EXHIBIT 10.15
SERIES A PREFERRED CONVERSION RESTRICTION AGREEMENT
THIS SERIES A CONVERSION RESTRICTION AGREEMENT (the "Agreement") is
made and entered into as of the date set forth on the signature page below,
between ERF WIRELESS, INC., a Nevada corporation (the "Company"), and the holder
identified on the signature page ("Holder").
WHEREAS, the Holder owns shares of the Company's Series A Preferred
Stock, as identified on the signature page, which are convertible into shares of
Company's common stock at the Holder's discretion;
WHEREAS, the Holder desires to enter into this Agreement to restrict
the amount of shares of Series A Preferred Stock that can be converted provided
that contemporaneously herewith the Company shall xxxxx Xxxxxx the Right of
First Refusal (as herein defined); and
WHEREAS, the Holder has agreed to accept the Right of First Refusal and
to enter into this Agreement and to restrict the conversion of the shares of the
Company's Series A Preferred Stock, all on the terms set forth below.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Each Holder agrees to restrict the amount of Series A Preferred
Stock that can be converted into common stock of the Company per calendar
quarter to an amount equal to the lesser of (i) 5% of their shares of the
Company's Series A Preferred Stock or (ii) 1% of the common stock then
outstanding determined on the first day of the calendar quarter. Amounts
remaining unconverted by one Holder may be assigned to another Holder as long as
the group doesn't exceed this limitation. The Holder acknowledges that the
certificates issued upon the conversion of the Series A Preferred Stock into the
Company's common stock will be subject to Rule 144 restrictive legend and will
also contain a restrictive legend reflecting this resale restriction.
2. The Holder agrees that it will not engage in any short selling of the
Company's common stock during the term of this Agreement.
3. Beginning January 1, 2006 and ending December 31, 2006, prior to the
Company selling any of its Series A Preferred Stock ("Future Series A
Financing"), the Company will send the terms of any proposed offering by written
notice to the Holders (the "Offer"). Each Holder will have the right to
participate pro rata (as defined below) in the Future Series A Financing by
providing the Company written notice of its acceptance of the Offer within five
(5) days after the Offer is sent (the "Right of First Refusal"). If any Holder
-1-
accepts the Offer, the Holder must fund the purchase price as described in the
Offer. If any Holder fails to either accept or fund the Offer, as provided for
herein, such Holder shall have waived its rights to participate in that Future
Series A Financing. For the purposes of any Offer under this Section 3, the "pro
rata" of any accepting Holder shall equal the ratio of (i) the aggregate number
of shares of Series A Preferred Stock held of record by such accepting Holder
prior to such Offer divided by (ii) the aggregate number of shares of Series A
Preferred Stock outstanding of record prior to such Offer. The Right of First
Refusal is not transferable or assignable.
4. Notwithstanding anything contained in this Agreement, a Holder may
transfer his/her/its shares of the Company's Series A Preferred Stock provided
that the transferee executes an agreement to be bound by all of the terms and
conditions of this Agreement and such transfer otherwise complies with
applicable securities laws.
5. Except as otherwise provided in this Agreement or any other
agreements between the parties, this Agreement shall not effect the Holder's
right to their respective beneficial rights of ownership of the Company's Series
A Preferred Stock or common stock, including the right to vote the Company's
Series A Preferred Stock and common stock for any and all purposes.
6. The Company's per share price restrictions of the common stock
covered by this Agreement shall be appropriately adjusted should the Company
undergo a forward split or a reverse split or otherwise reclassify its shares of
the Company's common stock.
7. The conversion restrictions on the Company's Series A Preferred
Stock set forth in this Agreement shall be in addition to all other restrictions
on transfer imposed by applicable United States and state securities laws, rules
and regulations.
8. The Company or each Holder who fails to fully adhere to the terms
and conditions of this Agreement shall be liable to every other party for any
damages suffered by any party by reason of any such breach of the terms and
conditions hereof. Each Holder agrees that in the event of a breach of any of
the terms and conditions of this Agreement by any such Holder, that in addition
to all other remedies that may be available in law or in equity to the
non-defaulting parties, a preliminary and permanent injunction and an order of a
court requiring such defaulting Holder to cease and desist from violating the
terms and conditions of this Agreement and specifically requiring such Holder to
perform his/her/its obligations hereunder is fair and reasonable by reason of
the inability of the parties to this Agreement to presently determine the type,
extent or amount of damages that the Company or the non-defaulting Holder may
suffer as a result of any breach or continuation thereof. In the event of
default hereunder, the non-defaulting parties shall be entitled to recover
reasonable attorney's fees incurred in the enforcement of this Agreement.
9. This Agreement sets forth the entire understanding of the parties
hereto with respect to the subject matter hereof, and may not be amended except
by a written instrument executed by the parties hereto.
10. The Company will be the transfer agent for all Series A Preferred
Stock and any Holder desiring to convert Series A Preferred must submit their
Series A stock certificate along with written instructions as to the number of
Series A shares they wish to convert directly to the Director of Investor
-2-
Relations, 0000 Xxxxx Xxxxx Xxxx. Xxxxxx Xxxx Xxxxx, 00000. The Holder will
receive a new Series A Preferred certificate as well as a common stock
certificate reflecting the transfer directly back from the Company. Holders
should anticipate that the conversion process will require approximately 75 days
from the point the request is received by the Company due to the 65 day
pre-notification requirement of the Series A Preferred designation as well as
the processing time for the new Series A Preferred and common stock
certificates.
11. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas applicable to contracts entered into and to
be performed wholly within said State; and the Company and the Holder agree that
any action based upon this Agreement may be brought in the United States and
state courts of Xxxxxx County, Texas only, and each submits
himself/herself/itself to the jurisdiction of such courts for all purposes
hereunder.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as of the day and year first above written.
Date: December 8, 2005 ERF WIRELESS, INC.
By:_______________________________________
Name:
Title:____________________________________
HOLDER
By:_______________________________________
Name:
Title:____________________________________
Amount of shares of Series A Preferred
Stock Owned:______________________________
-3-
