further
represents to the Purchaser that the Company's decision to enter into
this Agreement has been based solely on (a) the Purchaser's
representations and warranties in Section 3.2, and (b) the independent
evaluation by the Company and its own representatives and counsel.
(cc) Brokers and Finders Fees. Except as set forth on
Schedule 3.1(cc), the Company does not owe any broker or finder any
fees in connection with the transaction contemplated under this
Agreement.
Section 3.2. Representations and Warranties of the Purchaser. The
Purchaser hereby makes the following representations and warranties to the
Company:
(a) Organization and Standing of the Purchaser. The
Purchaser is a corporation duly incorporated, validly existing and in
good standing under the laws of the British Virgin Islands.
(b) Authorization and Power. The Purchaser has the requisite
power and authority to enter into and perform the Transaction
Documents and to purchase the Shares being sold to it hereunder. The
execution, delivery and performance of the Transaction Documents by
Purchaser and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action and
at the Initial Closing shall constitute valid and binding obligations
of the Purchaser enforceable against the Purchaser in accordance with
their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating
to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application
(c) No Conflicts. The execution, delivery and performance of
this Agreement and the consummation by the Purchaser of the
transactions contemplated hereby or relating hereto do not and will
not (i) result in a violation of the Purchaser's charter documents or
bylaws or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of any agreement, indenture or instrument
to which the Purchaser is a party, or result in a violation of any
law, rule, or regulation, or any order, judgment or decree of any
court or governmental agency applicable to the Purchaser or its
properties (except for such conflicts, defaults and violations as
would not, individually or in the aggregate, have a Material Adverse
Effect on Purchaser). The Purchaser is not required to obtain any
consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or to
purchase the Shares in accordance with the terms hereof.
(d) Financial Risks. The Purchaser acknowledges that it is
able to bear the financial risks associated with an investment in the
Shares and that it has been given full access to such records of the
Company and the subsidiaries and to the officers of the Company and
the subsidiaries as it has deemed necessary or appropriate to conduct
its due diligence investigation. The Purchaser is capable of
evaluating the risks and merits of an investment in the Shares by
virtue of its experience as an investor and its knowledge, experience,
and sophistication in financial and business matters and the Purchaser
is capable of bearing the entire loss of its investment in the Shares.
(e) Accredited Investor. The Purchaser is an "accredited
investor" as defined in Regulation D promulgated under the Securities
Act.
(f) General. The Purchaser understands that the Company is
relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the
Purchaser set forth herein in order to determine the suitability of
the Purchaser to acquire the Shares.
10
ARTICLE IV
COVENANTS
The Company covenants with the Purchaser as follows:
Section 4.1. Securities Compliance. If applicable, the Company shall
notify the Principal Market, in accordance with its rules and regulations, of
the transactions contemplated by this Agreement, and shall take all other
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and valid issuance of the Shares and the
Warrant to the Purchaser or subsequent holders.
Section 4.2. Registration and Listing. The Company will cause its
Common Stock to continue to be registered under Sections 12(b) or 12(g) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, will comply with all requirements related to
any registration statement filed pursuant to this Agreement, and will not take
any action or file any document (whether or not permitted by the Securities Act
or the Exchange Act or the rules promulgated thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act or Securities Act, except as permitted
herein. The Company will take all action necessary to continue the listing or
trading of its Common Stock on the Principal Market and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Principal Market and shall provide the Purchaser with
copies of any correspondence to or from such Principal Market which questions or
threatens delisting of the Common Stock, within three (3) Trading Days of the
Company's receipt thereof, until the Purchaser has disposed of all of the
Shares.
Section 4.3. Escrow Arrangement. The Company and the Purchaser shall
enter into an escrow arrangement with Xxxxxxx Xxxxxx & Green, P.C. (the "Escrow
Agent") in the Form of Exhibit B hereto respecting payment against delivery of
the Shares.
Section 4.4. Registration Rights Agreement. The Company and the
Purchaser shall enter into the Registration Rights Agreement in the Form of
Exhibit A hereto. Before the Purchaser shall be obligated to accept a Draw Down
request from the Company, the Company shall have caused a sufficient number of
shares of Common Stock to be registered to cover the Shares to be issued in
connection with such Draw Down.
Section 4.5. Accuracy of Registration Statement.On each Settlement
Date, the Registration Statement and the prospectus therein shall not contain
any untrue statement of a material fact or omit to state any material fact to be
required to be stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances under which they were made;
and on such Settlement Date or date of filing of the Registration Statement and
the prospectus therein will not include any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, the Company makes no representations or
warranties as to the information contained in or omitted from the Registration
Statement and the prospectus therein in reliance upon and in conformity with the
information furnished in writing to the Company by the Purchaser specifically
for inclusion in the Registration Statement and the prospectus therein.
Section 4.6. Compliance with Laws. The Company shall comply, and cause
each subsidiary to comply, with all applicable laws, rules, regulations and
orders, noncompliance with which could have a Material Adverse Effect.
Section 4.7. Keeping of Records and Books of Account. The Company
shall keep and cause each subsidiary to keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and
its subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
11
Section 4.8. Other Agreements. The Company shall not enter into any
agreement the terms of which such agreement would restrict or impair the ability
of the Company to perform its obligations under this Agreement.
Section 4.9. Notice of Certain Events Affecting Registration;
Suspension of Right to Request a Draw Down. The Company will immediately notify
the Purchaser in writing and obtain an acknowledgment from Purchaser upon the
occurrence of any of the following events in respect of the Registration
Statement or related prospectus in respect of the Shares: (i) receipt of any
request for additional information from the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement the response to which would require any amendments or supplements to
the Registration Statement or related prospectus; (ii) the issuance by the SEC
or any other federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in the Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case of
the Registration Statement, 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 not misleading, and that in the case
of the related prospectus, 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 the light of the circumstances
under which they were made, not misleading; and (v) the Company's reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate. The Company shall not deliver to the Purchaser any Draw
Down Notice during the continuation of any of the foregoing events. The Company
shall promptly make available to the Purchaser any such supplements or
amendments to the related prospectus, at which time, provided that the
registration statement and any supplements and amendments thereto are then
effective, the Company may recommence the delivery of Draw Down Notices.
Section 4.10. Consolidation; Merger. The Company shall not, at any
time after the date hereof, effect any merger or consolidation of the Company
with or into, or a transfer of all or substantially all of the assets of the
Company to, another entity (a "Consolidation Event") unless the resulting
successor or acquiring entity (if not the Company) assumes by written instrument
or by operation of law the obligation to deliver to the Purchaser such shares of
stock and/or securities as the Purchaser is entitled to receive pursuant to this
Agreement.
Section 4.11. Limitation on Future Financing. The Company agrees that,
except as set forth below, it will not enter into any sale of its Common Stock
or securities convertible into cash at a discount to the current market price
until the earlier of (i) 24 months from the Effective Date, or (ii) sixty (60)
days after the entire Commitment Amount has been purchased by the Purchaser. The
foregoing shall not prevent or limit the Company from engaging in any sale of
securities (i) in a registered public offering by the Company which is
underwritten by one or more established investment banks (not including an
equity line type of financing), (ii) in one or more private placements where the
purchasers do not have registration rights, (iii) pursuant to any presently
existing or future employee benefit plan which plan has been or is approved by
the Company's stockholders, (iv) pursuant to any compensatory plan for
directors, officers, full-time employee or key consultant, (v) in connection
with a strategic partnership or other business transaction, the principal
purpose of which is not simply to raise money, (vi) pursuant to a private
placement (not including an equity line type of financing) where the purchasers
do have registration rights provided that (A) such placement is entered into
within 30 calendar days of the Company completing at least two (2) consecutive
Draw Downs each for the applicable maximum Investment Amount pursuant to which
the Purchaser has purchased Draw Down Shares on at least 30 Trading Days during
the two most recent Draw Down Pricing Periods, and (B) the Company agrees to
exercise Draw Downs each for the maximum Investment Amount (and each with a
Threshold Price not to exceed 80% of the VWAP on the Trading Day the
corresponding Draw Down Notice is delivered) for each month thereafter until the
aggregate Purchase Price of such Draw Downs equals the aggregate gross proceeds
received by the Company (or its affiliates) pursuant to such private placement,
or (vii) to which Purchaser gives its prior written consent, which it shall not
unreasonably withhold. Further, the Purchaser shall have a right of first
refusal, to elect to participate, in such subsequent transaction in the case of
(i), (ii), (vi) and (vii) above. Such right of
12
first refusal must be exercised in writing and delivered pursuant to Section 9.4
hereof within seven (7) Trading Days of the Purchaser's receipt of notice of the
proposed terms of such financing.
Section 4.12. The Shares. The Draw Down Shares to be issued under this
Agreement shall be duly authorized by all necessary corporate action, and, when
paid for and issued in accordance with the terms hereof, the Draw Down Shares
shall be validly issued and outstanding, fully paid and non-assessable, and the
Purchaser shall be entitled to all rights accorded to a holder of Common Stock.
The Purchaser covenants with the Company as follows:
Section 4.13. Compliance with Law. The Purchaser agrees that its
trading activities with respect to shares of the Company's Common Stock will be
in compliance with all applicable state and federal securities laws, rules and
regulations and rules and regulations of the Principal Market on which the
Company's Common Stock is listed. Without limiting the generality of the
foregoing, the Purchaser agrees that it will, whenever required by federal
securities laws, deliver the prospectus included in the Registration Statement
to any purchaser of Shares from the Purchaser. Article V
CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS
Section 5.1. Conditions Precedent to the Obligation of the Company to
Sell the Shares. The obligation hereunder of the Company to proceed to close
this Agreement and to issue and sell the Shares to the Purchaser is subject to
the satisfaction or waiver, at or before the Initial Closing, and as of each
Settlement Date of each of the conditions set forth below. These conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion.
(a) Accuracy of the Purchaser's Representations and
Warranties. The representations and warranties of the Purchaser shall
be true and correct in all material respects as of the date when made
and as of the Initial Closing and as of each Settlement Date as though
made at that time, except for representations and warranties that
speak as of a particular date.
(b) Performance by the Purchaser. The Purchaser shall have
performed, satisfied and complied in all material respects with all
material covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Purchaser
at or prior to the Initial Closing and as of each Settlement Date.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.
Section 5.2. Conditions Precedent to the Obligation of the Purchaser
to Close. The obligation hereunder of the Purchaser to perform its obligations
under this Agreement and to purchase the Shares is subject to the satisfaction
or waiver, at or before the Initial Closing, of each of the conditions set forth
below. These conditions are for the Purchaser's sole benefit and may be waived
by the Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and
Warranties. Each of the representations and warranties of the Company
shall be true and correct in all material respects as of the date when
made and as of the Initial Closing as though made at that time (except
for representations and warranties that speak as of a particular
date).
13
(b) Performance by the Company. The Company shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Initial
Closing.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(d) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority shall
have been commenced, and no investigation by any governmental
authority shall have been threatened, against the Purchaser or the
Company or any subsidiary, or any of the officers, directors or
affiliates of the Company or any subsidiary seeking to restrain,
prevent or change the transactions contemplated by this Agreement, or
seeking damages in connection with such transactions.
(e) Opinion of Counsel, Etc. At the Initial Closing, the
Purchaser shall have received an opinion of counsel to the Company,
dated as of the Initial Closing Date, in the form of Exhibit C hereto.
(f) Warrant. On the Initial Closing Date, the Company shall
issue to the Purchaser a warrant certificate to purchase up to a
number of shares of Common Stock equal to $5,000,000 divided by the
VWAP on the Trading Day immediately preceding the Initial Closing
Date. The Warrant shall have a term from its initial date of exercise
of three (3) years. The exercise price of the Warrant shall be 115% of
the average of the VWAPs during the fifteen (15) Trading Days
immediately preceding the Initial Closing Date. The Common Stock
underlying the Warrant will be registered in the Registration
Statement referred to in Section 4.3 hereof. The Warrant shall be in
the form of Exhibit E hereto.
Section 5.3. Conditions Precedent to the Obligation of the Purchaser
to Accept a Draw Down and Purchase the Shares. The obligation hereunder of the
Purchaser to accept a Draw Down request and to acquire and pay for the Shares is
subject to the satisfaction at or before each Settlement Date, of each of the
conditions set forth below.
(a) Satisfaction of Conditions to Initial Closing. The
Company shall have satisfied, or the Purchaser shall have waived at
the Initial Closing, the conditions set forth in Section 5.2 hereof
(b) Effective Registration Statement. The Registration
Statement registering the Shares shall have been declared effective by
the SEC and shall remain effective on each Settlement Date.
(c) No Suspension. Trading in the Company's Common Stock
shall not have been suspended by the SEC or the Principal Market
(except for any suspension of trading of limited duration agreed to by
the Company, which suspension shall be terminated prior to the
delivery of each Draw Down Notice), and, at any time prior to such
Draw Down Notice, trading in securities generally as reported on the
Principal Market shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are
reported on the Principal Market unless the general suspension or
limitation shall have been terminated prior to the delivery of such
Draw Down Notice.
(d) Material Adverse Effect. No Material Adverse Effect and
no Consolidation Event where the successor entity has not agreed to
perform the Company's obligations shall have occurred.
(e) Opinion of Counsel. The Purchaser shall have received
(i) a "down-to-date" letter from the Company's counsel, confirming
that there is no change from the counsel's previously delivered
opinion, or else specifying with particularity the reason for any
change and an opinion as to the additional items specified in Exhibit
C hereto, and (ii) any other items set forth in the Escrow Agreement.
Article VI
14
DRAW DOWN TERMS
Section 6.1. Draw Down Terms. Subject to the satisfaction of the
conditions set forth in this Agreement, the parties agree as follows:
(a) The Company, may, in its sole discretion, issue and
exercise a draw down (a "Draw Down") during each Draw Down Pricing
Period, which Draw Down the Purchaser shall be obligated to accept for
a period of 24 months commencing immediately after the Effective Date
(the "Commitment Period").
(b) Only one Draw Down shall be allowed in each Draw Down
Pricing Period. There shall be at least seven (7) Trading Days between
Draw Down Pricing Periods. The number of shares of Common Stock
purchased by the Purchaser with respect to each Draw Down shall be
determined as set forth in Section 6.1(d) herein and settled on:
(i) as to the 1st through the 11th Trading Days
after a Draw Down Pricing Period commences (the "First
Settlement Period"), on the 13th Trading Day after a Draw
Down Pricing Period commences; and
(ii) (ii) as to the 12th through the 22nd Trading
Days after a Draw Down Pricing Period commences (the "Second
Settlement Period"), the 24th Trading Day after a Draw Down
Pricing Period. (each, a "Settlement Date" and the First and
Second Settlement Periods collectively referred to as
"Settlement Periods").
In connection with each Draw Down Pricing Period, the Company may set
the Threshold Price in the Draw Down Notice.
(c) The minimum Investment Amount for any Draw Down shall be
$100,000 and the maximum Investment Amount as to each Draw Down shall
be the lesser of (i) $1,500,000, and (ii) 10% of the average of the
VWAPs for the Common Stock for the sixty (90) calendar day period
immediately prior to the applicable Commencement Date (defined below)
multiplied by the total trading volume in respect of the Common Stock
for the sixty (90) calendar day period immediately prior to such
Commencement Date.
(d) The number of Shares of Common Stock to be issued on
each Settlement Date shall be a number of shares equal to the sum of
the quotients (for each trading day within the Settlement Period) of
(x) 1/22nd of the Investment Amount, and (y) the Purchase Price on
each Trading Day within the Settlement Period, subject to the
following adjustments:
(i) if the VWAP on a given Trading Day is less
than the Threshold Price, then the Investment Amount will be
reduced by 1/22nd and that day shall be withdrawn from the
Settlement Period; and
(ii) trading of the Common Stock on the Principal
Market is suspended for more than three (3) hours, in the
aggregate, on any Trading Day during the Settlement Period,
the Investment Amount shall be reduced by 1/22nd and that
day shall be withdrawn from the applicable Settlement
Period.
(e) The Company must inform the Purchaser by delivering a
draw down notice, in the form of Exhibit D hereto (the "Draw Down
Notice"), via facsimile transmission in accordance with Section 9.4 as
to the amount of the Draw Down (the "Investment Amount") the Company
wishes to exercise, before the first day of the Draw Down Pricing
Period (the "Commencement Date"). If the Commencement Date is to be
the date of the Draw Down Notice, the Draw Down Notice must be
delivered to and receipt confirmed by the Purchaser at least one hour
before trading commences on such date. At no time shall the Purchaser
be required
15
to purchase more than the maximum Investment Amount for a given Draw
Down Pricing Period so that if the Company chooses not to exercise the
maximum Investment Amount in a given Draw Down Pricing Period the
Purchaser is not obligated to and shall not purchase more than the
scheduled maximum Investment Amount in a subsequent Draw Down Pricing
Period.
(f) On or before each Settlement Date, the Shares purchased
by the Purchaser shall be delivered to The Depository Trust Company
("DTC") on the Purchaser's behalf. Upon the Company electronically
delivering whole shares of Common Stock to the Purchaser or its
designees via DTC through its Deposit Withdrawal Agent Commission
("DWAC") system by 1:00 p.m. EST, the Purchaser shall wire transfer
immediately available funds to the Company's designated account on
such day, less any fees as set forth in the Escrow Agreement, which
fees shall be wired as directed in the Escrow Agreement. Upon the
Company electronically delivering whole shares of Common Stock to the
Purchaser or its designees DTC account via DWAC after 1:00 pm EST, the
Purchaser shall wire transfer next day available funds to the
Company's designated account on such day, less any fees as set forth
in the Escrow Agreement, which fees shall be wired as directed in the
Escrow Agreement. In the event that the Purchaser elects to use the
Escrow Agent, the Shares shall be credited by the Company to the DTC
account designated by the Purchaser via DWAC upon receipt by the
Escrow Agent of payment for the Draw Down into the Escrow Agent's
master escrow account as provided in the Escrow Agreement. The Escrow
Agent shall be directed to pay the purchase price to the Company, net
of Seven Hundred Fifty Dollars ($750) per Settlement as escrow
expenses to the Escrow Agent and any additional fees as set forth in
the Escrow Agreement. The delivery of the Shares into the Purchaser's
DTC account in exchange for payment therefor shall be referred to
herein as "Settlement".
ARTICLE VII
TERMINATION
Section 7.1. Term. The term of this Agreement shall begin on the date
hereof and shall end twenty-four (24) months from the Effective Date or as
otherwise set forth in Section 7.2.
Section 7.2. Other Termination.
(a) This Agreement shall terminate upon one (1) Trading
Day's notice if (i) an event resulting in a Material Adverse Effect
has occurred and has not been cured for a period of 60 days, (ii) the
Common Stock is de-listed from the Principal Market unless such
de-listing is in connection with the listing of the Common Stock on
the Nasdaq National Market, Nasdaq SmallCap Market, the American Stock
Exchange or the New York Stock Exchange, or (iii) the Company files
for protection from creditors under any applicable law.
(b) The Company may terminate this Agreement upon one (1)
Trading Day's notice if the Purchaser shall fail to fund more than one
properly noticed Draw Down within three (3) Trading Days of a
Settlement Date.
Section 7.3. Effect of Termination. In the event of termination by the
Company or the Purchaser, written notice thereof shall forthwith be given to the
other party and the transactions contemplated by this Agreement shall be
terminated without further action by either party. If this Agreement is
terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become
void and of no further force and effect, except for Sections 9.1 and 9.2, and
Article VIII herein. Nothing in this Section 7.3 shall be deemed to release the
Company or the Purchaser from any liability for any breach under this Agreement,
or to impair the rights of the Company or the Purchaser to compel specific
performance by the other party of its obligations under this Agreement.
16
ARTICLE VIII
INDEMNIFICATION
Section 8.1. General Indemnity.
(a) The Company agrees to indemnify and hold harmless the
Purchaser (and its directors, officers, affiliates, agents, successors
and assigns) from and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys' fees, charges and disbursements)
incurred by the Purchaser as a result of any inaccuracy in or breach
of the representations, warranties or covenants made by the Company
herein.
(b) The Purchaser agrees to indemnify and hold harmless the
Company and its directors, officers, affiliates, agents, successors
and assigns from and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys' fees, charges and disbursements)
incurred by the Company as result of any material inaccuracy in or
breach of the representations, warranties or covenants made by the
Purchaser herein. Notwithstanding anything to the contrary herein, the
Purchaser shall be liable under this Section 8.1 for only that amount
as does not exceed the net proceeds to the Purchaser as a result of
the sale of the Shares.
Section 8.2. Indemnification Procedure. Any party entitled to
indemnification under this Article VIII (an "Indemnified Party") will give
written notice to the indemnifying party of any matters giving rise to a claim
for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VIII except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
Indemnified Party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of counsel to the Indemnified Party a conflict of interest
between it and the indemnifying party may exist with respect of such action,
proceeding or claim, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. In the event that the indemnifying party
advises an Indemnified Party that it will contest such a claim for
indemnification hereunder, or fails, within thirty (30) days of receipt of any
indemnification notice to notify, in writing, such person of its election to
defend, settle or compromise, at its sole cost and expense, any action,
proceeding or claim (or discontinues its defense at any time after it commences
such defense), then the Indemnified Party may, at its option, defend, settle or
otherwise compromise or pay such action or claim. In any event, unless and until
the indemnifying party elects in writing to assume and does so assume the
defense of any such claim, proceeding or action, the Indemnified Party's costs
(including reasonable attorneys' fees, charges and disbursements) and expenses
arising out of the defense, settlement or compromise of any such action, claim
or proceeding shall be losses subject to indemnification hereunder. The
Indemnified Party shall cooperate fully with the indemnifying party in
connection with any settlement negotiations or defense of any such action or
claim by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party, which relates to such
action or claim. The indemnifying party shall keep the Indemnified Party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the Indemnified Party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this Article VIII to the contrary, the indemnifying
party shall not, without the Indemnified Party's prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the Indemnified Party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all liability in respect of
such claim. The indemnification required by this Article VIII shall be made by
periodic payments of the amount thereof during the course of investigation or
defense, as and when bills are received or expense, loss, damage or liability is
incurred, within ten (10) Trading Days of written notice thereof to the
indemnifying party so long as the Indemnified Party irrevocably agrees to refund
such moneys, with interest, if it is ultimately determined by a court of
competent jurisdiction that such party was not entitled to indemnification. The
indemnity agreements contained herein shall be in
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addition to (a) any cause of action or similar rights of the Indemnified Party
against the indemnifying party or others, and (b) any liabilities to which the
indemnifying party may be subject.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Fees and Expenses. Each of the parties to this Agreement
shall pay its own fees and expenses related to the transactions contemplated by
this Agreement; except that, the Company shall pay, at the Initial Closing, the
fees and expenses incurred by the Purchaser in connection with the preparation,
negotiation, execution and delivery of this Agreement and the transactions
contemplated hereunder, as further set forth in the Escrow Agreement. In
addition, the Company shall pay all reasonable fees and expenses incurred by the
Purchaser in connection with any subsequent amendments, modifications or waivers
of this Agreement, the Escrow Agreement or the Registration Rights Agreement or
incurred in connection with the enforcement of this Agreement, the Escrow
Agreement and the Registration Rights Agreement, including, without limitation,
all reasonable attorneys' fees and expenses if such subsequent amendment,
modification or waiver is at the request of the Company. The Company shall pay
all stamp or other similar taxes and duties levied in connection with issuance
of the Shares pursuant hereto.
Section 9.2. Specific Enforcement. The Company and the Purchaser
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.
Section 9.3. Entire Agreement; Amendment. The Transaction Docuemnts
contain the entire understanding of the parties with respect to the matters
covered in the Transaction Documents, neither the Company nor the Purchaser
makes any representations, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or amended other than
by a written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought and no condition to closing any Draw Down in favor
of the Purchaser may be waived by the Purchaser.
Section 9.4. Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery or facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company: 000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax:
With copies to: Xxxxx & Lardner
(which shall not constitute One Maritime Plaza, 6th Floor
notice) Xxx Xxxxxxxxx, XX 00000
Attn:
Tel: (000) 000-0000
Fax:
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If to Purchaser: c/o Trident Xxxxxxxx
P.O. Box 146
Road Town, Tortola
British Virgin Islands
Attn: Francois Morax
Fax: 000-000-000-0000
with copies to: Xxxxxxx Xxxxxx & Green P.C.
(which shall not constitute 000 Xxxx Xxxxxx
xxxxxx) Xxx Xxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx
Any party hereto may from time to time change its address for notices
by giving written notice of such changed address to the other party hereto in
accordance herewith. Section 9.5. Waivers. No waiver by either party of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provisions, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.
Section 9.6. Headings. The article, section and subsection headings in
this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
Section 9.7. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
The parties hereto may not amend this Agreement or any rights or obligations
hereunder without the prior written consent of the Company and each Purchaser to
be affected by the amendment. After Initial Closing, the assignment by a party
to this Agreement of any rights hereunder shall not affect the obligations of
such party under this Agreement.
Section 9.8. No Third Party Beneficiaries.This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 9.9. Governing Law/Arbitration. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York, without giving effect to the choice of law provisions. The Company and
the Purchaser agree to submit itself to the in personam jurisdiction of the
state and federal courts situated within the Southern District of the State of
New York with regard to any controversy arising out of or relating to this
Agreement. Any dispute under this Agreement or any Exhibit attached hereto shall
be submitted to arbitration under the American Arbitration Association (the
"AAA") in New York City, New York, and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of three (3)
members (hereinafter referred to as the "Board of Arbitration") selected as
according to the rules governing the AAA. The Board of Arbitration shall meet on
consecutive business days in New York City, New York, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the losing party is
required to pay to the other party in respect of a claim filed. In connection
with rendering its decisions, the Board of Arbitration shall adopt and follow
the laws of the State of New York. To the extent practical, decisions of the
Board of Arbitration shall be rendered no more than thirty (30) calendar days
following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. The Board of Arbitration shall be authorized and is
directed to enter a default judgment against any party refusing to participate
in the arbitration proceeding within thirty days of any deadline for such
participation. Any decision made by the Board of Arbitration (either prior to or
after the expiration of such thirty (30) calendar day period) shall be final,
binding and conclusive on the parties to the dispute, and entitled to be
enforced to the fullest extent permitted by law and entered in any court of
competent
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jurisdiction. The prevailing party shall be awarded its costs, including
attorneys' fees, from the non-prevailing party as part of the arbitration award.
Any party shall have the right to seek injunctive relief from any court of
competent jurisdiction in any case where such relief is available. The
prevailing party in such injunctive action shall be awarded its costs, including
attorney's fees, from the non-prevailing party.
Section 9.10. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart. Execution may be made by
delivery by facsimile.
Section 9.11. Publicity. Neither the Company nor the Purchaser shall
issue any press release or otherwise make any public statement or announcement
with respect to this Agreement or the transactions contemplated hereby or the
existence of this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld. After the Initial Closing, the
Company may issue a press release or otherwise make a public statement or
announcement with respect to this Agreement or the transactions contemplated
hereby or the existence of this Agreement; provided, however, that prior to
issuing any such press release, making any such public statement or
announcement, the Company obtains the prior consent of the Purchaser, which
consent shall not be unreasonably withheld or delayed.
Section 9.12. Severability. The provisions of this Agreement are
severable and, in the event that The Board of Arbitration or any court or
officials of any regulatory agency of competent jurisdiction shall determine
that any one or more of the provisions or part of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement
and this Agreement shall be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of such provision, had never been contained
herein, so that such provisions would be valid, legal and enforceable to the
maximum extent possible, so long as such construction does not materially
adversely effect the economic rights of either party hereto.
Section 9.13. Further Assurances. From and after the date of this
Agreement, upon the request of the Purchaser or the Company, each of the Company
and the Purchaser shall execute and deliver such instruments, documents and
other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement.
Section 9.14. Effectiveness of Agreement. This Agreement shall become
effective only upon satisfaction of the conditions precedent to the Initial
Closing set forth in Article I of the Escrow Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorize officer as of this __ day of
January, 2001.
WORLD WIDE WIRELESS
COMMUNICATIONS, INC.
By:
--------------------------------------
Xxxxxxx X. Xxxxxx, President & CEO
Grenville Finance Ltd.
By:
------------
Francois Morax, Authorized Signatory
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