EXHIBIT 10.1
LOAN AGREEMENT
Between
WaveRider Communications Inc.
and
the Lenders Signatory Hereto
LOAN AGREEMENT dated as of October 15, 1999 (the "Agreement"), between
the Lenders signatory hereto (each a "Lender" and together the "Lenders"), and
WaveRider Communications Inc., a corporation organized and existing under the
laws of the State of Nevada (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall borrow from the Lenders the sum
of $1,500,000, and the Lenders shall also receive Warrants (as defined below) to
purchase up to 180,000 shares of the Common Stock (as defined below).
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Certain Definitions
Section 1.1. "Closing" shall mean the closing of the loan pursuant to Section
2.1.
Section 1.2. "Closing Date" shall mean the date on which all conditions to the
Closing have been satisfied or waived by the appropriate party or parties (as
defined in Section 2.1 (b) hereto) and the Closing shall have occurred.
Section 1.3. "Common Stock" shall mean the Company's common stock, $0.001 par
value.
Section 1.4. "Escrow Agent" shall have the meaning set forth in the Escrow
Agreement.
Section 1.5. "Escrow Agreement" shall mean the Escrow Agreement in substantially
the form of Exhibit B hereto executed and delivered contemporaneously with this
Agreement.
Section 1.6. "Note(s)" shall mean the promissory note or notes issued to the
Lenders at the Closing in the form of Exhibit A
hereto.
Section 1.7. "Option Shares" shall mean the shares of Common Stock which the
Lenders have the right to purchase following maturity of the Notes, as set forth
in the Notes.
Section 1.8. "Person" shall mean an individual, a corporation, a partnership, a
limited liability company, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
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Section 1.9. "Purchase Price" shall mean $1,500,000.
Section 1.10. "SEC" shall mean the Securities and Exchange Commission.
Section 1.11. "Securities Act" shall mean the Securities Act of 1933, as
amended.
Section 1.12. "Trading Day" shall mean any day during which the Over the Counter
Bulletin Board shall be open for business.
Section 1.13. "Warrants" shall mean the Warrants substantially in the form of
Exhibit C to be issued to the Lenders hereunder.
Section 1.14. "Warrant Shares" shall mean all shares of Common Stock or other
securities issued or issuable pursuant to exercise of the Warrants.
ARTICLE II
Purchase and Sale of the Note and Warrants
Section 2.1. Investment.
(a) Upon the terms and subject to the conditions set forth herein, the Company
agrees to sell, and each Lender, severally and not jointly, agrees to purchase
an aggregate total of One Million Five Hundred Thousand Dollars ($1,500,000)
principal amount of the Notes at the Purchase Price together with the Warrants,
in the proportions set forth in the signature pages hereto.
(b) Upon execution and delivery of this Agreement, each Lender shall deliver to
the Escrow Agent immediately available funds in their proportionate amount of
the Purchase Price for the Closing as set forth on the signature pages hereto,
and the Company shall deliver the Notes, the Option Shares and the Warrants to
the Escrow Agent, in each case to be held by the Escrow Agent pursuant to the
Escrow Agreement.
Upon satisfaction or waiver by the appropriate party or parties of the
conditions set forth in Section 2.1(c), the Closing shall occur at the offices
of the Escrow Agent at which the Escrow Agent (x) shall release the Notes and
the Warrants to the Lenders, (y) shall release the Purchase Price to the Company
(after all fees have been paid as set forth in the Escrow Agreement), pursuant
to the terms of the Escrow Agreement and (z) shall retain the Option Shares as
custodian thereof.
(c) The Closing is subject to the satisfaction or waiver by the appropriate
party or parties of the following conditions:
(i) acceptance and execution by the Company and by the Lenders, of this
Agreement and all Exhibits hereto;
(ii) delivery into escrow by each Lender of immediately available funds in
the amount of the Purchase Price of the Notes to be issued at the
Closing, as more fully set forth in the Escrow Agreement;
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(iii)all representations and warranties of the Lenders contained herein
shall remain true and correct as of the Closing Date (as a condition
to the Company's obligations);
(iv) all representations and warranties of the Company contained herein
shall remain true and correct as of the Closing Date (as a condition
to the Lenders' obligations);
(v) the Company shall have obtained all permits and qualifications
required by any state for the offer and sale of the Notes, the Option
Shares and Warrants, or shall have the availability of exemptions
therefrom;
(vi) the sale and issuance of the Notes and the Warrants hereunder, and the
proposed issuance by the Company to the Lenders of the Common Stock
underlying the Warrants upon exercise thereof and of the Option Shares
upon exercise of the rights of the Lenders with respect thereto shall
be legally permitted by all laws and regulations to which the Lenders
and the Company are subject and there shall be no ruling, judgment or
writ of any court prohibiting the transactions contemplated by this
Agreement;
(vii)delivery of the original fully executed Notes and Warrants and Option
Shares to the Escrow Agent; and
(viii) delivery to the Escrow Agent of the opinion of Xxxxx, Xxxx & Xxxxx
LLP in the form of Exhibit D hereto.
(d) The number of Warrants to be issued at the Closing shall be 180,000, with an
initial exercise price equal to the closing bid price of the Common Stock on the
OTC Bulletin Board on the Trading Day prior to the Closing Date.
ARTICLE III
Representations and Warranties of Lender
Each Lender, severally and not jointly, represents and warrants to the Company
that:
Section 3.1. Intent. The Lender is entering into this Agreement for its own
account and not with a view to or for sale in connection with any distribution
of the Note, the Warrants or the Common Stock issuable upon exercise thereof.
The Lender has no present arrangement (whether or not legally binding) at any
time to sell the Note, the Warrant, any Warrant Shares to or through any person
or entity; provided, however, that by making the representations herein, the
Lender does not agree to hold such securities for any minimum or other specific
term and reserves the right to dispose of the Warrant Shares at any time in
accordance with federal and state securities laws applicable to such
disposition.
Section 3.2. Sophisticated Lender. The Lender is a sophisticated investor (as
described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor (as
defined in Rule 501 of Regulation D), and Lender has such experience in business
and financial matters that it has the capacity to protect its own interests in
connection with this transaction and is capable of evaluating the merits and
risks of an investment in the Note, the Warrants and the underlying Common
Stock. The Lender acknowledges that an investment in the Note, the Warrants and
the underlying Common Stock is speculative and involves a high degree of risk.
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Section 3.3. Authority. This Agreement and each agreement attached as an Exhibit
hereto that is required to be executed by Lender has been duly authorized and
validly executed and delivered by the Lender and is a valid and binding
agreement of the Lender enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
Section 3.4. Absence of Conflicts. The execution and delivery of this Agreement
and each agreement which is attached as an Exhibit hereto and executed by the
Lender in connection herewith, and the consummation of the transactions
contemplated hereby and thereby, and compliance with the requirements hereof and
thereof by the Lender, will not violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Lender or (a) violate any
provision of any indenture, instrument or agreement to which Lender is a party
or is subject, or by which Lender or any of its assets is bound; (b) conflict
with or constitute a material default thereunder; (c) result in the creation or
imposition of any lien pursuant to the terms of any such indenture, instrument
or agreement, or constitute a breach of any fiduciary duty owed by Lender to any
third party; or (d) require the approval of any third-party (which has not been
obtained) pursuant to any material contract, agreement, instrument, relationship
or legal obligation to which Lender is subject or to which any of its assets,
operations or management may be subject.
Section 3.5. Disclosure; Access to Information. The Lender has received all
documents, records, books and other information pertaining to Lender's
investment in the Company that have been requested by the Lender.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to the Lenders that, except as set forth on
the Disclosure Schedule prepared by the Company and delivered herewith:
Section 4.1. Organization of the Company. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State of Nevada
and has all requisite corporate authority to own its properties and to carry on
its business as now being conducted.
Section 4.2. Authority. (i) The Company has the requisite corporate power and
corporate authority to enter into and perform its obligations under this
Agreement, the Notes, the Escrow Agreement, and the Warrants and to issue the
Notes, the Warrants and the Warrant Shares pursuant to their respective terms
and to issue the Option Shares upon exercise of the Lenders' rights thereto,
(ii) the execution, issuance and delivery of this Agreement, the Escrow
Agreement, the Notes, the Option Shares and the Warrants by the Company and the
consummation by it of the transactions contemplated hereby 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) this Agreement, the Escrow Agreement, the Notes and the
Warrants have been duly executed and delivered by the Company and at 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, 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 exercise of the Warrants and for
delivery of the Option Shares against cancellation of the Notes.
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Section 4.3. Valid Issuances. When issued and paid for in accordance with the
Warrants, the Warrant Shares will be duly and validly issued, fully paid, and
non-assessable. The Option Shares have been duly authorized and registered for
sale by the Company pursuant to presently effective registration statement file
no. 333-86251, and upon exercise of the Lenders' rights to tender the Notes in
exchange therefor, the Option Shares shall be validly issued, fully paid and
non-assessable shares of Common Stock of the Company, and shall be freely
transferable by the Lenders if sold in accordance with the distribution plan in
the above-mentioned registration statement.
Section 4.4. No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of and payment of
the Notes, the Warrants and the Warrant Shares, and upon exercise of the
Lenders' rights under the Notes, the Option Shares, do not and will not (i)
result in a violation of the Company's Articles of Incorporation or By-Laws or
(ii) conflict with, or constitute a material default (or an event that 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
material agreement, indenture or instrument, or any "lock-up" or similar
provision of any underwriting, equity line or similar agreement to which the
Company is a party, or (iii) result in a violation of any federal, state or
local law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to the Company or by which any
material property or asset of the Company is bound or affected, nor is the
Company otherwise in violation of, conflict with or default under any of the
foregoing (except in each case for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not have,
individually or in the aggregate, a Material Adverse Effect). The business of
the Company is not being conducted in violation of any law, ordinance or
regulation of any governmental entity, except for possible violations that
either singly or in the aggregate would 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 Notes or the Warrants or the Option Shares in accordance with the
terms hereof (other than any registration statement or so-called "blue sky"
filings that may be filed pursuant hereto); provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Lenders
herein.
Section 4.5. No Undisclosed Events or Circumstances. Since June 30, 1999, 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.
Section 4.6. Litigation and Other Proceedings. Except as disclosed in the
Company's SEC filings (the "SEC Documents"), there are no lawsuits or
proceedings pending or, to the knowledge of the Company, threatened, against the
Company or any subsidiary, nor has the Company received any written or oral
notice of any such action, suit, proceeding or investigation, which could
reasonably be expected to have a Material Adverse Effect. Except as set forth in
the SEC Documents, no judgment, order, writ, injunction or decree or award has
been issued by or, to the knowledge of the Company, requested of any court,
arbitrator or governmental agency.
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Section 4.7. Internal Controls and Procedures. The Company maintains books and
records and internal accounting controls which provide reasonable assurance that
(i) all transactions to which the Company or any subsidiary is a party or by
which its properties are bound are executed with management's authorization;
(ii) the recorded accounting of the Company's consolidated assets is compared
with existing assets at regular intervals; (iii) access to the Company's
consolidated assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which the Company or any subsidiary
is a party or by which its properties are bound are recorded as necessary to
permit preparation of the financial statements of the Company in accordance with
U.S. generally accepted accounting principles.
Section 4.8. Payments and Contributions. Neither the Company, any subsidiary,
nor any of its officers or, to its knowledge, directors or other employees has
(i) used any Company funds for any unlawful contribution, endorsement, gift,
entertainment or other unlawful expense relating to political activity; (ii)
made any direct or indirect unlawful payment of Company funds to any foreign or
domestic government official or employee; (iii) violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any bribe, rebate, payoff, influence payment, kickback or other similar
payment to any person with respect to Company matters.
Section 4.9. No Misrepresentation. The representations and warranties of the
Company contained in this Agreement, any schedule, annex or exhibit hereto and
any agreement, instrument or certificate furnished by the Company to the Lenders
pursuant to this Agreement, do 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 under which they
were made, not misleading.
ARTICLE V
Covenants of the Company
Section 5.1. Registration Statement. The Company shall use its best efforts to
cause its Registration Statement on Form S-3, File No. 333-86251 to remain
effective until payment in full of the Notes.
Section 5.2. Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to issue the Warrant Shares pursuant to any exercise of the
Warrants and to issue the Option Shares as set forth in the Notes. The number of
shares so reserved from time to time, as theretofore increased or reduced as
hereinafter provided, may be reduced by the number of shares actually delivered
pursuant to any exercise of the Warrants or upon exercise of the Lenders' rights
with respect to the Option Shares and the number of shares so reserved shall be
increased or decreased to reflect potential increases or decreases in the Common
Stock that the Company may thereafter be obligated to issue by reason of
adjustments to the Warrants.
Section 5.3. Listing of Common Stock. So long as any part of the Notes remain
unpaid, from whatever source, or the Option Shares remain held of record by any
Lender, the Company hereby agrees to maintain the listing of the Common Stock on
the OTC Bulletin Board or another nationally recognized stock market.
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Section 5.4. Exchange Act Registration. So long as any part of the Notes remain
unpaid, from whatever source, the Company will cause its Common Stock to remain
registered under Section 12(b) or (g) of the Exchange Act, will use its best
efforts to comply in all respects with its reporting and filing obligations
under the Exchange Act, and will not take any action or file any document
(whether or not permitted by the Exchange Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under said Act until the Lenders have disposed of all of
their Warrant Shares and Option Shares, if any.
Section 5.5. Corporate Existence; Conflicting Agreements. Subject to Section
5.6, the Company will take all steps necessary to preserve and continue the
corporate existence of the Company. The Company shall not enter into any
agreement, the terms of which agreement would restrict or impair the right or
ability of the Company to perform any of its obligations under this Agreement or
any of the other agreements attached as exhibits hereto.
Section 5.6. Consolidation; Merger. So long as any part of the Notes remain
unpaid, from whatever source, 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 Company's obligations under this Agreement, including the obligation to
deliver to the Lenders such shares of stock and/or securities as the Lenders are
entitled to receive pursuant to the Warrants or the Notes.
Section 5.7. Cooperation with Respect to Option Shares. In the event that any
Lender shall exercise its rights to purchase Option Shares in exchange for the
Notes, the Company agrees to cooperate with Lenders in the transfer of the
Option Shares. Such cooperation shall include, but not be limited to, causing
the Company's counsel to provide a legal opinion to the Company's transfer agent
concerning the transferability of the Option Shares following a valid purchase
thereof, or directing its transfer agent to rely upon such a legal opinion from
counsel to Lenders.
Section 5.8. Prepayment out of Equity Line of Credit. The Company agrees that if
it shall enter into an equity line of credit or similar funding arrangement
prior to the maturity date of the Notes, that it shall commence making draws or
puts, however denominated in such equity line agreement, no later than
seventy-five (75) days after the Closing Date, if permitted under such equity
line, to the maximum extent permitted under such equity line, for the purpose of
prepaying or paying the Notes. In any event, the Company shall utilize at least
fifty percent (50%) of the net proceeds from any sale by the Company of its
securities for cash for the purpose of prepaying the Notes.
Section 5.9. Pro-Rata Treatment of Notes. At all times, the Company shall use
best efforts to treat the Lenders (if there is more than one Lender) equally,
pro-rata to the principal amounts of their respective Notes, except as may be
otherwise agreed by he Lenders in writing in a particular instance, with respect
to payments and prepayments of principal and interest.
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ARTICLE VI
Survival; Indemnification
Section 6.1. Survival. The representations, warranties and covenants made by
each of the Company and each Lender in this Agreement, the annexes, schedules
and exhibits hereto and in each instrument, agreement and certificate entered
into and delivered by them pursuant to this Agreement, shall survive the Closing
and the consummation of the transactions contemplated hereby until payment in
full of the Notes, from whatever source. In the event of a breach or violation
of any of such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach or violation available to it under the provisions
of this Agreement, irrespective of any investigation made by or on behalf of
such party on or prior to the Closing Date.
Section 6.2. Indemnity. (a) The Company hereby agrees to indemnify and hold
harmless the Lenders, their respective Affiliates (as defined in SEC Rule 405)
and their respective officers, directors, partners and members (collectively,
the "Lender Indemnitees"), from and against any and all Damages, in each case
promptly as incurred by the Lender Indemnitees and to the extent arising out of
or in connection with:
(i) any misrepresentation, omission of fact or breach of any of the
Company's representations or warranties contained in this Agreement,
the annexes, schedules or exhibits hereto or any instrument, agreement
or certificate entered into or delivered by the Company pursuant to
this Agreement; or
(ii) any failure by the Company to perform in any material respect any of
its covenants, agreements, undertakings or obligations set forth in
this Agreement, the annexes, schedules or exhibits hereto or any
instrument, agreement or certificate entered into or delivered by the
Company pursuant to this Agreement; or
(iii)any action instituted against the Lenders, or any of them, by any
stockholder of the Company who is not an Affiliate of an Lender, with
respect to any of the transactions contemplated by this Agreement.
(b) Each Lender, severally and not jointly, hereby agrees to indemnify and hold
harmless the Company, its Affiliates and their respective officers, directors,
partners and members (collectively, the "Company Indemnitees"), from and against
any and all Damages, in each case promptly as incurred by the Company
Indemnitees and to the extent arising out of or in connection with:
(i) any misrepresentation, omission of fact, or breach of any of the
Lender's representations or warranties contained in this Agreement,
the annexes, schedules or exhibits hereto or any instrument, agreement
or certificate entered into or delivered by the Lender pursuant to
this Agreement; or
(ii) any failure by the Lender to perform in any material respect any of
its covenants, agreements, undertakings or obligations set forth in
this Agreement or any instrument, certificate or agreement entered
into or delivered by the Lender pursuant to this Agreement.
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Section 6.3. Notice. Promptly after receipt by either party hereto seeking
indemnification pursuant to Section 6.2 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party from whom indemnification pursuant to Section
6.2 is being sought (the "Indemnifying Party") of the commencement thereof; but
the omission to so notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is actually prejudiced by such omission or
delay. In connection with any Claim as to which both the Indemnifying Party and
the Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (y) the Indemnified Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
Section 6.4. Direct Claims. In the event one party hereunder should have a claim
for indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnified Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association as set forth in
Article VII. Judgment upon any award rendered by any arbitrators may be entered
in any court having competent jurisdiction thereof.
ARTICLE VII
Choice of Law; Arbitration
Section 7.1. Governing Law/Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. Any dispute under this Agreement
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
according to the rules governing the AAA. The Board of Arbitration shall meet on
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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 unless the matter at issue is the corporation
law of the company's state of incorporation, in which event the corporation law
of such jurisdiction shall govern such issue. 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. 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 jurisdiction. The Board of Arbitration shall be authorized and is
hereby directed to enter a default judgment against any party failing to
participate in any proceeding hereunder within the time periods set forth in the
AAA rules. The non-prevailing party to any arbitration (as determined by the
Board of Arbitration) shall pay the expenses of the prevailing party, including
reasonable attorney's fees, in connection with such arbitration. Any party shall
be entitled to obtain injunctive relief from a court in any case where such
relief is available.
ARTICLE VIII
Assignment
Section 8.1. Assignment. Neither this Agreement nor any rights of the Lenders or
the Company hereunder may be assigned by either party to any other person.
Notwithstanding the foregoing, (a) the provisions of this Agreement shall inure
to the benefit of, and be enforceable by, any permitted transferee of any of the
Notes or Warrants or Option Shares purchased or acquired by any Lender hereunder
with respect to the Notes or Warrants held by such person, and (b) each Lender's
interest in this Agreement may be assigned at any time, in whole or in part, to
any other person or entity (including any Affiliate of the Lender) who agrees to
make the representations and warranties contained in Article III and who agrees
to be bound by the terms of this Agreement.
ARTICLE IX
Notices
Section 9.1. Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) hand delivered, (ii) deposited
in the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice
or other communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, 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 first business day
following the date of sending by reputable courier service, fully prepaid,
addressed to such address, or (c) upon actual receipt of such mailing, if
mailed. The addresses for such communications shall be:
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If to the Company: 000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attention: T. Xxxxx Xxxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to (shall not
constitute notice): Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to the Lenders: As set forth on the signature pages hereto
with a copy to: Xxxxxx X. Xxxxx, Esq.
(shall not constitute notice) Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 9.1 by giving written notice of such changed
address or facsimile number to the other party hereto as provided in this
Section 9.1.
ARTICLE X
Miscellaneous
Section 10.5. Counterparts/ Facsimile/ Amendments. This Agreement may be
executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by all parties.
Section 10.6. Entire Agreement. This Agreement, the agreements attached as
Exhibits hereto, which include, but are not limited to the Notes, the Warrants
and the Escrow Agreement, set forth the entire agreement and understanding of
the parties relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written relating to the subject matter hereof. The terms and
conditions of all Exhibits to this Agreement are incorporated herein by this
reference and shall constitute part of this Agreement as is fully set forth
herein.
11
Section 10.7. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party.
Section 10.8. Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
Section 10.9. Number and Gender. There may be one or more Lenders parties to
this Agreement, which Lenders may be natural persons or entities. All references
to plural Lenders shall apply equally to a single Lender if there is only one
Lender, and all references to an Lender as "it" shall apply equally to a natural
person.
Section 10.10. Fees and Expenses. Each of the Company and the Lenders agrees to
pay its own expenses incident to the execution and delivery of this Agreement
and each agreement which is an Exhibit hereto, except that the Company shall pay
$20,000 for legal and escrow fees as set forth in the Escrow Agreement. The
Company shall reimburse the Lenders for their reasonable expenses and legal fees
incurred in enforcing this Agreement or in any modifications or waivers with
respect thereto.
Section 10.11. Brokerage. Each of the parties hereto represents that it has had
no dealings in connection with this transaction with any finder or broker other
than Ladenburg Xxxxxxxx & Co. Inc. who will demand payment of any fee or
commission from the other. The fees of Ladenburg shall be paid by the Company.
The Company on the one hand, and the Lenders, on the other hand, agree to
indemnify the other against and hold the other harmless from any and all
liabilities to any person claiming brokerage commissions or finder's fees on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby.
Section 10.12. Publicity. Except as required by law, the Company agrees that it
will not issue any press release or other public announcement of the
transactions contemplated by this Agreement without the prior consent of Lenders
holding a majority in interest of the Note, which shall not be unreasonably
withheld nor delayed. No release shall name the Lenders without their express
consent.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be executed by the undersigned, thereunto duly authorized, as of the date
first set forth above.
WaveRider Communications Inc.
By:_______________________________
T. Xxxxx Xxxxxxxxxxx
Chief Financial Officer
Address: c/o Ultra Finanz AG Lender: AMRO International, S.A.
Xxxxxxxxxxxxxxxxxx 0
Xxxxxx, XX-0000 Xxxxxxxxxxx By:_______________________________
Fax: 000-000-000-0000 Name: X.X. Xxxxxxxx
Principal Amount of Authorized Signatory
Notes to be Purchased: $1,500,000
12
EXHIBIT A
PROMISSORY NOTE
$1,500,000 October 27, 1999
FOR VALUE RECEIVED, and intending to be legally bound, WaveRider
Communications Inc., a Nevada corporation with an office and principal place of
business at 000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0 (the
"Maker"), hereby unconditionally and irrevocably promises to pay to the order of
AMRO International, S.A. (the "Payee"), at the offices of Ultra Finanz XX,
Xxxxxxxxxxxxxxxxxx 0, Xxxxxx XX-0000, Xxxxxxxxxxx, or such other place as Payee
may designate in writing, in lawful money of the United States of America, the
sum of One Million Five Hundred Thousand Dollars ($1,500,000) plus the Payment
Premium (as hereafter defined), plus all accrued but unpaid interest, on May 24,
2000 [the day which is 210 days from the Closing Date].
Interest shall accrue on the outstanding principal balance of this
Promissory Note daily from the date of issuance until paid in full at the rate
of ten percent (10%) per annum, and shall be due and payable at the maturity
date, except that upon any partial payment or prepayment of the principal
balance hereof, all accrued but unpaid interest shall be paid simultaneous with
such prepayment of principal.
This Promissory Note may be prepaid in whole or in part at any time or from
time to time subject to payment of the Payment Premium set forth herein and of
all accrued but unpaid interest, and shall be prepaid up to the extent of fifty
percent (50%) of the net proceeds to Maker from any public or private sale of
Maker's securities by Maker.
The "Payment Premium" shall be five percent (5%) of the outstanding
principal balance of this Promissory Note until the date which is one hundred
twenty (120) days from the date of this Promissory Note, and ten percent (10%)
thereafter.
For purposes of this Promissory Note, an "Event of Default" shall occur if
the Maker shall: (i) fail to pay the entire principal amount of this Promissory
plus the Payment Premium when due and payable after ten (10) days written notice
to Maker of such default by Payee, (ii) admit in writing its inability to pay
any of its monetary obligations under this Promissory Note, (iii) make a general
assignment of its assets for the benefit of creditors, or (iv) allow any
proceeding to be instituted by or against it seeking relief from or by
creditors, including, without limitation, any bankruptcy proceedings, which, if
not a voluntary proceeding, is not dismissed within ninety (90) days.
In the event that an Event of Default has occurred, the Payee or any other
holder of this Promissory Note may, by notice to the Maker, declare this entire
Promissory Note to be forthwith immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Maker. In the event that an Event of Default
consisting of a voluntary or involuntary bankruptcy filing has occurred, then
this entire Promissory Note shall automatically become due and payable without
any notice or other action by Payee.
The nonexercise or delay by the Payee or any other holder of this
Promissory Note of any of its rights hereunder in any particular instance shall
not constitute a waiver thereof in that or any subsequent instance. No waiver of
any right shall be effective unless in writing signed by the Payee, and no
waiver on one (1) or more occasions shall be conclusive as a bar to or waiver of
any right on any other occasion.
1
Upon the occurrence and during the continuation of an Event of Default, in
lieu of Payee's other remedies with respect thereto, Payee may purchase from
Maker shares of Maker's registered Common Stock (registered pursuant to Form
S-3, File No. 333-86251) if such registration statement is then effective, and
tender in full payment therefor this Note or any portion hereof. Such Common
Stock shall be purchased at a price equal to eighty percent (80%) of the average
of the closing bid prices of Maker's Common Stock on the OTC Bulletin Board (or
such other exchange or market on which the majority of trading volume in such
Common Stock then takes place) during the five Trading Days prior to the date on
which Payee tenders this Note to purchase such shares.
Should any part of the indebtedness evidenced hereby be collected by law or
through an attorney-at-law, the Payee or any other holder of this Promissory
Note shall, if permitted by applicable law, be entitled to collect from the
Maker all reasonable costs of collection, including, without limitation,
attorneys' fees.
All notices and other communications must be in writing to the address of
the party set forth in the first paragraph hereof and shall be deemed to have
been received when delivered personally (which shall include via fax or an
overnight courier service) or, if mailed, five (5) business days after having
been mailed by registered or certified mail, return receipt requested, postage
prepaid. The parties may designate by notice to each other any new address for
the purpose of this Promissory Note.
Maker hereby forever waives presentment, demand, presentment for payment,
protest, notice of protest, and notice of dishonor of this Promissory Note and
all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Promissory Note.
This Promissory Note shall be binding upon the successors and assigns of
the Maker, and shall be binding upon, and inure to the benefit of, the
successors and assigns of the Payee.
This Promissory Note shall be governed by and construed in accordance with
the internal laws of the State of New York. All disputes between the Maker and
the Payee relating in any way to this Promissory Note shall be resolved only by
state and federal courts located in New York County, New York, and the courts to
which an appeal therefrom may be taken.
IN WITNESS WHEREOF, the undersigned Maker has executed this Promissory Note
as of October 27, 1999.
MAKER:
WAVERIDER COMMUNICATIONS, INC.
By:_____________________________________
T. Xxxxx Xxxxxxxxxxx, Chief Financial Officer
2
EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of October 15, 1999, by
and among WaveRider Communications Inc. (the "Company"), the lenders signatory
hereto (each a "Lender" and together the "Lenders"), and Xxxxxxx Xxxxxx & Green,
P.C., (the "Escrow Agent"). Capitalized terms used but not defined herein shall
have the meanings set forth in the Loan Agreement referred to in the first
recital.
W I T N E S S E T H:
WHEREAS, the Lenders will be lending the Company $1,500,000 for the Notes
and the Lenders will receive Warrants to purchase, in the aggregate, up to
180,000 shares of Common Stock, at the purchase price set forth in the Loan
Agreement (the "Loan Agreement") dated the date hereof between the Lenders and
the Company, which will be issued as per the terms contained herein and in the
Loan Agreement; and
WHEREAS, the Company and the Lenders have requested that the Escrow Agent
hold the Purchase Price with respect to the Notes in escrow until the Escrow
Agent has received the Notes, the Warrants, the Option Shares and certain other
closing documents specified herein;
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW
Section 1.6. The parties hereby agree to establish an escrow account with
the Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase
of the $1,500,000 principal amount of Notes and the Warrants at the Closing as
contemplated by the Loan Agreement.
Section 1.7. (a) At the Closing, upon Escrow Agent's receipt of the
$1,500,000 Purchase Price for the Notes into its attorney trustee account from
the Lenders, together with executed counterparts of this Agreement and the Loan
Agreement, it shall telephonically advise the Company, or the Company's
designated attorney or agent, of the amount of funds it has received into its
account.
(b) Wire transfers to the Escrow Agent shall be made as
follows:
Xxxxxxx Xxxxxx & Green, P.C.
Master Escrow Account
Chase Manhattan Bank
0000 Xxxxxxxx - Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA No. 000000000
Account No. 000-0-000000
Attention: L. Borneo
1
Section 1.8. The Company, upon receipt of said notice, shall deliver to the
Escrow Agent the Notes and the Warrants to be issued to each Lender together
with:
(i) an original counterpart of this Escrow Agreement;
(ii) the original opinion of Xxxxx, Xxxx & Xxxxx LLP in the form of
Exhibit D to the Loan Agreement;
(iii)certificates representing four million (4,000,000) shares of
Common Stock without any restrictive legend thereon, registered
in the names of the Lenders pro-rata to the principal amounts of
the Notes issued to each Lender; and
(iv) such other closing certificates and documents as the Lenders may
reasonably request.
In the event that the foregoing items are not in the Escrow Agent's
possession within three (3) Trading Days of the Escrow Agent notifying the
Company that the Escrow Agent has custody of the Purchase Price, then each
Lender shall have the right to demand the return of said sum. Section 1.9. At
the Closing, Escrow Agent shall insert the Closing Date and the maturity date on
the face of the certificates representing the Notes and then wire that amount of
funds necessary to purchase the Notes and per the written instructions of the
Company net of the Lenders' legal and escrow administrative costs of twenty
thousand dollars ($20,000) and the commissions of Ladenburg Xxxxxxxx & Co., Inc.
of six percent (6%), which shall be paid as directed by Ladenburg Xxxxxxxx.
Once the funds (as set forth above) have been sent per the Company's
instructions, the Escrow Agent shall then arrange to have the Notes and the
Warrants delivered as per instructions from the Lenders and the Escrow Agent
shall retain the Option Shares in its capacity as Escrow Agent.
Section 1.1. 1.5 With respect to the Option Shares, the Company covenants
with the Lenders that it will not place or suffer any "stop transfer" or similar
instructions with the transfer agent and registrar of the Company's Common
Stock.
(a) Upon the maturity of the Notes, whether upon their stated maturity date
or upon acceleration for any reason set forth in such Notes, Escrow Agent shall,
at the written direction of the Lenders and without notice or liability to the
Company, deliver to each Lender, as its respective interests may appear, the
certificates representing the Option Shares. If the purchase of Option Shares
will satisfy the entire principal, Payment Premium and accrued interest of such
Note, the Lender shall tender the Note to the Escrow Agent against delivery of
the Option shares, and shall re-deliver such Note to the Company. The debt of
the Company to the Lenders shall be reduced by the value of the Option Shares
purchased, valued as set forth in Section 1.5(b).
(b) The Option Shares shall be valued at eighty percent (80%) of the
average of the closing bid prices of the Company's Common Stock on the OTC
Bulletin Board (or such other exchange or market on which the majority of
trading volume in such Common Stock then takes place) during the five Trading
Days prior to the date on which the Escrow Agent is directed to deliver the
Option Shares to Lenders.
2
(c) In the event that at any time or from time to time after the date
hereof, the Company shall declare any dividend or any other distribution on its
Common Stock, whether in securities, cash or other property by way of stock
split, spin-off, split-up or reclassification, combination of shares or the
like, or in case of any reorganization, consolidation or merger of the Company,
then and in each such case, the Company shall deliver to Escrow Agent all such
securities, cash and other property as part of the Option Shares.
(d) Escrow Agent shall redeliver the Option Shares, or such as remain
unpurchased, and all accessions thereto to the Company upon receipt of evidence
reasonably satisfactory to the Escrow Agent that the Notes have all been paid in
full.
(e) Provided no Event of Default is then continuing uncured under any of
the Notes, upon any partial payment of the Notes, Escrow Agent shall release to
the Company certificates representing Option Shares on the basis of 2.5 shares
per dollar of principal repaid.
ARTICLE 2
MISCELLANEOUS
2.1 No waiver or any breach of any covenant or provision herein contained
shall be deemed a waiver of any preceding or succeeding breach thereof, or of
any other covenant or provision herein contained. No extension of time for
performance of any obligation or act shall be deemed any extension of the time
for performance of any other obligation or act.
2.2 All notices or other communications required or permitted hereunder
shall be in writing, and shall be sent as set forth in the Loan Agreement.
Section 1.10. This Escrow Agreement shall be binding upon and shall inure
to the benefit of the permitted successors and permitted assigns of the parties
hereto.
Section 1.11. This Escrow Agreement is the final expression of, and
contains the entire agreement among, the parties with respect to the subject
matter hereof and supersedes all prior understandings with respect thereto. This
Escrow Agreement may not be modified, changed, supplemented or terminated, nor
may any obligations hereunder be waived, except by written instrument signed by
the parties to be charged or by its agent duly authorized in writing or as
otherwise expressly permitted herein.
Section 1.12. Whenever required by the context of this Escrow Agreement,
the singular shall include the plural and masculine shall include the feminine.
This Escrow Agreement shall not be construed as if it had been prepared by one
of the parties, but rather as if both parties had prepared the same. Unless
otherwise indicated, all references to Articles are to this Escrow Agreement.
Section 1.13. The parties hereto expressly agree that this Escrow Agreement
shall be governed by, interpreted under and construed and enforced in accordance
with the laws of the State of New York. Any action to enforce, arising out of,
or relating in any way to, any provisions of this Escrow Agreement shall only be
brought in a state or Federal court sitting in New York City. Section 1.14. The
Escrow Agent's duties hereunder may be altered, amended, modified or revoked
only by a writing signed by the Company, each Lender and the Escrow Agent.
3
Section 1.15. The Escrow Agent shall be obligated only for the performance
of such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally liable
for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent
while acting in good faith, and any act done or omitted by the Escrow Agent
pursuant to the advice of the Escrow Agent's attorneys-at-law shall be
conclusive evidence of such good faith.
Section 1.16. The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any other person
or corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
Section 1.17. The Escrow Agent shall not be liable in any respect on
account of the identity, authorization or rights of the parties executing or
delivering or purporting to execute or deliver the Loan Agreement or any
documents or papers deposited or called for thereunder.
Section 1.18. The Escrow Agent shall be entitled to employ such legal
counsel and other experts as the Escrow Agent may deem necessary properly to
advise the Escrow Agent in connection with the Escrow Agent's duties hereunder,
may rely upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Escrow Agent has acted as legal counsel for the
Lenders, and may continue to act as legal counsel for the Lenders, from time to
time, notwithstanding its duties as the Escrow Agent hereunder. The Company
consents to the Escrow Agent in such capacity as legal counsel for the Lenders
and waives any claim that such representation represents a conflict of interest
on the part of the Escrow Agent. The Company understands that the Lenders and
the Escrow Agent are relying explicitly on the foregoing provision in entering
into this Escrow Agreement.
Section 1.19. The Escrow Agent's responsibilities as escrow agent hereunder
shall terminate if the Escrow Agent shall resign by written notice to the
Company and the Lenders. In the event of any such resignation, the Lenders and
the Company shall appoint a successor Escrow Agent. Section 1.20. If the Escrow
Agent reasonably requires other or further instruments in connection with this
Escrow Agreement or obligations in respect hereto, the necessary parties hereto
shall join in furnishing such instruments.
Section 1.21. It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
documents or the escrow funds held by the Escrow Agent hereunder, the Escrow
Agent is authorized and directed in the Escrow Agent's sole discretion (1) to
retain in the Escrow Agent's possession without liability to anyone all or any
part of said documents or the escrow funds until such disputes shall have been
settled either by mutual written agreement of the parties concerned by a final
order, decree or judgment or a court of competent jurisdiction after the time
for appeal has expired and no appeal has been perfected, but the Escrow Agent
shall be under no duty whatsoever to institute or defend any such proceedings or
(2) to deliver the escrow funds and any other property and documents held by the
Escrow Agent hereunder to a state or Federal court having competent subject
matter jurisdiction and located in the City of New York in accordance with the
applicable procedure therefor.
4
Section 1.22. The Company and each Lender agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent hereunder or the transactions contemplated hereby or by the Loan Agreement
other than any such claim, liability, cost or expense to the extent the same
shall have been determined by final, unappealable judgment of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Escrow Agent.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
as of the date set forth above. WaveRider Communications Inc.
By:______________________________________
T. Xxxxx Xxxxxxxxxxx, Chief Financial Officer
Lender: AMRO International, S.A.
By:__________________________________
Name: X.X. Xxxxxxxx
Authorized Signatory
ESCROW AGENT:
XXXXXXX XXXXXX & GREEN, P.C.
By:___________________________________
5
EXHIBIT C
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT.
STOCK PURCHASE WARRANT
To Purchase 180,000 Shares of Common Stock of
WaveRider Communications Inc.
THIS CERTIFIES that, for value received, AMRO International, S.A. (the
"Holder"), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after
October 31, 1999 (the "Initial Exercise Date") and on or prior to the close of
business on October 31, 2003 (the "Termination Date") but not thereafter, to
subscribe for and purchase from WaveRider Communications, Inc., a corporation
incorporated in Nevada (the "Company"), up to One Hundred Eighty Thousand
(180,000) shares (the "Warrant Shares") of Common Stock, no par value, of the
Company (the "Common Stock"). The purchase price of one share of Common Stock
(the "Exercise Price") under this Warrant shall be $1.01, which is the closing
bid price of the Company's Common Stock on the OTC Bulletin Board on the Trading
Day prior to the date of this Warrant. The Exercise Price and the number of
shares for which the Warrant is exercisable shall be subject to adjustment as
provided herein. In the event of any conflict between the terms of this Warrant
and the Loan Agreement dated as of October 15, 1999 pursuant to which this
Warrant has been issued (the "Loan Agreement"), the Loan Agreement shall
control. Capitalized terms used and not otherwise defined herein shall have the
meanings set forth for such terms in the Loan Agreement.
12. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
13. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
1
14. Exercise of Warrant.
(b) Except as provided above and as further provided in Section 4 herein,
exercise of the purchase rights represented by this Warrant may be made at any
time or times on or after the Initial Exercise Date, and before the close of
business on the Termination Date by the surrender of this Warrant and the Notice
of Exercise Form annexed hereto duly executed, at the office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company) and upon payment of the Exercise Price of the
shares thereby purchased by wire transfer or cashier's check drawn on a United
States or Canadian bank, the holder of this Warrant shall be entitled to receive
a certificate for the number of shares of Common Stock so purchased.
Certificates for shares purchased hereunder shall be delivered to the holder
hereof within three (3) Trading Days after the date on which this Warrant shall
have been exercised as aforesaid. This Warrant shall be deemed to have been
exercised and such certificate or certificates shall be deemed to have been
issued, and Holder or any other person so designated to be named therein shall
be deemed to have become a holder of record of such shares for all purposes, as
of the date the Warrant has been exercised by payment to the Company of the
Exercise Price and all taxes required to be paid by Holder, if any, pursuant to
Section 5 prior to the issuance of such shares, have been paid.
(c) If this Warrant shall have been exercised in part, the Company shall,
at the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased shares of Common Stock called for by this Warrant,
which new Warrant shall in all other respects be identical with this Warrant.
(d) If the Company shall file a registration statement with the Securities
and Exchange Commission at any time prior to the date on which the Warrant
Shares could be sold under Rule 144(k), on a form which permits the registration
for resale by the Holder of the Warrant Shares, then the Company shall register
the Warrant Shares for resale by the Holder in such registration statement
without cost to the Holder. The Company shall provide Holder with customary
indemnification with respect thereto.
(e) If no registration statement is effective permitting the resale of the
shares of Common Stock issued upon exercise of this Warrant at any time
commencing one year after the issuance date hereof, then this Warrant shall also
be exercisable by means of a "cashless exercise" in which the holder shall be
entitled to receive a certificate for the number of shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
(A) = the average of the high and low trading prices per share of Common Stock
on the Trading Day preceding the date of such election on the Nasdaq Stock
Market, or if the Common Stock is not traded on the Nasdaq Stock Market, then
the principal market in terms of volume, and converted into US Dollars;
(B) = the Exercise Price of the Warrants; and
(X) = the number of shares issuable upon exercise of the Warrants in accordance
with the terms of this Warrant.
2
12. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the Exercise Price.
13. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.
14. Closing of Books. The Company will not close its shareholder books or
records in any manner which prevents the timely exercise of this Warrant.
15. Transfer, Division and Combination. (a) Subject to compliance with any
applicable securities laws, transfer of this Warrant and all rights hereunder,
in whole or in part, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the principal
office of the Company, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by Holder or its agent
or attorney and funds sufficient to pay any transfer taxes payable upon the
making of such transfer. Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned, may be exercised by a
new holder for the purchase of shares of Common Stock without having a new
Warrant issued.
(b) This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by Holder or its agent or attorney. Subject to compliance
with Section 7(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
(c) The Company shall prepare, issue and deliver at its own expense (other
than transfer taxes) the new Warrant or Warrants under this Section 7.
(d) The Company agrees to maintain, at its aforesaid office, books for the
registration and the registration of transfer of the Warrants.
16. No Rights as Shareholder until Exercise. This Warrant does not entitle
the holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price, the Warrant Shares so purchased shall
be and be deemed to be issued to such holder as the record owner of such shares
as of the close of business on the later of the date of such surrender or
payment.
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17. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant certificate
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.
18. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.
19. Adjustments of Exercise Price and Number of Warrant Shares. (a) Stock
Splits, etc. The number and kind of securities purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time to
time upon the happening of any of the following. In case the Company shall (i)
pay a dividend in shares of Common Stock or make a distribution in shares of
Common Stock to holders of its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares of Common
Stock, (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock or (iv) issue any shares of its capital stock
in a reclassification of the Common Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the holder of this Warrant shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which he
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number
of Warrant Shares or other securities of the Company which are purchasable
hereunder, the holder of this Warrant shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such adjustment
at an Exercise Price per Warrant Share or other security obtained by multiplying
the Exercise Price in effect immediately prior to such adjustment by the number
of Warrant Shares purchasable pursuant hereto immediately prior to such
adjustment and dividing by the number of Warrant Shares or other securities of
the Company resulting from such adjustment. An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
(f) Reorganization, Reclassification, Merger, Consolidation or Disposition
of Assets. In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
4
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of shares of
Common Stock for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 11.
For purposes of this Section 11, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 11 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
12. Voluntary Adjustment by the Company. The Company may at any time during
the term of this Warrant, reduce the then current Exercise Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the
Company.
13. Notice of Adjustment. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt requested, to the
holder of this Warrant notice of such adjustment or adjustments setting forth
the number of Warrant Shares (and other securities or property) purchasable upon
the exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such notice, in the absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
14. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to
receive a dividend or other distribution, or any right to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,
(c) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;
5
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 30 days' prior written notice of the record date for such dividend,
distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 30 days' prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Stock shall be entitled to any
such dividend, distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Stock shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with Section
16(d).
15. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Principal Market
upon which the Common Stock may be listed.
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant, and (c) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number
of shares of Common Stock for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
6
16. Miscellaneous.
(g) Jurisdiction. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract under the laws
of New York, without regard to its conflict of law, principles or rules, and be
subject to arbitration pursuant to the terms set forth in the Loan Agreement.
(h) Restrictions. The holder hereof acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(i) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination Date. If the
Company fails to comply with any provision of this Warrant, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
(j) Notices. Any notice, request or other document required or permitted to
be given or delivered to the holder hereof by the Company shall be delivered in
accordance with the notice provisions of the Loan Agreement.
(k) Limitation of Liability. No provision hereof, in the absence of
affirmative action by Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of Holder hereof, shall give rise
to any liability of Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
(l) Remedies. Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
(m) Successors and Assigns. Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.
(n) Indemnification. The Company agrees to indemnify and hold harmless
Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder in any manner relating to or arising out of any failure by the
Company to perform or observe in any material respect any of its covenants,
agreements, undertakings or obligations set forth in this Warrant; provided,
however, that the Company will not be liable hereunder to the extent that any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, attorneys' fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have resulted from Holder's negligence,
bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.
7
(o) Amendment. This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder.
(p) Severability. Wherever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
(q) Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: October 27, 1999
WaveRider Communications, Inc.
By:_____________________________________________
T. Xxxxx Xxxxxxxxxxx, Chief Financial Officer
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NOTICE OF EXERCISE
To: WaveRider Communications, Inc.
(1) The undersigned hereby elects to purchase ________ shares of Common
Stock (the "Common Stock"), of WaveRider Communications, Inc. pursuant to the
terms of the attached Warrant, and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
---------------------------------------------
(Name)
---------------------------------------------
(Address)
Dated:
------------------------------
Signature
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
___________________________________________________________ whose address is
____________________________________________________________________________.
____________________________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address:________________________________
________________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
